| Page Range | 88097-88608 | |
| FR Document |
| Page and Subject | |
|---|---|
| 81 FR 88135 - Fisheries of the Caribbean, Gulf of Mexico, and South Atlantic; Reef Fish Fishery of the Gulf of Mexico; Red Snapper Management Measures | |
| 81 FR 88110 - Implementation of the Nondiscrimination and Equal Opportunity Provisions of the Workforce Innovation and Opportunity Act | |
| 81 FR 88607 - Regarding the Proposed Acquisition of a Controlling Interest in Aixtron SE by Grand Chip Investment GmbH | |
| 81 FR 88605 - International Day of Persons With Disabilities, 2016 | |
| 81 FR 88238 - Sunshine Act Meeting Notice | |
| 81 FR 88218 - Applications for New Awards; Personnel Development To Improve Services and Results for Children With Disabilities-Preparation of Special Education, Early Intervention, and Related Services Leadership Personnel | |
| 81 FR 88226 - Applications for New Awards; Training and Information for Parents of Children With Disabilities-Community Parent Resource Centers | |
| 81 FR 88241 - Supplemental Notice Extending the Application Deadline for the Funded Priorities List | |
| 81 FR 88167 - Indemnification or Defense, or Providing Notice to the Department of Defense, Relating to a Third-Party Environmental Claim | |
| 81 FR 88237 - Notice of Agreements Filed | |
| 81 FR 88235 - Privacy Act of 1974, as Amended; Computer Matching Program Between the U.S. Department of Education and the Department of Veterans Affairs | |
| 81 FR 88276 - Changes to Aging Management Guidance for Various Steam Generator Components | |
| 81 FR 88247 - Agency Information Collection Activities; Proposed Collection; Public Comment Request | |
| 81 FR 88246 - Agency Information Collection Activities; Submission to OMB for Review and Approval; Public Comment Request | |
| 81 FR 88322 - Pipeline Safety: Meeting of the Gas Pipeline Safety Advisory Committee | |
| 81 FR 88275 - Armed Forces Radiobiology Research Institute | |
| 81 FR 88098 - Special Conditions: Embraer S.A., Model ERJ 190-300 Series Airplanes; Landing Pitchover Condition | |
| 81 FR 88274 - License Renewal for Grand Gulf Nuclear Station, Unit 1 | |
| 81 FR 88211 - Reorganization of Foreign-Trade Zone 17; (Expansion of Service Area) Under Alternative Site Framework; Kansas City, Kansas | |
| 81 FR 88270 - Notice of Lodging of Proposed Consent Decree Under the Comprehensive Environmental Response, Compensation, and Liability Act | |
| 81 FR 88262 - Notice of Regulatory Waiver Requests Granted for the Third Quarter of Calendar Year 2016 | |
| 81 FR 88213 - Foreign-Trade Zone 92-Gulfport, Mississippi; Application for Subzone; TopShip, LLC; Gulfport, Mississippi | |
| 81 FR 88213 - Foreign-Trade Zone 24-Pittston, Pennsylvania; Application for Subzone; Brake Parts Inc.; Hazleton, Pennsylvania | |
| 81 FR 88212 - Foreign-Trade Zone (FTZ) 24-Pittston, Pennsylvania; Notification of Proposed Production Activity; Brake Parts Inc; (Automotive Parts Kitting); Hazleton, Pennsylvania | |
| 81 FR 88213 - Reorganization of Foreign-Trade Zone 20 (Expansion of Service Area) Under Alternative Site Framework; Norfolk, Virginia | |
| 81 FR 88211 - Foreign-Trade Zone (FTZ) 226-Merced County, California; Notification of Proposed Production Activity; Brake Parts Inc; (Automotive Parts Kitting); Patterson, California | |
| 81 FR 88210 - Foreign-Trade Zone (FTZ) 134-Chattanooga, Tennessee; Notification of Proposed Production Activity; Volkswagen Group of America-Chattanooga Operations, LLC; (Passenger Motor Vehicles); Chattanooga, Tennessee | |
| 81 FR 88313 - CCET, LLC-Lease and Operation Exemption-Rail Line of Norfolk Southern Railway Company in Adams County, Ohio. | |
| 81 FR 88212 - Reorganization of Foreign-Trade Zone 93; (Expansion of Service Area) Under Alternative Site Framework; Raleigh-Durham, North Carolina | |
| 81 FR 88214 - Reorganization of Foreign-Trade Zone 244; (Expansion of Service Area) Under Alternative Site Framework; Riverside, California | |
| 81 FR 88211 - Approval of Expansion of Subzone 124D; LOOP LLC; Lafourche and St. James Parishes, Louisiana | |
| 81 FR 88212 - Approval of Expansion of Subzone 122J; Valero Refining Company; Nueces County, Texas | |
| 81 FR 88236 - Hazardous Waste Electronic Manifest System (“e-Manifest”) Advisory Board; Notice of Public Meeting | |
| 81 FR 88261 - The Critical Infrastructure Partnership Advisory Council | |
| 81 FR 88126 - Effluent Limitations Guidelines and Standards for the Oil and Gas Extraction Point Source Category-Implementation Date Extension | |
| 81 FR 88117 - Extension of Pharmacy Copayments for Medications | |
| 81 FR 88199 - Announcement of Grant Application Deadlines and Funding Levels | |
| 81 FR 88205 - Announcement of Grant and Loan Application Deadlines | |
| 81 FR 88235 - Proposed Subsequent Arrangement | |
| 81 FR 88249 - Office of the Assistant Secretary for Financial Resources, Statement of Organization, Functions, and Delegations of Authority | |
| 81 FR 88248 - Meeting Announcement for the Technical Advisory Panel on Medicare Trustee Reports | |
| 81 FR 88238 - Agency Information Collection Activities: Announcement of Board Approval Under Delegated Authority and Submission to OMB | |
| 81 FR 88239 - Agency Information Collection Activities: Announcement of Board Approval Under Delegated Authority and Submission to OMB | |
| 81 FR 88218 - Agency Information Collection Activities; Submission to the Office of Management and Budget for Review and Approval; Comment Request; Middle Grades Longitudinal Study of 2017-18 (MGLS: 2017) Operational Field Test (OFT) and Recruitment for Main Study Base-Year Study | |
| 81 FR 88243 - Announcement of the Award of Five Single-Source Low-Cost Extension Supplement Grants Within the Office of Refugee Resettlement's Unaccompanied Children's Program | |
| 81 FR 88317 - Request for Comments on a New Information Collection | |
| 81 FR 88214 - Schedules for Atlantic Shark Identification Workshops and Protected Species Safe Handling, Release, and Identification Workshops | |
| 81 FR 88273 - Notice of Permit Applications Received Under the Antarctic Conservation Act of 1978 | |
| 81 FR 88320 - Reports, Forms, and Record Keeping Requirements | |
| 81 FR 88313 - Notice to Manufacturers of Airports In-Pavement Stationary Runway Weather Information Systems | |
| 81 FR 88314 - Notice of Opportunity To Participate: Criteria and Application Procedures for Participation in the Military Airport Program (MAP) | |
| 81 FR 88115 - Security Zone; Kailua Bay, Oahu, HI | |
| 81 FR 88269 - Public Land Order No. 7857; Extension of Public Land Order No. 7254; Montana | |
| 81 FR 88110 - Safety Zone; Upper Mississippi River, St. Louis, MO | |
| 81 FR 88600 - Terrorism Risk Insurance Program; Adjustment to Civil Penalty Amount Under the Terrorism Risk Insurance Act of 2002 | |
| 81 FR 88592 - Terrorism Risk Insurance Program; Certification | |
| 81 FR 88323 - Sanctions Actions Pursuant to Executive Orders (E.O.s) 13722, 13687, and 13382 | |
| 81 FR 88242 - Proposed Data Collection Submitted for Public Comment and Recommendations | |
| 81 FR 88133 - Update to Email Address for the Electronic Submission via the Internet of Certain Accident/Incident Reports | |
| 81 FR 88317 - Requested Administrative Waiver of the Coastwise Trade Laws: Vessel BLOOMS; Invitation for Public Comments | |
| 81 FR 88198 - White River National Forest; Eagle County, CO El Jebel Administrative Sites, Upper and Lower Parcels, Conveyance Project | |
| 81 FR 88217 - Privacy Act of 1974; System of Records | |
| 81 FR 88245 - Determination of Regulatory Review Period for Purposes of Patent Extension; GARDASIL 9 | |
| 81 FR 88216 - First Responder Network Authority Combined Committee and Board Meeting | |
| 81 FR 88300 - CWM Advisors, LLC, et al.; Notice of Application | |
| 81 FR 88297 - Wells Fargo Advisors, LLC and Wells Fargo Advisors Financial Network, LLC; Notice of Application | |
| 81 FR 88286 - UBS Financial Services Inc.; Notice of Application | |
| 81 FR 88308 - Robert W. Baird & Co. Incorporated; Notice of Application | |
| 81 FR 88294 - Merrill Lynch, Pierce, Fenner & Smith Incorporated; Notice of Application | |
| 81 FR 88284 - Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing of Proposed Rule Changes to BZX Rule 14.11, Other Securities, and BZX Rule 14.12, Failure To Meet Listing Standards | |
| 81 FR 88290 - Self-Regulatory Organizations; NASDAQ BX, Inc.; Order Granting an Extension to Limited Exemption From Rule 612(c) of Regulation NMS in Connection With the Exchange's Retail Price Improvement Program Until December 1, 2017 | |
| 81 FR 88311 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Change the Titles of Equities Rule 7015 and Options Chapter XV, Section 3, and To Make Related Changes | |
| 81 FR 88279 - Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Pilot Period for the Retail Price Improvement Program Until December 1, 2017 | |
| 81 FR 88302 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposal to Change Representation Regarding Investments by PowerShares DB Trust Issued Receipts Listed Under Commentary .02 to NYSE Arca Equities Rule 8.200 | |
| 81 FR 88306 - Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Its Rules Governing Business Continuity and Disaster Recovery | |
| 81 FR 88304 - Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Its Rules Governing Business Continuity and Disaster Recovery Planning | |
| 81 FR 88293 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Penny Pilot Program | |
| 81 FR 88282 - Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Penny Pilot Program | |
| 81 FR 88291 - Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of Filing of Proposed Rule Change To Provide for the Clearance of Additional Credit Default Swap Contracts | |
| 81 FR 88277 - Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Make Non-Substantive Changes to the Fee Schedule | |
| 81 FR 88289 - Self-Regulatory Organizations; Bats EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Make Non-Substantive Changes to the Fee Schedule | |
| 81 FR 88281 - Self-Regulatory Organizations; Bats EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Make Non-Substantive Changes to the Equity Options Fee Schedule | |
| 81 FR 88270 - Proposed Collection, Comment Request | |
| 81 FR 88099 - Third-Party Certification Body Accreditation for Food Safety Audits: Model Accreditation Standards; Guidance for Industry and Food and Drug Administration Staff; Availability | |
| 81 FR 88244 - Posting Adverse Event Report Data Associated With Conventional Foods, Dietary Supplements, and Cosmetics on the Internet; Availability | |
| 81 FR 88270 - Notice of Lodging of Proposed Consent Decree Under the Clean Air Act | |
| 81 FR 88097 - List of Approved Spent Fuel Storage Casks: NAC International MAGNASTOR® Cask System; Certificate of Compliance No. 1031, Amendment No. 6 | |
| 81 FR 88124 - Approval and Promulgation of Implementation Plans; Texas; Reasonable Further Progress Plan and Motor Vehicle Emissions Budgets for the Dallas/Fort Worth 2008 Ozone Nonattainment Area | |
| 81 FR 88330 - Allowance for Private Purchase of an Outer Burial Receptacle in Lieu of a Government-Furnished Graveliner for a Grave in a VA National Cemetery | |
| 81 FR 88197 - National Advisory Committee on Microbiological Criteria for Foods | |
| 81 FR 88120 - Changes to Attributable Costing | |
| 81 FR 88324 - Funding Availability Under Supportive Services for Veteran Families Program | |
| 81 FR 88318 - Notice of Receipt of Petition for Decision That Nonconforming Model Year 2013 and 2014 Ferrari F12 Berlinetta Passenger Cars Are Eligible for Importation | |
| 81 FR 88261 - Center for Scientific Review; Notice of Closed Meeting | |
| 81 FR 88272 - Notice of Information Collection | |
| 81 FR 88234 - Agency Information Collection Activities; Submission to the Office of Management and Budget for Review and Approval; Comment Request; State Longitudinal Data System (SLDS) Survey 2017-2019 | |
| 81 FR 88251 - Division of Behavioral Health, Office of Clinical and Preventive Services; Methamphetamine and Suicide Prevention Initiative-Generation Indigenous (Gen-I) Initiative Support | |
| 81 FR 88112 - Safety Zone, Delaware River; Marcus Hook, PA | |
| 81 FR 88127 - Railroad Police Officers | |
| 81 FR 88173 - Paleontological Resources Preservation | |
| 81 FR 88147 - Prevention of Workplace Violence in Healthcare and Social Assistance | |
| 81 FR 88216 - U.S. Air Force Scientific Advisory Board Notice of Meeting | |
| 81 FR 88098 - Energy Conservation Program: Test Procedure for Commercial Packaged Boilers; Withdrawal | |
| 81 FR 88136 - Grid Security Emergency Orders: Procedures for Issuance | |
| 81 FR 88562 - Covered Asset Acquisitions | |
| 81 FR 88103 - Covered Asset Acquisitions | |
| 81 FR 88143 - Airworthiness Directives; Airbus Helicopters Deutschland GmbH Helicopters | |
| 81 FR 88145 - Airworthiness Directives; General Electric Company Turbofan Engines | |
| 81 FR 88101 - Visas: Classification of Immediate Family Members as A, C-3, G, and NATO Nonimmigrants | |
| 81 FR 88526 - Contact Lens Rule | |
| 81 FR 88368 - Medicare and State Health Care Programs: Fraud and Abuse; Revisions to the Safe Harbors Under the Anti-Kickback Statute and Civil Monetary Penalty Rules Regarding Beneficiary Inducements | |
| 81 FR 88334 - Medicare and State Health Care Programs: Fraud and Abuse; Revisions to the Office of Inspector General's Civil Monetary Penalty Rules | |
| 81 FR 88412 - Chartering and Field of Membership Manual |
Food Safety and Inspection Service
Forest Service
Rural Utilities Service
First Responder Network Authority
Foreign-Trade Zones Board
National Oceanic and Atmospheric Administration
National Telecommunications and Information Administration
Air Force Department
Centers for Disease Control and Prevention
Children and Families Administration
Food and Drug Administration
Indian Health Service
Inspector General Office, Health and Human Services Department
National Institutes of Health
Coast Guard
Fish and Wildlife Service
Land Management Bureau
Labor Statistics Bureau
Occupational Safety and Health Administration
Federal Aviation Administration
Federal Railroad Administration
Maritime Administration
National Highway Traffic Safety Administration
Pipeline and Hazardous Materials Safety Administration
Foreign Assets Control Office
Internal Revenue Service
Consult the Reader Aids section at the end of this issue for phone numbers, online resources, finding aids, and notice of recently enacted public laws.
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Nuclear Regulatory Commission.
Direct final rule; confirmation of effective date.
The U.S. Nuclear Regulatory Commission (NRC) is confirming the effective date of December 21, 2016, for the direct final rule that was published in the
Please refer to Docket ID NRC-2016-0137 when contacting the NRC about the availability of information for this action. You may obtain publicly-available information related to this action by any of the following methods:
• Federal Rulemaking Web site: Go to
• NRC's Agencywide Documents Access and Management System (ADAMS):
You may obtain publicly-available documents online in the ADAMS Public Documents collection at
• NRC's PDR: You may examine and purchase copies of public documents at the NRC's PDR, Room O1-F21, One White Flint North, 11555 Rockville Pike, Rockville, Maryland 20852.
Keith McDaniel, Office of Nuclear Material Safety and Safeguards, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001; telephone: 301-415-5252; email:
On October 7, 2016 (81 FR 69659), the NRC published a direct final rule amending § 72.214 of title 10 of the
In the direct final rule, the NRC stated that if no significant adverse comments were received, the direct final rule would become effective on December 21, 2016. As described more fully in the direct final rule, a significant adverse comment is a comment where the commenter explains why the rule would be inappropriate, including challenges to the rule's underlying premise or approach, or would be ineffective or unacceptable without a change.
The NRC received one comment on the direct final rule (ADAMS Accession No. ML16300A435). The comment stated “While the casks themselves are obviously important, nobody wants depleted uranium from leaking, the real problem is the long term effects of not finding proper storage for our spent nuclear fuel. Nuclear power is the power of the future, and yet we have no definitive solution as to where to store this stuff in bulk.” The NRC determined that this general comment about spent fuel storage is not within the scope of the direct final rule, which is limited to the specific changes contained in Amendment No. 6 to CoC No. 1031. The NRC also determined that this was not a significant adverse comment and did not make any changes to the direct final rule as a result of the public comment. Therefore, because no significant adverse comments were received, the direct final rule will become effective as scheduled. The final CoC, TSs, and Safety Evaluation Report can be viewed in ADAMS under Accession No. ML16319A064.
For the Nuclear Regulatory Commission.
Office of Energy Efficiency and Renewable Energy, Department of Energy.
Final rule; withdrawal.
The U.S. Department of Energy (DOE) is withdrawing its final rule to amend its test procedure for commercial packaged boilers which published in the
Effective December 7, 2016, the final rule published November 10, 2016 (81 FR 79224), effective December 12, 2016, is withdrawn.
Mr. James Raba, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Office, EE-5B, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 586-8654. Email:
DOE is withdrawing its final rule to amend its test procedure for commercial packaged boilers which published in the
Because the November 10, 2016, rule contained errors, DOE is withdrawing the final rule in its entirety and will republish the final rule amending its test procedure for commercial packaged boilers.
Federal Aviation Administration (FAA), DOT.
Final special conditions; request for comments.
These special conditions are issued for the Embraer S.A. Model ERJ 190-300 series airplanes. These airplanes will have a novel or unusual design feature when compared to the state of technology envisioned in the airworthiness standards for transport category airplanes. This design feature is an automatic braking system with a pilot-selectable function that allows earlier braking at landing without pilot pedal input. The applicable airworthiness regulations do not contain adequate or appropriate safety standards for this design feature. These special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.
This action is effective on Embraer S.A. on December 7, 2016. We must receive your comments by January 23, 2017.
Send comments identified by docket number FAA-2016-9461 using any of the following methods:
•
•
•
•
Greg Schneider, FAA, Airframe and Cabin Safety Branch, ANM-115, Transport Airplane Directorate, Aircraft Certification Service, 1601 Lind Avenue SW., Renton, Washington, 98057-3356; telephone 425-227-2116; facsimile 425-227-1320.
The FAA has determined that notice of, and opportunity for prior public comment on, these special conditions is impracticable because these procedures would delay issuance of the design approval and thus delivery of the affected airplane.
In addition, the substance of these special conditions has been subject to the public comment process in several prior instances with no substantive comments received. The FAA therefore finds that good cause exists for making these special conditions effective upon publication in the
We invite interested people to take part in this rulemaking by sending written comments, data, or views. The most helpful comments reference a specific portion of the special conditions, explain the reason for any recommended change, and include supporting data.
We will consider all comments we receive by the closing date for
On September 13, 2013, Embraer S.A. applied for an amendment to Type Certificate (TC) No. A57NM to include the new Model ERJ 190-300 series airplanes. The ERJ 190-300, which is a derivative of the ERJ 190-100 STD currently approved under TC No. A57NM, is a 97-114 passenger transport category airplane with two Pratt & Whitney Model PW1900G engines, a new wing design with a high aspect ratio and raked wingtip, digital fly-by-wire electronic flight control system, and an automatic braking system.
Under the provisions of Title 14, Code of Federal Regulations (14 CFR) 21.101, Embraer S.A. must show that the ERJ 190-300 meets the applicable provisions of the regulations listed in Type Certificate No. A57NM or the applicable regulations in effect on the date of application for the change, except for earlier amendments as agreed upon by the FAA. Embraer S.A. must show that the ERJ 190-300 meets the applicable provisions of 14 CFR part 25, as amended by Amendments 25-1 through 25-137.
If the Administrator finds that the applicable airworthiness regulations (
Special conditions are initially applicable to the Model for which they are issued. Should the type certificate for that model be amended later to include any other model that incorporates the same novel or unusual design features, or should any other model already included on the same type certificate be modified to incorporate the same novel or unusual design feature, these special conditions would also apply to the other model under § 21.101.
In addition to the applicable airworthiness regulations and special conditions, the ERJ 190-300 must comply with the fuel vent and exhaust emission requirements of 14 CFR part 34 and the noise-certification requirements of 14 CFR part 36.
The FAA issues special conditions, as defined in 14 CFR 11.19, in accordance with § 11.38, and they become part of the type certification basis under § 21.101.
The ERJ 190-300 will incorporate the following novel or unusual design features:
An automatic braking system with a pilot-selectable function that allows earlier braking at landing without pilot pedal input. When the autobrake system is armed before landing, it automatically commands a pre-defined braking action after the main wheels touch down. This might cause a high nose gear sink rate, and potentially higher gear and airframe loads than would occur with a traditional braking system.
These special conditions define a landing pitchover condition that accounts for the effects of the automatic braking system. The special conditions define the airplane configuration, speeds, and other parameters necessary to develop airframe and nose gear loads for this condition. The special conditions require that the airplane be designed to support the resulting limit and ultimate loads as defined in § 25.305.
These special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.
As discussed above, these special conditions are applicable to the ERJ 190-300 series airplanes. Should Embraer S.A. apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design feature, these special conditions would apply to that model as well.
This action affects only certain novel or unusual design features on one model of airplanes. It is not a rule of general applicability.
The substance of these special conditions has been subjected to the notice and comment period in several prior instances and has been derived without substantive change from those previously issued. It is unlikely that prior public comment would result in a significant change from the substance contained herein. Therefore, because a delay would affect the certification of the airplane, the FAA has determined that prior public notice and comment are unnecessary and impracticable, and good cause exists for adopting these special conditions upon publication in the
Aircraft, Aviation safety, Reporting and recordkeeping requirements.
The authority citation for these special conditions is as follows:
49 U.S.C. 106(g), 40113, 44701, 44702, 44704.
Accordingly, pursuant to the authority delegated to me by the Administrator, the following special conditions are issued as part of the type certification basis for the Embraer S.A. Model ERJ 190-300 series airplanes.
A landing pitchover condition must be addressed that takes into account the effect of the autobrake system. The airplane is assumed to be at the design maximum landing weight, or at the maximum weight allowed with the autobrake system on. The airplane is assumed to land in a tail-down attitude and at the speeds defined in § 25.481. Following main gear contact, the airplane is assumed to rotate about the main gear wheels at the highest pitch rate allowed by the autobrake system.
This is considered a limit load condition from which ultimate loads must also be determined. Loads must be determined for critical fuel and payload distributions and centers of gravity. The effect of the autobrake system on fatigue loading spectra must also be investigated. Nose gear loads, as well as airframe loads, must be determined. The airplane must meet § 25.305 for these loads.
Food and Drug Administration, HHS.
Notification of availability.
The Food and Drug Administration (FDA or we) is announcing the availability of a guidance for industry and FDA staff entitled “Third-Party Certification Body Accreditation for Food Safety Audits: Model Accreditation Standards.” The guidance contains FDA recommendations on third-party certification body qualifications for accreditation to conduct food safety audits and to issue food and/or facility certifications under an FDA program required by the FDA Food Safety Modernization Act (FSMA). The guidance is intended to describe the standards for accreditation of third-party certification bodies as required under the final rule entitled “Accreditation of Third-Party Certification Bodies to Conduct Food Safety Audits and to Issue Certifications.” In addition, this guidance discusses specific clauses of ISO/IEC 17021: 2015 and industry practice that are currently being used by third-party certification bodies and that FDA recommends accreditation bodies consider as a model when making accreditation decisions.
Submit either electronic or written comments on FDA 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 Center for Food Safety and Applied Nutrition (HFS-300), Food and Drug Administration, 5001 Campus Dr., College Park, MD 20740. Send two self-addressed adhesive labels to assist that office in processing your request. See the
Charlotte A. Christin, Center for Food Safety and Applied Nutrition, Food and Drug Administration, 10903 New Hampshire Ave., Silver Spring, MD 20993, 301-796-7526.
We are announcing the availability of a guidance for industry and FDA staff entitled “Third-Party Certification Body Accreditation for Food Safety Audits: Model Accreditation Standards.” We are issuing this guidance consistent with our good guidance practices regulation (21 CFR 10.115). The guidance represents the current thinking of FDA on this topic. 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.
In the
FDA was guided in developing this guidance, in part, by the National Technology Transfer and Advancement Act of 1995, which directs Federal Agencies to use voluntary consensus standards in lieu of government-unique standards, except where inconsistent with law or otherwise impractical.
In developing the guidance, FDA considered several voluntary consensus standards for their relevance to the qualifications of third-party certification bodies that would certify foreign food facilities and/or their foods for conformance with the requirements of the FD&C Act. FDA also sought to identify the standards most commonly used by stakeholders (
We received several comments on the draft guidance and have modified the final guidance where appropriate. We revised the guidance for clarity and conformance with the final rule. We also updated references to the ISO/IEC standards. The guidance announced in this notice finalizes the draft guidance dated July 2015.
This guidance refers to previously approved collection 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 regarding “Accreditation of Third Party Certification Bodies to Conduct Food Safety Audits and Issue Certifications,” have been approved under OMB control number 0910-0750.
Persons with access to the Internet may obtain the guidance at either
State Department.
Final rule.
This rule amends the definition of immediate family for purposes of A, C-3, G, and NATO visa classifications in two ways: It revises the eligibility requirements for unmarried adult sons and daughters age 21 or older for these visa classifications, and clarifies for purposes of G-4 visa classification that the international organization employing the principal alien must recognize an individual as immediate family to be eligible for derivative U.S. visa status. Furthermore, this rule permits qualified immediate family members of A-1, A-2, G-1, G-2, G-3, and G-4 nonimmigrants to be independently classified as NATO-1, NATO-2, NATO-3, NATO-4, NATO-5, and NATO-6.
This final rule is effective on December 7, 2016.
Paul-Anthony L. Magadia, U.S. Department of State, Office of Legislation and Regulations, CA/VO/L/R, 600 19th Street NW., SA-17, Room 12-526B, Washington, DC 20522, 202-485-7641 or
Prior to this amendment, an unmarried adult son or daughter who is not part of any other household and resides regularly in the household of the principal alien must be classified in A or G visa classifications, even if otherwise eligible for another nonimmigrant classification and regardless of age or the intention of the sending government or international organization. Yet for purposes of privileges and immunities, the Department of State accepts only unmarried children under the age of 21, or unmarried sons and daughters under the age of 23 and in full-time attendance as students at post-secondary educational institutions, as dependents. Similarly, under 8 CFR 214.2(a)(2) and (g)(2) for employment authorization purposes, Department of Homeland Security (DHS) regulations generally only consider unmarried children under the age of 21, or unmarried sons and daughters under the age of 23 and in full-time attendance as students at post-secondary educational institutions, to be dependents. (Under certain circumstances, DHS, under its regulations, may also recognize as dependents sons and daughters up to the age of 25 or of any age if physically or mentally challenged.) In practice, requiring A or G classification for sons and daughters above these age limits precludes them from obtaining a nonimmigrant classification that would enable them to accept employment in the United States.
This rule narrows the definition of immediate family in the A, C-3 (aliens in transit under section 212(d)(8) of the Immigration and Nationality Act, 8 U.S.C. 1182(d)(8)), G, and relevant NATO nonimmigrant visa classifications so that only unmarried sons and daughters residing with the principal who are under the age of 21, or under the age of 23 and in full-time attendance as students at post-secondary educational institutions, will continue to be considered immediate family. Any other unmarried son or daughter residing with the principal will only qualify if he or she meets the same criteria the rule imposes on other family members. In particular, he or she must be recognized as an “immediate family member” by the sending government or international organization for purposes of eligibility for rights and benefits and also is individually authorized by the Department. An adult son or daughter
Finally, prior to this amendment, 22 CFR 41.22(b) and 41.24(b) required that an alien entitled to classification as an A-1, A-2, or G-1 through G-4 nonimmigrant must be classified as such, even those who would otherwise be eligible for another nonimmigrant classification. This rule allows immediate family members of A-1s, A-2s, and G-1s through G-4s to be instead independently classified as a principal in NATO-1 through NATO-6 visa classifications, but not other nonimmigrant classifications.
The Department of State is of the opinion that regulating visa categories involves a foreign affairs function of the United States Government and that rules implementing this function are exempt from sections 553 (rulemaking) and 554 (adjudications) of the Administrative Procedure Act. Since the Department is of the opinion that this rule is exempt from 5 U.S.C. 553, it is the view of the Department that the provisions of Section 553(d) do not apply. Therefore, this rule is effective upon publication.
Because this final rule is exempt from notice and comment rulemaking under 5 U.S.C. 553, it is exempt from the regulatory flexibility analysis requirements set forth by the Regulatory Flexibility Act (5 U.S.C. 603 and 604). Nonetheless, consistent with the Regulatory Flexibility Act (5 U.S.C. 605(b)), the Department certifies that this rule will not have a significant economic impact on a substantial number of small entities.
The Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1532, generally requires agencies to prepare a statement before proposing any rule that may result in an annual expenditure of $100 million or more by State, local, or tribal governments, or by the private sector. This rule does not require the Department to prepare a statement because it will not result in any such expenditure, nor will it significantly or uniquely affect small governments. This rule involves visas, which involves individuals, and does not affect, state, local, or tribal governments, or businesses.
This rule is not a major rule as defined in 5 U.S.C. 804, for purposes of congressional review of agency rulemaking under the Small Business Regulatory Enforcement Fairness Act of 1996. This rule will not result in an annual effect on the economy of $100 million or more; a major increase in costs or prices; or adverse effects on competition, employment, investment, productivity, innovation, or the ability of United States-based companies to compete with foreign-based companies in domestic and import markets. This rule involves visas, which involves individuals, and does not affect, state, local, or tribal governments, or businesses.
Executive Orders 13563 and 12866 direct agencies to assess 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, distributed impacts, and equity). These Executive Orders stress the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. The Department has examined this rule in light of Executive Order 13563, and has determined that the rulemaking is consistent with the guidance therein.
This regulation will not have substantial direct effects on the States, on the relationship between the national government and the States, or the distribution of power and responsibilities among the various levels of government. Nor will the rule have federalism implications warranting the application of Executive Orders 12372 and 13132.
The Department has reviewed the rule in light of sections 3(a) and 3(b)(2) of Executive Order 12988 to eliminate ambiguity, minimize litigation, establish clear legal standards, and reduce burden.
The Department has determined that this rulemaking will not have tribal implications, will not impose substantial direct compliance costs on Indian tribal governments, and will not pre-empt tribal law. Accordingly, the requirements of Section 5 of Executive Order 13175 do not apply to this rulemaking.
This rule does not impose or revise any reporting or recordkeeping requirements subject to the Paperwork Reduction Act, 44 U.S.C. Chapter 35.
Aliens, Immigration, Nonimmigrant visas.
For the reasons stated in the preamble, 22 CFR part 41 is amended as follows:
22 U.S.C. 2651a; 8 U.S.C. 1104; Pub. L. 105-277, 112 Stat. 2681-795 through 2681-801; 8 U.S.C. 1185 note (section 7209 of Pub. L. 108-458, as amended by section 546 of Pub. L. 109-295).
(a) * * *
(3) Immediate family, as used in INA 101(a)(15)(A), 101(a)(15)(G), and 212(d)(8), and in classification under the NATO visa symbols, means:
(i) The spouse who resides regularly in the household of the principal alien and is not a member of some other household;
(ii) Unmarried sons and daughters, whether by blood or adoption, who reside regularly in the household of the principal alien and who are not members of some other household, and provided that such unmarried sons and daughters are:
(A) Under the age of 21, or
(B) Under the age of 23 and in full-time attendance as students at post-secondary educational institutions; and
(iii) Other individuals who:
(A) Reside regularly in the household of the principal alien;
(B) Are not members of some other household;
(C) Are recognized as dependents of the principal alien by the sending government or international organization, as demonstrated by eligibility for rights and benefits, such as the issuance of a diplomatic or official passport, or travel or other allowances; and
(D) Are individually authorized by the Department.
(b)
(b) * * *
(4) An alien not classifiable under INA section 101(a)(15)(A) or in NATO-1 through NATO-6 classification but entitled to classification under INA section 101(a)(15)(G) shall be classified under section 101(a)(15)(G), even if also eligible for another nonimmigrant classification. An alien classified under INA section 101(a)(15)(G) as an immediate family member of a principal alien classifiable G-1, G-2, G-3 or G-4, may continue to be so classified even if he or she obtains employment subsequent to his or her initial entry into the United States that would allow classification under INA section 101(a)(15)(A). Such alien shall not be classified in a category other than A or G, even if also eligible for another nonimmigrant classification.
Internal Revenue Service (IRS), Treasury.
Temporary regulations.
This document contains temporary Income Tax Regulations under section 901(m) of the Internal Revenue Code (Code) with respect to transactions that generally are treated as asset acquisitions for U.S. income tax purposes and either are treated as stock acquisitions or are disregarded for foreign income tax purposes. These regulations are necessary to provide guidance on applying section 901(m). The text of the temporary regulations also serves in part as the text of the proposed regulations under section 901(m) (REG-129128-14) published in the Proposed Rules section of this issue of the
Jeffrey L. Parry, (202) 317-6936 (not a toll-free number).
Section 212 of the Education Jobs and Medicaid Assistance Act (EJMAA), enacted on August 10, 2010 (Public Law 111-226), added section 901(m) to the Code. Section 901(m)(1) provides that, in the case of a covered asset acquisition (CAA), the disqualified portion of any foreign income tax determined with respect to the income or gain attributable to relevant foreign assets (RFAs) will not be taken into account in determining the foreign tax credit allowed under section 901(a), and in the case of foreign income tax paid by a section 902 corporation (as defined in section 909(d)(5)), will not be taken into account for purposes of section 902 or 960. Instead, the disqualified portion of any foreign income tax (the disqualified tax amount) is permitted as a deduction. See section 901(m)(6).
Under section 901(m)(2), a CAA is (i) a qualified stock purchase (as defined in section 338(d)(3)) to which section 338(a) applies; (ii) any transaction that is treated as an acquisition of assets for U.S. income tax purposes and as the acquisition of stock of a corporation (or is disregarded) for purposes of a foreign income tax; (iii) any acquisition of an interest in a partnership that has an election in effect under section 754; and (iv) to the extent provided by the Secretary, any other similar transaction.
Section 901(m)(3)(A) provides that the term “disqualified portion” means, with respect to any CAA, for any taxable year, the ratio (expressed as a percentage) of (i) the aggregate basis differences (but not below zero) allocable to such taxable year with respect to all RFAs; divided by (ii) the income on which the foreign income tax referenced in section 901(m)(1) is determined. If the taxpayer fails to substantiate the income on which the foreign income tax is determined to the satisfaction of the Secretary, such income will be determined by dividing the amount of such foreign income tax by the highest marginal tax rate applicable to the taxpayer's income in the relevant jurisdiction.
Section 901(m)(3)(B)(i) provides the general rule that the basis difference with respect to any RFA will be allocated to taxable years using the applicable cost recovery method for U.S. income tax purposes. Section 901(m)(3)(B)(ii) provides that, except as otherwise provided by the Secretary, if there is a disposition of an RFA, the basis difference allocated to the taxable year of the disposition will be the excess of the basis difference of such asset over the aggregate basis difference of such asset that has been allocated to all prior taxable years. The statute further provides that no basis difference with respect to such asset will be allocated to any taxable year thereafter.
Section 901(m)(3)(C)(i) provides that basis difference means, with respect to any RFA, the excess of (i) the adjusted basis of such asset immediately after the CAA, over (ii) the adjusted basis of such asset immediately before the CAA. If the adjusted basis of an RFA immediately before the CAA exceeds the adjusted basis of the RFA immediately after the CAA (that is, where the adjusted basis
Section 901(m)(4) provides that an RFA means, with respect to a CAA, an asset (including goodwill, going concern value, or other intangible) with respect to such acquisition if income, deduction, gain, or loss attributable to such asset is taken into account in determining the foreign income tax referenced in section 901(m)(1).
Section 901(m)(7) provides that the Secretary may issue regulations or other guidance as is necessary or appropriate to carry out the purposes of section 901(m).
The Department of the Treasury (Treasury Department) and the IRS issued Notice 2014-44 (2014-32 I.R.B 270 (July 21, 2014)) and Notice 2014-45 (2014-34 I.R.B. 388 (July 29, 2014)), announcing the intent to issue regulations addressing the application of section 901(m) to dispositions of RFAs following CAAs and to CAAs described in section 901(m)(2)(C) (regarding section 754 elections).
The notices were issued in response to certain taxpayers engaging in transactions shortly after a CAA with the intention of invoking the application of the statutory disposition rule under section 901(m)(3)(B)(ii) to avoid the purposes of section 901(m). To address these transactions, Notice 2014-44 described the definition of disposition that would be set forth in future regulations, as well as the rules for determining the portion of basis difference that would be taken into account upon a disposition of an RFA (the disposition amount). In addition, Notice 2014-44 described the computation of basis difference and disposition amount with respect to an RFA that is subject to a section 743(b) CAA. Notice 2014-44 also announced that future regulations would provide successor rules for the continued application of section 901(m) after a subsequent transfer of an RFA with remaining basis difference. Notice 2014-44 further provided that future regulations would provide that, if an asset is an RFA with respect to two section 743(b) CAAs involving the same partnership interest, the RFA will be treated as having no remaining basis difference with respect to the first section 743(b) CAA if the basis difference with respect to the second section 743(b) CAA is determined independently from the first section 743(b) CAA. In this regard, see generally § 1.743-1(f) and proposed § 1.743-1(f)(2).
Notice 2014-44 provided that the future regulations described therein would apply (i) concerning dispositions, to dispositions occurring on or after July 21, 2014 (the date Notice 2014-44 was issued), (ii) concerning section 743(b) CAAs, to section 743(b) CAAs occurring on or after July 21, 2014, unless a taxpayer consistently applied those provisions to all section 743(b) CAAs occurring on or after January 1, 2011, and (iii) concerning successor rules, to remaining basis difference with respect to an RFA as of July 21, 2014, and any basis difference with respect to an RFA that arises in a CAA occurring on or after July 21, 2014. Notice 2014-45 provided that the future regulations described in Notice 2014-44 also would apply to determine the tax consequences under section 901(m) of an entity classification election made under § 301.7701-3 that is filed on or after July 29, 2014 (the date Notice 2014-45 was issued), including whether a disposition results from the election for purposes of section 901(m) and the treatment of any remaining basis difference that results from such an election.
Proposed regulations under section 901(m) are being issued at the same time as these temporary regulations. In addition to cross-referencing these temporary regulations, the proposed regulations provide guidance under section 901(m) concerning issues not addressed in the temporary regulations. Consulting the preamble to the proposed regulations is recommended for a better understanding of how these temporary regulations are intended to work.
Section 1.901(m)-1T provides definitions that apply for purposes of the temporary regulations. Section 1.901(m)-2T identifies the transactions that are CAAs and the assets that are RFAs with respect to a CAA. Section 1.901(m)-4T provides the general rule for determining basis difference with respect to an RFA under section 901(m)(3)(C), as well as a special rule for determining basis difference with respect to an RFA that arises as a result of an acquisition of an interest in a partnership that has made a section 754 election (section 743(b) CAA). Section 1.901(m)-5T provides rules for taking into account basis difference under the applicable cost recovery method or as a result of a disposition of an RFA. Section 1.901(m)-6T provides successor rules for applying section 901(m) to subsequent transfers of RFAs that have basis difference that has not yet been fully taken into account.
The applicability dates of the temporary regulations relate back to the issuance of Notices 2014-44 and 2014-45. Accordingly, the temporary regulations apply to CAAs occurring on or after July 21, 2014, and to CAAs occurring before that date resulting from an entity classification election made under § 301.7701-3 that is filed on or after July 29, 2014, and that is effective on or before July 21, 2014 (referred to as the general applicability date). The temporary regulations also apply to CAAs occurring on or after January 1, 2011, and before the general applicability date (the transition period), but only if the basis difference within the meaning of section 901(m)(3)(C)(i) (statutory basis difference) in one or more RFAs with respect to such a CAA had not been fully taken into account under section 901(m)(3)(B) either as of July 21, 2014, or, in the case of an entity classification election made under § 301.7701-3 that is filed on or after July 29, 2014, and that is effective on or before July 21, 2014, prior to the transactions that are deemed to occur under § 301.7701-3(g) as a result of the change in classification.
Taxpayers also may choose to consistently apply § 1.901(m)-4T(d)(1) (regarding the determination of basis difference in an RFA with respect to a section 743(b) CAA) to all section 743(b) CAAs occurring on or after January 1, 2011.
Section 1.901(m)-2T(b) identifies the transactions that are CAAs under section 901(m)(2)(A) through (C). Section 1.901(m)-2T(c) provides that, with respect to a foreign income tax and a CAA, an RFA is any asset (including goodwill, going concern value, or other intangible) subject to the CAA that is relevant in determining foreign income for purposes of the foreign income tax. An asset is subject to a CAA, if, for example (i) in the case of a qualified stock purchase of a target corporation (as defined in section 338(d)(3)) to which section 338(a) applies, “new” target is treated as purchasing the asset from “old” target; (ii) in the case of a taxable acquisition of a disregarded entity that is treated as an acquisition of stock for foreign income tax purposes,
Section 1.901(m)-2T(d) provides that the statutory definitions under section 901(m)(2) and 901(m)(4) apply to determine whether a transaction that occurred during the transition period is a CAA and which assets are RFAs with respect to those CAAs, respectively.
A basis difference is computed separately with respect to each foreign income tax for which an asset is an RFA. Consistent with section 901(m)(3)(C), § 1.901(m)-4T(b) provides the general rule that basis difference with respect to an RFA is the U.S. basis in the RFA immediately after the CAA, less the U.S. basis in the RFA immediately before the CAA. If, however, an asset is an RFA with respect to a section 743(b) CAA, § 1.901(m)-4T(d) provides that basis difference with respect to the RFA is the resulting basis adjustment under section 743(b) that is allocated to the RFA under section 755.
Section 1.901(m)-2T(e) “resets” the basis difference in an RFA with respect to a CAA that occurred during the transition period by defining basis difference in the RFA as the portion of statutory basis difference that had not been taken into account under section 901(m)(3)(B) either as of July 21, 2014, or, in the case of an entity classification election made under § 301.7701-3 that is filed on or after July 29, 2014, and that is effective on or before July 21, 2014, prior to the transactions that are deemed to occur under § 301.7701-3(g) as a result of the change in classification. This is the basis difference in the RFA for the period to which the temporary regulations apply.
Section 1.901(m)-5T provides rules for determining the amount of basis difference with respect to an RFA that is taken into account in a given U.S. taxable year (allocated basis difference). The amount of basis difference taken into account in a U.S. taxable year is used to compute a disqualified tax amount for the U.S. taxable year. Basis difference is taken into account in two ways: Under an applicable cost recovery method or as a result of a disposition of the RFA. If an asset is an RFA with respect to more than one foreign income tax, basis difference with respect to each foreign income tax is separately taken into account under § 1.901(m)-5T.
Consistent with section 901(m)(3)(B)(i), § 1.901(m)-5T(b)(2) provides that a cost recovery amount for an RFA is determined by applying an applicable cost recovery method to the basis difference rather than to the U.S. basis of the RFA.
Section 901(m)(3)(B)(ii) provides that, except as otherwise provided by the Secretary, if there is a disposition of an RFA, the basis difference allocated to the U.S. taxable year of the disposition shall be the excess of the basis difference of such RFA over the total amount of such basis difference that has been allocated to all prior U.S. taxable years (unallocated basis difference). This result is appropriate when all the gain or loss from the disposition is recognized for both U.S. and foreign income tax purposes. In other cases, however, a disposition may not be the appropriate time for all of the unallocated basis difference to be taken into account. For example, it may not be appropriate for all of the unallocated basis difference to be taken into account upon a disposition that is fully taxable for U.S. income tax purposes but not for foreign income tax purposes. Accordingly, under the specific authority granted to the Secretary with respect to dispositions, these temporary regulations provide rules to determine when less than all of the unallocated basis difference is taken into account as a result of a disposition.
Section 1.901(m)-1T(a)(10) defines a disposition for purposes of section 901(m) as an event that results in gain or loss being recognized with respect to an RFA for purposes of U.S. income tax or foreign income tax, or both. Thus, the definition excludes certain transfers that might otherwise be considered dispositions under the ordinary meaning of that term. For example, an entity classification election by an RFA owner that results in a tax-free deemed liquidation for U.S. income tax purposes but that is disregarded for foreign income tax purposes does not result in a disposition of the RFAs under section 901(m), because no gain or loss is recognized for U.S. or foreign income tax purposes with respect to the distribution of the RFAs in the deemed liquidation. This is the case even though the deemed liquidation might otherwise be considered a “disposition” of assets under other provisions of the Code.
Section 1.901(m)-5T(c)(2) provides rules for determining a disposition amount. If a disposition of an RFA is fully taxable for U.S. and foreign income tax purposes, the disposition amount will be any remaining unallocated basis difference with respect to that RFA. This is because there generally will no longer be a disparity in the U.S. basis and the foreign basis of the RFA.
If a disposition is not fully taxable for both U.S. and foreign income tax purposes, generally there will continue to be a disparity in the U.S. basis and the foreign basis following the disposition, and it will be appropriate for the RFA to continue to have unallocated basis difference. To the extent that the disparity in the U.S. basis and the foreign basis is reduced as a result of the disposition, however, a portion of the unallocated basis difference (or, in certain cases, all of the unallocated basis difference) should be taken into account. Whether the disposition reduces the basis disparity will depend on whether the basis difference is positive or negative and the jurisdiction in which gain or loss is recognized.
If an RFA has a positive basis difference, a reduction in basis disparity generally will occur upon a disposition of the RFA if (i) a foreign disposition gain is recognized, which generally results in an increase in the foreign basis of the RFA, or (ii) a U.S. disposition loss is recognized, which generally results in a decrease in the U.S. basis of the RFA. Accordingly, if an RFA has a positive basis difference, the disposition amount equals the lesser of (i) any foreign disposition gain plus any U.S. disposition loss (for this purpose, expressed as a positive amount), or (ii) unallocated basis difference. See § 1.901(m)-5T(c)(2)(ii)(A).
If an RFA has a negative basis difference, a reduction in basis disparity generally will occur upon a disposition of the RFA if (i) a foreign disposition loss is recognized, which generally results in a decrease in the foreign basis of the RFA, or (ii) a U.S. disposition gain is recognized, which generally results in an increase in the U.S. basis of the RFA. Accordingly, if an RFA has a negative basis difference, the disposition amount equals the greater of (i) any U.S. disposition gain (for this purpose, expressed as a negative amount) plus any foreign disposition loss, or (ii) unallocated basis difference. See § 1.901(m)-5T(c)(2)(ii)(B).
For the avoidance of doubt, the determination of whether there is a disposition for U.S. income tax purposes, and the amount of U.S. disposition gain or U.S. disposition loss, is made without regard to whether gain or loss is deferred or disallowed or otherwise not taken into account currently (for example, see section 267, which defers or disallows certain recognized losses, and § 1.1502-13, which provides rules for taking into account items of income, gain, deduction, and loss of members of a U.S. consolidated group from intercompany transactions). This principle also applies if foreign law has an equivalent concept whereby gain or loss that is realized and recognized is deferred or disallowed.
If an asset is an RFA by reason of a section 743(b) CAA and subsequently there is a disposition of the RFA, then for purposes of determining the disposition amount, foreign disposition gain or foreign disposition loss means the amount of gain or loss recognized for purposes of a foreign income tax on the disposition of the RFA that is allocable to the partnership interest that was transferred in the section 743(b) CAA. See § 1.901(m)-5T(c)(2)(iii). In addition, U.S. disposition gain or U.S. disposition loss means the amount of gain or loss recognized for U.S. income tax purposes on the disposition of the RFA that is allocable to the partnership interest that was transferred in the section 743(b) CAA, taking into account the basis adjustment under section 743(b) that was allocated to the RFA under section 755 in the section 743(b) CAA. See id.
Section 1.901(m)-6T(b) provides that section 901(m) continues to apply to any unallocated basis difference with respect to an RFA after there is a transfer of the RFA for U.S. income tax purposes (successor transaction), regardless of whether the transfer is a disposition, a CAA, or a non-taxable transaction. A successor transaction does not occur if, as a result of the transfer of an RFA, the entire unallocated basis difference is taken into account because, for example, the transfer results in all realized gain or loss in the RFA being recognized for U.S. and foreign income tax purposes.
Notice 2014-44 stated that the Treasury Department and the IRS are continuing to study whether and to what extent section 901(m) should apply to an asset received in exchange for an RFA in a transaction in which the U.S. basis of the asset is determined by reference to the U.S. basis of the transferred RFA. The Treasury Department and the IRS have determined that an asset should not become an RFA solely because the U.S. basis of that asset is determined by reference to the U.S. basis of an RFA for which the asset is exchanged in a successor transaction. Accordingly, for example, if, in a successor transaction, an RFA owner transfers an RFA to a corporation in a transfer to which section 351 applies, the stock of the transferee corporation received is not an RFA even though the U.S. basis of the stock is determined under section 358 by reference to the U.S. basis of the RFA transferred.
An asset may be an RFA with respect to multiple CAAs if a successor transaction is also a CAA (subsequent CAA). In this case, the subsequent CAA may give rise to additional basis difference. Section 1.901(m)-6T(b)(4)(i) provides generally that the unallocated basis difference with respect to a CAA that occurred prior to the subsequent CAA (referred to in the regulations as a “prior CAA”) will continue to be taken into account under section 901(m) after the subsequent CAA.
Section 1.901(m)-6T(b)(4)(iii) provides an exception to the general rule if an RFA is subject to two section 743(b) CAAs (referred to in the regulations as a “prior section 743(b) CAA” and a “subsequent section 743(b) CAA”). In this case, to the extent the same partnership interest is transferred in the section 743(b) CAAs, the RFA will be treated as having no unallocated basis difference with respect to the prior section 743(b) CAA if basis difference for the subsequent section 743(b) CAA is determined independently from the prior section 743(b) CAA. In this regard, see generally § 1.743-1(f) and proposed § 1.743-1(f)(2). If the subsequent section 743(b) CAA results from the acquisition of only a portion of the partnership interest acquired in the prior section 743(b) CAA, the transferor must equitably apportion the unallocated basis difference attributable to the prior section 743(b) CAA between the portion of the interest retained and the portion of the interest transferred. With respect to the portion transferred, the RFA will be treated as having no unallocated basis difference attributable to the prior section 743(b) CAA.
For purposes of section 901(m), the temporary regulations define “foreign income tax” as any income, war profits, or excess profits tax for which a credit is allowable under section 901 or 903, other than any withholding tax determined on a gross basis as described in section 901(k)(1)(B). The Treasury Department and the IRS have determined that a withholding tax should not be subject to disallowance under section 901(m) because a withholding tax is a gross basis tax that is generally unaffected by changes in asset basis.
The following publications are obsolete as of December 7, 2016:
Notice 2014-44 (2014-32 I.R.B. 270) and Notice 2014-45 (2014-34 I.R.B. 388).
Certain IRS regulations, including these, are exempt from the requirements of Executive Order 12866, as supplemented and reaffirmed by Executive Order 13563. Therefore, a regulatory impact assessment is not required. For the applicability of the Regulatory Flexibility Act (5 U.S.C. chapter 6), refer to the Special Analyses section of the preamble of the cross-referenced notice of proposed rulemaking published in this issue of the
The principal author of these regulations is Jeffrey L. Parry of the Office of Associate Chief Counsel (International). However, other personnel from the Treasury Department and the IRS participated in their development.
Income taxes, Reporting and recordkeeping requirements.
Accordingly, 26 CFR part 1 is amended as follows:
26 U.S.C. 7805 * * *
Sections 1.901(m)-1T through -8T also issued under 26 U.S.C. 901(m)(7).
Section 1.901(m)-5T also issued under 26 U.S.C. 901(m)(3)(B)(ii). * * *
(a)
(1)-(5) [Reserved]
(6) The term
(7) The term
(8) The term
(9) [Reserved]
(10) The term
(11) The term
(12) [Reserved]
(13) The term
(14) The term
(15)-(17) [Reserved].
(18) The term
(19) The term
(20) The term
(21) The term
(22)-(25) [Reserved]
(26) The term
(27) The term
(28) The term
(29)-(32) [Reserved]
(33) The term
(34) The term
(35) [Reserved]
(36) The term
(37) The term
(38) The term
(39) [Reserved]
(40) The term
(41) The term
(42) [Reserved].
(43) The term
(44) The term
(45) The term
(b)
(2) Paragraphs (a)(6), (7), (8), (10), (11), (13), (14), (18), (19), (20), (21), (26), (27), (28), (33), (34), (36), (37), (38), (40), (41), (43), (44), and (45) of this section apply to CAAs occurring on or after July 21, 2014, and to CAAs occurring before that date resulting from an entity classification election made under § 301.7701-3 that is filed on or after July 29, 2014, and that is effective on or before July 21, 2014. Paragraphs (a)(6), (7), (8), (10), (11), (13), (14), (18), (19), (20), (21), (26), (27), (28), (33), (34), (36), (37), (38), (40), (41), (43), (44), and (45) of this section also apply to CAAs occurring on or after January 1, 2011, and before July 21, 2014, other than CAAs occurring before July 21, 2014, resulting from an entity classification election made under § 301.7701-3 that is filed on or after July 29, 2014, and that is effective on or before July 21, 2014, but only if the basis difference (within the meaning of section 901(m)(3)(C)(i)) in one or more RFAs with respect to the CAA had not been fully taken into account under section 901(m)(3)(B) either as of July 21, 2014, or, in the case of an entity classification election made under § 301.7701-3 that is filed on or after July 29, 2014, and that is effective on or before July 21, 2014, prior to the transactions that are deemed to occur under § 301.7701-3(g) as a result of the change in classification.
(3) [Reserved].
(c)
(a)
(b)
(1) A qualified stock purchase (as defined in section 338(d)(3)) to which section 338(a) applies (section 338 CAA);
(2) Any transaction that is treated as an acquisition of assets for U.S. income tax purposes and as an acquisition of stock of a corporation (or the transaction is disregarded) for foreign income tax purposes;
(3) Any acquisition of an interest in a partnership that has an election in effect under section 754 (section 743(b) CAA);
(4)-(6) [Reserved].
(c)
(2)
(3)
(d)
(e)
(f)
(2)-(3) [Reserved]
(g)
(a)
(b)
(c)
(d)
(2)
(e)
(f)
(g)
(2)-(3) [Reserved]
(h)
(a)
(b)
(2)
(ii)
(3)
(c)
(2)
(ii)
(A)
(
(
(B)
(
(
(iii)
(d)
(e)
(f)
(g)
(h)
(i)
(2) Paragraphs (b)(2)(i) and (c)(2) of this section apply to CAAs occurring on or after July 21, 2014, and to CAAs occurring before that date resulting from an entity classification election made under § 301.7701-3 of this chapter that is filed on or after July 29, 2014, and that is effective on or before July 21, 2014. Paragraphs (b)(2)(i) and (c)(2) of this section also apply to CAAs occurring on or after January 1, 2011, and before July 21, 2014, other than CAAs occurring before July 21, 2014, resulting from an entity classification election made under § 301.7701-3 that is filed on or after July 29, 2014, and that is effective on or before July 21, 2014, but only with respect to basis difference determined under § 1.901(m)-4T(e) with respect to the CAA.
(3) [Reserved]
(j)
(a)
(b)
(2)
(3)
(4)
(ii)
(iii)
(5)
(i)
(ii)
(c)
(d)
(2)-(3) [Reserved]
(e)
In rule document 2016-27737 beginning on page 87130 in the issue of Friday, December 2, 2016, make the following correction:
1. On page 87130, in the first column, after the
Coast Guard, DHS.
Temporary final rule.
The Coast Guard is establishing a temporary safety zone for navigable waters on the Upper Mississippi River from mile 179.2 to mile 180. The safety zone is needed to protect personnel, vessels, and the marine environment from potential
This rule is effective from 7:45 p.m. to 8:40 p.m. on December 31, 2016.
To view documents mentioned in this preamble as being available in the docket, go to
If you have questions on this rule, call or email LCDR Sean Peterson, Chief of Prevention, Sector Upper Mississippi River, U.S. Coast Guard; telephone 314-269-2332, email
The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a NPRM with respect to this rule because the Coast Guard was not notified of the fireworks display until November 9, 2016. After full review of the details for the planned display, the Coast Guard determined action is needed to protect people and property from the safety hazards associated with the fireworks display on the Upper Mississippi River (UMR) near St. Louis, MO. It is impracticable to publish an NPRM because we lack sufficient time to provide a reasonable comment period and then consider those comments before issuing the rule; we must establish this safety zone by December 31, 2016.
Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the
The Coast Guard is issuing this rule under authority in 33 U.S.C. 1231. The COTP has determined that potential hazards associated with the fireworks display will be a safety concern before, during, and after the display. The purpose of this rule is to ensure safety of vessels and the navigable waters in the safety zone before, during, and after the scheduled event.
This rule establishes a safety zone from 7:45 p.m. to 8:40 p.m. on December 31, 2016. The safety zone will cover all navigable waters between miles 179.2 and 180 on the UMR in St. Louis, MO. Exact times of the closures during this 55 minute period will be communicated to mariners using broadcast and local notice to mariners. The safety zone is intended to ensure the safety of vessels and these navigable waters before, during and after the fireworks display. No vessel or person will be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative.
We developed this rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders, and we discuss First Amendment rights of protestors.
Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, it has not been reviewed by the Office of Management and Budget.
This temporary final rule establishes a safety zone impacting a less than one mile area on the UMR for a limited time period less than one hour. During the enforcement period, vessels are prohibited from entering into or remaining within the safety zone unless specifically authorized by the COTP or other designated representative. Based on the location, limited safety zone area, and short duration of the enforcement period, this rule does not pose a significant regulatory impact. Additionally, notice of the safety zone will be made via broadcast and local notice to mariners.
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.
While some owners or operators of vessels intending to transit the safety zone may be small entities, for the reasons stated in section V.A. above, this rule will not have a significant economic impact on any vessel owner or operator.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain
This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.
Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this rule has implications for federalism or Indian tribes, please contact the person listed in the
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves a safety zone lasting less than one hour that will prohibit entry from mile 179.2 to mile 180 on the UMR. It is categorically excluded from further review under paragraph 34(g) of Figure 2-1 of the Commandant Instruction. An environmental analysis checklist supporting this determination and a Categorical Exclusion Determination are available in the docket where indicated under
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the
Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, and Waterways.
For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:
33 U.S.C. 1231; 50 U.S.C. 191; 33 CFR 1.05-1, 6.04-1, 6.04-6, and 160.5; Department of Homeland Security Delegation No. 0170.1.
(a)
(b)
(c)
(2) To seek permission to enter, contact the COTP or the COTP's representative via VHF-FM channel 16, or through Coast Guard Sector Upper Mississippi River at 314-269-2332. Those in the safety zone must comply with all lawful orders or directions given to them by the COTP or the COTP's designated representative.
(d)
(e)
Coast Guard, DHS.
Temporary final rule.
The Coast Guard is establishing a temporary safety zone on the waters of the Delaware River in the vicinity of Marcus Hook, Pennsylvania. The safety zone will temporarily restrict vessel traffic from transiting or anchoring in a portion of the Delaware River while rock blasting, dredging, and rock removal operations are being conducted to facilitate the Delaware River Main Channel Deepening project for the main navigational channel of the Delaware River. The safety zone is needed to protect personnel, vessels, and the marine environment from potential hazards created by rock blasting, dredging, and rock removal operations. Entry of vessels or persons into this zone is prohibited unless specifically authorized by the Captain of the Port or his designated representatives.
This rule is effective without actual notice from December 7, 2016 through March 15, 2017. For the purposes of enforcement, actual notice
To view documents mentioned in this preamble as being available in the docket, go to
If you have questions about this rule, call or email Marine Science Technician First Class Tom Simkins, U.S. Coast Guard, Sector Delaware Bay, Waterways Management Division, Coast Guard; telephone (215) 271-4889, email
The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency, for good cause, finds that those procedures are impracticable, unnecessary, or contrary to the public interest. Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because doing so would be impractical and contrary to the public interest because environmental restrictions put in place by the National Marine Fisheries Service to protect Shortnose and Atlantic sturgeon require all blasting operations to be conducted between December 1, 2016, and March 15, 2017. Due to the criticality of this phase of the Delaware River Main Channel Deepening project, immediate action is needed to accommodate operations while also ensuring vessels can safely transit through Marcus Hook Range in the Delaware River during this time. Going forward without establishing a safety zone would expose mariners and the public to unnecessary dangers associated with rock blasting, dredging, and rock removal operations. It is impracticable to publish an NPRM because the Coast Guard must establish this safety zone by December 1, 2016. The final details of the rock blasting, dredging, and rock removal operation were not received until November 23, 2016. Publishing an NPRM would be contrary to the public interest since immediate action is necessary to protect the public safety from rock blasting, dredging, and rock removal operations.
For similar reasons, under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this temporary rule effective less than 30 days after publication in the
The Coast Guard is issuing this rule under authority in 33 U.S.C. 1231. The Captain of the Port has determined that potential hazards associated with rock blasting, dredging, and rock removal operations starting December 1, 2016, will be a safety concern for anyone within 500 yards of rock blasting, dredging, and rock removal operations. This rule is needed to protect personnel, vessels, and the marine environment in the navigable waters within the operational area.
This rule establishes a safety zone between December 1, 2016, and March 15, 2017. The safety zone will cover all navigable waters in the Delaware River within 500 yards of vessels and machinery being used by personnel to conduct rock blasting, dredging, and rock removal operations in the vicinity of Marcus Hook, PA, between the southern end of Marcus Hook Anchorage to the western end of Little Tinicum Island, at the entrance to Darby Creek. The safety zone will be enforced in an area and in a manner that does not conflict with transiting commercial and recreational traffic, except for the short periods of time when explosive detonation evolutions are being conducted. The blasting detonations will not occur more than three times a day. At all other times, at least one side of the main navigational channel will be open for vessels to transit.
The duration of the zone is intended to protect personnel, vessels, and the marine environment in these navigable waters while operations are being conducted. For the duration of the project, in the vicinity of the rock blasting, rock removal, and dredging operation, one side of the main navigational channel will be closed. Vessels wishing to transit the safety zone in the main navigational channel may do so if they can make satisfactory passing arrangements with drill boat APACHE or the dredge TEXAS in accordance with the Navigational Rules in 33 CFR subchapter E via VHF-FM channel 13 at least 30 minutes prior to arrival. If vessels are unable to make satisfactory passing arrangements with the drill boat APACHE or the dredge TEXAS, they may request permission from the Captain of the Port, or his designated representative, on VHF-FM channel 16. All vessels must operate at the minimum safe speed necessary to maintain steerage and reduce wake.
No vessels may transit through the safety zone during times of explosives detonation. During rock blasting detonation vessels will be required to maintain a 500 yard distance from the drill boat APACHE. The drill boat APACHE will make broadcasts, via VHF-FM channels 13 and 16, at 15 minutes, 5 minutes, and 1 minute prior to detonation, as well as a countdown to detonation on VHF-FM channel 16. Sector Delaware Bay will ensure significant notice will be given to the maritime community of dates and times of blasting via broadcast notice to mariners on VHF-FM channel 16. After every explosive detonation a survey will be conducted to ensure the navigational channel is clear for vessels to transit. The drill boat APACHE will broadcast, via VHF-FM channel 13 and 16, when the survey has been completed and the channel is clear to transit. Vessels wishing to transit the safety zone in the main navigational channel may do so if they can make satisfactory passing arrangements with drill boat APACHE or the dredge TEXAS in accordance with the Navigational Rules in 33 CFR subchapter E via VHF-FM channel 13 at least 30 minutes prior to arrival. If vessels are unable to make satisfactory passing arrangements with the drill boat APACHE or the dredge TEXAS, they may request permission from the Captain of the Port, or his designated representative, on VHF-FM channel 16.
We developed this rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders, and we discuss First Amendment rights of protestors.
Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, it has not been reviewed by the Office of Management and Budget.
This regulatory action determination is based on the size, location, duration, and traffic management of the safety zone. The Coast Guard does not anticipate a significant economic impact because the safety zone will be enforced in an area and in a manner that does not conflict with transiting commercial and recreational traffic, except for the short periods of time when explosive detonation evolutions are being conducted. The blasting detonations will not occur more than three times a day. At all other times, at least one side of the main navigational channel will be open for vessels to transit. Moreover, the Coast Guard will work in coordination with the pilots to ensure vessel traffic is limited during the times of detonation and Broadcast Notice to Mariners are made via VHF-FM marine channel 13 and 16 when blasting operations will occur.
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.
While some owners or operators of vessels intending to anchor in or transit the safety zone may be small entities, for the reasons stated in section V.A above, this rule will not have a significant economic impact on any vessel owner or operator.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.
This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.
Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this rule has implications for federalism or Indian tribes, please contact the person listed in the
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves a safety zone in force from December 1, 2016, through March 15, 2017, that prohibits entry within 500 yards of vessels and machinery being used by personnel conducting rock blasting, dredging, and rock removal operations in the Delaware River near Marcus Hook, PA between the southern end of Marcus Hook Anchorage to the western end of Little Tinicum Island, at the entrance to Darby Creek. It is categorically excluded from further review under paragraph 34(g) of figure 2-1 of the Commandant Instruction. An environmental analysis checklist supporting this determination and a Categorical Exclusion Determination are available in the docket where indicated under
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the
This regulation meets the applicable standards set forth in sections 3(a) and 3(b)(2) of Executive order 12988, Civil Justice Reform to eliminate ambiguity, minimize litigation, establish clear legal standards, and reduce burden.
Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.
For the reasons discussed in the preamble, the Coast Guard amends 33 CFR 165 as follows:
33 U.S.C 1231; 50 U.S.C. 191; 33 CFR 1.05-1, 6.04-1, 6.04-6, and 160.5; Department of Homeland Security Delegation No. 0170.1.
(a)
(1) Vessels wishing to transit the safety zone in the main navigational channel may do so if they can make satisfactory passing arrangements with the drill boat APACHE or the dredge TEXAS in accordance with the Navigational Rules in 33 CFR subchapter E via VHF-FM channel 13 at least 30 minutes prior to arrival. If vessels are unable to make satisfactory passing arrangements with the drill boat APACHE or the dredge TEXAS, they may request permission from the Captain of the Port, or his designated representative, on VHF-FM channel 16.
(2) The operator of any vessel requesting to transit through the safety zone shall proceed as directed by the drill boat APACHE, the dredge TEXAS or the designated representative of the Captain of the Port and must operate at the minimum safe speed necessary to maintain steerage and reduce wake.
(3) No vessels may transit through the safety zone during times of explosives detonation. During rock blasting detonation vessels will be required to maintain a 500 yard distance from the drill boat APACHE. The drill boat APACHE will make broadcasts, via VHF-FM Channel 13 and 16, at 15 minutes, 5 minutes, and 1 minute prior to detonation, as well as a countdown to detonation on VHF-FM Channel 16.
(4) After every explosive detonation a survey will be conducted to ensure the navigational channel is clear for vessels to transit. The drill boat APACHE will broadcast, via VHF-FM channel 13 and 16, when the survey has been completed and the channel is clear to transit. Vessels requesting to transit through the safety zone shall proceed as directed by the designated representative of the Captain of the Port and contact the drill boat APACHE on VHF-FM channel 13 to make safe passing arrangements.
(b)
(c)
(d)
Coast Guard, DHS.
Temporary final rule.
The Coast Guard is establishing a temporary security zone for the protection of a Very Important Person (VIP). This VIP will be staying on beachfront property in close proximity to Kailua Bay. It is necessary to restrict waterway access to vessels and persons to prevent waterside threats to the VIP. The security zone encompasses two primary areas from the surface of the water to the ocean floor: The navigable waters of the Kawainui Canal, beginning at the North Kalaheo Avenue Road Bridge and continuing northeast into Kailua Bay; and the navigable waters of Kailua Bay beginning at Kapoho Point and extending in a southwesterly direction to the shore boundary of a property located at 123 Kailuana Loop, Kailua, HI 96734. Entry of persons or vessels into the security zone is prohibited unless authorized by the Captain of the Port (COTP) Honolulu or a designated representative.
This rule is effective from 8 a.m. (HST) on December 14, 2016, through 8 a.m. (HST) on January 4, 2017. If the security zone is terminated prior to January 4, 2017, the Coast Guard will provide notice via a broadcast notice to mariners.
Documents mentioned in this preamble are part of docket USCG-2016-1025. To view documents mentioned in this preamble as being available in the docket, go to
If you have questions on this rule, call or email Lieutenant Commander Nicolas Jarboe, Waterways Management Division, U.S. Coast Guard Sector Honolulu; telephone (808) 541-4359, email
The Coast Guard is issuing this temporary final rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) [5 U.S.C. 553 (b)]. This provision authorizes an agency to issue a rule without prior notice and opportunities to comment when the agency, for good cause, finds those procedures are “impractical, unnecessary, or contrary to the public interest.” Under 5 U.S.C.
The Coast Guard is issuing this rule under the authority in 33 U.S.C. 1231. From December 14, 2016 through January 4, 2017, a VIP of the United States of America plans to visit the Kailua Bay area on Oahu, Hawaii. The security zone encompasses two primary areas from the surface of the water to the ocean floor: (1) The navigable waters of the Kawainui Canal, beginning at the North Kalaheo Avenue Road Bridge and continuing northeast into Kailua Bay; and (2) the navigable waters of Kailua Bay beginning at Kapoho Point and extending in a southwesterly direction to the shore boundary of a property located at 123 Kailuana Loop, Kailua, HI 96734. The COTP of Honolulu has determined the potential risks associated with the VIP's visit to the Kailua Bay area render a security zone necessary to ensure the VIP's safety. Entry of persons or vessels into the security zone is prohibited unless expressly authorized by the COTP of Honolulu or a designated representative.
This temporary final rule establishes a security zone from 8 a.m. (HST) on December 14, 2016, through 8: a.m. (HST) on January 4, 2017. The security zone encompasses two primary areas from the surface of the water to the ocean floor: (1) The navigable waters of the Kawainui Canal, beginning at the North Kalaheo Avenue Road Bridge and continuing northeast into Kailua Bay; and (2) the navigable waters of Kailua Bay beginning at Kapoho Point and extending in a southwesterly direction to the shore boundary of a property located at 123 Kailuana Loop, Kailua, HI 96734.
Two (2) shore-side markers will be placed in proximity of the security zone along the security zone boundary and one (1) orange boom will be placed at the canal boundary at the North Kalaheo Avenue Road Bridge as visual aids for mariners and public to approximate the zone. An illustration of the security zone will be made available on
We developed this rule after considering numerous statutes and Executive Orders (E.O.s) related to rulemaking. Below we summarize our analyses based on these statutes and executive orders.
E.O. 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. The Coast Guard expects the economical impact of this rule to be so minimal that a full Regulatory Evaluation under the regulatory policies and procedures of the Department of Homeland Security (DHS) is unnecessary. This expectation is based on the limited duration of the zone, the limited geographic area affected by it, and the lack of commercial vessel traffic affected by the zone. This rule has not been designated a “significant regulatory action,” under E.O. 12866. Accordingly, it has not been reviewed by the Office of Management and Budget.
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.
While some owners or operators of vessels intending to transit the security zone may be small entities, for the reasons stated in section V.A above, this rule will not have a significant economic impact on any vessel owner or operator.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.
This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
A rule has implications for federalism under E.O. 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that executive order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in E.O. 13132.
Also, this rule does not have tribal implications under E.O. 13175,
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
We have analyzed this rule under the Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. It is categorically excluded from further review under paragraph 34(g) of Figure 2-1 of the Commandant Instruction. An environmental analysis checklist supporting this determination and a Categorical Exclusion Determination are available in the docket where indicated under
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the
Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, and Waterways.
For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:
33 U.S.C. 1226, 1231; 46 U.S.C. Chapter 701; 50 U.S.C. 191, 195; 33 CFR 1.05-1, 6.04-1, 6.04-6, and 160.5; Pub. L. 107-295, 116 Stat. 2064; Department of Homeland Security Delegation No. 0170.1
(a)
(b)
(c)
(1) All persons and vessels are required to comply with the general regulations governing security zones found in 33 CFR part 165.
(2) Entry into or remaining in this security zone is prohibited unless authorized by the COTP Honolulu or his designated representative.
(3) Persons or vessels desiring to transit the security zone identified in paragraph (a) of this section may contact the COTP of Honolulu through his designated representatives at the Command Center via telephone: (808) 842-2600 and (808) 842-2601; fax: (808) 842-2642; or on VHF channel 16 (156.8 Mhz) to request permission to transit the security zone. If permission is granted, all persons and vessels must comply with the instructions of the COTP Honolulu or his designated representative and proceed at the minimum speed necessary to maintain a safe course while in the security zone.
(4) The U.S. Coast Guard may be assisted in the patrol and enforcement of the security zone by Federal, State, and local agencies.
(d)
(e)
Department of Veterans Affairs.
Interim final rule.
The Department of Veterans Affairs (VA) amends its medical regulations concerning the copayment required for certain medications. This rulemaking freezes copayments at the current rate for veterans in priority groups 2 through 8 through February 26, 2017.
Written comments may be submitted by email through
Bridget Souza, Office of Community Care (10D), Veterans Health Administration, Department of Veterans Affairs, 810 Vermont Avenue NW., Washington, DC 20420, (202) 382-2537. (This is not a toll-free number.)
Under 38 U.S.C. 1722A(a), VA must require veterans to pay at least a $2 copayment for each 30-day supply of medication furnished on an outpatient basis for the treatment of a non-service-connected disability or condition unless a veteran has a service-connected disability rated 50 percent or more, is a former prisoner of war, or has an annual income at or below the maximum annual rate of VA pension that would be payable if the veteran were eligible for pension. Under 38 U.S.C. 1722A(b), VA “may,” by regulation, increase that copayment amount and establish a maximum annual copayment amount (a “cap”). We have consistently interpreted section 1722A(b) to mean that VA has discretion to determine the appropriate copayment amount and annual cap amount for medication furnished on an outpatient basis for covered treatment, provided that any decision by VA to increase the copayment amount or annual cap amount is the subject of a rulemaking proceeding. We have implemented this statute in 38 CFR 17.110.
Under 38 CFR 17.110(b)(1), veterans are obligated to pay VA a copayment for each 30-day or less supply of medication provided by VA on an outpatient basis (other than medication administered during treatment). Under the current regulation, the copayment amount for veterans in priority groups 2 through 6 of VA's health care system is $8 through December 31, 2016. 38 CFR 17.110(b)(1)(i). The copayment amount for veterans in priority groups 7 and 8 is $9 through December 31, 2016. 38 CFR 17.110(b)(1)(ii). Thereafter, the copayment amount for all affected veterans is to be established using a formula based on the prescription drug component of the Medical Consumer Price Index (CPI-P), set forth in 38 CFR 17.110(b)(1)(iii). Using this methodology would generally result in increased medication prices for veterans.
Currently § 17.110(b)(2) also includes a “cap” on the total amount of copayments in a calendar year for a veteran enrolled in one of VA's health care enrollment system priority groups 2 through 6. Through December 31, 2016, the annual cap is set at $960. Thereafter, the cap is to increase “by $120 for each $1 increase in the copayment amount” applicable to veterans in priority categories 2 through 6.
On October 27, 2014, we published an interim final rulemaking that “froze” copayments for veterans in priority categories 2 through 6 at $8 and for veterans in priority groups 7 and 8 at $9, through December 31, 2015. 79 FR 63819. This interim final rule was made final on September 16, 2015. 79 FR 55545. In that final rulemaking, we extended the copayment freeze to be effective through December 31, 2016. We stated that this extended timeframe would permit the freeze to be in effect all of calendar year 2016 for the continued benefit of veterans, and would allow VA to continue to develop and publish proposed and final rules to implement a tiered copayment structure for certain medications, which will further align VA's medication copayment structure with other Federal agencies and the commercial sector. In these rulemakings, we stated that this freeze was appropriate because failure to take the action would result in higher copayments, and, as described in prior rulemakings, higher copayments reduced the utilization of VA pharmacy benefits and caused VA patients to instead rely on external providers for medications. 79 FR 63820. We continue to believe this to be the case. The ability to ensure that medications are taken as prescribed is essential to effective health care management. VA can monitor whether its patients are refilling prescriptions at regular intervals while also checking for medications that may interact with each other when these prescriptions are filled by VA. When both VA and non-VA providers are issuing prescriptions to a veteran, there is a greater risk of adverse interactions and harm to the patient because it is more difficult for each provider to assess whether the patient is taking any other medications.
On January 5, 2016, we published a proposed rule that would establish a tiered medication copayment structure. 81 FR 196. In that proposed rule, we indicated that VA intended to publish a final rule that would make the proposed changes effective January 1, 2017. VA proposed an effective date of January 1, 2017 based on our assumption that the necessary system changes would be in place by that date to allow us to publish a final rule implementing a tiered medication copayment structure. VA will be unable to meet that timeline. However, VA thinks that the necessary changes will be in place in February 2017, and that a final rule establishing a tiered medication copayment regime can be published with an effective date of February 27, 2017.
In this rulemaking, we are removing December 31, 2016, in each place it appears in paragraphs (b)(1)(i)-(iii) and (b)(2), and inserting February 26, 2017, to continue to keep copayment rates and caps at their current levels until the tiered copayment system is established.
If we fail to extend the medication copayment freeze past December 31, 2016, affected veterans would be subject to increased medication copayments until such time as the anticipated final rule implementing the tiered medication copayment structure is effective. In that case, beginning January 1, 2017, VA would use the CPI-P methodology in § 17.110(b)(1)(iii) to determine whether to increase copayments and calculate any mandated increase in the copayment amount for veterans in priority groups 2 through 8. At that time, the copayment amounts would be adjusted to a higher rate based on changes in the CPI-P over the past five years, and the annual copayment cap would also be raised by $120 for each $1 increase in the copayment amount. The end result would be increased medication copayments, and a higher annual cap on copayments until the effective date of the anticipated final rule implementing tiered medication copayments. VA believes this would not only have an adverse financial effect on veterans subject to medication copayments, but would also cause unnecessary confusion by making two changes to veterans' medication copayment amounts over a two-month period. Thus, the intended effect of this interim final rule is to prevent increases in copayment amounts and the copayment cap for veterans in priority groups 2 through 8 until VA has published a final rule establishing a new copayment structure. At that time, veterans' copayments will be determined according to the methodology contained in the final rule that VA will publish to establish a tiered copayment system. If VA has not established a new tiered copayment system by the end of February, copayments and the copayment cap will increase as prescribed in current
The Secretary of Veterans Affairs finds that there is good cause under 5 U.S.C. 553(b)(B) and (d)(3) to dispense with the opportunity for advance notice and opportunity for public comment and good cause to publish this rule with an immediate effective date. As stated above, this rule freezes at current rates the prescription drug copayment that VA charges certain veterans. The Secretary finds that it is impracticable and contrary to the public interest to delay this rule for the purpose of soliciting advance public comment or to have a delayed effective date. If the medication copayment freeze is not extended, on January 1, 2017, affected veterans would be subject to increased medication copayments based on changes to the CPI-P since 2010, as well as an upward adjustment to the annual copayment cap. VA believes that this might cause a significant financial hardship for those affected veterans and may decrease patient adherence to medical plans and have other unpredictable negative health effects. Further, VA believes that failing to extend the current medication copayment freeze, without interruption, would likely result in confusion for the public and affected veterans because the new tiered medication copayment regime will go into effect within a relatively short period of time. Lastly, allowing the current medication copayment freeze to expire on December 31, 2016, would create programmatic issues that would be difficult for VA to administratively manage. Within a 60-day period IT algorithms that are currently in place would have to be removed, new copayment amounts and annual cap amounts would have to be calculated and implemented along with the necessary system changes, followed by application of the new IT changes necessary for establishing a new tiered medication copayment scheme.
For the above reasons, the Secretary issues this rule as an interim final rule. VA will consider and address comments that are received within 60 days of the date this interim final rule is published in the
Title 38 of the Code of Federal Regulations, as revised by this interim final rulemaking, represents VA's implementation of its legal authority on this subject. Other than future amendments to this regulation or governing statutes, no contrary guidance or procedures are authorized. All existing or subsequent VA guidance must be read to conform with this rulemaking if possible or, if not possible, such guidance is superseded by this rulemaking.
This interim final rule contains no provisions constituting a collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521).
Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, and other advantages; distributive impacts; and equity). Executive Order 13563 (Improving Regulation and Regulatory Review) emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. Executive Order 12866 (Regulatory Planning and Review) defines a “significant regulatory action,” requiring review by the Office of Management and Budget (OMB), unless OMB waives such review, as “any regulatory action that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in this Executive Order.”
The economic, interagency, budgetary, legal, and policy implications of this interim final rule have been examined, and it has been determined not to be a significant regulatory action under Executive Order 12866. VA's impact analysis can be found as a supporting document at
The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before issuing any rule that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any one year. This interim final rule will have no such effect on State, local, and tribal governments, or on the private sector.
The Secretary hereby certifies that this interim final rule will not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-612. This interim final rule will temporarily freeze the copayments that certain veterans are required to pay for prescription drugs furnished by VA. This interim rule directly affects individual VA patients and will not directly affect small entities. Therefore, pursuant to 5 U.S.C. 605(b), this rulemaking is exempt from the initial and final regulatory flexibility analysis requirements of 5 U.S.C. 603 and 604.
The Catalog of Federal Domestic Assistance numbers and titles for the programs affected by this document are as follows: 64.005, Grants to States for Construction of State Home Facilities; 64.007, Blind Rehabilitation Centers; 64.008, Veterans Domiciliary Care; 64.009, Veterans Medical Care Benefits; 64.010, Veterans Nursing Home Care; 64.011, Veterans Dental Care; 64.012, Veterans Prescription Service; 64.013, Veterans Prosthetic Appliances; 64.014, Veterans State Domiciliary Care; 64.015, Veterans State Nursing Home Care; 64.016, Veterans State Hospital Care; 64.018, Sharing Specialized Medical Resources; 64.019, Veterans Rehabilitation Alcohol and Drug Dependence; 64.022, Veterans Home Based Primary Care; and 64.024, VA Homeless Providers Grant and Per Diem Program.
The Secretary of Veterans Affairs, or designee, approved this document and authorized the undersigned to sign and submit the document to the Office of the
Administrative practice and procedure, Alcohol abuse, Alcoholism, Claims, Day care, Dental health, Drug abuse, Foreign relations, Government contracts, Grant programs—health, Grant programs—veterans, Health care, Health facilities, Health professions, Health records, Homeless, Medical and dental schools, Medical devices, Medical research, Mental health programs, Nursing homes, Philippines, Reporting and recordkeeping requirements, Scholarships and fellowships, Travel and transportation expenses, Veterans.
For the reasons set out in the preamble, VA amends 38 CFR part 17 as follows:
38 U.S.C. 501, and as noted in specific sections.
Sections 17.640 and 17.647 also issued under Public Law 114-2, sec. 4.
Sections 17.641 through 17.646 also issued under 38 U.S.C. 501(a) and Public Law 114-2, sec. 4.
Postal Regulatory Commission.
Final rule.
The Commission is issuing a set of final rules amending some existing Commission rules related to attributable costing. The final rules are consistent with methodology changes approved by the Commission. Relative to the proposed rules, one rule was revised to alleviate confusion and another revision was administrative in nature.
Effective January 6, 2017.
David A. Trissell, General Counsel, at 202-789-6820.
81 FR 63448 (Sept. 15, 2016).
On September 9, 2016, the Commission issued proposed rules consisting of necessary changes, resulting from Order No. 3506, that specifically define or describe attributable costs.
On September 9, 2016, the Commission issued Order No. 3506 after consideration of a United Parcel Service, Inc. (UPS) petition which sought to make changes to the methodologies employed by the Postal Service to account for the costs of the Postal Service's products in its periodic reports.
The instant rulemaking stems from the Commission's findings in Order No. 3506 on Proposal One. In that order, the Commission found that a portion of inframarginal costs (those inframarginal costs calculated as part of a product's incremental cost) have a reliably identifiable causal relationship to products. Order No. 3506 at 61. Therefore, pursuant to Order No. 3506, attributable costs must also include those inframarginal costs calculated as part of a competitive product's incremental costs (in addition to a product's volume-variable costs and product-specific fixed costs).
As noted above, on October 19, 2016, the Commission issued the Errata to clarify the definition of inframarginal costs described in Order No. 3506.
On October 17, 2016, the Commission received comments from Amazon Fulfillment Services, Inc. (Amazon),
Amazon also seeks clarification on the description of inframarginal costs (variable costs that do not vary directly with volume) in Order No. 3507. Amazon Comments at 2;
Finally, Amazon suggests revisions to proposed 3015.7(b) in order to cure what it believes is a circular reference in the rule.
Finally, the Public Representative cites to his comments in Docket No. RM2016-2 and, just as in that docket, maintains that a review of compliance with section 703(d) of the Postal Accountability and Enhancement Act (PAEA) is necessary in order to consider changes to attributable costs and revise related rules.
The Commission has previously discussed section 703(d) and its applicability to Order Nos. 3506 and 3507. In Order No. 3506, the Commission distinguished its review of attributable costing as a change in analytical principles pursuant to 39 U.S.C. 3652 rather than a proceeding under 39 U.S.C. 3633. Order No. 3506 at 117-122;
While the Commission appreciates the Public Representative's comments, its conclusions related to section 703(d)'s applicability in this matter remain unchanged. Therefore, the Commission declines to consider compliance with section 703(d) because these conforming changes are required by law.
The Postal Service also recommends an update to PRC Form CP-01 as part of proposed § 3060.21 by including a “slightly broader housekeeping change.”
However, the Postal Service explains that as part of its FY 2015 Annual Compliance Report (ACR), the amounts had grown larger and it was able to incorporate competitive market test amounts in its contribution target analysis by introducing a new row, Net Contribution Competitive Product Market Tests, into PRC Form CP-01.
In 39 U.S.C. 3622(c)(2), a market dominant product's ability to cover attributable costs is a factor in market dominant product rate regulation.
The Commission adopts final rules that reflect revisions to the proposed rules in response to comments.
In addition, the Commission finds it appropriate, as an administrative matter, to update PRC Form CP-01 in proposed § 3060.21 and include a new row of expenses titled “Net Contribution Competitive Products Market Tests” as recommended by the Postal Service.
1. Parts 3015 and 3060 of title 39, Code of Federal Regulations, are amended as set forth below the signature of this Order, effective 30 days after publication in the
2. The Secretary shall arrange for publication of this Order in the
By the Commission.
Administrative practice and procedure, Postal service.
Administrative practice and procedure, Reporting and recordkeeping requirements.
For the reasons discussed in the preamble, the Commission amends chapter III of title 39 of the Code of Federal Regulations as follows:
39 U.S.C. 503; 3633.
(a) Incremental costs will be used to test for cross-subsidies by market dominant products of competitive products. To the extent that incremental cost data are unavailable, the Commission will use the sum of competitive products' volume-variable costs and product-specific costs supplemented to include causally related, group-specific costs to test for cross-subsidies.
(b) Each competitive product must recover its attributable costs as defined in 39 U.S.C. 3631(b). Pursuant to 39 U.S.C. 3631(b), the Commission will calculate a competitive product's attributable costs as the sum of its volume-variable costs, product-specific costs, and those inframarginal costs calculated as part of a competitive product's incremental costs.
39 U.S.C. 503; 2011, 3633, 3634.
(b) * * *
(1) Attributable costs, including volume-variable costs, product-specific costs, and those inframarginal costs calculated as part of a competitive product's incremental costs; and
Environmental Protection Agency (EPA).
Final rule.
The Environmental Protection Agency (EPA) is approving the Dallas/Fort Worth (DFW) moderate nonattainment area Reasonable Further Progress (RFP) State Implementation Plan (SIP) revision for the 2008 ozone National Ambient Air Quality Standard (NAAQS or standard). EPA is also approving revisions to the 2011 base year emissions inventory for the DFW moderate nonattainment area for the 2008 ozone NAAQS, the 2017 transportation conformity motor vehicle emissions budgets (MVEBs), and the required contingency measures for failure to meet RFP. This action is being taken under the Clean Air Act (CAA).
This rule is effective on January 6, 2017.
The EPA has established a docket for this action under Docket ID No. EPA-R06-OAR-2015-0495. All documents in the docket are listed on the
Wendy Jacques, 214-665-7395,
Throughout this document “we,” “us,” and “our” means the EPA.
The background for this action is discussed in detail in our September 20, 2016 proposal (81 FR 64372). In that document we proposed to approve the DFW RFP SIP revision for the 2008 ozone standard submitted by the State of Texas. EPA also proposed to approve revisions to the 2011 base year emissions inventory for the DFW moderate nonattainment area for the 2008 ozone NAAQS, the 2017 transportation conformity motor vehicle emissions budgets (MVEBs), and the required contingency measures for failure to meet RFP. We did not receive any comments regarding our proposal.
We are approving the DFW RFP SIP revision for the 2008 ozone standard that was submitted on July 10, 2015 and supplemented on April 22, 2016. We are approving the revised base year emission inventory, the RFP plan, the 2017 MVEBs and the required contingency measures for failure to meet RFP. The 2017 MVEBs are listed in Table 1.
This action is being taken under section 110 of the CAA.
Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the
• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);
• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• Is not subject to requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the Clean Air Act; and
• Does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).
In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).
The Congressional Review Act, 5 U.S.C. 801
Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by February 6, 2017. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Ozone, Reporting and recordkeeping requirements, Volatile organic compounds.
40 CFR part 52 is amended as follows:
42 U.S.C. 7401
(e) * * *
Environmental Protection Agency (EPA).
Final rule.
The Environmental Protection Agency (EPA) is taking final action to extend the implementation deadline for certain facilities subject to the final rule establishing pretreatment standards under the Clean Water Act (CWA) for discharges of pollutants into publicly owned treatment works (POTWs) from onshore unconventional oil and gas (UOG) extraction facilities.
The final rule is effective December 7, 2016. In accordance with 40 CFR part 23, this regulation shall be considered issued for purposes of judicial review at 1 p.m. Eastern time on December 21, 2016. Under section 509(b)(1) of the CWA, judicial review of this regulation can be had only by filing a petition for review in the U.S. Court of Appeals within 120 days after the regulation is considered issued for purposes of judicial review. Under section 509(b)(2), the requirements in this regulation may not be challenged later in civil or criminal proceedings brought by EPA to enforce these requirements.
The EPA has established a docket for this action under Docket ID No. EPA-HQ-OW-2014-0598. All documents in the docket are listed on the
For more information, see the EPA's Web site:
Entities potentially regulated by this final action include:
The EPA promulgated revisions to the Effluent Guidelines and Standards for the Oil and Gas Extraction Point Source Category which established pretreatment standards for onshore UOG extraction facilities (81 FR 41845, June 28, 2016). This final pretreatment standards rule prohibited the discharge of pollutants in UOG extraction wastewater to POTWs, and established an effective date of August 29, 2016. In the preamble to the final pretreatment standards rule, the EPA indicated that because UOG facilities were currently meeting this zero discharge requirement, the implementation deadline for these pretreatment standards would be the same as the effective date of the final rule. After promulgation of the final rule, the EPA received two letters indicating that there are likely facilities discharging UOG wastewater to POTWs; this was new information to the EPA.
In light of this post-promulgation information, on September 30, 2016 (81 FR 67266, September 30, 2016), the EPA published a proposed rule to extend the compliance date to August 29, 2019, for existing sources that were lawfully discharging UOG wastewater to POTWs on or between the date of the
Based on the post-promulgation information submitted to the EPA suggesting that there are likely facilities subject to the final UOG pretreatment standards rule that are currently discharging UOG wastewater to POTWs, the EPA is extending the compliance date for existing sources that were lawfully discharging to POTWs on or between April 7, 2015 and June 28, 2016, to three years from the effective date of the rule—to August 29, 2019. This final rule does not change the compliance date for all other facilities subject to the final onshore UOG extraction pretreatment standards rule.
Comments received in response to the proposed rulemaking supported the extension of the compliance date for these facilities. The EPA did not receive any comments that opposed or otherwise questioned the appropriateness of the extension of the compliance date. The EPA did, however, receive comments regarding the applicability of the underlying pretreatment standards rule. Specifically, these comments disagreed with the definition of “unconventional” in the final UOG rule, arguing that the definition was “overly broad” or “arbitrary,” and suggested alternative definitions of “unconventional” that
The EPA's extension of the compliance date by three years is reasonable, as acknowledged by industry commenters on the direct final rule.
Under Executive Order 12866 (58 FR 51735, October 4, 1993) and Executive Order 13563 (76 FR 3821, January 21, 2011), this action is not a “significant regulatory action” and is therefore not subject to OMB review. With respect to the Regulatory Flexibility Act (5 U.S.C. 601
This action is subject to the CRA, and the EPA will submit a rule report to each House of the Congress and to the Comptroller General of the United States. This action is not a “major rule” as defined by 5 U.S.C. 804(2).
Environmental protection, Pretreatment, Unconventional oil and gas extraction, Waste treatment and disposal, Water pollution control.
Therefore, 40 CFR part 435 is amended as follows:
33 U.S.C. 1251, 1311, 1314, 1316, 1317, 1318, 1342 and 1361.
(a) * * *
(3)
Federal Railroad Administration (FRA), Department of Transportation (DOT).
Final rule.
This rule amends FRA's regulations on railroad police officers to implement certain provisions of the Fixing America's Surface Transportation
This final rule is effective February 6, 2017.
Gareth Rosenau, Office of Chief Counsel, Federal Railroad Administration, Mail Stop 10, Room W31-316, 1200 New Jersey Avenue SE., Washington, DC 20590 (telephone: 202-493-6054).
Prior to enactment of the FAST Act (Pub. L. 114-94 (Dec. 4, 2015)), 49 U.S.C. 28101 (Section 28101) authorized railroad employees commissioned or certified as police officers by any state to enforce, consistent with DOT regulations, the laws of any state where the railroad police officer's employer owns property to protect railroad property, personnel, passengers, and cargo. Section 28101 did not allow railroads to hire contractor railroad police officers or allow a railroad police officer to transfer from one state to another unless that officer was immediately commissioned or certified in the new state. Section 28101 also did not address training railroad police officers, except general references to the certification or commissioning of the officers under state law. FRA's regulations at 49 CFR part 207 implement Section 28101.
FAST Act Section 11412(b) (Section 11412) revised Section 28101 to allow: (1) Railroads to hire contractors as railroad police officers; (2) railroad police officers to transfer from one state to another without immediately needing to be commissioned or certified in the new state; and (3) a state to recognize an officer's training at another state's recognized police academy or a Federal law enforcement training center meets the state's basic police officer certification or commissioning requirements.
Section 11412 also requires the Secretary of Transportation (Secretary) to, within one year of enactment of the FAST Act, revise part 207 consistent with Section 11412. The authority to carry out this mandate is delegated to FRA.
The FAST Act made three substantive revisions to existing Section 28101. First, the FAST Act revised Section 28101 paragraphs (a) and (b) to allow railroad police officers to be either direct employees of a railroad or contractors to a railroad (prior to the FAST Act, Section 28101 required railroad police officers to be “employed by” a railroad). Specifically, the FAST Act amended Section 28101(a) (the general authorizing provision for railroad police officers) to specify railroad police officers may be “directly employed by or contracted by” railroads. This change allows railroads to not only directly employ railroad police officers, but also to hire contractors as railroad police officers. In Section 28101(b) (which allows a railroad police officer to be temporarily assigned to assist a second railroad), the FAST Act revised the words “employed by” to “directly employed by or contracted by” and specified that a railroad police officer assisting a second railroad is an employee “or agent, as applicable” of the second railroad carrier.
Second, the FAST Act added a new paragraph (c) to Section 28101 addressing the transfer of railroad police officers from one state of employment or residence to a state other than the one where he or she is commissioned. New paragraph (c) provides a one year interim period for the officer to become commissioned in the new state, while retaining authority to enforce laws in the new state under Section 28101.
Third, the FAST Act added a new paragraph (d) to Section 28101 specifically allowing a state to allow a railroad police officer's training at another state's recognized police academy or at a Federal law enforcement training center to meet the state's basic police officer certification or commissioning requirements.
FRA is proceeding directly to a final rule in this proceeding because it finds, for good cause, notice and public comment is unnecessary because the public would not benefit from such notice.
Existing § 207.1 states part 207 applies to “all railroads,” as defined in section 202(e) of the Federal Railroad Safety Act of 1970. FRA is updating this section to accurately reflect the current statutory cite for the term “railroad.” 49 U.S.C. 20103. This only updates an outdated statutory citation and is not a substantive amendment.
Existing paragraph (a) of § 207.2 defines “railroad police officer” as a “peace officer who is commissioned in his or her state of legal residence or state of primary employment and employed by a railroad to enforce state laws for the protection of railroad property, personnel, passengers, and/or cargo.” Consistent with the mandate of Section 11412, this rule revises this definition by clarifying that term includes peace officers “directly employed by” or “contracted by” a railroad.
Existing paragraph (b) of § 207.3 requires railroad police officers to be commissioned by the officer's state of legal residence or the officer's state of primary employment. Consistent with Section 11412's new provision providing for a one year interim period for an officer transferring from one state of employment or residence to another to become commissioned or certified in the new state, FRA is revising this paragraph to except railroad police officers from this commissioning requirement during such an interim period by referencing new § 207.6 (discussed below).
Consistent with new Section 28101(c), FRA is adding new § 207.6 to address transferring railroad police officers from one state of employment or residence to a state other than the one where he or she is commissioned. Section 207.6(a) provides that if a railroad police officer certified or commissioned as a police officer under the laws of a state or jurisdiction transfers primary employment or residence from the certifying or commissioning state to another state or jurisdiction, then the railroad police officer must apply to be certified or commissioned as a police officer under the laws of the state of new primary employment or residence not later than one year after the date of transfer. Section 207.6(b) provides that during the period beginning on the date of transfer and ending one year after the date of transfer, a railroad police officer certified or commissioned as a police officer under the laws of a state may enforce the laws of the new state or jurisdiction in which the railroad police officer resides, to the same extent as provided in existing § 207.5(a) governing the authority of railroad police officers in states where the officer is not commissioned or certified.
Consistent with new Section 28101, FRA is adding new § 207.7 specifically allowing a state to recognize a railroad police officer's training at another state's recognized police academy or at a Federal law enforcement training center meets the state's basic police officer certification or commissioning requirements. Tracking paragraph (d)(1) of Section 28101, paragraph (a) of new § 207.7 specifically allows states to recognize its basic police officer certification or commissioning requirements for qualification as a railroad police officer are met by any individual who successfully completes a program at another state's state-recognized police training academy or a Federal law enforcement training center and who is certified or commissioned as a police officer by that other state. Tracking paragraph (d)(2) of Section 28101, paragraph (b) of new § 207.7 explains the rule may not be construed to supersede or affect any state training requirements related to criminal law, civil procedure, motor vehicle code, any other state law, or state-mandated comparative or annual in-service training academy or Federal law enforcement training center.
FRA evaluated this final rule under existing policies and procedures and determined it is non-significant, under both Executive Orders 12866 and 13563, and DOT policies and procedures.
First, FRA found this final rule will not create any additional burden on any entities. Thus, we do not expect the rule to result in any costs, either quantifiable or non-quantifiable, as the rule does not create any additional requirements entities must follow.
Second, FRA found the final rule provides benefits to entities and benefits to workers from the three provisions allowing: (1) Railroads to hire contractor police officers; (2) railroad police officers to transfer from one state to another without immediately needing to be commissioned or certified in the new state; and (3) a state to recognize an officer's training at another state's recognized police academy or at a Federal law enforcement training center meets the state's basic police officer certification or commissioning requirements.
Providing entities with the ability to employ contractor police officers more easily allows entities to adjust employment rolls based upon their business needs. Providing flexibility for railroad police officers to transfer from one state to another allows for increased mobility of railroad police officers to meet interstate business needs. Increased interstate worker mobility addresses the current geographic immobility of railroad police officers caused by existing law that typically requires railroad police officers to be commissioned within their states of residence or primary employment. Similar to how allowing railroads to employ contractor police officers will lead to increased interstate worker mobility, allowing states to recognize an officer's training completed within another state or at a Federal law enforcement training center as meeting that state's basic police officer certification or commissioning requirements will likewise increase the interstate mobility of railroad police officers.
Thus, FRA concludes this final rule will result in several non-quantifiable benefits that allow railroads to more efficiently allocate the railroad police officer workforce based upon employment needs. Therefore, the final rule benefits workers because there is increased worker mobility, and the final rule benefits railroads, because of the increased flexibility and efficiency they have to allocate railroad police officers.
It is important to note the total number of railroad police officers is not expected to change as a result of this final rule. However, this final rule may result in a more stable labor market for railroad police officers, with a lower employment turnover rate, since railroad police officers can more easily relocate.
FRA developed this final rule under Executive Order 13272 (“Proper Consideration of Small Entities in Agency Rulemaking”) and DOT's procedures and policies to promote compliance with the Regulatory Flexibility Act (5 U.S.C. 601
The Regulatory Flexibility Act requires an agency to review regulations to assess their impact on small entities. An agency must conduct a regulatory flexibility analysis unless it determines and certifies that a rule is not expected to have a significant economic impact on a substantial number of small entities.
This final rule will apply to all entities employing or contracting for railroad police officers. Because the final rule does not impose any substantive requirements on regulated entities (either large or small), FRA estimates this rule imposes no costs on regulated entities. Thus, because this final rule does not create any costs, it will not result in greater costs per employee for small entities as compared to large entities.
FRA estimates there are fewer than 5 railroads that are both small entities for purposes of this analysis, and that employ or contract for railroad police officers. Moreover, because there are no costs associated with this final rule, the economic impact on these small entities is not significant.
The “universe” of entities under consideration includes only those small entities that can reasonably be expected to be directly affected by this final rule. The only small entities potentially
“Small entity” is defined in 5 U.S.C. 601 (Section 601). Section 601(6) defines “small entity” as having “the same meaning as the terms `small business', `small organization' and `small governmental jurisdiction’ ” as defined by Section 601. Section 601(3) defines “small business” as having the same meaning as “small business concern” under Section 3 of the Small Business Act. Section 601(4) defines “small organization” as “any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.” Section 601(5) defines “small governmental jurisdiction” as “governments of cities, counties, towns, townships, villages, school districts, or special districts, with a population of less than fifty thousand.”
The U.S. Small Business Administration (SBA) stipulates “size standards” for small entities. It provides that the largest a for-profit railroad business firm may be (and still be classified as a “small entity”) is 1,500 employees for “Line-Haul Operating Railroads” and 500 employees for “Short-Line Operating Railroads.”
Federal agencies may adopt their own size standards for small entities in consultation with SBA and in conjunction with public comment. Under that authority, FRA has published a final statement of agency policy formally establishing for FRA's regulatory purposes “small entities” or “small businesses” as railroads, contractors, and hazardous materials shippers that meet the revenue requirements of a Class III railroad as set forth in 49 CFR 1201.1-1 (which is $20 million or less in inflation-adjusted annual revenues, and commuter railroads or small governmental jurisdictions that serve populations of 50,000 or less).
FRA could not exactly quantify the number of entities that could be impacted by this final rule if there was a burden. However, evidence exists that, because of resource constraints, most Class III railroads (small entities) do not employ railroad police officers.
There are approximately 695 small railroads (as defined by revenue size). Class III railroads do not report to the STB, and the precise number of Class III railroads is difficult to ascertain due to conflicting definitions, conglomerates, and even seasonal operations. Potentially, all small railroads could be impacted by this final regulation, but there is no reason to believe that any additional small railroads are likely to employ or contract for railroad police officers.
Previously, FRA sampled small railroads and found that revenue averaged approximately $4.7 million (not discounted) in 2006. One percent of that average annual revenue per small railroad is $47,000. FRA realizes that some railroads will have lower revenue than $4.7 million. FRA estimates that this rule will not result in any additional expense to small railroads over the next ten years, as the final rule does not require entities to comply with anything. That is, while this final rule provides entities with relaxed constraints on how to employ railroad police officers, this final rule does not introduce any new requirements itself. Therefore, FRA concludes there is no expected burden for this final rule so it will not have a significant impact on the financial position of small entities, or on the small entity segment of the railroad industry as a whole.
Because this final rule does not contain any provision requiring action on the part of entities, either large or small, this final rule will not impact a substantial number of small entities.
Under the Regulatory Flexibility Act (5 U.S.C. 605(b)), FRA certifies this final rule will not have a significant economic impact on a substantial number of small entities.
The information collection requirements in this final rule are being submitted for approval to the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995, 44 U.S.C. 3501
All estimates include the time for reviewing instructions; searching existing data sources; gathering or maintaining the needed data; and reviewing the information. For information or a copy of the unchanged paperwork package submitted to OMB, contact Mr. Robert Brogan at 202-493-6292 or Ms. Kimberly Toone at 202-493-6132 or via email at the following addresses:
Organizations and individuals desiring to submit comments on the collection of information requirements should direct them to the Office of Management and Budget, Office of Information and Regulatory Affairs, Washington, DC 20503, Attention: FRA Desk Officer. Comments may also be sent via email to the Office of Management and Budget at the following address:
OMB is required to make a decision concerning the collection of information requirements contained in this final rule between 30 and 60 days after publication of this document in the
FRA cannot impose a penalty on persons for violating information collection requirements which do not display a current OMB control number, if required. FRA intends to obtain current OMB control numbers for any new information collection requirements resulting from this rulemaking action prior to the effective date of the final rule. The OMB control number, when assigned, will be announced by separate notice in the
Executive Order 13132, “Federalism” (64 FR 43255, Aug. 10, 1999), requires FRA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” are defined in the Executive Order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” Under Executive Order 13132, the agency may not issue a regulation with federalism implications that imposes substantial direct compliance costs and that is not required by statute, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by state and local governments, or the agency consults with state and local government officials early in the process of developing the regulation. Where a regulation has federalism implications and preempts state law, the agency seeks to consult with state and local officials in the process of developing the regulation.
This final rule has been analyzed consistent with the principles and criteria in Executive Order 13132. FRA has determined this rule does not have 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. This rule does not impose substantial direct compliance costs on state and local governments. Therefore, the consultation and funding requirements of Executive Order 13132 do not apply.
FRA has evaluated this final rule consistent with the National Environmental Policy Act (NEPA; 42 U.S.C. 4321
In analyzing the applicability of a CE, the agency must also consider whether extraordinary circumstances are present that would warrant a more detailed environmental review through the preparation of an EA or EIS.
FRA has evaluated this final rule consistent with the principles and criteria in Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, dated November 6, 2000. The final rule would not have a substantial direct effect on one or more Indian tribes, would not impose substantial direct compliance costs on Indian tribal governments, and would not preempt tribal laws. Therefore, the funding and consultation requirements of Executive Order 13175 do not apply, and a tribal summary impact statement is not required.
Executive Order 12898, Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations, and DOT Order 5610.2(a) (91 FR 27534, May 10, 2012) require DOT agencies to achieve environmental justice as part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or
Under Section 201 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, 2 U.S.C. 1531), each Federal agency “shall, unless otherwise prohibited by law, assess the effects of Federal regulatory actions on State, local, and tribal governments, and the private sector (other than to the extent that such regulations incorporate requirements specifically set forth in law).” Section 202 of the Act (2 U.S.C. 1532) further requires that
Executive Order 13211 requires Federal agencies to prepare a Statement of Energy Effects for any “significant energy action.” 66 FR 28355, May 22, 2001. Under the Executive Order, a “significant energy action” is defined as any action by an agency (normally published in the
The Trade Agreements Act of 1979 (Pub. L. 96-39, 19 U.S.C. 2501
FRA has assessed the potential effect of this final rule on foreign commerce and believes its requirements are consistent with the Trade Agreements Act of 1979. The requirements imposed relate to safety standards, which, as noted, are not considered unnecessary obstacles to trade.
Consistent with 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its rulemaking process. DOT posts these comments, without edit, including any personal information the commenter provides to,
Law enforcement, Law enforcement officers, Railroad employees, Railroad safety.
In consideration of the foregoing, FRA amends chapter II, subtitle B of title 49, Code of Federal Regulations as follows:
49 U.S.C. 28101; 49 CFR 1.89.
This part applies to all railroads as defined in 49 U.S.C. 20103.
(a)
(b) Except as provided by § 207.6, the designated railroad police officer shall be commissioned by the railroad police officer's state of legal residence or the railroad police officer's state of primary employment.
(a)
(b)
(a) A state may consider an individual to have met that state's basic police officer certification or commissioning requirements for qualification as a railroad police officer under this section if that individual:
(1) Has successfully completed a program at a state-recognized police training academy in another state or at a Federal law enforcement training center; and
(2) Is certified or commissioned as a police officer by the other state.
(b) Nothing in this section shall be construed as superseding or affecting any state training requirements related to criminal law, civil procedure, motor vehicle code, any other state law, or state-mandated comparative or annual in-service training academy or Federal law enforcement training center.
Federal Railroad Administration (FRA), Department of Transportation (DOT).
Final rule.
This final rule updates FRA's accident/incident reporting regulations to provide the current electronic mail address railroads must use to electronically submit to FRA certain accident/incident report forms.
Effective: December 7, 2016.
Kebo Chen, Staff Director, U.S. Department of Transportation, Federal Railroad Administration, Office of Safety Analysis, RRS-22, Mail Stop 25, West Building 3rd Floor, Room W33-314, 1200 New Jersey Ave. SE., Washington, DC 20590 (telephone 202-493-6079); or Gahan Christenson, Trial Attorney, U.S. Department of Transportation, Federal Railroad Administration, Office of Chief Counsel, RCC-10, Mail Stop 10, West Building 3rd Floor, Room W33-435, 1200 New Jersey Ave. SE., Washington, DC 20590 (telephone 202-493-1381).
This rule updates the electronic mail (email) address provided in 49 CFR part 225 for railroads to electronically submit certain FRA accident/incident report forms.
Starting in 2013, FRA informed railroad reporting officers of the change in the email address in §§ 225.27 and 225.37 and started transitioning to the new
This rule only updates the email address in the regulation and makes no other changes to part 225. FRA is issuing this final rule without providing an opportunity for prior to public notice and comment as the Administrative Procedure Act (APA) normally requires.
FRA evaluated this final rule under existing policies and procedures and determined it to be a non-significant regulatory action under both Executive Orders 12866 and 13563 and DOT policies and procedures.
The administrative burden to update the email address will depend on how the railroads submit accident/incident report forms to FRA. In general, railroads use the email address in two ways to submit accident/incident report forms. First, a railroad may manually enter the email address into its email program or electronic device (such as a multi-function printer) each time the railroad submits an accident/incident report form to FRA. In this case, substituting the new email address for the old one would present no additional burden because the railroad would have had to enter an email address regardless. Furthermore, if occasionally updating email addresses is a regular part of a railroad reporting officer's duties (the employee most likely to submit accident/incident report forms to FRA), the burden of updating the email address is already taken into account. The railroad employee would only need to take note of the new email address, requiring a minimal amount of time.
Second, a railroad may use an automated system to submit accident/incident report forms to FRA. In such a system, the reporting officer would need to update, save and/or compile, and check for errors when using the new email address (such as entering in the email address wrong). These steps are standardized, and again, would require minimal time to update one email address. In addition, whether email addresses are entered manually, or stored in an automated system, the email address would only need to be updated once. Thus, given the small amount of time needed to revise the current email address to the new one, and one-time occurrence of the task, the costs associated with this change will be minimal.
In sum, this final rule makes no substantive changes to part 225's reporting requirements. The rule only makes an administrative change to facilitate railroads submission of accident/incident forms to FRA. Thus, the rule imposes no significant additional costs, and creates no new significant benefits and FRA has determined further analysis under Executive Orders 12866, 13563 or DOT policies and procedures is not necessary.
FRA developed this rule under Executive Order 13272 (“Proper Consideration of Small Entities in Agency Rulemaking”) and DOT's procedures and policies to promote compliance with the Regulatory Flexibility Act (5 U.S.C. 601
The Regulatory Flexibility Act of 1980 (RFA) requires an agency to review regulations to assess their impact on small entities. An agency must conduct a regulatory flexibility analysis unless it determines and certifies that a rule is not expected to have a significant economic impact on a substantial number of small entities.
This final rule simply updates an email address railroads use to electronically submit to FRA certain accident/incident report forms. This rule does not contain any new substantive regulatory requirements. As a result, this rule will impose no new compliance costs on small entities other than those minimal potential costs outlined above in the Regulatory Evaluation section. Under the RFA, the Administrator of FRA certifies this final rule will have no significant economic impact on a substantial number of small entities.
Furthermore, FRA has determined the RFA does not apply to this rulemaking because FRA is not publishing a proposed rule in this proceeding. Given the minor change to replace an outdated email address with a current email address and FRA's finding that notice and public comment is unnecessary and would serve no public benefit, per guidance from the Small Business Administration, the RFA does not apply.
There are no new or additional information collection requirements associated with this final rule. FRA's collection of accident/incident reporting and recordkeeping information is currently approved under OMB No. 2130-0500. Therefore, FRA is not required to provide an estimate of a public reporting burden in this document.
Executive Order 13132, “Federalism” (64 FR 43255, Aug. 10, 1999), requires FRA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” are defined in the Executive Order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” Under Executive Order 13132, the agency may not issue a regulation with federalism implications that imposes substantial direct compliance costs and that is not required by statute, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by State and local governments, or the agency consults with State and local government officials early in the process of developing the regulation. Where a regulation has federalism implications and preempts State law, the agency seeks to consult with State and local officials in the process of developing the regulation.
FRA analyzed this final rule under the principles and criteria in Executive Order 13132. This rule will not have a substantial direct effect on States, on the relationship between the national government and the States, or on the distribution of power and the responsibilities among the various levels of government, as specified in the Executive Order 13132. In addition, FRA determined this rule does not impose substantial direct compliance costs on State and local governments. Accordingly, FRA concluded the consultation and funding requirements of Executive Order 13132 do not apply and preparation of a federalism assessment is not required.
FRA evaluated this final rule under its “Procedures for Considering Environmental Impacts” (FRA's Procedures) (64 FR 28545, May 26, 1999) as required by the National Environmental Policy Act (42 U.S.C. 4321
Consistent with section 4(c)(20) of FRA's Procedures, FRA concluded that no extraordinary circumstances exist with respect to this regulation that might trigger the need for a more detailed environmental review. As a result, FRA finds this rule is not a major Federal action significantly affecting the quality of the human environment.
Under Section 201 of the Unfunded Mandates Reform Act of 1995 (Public Law 104-4, 2 U.S.C. 1531), each Federal agency “shall, unless otherwise prohibited by law, assess the effects of Federal regulatory actions on State, local, and tribal governments, and the private sector (other than to the extent that such regulations incorporate requirements specifically set forth in law).” Section 202 of the Act (2 U.S.C. 1532) further requires that
Executive Order 13211 requires Federal agencies to prepare a Statement of Energy Effects for any “significant energy action.” 66 FR 28355, May 22, 2001. Under the Executive Order, a “significant energy action” is defined as any action by an agency (normally published in the
Executive Order 12898, Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations, and DOT Order 5610.2(a) (91 FR 27534, May 10, 2012) require DOT agencies to achieve environmental justice as part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects, including interrelated social and economic effects, of their programs, policies, and activities on minority populations and low-income populations. The DOT Order instructs DOT agencies to address compliance with Executive Order 12898 and requirements within the DOT Order in rulemaking activities, as appropriate. FRA evaluated this final rule under Executive Order 12898 and the DOT Order and determined it would not cause disproportionately high and adverse human health and environmental effects on minority or low-income populations.
FRA evaluated this final rule under the principles and criteria in Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, dated November 6, 2000. The final rule would not have a substantial direct effect on one or more Indian tribes, would not impose substantial direct compliance costs on Indian tribal governments, and would not preempt tribal laws. Therefore, the funding and consultation requirements of Executive Order 13175 do not apply, and a tribal summary impact statement is not required.
The Trade Agreements Act of 1979 19 U.S.C. 2501
Interested parties should be aware that anyone can search the electronic form of all written comments received into any agency docket by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the
Investigations, Penalties, Railroad safety, Reporting and recordkeeping requirements.
In consideration of the foregoing, FRA amends part 225 of chapter II, subtitle B of title 49, Code of Federal Regulations, as follows:
49 U.S.C. 103, 322(a), 20103, 20107, 20901-02, 21301, 21302, 21311; 28 U.S.C. 2461, note; and 49 CFR 1.89.
(c) Each railroad shall retain the original hard copy of each completed and signed Form FRA F 6180.55, “Railroad Injury and Illness Summary,” that the railroad submits to FRA on optical media (CD-ROM) or electronically via the Internet to
(c)(1) Each railroad utilizing the electronic submission via the Internet option shall submit to FRA at
In rule document 2016-28905 beginning on page 876971 in the issue of Friday, December 2, 2016, make the following correction:
1. On page 86971, in the first column, after the
Office of Electricity Delivery and Energy Reliability, U.S. Department of Energy.
Notice of proposed rulemaking and request for comment.
The U.S. Department of Energy is proposing to issue procedural regulations concerning the Secretary of Energy's issuance of an emergency order following the President's declaration of a Grid Security Emergency, under the Federal Power Act, as amended. The proposed procedures, if adopted, are intended to ensure the expeditious issuance of emergency orders under the Federal Power Act.
Public comment on this proposed rule will be accepted until February 6, 2017.
You may submit comments, identified by RIN 1901-AB40, by any of the following methods:
1. Follow the instructions for submitting comments on the Federal eRulemaking Portal at
2. Send email to
3. Address postal mail to U.S. Department of Energy, Office of Electricity Delivery and Energy Reliability, Mailstop OE-20, Room 8G-017, 1000 Independence Avenue SW., Washington, DC 20585.
Due to potential delays in the delivery of postal mail, we encourage respondents to submit comments electronically to ensure timely receipt.
This notice of proposed rulemaking, and any comments that DOE receives will be made available on regulations.gov. You may request a hardcopy of the comments be sent to you via postal mail by contacting
Jeffrey Baumgartner, (202) 586-1411; U.S. Department of Energy, Office of Electricity Delivery and Energy Reliability, Mailstop OE-20, Room 8G-017, 1000 Independence Avenue SW., Washington, DC 20585; or
On December 4, 2015, the President signed into law the Fixing America's Surface Transportation Act (“FAST Act” or “The Act”), Public Law 114-94. The Act contains several provisions designed to protect and enhance the Nation's electric power delivery infrastructure. Section 61003 of the Act adds a new section 215A, titled “Critical Electric Infrastructure Security,” to Part II of the Federal Power Act, codified at 16 U.S.C. 824o-1. New section 215A(a) defines, among other terms, a “grid security emergency.” New section 215A(b) authorizes the Secretary of Energy to order emergency measures after the President declares a grid security emergency. A grid security emergency could result from a physical attack, a cyber-attack using electronic communication or an electromagnetic pulse (EMP), or a geomagnetic storm event, damaging certain electricity infrastructure assets and impairing the reliability of the Nation's power grid. Emergency orders responding to grid security emergencies would aim to mitigate or eliminate threats to reliability as quickly and efficiently as possible. The statute authorizes the Secretary of Energy to issue orders for emergency measures as are necessary, in the Secretary's judgment, to protect or restore the reliability of critical electric infrastructure or defense critical electric infrastructure during the emergency. Critically, the Department's centralized direction following a declared grid security emergency will help the Department to coordinate resources efficiently to minimize the impact of the emergency.
The authority granted in section 215A of the Federal Power Act supplements the Secretary's existing authority, under section 202(c) of the Federal Power Act, to order temporary emergency measures if the Secretary finds “that an emergency exists by reason of a sudden increase in the demand for electric energy, or a shortage of electric energy or of facilities for the generation or transmission of electric energy, or of fuel or water for generating facilities, or other causes,” that the Secretary believes “will best meet the emergency and serve the public interest.” To that end, the Secretary may issue orders under section 202(c) requiring the “temporary connections of facilities[,] generation, delivery, interchange, or transmission of electric energy.”
The FAST Act also directs the Secretary, “after notice and opportunity for comment,” to “establish rules of procedure that ensure that such authority can be exercised expeditiously.” To ensure that stakeholders and the public understand how the Department would issue an order responding to a grid security emergency, the Department proposes in this notice of proposed rulemaking the procedures it would expect to follow in the event of such emergency. DOE proposes to add these procedures to the existing subpart W in 10 CFR part 205.
Both natural and artificial events can disrupt the Nation's power grid. Geomagnetic storm events are
If the President should declare a grid security emergency, the Department intends to follow the procedures established in this rulemaking proceeding. The Secretary is authorized to issue emergency orders “[w]henever the President issues and provides to the Secretary [of Energy] a written directive or determination identifying a grid security emergency.” The purpose of an emergency order is to designate “emergency measures as are necessary in the judgment of the Secretary to protect or restore the reliability of critical electric infrastructure or of defense critical electric infrastructure during such emergency.”
The proposed rule begins with definitions of key terms in § 205.380. Further explanations for certain definitions and terms appear below.
“Bulk-power system” encompasses the facilities used to transmit electricity and energy needed to maintain the reliability of that system of interconnected facilities—in essence, the electric power grid for which the President might declare a grid security emergency and authorize the Secretary to issue emergency orders to protect or restore its reliability. The term excludes facilities used in local electric distribution. This definition is drawn from the statutory definition applicable throughout section 215A of the Federal Power Act.
“Commission” refers to the Federal Energy Regulatory Commission, which is responsible for approving applicable reliability standards. This term does not apply here to State regulatory commissions or to the former Federal Power Commission.
“Electric Reliability Organization” refers to the organization, certified by the Commission under section 215(c) of the Federal Power Act, which establishes and enforces reliability standards with Commission oversight. As of this rulemaking, the Commission's designated Electric Reliability Organization is the North American Electric Reliability Corporation (NERC).
“Electricity Information Sharing and Analysis Center” (E-ISAC) refers to the organization, operated on behalf of the electricity subsector by the North American Electric Reliability Corporation, that gathers and analyzes security information, coordinates incident management, and communicates mitigation strategies with stakeholders within the electricity subsector, across interdependent sectors, and with government partners. E-ISAC is one of the organizations with which the Secretary will consult, to the extent practicable, in issuing an emergency order.
The “Electricity Subsector Coordinating Council” (ESCC) refers to the organization that aims to foster and facilitate the coordination of sector-wide, policy-related activities and initiatives designed to improve the reliability and resilience of the electricity subsector, including physical and cyber security infrastructure. The ESCC is another of the organizations with which the Secretary will consult, to the extent practicable, in issuing an emergency order. DOE considers the “electricity subsector” to include commercial and industrial actors who generate and deliver electric power, along with the facilities those actors use to generate and deliver the power.
An “Electromagnetic pulse” is one (1) or more pulses of electromagnetic energy emitted by a device capable of disabling or disrupting operation of, or destroying, electronic devices or communications networks, including hardware, software, and data, by means of such a pulse. The pulse can be accidental, incidental, or malicious.
The “Emergency & Incident Management Council” (EIMC) is the organization, internal to the Department and chaired by the Deputy Secretary of Energy, designed to increase cooperation and coordination across the Department to prepare for, mitigate, respond to, and recover from emergencies. The EIMC plays a central role in Grid Security Emergency orders, as it will meet, if practicable, after the President declares the emergency to prepare recommendations to the Secretary.
“Geomagnetic storm” refers to a temporary disturbance of the Earth's magnetic field resulting from solar activity. These natural phenomena are sometimes powerful enough to disrupt the Bulk-power system. If the disruption is sufficiently severe, a Grid Security Emergency could result.
“Regional entity” refers to organizations responsible for enforcing reliability standards for the Bulk-power system in certain, defined regions. These organizations operate under NERC and Commission oversight.
As described in proposed § 205.381, orders issued under section 215A(b) of the Federal Power Act may apply to the pertinent Electric Reliability Organization (NERC, as of this rulemaking), regional entity, or “any owner, user, or operator of critical electric infrastructure or of defense critical electric infrastructure within the United States.”
The procedures are designed to allow the Secretary to address a declared grid security emergency. The statute authorizes the Secretary to order response measures that the Secretary believes are necessary to protect or restore the reliability of certain infrastructure in a grid security emergency. Because the nature of a grid security emergency is uncertain, the procedures allow for flexibility in response measures and, as the statute requires, to “ensure that such authority can be exercised expeditiously.” While the procedures are expected to produce the most efficient and effective emergency response possible under the circumstances, the Secretary has final authority to issue appropriate grid security emergency orders.
In the event of a grid security emergency, DOE will immediately activate its unified command structure and coordinate outreach efforts. DOE expects that the EIMC will anchor the Department's proposed response via its recommendations to the Secretary. Based on the nature and timing of the emergency, however, the Secretary would maintain discretion, based on a judgment of the relevant circumstances, to issue an emergency order without EIMC input. To the extent practicable, DOE will promptly alert stakeholders of the grid security emergency through existing alert mechanisms, such as the NERC alert system and ESCC communication coordination processes.
Proposed § 205.382 outlines the EIMC procedures. When the Department is notified, in writing, that the President has declared a grid security emergency and has directed the Secretary to order emergency response measures, the EIMC will be activated. The EIMC will create ad hoc task groups, assign recommendation development tasks to these groups, and coordinate the Department's consultation efforts. The EIMC may take other actions but only as necessary and practicable to develop the Department's recommendations to the Secretary. After the EIMC makes its
Consistent with the Department's longstanding practice, all reasonable efforts will be made to consult with stakeholders prior to the issuance of an emergency order. The statute also requires the Secretary to consult with other governmental authorities and non-governmental entities before issuing emergency orders, “to the extent practicable in light of the nature of the grid security emergency and the urgency of the need for action.” The Department understands that electric reliability entities and private industry will likely be impacted by the emergency and have important situational awareness to assist the Department in identifying mitigation or protection measures. Proposed § 205.383 outlines how the Department will coordinate its communication with other entities. Within the Department, the Office of Electricity Delivery and Energy Reliability (OE) will be the lead program office supporting the Secretary in issuing grid security emergency orders. As set forth in this proposed rule, OE would be responsible for conducting the required consultations under the statute. Consultation would include the Department's effort to obtain information and recommended emergency measures from those government entities,
After the Secretary issues an emergency order, the Department will communicate the order's content to the entities subject to the order, as noted in proposed § 205.384. The Department will also enlist the ESCC and E-ISAC to communicate the order's content to those affected. The Department will also use any other form of communication most appropriate under the circumstances. Optimal communication on grid security emergencies will be paramount during the emergency, and the Department will work to ensure that information is shared that will help it to respond most effectively. For that reason, according to proposed § 205.384 and consistent with obligations to protect classified information, the Secretary may declassify information eligible for that change in status to ensure maximum distribution of information critical to the emergency response.
This proposed rule is limited to the Department's procedures for issuing an emergency order in response to a grid security emergency. Should the Secretary issue such an order, the order itself would set out the requirements and procedures for impacted entities to seek clarification or reconsideration of that particular order. Proposed § 205.385 provides general requirements for such requests. In particular, DOE proposes that anyone subject to a particular order may submit a request for clarification or reconsideration in writing to the Secretary. The requests would be posted on the Department's Web site consistent with criteria established for treatment of critical electric infrastructure information. In acting on a request for clarification or reconsideration, the Secretary may grant or deny the request or may abrogate or modify the final order, in whole or in part, with or without further proceedings, as soon as practicable. Such a request would not stay an emergency order unless the Secretary so determined.
As warranted, and to the extent practicable and consistent with obligations to protect classified information, the Secretary may allow key personnel of ordered entities temporary access to classified information. Proposed § 205.386 sets out this approach.
Proposed § 205.387 describes termination of grid security emergency orders. An emergency order remains effective for up to fifteen (15) days and may be extended for subsequent periods of up to 15 days if the President issues another directive to the Secretary that the original emergency has not ended or that the emergency measures already ordered are still required. If warranted, the Secretary may also terminate an order before the 15 days have elapsed. The entity or entities subject to the emergency order may also request that the Secretary terminate an order if the entity or entities believes that the grid security emergency ceases to exist and that protection or restoration of the grid has been achieved.
The Department also plans to determine compliance with grid security emergency orders, as described in proposed § 205.388. At the time the Department issues an emergency order, or shortly after the issuance, the Department may require the ordered party to provide a detailed account of compliance actions. As noted in proposed § 205.389, enforcement provisions in Part III of the Federal Power Act also apply to orders issued under section 215A.
As indicated in proposed § 205.391, the Department will not adjudicate cost recovery under an emergency order, as that determination is reserved for the Commission, state regulators, or the United States Court of Federal Claims. Specifically, the FAST Act allows the Commission to “establish a mechanism” allowing an aggrieved party to recover costs, but only if it determines that such a party has “incurred substantial costs to comply with an order for emergency measures issued under [section 215A] and that such costs were prudently incurred and cannot reasonably be recovered through regulated rates or market prices for the electric energy or services sold by” the aggrieved party.
Finally, the FAST Act shields parties affected by emergency orders from liability for what would otherwise be violations of the Federal Power Act or the reliability standards, except in cases of gross negligence. New section 215A(f) of the Federal Power Act states that any action or omission taken to comply with an emergency order that causes noncompliance “with any rule, order, regulation, or provision” of the Federal Power Act, as well as any FERC-approved reliability standard, “shall not be considered a violation” of that legal requirement. The same subsection incorporates the liability protection for emergency orders issued under section 202(c) of the Federal Power Act. That protection, for actions or omissions resulting in noncompliance with “any Federal, State, or local environmental law or regulation,” not only frees the ordered party from violations of those laws or regulations, but also shields the
DOE will accept comments, data, and information regarding this proposed rule before or after the public meeting, but no later than the date provided in the
Submitting comments via
However, your contact information will be publicly viewable if you include it in the comment or in any documents attached to your comment. Any information that you do not want to be publicly viewable should not be included in your comment, nor in any document attached to your comment. Persons viewing comments will see only first and last names, organization names, correspondence containing comments, and any documents submitted with the comments.
Do not submit to
DOE processes submissions made through
Submitting comments via email, hand delivery, or mail. Comments and documents submitted via email, hand delivery, or mail also will be posted to
Include contact information each time you submit comments, data, documents, and other information to DOE. If you submit via mail or hand delivery, please provide all items on a CD, 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, written in English and 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.
Campaign form letters. Please submit campaign form letters by the originating organization in batches of between 50 to 500 form letters per PDF or as one form letter with a list of supporters' names compiled into one or more PDFs. This reduces comment processing and posting time.
Confidential Business Information. According to 10 CFR 1004.11, any person submitting information that he or she believes to be confidential and exempt by law from public disclosure should submit via email, postal mail, or hand delivery two well-marked copies: One copy of the document marked confidential including all the information believed to be confidential, and one copy of the document marked non-confidential with the information believed to be confidential deleted. Submit these documents via email or on a CD, if feasible. DOE will make its own determination about the confidential status of the information and treat it according to its determination.
Factors of interest to DOE when evaluating requests to treat submitted information as confidential include: (1) A description of the items; (2) whether and why such items are customarily treated as confidential within the industry; (3) whether the information is generally known by or available from other sources; (4) whether the information has previously been made available to others without obligation concerning its confidentiality; (5) an explanation of the competitive injury to the submitting person which would result from public disclosure; (6) when such information might lose its confidential character due to the passage of time; and (7) why disclosure of the information would be contrary to the public interest.
It is DOE's policy that all comments may be included in the public docket, without change and as received, including any personal information provided in the comments (except information deemed to be exempt from public disclosure).
This proposed rule has been determined to be a significant regulatory action under Executive Order No. 12,866, “Regulatory Planning and Review,” 58 FR 51,735 (Oct. 4, 1993). Accordingly, this action was subject to review under that Executive Order by the Office of Information and Regulatory Affairs of the Office of Management and Budget.
DOE has determined that this proposed rule is covered under the Categorical Exclusion found in the DOE's National Environmental Policy Act regulations at paragraph A6 Rulemakings, procedural of appendix A to subpart D, 10 CFR part 1021, which applies to Rulemakings that are strictly procedural, such as rulemaking (under 48 CFR part 9) establishing procedures for technical and pricing proposals and establishing contract clauses and contracting practices for the purchase of goods and services, and rulemaking (under 10 CFR part 600) establishing application and review procedures for, and administration, audit, and closeout of, grants and cooperative agreements. Accordingly, neither an environmental assessment nor an environmental impact statement is required.
The Regulatory Flexibility Act (5 U.S.C. 601
DOE has reviewed this proposed rule under the provisions of the Regulatory Flexibility Act and the procedures and policies published on February 19, 2003. This proposed rule sets forth procedures that DOE expects to use to issue an order in the event of a declared grid security emergency. The procedures govern DOE activities in the issuance of an order and therefore impact DOE, a Federal agency, rather than any small entities.
DOE further expects that these orders would be issued rarely. In addition, the FAST Act authorizes DOE to issue orders only to specific entities—namely, the pertinent Electric Reliability Organization (NERC, as of this rulemaking), regional entity, or any owner, user or operator of critical energy infrastructure or defense critical energy infrastructure. DOE has determined that these entities most likely fall under NAICS code 221121, “Electric Bulk Power Transmission and Control.” To be considered a small entity, these businesses must have 500 employees or less. Due to the nature of the orders to protect or restore and/or infrastructure, DOE has determined that it is likely to consult with large businesses.
An entity subject to an order may request the clarification or rehearing of an order, or the termination of an order. DOE does not expect that these provisions, which would help an entity to understand an order or, in the case of a termination granted by the Secretary, end the applicability of an order, to impose a significant impact on any entity. DOE may also consult with any of these entities to understand the grid security emergency and obtain recommendations to address the emergency. DOE also does not expect these consultations to result in a significant impact on any entity because the interaction would not order the entity to perform any action, but would rather be an exchange of information to help DOE understand the emergency and consider measures to protect and/or restore infrastructure. In addition, it is likely that only entities with equities that could be impacted by potential orders would be consulted. In the event that an order is issued to address a grid security emergency, because the contents of any order would be highly dependent upon the nature of the grid security emergency, DOE again emphasizes that the order itself, rather than these procedures, would specify the requirements necessary to address the grid security emergency.
On the basis of the foregoing, DOE certifies that this proposed rule will not have a significant economic impact on a substantial number of small entities. Accordingly, DOE has not prepared a regulatory flexibility analysis for this rulemaking. DOE's certification and supporting statement of factual basis will be provided to the Chief Counsel for Advocacy of the Small Business Administration pursuant to 5 U.S.C. 605(b).
This proposed rule does not contain information collection requirements subject to approval by the Office of Management and Budget pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
The Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) generally requires Federal agencies to examine closely the impacts of regulatory actions on State, local, and tribal governments. Section 101(5) of title I of that law defines a Federal intergovernmental mandate to include any regulation that would impose upon State, local, or tribal governments an enforceable duty, except a condition of Federal assistance or a duty arising from participating in a voluntary federal program. Title II of that law requires each Federal agency to assess the effects of Federal regulatory actions on State, local, and tribal governments, in the aggregate, or to the private sector, other than to the extent such actions merely incorporate requirements specifically set forth in a statute. Section 202 of that title requires a Federal agency to perform a detailed assessment of the anticipated costs and benefits of any rule that includes a Federal mandate which may result in costs to State, local, or tribal governments, or to the private sector, of $100 million or more in any one year (adjusted annually for inflation). 2 U.S.C. 1532(a) and (b). Section 204 of that title requires each agency that proposes a rule containing a significant Federal intergovernmental mandate to develop an effective process for obtaining meaningful and timely input from elected officers of State, local, and tribal governments. 2 U.S.C. 1534.
This proposed rule will establish the procedures DOE expects to use issue an order in the event of a declared grid security emergency. In the event that an order is issued to address a grid security emergency, the order itself, rather than these procedures, would specify the requirements necessary to address the grid security emergency. The proposed rule will not result in the expenditure by State, local, and tribal governments in the aggregate, or by the private sector, of $100 million or more in any one year. Accordingly, no assessment or analysis is required under the Unfunded Mandates Reform Act of 1995.
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 will not have any impact on the autonomy or integrity of the family as an institution. Accordingly, DOE has concluded that it is not necessary to prepare a Family Policymaking Assessment.
Executive Order No. 13,132, “Federalism,” 64 FR 43,255 (Aug. 4, 1999) imposes certain requirements on agencies formulating and implementing policies or regulations that preempt State law or that have federalism implications. Agencies are required to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion of the States and carefully assess the necessity for such actions. DOE has examined this proposed rule and has determined that it will not preempt State law and 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. This proposed
With respect to the review of existing regulations and the promulgation of new regulations, section 3(a) of Executive Order No. 12,988, “Civil Justice Reform,” 61 FR 4729 (Feb. 7, 1996), imposes on Executive agencies the general duty to adhere to the following requirements: (1) Eliminate drafting errors and ambiguity; (2) write regulations to minimize litigation; and (3) provide a clear legal standard for affected conduct rather than a general standard and promote simplification and burden reduction. With regard to the review required by section 3(a), section 3(b) of Executive Order No. 12,988 specifically requires that Executive agencies make every reasonable effort to ensure that the regulation: (1) Clearly specifies the preemptive effect, if any; (2) clearly specifies any effect on existing Federal law or regulation; (3) provides a clear legal standard for affected conduct while promoting simplification and burden reduction; (4) specifies the retroactive effect, if any; (5) adequately defines key terms; and (6) addresses other important issues affecting clarity and general draftsmanship under any guidelines issued by the Attorney General. Section 3(c) of Executive Order No. 12,988 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 whether it is unreasonable to meet one or more of them. DOE has completed the required review and determined that, to the extent permitted by law, the proposed rule meets the relevant standards of Executive Order No. 12,988.
The Treasury and General Government Appropriations Act, 2001 (44 U.S.C. 3516 note) provides for agencies to review most disseminations of information to the public under guidelines established by each agency pursuant to general guidelines issued by OMB.
OMB's guidelines were published at 67 FR 8452 (Feb. 22, 2002), and DOE's guidelines were published at 67 FR 62,446 (Oct. 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.
Executive Order No. 13,211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use,” 66 FR 28,355 (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 No. 12,866, 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 will not have a significant adverse effect on the supply, distribution, or use of energy. The proposed rule would establish the procedures DOE expects to use issue an order in the event of a declared grid security emergency. In the event that an order is issued to address a grid security emergency, the order itself, rather than these procedures, would specify the requirements necessary to address the grid security emergency. In addition, the statute requires that the order must “protect or restore” critical electric infrastructure or defense critical electric infrastructure. Therefore, the rule is not a significant energy action. Accordingly, DOE has not prepared a Statement of Energy Effects.
The Secretary of Energy has approved publication of this proposed rule.
Administrative practice and procedure, Energy, and Recordkeeping and reporting requirements.
For the reasons stated in the preamble, DOE proposes to amend part 205 of chapter II, subchapter A, of Title 10 of the Code of Federal Regulations, as set forth below:
Department of Energy Organization Act, Pub. L. 95-91, 91 Stat. 565 (42 U.S.C. Section 7101). Federal Power Act, Pub. L. 66-280, 41 Stat. 1063 (16 U.S.C. Section 792)
As used in this part:
(1) Facilities and control systems necessary for operating an interconnected electric energy transmission network (or any portion thereof); and
(2) Electric energy from generation facilities needed to maintain transmission system reliability.
(3) The term does not include facilities used in the local distribution of electric energy.
(1) Critical to the defense of the United States; and
(2) Vulnerable to a disruption of the supply of electric energy provided to such facility by an external provider, but that is not owned or operated by the owner or operator of such facility.
(1) A malicious act using electronic communication or an electromagnetic pulse, or a geomagnetic storm event, that could disrupt the operation of those electronic devices or communications networks, including hardware, software, and data, that are essential to the reliability of critical electric infrastructure or of defense critical electric infrastructure; and
(2) Disruption of the operation of such devices or networks, with significant adverse effects on the reliability of critical electric infrastructure or of defense critical electric infrastructure, as a result of such act or event; or
(3) A direct physical attack on critical electric infrastructure or on defense critical electric infrastructure; and
(4) Significant adverse effects on the reliability of critical electric infrastructure or of defense critical electric infrastructure as a result of such physical attack.
An order for emergency measures under section 215A(b) of the Federal Power Act may apply to the Electric Reliability Organization, a regional entity, or any owner, user, or operator of critical electric infrastructure or of defense critical electric infrastructure within the United States.
(a) The Secretary has final authority and may act as quickly as necessary to address the emergency. The Secretary will adhere to these procedures unless, in the Secretary's judgment, the emergency requires alternative procedures.
(b) Upon the Department's receipt of the President's written directive or determination identifying a Grid Security Emergency, the Emergency & Incident Management Council (Council) will convene at least one emergency meeting. Resulting from this meeting, the Council's responsibilities will include, but not be limited to:
(1) Assigning consultation and situational awareness tasks;
(2) Creating ad hoc task groups; and
(3) Assigning recommendation development tasks to the ad hoc task groups it has created.
(c) The Council will present its recommendations to the Secretary as expeditiously as possible and practicable. As quickly as the situation requires, following presentation of the Council's recommendations, the Secretary will issue the emergency order.
The Department of Energy's Office of Electricity Delivery and Energy Reliability will conduct consultation related to any order issued by the Secretary in response to a declared Grid Security Emergency. Before the issuance of any order, to the extent practicable in light of the nature of the Grid Security Emergency and the urgency of the need for action, outreach efforts will be made to consult at least the following: Authorities in the government of Canada; authorities in the government of Mexico; appropriate Federal agencies including, but not limited to, those supporting Emergency Support Function No. 12; the Commission; and at least the following non-government entities: The Electricity Subsector Coordinating Council, the Electric Reliability Organization, regional entities, and owners, users, or operators of Critical Electric Infrastructure or of Defense Critical Electric Infrastructure within the United States. Consultation will include the Department's effort to obtain information related to the Grid Security Emergency and recommended emergency measures from those governments, electric reliability entities, and private sector companies impacted by the emergency.
The Department will communicate the content of emergency orders issued by the Secretary to the parties subject to the order. The Department will also rely on existing coordinating bodies, such as the Electricity Subsector Coordinating Council and the Electricity Information Sharing and Analysis Center, in addition to any other form or forms of communication most expedient under the circumstances, to communicate the content of emergency orders issued by
Any request for clarification or reconsideration of an emergency order issued under section 215A(b) of the Federal Power Act must be submitted in writing to the Secretary, and will be posted on the DOE Web site consistent with CEII criteria. The Secretary may, in his sole discretion, order a stay of the emergency order for which such clarification or rehearing is sought. The Secretary may grant or deny the request for clarification or reconsideration, or may abrogate or modify the order, in whole or in part, with or without further proceedings, as soon as practicable.
To the extent practicable, and consistent with obligations to protect classified information, the Secretary may provide temporary access to classified information, related to a Grid Security Emergency for which emergency measures are issued, to key personnel of any entity subject to such emergency measures. The purpose of this access is to enable optimum communication between the entity and the Secretary and other appropriate Federal agencies regarding the Grid Security Emergency.
(a) An order for emergency measures shall expire no later than 15 days after its issuance. The Secretary may reissue an order for emergency measures for subsequent periods, not to exceed 15 days for each such period, provided that the President, for each such period, issues and provides to the Secretary a written directive or determination that the Grid Security Emergency for which the Secretary intends to reissue an emergency order continues to exist or that the emergency measures continue to be required.
(b) The Secretary may rescind an emergency order after finding that the Grid Security Emergency for which that order was issued has ended and that protective or mitigation measures required by the order have been sufficiently taken.
(c) An entity or entities subject to an emergency order under this rule may, at any time, request termination of the emergency order by demonstrating, in a petition to the Secretary, that the emergency no longer exists and that protective or mitigation measures required by the order have been sufficiently taken.
Beginning at the time the Secretary issues an emergency order, the Department may require the ordered party to provide a detailed account of actions taken to comply with the terms of the order.
In accordance with Part III of the Federal Power Act, the Secretary may take or seek enforcement action against ordered parties who fail to comply with the terms of an order issued under section 215A(b) of that Act.
The procedures of Part III of the Federal Power Act apply to motions for rehearing of orders issued under section 215A(b) of that Act filed for the purpose of preserving appellate rights.
A party seeking recovery of costs associated with compliance with an order issued under section 215A(b) of the Federal Power Act must petition the appropriate State regulatory agency, the United States Court of Federal Claims, or the Commission for relief.
To the extent any action or omission taken by an entity that is necessary to comply with an order for emergency measures issued by authority of section 215A(b) of the Federal Power Act and pursuant to this Part, including any action or omission taken to voluntarily comply with such order, results in noncompliance with, or causes such entity not to comply with any rule, order, regulation, or provision of or under that Act, including any reliability standard approved by the Commission pursuant to section 215 of that Act, such action or omission shall not be considered a violation of such rule, order, regulation, or provision. Further, an action or omission by an owner, operator, or user of Critical Electric Infrastructure or of Defense Critical Electric Infrastructure to comply with an order for emergency measures issued under section 215A(b) of the Federal Power Act shall be treated as an action or omission taken to comply with an order issued under section 202(c) of that Act for purposes of such section. These liability exemptions shall not apply to an entity that, in the course of complying with an order for emergency measures issued under section 215A(b) of the Federal Power Act by taking an action or omission for which the entity would otherwise be liable, takes such action or omission in a grossly negligent manner.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for Airbus Helicopters Deutschland GmbH (Airbus Helicopters) Model MBB-BK117 C-2 helicopters. This proposed AD would require inspecting the pilot collective wiring harness. This proposed AD is prompted by a report that a heat-shrinkable sleeve prevented the twist grip on the collective from being fully engaged during a flight test. The proposed actions are intended to prevent failure of the hoist or emergency landing gear flotation systems due to chafing of wiring caused by an incorrectly installed heat-shrinkable sleeve.
We must receive comments on this proposed AD by February 6, 2017.
You may send comments by any of the following methods:
•
•
•
•
You may examine the AD docket on the Internet at
For service information identified in this proposed rule, contact Airbus Helicopters, 2701 N. Forum Drive, Grand Prairie, TX 75052; telephone (972) 641-0000 or (800) 232-0323; fax (972) 641-3775; or at
George Schwab, Aviation Safety Engineer, Safety Management Group, Rotorcraft Directorate, FAA, 10101 Hillwood Pkwy., Fort Worth, TX 76177; telephone (817) 222-5110; email
We invite you to participate in this rulemaking by submitting written comments, data, or views. We also invite comments relating to the economic, environmental, energy, or federalism impacts that might result from adopting the proposals in this document. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should send only one copy of written comments, or if comments are filed electronically, commenters should submit only one time.
We will file in the docket all comments that we receive, as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking. Before acting on this proposal, we will consider all comments we receive on or before the closing date for comments. We will consider comments filed after the comment period has closed if it is possible to do so without incurring expense or delay. We may change this proposal in light of the comments we receive.
EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD No. 2015-0144, dated July 21, 2015, to correct an unsafe condition for Airbus Helicopters Model MBB-BK117 C-2 helicopters, up to serial number 9708. EASA advises that, during a flight test, the pilot could not fully engage a twist grip on a Model MBB-BK117 C-2 helicopter. According to EASA, further investigation found a transparent sleeve on the collective lever wiring harness damaged because of incorrect installation of the heat-shrinkable sleeve. This condition, if not detected and corrected, could result in chafing of the harness, leading to the malfunction of the affected systems, EASA advises. EASA consequently requires a one-time inspection of the heat-shrinkable and transparent sleeves installed on the collective lever wiring harness.
These helicopters have been approved by the aviation authority of Germany and are approved for operation in the United States. Pursuant to our bilateral agreement with Germany, EASA, its technical representative, has notified us of the unsafe condition described in its AD. We are proposing this AD because we evaluated all known relevant information and determined that an unsafe condition is likely to exist or develop on other products of the same type design.
We reviewed Airbus Helicopters Alert Service Bulletin ASB MBB-BK117 C-2-88A-010, Revision 1, dated April 16, 2015 (ASB), which specifies a visual inspection of the heat-shrinkable sleeve for correct position. If the sleeve's position is incorrect, the ASB specifies shortening the sleeve. If there is any damage, the ASB calls for replacing the damaged parts.
This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
This proposed AD would require, within 100 hours time-in-service, visually inspecting the pilot collective wiring harness for correct position of the heat-shrinkable sleeve and the transparent sleeve. If the heat-shrinkable and the transparent sleeves are in their correct positions, this proposed AD would require re-installing the collective lever. If the heat-shrinkable sleeve is closer to or below the torque tube tangs, this proposed AD would require shortening the heat-shrinkable sleeve. If the transparent sleeve is damaged, this proposed AD would require replacing the heat-shrinkable sleeve, transparent sleeve, and identification sleeve. Lastly, this proposed AD would require replacing any damaged wires in the wiring harness.
The compliance time in the EASA AD is based on whether the helicopter has an externally mounted hoist or emergency flotation system. This proposed AD would require compliance within 100 hours time-in-service for all applicable helicopters.
We estimate that this proposed AD would affect 113 helicopters of U.S. Registry and that labor costs average $85 a work hour.
• Inspecting the pilot collective wiring harness for the correct position of the heat-shrinkable sleeve would require 1.5 work hours. No parts would be required for a total cost of $128 per helicopter and $14,464 for the U.S. fleet.
• Replacing or repairing the sleeves would require 5.5 work hours and parts would cost $10, for a total cost of $478 per helicopter.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and
For the reasons discussed, 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 to the extent that it justifies making a regulatory distinction; 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.
We prepared an economic evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket.
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.
This AD applies to Airbus Helicopters Deutschland GmbH Model MBB-BK 117 C-2 helicopters, serial numbers 9004 through 9708, certificated in any category.
This AD defines the unsafe condition as an incorrectly installed heat-shrinkable sleeve on the collective lever wiring harness. This condition could result in chafing of the wiring and subsequent failure of the hoist cable cutter or emergency landing gear flotation systems.
We must receive comments by February 6, 2017.
You are responsible for performing each action required by this AD within the specified compliance time unless it has already been accomplished prior to that time.
Within 100 hours time-in-service, remove the pilot collective lever and visually inspect the pilot collective lever wiring harness for proper installation of the heat-shrinkable sleeve and transparent sleeve and for damage in accordance with paragraph 3.B.2.1 and as depicted in Figure 2 of Airbus Helicopters Alert Service Bulletin MBB-BK117 C-2-88A-010, Revision 1, dated April 16, 2015 (ASB).
(1) If the heat-shrinkable sleeve and transparent sleeve are installed as depicted in Figure 2 of the ASB and there is no damage, install the collective lever in accordance with paragraphs 3.B.2.3.a through 3.B.2.3.f of the ASB.
(2) If the heat-shrinkable sleeve or transparent sleeve is installed as depicted in Figure 3, Detail B of the ASB, alter the heat-shrinkable sleeve as depicted in Figure 3, Detail C.
(3) If the transparent sleeve is damaged as depicted in Figure 4, Detail D of the ASB, replace the heat-shrinkable sleeve, transparent sleeve, and identification sleeve. Replace any wire that has a nick, scratch, cut, or is frayed.
(1) The Manager, Safety Management Group, FAA, may approve AMOCs for this AD. Send your proposal to: George Schwab, Aviation Safety Engineer, Safety Management Group, Rotorcraft Directorate, FAA, 10101 Hillwood Pkwy, Fort Worth, TX 76177; telephone (817) 222-5110; email
(2) For operations conducted under a 14 CFR part 119 operating certificate or under 14 CFR part 91, subpart K, we suggest that you notify your principal inspector, or lacking a principal inspector, the manager of the local flight standards district office or certificate holding district office before operating any aircraft complying with this AD through an AMOC.
The subject of this AD is addressed in European Aviation Safety Agency (EASA) AD No. 2015-0144, dated July 21, 2015. You may view the EASA AD on the Internet at
Joint Aircraft Service Component (JASC) Code: Wheel/Ski/Float/Emergency Equipment, 3246/2560.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for certain General Electric Company (GE) GE90 turbofan engines. This proposed AD was prompted by a report of an engine and airplane fire. This proposed AD would require replacing affected fuel/oil lube/servo coolers (“main heat exchangers”) with a part eligible for installation. We are proposing this AD to prevent failure of a main heat exchanger, which could result in an engine fire.
We must receive comments on this proposed AD by January 23, 2017.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
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For service information identified in this NPRM, contact General Electric Company, GE-Aviation, Room 285, 1 Neumann Way, Cincinnati, OH 45215, phone: 513-552-3272; email:
You may examine the AD docket on the Internet at
John Frost, Aerospace Engineer, Engine Certification Office, FAA, 1200 District Avenue, Burlington, MA 01803; phone: 781-238-7756; fax: 781-238-7199; email:
We invite you to send any written relevant data, views, or arguments about this NPRM. Send your comments to an address listed under the
We will post all comments we receive, without change, to
We propose to adopt an AD for certain GE GE90-76B, GE90-85B, GE90-90B, GE90-94B, GE90-110B1, and GE90-115B turbofan engines with a main heat exchanger, part number (P/N) 1838M88P11 or 1838M88P13.
This proposed AD is prompted by a report of an airplane fire caused by a failed main heat exchanger. The incident investigation determined the cause to be an internal main heat exchanger tube separation, which resulted in leakage of fuel into the oil system, causing oil sump flooding that overwhelmed the scavenge and venting system. This condition, if not corrected, could result in failure of a main heat exchanger, which could cause an engine fire. To correct this unsafe condition, we propose to require replacing the main heat exchanger with a part not affected by this proposed AD or with a part that is repaired in accordance with the manufacturer's service information.
We reviewed GE Service Bulletin (SB) GE90-100 SB 79-0034, Revision 03, dated August 5, 2016, and SB GE90 SB 79-0058, Revision 02, dated August 5, 2016. This service information describes procedures to replace and repair a main heat exchanger. These documents are distinct since they apply to different engine models.
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 replacing the affected main heat exchangers with a part eligible for installation.
We estimate that this proposed AD affects 185 engines installed on airplanes of U.S. registry. We estimate the following costs to comply with 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 23, 2017.
None.
This AD applies to General Electric Company (GE) GE90-76B, GE90-85B, GE90-90B, GE90-94B, GE90-110B1, and GE90-115B turbofan engines with a fuel/oil lube/servo cooler (“main heat exchanger”) part number (P/N) 1838M88P11 or 1838M88P13, with a serial number listed in paragraph 1.A of GE Service Bulletin (SB) GE90-100 SB 79-0034, Revision 03, dated August 05, 2016; or SB GE90 SB 79-0058, Revision 02, dated August 05, 2016.
Joint Aircraft System Component (JASC) Code 7921, Engine Oil Cooler.
This AD was prompted by an engine and airplane fire. We are issuing this AD to prevent failure of a main heat exchanger, which could result in an engine fire.
Comply with this AD within the compliance times specified, unless already done.
Within 12 months after the effective date of this AD, replace the main heat exchanger with a part eligible for installation.
For purposes of this AD, a part eligible for installation is a main heat exchanger with a P/N and serial number not listed in paragraph (c) of this AD or a main heat exchanger repaired in accordance with the Accomplishment Instructions, paragraphs 3.C.(2) through 3.C.(7), of GE SB GE90-100 SB 79-0034, dated December 3, 2014; Revision 01, dated August 14, 2015; Revision 02, dated November 6, 2015; or Revision 03, dated August 5, 2016; or GE SB GE90 SB 79-0058, dated August 18, 2015; Revision 01, dated December 10, 2015; or Revision 02, dated August 05, 2016.
(1) The Manager, Engine Certification Office, FAA, may approve AMOCs for this AD. Use the procedures found in 14 CFR 39.19 to make your request. You may email your request 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.
(1) For more information about this AD, contact John Frost, Aerospace Engineer, Engine Certification Office, FAA, 1200 District Avenue, Burlington, MA 01803; phone: 781-238-7756; fax: 781-238-7199; email:
(2) For service information identified in this AD, contact General Electric Company, GE-Aviation, Room 285, 1 Neumann Way, Cincinnati, OH 45215, phone: 513-552-3272; email:
(3) You may view this referenced service information at the FAA, Engine & Propeller Directorate, 1200 District Avenue, Burlington, MA. For information on the availability of this material at the FAA, call 781-238-7125.
Occupational Safety and Health Administration (OSHA), DOL.
Request for Information (RFI).
Workplace violence against employees providing healthcare and social assistance services is a serious concern. Evidence indicates that the rate of workplace violence in the industry is substantially higher than private industry as a whole. OSHA is considering whether a standard is needed to protect healthcare and social assistance employees from workplace violence and is interested in obtaining information about the extent and nature of workplace violence in the industry and the nature and effectiveness of interventions and controls used to prevent such violence. This RFI provides an overview of the problem of workplace violence in the healthcare and social assistance sector and the measures that have been taken to address it. It also seeks information on issues that might be considered in developing a standard, including scope and the types of controls that might be required.
Submit comments on or before April 6, 2017. All submissions must bear a postmark or provide other evidence of the submission date.
Submit comments and additional materials by any of the following methods:
If you submit scientific or technical studies or other results of scientific research, OSHA requests (but is not
OSHA is considering whether to commence rulemaking proceedings on a standard aimed at preventing workplace violence in healthcare and social assistance workplaces perpetrated by patients or clients. Workplace violence affects a myriad of healthcare and social assistance workplaces, including psychiatric facilities, hospital emergency departments, community mental health clinics, treatment clinics for substance abuse disorders, pharmacies, community-care facilities, residential facilities and long-term care facilities. Professions affected include physicians, registered nurses, pharmacists, nurse practitioners, physicians' assistants, nurses' aides, therapists, technicians, public health nurses, home healthcare workers, social and welfare workers, security personnel, maintenance personnel and emergency medical care personnel.
OSHA's analysis of available data suggest that workers in the Health Care and Social Assistance sector (NAICS 62) face a substantially increased risk of injury due to workplace violence. Table 1 compiles data from the Bureau of Labor Statistics' (BLS) Survey of Occupational Injuries and Illnesses (SOII). In 2014, workers in this sector experienced workplace-violence-related injuries at an estimated incidence rate of 8.2 per 10,000 full time workers, over 4 times higher than the rate of 1.7 per 10,000 workers in the private sector overall (BLS Table R8, 2015). Individual portions of the healthcare sector have much higher rates. Psychiatric hospitals have incidence rates over 64 times higher than private industry as a whole, and nursing and residential care facilities have rates 11 times higher than those for private industry as a whole. The overall rate for violence-related injuries in just the social assistance subsector was 9.8 per 10,000, and individual industries, such as vocational rehabilitation with rates of 20.8 per 10,000 full-time workers are higher. In 2014, 79 percent of serious violent incidents reported by employers in healthcare and social assistance settings were caused by interactions with patients (BLS, 2015, Table R3, p. 40).
BLS relies on employers to report injury and illness data and employers do not always record or accurately record workplace injuries and illnesses (Ruser, 2008; Robinson, 2014; BLS, 2014). In addition, healthcare and social assistance employees may be reluctant to report incidents of workplace violence (see Section V.A.3.b below).
Surveys of healthcare and social assistance workers provide another source of data useful for describing the extent of the problem. In one survey, 21 percent of registered nurses and nursing students reported being physically assaulted in a 12-month period (ANA, 2014). The U.S. Department of Health and Human Services (HHS) National Electronic Injury Surveillance System-Work Supplement (NEISS-WORK) reported that, of the cases where healthcare workers sought treatment for workplace violence related injuries in 2011 in hospital emergency rooms, patients were perpetrators an estimated 63 percent of the time (US GAO, 2016). Other perpetrators include patients' families and visitors, and co-workers (Stokowski, 2010; BLS Data, 2013).
A survey of 175 licensed social workers and 98 agency directors in a western state found that 25 percent of social workers had been assaulted by a client, nearly 50 percent had witnessed violence in a workplace, and more than 75 percent were fearful of violent acts (Rey, 1996). A similar survey of a national sample of 633 workers randomly drawn from the National Association of Social Workers Membership Directory reported that 17.4 percent of the respondents reported being physically threatened, and 2.8 percent being assaulted. Verbal abuse was prevalent and was reported by 42.8 percent respondents (Jayaratne
Though non-fatal injuries predominate by a large extent, homicides accounted for 14 fatalities in healthcare and social service settings that occurred in 2014, and 10 that occurred in 2013 (BLS SOII and CFOI Data, 2011-2014).
This RFI is focused on workplace violence occurring in health care and social assistance for several reasons. While workplace violence occurs in other industries, health care services and social assistance services have a common set of risk factors related to the unique relationship between the care provider and the patient or client. The complex culture of healthcare and social assistance, in which the health care provider is typically cast as the patient's advocate, increases resistance to the notion that healthcare workers are at risk for patient-related violence (McPhaul and Lipscomb, 2004). In addition, the number of healthcare and social assistance workers is likely to grow as the sector is a large and growing component of the U.S. economy.
OSHA has a history of providing guidance to employees and employers in this sector since 1996 (see Sections II and V). In addition, a body of knowledge has emerged in recent years from research about the factors that increase the risk of violence and the interventions that mitigate or reduce the risk in health care and social assistance. As a result, workplace violence is recognized as an occupational hazard for healthcare and social assistance, which, like other hazards, can be avoided or minimized when employers take appropriate precautions to reduce risk factors that have been shown to increase the risk of violence. See Section V.A.2., Worksite analysis and hazard identification, for a discussion of risk factors.
Though OSHA has no intention of including violence that is solely verbal in a potential regulation, the Agency does ask a series of questions about threats that could reasonably be expected to result in violent acts. These threats could be verbal or written, or could be marked by body language.
In order to chart the best course going forward and inform OSHA's approach to this hazard, OSHA has posed a number of detailed questions for comment throughout the RFI. To make the best decisions about OSHA's next steps in this area, the questions posed are designed to better elucidate these general subjects:
• The scope of the problem in healthcare and social assistance—frequency of incidents of workplace violence, where those incidents most commonly occur, and who is most often the victim in those incidents;
• The common risk factors that could be addressed;
• Interventions and controls that data show are working already in the field;
• The efficacy, feasibility and cost of different options.
The remainder of the RFI is organized as follows. Section II provides
Protecting healthcare and social assistance workers from workplace violence is not a new focus for OSHA. In 1996, OSHA published the first version of its “Guidelines for Preventing Workplace Violence for Healthcare and Social Service Workers.” The same year, NIOSH published and broadly disseminated its document describing violence as an occupational hazard in the healthcare workplace, as well as risk factors and prevention strategies for mitigating the hazard (NIOSH, 1996). In 2002, NIOSH published a report entitled “Violence: Occupational Hazards in Hospitals” (NIOSH, 2002). The current revision of OSHA's violence prevention guidelines (2015) is at:
OSHA's Guidelines are based on industry best practices and feedback from stakeholders, and provides recommendations for policies and procedures to eliminate or reduce workplace violence in a range of healthcare and social services settings. Information on five settings was included in the updated guidelines: Hospital settings, residential treatment settings, non-residential treatment/services settings, community care settings, and field work settings. In addition, the updated 2015 version covers a broader spectrum of workers in comparison with previously published guidelines because healthcare is increasingly being provided in other settings such as nursing homes, free-standing surgical and outpatient centers, emergency care clinics, patients' homes, and pre-hospitalization emergency care settings.
The Guidelines recommend a comprehensive violence prevention program that consists of five core elements or “building blocks”: (1) Management commitment and employee participation; (2) worksite analysis; (3) hazard prevention and control; (4) safety and health training; and (5) recordkeeping and program evaluation. These elements are discussed further in Section V below. While these guidelines provide much detailed, research-based information on specific controls and strategies for various healthcare and social assistance settings to help employers and employees prevent violence, they are recommendations and therefore non-mandatory.
Lipscomb and colleagues (2006) report the results of a participatory intervention study that implemented and then evaluated violence prevention programs that were based on the 1996 OSHA Guidelines in three New York state mental health facilities. The New York State Office of Mental Health (OMH), working through its labor-management health and safety committee established a policy requiring all 26 in-patient OMH facilities to develop and implement a proactive violence-prevention program. Recognizing the opportunity for a “natural” experiment, the study investigators chose three “intervention” and “comparison” sites, with the intervention sites benefitting from consultation with the study team and with the project's New York State-based violence-prevention coordinator. The intervention had three main components: (1) Implementation of a facility-specific violence prevention program; (2) conducting a risk assessment; and (3) designing and implementing feasible recommendations evolving from the risk assessment. The OSHA elements of management commitment and employee involvement, worksite analysis, hazard control and prevention, and training were operationalized within the project. The authors stated that the guideline's emphasis on management commitment and employee involvement was critical to the successful implementation of the program. Program impact was evaluated through focus groups and surveys. A comparison of pre- and post-intervention survey data indicate an improvement in staff perception of the quality of the facility's violence-prevention program (
In 2015, OSHA also published a complementary Web page, “Caring for Our Caregivers: Strategies and Tools for Workplace Violence Prevention in Healthcare” containing resources and tools to help healthcare facilities develop and implement a workplace violence prevention program, located at:
Although OSHA has no standard specific to the prevention of workplace violence, the Agency currently enforces Section 5(a)(1) (General Duty Clause) of the OSH Act against employers that expose their workers to this recognized hazard. Section 5(a)(1) states that employers have a general duty to furnish to each of its employees employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to its employees (29 U.S.C. 654(a)(1)). Section 5(a)(1) does not specifically prescribe how employers are to eliminate or reduce their employees' exposure to workplace violence. A standard on workplace violence would help clarify employer obligations and the measures necessary to protect employees from such violence.
To prove a violation of the General Duty Clause, OSHA must provide evidence that: (1) the employer failed to keep the workplace free of a hazard to which its employees were exposed; (2) the hazard was recognized; (3) the hazard was causing or likely to cause death or serious injury; and (4) a feasible and useful method was available to correct the hazard.
Prior to 2011, federal OSHA rarely used the General Duty Clause to inspect and cite healthcare and social assistance facilities for the hazard of workplace violence, in part because no guidance existed on how to conduct such an inspection. In September 2011, OSHA took an important step toward beginning to address workplace violence in healthcare and other high-risk settings by publishing a compliance Directive CPL 02-01-052 (
A relatively small percentage of the inspections related to workplace violence in health care facilities resulted in general duty clause citations. From 2011 through 2015, OSHA inspected 107 hospitals (NAICS code 622) and nursing and residential care facilities (NAICS code 623) and issued 17 general duty clause citations to healthcare employers for failing to address workplace violence (OSHA Enforcement Data).
As of August 2015, nine states had enacted laws that require employers who employ healthcare and/or social assistance workers to establish a plan or program to protect those workers from workplace violence: California, Connecticut, Illinois, Maine, Maryland, New Jersey, New York, Oregon, and Washington (US GAO, 2016). State laws differ widely in definitions of workplace violence, requirements and scopes of facilities covered. For example, Washington and New Jersey cover the healthcare sector broadly, while Maine covers only hospitals and Illinois covers only developmental disabilities and mental health centers. Eight state laws require worksite risk assessment to identify hazards that may lead to violent incidents; however, not all state regulations specify how to conduct a risk assessment. Only Maine does not have a requirement for a risk assessment. All the states but Maine also require violence prevention training, although requirements differ in frequency and format of training, as well as the occupations of the employees required to be trained. All nine states require healthcare employers to record incidents of violence against workers. Some laws apply specifically to healthcare settings (
Tragic events are often the impetus for legislation. Such was the case when a psychiatric technician was strangled on the Napa State Hospital grounds by a patient in November 2010. (
In June 2014, California's Board requested the Division of Occupational Safety and Health to convene an advisory committee and develop a proposal for workplace violence protection standards. In September 2014, the governor signed Senate Bill (SB) 1299, requiring the Board to adopt standards developed by the Division that would require facilities to adopt a workplace violence prevention plan as part of their injury and illness prevention plan. On October 20, 2016, California announced the adoption of those standards, and became the first state to promulgate an occupational health and safety standard requiring healthcare facilities to take certain specific steps to establish, implement and maintain an effective workplace violence prevention plan. Implementation will begin in 2017.
Some studies in the published literature evaluated whether healthcare facilities located in states with state laws have higher quality violence prevention programs than in states with no requirements, as a measure of the value or efficacy of state laws (Peek-Asa
Two years later, the same authors (Peek-Asa
One study examined the effects of a state law on workers' compensation costs, and supports the conclusion that Washington State's efforts to reduce workplace violence in the healthcare industry have led to lower injury rates and workers' compensation costs. From 1997 to 2007, the state's average annual rate of workers' compensation claims associated with workplace violence in the healthcare and social assistance industry was 75.5 per 10,000 full-time equivalent workers (FTEs). From 2007 to 2013, the rate had fallen to 54.5 claims per 10,000 FTEs, a decrease of 28 percent. This improvement coincides with Washington's 2009 rule that required hazard assessments, training, and incident tracking for workplace violence (Foley, and Rauser, 2012).
In response to a request from members of Congress, the GAO conducted an investigation of OSHA's efforts to protect healthcare workers from workplace violence in healthcare. The investigation focused on healthcare, and included residential care facilities and home health care services.
During its investigation, GAO identified nine states with workplace violence prevention requirements for healthcare employers, examined workplace violence incidents, conducted a literature review, and interviewed OSHA and state officials. The final report, published in April 2016, included a summary of interviews of healthcare workers, who described a
In its final report, the GAO recommended that OSHA provide additional information to assist inspectors in developing citations, develop a policy for following up on hazard alert letters concerning workplace violence hazards in healthcare facilities, and assess the results of its efforts to determine whether additional action, such as development of a standard, may be needed. OSHA agreed with the GAO's recommendations and stated that it would take action to address them. Since then, OSHA's Training Institute in the Directorate of Training and Education developed a course on Workplace Violence Investigations for its Compliance Safety and Health Officers (CSHOs) and other staff with responsibilities in this area. In June 2016, approximately 30 CSHOs, Area Directors, Acting Area Directors, and other OSHA staff, participated in the first offering of the 3-day course on workplace violence, which included exercises using actual scenarios encountered by investigators. The Agency's publication of this RFI is in part a response to the GAO's recommendation to consider issuance of a standard addressing workplace violence. OSHA will review the record developed as a result of the information received and decide on the appropriate course of action regarding a standard.
In July 2016, a coalition of unions representing healthcare workers, including SEIU, AFL-CIO, and the American Federation of Governmental Employees, petitioned the Agency for a Workplace Violence Prevention Standard. National Nurses United (NNU) filed a similar petition. While NNU petitioned the Agency for a standard covering its membership only (healthcare workers), the broader coalition of labor unions requested a standard covering all workers in healthcare and social assistance. By this time, the Agency had already made the public aware about the publication of an RFI by November 2016, via the Unified Regulatory Agenda.
In recent years, several nursing professional associations have published statements on workplace violence (ANA, 2015; APNA, 2008; ENA, 2010). In addition, the ANA has published a model state law, “The Violence Prevention in Health Care Facilities Act,” recommending that healthcare facilities establish violence prevention programs to protect healthcare workers from acts of violence (ANA, 2011).
Some organizations have recommended specific programmatic elements, policies, procedures and processes to reduce and prevent workplace violence. In 2008, APNA published recommendations for addressing workplace violence. In 2011, it published a report that included recommendations for adequate staffing, increased security, video monitoring, and safe areas for nurses (Cafaro, 2012;
In 2013, Public Citizen published “Health Care Workers Unprotected; Insufficient Inspections and Standards Leave Safety Risks Unaddressed,” which recommended that OSHA promulgate a standard to address the hazardous situations of workplace violence. Based on their analysis of data from the Bureau of Labor Statistics, the U.S. Census Bureau, OSHA, the AFL-CIO, and The Kaiser Family Foundation, they recommended that such a standard should require employers to create a policy of zero tolerance for workplace violence, including verbal and nonverbal threats; require workplace policies that encourage employees to promptly report incidents and suggest ways to reduce or eliminate risks; provide protections to employees to deter employers from retaliating against those who report workplace-violence incidents; and require employers to develop a comprehensive plan for maintaining security in the workplace (Public Citizen, 2013).
The Society for Human Resource Management's (SHRM) Workplace Violence Policy provides guidance on prohibited conduct, reporting procedures, risk reduction measures, employees at risk, dangerous/emergency situations, and enforcement for human resource professionals.
The following questions are intended to solicit information on the topics covered in this section. In general, OSHA is interested in hearing about healthcare facilities' experiences with
As discussed in the overview above, the data show that injuries and fatalities in the health care and social assistance sector due to workplace violence are substantially elevated compared to the private sector overall. This section addresses the question of how to define the universe of workplace violence that OSHA might cover in a standard. This involves at least two issues: (1) What events constitute “violence” (
The National Institute of Occupational Safety and Health (NIOSH) defines workplace violence as “violent acts (including physical assaults and threats of assaults) directed toward persons at work or on duty” (
Further, workplace violence can be classified into the following four categories, based on the relationship between the perpetrator and the victim/worker: Type I (criminal intent; the perpetrator has no legitimate relationship to the business), Type II (customer/client/patient), Type III (worker-on-worker), and Type IV (personal relationship) (UIIPRC, 2001). Type II events occur most commonly in healthcare and social assistance and these events are the type addressed by this RFI. Type III (sometimes referred to as “lateral violence”) is also commonly reported in the literature, especially when taking verbal abuse into account.
OSHA intends to address only Type II, or customer/client/patient violence in this RFI. Type I, or criminal intent, perpetrated by criminals with no connection to the workplace other than to commit a crime, typically does not apply the healthcare environment. OSHA does not intend to seek information specific to Type I or Type III incidents, “lateral” or “worker-on-worker” violence. In addition, OSHA does not intend to cover Type IV incidents or violence that happen to be carried out in a healthcare workplace but are based on personal relationships. Although such incidents often garner media attention, they are not the typical foreseeable workplace violence incidents that are associated with predictable risk factors in the workplace that employers can reduce or eliminate. OSHA has determined that Type I, III and IV incidents are generally outside the scope of any potential rulemaking activity stemming from this RFI.
The following questions are intended to solicit information on the topics covered in this section. Wherever possible, please indicate the title of the person providing the information and the type and number of employees of your healthcare and/or social assistance facility or facilities.
The Health Care and Social Assistance sector is composed of a wide range of establishments providing varying levels of healthcare and social assistance services, from general medical-surgical hospitals to at-home patient care to treatment facilities for substance abuse disorders, and different types of establishments providing social assistance, such as child day care services, vocational rehabilitation and food to the needy. In 2015 the healthcare industry had a total of 1,432,801 establishments and employed 18,738,870 workers in both healthcare and non-healthcare occupations (BLS, Census of Employment and Wages, 2016 and Occupational Employment Statistics, 2015). The Health Care and Social Assistance sector provides a range of services employing a diverse group of occupations at places such as: Nursing homes, free-standing surgical and outpatient centers, emergency care clinics, patients' homes, and pre-hospitalization emergency care settings. The largest occupational group employed in the Health Care and Social Assistance industry are healthcare practitioners (defined as healthcare professionals, technicians, and healthcare support workers), which included 6,288,040 workers in 2015, an increase of 1.2 million workers over the past 10 years (BLS, Occupational Employment Statistics, 2016). Healthcare practitioners are employed across various industries, but the industry with the largest concentration of healthcare practitioners is General Medical and Surgical Hospitals, which employed 2,926,350 workers in 2015.
Across all industries there were 8.0 million Health Care Practitioners and Technical workers employed in 2015 and can be found in various parts of the private sector outside of the Health Care and Social Assistance sector, for example in Air Transportation, Accommodations, Recreation, and Retail Trade. Of the almost 8.0 million Healthcare Practitioners and Technical workers, 515,970 are employed at retail trade facilities, the majority are specifically at Health and Personal Care Stores.
For purposes of assessing workplace violence risk, OSHA has used the BLS category of Intentional Injury by Other Person. OSHA has not included here the BLS category of Injury by Person—Unintentional or Intent Unknown. That category may include some incidents classifiable as workplace violence, but also includes large numbers of injuries resulting from such causes like attempting to lift patients. Unintentional injuries resembling workplace violence may also be common in mental health services. Of the almost 16,000 cases of Intentional Injury by Other Persons in the private sector in 2014, 11,100 were in the Healthcare and Social Assistance sector (BLS Table R4, November 2015).
The rate of intentional injury in the Healthcare and Social Assistance sector as a whole was 8.2 per 10,000 full time workers, over four times the rate across all private industry, 1.7 per 10,000 full-time workers in 2014 (BLS Table R8, November 2015). Within the Healthcare and Social Assistance sector, the incident rates for Intentional Injury by Other Person(s) ranges from a low of 0.4 per 10,000 full-time workers in Offices of Physicians (lower than private industry as a whole) to a high of 109.5 per 10,000 full-time workers in Psychiatric and Substance Abuse Hospitals
The industries in the Social Assistance subsector provide a wide variety of services directly to clients, and include industries with incident rates of intentional injury that are higher than those in the Ambulatory Health Care sector. The highest incident rate within this sector for intentional injury by other person was in Vocational Rehabilitation Services with 20.8 per 10,000 full time workers in 2014. The next highest industry in this sector was Services for the Elderly and Disabled with an incident rate of 11 per 10,000 full time workers. This sector includes, among other industries, services for children and youth, the elderly, and persons with disabilities; community food and housing services; vocational rehabilitation; and day care centers. Consequently, the risk of workplace violence to healthcare workers differs depending on the nature of the setting and the level of interaction with patients.
The severity of workplace violence in the Health Care and Social Assistance sector is even greater in state government entities where the incident rate for intentional injury by other person(s) in 2014 was 79.3 per 10,000 full time workers. Across state government sectors the incident rate for intentional injury by other persons in the Health Care and Social Assistance sector is the highest even compared to the sector for Public Administration at 10.5 per 10,000 full time workers, which includes Police Protection and Correctional Institutions. State-run healthcare facilities often serve individuals with fewer available heath care options and populations with fewer preventive healthcare services. State- run healthcare and social assistance facilities may face unique challenges compared to the private sector.
Locally-run health care and social assistance facilities, on the other hand, appear to present risks that are comparable to private facilities, the incident rate of intentional injury by other persons in sector of Healthcare and Social Assistance was 13.1 per 10,000 full time workers. The overall incident rate for the Public Administration sector in local governments is not much lower at 11.1 per 10,000 full time workers.
Another way to consider the data is by occupation. Nursing-Psychiatric and Home Health Aides (which includes Psychiatric Aids and Nursing Assistants) had the highest rates of violence in 2014 across three of the four sectors. Out of the 4,690 injury cases in Nursing and Residential Care Facilities (based on data from BLS provided upon request), 2,640 of the cases of workplace violence were perpetrated against Nursing-Psychiatric and Home Health Aides in 2014 (BLS SOII 2014 Data, requested June 2016). Across all private industries, the highest rates of incidents for Intentional Injury by Other Person(s) were for Psychiatric Aides at 426.4 per 10,000 full time workers, followed by Psychiatric Technicians at 206.8 per 10,000 full time workers in 2014 (BLS Table R100, November 2015). These two occupations reflect the highest rates of intentional injury by other person(s) that occurs in the major sector of healthcare practitioners and technical occupations.
Violence in the workplace is a topic that has been studied heavily using different data sources such as workers' compensation data, and occupation specific surveys. The results from these studies highlight similar findings to that of BLS's SOII data by industry, both showing that workplace injury rates of workers in the healthcare industry rank among the highest across private sector industries. In one study, Washington State workers compensation data was evaluated for the period between 1997 and 2007 (Foley, and Rauser, 2012). The results showed that the industry sectors with the highest rates of workplace violence were Health Care and Social Assistance (75.5 claims per 10, 000 FTEs), Public Administration (29.9 per 10,000 FTEs), and Educational Services (15.0 claims per 10,000 FTEs). Within the Health Care and Social Assistance sector, the industry groups with the highest estimated claim rates were Psychiatric and Substance Abuse Hospitals
The four subsectors that make up the Health Care and Social Assistance sector include a wide range of establishments providing varying types of services to the general public, and placing workers at elevated levels of exposure to workplace violence relative to other economic sectors. The Health Care and Social Assistance sector includes industries with the highest rates for Intentional Injury by Other Persons exceeding all other private sector industries.
The following questions are intended to solicit information on the topics covered in this section. Wherever possible, please indicate the title of the person completing the question and the type and employee size of your healthcare and/or social assistance facility.
OSHA has recognized the unique challenges of workplace violence in healthcare and social assistance for decades. OSHA's “Guidelines for Preventing Workplace Violence for Healthcare and Social Service Workers,” which was last updated in 2015 is based on industry best practices and feedback from stakeholders, provides recommendations for policies and procedures to eliminate or reduce workplace violence in a range of healthcare and social assistance settings. The guidelines recommend a comprehensive violence prevention program that covers the following five core elements: (1) Management commitment and worker participation; (2) worksite analysis and hazard identification; (3) hazard prevention and control; (4) safety and health training; and (5) recordkeeping and program evaluation. Below, OSHA uses this framework in discussing and seeking information on the elements that might be included in a workplace violence standard. In addition, because there are particular concerns with underreporting of workplace violence in the healthcare and social assistance sector, below OSHA also discusses and seeks information on effectiveness of its whistleblower protection requirements in these sectors.
OSHA's Guidelines for Preventing Workplace Violence for Healthcare and Social Service Workers highlight the benefits of commitment by management and establishment of a joint management-employee committee, whether the committee is focused on workplace violence prevention or worker safety more broadly. The structure of the management-employee teams will differ based on the facility's size and the availability of personnel to staff it.
OSHA is interested in hearing from employers and individuals working in healthcare and social assistance about their experiences with management commitment and employee participation. Specific questions regarding these topics are at the end of Section V.
OSHA's guidelines emphasize worksite analysis and hazard identification. A worksite analysis involves a mutual step-by-step assessment of the workplace to find existing or potential hazards that may lead to incidents of workplace violence.
Healthcare and social assistance workers face a number of risk factors that are known to contribute to violence in the workplace. Common risk factors (or factors that have been shown to increase the risk of harm if one is exposed to a hazard) for workplace violence generally fall into two groups: (1) Patient, client and setting-related and (2) organizational-related (OSHA, 2015a, p. 4-5). The patient/client and setting-related group includes: (a) Working directly with people who have a history of violence, especially if they are under the influence of drugs or alcohol or a diagnosis of dementia; (b) lifting, moving and transporting patients and clients; (c) working alone in a facility or in patients' homes; (d) poor environmental design of the workplace that may block employee vision or interfere with escape from a violent incident; poor lighting in hallways, corridors, rooms, parking lots and other exterior areas; (e) lack of means of emergency communication; (f) long waiting periods for service; or (g) working in neighborhoods with high crime rates.
Organizational risks (the second group) arise from workplace policies, or the lack thereof. Examples include a lack of facility policies and staff training for recognizing and managing escalating hostile and assaultive behaviors from patients, clients, visitors, or staff; working when understaffed, especially during mealtimes and visiting hours; inadequate security and mental health personnel on site; not permitting smoking; allowing unrestricted movement of the public in clinics and hospitals; allowing a perception that violence is tolerated and victims will not be able to report the incident to police and/or press charges; and an overemphasis on customer satisfaction over staff safety (OSHA, 2015a).
Studies show that staff working in some hospital units or areas are at greater risks than others. High-risk areas include emergency departments (EDs), admission areas, long-term care and geriatrics settings, behavioral health, waiting rooms, and obstetrics and pediatrics, among others (DeSanto
Assault rates for nurses, physicians and other staff working in EDs have been shown to be among the highest (Crilly
Workers in the healthcare occupations of psychiatric aides, psychiatric
Surveys of nurses have identified risk factors including patient mental health or behavioral issues, medication withdrawal, pain, history of a substance abuse disorder, and being unhappy with care (Pompeii
OSHA is interested in hearing from employers and individuals working in healthcare and social assistance about their experiences with worksite analysis and hazard identification, including how they use risk factors. Specific questions regarding these topics are at the end of Section V.
Once workplace violence hazards are identified, controls can be designed and implemented to prevent and control them. OSHA's hierarchy of controls includes: elimination, substitution, engineering controls, administrative controls, and work practices, and personal protective equipment (PPE) in that order. Engineering controls for workplace violence prevention are permanent changes to the work environment. Administrative controls are policies and procedures that reduce or prevent exposure to risk factors. Administrative strategies include modification of job rules and procedures, training and education, scheduling, or modifying assigned duties.
Engineering controls attempt to remove the hazard from the workplace or create a barrier between the worker and the hazard. Examples of engineering controls include the installation of alarm systems, panic buttons, hand-held alarms, or noise devices, installation of door locks and increased lighting or use of closed-circuit video monitoring on a 24-hour basis (Haynes, 2013). Other examples include improvements to the layout of the admission area, nurses' stations and rooms. Where appropriate, some hospitals may have metal detectors installed to detect for guns, knives, box cutters, razors, and other weapons.
Effective interventions that have been described in the literature include K-9 security dog teams, metal detectors, and the installation of a security system, that includes metal detectors, cameras, and security personnel (Stirling
Administrative controls, sometimes referred to as management policies, include organizational factors and can have a major impact on day-to-day operations in healthcare and social assistance, for both staff and patients/residents. For example, staffing issues, such as mandatory overtime and inadequate staffing levels can lead to increased and unscheduled absences, high turnover, low morale and increased risk of violence for both healthcare and social assistance workers and their patients. Adequate numbers of well-trained staff can help ensure that situations with the potential for violence can be diffused before they escalate into full-blown violent incidents, resulting in fewer injuries. Adequate numbers of staff to address the needs of the patients can result in a higher level of safety and comfort for both patients and staff. Effective training can increase staff confidence and control in preventing, managing and de-escalating these incidents, resulting in a greater sense of safety for both staff and patients.
Employer policies often include security measures to prevent workplace violence, including policies for monitoring and maintaining premises security (
Zero Tolerance policies are policy statements from employers/management that state that any violence to employees and patients/customers will not be tolerated. In general, zero tolerance policies require and encourage staff to report all assaults or threats to a supervisor or manager. Supervisors and managers keep a log of incidents, and all reports of workplace violence are investigated to help determine what actions to take to prevent future incidents. Some studies in the literature describe and discuss the effectiveness of zero-tolerance policies (Nachreiner
Policies that encourage employees to report incidents help ensure that hazards are addressed; however, the current evidence shows that many assaults go unreported (Snyder
Research has shown that injured healthcare and social assistance workers and their employers are reluctant to report violent incidents and resulting injuries out of fear of stigmatizing the patients or residents who are the perpetrators of the violence, particularly when they are mentally ill, developmentally disabled, or cognitively impaired elderly. There is also an attitude among many that violence toward those working with the public, especially with individuals with cognitive impairment, mental illness, or brain injury, is part of the job (Lipscomb and London, 2015; Speroni
In OSHA's hierarchy of controls, personal protective equipment is the least-preferred type of control because these methods rely on the compliance of all individuals, and often places a burden on the individual worker rather than on the organization as a whole. However, there may be circumstances where the use of personal protective equipment (PPE) is appropriate for preventing workplace violence. For example, the ANA identified the use of gloves, sleeves, and blocking mats as a barrier method to protect staff from bites and scratches when caring for individuals with certain developmental disabilities and where other types of controls are infeasible (Lipscomb and London, 2015).
In addition to controls that fall into the traditional OSHA hierarchical approach previously described here, OSHA is also very interested in hearing about strategies and innovations that have been developed from the clinical experience of health professionals, particularly if they have been shown to be effective. The Agency is interested in how existing operations tools, such as electronic infrastructure and work practices, can be modified to support
New Hampshire Hospital, a state-run behavioral health facility, serves as a teaching hospital through its affiliation with the Geisel School of Medicine at Dartmouth College. This connection allows New Hampshire Hospital to serve as a living laboratory for ongoing research to identify precursors to violence and test new practices. Physicians engage patients as partners in their research, which is part of the hospital's drive for continual improvement. This connection to academic studies also helps to raise awareness of other new research and encourage staff members to adopt the best available evidence-based approaches.
OSHA is interested in hearing from employers and individuals working in healthcare and social assistance about their experiences with hazard prevention and control. Specific questions regarding these topics are at the end of Section V.
OSHA's Guidelines for Preventing Workplace Violence for Healthcare and Social Service Workers highlight education and training as an essential element of a workplace violence prevention program. Safety and health training helps ensure that all staff members are aware of potential safety hazards and how to protect themselves, their coworkers and patients through established policies and procedures. The content and frequency of training can vary, as well as the staff eligible for training. In general, training covers policies and procedures specific to the facility and perhaps the unit, as well as de-escalation and self-defense techniques. De-escalation of aggressive behavior and managing aggressive behavior when it occurs are very important components of the training (Nonviolent Crisis Intervention Training, 2014).
Training provides opportunities to learn and practice strategies to improve both patient safety and worker safety. The nationwide movement toward reducing the use of restraints (physical and medication) and seclusion in behavioral health—which is mandated in some states—along with the movement toward “trauma-informed care,” means that workers are relying more on approaches that minimize physical contact with patients, intervening with verbal de-escalation strategies before an incident turns into a physical assault thereby reducing injuries. Trauma-informed care is a strengths-based approach that is grounded in an understanding of and responsiveness to the impact of trauma, that emphasizes physical, psychological, and emotional safety for both providers and survivors, and that creates opportunities for survivors to rebuild a sense of control and empowerment (SAMHSA). The results can be a “win-win” for patient and worker safety (OSHA, 2015b). Training ensures consistent dissemination of information about policies and procedures, as well as an opportunity to practice and develop confidence with newly-learned skills and techniques, such as de-escalation. In particular, when implementing a zero tolerance policy, training staff on what and when to report is essential to changing the expectation that violence will not be tolerated.
Staff training on policies and procedures is usually conducted at orientation and periodically (
Because duties, work locations, and patient interactions vary by job, violence prevention training can be customized to address the needs of different groups of healthcare personnel, particularly: Nurses and other direct caregivers; emergency department (ED) staff; support staff (
OSHA is interested in hearing from employers and individuals working in healthcare and social assistance about their experiences with the various types of training and their effectiveness. Specific questions regarding training are at the end of Section V.
OSHA's recordkeeping regulations require employers to record certain workplace injuries and illnesses. The OSHA 300 Log can be a valuable source of evaluation metrics data for establishing baseline injury and illness rates and benchmarks for success. Information from the
All employers, including those who are partially exempt from keeping records, must report any work-related fatality to OSHA within 8 hours of learning of the incident, and must report all work-related inpatient hospitalizations, amputations, and losses of an eye to OSHA within 24 hours of learning of the incident (29
Employers do not always record or accurately record workplace injuries and illnesses in general. Specifically, in a 2012 report OSHA found that for calendar years 2007 and 2008, approximately 20 percent of injury and illness cases reconstructed by inspectors during a review of employee records were either not recorded or incorrectly recorded by the employer (OSHA, 2012). BLS is working on improving reporting by conducting additional research on the extent to which cases are undercounted in the SOII and exploring whether computer-assisted coding can improve reporting (BLS, 2014). Further, as discussed above in Section V.A.3.b, there are a number of published studies that show that employees substantially underreport workplace violence cases.
OSHA is interested in hearing from employers and individuals in healthcare and social assistance facilities about their experiences with both recordkeeping to comply with OSHA requirements as well as reporting of incidents at the facility or unit level. Specific questions regarding recordkeeping are at the end of Section V.
Programs are evaluated to identify deficiencies and opportunities for improvement. Accurate records of injuries and illnesses can help employers gauge the effectiveness of intervention efforts. The evaluation of a comprehensive workplace violence prevention program typically includes, but is not limited to, measuring improvement based on lowering the frequency and severity of workplace violence incidents; keeping up-to-date records of administrative and work practice changes implemented to prevent workplace violence (to evaluate how well they work); surveying workers before and after making job or worksite changes or installing security measures or new systems to evaluate their effectiveness; tracking recommendations through to completion; keeping abreast of new strategies available to prevent and respond to violence as they develop; and establishing an ongoing relationship with local law enforcement and educating them about the nature and challenges of working with potentially violent patients. The quality and effectiveness of training is particularly important to assess.
OSHA is interested in hearing from employers and individuals in healthcare and social assistance facilities about their experiences with program evaluation. Specific questions regarding program evaluation are located in section V.3. below.
OSHA is interested in hearing from employers and individuals in facilities that provide healthcare and social assistance about their experiences with the various components of workplace violence prevention programs that are currently being implemented by their facilities. Wherever possible, please indicate the title of the person completing the question and the type and employee size of your facility. In particular, the Agency appreciates respondents addressing the following:
Q
As part of the Agency's consideration of a possible workplace violence standard, OSHA is interested in the costs, economic impacts, and benefits of related practices. OSHA is also interested in the benefits of such practices in terms of reduced injuries, deaths, and compromised operations (
Workplace violence exacts a high cost today. It harms workers often both physically and emotionally, and employers also bear several costs. A single serious injury can lead to workers' compensation losses of thousands of dollars, along with thousands of dollars in additional costs for overtime, temporary staffing, or recruiting and training a replacement. Even if a worker does not have to miss work, violence can still lead to “hidden costs” such as higher turnover and deterioration of productivity and morale. In the study of Washington state's workers' compensation data (1997-2007), the average cost claim per time-lost was $32,963, with an annual average of at least 2,247 claims related to workplace violence in Washington State for the period from 1997-2007. Similar costs were cited by McGovern
In addition to the out-of-pocket costs by the employer and employee, healthcare workers who experience workplace violence have reported short term and long term emotional effects which can negatively impact productivity. It was found by Gates
OSHA requests any workers' compensation data related to workplace violence. Any other information on your facility's experience would also be appreciated.
Several studies have evaluated the effectiveness of various engineering and administrative workplace violence controls in a variety of settings (
The following questions are intended to solicit information on the topics covered in this section. Wherever possible, please indicate the title of the person providing the information and the type and number of employees at your healthcare and/or social assistance facility.
As part of the Agency's consideration of a workplace violence prevention standard, OSHA is concerned whether its actions will have a significant economic impact on a substantial number of small businesses. Injury and illness incident rates are known to vary by establishment size in the healthcare industry, where establishments between 50 and 999 employees had a rate of 5.4 per 10,000 full time workers, while establishments under 50 employees had a rate of 2.8 and lower in 2014 (BLS Table Q1, October 2015).
If the Agency pursues development of a standard that would have such impacts on small businesses, OSHA is required to develop a regulatory flexibility analysis and convene a Small Business Advocacy Review (SBAR) under the Small Business Regulatory Enforcement Fairness Act (SBREFA) Panel prior to publishing a proposal. Regardless of the significance of the impacts, OSHA seeks ways of minimizing the burdens on small businesses consistent with OSHA's statutory and regulatory requirements and objectives (Regulatory Flexibility Act, 5 U.S.C. 601
Dr. David Michaels, Assistant Secretary of Labor for Occupational Safety and Health, authorized the preparation of this notice pursuant to 29 U.S.C. 653, 655, and 657, Secretary's Order 1-2012 (77 FR 3912; Jan. 25, 2012), and 29 CFR part 1911.
Department of Defense (DoD).
Proposed rule.
The DoD proposes to identify the proper address and notification method for an entity making a request for indemnification or defense, or providing notice to DoD, of a third-party claim under section 330 of the National Defense Authorization Act for Fiscal Year 1993, as amended (hereinafter “section 330”), or under section 1502(e) of the Floyd D. Spence National Defense Authorization Act for Fiscal Year 2001, (hereinafter “section 1502(e)”). This rule also identifies the documentation required to demonstrate proof of any claim, loss, or damage for indemnification or defense or for providing notice to DoD of a third-party claim. This rule also provides the mailing address for such requests for indemnification or defense or notice to DoD of a third-party claim to be filed with DoD, Office of General Counsel, Deputy General Counsel for Environment, Energy, and Installations (DoDGC(EE&I)). This will allow for timely review and greater efficiency in screening requests for indemnification or defense by providing clarity to requesters.
Written comments on this proposed rule will be accepted on or before February 6, 2017.
You may submit comments, identified by docket number and/or Regulatory Information Number (RIN) number and title, by any of the following methods:
•
•
Mr. Philip Sheuerman, 703-692-2287.
This part is proposed under 10 U.S.C. 113, 5 U.S.C. 301, section 330 of the National Defense Authorization Act for Fiscal Year 1993, Public Law 102-484, October 23, 1992, 106 Stat. 2371, as amended, and section 1502(e) of the Floyd D. Spence National Defense Authorization Act for Fiscal Year 2001, Public Law 106-398, October 30, 2000, 1014 Stat. 1654A-350, as amended.
Sections 330 and 1502(e) provide that, subject to certain exceptions set forth in the statutes, the Secretary of Defense shall hold harmless, defend, and indemnify in full certain persons and entities that acquire ownership or control of, in the case of section 330, any military installation closed pursuant to a base closure law or, in the case of section 1502(e), certain portions of the former Naval Ammunition Support Detachment on the island of Vieques, Puerto Rico (hereinafter “Detachment”), from and against any suit, claim, demand or action, liability, judgment, cost or other fee arising out of any claim for personal injury or property damage (including death, illness, or loss of or damage to property or economic loss) that results from, or is in any manner predicated upon, the release or threatened release of any hazardous substance, pollutant or contaminant, or petroleum or petroleum derivative
The authority to adjudicate requests for indemnification and process requests for defense under sections 330 or 1502(e) has been delegated from the Secretary of Defense to the DoD General Counsel and re-delegated by the General Counsel to DoDGC(EE&I). Requests for indemnification or defense or notice to DoD of a third-party claim must be sent to DoDGC(EE&I) to be considered.
The DoD recognizes that some real property transfer documents, such as deeds and agreements, entered into in past years provide for notification under sections 330 or 1502(e) being made to,
The United States Federal Circuit has interpreted the definition of a “claim for personal injury or property damages” under section 330 to include, under certain circumstances, notice from an enforcement agency to conduct a cleanup.
The timely and proper filing of a request for indemnification or defense enables DoDGC(EE&I) to perform its adjudication function for requests, maintain oversight of the implementation of sections 330 and 1502(e), and secure the rights of requesters under sections 330 and 1502(e). Proper notice to DoD of a claim from a third-party is also essential to allow DoD to exercise its right to defend against such a claim pursuant to sections 330(c) or 1502(e).
Under sections 330(c)(2) and 1502(e)(3)(B), the requester must allow DoD to defend the claim in order to be afforded indemnification for that claim. This regulation makes clear that failure to notify DoD immediately of receipt of any claim, or of a release that may lead to a claim, could prevent DoD from settling or defending that claim, and on that basis, DoD may deny indemnification. Failure to provide necessary documents and access will also prevent DoD from exercising its right to settle and defend the claim and, on that basis, DoD may deny indemnification.
In the context of a claim from an enforcement agency or third party seeking to require a cleanup or response action, failure to notify DoD may prevent DoD from exercising its right to defend against the claim. If the requester undertakes a cleanup or response action itself prior to providing immediate notice to DoD, the requestor's actions may interfere with DoD's ability to defend against a claim, which might result in denial of indemnification.
This proposed rule does not affect claims that are made pursuant to other authorities such as under a real property covenant contained in a deed in accordance with section 120(h) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA).
This proposal identifies the required process for submitting documentation necessary to support a request for indemnification or defense or to provide notice to DoD of a third-party claim under sections 330 or 1502(e). For a notice to DoD of a third-party claim, DoDGC(EE&I) must receive the specified paperwork at the specified address no less than 30 days after a requester
To ensure the proper implementation of sections 330 and 1502(e), requesters and DoD must communicate effectively and in a timely manner. This proposal will provide the necessary information for that interaction to take place.
This proposal applies to the DoD General Counsel's Office, to the Military Departments, and to any person or entity making a request for indemnification or defense, or providing notice to DoD, of a third-party claim pursuant to sections 330 or 1502(e).
This proposal defines the terms “commercial delivery service”, “Deputy General Counsel”, “received”, “request”, “requester”, “section 330”, “section 1502(e)”, and “third-party claim”.
This proposal advises that the responsibilities of the Secretary of Defense under sections 330 and 1502(e) have been delegated to the General Counsel of the DoD who has, in turn, re-delegated certain of those responsibilities, particularly with regard to adjudication of requests for indemnification, to DoDGC(EE&I). DoDGC(EE&I) exercises this responsibility through close communication with the military department that has property disposal responsibility for the closed installation subject of the request for indemnification or defense. Such communication includes obtaining review by, and the recommendations of, the military department on the merits of the request for indemnification or defense. Likewise, DoDGC(EE&I) communicates any notice of a third-party claim to the military department and works closely with the military department in determining what action, if any, the DoD will take in response to the notice. The proposal also contains responsibilities of requesters, delineated in the body of the rule.
This proposal explains the process to be used, timelines that apply, and documentation that must be received by DoDGC(EE&I) for a request for indemnification or defense. The mailing address and required method of delivery are specified. The proposal also requires a requester to provide DoD with a right of entry at reasonable times for purposes of inspecting the property and obtaining samples. The proposal also provides for reconsideration of a DoD determination.
This proposal explains the process to be used, timelines that apply, and documentation that must be received by DoDGC(EE&I) relating to a notice of a third-party claim. The mailing address and required method of delivery are specified. The proposal also requires a requester to provide DoD with a right of entry at reasonable times for purposes of inspecting the property and obtaining samples. The section specifies that a requester must notify DoD within 30 days of receiving the third-party claim or 30 days before taking an action in order to allow DoD to determine what action to take with regard to the claim.
Informing all affected persons and entities about this rule will require communication with relevant non-governmental organizations.
The current process is unclear, inefficient, and time-consuming, causes delay, and may be ineffective. This lack of clarity contributes to concern that indemnification is not being addressed adequately and creates the potential for impairment of DoD's ability to present an effective defense of claims under sections 330 or 1502(e). The DoD is committed to sound environmental stewardship in all of its activities while meeting the goal of encouraging the development of land for productive use.
Based on the relatively small number of claims per year, compliance costs under this regulation are expected to be minimal. In fact, this regulation will reduce compliance costs because it will streamline and clarify the process for the submission of information which would have to be submitted in any case in order to obtain a determination regarding indemnification or defense or provide notice to DoD of a third-party claim under sections 330 or 1502(e).
This proposal will clarify the process for requesters of indemnification or defense and promote efficient protection of the environment by enhancing communication between requesters and DoD. This enhanced and simplified communication process will result in fewer burdens for both requesters and DoD in the form of avoiding unnecessary, inappropriate, or duplicative paperwork. This proposal does not require any greater disclosure of information from a requester than sections 330 or 1502(e) already require. Enhancing DoDGC(EE&I)'s ability to adjudicate requests for indemnification or respond to requests for defense under sections 330 or 1502(e) will reduce the burden of information requests upon those entities requesting indemnification or defense, or providing notice to DoD, of a third-party claim under sections 330 or 1502(e). This proposal will promote protection of requesters' rights by reducing the possibility of a request for indemnification or defense being acted upon by the wrong agency or a statute of limitations running due to failure to provide timely notification to the proper agency.
Under E.O. 12866 and E.O. 13563, DoD must determine whether this regulatory action is “significant” and therefore subject to review by the Office of Management and Budget (OMB) and to the requirements of this E.O., which include assessing the costs and benefits anticipated as a result of the proposed regulatory action. E.O. 12866 defines “significant regulatory action” as one that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 million or more or may adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) create serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raise novel legal or policy issues arising out of legal mandates, the
This proposed rule will not have an adverse effect on the economy or cost the economy $100 million or more per year. Requests for indemnification are small in number and do not approach anywhere near $100 million per year, individually or collectively. c Although not economically significant, this rule has been designated a “significant regulatory action” under section 3(f) of Executive Order 12866. Accordingly, the rule has been reviewed by OMB under the requirements of these Executive Orders.
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601,
The Paperwork Reduction Act of 1995, 44 U.S.C. 3501, authorizes the Director of OMB to review certain information collection requests by Federal agencies. The recordkeeping and reporting requirements of this proposed rule do not constitute a “collection of information” as defined in 44 U.S.C. 3502(3), the Paperwork Reduction Act of 1995.
Under E.O. 12898 (59 FR 7629 (February 11, 1994)), Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations, Federal agencies are required to identify and address disproportionately high and adverse human health and environmental effects of Federal programs, policies, and activities on minority and low-income populations. Given the application of this proposed rule throughout the entire United States, DoD is soliciting comment and input from all public entities and government agencies, including members of the environmental justice community and members of the regulated community.
Sections 330 and 1502(e) are intended to reduce specified risks from development of former military land by aiding and legally protecting the entities that take title to land on closed military installations for development purposes. Because this rule will equally affect reporting associated with the development of land on a national basis, a disparate impact on minority and low-income population areas is not expected.
Title II of the Unfunded Mandates Report Act of 1995 (UMRA), Public Law 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and Indian tribal governments and the private sector. Under Section 202 of the UMRA, DoD generally must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures to State, local, and Indian tribal governments, in the aggregate, or to the private sector, of $100 million or more in any one year.
The DoD has determined that this rule does not contain a Federal mandate that may result in expenditures of $100 million or more for State, local, and Indian tribal governments, in the aggregate, or the private sector in any one year. Thus, this proposed rule is not subject to the requirements of Section 202 of the UMRA.
It has been determined that this rule does not have federalism implications. 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.
Indemnification, Claim.
10 U.S.C. 113, 5 U.S.C. 301, section 330 of the National Defense Authorization Act for Fiscal Year 1993, Public Law 102-484, October 23, 1992, 106 Stat. 2371, as amended, and section 1502(e) of the Floyd D. Spence National Defense Authorization Act for Fiscal Year 2001, Public Law 106-398, October 30, 2000, 1014 Stat. 1654A-350, as amended.
This part describes the process for filing a request for indemnification or defense, or providing proper notice to DoD, of a third-party claim pursuant to section 330 of the National Defense Authorization Act for Fiscal Year 1993, Public Law 102-484, October 23, 1992, 106 Stat. 2371, as amended (hereafter “section 330”), or section 1502(e) of the Floyd D. Spence National Defense Authorization Act for Fiscal Year 2001, Public Law 106-398, October 30, 2000, 1014 Stat. 1654A-350, as amended (hereafter “section 1502(e)”). This process identifies the minimum information that a request for indemnification or defense or notice to DoD of a third-party claim for indemnification must include, where that information must be sent, how to make such a request or provide such a notice, the time limits that apply to such a request or notice, and other requirements.
(a) This part applies to—
(1) The Office of the General Counsel of the Department of Defense and the Military Departments.
(2) Any person or entity making a request for indemnification or defense, or providing notice to DoD, of a third-party claim pursuant to section 330 or section 1502(e).
(b) In the case of a property that is subject to an earlier agreement containing different notification requirements, the requirement for notice to the Deputy General Counsel in sections 175.5 and 175.6 are in addition to those notification requirements.
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(a) The General Counsel of the Department of Defense has been delegated the authorities and responsibilities of the Secretary of Defense under section 330 or section 1502(e), with certain limitations as to re-delegation.
(b) The General Counsel has re-delegated the authority and responsibility to adjudicate requests for indemnification or defense and to process notices to DoD of a third-party claim under section 330 and section 1502(e) to the Deputy General Counsel, Environment, Energy, and Installations, of the Department of Defense or, when the position of Deputy General Counsel is vacant, the acting Deputy General Counsel. The authority to acknowledge receipt of a request has been delegated to an Associate General Counsel under the Deputy General Counsel, Environment, Energy, and Installations.
(a)
(b)
(c)
(d)
(1) A complete copy of the third-party claim, or, if not presented in writing, a complete summary of the claim, with the names of officers, employees, or agents with knowledge of any information that may be relevant to the claim or any potential defenses. The third-party claim may consist of a summons and complaint or, in the case of a third-party claim from a governmental regulatory authority, a notice, letter, order, compliance advisory, compliance agreement, or similar notification.
(2) A complete copy of all pertinent records, including any deed, sales agreement, bill of sale, lease, license, easement, right-of-way, or transfer document for the facility for which the third-party claim is made.
(3) If the requester is not the first transferee from DoD, a complete copy of all intervening deeds, sales agreements, bills of sale, leases, licenses, easements, rights-of-way, or other transfer documents between the original transfer from DoD and the transfer to the current owner. If the requester is a lender who has made a loan to a person or entity who owns, controls, or leases the facility for which the request for indemnification is made that is secured by said facility, complete copies of all promissory notes, mortgages, deeds of trust, assignments, or other documents evidencing such a loan by the requester.
(4) A complete copy of any insurance policies related to such facility.
(5) If the notice to DoD of a third-party claim is being made by a representative, agent, or attorney in fact or at law, proof of authority to make the notice on behalf of the requester.
(6) Evidence or proof of any claim, loss, or damage alleged to be suffered by the third-party claimant which the requester asserts is covered by section 330 or by section 1502(e).
(7) In the case where a requester intends to enter into, agree to, settle, or solicit a third-party claim, a description or copy of the proposed claim, settlement, or solicitation, as the case may be.
(8) To the extent that any environmental response action has been taken, the documentation supporting such response action and its costs included in the request for indemnification.
(9) To the extent that any environmental response action has been taken, a statement as to whether the remedial action is consistent with the National Oil and Hazardous Substances Pollution Contingency Plan (Part 300 of title 42, Code of Federal Regulations) or other applicable regulatory requirements.
(10) A complete copy of any claims made by the requester to any other entity related to the conditions on the property which are the subject of the claim, and any responses or defenses thereto or made to any third-party claims, including correspondence, litigation filings, consultant reports, and other information supporting a claim or defense.
(e)
(f)
(g)
(1) A requester must, within 30 days of receiving a third-party claim, file with DoD a notice of such claim in accordance with this part. Failure to timely file such a notice, if it in any way compromises the ability of DoD to defend against such a claim pursuant to section 330(c) or section 1502(e)(3), will result in denial of any subsequent request for indemnification or defense resulting from such a claim. Requesters who take action in compliance with any such third-party claim, or any part of such claim, without first providing DoD with a notice of such claim in accordance with this section do so at their own risk.
(2) A requester must, at least 30 days prior to the earlier of entering into, agreeing to, settling, or soliciting a third-party claim, file a notice to DoD of such intent in accordance with this part. Failure to file such a notice will compromise the ability of DoD to defend against such a claim pursuant to section 330(c) or section 1502(e)(3) and will result in denial of any subsequent request for indemnification or defense resulting from such a claim.
(h)
(i)
(a)
(b)
(c)
(d)
(e)
(1) A complete copy of the third-party claim, or, if not presented in writing, a complete summary of the claim, with the names of officers, employees, or agents with knowledge of any information that may be relevant to the claim or any potential defenses.
(2) A complete copy of all pertinent records, including any deed, sales agreement, bill of sale, lease, license, easement, right-of-way, or transfer document for the facility for which the request for indemnification or defense is made.
(3) If the requester is not the first transferee from DoD, a complete copy of all intervening deeds, sales agreements, bills of sale, leases, licenses, easements, rights-of-way, or other transfer documents between the original transfer from DoD and the transfer to the current owner. If the requester is a lender who has made a loan to a person or entity who owns, controls, or leases the facility for which the request for indemnification is made that is secured by said facility, complete copies of all promissory notes, mortgages, deeds of trust, assignments, or other documents evidencing such a loan by the requester.
(4) A complete copy of any insurance policies related to such facility.
(5) If the request for indemnification or defense is being made by a representative, agent, or attorney in fact or at law, proof of authority to make the request on behalf of the requester.
(6) Evidence or proof of any claim, loss, or damage covered by section 330 or by section 1502(e).
(7) In the case of a request for defense, a copy of the documents, such as a summons and complaint, or enforcement order, representing the matter against which the United States is being asked to defend.
(8) To the extent that any environmental response action has been taken, the documentation supporting such response action and its costs included in the request for indemnification.
(9) To the extent that any environmental response action has been taken, a statement as to whether the remedial action is consistent with the National Oil and Hazardous Substances Pollution Contingency Plan (Part 300 of title 42, Code of Federal Regulations) or other applicable regulatory requirements.
(10) A complete copy of any claims made by the requester to any other entity related to the conditions on the property which are the subject of the claim, and any responses or defenses thereto or made to any third-party claims, including correspondence, litigation filings, consultant reports, and
(f)
(g)
(h)
(i)
(j)
Bureau of Land Management, Bureau of Reclamation, National Park Service, U.S. Fish and Wildlife Service; Interior.
Proposed rule.
The Department of the Interior (DOI) proposes to promulgate regulations under the Paleontological Resources Preservation Act. Implementation of the proposed rule would preserve, manage, and protect paleontological resources on lands administered by the Bureau of Land Management, the Bureau of Reclamation, the National Park Service, and the U.S. Fish and Wildlife Service and ensure that these federally owned resources are available for current and future generations to enjoy as part of America's national heritage. The proposed rule would address the management, collection, and curation of paleontological resources from federal lands using scientific principles and expertise, including collection in accordance with permits; curation in an approved repository; and maintenance of confidentiality of specific locality data. The Paleontological Resources Preservation Act authorizes civil and criminal penalties for illegal collecting, damaging, otherwise altering or defacing, or for selling paleontological resources, and the proposed rule further details the processes related to the civil penalties, including hearing requests and appeals of the violation or the amount of the civil penalties.
Comments on the proposed rule must be received by February 6, 2017. Comments on the information collection requirements must be received by January 6, 2017.
You may submit comments, identified by Regulation Identifier Number (RIN) 1093-AA16, by any of the following methods:
•
•
• Desk Officer for the Department of the Interior at OMB-OIRA at (202) 295-5806 (fax) or
• Jeffrey Parrillo, Office of the Secretary, Departmental Information Collection Clearance Lead, Department of the Interior, 1849 C Street NW., Mailstop MIB-7056, Washington, DC 20240 (mail); or
Julia F. Brunner, Geologic Resources Division, National Park Service, by telephone: (303) 969-2012 or email:
In 1999, the Senate Interior Appropriations Subcommittee requested that DOI, the U.S. Department of Agriculture (USDA) Forest Service (FS), and the Smithsonian Institution prepare a report on fossil resource management on federal lands (see Sen. Rep. 105-227, at 60 (1998)). The request directed these entities to analyze (1) the need for a unified federal policy for the collection, storage, and preservation of fossils; (2) the need for standards that would maximize the availability of fossils for scientific study; and (3) the effectiveness of current methods for storing and preserving fossils collected from federal lands. During the course of preparing the report, the agencies held a public meeting to gather public input. The DOI report to Congress, “Assessment of Fossil Management of Federal and Indian Lands,” was published in May 2000.
After the report was released, the Paleontological Resources Preservation Act (PRPA) was introduced in the 107th Congress. PRPA was modeled after the Archaeological Resources Protection Act of 1979, as amended (16 U.S.C. 470aa-470mm), and emphasized the recommendations and guiding principles in the May 2000 report. The legislation was reintroduced in subsequent Congresses through the 111th Congress when it was included as a subtitle in the Omnibus Public Land Management Act, which became law on March 30, 2009. Legislative history
PRPA requires DOI and USDA to issue regulations as appropriate to carry out the law. Accordingly, DOI and USDA formed an interagency coordination team in April 2009 to draft the proposed regulations. The interagency coordination team included paleontology and archaeology program leads and regulatory specialists from the Bureau of Land Management (BLM), the National Park Service (NPS), the Bureau of Reclamation (Reclamation), the U.S. Fish and Wildlife Service (FWS) (the bureaus), and the FS.
On May 23, 2013, the FS published a proposed rule that would implement PRPA with respect to National Forest System lands (78 FR 30810). On April 17, 2015, the FS published these regulations as final (80 FR 21588).
This proposed rule would address management of paleontological resources on federal lands under the jurisdiction of the Secretary of the Interior, and managed by BLM, Reclamation, NPS, and FWS. The proposed rule would amend title 43 of the Code of Federal Regulations (CFR) by adding a new part 49 entitled “Paleontological Resources Preservation.” In accordance with 16 U.S.C. 470aaa-1, the proposed rule would outline how the four bureaus would manage, protect, and preserve paleontological resources on federal land using scientific principles and expertise. Most of the proposed rule, specifically subparts A through H, would apply to all four bureaus. The only exception is subpart I, which would apply only to BLM and Reclamation, governing casual collecting (collecting common invertebrate and plant paleontological resources without a permit) on certain lands administered by those bureaus. PRPA does not allow casual collecting in areas administered by NPS or FWS, and therefore subpart I would not apply to these two bureaus. The following is a section-by-section analysis of subparts A through I.
Proposed § 49.1 would restate the purposes of PRPA and summarize the contents of the proposed rule.
Proposed § 49.5 would define certain terms used in the proposed rule. The bureaus believe that most of the terms are readily understood, but discuss the following in more detail below:
(1) Those that are found in an archaeological context and are an archaeological resource as defined in section 3(1) of the Archaeological Resources Protection Act of 1979 (16 U.S.C. 470bb(1)); or
(2) Cultural items, as defined in section 2 of the Native American Graves Protection and Repatriation Act (25 U.S.C. 3001
(3) Resources determined in writing by the authorized officer to lack paleontological interest or not provide information about history of life on earth, based on scientific and other management considerations.
Thus, under PRPA and the proposed regulation, fossils are “paleontological resources” unless they are found in an archaeological context and are archaeological resources, or are cultural items under the Native American Graves Protection and Repatriation Act, or are determined by an authorized officer to lack paleontological interest or not provide information about the history of life on earth.
An example of a fossil that is found in an archaeological context and is therefore an archaeological resource would be a fossil that was collected by prehistoric peoples and is now part of an archaeological site. In this case, the fossil has been removed from its original geological context and is now important primarily for its archaeological informational value. A fossil found in an archaeological context is not a paleontological resource under PRPA or the proposed rule, but may still have scientific value for paleontological investigations and be protected under other authorities. Fossils that are merely in geographical proximity to archaeological resources but are not necessarily in an archaeological context, are therefore not necessarily archaeological resources.
Fossils that the authorized officer determines to not have paleontological interest or not provide information about the history of life on earth, such as fossil fuel deposits or limestone units, would not be considered paleontological resources under PRPA or the proposed rule, although they would remain subject to other laws and regulations. For example, fossils on NPS-administered lands that are not considered paleontological resources would still be protected as natural and cultural resources under the NPS Organic Act of 1916, NPS regulations, and NPS policies. As another example, fossils on BLM-administered lands that are not considered paleontological resources would still be subject to consideration under the Federal Land Policy and Management Act of 1976 (FLPMA), thus allowing BLM to track and report scientific activities, such as research on non-vertebrate microfossils, without requiring that those fossils be managed as paleontological resources or otherwise be subject to PRPA.
Petrified wood is managed as a paleontological resource when on or from lands administered by NPS, Reclamation, and FWS. On lands administered by BLM, petrified wood (defined by the Petrified Wood Act of 1962, Pub. L. 87-713, 76 Stat. 652, Sept. 28, 1962 as agatized, opalized, petrified, or silicified wood, or any material formed by the replacement of wood by silica or other matter, and identified as a mineral material under the Materials Act of 1947) is subject to commercial sale at 43 CFR part 3600 and free use regulations at 43 CFR part 3622. Therefore, on BLM lands, petrified wood may be managed as a paleontological resource, but the savings provisions in PRPA (16 U.S.C. 470aaa-10) prevent the imposition of additional restrictions on the sale or free use of petrified wood. When it is not subject to sale or free use, petrified wood on BLM-administered lands may be managed as a paleontological resource and/or under the authority of FLPMA.
Geological units including but not limited to limestones, diatomites, chalk beds, and fossil soils (
Fossils such as conodonts and nonvertebrate microfossils would be considered paleontological resources when they, as part of a scientific research design, provide critical information toward the understanding of geological units, biological evolution, climate change, and other scientific questions. However, in accordance with section 6311 of PRPA, the proposed rule would not require a permit for the collection of conodonts or nonvertebrate microfossils in association with authorized oil, gas, geothermal, or other minerals activities that are permitted under other authorities. Casual collection of conodonts or nonvertebrate microfossils may be permissible on certain BLM- or Reclamation-managed lands consistent with the limitations defined in subpart I of the proposed rule. Bureaus may individually determine that certain conodonts or nonvertebrate microfossils lack paleontological interest and therefore are not paleontological resources on all or on portions of land they administer.
When paleontological resources on certain BLM- and Reclamation-managed lands are common plant or invertebrate fossils, they may be casually collected in compliance with subpart I of the proposed rule. They are still paleontological resources (meaning that they have paleontological interest and provide information about the history of life on earth), but PRPA authorizes the limited collection of these resources on lands administered by BLM and Reclamation where such collection is consistent with the laws governing the management of those lands, PRPA, and subpart I of the proposed rule.
Proposed § 49.10 would state that the proposed rule preserves the authority of the Secretary of the Interior under this and other laws and regulations to manage, protect, and preserve
Proposed § 49.15 would state that the proposed rule does not impose additional requirements on activities permitted under the general mining or mineral laws, does not apply to Indian land, and does not apply to land other than federal land as defined in the proposed rule. This is consistent with the savings provisions of the PRPA. This section means that the bureaus will not add requirements under PRPA and the proposed rule to mining- and mineral-related permits. For example, the bureaus may not cite PRPA or the proposed rule in the list of mitigation measures that is attached to an approved mining plan of operations. However, because PRPA and the proposed rule do not limit the applicability of other legal authorities such as the Mining in the Parks Act and FLPMA, the bureaus may continue to cite those other authorities as protection for paleontological resources when authorizing or conditioning land or resource uses under those authorities. This section would also clarify that, under PRPA, the word “reclamation” means reclamation in the context of mining and mineral activities and not the broader context of all federal reclamation activities.
Proposed § 49.20 would state that the proposed rule would not create a right or standing to file suit for persons who are not officers or employees of the United States acting in that capacity. It would repeat section 6311 of PRPA (16 U.S.C. 470aaa-10) for public notice and clarity.
Proposed § 49.25 would implement the provision in PRPA that exempts information about the nature and specific location of a paleontological resource from disclosure under the Freedom of Information Act and any other law unless the authorized officer determines that disclosure would: (1) Further the purposes of PRPA; (2) not create risk of harm to or theft or destruction of the resource or site containing the resource; and (3) be in accordance with other applicable laws. This proposed section would also require a written agreement between the bureau and the party seeking the disclosure, which would ensure that the recipient of the disclosure does not publicly distribute or otherwise release, disclose, or share the information. For example, a partner repository would not be permitted to post specific locality information on-line, but if authorized to do so in a written agreement could still share such information for educational or scientific uses that would not create harm or risk to the resource. The agreement to maintain confidentiality of released information would ensure that the release of confidential information in one situation would not trigger the requirement of the bureau to release that same information to other requestors.
Proposed § 49.30 would explain that the bureaus will conduct inventory, monitoring, and preservation activities based upon scientific and resource management principles and practices, and clarify that these activities are undertaken by each bureau internally or may be coordinated with other agencies, non-federal partners, scientists, and the general public where appropriate and practical. Such coordination might take place through mechanisms such as agreements, permits, grants, citizen science efforts, or other arrangements. For public notice and clarity, § 49.30 would repeat section 6302 of PRPA, 16 U.S.C. 470aaa-1.
Proposed § 49.35 would explain that the bureaus will establish a program to increase public awareness, coordinated with other agencies, non-federal partners, scientists, and the general public where appropriate and practical. National Fossil Day, an annual multi-agency and multi-partner event, is a successful example of how the bureaus are already working to increase public awareness. For public notice and clarity, § 49.35 would repeat section 6303 of PRPA, 16 U.S.C. 470aaa-2.
Proposed § 49.40(a) would state that the authorized officer may restrict access to or close areas to collection to protect resources or provide for public safety. For public notice and clarity, paragraph (a) would repeat section 6304(e) of PRPA, 16 U.S.C. 470aaa-3(e). Proposed § 49.40(b) would clarify that other authorities may also be used to restrict access to or close areas in order to preserve or protect paleontological resources or provide for public safety. This authority supplements the bureaus' existing authority and procedures for restricting access to areas or closing areas to collection (see BLM regulations at 43 CFR 8364.1; Reclamation regulations at 43 CFR 423.29; FWS regulations at 50 CFR 25.21; and NPS regulations at 36 CFR 1.5).
Since 1906, the bureaus have permitted the collection of paleontological resources under various legal and regulatory authorities. Permitting will continue under PRPA and the proposed regulations.
Proposed § 49.50 would clarify when a permit is required and who must have a permit. A permit would be required for collecting paleontological resources or disturbing paleontological sites except for casual collecting on certain lands managed by BLM or Reclamation where casual collecting is allowed. The conditions for casual collecting are defined in subpart I of this proposed rule. Proposed § 49.50(b) states a permit may be required by a bureau for paleontological investigative activities that do not involve collection or disturbance in order to track and report on scientific activities or for other purposes. Proposed § 49.50(c) states a permit would be required for federal employees to disturb paleontological sites or collect paleontological resources although bureaus may implement this requirement on a programmatic basis, consistent with their internal processes. The bureau personnel so authorized must meet the professional requirements defined in § 49.60 of the proposed rule, and have experience appropriate to the planned work. The approval must be issued by the bureau managing the land. All collected materials are the property of the Federal Government, and must be managed and curated consistent with the requirements of subpart C of the proposed rule.
Proposed § 49.55 would establish that applicants who meet the qualification requirements of proposed § 49.60, provide a complete application, and
Proposed § 49.60(a)(1)-(4) would describe qualifications needed for an applicant to receive a permit. PRPA requires the bureaus to ensure that proposed work under a permit will further paleontological knowledge or public education and that the applicant is qualified to carry out the permitted activity. In order to accomplish both requirements, the proposed regulations would require the applicant and others overseeing work under the permit to have experience and qualifications in paleontology appropriate to the tasks they are to perform. For the applicant, an advanced degree in paleontology or equivalent experience and prior field experience has been the baseline for this requirement for all of the bureaus for more than 20 years and is consistent with similar policy for archaeology permits that are authorized under the Archaeological Resources Protection Act of 1979. The authorized officer may grant a permit to an applicant who lacks an advanced degree or specialized experience if the authorized officer is satisfied that the applicant's education and experience are sufficient to carry out the work that is proposed. The authorized officer may grant the permit, grant the permit with limitations, or deny the permit based on the applicant's education, experience, and past performance, and qualifications of persons named in the application as overseeing work.
Proposed § 49.60(b) states that past performance will also be considered, and includes any aspect that could affect performance under the permit being applied for. This would include compliance with previous permits, relevant civil or criminal violations, or relevant indictments or charges.
In order to ensure consistency among bureaus, proposed § 49.65 lists the information that a permit applicant is required to provide before a bureau can issue a permit under this subpart. Proposed § 49.65(a) would require permit applicants to submit an application to the bureau that administers the federal land where the proposed activity would be conducted. For activities on lands administered by BLM, Reclamation, and FWS, permit applicants would use DI Form 9002 (
Proposed § 49.65(b) would describe the information requirements that the permit application forms would include.
Proposed § 49.70(a) and (b) would identify how a bureau evaluates and decides on a permit application. Because permit approval would be partially based on whether the proposed repository for the collection under the permit would meet the standards of 411 DM, proposed § 49.70(c) would require the authorized officer to work with the permit applicant and proposed repository to decide whether to approve that repository for the collection. The phrase “the authorized officer may” means that the authorized officer has discretion to approve or deny a permit based on information provided by the applicant, past and present performance, management considerations, bureau policy, and other considerations.
Proposed § 49.75(a) would specify that a permit would include but not be limited to certain terms and conditions. Section 6304 of PRPA lists three required permit terms and conditions. The proposed rule would require additional terms and conditions in order to enhance consistency among bureaus as emphasized by section 6302(b) of PRPA. For approved activities on lands administered by BLM, Reclamation, and FWS, the authorized officer would issue the permit using DI Form 9003 (
Proposed § 49.75(a)(3) would clarify that the permittee is responsible for ensuring that the resource site or recovered paleontological materials are not put at risk as a result of work that is done under the permit. For example, if fossils are exposed by collection or excavation, they must be protected from damage, theft, or other harm for the period they are exposed to risk. Additionally, the permit would not authorize permittees to modify the environment around an area of work. For example, permittees would not be allowed to cut trees, create roads, or grade parking areas.
Proposed § 49.75(a)(8) would require a permittee to report suspected resource damage or theft to the authorized officer after learning of such damage or theft. Such reporting should be done as soon as possible, but in all cases must be done within 48 hours. Based on the bureaus' experience, 48 hours is a reasonable timeframe for such reporting.
Proposed § 49.75(a)(9) would clarify that collections made under a permit must be deposited in the approved repository, and that the permittee must notify the bureau of the deposit. The notification of deposit is required because the bureau must know the nature, condition, and location of federally owned paleontological resources in order to meet PRPA's mandate to manage these resources using scientific principles and expertise, and to meet Departmental museum management requirements. Documentation of the transfer of paleontological resources from the care of the permittee to the care of the approved repository is necessary so that the bureau, the permittee, and the approved repository will each know which party is responsible for the care and management of the paleontological collection.
To avoid a situation where bureaus or repositories could have large collections of paleontological resources that are costly to maintain or no longer contribute to science, the proposed rule would allow the authorized officer to determine that specimens that are found to be redundant, lack adequate associated data, or otherwise are determined not to further paleontological knowledge, public education, or management of paleontological resources may be removed from museum collections and placed into working collections.
Proposed § 49.75(a)(10) would clarify that all paleontological resources collected under a permit remain federal property. The resources that are not collected, but instead are left
Proposed § 49.75(a)(12) would state that the permittee is responsible for the costs of carrying out the permitted
Proposed § 49.75(a)(13) would require a permittee to provide reports as required by the bureau in the permit. The permittee will ensure that reports are submitted in a timely fashion and contain the information necessary to ensure accountability for federal resources. For activities that were conducted on lands administered by BLM, Reclamation, or FWS, reports would be submitted using DI Form 9005 (
Proposed § 49.75(b) would authorize the bureau to hold a permittee responsible for complying with applicable permit terms and conditions after it has expired or been cancelled, suspended, or revoked. Like all terms and conditions, this requirement would be enforceable under the criminal and civil penalties provision of this part, and would enable bureaus to preserve paleontological resources and maintain accountability by requiring that affected resource sites be left in a good condition, collections be transferred to the approved repository in a timely manner, that associated records be produced, and that reports be submitted, regardless of the status of the permit.
Proposed § 49.75(c) would provide that the authorized officer may include in the permit additional terms and conditions necessary to carry out the purposes of this part.
Proposed § 49.75(d) would provide that for activities approved on lands administered by BLM or Reclamation, the authorized officer may provide a permittee with DI Form 9007 (
Proposed § 49.80 would identify when and how a permit may be modified, suspended, revoked, or cancelled. The authorized officer would notify a permittee of such actions verbally or in writing. Any verbal notification would be confirmed by a written order delivered as soon as practicable after issuance of the verbal order. The notification would be immediately effective upon the permittee's receipt of the verbal or written notification, whichever is received first.
Proposed § 49.80(a) would identify when a permit may be modified. Common permit modifications may include changing the duration of a permit, changing personnel that are named on a permit, changing the geographic area that is authorized under a permit, making minor modifications to the stratigraphic context or scope of work, or adding or altering supplemental terms and conditions to a permit. These modifications may be requested by the permittee or initiated by the bureau. The authorized officer may issue a new permit or require the permittee to submit a new application when a modification would substantially change the scope of the existing permit.
Proposed § 49.80(b) would identify when activities under a permit may be suspended. Common reasons for a suspension include the discovery of potential resource conflicts, failure of the permittee to follow terms and conditions, resource protection issues, or budget or staffing concerns. A suspension would last no longer than 45 days, and may be lifted by the authorized officer when the reasons for suspension no longer apply, or when conditions for lifting a suspension have been met. After 45 days, if the circumstances prompting the suspension have not been resolved, the suspension will end and the authorized officer may modify, revoke, or cancel the permit, as appropriate to the specific circumstance.
Proposed § 49.80(c) would identify when a permit may be revoked. A permit will be revoked when, for example, a permittee fails to follow the terms and conditions of a permit, is charged with a civil or criminal violation under PRPA or under other applicable laws, or is found ineligible to hold a paleontology permit.
Proposed § 49.80(d) would identify when a permit may be cancelled. Cancellation would differ from revocation in that it would terminate a permit for reasons that do not relate to improper or poor performance on the part of the permittee. Cancellation is not a negative action and should not be cause to deny a future permit to the applicant. Cancellation may occur when administrative or resource issues warrant, and may follow a 45-day suspension, or may occur without a suspension occurring. A permittee may request a permit to be cancelled for any reason, or the bureau may need to cancel the permit for administrative or management reasons. Although PRPA does not specifically reference permit cancellation, the proposed regulations include this option because permit cancellation is a form of permit modification (changing the end date of the permit) and is therefore within the scope of PRPA.
Proposed § 49.80(e) would specify that the authorized officer will notify a permittee of the modification, suspension, revocation, or cancellation either verbally or in writing. Proposed § 49.80(f) would specify that notifications of modification, suspension, revocation, or cancellation are effective upon the permittee's receipt of the written notification.
Authorized officers have discretion to make permit-related decisions based on information provided by the applicant, past and present performance, management considerations, bureau policy, and other considerations. Proposed § 49.85 would state that permit-related decisions may be appealed.
Proposed § 49.90 would specify the processes for appealing permit-related decisions. BLM and FWS each have applicable regulations, and NPS already has a process in place. Reclamation will develop an appeals process for permit decisions and will document the process in Reclamation's system of written directives. The appeals process may include a review by the applicable Reclamation Regional Director, followed by appeal to Reclamation's Commissioner, similar to the process in place for land use decisions found at 43 CFR part 429.
Proposed § 49.95 would describe the information collection status of this part.
The proposed requirements provided in subpart C are consistent with requirements provided for
Proposed § 49.200 would clarify that collections made under a permit issued under this part must be deposited in a repository approved by the authorized officer. Collections made prior to the effective date of the proposed rule would be subject to the terms and conditions of the original collection permit or agreement, which is also consistent with guidance in current DOI museum policy.
Proposed § 49.205(a) would grant the authorized officer discretion to approve a repository for a collection based on several factors, including appropriate scope of collections, qualified curation staff, adequate public access, compliance with DOI museum collection standards, and consistency with bureau management goals. Approval of a repository is necessary for both federal and non-federal repositories.
Proposed § 49.205(b) would clarify that when the authorized officer approves a repository for the collection, that repository will be listed in the approved permit and will remain approved to curate the collection unless the authorized officer determines that any one of the considerations in paragraph (a) of this section is no longer met. In that case, the repository would be notified and would have a reasonable amount of time to:
(1) Correct the deficiency;
(2) Move the collection to another approved repository; or
(3) Take other actions the authorized officer requests.
In situations involving movement of the collection to another approved repository, the first repository would likely ship the collection to the second repository in accordance with the authorized officer's instructions. The bureau would then close the deposit agreement with the first repository and enter into a new agreement with the second repository.
Proposed § 49.210 would clarify the process for depositing paleontological collections at the approved repository. Under proposed § 49.210(a), the authorized officer would work with the permittee and approved repository, using scientific principles and expertise, to ensure that the collection is complete and that the content of the collection would further paleontological knowledge, public education, or management of paleontological resources. In addition, the authorized officer would review any existing agreement between the bureau and the approved repository to determine if that agreement adequately addresses requirements that are specific to the collection and either develop a new agreement, or amend an existing agreement, if an adequate agreement does not exist.
Under proposed § 49.210(b), the permittee or the repository would submit DI Form 9008 (
For repository managers concerned that the curation requirements of PRPA and the proposed rule could lead to unrealistic or burdensome curation requirements, the proposed rule addresses these concerns in three ways. First, a repository may agree or decline to curate a collection of paleontological resources. Second, the authorized officer is ultimately responsible for determining the content of the collection, with input from the permittee and the repository, and ensuring that the collection meets bureau management goals. Third, the proposed rule specifies that the standard for collection under permit and deposit into an approved repository is that the collection furthers paleontological knowledge, public education, or management goals for paleontological resources. If a proposed collection would not meet this standard, then the collection should not be permitted. If the authorized officer determines that a collection formerly met this standard but no longer does, then part or all of the collection may be removed from the approved repository, transferred to a working collection, or managed in other ways consistent with DOI standards in 411 DM and bureau museum management procedures. Note that, in such a circumstance, that collection is still comprised of paleontological resources. If the specimens in a collection are determined by the authorized officer to no longer have paleontological interest or provide information about the history of life on earth, then they are not paleontological resources as defined in PRPA and the proposed rule. All of these aspects of the proposed rule should ameliorate the concerns of repository managers that the requirements in PRPA would be burdensome.
Proposed § 49.215 would specify the terms and conditions that must be included in an agreement between the bureau and the repository. The terms and conditions provided in this section are consistent with 411 DM. Several of these terms and conditions are addressed below for further clarification.
First, proposed § 49.215(a)(2) would clarify that the Federal Government retains ownership of all paleontological resources collected under a permit, regardless of where the resources reside, who discovered or collected them, or who assumes administrative responsibility for their care. Bureaus may transfer all or portions of collections of paleontological resources to other federal bureaus (including the Smithsonian) either by loan or by administrative transfer without changing the fact that they are owned by the Federal Government.
Proposed § 49.215(a)(6) requires that agreements describe any special procedures or restrictions for access to controlled property, consumptive use, reproduction, or curatorial services, including loans. These terms are all defined in 411 DM.
Proposed § 49.215(a)(11) would clarify that one of the terms and conditions is a statement that employees cannot take any action that results in collection encumbrance, seizure, theft, damage, or other issues, and closely follows 36 CFR part 79 and DOI policy in 411 DM. The prohibition against damaging a collection does not prevent consumptive use that is approved by the bureau in a permit, agreement, or other written documentation.
Proposed § 49.220 would provide standards for managing collections made under this part that are consistent with DOI policy for the management of museum collections found at 411 DM. Particular provisions of this proposed section are addressed below.
Proposed § 49.220(a)(1) would make collections and locality data available subject to the confidentiality provisions of the proposed rule and PRPA.
Proposed § 49.220(b) would authorize repositories to charge reasonable fees, consistent with applicable law, to cover their costs of making federal paleontological resources available to the public.
For public notice and clarity, proposed § 49.300 would restate the prohibitions contained in section 6306 of PRPA (16 U.S.C. 470aaa-5). Under PRPA and this section, a person may not:
(a) Excavate, remove, damage, or otherwise alter or deface or attempt to excavate, remove, damage, or otherwise alter or deface any paleontological resource located on federal land unless this activity is conducted in accordance with PRPA and this part. For example, this would prohibit moving or relocating a paleontological resource from its
(b) Exchange, transport, export, receive, or offer to exchange, transport, export, or receive any paleontological resource if the person knew or should have known such resource to have been excavated or removed from federal land in violation of any provision, rule, regulation, law, ordinance, or permit in effect under federal law, including PRPA and this part.
(c) Sell or purchase or offer to sell or purchase any paleontological resource if the person knew or should have known such resource to have been excavated, removed, sold, purchased, exchanged, transported, or received from federal land.
(d) Make or submit any false record, account, or label for, or any false identification of, any paleontological resource excavated or removed from federal land. This provision would apply when a person knew or should have known that information was false, or when there was intent to deceive, misrepresent, or mislead.
Proposed § 49.400 would describe what criminal penalties apply to persons who commit prohibited acts under this part. Bureaus may utilize other authorities to issue citations for criminal violations involving paleontological resources.
Proposed § 49.400(a) would state that criminal penalties would not apply with respect to paleontological resources in the lawful possession of a person on or before March 30, 2009, which is the date that PRPA was enacted.
Proposed § 49.400(b) would authorize penalties upon conviction for persons who knowingly violate or counsel, procure, solicit, or employ another person to violate subpart D of this proposed rule. If the value of the paleontological resources involved (which means the sum of the commercial and scientific value of the paleontological resources involved and the cost of response, restoration, and repair of the resources and sites involved) is more than $500, penalties would be assessed in accordance with Title 18 of the U.S. Code and/or may include imprisonment for up to 5 years. If the value of the paleontological resources involved is less than $500, penalties would be assessed in accordance with Title 18 of the U.S. Code and/or may include imprisonment for up to 2 years. A court may award restitution, which may also be called penalties or damages, to the bureau for injuries to paleontological resources, in lieu of or in addition to fines.
Proposed § 49.400(c) would state that the term “value of the paleontological resources involved” would be explained in subpart G of this proposed rule.
Proposed § 49.400(d) would state that in the case of a second or subsequent violation by the same person, the amount of the penalties assessed under this subpart may be doubled.
Proposed § 49.400(e) would authorize law enforcement officers to issue citations for minor violations under the bureaus' existing enforcement authorities, such as misdemeanor penalties, rather than relying solely on the criminal penalties provided by PRPA.
Proposed § 49.500 would state that the authorized officer may assess a civil penalty upon any person who violates the provisions of the proposed rule or a permit issued under the proposed rule, and that each violation would be considered a separate offense.
Proposed § 49.505 would state the authorized officer may serve a notice of violation in person, by certified mail, return receipt requested, or other verifiable delivery method upon a person that the authorized officer believes has committed a violation of the proposed rule.
Proposed § 49.510 would describe the contents of a notice of violation.
Proposed § 49.515 would state that a person who receives a notice of violation and proposed civil penalty has 30 days from the date of receipt in which to file a written objection with the authorized officer. The person must state the reasons for the objection, provide any supporting documentation, and sign the objection.
By written notice, the authorized officer would sustain or deny the objection based on the information in the objection and any information provided upon request. If the authorized officer concludes there was no violation, the objection would be sustained, the notice of violation revoked, and no civil penalty would be assessed. If the authorized officer finds that a violation occurred, the objection would be denied. If the authorized officer finds that a violation occurred but the proposed civil penalty was too high, the objection would be denied in part and sustained in part.
Proposed § 49.520 would state that if the person who was served with a notice of violation and proposed civil penalty does not file a timely objection, or files a timely objection which is denied, the authorized officer would issue a final assessment of civil penalty.
Proposed § 49.525 would explain the factors that the authorized officer will take into account when calculating a proposed and a final assessment of civil penalty. For a first violation, the authorized officer considers the factors listed in § 49.525(a) and (b) and assesses a penalty. For example, the penalty might be $1,000.
Under proposed § 49.525(c), penalties for subsequent violations may be doubled. Thus, if a person who has already been assessed a civil penalty for a particular violation commits another prohibited act, the authorized officer may double the penalty for that act. For example, if the penalty for the second prohibited act would be $1,200 under the factors listed in paragraphs (a) and (b) of this section, the authorized officer
Proposed § 49.525(d)(2) authorizes civil penalties for damages to paleontological resources and paleontological sites. If other resources or sites are damaged, the bureaus can utilize their authorities under laws such as the Endangered Species Act, the Archaeological Resources Protection Act, the National Park System Resources Protection Act, and other statutes to pursue separate legal or administrative remedies.
Proposed § 49.525(e) would direct the authorized officer to use proposed subpart G of this proposed rule to determine scientific or commercial values and the cost of response, restoration, and repair.
Proposed § 49.525(f) would state that the final assessment may be equal to, less than, or more than the proposed civil penalty.
Proposed § 49.530 would state that the authorized officer would serve the final assessment of civil penalty by certified mail, return receipt requested, or another verifiable delivery method. The proposed section would also describe the required content of the final assessment.
Proposed § 49.535 would provide that a person who receives a final assessment of civil penalty must exercise one of two options within 30 days of the date the assessment is received: (1) Accept the assessment by filing a written notice with the authorized officer or paying the assessed penalty, or (2) file a request for hearing before an administrative law judge with the Departmental Case Hearings Division (DCHD), Office of Hearings and Appeals, DOI in accordance with § 49.535(b). The request for hearing will be dismissed if it is not timely filed with DCHD and may be dismissed if it does not contain all information described in proposed § 49.535(b).
If the person fails to file under either option within 30 days, the assessment will be deemed accepted. Acceptance of the assessment waives the right to hearing.
If a person files a request for a hearing with an administrative law judge, proposed § 49.540 would explain the procedures for that hearing.
Proposed § 49.545 would describe the contents of the administrative law judge's decision and would state that such decision would become effective 31 days from the date of the decision absent a timely appeal of the decision.
Proposed § 49.550 would provide the person who filed a request for the hearing with an administrative law judge, as well as the bureau, with the opportunity to appeal that judge's decision by submitting a written dated appeal of the decision to the DOI Office of Hearing and Appeals via certified mail, return receipt requested, or other verifiable delivery method, and would also describe the contents of the appeal documents and the mailing addresses where the appeal documents must be sent.
Proposed § 49.555 would state that the appeal to OHA is governed by 43 CFR part 4, subparts A and G, and other provisions of 43 CFR part 4, where applicable.
Proposed § 49.560 would explain decisions that are considered final administrative decisions. A person has 30 days from the date of those final decisions to fully pay the final assessment of civil penalty or agree to a payment schedule.
Proposed § 49.565 would explain that, within 30 days of the OHA decision, a person may file a petition for judicial review in the United States District Court for the District of Columbia or in the district where the violation occurred, and that the deadline for payment of the civil penalty will be stayed pending resolution of the judicial review.
Proposed § 49.570 would describe the consequences of failing to fully pay the final assessment of civil penalty by the required deadlines.
Proposed § 49.575 would state that civil penalties collected under this subpart are available without further appropriation to the bureau that administers the federal land or paleontological resources that were the subject of the violation, and may be used by the bureau for several purposes, including: Protection, restoration, or repair of the paleontological resources and sites that were the subject of the action, and protection, monitoring, and study of the resources and sites; and provision of educational materials to the public about paleontological resources, paleontological sites, or resource protection; or payment of rewards.
Proposed subpart G would provide direction on determining values and the cost of response, restoration, and repair under this part. The authorized officer may consult with subject matter experts, such as resource specialists, area specialists, and law enforcement specialists, in determining these values.
Proposed § 49.600 would describe scientific value. PRPA uses the term “paleontological value” in the section on prohibited acts and criminal penalties, and then switches to “scientific value” in the section on civil penalties. The bureaus agree that the two terms are synonymous and that for purposes of consistency and clarity only the term “scientific value” would be used in the proposed rule.
Proposed § 49.605 would describe commercial value. PRPA uses the term “commercial value” in the section on prohibited acts and criminal penalties, and then switches to “fair market value” in the section on civil penalties. The bureaus agree that the two terms are synonymous and for the purposes of consistency and clarity only the term “commercial value” would be used in the proposed rule.
Proposed § 49.610 would define the cost of response, restoration, and repair. In some cases, it may be appropriate for the estimated cost of response, restoration, and repair to be peer reviewed. The values and costs should be determined by paleontologists with appropriate expertise.
Proposed § 49.700 would explain when a violation will lead to the forfeiture of paleontological resources. When there are civil or criminal forfeitures, paleontological resources are either returned to, or remain in, the administrative authority of the Federal Government. Where appropriate, the bureau will initiate forfeiture under a cooperative agreement with agencies that have forfeiture regulations.
Proposed § 49.705 would describe the rewards that may be paid for assistance in enforcing the proposed rule. Proposed § 49.705(a) would establish that the bureau may pay a reward to the person or persons who assist the bureau by furnishing information that leads to a finding of a civil or criminal violation. Rewards will not be paid for the discovery or reporting of a paleontological resource (
Proposed § 49.800 would explain that PRPA does not allow casual collecting in areas managed by NPS or FWS. In those areas, collecting any paleontological resource must be conducted in accordance with a permit issued by NPS or FWS under subpart B of this proposed rule.
Under proposed § 49.805(a), casual collecting would continue as currently authorized on lands administered by BLM, except that the PRPA terms “negligible disturbance” and “reasonable amount” defined under § 49.810 must be followed. Casual collecting will not be allowed on BLM lands that are or become closed to casual collecting, BLM-administered national monuments, BLM-administered national conservation areas, outstanding natural areas, forest reserves, or cooperative management and protection areas, except where the bureau has specifically determined that casual collection would not impair the intent of the preservation designation. Because BLM must “conserve, protect, and restore [these] nationally significant landscapes that have outstanding cultural, ecological, and scientific values for the benefit of current and future generations,” the bureau must ensure that these areas would not be negatively affected by casual collecting (establishment of the National Landscape Conservation System, 16 U.S.C. 7202). Closures or restrictions may be short term, long term, or permanent. The BLM is requesting public comment regarding the range of designations listed in § 49.805(a)(2) as prohibiting or restricting casual collection, including whether and why additional designations should be included or currently proposed designations excluded from the list.
Proposed § 49.805(b) would explain that casual collecting of common invertebrate or plant paleontological resources will be allowed on land administered by Reclamation only in locations where Reclamation has established a special use area for casual collecting using processes defined in Reclamation's regulation at 43 CFR part 423,
Proposed § 49.805(c) would clearly place full responsibility on persons interested in casual collecting to ascertain which bureau manages the land where those persons would like to collect paleontological resources, whether the land is open to casual collecting, and what may be collected in an area, and to obtain information about the managing bureau's casual collecting procedures.
Proposed § 49.810(a) would restate the PRPA definition of casual collecting. Proposed § 49.810(a)(1) through (a)(5) would provide specific definitions for the terms used in the PRPA definition.
Under proposed § 49.810(a)(1), only common invertebrate and common plant paleontological resources may be casually collected. Common invertebrate and common plant paleontological resources are invertebrate or plant fossils that have been established by the bureaus, based on available scientific information and current professional standards, as having ordinary occurrence and wide-spread distribution.
Although these particular resources may be common, they are still paleontological resources as defined in PRPA and the proposed rule. That is, they have paleontological interest and provide information about the history of life on earth.
Not all invertebrate or plant paleontological resources are common. If the resources are not common, they may only be collected under a permit. It may not always be possible for a collector to identify in the field whether a fossil is common. When in doubt, collectors should err on the side of caution and collect only the resources that they know are common. The bureaus may hold a trained amateur, avocational paleontologist, or professional to a higher standard of knowledge than the general public about whether or not a fossil is common.
If a knowledgeable collector makes an unanticipated discovery of an uncommon paleontological resource while casually collecting, that collector shall not collect that resource because he or she is not authorized to do so. Instead, the collector should alert the relevant bureau. If the collector wishes to pursue collection, he or she must obtain a permit to collect the uncommon resource. If the collector does collect the uncommon resource without a permit, that collector may be subject to penalties.
Proposed § 49.810(a)(2) would establish “reasonable amount” for casual collecting as 25 pounds per day per collector, not to exceed 100 pounds per year per collector. This proposed definition would also clarify that pooling of multiple daily amounts by one or more collectors to obtain pieces in excess of 25 pounds is not allowed. The bureaus determined that the 25 pounds per day per collector, and the 100 pounds per year per collector, are reasonable amounts based on BLM's long experience with the collecting of petrified wood and other fossils from BLM lands before PRPA was enacted. These amounts represent a balance between PRPA's mandate to allow casual collecting and other laws that require the bureaus to protect and manage other natural and cultural resources.
The proposed prevention of the pooling of multiple daily amounts
The bureaus considered defining “reasonable amount” as equaling two quarts instead of 25 pounds, but decided that the use of a weight limit, rather than a size limit, is more consistent with existing collection standards that are already understood by the public and the bureaus.
Proposed § 49.810(a)(3) would clarify that “negligible disturbance” for casual collecting means little or no change to the surface of the land, and minimal or no effect to natural and cultural resources. This proposed definition would specify that in no circumstance may the surface disturbance exceed 1 square yard (3 feet by 3 feet) per individual collector; that in cases of multiple collectors each square yard of surface disturbance must be separated by at least 10 feet; and that all areas of surface disturbance must be backfilled with the material that was removed in order to render the disturbance substantially unnoticeable to the casual observer. The reason for using the “1 square yard” maximum is that this would be similar to longstanding BLM practice, and such consistency is encouraged by PRPA. In the context of compliance with the National Environmental Policy Act (NEPA) in the issuance of research permits for BLM, for instance, a proposal to engage in surface disturbance of anything larger than 1 square meter is not usually subject to categorical exclusion but is subject to further analysis under NEPA. The fossil-collecting community should, therefore, already be familiar with this type of threshold. For purposes of managing “negligible disturbance,” 1 square yard is considered to be approximately equal to 1 square meter.
The proposed definition would also specify that collecting areas need to be separated by at least 10 feet where there is surface disturbance. The separation would reduce cumulative effects to other resources. Where there is no surface disturbance, there is no need to separate collecting areas.
Proposed § 49.810(a)(4) would address the uses to which casually collected resources can be put. Casually collected resources may be used only for noncommercial personal use, which means a use other than purchase, sale, financial gain, or research. The restriction on any commercial use of casually collected resources is not new. For instance, rules of conduct applicable to BLM-managed public lands currently allow casual collecting of paleontological resources only for “noncommercial purposes” (43 CFR 8365.1-5(b)).
Proposed § 49.810(a)(5) would define the kinds of tools that may be used to casually collect these resources. These tools must be small, such as a geologic hammer, trowel, or sieve; they cannot use or be operated by a motor, engine, or other mechanized power source; and they must be light and small enough to be hand-carried by one person. A tool that exceeds this definition cannot be used to casually collect these resources.
Proposed § 49.810(b) would enable the authorized officer to establish limitations on casual collecting, in addition to the limitations already contained in the proposed rule. Examples of additional limitations include reducing the maximum weight for “reasonable amount,” decreasing the threshold for negligible disturbance, limiting depth of allowable disturbance, limiting specific tools that may be used, defining what is common in a specific area, establishing time or duration limits for collecting, establishing limits to avoid cumulative effects, and establishing parameters for safety.
Proposed § 49.810(c) would clarify that casual collecting is not allowed when any of the parameters that restrict casual collecting (reasonable amount, common invertebrate and plant paleontological resources, personal noncommercial use, negligible disturbance and non-powered hand tools) is exceeded or does not apply. Casual collecting is a limited exception to the overarching permit requirement of PRPA, and is allowed under the presumption that the “commonness” of these resources, in combination with limitations on amount, surface disturbance, tools, and eventual use of the collected resources, contributes to the underlying objective of protecting paleontological resources on federal lands. Proposed § 49.810(c) also clarifies that casual collecting in excess of the specified limitations is prohibited and subject to civil and criminal penalties.
PRPA requires the BLM to allow the casual collecting of common invertebrate and plant paleontological resources, which is consistent with existing BLM policy. However, this rule would amend the text at existing 43 CFR 8365.1-5 to conform to the language used by PRPA.
The authority citations for 43 CFR part 8360 and the list of authorities at § 8360.0-3 would each be amended to add PRPA (16 U.S.C. 470aaa
The current § 8365.1-5 would be amended to conform to the terms introduced by PRPA. The specific changes are:
• § 8365.1-5(b)(2) would be amended to remove the phrase “common invertebrate and common plant fossils;”
• § 8365.1-5(b)(4) would be amended to remove “and” in order to maintain grammatical structure;
• § 8365.1-5(b)(5) would be amended to add “and” in order to maintain grammatical structure; and
• A proposed new § 8365.1-5(b)(6) would be added to include “common invertebrate and plant paleontological resources” on the list of things that may be collected from BLM public lands in reasonable amounts for noncommercial purposes. The paragraph also provides a reference to proposed part 49, which would authorize and provide rules for casual collecting.
PRPA states that a paleontological resource may not be collected from federal land without a permit issued under that authority. The proposed amendment at § 27.63 would add a paragraph that states that a permit is required in order to collect paleontological resources and would provide a reference to proposed part 49, which would authorize and provide rules for issuing permits under PPRA.
Proposed new § 27.63(c) would state that permits are required for paleontological studies on national wildlife refuges in accordance with the provisions at proposed 43 CFR part 49.
Executive Order 12866 provides that the Office of Information and Regulatory Affairs (OIRA) in the Office of Management and Budget will review all significant rules. OIRA has determined that this proposed rule is not significant.
Executive Order 13563 reaffirms the principles of Executive Order 12866
This proposed rule will not have a significant economic effect on a substantial number of small entities under the RFA (5 U.S.C. 601
This proposed rule is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. This rule:
a. Does not have an annual effect on the economy of $100 million or more.
b. Will not cause a major increase in costs or prices for consumers, individual industries, federal, state, or local government agencies, or geographic regions.
c. Does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises.
This proposed rule does not impose an unfunded mandate on state, local, or tribal governments or the private sector of more than $100 million per year. This rule will not have a significant or unique effect on state, local, or tribal governments or the private sector. The rule addresses the management of paleontological resources from lands managed by BLM, Reclamation, FWS, and NPS, and imposes no requirements on other agencies or governments. A statement containing information required by the UMRA (2 U.S.C. 1531
This proposed rule does not affect a taking of private property or otherwise have taking implications under Executive Order 12630. This proposed rule is not a government action capable of interfering with constitutionally protected property rights. It would implement the new statutory authority for managing, preserving, and protecting paleontological resources on federal lands and is consistent with prior policies, procedures, and practices for the collection and curation of paleontological resources on federal land. Private property is not affected. A takings implication assessment is not required.
Under the criteria in section 1 of Executive Order 13132, this proposed rule does not have sufficient federalism implications to warrant the preparation of a federalism summary impact statement. This rule addresses the management of paleontological resources on and from lands managed by the BLM, Reclamation, FWS, and NPS, and imposes no requirements on other agencies or governments. It does not have a substantial direct effect on the states, on the relationship between the Federal Government and the states, or on the distribution of power and responsibilities among the levels of government. A federalism summary impact statement is not required.
This proposed rule complies with the requirements of Executive Order 12988. Specifically, this rule:
(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.
DOI strives to strengthen its government-to-government relationship with Indian tribes through a commitment to consultation with Indian tribes and recognition of their right to self-governance and tribal sovereignty. We have evaluated this proposed rule under DOI's consultation policy and under the criteria in Executive Order 13175 and have determined that it has no substantial direct effects on federally recognized Indian tribes and that consultation is not required. This proposed rule applies to lands managed by BLM, Reclamation, FWS, and NPS. It does not apply to and has no direct effect on tribal trust lands or lands subject to a restriction on alienation imposed by the United States.
DOI is sending a letter to notify the 566 federally recognized Indian tribes that the proposed rulemaking is being published in the
This proposed rule contains a collection of information that has been submitted to OMB for approval under the PRA (44 U.S.C. 3501
OMB has reviewed and approved the information collection requirements associated with the NPS' application and reports for paleontological permits (OMB Control Number 1024-0236).
DOI proposes to collect the following information associated with paleontological permits for work on lands administered by the BLM, Reclamation, and FWS:
(1) Applicant's name, affiliation, and contact information.
(2) Current resume for the applicant and all other persons who will oversee fieldwork and other work.
(3) Description, estimated start and end dates of proposed work, and maps and other location information.
(4) Purpose and methodology of proposed work, including a detailed scope of work or research plan for the proposed activity, logistical information, methods that will be employed to explore for or remove the paleontological resources, proposed content and nature of any collection to be made under the permit.
(5) Bonding information.
(6) Information about the proposed repository.
(7) Information on the applicant's past performance on previous permits.
(1) The reasons for challenging the final assessment;
(2) The relief sought and the basis for the relief;
(3) A copy of the original notice of civil violation and proposed civil penalty assessment;
(4) A copy of any objection and supporting documentation filed under § 49.515(a);
(5) A copy of the final assessment of civil penalty; and
(6) A certificate of service acknowledging service of the request for hearing with the accompanying documentation on the Office of the Solicitor.
Send comments specific to the information collection aspects of this proposed rule to the Desk Officer for the Department of the Interior with a copy to the Office of the Secretary Information Collection Clearance Officer, Department of the Interior. See the
This proposed rule is anticipated to be categorically excluded from National Environmental Policy Act analysis under DOI categorical exclusion, 43 CFR 46.210(i), which covers “Policies, directives, regulations, and guidelines: that are of an administrative, financial, legal, technical, or procedural nature; or whose environmental effects are too broad, speculative, or conjectural to lend themselves to meaningful analysis and will later be subject to the NEPA process, either collectively, or case-by-case.”
The categorical exclusion is appropriate and applicable for the
Both the establishment of the permit system, and future decisions to close lands to casual collecting (and, conversely, to open lands to casual collecting where that use is not already authorized) are subject to the second part of the categorical exclusion. Issuance of a permit (whether programmatic or individual in scope) for the collection of paleontological resources itself requires agency compliance with NEPA. Moreover, a permit must contain permit conditions, supported by appropriate NEPA analysis, that ensure the underlying project or action will continue to meet regulatory requirements throughout the entire duration of the permit. Likewise, any decision to close or open lands to casual collecting also requires agency compliance with NEPA and may contain conditions, supported by appropriate NEPA analysis, that ensure the appropriate management of these resources. Because the environmental effects of this proposed rule are too speculative to lend themselves to meaningful analysis, and the environmental consequences of any of these decisions will be analyzed in detail at the time the permit application or proposed opening or closing to casual collecting is evaluated and before a decision is made, the rule is subject to the second part of DOI categorical exclusion, 43 CFR 46.210(i).
Pursuant to 43 CFR 46.205(c), DOI has reviewed its reliance upon this categorical exclusion against the list of extraordinary circumstances, at 43 CFR 46.215, and has found that none applies to this rule. Therefore, neither an environmental assessment (EA) nor an environmental impact statement (EIS) is required for this rulemaking.
Even though neither an EA nor an EIS must be prepared for this rule, the BLM has elected to prepare an EA to inform decision makers regarding the possible effects of two specific provisions as applied to the public lands BLM manages, as allowed under DOI's regulations implementing NEPA, 43 CFR 46.300(b)(1). BLM-administered lands are open to casual collection of paleontological resources unless specifically closed by a site-specific decision. As such, casual collection has been and will continue to occur on certain public lands.
PRPA provides specific authority and limits under which this activity can take place. In particular, PRPA allows for “casual collecting,” which is defined as “the collecting of a reasonable amount of common invertebrates and plant paleontological resources for non-commercial personal use, either by surface collection or the use of non-powered hand tools resulting in only negligible disturbance to the Earth's surface and other resources” (Pub. L. 111-11, section 6301(1), 123 Stat. 1172), and specifies that the Secretary of the Interior is to determine how these terms are to be defined. The rule's proposed definitions for “negligible disturbance” and “reasonable amount” describe the conditions limiting any casual collection activities on certain public lands managed by the BLM. The BLM is preparing an EA for these proposed definitions, which will immediately apply to casual collection on BLM public lands when this rule is finalized. The EA is under development and may be found at
This proposed rule is not a significant energy action under the definition in Executive Order 13211. DOI has determined that this proposed rule will not have substantial direct effects on energy supply, distribution, or use, including a shortfall in supply or price increase. The rule has no bearing on energy development and will have no effect on the volume or consumption of energy supplies. A Statement of Energy Effects is not required.
DOI is required by Executive Orders 12866 (section 1(b)(12)), 12988 (section 3(b)(1)(B)), and 13563 (section 1(a)), and by the Presidential Memorandum of June 1, 1998, to write all rules in plain language. This means that each rule we publish must:
(a) Be logically organized;
(b) Use the active voice to address readers directly;
(c) Use common, everyday words and clear language rather than jargon;
(d) Be divided into short sections and sentences; and
(e) Use lists and tables wherever possible.
If you believe the DOI has not met these requirements, send comments by one of the methods listed in the
This proposed rule reflects the efforts of staff in BLM, Reclamation, FWS, and NPS.
DOI, whenever practicable, affords the public an opportunity to participate in the rulemaking process. Accordingly, interested persons may submit written comments regarding this proposed rule by one of the methods listed in the
Before including your address, phone number, email address, or other personal identifying information in your comment, please know that we may make your entire comment—including your personal identifying information—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.
Casual collecting, Civil penalties, Collecting, Commercial value, Confidentiality, Criminal penalties, Curation, Museums, Natural resources, Paleontological resources, Paleontology, Permits, Prohibited acts, Prohibitions, Public awareness, Public education, Recreation, Reporting and record keeping requirements, Repository, Research, Scientific principles, Scientific value.
Penalties, Public lands, Recreation activities, Recreation and recreation areas.
Wildlife refuges.
For reasons stated in the preamble, the Department of the Interior proposes to amend title 43 of the CFR by adding part 49 and amending part 8360 and to amend part 27 of title 50, as set forth below:
16 U.S.C. 470aaa-aaa-11.
This part:
(a) Directs the Bureau of Land Management (BLM), Bureau of Reclamation (Reclamation), U.S. Fish and Wildlife Service (FWS), and National Park Service (NPS) (collectively referred to as “the bureaus”) to manage, protect, and preserve paleontological resources on federal land using scientific principles and expertise;
(b) Coordinates paleontological resources management among the bureaus;
(c) Promotes public awareness; provides for collection under permit; clarifies that paleontological resources cannot be collected from federal land for sale or purchase; establishes civil and criminal penalties; sets curation standards; and
(d) Authorizes casual collecting of common invertebrate and plant fossils from certain BLM-administered land and certain Reclamation-administered land.
The terms used in this part have the following definitions.
(1) Primary records relating to identification, evaluation, documentation, study, preservation, context, or recovery of a paleontological resource;
(2) Public records including, but not limited to, land status records, bureau reports, publications, court documents, and agreements; and
(3) Administrative records and reports generated during the permitting process that pertain to survey, excavation, or study of the paleontological resource.
(1) Those that are found in an archaeological context and are an archaeological resource as defined in section 3(1) of the Archaeological Resources Protection Act of 1979 (16 U.S.C. 470bb(1)); or
(2) “Cultural items,” as defined in section 2 of the Native American Graves Protection and Repatriation Act (25 U.S.C. 3001
(3) Resources determined in writing by the authorized officer to lack paleontological interest or not provide information about history of life on earth, based on scientific and other management considerations.
No. This part preserves the authority of the Secretary of the Interior and the bureaus under this and other laws and regulations to manage, protect, and preserve paleontological resources on federal land.
(a) The regulations in this part do not invalidate, modify, or impose additional restrictions or permitting requirements on mineral, reclamation, or related multiple use activities for which authorization exists or permits are issued under the general mining, mineral leasing, geothermal leasing, or mineral materials disposal laws.
(b) The regulations in this part do not apply to Indian land.
(c) The regulations in this part do not apply to any land other than federal land as defined in this part, or resources other than paleontological resources as defined in this part.
(a) This part does not create any right, privilege, benefit, or entitlement for any person who is not an officer or employee of the United States acting in that capacity.
(b) Only an officer or employee of the United States acting in that capacity has standing to file a civil action in a court of the United States to enforce this part.
(a) In keeping with section 6309 of the Act, information concerning the nature and specific location of a paleontological resource is exempt from disclosure under the Freedom of Information Act and any other law unless the authorized officer determines that disclosure would:
(1) Further the purposes of the Act;
(2) Not create risk of harm to or theft or destruction of the resource or site containing the resource; and
(3) Be in accordance with other applicable laws.
(b) If the authorized officer determines that a proposed disclosure would meet the requirements of paragraphs (a)(1)-(a)(3) of this section, then the authorized officer will, prior to disclosing the information, enter into a written agreement with the party seeking the disclosure. Such agreement will provide stipulations focused on ensuring that the recipient of the disclosure does not publicly distribute or otherwise release, disclose, or share the information.
(c) No disclosure complying with paragraph (b) of this section will be considered an official public disclosure for purposes of the Freedom of Information Act.
(a) The bureaus will develop plans and procedures for the inventory and monitoring of paleontological resources on and from federal land in accordance with applicable laws and regulations.
(b) The bureaus will manage, protect, and preserve paleontological resources on and from federal land using scientific principles and expertise.
(c) Activities under paragraphs (a) and (b) of this section will be coordinated with other agencies, non-federal partners, the scientific community, and the general public where appropriate and practicable.
The bureaus will establish a program to increase public awareness about the significance of paleontological resources on or from federal land. This effort will be coordinated with other agencies, non-federal partners, the scientific community, and the general public where appropriate and practicable.
(a) The authorized officer may restrict access to an area or close areas to collection of paleontological resources to protect paleontological or other resources or to provide for public safety.
(b) The regulations in this part do not preclude the use of other authorities that provide for area restrictions or closures on federal land.
(a) A permit is required for any person to collect paleontological resources or disturb paleontological sites, except for casual collecting on certain lands managed by the BLM or Reclamation, which is defined and addressed in subpart I of this part.
(b) A permit may be required by a bureau for activities that do not involve collection or disturbance.
(c) A permit is required for Federal Government personnel to collect paleontological resources or disturb paleontological sites unless the bureau authorizes the action by programmatic or other means.
Applicants who demonstrate that they meet the qualification requirements described in § 49.60, who provide a complete application as described in § 49.65, and whose proposed activity meets the issuance criteria described in § 49.70 may receive a permit.
(a) Permit applicant qualification requirements include:
(1) A graduate degree from an accredited institution in paleontology or related field of study with a major emphasis in paleontology or equivalent academic training to undertake the proposed activity;
(2) Experience in collecting, analyzing, summarizing, and reporting paleontological data, and preparing collections for long-term care;
(3) Experience in planning, equipping, staffing, organizing, and supervising field crews on projects similar to the type, nature, and scope of work proposed in the application; and
(4) Other expertise, knowledge, or experience required by the bureau in policies or procedures.
(b) Past performance by the applicant will also be considered. Past performance includes compliance with previous permits, relevant civil or criminal violations, or current indictments or charges.
(a) A permit applicant must submit an application to the bureau that administers the federal land where the proposed activity would be conducted. It is the permit applicant's responsibility to determine which bureau has jurisdiction, use that bureau's permit application form and process, and respond to that bureau's requests for information in a timely manner.
(b) A permit applicant proposing to work in areas administered by BLM, Reclamation, or FWS must provide the information requested by DI Form 9002 (
(1) The applicant's name, affiliation, and contact information.
(2) A current resume for the applicant and all other persons who oversee work under the permit, and any additional information demonstrating that the applicant possesses the qualifications required by § 49.60.
(3) A description, estimated start and end dates, and maps and other location information for the proposed work.
(4) Purpose and methodology of proposed work, including a detailed scope of work or research plan for the proposed activity, logistical information, methods that will be employed to explore for or remove the paleontological resources, proposed content and nature of any collection to be made under the permit, collection management processes, timetable for transfer to the proposed repository, and any additional information that will help the authorized officer identify the extent, nature, and impacts of the proposal.
(5) Bonding information, if required by the bureau.
(6) Information about the proposed repository for any collection that would be made under the permit, including:
(i) Name, location, and contact information for the proposed repository;
(ii) Written verification from the proposed repository confirming that it will agree to receive the collection; and
(iii) Names of organizations responsible for costs of curatorial services.
(7) Information on the applicant's past performance on previous permits.
(c) Because of the span of activities covered by paleontological permits and the different management needs and resources of each bureau, applicants may not be required to provide all of the information listed in paragraph (b) of this section. Each bureau will have the discretion to ask for less information.
(a) The authorized officer will assess whether the permit application complies with other applicable authorities.
(b) The authorized officer may issue a permit upon determining that:
(1) The applicant possesses the qualifications required by § 49.60;
(2) The permitted activity and any collection that would be made under the proposed permit would further paleontological knowledge, public education, or management of paleontological resources;
(3) The permitted activity would be consistent with the purpose and management objectives defined for the federal land; and
(4) The permitted activity would be conducted in a manner that would avoid or reduce adverse effects to significant natural or cultural resources.
(c) The authorized officer will work with the permit applicant and proposed repository to decide whether to approve the proposed repository, based on the criteria described in § 49.205(a), for the collection that would be made under the permit.
(a) The authorized officer will use DI Form 9003 (
(1) Permittee must not release, disclose, or share information about the specific location of paleontological resources without the prior written permission of the authorized officer.
(2) Permittee must report in writing to the authorized officer any change in the persons who are conducting activities under the permit, and submit the credentials of any new persons for approval.
(3) Permittee must protect paleontological sites and associated resources from harm resulting from the work under the permit, and is responsible for the actions of all persons working under the permit.
(4) Permittee, or a designee approved by the authorized officer and named on the permit, must be on site at all times when fieldwork is in progress and have a copy of the signed permit on hand.
(5) Permittee must comply with all vehicle or access restrictions, safety or environmental restrictions, local safety conditions or restrictions, and applicable federal, state, and local laws.
(6) Permittee acknowledges that the geographic area within the scope of the permit may be subject to other uses, and will take steps to avoid or minimize potential conflicts with such uses.
(7) Permittee will record locality information on DI Form 9004 (
(8) Permittee must report suspected resource damage or theft of paleontological or other resources to the authorized officer as soon as possible, but not to exceed 48 hours after learning of such damage or theft.
(9) A copy of the permit must be kept with the collection during transport and shared with the approved repository.
(10) Permittee must deposit the collection in the approved repository and provide the bureau with DI Form 9008 (
(11) If the permittee has not transferred the collection to the approved repository by the due date of the annual report or other schedule approved for the permit, the permittee must provide the authorized officer a complete list and description of all paleontological resources collected and the current location of the paleontological resources.
(12) Permittee acknowledges that all paleontological resources collected under the permit will remain federal property, and that he or she will not sell, trade, exchange, or keep for personal use the paleontological resources collected under the permit.
(13) Permittee must acknowledge the permitting bureau in any report, publication, paper, news article, film, television program, or other media resulting from the work performed under the permit.
(14) Permittee is responsible for the costs, monetary and otherwise, of the permitted activity, including fieldwork, data analysis, report preparation, curation of the collection and its associated records consistent with subpart C of this part.
(15) Permittees conducting activities on lands administered by BLM, Reclamation, or FWS must submit reports to the bureaus using DI Form 9005 (
(16) Permittee must comply with timelines established by the permit.
(17) Permittee must conduct the work consistent with the permit.
(18) Permittee must not transfer the permit.
(b) A permittee must continue to comply with applicable terms and conditions in the event of permit expiration, suspension, cancellation, or revocation unless specified otherwise by the authorized officer.
(c) The authorized officer may include in the permit additional terms and conditions necessary to carry out the purposes of this part, including a bond where warranted.
(d) For activities approved on lands administered by BLM or Reclamation, the authorized officer may provide permittees with DI Form 9007 (
(e) Persons who do not comply with the terms of a permit issued under this part may be subject to civil or criminal penalties.
(a)
(b)
(c)
(d)
(e) Notification of modification, suspension, revocation, or cancellation.
(1) The authorized officer will notify the permittee of the modification, suspension, revocation, or cancellation verbally or in writing. The authorized officer will, as soon as practicable, confirm a verbal notification with a written notification. A written notification will be served on the permittee by certified mail, return receipt requested, or another verifiable delivery method. The notification will explain the reason for the modification, suspension, revocation, or cancellation.
(2) In the case of a suspension, the written notification will also include the conditions or actions necessary for ending the suspension; the anticipated duration of the suspension or schedule for resolution of the conditions that led to the suspension; and a statement that the permit will be modified, revoked, or cancelled if the conditions that led to the suspension are not resolved.
(3) The notification will inform the permittee how to appeal the modification, revocation, suspension, or cancellation.
(f) Immediately effective. A modification, suspension, revocation, or cancellation is in full force and effective
Permit applicants and permittees may appeal the denial of a permit application, and the modification, suspension, revocation, or cancellation of an issued permit.
A permit-related decision may be appealed using processes defined by the issuing bureau.
(a) Permit-related decisions by BLM may be appealed under the process explained at 43 CFR part 4, subpart E.
(b) Permit-related decisions by FWS may be appealed under the process explained at 50 CFR 36.41(i).
(c) Permit-related decisions by Reclamation may be appealed under the process used for other types of scientific research and collecting permits issued by Reclamation, which will be specified in writing in the permit-related decision.
(d) Permit-related decisions by NPS may be appealed under the process used for other types of scientific research and collecting permits issued by NPS, which will be specified in writing in the permit-related decision.
BLM, Reclamation, NPS, and FWS use the information collected under this part to manage, protect, and preserve paleontological resources on and from federal land. The Office of Management and Budget (OMB) reviewed and approved the information collection requirements contained in this part and assigned OMB Control No. 1093-XXXX. OMB has approved the information collection requirements for NPS Research Permit and Reporting System, which includes paleontological permits, and assigned OMB Control No. 1024-0236. A federal agency may not conduct or sponsor and you are not required to respond to a collection of information unless it displays a currently valid OMB control number. You may send comments on the information collection requirements to the Office of the Secretary, Departmental Information Collection Clearance Lead, Department of the Interior, 1849 C Street NW., Mailstop MIB-7056, Washington, DC 20240.
(a) A collection from federal land made under a permit issued under this part will be deposited in the repository approved by the authorized officer under § 49.205.
(b) The curation of paleontological resources collected from federal land before January 6, 2017 is governed by the terms and conditions of the original collection permit or agreement.
(a) During the permit application process under subpart B of this part, the authorized officer will decide whether or not to approve a repository for the deposit of the collection that will be made under the permit, based on whether the:
(1) Repository has facilities and staff that provide curatorial services as defined in this part;
(2) Repository has a scope of collections statement or similar policy document that identifies paleontological resources as part of the repository's acquisition policy;
(3) Repository has access to paleontological and curatorial staff trained and experienced in managing and preserving paleontological resource collections;
(4) Repository's past and current performance meets applicable Departmental standards;
(5) Deposit would meet the bureau's management goals for the collection; and
(6) Repository will not release specific location data to the public except as consistent with § 49.25 or as provided in an agreement between the repository and the bureau.
(b) When the authorized officer approves a repository for the collection, that repository will be listed in the approved permit, and will remain approved to curate the collection unless the authorized officer determines that any one of the considerations in paragraph (a) of this section is no longer met. In that case, the authorized officer will notify the repository in writing and provide a reasonable time for the repository to:
(1) Correct the deficiency;
(2) Move the collection to another approved repository; or
(3) Take other actions the authorized officer requests.
(a) The authorized officer will take the following actions before the collection is deposited at the approved repository:
(1) Work with the permittee and approved repository, using scientific principles and expertise, to ensure that the collection is complete and that the content of the collection will further paleontological knowledge, public education, or management of paleontological resources;
(2) Review any existing agreement between the bureau and the approved repository to determine if that agreement adequately addresses requirements that are specific to the collection; and
(3) Develop a new agreement, if an adequate agreement does not exist between the repository and the bureau.
(b) After the collection is deposited at the approved repository, the permittee or the repository will submit DI Form 9008 (
(a) Agreements between the bureau and approved repository will contain the following information as deemed appropriate by the authorized officer:
(1) Statement (updated as necessary) that identifies the collection or group of collections at the approved repository.
(2) Statement that asserts federal ownership of the collection.
(3) Statement of work to be performed by the approved repository.
(4) Statement of the responsibilities of the bureau and of the approved repository for the long-term care of the collection.
(5) Statement that collections are available for scientific and educational uses and that the specific location data may be shared consistent with § 49.25.
(6) Description of any special procedures or restrictions for access to controlled property, consumptive use, reproductions, or curatorial services, including loans.
(7) Statement describing the frequency, methods, and reporting process for inventories.
(8) Statement that all exhibits, publications, and studies of paleontological resources will
(9) Statement that copies of any publications or reports resulting from study of the collection will be made available to the bureau.
(10) Statement describing how collection management records will be made available to the bureau that administers the collection.
(11) Statement that employees of the repository will take no actions whereby any of the collection shall or may be encumbered, seized, taken, sold, attached, lost, stolen, destroyed or damaged.
(12) Effective term of the agreement and procedures for modification, cancellation, suspension, extension, and termination of the agreement, including costs.
(13) Additional terms and conditions as needed to manage the collection.
(b) The agreement must be signed by an authorized representative of the approved repository and the authorized officer.
(a) Each approved repository must:
(1) Provide curatorial services consistent with § 49.5, and make the collections available for scientific research, public education, and management uses that further the Act, subject to § 49.25;
(2) Ensure that use of the collections is consistent with Departmental and bureau museum management standards and the terms of the agreement between the bureau and the approved repository;
(3) Obtain approval of the authorized officer on a case-by-case basis before conducting or allowing reproduction or consumptive use of part or all of the collection, unless another procedure for obtaining such approval is defined in the agreement between the bureau and the approved repository;
(4) Obtain approval of the authorized officer and follow Departmental and bureau policy when moving part or all of the collection from museum to working collections; and
(5) Conduct inventories consistent with Departmental and bureau museum management standards, and report the results to the bureau.
(b) The approved repository may charge reasonable fees, consistent with applicable law, to persons who use, or institutions that borrow, part or all of a collection. Fees may cover costs for handling, packing, shipping, and insuring the collection, photocopying associated records, and other costs associated with that use.
A person may not:
(a) Excavate, remove, damage, or otherwise alter or deface or attempt to excavate, remove, damage, or otherwise alter or deface any paleontological resource located on federal land unless this activity is conducted in accordance with the Act and this part.
(b) Exchange, transport, export, receive, or offer to exchange, transport, export, or receive any paleontological resource if the person knew or should have known such resource to have been excavated or removed from federal land in violation of any provision, rule, regulation, law, ordinance, or permit in effect under federal law, including the Act and this part.
(c) Sell or purchase or offer to sell or purchase any paleontological resource if the person knew or should have known such resource to have been excavated, removed, sold, purchased, exchanged, transported, or received from federal land.
(d) Make or submit any false record, account, or label for, or any false identification of, any paleontological resource excavated or removed from federal land.
(a) The penalties in this section do not apply with respect to paleontological resources in the lawful possession of a person on or before March 30, 2009.
(b) Anyone who knowingly violates or counsels, procures, solicits, or employs another person to commit a prohibited act identified in subpart D of this part will, upon conviction, be assessed:
(1) Fines in accordance with 18 U.S.C., or imprisonment of up to 5 years, or both, if the sum of the commercial and scientific value of the paleontological resources involved and the cost of response, restoration, and repair of the resources and sites involved is more than $500; or
(2) Fines in accordance with 18 U.S.C., or imprisonment of up to 2 years, or both, if the sum of the commercial and scientific value of the paleontological resources involved and the cost of response, restoration, and repair of the resources and sites involved is $500 or less.
(c) Commercial and scientific values and the cost of response, restoration, and repair are determined under subpart G of this part.
(d) In the case of a second or subsequent violation by the same person, the amount of the penalties assessed under this subpart may be doubled.
(e) To the extent that a prohibited act under this subpart involves a violation of other applicable law, the violator may be subject to other criminal penalties.
(a) The authorized officer may assess a civil penalty upon any person who violates the provisions of this part or a permit issued under this part, in accordance with the process explained in this subpart.
(b) For purposes of this subpart, each violation is considered a separate offense.
The authorized officer may serve a notice of violation in person, by certified mail, return receipt requested, or other verifiable delivery method upon a person that the authorized officer believes has committed a violation of this part.
A notice of violation will include:
(a) A concise statement of the facts believed to show a violation has occurred;
(b) A citation of the provisions of this part or a permit issued under this part alleged to have been violated;
(c) The amount of civil penalty proposed;
(d) Notification of the right to await the final assessment of civil penalty or to object to the notice of violation and proposed civil penalty, and the right to file a request for hearing of the final assessment of civil penalty. The notice shall also inform the person of the right to seek judicial review upon the issuance of the final administrative order under this subpart; and
(e) The name and contact information of the authorized officer who is serving the notice of violation.
(a)
(b)
(1) Clearly and concisely state the reasons why the person believes that the person did not commit a violation and/
(2) Be accompanied by any documentation supporting the person's reasons for objecting; and
(3) Be signed by the person or the person's authorized representative.
(c)
(d)
(1) Sustain the objection and revoke the notice of violation and proposed civil penalty, if the authorized officer determines that the information warrants a conclusion that no violation occurred;
(2) Deny the objection, if the authorized officer determines that the information warrants a conclusion that a violation occurred and that the proposed civil penalty is not too high; or
(3) Deny the objection in part and sustain it in part, if the authorized officer determines that the information warrants a conclusion that a violation has occurred, but the amount of the civil penalty too high.
The authorized officer will issue a final assessment of civil penalty:
(a) If the person served with a notice of violation and proposed civil penalty does not file a timely objection; or
(b) If the person does file a timely objection that is denied in whole or in part under § 49.515.
(a) The authorized officer will determine the amount of the civil penalty by taking into account:
(1) The scientific or commercial value, whichever is greater as determined by the authorized officer, of the paleontological resource involved;
(2) The cost of response, restoration, and repair of the paleontological resource and the paleontological site involved;
(3) Other factors that the authorized officer considers relevant, such as prior violations or warnings or evidence of malicious intent;
(4) Information provided under § 49.515 or furnished to the authorized officer upon his or her request; and
(5) Mitigating factors, which may include return of paleontological resources and whether the person will provide information that may assist the bureau.
(b) Scientific and commercial values and the cost of response, restoration, and repair are determined under subpart G of this part.
(c) In the case of any subsequent violation by the same person, the authorized officer may calculate a penalty in accordance with paragraph (a) of this section and double it for that subsequent violation.
(d) The maximum penalty assessed under paragraph (c) of this section for any one violation may not exceed the sum of:
(1) Two times the cost of response, restoration, and repair of paleontological resources and paleontological site damage; plus
(2) Two times the scientific or commercial value, whichever is greater as determined by the authorized officer, of the paleontological resources and paleontological sites destroyed or not recovered.
(e) The authorized officer will use subpart G of this part to determine scientific or commercial values and the cost of response, restoration, and repair.
(f) The final assessment may be equal to, less than, or more than the proposed civil penalty.
(a) The authorized officer will serve the final assessment of civil penalty by certified mail, return receipt requested, or other verifiable delivery method.
(b) The final assessment of civil penalty will include:
(1) The facts and conclusions that are the bases for the authorized officer's determination that a violation occurred;
(2) The basis for the authorized officer's determination of the amount of civil penalty assessed;
(3) Notification of the rights to accept the final assessment of civil penalty or, alternatively, to file a request for hearing on the final assessment with a DCHD administrative law judge under § 49.535(a)(2).
(4) A statement that the civil penalty must be paid within 30 days of the date that the final assessment of civil penalty is received, unless the person served with the final assessment of civil penalty files a request for hearing in accordance with this subpart and the procedures specified in the notice.
(a)
(1) Accept the final assessment, either in writing, by payment of the proposed penalty, or by failing to timely file a request for hearing under paragraph (a)(2) of this section; or
(2) File a request for a hearing on the final assessment before a DCHD administrative law judge via certified mail, return receipt requested, or other verifiable delivery method with the Departmental Cases Hearings Division, Office of Hearings and Appeals, Department of the Interior, 351 S. West Temple, Room 6.300, Salt Lake City, Utah 84101.
(b)
(1) Be signed by the person who receives the final assessment of civil penalty or a representative qualified to represent that person under 43 CFR 1.3;
(2) Identify the final assessment of civil penalty being challenged;
(3) State clearly and concisely the reasons for challenging the final assessment, including the reasons why the person believes that he or she did not commit a violation and/or that the proposed civil penalty should be reduced or eliminated;
(4) State the relief sought and the basis for that relief;
(5) Be accompanied by the following documentation:
(i) A copy of the notice of violation and proposed civil penalty;
(ii) A copy of any objection and supporting documentation filed under § 49.515(a); and
(iii) A copy of the final assessment of civil penalty; and
(6) Contain a certificate acknowledging service of the request for hearing with the documentation listed in paragraph (b)(5) of this section on the Office of the Solicitor at the address identified in paragraph (c) of this section.
(c)
(d)
(1) If the request for hearing is not received by DCHD within 30 days of the date of receipt of the final assessment, the request for hearing will not be considered and the hearing will be dismissed.
(2) The request for hearing may be dismissed for failing to meet any of the requirements of paragraph (c) of this section.
(e)
(a) Upon receipt of a request for hearing under § 49.535(a)(2), DCHD will assign an administrative law judge to preside over the hearing process and issue a decision. DCHD will promptly notify the parties of the assignment. Thereafter, all pleadings, papers, and other documents in the hearing process must be filed directly with that judge, with copies served on the other party.
(b) An attorney from the Office of the Solicitor, DOI, will represent the bureau. The attorney will enter his or her appearance on behalf of the bureau and file all motions and correspondence between the bureau and the person who filed the request for hearing. Subsequently, any service upon the bureau must be made to the attorney.
(c) To the extent not inconsistent with the provisions of this subpart, the rules in 43 CFR part 4, subparts A and B, and in 43 CFR 4.422 through 4.437 will apply to the hearing process under this subpart.
(d) The hearing will be conducted in accordance with 5 U.S.C. 554. The bureau will have the burden of proving by a preponderance of the evidence the fact of the violation and the basis for the amount of the civil penalty. Upon completion of the hearing and incorporation of the hearing transcript in the record, the administrative law judge will issue a written decision in accordance with § 49.545 and serve it on the parties.
(a) The administrative law judge's written decision will set forth:
(1) The findings of fact and conclusions of law;
(2) The reasons and bases for the findings; and
(3) An assessment of the penalty, if any.
(b) The amount of any penalty assessed will:
(1) Be determined in accordance with this subpart; and
(2) Not be limited by the amount assessed by the authorized officer under § 49.525 or by any offer of mitigation or remission previously made.
(c) The administrative law judge's decision will become effective 31 days from the date of the written decision unless a timely appeal of the decision is filed under § 49.550.
(a)
(b)
(1) Be signed by the person filing the appeal or a representative qualified to represent that person under 43 CFR 1.3;
(2) Identify the administrative law judge's decision being appealed, including the DCHD docket number;
(3) State clearly and concisely the reasons for challenging the decision, including:
(i) The reasons why the person believes that he or she did not commit a violation and/or that the proposed civil penalty should be reduced or eliminated; and
(ii) A concise but complete statement of the facts relied upon to challenge the decision;
(4) State the relief sought and the basis for that relief;
(5) Be accompanied by the following documentation:
(i) A copy of the notice of violation and proposed civil penalty;
(ii) A copy of the final assessment of civil penalty; and
(iii) A copy of the administrative law judge's decision; and
(6) Contain a certificate acknowledging service of the notice with the documentation listed in paragraph (b)(5) of this section on the other party to the hearing process at the address listed on the administrative law judge's decision.
(c)
(1) The other party to the hearing process; and
(2) DCHD.
(d)
(e)
(a) Upon receipt of a notice of appeal filed under § 49.550(a), the OHA Director will appoint an Ad Hoc Board to consider the appeal and issue a decision thereon.
(b) To the extent not inconsistent with the provisions of this subpart, the rules in 43 CFR part 4, subparts A, B, and G, will apply to the appeal proceedings under § 49.550.
A person assessed a civil penalty has 30 days from the date of the final administrative decision in which to make full payment of the final assessment of the civil penalty, or agree to a payment schedule. For the purposes of this subpart, the final administrative decision is:
(a) The final assessment of civil penalty if the person served with the final assessment does not file a timely request for hearing under § 49.535(a)(2).
(b) The administrative law judge's decision on the request for hearing if a timely appeal to the OHA Director is not filed under § 49.550(a); or
(c) The decision of the Ad Hoc Board of Appeals appointed by the OHA Director if a timely appeal of the administrative law judge's decision was filed under § 49.550(a).
A person may file a petition for judicial review in the United States District Court for the District of Columbia or in the district where the violation occurred, within 30 days of the decision of the Ad Hoc Board of Appeals appointed by the OHA Director. For purposes of the Act and this part, that decision will be considered a final administrative order. The deadline for payment of the civil penalty will be stayed pending resolution of the judicial review.
(a) If the civil penalty is not paid by the required deadlines, the United
(b) Failure to pay a civil penalty assessed under this subpart is a debt to the United States.
(c) Failure to pay a civil penalty assessed under this subpart may prevent a person from obtaining a future authorization for activities related to paleontological resources on federal land as well as receiving other future federal funding or assistance.
(d) By assessing a civil penalty under this subpart, the United States does not waive the right to pursue other legal or administrative remedies.
Civil penalties collected under this subpart are available without further appropriation to the bureau that administers the federal land or paleontological resources that were the subject of the violation, and may be used only to:
(a) Protect, restore, or repair the paleontological resources and sites that were the subject of the action, and to protect, monitor, and study the resources and sites;
(b) Provide educational materials to the public about paleontological resources, paleontological sites, or resource protection; or
(c) Pay rewards under subpart H of this part.
The scientific value of a paleontological resource is the value of the scientific and educational information associated with the resource. It is determined by the authorized officer based upon the estimated costs of obtaining the scientific and educational information from the disturbed paleontological site if the prohibited act had not occurred. These costs may include, but are not limited to:
(a) Research design development;
(b) Fieldwork;
(c) Laboratory analysis;
(d) Curation;
(e) Reports or educational materials; and
(f) Lost visitor services or experience.
The commercial value of a paleontological resource is the monetary value of that resource, and is determined by the authorized officer using comparable sales information, appraisals, market value, or other information for comparable resources. If there is no comparable sales information, appraisal, market value, or other information, the authorized officer will determine the commercial value of the paleontological resource using other methods such as scientific value or the cost of response, restoration, and repair.
The cost of response, restoration, and repair of a paleontological resource or paleontological site is determined by the authorized officer, and includes but is not limited to the costs of:
(a) Law enforcement investigations;
(b) Immediate stabilization;
(c) Longer term response, restoration, and repair, including but not limited to reconstructing or stabilizing the resource or site, salvaging the resource or site, erecting physical barriers or other protective devices or signs to protect the site, and monitoring the site;
(d) Fossil preparation, stabilization, and conservation;
(e) Storage and curation of the resources; and
(f) Reporting upon the above activities.
(a) A paleontological resource with respect to which a violation under this part occurred is stolen federal property and is subject to forfeiture.
(b) The bureau may either deposit forfeited resources into an approved repository, or transfer or assign administration of the forfeited resources to federal or non-federal institutions to be used for scientific or educational purposes.
(a) The bureau may pay a reward to the person or persons furnishing information leading to a finding of civil violation or criminal conviction.
(b) The reward may be no more than half of the penalties collected. If several persons provide the information, the bureau may divide the reward among them.
(c) The funds for the reward may come from the penalties collected or from appropriated funds.
(d) An officer or employee of federal, state, or local government who furnishes information or renders service in the performance of official duties is not eligible for a reward under this section.
Casual collecting of paleontological resources is not allowed on lands administered by NPS or FWS. On those lands, collecting any paleontological resource must be conducted in accordance with a permit as described in subpart B of this part.
(a) Casual collecting of common invertebrate or plant paleontological resources is allowed on lands administered by BLM in accordance with this subpart, except:
(1) On any BLM-administered land that is closed to casual collecting in accordance with this part, other statutes, executive orders, regulations, or land use plans; or
(2) On BLM-administered national monuments, national conservation areas, outstanding natural areas, forest reserves, or cooperative management and protection areas, except where allowed by other statutes, executive orders, regulations, or land use plans.
(b) Casual collecting of common invertebrate or plant paleontological resources is allowed on land administered by Reclamation only in locations where Reclamation has established a special use area for casual collecting using processes defined in 43 CFR part 423,
(c) Persons interested in casual collecting are responsible for learning which bureau manages the land where they would like to collect paleontological resources, learning if the land is open to casual collecting, learning what may be collected in an area, and obtaining information about the managing bureau's casual collecting procedures.
(a) Casual collecting means the collecting without a permit of a reasonable amount of common invertebrate or plant paleontological resources for non-commercial personal use, either by surface collection or the use of non-powered hand tools, resulting in only negligible disturbance to the Earth's surface or paleontological or other resources.
(1)
(2)
(3)
(i) In no circumstance may the surface disturbance exceed 1 square yard (3 feet × 3 feet) per individual collector;
(ii) For multiple collectors, each square yard of surface disturbance must be separated by at least 10 feet;
(iii) All areas of surface disturbance must be backfilled with the material that was removed so as to render the disturbance substantially unnoticeable to the casual observer.
(4)
(5)
(b) In order to preserve paleontological or other resources, or for other management reasons, the authorized officer may establish limitations on casual collecting, including but not limited to reducing the weight of common invertebrate or plant paleontological resources below the amount specified in this subpart; limiting the depth of disturbance; establishing site-specific dates or locations for collecting; or establishing what is common in a specific area.
(c) Collecting common invertebrate or plant paleontological resources inconsistent with any of the limitations in paragraphs (a) or (b) of this section is not casual collecting, and must be immediately discontinued.
(d) Collecting common invertebrate or plant paleontological resources inconsistent with this subpart is a prohibited act and may result in civil or criminal penalties.
16 U.S.C. 470aaa
The regulations of this part are issued under the provisions of the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1701
(b) * * *
(2) Nonrenewable resources such as rocks, mineral specimens, and semiprecious gemstones;
(4) Mineral materials as provided under subpart 3604;
(5) Forest products for use in campfires on the public lands. Other collection of forest products shall be in accordance with the provisions of Group 5500 of this title; and
(6) Common invertebrate and plant paleontological resources as provided under subpart 49 of this title.
5 U.S.C. 685, 752, 690d; 16 U.S.C. 460k, 460
(c) Permits are required for the collection of paleontological resources on national wildlife refuges in accordance with the provisions of 43 CFR part 49.
Food Safety and Inspection Service, USDA.
Notice soliciting nominations for membership on the National Advisory Committee on Microbiological Criteria for Foods.
The U.S. Department of Agriculture (USDA) is soliciting nominations for membership on the National Advisory Committee on Microbiological Criteria for Foods (NACMCF). There are 15 vacancies. Advisory Committee members serve a two-year term, renewable for two consecutive terms.
USDA is seeking nominees with scientific expertise in the fields of microbiology, epidemiology, food technology (food, clinical, and predictive), toxicology, risk assessment, infectious disease, biostatistics, and other related sciences. USDA is seeking nominations for NACMCF from persons in academia, industry, State governments, and the Federal Government, as well as all other interested persons with the required expertise. Please note that federally registered lobbyists cannot be considered for USDA advisory committee membership.
USDA is also seeking nominations for one individual affiliated with a consumer group to serve on the NACMCF. This member will serve as a representative member to provide a consumer viewpoint to the committee. This member will not be required to have a scientific background and will not be subject to a conflict of interest review.
Members can serve on only one USDA advisory committee at a time. All nominees will undergo a USDA background check.
With the exception of the consumer representative member, any member who is not a Federal government employee will be appointed to serve as a non-compensated special government employee (SGE). SGEs will be subject to appropriate conflict of interest statutes and standards of ethical conduct.
Nominations for membership on the NACMCF must be addressed to the Secretary of USDA and accompanied by a cover letter addressing the nomination, a resume or curriculum vitae, and a completed USDA Advisory Committee Membership Background Information form AD-755 available online at:
All materials must be received by January 6, 2017.
Nomination packages should be sent via email to
Ms. Karen Thomas-Sharp, Advisory Committee Specialist, by telephone at 202-690-6620 or by email
The Food Safety and Inspection Service (FSIS) invites interested persons to submit comments on this notice. Comments may be submitted by either of the following methods: Federal eRulemaking Portal: This Web site (
The NACMCF was established in March 1988, in response to a recommendation in a 1985 report of the National Academy of Sciences Committee on Food Protection, Subcommittee on Microbiological Criteria, “An Evaluation of the Role of Microbiological Criteria for Foods.” The current charter for the NACMCF and other information about the Committee are available to the public for viewing on the FSIS Web site at:
The Committee provides scientific advice and recommendations to the Secretary of Agriculture and the Secretary of Health and Human Services concerning the development of microbiological criteria by which the safety and wholesomeness of food can be assessed. For example, one of the most recent efforts of the Committee is to provide the best scientific information available on Shiga Toxin producing
Appointments to the Committee will be made by the Secretary of Agriculture after consultation with the Secretary of
The full Committee expects to meet at least once a year by teleconference or in-person, and the meetings will be announced in the
NACMCF holds subcommittee meetings in order to accomplish the work of NACMCF; all subcommittee work is reviewed and approved during a public meeting of the full Committee, as announced in the
Members must be prepared to work outside of scheduled Committee and subcommittee meetings and may be required to assist in document preparation. Committee members serve on a voluntary basis; however, travel expenses and per diem reimbursement are available.
All SGE and Federal government employee nominees who are selected must complete the Office of Government Ethics (OGE) 450 Confidential Financial Disclosure Report before rendering any advice or before their first meeting. With the exception of the consumer representative committee member, all committee members will be reviewed pursuant to 18 U.S.C. 208 for conflicts of interest relating to specific NACMCF work charges, and financial disclosure updates will be required annually. Members subject to financial disclosure must report any changes in financial holdings requiring additional disclosure. OGE 450 forms are available on-line at:
Public awareness of all segments of rulemaking and policy development is important. Consequently, FSIS will announce this
FSIS also will make copies of this publication available through the FSIS Constituent Update, which is used to provide information regarding FSIS policies, procedures, regulations,
No agency, officer, or employee of the USDA shall, on the grounds of race, color, national origin, religion, sex, gender identity, sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program, or political beliefs, exclude from participation in, deny the benefits of, or subject to discrimination any person in the United States under any program or activity conducted by the USDA.
To file a complaint of discrimination, complete the USDA Program Discrimination Complaint Form, which may be accessed online at
Send your completed complaint form or letter to USDA by mail, fax, or email:
Persons with disabilities who require alternative means for communication (Braille, large print, audiotape, etc.), should contact USDA's TARGET Center at (202) 720-2600 (voice and TDD).
Forest Service, USDA.
Notice of intent to prepare an environmental impact statement.
The Forest Service is proposing to convey two adjacent parcels of land, and the associated water rights and mineral estate in El Jebel, Colorado pursuant to the Forest Service Facility Realignment and Enhancement Act of 2005 Public Law 109-54; 16 U.S.C. 580d note, as amended by Public Law 112-74, Title IV, Sec. 421. The property is proposed to be sold as two parcels. The Lower Parcel is approximately 40 acres and is predominantly riparian in nature and the Upper Parcel is approximately 30 acres and consists of three residences, one mobile home pad, horse pastures, and outdoor equipment storage. A conservation easement or deed restriction intended to protect the wetlands, floodplains, aquatic, botanical, wildlife resources, and future public access may be placed on the Lower Parcel at the time of sale. The property may be sold directly to an identified purchaser or may be sold under competitive bidding procedures. The method of sale will be determined at a later date. Conveying the parcel will help the Forest Service to streamline its administrative sites and create a more efficient pattern of land ownership in Eagle County. The proposal includes a project-specific forest plan amendment.
Comments concerning the scope of the analysis must be received by January 23, 2017. The draft environmental impact statement (EIS) is expected to be available for public review in summer 2017 and the final EIS is expected in winter 2018.
Send written comments to Scott Fitzwilliams, Forest Supervisor c/
Additional information related to the project can be obtained from the project Web page:
Individuals who use telecommunication devices for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1-800-877-8339 between 8 a.m. and 8 p.m., Eastern Time, Monday through Friday.
Comments should be provided prior to the close of the comment period and should clearly articulate the reviewer's concerns and contentions. A public open house meeting will discuss the proposed action on December 8, 2016 from 5:30-7:00 p.m., (Mountain Standard Time) at the Eagle County Community Center located at 0020 Eagle County Drive, El Jebel, CO 81623. The meeting will be held in the Mt. Sopris Room.
Comments received in response to this solicitation, including names and addresses of those who comment, will be part of the public record for this proposed action. Comments submitted anonymously will be accepted and considered, however anonymous commenters would not have standing to file an objection. Those who submit comments will have eligibility to file an objection following the procedure laid out in 36 CFR 218.8. There will be an additional opportunity to comment when the Notice of Availability of the Draft EIS is published in the
For objection eligibility, each individual or representative from each entity submitting written comments must either sign the comment or verify identity upon request. Individuals and organizations wishing to be eligible to object must meet the information requirements in 36 CFR 218.5.
Rural Utilities Service, USDA.
Notice of Solicitation of Applications (NOSA), Household Water Well System Grant Program.
The Rural Utilities Service (RUS) announces its Household Water Well System (HWWS) Grant Program application window for fiscal year (FY) 2017. RUS will make grants to qualified private non-profit organizations to establish lending programs for homeowners to borrow up to $11,000 to construct or repair household water wells for an existing home. The HWWS Grant Program is authorized under 7 U.S.C. 1926e. Regulations may be found at 7 CFR part 1776.
This year RUS will assign administrative discretion points to applications that:
1. Direct loans to rural areas where according to the American Community Survey data by census tracts show that at least 20 percent of the population is living in poverty.
2. Direct loans to areas which lack running water, flush toilets, and modern sewage disposal systems, and areas which have open sewers and high rates of disease caused by poor sanitation, in particular, colonias or Substantially Underserved Trust Areas.
3. Direct loans to rural areas impacted by severe drought.
The deadline for completed applications for a HWWS grant is February 6, 2017. Applications in either paper or electronic format must be postmarked or time-stamped electronically on or before the deadline. Late applications will be ineligible for grant consideration.
Submit applications to the following addresses:
1.
2.
Obtain application guides and materials for the HWWS Grant Program electronically or in paper format from the following addresses:
1.
2.
Derek Jones, Community Programs Specialist, Water and Environmental Programs, Rural Utilities Service, Rural Development, U.S. Department of Agriculture, STOP 1570, Room 2234-S, 1400 Independence Avenue SW., Washington, DC 20250-1570;. Telephone: (202) 720-9640, fax: (202) 690-0649, email:
I. Funding Opportunity: Description of the HWWS Grant Program.
II. Award Information: To be determined.
III. Eligibility Information: Who is eligible, what kinds of projects are eligible, what criteria determine basic eligibility.
IV. Application and Submission Information: Where to get application materials, what constitutes a completed application, how and where to submit applications, deadlines, items that are eligible.
V. Application Review Information: Considerations and preferences, scoring criteria, review standards, selection information.
VI. Award Administration Information: Award notice information, award recipient reporting requirements.
VII. Agency Contacts: Web site, phone, fax, email, contact name.
VIII. Non-discrimination Statement: USDA non-discrimination statement, how to file a complaint, persons with disabilities.
The HWWS Grant Program has been established to help individuals with low to moderate incomes finance the costs of household water wells that they own or will own. The HWWS Grant Program is authorized under Section 306E of the Consolidated Farm and Rural Development Act (CONACT), 7 U.S.C. 1926e. The CONACT authorizes RUS to make grants to qualified private non-profit organizations to establish lending programs for household water wells.
As the grant recipients, private non-profit organizations will receive HWWS grants to establish lending programs that will provide water well loans to individuals. The individuals, as loan recipients, may use the loans to construct, refurbish, and service their household well systems. A loan may not exceed $11,000 and will have a term up to 20 years at a one percent annual interest rate.
RUS supports the sound development of rural communities and the growth of our economy without endangering the environment. RUS provides financial and technical assistance to help communities bring safe drinking water and sanitary, environmentally sound waste disposal facilities to Rural Americans in greatest need.
Central water systems may not be the only or best solution to drinking water problems. Distance or physical barriers make public central water systems costly to deploy in remote areas. A significant number of geographically isolated households without water service might require individual wells rather than connections to new or existing community systems. The goal of RUS is not only to make funds available to those communities most in need of potable water but also to ensure that facilities used to deliver drinking water are safe and affordable. There is a role for private wells in reaching this goal.
The purpose of the HWWS Grant Program is to provide funds to private non-profit organizations to assist them in establishing loan programs from which individuals may borrow money for HWWS. Faith-based organizations are eligible and encouraged to apply for this program. Applicants must show that the project will provide technical and financial assistance to eligible individuals to remedy household well problems.
Due to the limited amount of funds available typically available under the HWWS Grant Program, the RUS anticipates that 10 applications may be funded from FY 2017 funds. Applications from existing HWWS grant recipients are acceptable and will be evaluated as new applications.
1. An organization is eligible to receive a HWWS grant if it:
a. Has an active registration with current information in the System for Award Management (SAM) and has a Dun and Bradstreet (D&B) Data Universal Numbering System (DUNS) number.
b. Is a private, non-profit organization.
c. Is legally established and located within one of the following:
d. Has the legal capacity and authority to carry out the grant purpose.
e. Has sufficient expertise and experience in lending activities.
f. Has sufficient expertise and experience in promoting the safe and productive use of individually-owned HWWS and ground water.
g. Has no delinquent debt to the federal government or no outstanding judgments to repay a federal debt.
h. Demonstrates that it possesses the financial, technical, and managerial capability to comply with federal and State laws and requirements, and
i. Is not a corporation that has been convicted of a felony (or had an officer or agent acting on behalf of the corporation convicted of a felony) within the past 24 months. 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 is not eligible.
2. An individual is ineligible to receive a HWWS grant. An individual may receive a loan from an organization receiving a grant award.
1.
a. Be a revolving loan fund created to provide loans to eligible individuals to construct, refurbish, and service individually-owned HWWS (see 7 CFR 1776.11 and 1776.12). Loans may not be provided for home sewer or septic system projects.
b. Be established and maintained by a private, non-profit organization.
c. Be located in a rural area. Rural area is defined as locations other than cities or towns of more than 50,000 people and the contiguous and adjacent urbanized area of such towns and cities.
2.
3.
a. DUNS Number. The applicant for a grant must supply a DUNS number as part of an application. The Standard Form 424 (SF-424) contains a field for the DUNS number. The applicant can obtain the DUNS number free of charge by calling Dun and Bradstreet. Please see
b. Prior to submitting an application, the applicant must register in System for Award Management (SAM).
(1) Applicants may register for SAM at
(2) The SAM registration must remain active with current information at all times while RUS is considering an application or while a Federal grant award or loan is active. To maintain the registration in the SAM database the applicant must review and update the information in the SAM database
c. Eligibility to receive a HWWS loan will be based on the following criteria:
(1) An individual must be a member of a household of which the combined household income of all members does not exceed 100 percent of the median non-metropolitan household income for the State or territory in which the individual resides. Household income is the total income from all sources received by each adult household member for the most recent 12-month period for which the information is available. It does not include income earned or received by dependent children under 18 years old or other benefits that are excluded by federal law. The non-metropolitan household income must be based on the 5-year income data from the American Community Survey (ACS) or, if needed, other data from the United States Bureau of the Census.
RUS publishes a list of income exclusions in 7 CFR 3550.54(b). Also, the Department of Housing and Urban Development published a list of income exclusions in the
(2) The loan recipient must own and occupy the home being improved with the proceeds of the Household Water Well loan or be purchasing the home to occupy under a legally enforceable land purchase contract which is not in default by either the seller or the purchaser.
(3) The home being improved with the water well system must be located in a rural area.
(4) The loan for a water well system must not be associated with the construction of a new dwelling.
(5) The loan must not be used to substitute a water well system for water service available from collective water systems. (For example, a loan may not be used to restore an old well abandoned when a dwelling was connected to a water district's water line.)
(6) The loan recipient must not be suspended or debarred from participation in Federal programs.
The HWWS Grant Application Guide (Application Guide), copies of necessary forms and samples, and the HWWS Grant Program regulation are available from these sources:
1. Internet for electronic copies:
2. Water and Environmental Programs for paper copies: RUS, Water Programs Division, STOP 1570, Room 2233-S, 1400 Independence Avenue SW., Washington, DC 20250-1570, Telephone: (202) 720-9589, Fax: (202) 690-0649.
1. Rules and Guidelines:
a. Detailed information on each item required can be found in the HWWS Grant Program regulation (7 CFR part 1776) and the Application Guide. Applicants are strongly encouraged to read and apply both the regulation and the Application Guide. This Notice does not change the requirements for a completed application for any form of HWWS financial assistance specified in the regulation. The regulation and Application Guide provide specific guidance on each of the items listed.
b. Applications should be prepared in conformance with the provisions in 7 CFR part 1776, subpart B, and departmental and other applicable regulations including 2 CFR parts 180, 182, 200, 400, and 421, or any successor regulations. Applicants should use the Application Guide which contains instructions and other important information in preparing their application. Completed applications must include the items found in the checklist in the next paragraph.
2. Checklist of Items in Completed Application Packages:
a. DUNS Number. The applicant for a grant must supply a Dunn and Bradstreet Data Universal Numbering System (DUNS) number as part of an application. The Standard Form 424 (SF-424) contains a field for the DUNS number. The applicant can obtain the DUNS number free of charge by calling Dun and Bradstreet. Please see
b. Prior to submitting an application, the applicant must register in the System for Award Management (SAM).
(1) Applicants may register for the SAM at:
(2) The SAM registration must remain active with current information at all times while RUS is considering an application or while a Federal Grant Award or loan is active. To maintain the registration in the SAM database the applicant must review and update the information in the SAM database annually from date of initial registration or from the date of the last update. The applicant must ensure that the information in the database is current, accurate, and complete.
(3) Your organization must be listed in the SAM. If you have not used
c. The electronic and paper application process requires forms with the prefixes RD and SF as well as supporting documents and certifications.
(1) SF-424, “Application for Federal Assistance”.
(2) SF-424A, “Budget Information—Non-Construction Programs”.
(3) SF-424B, “Assurances—Non-Construction Programs”.
(4) SF-LLL, “Disclosure of Lobbying Activity”.
(5) Form RD 400-1, “Equal Opportunity Agreement”.
(6) Form RD 400-4, “Assurance Agreement (Under Title VI, Civil Rights Act of 1964).
(7) Project Proposal, Project Summary, Needs Assessment, Project Goals and Objectives, Project Narrative.
(8) Work Plan.
(9) Budget and Budget Justification.
(10) Evidence of Legal Authority and Existence.
(11) Documentation of private non-profit status and Internal Revenue Service (IRS) Tax Exempt Status.
(12) List of Directors and Officers.
(13) Financial information and sustainability (narrative).
(14) Assurances and certifications of compliance with other Federal Statutes.
The forms in items 1 through 6 must be completed and signed where appropriate by an official of your organization who has authority to obligate the organization legally. RD forms are used by programs under the RD mission area. Standard forms (SF) are used government-wide. In addition
See section V, “Application Review Information,” for instructions and guidelines on preparing Items 7 through 13.
3.
a. 7 CFR part 15, subpart A—Nondiscrimination in Federally Assisted Programs of the Department of Agriculture—Effectuation of Title VI of the Civil Rights Act of 1964.
b. 2 CFR part 417—Governmentwide Debarment and Suspension (Nonprocurement), or any successor regulations.
c. 7 CFR part 3052—Audits of States, Local Governments, and Non-profit Organizations, or any successor regulations.
d. Subpart B of 2 CFR part 421, which adopts the Governmentwide implementation (2 CFR part 182) of the Drug-Free Workplace Act.
e. Executive Order 13166, “Improving Access to Services for Persons with Limited English Proficiency.” For information on limited English proficiency and agency-specific guidance go to
f. Federal Obligation Certification on Delinquent Debt.
1.
2.
1. Submitting Paper Applications:
a. For paper applications, mail or ensure delivery of an original paper application (no stamped, photocopied, or initialed signatures) and two copies by the deadline date to:
Rural Development, Rural Utility Service, Water Programs Division, STOP 1570, Room 2234-S, 1400 Independence Avenue SW., Washington, DC 20250-1570, Telephone: (202) 720-9583.
Submit paper applications marked “Attention: Water and Environmental Programs.”
b. Applications must show proof of mailing or shipping by one of the following:
(1) A legibly dated U.S. Postal Service (USPS) postmark;
(2) A legible mail receipt with the date of mailing stamped by the USPS; or,
(3) A dated shipping label, invoice, or receipt from a commercial carrier.
c. If a deadline date falls on a weekend, it will be extended to the following Monday. If the date falls on a federal holiday, it will be extended to the next business day.
d. Due to screening procedures at the Department of Agriculture, packages arriving via the USPS are irradiated, which can damage the contents and delay delivery. RUS encourages applicants to consider the impact of this procedure in selecting an application delivery method.
2. Submitting Electronic Applications:
a. Applications will not be accepted by fax or electronic mail.
b. Electronic applications for grants will be accepted if submitted through
c. Applicants must preregister successfully with
d. Applicants who apply through
e.
f.
g. You must be registered with
(1) You must register at
(2) Organization registration user guides and checklists are also available at
(3)
(4) Some or all of the SAM and
h. To use
(1) Follow the instructions on the Web site to find grant information.
(2) Download a copy of an application package.
(3) Complete the package off-line.
(4) Upload and submit the application via the
(5) If a system problem or technical difficulty occurs with an electronic application, please use the customer support resources available at the
(6) Again, RUS encourages applicants to take early action to complete the sign-up, credentialing and authorization procedures at
The deadline for paper and electronic submissions is February 6, 2017. Paper applications must be postmarked and mailed, shipped, or sent overnight no later than the closing date to be considered for FY 2017 grant funding. Electronic applications must have an electronic date and time stamp by midnight of February 6, 2017 to be considered on time. RUS will not accept applications by fax or email. Applications that do not meet the criteria above are considered late applications and will not be considered. RUS will notify each late applicant that its application will not be considered.
1. Eligible Grant Purposes:
a. Grant funds must be used to establish and maintain a revolving loan fund to provide loans to eligible individuals for household water well systems.
b. Individuals may use the loans to construct, refurbish, rehabilitate, or
c. Grant funds may be used to pay administrative expenses associated with providing HWWS loans.
2. Ineligible Grant Purposes:
a. Administrative expenses incurred in any calendar year that exceed 10 percent of the household water well loans made during the same period do not qualify for reimbursement.
b. Administrative expenses incurred before RUS executes a grant agreement with the recipient do not qualify for reimbursement.
c. Delinquent debt owed to the Federal Government does not qualify for reimbursement.
d. Grant funds may not be used to provide loans for household sewer or septic systems.
e. Household Water Well loans may not be used to pay the costs of water well systems for the construction of a new house.
f. Household Water Well loans may not be used to pay the costs of a home plumbing system.
This section contains instructions and guidelines on preparing the project proposal, work plan, and budget sections of the application. Also, guidelines are provided on the additional information required for RUS to determine eligibility and financial feasibility.
1.
(1) Document the grant applicant's ability to manage and service a revolving fund. The narrative may describe the systems that are in place for the full life cycle of a loan from loan origination through servicing. If a servicing contractor will service the loan portfolio, the arrangement and services provided must be discussed.
(2) Show evidence of the availability of funds from sources other than the HWWS grant. Describe the contributions the project will receive from your organization, state agencies, local government, other federal agencies, non-government organizations, private industry, and individuals. The documentation should describe how the contributions will be used to pay your operational costs and provide financial assistance for projects.
(3) Demonstrate that the organization has secured commitments of significant financial support from other funding sources.
(4) List the fees and charges that borrowers will be assessed.
2.
3.
a. Provide a budget with line item detail and detailed calculations for each budget object class identified in section B of the Budget Information form (SF-424A). Detailed calculations must include estimation methods, quantities, unit costs, and other similar quantitative detail sufficient for the calculation to be duplicated. Also include a breakout by the funding sources identified in Block 15 of the SF-424.
b. Provide a narrative budget justification that describes how the categorical costs are derived for all capital and administrative expenditures, the matching contribution, and other sources of funds necessary to complete the project. Discuss the necessity, reasonableness, and allocability of the proposed costs.
c. If the grant applicant will use a servicing contractor, the fees may be reimbursed as an administrative expense as provided in 7 CFR 1776.13. These fees must be discussed in the budget narrative. If the grant applicant will hire a servicing contractor, it must demonstrate that all procurement transactions will be conducted in a manner to provide, to the maximum extent practical, open and free competition. Recipients must justify any anticipated procurement action that is expected to be awarded without competition and exceed the simplified acquisition threshold fixed at 41 U.S.C. 134 (currently set at $100,000).
d. The indirect cost category should be used only when the grant applicant currently has an indirect cost rate approved by the Department of Agriculture or another cognizant Federal agency. A grant applicant that will charge indirect costs to the grant must enclose a copy of the current rate agreement. If the grant applicant is in the process of initially developing or renegotiating a rate, the grant applicant shall submit its indirect cost proposal to the cognizant agency immediately after the applicant is advised that an award will be made. In no event, shall the indirect cost proposal be submitted later than three months after the effective date of the award.
4.
5.
6.
7.
Grant applications that are complete and eligible will be scored competitively based on the following scoring criteria:
1. Incomplete applications as of the deadline for submission will not be considered. If an application is determined to be incomplete, the applicant will be notified in writing and the application will be returned with no further action.
2. Ineligible applications will be returned to the applicant with an explanation.
3. Complete, eligible applications will be evaluated competitively by a review team, composed of at least two RUS employees selected from the Water Programs Division. They will make overall recommendations based on the program elements found in 7 CFR part 1776 and the review criteria presented in this notice. They will award points as described in the scoring criteria in 7 CFR 1776.9 and this notice. Each application will receive a score based on the averages of the reviewers' scores and discretionary points awarded by the RUS Administrator.
4. Applications will be ranked and grants awarded in rank order until all grant funds are expended.
5. Regardless of the score an application receives, if RUS determines that the project is technically infeasible, RUS will notify the applicant, in writing, and the application will be returned with no further action.
RUS will notify a successful applicant by an award letter accompanied by a grant agreement. The grant agreement will contain the terms and conditions for the grant. The applicant must execute and return the grant agreement, accompanied by any additional items required by the award letter or grant agreement.
1. This notice, the 7 CFR part 1776, and the application guide implement the appropriate administrative and national policy requirements. Grant recipients are subject to the requirements in 7 CFR part 1776.
2. Direct federal grants, sub-award funds, or contracts under the HWWS Grant Program shall not be used to fund inherently religious activities, such as worship, religious instruction, or proselytization. Therefore, organizations that receive direct assistance should take steps to separate, in time or location, their inherently religious activities from the services funded under the HWWS Grant Program. Regulations for the Equal Treatment for Faith-based Organizations are contained in 7 CFR part 16, which includes the prohibition against federal funding of inherently religious activities.
1.
2.
a. Non-Federal Entities expending $500,000 or more Federal funds per fiscal year will submit an audit conducted in accordance with 2 CFR part 200 or successor guidance. The audit will be submitted within nine months after the Non-Federal Entity's fiscal year. Additional audits may be required if the project period covers more than one fiscal year.
b. Non-Federal Entities expending less than $500,000 will provide annual financial statements covering the grant period, consisting of the organization's statement of income and expense and balance sheet signed by an appropriate official of the organization. Financial statements will be submitted within 90 days after the Non-Federal Entity's fiscal year.
3.
a. First Tier Sub-Awards of $25,000 or more in non-Recovery Act funds (unless they are exempt under 2 CFR part 170) must be reported by the Recipient to
b. The Total Compensation of the Recipient's Executives (five most highly compensated executives) must be reported by the Recipient (if the Recipient meets the criteria under 2 CFR part 170) to
c. The Total Compensation of the Subrecipient's Executives (5 most highly compensated executives) must be reported by the Subrecipient (if the Subrecipient meets the criteria under 2 CFR part 170) to the Recipient by the end of the month following the month in which the subaward was made.
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
(1)
(2)
(3)
USDA is an equal opportunity provider, employer, and lender.
Rural Utilities Service, USDA.
Notice of Solicitation of Applications (NOSA), Revolving Fund Program.
The Rural Utilities Service (RUS) announces its Revolving Fund Program (RFP) application window for Fiscal Year (FY) 2017. The RFP is authorized under section 306(a)(2)(B) of the Consolidated Farm and Rural Development Act (Con Act), 7 U.S.C. 1926(a)(2)(B). Under the RFP, qualified private, non-profit organizations may receive RFP grant funds to establish a lending program for eligible entities. Eligible entities for the revolving loan fund will be the same entities eligible, under paragraph 1 or 2 of Section 306(a) of the Con Act, 7 U.S.C. 1926(a)(1) or (b)(2), to obtain a loan, loan guarantee, or grant from the RUS Water, Waste Disposal, and Wastewater loan and grant programs.
This year administrative discretion points may be awarded for work plans that:
1. Direct loans to the smallest communities with the lowest incomes emphasizing areas where according to the American Community Survey data by census tracts show that at least 20 percent of the population is living in poverty.
2. Direct loans to areas that lack running water, flush toilets, and modern sewage disposal systems, and areas which have open sewers and high rates of disease caused by poor sanitation, in particular, colonias or Substantially Underserved Trust Areas.
3. Direct loans that emphasize energy and water efficient components to reduce costs and increase sustainability of rural systems.
You may submit completed applications for grants on paper or electronically according to the following deadlines:
• Paper copies must be postmarked and mailed, shipped, or sent overnight
• Electronic copies must be received by February 6, 2017 to be eligible for FY 2017 grant funding. Late or incomplete applications will not be eligible for FY 2017 grant funding.
You may obtain application guides and materials for the RFP program at the Water and Environmental Programs (WEP) Web site:
Submit electronic grant applications at
Submit completed paper applications for RFP grants to, Rural Utilities Service, Rural Development, U.S. Department of Agriculture, 1400 Independence Avenue SW., Room 2234, STOP 1570, Washington, DC 20250-1570. Applications should be marked Attention: Lisa Chesnel, Water and Environmental Programs.
Lisa Chesnel, Community Programs Specialist, Water and Environmental Programs, Rural Utilities Service, Rural Development, U.S. Department of Agriculture STOP 1570, Room 2234-S, 1400 Independence Avenue SW., Washington, DC 20250-1570; Telephone: (202) 720-0499: Fax: (202) 690-0649.
Items in Supplementary Information
Drinking water systems are basic and vital to both health and economic development. With dependable water facilities, rural communities can attract families and businesses that will invest in the community and improve the quality of life for all residents. Without dependable water facilities, the communities cannot sustain economic development.
RUS provides financial and technical assistance to help communities bring safe drinking water and sanitary, environmentally sound waste disposal facilities to rural Americans. It supports the sound development of rural communities and the growth of our economy without endangering the environment.
The Revolving Fund Program (RFP) was established under 7 U.S.C. part 1783 to assist communities with water or wastewater systems. Qualified private, non-profit organizations, who are selected for funding, will receive RFP grant funds to establish a lending program for eligible entities. Eligible entities for the revolving loan fund will be those entities eligible under 7 U.S.C.1926(a)(1) and (2) to obtain a loan, loan guarantee, or grant from the Water and Waste Disposal loan and grant programs administered by RUS. As grant recipients, the non-profit organizations will set up a revolving loan fund to provide loans to finance predevelopment costs of water or wastewater projects, or short-term small capital projects not part of the regular operation and maintenance of current water and wastewater systems. The amount of financing to an eligible entity shall not exceed $100,000.00 and shall be repaid in a term not to exceed 10 years. The rate shall be determined in the approved grant work plan.
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a. Is a private, non-profit organization;
b. Is legally established and located within one of the following:
i. A state within the United States;
ii. The District of Columbia;
iii. The Commonwealth of Puerto Rico; or
iv. A United States territory;
c. Has the legal capacity and authority to carry out the grant purpose;
d. Has a proven record of successfully operating a revolving loan fund to rural areas;
e. Has capitalization acceptable to the Agency, and is composed of at least 51 percent of the outstanding interest or membership being citizens of the United States or individuals who reside in the United States after being legally admitted for permanent residence;
f. Has no delinquent debt to the Federal government or no outstanding judgments to repay a Federal debt;
g. Demonstrates that it possesses the financial, technical, and managerial capability to comply with Federal and state laws and requirements; and
h. Is not a corporation that has been convicted of a felony (or had an officer or agent acting on behalf of the corporation convicted of a felony) within the past 24 months. 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 is not eligible.
2.
3.
a. The following activities are authorized under the RFP statute:
i. Grant funds must be used to capitalize a revolving fund program for the purpose of providing direct loan financing to eligible entities for pre-development costs associated with proposed or with existing water and wastewater systems, or,
ii. Short-term costs incurred for equipment replacement, small-scale extension of services, or other small capital projects that are not part of the regular operations and maintenance activities of existing water and wastewater systems.
b. Grant funds may not be used to pay any of the following:
i. Payment of the Grant Recipient's administrative costs or expenses, or,
ii. Delinquent debt owed to the Federal Government.
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a. The Internet:
b. For paper copies of these materials, you may call (202) 720-9583.
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a. You may file an application in either paper or electronic format. To be considered for support, you must be an eligible entity and must submit a complete application by the deadline date. Applicants should consult the cost principles and general administrative requirements for grants pertaining to their organizational type in order to prepare the budget and complete other parts of the application. You also must demonstrate compliance (or intent to comply), through certification or other means, with a number of public policy requirements. Applications should be prepared in conformance with 7 CFR part 1783, and departmental and other applicable regulations including 2 CFR parts 180, 182, 200, 400 and 421, or any successor regulations.
Whether you file a paper or an electronic application, you will need a DUNS number and must be registered in the System for Award Management (SAM). Detailed information on obtaining a DUNS number and registering for SAM may be found in section D(3).
b. Applicants must complete and submit the following forms to apply for a RFP grant:
i. Standard Form 424, “Application for Federal Assistance”.
ii. Standard Form 424A, “Budget Information—Non-Construction Programs”.
iii. Standard Form 424B, “Assurances—Non-Construction Programs”.
iv. Standard Form LLL, “Disclosure of Lobbying Activity”.
v. Form RD 400-1, “Equal Opportunity Agreement”.
vi. Form RD 400-4, “Assurance Agreement (Under Title VI, Civil Rights Act of 1964).
c. The project proposal should outline the project in sufficient detail to provide a reader with a complete understanding of how the loan program will work. Explain what you will accomplish by lending funds to eligible entities. Demonstrate the feasibility of the proposed loan program in meeting the objectives of this grant program. The proposal should cover the following elements:
i. Present a brief project overview. Explain the purpose of the project, how it relates to RUS's purposes, how you will carry out the project, what the project will produce, and who will direct it.
ii. Describe why the project is necessary. Demonstrate that eligible entities need loan funds. Quantify the number of prospective borrowers or provide statistical or narrative evidence that a sufficient number of borrowers will exist to justify the grant award. Describe the service area. Address community needs.
iii. Clearly state your project goals. Your objectives should clearly describe the goals and be concrete and specific enough to be quantitative or observable. They should also be feasible and relate to the purpose of the loan program.
iv. The narrative should cover in more detail the items briefly described in the Project Summary. It should establish the basis for any claims that you have substantial expertise in promoting the safe and productive use of revolving funds. In describing what the project will achieve, you should tell the reader if it also will have broader influence. The narrative should address the following points:
(1) Document your ability to administer and service a revolving fund in accordance with the provisions of 7 CFR part 1783.
(2) Document your ability to commit financial resources to establish the RFP with funds your organization controls. This documentation should describe the sources of funds other than the RFP grant that will be used to pay your operational costs and provide financial assistance for projects.
(3) Demonstrate that you have secured commitments of significant financial support from other funding sources, if appropriate.
(4) List the fees and charges that borrowers will be assessed.
v. The work plan must describe the tasks and activities that will be accomplished with available resources during the grant period. It must show the work you plan to do to achieve the anticipated outcomes, goals, and objectives set out for the RFP. The plan must:
(1) Describe the work to be performed by each person.
(2) Give a schedule or timetable of work to be done.
(3) Show evidence of previous experience with the techniques to be used or their successful use by others.
(4) Outline the loan program to include the following: specific loan purposes, a loan application process, priorities, borrower eligibility criteria, limitations, fees, interest rates, terms, and collateral requirements.
(5) Provide a marketing plan.
(6) Explain the mechanics of how you will transfer loan funds to the borrowers.
(7) Describe follow-up or continuing activities that should occur after project completion such as monitoring and reporting borrowers' accomplishments.
(8) Describe how the results will be evaluated. The evaluation criteria should be in line with the project objectives.
(9) List all personnel responsible for administering this program along with a statement of their qualifications and experience.
vi. The written justification for projected costs should explain how budget figures were determined for each category. It should indicate which costs are to be covered by grant funds and which costs will be met by your organization or other organizations. The justification should account for all expenditures discussed in the narrative. It should reflect appropriate cost-sharing contributions. The budget justification should explain the budget and accounting system proposed or in place. The administrative costs for operating the budget should be expressed as a percentage of the overall budget. The budget justification should provide specific budget figures, rounding off figures to the nearest dollar. Applicants should consult 2 CFR 200, Subpart E, “Cost Principals,” for information about appropriate costs for each budget category.
vii. In addition to completing the standard application forms, you must submit:
(1) Supplementary material that demonstrate that your organization is legally recognized under state or Tribal and Federal law. Satisfactory documentation includes, but is not limited to, certificates from the Secretary of State, or copies of state statutes or laws establishing your organization. Letters from the IRS awarding tax-exempt status are not considered adequate evidence.
(2) A certified list of directors and officers with their respective terms.
(3) Evidence of tax exempt status from the IRS.
(4) The most recent audit of your organization.
(5) The following financial statements:
(a) A pro forma balance sheet at start-up and for at least three additional years; Balance sheets, income statements, and cash flow statements for the last three years.
(b) If your organization has been formed less than three years, the financial statements should be submitted for the periods from inception to the present. Projected income and cash flow statements for at least three years supported by a list of assumptions showing the basis for the projections. The projected income statement and balance sheet must include one set of projections that shows the revolving loan fund only and a separate set of projections that shows your organization's total operations.
(6) Additional information to support and describe your plan for achieving the grant objectives. The information may be regarded as essential for understanding and evaluating the project and may be found in letters of support, as resolutions, policies, and other relevant documents. The supplements may be presented in appendices to the proposal.
d. Compliance with other federal statutes.
The applicant must provide evidence of compliance with other federal statutes, including but not limited to the following:
i. Debarment and suspension information is required in accordance with 2 CFR part 417 (Nonprocurement Debarment and Suspension) supplemented by 2 CFR part 180, if it applies. The section heading is “What information must I provide before entering into a covered transaction with the Federal Government?” located at 2 CFR 180.335. It is part of OMB's Guidance for Grants and Agreements concerning Government-wide Debarment and Suspension.
ii. All of your organization's known workplaces by including the actual address of buildings (or parts of buildings) or other sites where work under the award takes place. Workplace identification is required under the drug-free workplace requirements in Subpart B of 2 CFR part 421, which adopts the Government-wide implementation (2 CFR part 182) of the Drug-Free Workplace Act.
iii. 2 CFR parts 200 and 400 (Uniform Assistance Requirements, Cost Principles and Audit Requirements for Federal Awards).
iv. 2 CFR part 182 (Governmentwide Requirements for Drug-Free Workplace (Financial Assistance)) and 2 CFR part 421 (Requirements for Drug Free Workplace (Financial Assistance)).
v. Executive Order 13166, “Improving Access to Services for Persons with Limited English Proficiency.” For information on limited English proficiency and agency-specific guidance, go to
e. Requirements for numbers of copies of submitted applications
i. Send or deliver paper applications by the U.S. Postal Service (USPS) or courier delivery services to: Water and Environmental Programs, Rural Utilities Service, 1400 Independence Avenue SW., Attention: Lisa Chesnel, Mail STOP 1570, Room 2233-S, Washington, DC, 20250-1570.
ii. For paper applications mail or ensure delivery of an original paper application (no stamped, photocopied, or initialed signatures) and two copies by the deadline date. The application and any materials sent with it become Federal records by law and cannot be returned to you.
iii. Electronically submitted applications:
(1). Applications will not be accepted by fax or electronic mail.
(2). Electronic applications for grants will be accepted if submitted through
(3). Applicants must preregister successfully with
(4). Applicants who apply through
(5).
(6).
3.
In accordance with 2 CFR part 25, whether applying electronically or by paper, the applicant must register in the System for Award Management (SAM) prior to submitting an application. Applicants may register for the SAM at
4.
a. Paper copies must be postmarked and mailed, shipped, or sent overnight no later than February 6, 2017 to be eligible for FY 2017 grant funding. Late or incomplete applications will not be eligible for FY 2017 grant funding.
b. Electronic copies must be received by February 6, 2017 to be eligible for FY 2017 grant funding. Late or incomplete applications will not be eligible for FY 2017 grant funding.
5.
Within 30 days of receiving your application, RUS will send you a letter of acknowledgment. Your application will be reviewed for completeness to determine if you included all of the items required. If your application is incomplete or ineligible, RUS will return it to you with an explanation. A review team, composed of at least two
1.
a. Degree of expertise and successful experience in making and servicing commercial loans, with a successful record, for the following number of full years:
i. At least 1 but less than 3 years—5 points.
ii. At least 3 but less than 5 years—10 points.
iii. At least 5 but less than 10 years—20 points.
iv. 10 or more years—30 points.
b. Extent to which the work plan demonstrates a well thought out, comprehensive approach to accomplishing the objectives of this part, clearly defines who will be served by the project, clearly articulates the problem/issues to be addressed, identifies the service area to be covered by the RFP loans and appears likely to be sustainable; Up to 40 points.
c. Percentage of applicant contributions. Points allowed under this paragraph will be based on written evidence of the availability of funds from sources other than the proceeds of an RFP grant to pay part of the cost of a loan recipient's project. In-kind contributions will not be considered. Funds from other sources as a percentage of the RFP grant and points corresponding to such percentages are as follows:
i. Less than 20 percent—ineligible.
ii. At least 20 percent but less than 50 percent—10 points.
iii. 50 percent or more—20 points.
d. Extent to which the goals and objectives are clearly defined, tied to the work plan, and are measurable; Up to 15 points.
e. Lowest ratio of projected administrative expenses to loans advanced; Up to 10 points.
f. The evaluation methods for considering loan applications and making RFP loans are specific to the program, clearly defined, measurable, and are consistent with program outcomes; Up to 20 points.
g. Administrator's discretion points up to 10 points may be awarded. To the maximum extent possible, there should be an emphasis on high poverty areas in rural communities and rural areas with the lowest incomes, particularly those areas where at least 45 percent of children qualify for the National School Lunch Program.
Factors include:
i. Directs loans to the smallest communities with the lowest incomes emphasizing areas where according to the American Community Survey data by census tracts show that at least 20 percent of the population is living in poverty.
ii. Directs loans to areas which lack running water, flush toilets, and modern sewage disposal systems, and areas which have open sewers and high rates of disease caused by poor sanitation, in particular, colonias or Substantially Underserved Trust Areas.
iii. Directs loans that emphasize energy and water efficient components to reduce costs and increase sustainability of rural systems.
2.
a. In making its decision about your application, RUS may determine that your application is:
i. Eligible and selected for funding,
ii. Eligible but offered fewer funds than requested,
iii. Eligible but not selected for funding, or
iv. Ineligible for the grant.
c. In accordance with 7 CFR part 1900, subpart B, you generally have the right to appeal adverse decisions. Some adverse decisions cannot be appealed. For example, if you are denied RUS funding due to a lack of funds available for the grant program, this decision cannot be appealed. However, you may make a request to the National Appeals Division (NAD) to review the accuracy of our finding that the decision cannot be appealed. The appeal must be in writing and filed at the appropriate regional office, which can be found at
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2.
a. SF-270, “Request for Advance or Reimbursement,” will be completed by the Non-Federal Entity and submitted to either the state or national office no more frequently than monthly.
b. Upon receipt of a properly completed SF-270, the funds will be requested through the field office terminal system. Ordinarily, payment will be made within 30 days after receipt of a proper request for reimbursement.
c. Non-Federal Entities may use women- and minority-owned banks (a bank which is owned at least 50 percent by women or minority group members) for the deposit and disbursement of funds.
3.
b. Non-Federal Entities shall constantly 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. The Non-Federal Entity will provide project reports as follows:
i. SF-425, “Financial Status Report (short form),” and a project performance activity report will be required of all Non-Federal Entities on a quarterly basis, due 30 days after the end of each quarter.
ii. A final project performance report will be required with the last SF-425 due 90 days after the end of the last quarter in which the project is completed. The final report may serve as the last quarterly report.
iii. All multi-State Non-Federal Entities are to submit an original of each report to the National Office. Non-Federal Entities serving only one State are to submit an original of each report to the State Office. The project performance reports should detail, preferably in a narrative format,
c. Financial reporting. The Non-Federal Entity will provide an audit report or financial statements as follows:
i. Non-Federal Entities expending $750,000 or more Federal funds per fiscal year will submit an audit conducted in accordance with 2 CFR part 200 The audit will be submitted within nine months after the Non-Federal Entity's fiscal year. Additional audits may be required if the project period covers more than one fiscal year.
ii. Non-Federal Entities expending less than $750,000 will provide annual financial statements covering the grant period, consisting of the organization's statement of income and expense and balance sheet signed by an appropriate official of the organization. Financial statements will be submitted within 90 days after the Non-Federal Entity's fiscal year.
iii. Recipient and Subrecipient Reporting. The applicant must have the necessary processes and systems in place to comply with the reporting requirements for first-tier sub-awards and executive compensation under the Federal Funding Accountability and Transparency Act of 2006 in the event the applicant receives funding unless such applicant is exempt from such reporting requirements pursuant to 2 CFR part 170, § 170.110(b). The reporting requirements under the Transparency Act pursuant to 2 CFR part 170 are as follows:
(1) First Tier Sub-Awards of $25,000 or more in non-Recovery Act funds (unless they are exempt under 2 CFR part 170) must be reported by the Recipient to
(2) The Total Compensation of the Recipient's Executives (five most highly compensated executives) must be reported by the Recipient (if the Recipient meets the criteria under 2 CFR part 170) to
(3) The Total Compensation of the Subrecipient's Executives (five most highly compensated executives) must be reported by the Subrecipient (if the Subrecipient meets the criteria under 2 CFR part 170) to the Recipient by the end of the month following the month in which the subaward was made.
1. Web site:
2. Phone: (202) 720-9640.
3. Fax: (202) 690-0649.
4. Email:
5. Main point of contact: Lisa Chesnel, Community Programs Specialist, Water and Environmental Programs, Rural Utilities Service, Rural Development, U.S. Department of Agriculture.
1.
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
(1) Mail: U.S. Department of Agriculture, Office of the Assistant Secretary for Civil Rights, 1400 Independence Avenue SW., Washington, DC 20250-9410; (2) fax: (202) 690-7442; or (3) email:
USDA is an equal opportunity provider, employer, and lender.
Volkswagen Group of America—Chattanooga Operations, LLC (VW) submitted a notification of proposed production activity to the FTZ Board for its facility in Chattanooga, Tennessee, within FTZ 134. The notification conforming to the requirements of the regulations of the FTZ Board (15 CFR 400.22) was received on November 25, 2016.
VW already has authority to produce passenger motor vehicles within Site 3 of FTZ 134. The current request would add foreign status materials/components to the scope of authority. Pursuant to 15 CFR 400.14(b), additional FTZ authority would be limited to the specific foreign-status materials/components and specific finished products described in the submitted notification (as described below) and subsequently authorized by the FTZ Board.
Production under FTZ procedures could exempt VW from customs duty payments on the foreign-status materials/components used in export production. On its domestic sales, VW would be able to choose the duty rates during customs entry procedures that apply to passenger motor vehicles (duty rate 2.5%) for the foreign-status materials/components noted below and in the existing scope of authority. Customs duties also could possibly be deferred or reduced on foreign-status production equipment.
The materials/components sourced from abroad include: Gasoline; diesel fuel, polyurea grease; hydraulic oil; polycarbamide grease; refrigerant; urea; clear lacquer; blending solvent; PVC finishing sheet; canvas covers; aluminum chassis plate; screw driver bits; software; spindle drives; aux-in ports; optical fiber cable; white motor vehicle bodies; and, prototype vehicles
Public comment is invited from interested parties. Submissions shall be addressed to the Board's Executive Secretary at the address below. The closing period for their receipt is January 17, 2017.
A copy of the notification will be available for public inspection at the Office of the Executive Secretary, Foreign-Trade Zones Board, Room 21013, U.S. Department of Commerce, 1401 Constitution Avenue NW., Washington, DC 20230-0002, and in the “Reading Room” section of the Board's Web site, which is accessible via
For further information, contact Christopher Kemp at
Pursuant to its authority under the Foreign-Trade Zones Act of June 18, 1934, as amended (19 U.S.C. 81a-81u), the Foreign-Trade Zones Board (the Board) adopts the following Order:
The application to reorganize FTZ 17 to expand the service area under the ASF is approved, subject to the FTZ Act and the Board's regulations, including Section 400.13, and to the Board's standard 2,000-acre activation limit for the zone.
ATTEST:
Pursuant to its authority under the Foreign-Trade Zones Act of June 18, 1934, as amended (19 U.S.C. 81a-81u), the Foreign-Trade Zones Board (the Board) adopts the following Order:
Brake Parts Inc (BPI) submitted a notification of proposed production activity to the FTZ Board for its facility in Patterson, California, within FTZ 226. The notification conforming to the requirements of the regulations of the FTZ Board (15 CFR 400.22) was received on November 30, 2016.
The BPI facility is located within Site 14 of FTZ 226. The facility is used for the kitting of aftermarket automotive parts. Pursuant to 15 CFR 400.14(b), FTZ activity would be limited to the specific foreign-status materials and components and specific finished products described in the submitted notification (as described below) and subsequently authorized by the FTZ Board.
Production under FTZ procedures could exempt BPI from customs duty payments on the foreign-status components used in export production. On its domestic sales, BPI would be able to choose the duty rates during customs entry procedures that apply to master cylinder kits, brake drum kits, brake pad kits, brake shoe kits and brake caliper kits (duty rate ranges from free to 2.5%) for the foreign-status inputs noted below. Customs duties also could possibly be deferred or reduced on foreign-status production equipment.
The components and materials sourced from abroad include: Rubber O-rings; rubber seals; rubber brake components; paperboard corrugated
Public comment is invited from interested parties. Submissions shall be addressed to the Board's Executive Secretary at the address below. The closing period for their receipt is January 17, 2017.
A copy of the notification will be available for public inspection at the Office of the Executive Secretary, Foreign-Trade Zones Board, Room 21013, U.S. Department of Commerce, 1401 Constitution Avenue NW., Washington, DC 20230-0002, and in the “Reading Room” section of the Board's Web site, which is accessible via
Christopher Kemp at
Pursuant to its authority under the Foreign-Trade Zones Act of June 18, 1934, as amended (19 U.S.C. 81a-81u), the Foreign-Trade Zones Board (the Board) adopts the following Order:
The application to reorganize FTZ 93 to expand the service area under the ASF is approved, subject to the FTZ Act and the Board's regulations, including Section 400.13, and to the Board's standard 2,000-acre activation limit for the zone.
ATTEST:
Pursuant to its authority under the Foreign-Trade Zones Act of June 18, 1934, as amended (19 U.S.C. 81a-81u), the Foreign-Trade Zones Board (the Board) adopts the following Order:
Brake Parts Inc (BPI) submitted a notification of proposed production activity to the FTZ Board for its facility in Hazleton, Pennsylvania. The notification conforming to the requirements of the regulations of the FTZ Board (15 CFR 400.22) was received on November 30, 2016.
A separate application for subzone designation at the BPI facility was submitted and will be processed under Section 400.31 of the Board's regulations. The facility is used for the kitting of aftermarket automotive parts. Pursuant to 15 CFR 400.14(b), FTZ activity would be limited to the specific foreign-status materials and components and specific finished products described in the submitted notification (as described below) and subsequently authorized by the FTZ Board.
Production under FTZ procedures could exempt BPI from customs duty payments on the foreign-status components used in export production. On its domestic sales, BPI would be able to choose the duty rates during customs entry procedures that apply to master cylinder kits, brake drum kits, brake pad kits, brake shoe kits and brake caliper kits (duty rate ranges from free to 2.5%) for the foreign-status inputs noted below. Customs duties also could possibly be deferred or reduced on foreign-status production equipment.
The components and materials sourced from abroad include: Rubber O-
Public comment is invited from interested parties. Submissions shall be addressed to the Board's Executive Secretary at the address below. The closing period for their receipt is January 17, 2017.
A copy of the notification will be available for public inspection at the Office of the Executive Secretary, Foreign-Trade Zones Board, Room 21013, U.S. Department of Commerce, 1401 Constitution Avenue NW., Washington, DC 20230-0002, and in the “Reading Room” section of the Board's Web site, which is accessible via
Christopher Kemp at
An application has been submitted to the Foreign-Trade Zones Board (the Board) by the Eastern Distribution Center, Inc., grantee of FTZ 24, requesting subzone status for the facility of Brake Parts Inc., located in Hazleton, Pennsylvania. The application was submitted pursuant to the provisions of the Foreign-Trade Zones Act, as amended (19 U.S.C. 81a-81u), and the regulations of the Board (15 CFR part 400). It was formally docketed on December 1, 2016.
The proposed subzone (28 acres) is located at 62 Green Mountain Road, Hazleton, Schuylkill County. A notification of proposed production activity has been submitted and will be published separately for public comment and processed under 15 CFR 400.37. The proposed subzone would be subject to the existing activation limit of FTZ 24.
In accordance with the Board's regulations, Elizabeth Whiteman of the FTZ Staff is designated examiner to review the application and make recommendations to the Executive Secretary.
Public comment is invited from interested parties. Submissions shall be addressed to the Board's Executive Secretary at the address below. The closing period for their receipt is January 17, 2017. Rebuttal comments in response to material submitted during the foregoing period may be submitted during the subsequent 15-day period to January 31, 2017.
A copy of the application will be available for public inspection at the Office of the Executive Secretary, Foreign-Trade Zones Board, Room 21013, U.S. Department of Commerce, 1401 Constitution Avenue NW., Washington, DC 20230-0002, and in the “Reading Room” section of the Board's Web site, which is accessible via
For further information, contact Elizabeth Whiteman at
An application has been submitted to the Foreign-Trade Zones Board (the Board) by the Mississippi Coast Foreign Trade Zone, Inc., grantee of FTZ 92, requesting subzone status for the facility of TopShip, LLC, located in Gulfport, Mississippi. The application was submitted pursuant to the provisions of the Foreign-Trade Zones Act, as amended (19 U.S.C. 81a-81u), and the regulations of the Board (15 CFR part 400). It was formally docketed on December 1, 2016.
The proposed subzone (114.23 acres) is located at 13301 Seaway Road in Gulfport. The proposed subzone would be subject to the existing activation limit of FTZ 92. A notification of proposed production activity has been submitted and is being processed under 15 CFR 400.37 (Doc. B-57-2016).
In accordance with the Board's regulations, Camille Evans of the FTZ Staff is designated examiner to review the application and make recommendations to the Executive Secretary.
Public comment is invited from interested parties. Submissions shall be addressed to the Board's Executive Secretary at the address below. The closing period for their receipt is January 17, 2017. Rebuttal comments in response to material submitted during the foregoing period may be submitted during the subsequent 15-day period to January 31, 2017.
A copy of the application will be available for public inspection at the Office of the Executive Secretary, Foreign-Trade Zones Board, Room 21013, U.S. Department of Commerce, 1401 Constitution Avenue NW., Washington, DC 20230-0002, and in the “Reading Room” section of the Board's Web site, which is accessible via
For further information, contact Camille Evans at
Pursuant to its authority under the Foreign-Trade Zones Act of June 18, 1934, as amended (19 U.S.C. 81a-81u), the Foreign-Trade Zones Board (the Board) adopts the following Order:
Whereas, the Board adopted the alternative site framework (ASF) (15 CFR Sec. 400.2(c)) as an option for the establishment or reorganization of zones;
Whereas, the Virginia Port Authority, grantee of Foreign-Trade Zone 20, submitted an application to the Board (FTZ Docket B-31-2016, docketed May 9, 2016) for authority to expand the service area of the zone to include Elizabeth City, North Carolina and the Counties of Camden, Chowan, Currituck, Gates, Hertford, Pasquotank and Perquimans, North Carolina as described in the application, adjacent to the Norfolk-Newport News Customs and Border Protection port of entry;
Whereas, notice inviting public comment was given in the
Whereas, the Board adopts the findings and recommendations of the examiner's report, and finds that the requirements of the FTZ Act and the Board's regulations are satisfied;
Now, therefore, the Board hereby orders:
The application to reorganize FTZ 20 to expand the service area under the ASF is approved, subject to the FTZ Act and the Board's regulations, including Section 400.13, and to the Board's standard 2,000-acre activation limit for the zone.
Pursuant to its authority under the Foreign-Trade Zones Act of June 18, 1934, as amended (19 U.S.C. 81a-81u), the Foreign-Trade Zones Board (the Board) adopts the following Order:
The amended application to reorganize FTZ 244 to expand the service area under the ASF is approved, subject to the FTZ Act and the Board's regulations, including Section 400.13, and to the Board's standard 2,000-acre activation limit for the zone.
ATTEST:
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of public workshops.
Free Atlantic Shark Identification Workshops and Protected Species Safe Handling, Release, and Identification Workshops will be held in January, February, and March of 2017. Certain fishermen and shark dealers are required to attend a workshop to meet regulatory requirements and to maintain valid permits. Specifically, the Atlantic Shark Identification Workshop is mandatory for all federally permitted Atlantic shark dealers. The Protected Species Safe Handling, Release, and Identification Workshop is mandatory for vessel owners and operators who use bottom longline, pelagic longline, or gillnet gear, and who have also been issued shark or swordfish limited access permits. Additional free workshops will be conducted during 2017 and will be announced in a future notice.
The Atlantic Shark Identification Workshops will be held on January 12, February 9, and March 9, 2017.
The Protected Species Safe Handling, Release, and Identification Workshops will be held on January 17, January 20, February 1, February 3, March 7, and March 16, 2017.
See
The Atlantic Shark Identification Workshops will be held in Kenner, LA; Norfolk, VA; and Fort Pierce, FL.
The Protected Species Safe Handling, Release, and Identification Workshops will be held in Kenner, LA; Wilmington, NC; Port Saint Lucie, FL; Portsmouth, NH; Largo, FL; and Houston, TX.
See
Rick Pearson by phone: (727) 824-5399, or by fax: (727) 824-5398.
The workshop schedules, registration information, and a list of frequently asked questions regarding these workshops are posted on the Internet at:
Since January 1, 2008, Atlantic shark dealers have been prohibited from receiving, purchasing, trading, or bartering for Atlantic sharks unless a valid Atlantic Shark Identification Workshop certificate is on the premises of each business listed under the shark dealer permit that first receives Atlantic sharks (71 FR 58057; October 2, 2006). Dealers who attend and successfully complete a workshop are issued a certificate for each place of business that is permitted to receive sharks. These certificate(s) are valid for 3 years. Approximately 127 free Atlantic Shark Identification Workshops have been conducted since January 2007.
Currently, permitted dealers may send a proxy to an Atlantic Shark Identification Workshop. However, if a dealer opts to send a proxy, the dealer must designate a proxy for each place of business covered by the dealer's permit which first receives Atlantic sharks. Only one certificate will be issued to each proxy. A proxy must be a person who is currently employed by a place of business covered by the dealer's permit; is a primary participant in the identification, weighing, and/or first receipt of fish as they are offloaded from a vessel; and who fills out dealer reports. Atlantic shark dealers are prohibited from renewing a Federal shark dealer permit unless a valid Atlantic Shark Identification Workshop certificate for each business location that first receives Atlantic sharks has been submitted with the permit renewal
1. January 12, 2017, 12 p.m.—4 p.m., DoubleTree Hotel, 2150 Veterans Memorial Highway, Kenner, LA 70062.
2. February 9, 2017, 12 p.m.—4 p.m. LaQuinta Inn, 1387 North Military Highway, Norfolk, VA 32502.
3. March 9, 2017, 12 p.m.—4 p.m. LaQuinta Inn, 2655 Crossroads Parkway, Fort Pierce, FL 34945.
To register for a scheduled Atlantic Shark Identification Workshop, please contact Eric Sander at
To ensure that workshop certificates are linked to the correct permits, participants will need to bring the following specific items to the workshop:
• Atlantic shark dealer permit holders must bring proof that the attendee is an owner or agent of the business (such as articles of incorporation), a copy of the applicable permit, and proof of identification.
• Atlantic shark dealer proxies must bring documentation from the permitted dealer acknowledging that the proxy is attending the workshop on behalf of the permitted Atlantic shark dealer for a specific business location, a copy of the appropriate valid permit, and proof of identification.
The Atlantic Shark Identification Workshops are designed to reduce the number of unknown and improperly identified sharks reported in the dealer reporting form and increase the accuracy of species-specific dealer-reported information. Reducing the number of unknown and improperly identified sharks will improve quota monitoring and the data used in stock assessments. These workshops will train shark dealer permit holders or their proxies to properly identify Atlantic shark carcasses.
Since January 1, 2007, shark limited-access and swordfish limited-access permit holders who fish with longline or gillnet gear have been required to submit a copy of their Protected Species Safe Handling, Release, and Identification Workshop certificate in order to renew either permit (71 FR 58057; October 2, 2006). These certificate(s) are valid for 3 years. As such, vessel owners who have not already attended a workshop and received a NMFS certificate, or vessel owners whose certificate(s) will expire prior to the next permit renewal, must attend a workshop to fish with, or renew, their swordfish and shark limited-access permits. Additionally, new shark and swordfish limited-access permit applicants who intend to fish with longline or gillnet gear must attend a Protected Species Safe Handling, Release, and Identification Workshop and submit a copy of their workshop certificate before either of the permits will be issued. Approximately 244 free Protected Species Safe Handling, Release, and Identification Workshops have been conducted since 2006.
In addition to certifying vessel owners, at least one operator on board vessels issued a limited-access swordfish or shark permit that uses longline or gillnet gear is required to attend a Protected Species Safe Handling, Release, and Identification Workshop and receive a certificate. Vessels that have been issued a limited-access swordfish or shark permit and that use longline or gillnet gear may not fish unless both the vessel owner and operator have valid workshop certificates onboard at all times. Vessel operators who have not already attended a workshop and received a NMFS certificate, or vessel operators whose certificate(s) will expire prior to their next fishing trip, must attend a workshop to operate a vessel with swordfish and shark limited-access permits that uses longline or gillnet gear.
1. January 17, 2017, 9 a.m.-5 p.m., Hilton Hotel, 901 Airline Drive, Kenner, LA 70062.
2. January 20, 2017, 9 a.m.-5 p.m., Hilton Garden Inn, 6745 Rock Spring Road, Wilmington, NC 28405.
3. February 1, 2017, 9 a.m.-5 p.m., Holiday Inn, 10120 South Federal Highway, Port St Lucie, FL 34952.
4. February 3, 2017, 9 a.m.-5 p.m., Holiday Inn, 300 Woodbury Avenue, Portsmouth, NH 03801.
5. March 7, 2017, 9 a.m.-5 p.m., Holiday Inn, 210 Seminole Boulevard, Largo, FL 33770.
6. March 16, 2017, 9 a.m.-5 p.m., Holiday Inn Express, 8080 Main Street, Houston, TX 77025.
To register for a scheduled Protected Species Safe Handling, Release, and Identification Workshop, please contact Angler Conservation Education at (386) 682-0158.
To ensure that workshop certificates are linked to the correct permits, participants will need to bring the following specific items with them to the workshop:
• Individual vessel owners must bring a copy of the appropriate swordfish and/or shark permit(s), a copy of the vessel registration or documentation, and proof of identification.
• Representatives of a business-owned or co-owned vessel must bring proof that the individual is an agent of the business (such as articles of incorporation), a copy of the applicable swordfish and/or shark permit(s), and proof of identification.
• Vessel operators must bring proof of identification.
The Protected Species Safe Handling, Release, and Identification Workshops are designed to teach longline and gillnet fishermen the required techniques for the safe handling and release of entangled and/or hooked protected species, such as sea turtles, marine mammals, and smalltooth sawfish. In an effort to improve reporting, the proper identification of protected species will also be taught at these workshops. Additionally, individuals attending these workshops will gain a better understanding of the requirements for participating in these fisheries. The overall goal of these workshops is to provide participants with the skills needed to reduce the mortality of protected species, which may prevent additional regulations on these fisheries in the future.
16 U.S.C. 1801
First Responder Network Authority (FirstNet), U.S. Department of Commerce.
Notice of public meeting of the First Responder Network Authority Board.
The Board of the First Responder Network Authority (Board) will convene an open public meeting on December 14, 2016, preceded by open public meetings of the Board Committees on December 13, 2016.
A joint meeting of the four FirstNet Board Committees will be held on December 13, 2016, between 8:00 a.m. and 3:30 p.m. (PST). The meeting of the Governance and Personnel, Technology, Consultation and Outreach, and Finance Committees will be open to the public from 8:00 a.m. to 10:15 a.m. (PST). The FirstNet Committees will be in a closed session from 10:15 a.m. to 3:30 p.m. (PST). The FirstNet Board will hold an open public meeting on December 14, 2016 between 8:00 a.m. and 9:55 a.m. (PST) and between 10:20 a.m. and 11:00 a.m. (PST). The FirstNet Board will be in closed session on December 14, 2016 between 9:55 a.m. and 10:20 a.m. (PST).
The meetings on December 13 and December 14, 2016 will be held at the Doubletree by Hilton Hotel Sacramento, 2001 Point West Way, Sacramento, CA 95815. Members of the public may listen to the meeting by dialing toll free 1-888-324-8109 and entering participant code 2827944#.
Karen Miller-Kuwana, Board Secretary, FirstNet, 12201 Sunrise Valley Drive, M/S 243, Reston, VA 20192; telephone: (571) 665-6177; email:
This notice informs the public that the Board of the First Responder Network Authority (Board) will convene an open public meeting on December 14, 2016, preceded by open public meetings of the Board Committees on December 13, 2016.
The Combined Committee and Board Meetings are accessible to people with disabilities. Individuals requiring accommodations, such as sign language interpretation or other ancillary aids, are asked to notify Ms. Miller-Kuwana by telephone (571) 665-6177 or email at
The meeting will also be webcast. Please refer to FirstNet's Web site at
Department of the Air Force, Air Force Scientific Advisory Board.
Federal Registrar meeting notice.
The United States Air Force Scientific Advisory Board plans to hold its Winter Board meeting in January.
The meeting date is January 24, 2017, from 8 a.m. to 5 p.m.
The meeting will take place at the Beckman Center of National Academies of Science and Engineering, 100 Academy Drive, Irvine, California 92617.
Under the provisions of the Federal Advisory Committee Act of 1972 (5 U.S.C., Appendix, as amended), the Government in the Sunshine Act of 1976 (5 U.S.C. 552b, as amended), and 41 CFR 102-3.150, the Department of Defense announces the United States Air Force (USAF) Scientific Advisory Board (SAB) Winter Board meeting will take place on 24 January 2017 at the Beckman Center of National Academies of Science and Engineering, located at 100 Academy Drive, Irvine, California 92617. The meeting will occur from 8:00 a.m.-5:00 p.m. on Tuesday, 24 January 2017. The session that will be open to the
Any member of the public that wishes to attend this meeting or provide input to the Air Force Scientific Advisory Board must contact the Scientific Advisory Board meeting organizer at the phone number or email address listed in this announcement at least five working days prior to the meeting date. Please ensure that you submit your written statement in accordance with 41 CFR 102-3.140(c) and section 10(a)(3) of the Federal Advisory Committee Act. Statements being submitted in response to the agenda mentioned in this notice must be received by the Scientific Advisory Board meeting organizer at least five calendar days prior to the meeting commencement date. The Scientific Advisory Board meeting organizer will review all timely submissions and respond to them prior to the start of the meeting identified in this notice. Written statements received after this date may not be considered by the Scientific Advisory Board until the next scheduled meeting.
Office of the Secretary of Defense, DoD.
Notice to delete a System of Records.
Pursuant to the Privacy Act of 1974 and Office of Management and Budget (OMB) Circular No. A-130, notice is hereby given that the Department of Defense proposes to delete a system of records, “International Affairs Personnel Initiatives Database,” last published at 75 FR 19622 on April 15, 2010. This system of records is a single central facility with the Department of Defense (DoD) that maintains and verifies information provided by individuals seeking international affairs certification based on their current experience and training.
Based on a recent review of DSCA 01, International Affairs Personnel Initiatives Database, it has been determined that this system of records is covered by system of records notice DSCA 07, Security Assistance Network (SAN) (September 22, 2016, 81 FR 65343). All records will be maintained in accordance with the DSCA 07 records retention. Therefore, DSCA 01, International Affairs Personnel Initiatives Database can be deleted.
Comments will be accepted on or before January 6, 2017. This proposed action will be effective the date following the end of the comment period unless comments are received which result in a contrary determination.
You may submit comments, identified by docket number and title, by any of the following methods:
*
*
Mrs. Luz D. Ortiz, Chief, Records, Privacy and Declassification Division (RPD2), 1155 Defense Pentagon, Washington, DC 20301-1155, or by phone at (571) 372-0478.
The Office of the Secretary of Defense notices for systems of records subject to the Privacy Act of 1974 (5 U.S.C. 552a), as amended, have been published in the
International Affairs Personnel Initiatives Database (April 15, 2010, 75 FR 19622)
National Center for Education Statistics (NCES), Department of Education (ED).
Notice.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 3501
Interested persons are invited to submit comments on or before January 6, 2017.
To access and review all the documents related to the information collection listed in this notice, please use
For specific questions related to collection activities, please contact NCES Information Collections at
The Department of Education (ED), in accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)), provides the general public and Federal agencies with an opportunity to comment on proposed, revised, and continuing collections of information. This helps the Department assess the impact of its information collection requirements and minimize the public's reporting burden. It also helps the public understand the Department's information collection requirements and provide the requested data in the desired format. ED is soliciting comments on the proposed information collection request (ICR) that is described below. The Department of Education is especially interested in public comment addressing the following issues: (1) Is this collection necessary to the proper functions of the Department; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the Department enhance the quality, utility, and clarity of the information to be collected; and (5) how might the Department minimize the burden of this collection on the respondents, including through the use of information technology. Please note that written comments received in response to this notice will be considered public records.
Office of Special Education and Rehabilitative Services, Department of Education.
Notice.
Notice inviting applications for a new award for fiscal year (FY) 2017.
Catalog of Federal Domestic Assistance (CFDA) Number: 84.325D.
This priority is:
There is a well-documented need for leadership personnel to fill faculty and leadership positions in special education, early intervention, and related services (Castillo, Curtis, & Tan, 2014; Montrosse & Young, 2012; Robb, Smith, & Montrosse, 2012; Smith, Montrosse, Robb, Tyler, & Young, 2011; Smith, Robb, West, & Tyler, 2010; Woods & Snyder, 2009). These leaders conduct research to increase the knowledge of effective interventions and services for children and youth with disabilities. These leaders also teach practices supported by evidence to future special education, early intervention, and related services professionals who will work in a variety of educational settings and provide services directly to these children (Robb et al., 2012; Smith et al., 2010; West & Hardman, 2012). Shortages in these leadership positions could limit the field's capacity to generate new knowledge of effective interventions and to prepare future professionals to improve outcomes for children with disabilities (Smith et al., 2011).
Shortages of leadership personnel at State and local agencies to fill special education and early intervention administrator positions have also been noted (Billingsley, Crockett, & Kamman, 2014). These administrators supervise and evaluate the implementation of instructional programs supported by evidence to make sure that State or local agencies are meeting the needs of children with disabilities. Administrators also ensure that schools and programs meet Federal, State, and local requirements for special education, early intervention, and related services (Lashley & Boscardin, 2003).
Federal support can increase the supply of personnel who have the necessary knowledge and skills to assume leadership positions in special education, early intervention, and related services as researchers and special education/early intervention/related services personnel preparers in IHEs, or as leaders in national organizations, SEAs, LAs, LEAs, EIS programs, or schools. Critical competencies for special education, early intervention, and related services personnel vary depending on the type of personnel and the requirements of the preparation program but can include, for example, skills needed for postsecondary instruction, administration, policy development, professional practice, leadership, or research. However, all leadership personnel need to have current knowledge of effective interventions and services that improve outcomes for children with disabilities, including high-need children with disabilities.
Type A programs are designed to prepare special education, early intervention, and related services personnel as researchers and personnel preparers in IHEs. Type A programs culminate in a doctoral degree.
Preparation programs that lead to clinical doctoral degrees in related services (
Type B programs are designed to prepare special education or early intervention administrators to work as leaders in national organizations, SEAs, LAs, LEAs, or EIS programs. Type B programs prepare personnel for positions such as SEA special education administrators, LEA or regional special education directors, school-based special education directors, including those in youth correctional facilities, preschool coordinators, and early intervention coordinators. Type B programs culminate in a doctoral degree.
The preparation of school principals is not included in this priority.
Applicants must identify the specific program type, A or B, for which they are applying for funding as part of the abstract. Applicants may not submit the same proposal for more than one program type.
To be considered for funding under the Preparation of Special Education, Early Intervention, and Related Services Leadership Personnel absolute priority, all program applicants must meet the application requirements contained in the priority. All projects funded under this absolute priority also must meet the
The requirements of this priority are as follows:
(a) Demonstrate, in the narrative section of the application under “Significance of the Project,” how—
(1) The project addresses national, State, regional, or district needs for leadership personnel to administer programs or provide, or prepare others to provide, interventions and services that improve outcomes of children with disabilities, ages birth through 21, including high-need children with disabilities.
(i) Present appropriate and applicable data (
(ii) Present data demonstrating the effectiveness of the doctoral program to date in producing leaders in special education, early intervention, or related services such as: the professional accomplishments of program graduates (
Data on the effectiveness of a doctoral program should be no older than five years prior to the start date of the project proposed in the application. When reporting percentages, the denominator (
(2) Scholar competencies to be acquired in the program relate to knowledge and skills needed by the leadership personnel the applicant proposes to prepare, including knowledge of technologies designed to provide instruction. To address this requirement, the applicant must—
(i) Identify the competencies needed by leadership personnel in postsecondary instruction, administration, policy development, professional practice, leadership, or research in order to administer programs or provide, or prepare others to provide, interventions and services that improve outcomes of children with disabilities, ages birth through 21, including high-need children with disabilities; and
(ii) Provide the conceptual framework of the leadership preparation program, including any empirical support, that will promote the acquisition of the identified competencies needed by leadership personnel, including knowledge of technologies designed to provide instruction, and, where applicable, how these competencies relate to the project's specialized preparation area.
(b) Demonstrate, in the narrative section of the application under “Quality of the Project Services,” how—
(1) The applicant will recruit and support high-quality scholars. The narrative must—
(i) Describe the selection criteria the applicant will use to identify high-quality applicants for admission in the program;
(ii) Describe the recruitment strategies the applicant will use to attract high-quality applicants and any specific recruitment strategies targeting high-quality applicants from traditionally underrepresented groups, including individuals with disabilities; and
(iii) Describe the approach the applicant will use to help all scholars, including individuals with disabilities, complete the program; and
(2) The project is designed to promote the acquisition of the competencies needed by leadership personnel to administer programs or provide, or prepare others to provide, interventions and services supported by evidence to improve outcomes, including college- and career-readiness of children with disabilities. To address this requirement, the applicant must—
(i) Describe how the components of the project, such as coursework, internship or practicum experiences, research requirements, and other opportunities provided to scholars to analyze data, critique research and methodologies, and practice newly acquired knowledge and skills, will enable the scholars to acquire the competencies needed by leadership personnel for postsecondary instruction, administration, policy development, professional practice, leadership, or research in special education, early intervention, or related services;
(ii) Describe how the components of the project are integrated in order to support the acquisition and enhancement of the identified competencies needed by leadership personnel in special education, early intervention, or related services, including knowledge of technologies designed to provide instruction;
(iii) Describe how the components of the project prepare scholars to administer programs or provide, or prepare others to provide, interventions and services that are supported by evidence to improve outcomes, including college- and career-readiness, of children with disabilities in a variety of settings, including in high-need LEAs;
(iv) Demonstrate, through a letter of support from a partnering agency, school, or program, that there is an agreement with one or more high-need LEAs; publicly funded preschool programs, including Head Start programs, located within the geographic boundaries of a high-need LEA; or programs serving children eligible for services under Part C or Part B, section 619 of IDEA located within the
(v) Describe how the project will use resources, as appropriate, available through technical assistance centers, which may include centers funded by the Department; and
(vi) Describe the approach that faculty members will use to mentor scholars with the goal of helping them acquire competencies needed by leadership personnel and promote career goals in special education, early intervention, or related services.
(c) Demonstrate, in the narrative section of the application under “Quality of the Project Evaluation,” how—
(1) The applicant will evaluate how well the goals or objectives of the proposed leadership project have been met. The applicant must describe the outcomes to be measured for both the project and the scholars, particularly the acquisition of scholar competencies and their impact on the services provided by future teachers, service providers, or administrators; and the evaluation methodologies to be employed, including proposed instruments, data collection methods, and possible analyses;
(2) The applicant will collect, analyze, and use data on current scholars and scholars who graduate from the program to improve the proposed program on an ongoing basis; and
(3) The applicant will report the evaluation results to OSEP in its annual and final performance reports.
(d) Demonstrate, in the narrative under “Required Project Assurances,” or appendices as directed, that the following program requirements are met. The applicant must—
(1) Include in the application appendix—
(i) Course syllabi for all coursework in the major and any required coursework for a minor;
(ii) Course syllabi for all research methods, evaluation methods, or data analysis courses required by the degree program and elective research methods, evaluation methods, or data analysis courses that have been completed by more than one scholar enrolled in the program in the last five years; and
(iii) For new coursework, proposed syllabi;
Applicants for Type B programs should provide a syllabus or syllabi for current or proposed courses that provide instruction on, or permit practice with, research and the methodological, statistical, and practical considerations in the use of data on early learning outcomes, student achievement, or growth in student achievement to evaluate the effectiveness of early intervention providers, related services providers, teachers, or principals.
(2) Ensure that the proposed number of scholars to be recruited into the program can graduate from the program by the end of the grant's project period. The described scholar recruitment strategies, including recruitment of individuals with disabilities, the program components and their sequence, and proposed budget must be consistent with this project requirement;
(3) Ensure scholars will not be selected based on race or national origin/ethnicity. Per the Supreme Court's decision in
(4) Ensure that the project will meet the requirements in 34 CFR 304.23, particularly those related to informing all scholarship recipients of their service obligation commitment. Failure by a grantee to properly meet these requirements is a violation of the grant award that may result in sanctions, including the grantee being liable for returning any misused funds to the Department. Specifically, the grantee must prepare, and ensure that each scholarship recipient signs, the following two documents:
(i) A Pre-Scholarship Agreement prior to the scholar receiving a scholarship for an eligible program (Office of Management and Budget (OMB) Control Number 1820-0686); and
(ii) An Exit Certification immediately upon the scholar leaving, completing, or otherwise exiting that program (OMB Control Number 1820-0686);
(5) Ensure that prior approval from the OSEP project officer will be obtained before admitting additional scholars beyond the number of scholars proposed in the application and before transferring a scholar to another preparation program funded by OSEP;
(6) Ensure that the project will meet the statutory requirements in section 662(e) through 662(h) of IDEA;
(7) Ensure that at least 65 percent of the total requested budget over the five years will be used for scholar support;
(8) Ensure that the IHE will not require scholars enrolled in the program to work (
(9) Ensure that the budget includes attendance of the project director at a three-day project directors' meeting in Washington, DC, during each year of the project. The budget may also provide for the attendance of scholars at the same three-day project directors' meetings in Washington, DC;
(10) Ensure that if the project maintains a Web site, relevant information and documents are in a format that meets government or industry-recognized standards for accessibility;
(11) Ensure that scholar accomplishments (
(12) Ensure that annual data will be submitted on each scholar who receives grant support (OMB Control Number 1820-0686). The primary purposes of the data collection are to track the service obligation fulfillment of scholars who receive funds from OSEP grants and to collect data for program performance measure reporting under the Government Performance and Results Act of 1993 (GPRA). Applicants are encouraged to visit the Personnel Development Program Data Collection System (DCS) Web site at
The regulations in 34 CFR part 86 apply to IHEs only.
Contingent upon the availability of funds and the quality of applications, we may make additional awards in FY 2018 from the list of unfunded applications from this competition.
The Department is not bound by any estimates in this notice.
1.
2.
3.
(b) The grantee may award subgrants to entities it has identified in an approved application.
4.
(a) Recipients of funding under this competition must make positive efforts to employ and advance in employment qualified individuals with disabilities (see section 606 of IDEA).
(b) Each applicant for, and recipient of, funding must, with respect to the aspects of their proposed project relating to the absolute priority, involve individuals with disabilities, or parents of individuals with disabilities ages birth through 26, in planning, implementing, and evaluating the project (see section 682(a)(1)(A) of IDEA).
1.
You can contact ED Pubs at its Web site, also:
If you request an application package from ED Pubs, be sure to identify this competition as follows: CFDA number 84.325D.
Individuals with disabilities can obtain a copy of the application package in an accessible format (
2.
• A “page” is 8.5″ x 11″, on one side only, with 1″ margins at the top, bottom, and both sides.
• Double-space (no more than three lines per vertical inch) all text in the application narrative, including titles, headings, footnotes, quotations, reference citations, and captions, as well as all text in charts, tables, figures, graphs, and screen shots.
• Use a font that is 12 point or larger.
• Use one of the following fonts: Times New Roman, Courier, Courier
The page limit and double-spacing requirements do not apply to Part I, the cover sheet; Part II, the budget section, including the narrative budget justification; Part IV, the assurances and certifications; or the abstract (follow the guidance provided in the application package for completing the abstract), the table of contents, the list of priority requirements, the resumes, the reference list, the letters of support, or the appendices. However, the page limit and double-spacing requirements do apply to all of Part III, the application narrative, including all text in charts, tables, figures, graphs, and screen shots.
We will reject your application if you exceed the page limit in the application narrative section, or if you apply standards other than those specified in this notice and the application package.
3.
Applications for grants under this competition must be submitted electronically using the
We do not consider an application that does not comply with the deadline requirements.
Individuals with disabilities who need an accommodation or auxiliary aid in connection with the application process should contact the person listed under
4.
5.
6.
a. Have a Data Universal Numbering System (DUNS) number and a Taxpayer Identification Number (TIN);
b. Register both your DUNS number and TIN with the System for Award Management (SAM), the Government's primary registrant database;
c. Provide your DUNS number and TIN on your application; and
d. Maintain an active SAM registration with current information while your application is under review by the Department and, if you are awarded a grant, during the project period.
You can obtain a DUNS number from Dun and Bradstreet at the following Web site:
If you are a corporate entity, agency, institution, or organization, you can obtain a TIN from the Internal Revenue Service. If you are an individual, you can obtain a TIN from the Internal Revenue Service or the Social Security Administration. If you need a new TIN, please allow two to five weeks for your TIN to become active.
The SAM registration process can take approximately seven business days, but may take upwards of several weeks, depending on the completeness and accuracy of the data you enter into the SAM database. Thus, if you think you might want to apply for Federal financial assistance under a program administered by the Department, please allow sufficient time to obtain and register your DUNS number and TIN. We strongly recommend that you register early.
Once your SAM registration is active, it may be 24 to 48 hours before you can access the information in, and submit an application through,
If you are currently registered with SAM, you may not need to make any changes. However, please make certain that the TIN associated with your DUNS number is correct. Also note that you will need to update your registration annually. This may take three or more business days.
Information about SAM is available at
In addition, if you are submitting your application via
7.
a.
We will reject your application if you submit it in paper format unless, as described elsewhere in this section, you qualify for one of the exceptions to the electronic submission requirement
You may access the electronic grant application for the Preparation of Special Education, Early Intervention, and Related Services Leadership Personnel competition at
Please note the following:
• When you enter the
• Applications received by
• The amount of time it can take to upload an application will vary depending on a variety of factors, including the size of the application and the speed of your Internet connection. Therefore, we strongly recommend that you do not wait until the application deadline date to begin the submission process through
• You should review and follow the Education Submission Procedures for submitting an application through
• You will not receive additional point value because you submit your application in electronic format, nor will we penalize you if you qualify for an exception to the electronic submission requirement, as described elsewhere in this section, and submit your application in paper format.
• You must submit all documents electronically, including all information you typically provide on the following forms: The Application for Federal Assistance (SF 424), the Department of Education Supplemental Information for SF 424, Budget Information—Non-Construction Programs (ED 524), and all necessary assurances and certifications.
• You must upload any narrative sections and all other attachments to your application as files in a read-only, non-modifiable Portable Document Format (PDF). Do not upload an interactive or fillable PDF file. If you upload a file type other than a read-only, non-modifiable PDF (
• Your electronic application must comply with any page-limit requirements described in this notice.
• After you electronically submit your application, you will receive from
Once your application is successfully validated by
These emails do not mean that your application is without any disqualifying errors. While your application may have been successfully validated by
• We may request that you provide us original signatures on forms at a later date.
If you are prevented from electronically submitting your application on the application deadline date because of technical problems with the
If you submit an application after 4:30:00 p.m., Washington, DC time, on the application deadline date, please contact the person listed under
The extensions to which we refer in this section apply only to the unavailability of, or technical problems with, the
• You do not have access to the Internet; or
• You do not have the capacity to upload large documents to the
• No later than two weeks before the application deadline date (14 calendar days or, if the fourteenth calendar day before the application deadline date falls on a Federal holiday, the next business day following the Federal
If you mail your written statement to the Department, it must be postmarked no later than two weeks before the application deadline date. If you fax your written statement to the Department, we must receive the faxed statement no later than two weeks before the application deadline date.
Address and mail or fax your statement to: Celia Rosenquist, U.S. Department of Education, 400 Maryland Avenue SW., Room 5146, Potomac Center Plaza (PCP), Washington, DC 20202-5076. FAX: (202) 245-7590.
Your paper application must be submitted in accordance with the mail or hand-delivery instructions described in this notice.
b.
You must show proof of mailing consisting of one of the following:
(1) A legibly dated U.S. Postal Service postmark.
(2) A legible mail receipt with the date of mailing stamped by the U.S. Postal Service.
(3) A dated shipping label, invoice, or receipt from a commercial carrier.
(4) Any other proof of mailing acceptable to the Secretary of the U.S. Department of Education.
If you mail your application through the U.S. Postal Service, we do not accept either of the following as proof of mailing:
(1) A private metered postmark.
(2) A mail receipt that is not dated by the U.S. Postal Service.
The U.S. Postal Service does not uniformly provide a dated postmark. Before relying on this method, you should check with your local post office.
We will not consider applications postmarked after the application deadline date.
c.
The Application Control Center accepts hand deliveries daily between 8:00 a.m. and 4:30:00 p.m., Washington, DC time, except Saturdays, Sundays, and Federal holidays.
(1) You must indicate on the envelope and—if not provided by the Department—in Item 11 of the SF 424 the CFDA number, including suffix letter, if any, of the competition under which you are submitting your application; and
(2) The Application Control Center will mail to you a notification of receipt of your grant application. If you do not receive this notification within 15 business days from the application deadline date, you should call the U.S. Department of Education Application Control Center at (202) 245-6288.
1.
2.
In addition, in making a competitive grant award, the Secretary requires various assurances, including those applicable to Federal civil rights laws that prohibit discrimination in programs or activities receiving Federal financial assistance from the Department of Education (34 CFR 100.4, 104.5, 106.4, 108.8, and 110.23).
3.
4.
5.
Please note that, if the total value of your currently active grants, cooperative agreements, and procurement contracts from the Federal Government exceeds $10,000,000, the reporting requirements
1.
If your application is not evaluated or not selected for funding, we notify you.
2.
We reference the regulations outlining the terms and conditions of an award in the
3.
(b) At the end of your project period, you must submit a final performance report, including financial information, as directed by the Secretary. If you receive a multiyear award, you must submit an annual performance report that provides the most current performance and financial expenditure information as directed by the Secretary under 34 CFR 75.118. The Secretary may also require more frequent performance reports under 34 CFR 75.720(c). For specific requirements on reporting, please go to
4.
In addition, the Department will gather information on the following outcome measures: (1) The percentage of scholars who completed the preparation program and are employed in high-need districts; (2) the percentage of scholars who completed the preparation program and are employed in the field of special education for at least two years; and (3) the percentage of scholars who completed the preparation program and who are rated effective by their employers.
Grantees may be asked to participate in assessing and providing information on these aspects of program quality.
5.
In making a continuation award, the Secretary also considers whether the grantee is operating in compliance with the assurances in its approved application, including those applicable to Federal civil rights laws that prohibit discrimination in programs or activities receiving Federal financial assistance from the Department (34 CFR 100.4, 104.5, 106.4, 108.8, and 110.23).
Celia Rosenquist, U.S. Department of Education, 400 Maryland Avenue SW., Room 5146, Potomac Center Plaza, Washington, DC 20202-5076. Telephone: (202) 245-7373.
If you use a TDD or a TTY, call the Federal Relay Service (FRS), toll free, at 1-800-877-8339.
You may also access documents of the Department published in the
Office of Special Education and Rehabilitative Services, Department of Education.
Notice.
Training and Information for Parents of Children with Disabilities—Community Parent Resource Centers Notice inviting applications for new awards for fiscal year (FY) 2017.
This priority is:
More than 35 years of research and experience has demonstrated that the education of children with disabilities can be made more effective by strengthening the ability of parents to participate fully in the education of their children at school and at home (see section 601(c)(5)(B) of IDEA). Since the Department first funded CPRCs over 20 years ago, the CPRC program has helped parents in their communities set high expectations for children with disabilities and has provided parents with the information and training they need to help their children meet those expectations. Information about the Office of Special Education's parent training and information program can be found at:
CPRCs, consistent with section 672(b) of IDEA, help families in the geographically defined communities identified by the applicant: (a) Navigate systems that provide early intervention, special education, general education, postsecondary options, and related services; (b) understand the nature of their children's disabilities; (c) learn about their rights and responsibilities under IDEA; (d) expand their knowledge of evidence-based, as defined in this notice, education practices to help their children succeed; (e) strengthen their collaboration with professionals; (f) locate resources available for themselves and their children, which connects them to their local communities; and (g) advocate for improved student achievement, increased graduation rates, and improved postsecondary outcomes for all children through participation in school reform activities. In addition, CPRCs may help youth with disabilities in their communities have high expectations for themselves and understand their rights and responsibilities. In addition, effective CPRCs can partner with local agencies, providing expertise on how to better support families in their communities and help them access other community supports that empower families.
The CPRCs to be funded through this priority will provide parents with information, individual assistance, and training to enable them to: (a) Advocate for their children's access to appropriate services, including access to general education classrooms and extracurricular activities; (b) help their children meet developmental and academic goals; (c) help their children meet challenging expectations established for all children; and (d) prepare their children to achieve positive postsecondary outcomes that lead to lives that are as productive and independent as possible. In addition, all CPRCs will be required to help youth with disabilities become effective self-advocates.
(a) Demonstrate, in the narrative section of the application under “Significance of the Project,” how the proposed project will—
(1) Address the needs of parents of children with disabilities who experience significant isolation from available sources of information and support for services that increase the parents' capacity to help their children improve their early learning, school-aged, and postsecondary outcomes. To meet this requirement, the applicant must—
(i) Present appropriate information on the characteristics and needs of parents in the identified community who experience significant challenges identifying reliable sources of information and support, including, for example, low-income parents, parents with limited English proficiency, parents of incarcerated youth with disabilities, and parents with disabilities;
(ii) Present appropriate information about the identified community, including a description of its geographic area, population demographics, and the resources available in the community to support all families;
(iii) Demonstrate knowledge of best practices in providing training and information to parents and youth in the identified community;
(iv) Demonstrate knowledge of current evidence-based education practices and policy initiatives to improve outcomes in early intervention and early childhood, general and special education, transition services, and postsecondary options, including, if applicable to its community, the Promoting the Readiness of Minors in Supplemental Security Income (PROMISE) initiative; and
(v) Demonstrate knowledge of how to identify and work with appropriate partners in the community, including agencies providing Part C services under IDEA; local educational agencies (LEAs); child welfare agencies; disability-specific resources serving families, such as local service providers; and other community nonprofits serving families; and
(2) Address the needs of youth with disabilities for services that increase their capacity to be effective self-advocates. To meet this requirement, the applicant must—
(i) Present appropriate information on the needs of youth with disabilities in the identified community who experience significant isolation from available sources of information and support, including, for example, youth who are low-income, homeless, or limited English proficient, have dropped out of school, or are in foster care or involved in the juvenile justice system;
(ii) Demonstrate knowledge of best practices in providing training and information to youth with disabilities in the identified community;
(iii) Demonstrate knowledge of best practices in self-advocacy; and
(iv) Demonstrate knowledge of how to work with appropriate partners serving youth with disabilities in the identified community, including local agencies, other nonprofits, and Independent Living Centers that provide assistance such as postsecondary education options, employment training, and supports.
(b) Demonstrate, in the narrative section of the application, under “Quality of the Project Services,” how the proposed project will—
(1) Use a project logic model (see paragraph (f)(1) of this priority) to guide the development of project plans and activities within the identified community;
(2) Develop and implement an outreach plan to inform parents of children with disabilities and youth with disabilities in the identified community of how they can benefit from the services provided by the CPRC;
(3) Provide services that increase parents' capacity to help their children with disabilities improve their early learning, school-aged, and postsecondary outcomes. To meet this requirement, the applicant must include information as to how the services will—
(i) Increase parents' knowledge of—
(A) The nature of their children's disabilities, including their children's strengths and academic, behavioral, and developmental challenges;
(B) The importance of having high expectations for their children and how to help them meet those expectations;
(C) The local, State, and Federal resources available to assist them and their children, and local resources that strengthen their connection to their community;
(D) IDEA, Federal IDEA regulations, and State implementation of IDEA, including parents' role on Individualized Family Service Plan (IFSP) and Individualized Education Program (IEP) Teams and how to effectively participate on IFSP and IEP Teams;
(E) Other relevant educational and health care legislation, including the Elementary and Secondary Education Act of 1965, as amended (ESEA); section 504 of the Rehabilitation Act of 1973, as amended (section 504); and the Americans with Disabilities Act of 1990 (ADA);
(F) Transition services at all levels, including: Part C early intervention to Part B preschool, preschool to elementary school, elementary school to secondary school, and secondary school to postsecondary education and workforce options;
(G) How their children can have access to the general education curriculum, including access to college- and career-ready academic standards and assessments; inclusive early learning programs; inclusive general education classrooms and settings; vocational education; extracurricular and enrichment opportunities available to all children; and other initiatives to make students college- and career-ready;
(H) Evidence-based early intervention and education practices that improve early learning, school-aged, and postsecondary outcomes;
(I) Local school reform efforts to improve student achievement and increase graduation rates; and
(J) The use of data to inform instruction and advance school reform efforts;
(ii) Increase parents' capacity to—
(A) Effectively support their children with disabilities and participate in their children's education;
(B) Communicate effectively and work collaboratively in partnership with early intervention service providers, school-based personnel, related services personnel, and administrators;
(C) Resolve disputes effectively; and
(D) Participate in school reform activities to improve outcomes for all children;
(4) Provide services that increase youth with disabilities' capacity to be effective self-advocates. To meet this requirement, the applicant must include information as to how the services will—
(i) Increase the knowledge of youth with disabilities about—
(A) The nature of their disabilities, including their strengths, and their academic, behavioral, and developmental challenges;
(B) The importance of having high expectations for themselves and how to meet those expectations;
(C) The resources available to support their success in secondary and postsecondary education and employment and full participation in their communities;
(D) IDEA, section 504, ADA, and other legislation and policies that affect people with disabilities;
(E) Their rights and responsibilities while receiving services under IDEA and after transitioning to post-school programs, services, and employment;
(F) How they can participate on IEP Teams; and
(G) Supported decisionmaking necessary to transition to adult life; and
(ii) Increase the capacity of youth with disabilities to advocate for themselves, including communicating effectively and working in partnership with providers;
(5) Use various methods to deliver services that are appropriate in the context of the identified community;
(6) Use best practices to provide training and information to adult learners and youth in the identified community;
(7) Establish cooperative partnerships with any Parent Training and Information Center and any other CPRCs funded in the State under sections 671 and 672 of IDEA, respectively; and
(8) Network with local and State organizations and agencies, such as the Part C State Interagency Coordinating Council, the Part B State Advisory Panel, and protection and advocacy agencies that serve parents and families of children with disabilities, to better support the families and children with disabilities in the identified community to effectively and efficiently access IDEA services.
(c) Demonstrate, in the narrative section of the application, under “Quality of the Evaluation Plan,” how—
(1) The applicant will evaluate how well the goals or objectives of the proposed project, as described in its logic model, have been met, including a description of how the applicant will measure the outcomes proposed in the logic model (see paragraph (f)(1) of this priority). The description must include—
(i) Proposed evaluation methodologies appropriate to the scope of the project and the identified community, including proposed instruments, data collection methods, and analyses; and
(ii) Proposed criteria for determining if the project has reached and served families and youth in the identified community; and
(2) The proposed project will use the evaluation results to examine its implementation and its progress toward achieving intended outcomes.
(d) Demonstrate, in the narrative section of the application under “Adequacy of Project Resources,” how—
(1) The proposed personnel, consultants, and contractors have the qualifications and experience to carry out the proposed activities and achieve the intended outcomes identified in the project logic model (see paragraph (f)(1) of this priority);
(2) The applicant will encourage applications for employment from persons who are members of groups that have historically been underrepresented based on race, color, national origin,
(3) The applicant and key partners have adequate resources to carry out the proposed activities.
(e) Demonstrate, in the narrative section of the application under “Quality of the Management Plan,” how—
(1) The proposed management plan will ensure that the intended outcomes identified in the project logic model (see paragraph (f)(1) of this priority) will be achieved on time and within budget;
(2) The time of key personnel, consultants, and contractors will be sufficiently allocated to the project;
(3) The proposed management plan will ensure that the services provided are of high quality;
(4) The board of directors will be used to provide appropriate oversight to the project;
(5) The proposed project benefits from a diversity of perspectives, including those of parents, providers, and administrators in the identified community;
(6) The proposed project will ensure that the Annual Performance Reports submitted to the Department will—
(i) Be accurate and timely;
(ii) Include information on the projects' outputs and outcomes; and
(iii) Include, at a minimum, the number and demographics of parents and youth to whom the CPRC provided information and training, and the levels of service provided to them; and
(7) The project management and staff will—
(i) Make use of the technical assistance (TA) and products provided by the Center on Parent Information and Resources, Regional Parent Technical Assistance Centers (PTACs), Native American PTAC, Military PTAC, and other TA centers funded by the Office of Special Education Programs (OSEP), as appropriate, including the PROMISE TA Center, in order to serve parents of children with disabilities and youth with disabilities as effectively as possible;
(ii) Participate in developing individualized TA plans with the Regional PTAC as appropriate; and
(iii) Facilitate one site visit from the Regional PTAC during the grant cycle.
(f) In the narrative or appendices as directed, the applicant must—
(1) Include, in Appendix A, a logic model that depicts, at a minimum, the goals, activities, outputs, and intended outcomes of the proposed project. A logic model communicates how a project will achieve its intended outcomes and provides a framework for both the formative and summative evaluations of the project;
The following Web sites provide more information on logic models:
(2) Include, in Appendix A, person-loading charts and timelines, as applicable, to illustrate the management plan described in the narrative; and
(3) Include, in the budget, attendance by the project director at one OSEP meeting in Washington DC annually, to be determined by OSEP;
Within 30 days of receipt of the award, a post-award teleconference must be held between the OSEP project officer and the grantee's project director and other authorized representatives.
The regulations in 34 CFR part 79 apply to all applicants except federally recognized Indian tribes.
The regulations in 34 CFR part 86 apply to institutions of higher education (IHEs) only.
Contingent upon the availability of funds and the quality of applications, we may make additional awards in FY 2018 from the list of unfunded applications from this competition.
The Department is not bound by any estimates in this notice.
1.
Section 672(a)(2) of IDEA defines a “local parent organization” as a parent organization, as defined in section 671(a)(2), that—
(a) Has a board of directors the majority of whom are parents of children with disabilities ages birth through 26 from the community to be served; and
(b) Has as its mission serving families of children with disabilities who—
(i) Are ages birth through 26; and
(ii) Have the full range of disabilities described in section 602(3) of IDEA.
2.
3.
(b) The grantee may award subgrants to entities it has identified in an approved application.
4.
(a) Recipients of funding under this program must make positive efforts to employ and advance in employment qualified individuals with disabilities (see section 606 of IDEA).
(b) Each applicant for, and recipient of, funding under this program must involve individuals with disabilities, or parents of individuals with disabilities ages birth through 26, in planning, implementing, and evaluating the project (see section 682(a)(1)(A) of IDEA).
1.
To obtain a copy via the Internet, use the following address:
You can contact ED Pubs at its Web site, also:
If you request an application package from ED Pubs, be sure to identify this competition as follows: CFDA number 84.328C.
To obtain a copy from the program office, contact: Carmen Sanchez, U.S. Department of Education, 400 Maryland Avenue SW., room 5175, Potomac Center Plaza, Washington DC 20202-5076. Telephone: (202) 245-6595. If you use a TDD or TTY, call the Federal Relay Service (FRS), toll free, at 1-800-877-8339.
Individuals with disabilities can obtain a copy of the application package in an accessible format (
2.
• A “page” is 8.5″ x 11″, on one side only, with 1″ margins at the top, bottom, and both sides.
• Double-space (no more than three lines per vertical inch) all text in the application narrative, including titles, headings, footnotes, quotations, reference citations, and captions, as well as all text in charts, tables, figures, graphs, and screen shots.
• Use a font that is 12 point or larger.
• Use one of the following fonts: Times New Roman, Courier, Courier New, or Arial. An application submitted in any other font (including Times Roman or Arial Narrow) will not be accepted.
The page limit and double-spacing requirements do not apply to Part I, the cover sheet; Part II, the budget section, including the narrative budget justification; Part IV, the assurances and certifications; or the abstract (follow the guidance provided in the application package for completing the abstract), the table of contents, the list of priority requirements, the resumes, the reference list, the letters of support, or the appendices. However, the page limit and double-spacing requirements do apply to all of Part III, the application narrative, including all text in charts, tables, figures, graphs, and screen shots.
We will reject your application if you exceed the page limit in the application narrative section; or if you apply standards other than those specified in the application package.
3.
Applications for grants under this competition must be submitted electronically using the
We do not consider an application that does not comply with the deadline requirements.
Individuals with disabilities who need an accommodation or auxiliary aid in connection with the application process should contact the person listed under
4.
5.
6.
a. Have a Data Universal Numbering System (DUNS) number and a Taxpayer Identification Number (TIN);
b. Register both your DUNS number and TIN with the System for Award Management (SAM), the Government's primary registrant database;
c. Provide your DUNS number and TIN on your application; and
d. Maintain an active SAM registration with current information while your application is under review by the Department and, if you are awarded a grant, during the project period.
You can obtain a DUNS number from Dun and Bradstreet at the following Web site:
If you are a corporate entity, agency, institution, or organization, you can obtain a TIN from the Internal Revenue Service. If you are an individual, you can obtain a TIN from the Internal Revenue Service or the Social Security Administration. If you need a new TIN, please allow two to five weeks for your TIN to become active.
The SAM registration process can take approximately seven business days, but may take upwards of several weeks, depending on the completeness and accuracy of the data you enter into the SAM database. Thus, if you think you might want to apply for Federal financial assistance under a program administered by the Department, please allow sufficient time to obtain and register your DUNS number and TIN. We strongly recommend that you register early.
Once your SAM registration is active, it may be 24 to 48 hours before you can access the information in, and submit an application through,
If you are currently registered with SAM, you may not need to make any changes. However, please make certain that the TIN associated with your DUNS number is correct. Also note that you will need to update your registration annually. This may take three or more business days.
Information about SAM is available at
In addition, if you are submitting your application via
7.
a.
Applications for grants under the Community Parent Resource Centers competition, CFDA number 84.328C, must be submitted electronically using the Governmentwide
We will reject your application if you submit it in paper format unless, as described elsewhere in this section, you qualify for one of the exceptions to the electronic submission requirement
You may access the electronic grant application for the Community Parent Resource Centers competition at
Please note the following:
• When you enter the
• Applications received by
• The amount of time it can take to upload an application will vary depending on a variety of factors, including the size of the application and the speed of your Internet connection. Therefore, we strongly recommend that you do not wait until the application deadline date to begin the submission process through
• You should review and follow the Education Submission Procedures for submitting an application through
• You will not receive additional point value because you submit your application in electronic format, nor will we penalize you if you qualify for an exception to the electronic submission requirement, as described elsewhere in this section, and submit your application in paper format.
• You must submit all documents electronically, including all information you typically provide on the following forms: The Application for Federal Assistance (SF 424), the Department of Education Supplemental Information for SF 424, Budget Information—Non-Construction Programs (ED 524), and all necessary assurances and certifications.
• You must upload any narrative sections and all other attachments to your application as files in a read-only, non-modifiable Portable Document Format (PDF). Do not upload an interactive or fillable PDF file. If you upload a file type other than a read-only, non-modifiable PDF (
• Your electronic application must comply with any page-limit requirements described in this notice.
• After you electronically submit your application, you will receive from
Once your application is successfully validated by
These emails do not mean that your application is without any disqualifying errors. While your application may have been successfully validated by
• We may request that you provide us original signatures on forms at a later date.
If you are prevented from electronically submitting your application on the application deadline date because of technical problems with the
If you submit an application after 4:30:00 p.m., Washington, DC time, on the application deadline date, please contact the person listed under
The extensions to which we refer in this section apply only to the unavailability of, or technical problems with, the
• You do not have access to the Internet; or
• You do not have the capacity to upload large documents to the
• No later than two weeks before the application deadline date (14 calendar days or, if the fourteenth calendar day before the application deadline date falls on a Federal holiday, the next business day following the Federal holiday), you mail or fax a written statement to the Department, explaining which of the two grounds for an exception prevents you from using the Internet to submit your application.
If you mail your written statement to the Department, it must be postmarked no later than two weeks before the application deadline date. If you fax your written statement to the Department, we must receive the faxed statement no later than two weeks before the application deadline date.
Address and mail or fax your statement to: Carmen Sanchez, U.S. Department of Education, 400 Maryland Avenue SW., Room 5175, Potomac Center Plaza, Washington, DC 20202-5076. FAX: (202) 245-7590.
Your paper application must be submitted in accordance with the mail or hand delivery instructions described in this notice.
b.
If you qualify for an exception to the electronic submission requirement, you may mail (through the U.S. Postal Service or a commercial carrier) your application to the Department. You must mail the original and two copies of your application, on or before the application deadline date, to the Department at the following address: U.S. Department of Education, Application Control Center, Attention: (CFDA Number 84.328C), LBJ Basement Level 1, 400 Maryland Avenue SW., Washington, DC 20202-4260.
You must show proof of mailing consisting of one of the following:
(1) A legibly dated U.S. Postal Service postmark.
(2) A legible mail receipt with the date of mailing stamped by the U.S. Postal Service.
(3) A dated shipping label, invoice, or receipt from a commercial carrier.
(4) Any other proof of mailing acceptable to the Secretary of the U.S. Department of Education.
If you mail your application through the U.S. Postal Service, we do not accept either of the following as proof of mailing:
(1) A private metered postmark.
(2) A mail receipt that is not dated by the U.S. Postal Service.
The U.S. Postal Service does not uniformly provide a dated postmark. Before relying on this method, you should check with your local post office.
We will not consider applications postmarked after the application deadline date.
c.
If you qualify for an exception to the electronic submission requirement, you (or a courier service) may deliver your paper application to the Department by hand. You must deliver the original and two copies of your application by hand, on or before the application deadline date, to the Department at the following address: U.S. Department of Education, Application Control Center, Attention: (CFDA Number 84.328C), 550 12th Street SW., Room 7039, Potomac Center Plaza, Washington, DC 20202-4260.
The Application Control Center accepts hand deliveries daily between 8:00 a.m. and 4:30:00 p.m., Washington, DC time, except Saturdays, Sundays, and Federal holidays.
(1) You must indicate on the envelope and—if not provided by the Department—in Item 11 of the SF 424 the CFDA number, including suffix letter, if any, of the competition under which you are submitting your application; and
(2) The Application Control Center will mail to you a notification of receipt of your grant application. If you do not receive this notification within 15 business days from the application deadline date, you should call the U.S. Department of Education Application Control Center at (202) 245-6288.
1.
2.
In addition, in making a competitive grant award, the Secretary requires various assurances including those applicable to Federal civil rights laws that prohibit discrimination in programs or activities receiving Federal financial assistance from the Department of Education (34 CFR 100.4, 104.5, 106.4, 108.8, and 110.23).
3.
In the past, the Department has had difficulty finding peer reviewers for certain competitions because so many individuals who are eligible to serve as
4.
5.
Please note that, if the total value of your currently active grants, cooperative agreements, and procurement contracts from the Federal Government exceeds $10,000,000, the reporting requirements in 2 CFR part 200, Appendix XII, require you to report certain integrity information to FAPIIS semiannually. Please review the requirements in 2 CFR part 200, Appendix XII, if this grant plus all the other Federal funds you receive exceed $10,000,000.
1.
If your application is not evaluated or not selected for funding, we notify you.
2.
We reference the regulations outlining the terms and conditions of an award in the
3.
(b) At the end of your project period, you must submit a final performance report, including financial information, as directed by the Secretary. If you receive a multiyear award, you must submit an annual performance report that provides the most current performance and financial expenditure information as directed by the Secretary under 34 CFR 75.118. The Secretary may also require more frequent performance reports under 34 CFR 75.720(c). For specific requirements on reporting, please go to
(c) Under 34 CFR 75.250(b), the Secretary may provide a grantee with additional funding for data collection analysis and reporting. In this case the Secretary establishes a data collection period.
4.
Grantees will be required to report information on their project's performance in annual and final performance reports to the Department (34 CFR 75.590).
5.
In making a continuation award, the Secretary also considers whether the grantee is operating in compliance with the assurances in its approved application, including those applicable to Federal civil rights laws that prohibit discrimination in programs or activities receiving Federal financial assistance from the Department (34 CFR 100.4, 104.5, 106.4, 108.8, and 110.23).
Carmen Sanchez, U.S. Department of Education, 400 Maryland Avenue SW., Room 5175, Potomac Center Plaza, Washington, DC 20202-5076. Telephone: (202) 245-6595.
If you use a TDD or a TTY, call the FRS, toll free, at 1-800-877-8339.
You may also access documents of the Department published in the
Department of Education (ED), National Center for Education Statistics (NCES).
Notice.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 3501
Interested persons are invited to submit comments on or before January 6, 2017.
To access and review all the documents related to the information collection listed in this notice, please use
For specific questions related to collection activities, please contact NCES Information Collections at
The Department of Education (ED), in accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)), provides the general public and Federal agencies with an opportunity to comment on proposed, revised, and continuing collections of information. This helps the Department assess the impact of its information collection requirements and minimize the public's reporting burden. It also helps the public understand the Department's information collection requirements and provide the requested data in the desired format. ED is soliciting comments on the proposed information collection request (ICR) that is described below. The Department of Education is especially interested in public comment addressing the following issues: (1) Is this collection necessary to the proper functions of the Department; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the Department enhance the quality, utility, and clarity of the information to be collected; and (5) how might the Department minimize the burden of this collection on the respondents, including through the use of information technology. Please note that written comments received in response to this notice will be considered public records.
Department of Education.
Notice.
This document provides notice of the computer matching program between the U.S. Department of Education (ED) and the Department of Veterans Affairs (VA). The computer matching program will begin on the effective date specified in paragraph 5.
This notice is provided under the Privacy Act of 1974 (5 U.S.C. 552a), as amended by the Computer Matching and Privacy Protection Act of 1988 (Pub. L. 100-503) and the Computer Matching and Privacy Protection Amendments of 1990 (Pub. L. 101-508)(Privacy Act); the Office of Management and Budget (OMB) Final Guidance Interpreting the Provisions of Public Law 100-503, the Computer Matching and Privacy Protection Act of 1988, 54 FR 25818 (June 19, 1989); and OMB Circular A-130, Appendix 1.
1.
2.
3.
4.
VA will disclose to ED the name (first and last), date of birth, Social Security Number, and date of disability determination for individuals who are in receipt of VA disability compensation benefits with a VA disability compensation rating of 100 percent Permanent and Total.
ED will match the file received from VA with ED's records on individuals who owe a balance on one or more title IV, HEA loans or who have had a loan written off due to default, as contained in ED's system of records entitled “National Student Loan Data System (NSLDS)” (18-11-06), last published in the
The ED data described in the preceding paragraph will be matched with the VA system of records identified as “BIRLS—VA” (38VA21), first published at 49 FR 38095 (August 26, 1975), routine use 21, as added by 66 FR 30049-30050 (June 4, 2001), which is the published system notice that added routine use 21 to this system of records notice.
5.
6.
If you use a telecommunications device for the deaf (TDD) or a text telephone (TTY), you may call the Federal Relay Service (FRS) at 1-800-877-8339.
Individuals with disabilities can obtain this document in an alternative format (
You may also access documents of ED published in the
The Privacy Act of 1974, as amended (5 U.S.C. 552a).
Office of Nonproliferation and Arms Control, Department of Energy.
Proposed subsequent arrangement.
This document is being issued under the authority of the Atomic Energy Act of 1954, as amended. The Department is providing notice of a subsequent arrangement under the Agreement for Cooperation Between the United States of America and the Republic of Kazakhstan Concerning Peaceful Uses of Nuclear Energy and the Agreement for Cooperation Between the Government of the United States of America and the Government of Japan Concerning Peaceful Uses of Nuclear Energy.
This subsequent arrangement will take effect no sooner than December 22, 2016.
Mr. Richard S. Goorevich, Office of Nonproliferation and Arms Control, National Nuclear Security Administration, Department of Energy.
This subsequent arrangement concerns the retransfer of 26,510,383 g of U.S.-origin enriched uranium oxide (UO2), containing 1,003,443 g of the isotope U-235 (less than five percent enrichment) which is recovered uranium from fuel fabrication scrap, from Ulba Metallurgical Plant in Ust-Kamengorsk, Kazakhstan, to Nuclear Fuel Industries, Ltd. in Minato-Ku, Tokyo, Japan. The material, which has already been retransferred to from Ulba to Nuclear Fuel Industries, Ltd., was to be fabricated into fuel pellets for electric utilities in Japan.
In accordance with section 131a. of the Atomic Energy Act of 1954, as amended, it has been determined that this subsequent arrangement concerning the retransfer of nuclear material of United States origin will not be inimical to the common defense and security of the United States of America.
For the Department of Energy.
Environmental Protection Agency (EPA).
Notice.
There will be an inaugural three (3) day meeting of the Hazardous Waste Electronic Manifest System (“e-Manifest”) Advisory Board to consider and advise the Agency about the initial launch of the e-Manifest System (Meeting Theme:
The meeting will be held on January 10-12, 2017, from approximately 9:00 a.m. to 5:00 p.m. EST.
Fred Jenkins, Designated Federal Officer (DFO), U.S. Environmental Protection Agency, Office of Resource Conservation and Recovery, (MC: 5303P), 1200 Pennsylvania Avenue NW., Washington, DC 20460, Phone: 703-308-7049; or by email:
This action is directed to the public in general. This action may be of particular interest to persons who are or may be subject to the Hazardous Waste Electronic Manifest Establishment (e-Manifest) Act. Since other entities may also be interested, the Agency has not attempted to describe all the specific entities that may be affected by this action.
You may participate in this meeting by following the instructions in this document. To ensure proper receipt of your public comments by EPA, it is imperative that you identify docket ID number EPA-HQ-OLEM-2016-0695.
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The Hazardous Waste Electronic Manifest System Advisory Board is established in accordance with the provisions of the Hazardous Waste Electronic Manifest Establishment Act, 42 U.S.C. 6939g, and the Federal Advisory Committee Act (FACA), 5 U.S.C. App. 2. The e-Manifest Advisory Board is in the public interest and supports the Environmental Protection Agency in performing its duties and responsibilities.
The e-Manifest Advisory Board will provide recommendations on matters related to the operational activities, functions, policies, and regulations of EPA under the e-Manifest Act, including:
• The effectiveness of the Manifest IT system and associated user fees and processes;
• Matters and policies related to the e-Manifest program;
• Regulations and guidance as required by the e-Manifest Act;
• Actions to encourage the use of the electronic (paperless) system;
• Changes to the user fees as described in e-Manifest Act Section 2 (c)(3)(B)(i); and
• Issues in the e-Manifest area, including those identified in EPA' s E-Enterprise strategy that intersect with the e-Manifest system, such as:
• Business to business communications;
• Performance standards for mobile devices; and
• EPA's Cross Media Electronic Reporting Rule (CROMERR) requirements.
The sole duty of the Advisory Board is to provide advice and recommendations to the EPA Administrator. As required by the e-Manifest Act, the e-Manifest Advisory Board will be composed of nine (9) members. One (1) member will be the EPA Administrator (or a designee), who will serve as Chairperson of the Advisory Board. The rest of the committee will be composed of:
• At least two (2) members who have expertise in information technology;
• At least three (3) members who have experience in using or represent users of the manifest system to track the transportation of hazardous waste under the e-Manifest Act;
• At least three (3) members who will be state representatives responsible for processing e-manifests.
All members of the e-Manifest Advisory Board, with the exception of the EPA Administrator, will be appointed as Special Government Employees or representatives.
The EPA will convene the e-Manifest Advisory Board to hold its first Federal Advisory Committee meeting. The meeting theme will be entitled
EPA's background paper, related supporting materials, charge/questions to the Advisory Board, the Advisory Board roster (
The Commission hereby gives notice of the filing of the following agreements under the Shipping Act of 1984. Interested parties may submit comments on the agreements to the Secretary, Federal Maritime Commission, Washington, DC 20573, within twelve days of the date this notice appears in the
By Order of the Federal Maritime Commission.
10:00 a.m., Tuesday, December 13, 2016.
The Richard V. Backley Hearing Room, Room 511N, 1331 Pennsylvania Avenue NW., Washington, DC 20004 (enter from F Street entrance).
Closed.
The Commission will consider and act upon the following in closed session:
Any person attending this meeting who requires special accessibility features and/or auxiliary aids, such as sign language interpreters, must inform the Commission in advance of those needs. Subject to 29 CFR 2706.150(a)(3) and 2706.160(d).
Emogene Johnson (202) 434-9935/(202) 708-9300 for TDD Relay/1-800-877-8339 for toll free.
Board of Governors of the Federal Reserve System.
The Board of Governors of the Federal Reserve System (Board or Federal Reserve) is adopting a proposal to revise, with extension, the mandatory Savings Association Holding Company Report. The revision to this mandatory information is effective December 31, 2016.
On June 15, 1984, the Office of Management and Budget (OMB) delegated to the Board authority under the Paperwork Reduction Act (PRA) to approve of and assign OMB control numbers to collection of information requests and requirements conducted or sponsored by the Board. In exercising this delegated authority, the Board is directed to take every reasonable step to solicit comment. In determining whether to approve a collection of information, the Board will consider all comments received from the public and other agencies.
The FR H-(b)11 covers 6 different items. Item 1 consists of SEC filings made by the SLHC that are not publicly traded companies and item 2 consists of reports provided by nationally recognized statistical rating organizations and securities analysts on any company in the SLHC's consolidated organization. The Board's Legal Division has determined that neither of these items should raise any issue of confidentiality.
Item 3 consists of supplemental information for any questions on the FR 2320 to which the SLHC answered “yes.” The Board's Legal Division has determined that supplemental information in response to a “yes” answer for the FR 2320's questions 24, 25, and 26 may be protected from disclosure under exemption 4 of the Freedom of Information Act (FOIA), which covers “trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential” (5 U.S.C. 522(b)(4)). These questions concern any
With regard to the supplemental information for other FR 2320 questions that would be provided in item 3 of the FR H-(b)11, as well as item 4 (Other Materially Important Events), item 5 (Financial Statements) and item 6 (Exhibits—essentially copies not previously filed of its charter or bylaws), the respondent may request confidential treatment of such information under one or more of the exemptions in the FOIA. The most likely case for confidential treatment will be exemption 4 (5 U.S.C. 522(b)(4)). However, all such requests for confidential treatment would need to be reviewed on a case-by-case basis and in response to a specific request for disclosure.
Board of Governors of the Federal Reserve System.
The Board of Governors of the Federal Reserve System (Board or Federal Reserve) is adopting a proposal to extend for three years all of the Financial Reports of Foreign Banking Organizations: The Financial Statements of U.S. Nonbank Subsidiaries Held by Foreign Banking Organizations (FR Y-7N), the Abbreviated Financial Statements of U.S. Nonbank Subsidiaries Held by Foreign Banking Organizations (FR Y-7NS), and the mandatory Capital and Asset Report for Foreign Banking Organizations (FR Y-7Q); with revisions to the FR Y-7Q, effective December 31, 2016, except for three new FR Y-7Q items, which are effective March 31, 2018.
On June 15, 1984, the Office of Management and Budget (OMB) delegated to the Board authority under the Paperwork Reduction Act (PRA) to approve of and assign OMB control numbers to collection of information requests and requirements conducted or sponsored by the Board. In exercising this delegated authority, the Board is directed to take every reasonable step to solicit comment. In determining whether to approve a collection of information, the Board will consider all comments received from the public and other agencies.
Federal Reserve Board Clearance Officer—Nuha Elmaghrabi—Office of the Chief Data Officer, Board of Governors of the Federal Reserve System, Washington, DC 20551 (202) 452-3829. Telecommunications Device for the Deaf (TDD) users may contact (202) 263-4869, Board of Governors of the Federal Reserve System, Washington, DC 20551.
OMB Desk Officer—Shagufta Ahmed—Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Room 10235, 725 17th Street NW., Washington, DC 20503.
On February 18, 2014, the Board approved a final rule, pursuant to section 165 of the Dodd-Frank Act, that requires an FBO with total consolidated assets of $50 billion or more to certify to the Board that it meets capital adequacy standards on a consolidated basis, as established by its home-country supervisor, that are consistent with the regulatory capital framework published by the Basel Committee on Banking Supervision.
The proposal would require an FBOs with total consolidated assets of $50 billion or more to complete a new section, Part 1B, effective December 31, 2016 (with three of the proposed items effective March 31, 2018). Proposed Part 1B would contain 12 items related to home country regulatory capital ratios that would be reported on a quarterly basis.
(1) Common equity tier 1 capital,
(2) Additional tier 1 capital,
(3) Tier 1 capital (sum of items 1 and 2),
(4) Tier 2 capital,
(5) Total risk-based capital (sum of items 3 and 4),
(6) Capital conservation buffer,
(7) Countercyclical capital buffer,
(8) GSIB buffer,
(9) Compliance with restrictions on capital distributions and discretionary bonus payments associated with a capital buffer.
The proposed line items that would be effective March 31, 2018, include:
(10) Home country capital measure used in the numerator of the leverage ratio as set forth in the Basel Capital Framework,
(11) Home country exposure measure used in the denominator of the leverage ratio as set forth in the Basel Capital Framework,
(12) Minimum home country leverage ratio (if different from the leverage ratio in the Basel Capital Framework, as applicable).
As noted above, Part 1A of the current FR Y-7Q form, which applies to all FBOs, collects tier 1 capital, total risk-based capital, risk-weighted assets, total consolidated assets and total combined assets of U.S. operations, net of intercompany balances and transactions between U.S. domiciled affiliates, branches, and agencies, and total U.S. non-branch assets. While the Federal Reserve does not propose to change existing items reported in Part 1A of the FR Y-7Q, the proposal would modify the instructions to clarify that an FBO would be required to report Tier 1 capital and Total risk-based capital only on Part 1B, if the FBO's home country methodologies are consistent with the Basel Capital Framework.
The instructions would also clarify the reporting frequency of Part 1, in light of the new proposed section. Specifically, FBOs with total consolidated assets of less than $50 billion and that are not FHCs would only file Part 1A on an annual basis. FBOs who have elected to become FHCs and do not have $50 billion or more in total consolidated assets will file Part 1A on a quarterly basis. FBOs with total consolidated assets of $50 billion or more would complete both Part 1A
The Federal Reserve recommends no changes to the reporting frequency of the FR Y-7N/NS and FR Y-7Q. The current reporting frequencies provide adequate timely data to meet the analytical and supervisory needs of the Federal Reserve.
A commenter requested guidance on whether an FBO would be deemed to satisfy the requirement to report and certify compliance with its home country capital adequacy requirements through its FR Y-7Q report. In addition, the commenter asked the Board to confirm the as of date and frequency of the certification.
Regulation YY requires an FBO to report compliance with capital adequacy measures that are consistent with the Basel Capital Framework (as defined in 12 CFR 252.143(a) and § 252.154(a)) concurrently with filing the FR Y-7Q; however it does not specify the frequency or the as of date for an FBO's certification of compliance with its home country capital requirements. The Board confirms that an FBO's completion of the FR Y-7Q on a quarterly basis would satisfy both the requirement to report and the requirement to certify to the Board its compliance with capital adequacy measures that are consistent with the Basel Capital Framework. If an FBO is unable to report that it is in compliance with such capital adequacy measures, the Board may impose requirements, conditions, and restrictions relating to the U.S. operations of the FBO.
Commenters raised concerns regarding the potential confidentiality of two items required to be reported in the proposal that may be considered non-public supervisory capital buffers by an FBO's home country supervisor: the Pillar II buffer and any “other” applicable capital buffer. In response to these concerns, the Board has reviewed the information it proposed to collect on the FR Y-7Q and has revised the proposal to eliminate these two items from the information collection and only collect 12 new data items, each of which are expected to be disclosed
A commenter also requested that the Board expand the confidential treatment for certain of the proposed new items. The proposal stated that the Board would determine confidentiality on the proposed items reported on the FR Y-7Q on a case-by-case basis. However, the proposal noted that some jurisdictions may treat the information collected as confidential on a blanket basis on the grounds that a more selective confidential treatment could signal an FBO's financial strength or weakness and could thereby cause substantial competitive harm. Therefore, the proposal invited comment on whether these items should qualify for confidential treatment in all cases, such that treating this information as confidential on a blanket basis would be appropriate.
In response to the proposal, a commenter suggested the following modifications to the Board's proposed “case-by-case” approach: (1) Where a home country supervisor treats an item included in Part 1B as confidential on a blanket basis, the Board likewise should extend blanket confidential treatment of that item to all FBOs supervised by the home country authority; and (2) where a home country supervisor treats an item included in Part 1B as confidential on a case-by-case basis, the Board should automatically treat this item as confidential for any FBO whose home country supervisor has extended such treatment.
As discussed above, in response to commenters' general concerns regarding confidentiality, the Board has revised the FR Y-7Q to collect only information that is expected to be disclosed under the Basel Capital Framework, and therefore will be public and not considered confidential. The Board further notes that information disclosed in these reports would be collected as part of the Board's supervisory process and may be accorded confidential treatment under Exemption 8 of FOIA. However, individual respondents may request that certain data be protected pursuant to Exemptions 4 and 6 of FOIA, where such data relates to trade secrets and financial information, or to personal information, respectively. The applicability of these exemptions will be determined on a case-by-case basis.
In addition, the proposed modification to the “case-by-case” approach set forth by one commenter would require the Federal Reserve to determine confidentiality for all FBOs supervised by a particular home-country authority on a country-by-country basis. An FBO seeking confidential treatment for any information reported on the FR Y-7Q must file a request pursuant to Exemption 4 of FOIA and state in reasonable detail the facts supporting the request and the legal justification for the request. Because the FBO is best suited to describe its home country supervisor's confidential treatment of information, the Federal Reserve relies on information provided by the FBO in making its determination of whether the release of that information would cause the FBO substantial competitive harm. In addition, the Federal Reserve may need additional information to support such a determination, and the home country supervisor's treatment of the information alone may not meet the standard for confidential treatment in Exemption 4 of FOIA in all cases. Accordingly, as proposed, the Federal Reserve would grant an FBO's request for confidential status for information reported on the FR Y-7Q, pursuant to Exemption 4 of FOIA, only on a case-by-case basis.
A commenter also requested that the Board confirm that an FBO would not be required to report any item where applicable home country law prohibits the FBO from disclosing such item to any person, except an appropriate home country supervisor, regardless of whether the other person would agree to keep such information strictly confidential.
The Board is authorized by law to collect information from an FBO regarding its financial condition and, in submitting to the Board's jurisdiction, an FBO is required to provide the Board with adequate assurances that information will be made available to the Board on the operations or activities of the FBO and any of its affiliates that the Board deems necessary to determine and enforce compliance with applicable federal banking statutes, including information on its consolidated regulatory capital information. Therefore, an FBO is required to provide all of the information requested on the FR Y-7Q report. However, there could be infrequent instances that may raise questions about an FBO's ability to report a particular item on the FR Y-7Q if home country law prohibits an FBO from reporting that information to the Board, and, in those limited circumstances, the Board may consider an FBO's request not to report that information on the FR Y-7Q, on a case-by-case basis.
Gulf Coast Ecosystem Restoration Council.
Notice.
Through this
On December 31, 2015, the Council published an FRN (80 FR 81819) inviting Council members to apply for funding under the Council-Selected Restoration Component of the Resources and Ecosystems Sustainability, Tourist Opportunities, and Revived Economies of the Gulf Coast States Act of 2012 (RESTORE Act) (33 U.S.C. 1321(t)(2)) to implement projects and programs approved on the 12/09/2015 FPL Addendum to the Initial Comprehensive Plan. The December 31, 2015 FRN specified that applications were due by December 31, 2016. Through this notice, the Council announces that the deadline for applications is no longer December 31, 2016 and that applications will now be accepted on a rolling basis and are still to be submitted through the Restoration Assistance and Awards Management System (RAAMS). This notice does not change any other
Centers for Disease Control and Prevention (CDC), Department of Health and Human Services (HHS).
Notice with comment period.
The Centers for Disease Control and Prevention (CDC), as part of its continuing efforts to reduce public burden and maximize the utility of government information, 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. This notice invites comment on the proposed information collection project entitled “Formative Assessment Regarding Contraception Use in the U.S. Virgin Islands (USVI) in the Context of Zika”.
Written comments must be received on or before February 6, 2017.
You may submit comments, identified by Docket No. CDC-2016-0116 by any of the following methods:
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To request more information on the proposed project or to obtain a copy of the information collection plan and instruments, contact the Information Collection Review Office, Centers for Disease Control and Prevention, 1600 Clifton Road NE., MS-D74, Atlanta, Georgia 30329; phone: 404-639-7570; Email:
Under the Paperwork Reduction Act of 1995 (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. In addition, the PRA also requires Federal agencies to provide a 60-day notice in the
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 of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; (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; and (e) estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information. Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, disclose or provide information to or for a Federal agency. This includes the time needed to review instructions; to develop, acquire, install and utilize technology and systems for the purpose of collecting, validating and verifying information, processing and maintaining information, and disclosing and providing information; to train personnel and to be able to respond to a collection of information, to search data sources, to complete and review the collection of information; and to transmit or otherwise disclose the information.
Formative Assessment Regarding Contraception Use in the U.S. Virgin Islands (USVI) in the Context of Zika—New—National Center for HIV/AIDS, Viral Hepatitis, STD, and TB Prevention (NCHHSTP), Centers for Disease Control and Prevention (CDC).
As of October 11, 2016, the U.S. Virgin Islands (USVI) Department of Health reported 1,320 Zika cases, in which 524 have been confirmed Zika cases.
Ongoing Zika virus transmission in the USVI intensifies the urgent public health need to increase contraceptive access for women who choose to delay or avoid pregnancy as a primary strategy to reduce Zika-related adverse pregnancy and birth outcomes. Among the approximately 12,000 women at risk of unintended pregnancy (women of reproductive age, 18-44 years, who are sexually active and fertile, and not currently desiring a pregnancy) in the USVI, nearly half are not using highly or moderately effective contraception (long acting reversible methods [LARCs], including intrauterine devices [IUDs] and implants, or hormonal methods).
In response to the continued impact of the Zika virus in the USVI, CDC is proposing to develop a comprehensive communication strategy to raise awareness that pregnancy prevention in women who choose to delay or avoid pregnancy is a primary strategy to reduce Zika-related adverse pregnancy and birth outcomes, as well as inform women about available contraceptive methods and services. To ensure the cultural appropriateness and relevance of this approach, CDC plans to conduct a formative assessment with women and men between the ages of 18 and 44 years in the USVI.
The goal of this information collection request is to qualitatively assess current knowledge, attitudes, and beliefs regarding contraception use, in general, and related to Zika virus exposure, in particular, in the USVI. We will explore perceived barriers to accessing contraception and effective ways to provide messages about the contraceptive methods and services available. Additionally, we will seek information on acceptable messaging strategies, including message content and related imagery, effective channels for message dissemination, and appropriate spokespersons and partners.
The intended use of the resulting data is for CDC to develop timely, relevant, clear, and engaging materials for the USVI regarding pregnancy prevention during the Zika outbreak.
CDC will use focus groups to collect the data. This methodology provides flexible in-depth exploration of the participants' perceptions and experience and yield descriptions in the participants' own words. Furthermore, the facilitator will have flexibility to pursue relevant and important issues as they arise during the discussion.
There is no cost to participants other than their time. The total estimated annualized burden hours are 144.
Office of Refugee Resettlement (ORR), Administration for Children and Families (ACF), U.S. Department of Health and Human Services (HHS).
Notice of award of five single-source low-cost extension supplement grants under the Unaccompanied Children's (UC) Program.
ACF, ORR, announces the award of five single-source low-cost extension supplement grants for a total of $19,604,765 under the UC Program.
Low-cost extension supplement grants will support activities from October 1, 2016, through December 31, 2016.
Jallyn Sualog, Director, Division of Children's Services, Office of Refugee Resettlement, 330 C Street SW., Washington, DC 20201. Email:
The following supplement grants will support the immediate need for additional capacity of shelter services to accommodate the increasing number of UC referred by the Department of Homeland Security (DHS) into ORR care. The increase in the UC population makes it necessary to expand the services to expedite the release of UC to designated sponsors. To prepare for an increase in referrals for shelter services, ORR will solicit proposals from one grantee to accommodate the referrals from DHS.
ORR is continuously monitoring its capacity to provide post-release services to UC in HHS custody.
ORR has specific requirements for the provision of services. Award recipients must have the infrastructure, licensing, experience, and appropriate level of trained staff to meet those requirements. The expansion of the existing post-release services program through this supplemental award is a key strategy for ORR to be prepared to meet its responsibility of safe and timely release of UC referred to its care by DHS. It also lets the U.S. Border Patrol continue its vital national security mission to prevent illegal migration and trafficking and protect the borders of the United States.
(A) Section 462 of the Homeland Security Act of 2002, which in March 2003, transferred responsibility for the care and custody of UC from the Commissioner of the former Immigration and Naturalization Service to the Director of ORR in HHS.
(B) The Flores Settlement Agreement, Case No. CV85-4544RJK (C. D. Cal. 1996), as well as the William Wilberforce Trafficking Victims Protection Reauthorization Act of 2008 (Pub. L. 110-457), which authorizes post release services under certain conditions to eligible children. All programs must comply with the Flores Settlement Agreement, Case No. CV85-4544-RJK (C.D. Cal. 1996), pertinent regulations and ORR policies and procedures.
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA or we) is announcing the availability of data extracted from adverse event reports from January 2004 to the present involving food (including food additives, color additives, and dietary supplements) and cosmetics regulated by our Center for Food Safety and Applied Nutrition (CFSAN). The data files are being made publicly available on FDA's Web site to improve transparency about adverse event reports involving CFSAN-regulated products and increase awareness about reporting these adverse events to FDA.
Lyle Canida, Center for Food Safety and Applied Nutrition (HFS-014), Food and Drug Administration, 5001 Campus Dr., College Park, MD 20740, 240-402-1817.
We are announcing the availability of data extracted from the CFSAN Adverse Event Reporting System (CAERS) from adverse event reports involving food (including food additives, color additives, and dietary supplements) and cosmetics regulated by CFSAN that were submitted to FDA from January 2004 to the present. We will make these data files available on a quarterly basis on the FDA Web site at
• Demographic (
• Date of event;
• Product role (suspect or concomitant);
• Reported brand/product name;
• Industry code/name;
• Reported symptom(s); and
• Outcome information.
The CAERS database collects reports submitted by consumers, health professionals, industry, and others about adverse health events and product complaints related to CFSAN-regulated products. It includes voluntary reports involving conventional foods, including food additives and color additives, and cosmetics, and both mandatory and voluntary reports with respect to adverse events involving dietary supplements. Reports are mandatory for dietary supplements used in the United States in the case of a serious adverse event that has resulted in death, a life-threatening experience, inpatient hospitalization, a persistent or significant disability or incapacity, a congenital anomaly or birth defect, or that requires, based on reasonable medical judgment, a medical or surgical intervention to prevent one of those outcomes (
The goal of CAERS is to improve consumer protection by providing FDA with information from which we may be able to quickly identify situations in which the data provide a signal that a particular product may be harmful and should be investigated further.
However, we note that adverse event reports about a particular product and the total number of adverse event reports for a product in the CAERS database only reflect information reported and do not represent any conclusion by FDA about whether the product actually caused the adverse event(s). Because we constantly update CAERS with new information, the number of reports for a given product and the content of individual reports may change over time. Furthermore, even with respect to dietary supplements, for which reporting of serious adverse events is mandatory, adverse events associated with any product may be underreported. On the other hand, in some instances there may be duplicate reports in CAERS for the same adverse event because multiple people (such as an injured consumer and a health care provider who treated him or her) may have submitted reports. Questions and answers (Q&As) accompanying the data at our Web site explain the data limitations, as well as the reasons why we need complete reporting.
• We are making this information available for the purpose of improving transparency by providing the public, including researchers and health care professionals, with online access to information from adverse event reports about CFSAN-regulated products. This information has previously been available only through the process of specific requests under the Freedom of Information Act, 5 U.S.C. 552. In addition, we believe that posting these data may increase the number and completeness of the adverse event reports we receive. For the most part, FDA does not have pre-market authority over foods and cosmetics. As a result, identifying through post-market surveillance possible risks associated with these products is critical.
• We will post CAERS data on a quarterly basis on the FDA Web site at
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) has determined the regulatory review period for GARDASIL 9 and is publishing this notice of that determination as required by law. FDA has made the determination because of the submission of applications to the Director of the U.S. Patent and Trademark Office (USPTO), Department of Commerce, for the extension of a patent which claims that human biological product.
Anyone with knowledge that any of the dates as published (see the
You may submit comments as follows:
Submit electronic comments in the following way:
•
• 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
Beverly Friedman, Office of Regulatory Policy, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 51, Rm. 6250, Silver Spring, MD 20993, 301-796-3600.
The Drug Price Competition and Patent Term Restoration Act of 1984 (Pub. L. 98-417) and the Generic Animal Drug and Patent Term Restoration Act (Pub. L. 100-670) generally provide that a patent may be extended for a period of up to 5 years so long as the patented item (human drug product, animal drug product, medical device, food additive, or color additive) was subject to regulatory review by FDA before the item was marketed. Under these acts, a product's regulatory review period forms the basis for determining the amount of extension an applicant may receive.
A regulatory review period consists of two periods of time: A testing phase and an approval phase. For human biological products, the testing phase begins when the exemption to permit the clinical investigations of the biological becomes effective and runs until the approval phase begins. The approval phase starts with the initial submission of an application to market the human biological product and continues until FDA grants permission to market the biological product. Although only a portion of a regulatory review period may count toward the actual amount of extension that the Director of USPTO may award (for example, half the testing phase must be subtracted as well as any time that may have occurred before the patent was issued), FDA's determination of the length of a regulatory review period for a human biological product will include all of the testing phase and approval phase as specified in 35 U.S.C. 156(g)(1)(B).
FDA has approved for marketing the human biologic product GARDASIL 9
• Cervical, vulvar, vaginal, and anal cancer caused by Human Papillomavirus (HPV) types 16, 18, 31, 33, 45, 52, and 58.
• Genital warts caused by HPV types 6 and 11.
• Cervical intraepithelial neoplasia (CIN) grade 2/3 and cervical adenocarcinoma in situ.
• CIN grade 1.
• Vulvar intraepithelial neoplasia (VIN) grade 2 and grade 3.
• Vaginal intraepithelial neoplasia (VaIN) grade 2 and grade 1.
• Anal intraepithelial neoplasia (AIN) grades 1, 2, and 3.
• Anal cancer caused by HPV types 16, 18, 31, 33, 45, 52 and 58.
• Genital warts caused by HPV types 6 and 11.
• AIN grades 1, 2, and 3.
Subsequent to this approval, the USPTO received patent term restoration applications for GARDASIL 9 (U.S. Patent Nos. 7,476,389 and 7,482,015) from Merck Sharp & Dohme Corp. for CSL Limited and The University of Queensland; the USPTO requested FDA's assistance in determining the patents' eligibility for patent term restoration. In a letter dated April 26, 2016, FDA advised the USPTO that this human biological product had undergone a regulatory review period and that the approval of GARDASIL 9 represented the first permitted commercial marketing or use of the product. Thereafter, the USPTO requested that FDA determine the product's regulatory review period.
FDA has determined that the applicable regulatory review period for GARDASIL 9 is 2,662 days. Of this time, 2,296 days occurred during the testing phase of the regulatory review period, while 366 days occurred during the approval phase. These periods of time were derived from the following dates:
1.
2.
3.
This determination of the regulatory review period establishes the maximum potential length of a patent extension. However, the USPTO applies several statutory limitations in its calculations of the actual period for patent extension. In its applications for patent extension, this applicant seeks 1,062 days or 1,254 days of patent term extension.
Anyone with knowledge that any of the dates as published are incorrect may submit either electronic or written comments and ask for a redetermination (see DATES). Furthermore, any interested person may petition FDA for a determination regarding whether the applicant for extension acted with due diligence during the regulatory review period. To meet its burden, the petition must be timely (see DATES) and contain sufficient facts to merit an FDA investigation. (See H. Rept. 857, part 1, 98th Cong., 2d sess., pp. 41-42, 1984.) Petitions should be in the format specified in 21 CFR 10.30.
Submit petitions electronically to
Office of the Secretary, HHS.
Notice.
In compliance with section 3507(a)(1)(D) of the Paperwork Reduction Act of 1995, the Office of the Secretary (OS), Department of Health and Human Services, has submitted an Information Collection Request (ICR), described below, to the Office of Management and Budget (OMB) for review and approval. The ICR is for renewal of the approved information collection assigned OMB control number 0937-0191, scheduled to expire on December 31, 2016. Comments submitted during the first public review of this ICR will be provided to OMB. OMB will accept further comments from the public on this ICR during the review and approval period.
Comments on the ICR must be received on or before January 6, 2017.
Submit your comments to
Information Collection Clearance staff,
When submitting comments or requesting information, please include the OMB control number 0937-0191-30D for reference.
The total annual burden hours estimated for this ICR are summarized in the table below.
Office of the Secretary, HHS.
Notice.
In compliance with section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995, the Office of the Secretary (OS), Department of Health and Human Services, announces plans to submit a new Information Collection Request (ICR), described below, to the Office of Management and Budget (OMB). Prior to submitting the ICR to OMB, OS seeks comments from the public regarding the burden estimate, below, or any other aspect of the ICR.
Comments on the ICR must be received on or before February 6, 2017.
Submit your comments to
Sherrette Funn,
When submitting comments or requesting information, please include the document identifier HHS-OS-0990-New-60D for reference.
Data collection will include in-depth, private interviews with 320 domestic violence survivors conducted by trained professional staff. At Time 1 study enrollment, they will be interviewed about their backgrounds, housing and safety obstacles, and services desired. There will be three follow-up interviews with them every six months after the Time 1 Interview (
The primary service providers working with the domestic violence survivors will complete self-administered online questionnaires to provide more detailed program implementation data. Service providers will complete a survey about their work history and demographics and a survey about the services provided for each domestic violence survivor in their caseload that is a participant in the study (approximately 16 survivors per provider). This latter data collection will occur six months after a domestic violence survivor enrolls in the study over 15 months to correspond to the study enrollment period. Finally, the study will also include monthly data collection for 19 months from an agency point of contact (POC) in order to verify agency information (
OS specifically requests comments on (1) the necessity and utility of the proposed information collection for the proper performance of the agency's functions, (2) the accuracy of the estimated burden, (3) ways to enhance the quality, utility, and clarity of the information to be collected, and (4) the use of automated collection techniques or other forms of information technology to minimize the information collection burden.
Notice of public meeting.
This notice announces the meeting dates for the Technical Advisory Panel on Medicare Trustee Reports on Monday, December 19, 2016 and Tuesday, December 20, 2016 in Washington, DC.
The meeting will be held on Monday, December 19, 2016 from 9:15 a.m. to 5:00 p.m. and Tuesday, December 20, 2016, from 9:00 a.m. to 3:30 p.m. Eastern Daylight Time (EDT) and it is open to the public.
The meeting will be held at the Hubert Humphrey Building, 200 Independence Ave. SW., Washington, DC 20201, Room 738G.3.
Dr. Donald Oellerich, Designated Federal Officer, at the Office of Human Services Policy, Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services, 200 Independence Ave. SW., Washington, DC 20201, (202) 690-8410.
The Panel will discuss the long-term rate of change in health spending and may make recommendations to the Secretary on how the Medicare Trustees might more accurately estimate health spending in the short and long run. The Panel's discussion is expected to be very technical in nature and will focus on the actuarial and economic assumptions and methods by which Trustees might more accurately measure health spending. This Committee is governed by the provisions of the Federal Advisory Committee Act, as amended (5 U.S.C. App. 2, section 10(a)(1) and (a)(2)). The Committee is composed of nine members appointed by the Assistant Secretary for Planning and Evaluation.
The Panel will likely hear presentations from two outside experts; one on prescription drugs spending and a second on spillover effects. In addition the HHS Office of the Actuary will present on issues the panel may wish to address. Additional presentations regarding long range growth, sustainability of provider payments under Affordable Care Act (ACA) and Medicare Access and Chip Reauthorization Act (MACRA), methods for transitioning from short term (10 year) to long term (75 year) projections and methods and the presentation of uncertainty in the report may follow. After any presentations, the Panel will deliberate openly on the topics. Interested persons may observe the deliberations, but the Panel will not hear public comments during this time. The Panel will also allow an open public session for any attendee to address issues specific to the topic.
The Monday, December 19, 2016 and Tuesday, December 20, 2016 meetings are open to the public; however, in-person attendance is limited to space available.
The public may attend the meeting in-person. Space is limited and registration is
If sign language interpretation or other reasonable accommodation for a disability is needed, please contact Dr. Oellerich, no later than December 12, 2016 by sending an email message to
A confirmation email will be sent to the registrants shortly after completing the registration process.
Individuals requiring special accommodations must include the request for these services during registration.
The Secretary's Charter for the Technical Advisory Panel on Medicare Trustee Reports is available upon request from Dr. Donald Oellerich at
Part A, Office of the Secretary, Statement of Organization, Functions and Delegations of Authority for the Department of Health and Human Services (HHS) is being amended at Chapter AM, Office of the Assistant Secretary for Financial Resources (ASFR), as last amended at 78 FR 52197-52199 dated August 22, 2013; 76 FR19774-19776 dated April 8, 2011; 75 FR 369-370, dated January 5, 2010; 74 FR57679-57682, dated November 9, 2009; and 71 FR38884-88, dated July 10, 2006, as follows:
I. B. Under Section AM.20 Functions, make the following changes:
1. Under paragraph D, “Office of Finance (AMS),” delete in its entirety and replace with the following:
The office includes the following:
1.
a.
(1) Provides leadership for the HHS CFO community;
(2) Leads strategic planning for the HHS CFO community and the Office of Finance;
(3) Serves as the liaison with internal and external stakeholders regarding financial management matters;
(4) Provides operational support for the OF;
(5) Leads workforce development initiatives for the OF;
(6) Advises the ASFR/CFO regarding financial management matters affecting the Department; and
(7) Leads other activities that enhance OF's management and operations.
b.
(1) Coordinates across HHS to establish and communicate HHS's ERM vision, culture, strategy, and framework;
(2) Designs and implements an ERM infrastructure across HHS, including governance;
(3) Develops and shares tools, guidance, and best practices regarding ERM;
(4) Provides technical assistance and direction to HHS Operating Divisions (OPDIVs) and Staff Divisions (STAFFDIVs) on implementing ERM;
(5) Facilitates enterprise-wide, integrated and comprehensive assessments across HHS's risk portfolio including leading the development of the agency's risk profile and guiding management's prioritization of risks across the agency;
(6) Leads the Department's efforts to meet the ERM requirement in OMB Circular A-123, “Management's Responsibility for Enterprise Risk Management and Internal Control”;
(7) Prepares reports, briefings, and makes recommendations to senior HHS leadership, OPDIVs, STAFFDIVs and other stakeholders on ERM related activities; and
(8) Leads other activities that enhance HHS implementation and integration of ERM into business operations.
2.
a.
(1) Leads the Department's efforts to establish and maintain proper internal control over reporting and ensures that requirements are met under Appendix A, OMB Circular A-123, “Management's Responsibility for Enterprise Risk Management and Internal Control”;
(2) Coordinates with the OPDIVs in the preparation of the corrective action plan (CAP), which is submitted annually to OMB and reflects the material weaknesses, significant deficiencies, and other reportable conditions from the annual CFO Act audit;
(3) Recommends, develops, and promulgates Department-wide policies, procedures, and standards for financial management areas including OMB, GAO, Treasury, Federal Accounting Standards Advisory Board (FASAB), and other agency guidance related to government-wide accounting policies and standards, cash management, credit management, debt management, payment and disbursement activities and functions, and budget execution accounting;
(4) Provides support to the OPDIV CFOs for financial planning and improvement initiatives;
(5) Serves as principal staff advisor on financial management policy matters to the DASF;
(6) Manages the Departmental process for the development of the required annual report on HHS's audited financial statements; and
(7) Maintains a system for tracking and improving cash and credit management and debt collection performance throughout the Department.
b.
(1) Oversees the preparation and submission of consolidated financial statements for the Department in accordance with OMB and Treasury requirements;
(2) Serves as the principal liaison with the Office of the Inspector General (OIG) in planning the annual financial statement audit strategy under the CFO Act, as amended. Coordinates with OPDIVs and STAFFDIVs to ensure timely audit deliverables;
(3) Reviews and interprets OMB, GAO, Treasury, and FASAB guidance and requirements related to government-wide accounting policies and standards;
(4) Assures that OPDIVs' reporting is in accordance with internal control and reporting standards from OMB, GAO, Treasury, FASAB, and the HHS Accounting Treatment Manual;
(5) Provides advice and assistance to OPDIVs and STAFFDIVs on financial reporting and related fiscal matters;
(6) Reviews and analyzes OPDIVs' financial statements and key reconciliations and consolidates Department financial statements as required by OMB and Treasury;
(7) Collaborates with the Division of Financial Management Policy on the preparation of the Department's agency financial report, CAPs and financial policies;
(8) Serves as the liaison with OMB, Treasury, intragovernmental groups and other agencies on accounting, financial policy and reporting issues; and
(9) Serves as the principal advisor to the DASF regarding financial reporting standards.
c.
(1) Oversees the design, preparation, and submission of financial management reports for the Department, as required by legislation, regulation, OMB, Treasury, GAO, and Congressional requests;
(2) Provides review and analysis of financial management reports for senior management, OMB, Treasury, GAO, Congress, and other stakeholders;
(3) Reviews and interprets OMB, GAO, Treasury, GAO, and FASAB guidance related to financial management reporting requirements or data requests that are in addition to the consolidated financial statements;
(4) Provides guidance, advice and assistance to OPDIVs and STAFFDIVs on new reporting requirements and related fiscal matters; and
(5) Serves as principal advisor to the DASF regarding new required financial management reports, and related OMB and Treasury transparency initiatives.
d.
(1) Oversees the strategic planning and maintenance of the Department-wide Accounting Treatment Manual (ATM) in accordance with Federal accounting concepts, standards, and HHS financial management policies;
(2) Establishes developmental goals that promote improvement within the ATM framework and support the Department-wide standardization of accounting data elements and related attributes;
(3) Monitors financial data for adherence to Department-wide accounting standards, and advises OPDIVs on proper accounting treatments in accordance with the Department's ATM;
(4) Introduces uniform business rules and data standards required to support new financial reporting requirements;
(5) Collaborates with system owners and financial management offices to facilitate standardized enterprise-wide solutions within the financial accounting and reporting systems;
(6) Serves as liaison with OMB, Treasury, and other authoritative Federal agencies on standard general ledger compliance matters;
(7) Collaborates with the Office of Financial Systems Policy and Oversight to ensure financial system conformity with the ATM and related data standards; and
(8) Serves as principal staff advisor to the DASF as it relates to proper accounting treatment, accounting standardization, and financial performance monitoring.
3.
a.
(1) Provides oversight of all aspects of the Department-wide financial systems and coordinates with executive-level stakeholders to execute the financial systems strategy;
(2) Supports and coordinates the other OFSPO divisions in management of designated functions and responsibilities;
(3) Develops strategic plans to manage, enhance and support the Department-wide financial systems environment;
(4) Serves as the liaison with internal and external stakeholders regarding financial systems;
(5) Advises the DASF regarding financial systems matters affecting the Department.
b.
(1) Prepares and manages the budget for OF-managed financial systems;
(2) Manages the IT portfolio and investment functions throughout the Capital Planning & Investment Control Lifecycle (CPIC) for OF-managed financial systems;
(3) Establishes and manages acquisition vehicles for Department-wide financial systems, including contract management and program monitoring; and,
(4) Ensures that services are aligned with changing business needs and improvements are made to processes, IT services, and IT infrastructure.
c.
(1) Oversees the Department-wide financial systems, including the three major core accounting systems (the Healthcare Integrated General Ledger Accounting System (HIGLAS) at the Centers for Medicare & Medicaid Services (CMS), National Institutes of Health Business System (NBS), and the Unified Financial Management System (UFMS) for the rest of the Department), the Consolidated Financial Reporting System (CFRS), and the Financial Business Intelligence System (FBIS);
(2) Establishes, facilitates, and supports a governance framework for Department-wide financial management;
(3) Provides project management and strategic communications support for financial systems and programs;
(4) Reports financial system program and project performance (progress, milestones, risks, etc.) to HHS financial management leadership and customers on a periodic basis; and
(5) Maintains and analyzes service level metrics for provided services.
d.
(1) Develops policies for Department-wide financial management systems including core financial systems and the financial portion of the mixed systems;
(2) Oversees compliance with Federal and Departmental policies and procedures for financial systems, including compliance with the Federal Financial Management Improvement Act of 1996 (FFMIA) and Section 4 of the Federal Managers' Financial Integrity Act (FMFIA);
(3) Oversees development, maintenance, and execution of
(4) Collaborates with the HHS Office of the Chief Information Officer (OCIO) and ensures that financial systems security controls are comprehensive, effective, and efficient; and
(5) Provides oversight of the security controls environment for OF-managed financial systems.
e.
(1) Performs the planning, design, development, and implementation of Department-wide financial systems, including UFMS, CFRS and FBIS;
(2) Coordinates activities to enhance the Department-wide financial systems environment;
(3) Collaborates with other business domains to integrate mixed financial systems;
(4) Identifies and plans for the integration of new technologies and programs into the financial systems environment, based on analysis of industry trends, best practices, and current/future business requirements; and
(5) Administers a data governance program, including supporting the implementation of Department-wide financial definitions and data structures.
f.
(1) Provides comprehensive IT service management (operations and maintenance) for Department-wide financial systems, including UFMS, CFRS, FBIS, and other business systems, and ensures the applications are secure, reliable, and available;
(2) Coordinates and executes the activities and processes required to deliver and manage services at agreed levels to business users and customers;
(3) Manages the technology that is used to deliver and support services; and
(4) Manages activities to resolve security vulnerabilities and audit findings identified within the managed systems.
4.
a.
(1) Implements the Improper Payments Information Act of 2002, the Improper Payments Elimination and Recovery Act of 2010, the Improper Payments Elimination and Recovery Improvement Act of 2012, and improper payment related Executive Orders and other regulatory requirements;
(2) Provides analysis of high risk programs and coordinates error rate measurements and CAPs for high risk programs;
(3) Coordinates efforts among OPDIVs to recapture improper payments;
(4) Identifies and shares best practices on addressing improper payments with HHS leadership;
(5) Coordinates implementation of the “Do Not Pay” initiative at HHS;
(6) Prepares reports and briefings, and makes recommendations to senior HHS leadership, OPDIVs, OMB and other stakeholders on improper payment initiatives; and
(7) Leads other activities that support improving payment accuracy.
b.
(1) Reviews, resolves, and coordinates, where necessary, the single audit findings of grantees affecting the programs of more than one OPDIV or other Federal agency;
(2) Coordinates and provides technical assistance to grantees and HHS Divisions on all aspects of single audit resolution in an effort to reduce the number and significance of single audit findings;
(3) Works with HHS's Single Audit Coordinator to streamline and enhance the efficiency of the audit resolution process;
(4) Interprets single audit guidance and establishes and monitors Department policies regarding audit resolution and associated metrics and analytics;
(5) Prepares reports, briefings, and makes recommendations to senior HHS leadership, OPDIVs, and other stakeholders regarding single audit resolution activities;
(6) Prepares the Management Report on Final Action;
(7) Ensures HHS compliance with the Uniform Guidance (2 CFR part 200); and
(8) Leads other activities that support and advance audit resolution.
c.
(1) Develops, implements, and manages an enterprise-wide audit tracking and analytics system that includes at a minimum: single audits, OIG audits, and GAO audits;
(2) Oversees and coordinates Department-wide change management efforts to prepare OPDIVs for implementation and future changes to the enterprise-wide system;
(3) Provides operations and maintenance support for the enterprise-wide system;
(4) Assigns single audit findings to OPDIVs and STAFFDIVs for resolution;
(5) Ensures HHS' single audit findings are resolved in accordance with the guidelines promulgated in the Uniform Guidance (2 CFR part 200);
(6) Performs analysis on audit data to assist in targeting corrective actions and reducing future findings; and
(7) Leads other activities that support the implementation of the enterprise-wide system and usage of the data maintained in the system.
II. Delegations of Authority. All delegations and re-delegations of authority made to officials and employees of affected organizational components will continue in them or their successors pending further re-delegation, provided they are consistent with this reorganization.
The Indian Health Service (IHS), an agency which is part of the Department of Health and Human Services (HHS), is accepting applications for grants for the
The primary purpose of this IHS grant is to focus on MSPI goal #6, “to promote positive AI/AN youth development and family engagement through the implementation of early intervention strategies to reduce risk factors for suicidal behavior and substance use.” Grants will be awarded in three IHS Areas: Navajo Area, Phoenix Area, and the Tucson Area. The last FOA did not yield the full allocation of funds for these three IHS Areas. Projects will accomplish this by focusing specifically on MSPI Purpose Area #4: GEN-I Initiative Support.
The focus of Purpose Area #4 is to:
1. Implement evidence-based and practice-based approaches to build resiliency, promote positive development, and increase self-sufficiency behaviors among Native youth;
2. Promote family engagement;
3. Increase access to prevention activities for youth to prevent methamphetamine use and other substance use disorders that contribute to suicidal behaviors, in culturally appropriate ways; and
4. Hire additional behavioral health staff (
All four of the broad objectives listed for MSPI Purpose Area #4 must be addressed in the application Project Narrative scope of work for new applicants. If an application submission does not address all the required broad objectives in the Project Narrative scope of work, the application will not be considered for funding.
IHS strongly emphasizes the use of data and evidence in policymaking and program development and implementation. Applicants must identify one or more evidence-based practice, practice-based evidence, best or promising practice, and/or local effort that the applicant plans to implement in the Project Narrative section of the application. The MSPI Program Web site (
This section is only required if the applicant has included a “conference” in the proposed scope of work and intends on using funding to plan and conduct a conference or meeting during the project period. For definitions of what constitutes a “conference,” please see the policy at the link provided below. The awardee is required to comply with the “HHS Policy on Promoting Efficient Spending: Use of Appropriated Funds for Conferences and Meeting Space, Food, Promotional Items, and Printing and Publications,” dated December 16, 2013 (“Policy”), as applicable to conferences funded by grants and cooperative agreements. The Policy is available at
The awardee is required to:
Provide a separate detailed budget justification and narrative for each conference anticipated. The cost categories to be addressed are as follows: (1) Contract/Planner, (2) Meeting Space/Venue, (3) Registration Web site, (4) Audio Visual, (5) Speakers Fees, (6) Non-Federal Attendee Travel, (7) Registration Fees, and (8) Other (explain in detail and cost breakdown). For additional questions please contact Audrey Solimon, National Program Coordinator in the IHS Division of Behavioral Health, at
Grant.
The total amount of funding identified for awards is approximately $1,417,142 for all three IHS areas. Applicants will be awarded according to their location within their respective IHS service area and will not compete
Approximately six awards will be issued under this funding opportunity announcement. The funding breakdown by area is as follows:
IHS expects to provide approximately $819,142 in total awards. Applicants may apply for amounts between $200,000-$400,000, or, if applying on behalf of the entire Tribe, IHS will accept applications for the entire award amount of $819,142.
IHS expects to provide approximately $525,000 in total awards. Applicants should apply for $175,000.
IHS expects to make one award in the amount of $73,000. Applicants should apply for $73,000.
The period of performance for this funding announcement will be for four years. Applicants should note that the first budget period will run from February 1, 2017 to September 29, 2017 (the first budget period will only be for 7 months, but a full 12 months of funding will be provided). Budget periods 2-4 will be for a 12 month period and run consecutively from September 30, 2017 to September 29, 2020.
Eligible applicants must be one of the following as defined by 25 U.S.C. 1603:
• A Federally-recognized Indian Tribe 25 U.S.C. 1603(14).
• A Tribal organization 25 U.S.C. 1603(26).
Please refer to Section IV.2 (Application and Submission Information/Subsection 2, Content and Form of Application Submission) for additional proof of applicant status documents required, such as Tribal resolutions, proof of non-profit status, etc.
The IHS does not require matching funds or cost sharing for grants or cooperative agreements.
If an application's budget exceeds the maximum funding amount listed for the applicant's IHS area breakdown outlined under the “Estimated Funds Available” section within this funding announcement, the application will be considered ineligible and will not be reviewed for further consideration. If deemed ineligible, IHS will not return the application. The applicant will be notified by email by the Division of Grants Management (DGM) of this decision.
Grantees/awardees are required to send the project director and/or project coordinator (the individual who runs the day-to-day project operations) to an annual MSPI meeting. Participation will be in-person or via virtual meetings. The grantee/awardee is required to include travel for this purpose in the budget and narrative of the project proposal. At these meetings, grantees/awardees will present updates and results of their projects including note of significant or ongoing concerns related to project implementation or management. Federal staff will provide updates and technical assistance to grantees/awardees in attendance.
Tribal resolutions are required from all Tribes and Tribal organizations. An Indian Tribe or Tribal organization that is proposing a project affecting another Indian Tribe must include
An official signed Tribal resolution must be received by the DGM prior to a Notice of Award being issued to any applicant selected for funding. However, if an official signed Tribal resolution cannot be submitted with the electronic application submission prior to the official application deadline date, a draft Tribal resolution must be submitted by the deadline in order for the application to be considered complete and eligible for review. The draft Tribal resolution is not in lieu of the required signed resolution, but is acceptable until a signed resolution is received. If an official signed Tribal resolution is not received by DGM when funding decisions are made, then a Notice of Award will not be issued to that applicant and they will not receive any IHS funds until such time as they have submitted a signed resolution to the grants management specialist listed in this funding announcement.
Organizations claiming non-profit status must submit proof. A copy of the 501(c)(3) Certificate must be received with the application submission by the Application Deadline Date listed under the Key Dates section on page one of this announcement.
An applicant submitting any of the above additional documentation after the initial application submission due date is required to ensure the information was received by the IHS DGM by obtaining documentation confirming delivery (
The application package and detailed instructions for this announcement can be found at
Questions regarding the electronic application process may be directed to Mr. Paul Gettys at (301) 443-2114 or (301) 443-5204.
The applicant must include the project narrative as an attachment to the application package. Mandatory documents for all applicants include:
• Table of Contents.
• Abstract (must be single-spaced and not exceed one page) summarizing the project.
• Application forms:
○ SF-424, Application for Federal Assistance.
○ SF-424A, Budget Information—Non-Construction Programs.
○ SF-424B, Assurances—Non-Construction Programs.
• Statement of Need (must be single-spaced and not exceed two pages).
○ Includes the Tribe or Tribal organization background information.
• Project Narrative (must be single-spaced and not exceed 20 pages).
○ Proposed scope of work, objectives, and activities that provide a description of what will be accomplished, including a one-page Timeline Chart, and a Local Data Collection Plan.
• Budget and Budget Narrative (must be single-spaced and not exceed four pages).
• Tribal Resolution(s) (only required for Indian Tribes and Tribal organizations).
• Letter(s) of Support:
○
○
○
• 501(c)(3) Certificate (if applicable).
• Biographical sketches for all key personnel (
• Contractor/consultant qualifications and scope of work.
• Disclosure of Lobbying Activities (SF-LLL).
• Certification Regarding Lobbying (GG-Lobbying Form).
• Copy of current Negotiated Indirect Cost rate (IDC) agreement (required in order to receive IDC).
• Documentation of current Office of Management and Budget (OMB) Financial Audit (if applicable).
Acceptable forms of documentation include:
○ Email confirmation from Federal Audit Clearinghouse (FAC) that audits were submitted; or
○ Face sheets from audit reports. These can be found on the FAC Web site:
All Federal-wide public policies apply to IHS grants and cooperative agreements with exception of the discrimination policy.
The statement of need describes the history and current situation in the applicant's Tribal community (“community” means the applicant's Tribe, village, Tribal organization, or consortium of Tribes or Tribal organizations). The statement of need provides the facts and evidence that support the need for the project and establishes that the Tribe or Tribal organization understands the problems and can reasonably address them and provides background information on the Tribe or Tribal organization. The statement of need must not exceed two single-spaced pages and must be type written, have consecutively number pages, use black type not smaller than 12 point, and printed on one side of standard size 8-1/2″ × 11″ paper.
A.
Be sure to succinctly address and answer all questions listed under the Project Narrative section and place them under the evaluation review criteria (refer to Section V.1, Evaluation criteria in this announcement) and place all responses and required information in the correct section (noted below), or they will not be considered or scored. These narratives will assist the Objective Review Committee (ORC) in becoming familiar with the applicant's activities and accomplishments prior to this grant award. If the narrative exceeds the page limit, only the first 20 pages will be reviewed. The 20-page limit for the narrative does not include the table of contents, abstract, statement of need, work plan, standard forms, Tribal resolutions, budget or budget narrative, and/or other appendix items.
There are five (5) parts to the project narrative:
• Part A—Goals and Objectives;
• Part B—Project Activities;
• Part C—Timeline Chart (template provided);
• Part D—Organizational Capacity and Staffing/Administration; and
• Part E—Plan for Local Data Collection.
See below for additional details about what must be included in the narrative.
• Describe the purpose of the proposed project that includes a clear statement of goals and objectives.
• Address the four (4) broad objectives listed for MSPI Purpose Area #4 and the objectives should be clearly outlined in the project narrative. If the application does not address all four broad objectives, the application will be considered ineligible and will not be reviewed for further consideration.
• Describe how project activities will increase the capacity of the identified community to plan and improve the coordination of a collaborative behavioral health and wellness service systems.
• Describe anticipated barriers to progress of the project and how the barriers will be addressed.
• Discuss how the proposed approach addresses the local language, concepts, attitudes, norms and values about suicide, and/or substance use.
• Describe how the proposed project will address issues of diversity within the population of focus including age, race, gender, ethnicity, culture/cultural identity, language, sexual orientation, disability, and literacy.
• If the applicant plans to include an advisory body in the project, describe its membership, roles and functions, and frequency of meetings.
• Describe how the efforts of the proposed project will be coordinated with any other related Federal grants, including IHS, the Substance Abuse and Mental Health Services Administration (SAMHSA), or Bureau of Indian Affairs (BIA) services provided in the community (if applicable).
• Identify any other organization(s) that will participate in the proposed project. Describe their roles and responsibilities and demonstrate their commitment to the project. Include a list of these organizations as an
• Provide a one-year (first budget year) timeline chart depicting a realistic timeline for the project period showing key activities, milestones, and responsible staff. These key activities should include the requirements outlined for MSPI Purpose Area #4. [
• Describe the management capability and experience of the applicant Tribe or Tribal organization and other participating organizations in administering similar grants and projects.
• Discuss the applicant Tribe or Tribal organization experience and capacity to provide culturally appropriate/competent services to the community and specific populations of focus.
• Describe the resources available for the proposed project (
• Describe how project continuity will be maintained if/when there is a change in the operational environment (
• Provide a complete list of staff positions for the project, including the project director, project coordinator, and other key personnel, showing the role of each and their level of effort and qualifications.
• Include position descriptions as
• For individuals that are identified and currently on staff, include a biographical sketch (not to include personally identifiable information) for the project director, project coordinator, and other key positions as
Personally Identifiable Information;
Resumes; or
Curriculum Vitae.
• Describe the applicant's plan for gathering local data, submitting data requirements, and document the applicant's ability to ensure accurate data tracking and reporting. Describe how members of the community (including youth and families that may receive services) will be involved in the planning, implementation, and data collection.
Funded projects are required to coordinate data collection efforts with their assigned regional Technical Assistance (TA) Provider for evaluation. The regional TA Providers for evaluation are the Tribal Epidemiology Centers (TECs) for each IHS area. The TA Providers for evaluation are funded by IHS. Awardees will work with their assigned regional TA Provider for evaluation to measure and track the core processes, outcomes, impacts, and benefits associated with the MSPI. Awardees shall collect local data related to the project and submit it in annual progress reports to IHS and will assist the national MSPI evaluation. The purpose of the national evaluation is to assess the extent to which the projects are successful in achieving project goals and objectives and to determine the impact of MSPI-related activities on individuals and the larger community.
Progress reporting will be required on national data elements related to program outcomes and financial reporting for all awardees. Progress reports will be collected annually throughout the project on a Web-based data portal and transferred to the GrantSolutions system to comply with the grant requirements. Progress reports include the compilation of quantitative (numerical) data (
The reporting portal will be open to project staff on a 24 hour/7 day week basis for the duration of each reporting period. In addition, Federal financial report forms (SF-425), which document funds received and expended during the reporting period, will be available. Required financial forms will be available from the IHS DGM, and other required forms will be provided throughout the funding period by DGM or the IHS Division of Behavioral Health (DBH). All document/materials are to be submitted online. Technical assistance for Web-based data entry and for the completion of required fiscal documents will be timely and readily available to awardees by assigned IHS area project officers.
B.
The applicant must provide a narrative justification for all items included in the proposed line item budget supporting the mission and goals of MSPI, as well as a description of existing resources and other support the applicant expects to receive for the proposed project. Other support is defined as funds or resources, whether Federal, non-Federal or institutional, in direct support of activities through fellowships, gifts, prizes, in-kind contributions or non-Federal means. (This should correspond to Item #18 on the applicant's SF-424, Estimated Funding.) Provide a narrative justification supporting the development or continued collaboration with other partners regarding the proposed activities to be implemented.
Templates are provided for the project narrative, timeline chart, budget and budget narrative, and biographical sketch. These templates can be located and downloaded at the MSPI Web site at:
Applications must be submitted electronically through
If technical challenges arise and assistance is required with the electronic application process, contact
Executive Order 12372 requiring intergovernmental review is not applicable to this program.
• Pre-award costs are not allowable.
• The available funds are inclusive of direct and appropriate indirect costs.
• Only one grant/cooperative agreement will be awarded per applicant.
• IHS will not acknowledge receipt of applications.
All applications must be submitted electronically. Please use the
If the applicant needs to submit a paper application instead of submitting electronically through
Once the waiver request has been approved, the applicant will receive a confirmation of approval email containing submission instructions and the mailing address to submit the application. A copy of the written approval must be submitted along with the hardcopy of the application that is mailed to DGM. Paper applications that are submitted without a copy of the signed waiver from the Senior Policy Analyst of the DGM will not be reviewed or considered for funding. The applicant will be notified via email of this decision by the Grants Management Officer of the DGM. Paper applications must be received by the DGM no later than 5:00 p.m., EDT, on the Application Deadline Date listed in the Key Dates section on page one of this announcement. Late applications will not be accepted for processing or considered for funding. Applicants that do not adhere to the timelines for System for Award Management (SAM) and/or
Please be aware of the following:
• Please search for the application package in
• If you experience technical challenges while submitting your application electronically, please contact
• Upon contacting
• Applicants are strongly encouraged not to wait until the deadline date to begin the application process through
• Please use the optional attachment feature in
• All applicants must comply with any page limitation requirements described in this funding announcement.
• After electronically submitting the application, the applicant will receive an automatic acknowledgment from
• Email applications will not be accepted under this announcement.
All IHS applicants and grantee organizations are required to obtain a DUNS number and maintain an active registration in the SAM database. The DUNS number is a unique 9-digit identification number provided by D&B which uniquely identifies each entity. The DUNS number is site specific; therefore, each distinct performance site may be assigned a DUNS number. Obtaining a DUNS number is easy, and there is no charge. To obtain a DUNS number, you may access it through
All HHS recipients are required by the Federal Funding Accountability and Transparency Act of 2006, as amended (“Transparency Act”), to report information on sub-awards. Accordingly, all IHS grantees must notify potential first-tier sub-recipients that no entity may receive a first-tier sub-award unless the entity has provided its DUNS number to the prime grantee organization. This requirement ensures the use of a universal identifier to enhance the quality of information available to the public pursuant to the Transparency Act.
Organizations that were not registered with Central Contractor Registration and have not registered with SAM will need to obtain a DUNS number first and then access the SAM online registration through the SAM home page at
Additional information on implementing the Transparency Act, including the specific requirements for DUNS and SAM, can be found on the IHS grants management, grants policy Web site:
The instructions for preparing the application narrative also constitute the evaluation criteria for reviewing and scoring the application. Weights assigned to each section are noted in parentheses. The 20 page narrative should include only the first year of activities. The narrative section should be written in a manner that is clear to outside reviewers unfamiliar with prior related activities of the applicant. It should be well organized, succinct, and contain all information necessary for reviewers to understand the project fully. Points will be assigned to each evaluation criteria adding up to a total of 100 points. A minimum score of 65 points is required for funding. Points are assigned as follows:
Applications will be reviewed and scored according to the quality of responses to the required application components in Sections A-E below. In developing the required sections of this application, use the instructions provided for each section, which have been tailored to this program. The application must use the five sections (Sections A-E) listed below in developing the application. The applicant must place the required information in the correct section or it will not be considered for review. The application will be scored according to how well the applicant addresses the requirements for each section listed below. The number of points after each heading is the maximum number of points the review committee may assign to that section. Although scoring weights are not assigned to individual bullets, each bullet is assessed deriving the overall section score.
The statement of need should not exceed two single-spaced pages.
(1) Identify the proposed catchment area and provide demographic information on the population(s) to receive services through the targeted systems or agencies,
(2) Based on the information and/or data currently available, document the prevalence of suicide ideations, attempts, clusters (groups of suicides or suicide attempts or both that occurred close together in time and space), and completions, and substance use rates. For this purpose area, the data should be geared toward AI/AN children and youth.
(3) Based on the information and/or data currently available, document the need for an enhanced infrastructure to increase the capacity to implement, sustain, and improve effective substance abuse prevention and/or behavioral health services in the proposed catchment area that is consistent with the purpose of the program and the funding opportunity announcement. Based on available data, describe the service gaps and other problems related to the need for infrastructure development. Identify the source of the data. Documentation of need may come from a variety of qualitative and quantitative sources. Examples of data sources for the quantitative data that could be used are local epidemiologic data (TECs, IHS area offices), state data (
(4) Describe the current suicide prevention, substance abuse prevention, trauma-related, and mental health promotion activities happening in the applicant's community/communities for Native youth up to and including age 24 and their families. Indicate which organizations/entities are currently offering these activities and where the resources come from to support them.
(5) Describe the current service gaps, including disconnection between available services and unmet needs of Native youth up to and including age 24 and their families.
(6) Describe potential project partners and community resources in the catchment area that can participate in the planning process and infrastructure development.
The project narrative required components (listed as the six components in “Requirements for Project Narrative”) together should not exceed 20 single-spaced pages.
(1) Describe the purpose of the proposed project, including a clear statement of goals and objectives. The proposed project narrative is required to address all four objectives listed for MSPI Purpose Area #4. Describe how achievement of goals will increase system capacity to support the goals and objectives or activities for MSPI Purpose Area #4 by showing how the project will work with Native youth up to and including age 24.
(2) Describe how project activities will increase the capacity of the identified community to plan and improve the coordination of a collaborative behavioral health and wellness service systems. Describe anticipated barriers to progress of the project and how these barriers will be addressed.
(3) Discuss how the proposed approach addresses the local language, concepts, attitudes, norms and values about suicide, and/or substance use.
(4) Describe how the proposed project will address issues of diversity for Native youth up to and including age 24 including race/ethnicity, gender, culture/cultural identity, language, sexual orientation, disability, and literacy.
(5) Describe how Native youth up to and including ages 24 and families may receive services and how they will be involved in the planning, implementation, and data collection and regional evaluation of the project.
(6) Describe how the efforts of the proposed project will be coordinated with any other related Federal grants, including IHS, SAMHSA, or BIA services provided in the community (if applicable).
(7) Provide a timeline chart depicting a realistic timeline for the 1-year project period showing key activities, milestones, and responsible staff. [Note: The timeline chart should be part of the project narrative as specified in the “Requirements for Project Proposals” section. It should not be placed as an attachment.]
(8) If the applicant plans to include an advisory body in the project, describe its membership, roles and functions, and frequency of meetings.
(9) Identify any other organization(s) that will participate in the proposed project. Describe their roles and responsibilities and demonstrate their commitment to the project. Include a list of these organizations as an
(1) Describe the management capability and experience of the applicant Tribe or Tribal organization and other participating organizations in administering similar grants and projects.
(2) Identify the department/division that will administer this project. Include a description of this entity, its function and its placement within the organization (Tribe or Tribal organization). If the program is to be managed by a consortium or Tribal organization, identify how the project office relates to the member community/communities.
(3) Discuss the applicant Tribe or Tribal organization experience and capacity to provide culturally appropriate/competent services to the community and specific populations of focus.
(4) Describe the resources available for the proposed project (
(5) Describe how project continuity will be maintained if/when there is a change in the operational environment (
(6) Provide a list of staff positions for the project, including the behavioral health staff, project director, project coordinator, and other key personnel, showing the role of each and their level of effort and qualifications. Demonstrate successful project implementation for the level of effort budgeted for the behavioral health staff, project director, project coordinator, and other key staff.
(7) Include position descriptions as
(8) For individuals that are currently on staff, include a biographical sketch (not to include personally identifiable information) for each individual that will be listed as the behavioral health
Personally Identifiable Information;
Resumes; or
Curriculum Vitae.
Describe the applicant's plan for gathering local data, submitting data requirements, and document the applicant's ability to ensure accurate data tracking and reporting. Describe how members of the community (including Native youth up to and including age 24 and families that may receive services) will be involved in the planning, implementation, and data collection.
Funded projects are required to coordinate data collection efforts with their assigned regional TA Provider for evaluation. The regional TA Providers for evaluation are the TECs for each IHS area. The TA Providers for evaluation are funded by IHS. Awardees will work with their assigned regional TA Provider for evaluation to measure and track the core processes, outcomes, impacts, and benefits associated with the MSPI. Awardees shall collect local data related to the project and submit it in annual progress reports to IHS and will assist the national MSPI evaluation. The purpose of the national evaluation is to assess the extent to which the projects are successful in achieving project goals and objectives and to determine the impact of MSPI-related activities on individuals and the larger community.
Progress reporting will be required on national selected data elements related to program outcomes and financial reporting for all awardees. Progress reports will be collected annually throughout the project on a web-based data portal. Progress reports include the compilation of quantitative (numerical) data (
The applicant is required to include a line item budget for all expenditures identifying reasonable and allowable costs necessary to accomplish the goals and objectives as outlined in the project narrative for Budget Year 1 only. The budget should match the scope of work described in the project narrative for the first budget year expenses only. The budget and budget narrative must not exceed four single-spaced pages.
The applicant must provide a narrative justification of the items included in the proposed line item budget supporting the mission and goals of MSPI, as well as a description of existing resources and other support the applicant expects to receive for the proposed project. Other support is defined as funds or resources, whether Federal, non-Federal or institutional, in direct support of activities through fellowships, gifts, prizes, in-kind contributions or non-Federal means (this should correspond to Item #18 on the applicant's SF-424, Estimated Funding). Provide a narrative justification supporting the development or continued collaboration with other partners regarding the proposed activities to be implemented.
The Budget and Budget Narrative the applicant provides will be considered by reviewers in assessing the applicant's submission, along with the material in the Project Narrative. Applicants should ensure that the budget and budget narrative are aligned with the project narrative.
• Work plan, logic model and/or time line for proposed objectives.
• Position descriptions for key staff.
• Resumes of key staff that reflect current duties.
• Consultant or contractor proposed scope of work and letter of commitment (if applicable).
• Current Indirect Cost Agreement.
• Organizational chart.
• Map of area identifying project location(s).
• Additional documents to support narrative (
Each application will be prescreened by the DGM staff for eligibility and completeness as outlined in the funding announcement. Applications that meet the eligibility criteria shall be reviewed for merit by the ORC based on evaluation criteria in this funding announcement. The ORC could be composed of both Tribal and Federal reviewers appointed by the IHS program to review and make recommendations on these applications. The technical review process ensures selection of quality projects in a national competition for limited funding. Incomplete applications and applications that are non-responsive to the eligibility criteria will not be referred to the ORC. The applicant will be notified via email of this decision by the Grants Management Officer of the DGM. Applicants will be notified by DGM, via email, to outline minor missing components (
To obtain a minimum score for funding by the ORC, applicants must address all program requirements and provide all required documentation.
The Notice of Award (NoA) is a legally binding document signed by the Grants Management Officer and serves as the official notification of the grant award. The NoA will be initiated by the DGM in our grant system, GrantSolutions (
Applicants who received a score less than the recommended funding level for approval, 65 points, and were deemed to be disapproved by the ORC, will receive an Executive Summary Statement from the IHS program office within 30 days of the conclusion of the ORC outlining the strengths and weaknesses of their application submitted. The summary statement will be sent to the Authorized Organizational Representative that is identified on the face page (SF-424) of the application. The IHS program office will also provide additional contact information
Approved but unfunded applicants that met the minimum scoring range and were deemed by the ORC to be “Approved”, but were not funded due to lack of funding, will have their applications held by DGM for a period of one year. If additional funding becomes available during the course of fiscal year 2017, the approved but unfunded application may be re-considered by the awarding program office for possible funding. The applicant will also receive an Executive Summary Statement from the IHS program office within 30 days of the conclusion of the ORC.
Any correspondence other than the official NoA signed by an IHS grants management official announcing to the project director that an award has been made to their organization is not an authorization to implement their program on behalf of IHS.
Grants are administered in accordance with the following regulations and policies:
A. The criteria as outlined in this program announcement.
B. Administrative Regulations for Grants:
• Uniform Administrative Requirements for HHS Awards, located at 45 CFR part 75.
C. Grants Policy:
• HHS Grants Policy Statement, Revised 01/07.
D. Cost Principles:
• Uniform Administrative Requirements for HHS Awards, “Cost Principles,” located at 45 CFR part 75, subpart E.
E. Audit Requirements:
• Uniform Administrative Requirements for HHS Awards, “Audit Requirements,” located at 45 CFR part 75, subpart F.
This section applies to all grant recipients that request reimbursement of indirect costs (IDC) in their grant application. In accordance with HHS Grants Policy Statement, Part II-27, IHS requires applicants to obtain a current IDC rate agreement prior to award. The rate agreement must be prepared in accordance with the applicable cost principles and guidance as provided by the cognizant agency or office. A current rate covers the applicable grant activities under the current award's budget period. If the current rate is not on file with the DGM at the time of award, the IDC portion of the budget will be restricted. The restrictions remain in place until the current rate is provided to the DGM.
Generally, IDC rates for IHS grantees are negotiated with the Division of Cost Allocation (DCA)
The grantee must submit required reports consistent with the applicable deadlines. Failure to submit required reports within the time allowed may result in suspension or termination of an active grant, withholding of additional awards for the project, or other enforcement actions such as withholding of payments or converting to the reimbursement method of payment. Continued failure to submit required reports may result in one or both of the following: (1) The imposition of special award provisions; and (2) the non-funding or non-award of other eligible projects or activities. This requirement applies whether the delinquency is attributable to the failure of the grantee organization or the individual responsible for preparation of the reports. Per DGM policy, all reports are required to be submitted electronically by attaching them as a “Grant Note” in GrantSolutions. Personnel responsible for submitting reports will be required to obtain a login and password for GrantSolutions. Please see the Agency Contacts list in section VII for the systems contact information.
The reporting requirements for this program are noted below.
Program progress reports are required annually, within 30 days after the budget period ends. These reports must include a brief comparison of actual accomplishments to the goals established for the period, a summary of progress to date or, if applicable, provide sound justification for the lack of progress, and other pertinent information as required. A final program progress report must be submitted within 90 days of expiration of the budget/project period at the end of the funding cycle. Additional information for reporting and associated requirements will be included in the “Programmatic Terms and Conditions” in the official NoA, if funded.
Federal Financial Report FFR (SF-425), Cash Transaction Reports are due 30 days after the close of every calendar quarter to the Payment Management Services, HHS at
Grantees are responsible and accountable for accurate information being reported on all required reports: The Progress Reports and Federal Financial Report.
This section is only required if the applicant has included a “conference” in the proposed scope of work and intends on using funding to plan and conduct a conference or meeting during the project period. The following requirements were enacted in Section 3003 of the Consolidated Continuing Appropriations Act, 2013, and Section 119 of the Continuing Appropriations Act, 2014;
This award may be subject to the Transparency Act sub-award and executive compensation reporting requirements of 2 CFR part 170.
The Transparency Act requires the OMB to establish a single searchable database, accessible to the public, with information on financial assistance awards made by Federal agencies. The Transparency Act also includes a requirement for recipients of Federal grants to report information about first-tier sub-awards and executive compensation under Federal assistance awards.
IHS has implemented a Term of Award into all IHS Standard Terms and
For the full IHS award term implementing this requirement and additional award applicability information, visit the DGM Grants Policy Web site at:
Recipients of federal financial assistance (FFA) from HHS must administer their programs in compliance with Federal civil rights law. This means that recipients of HHS funds must ensure equal access to their programs without regard to a person's race, color, national origin, disability, age and, in some circumstances, sex and religion. This includes ensuring your programs are accessible to persons with limited English proficiency. HHS provides guidance to recipients of FFA on meeting their legal obligation to take reasonable steps to provide meaningful access to their programs by persons with limited English proficiency. Please see
The HHS Office for Civil Rights (OCR) also provides guidance on complying with civil rights laws enforced by HHS. Please see
Pursuant to 45 CFR 80.3(d), an individual shall not be deemed subjected to discrimination by reason of his/her exclusion from benefits limited by Federal law to individuals eligible for benefits and services from the IHS. Recipients will be required to sign the HHS-690 Assurance of Compliance form which can be obtained from the following Web site:
The IHS is required to review and consider any information about the applicant that is in the Federal Awardee Performance and Integrity Information System (FAPIIS) before making any award in excess of the simplified acquisition threshold (currently $150,000) over the period of performance. An applicant may review and comment on any information about itself that a Federal awarding agency previously entered. IHS will consider any comments by the applicant, in addition to other information in FAPIIS in making a judgment about the applicant's integrity, business ethics, and record of performance under Federal awards when completing the review of risk posed by applicants as described in 45 CFR 75.205.
As required by 45 CFR part 75 Appendix XII of the Uniform Guidance, non-federal entities (NFEs) are required to disclose in FAPIIS any information about criminal, civil, and administrative proceedings, and/or affirm that there is no new information to provide. This applies to NFEs that receive Federal awards (currently active grants, cooperative agreements, and procurement contracts) greater than $10,000,000 for any period of time during the period of performance of an award/project.
As required by 2 CFR part 200 of the Uniform Guidance, and the HHS implementing regulations at 45 CFR part 75, effective January 1, 2016, the IHS must require a non-federal entity or an applicant for a Federal award to disclose, in a timely manner, in writing to the IHS or pass-through entity all violations of Federal criminal law involving fraud, bribery, or gratuity violations potentially affecting the Federal award.
Submission is required for all applicants and recipients, in writing, to the IHS and to the HHS Office of Inspector General all information related to violations of Federal criminal law involving fraud, bribery, or gratuity violations potentially affecting the Federal award. 45 CFR 75.113
U.S. Department of Health and Human Services, Indian Health Service, Division of Grants Management, ATTN: Robert Tarwater, Director, 5600 Fishers Lane, Mail Stop: 09E70, Rockville, Maryland 20857 (Include “Mandatory Grant Disclosures” in subject line).
U.S. Department of Health and Human Services, Office of Inspector General, ATTN: Mandatory Grant Disclosures, Intake Coordinator, 330 Independence Avenue SW., Cohen Building, Room 5527, Washington, DC 20201.
Failure to make required disclosures can result in any of the remedies described in 45 CFR 75.371 Remedies for noncompliance, including suspension or debarment (See 2 CFR parts 180 & 376 and 31 U.S.C. 3321).
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The Public Health Service strongly encourages all cooperative agreement and contract recipients to provide a smoke-free workplace and promote the non-use of all tobacco products. In addition, Public Law 103-227, the Pro-Children Act of 1994, prohibits smoking in certain facilities (or in some cases, any portion of the facility) in which regular or routine education, library, day care, health care, or early childhood development services are provided to children. This is consistent with the HHS mission to protect and advance the physical and mental health of the American people.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
National Protection and Programs Directorate, DHS.
Quarterly Critical Infrastructure Partnership Advisory Council membership update.
The Department of Homeland Security (DHS) announced the establishment of the Critical Infrastructure Partnership Advisory Council (CIPAC) in a
Renee Murphy, Designated Federal Officer, Critical Infrastructure Partnership Advisory Council, Sector Outreach and Programs Division, Office of Infrastructure Protection, National Protection and Programs Directorate, U.S. Department of Homeland Security, 245 Murray Lane, Mail Stop 0607, Arlington, VA 20598-0607; telephone: (703) 603-5083; email:
(i) Critical Infrastructure owner and operator members of a DHS-recognized SCC, including their representative trade associations or equivalent organization members of a SCC as determined by the SCC.
(ii) Federal, State, local, and tribal governmental entities comprising the members of the GCC for each sector, including their representative organizations; members of the State, Local, Tribal, and Territorial Government Coordinating Council; and representatives of other Federal agencies with responsibility for Critical Infrastructure activities.
CIPAC membership is organizational. Multiple individuals may participate in CIPAC activities on behalf of a member organization.
Office of the General Counsel, HUD.
Notice.
Section 106 of the Department of Housing and Urban Development Reform Act of 1989 (the HUD Reform Act) requires HUD to publish quarterly
For general information about this notice, contact Ariel Pereira, Associate General Counsel for Legislation and Regulations, Department of Housing and Urban Development, 451 7th Street SW., Room 10282, Washington, DC 20410-0500, telephone 202-708-3055 (this is not a toll-free number). Persons with hearing- or speech-impairments may access this number through TTY by calling the toll-free Federal Relay Service at 800-877-8339.
For information concerning a particular waiver that was granted and for which public notice is provided in this document, contact the person whose name and address follow the description of the waiver granted in the accompanying list of waivers that have been granted in the third quarter of calendar year 2016.
Section 106 of the HUD Reform Act added a new section 7(q) to the Department of Housing and Urban Development Act (42 U.S.C. 3535(q)), which provides that:
1. Any waiver of a regulation must be in writing and must specify the grounds for approving the waiver;
2. Authority to approve a waiver of a regulation may be delegated by the Secretary only to an individual of Assistant Secretary or equivalent rank, and the person to whom authority to waive is delegated must also have authority to issue the particular regulation to be waived;
3. Not less than quarterly, the Secretary must notify the public of all waivers of regulations that HUD has approved, by publishing a notice in the
a. Identify the project, activity, or undertaking involved;
b. Describe the nature of the provision waived and the designation of the provision;
c. Indicate the name and title of the person who granted the waiver request;
d. Describe briefly the grounds for approval of the request; and
e. State how additional information about a particular waiver may be obtained.
Section 106 of the HUD Reform Act also contains requirements applicable to waivers of HUD handbook provisions that are not relevant to the purpose of this notice.
This notice follows procedures provided in HUD's Statement of Policy on Waiver of Regulations and Directives issued on April 22, 1991 (56 FR 16337). In accordance with those procedures and with the requirements of section 106 of the HUD Reform Act, waivers of regulations are granted by the Assistant Secretary with jurisdiction over the regulations for which a waiver was requested. In those cases in which a General Deputy Assistant Secretary granted the waiver, the General Deputy Assistant Secretary was serving in the absence of the Assistant Secretary in accordance with the office's Order of Succession.
This notice covers waivers of regulations granted by HUD from July 1, 2016 through September 30, 2016. For ease of reference, the waivers granted by HUD are listed by HUD program office (for example, the Office of Community Planning and Development, the Office of Fair Housing and Equal Opportunity, the Office of Housing, and the Office of Public and Indian Housing, etc.). Within each program office grouping, the waivers are listed sequentially by the regulatory section of title 24 of the Code of Federal Regulations (CFR) that is being waived. For example, a waiver of a provision in 24 CFR part 58 would be listed before a waiver of a provision in 24 CFR part 570.
Where more than one regulatory provision is involved in the grant of a particular waiver request, the action is listed under the section number of the first regulatory requirement that appears in 24 CFR and that is being waived. For example, a waiver of both § 58.73 and § 58.74 would appear sequentially in the listing under § 58.73.
Waiver of regulations that involve the same initial regulatory citation are in time sequence beginning with the earliest-dated regulatory waiver.
Should HUD receive additional information about waivers granted during the period covered by this report (the third quarter of calendar year 2016) before the next report is published (the fourth quarter of calendar year 2016), HUD will include any additional waivers granted for the third quarter in the next report.
Accordingly, information about approved waiver requests pertaining to HUD regulations is provided in the Appendix that follows this notice.
The regulatory waivers granted appear in the following order:
For further information about the following regulatory waivers, please see the name of the contact person that immediately follows the description of the waiver granted.
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For further information about the following regulatory waivers, please see the name of the contact person that immediately follows the description of the waiver granted.
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For further information about the following regulatory waivers, please see the name of
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Equity take-outs for existing projects (refinance transactions): Permit the insured mortgage to exceed the sum of the total cost of acquisition, cost of financing, cost of repairs, and reasonable transaction costs or “equity take-outs” in refinances of HFA-financed projects and those outside of HFA's portfolio if the result is preservation with the following conditions:
1. Occupancy is no less than 93% for previous 12 months;
2. No defaults in the last 12 months of the HFA loan to be refinanced;
3. A 20-year affordable housing deed restriction placed on title that conforms to the 542(c) statutory definition;
4. A Property Capital Needs Assessment (PCNA) must be performed and funds escrowed for all necessary repairs, and reserves funded for future capital needs; and
5. For projects subsidized by Section 8 Housing Assistance Payment (HAP) contracts: Owner agrees to renew HAP contract(s) for 20-year term, (subject to appropriations and statutory authorization, etc.,), and existing and post-refinance HAP residual receipts are set aside to be used to reduce future HAP payments.
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For further information about the following regulatory waivers, please see the name of the contact person that immediately follows the description of the waiver granted.
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This FASS audited financial submission waiver (extension) does not apply to Single Audit submissions to the Federal Audit Clearinghouse; the HA is required to meet the Single Audit due date.
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Pursuant to 24 CFR 5.110, the HA was granted a partial waiver for good cause of the PHAS and physical inspection score for its FYE September 30, 2016. The HA was advised that the inspection results will be for informational purposes and would not serve as the inspection of record. The HA was also advised that September 30, 2017, would be the baseline year to determine its eligibility for Small PHA Deregulation and that a new inspection would be required upon that date.
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Pursuant to 24 CFR 5.110, the HA was granted a partial waiver for good cause of the PHAS and physical inspection score for its FYE September 30, 2016. The HA was advised that the inspection results will be for informational purposes and would not serve as the inspection of record. The HA was also advised that September 30, 2017, would be the baseline year to determine its eligibility for Small PHA Deregulation and that a new inspection would be required upon that date.
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Project/Activity: Tallahassee Housing Authority (THA) in Tallahassee, Florida, requested a waiver of 24 CFR 985.101(a) so that it could submit its Section Eight Management Assessment Program (SEMAP) certification after the deadline.
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Bureau of Land Management, Interior.
Public land order.
This order extends the duration of the withdrawal created by Public Land Order No. 7254, as corrected and amended, for an additional 20-year period, which would otherwise expire on April 9, 2017. Public Land Order No. 7254 withdrew 19,686.09 acres of public mineral estate in Toole and Liberty Counties, Montana, from location and entry under the United States mining laws, but not from leasing under the mineral leasing laws. This extension is necessary to continue to protect the Sweet Grass Hills Area of Critical Environmental Concern and surrounding areas located in Toole and Liberty Counties, Montana.
This Public Land Order is effective on April 10, 2017.
Micah Lee, Realty Specialist, at 406-262-2851, Bureau of Land Management, Havre Field Office, 3990 HWY 2 West, Havre, Montana 59501, or Deborah Sorg, Land Law Examiner at 406-896-5045, Bureau of Land Management, Montana/Dakotas State Office, 5001 Southgate Drive, Billings, Montana 59101-4669. Persons who use a telecommunications device for the deaf (TDD) may call the Federal Relay Service at 1-800-877-8339 to contact either of the above individuals. The Service is available 24 hours a day, 7 days a week, to leave a message or question with the above individuals. You will receive a reply during normal business hours.
The purpose for which the withdrawal was first made requires this extension to continue to protect the unique resources within the Sweet Grass Hills Area of Critical Environmental Concern and surrounding areas. The lands will remain open to the mineral and geothermal leasing laws and mineral materials disposal under the Materials Act.
By virtue of the authority vested in the Secretary of the Interior by Section 204 of the Federal Land Policy and Management Act of 1976, 43 U.S.C. 1714, it is ordered as follows:
Public Land Order No. 7254 (62 FR 17633 (1997)), as corrected (62 FR 22964 (1997)), and amended (81 FR 796 (2016)), which withdrew 19,686.09 acres of public mineral estate in Toole and Liberty Counties, Montana from location and entry under the United States mining laws, is hereby extended for an additional 20-year period. The withdrawal extended by this order will expire on April 9, 2037, unless, as a result of a review conducted prior to the expiration date pursuant to Section 204(f) of the Federal Land Policy and Management Act of 1976, 43 U.S.C. 1714(f), the Secretary determines that the withdrawal shall be further extended.
On November 22, 2016, the Department of Justice lodged a proposed consent decree with the United States District Court for the Western District of North Carolina in the lawsuit entitled
The United States, on behalf of the U.S. Environmental Protection Agency (EPA), filed this lawsuit under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The complaint seeks performance of response actions to address contamination of tricholorethylene in the groundwater at the CTS of Asheville, Inc. Superfund Site in Asheville, North Carolina.
The proposed consent decree would resolve the claims alleged in the complaint. It requires the defendants, CTS Corporation, Mills Gap Road Associates, and Northrop Grumman Corporation, to implement the remedy selected by EPA, which is estimated to cost $8,885,000.
The publication of this notice opens a period for public comment on the consent decree. Comments should be addressed to the Assistant Attorney General, Environment and Natural Resources Division, and should refer to
During the public comment period, the consent decree may be examined and downloaded at this Justice Department Web site:
For a paper copy, please enclose a check or money order for $109.50 (25 cents per page reproduction cost) payable to the United States Treasury. For a paper copy without the exhibits and signature pages, the cost is $8.50.
On December 1, 2016, the Department of Justice lodged a proposed consent decree with the United States District Court for the Western Division of North Dakota in the lawsuit entitled
The United States filed this lawsuit under the Clean Air Act. The United States' complaint seeks injunctive relief and civil penalties for violations of (a) the Federal Implementation Plan for Oil and Natural Gas Well Production Facilities; Fort Berthold Indian Reservation and (b) North Dakota's federally-approved State Implementation Plan at well pads owned and operated by Slawson in North Dakota. The principal violations relate to alleged failures to adequately design, operate, and maintain storage tank vapor control systems, resulting in emissions of volatile organic compounds (“VOC”) and other pollutants to the atmosphere. Many of the well pads are located on the Fort Berthold Indian Reservation. The remainder are located in North Dakota outside the exterior boundaries of the reservation. The consent decree requires Slawson to perform injunctive relief and pay a $2.1 million civil penalty.
The publication of this notice opens a period for public comment on the consent decree. Comments should be addressed to the Assistant Attorney General, Environment and Natural Resources Division, and should refer to
During the public comment period, the consent decree may be examined and downloaded at this Justice Department Web site:
Please enclose a check or money order for $21.00 (25 cents per page reproduction cost) payable to the United States Treasury.
Notice.
The Department of Labor, as part of its continuing effort to reduce paperwork and respondent burden, conducts a pre-clearance consultation program to provide the general public and Federal agencies with an opportunity to comment on proposed and/or continuing collections of information in accordance with the Paperwork Reduction Act of 1995 (PRA95). This program helps to ensure that requested data can be provided in the desired format, reporting burden (time and financial resources) is minimized, collection instruments are clearly understood, and the impact of collection requirements on respondents can be properly assessed. The Bureau of Labor Statistics (BLS) is soliciting comments concerning the proposed revisions to the confidentiality pledge for the following information collections titles.
A copy of the proposed information collection request (ICR) can be obtained by contacting the individual listed below in the Addresses section of this notice.
Written comments must be submitted to the office listed in the Addresses section of this notice on or before February 6, 2017.
Send comments to Nora Kincaid, BLS Clearance Officer, Division of Management Systems, Bureau of Labor Statistics, Room 4080, 2 Massachusetts Avenue NE., Washington, DC 20212. Written comments also may be transmitted by fax to 202-691-5111 (this is not a toll free number).
Nora Kincaid, BLS Clearance Officer, at 202-691-7628 (this is not a toll free number). (See Addresses section.)
Under 44 U.S.C. 3506(e), and 44 U.S.C. 3501, the Bureau of Labor Statistics is seeking comments on its revisions to the confidentiality pledges it provides to its respondents under the Confidential Information Protection and Statistical Efficiency Act (44 U.S.C. 3501) (CIPSEA). These revisions are required by the passage and implementation of provisions of the Federal Cybersecurity Enhancement Act of 2015 (H.R. 2029, Division N, Title II, Subtitle B, Sec. 223), which require the Secretary of Homeland Security to provide Federal civilian agencies' information technology systems with cybersecurity protection for their Internet traffic.
Office of Management and Budget clearance is being sought for the information collections listed in the table above.
For each of these information collections, the BLS statistical confidentiality pledges will be modified to include the sentence in bold below.
Per the Federal Cybersecurity Enhancement Act of 2015, Federal information systems are protected from malicious activities through cybersecurity screening of transmitted data.
The Bureau of Labor Statistics is particularly interested in comments that address the revised pledge language.
Comments submitted in response to this notice will be summarized and/or included in the request for Office of Management and Budget approval of the information collection request; they also will become a matter of public record.
National Aeronautics and Space Administration (NASA).
Notice of information collection.
The National Aeronautics and Space Administration, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995 (Pub. L. 104-13, 44 U.S.C. 3506(c)(2)(A)).
All comments should be submitted within 30 calendar days from the date of this publication.
Interested persons are invited to submit written comments regarding the proposed information collection to the Office of Information and Regulatory Affairs, Office of Management and Budget, 725 7th Street NW., Washington, DC 20543. Attention: Desk Officer for NASA.
Requests for additional information or copies of the information collection instrument(s) and instructions should be directed to Frances Teel, NASA Clearance Officer, NASA Headquarters, 300 E Street SW., JF0000, Washington, DC 20546, (202) 358-2225.
NASA hosts/sponsors numerous events on federally owned/leased property which are open to NASA affiliates and members of the public. The events include but are not limited to meetings, conferences, briefings, public outreach activities, tours, focus groups, etc. Visitor access is substantiated by a credentialed NASA sponsor who validates the visitor's need to access a building/area, guest networking services, etc. for a specific event/purpose. Information is collected to validate identity and enable intermittent access to activities.
Currently, visitor registration is accomplished via several electronic and paper processes. The NASA Office of Protective Services is transitioning to a one-NASA process to manage access for visitors with an affiliation less than 30-days.
NASA may collect event registration information to include but not limited to a visitor's name, address, citizenship, biometric data, purpose of visit, the location to be visited, escort/sponsor name with contact data, and preferred meeting/event sessions when options are available. When parking is provided on federal owned/leased space, driver's license information as well as vehicle make/model/tag information will be collected.
When visitors/vendors are permitted to bring equipment and/or event set-up materials such as booths and displays. Information will be collected to issue property passes and coordinate equipment/property delivery as well as set-up requirements to include electrical power, Internet capability, etc.
NASA collects, stores, and secures information from individuals requiring routine and intermittent access in a manner consistent with the Constitution and applicable laws, including the Privacy Act (5 U.S.C. 552a) and the Paperwork Reduction Act.
Electronic
Comments are invited on: (1) Whether the proposed collection of information is necessary for the proper performance of the functions of NASA, including whether the information collected has practical utility; (2) the accuracy of NASA's estimate of the burden (including hours and cost) of the proposed collection of information; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including automated collection techniques or the use of other forms of information technology.
Comments submitted in response to this notice will be summarized and included in the request for OMB approval of this information collection. They will also become a matter of public record.
National Aeronautics and Space Administration (NASA).
Notice of information collection.
The National Aeronautics and Space Administration, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995 (Pub. L. 104-13, 44 U.S.C. 3506(c)(2)(A)).
All comments should be submitted within 60 calendar days from the date of this publication.
All comments should be addressed to Frances Teel, National Aeronautics and Space Administration, Mail Code JF-000, Washington DC 20546-0001.
Requests for additional information or copies of the information collection instrument(s) and instructions should be directed to Frances Teel, NASA Clearance Officer, NASA Headquarters, 300 E Street SW., JF0000, Washington, DC 20546.
Contractors performing research and development are required by statutes, NASA implementing regulations, and OMB policy to submit reports of inventions, patents, data, and copyrights, including the utilization and disposition of same. The NASA New Technology Summary Report reporting form is being used for this purpose.
NASA FAR Supplement clauses for patent rights and new technology encourage the contractor to use an electronic form and provide a hyperlink to the electronic New Technology Reporting Web (eNTRe) site
Comments are invited on—(1) whether the proposed collection of information is necessary for the proper performance of the functions of NASA, including whether the information collected has practical utility; (2) the accuracy of NASA's estimate of the burden (including hours and cost) of the proposed collection of information; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including automated collection techniques or the use of other forms of information technology.
Comments submitted in response to this notice will be summarized and included in the request for OMB approval of this information collection. They will also become a matter of public record.
National 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 670 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 January 6, 2017. 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.
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 670 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 January 6, 2017. 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
Nuclear Regulatory Commission.
License renewal and record of decision; issuance.
The U.S. Nuclear Regulatory Commission (NRC) has issued renewed facility operating license No. NPF-29 to Entergy Company (Entergy or the licensee), the operator of Grand Gulf Nuclear Station, Unit 1 (GGNS). Renewed facility operating license No. NPF-29 authorizes operation of GGNS by the licensee at reactor core power levels not in excess of 4,408 megawatts thermal, in accordance with the provisions of the GGNS renewed license and technical specifications. In addition, the NRC has prepared a record of decision (ROD) that supports the NRC's decision to renew facility operating license No. NPF-29.
The license renewal of facility operating license No. NPF-29 was effective on December 1, 2016.
Please refer to Docket ID NRC-2016-0236 when contacting the NRC about the availability of information regarding this document. You may obtain publicly-available information related to this document using any of the following methods:
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•
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Emmanuel Sayoc, Office of Nuclear Reactor Regulation, U.S. Nuclear Regulatory Commission, Washington, DC 20555; telephone: 301-415-4084; email:
Notice is hereby given that the NRC has issued renewed facility operating license No. NPF-29 to Entergy Company, the operator of GGNS. Renewed facility operating license No. NPF-29 authorizes operation of GGNS by the licensee at reactor core power levels not in excess of 4,408 megawatts thermal, in accordance with the provisions of the GGNS renewed license and technical specifications. The NRC's ROD that supports the NRC's decision to renew facility operating license No. NPF-29 is available in ADAMS under Accession No. ML16243A024. As discussed in the ROD and the final supplemental environmental impact statement (FSEIS) for GGNS, Supplement 50 to NUREG-1437, “Generic Environmental Impact Statement for License Renewal of Nuclear Plants Regarding Grand Gulf Nuclear Station, Unit 1,” dated November 30, 2014 (ADAMS Accession No. ML14328A171), the NRC has considered a range of reasonable alternatives that included natural gas combined-cycle (NGCC), supercritical pulverized coal, combination of wind, solar, and NGCC, and the no action alternative. The ROD and FSEIS document the NRC decision for the environmental review that the adverse environmental impacts of license renewal for GGNS are not so great that preserving the option of license renewal for energy planning decision makers would be unreasonable.
Grand Gulf Nuclear Station, Unit 1 is a boiling water reactor located 20 miles southwest of Vicksburg, Mississippi. The application for the renewed license, “License Renewal Application, Grand Gulf Nuclear Station, Unit 1,” dated October 28, 2011, as supplemented by letters dated through October 3, 2016 (ADAMS Accession No. ML11308A052), complied with the standards and requirements of the Atomic Energy Act of 1954, as amended (the Act), and the NRC's regulations. As required by the Act and the NRC's regulations in chapter 1 of title 10 of the
For further details with respect to this action, see: (1) Entergy Company, license renewal application for Grand Gulf Nuclear Station, Unit 1, dated October 28, 2011, as supplemented by letters dated through October 3, 2016; (2) the NRC's safety evaluation report published on October 18, 2016 (ADAMS
For the U.S. Nuclear Regulatory Commission.
Nuclear Regulatory Commission.
License renewal; issuance.
The U.S. Nuclear Regulatory Commission (NRC) issued a renewal of Facility Operating License No. R-84, held by the Armed Forces Radiobiology Research Institute (AFRRI or the licensee) for the continued operation of its AFRRI Training, Research, Isotopes Production, General Atomics (TRIGA) reactor for an additional 20 years.
The Renewed Facility Operating License No. R-84 is effective on November 30, 2016.
Please refer to Docket ID NRC-2012-0272 when contacting the NRC about the availability of information regarding this document. You may obtain publicly-available information related to this document using any of the following methods:
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•
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Cindy K. Montgomery, Office of Nuclear Reactor Regulation, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001; telephone: 301-415-3398; email:
The NRC has issued renewed Facility Operating License No. R-84, held by the licensee, which authorizes continued operation of the AFRRI TRIGA reactor, located in Bethesda, Maryland. The AFRRI TRIGA reactor is a heterogeneous pool-type, natural convection, light-water cooled and shielded reactor. The renewed license authorizes the licensee to operate the AFRRI TRIGA reactor up to a steady-state power level of 1.1 megawatts thermal with pulsing capability using reactivity insertions up to 2.45% Δk/k. The renewed Facility Operating License No. R-84 will expire 20 years from its date of issuance, November 30, 2016.
The renewed facility operating license complies with the standards and requirements of the Atomic Energy Act of 1954, as amended (the Act), and the Commission's rules and regulations. The Commission has made appropriate findings as required by the Act and the Commission's regulations in Chapter I of title 10 of the
The NRC staff prepared a Safety Evaluation Report related to the renewal of Facility Operating License No. R-84 and concluded, based on that evaluation, that the licensee can continue to operate the facility without endangering the health and safety of the public. The NRC staff also prepared an Environmental Assessment and Finding of No Significant Impact regarding the renewal of the facility operating license, noticed in the
The documents identified in the following table are available to interested persons through ADAMS accession numbers, as indicated.
For the Nuclear Regulatory Commission
Nuclear Regulatory Commission.
Interim staff guidance; issuance.
The U.S. Nuclear Regulatory Commission (NRC) is issuing the final License Renewal Interim Staff Guidance (LR-ISG), LR-ISG-2016-01, “Changes to Aging Management Guidance for Various Steam Generator Components.” This LR-ISG describes changes to aging management program (AMP) XI.M19, “Steam Generators,” and aging management review (AMR) items for steam generator components in NUREG-1801, “Generic Aging Lessons Learned (GALL) Report,” Revision 2, and NUREG-1800, “Standard Review Plan for Review of License Renewal Applications for Nuclear Power Plants” (SRP-LR), Revision 2.
This guidance is effective on January 6, 2017.
Please refer to Docket ID NRC-2016-0108 when contacting the NRC about the availability of information regarding this document. You may obtain publicly-available information related to this document using any of the following methods:
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Seung Min, Office of Nuclear Reactor Regulation, U.S. Nuclear Regulatory Commission, Washington, DC 20555-
The NRC issues LR-ISGs to communicate insights and lessons learned and to address emergent issues not covered in existing license renewal guidance documents such as the GALL Report, NUREG-1801, Revision 2 (December 2010); and the SRP-LR, NUREG-1800, Revision 2 (December 2010), which are available in ADAMS under Accession Nos. ML103490041 and ML103490036, respectively. The NRC staff and stakeholders may use the guidance in an LR-ISG document before it is incorporated into a license renewal guidance document revision. The NRC staff issues LR-ISGs in accordance with the LR-ISG Process, Revision 2 (ADAMS Accession No. ML100920158), for which a notice of availability was published in the
The NRC staff has developed LR-ISG-2016-01 (ADAMS Accession No. ML16237A383) to describe changes to the aging management guidance for various steam generator components within the scope of part 54 of title 10 of the
On June 7, 2016, (81 FR 36612) the NRC requested public comments on draft LR-ISG-2016-01 (ADAMS Accession No. ML16102A268). The NRC received comments from the Nuclear Energy Institute by letter dated July 7, 2016 (ADAMS Accession No. ML16194A026). No other comments were submitted. The NRC considered those comments in developing the final LR-ISG. Detailed responses to the comments can be found in Appendix C of the final LR-ISG.
The final LR-ISG-2016-01 is approved for NRC staff and stakeholder use and will be incorporated into the next revision of the NRC's license renewal guidance document. These changes provide one acceptable approach for managing the associated aging effects for steam generator components within the scope of the license renewal rule (10 CFR part 54). A licensee may cite LR-ISG-2016-01 in its license renewal application until the guidance in this LR-ISG is incorporated into the license renewal guidance documents (
The staff also plans to consider the information in this LR-ISG and make corresponding changes when finalizing the aging management guidance for the subsequent license renewal period (
This LR-ISG is a rule as defined in the Congressional Review Act (5 U.S.C. 801-808). However, the Office of Management and Budget has not found it to be a major rule as defined in the Congressional Review Act.
The NRC intends to use the guidance in this LR-ISG when reviewing current and future license renewal applications. Issuance of this final LR-ISG does not constitute backfitting as defined in 10 CFR 50.109 (the Backfit Rule). As discussed in the “Backfitting” section of the final LR-ISG-2016-01, the backfitting provisions in 10 CFR 50.109 are not applicable to an applicant for a renewed license. Therefore, issuance of this LR ISG would not constitute backfitting for licensees currently in the license renewal process as defined in 10 CFR 50.109(a)(1). This guidance is nonbinding and the LR-ISG does not require current holders of renewed licenses to take any action (
For the Nuclear Regulatory Commission.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange filed a proposal to make several non-substantive changes to 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 make certain clarifying and non-substantive changes to its fee schedule in order to improve formatting, eliminate certain redundancies, increase overall readability, and provide users with straightforward descriptions to augment overall comprehensibility and usability of the existing fee schedule. The Exchange notes that these changes are purely clerical and do not substantively amend any fee or rebate, nor do they alter the manner in which the Exchange assesses fees or calculates rebates. The proposed changes are simply intended to provide greater transparency to market participants regarding how the Exchange assesses fees and calculates rebates. Specifically, the Exchange proposes to:
• Alphabetize defined terms under the “Definitions” section;
• capitalize the title of the column setting forth each tier's rate under footnotes 1, 2, 3, 4, 11, 12, 13, and 14;
• amend the name of footnote 2 from “Tiers” to “Tier” to connote the footnote's single tier;
• amend the title of the first column of footnote 1, 2, 3, and 14 to simply state “Tier” as the deleted language is redundant with the respective tier's title or with the description of the tier's criteria;
• amend the title of the column setting forth the tier's rate under footnote 13 to simply state “Fee Per Share to Remove” or “Rebate Per Share to Add” as applicable. Renaming these [sic] column is intended to clearly indicate whether the footnote provides a fee and/or a rebate, and whether that enhanced pricing applies to orders which add or remove liquidity. In renaming these columns, the Exchange also proposes to remove certain other descriptive language as such language is redundant and set forth in the tier's title and list of its applicable fee codes;
• amend the name under first column of the tiers listed under footnotes 2, 3, 4, 11, 12, 13 and 14 to simply state “Tier” or “Tier 1”, Tier 2”, etc.;
• replace the phrases “is equal to or greater than”, “is at least”, “of at least” and “that is . . . or more” with “≥” in all required criteria cells throughout the fee schedule; and
• amend the description of the required criteria under the third column of the tiers to begin with “Member has an” where applicable. Amending this description is intended to harmonize the format of the tier's criteria with its affiliate exchanges.
The Exchange believes that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6 of the Act.
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, as amended. To the contrary, the Exchange believes that the proposed rule change will not impose any burden on competition as the changes are purely clerical and do not amend any fee or rebate.
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
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 Exchange seeks to extend the pilot period for the Exchange's Retail Price Improvement (“RPI”) Program (the “Program”), which is set to expire on December 1, 2016, for a period of one year, to expire on December 1, 2017.
The Exchange has designated December 1, 2016 as the date the proposed rule change becomes effective.
The text of the proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The purpose of this filing is to extend the pilot period of the RPI Program,
In November 2014, the Commission approved the RPI Program on a pilot basis.
The Program was approved by the Commission on a pilot basis running one-year from the date of implementation.
The Exchange established the RPI Program in an attempt to attract retail order flow to the Exchange by potentially providing price improvement to such order flow. The Exchange believes that the Program promotes competition for retail order flow by allowing Exchange members to submit Retail Price Improvement Orders (“RPI Orders”)
The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,
The Exchange believes that extending the pilot period for the RPI Program is consistent with these principles because the Program is reasonably designed to attract retail order flow to the exchange environment, while helping to ensure that retail investors benefit from the better price that liquidity providers are willing to give their orders. Additionally, as previously stated, the competition promoted by the Program may facilitate the price discovery process and potentially generate additional investor interest in trading securities. The extension of the pilot period will allow the Commission and the Exchange to continue to monitor the Program for its potential effects on public price discovery, and on the broader market structure.
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, as amended. The proposed rule change extends an established pilot program for one year, thus allowing the RPI Program to enhance competition for retail order flow and contribute to the public price discovery process.
No written comments were either solicited or received.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act
A proposed rule change filed under Rule 19b-4(f)(6) normally may not become operative prior to 30 days after the date of filing. However, Rule 19b-4(f)(6)(iii)
The Commission believes that waiver of the 30-day operative delay period is consistent with the protection of investors and the public interest. Specifically, the Commission believes that the proposal would allow the RPI Program to continue uninterrupted and to provide additional time for data about the program to be generated and analyzed. For these reasons, the Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest, and designates the proposed rule change to be operative upon filing with the Commission.
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act.
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 make several non-substantive changes to the fee schedule applicable to Members
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 modify its fee schedule applicable to the Exchange's equity options platform (“EDGX Options”) to make certain clarifying and non-substantive changes to its fee schedule in order to improve formatting, eliminate certain redundancies, increase overall readability, and provide users with straightforward descriptions to augment overall comprehensibility and usability of the existing fee schedule. The Exchange notes that these changes are purely clerical and do not substantively amend any fee or rebate, nor do they alter the manner in which the Exchange assesses fees or calculates rebates. The proposed changes are simply intended to provide greater transparency to market participants regarding how the Exchange assesses fees and calculates rebates. Specifically, the Exchange proposes to:
• Alphabetize defined terms under the “Definitions” section;
• amend footnote 3 to include the word “Tier” at the end of its title;
• amend the title of the column setting forth each tier's rate to simply state “Fee Per Contract”, “Rebate Per Contract” or “Fee/Rebate Per Contract”), as applicable. Renaming these columns is intended to clearly indicate whether the footnote provides a fee and/or a rebate. In renaming these columns, the Exchange also proposes to remove certain other descriptive language as such language is redundant and set forth in the tier's title and list of its applicable fee codes;
• ensure each tier requiring multiple criteria is conjoined using “; and” to clarify that all of a tier's criteria must be satisfied to receive the applicable rate;
• replace the phrase “equal to or greater than” with “≥” in all required criteria cells under footnote 1, 2, 3, and 4.
The Exchange believes that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the
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, as amended. To the contrary, the Exchange believes that the [sic] will not impose any burden on competition as the changes are purely clerical and do not amend and [sic] fee or rebate.
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 proposes to extend the operation of Penny Pilot Program through June 30, 2017. The text of the proposed rule change is provided below.
(additions are
The Board of Directors may establish minimum quoting increments for options traded on the Exchange. When the Board of Directors determines to change the minimum increments, the Exchange will designate such change as a stated policy, practice, or interpretation with respect to the administration of this Rule within the meaning of subparagraph (3)(A) of subsection 19(b) of the Exchange Act and will file a rule change for effectiveness upon filing with the Commission. Until such time as the Board of Directors makes a change to the minimum increments, the following minimum increments shall apply to options traded on the Exchange:
(1) No change.
(2) No change.
(3) The decimal increments for bids and offers for all series of the option classes participating in the Penny Pilot Program are: $0.01 for all option series quoted below $3 (including LEAPS), and $0.05 for all option series $3 and above (including LEAPS). For QQQQs, IWM, and SPY, the minimum increment is $0.01 for all option series. The Exchange may replace any option class participating in the Penny Pilot Program that has been delisted with the next most actively-traded, multiply-listed option class, based on national average daily volume in the preceding six calendar months, that is not yet included in the Pilot Program. Any replacement class would be added on the second trading day following [July 1, 2016]
(4) No change.
The text of the proposed rule change is also available on the Exchange's Web site (
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Penny Pilot Program (the “Pilot Program”) is scheduled to expire on December 31, 2016. C2 proposes to extend the Pilot Program until June 30, 2017. C2 believes that extending the Pilot Program will allow for further analysis of the Pilot Program and a determination of how the Pilot Program should be structured in the future.
During this extension of the Pilot Program, C2 proposes that it may replace any option class that is currently included in the Pilot Program and that has been delisted with the next most actively traded, multiply listed option class that is not yet participating in the Pilot Program (“replacement class”). Any replacement class would be determined based on national average daily volume in the preceding six months,
C2 is specifically authorized to act jointly with the other options exchanges participating in the Pilot Program in identifying any replacement class.
The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the “Act”) and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.
C2 does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Specifically, the Exchange believes that, by extending the expiration of the Pilot Program, the proposed rule change will allow for further analysis of the Pilot Program and a determination of how the Program shall be structured in the future. In doing so, the proposed rule change will also serve to promote regulatory clarity and consistency, thereby reducing burdens on the marketplace and facilitating investor protection. In addition, the Exchange has been authorized to act jointly in extending the Pilot Program and believes the other exchanges will be filing similar extensions.
The Exchange neither solicited nor received comments on the proposed rule change.
The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A) of the Act
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission will institute proceedings to determine whether the proposed rule change should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange filed a proposal to amend the listing rules for exchange-traded products in Bats Rule 14.11 (“ETPs”) to add additional continued listing standards as well as a related amendment to Rule 14.12, entitled “Failure to Meet Listing Standards.” The Exchange is also proposing to make certain cleanup changes throughout Rule 14.11 in order to make the rule text more clear.
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 the listing rules for ETPs in Bats Rule 14.11, entitled “Other Securities,” to add additional continued listing standards as well as a related amendment to Rule 14.12, entitled “Failure to Meet Listing Standards.” The Exchange is also proposing to make certain cleanup changes throughout Rule 14.11 in order to make the rule text more clear.
The proposed rule changes are being made at the request of and as part of discussions with the Commission. Based on concerns about certain of the ETP listing rules applying only on an initial basis, SEC staff has requested that the Exchange adopt certain additional continued listing standards for ETPs. As a result, the proposed amendment reflects guidance provided by SEC staff to clarify that most initial listing standards, as well as certain representations (“Continued Listing Representations”) included in Exchange rule filings pursuant to Section 19(b) of the Act
The proposed rule changes require that ETPs listed by the Exchange without a Rule Filing must maintain the initial index or reference asset criteria, among other requirements, on both an initial listing and continual basis. For example, in the case of a domestic equity index, these criteria generally include: (a) Stocks with 90% of the weight of the index must have a minimum market value of at least $75 million; (b) stocks with 70% of the weight of the index must have a minimum monthly trading volume of at least 250,000 shares; (c) the most heavily weighted component cannot exceed 30% of the weight of the index, and the five most heavily weighted stocks cannot exceed 65%; (d) there must be at least 13 stocks in the index; and (e) all securities in the index must be listed in the U.S. Such requirements are currently only applicable on an initial listing basis, but the proposal would require that such criteria be met on a continual basis as well. The Exchange is also proposing similar changes as it relates to the comparable criteria for international indexes, fixed-income indexes, indexes with a combination of components, and other underlying reference assets. Where an ETP fails to meet the proposed applicable continued listing requirements, the Exchange would, generally, initiate delisting proceedings pursuant to Rule 14.12.
If an ETP is listed on the Exchange pursuant to a Rule Filing, this proposed rule change would require that the issuer of the security comply on an ongoing basis with any Continued Listing Representations, which include any of the representations in the rule filing regarding the index composition, the description of the portfolio or reference assets, limitations on portfolio holdings or reference assets, dissemination and availability of index and intraday indicative values (as applicable), and the applicability of Exchange rules and surveillance procedures made in any filing to list a series of ETPs. As proposed, where an ETP fails to meet the Continued Listing Representations, the Exchange would initiate delisting proceedings pursuant to Rule 14.12.
The Exchange is also proposing to modify its rules such that issuers of securities listed under Rule 14.11 would be required to provide the Exchange with prompt notification after an Executive Officer
The Exchange believes that the proposal is consistent with Section 6(b) of the Act
The proposed rule changes accomplish these objectives by enhancing the current continued listing standards by clarifying that most initial listing standards, as well as Continued Listing Representations, are considered continued listing standards. Additionally, the Exchange is proposing to require issuers to provide the Exchange with prompt notification after an Executive Officer of the [sic] becomes aware of any noncompliance and to clarify that deficiencies will be subject to potential trade halts and delisting proceedings pursuant to Rule 14.12. The Exchange believes that these amendments will enhance the Exchange's listing rules, thereby serving to improve the national market system and protect investors and the public interest.
The Exchange does not believe that the cleanup changes have any impact on the reasonable and equitable and not unfairly discriminatory nature of the proposal.
For these reasons, the Exchange believes that the proposed rule change is consistent with the requirements of Section 6(b)(5) of the Act.
The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act, as amended. The Exchange believes that the proposed rule change to amend Rule 14.11 related to the listing of ETPs, the notification requirement in Rule 14.11(a), and the proposed related amendments to Rule 14.12 will have no impact on competition. Furthermore, since Commission staff has provided the same guidance regarding ETP continued listing requirements to all listing exchanges, the Exchange believes that there will be no effect on competition.
The Exchange has neither solicited nor received written comments 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 paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Securities and Exchange Commission (“Commission”).
Notice of application for an exemptive order under section 206A of the Investment Advisers Act of 1940 (“Advisers Act”) providing an exemption from the written disclosure and consent requirements of section 206(3).
UBS Financial Services Inc. (“Applicant”).
Exemption requested under section 206A from the written disclosure and consent requirements of section 206(3).
Applicant requests that the Commission issue an order under section 206A exempting it and Future Advisers (as defined below) from the written disclosure and consent requirements of section 206(3) with respect to principal transactions with nondiscretionary advisory client accounts.
The application was filed on November 22, 2016.
An order granting the requested relief will be issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Commission's Secretary and serving Applicant with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on December 27, 2016, and should be accompanied by proof of service on Applicant, in the form of an affidavit or, for lawyers, a certificate of service. Pursuant to rule 0-5 under the Advisers Act, hearing requests should state the nature of the writer's interest, any facts bearing upon the desirability of a hearing on the matter, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Commission's Secretary.
Secretary, U.S. Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. Applicant, Laura E. Flores and Steven W. Stone, Morgan, Lewis & Bockius LLP, 1111 Pennsylvania Ave. NW., Washington, DC 20004.
Robert Shapiro, Senior Counsel, at (202) 551-7758 (Chief Counsel's Office, Division of Investment Management) or Melissa Harke, Senior Special Counsel, at (202) 551-6787 (Investment Adviser Regulation Office, Division of Investment Management).
The following is a summary of the application. The complete application may be obtained via the Commission's Web site at
Applicant seeks relief from the written disclosure and consent requirements of section 206(3) of the Advisers Act that would be similar to relief currently provided by Advisers Act rule 206(3)-3T (the “Rule”), which will expire by its terms on December 31, 2016. The relief sought by Applicant, if granted, would be subject to conditions similar to those under the Rule, as well as certain revised or additional conditions.
1. The Applicant is registered as an investment adviser with the Commission and is a registered broker-dealer. The Applicant is a subsidiary of UBS AG, a diversified financial services company with operations around the world. The Applicant offers a number of advisory programs, including the UBS Strategic Advisor Program (the “Program”), a nondiscretionary advisory program.
2. In 2007, many of the Applicant's fee-based brokerage accounts were converted to nondiscretionary advisory accounts in the Program, following the invalidation of former rule 202(a)(11)-1 under the Advisers Act. When these accounts had been fee-based brokerage accounts, the Applicant, in its capacity as a broker-dealer, engaged in principal transactions with its customers in accordance with applicable law. The Applicant currently relies on the Rule to engage in principal transactions with its client accounts in the Program.
3. The Applicant currently has approximately 115,982 client accounts enrolled in the Program. Those accounts have approximately $65 billion in assets under management as of September 20, 2016. In the period January 1, 2015 through December 31, 2015, 11,619 trades were effected in reliance on the Rule in the Program. Approximately 66% percent of the trades done in reliance on the Rule in this period were purchases by client accounts; the average purchase was approximately $109,838. Approximately 34% percent of the trades done in reliance on the Rule in this period were sales from client accounts; the average sale was approximately $105,022.
4. As permitted under the Rule, the Applicant has engaged in principal trades in investment-grade fixed income securities underwritten by the Applicant or an affiliate.
5. The Applicant acknowledges that the Order, if granted, would not be construed as relieving in any way the Applicant from acting in the best interests of an advisory client, including fulfilling the duty to seek the best execution for the particular transaction for the advisory client; nor shall it relieve the Applicant from any obligation that may be imposed by sections 206(1) or (2) of the Advisers Act or by other applicable provisions of the federal securities laws or applicable FINRA rules.
1. Section 206(3) provides that it is unlawful for any investment adviser, directly or indirectly, acting as principal for its own account, knowingly to sell any security to or purchase any security from a client, without disclosing to the client in writing before the completion of the transaction the capacity in which the adviser is acting and obtaining the client's consent to the transaction. Rule 206(3)-3T deems an investment adviser to be in compliance with the provisions of section 206(3) of the Advisers Act when the investment adviser, or a person controlling, controlled by, or under common control with the investment adviser, acting as principal for its own account, sells to or purchases from an advisory client any security, provided that the investment adviser complies with the conditions of the Rule.
2. Rule 206(3)-3T requires, among other things, that the investment adviser obtain a client's written, revocable consent prospectively authorizing the adviser, directly or indirectly, acting as principal for its own account, to sell any security to or purchase any security from the client. The consent must be obtained after the adviser provides the client with written disclosure about: (i) The circumstances under which the investment adviser may engage in principal transactions with the client; (ii) the nature and significance of the conflicts the investment adviser has with its client's interests as a result of those transactions; and (iii) how the investment adviser addresses those conflicts. The investment adviser also must provide trade-by-trade disclosure to the client, before the execution of each principal transaction, of the capacity in which the adviser may act with respect to the transaction, and obtain the client's consent (which may be written or oral) to the transaction. The Rule is available only to an investment adviser that is also a broker-dealer registered under section 15 of the Securities Exchange Act of 1934 (“Exchange Act”) and may only be relied upon with respect to a nondiscretionary account that is a brokerage account subject to the Exchange Act, and the rules thereunder, and the rules of the self-regulatory organization(s) of which it is a member. Rule 206(3)-3T is not available for principal transactions if the investment adviser or a person who controls, is controlled by, or is under common control with the adviser (“control person”) is the issuer or is an underwriter of the security, except that an adviser may rely on the Rule for trades in which the adviser or a control person is an underwriter of non-convertible investment-grade debt securities.
3. The investment adviser also must provide to the client a trade confirmation that, in addition to the requirements of rule 10b-10 under the Exchange Act, includes a conspicuous, plain English statement informing the client that the investment adviser disclosed to the client before the execution of the transaction that the investment adviser may act as principal in connection with the transaction, that the client authorized the transaction, and that the investment adviser sold the security to or bought the security from the client for its own account. The investment adviser also must deliver to the client, at least annually, a written statement listing all transactions that were executed in the account in reliance on the Rule, including the date and price of each transaction.
4. Rule 206(3)-3T is scheduled to expire on December 31, 2016. Upon expiration, the Applicant would be required to provide trade-by-trade written disclosure to each nondiscretionary advisory client with whom the Applicant sought to engage in a principal transaction in accordance with section 206(3). The Applicant submits that its nondiscretionary clients, through the Applicant's current reliance on the Rule, have had access to the Applicant's inventory through principal transactions for a number of years, and expect to continue to have such access in the future. The Applicant believes that engaging in principal transactions with its clients provides certain benefits to its clients, including access to securities of limited availability, such as municipal bonds, and that the written disclosure and client consent requirements of section 206(3) act as an operational barrier to its ability to engage in principal trades with its clients, especially when the transaction involves securities of limited availability.
5. Unless the Applicant is provided an exemption from the written disclosure and client consent requirements of section 206(3), Applicant believes that it will be unable to provide the same range of services and access to the same types of securities to its nondiscretionary advisory clients as it currently is able to provide to clients under the Rule.
6. The Applicant notes that, if the requested relief is granted, it will remain subject to the fiduciary duties that are generally enforceable under sections 206(1) and 206(2) of the Advisers Act, which, in general terms, require the Applicant to: (i) Disclose material facts about the advisory relationship to its clients; (ii) treat each client fairly; and (iii) act only in the best interests of its client, disclosing conflicts of interest when present and obtaining client consent to arrangements that present such conflicts.
7. The Applicant further notes that, in its capacity as a broker-dealer with respect to these accounts, it will remain subject to a comprehensive set of Commission and FINRA regulations that apply to the relationship between a broker-dealer and its customer in addition to the fiduciary duties an adviser owes a client. These rules require, among other things, that the Applicant deal fairly with its customers, seek to obtain best execution of customer orders, and make only suitable recommendations. These obligations are designed to promote business conduct that protects customers from abusive practices that may not necessarily be fraudulent, and to protect against unfair prices and excessive commissions. Specifically, these provisions, among other things, require that the prices charged by the Applicant be reasonably related to the prevailing market, and limit the commissions and mark-ups the Applicant can charge. Additionally, these obligations require that the Applicant have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on information obtained through reasonable diligence.
8. The Applicant requests that the Commission issue an Order pursuant to section 206A exempting it from the written disclosure and consent requirements of section 206(3) only with respect to client accounts in the Program and any similar nondiscretionary program to be created in the future. The Applicant also requests that the Commission's Order
The Applicant agrees that any Order granting the requested relief will be subject to the following conditions:
1. The Applicant will exercise no “investment discretion” (as such term is defined in section 3(a)(35) of the Exchange Act), except investment discretion granted by the advisory client on a temporary or limited basis,
2. The Applicant will not trade in reliance on this Order any security for which the Applicant or any person controlling, controlled by, or under common control with the Applicant is the issuer, or, at the time of the sale, an underwriter (as defined in section 202(a)(20) of the Advisers Act).
3. The Applicant will not directly or indirectly require the client to consent to principal trading as a condition to opening or maintaining an account with the Applicant.
4. The advisory client has executed a written revocable consent prospectively authorizing the Applicant directly or indirectly to act as principal for its own account in selling any security to or purchasing any security from the advisory client. The advisory client's written consent must be obtained through a signature or other positive manifestation of consent that is separate from or in addition to the signature indicating the client's consent to the advisory agreement. The separate or additional signature line or alternative means of expressing consent must be preceded immediately by prominent, plain English disclosure containing either: (a) An explanation of: (i) The circumstances under which the Applicant directly or indirectly may engage in principal transactions; (ii) the nature and significance of conflicts with its client's interests as a result of the transactions; and (iii) how the Applicant addresses those conflicts; or (b) a statement explaining that the client is consenting to principal transactions, followed by a cross-reference to a specific document provided to the client containing the disclosure in (a)(i)-(iii) above and to the specific page or pages on which such disclosure is located; provided, however, that if the Applicant requires time to modify its electronic systems to provide the specific page cross-reference required by clause (b), the Applicant may, while updating such electronic systems, and for no more than 90 days from the date of the Order, instead provide a cross-reference to a specific document provided to the client containing the disclosure in (a)(i)-(iii) above and to the specific section in such document in which such disclosure is located.
5. The Applicant, prior to the execution of each transaction in reliance on this Order, will: (a) Inform the advisory client, orally or in writing, of the capacity in which it may act with respect to such transaction; and (b) obtain consent from the advisory client, orally or in writing, to act as principal for its own account with respect to such transaction.
6. The Applicant will send a written confirmation at or before completion of each such transaction that includes, in addition to the information required by rule 10b-10 under the Exchange Act, a conspicuous, plain English statement informing the advisory client that the Applicant: (a) Disclosed to the client prior to the execution of the transaction that the Applicant may be acting in a principal capacity in connection with the transaction and the client authorized the transaction; and (b) sold the security to, or bought the security from, the client for its own account.
7. The Applicant will send to the client, no less frequently than annually, written disclosure containing a list of all transactions that were executed in the client's account in reliance upon this Order, and the date and price of each such transaction.
8. The Applicant is a broker-dealer registered under section 15 of the Exchange Act and each account for which the Applicant relies on this Order is a brokerage account subject to the Exchange Act, and the rules thereunder, and the rules of the self-regulatory organization(s) of which it is a member.
9. Each written disclosure required as a condition to this Order will include a conspicuous, plain English statement that the client may revoke the written consent referred to in Condition 4 above without penalty at any time by written notice to the Applicant in accordance with reasonable procedures established by the Applicant, but in all cases such revocation must be given effect within 5 business days of the Applicant's receipt thereof.
10. The Applicant will maintain records sufficient to enable verification of compliance with the conditions of this Order. Such records will include,
11. The Applicant will adopt written compliance policies and procedures reasonably designed to ensure, and the Applicant's chief compliance officer will monitor, the Applicant's
By the Commission.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange filed a proposal to make several non-substantive changes to 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 make certain clarifying and non-substantive changes to its fee schedule in order to improve formatting, eliminate certain redundancies, increase overall readability, and provide users with straightforward descriptions to augment overall comprehensibility and usability of the existing fee schedule. The Exchange notes that these changes are purely clerical and do not substantively amend any fee or rebate, nor do they alter the manner in which the Exchange assesses fees or calculates rebates. The proposed changes are simply intended to provide greater transparency to market participants regarding how the Exchange assesses fees and calculates rebates. Specifically, the Exchange proposes to:
• Capitalize the title of the column setting forth each tier's rate under footnotes 3 and 4;
• replace the phrase “of at least” with “≥” in all required criteria cells under footnotes 3 and 4;
• amend the description of the required criteria of “Step-Up Tier 1” and the “Step-Up Tier 2” under footnote 4 to begin with “MPID adds/has” and delete the phrase “[o]n an MPID Basis”. Amending this description is intended to harmonize the format of the tier's criteria with that of other tier's listed under footnotes 3 and 4 which state “Member has” or “Member adds”.
The Exchange believes that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6 of the Act.
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, as amended. To the contrary, the Exchange believes that the [sic] will not impose any burden on competition as the changes are purely clerical and do not amend and [sic] fee or rebate.
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.
On November 28, 2014, the Commission issued an order pursuant to its authority under Rule 612(c) of Regulation NMS
The Exchange now seeks to extend the exemption until December 1, 2017.
For this reason and the reasons stated in the RPI Approval Order originally granting the limited exemption, the Commission, pursuant to its authority under Rule 612(c) of Regulation NMS, finds that extending the exemption is appropriate in the public interest and consistent with the protection of investors.
The limited and temporary exemption extended by this Order is subject to modification or revocation if at any time the Commission determines that such action is necessary or appropriate in furtherance of the purposes of the Act. Responsibility for compliance with any applicable provisions of the Federal securities laws must rest with the persons relying on the exemption that are the subject of this Order.
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 principal purpose of the proposed rule change is to revise the ICC Rulebook (the “Rules”) to provide for the clearance of Standard Australian Corporate Single Name CDS contracts (collectively, “STAC Contracts”) and Standard Australian Financial Corporate Single Name CDS contracts (collectively, “STAFC Contracts”).
In its filing with the Commission, ICC 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. ICC has prepared summaries, set forth in sections (A), (B), and (C) below, of the most significant aspects of these statements.
The purpose of the proposed rule change is to adopt rules that will provide the basis for ICC to clear additional credit default swap contracts. Specifically, ICC proposes amending Chapter 26 of the ICC Rules to add Subchapters 26M and 26N to provide for the clearance of STAC and STAFC Contracts, respectively. ICC believes the addition of these contracts will benefit the market for credit default swaps by providing market participants the benefits of clearing, including reduction in counterparty risk and safeguarding of margin assets pursuant to clearing house rules. Clearing of the additional STAC and STAFC Contracts will not require any changes to ICC's Risk Management Framework or other policies and procedures constituting rules within the meaning of the Securities Exchange Act of 1934 (“Act”).
STAC Contracts have similar terms to the Standard European Corporate Single Name CDS contracts (“STEC Contracts”) currently cleared by ICC and governed by Subchapter 26G of the ICC Rules. Accordingly, the proposed rules found in Subchapter 26M largely mirror the ICC Rules for STEC Contracts in Subchapter 26G, with certain modifications that reflect differences in terms and market conventions between those contracts and STAC Contracts. STAC Contracts will be denominated in United States Dollars.
ICC Rule 26M-102 (Definitions) sets forth the definitions used for the STAC Contracts. The definitions are substantially the same as the definitions found in Subchapter 26G of the ICC Rules, other than certain conforming changes. ICC Rules 26M-203 (Restriction on Activity), 26M-206 (Notices Required of Participants with respect to STAC Contracts), 26M-303 (STAC Contract Adjustments), 26M-309 (Acceptance of STAC Contracts by ICE Clear Credit), 26M-315 (Terms of the Cleared STAC Contract), 26M-316 (Relevant Physical Settlement Matrix Updates), 26M-502 (Specified Actions), and 26M-616 (Contract Modification) reflect or incorporate the basic contract specifications for STAC Contracts and are substantially the same as under Subchapter 26G of the ICC Rules.
STAFC Contracts have similar terms to the Standard European Financial Corporate Single Name CDS contracts (“STEFC Contracts”) currently cleared by ICC and governed by Subchapter 26H of the ICC Rules. Accordingly, the proposed rules found in Subchapter 26N largely mirror the ICC Rules for STEFC Contracts in Subchapter 26H, with certain modifications that reflect differences in terms and market conventions between those contracts and STAFC Contracts. STAFC Contracts will be denominated in United States Dollars.
ICC Rule 26N-102 (Definitions) sets forth the definitions used for the STAFC Contracts. The definitions are substantially the same as the definitions found in Subchapter 26H of the ICC Rules, other than certain conforming changes. ICC Rules 26N-203 (Restriction on Activity), 26N-206 (Notices Required of Participants with respect to STAFC Contracts), 26N-303 (STAFC Contract Adjustments), 26N-309 (Acceptance of STAFC Contracts by ICE Clear Credit), 26N-315 (Terms of the Cleared STAFC Contract), 26N-316 (Relevant Physical Settlement Matrix Updates), 26N-502 (Specified Actions), and 26N-616 (Contract Modification) reflect or incorporate the basic contract specifications for STAFC Contracts and are substantially the same as under Subchapter 26H of the ICC Rules.
Section 17A(b)(3)(F) of the Act
Clearing of the STAC and STAFC Contracts will also satisfy the requirements of Rule 17Ad-22.
The STAC and STAFC Contracts will be available to all ICC participants for clearing. The clearing of these STAC and STAFC Contracts by ICC does not preclude the offering of the STAC and STAFC Contracts for clearing by other market participants. Accordingly, ICC does not believe that clearance of the STAC and STAFC Contracts will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act.
Written comments relating to the proposed rule change have not been solicited or received. ICC will notify the Commission of any written comments received by ICC.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove the proposed rule change or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-ICC-2016-014 and should be submitted on or before December 28, 2016.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange proposes to extend the operation of Penny Pilot Program through June 30, 2017. The text of the proposed rule change is provided below.
The Board of Directors may establish minimum increments for options traded on the Exchange. When the Board of Directors determines to change the minimum increments, the Exchange will designate such change as a stated policy, practice, or interpretation with respect to the administration of Rule 6.42 within the meaning of subparagraph (3)(A) of subsection 19(b) of the Exchange Act and will file a rule change for effectiveness upon filing with the Commission. Until such time as the Board of Directors makes a change to the minimum increments, the following minimum increments shall apply to options traded on the Exchange:
(1) No change.
(2) No change.
(3) The decimal increments for bids and offers for all series of the option classes participating in the Penny Pilot Program are: $0.01 for all option series quoted below $3 (including LEAPS), and $0.05 for all option series $3 and above (including LEAPS). For QQQQs, IWM, and SPY, the minimum increment is $0.01 for all option series. The Exchange may replace any option class participating in the Penny Pilot Program that has been delisted with the next most actively-traded, multiply-listed option class, based on national average daily volume in the preceding six calendar months, that is not yet included in the Pilot Program. Any replacement class would be added on the second trading day following [July 1, 2016]
(4) No change.
. . . Interpretations and Policies:
.01-.04 No change.
The text of the proposed rule change is also available on the Exchange's Web site (
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Penny Pilot Program (the “Pilot Program”) is scheduled to expire on December 31, 2016. CBOE proposes to extend the Pilot Program until June 30, 2017. CBOE believes that extending the Pilot Program will allow for further analysis of the Pilot Program and a determination of how the Pilot Program should be structured in the future.
During this extension of the Pilot Program, CBOE proposes that it may replace any option class that is currently included in the Pilot Program and that has been delisted with the next most actively traded, multiply listed option class that is not yet participating in the Pilot Program (“replacement class”). Any replacement class would be determined based on national average daily volume in the preceding six months,
CBOE is specifically authorized to act jointly with the other options exchanges participating in the Pilot Program in identifying any replacement class.
The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the “Act”) and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.
CBOE does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Specifically, the Exchange believes that, by extending the expiration of the Pilot Program, the proposed rule change will allow for further analysis of the Pilot Program and a determination of how the Program shall be structured in the future. In doing so, the proposed rule change will also serve to promote regulatory clarity and consistency, thereby reducing burdens on the marketplace and facilitating investor protection. In addition, the Exchange has been authorized to act jointly in extending the Pilot Program and believes the other exchanges will be filing similar extensions.
The Exchange neither solicited nor received comments on the proposed rule change.
The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A) of the Act
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission will institute proceedings to determine whether the proposed rule change should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Securities and Exchange Commission (“Commission”).
Notice of application for an exemptive order under section 206A of the Investment Advisers Act of 1940 (“Advisers Act”) providing an exemption from the written disclosure and consent requirements of section 206(3).
Secretary, U.S. Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. Applicant, Mackenzie E. Crane, Esq., Bank of America, 100 Federal Street, MA5-100-03-09, Boston, MA 02110 or James E. Anderson, Esq. and Kimberly B. Saunders, Esq., Willkie Farr & Gallagher LLP, 1875 K Street NW., Washington, DC 20006.
Robert Shapiro, Senior Counsel, at (202) 551-7758 (Chief Counsel's Office, Division of Investment Management) or Melissa Harke, Senior Special Counsel, at (202) 551-6787 (Investment Adviser Regulation Office, Division of Investment Management).
The following is a summary of the application. The complete application may be obtained via the Commission's Web site at
Applicant seeks relief from the written disclosure and consent requirements of section 206(3) of the Advisers Act that would be similar to relief currently provided by Advisers Act rule 206(3)-3T (the “Rule”), which will expire by its terms on December 31, 2016. The relief sought by Applicant, if granted, would be subject to conditions similar to those under the Rule, as well as certain revised or additional conditions.
1. The Applicant is registered as an investment adviser with the Commission and is a registered broker-dealer. The Applicant is a subsidiary of Bank of America Corporation, a diversified financial services company with operations around the world. The Applicant offers a number of advisory programs, including Merrill Lynch Personal Advisor (“MLPA”), a nondiscretionary advisory program, and Merrill Lynch Investment Advisory Program (“MLIAP”). While the Applicant offers both discretionary and nondiscretionary advisory services under MLIAP, the relief sought by the Applicant, as it relates to MLIAP, is limited to the client accounts enrolled in nondiscretionary strategies.
2. In 2007, many of the Applicant's fee-based brokerage accounts were converted to nondiscretionary advisory accounts in MLPA, following the invalidation of former rule 202(a)(11)-1 under the Advisers Act. When these accounts had been fee-based brokerage accounts, the Applicant, in its capacity as a broker-dealer, engaged in principal transactions with its customers, in accordance with applicable law. The Applicant currently relies on the Rule to engage in principal transactions with its client accounts in MLPA and client accounts enrolled in nondiscretionary strategies in MLIAP.
3. The Applicant currently has approximately 393,535 client accounts enrolled in nondiscretionary strategies in MLIAP. Those accounts have approximately $157 billion in assets under management as of June 30, 2016. In the period January 1, 2015 through December 31, 2015, there were approximately 53.9 million trades in MLIAP, involving approximately $79.1 billion in securities. In the period January 1, 2015 through December 31, 2015, 25,114 trades were effected in reliance on the Rule in 5,978 unique accounts, representing an approximate average of 4.2 such trades per account. Approximately 70 percent of the trades done in reliance on the Rule in this period were purchases by client accounts; the average purchase was approximately $55,850. Approximately 30 percent of the trades done in reliance on the Rule in this period were sales from client accounts; the average sale was approximately $41,504.
4. In 2013, the Applicant began transitioning its investment advisory client accounts from five legacy investment advisory programs, including MLPA, to MLIAP. The Applicant currently has approximately 3,239 client accounts remaining in MLPA. Those accounts have approximately $5.5 billion in assets under management as of June 30, 2016. It is expected that these client accounts will either transition to MLIAP or terminate their investment advisory relationship with the Applicant, at which point MLPA will be retired. In the period January 1, 2015 through December 31, 2015, there were approximately 675,000 trades in MLPA, involving approximately $13 billion in securities. In the period January 1, 2015 through December 31, 2015, 11,400 trades were effected in reliance on the Rule in 2,857 unique accounts, representing an approximate average of 4 such trades per account. Approximately 70 percent of the trades done in reliance on the Rule in this period were purchases by client accounts; the average purchase was approximately $77,600. Approximately 30 percent of the trades done in reliance on the Rule in this period were sales from client accounts; the average sale was approximately $77,517.
5. From January 1, 2015 to December 31, 2015, Applicant did not rely on the Rule for any principal trades in securities it underwrote. Any principal transactions in securities that are underwritten by the Applicant are effected in accordance with section 206(3) of the Advisers Act.
6. The Applicant acknowledges that the Order, if granted, would not be construed as relieving in any way the Applicant from acting in the best interests of an advisory client, including fulfilling the duty to seek the best execution for the particular transaction for the advisory client; nor shall it relieve the Applicant from any obligation that may be imposed by sections 206(1) or (2) of the Advisers Act or by other applicable provisions of the federal securities laws or applicable FINRA rules.
1. Section 206(3) provides that it is unlawful for any investment adviser, directly or indirectly, acting as principal for its own account, knowingly to sell any security to or purchase any security from a client, without disclosing to the client in writing before the completion of the transaction the capacity in which the adviser is acting and obtaining the client's consent to the transaction. Rule 206(3)-3T deems an investment adviser to be in compliance with the provisions of section 206(3) of the Advisers Act when the investment adviser, or a person controlling, controlled by, or under common control with the investment adviser, acting as principal for its own account, sells to or purchases from an advisory client any security, provided that the investment adviser complies with the conditions of the Rule.
2. Rule 206(3)-3T requires, among other things, that the investment adviser obtain a client's written, revocable consent prospectively authorizing the adviser, directly or indirectly, acting as principal for its own account, to sell any security to or purchase any security from the client. The consent must be obtained after the adviser provides the client with written disclosure about: (i) The circumstances under which the investment adviser may engage in principal transactions with the client; (ii) the nature and significance of the conflicts the investment adviser has with its client's interests as a result of those transactions; and (iii) how the investment adviser addresses those conflicts. The investment adviser also must provide trade-by-trade disclosure to the client, before the execution of each principal transaction, of the capacity in which the adviser may act with respect to the transaction, and obtain the client's consent (which may be written or oral) to the transaction. The Rule is available only to an
3. The investment adviser also must provide to the client a trade confirmation that, in addition to the requirements of rule 10b-10 under the Exchange Act, includes a conspicuous, plain English statement informing the client that the investment adviser disclosed to the client before the execution of the transaction that the investment adviser may act as principal in connection with the transaction, that the client authorized the transaction, and that the investment adviser sold the security to or bought the security from the client for its own account. The investment adviser also must deliver to the client, at least annually, a written statement listing all transactions that were executed in the account in reliance on the Rule, including the date and price of each transaction.
4. Rule 206(3)-3T is scheduled to expire on December 31, 2016. Upon expiration, the Applicant would be required to provide trade-by-trade written disclosure to each nondiscretionary advisory client with whom the Applicant sought to engage in a principal transaction in accordance with section 206(3). The Applicant submits that its nondiscretionary clients, through the Applicant's current reliance on the Rule, have had access to the Applicant's inventory through principal transactions for a number of years, and expect to continue to have such access in the future. The Applicant believes that engaging in principal transactions with its clients provides certain benefits to its clients, including access to securities of limited availability, such as municipal bonds, and that the written disclosure requirement of section 206(3) acts as an operational barrier to its ability to engage in principal trades with its clients, especially when the transaction involves securities of limited availability.
5. Unless the Applicant is provided an exemption from the written disclosure and client consent requirements of section 206(3), Applicant believes that it will be unable to provide the same range of services and access to the same types of securities to its nondiscretionary advisory clients as it currently is able to provide to clients under the Rule.
6. The Applicant notes that, if the requested relief is granted, it will remain subject to the fiduciary duties that are generally enforceable under sections 206(1) and 206(2) of the Advisers Act, which, in general terms, require the Applicant to: (i) Disclose material facts about the advisory relationship to its clients; (ii) treat each client fairly; and (iii) act only in the best interests of its client, disclosing conflicts of interest when present and obtaining client consent to arrangements that present such conflicts.
7. The Applicant further notes that, in its capacity as a broker-dealer with respect to these accounts, it will remain subject to a comprehensive set of Commission and FINRA regulations that apply to the relationship between a broker-dealer and its customer in addition to the fiduciary duties an adviser owes a client. These rules require, among other things, that the Applicant deal fairly with its customers, seek to obtain best execution of customer orders, and make only suitable recommendations. These obligations are designed to promote business conduct that protects customers from abusive practices that may not necessarily be fraudulent, and to protect against unfair prices and excessive commissions. Specifically, these provisions, among other things, require that the prices charged by the Applicant be reasonably related to the prevailing market, and limit the commissions and mark-ups the Applicant can charge. Additionally, these obligations require that the Applicant have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on information obtained through reasonable diligence.
8. The Applicant requests that the Commission issue an Order pursuant to section 206A exempting it from the written disclosure and consent requirements of section 206(3) only with respect to client accounts in MLPA, nondiscretionary strategies in MLIAP, and any similar nondiscretionary program to be created in the future. The Applicant also requests that the Commission's Order apply to future investment advisers controlling, controlled by, or under common control with the Applicant (“Future Advisers”). Any Future Adviser relying on any Order granted pursuant to the application will comply with the terms and conditions stated in the application.
The Applicant agrees that any Order granting the requested relief will be subject to the following conditions:
1. The investment adviser will exercise no “investment discretion” (as such term is defined in section 3(a)(35) of the Exchange Act), except investment discretion granted by the advisory client on a temporary or limited basis,
2. The investment adviser will not trade in reliance on this Order any security for which the investment adviser or any person controlling, controlled by, or under common control with the investment adviser is the issuer, or, at the time of the sale, an underwriter (as defined in section 202(a)(20) of the Advisers Act).
3. The investment adviser will not directly or indirectly require the client to consent to principal trading as a condition to opening or maintaining an account with the investment adviser.
4. The advisory client has executed a written revocable consent prospectively authorizing the investment adviser directly or indirectly to act as principal for its own account in selling any security to or purchasing any security from the advisory client. The advisory client's written consent must be obtained through a signature or other positive manifestation of consent that is separate from or in addition to the signature indicating the client's consent to the advisory agreement. The separate
5. The investment adviser, prior to the execution of each transaction in reliance on this Order, will: (a) Inform the advisory client, orally or in writing, of the capacity in which it may act with respect to such transaction; and (b) obtain consent from the advisory client, orally or in writing, to act as principal for its own account with respect to such transaction.
6. The investment adviser will send a written confirmation at or before completion of each such transaction that includes, in addition to the information required by rule 10b-10 under the Exchange Act, a conspicuous, plain English statement informing the advisory client that the investment adviser: (a) Disclosed to the client prior to the execution of the transaction that the adviser may be acting in a principal capacity in connection with the transaction and the client authorized the transaction; and (b) sold the security to, or bought the security from, the client for its own account.
7. The investment adviser will send to the client, no less frequently than annually, written disclosure containing a list of all transactions that were executed in the client's account in reliance upon this Order, and the date and price of each such transaction.
8. The investment adviser is a broker-dealer registered under section 15 of the Exchange Act and each account for which the investment adviser relies on this Order is a brokerage account subject to the Exchange Act, and the rules thereunder, and the rules of the self-regulatory organization(s) of which it is a member.
9. Each written disclosure required as a condition to this Order will include a conspicuous, plain English statement that the client may revoke the written consent referred to in Condition 4 above without penalty at any time by written notice to the investment adviser in accordance with reasonable procedures established by the investment adviser, but in all cases such revocation must be given effect within 5 business days of the investment adviser's receipt thereof.
10. The investment adviser will maintain records sufficient to enable verification of compliance with the conditions of this Order. Such records will include,
11. The investment adviser will adopt written compliance policies and procedures reasonably designed to ensure, and the investment adviser's chief compliance officer will monitor, the investment adviser's compliance with the conditions of this Order. The investment adviser's chief compliance officer will, on at least a quarterly basis, conduct testing reasonably sufficient to verify such compliance. Such written policies and procedures, monitoring and testing will address,
By the Commission.
Securities and Exchange Commission (“Commission”).
Notice of application for an exemptive order under section 206A of the Investment Advisers Act of 1940
Secretary, U.S. Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. Applicants, Laura E. Flores and Steven W. Stone, Morgan, Lewis & Bockius LLP, 1111 Pennsylvania Ave. NW., Washington, DC 20004.
Robert Shapiro, Senior Counsel, at (202) 551-7758 (Chief Counsel's Office, Division of Investment Management) or Melissa Harke, Senior Special Counsel, at (202) 551-6787 (Investment Adviser Regulation Office, Division of Investment Management).
The following is a summary of the application. The complete application may be obtained via the Commission's Web site at
Applicants seek relief from the written disclosure and consent requirements of section 206(3) of the Advisers Act that would be similar to relief currently provided by Advisers Act rule 206(3)-3T (the “Rule”), which will expire by its terms on December 31, 2016. The relief sought by Applicants, if granted, would be subject to conditions similar to those under the Rule, as well as certain revised or additional conditions.
1. WFA and FiNet are each registered as investment advisers with the Commission and each is a registered broker-dealer. WFA and FiNet are each indirect subsidiaries and under the common control of Wells Fargo & Company, a diversified financial services company with operations around the world. Each of WFA and FiNet offers a number of advisory programs, including Asset Advisor (the “Program”), a nondiscretionary advisory program.
2. WFA created the Program in 2004; FiNet has been offering the Program since 2004. In September 2007, a number of WFA's and FiNet's fee-based brokerage accounts were converted to nondiscretionary advisory accounts in the Program following the invalidation of former Rule 202(a)(11)-1 under the Advisers Act. When these accounts had been fee-based brokerage accounts, the Applicants, in their capacity as broker-dealers, engaged in principal transactions with their respective customers in accordance with applicable law. The Applicants currently rely on the Rule to engage in principal transactions with their client accounts in the Program.
3. The Applicants currently have more than 260,000 client accounts enrolled in the Program. Those accounts have approximately $115 billion in assets under management as of August 30, 2016. For 2014 and 2015, WFA and FiNet conducted 27,478 and 2,476 principal trades, respectively, in reliance on the Rule, involving more than $1.5 billion and $141 million in securities, respectively. Approximately 78% percent of the trades done in reliance on the Rule in 2015 were purchases by client accounts; the average purchase was approximately $43,000. Approximately 22% percent of the trades done in reliance on the Rule in 2015 were sales from client accounts; the average sale was approximately $36,000.
4. Any principal transactions in securities that are underwritten by Applicants or an affiliate are effected in accordance with section 206(3) of the Advisers Act.
5. The Applicants acknowledge that the Order, if granted, would not be construed as relieving in any way the Applicants from acting in the best interests of an advisory client, including fulfilling the duty to seek the best execution for the particular transaction for the advisory client; nor shall it relieve the Applicants from any obligation that may be imposed by sections 206(1) or (2) of the Advisers Act or by other applicable provisions of the federal securities laws or applicable FINRA rules.
1. Section 206(3) provides that it is unlawful for any investment adviser, directly or indirectly, acting as principal for its own account, knowingly to sell any security to or purchase any security from a client, without disclosing to the client in writing before the completion of the transaction the capacity in which the adviser is acting and obtaining the client's consent to the transaction. Rule 206(3)-3T deems an investment adviser to be in compliance with the provisions of section 206(3) of the Advisers Act when the investment adviser, or a person controlling, controlled by, or under common control with the investment adviser, acting as principal for its own account, sells to or purchases from an advisory client any security, provided that the investment adviser complies with the conditions of the Rule.
2. Rule 206(3)-3T requires, among other things, that the investment adviser obtain a client's written, revocable consent prospectively authorizing the adviser, directly or indirectly, acting as principal for its own account, to sell any security to or purchase any security from the client. The consent must be obtained after the adviser provides the client with written disclosure about: (i) The circumstances under which the investment adviser may engage in principal transactions with the client; (ii) the nature and significance of the conflicts the investment adviser has with its client's interests as a result of those transactions; and (iii) how the investment adviser addresses those conflicts. The investment adviser also must provide trade-by-trade disclosure to the client, before the execution of each principal transaction, of the capacity in which the adviser may act with respect to the transaction, and obtain the client's consent (which may be written or oral) to the transaction. The Rule is available only to an investment adviser that is also a broker-dealer registered under section 15 of the
3. The investment adviser also must provide to the client a trade confirmation that, in addition to the requirements of rule 10b-10 under the Exchange Act, includes a conspicuous, plain English statement informing the client that the investment adviser disclosed to the client before the execution of the transaction that the investment adviser may act as principal in connection with the transaction, that the client authorized the transaction, and that the investment adviser sold the security to or bought the security from the client for its own account. The investment adviser also must deliver to the client, at least annually, a written statement listing all transactions that were executed in the account in reliance on the Rule, including the date and price of each transaction.
4. Rule 206(3)-3T is scheduled to expire on December 31, 2016. Upon expiration, the Applicants would be required to provide trade-by-trade written disclosure to each nondiscretionary advisory client with whom the Applicants sought to engage in a principal transaction in accordance with section 206(3). The Applicants submit that their nondiscretionary clients, through the Applicants' current reliance on the Rule, have had access to the Applicants' inventory through principal transactions for a number of years, and expect to continue to have such access in the future. The Applicants believe that engaging in principal transactions with their clients provides certain benefits to their clients, including access to securities of limited availability, such as municipal bonds, and that the written disclosure and client consent requirements of section 206(3) act as an operational barrier to their ability to engage in principal trades with their clients, especially when the transaction involves securities of limited availability.
5. Unless the Applicants are provided an exemption from the written disclosure and client consent requirements of section 206(3), Applicants believe that they will be unable to provide the same range of services and access to the same types of securities to their nondiscretionary advisory clients as they currently is able to provide to clients under the Rule.
6. The Applicants note that, if the requested relief is granted, they will remain subject to the fiduciary duties that are generally enforceable under sections 206(1) and 206(2) of the Advisers Act, which, in general terms, require the Applicants to: (i) Disclose material facts about the advisory relationship to their clients; (ii) treat each client fairly; and (iii) act only in the best interests of their client, disclosing conflicts of interest when present and obtaining client consent to arrangements that present such conflicts.
7. The Applicants further note that, in their capacity as broker-dealers with respect to these accounts, they will remain subject to a comprehensive set of Commission and FINRA regulations that apply to the relationship between a broker-dealer and its customer in addition to the fiduciary duties an adviser owes a client. These rules require, among other things, that the Applicants deal fairly with their customers, seek to obtain best execution of customer orders, and make only suitable recommendations. These obligations are designed to promote business conduct that protects customers from abusive practices that may not necessarily be fraudulent, and to protect against unfair prices and excessive commissions. Specifically, these provisions, among other things, require that the prices charged by the Applicants be reasonably related to the prevailing market, and limit the commissions and mark-ups the Applicants can charge. Additionally, these obligations require that the Applicants have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on information obtained through reasonable diligence.
8. The Applicants request that the Commission issue an Order pursuant to section 206A exempting them from the written disclosure and consent requirements of section 206(3) only with respect to client accounts in the Program and any similar nondiscretionary program to be created in the future. The Applicants also request that the Commission's Order apply to future investment advisers controlling, controlled by, or under common control with the Applicants (“Future Advisers”). Any Future Adviser relying on any Order granted pursuant to the application will comply with the terms and conditions stated in the application.
The Applicants agree that any Order granting the requested relief will be subject to the following conditions:
1. The Applicants will exercise no “investment discretion” (as such term is defined in section 3(a)(35) of the Exchange Act), except investment discretion granted by the advisory client on a temporary or limited basis
2. The Applicants will not trade in reliance on this Order any security for which either Applicant or any person controlling, controlled by, or under common control with the Applicants is the issuer, or, at the time of the sale, an underwriter (as defined in section 202(a)(20) of the Advisers Act).
3. The Applicants will not directly or indirectly require the client to consent to principal trading as a condition to opening or maintaining an account with an Applicant.
4. The advisory client has executed a written revocable consent prospectively authorizing the Applicants directly or indirectly to act as principal for their own account in selling any security to or purchasing any security from the advisory client. The advisory client's written consent must be obtained through a signature or other positive manifestation of consent that is separate from or in addition to the signature indicating the client's consent to the advisory agreement. The separate or additional signature line or alternative means of expressing consent must be
5. The Applicants, prior to the execution of each transaction in reliance on this Order, will: (a) Inform the advisory client, orally or in writing, of the capacity in which they may act with respect to such transaction; and (b) obtain consent from the advisory client, orally or in writing, to act as principal for their own account with respect to such transaction.
6. The Applicants will send a written confirmation at or before completion of each such transaction that includes, in addition to the information required by rule 10b-10 under the Exchange Act, a conspicuous, plain English statement informing the advisory client that the Applicants: (a) Disclosed to the client prior to the execution of the transaction that the Applicants may be acting in a principal capacity in connection with the transaction and the client authorized the transaction; and (b) sold the security to, or bought the security from, the client for its own account.
7. The Applicants will send to the client, no less frequently than annually, written disclosure containing a list of all transactions that were executed in the client's account in reliance upon this Order, and the date and price of each such transaction.
8. Each Applicant is a broker-dealer registered under section 15 of the Exchange Act and each account for which the Applicants rely on this Order is a brokerage account subject to the Exchange Act, and the rules thereunder, and the rules of the self-regulatory organization(s) of which it is a member.
9. Each written disclosure required as a condition to this Order will include a conspicuous, plain English statement that the client may revoke the written consent referred to in Condition 4 above without penalty at any time by written notice to the Applicants in accordance with reasonable procedures established by the Applicants, but in all cases such revocation must be given effect within 5 business days of the Applicants' receipt thereof.
10. The Applicants will maintain records sufficient to enable verification of compliance with the conditions of this Order. Such records will include,
11. The Applicants will adopt written compliance policies and procedures reasonably designed to ensure, and each Applicant's chief compliance officer will monitor, the Applicant's compliance with the conditions of this Order. Each Applicant's chief compliance officer will, on at least a quarterly basis, conduct testing reasonably sufficient to verify such compliance. Such written policies and procedures, monitoring and testing will address,
By the Commission.
Securities and Exchange Commission (“Commission”).
Notice of an application for an order under section 6(c) of the Investment Company Act of 1940 (the “Act”) for an exemption from sections 2(a)(32), 5(a)(1), 22(d), and 22(e) of the Act and rule 22c-1 under the Act, under sections 6(c) and 17(b) of the Act for an exemption from sections 17(a)(1) and 17(a)(2) of the Act, and under section 12(d)(1)(J) for an exemption from sections 12(d)(1)(A) and 12(d)(1)(B) of
Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090; Applicants: CWM Advisors, LLC, 650 San Benito St, Ste. 130, Hollister, CA 95023; Northern Lights Fund Trust IV, 17605 Wright Street, Omaha, NE 68130.
Vanessa M. Meeks, Senior Counsel, or Parisa Haghshenas, Branch Chief, at (202) 551-6825 (Division of Investment Management, Chief Counsel's Office).
The following is a summary of the application. The complete application may be obtained via the Commission's Web site by searching for the file number, or for an applicant using the Company name box, at
1. Applicants request an order that would allow Funds to operate as index exchange traded funds (“ETFs”).
2. Each Fund will hold investment positions selected to correspond generally to the performance of an Underlying Index. In the case of Self-Indexing Funds, an affiliated person, as defined in section 2(a)(3) of the Act (“Affiliated Person”), or an affiliated person of an Affiliated Person (“Second-Tier Affiliate”), of the Trust or a Fund, of the Adviser, of any sub-adviser to or promoter of a Fund, or of the Distributor will compile, create, sponsor or maintain the Underlying Index.
3. Shares will be purchased and redeemed in Creation Units and generally on an in-kind basis. Except where the purchase or redemption will include cash under the limited circumstances specified in the application, purchasers will be required to purchase Creation Units by depositing specified instruments (“Deposit Instruments”), and shareholders redeeming their shares will receive specified instruments (“Redemption Instruments”). The Deposit Instruments and the Redemption Instruments will each correspond pro rata to the positions in the Fund's portfolio (including cash positions) except as specified in the application.
4. Because shares will not be individually redeemable, applicants request an exemption from section 5(a)(1) and section 2(a)(32) of the Act that would permit the Funds to register as open-end management investment companies and issue shares that are redeemable in Creation Units only.
5. Applicants also request an exemption from section 22(d) of the Act and rule 22c-1 under the Act as secondary market trading in shares will take place at negotiated prices, not at a current offering price described in a Fund's prospectus, and not at a price based on NAV. Applicants state that (a) secondary market trading in shares does not involve a Fund as a party and will not result in dilution of an investment in shares, and (b) to the extent different prices exist during a given trading day, or from day to day, such variances occur as a result of third-party market forces, such as supply and demand. Therefore, applicants assert that secondary market transactions in shares will not lead to discrimination or preferential treatment among purchasers. Finally, applicants represent that share market prices will be disciplined by arbitrage opportunities, which should prevent shares from trading at a material discount or premium from NAV.
6. With respect to Funds that effect creations and redemptions of Creation Units in kind and that are based on certain Underlying Indexes that include foreign securities, applicants request relief from the requirement imposed by section 22(e) in order to allow such Funds to pay redemption proceeds within fourteen calendar days following the tender of Creation Units for redemption. Applicants assert that the requested relief would not be inconsistent with the spirit and intent of section 22(e) to prevent unreasonable, undisclosed or unforeseen delays in the actual payment of redemption proceeds.
7. Applicants request an exemption to permit Funds of Funds to acquire Fund shares beyond the limits of section 12(d)(1)(A) of the Act; and the Funds, and any principal underwriter for the Funds, and/or any broker or dealer registered under the Exchange Act, to
8. Applicants request an exemption from sections 17(a)(1) and 17(a)(2) of the Act to permit persons that are Affiliated Persons, or Second Tier Affiliates, of the Funds, solely by virtue of certain ownership interests, to effectuate purchases and redemptions in-kind. The deposit procedures for in-kind purchases of Creation Units and the redemption procedures for in-kind redemptions of Creation Units will be the same for all purchases and redemptions and Deposit Instruments and Redemption Instruments will be valued in the same manner as those investment positions currently held by the Funds. Applicants also seek relief from the prohibitions on affiliated transactions in section 17(a) to permit a Fund to sell its shares to and redeem its shares from a Fund of Funds, and to engage in the accompanying in-kind transactions with the Fund of Funds.
9. Section 6(c) of the Act permits the Commission to exempt any persons or transactions from any provision of the Act if such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. Section 12(d)(1)(J) of the Act provides that the Commission may exempt any person, security, or transaction, or any class or classes of persons, securities, or transactions, from any provision of section 12(d)(1) if the exemption is consistent with the public interest and the protection of investors. Section 17(b) of the Act authorizes the Commission to grant an order permitting a transaction otherwise prohibited by section 17(a) if it finds that (a) the terms of the proposed transaction are fair and reasonable and do not involve overreaching on the part of any person concerned; (b) the proposed transaction is consistent with the policies of each registered investment company involved; and (c) the proposed transaction is consistent with the general purposes of the Act.
For the Commission, by the Division of Investment Management, under delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to change a representation regarding investments by the following issues, which are currently listed on the Exchange under Commentary .02 to NYSE Arca Equities Rule 8.200 (Trust Issued Receipts): PowerShares DB Commodity Index Tracking Fund; PowerShares DB Energy Fund; PowerShares DB Oil Fund; PowerShares DB Precious Metals Fund; PowerShares DB Gold Fund; PowerShares DB Silver Fund; PowerShares DB Base Metals Fund; PowerShares DB Agriculture Fund; PowerShares DB G10 Currency Harvest Fund; PowerShares DB US Dollar Index Bullish Fund; and PowerShares DB US Dollar Index Bearish Fund. 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 currently lists and trades shares of the following securities under Commentary .02 to NYSE Arca Equities Rule 8.200 (Trust Issued Receipts): PowerShares DB Commodity Index Tracking Fund; PowerShares DB Energy Fund; PowerShares DB Oil Fund; PowerShares DB Precious Metals Fund; PowerShares DB Gold Fund; PowerShares DB Silver Fund; PowerShares DB Base Metals Fund; PowerShares DB Agriculture Fund; PowerShares DB G10 Currency Harvest Fund; PowerShares DB US Dollar Index Bullish Fund; and PowerShares DB US Dollar Index Bearish Fund (each a “Fund” and, collectively, the “Funds”).
Shares of the Funds were originally approved for listing on the American Stock Exchange LLC (“Amex”) (now known as NYSE MKT LLC),
Each Fund seeks to track an index of commodity or currency futures. As described in the Amex Filings and UTP Filings, the cash proceeds of the issuance of each Fund's Shares are invested in cash and United States Treasury Securities (“Treasury Securities”), some of which are deposited with a futures commission merchant as margin for futures positions. The Exchange proposes to add to this representation that a Fund may gain exposure to Treasury Securities, for cash management and/or margin purposes, through an investment in (1) government money market funds (as defined in Rule 2a-7 under the Investment Company Act of 1940 (“1940 Act”)
The Funds' Managing Owner (Invesco PowerShares Capital Management LLC) represents that the proposed change to permit investment in T-Bill ETFs, as described above, is consistent with each Fund's investment objective, and will further assist the Funds' Managing Owner to achieve each Fund's investment objective. Specifically, by investing in government money market funds and T-Bill ETFs, in addition to U.S. Treasury Securities, each Fund will have additional flexibility to gain exposure to Treasury Securities. Except for the changes noted above, all other representations made in the Amex Filings and UTP Filings remain unchanged. The Funds will continue to comply with all initial and continued listing requirements under NYSE Arca Equities Rule 8.200.
The basis under the Act for this proposed rule change is the requirement under Section 6(b)(5)
The Exchange believes that the proposed rule change is designed to prevent fraudulent and manipulative acts and practices in that trading in government money market funds and T-Bill ETFs occurs in transparent, liquid markets in the U.S. By investing in government money market funds and T-Bill ETFs, in addition to U.S. Treasury Securities, each Fund will have additional flexibility to gain exposure to Treasury Securities. The Adviser represents that the respective investment objectives of the Funds have not changed.
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 purpose of the Act. The Exchange believes the proposed rule change, which would permit each Fund to utilize government money market funds and T-Bill ETFs for cash management and/or margin purposes, will enhance competition among issues of Trust Issued Receipts that invest in commodity and currency futures.
No written comments were solicited or received with respect to the proposed rule change.
Because the proposed rule change does not (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act
The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Commission believes that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest because each Fund is already permitted to seek exposure to Treasury Securities, and the proposed rule change will merely provide each Fund with additional flexibility to gain such exposure through investments in government money market funds and T-Bill ETFs, which trade in transparent, liquid markets in the United States. Therefore, the Commission designates
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 Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to amend its rules governing business continuity and disaster recovery to delete Rule 49—Equities (Emergency Powers) and set an operative date for Rule 49—Equities (Exchange Business Continuity and Disaster Recovery Plans and Mandatory Testing). 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 its rules governing business continuity and disaster recovery to delete Rule 49—Equities (Emergency Powers) (“Print as P Rule”) and set an operative date for Rule 49—Equities (Exchange Business Continuity and Disaster Recovery Plans and Mandatory Testing) (“Rule 49”). The Exchange proposes to make these changes because the Exchange has completed testing of the operation of Rule 49 in its Disaster Recovery “DR” facility and therefore plans to implement it. Accordingly, the Exchange proposes to delete its Print as P Rule as obsolete, with an operative date of November 23, 2016.
On September 29, 2016, the Commission approved amendments to the Exchange's business continuity and disaster recovery plans.
In addition, the Exchange added the following preamble to Rule 49 and added an “N” modifier to Rule 49(b), to distinguish it from paragraph (b) of the Print as P Rule.
On November 5 and 19, 2016, the Exchange held the mandatory testing sessions for the operation of Rule 49 in the DR facility.
The Exchange therefore proposes to:
• Delete the Print as P Rule, including the preamble;
• Delete the explanatory preamble to Rule 49; and
• Delete the “N” modifier to new Rule 49(b), which distinguished new Rule 49(b) from the Print as P Rule 49(b).
In addition to this proposed rule change, the Exchange proposes to announce the operative date of November 23, 2016 via Trader Update.
The proposed rule changes are consistent with Section 6(b) of the Act,
In particular, the Exchange believes that amending its rules to delete the Print as P Rule, which is no longer operative after the successful completion of mandatory testing by the Exchange's member organizations of the operation of Rule 49, would promote the protection of investors and the public interest because it would promote clarity and transparency on the Exchange rules governing the Exchange's business continuity and disaster recovery planning. The Exchange further believes that deleting the superseded rule that was applicable only to the prior disaster recovery plan, deleting the preamble to Rule 49, and deleting the “N” modifier that distinguished the new rule from the now obsolete rule would remove impediments to and perfect the mechanism of a national market system because these proposed changes would add greater clarity to the Exchange's rules and promote market transparency and efficiency.
The Exchange does not believe that the proposed rule change would impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change is not designed to address competitive issues but rather is designed to facilitate trading in Exchange-listed securities on its DR facility. As such, the Exchange believes that the proposed rule change would promote competition for the benefit of market participants and investors generally because it provides transparency on the Exchange rules which would govern trading in Exchange traded securities if they trade on the Exchange's DR facility and greater efficiency and transparency concerning trading on the Exchange in the event of a disaster.
No written comments were solicited or received with respect to the proposed rule change.
The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act
A proposed rule change filed under Rule 19b-4(f)(6)
The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest because doing so would allow the Exchange to more quickly implement a business continuity and disaster recovery plan under which the Exchange no longer relies on the facilities of an affiliated exchange. Therefore, the Commission hereby
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B)
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to amend its rules governing business continuity and disaster recovery to delete Rule 49 (Emergency Powers) and set an operative date for Rule 49 (Exchange Business Continuity and Disaster Recovery Plans and Mandatory Testing). 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 its rules governing business continuity and disaster recovery to delete Rule 49 (Emergency Powers) (“Print as P Rule”) and set an operative date for Rule 49 (Exchange Business Continuity and Disaster Recovery Plans and Mandatory Testing) (“Rule 49”). The Exchange proposes to make these changes because the Exchange has completed testing of the operation of Rule 49 in its Disaster Recovery “DR” facility and therefore plans to implement it. Accordingly, the Exchange proposes to delete its Print as P Rule as obsolete, with an operative date of November 23, 2016.
On September 29, 2016, the Commission approved amendments to the Exchange's business continuity and disaster recovery plans.
In addition, the Exchange added the following preamble to Rule 49 and added an “N” modifier to Rule 49(b), to distinguish it from paragraph (b) of the Print as P Rule.
On November 5 and 19, 2016, the Exchange held the mandatory testing sessions for the operation of Rule 49 in the DR facility.
The Exchange therefore proposes to:
• Delete the Print as P Rule, including the preamble;
• Delete the explanatory preamble to Rule 49; and
• Delete the “N” modifier to new Rule 49(b), which distinguished new Rule 49(b) from the Print as P Rule 49(b).
In addition to this proposed rule change, the Exchange proposes to announce the operative date of November 23, 2016 via Trader Update.
The proposed rule changes are consistent with Section 6(b) of the Act,
In particular, the Exchange believes that amending its rules to delete the Print as P Rule, which is no longer operative after the successful completion of mandatory testing by the Exchange's member organizations of the operation of Rule 49, would promote the protection of investors and the public interest because it would promote clarity and transparency on the Exchange rules governing the Exchange's business continuity and disaster recovery planning. The Exchange further believes that deleting the superseded rule that was applicable only to the prior disaster recovery plan, deleting the preamble to Rule 49, and deleting the “N” modifier that distinguished the new rule from the now obsolete rule would remove impediments to and perfect the mechanism of a national market system because these proposed changes would add greater clarity to the Exchange's rules and promote market transparency and efficiency.
The Exchange does not believe that the proposed rule change would impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change is not designed to address competitive issues but rather is designed to facilitate trading in Exchange-listed securities on its DR facility. As such, the Exchange believes that the proposed rule change would promote competition for the benefit of market participants and investors generally because it provides transparency on the Exchange rules which would govern trading in Exchange traded securities if they trade on the Exchange's DR facility and greater efficiency and transparency concerning trading on the Exchange in the event of a disaster.
No written comments were solicited or received with respect to the proposed rule change.
The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act
A proposed rule change filed under Rule 19b-4(f)(6)
The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest because doing so would allow the Exchange to more quickly implement a business continuity and disaster recovery plan under which the Exchange no longer relies on the facilities of an affiliated exchange. Therefore, the Commission hereby
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.
Securities and Exchange Commission (“Commission”).
Notice of application for an exemptive order under section 206A of the Investment Advisers Act of 1940 (“Advisers Act”) providing an exemption from the written disclosure and consent requirements of section 206(3).
Secretary, U.S. Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. Applicant, Charles M. Weber, Managing Director, Robert W. Baird & Co. Incorporated, 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202 and Monica Lea Parry, Morgan, Lewis & Bockius LLP, 1111 Pennsylvania Ave. NW., Washington, DC 20004.
Robert Shapiro, Senior Counsel, at (202) 551-7758 (Chief Counsel's Office, Division of Investment Management) or Melissa Harke, Senior Special Counsel, at (202) 551-6787 (Investment Adviser Regulation Office, Division of Investment Management).
The following is a summary of the application. The complete application may be obtained via the Commission's Web site at
Applicant seeks relief from the written disclosure and consent requirements of section 206(3) of the Advisers Act that would be similar to relief currently provided by Advisers Act rule 206(3)-3T (the “Rule”), which will expire by its terms on December 31, 2016. The relief sought by Applicant, if granted, would be subject to conditions similar to those under the Rule, as well as certain revised or additional conditions.
1. The Applicant is registered as an investment adviser with the Commission and is a registered broker-dealer. The Applicant is an employee-owned wealth management, capital markets, asset management, and private equity firm with operations in the United States, Europe, and Asia. The Applicant offers a number of advisory programs, including the Advisory
2. The Applicant created the Program in 2007 to accommodate the conversion of many of the Applicant's fee-based brokerage accounts to nondiscretionary advisory accounts following the invalidation of former Rule 202(a)(11)-1 under the Advisers Act. When these accounts had been fee-based brokerage accounts, the Applicant, in its capacity as a broker-dealer, engaged in principal transactions with its customers in accordance with applicable law. The Applicant currently relies on the Rule to engage in principal transactions with its client accounts in the Program.
3. The Applicant currently has approximately 34,000 client accounts enrolled in the Program. Those accounts have approximately $14 billion in assets under management as of June 30, 2016. In the period January 1, 2015 through December 31, 2015, 890 trades were effected in reliance on the Rule in the Program. Approximately 81% percent of the trades done in reliance on the Rule in this period were purchases by client accounts; the average purchase was approximately $48,000. Approximately 19% percent of the trades done in reliance on the Rule in this period were sales from client accounts; the average sale was approximately $51,000.
4. For the 12-month periods ended December 31, 2014, and December 31, 2015, the Applicant did not rely on the Rule to engage in principal trades in investment-grade fixed income securities it underwrote.
5. The Applicant acknowledges that the Order, if granted, would not be construed as relieving in any way the Applicant from acting in the best interests of an advisory client, including fulfilling the duty to seek the best execution for the particular transaction for the advisory client; nor shall it relieve the Applicant from any obligation that may be imposed by sections 206(1) or (2) of the Advisers Act or by other applicable provisions of the federal securities laws or applicable FINRA rules.
1. Section 206(3) provides that it is unlawful for any investment adviser, directly or indirectly, acting as principal for its own account, knowingly to sell any security to or purchase any security from a client, without disclosing to the client in writing before the completion of the transaction the capacity in which the adviser is acting and obtaining the client's consent to the transaction. Rule 206(3)-3T deems an investment adviser to be in compliance with the provisions of section 206(3) of the Advisers Act when the investment adviser, or a person controlling, controlled by, or under common control with the investment adviser, acting as principal for its own account, sells to or purchases from an advisory client any security, provided that the investment adviser complies with the conditions of the Rule.
2. Rule 206(3)-3T requires, among other things, that the investment adviser obtain a client's written, revocable consent prospectively authorizing the adviser, directly or indirectly, acting as principal for its own account, to sell any security to or purchase any security from the client. The consent must be obtained after the adviser provides the client with written disclosure about: (i) The circumstances under which the investment adviser may engage in principal transactions with the client; (ii) the nature and significance of the conflicts the investment adviser has with its client's interests as a result of those transactions; and (iii) how the investment adviser addresses those conflicts. The investment adviser also must provide trade-by-trade disclosure to the client, before the execution of each principal transaction, of the capacity in which the adviser may act with respect to the transaction, and obtain the client's consent (which may be written or oral) to the transaction. The Rule is available only to an investment adviser that is also a broker-dealer registered under section 15 of the Securities Exchange Act of 1934 (“Exchange Act”) and may only be relied upon with respect to a nondiscretionary account that is a brokerage account subject to the Exchange Act, and the rules thereunder, and the rules of the self-regulatory organization(s) of which it is a member. Rule 206(3)-3T is not available for principal transactions if the investment adviser or a person who controls, is controlled by, or is under common control with the adviser (“control person”) is the issuer or is an underwriter of the security, except that an adviser may rely on the Rule for trades in which the adviser or a control person is an underwriter of non-convertible investment-grade debt securities.
3. The investment adviser also must provide to the client a trade confirmation that, in addition to the requirements of rule 10b-10 under the Exchange Act, includes a conspicuous, plain English statement informing the client that the investment adviser disclosed to the client before the execution of the transaction that the investment adviser may act as principal in connection with the transaction, that the client authorized the transaction, and that the investment adviser sold the security to or bought the security from the client for its own account. The investment adviser also must deliver to the client, at least annually, a written statement listing all transactions that were executed in the account in reliance on the Rule, including the date and price of each transaction.
4. Rule 206(3)-3T is scheduled to expire on December 31, 2016. Upon expiration, the Applicant would be required to provide trade-by-trade written disclosure to each nondiscretionary advisory client with whom the Applicant sought to engage in a principal transaction in accordance with section 206(3). The Applicant submits that its nondiscretionary clients, through the Applicant's current reliance on the Rule, have had access to the Applicant's inventory through principal transactions for a number of years, and expect to continue to have such access in the future. The Applicant believes that engaging in principal transactions with its clients provides certain benefits to its clients, including access to securities of limited availability, such as municipal bonds, and that the written disclosure and client consent requirements of section 206(3) act as an operational barrier to its ability to engage in principal trades with its clients, especially when the transaction involves securities of limited availability.
5. Unless the Applicant is provided an exemption from the written disclosure and client consent requirements of section 206(3), Applicant believes that it will be unable to provide the same range of services and access to the same types of securities to its nondiscretionary advisory clients as it currently is able to provide to clients under the Rule.
6. The Applicant notes that, if the requested relief is granted, it will remain subject to the fiduciary duties that are generally enforceable under sections 206(1) and 206(2) of the Advisers Act, which, in general terms, require the Applicant to: (i) Disclose material facts about the advisory relationship to its clients; (ii) treat each client fairly; and (iii) act only in the best interests of its client, disclosing conflicts of interest when present and obtaining client consent to arrangements that present such conflicts.
7. The Applicant further notes that, in its capacity as a broker-dealer with respect to these accounts, it will remain subject to a comprehensive set of Commission and FINRA regulations that apply to the relationship between a broker-dealer and its customer in
8. The Applicant requests that the Commission issue an Order pursuant to section 206A exempting it from the written disclosure and consent requirements of section 206(3) only with respect to client accounts in the Program and any similar nondiscretionary program to be created in the future. The Applicant also requests that the Commission's Order apply to future investment advisers controlling, controlled by, or under common control with the Applicant (“Future Advisers”). Any Future Adviser relying on any Order granted pursuant to the application will comply with the terms and conditions stated in the application.
The Applicant agrees that any Order granting the requested relief will be subject to the following conditions:
1. The Applicant will exercise no “investment discretion” (as such term is defined in section 3(a)(35) of the Exchange Act), except investment discretion granted by the advisory client on a temporary or limited basis,
2. The Applicant will not trade in reliance on this Order any security for which the Applicant or any person controlling, controlled by, or under common control with the Applicant is the issuer, or, at the time of the sale, an underwriter (as defined in section 202(a)(20) of the Advisers Act).
3. The Applicant will not directly or indirectly require the client to consent to principal trading as a condition to opening or maintaining an account with the Applicant.
4. The advisory client has executed a written revocable consent prospectively authorizing the Applicant directly or indirectly to act as principal for its own account in selling any security to or purchasing any security from the advisory client. The advisory client's written consent must be obtained through a signature or other positive manifestation of consent that is separate from or in addition to the signature indicating the client's consent to the advisory agreement. The separate or additional signature line or alternative means of expressing consent must be preceded immediately by prominent, plain English disclosure containing either: (a) An explanation of: (i) The circumstances under which the Applicant directly or indirectly may engage in principal transactions; (ii) the nature and significance of conflicts with its client's interests as a result of the transactions; and (iii) how the Applicant addresses those conflicts; or (b) a statement explaining that the client is consenting to principal transactions, followed by a cross-reference to a specific document provided to the client containing the disclosure in (a)(i)-(iii) above and to the specific page or pages on which such disclosure is located; provided, however, that if the Applicant requires time to modify its electronic systems to provide the specific page cross-reference required by clause (b), the Applicant may, while updating such electronic systems, and for no more than 90 days from the date of the Order, instead provide a cross-reference to a specific document provided to the client containing the disclosure in (a)(i)-(iii) above and to the specific section in such document in which such disclosure is located.
5. The Applicant, prior to the execution of each transaction in reliance on this Order, will: (a) Inform the advisory client, orally or in writing, of the capacity in which it may act with respect to such transaction; and (b) obtain consent from the advisory client, orally or in writing, to act as principal for its own account with respect to such transaction.
6. The Applicant will send a written confirmation at or before completion of each such transaction that includes, in addition to the information required by rule 10b-10 under the Exchange Act, a conspicuous, plain English statement informing the advisory client that the Applicant: (a) Disclosed to the client prior to the execution of the transaction that the Applicant may be acting in a principal capacity in connection with the transaction and the client authorized the transaction; and (b) sold the security to, or bought the security from, the client for its own account.
7. The Applicant will send to the client, no less frequently than annually, written disclosure containing a list of all transactions that were executed in the client's account in reliance upon this Order, and the date and price of each such transaction.
8. The Applicant is a broker-dealer registered under section 15 of the Exchange Act and each account for which the Applicant relies on this Order is a brokerage account subject to the Exchange Act, and the rules thereunder, and the rules of the self-regulatory organization(s) of which it is a member.
9. Each written disclosure required as a condition to this Order will include a conspicuous, plain English statement that the client may revoke the written consent referred to in Condition 4 above without penalty at any time by written notice to the Applicant in accordance with reasonable procedures established by the Applicant, but in all cases such revocation must be given effect within 5 business days of the Applicant's receipt thereof.
10. The Applicant will maintain records sufficient to enable verification of compliance with the conditions of this Order. Such records will include,
11. The Applicant will adopt written compliance policies and procedures reasonably designed to ensure, and the Applicant's chief compliance officer will monitor, the Applicant's compliance with the conditions of this Order. The Applicant's chief compliance officer will, on at least a quarterly basis, conduct testing reasonably sufficient to verify such compliance. Such written policies and procedures, monitoring and testing will address,
By the Commission.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to rename the title of rules that assess fees for connectivity to systems operated by the Exchange or FINRA under Equities Rule 7015 and Options Chapter XV, Section 3, and to make related changes to other rules that reference the renamed rules.
The text of the proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The purpose of the proposed rule change is to rename related text in Rule 7015 and Chapter XV, Section 3, to more accurately reflect the services being provided and eliminate an outdated term. Both Rule 7015 and Chapter XV, Section 3, include connectivity to services that are not related to connecting to the Exchange trading system, such as TradeInfo,
The Exchange is also proposing to amend reference to the title of Rule 7015 in Rule 7007(a), which is titled “Collection of Exchange Fees and Other Claims and Billing Policy,” and is also amending reference to the title of Chapter XV, Section 3, found under Section 7(c)(2) of Chapter XV to reflect the amended titles of Rule 7015 and Chapter XV, Section 3.
The Exchange believes that its proposal is consistent with Section 6(b) of the Act,
The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes that, to the extent it has any impact on competition, the proposed change will promote competition by making it clear to all market participants and exchange competitors what is provided under Rule 7015 and Chapter XV, Section 3.
No written comments were either solicited or received.
Because the foregoing proposed rule change does not (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act
A proposed rule change filed under Rule 19b-4(f)(6) normally does not become operative for 30 days after the date of its filing. However, Rule 19b-4(f)(6)(iii)
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule change should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
CCET, LLC (CCET), a Class III carrier, has filed a verified notice of exemption under 49 CFR 1150.41 to lease from Norfolk Southern Railway Company (NSR) and operate a portion of NSR's CT Line, between milepost CT 62.20, east of Seaman, Ohio, and milepost CT 78.45, at Mineral Springs, Ohio (Line Extension).
CCET and NSR previously entered into a lease agreement on March 14, 2014, under which CCET leased a 24-mile portion of the CT Line between milepost CT 9.0 at Clare, Ohio, and milepost CT 32.83, west of Williamsburg, Ohio.
CCET states that the lease between CCET and NSR does not contain any provision that prohibits, restricts, or would otherwise limit future interchange of traffic with any third-party carrier.
CCET has certified that its projected annual revenues as a result of this transaction will not result in CCET's becoming a Class II or Class I rail carrier and will not exceed $5 million.
CCET states that the lease and operation of the Line Extension will commence on or after December 21, 2016, the effective date of the exemption (30 days after the verified notice of exemption was filed).
If the verified notice contains false or misleading information, the exemption is void ab initio. Petitions to revoke the exemption under 49 U.S.C. 10502(d) may be filed at any time. The filing of a petition to revoke will not automatically stay the effectiveness of the exemption. Petitions for stay must be filed no later than December 14, 2016 (at least seven days before the exemption becomes effective).
An original and 10 copies of all pleadings, referring to Docket No. FD 36079 must be filed with Surface Transportation Board, 395 E Street, SW., Washington, DC 20423-0001. In addition, one copy of each pleading must be served on James H. M. Savage, 22 Rockingham Court, Germantown, MD 20874.
According to CCET, this action is categorically excluded from environmental review under 49 CFR 1105.6(c).
Board decisions and notices are available on our Web site at “
By the Board, Rachel D. Campbell, Director, Office of Proceedings.
Federal Aviation Administration (FAA), DOT.
Notice and request for information.
The FAA is considering issuing waivers to foreign manufactures of Active and/or Passive In-Pavement Stationary Runway Weather Information Systems that meet the requirements of FAA Advisory Circular (AC) 15015220-30, Airport Winter Safety and Operations. This notice requests information from manufactures of systems meeting the technical requirements to determine whether a waiver to the Buy American Preferences should be issued. Projects funded under the Airport Improvement Program (AIP) must meet the requirements of Buy American Preferences.
The information must be received by January 23, 2017.
Mr. Carlos N. Fields, Airports Financial Assistance, APP 520, Rooms 619, FAA, 800 Independence Avenue SW., Washington, DC 20591, Telephone (202) 267-8826.
The Federal Aviation Administration (FAA) manages a Federal grant program for airports called the Airports Improvement Program (AIP). AIP grant recipients must follow 49 U.S.C. 50101, Buy American Preferences.
Under 49 U.S.C 50101(b)(3), the Secretary of Transportation may waive the Buy American Preference requirement if the goods are not produced in a sufficient and reasonably available amount or are not of a satisfactory quality.
The purpose of this notice is to request manufactures of both passive and active in-pavement runway surface condition sensor systems, both domestic and foreign, to advise FAA of the system that they manufacture and whether it can meet the FAA Advisory Circular technical requirements. To respond to this notice, manufactures are to submit a written statement confirming that they currently manufacture passive and/or active in-pavement runway weather information systems on their business letterhead and signed by an authorized designee. The FAA wants to determine if there is sufficient quantity of domestic manufactures capable of meeting the FAA technical requirements. If the FAA cannot find that there are enough U.S. manufactures, it may issue a nationwide waiver to the foreign manufacturers identified as being capable of meeting the technical requirements.
Technical Requirements: FAA Advisory Circular (AC) 150/5220-30, Airport Winter Safety and Operations recommend that in-pavements runway sensor systems comply with the performances and installations requirements of SAE Aerospace Recommended Practice 5533, Stationary Runway Weather Information System (In-pavement). The SAE specification is available for purchases at
After review, the FAA may issue a nationwide waiver to Buy American Preferences for foreign manufactures or United States manufactures that meet the Buy American preference requirements. Waivers would not be
Items that have been granted a “nationwide waiver” can be found on the FAA Web site at:
Federal Aviation Administration (FAA), DOT.
Notice of criteria and application procedures.
This document announces the criteria, application procedures, and schedule to be applied by the Secretary of Transportation in designating or redesignating a maximum of 15 current joint-use or former military airports (at any one time), seeking a designation or redesignation to participate in the MAP for the purposes of capital development funding assistance.
Applications must be received on or before February 6, 2017.
Submit a signed original of Standard Form (SF) 424, “Application for Federal Assistance,” prescribed by the Office of Management and Budget Circular A-102, available at
Mr. Jonathan DiMartino (
The MAP provides capital development assistance to civil airport sponsors of designated current joint-use military airfields or former military airports that are included in the FAA's National Plan of Integrated Airport Systems (NPIAS). Airports designated to the MAP may be able to receive grant funds from a set-aside (currently four percent of Airport Improvement Program (AIP) discretionary funds) for airport development, including certain projects not otherwise eligible for AIP assistance. These airports are also eligible to receive grants from other categories of AIP funding.
The Secretary considers for designation only current joint-use or former military airports that meet the criteria set forth under “Designation Considerations,” below.
A maximum of 15 airports per fiscal year may participate in the MAP, of which three may be General Aviation (GA) airports. There are twelve slots available in FY 2017. Of the twelve slots available, there are two GA slots available in FY 2017.
The maximum term is five fiscal years following designation. The FAA can designate airports for a period of less than five years. The FAA will evaluate the conversion needs of the airport in its capital development plan to determine the appropriate length of designation.
Previously designated airports may apply for redesignation to an additional term or terms that may not exceed five years per each. Those airports must meet current eligibility requirements outlined in 49 U.S.C. 47118(a) at the beginning of each grant period. The FAA will evaluate applications for redesignation primarily in terms of justified projects specifically fundable only under the MAP as redesignees generally tend to have fewer conversion needs than new candidates. The FAA's goal is to graduate MAP airports to regular AIP participation by successfully converting these airports to civilian airport operations.
In addition to eligible AIP projects, the MAP can fund fuel farms, utility systems, surface automobile parking lots, hangars, and air cargo terminals up to 50,000 square feet. A designated or redesignated military airport can receive not more than $7,000,000 in each fiscal year to construct, improve, or repair terminal building facilities. In addition, a designated or redesignated military airport can receive not more than $7,000,000 each fiscal year for MAP eligible projects including hangars, cargo facilities, fuel farms, automobile surface parking, or utility work.
The MAP allows the Secretary of Transportation to designate current joint-use or former military airports (other than an airport so designated before August 24, 1994) to receive grants from the AIP if they meet the following general requirements:
(1) The airport is a former military installation closed or realigned under:
(a) Section 2687 of title 10 (announcement of closures of large Department of Defense installations after September 30, 1977);
(b) Section 201 of the Defense Authorization Amendments and Base Closure and Realignment Act (BRAC) (10 U.S.C. 2687 note); or
(c) Section 2905 of the Defense Base Closure and Realignment Act of 1990 (10 U.S.C. 2687 note); or
(2) The airport is a military installation with both military and civil aircraft operations; and
(3) The airport is classified as a commercial service or reliever airport in the NPIAS. (See 49 U.S.C. 47105(b)(2)). In addition, three of the designated airports, if included in the NPIAS, may be GA airports that were former military installations closed or realigned under BRAC, as amended, or 10 U.S.C. 2687. (See 49 U.S.C. 47118(g)). Therefore, a GA airport can only qualify under (1) above. “General aviation airport” means a public airport that is located in a State that, as determined by the Secretary: (A) does not have scheduled service; or (B) has scheduled service with fewer than 2,500 passenger boardings per year.
In designating new candidate airports, the Secretary shall consider if a grant will:
(1) Reduce delays at an airport with more than 20,000 hours of annual
(2) Enhance airport and air traffic control system capacity in a metropolitan area or reduce current and projected flight delays.
Recently realigned or closed military airports, as well as active military airfields with new joint-use agreements, generally have the greatest need of funding assistance for conversion to or incorporation of civil airport operations. Newly converted airports and new joint-use locations frequently have minimal capital development resources and will therefore receive priority consideration for designation and MAP funding. The FAA will evaluate the need for eligible projects based upon information in the candidate airport's five-year Capital Improvement Plan (CIP).
(1) The FAA will evaluate candidate airports and any reliever role that they may perform for nearby airports based on the following specific factors:
• Compatibility of airport roles and the ability of the airport to provide an adequate airport facility;
• The capability of the candidate airport and its airside and landside complex to serve aircraft that otherwise must use a congested airport;
• Landside surface access;
• Airport operational capability, including peak hour and annual capacities of the candidate airport;
• Potential of other metropolitan area airports to relieve the congested airport;
• Ability to satisfy, relieve, or meet air cargo demand within the metropolitan area;
• Forecasted aircraft and passenger levels, type of commercial service anticipated,
• Type and capacity of aircraft projected to serve the airport and level of operations at the congested airport and the candidate airport;
• The potential for the candidate airport to be served by aircraft or users, including the airlines, serving the congested airport;
• Ability to replace an existing commercial service or reliever airport serving the area; and
• Any other documentation to support the FAA designation of the candidate airport.
(2) The FAA will evaluate the extent to which development needs funded through the MAP will make the airport a viable civilian airport that will enhance system capacity or reduce delays.
Airport sponsors applying for designation or redesignation must complete and submit an SF-424, Application for Federal Assistance, and provide supporting documentation to the appropriate FAA Airports regional or district office serving that airport. Sponsors may obtain this fillable form at
Applicants must fill out this form completely, including the following:
• Mark Item 1, Type of Submission as a “pre-application” and indicate it is for “construction”.
• Mark item 8, Type of Application as “new”, and in “other”, fill in “Military Airport Program”.
• Fill in Item 11, Descriptive Title of Applicant's Project. “Designation (or redesignation) to the Military Airport Program”.
• Under Item 15a, Estimated Funding, indicate the total amount of funding requested from the MAP during the entire term for which you are applying.
A. Identification as a Current or Former Military Airport. The application must identify the airport as either a current or former military airport and indicate whether it was:
(1) Closed or realigned under Section 201 of the Defense Authorization Amendments and Base Closure and Realignment Act, and/or Section 2905 of the Defense Base Closure and Realignment Act of 1990 (Installations Approved for Closure by the Defense Base Realignment and Closure Commissions), or
(2) Closed or realigned pursuant to 10 U.S.C. § 2687 as excess property (bases announced for closure by Department of Defense (DOD) pursuant to this title after September 30, 1977 (this is the date of announcement for closure)), or
(3) A military installation with both military and civil aircraft operations. A general aviation airport applying for the MAP may be joint-use but must also qualify under (1) or (2) above.
B. Qualifications for MAP. Submit documents for (1) through (8) below:
(1) Documentation that the airport meets the definition of a “public airport” as defined in 49 U.S.C. § 47102(20).
(2) Documentation indicating the required environmental review for civil reuse or joint-use of the military airfield has been completed. This environmental review need not include review of the individual projects to be funded by the MAP. Rather, the documentation must reflect that the environmental review necessary to convey the property, enter into a long-term lease, or finalize a joint-use agreement has been completed. The military department conveying or leasing the property, or entering into a joint-use agreement, has the lead responsibility for this environmental review. To meet AIP requirements, the environmental reviews and approvals must indicate that the operator or owner of the airport has good title that is satisfactory to the Secretary or assures, to the FAA's satisfaction, that good title will be acquired.
(3) For a former military airport, documentation that the eligible airport sponsor holds or will hold satisfactory title, a long-term lease in furtherance of conveyance of property for airport purposes, or a long-term interim lease for 25 years or longer to the property on which the civil airport is being located. Documentation that an application for surplus or BRAC airport property has been accepted by the Federal Government is sufficient to indicate the eligible airport sponsor holds or will hold satisfactory title or a long-term lease.
(4) For a current military airport, documentation that the airport sponsor has an existing joint-use agreement with the military department having jurisdiction over the airport. For all first time applicants, a copy of the existing joint-use agreement must be submitted with the application. This is necessary so the FAA can legally issue grants to the sponsor. Here and in (3) directly above, the airport must possess the necessary property rights in order to accept a grant for its proposed projects during FY 2016.
(5) Documentation that the airport is classified as a “commercial service airport” or a “reliever airport” as defined in 49 U.S.C. 47102(7) and 47102(23).
(6) Documentation that the airport owner is an eligible airport “sponsor,” as defined in 49 U.S.C. 47102(26).
(7) Documentation that the airport has a five-year CIP indicating all eligible grant projects requested to be funded either from the MAP or other portions of the AIP and an FAA approved Airport Layout Plan (ALP).
(8) For commercial service airports, a business/marketing plan or equivalent must be submitted with the application. For relievers or general aviation
C. Evaluation Factors. Submit information on the items below to assist in the FAA's evaluation:
(1) Information identifying the existing and potential levels of visual or instrument operations and aeronautical activity at the current or former military airport and, if applicable, the congested airport. Also, if applicable, information on how the airport contributes to the air traffic system or airport system capacity. If served by commercial air carriers, the revenue passenger and cargo levels must be provided.
(2) A description of the airport's projected civil role and development needs for transitioning from use as a military airfield to a civil airport. Include how development projects would serve to reduce delays at an airport with more than 20,000 hours of annual delays in commercial passenger aircraft takeoffs and landings; or enhance capacity in a metropolitan area or reduce current and projected flight delays.
(3) A description of the existing airspace capacity. Describe how anticipated new operations would affect the surrounding airspace and air traffic flow patterns in the metropolitan area in or near the airport. Include a discussion of whether operations at this airport create airspace conflicts that may cause congestion or whether air traffic works into the flow of other air traffic in the area.
(4) A description of the airport's five-year CIP, including a discussion of major projects, their priorities, projected schedule for project accomplishment, and estimated costs. The CIP must specifically identify the safety, capacity, and conversion related projects, associated costs, and projected five-year schedule of project construction, including those requested for consideration for MAP funding.
(5) A description of those projects that are consistent with the role of the airport and effectively contribute to the joint-use or conversion of the airfield to a civil airport. The projects can be related to various improvement categories depending on what is needed to convert from military to civil airport use, to meet required civil airport standards, and/or to provide capacity to the airport and/or airport system. The projects selected (
• Modification of airport or military airfield for safety purposes, including airport pavement modifications, marking, lighting, strengthening, drainage or modifying other structures or features in the airport environs to meet civil standards for approach, departure and other protected airport surfaces as described in 14 CFR part 77 or standards set forth in FAA Advisory Circular 150/5300-13.
• Construction of facilities or support facilities, such as passenger terminal gates, aprons for passenger terminals, taxiways to new terminal facilities, aircraft parking, and cargo facilities to accommodate civil use.
• Modification of airport or military utilities (electrical distribution systems, communications lines, water, sewer, storm drainage) to meet civil standards. Also, modifications that allow utilities on the civil airport to operate independently, where other portions of the base are conveyed to entities other than the airport sponsor or retained by the Government.
• Purchase, rehabilitation, or modification of airport and airport support facilities and equipment, including snow removal, aircraft rescue, firefighting buildings and equipment, airport security, lighting vaults, and reconfiguration or relocation of eligible buildings for more efficient civil airport operations.
• Modification of airport or military airfield fuel systems and fuel farms to accommodate civil aviation use.
• Acquisition of additional land for runway protection zones, other approach protection, or airport development.
• Cargo facility requirements.
• Modifications which will permit the airfield to accommodate general aviation users.
• Construction of surface parking areas and access roads to accommodate automobiles in the airport terminal and air cargo areas and provide an adequate level of access to the airport.
• Construction or relocation of access roads to provide efficient and convenient movement of vehicular traffic to, on, and from the airport, including access to passenger, air cargo, fixed base operations, and aircraft maintenance areas.
• Modification or construction of facilities such as passenger terminals, surface automobile parking lots, hangars, air cargo terminal buildings, and access roads to cargo facilities to accommodate civil use.
(6) An evaluation of the ability of surface transportation facilities (
(7) A description of the type and level of aviation and community interest in the civil use of a current or former military airport.
(8) One copy of the FAA-approved ALP for each copy of the application. The ALP or supporting information must clearly show capacity and conversion related projects. Other information such as project costs, schedule, project justification, other maps and drawings showing the project locations, and any other supporting documentation that would make the application easier to understand should also be included. You may also provide photos, which would further describe the airport, projects, and otherwise clarify certain aspects of this application. These maps and ALPs should be cross-referenced with the project costs and project descriptions.
Airports applying for redesignation to the MAP must submit the same information required by new candidate airports applying for a new designation. On the SF 424, Application for Federal Assistance, prescribed by the Office of Management and Budget Circular A-102, airports must indicate their application is for redesignation to the MAP. In addition to the information required for new candidates, airports requesting redesignation must also explain:
(1) Why a redesignation and additional MAP eligible project funding is needed to accomplish the conversion to meet the civilian role of the airport and the preferred time period for redesignation (not to exceed five years);
(2) Why funding of eligible work under other categories of AIP or other sources of funding would not accomplish the development needs of the airport; and
(3) Why, based on the previously funded MAP projects, the projects and/or funding levels were insufficient to accomplish the airport conversion needs and development goals.
In addition to the information requested above, airports applying for redesignation must provide a reanalysis of their original business/marketing plans (for example, a plan previously funded by the Office of Economic Adjustment or the original Master Plan
(1) Whether the original business/marketing plan is still appropriate;
(2) Is the airport continuing to work towards the goals established in the business/marketing plan;
(3) Discuss how the MAP projects contained in the application contribute to the goals of the sponsor and their plans; and
(4) If the business/marketing plan no longer applies to the current goals of the airport, how has the airport altered the business/marketing plan to establish a new direction for the facility and how do the projects contained in the MAP application aid in the completion of the new direction and goals and by what date does the sponsor anticipate graduating from the MAP.
This notice is issued pursuant to Title 49 U.S.C. 47118.
Maritime Administration, Department of Transportation.
Notice.
The Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to grant waivers of the U.S.-build requirement of the coastwise laws under certain circumstances. A request for such a waiver has been received by MARAD. The vessel, and a brief description of the proposed service, is listed below.
Submit comments on or before January 6, 2017.
Comments should refer to docket number MARAD-2016-0121. Written comments may be submitted by hand or by mail to the Docket Clerk, U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590. You may also send comments electronically via the Internet at
Bianca Carr, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE., Room W23-453, Washington, DC 20590. Telephone 202-366-9309, Email
As described by the applicant the intended service of the vessel BLOOMS is:
The complete application is given in DOT docket MARAD-2016-0121 at
Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the
By Order of the Maritime Administrator.
National Highway Traffic Safety Administration (NHTSA)
Notice and request for comments.
In compliance with the Paperwork Reduction Act of 1995, this notice announces that the Information Collection Request (ICR) abstracted below is being forwarded to the Office of Management and Budget (OMB) for review and comments. A
Comments must be submitted on or before January 6, 2017.
Margaret Petrella, Volpe National Transportation Systems Center, U.S. Department of Transportation, 55 Broadway, Cambridge, MA 02142, 617-494-3582. Her email address is
The information collection activity will be in 12 law enforcement agency (LEA) sites. Site selection will cover the diversity of LEAs that are deploying ALPR for traffic safety purposes, as determined through a thorough review of the literature. Case studies will involve interviews with a variety of personnel in each selected LEA. This approach will provide a knowledge base about this particular use of ALPR systems by providing rich, contextual information from those most knowledgeable about the weaknesses and strengths or incentives and barriers to this technology's effective implementation and use for traffic safety purposes.
Comments are invited on: Whether the proposed collection of information is necessary for the proper performance of the functions of the Department, including whether the information will have practical utility; the accuracy of the Department's estimate of the burden of the proposed information collection; ways to enhance the quality, utility and clarity of the information to be collected; and ways to minimize the burden of the collection of information on respondents, including the use of automated collection techniques or other forms of information technology.
44 U.S.C. Section 3506(c)(2)(A).
National Highway Traffic Safety Administration (NHTSA), Department of Transportation (DOT).
Receipt of petition.
This document announces receipt by the National Highway Traffic Safety Administration (NHTSA) of a petition for a decision that model year (MY) 2013 and 2014 Ferrari F12 Berlinetta passenger cars (PCs) that were not originally manufactured to comply with all applicable Federal motor vehicle safety standards (FMVSS), are eligible for importation into the United States because (1) they are substantially similar to vehicles that were originally manufactured for sale in the United States and certified by their manufacturer as complying with the safety standards (the U.S.-certified version of the MY 2013 and 2014 Ferrari F12 Berlinetta PC), and (2) they are capable of being readily altered to conform to the standards.
The closing date for comments on the petition is January 6, 2017.
Comments should refer to the docket and notice numbers above and be submitted by any of the following methods:
•
•
•
•
George Stevens, Office of Vehicle Safety Compliance, NHTSA (202-366-5308).
Under 49 U.S.C. 30141(a)(1)(A), a motor vehicle that was not originally manufactured to conform to all applicable FMVSS shall be refused admission into the United States unless NHTSA has decided that the motor vehicle is substantially similar to a motor vehicle originally manufactured for importation into and sale in the United States, certified under 49 U.S.C. 30115, and of the same model year as the model of the motor vehicle to be compared, and is capable of being readily altered to conform to all applicable FMVSS.
Petitions for eligibility decisions may be submitted by either manufacturers or importers who have registered with
G&K Automotive Conversion, Inc. (G&K) of Santa Ana, California (Registered Importer R-90-007) has petitioned NHTSA to decide whether nonconforming MY 2013 and 2014 Ferrari F12 Berlinetta PCs are eligible for importation into the United States. The vehicles which G&K believes are substantially similar are MY 2013 and 2014 Ferrari F12 Berlinetta PCs sold in the United States and certified by their manufacturer as conforming to all applicable FMVSS.
The petitioner claims that it compared non-U.S. certified MY 2013 and 2014 Ferrari F12 Berlinetta PCs to their U.S.-certified counterparts, and found the vehicles to be substantially similar with respect to compliance with most FMVSS.
G&K submitted information with its petition intended to demonstrate that non-U.S. certified MY 2013 and 2014 Ferrari F12 Berlinetta PCs, as originally manufactured, conform to many applicable FMVSS in the same manner as their U.S.-certified counterparts, or are capable of being readily altered to conform to those standards.
Specifically, the petitioner claims that the non U.S.-certified MY 2013 and 2014 Ferrari F12 Berlinetta PCs, as originally manufactured, conform to: Standard Nos. 102
The petitioner also contends that the subject non-U.S certified vehicles are capable of being readily altered to meet the following standards, in the manner indicated:
Standard No. 101
Inspection of all vehicles and modification of any vehicles that fail to have all required displays and indicators function as required by the standard such that they comply with the standard.
Standard No. 108
Inspection of all vehicles and installation of U.S.-model headlamps on vehicles not already so equipped to ensure that the vehicles meet the requirements of this standard.
Standard No. 110
Standard No. 111
Standard No. 114
Standard No. 138
Standard No. 208
Standard No. 214
Standard No. 401
Standard No. 225
Standard No. 301
The petitioner additionally states that a vehicle identification plate must be affixed to the vehicle near the left windshield pillar to meet the requirements of 49 CFR part 565.
Because the subject petition covers nonconforming vehicles that have been manufactured on or after September 1, 2006, compliance with the advanced air bag requirements of FMVSS No. 208 is of significant concern to the agency. NHTSA is therefore particularly interested in comments regarding the ability of a Registered Importer to readily alter the subject vehicles to fully meet the driver and front outboard passenger frontal crash protection and child passenger protection requirements of FMVSS No. 208. The following is a partial listing of the components that may be affected:
All comments received before the close of business on the closing date indicated above will be considered, and will be available for examination in the docket at the above addresses both before and after that date. To the extent possible, comments filed after the closing date will also be considered. Notice of final action on the petition will be published in the
49 U.S.C. 30141(a)(1)(A), (a)(1)(B), and (b)(1); 49 CFR 593.7; delegation of authority at 49 CFR 1.95 and 501.8.
National Highway Traffic Safety Administration (NHTSA), DOT.
Request for public comment on proposed collection of information.
Before a Federal agency can collect certain information from the public, it must receive approval from the Office of Management and Budget (OMB). Under procedures established by the Paperwork Reduction Act of 1995, before seeking OMB approval, Federal agencies must solicit public comment on proposed collections of information, including extensions and reinstatements of previously approved collections.
This document describes one collection of information for which NHTSA intends to seek OMB approval.
Comments must be received on or before February 6, 2017.
You may submit comments identified by DOT Docket ID Number NHTSA-2016-0121 using any of the following methods:
Brian Chodrow, Office of Safety Programs (NPD-210), National Highway Traffic Safety Administration, 1200 New Jersey Avenue SE., W44-230, Washington, DC 20590. Mr. Chodrow's phone number is 202-366-9765 and his email address is
Under the Paperwork Reduction Act of 1995, before an agency submits a proposed collection of information to OMB for approval, it must publish a document in the
(i) whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(ii) the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
(iii) how to enhance the quality, utility, and clarity of the information to be collected; and
(iv) how to minimize the burden of the collection of information on those who are to respond, including the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
In compliance with these requirements, NHTSA asks public comment on the following proposed collection of information:
NHTSA also proposes to conduct a web-based survey to gather information about bus driver distraction as related to student behavior and seat belt use to see if the use of seat belts has influenced disruptive behavior. NHTSA expects to distribute the survey to at least one bus driver in each of the school districts that participate in the aforementioned interviews, but hopes to collect surveys from more than one driver in each of those school districts. The survey will not take more than 10-15 minutes to complete. Follow-up telephone discussions may also be conducted depending on the interest of respondents in providing additional information.
There has generally been resistance against installing seat belts on school buses based on a variety of reasons including the existing safety features of school buses compared to other vehicles (
The current project seeks to understand the decisions that states and local agencies use when deciding to implement seat belts on school buses and the funding mechanisms that are used to pay for seat belt installation. From there, model policy and a best practices guide will be developed to assist jurisdictions that are considering the use of seat belts on school buses. Finally, the project will also obtain data related to the role of distraction and whether seat belts aid in managing behavior on school buses. The project will culminate with a final report to explain the results and outcomes from the project's activities.
The next step, after school districts have been identified, is to reach out to these school districts who have agreed to provide NHTSA with more information and to gather information to understand the states' and local agencies' decisions to implement seat belts on school buses and the funding mechanisms that are used to pay for seat belt installation. Informational interviews will be conducted with State directors of pupil transportation and local school district professionals to identify policy components that influence seat belt acquisition and use. Prior to reaching out to any of the school districts, NHTSA will contact the NHTSA Regional Administrators to inform them of the school districts that NHTSA (through their contractor) intends to contact within their region. The process will then commence with introduction emails that NHTSA will send to the identified contact in each school district. The email will provide a brief overview of the project and discussion/interview goals, and will contain two attachments: (1) An introduction letter from NHTSA describing the goals of the project and interview process, and explaining how the information that they provide will be incorporated into the project and report, and (2) a list of discussion topics and questions. Although specific interview questions will be developed to keep the discussion on track as needed, it is expected that the actual interviews will occur as more of a fluid, conversational dialogue rather than a structured interview. NHTSA will follow up with each contact via telephone within 1-2 weeks of sending the email. During this call, NHTSA (through their contractor) will either work with the contact to schedule a time to conduct the interview, or will conduct the interview on the spot if preferred by the contact. In some cases, the necessary information may be retrieved through a one-time telephone or in-person discussion, while in other cases discussions may continue via telephone and email as an on-going discussion throughout the course of the project as school districts think of more information to provide or if they provide additional contacts to follow up with in their district. NHTSA is seeking to gather as much information as the school districts are willing to provide, and frequency of response and discussion will be driven by how involved the school district would like to be in the conversation. It is anticipated that the more detailed discussions will be held with approximately 25 individuals for a collective total of 100 hours, or an average of 4 hours per individual over an extended period.
Finally, NHTSA will conduct a survey to gather information about bus driver distraction as related to student behavior and seat belt use to see if the use of seat belts has influenced disruptive behavior. The potential respondents would include bus drivers from school districts who have implemented seat belts. The survey will be web-based and should take no longer than 10-15 minutes to complete. NHTSA expects to distribute the survey to at least one bus driver in each of the school districts that participate in the aforementioned interviews, but hopes to collect surveys from more than one driver in each of those school districts. NHTSA will share the link to the survey with their existing contact(s) within that school district, and will request that they distribute the survey to the appropriate bus drivers within their school district. Follow-up discussions may also be conducted via telephone or email depending on the interest of respondents in providing additional information that may not have been captured by the survey.
Throughout the project, the privacy of all participants will be protected. The Model Policy and Best Practices Guide, or any other reports developed as a result of this data collection effort, will not identify any individuals by name. School districts may be identified, but only if permission is given to NHTSA by the school district. Additionally, any school district identified in the Model Policy and Best Practices will be given the opportunity to review and edit any text referring directly to their school district.
The online bus driver survey results will be password protected and access will only be given to team members who have been authorized by the Project Manager (principal investigators and research assistants). The survey data will be exported to an Excel® file and stored in a SharePoint site folder that is also only visible to those who have been authorized by the Project Manager. The research team will check the data file as soon as it is exported to the secure SharePoint folder to ensure that no personally identifiable information (
The initial discussions would take approximately 5 minutes with 100 people for a total of 8.3 hours. The detailed discussions with school districts who have agreed to participate with the project will take place with a commitment of an average of 4 hours with 25 people for a total of 100 hours.
44 U.S.C. Section 3506(c)(2)(A).
Pipeline and Hazardous Materials Safety Administration (PHMSA), DOT.
Notice; Advisory Committee meeting reschedule.
This notice announces that the public meeting of the Technical Pipeline Safety Standards Committee, also known as the Gas Pipeline Advisory Committee (GPAC), scheduled for December 7-8, 2016, has been rescheduled for January 11-12, 2017. Notice of the original meeting appeared in the
The postponed meeting was scheduled for 8:30 a.m. to 5:00 p.m. EST on both December 7, 2016, and December 8, 2016. The rescheduled meeting will take place from 8:30 a.m. to 5:00 p.m. on both January 11, 2017, and January 12, 2017.
The meetings will not be web cast; however, presentations will be available on the meeting Web site and posted on the E-Gov Web site:
The meeting will be held at the Hilton Arlington, 950 North Stafford Street, Arlington, VA, 22203. Additional information regarding hotel and meeting registration and the agenda will be published on the following pipeline advisory committee meeting and registration page:
This meeting will be open to the public. Members of the public who wish to attend in person are asked to register at:
If you wish to receive confirmation of receipt of your written comments, please include a self-addressed, stamped postcard with the following statement: “Comments on PHMSA-2016- 0136.” The Docket Clerk will date stamp the postcard prior to returning it to you via the U.S. mail.
In accordance with 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its rulemaking process. DOT posts these comments, without edit, including any personal information the commenter provides, to
For information about the meeting, contact Cheryl Whetsel by phone at 202-366-4431 or by email at
The GPAC will be discussing the proposed rule, “Safety of Gas Transmission and Gathering Pipelines” published in the
• Requiring periodic assessments of pipelines in locations where persons are expected to be at risk that are not already covered under the integrity management program requirements;
• Modifying the repair criteria, both inside and outside of high consequence areas;
• Requiring inspections of pipelines in areas affected by extreme weather, man-made and natural disasters, and other similar events;
• Providing additional specificity for in-line inspection, including explicit requirements to account for uncertainty of reported inspection data when evaluating in-line inspection data to identify anomalies;
• Expanding integrity assessment methods to explicitly address guided wave ultrasonic inspection and excavation with direct in-situ examination;
• Providing clearer functional requirements for conducting risk assessment for integrity management, including addressing seismic risk;
• Expanding the mandatory data collection and integration requirements for integrity management, including data validation and seismicity;
• Adding requirements to address Management of Change;
• Repealing the use of API 80 for gathering lines;
• Applying Type B requirements to newly regulated Type A gathering lines
• Extending the reporting requirements to all gathering lines;
• Expanding requirements for corrosion protection to specify additional post-construction quality checks and periodic operational and maintenance checks to address coating integrity, cathodic protection, and gas quality monitoring;
• Requiring operators to report MAOP Exceedance;
• Requiring safety features on in-line inspection tool launchers and receivers;
• Adding certain types of roadways to definition of “identified sites” (NTSB P-14-1); and
• Addressing grandfathered pipe and pipe with inadequate records.
The agenda, once finalized, will be published on the meeting page.
The GPAC is a statutorily mandated advisory committee that advises PHMSA on proposed gas pipeline safety standards and risk assessments for transporting gas and for gas pipeline facilities. The committee is established in accordance with the Federal Advisory Committee Act (5 U.S.C. App. 2, as amended) and 49 U.S.C. 60115. The committee consists of 15 members—with membership evenly divided among the federal and state governments, the regulated industry, and the general public. The committees advise PHMSA on the technical feasibility, reasonableness, cost-effectiveness, and practicability of each proposed pipeline safety standard.
Office of Foreign Assets Control, Treasury
Notice.
The Treasury Department's Office of Foreign Assets Control (OFAC) is publishing the names of 14 entities whose property and interests in property are blocked pursuant to E.O. 13722, “Blocking Property of the Government of North Korea and the Workers' Party of Korea, and Prohibiting Certain Transactions With Respect to North Korea,” 16 aircraft identified as property in which a Specially Designated National has an interest and that are therefore blocked pursuant to E.O. 13722, four individuals and one entity whose property and interests in property are blocked pursuant to E.O. 13687, “Imposing Additional Sanctions With Respect to North Korea,” and three individuals and one entity whose property and interests in property are blocked pursuant to E.O. 13382, “Blocking Property of Weapons of Mass Destruction Proliferators and Their Supporters.”
OFAC's actions described in this notice were effective on December 2, 2016.
The Department of the Treasury's OFAC: 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 December 2, 2016, OFAC blocked the property and interests in property of the following 14 entities pursuant to E.O. 13722, “Blocking Property of the Government of North Korea and the Workers' Party of Korea, and Prohibiting Certain Transactions With Respect to North Korea”:
In addition, on December 2, 2016, OFAC identified the following 16 aircraft as blocked pursuant to E.O. 13722, “Blocking Property of the Government of North Korea and the Workers' Party of Korea, and Prohibiting Certain Transactions With Respect to North Korea”:
In addition, on December 2, 2016, OFAC blocked the property and interests in property of the following four individuals and one entity whose property and interests in property are blocked pursuant to E.O. 13687, “Imposing Additional Sanctions With Respect to North Korea”:
In addition, on December 2, 2016, OFAC blocked the property and interests in property of the following three individuals and one entity whose property and interests in property are blocked pursuant to E.O. 13382, “Blocking Property of Weapons of Mass Destruction Proliferators and Their Supporters”:
Veterans Health Administration, Department of Veterans Affairs.
Notice of funding availability.
Funding Opportunity Title: Supportive Services for Veteran Families Program; Announcement Type: Initial; Funding Opportunity Number: VA-SSVF-120516; Catalog of Federal Domestic Assistance Number: 64.033, VA Supportive Services for Veteran Families Program.
The Department of Veterans Affairs (VA) is announcing the availability of funds for supportive services grants under the Supportive Services for Veteran Families (SSVF) program. This Notice of Fund Availability (NOFA) contains information concerning the SSVF program, initial and renewal supportive services grant application processes, and the amount of funding available. Awards made for supportive services grants will fund operations beginning October 1, 2017.
Applications for supportive services grants under the SSVF Program must be received by the SSVF Program Office by 4:00 p.m. Eastern Standard Time on February 3, 2017. In the
Mr. John Kuhn, National Director, Supportive Services for Veteran Families at the following email address:
Assistance in obtaining or retaining permanent housing is a fundamental goal of the SSVF program. Grantees must provide case management services in accordance with 38 CFR 62.31. Such case management should include tenant counseling, mediation with landlords and outreach to landlords.
1. Grantees may use a maximum of 10 percent of supportive services grant funds for administrative costs identified in 38 CFR 62.70.
2. Grantees must use a minimum of 60 percent of the temporary financial assistance portion of their supportive services grant funds to serve very low-income Veteran families who qualify under 38 CFR 62.11(b). (NOTE: Grantees may request a waiver to decrease this minimum, as discussed in section V.B.3.a.)
3. Grantees may use a maximum of 50 percent of supportive services grant funds to provide the supportive service of temporary financial assistance paid directly to a third party on behalf of a participant for child care, emergency housing assistance, transportation, rental assistance, utility-fee payment assistance, security deposits, utility deposits, moving costs, and general housing stability assistance (which includes emergency supplies) in accordance with 38 CFR 62.33 and 38 CFR 62.34.
Grantees must develop plans that will ensure that Veteran participants have the level of income and economic stability needed to remain in permanent housing after the conclusion of the SSVF intervention. Both employment and benefits assistance from VA and non-VA sources represent a significant underutilized source of income stability for homeless Veterans. The complexity of program rules and the stigma some associate with entitlement programs contributes to their lack of use. For this reason, grantees are encouraged to consider strategies that can lead to prompt and successful access to employment and benefits that are essential to retaining housing.
1. Consistent with the Housing First model supported by VA, grantees are expected to offer the following supportive services: Counseling participants about housing; assisting participants in understanding leases; securing utilities; making moving arrangements; providing representative payee services concerning rent and utilities when needed; and mediation and outreach to property owners related to locating or retaining housing. Grantees may also assist participants by providing rental assistance, security or utility deposits, moving costs, emergency housing, or general housing stability assistance; or using other Federal resources, such as the HUD's ESG, or supportive services grant funds subject to the limitations described in this NOFA and 38 CFR 62.34.
2. As SSVF is a short-term crisis intervention, grantees must develop plans that will produce sufficient income to sustain Veteran participants in permanent housing after the conclusion of the SSVF intervention. Grantees must ensure the availability of
3. Per 38 CFR 62.33, grantees must assist participants in obtaining public benefits. Grantees must screen all participants for eligibility for a broad range of entitlements such as TANF, Social Security, the Supplemental Nutrition Assistance Program (SNAP), the Low Income Home Energy Assistance Program (LIHEAP), the Earned Income Tax Credit (EITC), and local General Assistance programs. Grantees are expected to access the Substance Abuse and Mental Health Services Administration's SSI/SSDI Outreach, Access, and Recovery (SOAR) program either though community linkages or by training staff to deliver SOAR services. In addition, where available, grantees should access information technology tools to support case managers in their efforts to link participants to benefits.
4. Grantees are encouraged to provide, or assist participants in obtaining, legal services relevant to issues that interfere with the participants' ability to obtain or retain permanent housing. (NOTE: Information regarding legal services provided may be protected from being released to the grantee or VA under attorney-client privilege, although the grantee must provide sufficient information to demonstrate the frequency and type of service delivered.) Support for legal services can include paying for court filing fees to assist a participant with issues that interfere with the participant's ability to obtain or retain permanent housing or supportive services, including issues that affect the participant's employability and financial security. Grantees (in addition to employees and members of grantees) may represent participants before VA with respect to a claim for VA benefits, but only if they are recognized for that purpose pursuant to 38 U.S.C. Chapter 59. Further, the individual providing such representation must be accredited pursuant to 38 U.S.C. Chapter 59.
5. Access to mental health and addiction services are required by SSVF; however, grantees cannot fund these services directly through the SSVF grant. Therefore, applicants must demonstrate, through either formal or informal agreements, their ability to promote rapid access to and engagement with mental health and addiction services for the Veteran and family members.
6. VA recognizes that extremely low-income Veterans, with incomes below 30 percent of the area median income, face greater barriers to permanent housing placement. Grantees should consider how they can support these participants.
7. When serving participants who are residing in permanent housing, the defining question to ask is: “Would this individual or family be homeless but for this assistance?” The grantee must use a VA-approved screening tool with criteria that targets those most at-risk of homelessness. To qualify for SSVF services, a participant who is served under 38 CFR 62.11(a) (homeless prevention) must not have sufficient resources or support networks (
(a) Has moved because of economic reasons two or more times during the 60 days immediately preceding the application for homelessness prevention assistance;
(b) Is living in the home of another because of economic hardship;
(c) Has been notified in writing that their right to occupy their current housing or living situation will be terminated within 21 days after the date of application for assistance;
(d) Lives in a hotel or motel and the cost of the hotel or motel stay is not paid by charitable organizations or by Federal, State, or local government programs for low-income individuals;
(e) Is exiting a publicly funded institution or system of care (such as a health care facility, a mental health facility, or correctional institution) without a stable housing plan; or
(f) Otherwise lives in housing that has characteristics associated with instability and an increased risk of homelessness, as identified in the recipient's approved screening tool.
8. SSVF grantees are required to participate in local planning efforts designed to end Veteran homelessness. Grantees may use grant funds to support SSVF involvement in such community planning by sub-contracting with CoCs, when such funding is essential to create or sustain the development of these data driven plans.
9. When other funds from community resources are not readily available to assist program participants, grantees may choose to utilize supportive services grants, to the extent described in this NOFA and in 38 CFR 62.33 and 62.34, to provide temporary financial assistance. Such assistance may, subject to the limitations in this NOFA and 38 CFR part 62, be paid directly to a third party on behalf of a participant for child care, transportation, family emergency housing assistance, rental assistance, utility-fee payment assistance, security or utility deposits, moving costs and general housing stability assistance as necessary.
1.
2.
3.
Funds remaining after Priority 1 awards will be available to Priority 2 and 3 applicants.
As provided in section V.5., VA may in its discretion offer to award a non-renewed grant to the highest-ranked applicant that is awarded a renewal grant in the same community as, or a proximate community to, the non-renewed grant, so long as that applicant has the capacity to promptly begin providing services in connection with all awards. In such instance, the amount of the award will be equal to or less than the prior award which was not renewed.
1. In response to this NOFA, only existing grantees can apply as Priority 1 or 2 grantees.
2. New applications for Priority 3 will only be accepted from designated target communities and requests cannot exceed $2 million. Eligible entities can submit no more than one application for new funding.
3. Each renewal grant request cannot exceed the current annualized award.
4. Applicants may request an amount less than their current award. (This will not be considered a substantial change to the program concept.)
5. If a grantee failed to use all of awarded funds in the previous fiscal year (FY 2016) or had unspent funds returned to VA in FY 2017, VA may elect to limit renewal award to the amount of funds used in the previous fiscal year or in the current fiscal year less the money swept.
6. Applicants should fill out separate applications for each supportive services funding request.
1. Existing applicants applying for Priority 1 or 2 grants may apply only as renewal applicants using the application designed for renewal grants.
2. Existing or new applicants applying for new funding under Priority 3 must use the application designed for new grants.
3. At the discretion of VA, multiple grant proposals submitted by the same lead agency may be combined into a single grant award if the proposals provide services to contiguous areas. Any funds awarded pursuant to section V.5. will be combined into a single award.
4. Additional supportive services grant application requirements are specified in the application package. Submission of an incorrect or incomplete application package will result in the application being rejected during threshold review. The application packages must contain all required forms and certifications. Selections will be made based on criteria described in 38 CFR part 62 and this NOFA. Applicants and grantees will be notified of any additional information needed to confirm or clarify information provided in the application and the deadline by which to submit such information. Applicants are strongly encouraged to submit applications electronically. If mailed, applications and CDs must be submitted to the following address: SSVF Program Office, National Center on Homelessness Among Veterans, 4100 Chester Avenue, Suite 201,
1. VA will only score applicants that meet the threshold requirements described in 38 CFR 62.21.
2. VA will use the criteria described in 38 CFR 62.22 to score a new application (Priority 3) for a supportive services grant and criteria in 38 CFR 62.24 to score grantees applying for renewal (Priority 1 and 2) of a supportive services grant.
1. Score all applications that meet the threshold requirements described in 38 CFR 62.21.
2. Rank those applications who score at least 75 cumulative points and receive at least one point under each of the categories identified for new applicants in 38 CFR 62.22 and renewal applicants in 38 CFR 62.24. The applications will be ranked in order from highest to lowest scores in accordance with 38 CFR 62.23 for new applicants and 38 CFR 62.25 for renewal applicants.
3. Utilize the ranked scores of applications as the primary basis for selection. However, VA will also utilize the following considerations in 38 CFR 62.23(d) to select applicants for funding:
(a) Give preference to applications that provide or coordinate the provision of supportive services for very low-income Veteran families transitioning from homelessness to permanent housing. Consistent with this preference, where other funds from community resources are not readily available for temporary financial assistance, applicants are required to spend no less than 60 percent of all budgeted temporary financial assistance on participants occupying permanent housing as defined in 38 CFR 62.11(b). Waivers to this 60 percent requirement may be requested when grantees can demonstrate significant local progress towards eliminating homelessness in the target service area. Waiver requests must include data from authoritative sources such as USICH certification that a community has ended homelessness as defined by Federal Benchmarks and Criteria or have reached Community Solution's Functional Zero (
(b) To the extent practicable, ensure that supportive services grants are equitably distributed across geographic regions, including rural communities and tribal lands. This equitable distribution criteria will be used to ensure that SSVF resources are provided to those communities with the highest need as identified by VA's assessment of expected demand and available resources to meet that demand.
4. Subject to the considerations noted in paragraph B.3 above, VA will fund the highest-ranked applicants for which funding is available.
5. VA may in its discretion offer to award a non-renewed grant to the highest-ranked applicant that is awarded a grant in the same community as, or a proximate community to, the non-renewed grant, so long as that applicant has the capacity to promptly begin providing services in connection with all awards. If that applicant declines the award, VA will offer the award to the next highest-ranked applicant and continue in that manner until a qualifying grantee accepts the award.
Consistent with the Housing First model supported by VA, grantees are expected to offer the following supportive services: housing counseling; assisting participants in understanding leases; securing utilities; making moving arrangements; providing representative payee services concerning rent and utilities when needed; and mediation and outreach to property owners related to locating or retaining housing. Grantees may also assist participants by providing rental assistance, security or utility deposits, moving costs or general housing stability assistance, using other Federal resources, such as the ESG, or supportive services grant funds to the extent described in this NOFA and 38 CFR 62.34.
As SSVF grants cannot be used to fund treatment for mental health or substance use disorders, applicants must provide evidence that they can provide access to such services to all program participants through formal and informal agreements with community providers.
1. Upon execution of a supportive services grant agreement with VA, grantees will have a VA regional coordinator assigned by the SSVF Program Office who will provide oversight and monitor supportive services provided to participants.
2. Grantees will be required to enter data into a Homeless Management Information System (HMIS) Web-based software application. This data will consist of information on the participants served and types of supportive services provided by grantees. Grantees must treat the data for activities funded by the SSVF program separate from that of activities funded by other programs. Grantees will be required to work with their HMIS Administrators to export client-level data for activities funded by the SSVF Program to VA on at least a monthly basis.
3. VA shall complete annual monitoring evaluations of each grantee. Monitoring will also include the submittal of quarterly and annual financial and performance reports by the grantee. The grantee will be expected to demonstrate adherence to the grantee's proposed program concept, as described in the grantee's application. All grantees are subject to audits conducted by the VA or its representative. Grantees will be required to provide each participant with a satisfaction survey which can be submitted by the participant directly to VA within 30 days of such participant's pending exit from the grantee's program.
5. Grantees will be assessed based on their ability to meet critical performance measures. In addition to meeting program requirements defined by the regulations and applicable NOFA(s), grantees will be assessed on their ability to place participants into housing and the housing retention rates of participants served. Higher placement for homeless participants and higher housing retention rates for at-risk participants are expected for very-low income Veteran families when compared to extremely low-income Veteran families with incomes below 30 percent of the area median income.
6. Organizations receiving renewal awards and that have had ongoing SSVF program operation for at least 1 year (as measured from the start of initial SSVF services until December 5, 2016) may be eligible for a 3-year award. Grantees meeting outcome goals defined by VA and in substantial compliance with their grant agreements (defined by meeting targets and having no outstanding corrective action plans) and who, in addition, receive 3-year accreditation from the Commission on Accreditation of Rehabilitation Facilities (CARF) in Employment and Community Services: Rapid Rehousing and Homeless Prevention standards or a 4-year accreditation from the Council on Accreditation's (COA) accreditation in Supported Community Living Services standards or a 3 year accreditation in The Joint Commission's Behavioral Health Care: Housing Support Services Standards are eligible for a 3-year grant renewal subject to funding availability (NOTE: Multi-year awards are contingent on funding availability). If awarded a multiple year renewal, grantees may be eligible for funding increases as defined in NOFAs that correspond to years 2 and 3 of their renewal funding.
1. Veteran families earning less than 30 percent of area median income as most recently published by HUD for programs under section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f) (
2. Veterans with at least one dependent family member.
3. Veterans returning from Operation Enduring Freedom, Operation Iraqi Freedom, or Operation New Dawn.
4. Veteran families located in a community, as defined by HUD's CoC, or a county not currently served by a SSVF grantee.
5. Veteran families located in a community, as defined by HUD's CoC, where current level of SSVF services is not sufficient to meet demand of Category 2 and 3 (currently homeless) Veteran families.
6. Veteran families located in a rural area.
7. Veteran families located on Indian Tribal Property.
1. During the first quarter of the grantee's supportive services annualized grant award period, the grantee's cumulative requests for supportive services grant funds may not exceed 35 percent of the total supportive services grant award without written approval by VA.
2. By the end of the second quarter of the grantee's supportive services annualized grant award period, the grantee's cumulative requests for supportive services grant funds may not exceed 60 percent of the total supportive services grant award without written approval by VA.
3. By the end of the third quarter of the grantee's supportive services annualized grant award period, the grantee's cumulative requests for supportive services grant funds may not exceed 80 percent of the total supportive services grant award without written approval by VA.
4. By the end of the fourth quarter of the grantee's supportive services annualized grant award period, the grantee's cumulative requests for supportive services grant funds may not exceed 100 percent of the total supportive services grant award.
The Secretary of Veterans Affairs, or designee, approved this document and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs. Gina S. Farrisee, Deputy Chief of Staff, Department of Veterans Affairs, approved this document on December 1, 2016, for publication.
Department of Veterans Affairs.
Notice.
The Department of Veterans Affairs (VA) is updating the monetary allowance payable for qualifying interments that occur during calendar year 2017, which applies toward the private purchase of an outer burial receptacle (or “graveliner”) for use in a VA national cemetery. The allowance is equal to the average cost of Government-furnished graveliners less any administrative costs to VA. The purpose of this Notice is to notify interested
William Carter, Budget Operations and Field Support Division, National Cemetery Administration, Department of Veterans Affairs, 810 Vermont Avenue NW., Washington, DC 20420. Telephone: (202) 461-9764 (this is not a toll-free number).
Section 2306(e)(3) and (4) of title 38, United States Code (U.S.C.) authorizes VA to provide a monetary allowance for the private purchase of an outer burial receptacle for use in a VA national cemetery where its use is authorized. The allowance for qualified interments that occur during calendar year 2017 is the average cost of Government-furnished graveliners in fiscal year 2016, less the administrative costs incurred by VA in processing and paying the allowance in lieu of the Government-furnished graveliner.
The average cost of Government-furnished graveliners is determined by taking VA's total cost during a fiscal year for single-depth graveliners that were procured for placement at the time of interment and dividing it by the total number of such graveliners procured by VA during that fiscal year. The calculation excludes both graveliners procured and pre-placed in gravesites as part of cemetery gravesite development projects and all double-depth graveliners. Using this method of computation, the average cost was determined to be $351.00 for fiscal year 2016.
The administrative costs incurred by VA consist of those costs that relate to processing and paying an allowance in lieu of the Government-furnished graveliner. These costs have been determined to be $9.00 for calendar year 2017.
The allowance payable for qualifying interments occurring during calendar year 2017, therefore, is $342.00.
The Secretary of Veterans Affairs, or designee, approved this document and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs. Gina S. Farrisee, Deputy Chief of Staff, Department of Veterans Affairs, approved this document on December 1, 2016, for publication.
Office of Inspector General (OIG), HHS.
Final rule.
This final rule amends the civil monetary penalty (CMP or penalty) rules of the Office of Inspector General to incorporate new CMP authorities, clarify existing authorities, and reorganize regulations on civil money penalties, assessments, and exclusions to improve readability and clarity.
These regulations are effective on January 6, 2017.
Katie Arnholt or Geoff Hymans at (202) 619-0335, Office of Counsel to the Inspector General.
The Affordable Care Act of 2010 (Patient Protection and Affordable Care Act, Pub. L. 111-148, 124 Stat. 119 (2010), as amended by the Health Care and Education Reconciliation Act of 2010, Pub. L. 111-152, 124 Stat. 1029 (2010), hereafter the ACA) significantly expanded OIG's authority to protect Federal health care programs from fraud and abuse. The OIG proposed to update its regulations to codify the changes made by the ACA in the regulations. At the same time, OIG proposed updates pursuant to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 and other statutory authorities, as well as technical changes to clarify and update the regulations.
The legal authority, laid out later in the preamble, for this regulatory action is found in the Social Security Act (the Act), as amended by the ACA. The legal authority for the changes is listed by the parts of Title 42 of the Code of Federal Regulations that we proposed to modify:
We proposed changes to the Civil Monetary Penalties (CMP) regulations at 42 CFR part 1003 to implement or codify authorities under the ACA and other statutes. The ACA provides for CMPs, assessments, and exclusion for:
• Failure to grant OIG timely access to records;
• ordering or prescribing while excluded;
• making false statements, omissions, or misrepresentations in an enrollment application;
• failure to report and return an overpayment; and
• making or using a false record or statement that is material to a false or fraudulent claim.
We also proposed a reorganization of 42 CFR part 1003 to make the regulations more accessible to the public and to add clarity to the regulatory scheme. We proposed an alternate methodology for calculating penalties and assessments for employing excluded individuals in positions in which the individuals do not directly bill Federal health care programs for furnishing items or services. We also clarified the liability guidelines under OIG authorities, including the Civil Monetary Penalties Law (CMPL); the Emergency Medical Treatment and Labor Act (EMTALA); section 1140 of the Act for conduct involving electronic mail, Internet, and telemarketing solicitations; and section 1927 of the Act for late or incomplete reporting of drug-pricing information.
There are no significant costs associated with the regulatory revisions that would impose any mandates on State, local, or tribal governments or the private sector. The OIG anticipates that CMP collections may increase in the future in light of the new CMP authorities and other changes proposed in this rule. However, it is difficult to accurately predict the extent of any increase because of a variety of factors, such as budget and staff resources, the number and quality of CMP referrals or other potential cases, and the time needed to investigate and litigate a case. In calendar years 2004-2015, OIG collected annual amounts ranging between $10.2 million and $107.3 million in CMP resolutions for a total of over $309.2 million.
In response to the notice of proposed rulemaking, 79 FR 27,080 (May 12, 2014), OIG received 27 public comments from various health care providers and organizations, professional medical societies and associations, and other interested parties. We also received a comment that was filed one day late, which we included in our responses. The comments included both concerns regarding the general factors and more detailed comments on specific CMP provisions.
Set forth below is a discussion of the proposed changes to the regulations at the 42 CFR part 1003, a synopsis of the various comments and recommendations received in response to the proposed rule, our response to those comments and recommendations, and a summary of the specific revisions and clarifications being made to the regulations as a result of the public comments.
For over 27 years, OIG has exercised the authority to impose CMPs, assessments, and exclusions in furtherance of its mission to protect Federal health care programs and their beneficiaries from fraud, waste, and abuse. As those programs have changed over the last two decades, OIG has received new fraud-fighting CMP authorities, including new authorities under the ACA. With the addition of new authorities over time, part 1003 has become cumbersome. While adding new authorities, we are also reorganizing part 1003 to improve its readability and clarity and addressing several substantive issues in our existing authorities.
In 1981, Congress enacted the CMPL, section 1128A of the Act (42 U.S.C. 1320a-7a), as one of several administrative remedies to combat fraud and abuse in Medicare and Medicaid. The CMPL authorized the Secretary to impose penalties and assessments on a person, as defined in 42 CFR part 1003, who defrauded Medicare or Medicaid or engaged in certain other wrongful conduct. The CMPL also authorized the Secretary to exclude persons from Medicare and all State health care programs (including Medicaid). Congress later expanded the CMPL and the scope of exclusion to apply to all Federal health care programs. The Secretary delegated the CMPL's authorities to OIG. 53 FR 12,993 (April 20, 1988). Since 1981, Congress has
The ACA is the most recent expansion of the CMP provisions and OIG's ability to protect Federal health care programs from fraud and abuse. Sections 6402(d)(2)(A)(iii) and 6408(a) of ACA amended the CMPL by adding new conduct that subjects a person to penalties, assessments, and/or exclusion from participation in Federal health care programs. The new covered conduct includes: (1) Failure to grant OIG timely access to records, upon reasonable request; (2) ordering or prescribing while excluded when the excluded person knows or should know that the item or service may be paid for by a Federal health care program; (3) making false statements, omissions, or misrepresentations in an enrollment or similar bid or application to participate in a Federal health care program; (4) failure to report and return an overpayment; and (5) making or using a false record or statement that is material to a false or fraudulent claim.
Section 6408(b)(2) of the ACA amended section 1857(g)(1) of the Act (42 U.S.C. 1395w-27(g)(1)), which relates to Medicare Advantage and Part D contracting organizations.
We have codified these new authorities in the proposed regulations at § 1003.400(c) and their corresponding penalties and assessments at § 1003.410. The Centers for Medicare & Medicaid Services (CMS) may also impose sanctions under its authorities related to Medicare Advantage or Part D contracting organizations. Those authorities are at 42 CFR parts 422 and 423.
We proposed reorganizing part 1003 to make the regulations more accessible to the public and to add clarity to the regulatory scheme. Except for general and procedural subparts, the reorganized part 1003 groups CMP authorities into subparts by subject matter. This revised structure also clarifies the differences between the various CMP authorities and their respective statutory remedies. For certain CMP authorities, penalties, assessments, and exclusion are authorized. For other CMP authorities, only penalties, or penalties and assessments, are authorized. Each subpart is intended to be self-contained, with all the relevant provisions concerning a particular violation included in the same subpart.
We received no comments on the reorganization and finalize it as proposed.
Because we intended each subpart to be self-contained, we proposed incorporating the exclusion sections, which were found at §§ 1003.105 and 1003.107, into the subparts in which exclusion is available: False Claims; Anti-kickback and Physician Self-Referral; EMTALA; and Beneficiary Inducement. This proposed revision more clearly reflects the statutory scheme, which permits both monetary and exclusion remedies for these violations.
The proposed changes clarify in each subject matter subpart that we may impose a penalty for each individual violation of the applicable provision. As we explained in the notice of proposed rulemaking, and below, the statutory authorities are clear that each act that constitutes a violation is subject to penalties. The proposed revisions to the regulatory language better reflect this statutory framework.
Throughout part 1003, we proposed replacing references to Medicare and State health care programs with “Federal health care programs” when the provision concerns exclusion to more completely reflect the full scope of exclusion. The proposed changes also remove all references to the penalties and assessments available before 1997 because any conduct prior to 1997 falls outside the CMPL's statute of limitations.
The proposed changes clarify that a principal's liability for the acts of its agents does not limit liability only to the principal. Agents are still liable for their misconduct. In our enforcement litigation, we have encountered the argument that agents are not liable for their misconduct where the principal is liable for the same misconduct. We believed the law provides that the agent remains liable for his or her conduct and may not use the principal as a liability shield. The proposed revision clarifies this point. In addition, we proposed to consolidate § 1003.102(d)(1)-(4), which addressed situations in which multiple parties may have liability for separate CMP provisions. This proposed revision clarifies that each party may be held liable for any applicable penalties and that the parties may be held jointly and severally liable for the assessment.
We received no comments on these topics and finalize the regulation as proposed.
Under the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (sec. 701 of Pub. L. 114-74, 129 Stat. 599), which amended the Federal Civil Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410, 104 Stat. 890), Federal agencies must make annual adjustments to their CMPs, including the CMPs in the Social Security Act. The Department of Health and Human Services (HHS or the Department) will publish all of the Department's adjusted CMP amounts at 45 CFR part 102. That section will include CMPs that have been delegated to OIG. To ensure transparency, we have added footnotes to subparts B through M stating that the penalty amounts are adjusted for inflation and citing to 45 CFR part 102.
Subpart A contains the general provisions that apply to part 1003. The proposed changes revised the “Basis and Purpose” section to state more succinctly part 1003's purpose and to
We received no comments on these changes and finalize the regulations as proposed.
The proposed rule included several changes to the “Definitions” section for clarity and readability. First, we proposed to redesignate § 1003.101 as § 1003.110. We proposed to remove terms from this part that duplicate definitions in part 1000 or are no longer used in this part. We also proposed the following changes and additions to the specific definitions.
We proposed to revise the definition of “claim” by changing the word “to” to “under.” This change more closely aligns the regulations to the CMPL's definition of “claim” to avoid any misinterpretation that a claim is limited to an application for payment for an item or service made directly to a Federal health care program (
We proposed to update the definition of “contracting organization” to include all entities covered by sections 1857, 1860D-12, 1876(b) (42 U.S.C. 1395mm(b)), or 1903(m) of the Act.
We proposed revisions to the definition of the term “item or service.” Section 1128A of the Act provides that the term “item or service” “includes” various items, devices, supplies, and services. By using the word “includes” in section 1128A of the Act, Congress created an illustrative statutory definition that is broad enough to capture all the uses of the term in section 1128A of the Act. The term is used in section 1128A of the Act in two different contexts: one, in reference to submitting claims for items and services reimbursed by a Federal health care program, and two, in the definition of “remuneration” to beneficiaries in reference to section 1128A(a)(5) of the Act. We proposed clarifying the definition to ensure that it reflects the broad meaning of “item or service” in both contexts.
We proposed clarifying the definition of “knowingly,” found in the existing regulation at § 1003.102(e), to cover acts as opposed to information. We also proposed removing the reference to the False Claims Act (FCA) from the definition of “knowingly” because it is unnecessary. As used in part 1003, the term “knowingly” applies only to acts, such as the act of presenting a claim. When a person's awareness or knowledge of information is at issue, the CMPL and other statutes use either a “knows or should know” or a “knew or should have known” construction. For example, section 1128A(a)(2) of the Act subjects a person to liability when the person knowingly presents, or causes to be presented, a claim that the person knew or should have known is false or fraudulent. Here, the act is presenting the claim or causing the claim to be presented. The information is that the claim was false or fraudulent.
We proposed a definition of “material” that mirrors the FCA definition as “having a tendency to influence, or be capable of influencing, the payment or receipt of money or property.”
We proposed a definition of “overpayment” that is taken from section 1128J(d)(4) of the Act (42 U.S.C. 1320a-7k(d)(4)), as amended by section 6402(a) of the ACA.
We proposed a definition of “reasonable request” as part of implementing the new ACA CMP authority for failure to grant OIG timely access to records, as discussed below under § 1003.200, subpart B.
We proposed a definition of “Responsible Official” as this term relates to the select agent and toxin CMP authority. We proposed to amend the definition of “select agent and toxin” as the term relates to the select agent and toxin CMP authority (42 U.S.C. 262a(i); Act, section 1128A(j)(2)).
We also proposed revising the definition of “responsible physician” to more closely conform to statutory intent, as discussed below under § 1003.500, subpart E.
We also proposed definitions of “separately billable item or service” and “non-separately-billable item or service” to create an alternate method for calculating penalties and assessments for violations of section 1128A(a)(6) of the Act.
We did not receive comments on the proposed definitions of “claim,” “contracting organization,” “item or service,” “Responsible Official,” “non-separately-billable item or service,” or “separately billable item or service” and are finalizing the definition as proposed. We received comments on the definition of “knowingly,” “should know, or should have known,” “material,” and “timely basis,” which are discussed below. We also received comments on the definitions of “overpayment,” “reasonable request,” and “responsible physician,” which we will address in the discussion of the overpayment, timely access, and EMTALA CMPs respectively.
We proposed modifying the provisions relating to the factors considered in determining exclusion periods and the amount of penalties and assessments for violations. The existing structure separately listed factors for certain CMP violations in § 1003.106(a) and provided additional detail on these factors for certain CMP violations in § 1003.106(b) and (d). This structure was cumbersome and potentially confusing for the reader.
To add clarity and improve transparency in OIG's decision-making, we identified the most common issues among the factors listed and created a single, primary list of factors in the proposed § 1003.140. The primary factors are: (1) The nature and circumstances of the violation, (2) the degree of culpability of the person, (3) the history of prior offenses, (4) other wrongful conduct, and (5) other matters as justice may require. As the fifth factor demonstrates, these are illustrative factors rather than a comprehensive list. These factors would apply to all CMP violations, except as otherwise provided in the subpart relating to a specific subject matter, which may contain additional detail or explanation regarding a factor's applicability to a specific violation. For example, the aggravating factors listed in § 1003.106(b)(1) related to the nature and circumstances of a violation. Because these factors relate most directly to billing issues, the proposed regulations include them in §§ 1003.220, 1003.320, and 1003.420. We proposed updating the claims-mitigating factor by increasing the maximum dollar amount considered as mitigation from $1,000 to $5,000. We believed this updated amount is an appropriate threshold that is consistent with rationale behind the original amount. A dollar threshold as a mitigating factor for CMP purposes differentiates between conduct that could be considered less serious and more serious. Conduct resulting in more than $5,000 in Federal health care program loss is an indication of more serious conduct. Given the changes in the costs of health care since this regulation was last updated in 2002, we believed the $1,000 threshold was lower than appropriate. We also proposed revising the claims-aggravating factor that was at 1003.106(b)(1)(iii) by replacing “substantial” with “$15,000 or more.” We believe that replacing “substantial” with a specific dollar threshold increases transparency and gives providers better guidance on OIG's evaluation of this factor. In assigning a dollar value to the aggravating factor, we considered our practices in evaluating conduct for pursuing CMPs and proposed that a loss greater than $15,000 is an indication of serious misconduct. As discussed in response to comments, we are finalizing the aggravating factor as a loss greater than $50,000.
The OIG will, however, continue to review the facts and circumstances of a violation on a case-by-case basis. For instance, when considering the nature and circumstances of any case, OIG will consider, among other things and to the extent they are relevant, the period over which the conduct occurred, whether a pattern of misconduct is indicated, the magnitude of the violation, the materiality or significance of a false statement or omission, the number of people involved, the number of victims, and whether patients were or could have been harmed.
The proposed changes also clarify that these factors apply to exclusion determinations made under part 1003 as well as penalty and assessment amount determinations. We are removing § 1003.107(c) in light of this reorganization. The existing regulations stated, at § 1003.107(c), that the guidelines regarding exclusion determinations are not binding. This language was used to emphasize that only the reasonableness of a period of exclusion is reviewable on appeal as opposed to OIG's decision to impose an exclusion. While OIG's discretion to exercise its exclusion authority remains unreviewable, the § 1003.107(c) language is no longer necessary under the proposed reorganization. The revisions at § 1003.140 more clearly state that the general guidelines relate to the length of exclusion as opposed to the decision whether to exclude a person.
At § 1003.106(b)(2), the regulations discussed a person's degree of culpability and listed several aggravating circumstances concerning whether a person had knowledge of the violation. We believed the language was out-of-date in light of all the CMP authorities that have been added to part 1003 over the years. We proposed to consider as an aggravating factor a person's having a level of intent to commit the violation that is greater than the minimum intent required to establish liability.
Various CMP authorities have different intent or scienter requirements. Some authorities have a “knows or should know” standard consistent with
Possessing the lowest level intent to commit a violation is not a defense against liability, a mitigating factor, or a justification for a less serious remedy. Individuals and entities are expected to know the law and Federal health care program rules. While the degree of culpability is relevant in our determination to impose a monetary or exclusion remedy, other factors, such as the nature and circumstances of the violation, may justify a maximum monetary remedy or exclusion to protect Federal health care programs and beneficiaries from fraud, waste, and abuse.
In addition, we proposed to add a mitigating circumstance to the degree-of-culpability factor for taking “appropriate and timely corrective action in response to the violation.” The proposed regulation required that a person, to qualify as taking corrective action, disclose the violation to OIG through the Self-Disclosure Protocol (the Protocol) and fully cooperate with OIG's review and resolution of the violation. We have long emphasized the importance of compliance programs that result in appropriate action when Federal health care program compliance issues are identified. We continue to believe that appropriate action for potential violations of OIG's CMP authorities must include self-disclosure and cooperation in the inquiry and resolution of the matter. For most OIG CMP authorities, the person should not qualify for mitigation of the potential monetary or exclusion remedies without self-disclosure through the Protocol (available at—
The proposed changes clarified that when we are determining the appropriate remedy against an entity, aggravating circumstances include the prior offenses or other wrongful conduct of: (1) The entity itself; (2) any individual who had a direct or indirect ownership or control interest (as defined in section 1124(a)(3) of the Act (42 U.S.C. 1320a-3)) in the entity at the time the violation occurred and who knew, or should have known, of the violation; or (3) any individual who was an officer or a managing employee (as defined in section 1126(b) of the Act (42 U.S.C. 1320a-5)) of the entity at the time the violation occurred. For “prior offenses,” we also proposed to change “any other public or private program for reimbursement for medical services” to “in connection with the delivery of a health care item or service.” This proposed change is consistent with the aggravating circumstance “other wrongful conduct.”
Finally, the proposed rule clarified when OIG considers the financial condition of a person in determining penalty or assessment amounts. The regulations discussed financial condition in various sections with varying degrees of specificity: § 1003.106(a)(1)(iv); (a)(3)(i)(F); (a)(4)(iv); (b)(5); and (d)(4). We proposed a more uniform and specific standard to apply after OIG evaluates the facts and circumstances of the conduct and weighs the aggravating and mitigating factors to determine an appropriate penalty and assessment amount. Once OIG proposes this penalty and assessment amount, the person may request that OIG consider its ability to pay the proposed amount. To permit OIG to evaluate a person's ability to pay, the person must submit sufficient documentation that OIG deems necessary to conduct its review, including, but not limited to, audited financial statements, tax returns, and financial disclosure statements. This ability-to-pay review may also consider the ability of the person to reduce expenses or obtain financing to pay the proposed penalty and assessment. If a person requested a hearing in accordance with 42 CFR 1005.2, the only financial documentation subject to review would be that which the person submitted to OIG, unless the Administrative Law Judge (ALJ) finds that extraordinary circumstances prevented the person from providing the financial documentation to OIG in the time and manner requested by OIG prior to the hearing request.
We received the following comments on these proposals. To the extent the comments do not address aspects of these changes, we are finalizing this section of the rule, as proposed.
Finally, while commenters acknowledged OIG's experience in CMP enforcement as the main support for its degree-of-culpability proposal, commenters noted that this rule expands OIG's authority to new types of conduct under the five new ACA liability bases to its enforcement
We are also amending subpart E (EMTALA) to include in this mitigating factor disclosure of the violation to CMS prior to CMS receiving a complaint regarding the violation from another source or otherwise learning of the violation.
The proposed rule also adds an express delegation of authority from the Secretary to OIG to impose penalties, assessments, and exclusions against persons who violate any of the provisions of part 1003. Several
We received no comments on this provision and finalize, as proposed.
We also proposed changes to part 1003's exclusion-waiver provisions to clarify the criteria for a waiver request from a State agency. The existing regulations stated that OIG will consider an exclusion waiver request from a State agency for exclusions imposed pursuant to 42 CFR 1003.102(a), (b)(1), and (b)(4) and 1003.105(a)(1)(ii) under certain circumstances. We proposed updating the regulations to permit an administrator of a Federal health care program to request a waiver, similar to the waiver in part 1001. Also, we proposed removing the limitations concerning when a waiver may be requested by such an administrator.
We received no comments on this provision and finalize, as proposed.
Subpart B contains most of the provisions that were found in the existing regulations at § 1003.102(a) and several of the provisions that were found in § 1003.102(b). The text of the proposed provisions remains largely unchanged, except for a separate provision we created to address section 1128A(a)(6) of the Act. Section 1128A(a)(6) of the Act subjects persons to liability for arranging or contracting with (by employment or otherwise) a person who the employer or contractor knows or should know is excluded from participation in a Federal health care program for the provision of items or services for which payment may be made under that program. This authority was included in the regulations describing false or fraudulent claims at § 1003.102(a)(2). Because of our desire to improve the clarity of the regulations generally and because of the proposed penalty and assessment provisions discussed below, the proposed regulation addressed section 1128A(a)(6) of the Act in a separate subsection at § 1003.200(b)(4).
On the basis of our experience enforcing section 1128A(a)(6) of the Act, we proposed an alternate methodology for calculating penalties and assessments. This alternate methodology recognizes the variety of ways in which items and services are reimbursed by Federal health care programs and the numerous types of health care professionals and other individuals and entities that contribute to the provision of those items and services.
The proposed regulations addressed how penalties and assessments would be imposed for two distinct types of violations: (1) Instances in which items or services provided by the excluded person may be separately billed to the Federal health care programs and (2) instances in which the items or services provided by the excluded person are not separately billable to the Federal health care programs, but are reimbursed by the Federal health care programs in some manner.
To achieve this distinction, we proposed to define two new terms: “separately billable item or service” and “non-separately-billable item or service.” A “separately billable item or service” is defined as “an item or service for which an identifiable payment may be made under a Federal health care program.” This type of item or service exists when a person provides, furnishes, orders, or prescribes an identifiable item or service for which a claim for reimbursement may be submitted to a Federal health care program by either the person or another person. Examples include physician office visits and prescribed pharmaceuticals.
A “non-separately-billable item or service” is defined as “an item or service that is a component of, or otherwise contributes to the provision of, an item or service, but is not itself a separately billable item or service.” Non-separately-billable items or services are reimbursed as part of the claim submitted under the applicable payment methodology,
In instances in which the item or service provided by the excluded person is separately billable, the employing or contracting person would continue to be subject to penalties and assessments based on the number and value of those separately billable items and services. For instances in which the item or service provided by the excluded person is non-separately-billable, we proposed an alternate methodology to calculate penalties and assessments. We proposed that penalties would be based on the number of days the excluded person was employed, was contracted with, or otherwise arranged to provide non-separately-billable items or services. We proposed that assessments would be based on the total costs to the employer or contractor of employing or contracting with the excluded person during the exclusion, including salary, benefits, and other money or items of value. We believe this cost-based assessment achieves the purposes of section 1128A(a)(6) of the Act by capturing the value of the excluded person to the employing or contracting person. As discussed below in our response to comments, we are finalizing the assessments, as proposed, but are finalizing the penalties based on each item or service provided by the excluded person.
As discussed above, the ACA added five new violations and corresponding penalties to the CMPL. These new violations and the corresponding penalties are at proposed §§ 1003.200(b)(6)-(10), 1003.210(a)(6)-(9), and 1003.210(b)(3). In general, the proposed regulatory text closely mirrors the statutory text. However, we supplement the statutory text where appropriate. Section 6402(d)(2)(A) of the ACA amends the CMPL by adding a violation for knowingly making or causing to be made “any false statement,
Also, we proposed clarifying the penalty under the CMPL, as amended by section 6402(d)(2) of the ACA, for failure to report and return overpayments. Under the amended section 1128J(d) of the Act, overpayments must be reported and returned by the later of 60 days after the date the overpayment was identified or the date any corresponding cost report is due, if applicable. The new CMPL authority under section 1128A(a)(10) of the Act does not contain a specific penalty amount, but instead uses the default penalty amount in the CMPL, which is up to $10,000 for each item or service. In this context, we proposed regulatory text interpreting the CMPL's default penalty as up to $10,000 for each day a person fails to report and return an overpayment by the deadline in section 1128J(d) of the Act. Because the failure to report and return overpayments within 60 days of identification is based on the 60-day period passing, we believed that the penalty could be interpreted to attach to each following day that the overpayment is retained. However, as we noted in the proposed rule, Congress specified a per day penalty in sections 1128A(a)(4) and (12) of the Act and did not do so for section 1128A(a)(10) of the Act. Thus, we solicited comments on whether to interpret the default penalty of up to $10,000 for each item or service as pertaining to each claim for which the provider or supplier identified an overpayment. As discussed below in our response to comments, we are finalizing the rule using the default penalty amount in the CMPL, which is up to $10,000 for each item or service.
Section 6408(a)(2) of the ACA amended the CMPL by adding a violation for failure to grant timely access, upon reasonable request, to OIG for the purpose of audits, investigations, evaluations, or other statutory functions. Section 1128(b)(12) of the Act and 42 CFR 1001.1301 authorize exclusion based on similar, but not identical, conduct — failure to grant immediate
The proposed definitions of “failure to grant timely access” and “reasonable request” give OIG flexibility to determine the period in which a person must respond to a specific request for access, depending on the circumstances. Given the different purposes for which OIG may request access to material, such as audits, evaluations, investigations, and enforcement actions, we believe the best approach is for OIG to specify the date for production or access to the material in OIG's written request. In making this decision, OIG will consider the circumstances of the request, including the volume of material, size and capabilities of the party subject to the request, and OIG's need for the material in a timely way to fulfill its responsibilities. The exception to this approach is a case in which OIG has reason to believe that the requested material is about to be altered or destroyed. Under those circumstances, timely access means access at the time the request is made. This exception is the same as provided in § 1001.1301.
Finally, we proposed revisions to the regulation's aggravating factors for CMPL violations. The aggravating factors listed in proposed § 1003.220 are based on those that apply to the violations in the existing regulations. We proposed moving the aggravating factors to one section and consolidating similar factors into one factor. For instance, the first aggravating factor,
We received the following comments on this subpart. To the extent provisions of the proposed rule are not addressed in the comments below, we are finalizing this section of the rule, as proposed.
Subpart C contains the provisions relating to violations of the anti-kickback statute and physician self-referral law, which were found in the existing regulations at § 1003.102(a)(5), (b)(9), (b)(10), and (b)(11). The proposed changes include various technical corrections to improve readability and ensure consistency with the language in the anti-kickback statute and physician self-referral law.
We proposed revising the CMP provisions relating to the physician self-referral law to incorporate statutory terms that are unique to the physician self-referral law (section 1877 of the Act (42 U.S.C. 1395nn)). These revisions include using “designated health service” instead of “item or service” and “furnished” instead of “provided.” In addition, we proposed revising the authority regarding “cross-referral arrangements” that was in the existing regulations at § 1003.102(b)(10) to more closely reflect the statutory language. Section 1877(g)(4) of the Act provides for CMPs and exclusion against any physician or other person who enters into any arrangement or scheme (such as a cross-referral arrangement) that the physician or other person knows, or should know, has a principal purpose of ensuring referrals by the physician to a particular person who, if the physician directly made referrals to such person, would violate the prohibitions of 42 CFR 411.353. The regulations, at § 1003.102(b)(10)(i), contained an example of a cross-referral arrangement whereby the physician-owners of entity “X” refer to entity “Y” and the physician-owners of entity “Y” refer to entity “X” in violation of 42 CFR 411.353. While this is one example of a cross-referral arrangement, such arrangements and circumvention schemes can take a variety of forms. The proposed changes to the regulatory language more closely align the regulations to the statute to avoid any misinterpretation that § 1003.102(b)(10)(i) limited the conduct that circumvents the prohibitions of the physician self-referral law.
The proposed changes also include minor technical corrections to the CMPs related to the anti-kickback statute to improve consistency with the statute. First, we added the phrases “to induce” and “in whole and in part” to § 1003.300(d) to better mirror the statutory language of the anti-kickback statute. The proposed change also clarified that the CMP at section 1128A(a)(7) of the Act permits imposing a penalty for each offer, payment, solicitation, or receipt of remuneration and that each action constitutes a separate violation. In addition, we included the language from the CMPL stating that the calculation of the total remuneration for purposes of an assessment does not consider whether any portion of the remuneration had a lawful purpose.
We received no comments and finalize this subpart, as proposed, except that, for the reasons provided in response to comments to proposed § 1003.220(b)(3), we increased the threshold for the aggravating factor at
Subpart D contains the proposed provisions for penalties and assessments against managed care organizations. We proposed several stylistic changes to the existing regulations at § 1003.103(f). We changed the verbs in this subpart from past tense to present tense to conform to the statutory authorities and many other regulations in this part. The proposed regulation also removes superfluous phrases, such as “in addition to” or “in lieu of other remedies available under law.” The proposed regulation replaced references to “an individual or entity” with “a person” because “person” is defined in the general section as an individual or entity. The proposed regulation also removes the phrase “for each determination by CMS.” The OIG may impose CMPs in addition to or in place of sanctions imposed by CMS under its authorities.
We also added to the regulations OIG's authority to impose CMPs against Medicare Advantage contracting organizations pursuant to section 1857(g)(1) of the Act and against Part D contracting organizations pursuant to section 1860D-12(b)(3) of the Act.
The ACA amended several provisions of the Act that apply to misconduct by Medicare Advantage or Part D contracting organizations. We included these provisions in the proposed regulations. We added the change in section 6408(b)(2)(C) of the ACA regarding assessing penalties against a Medicare Advantage or Part D contracting organization when its employees or agents, or any provider or supplier that contracts with it, violates section 1857 of the Act. We proposed to add the five new violations created in the ACA, and their corresponding penalties, at § 1003.400(c). We also proposed to include the new assessments, which are available for two of the five new violations, at § 1003.410(c). The proposed regulatory text closely mirrors that of the statute.
The violations in this subpart are grouped according to the contracting organizations to which they apply. For instance, § 1003.400(a) violations apply to all contracting organizations. Section 1003.400(b) violations apply to all Medicare contracting organizations,
We also proposed to remove the definition of “violation,” which was found at § 1003.103(f)(6), because throughout this part, violation means each incident or act that violates the applicable CMP authority. We also proposed including aggravating circumstances to be used as guidelines for taking into account the factors listed in proposed § 1003.140. These aggravating circumstances are adapted from those listed in the existing regulations at §§ 1003.106(a)(5) and 1003.106(b)(1) and those published in the
We received the following comments on the subpart. As discussed in response to the comments, we are finalizing this section of the rule as proposed.
Subpart E contains the penalty and exclusion provisions for violations of EMTALA, section 1867 of the Act (42 U.S.C. 1395dd). EMTALA was passed in 1986 as part of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), Public Law 99-272. Section 1867 of the Act sets forth the obligations of a Medicare-participating hospital to provide medical screening examinations to individuals who come to the hospital's emergency department and request examination or treatment for a medical condition. EMTALA further provides that, if the individual has an emergency medical condition, the hospital is obligated to stabilize that condition or to arrange for an appropriate transfer to another medical facility where stabilizing treatment can be provided. EMTALA also requires hospitals with specialized capabilities or facilities to accept appropriate transfers of individuals from other hospitals. Finally, EMTALA creates obligations for physicians responsible for the examination, treatment, or transfer of an individual in a participating hospital, including a physician on call for the care of that individual. The CMS regulations related to section 1867 of the Act are found at 42 CFR 489.24.
Under section 1867(d) of the Act, participating hospitals and responsible physicians may be liable for CMPs of up to $50,000 ($25,000 for hospitals with fewer than 100 State-licensed and Medicare-certified beds) for each negligent violation of their respective EMTALA obligations. Responsible physicians are also subject to exclusion for committing a gross and flagrant or repeated violation of their EMTALA obligations. The OIG's regulations concerning the EMTALA CMPs and exclusion are at 42 CFR 1003.102(c), 103(e) and 106(a)(4) and (d).
We proposed several updates to the EMTALA CMP regulations. First, as part of our proposed general reorganization, we have included the EMTALA authorities within a separate subpart. Further, the proposed revision removed outdated references to the pre-1991 “knowing” scienter requirement. We also proposed minor revisions to emphasize that the CMP may be assessed for each violation of EMTALA and that all participating hospitals subject to EMTALA, including those with emergency departments and those with specialized capabilities or facilities, are subject to penalties.
We proposed revising the “responsible physician” definition to clarify that on-call physicians at any participating hospital subject to EMTALA, including the hospital to which the individual initially presented and the hospital with specialized capabilities or facilities that has received a request to accept an appropriate transfer, face potential CMP and exclusion liability under EMTALA.
Section 1867(d) of the Act provides that any physician who is responsible for the examination, treatment, or transfer of an individual in a participating hospital, including any physician on-call for the care of such an individual, and who negligently violates section 1867 of the Act may be penalized under section 1867(d)(1)(B) of the Act. The definition of “responsible physician” also provides for on-call physician liability. We proposed to revise the definition to clarify the circumstances when an on-call physician has EMTALA liability. An on-call physician who fails or refuses to appear within a reasonable time after such physician is requested to come to the hospital for examination, treatment, or transfer purposes is subject to EMTALA liability. This includes on-call physicians at the hospital where the individual presents initially and requests medical examination or treatment as well as on-call physicians at a hospital with specialized capabilities or facilities where the individual may need to be transferred. In addition, an on-call physician at the hospital with specialized capabilities or facilities may violate EMTALA by refusing to accept an appropriate transfer.
We also proposed revising the factors that were set forth in §§ 1003.106(a)(4) and (d) to improve clarity and better reflect OIG's enforcement policy. First, we proposed clarifying that the factors listed in proposed § 1003.520 will be used in making both CMP and exclusion determinations. Further, we proposed incorporating the general factors listed in § 1003.140 and provide additional guidance on the EMTALA subpart at proposed § 1003.520. Many of the factors that were in § 1003.106(a)(4) and (d) duplicate those general factors.
Finally, we examined the factors that were at § 1003.106(d) in light of our lengthy enforcement experience. Congress enacted EMTALA to ensure that individuals with emergency medical conditions are not denied essential lifesaving services. 131 Cong. Rec. S13904 (daily ed. Oct. 23, 1985) (statement of Sen. David Durenberger); H.R. Rep. No 99-241, pt. 1, at 27 (1986), reprinted 1986 U.S.C.C.A.N. 579, 605. In light of this statutory purpose, the circumstances surrounding the individual's presentment to a hospital are important to determinations about whether and to what extent a CMP or an exclusion is appropriate. Thus, the proposed regulations revised the factors to clarify that aggravating circumstances include: A request for proof of insurance or payment prior to screening or treating; patient harm, unnecessary risk of patient harm, premature discharge, or a need for additional services or subsequent hospital admission that resulted, or could have resulted, from the incident; and whether the individual presented with an emergency medical condition. While we removed the language at § 1003.106(a)(4), we consider these circumstances to be included in the general factors listed at proposed § 1003.140. Thus, while the proposed regulations do not state that OIG will consider “other instances where the respondent failed to provide appropriate medical screening examination, stabilization and treatment of individuals coming to a hospital's emergency department or to effect an appropriate transfer,” OIG will consider each of these failures when determining a penalty because they relate to a respondent's history.
We concluded that for several reasons, the mitigating factors should be removed. Because of the overall statutory purpose, the fact-specific nature of EMTALA violations, and the CMS certification process, the mitigating factors that were found at
We will continue to evaluate the circumstances of each EMTALA referral to determine whether to exercise our discretion to pursue the violation and to determine the appropriate remedy.
We received the following comments on the subpart. To the extent the provisions of the proposed rule are not addressed in response to the comments below, we are finalizing this section of the rule, as proposed.
Subpart F applies to violations of section 1140 of the Act (42 U.S.C. 1320b-10). The most significant proposed change to this subpart was clarifying the application of section 1140 of the Act to telemarketing, Internet, and electronic mail solicitations. Section 1140 of the Act, as amended by the Bipartisan Budget Act of 2015 (Bipartisan Budget Act, Pub. L. 114-74, section 814(a), 129 stat. 604 (2015)), prohibits the use of words, letters, symbols, or emblems of HHS, CMS, Medicare, or Medicaid in connection with “an
We previously defined conduct that constituted a violation for (1) direct or printed mailing solicitations or advertisements and (2) broadcasts or telecasts. The proposed regulations were updated to also reflect telephonic and Internet communications. Under a plain reading of the Act, telemarketing solicitations, email, and Web sites fall within the statutory terms emphasized above. In fact, since the publication of the proposed rule, the Bipartisan Budget Act of 2015 amended section 1140(a)(1) of the Act to expressly include Internet and other electronic communications. We believe telephonic and Internet communications are analogous to, and therefore proposed imposing penalties that would apply in the same manner as, those for direct mail and other printed materials. The number of individuals who received direct mail and other printed materials can be more easily quantified than the number of individuals who saw a television commercial or heard a radio commercial. Telemarketing calls, electronic messages, and Web page views can be similarly quantified. Thus, we proposed subjecting telemarketing, email, and Web site violations to the same $5,000 penalty as printed media. Each separate email address that received the email, each telemarketing call, and each Web page view would constitute a separate violation. This proposal is further supported by the Bipartisan Budget Act of 2015, which amended section 1140(b) of the Act to state that, for violations involving the Internet or other electronic communications, “each dissemination, viewing, or accessing of such communication . . . shall represent a separate violation.” Bipartisan Budget Act of 2015, section 814(b).
The final rule includes changes from the proposed rule to reflect the Bipartisan Budget Act of 2015. We changed “electronic message” and “electronic mail” to “electronic communication.” We also state “each dissemination, viewing, or accessing of the electronic communication,” as opposed to “each separate email address that received the email message,” will constitute a violation. The proposed rule used email addresses as a way to determine the number of disseminations, views, or accessing of the communication. Because not all “electronic communications” involve an “email address,” we believe “each dissemination, viewing, or accessing of the electronic communication” is a more appropriate description of potential violations of the rule.
We received no comments on this subpart and finalize, as proposed, except as explained above.
Subpart H covers violations for failing to report payments in settlement of a medical malpractice claim in accordance with section 421 of Public Law 99-660 (42 U.S.C. 11131); failing to report adverse actions pursuant to section 221 of Public Law 104-191 as set forth in section 1128E of the Act (42 U.S.C. 1320a-7e); or improperly disclosing, using, or permitting access to information reported in accordance with Part B of Title IV of Public Law 99-660 (42 U.S.C. 11137).
The language in proposed subpart H remains largely unchanged from the existing regulations at §§ 1003.102(b)(5)-(6) and §§ 1003.103(c), (g). We proposed to remove the reference to the Healthcare Integrity and Protection Data Bank (HIPDB) in conformity with section 6403(a) of the ACA, which removed the reference from section 1128E of the Act. The relevant reporting requirements, violation, and penalties would remain unchanged. Under section 1128E of the Act, providers must still report the same information. Once the HIPDB is phased out pursuant to section 6403(a) of ACA, the information will be collected and stored in the National Practitioner Data Bank established pursuant to the Health Care Quality Improvement Act of 1986 (42 U.S.C. 11101
We received no comments on this subpart and finalize, as proposed.
Subpart I contains penalties for violations involving select agents, found in the existing regulations at § 1003.102(b)(16) and § 1003.103(l). The Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (Bioterrorism Act of 2002), Public Law 107-188, provides for the regulation of certain biological agents and toxins (referred to below as “select agents and toxins”) by HHS. The regulations created pursuant to the Bioterrorism Act of 2002 are found at 42 CFR part 73. The regulations set forth requirements for the possession and use in the United States, receipt from outside the United States, and transfer within the United States of the select agents and toxins. For each violation of 42 CFR part 73, OIG is authorized to impose CMPs of up to of $250,000 in the case of an individual, and $500,000 in the case of an entity.
Proposed subpart I explains that the CMP may be assessed for each individual violation of 42 CFR part 73. The Bioterrorism Act of 2002 states that any person who violates “any provision” of the regulations is subject to the maximum statutory penalty. The plain meaning of “any provision” means that any single violation can
In addition, proposed subpart I includes several aggravating circumstances to guide our penalty determinations. Aggravating factors include: (1) The Responsible Official participated in or knew or should have known of the violation; (2) the violation was a contributing factor, regardless of proportionality, to an unauthorized individual's access to or possession of a select agent or toxin, an individual's exposure to a select agent or toxin, or the unauthorized removal of a select agent or toxin from the person's physical location as identified on the person's certificate of registration; and (3) the person previously received a statement of deficiency from HHS or the Department of Agriculture for the same or substantially similar conduct. In the final rule, we removed “regardless of proportionality” from the second aggravating factor. Such proportionality would be relevant to our qualitative weighing of the aggravating factor, but it would not be relevant to the applicability of the aggravating factor. We also added “observation” and “finding” to previous “statements of deficiency” in the third aggravating factor to better reflect the terminology used by HHS and the Department of Agriculture in Facility Inspection Reports.
We received no comments on this subpart and, except as noted above, finalize, as proposed.
Subpart J covers two statutory provisions concerning beneficiary inducement violations. We proposed moving the existing regulation, § 1003.102(b)(13), concerning the beneficiary inducement provision in the CMPL (section 1128A(a)(5) of the Act), to this subpart. We also proposed regulatory language for the authority at section 1862(b)(3)(C) of the Act. The statutory authority is self-implementing and does not require a regulation. We proposed adding the regulatory language at this time in light of the general reorganization. Under section 1862(b)(3)(C) of the Act, a penalty of up to $5,000 may be imposed against any person who offers any financial or other incentive for an individual entitled to benefits under Medicare not to enroll, or to terminate enrollment, under a group health plan or a large group health plan that would, in the case of such enrollment, be a primary plan as defined in section 1862(b)(2)(A) of the Act. The proposed regulatory text closely follows the language of the statute.
We proposed to incorporate the general factors listed in § 1003.140 for determining amounts of penalties and assessments for violations in this subpart and to clarify that we will consider the amount of remuneration, other financial incentives, or other incentives. This provision was in the existing regulations at § 1003.106(a)(1)(vii).
We changed the basis for penalties for violations of § 1003.1000(a) in the final rule to reflect the statute, which uses the CMPL default of penalties for each item or service.
We received the following comment on this subpart. As the comment was outside the scope of this rulemaking, we are finalizing this subpart, as proposed, except as explained above.
Subpart K covers violations relating to the sale of Medicare supplemental policies. The statutory authority is self-implementing and does not require a regulation. Omnibus Budget Reconciliation Act of 1990, Public Law 101-508, section 4354(c), 104 Stat. 3327 (1990); 42 U.S.C. 1395ss(d). However, we proposed adding the regulatory language at this time in light of the general reorganization.
The OIG may impose a penalty against any person who it determines has violated section 1882(d)(1) of the Act (42 U.S.C. 1395ss(d)(1)) by knowingly and willfully making or causing to be made or inducing or seeking to induce the making of any false statement or representation of material fact with respect to the compliance of any policy with Medicare supplemental policy standards and requirements or with respect to the use of the Secretary's emblem (described at section 1882(a)(1) of the Act (42 U.S.C. 1395ss(a)(1))) indicating that a policy has received the Secretary's certification. We proposed to add this violation at § 1003.1100(a).
The OIG may impose a penalty against any person who it determines has violated section 1882(d)(2) of the Act (42 U.S.C. 1395ss(d)(2)) by falsely assuming or pretending to be acting, or misrepresenting in any way that he is acting, under the authority of or in association with, Medicare or any Federal agency, for the purpose of selling or attempting to sell insurance, or in such pretended character demands or obtains money, paper, documents or anything of value. We proposed to add this violation at § 1003.1100(b).
The OIG may also impose a penalty against any person who it determines has violated section 1882(d)(4)(A) of the Act (42 U.S.C. 1395ss(d)(4)(A)) by mailing or causing to be mailed any matter for advertising, soliciting, offering for sale, or the delivery of Medicare supplemental insurance policy that has not been approved by the State commissioner or superintendent of insurance. We proposed to add this violation at § 1003.1100(c).
The OIG may impose a penalty against any person who it determines has violated section 1882(d)(3)(A)(i) of the Act (42 U.S.C. 1395ss(d)(3)(A)) by issuing or selling to an individual entitled to benefits under Part A or enrolled in Part B (including an individual electing a Medicare Part C plan): (1) A health insurance policy with the knowledge that the policy duplicates Medicare or Medicaid health benefits to which the individual is otherwise entitled; (2) a Medicare supplemental policy to an individual who has not elected a Medicare Part C plan where the person knows that the individual is entitled to benefits under another Medicare supplemental policy; (3) a Medicare supplemental policy to an individual who has elected a Medicare Part C plan where the person knows that the policy duplicates health
The OIG may also impose a penalty against any person who violated section 1882(d)(3)(A)(vi)(II) of the Act (42 U.S.C. 1395ss(d)(3)(A)(vi)(II)) by issuing or selling a health insurance policy (other than a policy described in section 1882(d)(3)(A)(vi)(III) of the Act) to an individual entitled to benefits under Part A or enrolled under Part B who is applying for a health insurance policy without furnishing a disclosure statement (described at section 1882(d)(3)(A)(vii) of the Act). We proposed to add this violation at § 1003.1100(e).
The OIG may also impose a penalty against any person who it determines has violated section 1882(d)(3)(B)(iv) of the Act (42 U.S.C. 1395ss(d)(3)(B)(iv)) by issuing or selling a Medicare supplemental policy to any individual eligible for benefits under Part A or enrolled under Part B without obtaining the written statement from the individual or written acknowledgement from the seller required by section 1882(d)(3)(B) of the Act (42 U.S.C. 1395ss(d)(3)(B)). We proposed to add this violation at § 1003.1100(f).
For violations of section 1882(d)(1), (d)(2), and (d)(4)(A) of the Act, OIG may impose a penalty of not more than $5,000 for each violation. We proposed to add this penalty at § 1003.1110(a). For violations of section 1882(d)(3)(A) and (B) of the Act, OIG may impose a penalty of not more than $25,000 for each violation by a seller that is also the issuer of the policy and a penalty of not more than $15,000 for each violation by a seller that is not the issuer of the policy. We proposed to add these penalties at §§ 1003.1110(b) and (c). In determining the amount of the penalty in accordance with proposed subpart K, OIG would consider the factors listed in the proposed § 1003.140.
We received the following comment on this subpart. As discussed below, we are finalizing this subpart, as proposed.
Subpart L contains the CMPs for drug-price reporting found in section 1927(b)(3)(B)-(C) of the Act (42 U.S.C. 1396r-8(b)(3)(B)-(C)). Although the statutory authority is self-implementing and does not require a regulation, we proposed adding the regulatory language at this time in light of the general reorganization. The proposed regulation text closely mirrors the language of the statute.
Section 1927(a) of the Act implements a drug-pricing program in which manufacturers that sell covered outpatient drugs to covered entities must agree to charge a price that will not exceed an amount determined under a statutory formula. Under section 1927(a) of the Act, manufacturers must provide certain statutorily mandated discounts to covered entities. Section 1927(b)(3)(A) of the Act requires manufacturers with Medicaid Drug Rebate Agreements to provide specified drug-pricing and product information to the Secretary, including, but not limited to, average manufacturer price (AMP), average sales price (ASP), wholesale acquisition cost, and best price. Labelers are required to certify each product and pricing data submission made to CMS.
Manufacturers submit the product and pricing information required by section 1927 of the Act using the National Drug Code (NDC) product identifier. The OIG proposed calculating CMPs under section 1927(b)(3)(C) of the Act at the NDC level. For example, a manufacturer that fails to provide the information required by section 1927(b)(3)(A) of the Act for five separate NDCs may be penalized for each NDC, in an aggregate amount of not more than $50,000 per day for each day that the information is not provided. If, after 2 days, the manufacturer in this example submitted information for two of the missing NDCs, the manufacturer would be subject to an aggregate penalty of not more than $30,000 per day for each additional day that information was not provided for the remaining three NDCs. The OIG believes that this interpretation is supported by the statutory text, which refers to NDCs, and by the reporting systems employed by CMS, under which manufacturers are required to report AMP and ASP product and pricing data using NDCs.
Section 1927(b)(3)(B) of the Act provides for verification surveys of AMPs and establishes that a penalty of not more than $100,000 may be imposed against a wholesaler, direct seller, or manufacturer that directly distributes its covered outpatient drugs for refusing a request for information by, or for knowingly providing false information to, the Secretary about charges or prices in connection with such a survey.
Pursuant to section 1927(b)(3)(C) of the Act, OIG may impose a penalty of not more than $100,000 against any manufacturer with an agreement under section 1927 of the Act that knowingly provides false information for each item of false information.
We received the following comments on this subpart. To the extent provisions of the proposed rule are not addressed in our response to the comments below, we are finalizing this section of the rule, as proposed.
In subpart M, we proposed to add regulations providing for CMPs for notifying a skilled nursing facility (SNF), nursing facility (NF), home health agency (HHA), or a community care setting of the date or time of a survey. The statutory authority for these CMPs is self-implementing and does not require a regulation. Sections 1819(g)(2)(A), 1919(g)(2)(A), 1891(c)(1), 1929(i)(3)(A); 42 U.S.C. 1395i-3(g)(2)(A), 1396r(g)(2)(A), 1395bbb(c)(1), 1396t(i)(3)(A) of the Act. However, we proposed adding the regulatory language at this time in light of the general reorganization. The proposed regulation text closely mirrors the language of the statute.
SNFs, NFs, HHAs, and community care settings are subject to State compliance surveys without any prior notice. Sections 1819(g)(2)(A), 1919(g)(2)(A), 1891(c)(1), and 1929(i)(3)(A) of the Act provide for imposing a penalty of not more than $2,000 against any individual who notifies, or causes to be notified, a SNF, NF, home health agency, or community care setting of the time or date on which a survey is scheduled to be conducted.
The OIG will consider the general factors listed in § 1003.140 when determining the amount of the penalties to be imposed under this subpart.
We received no comments on this subpart and finalize, as proposed.
Subpart O contains the procedural provisions that apply to part 1003. We proposed several clarifying changes to procedures in this subpart. We proposed amending the methods permitted for service of a notice of a proposal of a penalty, assessment, or exclusion under part 1003. Section 1003.109 required service by certified mail, return receipt requested. Section 1128A(c)(1) of the Act, however, permits service by any method authorized by Rule 4 of the Federal Rules of Civil Procedure (FRCP), which has been amended to authorize various service methods depending on whether the recipient is a domestic or foreign individual or corporation. Therefore, we are amending our regulation at §§ 1003.1500(a) and 1003.1510 to permit service under any means authorized by FRCP Rule 4. By referencing the rule, the regulation would reflect any future amendments to Rule 4 automatically.
We also proposed technical changes to the judicial review provision at § 1003.127 in the existing regulation and redesignated as § 1003.1540 to better conform to the statutory scheme requiring a person to exhaust his or her administrative remedies before filing a claim in Federal court. Exhaustion of administrative remedies is a well-settled legal principle, particularly concerning section 405(g) of the Act (42 U.S.C. 205(g)). Consistent with existing law, the proposed regulations clarify that a person may not bring a claim in Federal court without first raising that claim at every applicable stage within the administrative process, including any administrative appeal process. In the context of part 1003, that administrative process consists of making a timely request for a hearing before an ALJ pursuant to 42 CFR 1005.2 and, if the respondent loses at the ALJ level, timely filing an appeal of the ALJ decision to the Appellate Division of the Departmental Appeals Board. Only after the Departmental Appeals Board makes a final decision under 42 CFR 1005.21(j) is the respondent eligible to file an action in Federal court.
We also proposed a technical change to the regulatory language to clarify the statutory limit on issues eligible for judicial review. Section 1128A(e) of the Act provides that “[n]o objection that has not been urged before the Secretary shall be considered by the court, unless the failure or neglect to urge such objection shall be excused because of extraordinary circumstances.” We interpret this to mean that a person is precluded from making arguments or raising issues in Federal court that were not first raised during the administrative process, unless the court finds that extraordinary circumstances prevented raising those arguments or issues. We interpret “extraordinary circumstances” to mean that those arguments or issues were beyond the authority of the administrative process.
We received no comments on this subpart and finalize, as proposed.
The OIG has authority to impose CMPs against endorsed sponsors under the Medicare Prescription Drug Discount Card Program that knowingly commit certain violations. The discount card program has been defunct since January 1, 2006, when Medicare Part D went into effect. We proposed to remove this CMP from the regulations as the statute of limitations has expired for any conduct that might implicate this CMP.
We received no comments on removing this CMP and finalize, as proposed.
We proposed changes to OIG regulations at 42 CFR part 1005 to correct an internal inconsistency in § 1005.4(c). The regulation states at § 1005.4(c)(5)-(6) that an ALJ is not authorized to (1) review the exercise of discretion by OIG to exclude an individual or entity under section 1128(b) of the Act, (2) determine the scope or effect of the exclusion, or (3) set a period of exclusion at zero when the ALJ finds that the individual or entity committed an act described in section 1128(b) of the Act. Section 1005.4(c)(7) stated that an ALJ is not authorized to review the exercise of discretion by OIG to impose a CMP, an assessment, or an exclusion under part 1003. The second and third limits on ALJ authority with respect to exclusions under section 1128(b) of the Act should also apply to exclusions imposed under part 1003. To correct this inconsistency, we proposed to clarify that when reviewing exclusions imposed pursuant to part 1003, an ALJ is not authorized to (1) review OIG's exercise of discretion to exclude an individual or entity, (2) determine the scope or effect of the exclusion, or (3) set a period of exclusion at zero if the ALJ finds that the individual or entity committed an act described in part 1003. We believe that this requirement is consistent with congressional intent in enacting the statutes providing authority for part
We received the following comment on this proposal. As discussed in response to the comment, we are finalizing this section of the rule, as proposed.
We have examined the impact of this proposed rule as required by Executive Order 12866, Executive Order 13563, the Regulatory Flexibility Act (RFA) of 1980, the Unfunded Mandates Reform Act of 1995, and Executive Order 13132.
Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulations are necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects; distributive impacts; and equity). Executive Order 13563 is supplemental to and reaffirms the principles, structures, and definitions governing regulatory review as established in Executive Order 12866. A regulatory impact analysis must be prepared for major rules with economically significant effects,
This proposed rule is designed to codify in regulations new statutory provisions, including new CMP authorities. This proposed rule is also designed to clarify the intent of existing statutory requirements and to reorganize CMP regulation sections for ease of use. The vast majority of providers, suppliers, and other persons participating in Federal health care programs would be minimally affected, if at all, by these proposed revisions.
Accordingly, we believe that the likely aggregate economic effect of these regulations would be significantly less than $100 million.
The Regulatory Flexibility Act (RFA) and the Small Business Regulatory Enforcement and Fairness Act of 1996, which amended the RFA, require agencies to analyze options for regulatory relief of small businesses. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and government agencies. Most providers are considered small entities if they have revenues of $5 million to $25 million or less in any one year. For purposes of the RFA, most physicians and suppliers are considered small entities.
The aggregate effect of the changes to the CMP provisions would be minimal.
In summary, we have concluded that this proposed rule should not have a significant impact on the operations of a substantial number of small providers and that a regulatory flexibility analysis is not required for this rulemaking.
In addition, section 1102(b) of the Act (42 U.S.C. 1302) requires us to prepare a regulatory impact analysis if a rule under Titles XVIII or XIX or section B of Title XI of the Act may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to section 604 of the RFA. Only one proposed change has been made under the relevant title, the amendments to the Medicare Contracting Organization Rule at proposed § 1003.400,
Section 202 of the Unfunded Mandates Reform Act of 1995, Public Law 104-4, also requires that agencies assess anticipated costs and benefits before issuing any rule that may result in expenditures in any one year by State, local, or tribal governments, in the aggregate, or by the private sector, of $110 million or more. As indicated above, these proposed revisions comport with statutory amendments and clarify existing law. We believe that as a result, there would be no significant costs associated with these proposed revisions that would impose any mandates on State, local, or tribal governments or the private sector that would result in an expenditure of $110 million or more (adjusted for inflation) in any given year and that a full analysis under the Unfunded Mandates Reform Act is not necessary.
Executive Order 13132, Federalism, establishes certain requirements that an agency must meet when it promulgates a rule that imposes substantial direct requirements or costs on State and local governments, preempts State law, or otherwise has Federalism implications. In reviewing this rule under the threshold criteria of Executive Order 13132, we have determined that this proposed rule would not significantly affect the rights, roles, and responsibilities of State or local governments.
These proposed changes to parts 1003 and 1005 impose no new reporting requirements or collections of information. Therefore, a Paperwork Reduction Act review is not required.
Fraud, Grant programs—health, Health facilities, Health professions, Medicaid, Reporting and recordkeeping.
Administrative practice and procedure, Fraud, Investigations, Penalties.
For the reasons set forth in the preamble, the Office of the Inspector General, Department of Health and Human Services, amends 42 CFR chapter V, subchapter B as follows:
42 U.S.C. 262a, 1302, 1320-7, 1320a-7a, 1320b-10, 1395u(j), 1395u(k), 1395cc(j), 1395w-141(i)(3), 1395dd(d)(1), 1395mm, 1395nn(g), 1395ss(d), 1396b(m), 11131(c), and 11137(b)(2).
(a)
(b)
(1) Provides for the imposition of civil money penalties and, as applicable, assessments and exclusions against persons who have committed an act or omission that violates one or more provisions of this part and
(2) Sets forth the appeal rights of persons subject to a penalty, assessment, and exclusion.
The revisions and additions read as follows:
(a) In any case in which it is determined that more than one person was responsible for a violation described in this part, each such person may be held liable for the penalty prescribed by this part.
(b) In any case in which it is determined that more than one person was responsible for a violation described in this part, an assessment may be imposed, when authorized, against any one such person or jointly and severally against two or more such persons, but the aggregate amount of the assessments collected may not exceed the amount that could be assessed if only one person was responsible.
(c) Under this part, a principal is liable for penalties and assessments for the actions of his or her agent acting within the scope of his or her agency. This provision does not limit the underlying liability of the agent.
The assessment in this part is in lieu of damages sustained by the Department or a State agency because of the violation.
(a) Except as otherwise provided in this part, in determining the amount of any penalty or assessment or the period of exclusion in accordance with this part, the OIG will consider the following factors—
(1) The nature and circumstances of the violation;
(2) The degree of culpability of the person against whom a civil money penalty, assessment, or exclusion is proposed. It should be considered an aggravating circumstance if the respondent had actual knowledge where a lower level of knowledge was required to establish liability (
(3) The history of prior offenses. Aggravating circumstances include, if at any time prior to the violation, the individual—or in the case of an entity, the entity itself; any individual who had a direct or indirect ownership or control interest (as defined in section 1124(a)(3) of the Act) in a sanctioned entity at the time the violation occurred and who knew, or should have known, of the violation; or any individual who was an officer or a managing employee (as defined in section 1126(b) of the Act) of such an entity at the time the violation occurred—was held liable for criminal, civil, or administrative sanctions in connection with a program covered by this part or in connection with the delivery of a health care item or service;
(4) Other wrongful conduct. Aggravating circumstances include proof that the individual—or in the case of an entity, the entity itself; any individual who had a direct or indirect ownership or control interest (as defined in section 1124(a)(3) of the Act) in a sanctioned entity at the time the violation occurred and who knew, or should have known, of the violation; or any individual who was an officer or a managing employee (as defined in section 1126(b) of the Act) of such an entity at the time the violation occurred—engaged in wrongful conduct, other than the specific conduct upon which liability is based, relating to a government program or in connection with the delivery of a health care item or service. The statute of limitations governing civil money penalty proceedings does not apply to proof of other wrongful conduct as an aggravating circumstance; and
(5) Such other matters as justice may require. Other circumstances of an aggravating or mitigating nature should be considered if, in the interests of justice, they require either a reduction or an increase in the penalty, assessment, or period of exclusion to achieve the purposes of this part.
(b)(1) After determining the amount of any penalty and assessment in accordance with this part, the OIG considers the ability of the person to pay the proposed civil money penalty or assessment. The person shall provide, in a time and manner requested by the OIG, sufficient financial documentation,
(2) If the person requests a hearing in accordance with 42 CFR 1005.2, the only financial documentation subject to review is that which the person provided to the OIG during the administrative process, unless the ALJ finds that extraordinary circumstances prevented the person from providing the financial documentation to the OIG in the time and manner requested by the OIG prior to the hearing request.
(c) In determining the amount of any penalty and assessment to be imposed under this part the following circumstances are also to be considered—
(1) If there are substantial or several mitigating circumstances, the aggregate amount of the penalty and assessment should be set at an amount sufficiently below the maximum permitted by this part to reflect that fact.
(2) If there are substantial or several aggravating circumstances, the aggregate amount of the penalty and assessment should be set at an amount sufficiently close to or at the maximum permitted by this part to reflect that fact.
(3) Unless there are extraordinary mitigating circumstances, the aggregate amount of the penalty and assessment should not be less than double the approximate amount of damages and costs (as defined by paragraph (e)(2) of this section) sustained by the United States, or any State, as a result of the violation.
(4) The presence of any single aggravating circumstance may justify imposing a penalty and assessment at or close to the maximum even when one or more mitigating factors is present.
(d)(1) The standards set forth in this section are binding, except to the extent that their application would result in imposition of an amount that would exceed limits imposed by the United States Constitution.
(2) The amount imposed will not be less than the approximate amount required to fully compensate the United States, or any State, for its damages and costs, tangible and intangible, including, but not limited to, the costs attributable to the investigation, prosecution, and administrative review of the case.
(3) Nothing in this part limits the authority of the Department or the OIG to settle any issue or case as provided by § 1003.1530 or to compromise any exclusion and any penalty and assessment as provided by § 1003.1550.
(4) Penalties, assessments, and exclusions imposed under this part are in addition to any other penalties, assessments, or other sanctions prescribed by law.
The OIG is delegated authority from the Secretary to impose civil money penalties and, as applicable, assessments and exclusions against any person who has violated one or more provisions of this part. The delegation of authority includes all powers to impose and compromise civil monetary penalties, assessments, and exclusion under section 1128A of the Act.
(a) The OIG will consider a request from the administrator of a Federal health care program for a waiver of an exclusion imposed under this part as set forth in paragraph (b) of this section. The request must be in writing and from an individual directly responsible for administering the Federal health care program.
(b) If the OIG subsequently obtains information that the basis for a waiver no longer exists, the waiver will cease and the person will be fully excluded from the Federal health care programs for the remainder of the exclusion period, measured from the time the full exclusion would have been imposed if the waiver had not been granted.
(c) The OIG will notify the administrator of the Federal health care program whether his or her request for a waiver has been granted or denied.
(d) If a waiver is granted, it applies only to the program(s) for which waiver is requested.
(e) The decision to grant, deny, or rescind a waiver is not subject to administrative or judicial review.
(a) The OIG may impose a penalty, assessment, and an exclusion against any person who it determines has knowingly presented, or caused to be presented, a claim that was for—
(1) An item or service that the person knew, or should have known, was not provided as claimed, including a claim that was part of a pattern or practice of claims based on codes that the person knew, or should have known, would result in greater payment to the person than the code applicable to the item or service actually provided;
(2) An item or service for which the person knew, or should have known, that the claim was false or fraudulent;
(3) An item or service furnished during a period in which the person was excluded from participation in the Federal health care program to which the claim was presented;
(4) A physician's services (or an item or service) for which the person knew, or should have known, that the individual who furnished (or supervised the furnishing of) the service—
(i) Was not licensed as a physician;
(ii) Was licensed as a physician, but such license had been obtained through a misrepresentation of material fact (including cheating on an examination required for licensing); or
(iii) Represented to the patient at the time the service was furnished that the physician was certified by a medical specialty board when he or she was not so certified; or
(5) An item or service that a person knew, or should have known was not
(b) The OIG may impose a penalty; an exclusion; and, where authorized, an assessment against any person who it determines—
(1) Has knowingly presented, or caused to be presented, a request for payment in violation of the terms of—
(i) An agreement to accept payments on the basis of an assignment under section 1842(b)(3)(B)(ii) of the Act;
(ii) An agreement with a State agency or other requirement of a State Medicaid plan not to charge a person for an item or service in excess of the amount permitted to be charged;
(iii) An agreement to be a participating physician or supplier under section 1842(h)(1) of the Act; or
(iv) An agreement in accordance with section 1866(a)(1)(G) of the Act not to charge any person for inpatient hospital services for which payment had been denied or reduced under section 1886(f)(2) of the Act;
(2) Has knowingly given, or caused to be given, to any person, in the case of inpatient hospital services subject to section 1886 of the Act, information that he or she knew, or should have known, was false or misleading and that could reasonably have been expected to influence the decision when to discharge such person or another person from the hospital;
(3) Is an individual who is excluded from participating in a Federal health care program under section 1128 or 1128A of the Act, and who—
(i) Knows, or should know, of the action constituting the basis for the exclusion and retains a direct or indirect ownership or control interest of 5 percent or more in an entity that participates in a Federal health care program or
(ii) Is an officer or a managing employee (as defined in section 1126(b) of the Act) of such entity;
(4) Arranges or contracts (by employment or otherwise) with an individual or entity that the person knows, or should know, is excluded from participation in Federal health care programs for the provision of items or services for which payment may be made under such a program;
(5) Has knowingly and willfully presented, or caused to be presented, a bill or request for payment for items and services furnished to a hospital patient for which payment may be made under a Federal health care program if that bill or request is inconsistent with an arrangement under section 1866(a)(1)(H) of the Act or violates the requirements for such an arrangement;
(6) Orders or prescribes a medical or other item or service during a period in which the person was excluded from a Federal health care program, in the case when the person knows, or should know, that a claim for such medical or other item or service will be made under such a program;
(7) Knowingly makes, or causes to be made, any false statement, omission, or misrepresentation of a material fact in any application, bid, or contract to participate or enroll as a provider of services or a supplier under a Federal health care program, including contracting organizations, and entities that apply to participate as providers of services or suppliers in such contracting organizations;
(8) Knows of an overpayment and does not report and return the overpayment in accordance with section 1128J(d) of the Act;
(9) Knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim for payment for items and services furnished under a Federal health care program; or
(10) Fails to grant timely access to records, documents, and other material or data in any medium (including electronically stored information and any tangible thing), upon reasonable request, to the OIG, for the purpose of audits, investigations, evaluations, or other OIG statutory functions. Such failure to grant timely access means:
(i) Except when the OIG reasonably believes that the requested material is about to be altered or destroyed, the failure to produce or make available for inspection and copying the requested material upon reasonable request or to provide a compelling reason why they cannot be produced, by the deadline specified in the OIG's written request, and
(ii) When the OIG has reason to believe that the requested material is about to be altered or destroyed, the failure to provide access to the requested material at the time the request is made.
(c) The OIG may impose a penalty against any person who it determines, in accordance with this part, is a physician and who executes a document falsely by certifying that a Medicare beneficiary requires home health services when the physician knows that the beneficiary does not meet the eligibility requirements in section 1814(a)(2)(C) or 1835(a)(2)(A) of the Act.
(d) The OIG may impose a penalty against any person who it determines knowingly certifies, or causes another individual to certify, a material and false statement in a resident assessment pursuant to sections 1819(b)(3)(B) and 1919(b)(3)(B).
(a)
(2) The OIG may impose a penalty of not more than $15,000 for each person with respect to whom a determination was made that false or misleading information was given under § 1003.200(b)(2).
(3) The OIG may impose a penalty of not more than $10,000 per day for each day that the prohibited relationship described in § 1003.200(b)(3) occurs.
(4) For each individual violation of § 1003.200(b)(4), the OIG may impose a penalty of not more than $10,000 for each separately billable or non-separately-billable item or service provided, furnished, ordered, or prescribed by an excluded individual or entity.
(5) The OIG may impose a penalty of not more than $2,000 for each bill or request for payment for items and services furnished to a hospital patient in violation of § 1003.200(b)(5).
(6) The OIG may impose a penalty of not more than $50,000 for each false statement, omission, or misrepresentation of a material fact in violation of § 1003.200(b)(7).
(7) The OIG may impose a penalty of not more than $50,000 for each false record or statement in violation of § 1003.200(b)(9).
(8) The OIG may impose a penalty of not more than $10,000 for each item or service related to an overpayment that is not reported and returned in accordance with section 1128J(d) of the Act in violation of § 1003.200(b)(8).
(9) The OIG may impose a penalty of not more than $15,000 for each day of failure to grant timely access in violation of § 1003.200(b)(10).
(10) For each false certification in violation of § 1003.200(c), the OIG may impose a penalty of not more than the greater of—
(i) $5,000; or
(ii) Three times the amount of Medicare payments for home health services that are made with regard to the false certification of eligibility by a
(11) For each false certification in violation of § 1003.200(d), the OIG may impose a penalty of not more than—
(i) $1,000 with respect to an individual who willfully and knowingly falsely certifies a material and false statement in a resident assessment; and
(ii) $5,000 with respect to an individual who willfully and knowingly causes another individual to falsely certify a material and false statement in a resident assessment.
(b)
(2) For violations of § 1003.200(b)(4), the OIG may impose an assessment of not more than 3 times—
(i) The amount claimed for each separately billable item or service provided, furnished, ordered, or prescribed by an excluded individual or entity or
(ii) The total costs (including salary, benefits, taxes, and other money or items of value) related to the excluded individual or entity incurred by the person that employs, contracts with, or otherwise arranges for an excluded individual or entity to provide, furnish, order, or prescribe a non-separately-billable item or service.
(3) For violations of § 1003.200(b)(7), the OIG may impose an assessment of not more than 3 times the total amount claimed for each item or service for which payment was made based upon the application containing the false statement, omission, or misrepresentation of material fact.
In considering the factors listed in § 1003.140—
(a) It should be considered a mitigating circumstance if all the items or services or violations included in the action brought under this part were of the same type and occurred within a short period of time, there were few such items or services or violations, and the total amount claimed or requested for such items or services was less than $5,000.
(b) Aggravating circumstances include—
(1) The violations were of several types or occurred over a lengthy period of time;
(2) There were many such items or services or violations (or the nature and circumstances indicate a pattern of claims or requests for payment for such items or services or a pattern of violations);
(3) The amount claimed or requested for such items or services, or the amount of the overpayment was $50,000 or more;
(4) The violation resulted, or could have resulted, in patient harm, premature discharge, or a need for additional services or subsequent hospital admission; or
(5) The amount or type of financial, ownership, or control interest or the degree of responsibility a person has in an entity was substantial with respect to an action brought under § 1003.200(b)(3).
The OIG may impose a penalty, an assessment, and an exclusion against any person who it determines in accordance with this part—
(a) Has not refunded on a timely basis, as defined in § 1003.110, amounts collected as a result of billing an individual, third party payer, or other entity for a designated health service furnished pursuant to a prohibited referral as described in 42 CFR 411.353.
(b) Is a physician or other person who enters into any arrangement or scheme (such as a cross-referral arrangement) that the physician or other person knows, or should know, has a principal purpose of ensuring referrals by the physician to a particular person that, if the physician directly made referrals to such person, would be in violation of the prohibitions of 42 CFR 411.353.
(c) Has knowingly presented, or caused to be presented, a claim that is for a payment that such person knows, or should know, may not be made under 42 CFR 411.353;
(d) Has violated section 1128B(b) of the Act by unlawfully offering, paying, soliciting, or receiving remuneration to induce or in return for the referral of business paid for, in whole or in part, by Medicare, Medicaid, or other Federal health care programs.
(a)
(1) $15,000 for each claim or bill for a designated health service, as defined in § 411.351 of this title, that is subject to a determination under § 1003.300(a) or (c);
(2) $100,000 for each arrangement or scheme that is subject to a determination under § 1003.300(b); and
(3) $50,000 for each offer, payment, solicitation, or receipt of remuneration that is subject to a determination under § 1003.300(d).
(b)
(1) The amount claimed for each designated health service that is subject to a determination under § 1003.300(a), (b), or (c).
(2) The total remuneration offered, paid, solicited, or received that is subject to a determination under § 1003.300(d). Calculation of the total remuneration for purposes of an assessment shall be without regard to whether a portion of such remuneration was offered, paid, solicited, or received for a lawful purpose.
In considering the factors listed in § 1003.140:
(a) It should be considered a mitigating circumstance if all the items, services, or violations included in the action brought under this part were of the same type and occurred within a short period of time; there were few such items, services, or violations; and the total amount claimed or requested for such items or services was less than $5,000.
(b) Aggravating circumstances include—
(1) The violations were of several types or occurred over a lengthy period of time;
(2) There were many such items, services, or violations (or the nature and circumstances indicate a pattern of claims or requests for payment for such items or services or a pattern of violations);
(3) The amount claimed or requested for such items or services or the amount of the remuneration was $50,000 or more; or
(4) The violation resulted, or could have resulted, in harm to the patient, a premature discharge, or a need for additional services or subsequent hospital admission.
(a)
(1) Fails substantially to provide an enrollee with medically necessary items and services that are required (under the Act, applicable regulations, or contract with the Department or a State) to be provided to such enrollee and the failure adversely affects (or has the substantial likelihood of adversely affecting) the enrollee;
(2) Imposes a premium on an enrollee in excess of the amounts permitted under the Act;
(3) Engages in any practice that would reasonably be expected to have the effect of denying or discouraging enrollment by beneficiaries whose medical condition or history indicates a need for substantial future medical services, except as permitted by the Act;
(4) Misrepresents or falsifies information furnished to a person under sections 1857, 1860D-12, 1876, or 1903(m) of the Act;
(5) Misrepresents or falsifies information furnished to the Secretary or a State, as applicable, under sections 1857, 1860D-12, 1876, or 1903(m) of the Act;
(6) Fails to comply with the requirements of 42 CFR 417.479(d) through (i) for Medicare and 42 CFR 417.479(d) through (g) and (i) for Medicaid regarding certain prohibited incentive payments to physicians; or
(7) Fails to comply with applicable requirements of the Act regarding prompt payment of claims.
(b)
(1) Acts to expel or to refuse to reenroll a beneficiary in violation of the Act; or
(2) Employs or contracts with a person excluded, under section 1128 or 1128A of the Act, from participation in Medicare for the provision of health care, utilization review, medical social work, or administrative services, or employs or contracts with any entity for the provision of such services (directly or indirectly) through an excluded person.
(c)
(1) Enrolls an individual without the individual's (or his or her designee's) prior consent, except as provided under subparagraph (C) or (D) of section 1860D-1(b)(1) of the Act;
(2) Transfers an enrollee from one plan to another without the individual's (or his or her designee's) prior consent;
(3) Transfers an enrollee solely for the purpose of earning a commission;
(4) Fails to comply with marketing restrictions described in subsection (h) or (j) of section 1851 of the Act or applicable implementing regulations or guidance; or
(5) Employs or contracts with any person who engages in the conduct described in paragraphs (a) through (c) of this section.
(d)
(e)
(a)
(2) The OIG may impose a penalty of up to $100,000 for each individual violation under § 1003.400(a)(3), (a)(5), or (e).
(b)
(1) An additional penalty equal to double the amount of excess premium charged by the contracting organization for each individual violation of § 1003.400(a)(2). The excess premium amount will be deducted from the penalty and returned to the enrollee.
(2) An additional $15,000
(c)
(d) The OIG may impose a penalty or, when applicable, an assessment, against a contracting organization with a contract under section 1857 or 1860D-12 of the Act (Medicare Advantage or Part D) if any of its employees, agents, or contracting providers or suppliers engages in any of the conduct described in § 1003.400(a) through (d).
In considering the factors listed in § 1003.140, aggravating circumstances include—
(a) Such violations were of several types or occurred over a lengthy period of time;
(b) There were many such violations (or the nature and circumstances indicate a pattern of incidents);
(c) The amount of money, remuneration, damages, or tainted claims involved in the violation was $15,000 or more; or
(d) Patient harm, premature discharge, or a need for additional services or subsequent hospital admission resulted, or could have resulted, from the incident; and
(e) The contracting organization knowingly or routinely engaged in any prohibited practice that acted as an inducement to reduce or limit medically necessary services provided with respect to a specific enrollee in the organization.
(a) The OIG may impose a penalty against any participating hospital with an emergency department or specialized capabilities or facilities for each negligent violation of section 1867 of the Act or § 489.24 (other than § 489.24(j)) of this title.
(b) The OIG may impose a penalty against any responsible physician for each—
(1) Negligent violation of section 1867 of the Act;
(2) Certification signed under section 1867(c)(l)(A) of the Act if the physician knew, or should have known, that the benefits of transfer to another facility did not outweigh the risks of such a transfer; or
(3) Misrepresentation made concerning an individual's condition or other information, including a hospital's obligations under section 1867 of the Act.
(c) The OIG may, in lieu of or in addition to any penalty available under this subpart, exclude any responsible physician who commits a gross and flagrant, or repeated, violation of this subpart from participation in Federal health care programs.
(d) For purposes of this subpart, a “gross and flagrant violation” is a violation that presents an imminent danger to the health, safety, or well-being of the individual who seeks examination and treatment or places that individual unnecessarily in a high-risk situation.
The OIG may impose
(a) Against each participating hospital, a penalty of not more than $50,000 for each individual violation, except that if the participating hospital has fewer than 100 State-licensed, Medicare-certified beds on the date the penalty is imposed, the penalty will not exceed $25,000 for each violation, and
(b) Against each responsible physician, a penalty of not more than $50,000 for each individual violation.
In considering the factors listed in § 1003.140,
(a) It should be considered a mitigating circumstance if a hospital took appropriate and timely corrective action in response to the violation. For purposes of this subpart, corrective action must be completed prior to CMS initiating an investigation of the hospital for violations of section 1867 of the Act and must include disclosing the violation to CMS prior to CMS receiving a complaint regarding the violation from another source or otherwise learning of the violation.
(b) Aggravating circumstances include:
(1) Requesting proof of insurance, prior authorization, or a monetary payment prior to appropriately screening or initiating stabilizing treatment for an emergency medical condition, or requesting a monetary payment prior to stabilizing an emergency medical condition;
(2) Patient harm, or risk of patient harm, resulted from the incident; or
(3) The individual presented to the hospital with a request for examination or treatment of a medical condition that was an emergency medical condition, as defined by § 489.24(b) of this title.
(a) The OIG may impose a penalty against any person who it determines in accordance with this part has used the words, letters, symbols, or emblems as defined in paragraph (b) of this section in such a manner that such person knew, or should have known, would convey, or in a manner that reasonably could be interpreted or construed as conveying, the false impression that an advertisement, a solicitation, or other item was authorized, approved, or endorsed by the Department or CMS or that such person or organization has some connection with or authorization from the Department or CMS.
(b) Civil money penalties may be imposed, regardless of the use of a disclaimer of affiliation with the United States Government, the Department, or its programs, for misuse of—
(1) The words “Department of Health and Human Services,” “Health and Human Services,” “Centers for Medicare & Medicaid Services,” “Medicare,” or “Medicaid” or any other combination or variations of such words;
(2) The letters “DHHS,” “HHS,” or “CMS,” or any other combination or variation of such letters; or
(3) A symbol or an emblem of the Department or CMS (including the design of, or a reasonable facsimile of the design of, the Medicare card, the check used for payment of benefits under Title II, or envelopes or other stationery used by the Department or CMS) or any other combination or variation of such symbols or emblems.
(c) Civil money penalties will not be imposed against any agency or instrumentality of a State, or political subdivision of the State, that uses any symbol or emblem or any words or letters that specifically identify that agency or instrumentality of the State or political subdivision.
(a) The OIG may impose a penalty of not more than
(1) $5,000 for each individual violation resulting from the misuse of Departmental, CMS, or Medicare or Medicaid program words, letters, symbols, or emblems as described in § 1003.600(a) relating to printed media;
(2) $5,000 for each individual violation in the case of such misuse related to an electronic communication, Web page, or telemarketing solicitation;
(3) $25,000 for each individual violation in the case of such misuse related to a broadcast or telecast.
(b) For purposes of this paragraph, a violation is defined as—
(1) In the case of a direct mailing solicitation or advertisement, each separate piece of mail that contains one or more words, letters, symbols, or emblems related to a determination under § 1003.600(a);
(2) In the case of a printed solicitation or advertisement, each reproduction, reprinting, or distribution of such item related to a determination under § 1003.600(a);
(3) In the case of a broadcast or telecast, each airing of a single commercial or solicitation related to a determination under § 1003.600(a);
(4) In the case of an electronic communication, each dissemination, viewing, or accessing of the electronic communication that contains one or more words, letters, symbols, or emblems related to a determination under § 1003.600(a);
(5) In the case of a Web page accessed by a computer or other electronic means, each instance in which the Web page was viewed or accessed and that Web page contains one or more words, letters, symbols, or emblems related to a determination under § 1003.600(a); and
(6) In the case of a telemarketing solicitation, each individual unsolicited telephone call regarding an item or service under Medicare or Medicaid related to a determination under § 1003.600(a).
(a) In considering the factors listed in § 1003.140, the following circumstances are to be considered—
(1) The nature and objective of the advertisement, solicitation, or other communication and the degree to which it had the capacity to deceive members of the public;
(2) The frequency and scope of the violation and whether a specific segment of the population was targeted; and
(3) The prior history of the individual, organization, or entity in its willingness or refusal to comply with a formal or informal request to correct violations.
(b) The use of a disclaimer of affiliation with the United States Government, the Department, or its programs will not be considered as a mitigating factor in determining the amount of penalty in accordance with § 1003.600(a).
The OIG may impose a penalty against any person (including an insurance company) who it determines—
(a) Fails to report information concerning—
(1) A payment made under an insurance policy, self-insurance, or otherwise for the benefit of a physician, dentist, or other health care practitioner in settlement of, or in satisfaction in whole or in part of, a medical malpractice claim or action or a judgment against such a physician, dentist, or other practitioner in accordance with section 421 of Public Law 99-660 (42 U.S.C. 11131) and as required by regulations at 45 CFR part 60 or
(2) An adverse action required to be reported under section 1128E, as established by section 221 of Public Law 104-191.
(b) Improperly discloses, uses, or permits access to information reported in accordance with Part B of Title IV of Public Law 99-660 (42 U.S.C. 11137) or regulations at 45 CFR part 60. (The disclosure of information reported in accordance with Part B of Title IV in response to a subpoena or a discovery request is considered an improper disclosure in violation of section 427 of Public Law 99-660. However, disclosure or release by an entity of original documents or underlying records from which the reported information is obtained or derived is not considered an improper disclosure in violation of section 427 of Public Law 99-660.)
The OIG may impose a penalty of not more than
(a) $11,000 for each payment for which there was a failure to report required information in accordance with § 1003.800(a)(1) or for each improper disclosure, use, or access to information in accordance with a determination under § 1003.800(b); and
(b) $25,000 against a health plan for each failure to report information on an adverse action required to be reported in accordance with section 1128E of the Act and § 1003.800(a)(2).
In determining the amount of any penalty in accordance with this subpart, the OIG will consider the factors listed in § 1003.140.
The OIG may impose a penalty against any person who it determines in accordance with this part is involved in the possession or use in the United States, receipt from outside the United States or transfer within the United States, of select agents and toxins in violation of sections 351A(b) or (c) of the Public Health Service Act or 42 CFR part 73.
For each individual violation of section 351A(b) or (c) of the Public Health Service Act or 42 CFR part 73, the OIG may impose a penalty of not more than $250,000 in the case of an individual, and not more than $500,000 in the case of any other person.
In considering the factors listed in § 1003.140, aggravating circumstances include:
(a) The Responsible Official participated in or knew, or should have known, of the violation;
(b) The violation was a contributing factor to an unauthorized individual's access to or possession of a select agent or toxin, an individual's exposure to a select agent or toxin, or the unauthorized removal of a select agent or toxin from the person's physical location as identified on the person's certificate of registration; or
(c) The person previously received an observation, finding, or other statement of deficiency from the Department or the Department of Agriculture for the same or substantially similar conduct.
(a) The OIG may impose a penalty, an assessment, and an exclusion against any person who it determines offers or transfers remuneration (as defined in § 1003.110) to any individual eligible for benefits under Medicare or a State health care program that such person knows, or should know, is likely to influence such individual to order or to receive from a particular provider, practitioner, or supplier, any item or
(b) The OIG may impose a penalty against any person who it determines offered any financial or other incentive for an individual entitled to benefits under Medicare not to enroll, or to terminate enrollment, under a group health plan or a large group health plan that would, in the case of such enrollment, be a primary plan as defined in section 1862(b)(2)(A) of the Act.
The OIG may impose a penalty of not more than
(a) $10,000 for each item or service for which payment may be made, in whole or in part, under Medicare or a State health care program, ordered by or received from a particular provider, practitioner, or supplier for a beneficiary who was offered or received remuneration in violation of § 1003.1000(a) that was likely to influence the beneficiary to order or receive the item or service from the provider, practitioner, or supplier, and an assessment of not more than 3 times the amount claimed for each such item or service and
(b) $5,000 for each individual violation of § 1003.1000(b).
In determining the amount of any penalty or assessment or the period of exclusion under this subpart, the OIG will consider the factors listed in § 1003.140, as well as the amount of remuneration or the amount or nature of any other incentive.
The OIG may impose a penalty against any person who—
(a) Knowingly and willfully makes or causes to be made or induces or seeks to induce the making of any false statement or representation of a material fact with respect to—
(1) The compliance of any policy with the standards and requirements for Medicare supplemental policies set forth in section 1882(c) of the Act or in promulgating regulations, or
(2) The use of the emblem designed by the Secretary under section 1882(a) of the Act for use as an indication that a policy has received the Secretary's certification;
(b) Falsely assumes or pretends to be acting, or misrepresents in any way that he or she is acting, under the authority of or in association with Medicare or any Federal agency, for the purpose of selling or attempting to sell insurance, or in such pretended character demands, or obtains money, paper, documents, or anything of value;
(c) Knowingly, directly, or through his or her agent, mails or causes to be mailed any matter for the advertising, solicitation, or offer for sale of a Medicare supplemental policy, or the delivery of such a policy, in or into any State in which such policy has not been approved by the State commissioner or superintendent of insurance;
(d) Issues or sells to any individual entitled to benefits under Part A or enrolled under Part B of Medicare—
(1) A health insurance policy with knowledge that the policy duplicates health benefits to which the individual is otherwise entitled under Medicare or Medicaid,
(2) A health insurance policy (other than a Medicare supplemental policy) with knowledge that the policy duplicates health benefits to which the individual is otherwise entitled, other than benefits to which the individual is entitled under a requirement of State or Federal law,
(3) In the case of an individual not electing a Part C plan, a Medicare supplemental policy with knowledge that the individual is entitled to benefits under another Medicare supplemental policy, or
(4) In the case of an individual electing a Part C plan, a Medicare supplemental policy with knowledge that the policy duplicates health benefits to which the individual is otherwise entitled under the Part C plan or under another Medicare supplemental policy;
(e) Issues or sells a health insurance policy (other than a policy described in section 1882(d)(3)(A)(vi)(III)) to any individual entitled to benefits under Medicare Part A or enrolled under Medicare Part B who is applying for a health insurance policy and fails to furnish the appropriate disclosure statement described in section 1882(d)(3)(A)(vii); or
(f) Issues or sells a Medicare supplemental policy to any individual eligible for benefits under Part A or enrolled under Medicare Part B without obtaining the written statement or the written acknowledgment described in section 1882(d)(3)(B) of the Act.
The OIG may impose a penalty of not more than
(a) $5,000 for each individual violation of § 1003.1100(a), (b), or (c).
(b) $25,000 for each individual violation of § 1003.1100(d), (e), or (f) by a seller who is also the issuer of the policy; and
(c) $15,000 for each individual violation of § 1003.1100(d), (e), or (f) by a seller who is not the issuer of the policy.
In determining the amount of the penalty in accordance with this subpart, the OIG will consider the factors listed in § 1003.140.
The OIG may impose a penalty against—
(a) Any wholesaler, manufacturer, or direct seller of a covered outpatient drug that—
(1) Refuses a request for information by, or
(2) Knowingly provides false information to, the Secretary about charges or prices in connection with a survey being conducted pursuant to section 1927(b)(3)(B) of the Act; and
(b) Any manufacturer with an agreement under section 1927 of the Act that—
(1) Fails to provide any information required by section 1927(b)(3)(A) of the Act by the deadlines specified therein, or
(2) Knowingly provides any item information required by section 1927(b)(3)(A) or (B) of the Act that is false.
The OIG may impose a penalty of not more than
(a) $100,000 for each individual violation of § 1003.1200(a) or § 1003.1200(b)(2); and
(b) $10,000 for each day that such information has not been provided in violation of § 1003.1200(b)(1).
In determining the amount of the penalty in accordance with this subpart,
The OIG may impose a penalty against any individual who notifies, or causes to be notified, a skilled nursing facility, nursing facility, home health agency, a community care setting, of the time or date on which a survey pursuant to sections 1819(g)(2)(A), 1919(g)(2)(A), 1891(c)(1), or 1929(i) of the Act is scheduled to be conducted.
The OIG may impose a penalty of not more than $2,000 for each individual violation of § 1003.1300.
In determining the amount of the penalty in accordance with this subpart, the OIG will consider the factors listed in § 1003.140.
(a) If the OIG proposes a penalty and, when applicable, an assessment, or proposes to exclude a respondent from participation in all Federal health care programs, as applicable, in accordance with this part, the OIG must serve on the respondent, in any manner authorized by Rule 4 of the Federal Rules of Civil Procedure, written notice of the OIG's intent to impose a penalty, an assessment, and an exclusion, as applicable. The notice will include—
(1) Reference to the statutory basis for the penalty, assessment, and exclusion;
(2) A description of the violation for which the penalty, assessment, and exclusion are proposed (except in cases in which the OIG is relying upon statistical sampling in accordance with § 1003.1580, in which case the notice shall describe those claims and requests for payment constituting the sample upon which the OIG is relying and will briefly describe the statistical sampling technique used by the OIG);
(3) The reason why such violation subjects the respondent to a penalty, an assessment, and an exclusion,
(4) The amount of the proposed penalty and assessment, and the length of the period of proposed exclusion (where applicable);
(5) Any factors and circumstances described in this part that were considered when determining the amount of the proposed penalty and assessment and the length of the period of exclusion;
(6) Instructions for responding to the notice, including—
(i) A specific statement of the respondent's right to a hearing and
(ii) A statement that failure to request a hearing within 60 days permits the imposition of the proposed penalty, assessment, and exclusion without right of appeal; and
(7) In the case of a notice sent to a respondent who has an agreement under section 1866 of the Act, the notice also indicates that the imposition of an exclusion may result in the termination of the respondent's provider agreement in accordance with section 1866(b)(2)(C) of the Act.
(b) Any person upon whom the OIG has proposed the imposition of a penalty, an assessment, or an exclusion may appeal such proposed penalty, assessment, or exclusion to the Departmental Appeals Board in accordance with 42 CFR 1005.2. The provisions of 42 CFR part 1005 govern such appeals.
(c) If the respondent fails, within the time period permitted, to exercise his or her right to a hearing under this section, any exclusion, penalty, or assessment becomes final.
If the respondent does not request a hearing within 60 days after the notice prescribed by § 1003.1500(a) is received, as determined by 42 CFR 1005.2(c), by the respondent, the OIG may impose the proposed penalty, assessment, and exclusion, or any less severe penalty, assessment, or exclusion. The OIG shall notify the respondent in any manner authorized by Rule 4 of the Federal Rules of Civil Procedure of any penalty, assessment, and exclusion that have been imposed and of the means by which the respondent may satisfy the judgment. The respondent has no right to appeal a penalty, an assessment, or an exclusion with respect to which he or she has not made a timely request for a hearing under 42 CFR 1005.2.
(a) Where a final determination pertaining to the respondent's liability for acts that violate this part has been rendered in any proceeding in which the respondent was a party and had an opportunity to be heard, the respondent shall be bound by such determination in any proceeding under this part.
(b) In a proceeding under this part, a person is estopped from denying the essential elements of the criminal offense if the proceeding—
(1) Is against a person who has been convicted (whether upon a verdict after trial or upon a plea of guilty or nolo contendere) of a Federal crime charging fraud or false statements, and
(2) Involves the same transactions as in the criminal action.
The OIG has exclusive authority to settle any issues or case without consent of the ALJ.
(a) Section 1128A(e) of the Act authorizes judicial review of a penalty, an assessment, or an exclusion that has become final. The only matters subject to judicial review are those that the respondent raised pursuant to 42 CFR 1005.21, unless the court finds that extraordinary circumstances existed that prevented the respondent from raising the issue in the underlying administrative appeal.
(b) A respondent must exhaust all administrative appeal procedures established by the Secretary or required by law before a respondent may bring an action in Federal court, as provided in section 1128A(e) of the Act, concerning any penalty, assessment, or exclusion imposed pursuant to this part.
(c) Administrative remedies are exhausted when a decision becomes final in accordance with 42 CFR 1005.21(j).
(a) Once a determination by the Secretary has become final, collection of any penalty and assessment will be the responsibility of CMS, except in the
(b) A penalty or an assessment imposed under this part may be compromised by the OIG and may be recovered in a civil action brought in the United States district court for the district where the claim was presented or where the respondent resides.
(c) The amount of penalty or assessment, when finally determined, or the amount agreed upon in compromise, may be deducted from any sum then or later owing by the United States Government or a State agency to the person against whom the penalty or assessment has been assessed.
(d) Matters that were raised, or that could have been raised, in a hearing before an ALJ or in an appeal under section 1128A(e) of the Act may not be raised as a defense in a civil action by the United States to collect a penalty under this part.
(a) Whenever a penalty, an assessment, or an exclusion becomes final, the following organizations and entities will be notified about such action and the reasons for it: The appropriate State or local medical or professional association; the appropriate quality improvement organization; as appropriate, the State agency that administers each State health care program; the appropriate Medicare carrier or intermediary; the appropriate State or local licensing agency or organization (including the Medicare and Medicaid State survey agencies); and the long-term-care ombudsman. In cases involving exclusions, notice will also be given to the public of the exclusion and its effective date.
(b) When the OIG proposes to exclude a nursing facility under this part, the OIG will, at the same time the facility is notified, notify the appropriate State licensing authority, the State Office of Aging, the long-term-care ombudsman, and the State Medicaid agency of the OIG's intention to exclude the facility.
No action under this part will be entertained unless commenced, in accordance with § 1003.1500(a), within 6 years from the date on which the violation occurred.
(a) In meeting the burden of proof in 42 CFR 1005.15, the OIG may introduce the results of a statistical sampling study as evidence of the number and amount of claims and/or requests for payment, as described in this part, that were presented, or caused to be presented, by the respondent. Such a statistical sampling study, if based upon an appropriate sampling and computed by valid statistical methods, shall constitute prima facie evidence of the number and amount of claims or requests for payment, as described in this part.
(b) Once the OIG has made a prima facie case, as described in paragraph (a) of this section, the burden of production shall shift to the respondent to produce evidence reasonably calculated to rebut the findings of the statistical sampling study. The OIG will then be given the opportunity to rebut this evidence.
The effect of an exclusion will be as set forth in 42 CFR 1001.1901.
A person who has been excluded in accordance with this part may apply for reinstatement at the end of the period of exclusion. The OIG will consider any request for reinstatement in accordance with the provisions of 42 CFR 1001.3001 through 1001.3004.
42 U.S.C. 405(a), 405(b), 1302, 1320a-7, 1320a-7a and 1320c-5.
(c) The ALJ does not have the authority to—
(5) Review the exercise of discretion by the OIG to exclude an individual or entity under section 1128(b) of the Act or under part 1003 of this chapter, or determine the scope or effect of the exclusion;
(6) Set a period of exclusion at zero, or reduce a period of exclusion to zero, in any case in which the ALJ finds that an individual or entity committed an act described in section 1128(b) of the Act or under part 1003 of this chapter; or
This document was received by the Office of the Federal Register on November 18, 2016.
Office of Inspector General (OIG), HHS.
Final rule.
In this final rule, OIG amends the safe harbors to the anti-kickback statute by adding new safe harbors that protect certain payment practices and business arrangements from sanctions under the anti-kickback statute. The OIG also amends the civil monetary penalty (CMP) rules by codifying revisions to the definition of “remuneration,” added by the Balanced Budget Act (BBA) of 1997 and the Patient Protection and Affordable Care Act, Public Law 111-148, 124 Stat. 119 (2010), as amended by the Health Care and Education Reconciliation Act of 2010 (ACA). This rule updates the existing safe harbor regulations and enhances flexibility for providers and others to engage in health care business arrangements to improve efficiency and access to quality care while protecting programs and patients from fraud and abuse.
These regulations are effective on January 6, 2017.
Heather L. Westphal, Office of Counsel to the Inspector General, (202) 619-0335.
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) and ACA include exceptions to the anti-kickback statute, and the BBA of 1997 and ACA include exceptions to the definition of “remuneration” under the civil monetary penalties law. The OIG is codifying those changes here. At the same time, OIG is finalizing additional changes to make technical corrections to an existing regulation and to add new safe harbors to the anti-kickback statute to protect certain services that the industry has expressed an interest in offering and that we believe could be, if properly structured and with appropriate safeguards, low risk to Federal health care programs.
In this final rule, we amend 42 CFR 1001.952 by modifying certain existing safe harbors to the anti-kickback statute and by adding safe harbors that provide new protections or codify certain existing statutory protections. These changes include:
• A technical correction to the existing safe harbor for referral services;
• protection for certain cost-sharing waivers, including:
• pharmacy waivers of cost-sharing for financially needy beneficiaries; and
• waivers of cost-sharing for emergency ambulance services furnished by State- or municipality-owned ambulance services;
• protection for certain remuneration between Medicare Advantage (MA) organizations and federally qualified health centers (FQHCs);
• protection for discounts by manufacturers on drugs furnished to beneficiaries under the Medicare Coverage Gap Discount Program; and
• protection for free or discounted local transportation services that meet specified criteria.
We amend the definition of “remuneration” in the CMP regulations at 42 CFR part 1003 by interpreting and incorporating certain statutory exceptions for:
• Copayment reductions for certain hospital outpatient department services;
• certain remuneration that poses a low risk of harm and promotes access to care;
• coupons, rebates, or other retailer reward programs that meet specified requirements;
• certain remuneration to financially needy individuals; and
• copayment waivers for the first fill of generic drugs.
In addition, because the original language in the introductory paragraph of the definition of “remuneration” referred only to “coinsurance and deductible amounts,” we have added the word “copayment” for consistency with the other text that we proposed and are finalizing.
There are no significant costs associated with the regulatory revisions that would impose any mandates on State, local, or tribal governments or on the private sector.
Section 1128B(b) of the Social Security Act (the Act), the anti-kickback statute, provides criminal penalties for individuals or entities that knowingly and willfully offer, pay, solicit, or receive remuneration in order to induce or reward the referral of business reimbursable under Federal health care programs, as defined in section 1128B(f) of the Act. The offense is classified as a felony and is punishable by fines of up to $25,000 and imprisonment for up to 5 years. Violations may also result in the imposition of CMPs under section 1128A(a)(7) of the Act, program exclusion under section 1128(b)(7) of the Act, and liability under the False Claims Act (31 U.S.C. 3729-33).
The types of remuneration covered specifically include, without limitation, kickbacks, bribes, and rebates, whether made directly or indirectly, overtly or covertly, in cash or in kind. In addition, prohibited conduct includes not only the payment of remuneration intended to induce or reward referrals of patients, but also the payment of remuneration intended to induce or reward the purchasing, leasing, or ordering of, or arranging for or recommending the purchasing, leasing, or ordering of, any good, facility, service, or item reimbursable by any Federal health care program.
Because of the broad reach of the statute, concern was expressed that some relatively innocuous commercial arrangements were covered by the statute and, therefore, potentially subject to criminal prosecution. In response, Congress enacted section 14 of the Medicare and Medicaid Patient and Program Protection Act of 1987, Public Law 100-93 (section 1128B(b)(3)(E) of the Act), which specifically requires the development and promulgation of regulations, the so-called safe harbor provisions, that would specify various payment and business practices that would not be treated as criminal offenses under the anti-kickback statute, even though they may potentially be
Section 205 of the Health Insurance Portability and Accountability Act of 1996, Public Law 104-191, established section 1128D of the Act, which includes criteria for modifying and establishing safe harbors. Specifically, section 1128D(a)(2) of the Act provides that, in modifying and establishing safe harbors, the Secretary of Health and Human Services (Secretary) may consider whether a specified payment practice may result in:
• An increase or decrease in access to health care services;
• an increase or decrease in the quality of health care services;
• an increase or decrease in patient freedom of choice among health care providers;
• an increase or decrease in competition among health care providers;
• an increase or decrease in the ability of health care facilities to provide services in medically underserved areas or to medically underserved populations;
• an increase or decrease in the cost to Federal health care programs;
• an increase or decrease in the potential overutilization of health care services;
• the existence or nonexistence of any potential financial benefit to a health care professional or provider, which benefit may vary depending on whether the health care professional or provider decides to order a health care item or service or arrange for a referral of health care items or services to a particular practitioner or provider;
• any other factors the Secretary deems appropriate in the interest of preventing fraud and abuse in Federal health care programs.
Since July 29, 1991, we have published in the
Health care providers and others may voluntarily seek to comply with safe harbors so that they have the assurance that their business practices will not be subject to enforcement action under the anti-kickback statute, the CMP provision for anti-kickback violations, or the program exclusion authority related to kickbacks. We note, however, that compliance with a safe harbor insulates an individual or entity from liability under the anti-kickback statute and the beneficiary inducements CMP
Section 101 of the MMA added a new section 1860D to the Act, establishing the Part D prescription drug benefit in the Medicare program. Section 101(e) of the MMA amends section 1128B(b)(3) of the Act to permit pharmacies to waive or reduce cost-sharing imposed under Part D as long as specified conditions are met. In addition, section 237 of the MMA added an exception to permit certain remuneration between MA organizations and FQHCs.
The ACA also includes a number of provisions that could affect liability under the anti-kickback statute. Section 3301 of the ACA establishes the Medicare Coverage Gap Discount Program, codified at section 1860D-14A of the Act. Pursuant to this program, prescription drug manufacturers have entered into agreements with the Secretary to provide certain beneficiaries access to discounts on drugs at the point of sale. Section 3301(d) of the ACA amends the anti-kickback statute to protect the discounts provided for under the Medicare Coverage Gap Discount Program.
In this final rule, we incorporate into our regulations safe harbors for payment and business practices permitted under the MMA and ACA, as well as new safe harbors pursuant to our authority under section 14 of the Medicare and Medicaid Patient and Protection Act of 1987 to protect practices that we view as posing a low risk to Federal health care programs as long as specified conditions are met. We considered the factors cited by Congress in promulgating the safe harbors in this final rule. We believe the safe harbors in this rule further the goals of access, quality, patient choice, appropriate utilization, and competition, while protecting against increased costs, inappropriate steering of patients, and harms associated with inappropriate incentives tied to referrals.
In 1981, Congress enacted the CMP law, section 1128A of the Act, as one of several administrative remedies to combat fraud and abuse in Medicare and Medicaid. The law authorized the Secretary to impose penalties and assessments on persons who defrauded Medicare or Medicaid or engaged in certain other wrongful conduct. The CMP law also authorized the Secretary to exclude persons from Federal health care programs (as defined in section 1128B(f)(1) of the Act) and to direct the appropriate State agency to exclude the person from participating in any State health care programs (as defined in section 1128(h) of the Act). Congress later expanded the CMP law and the scope of exclusion to apply to all Federal health care programs, but the CMP applicable to beneficiary inducements remains limited to Medicare and State health care program beneficiaries. Since 1981, Congress has created various other CMP authorities covering numerous types of fraud and abuse.
The BBA of 1997 and section 6402(d)(2)(B) of the ACA amended the definition of “remuneration” for purposes of the beneficiary inducements CMP at section 1128A(a)(5) of the Act, as discussed below. In this final rule, we are incorporating these changes into the definition of “remuneration” under § 1003.110.
On October 3, 2014, we published in the
We solicited comments on interpretations of each of the anti-kickback safe harbors and CMP exceptions to ensure that we protect low-risk, beneficial arrangements without opening the door to abusive practices that increase costs or compromise patient choice or quality of care.
In the Proposed Rule, we also proposed to add a regulation to reflect section 1128A(b) of the Act (the Gainsharing CMP). The Gainsharing CMP is a self-implementing law that, at the time we issued the Proposed Rule, prohibited hospitals and critical access hospitals (CAHs) from knowingly paying a physician to induce the physician “to reduce or limit services” provided to Medicare or Medicaid beneficiaries who are under the physician's direct care, and prohibited the physician from accepting such payments. As we have explained in various guidance documents over the years,
In finalizing this rule, we are mindful of the impact of delivery system and payment reform on Federal health care programs and the changing relationships between providers in delivering better care, smarter spending, and improved health. Congress intended the safe harbors to evolve with changes in the health care system, and we believe this final rule balances additional flexibility for industry stakeholders to provide efficient, well-coordinated, patient-centered care with protections against fraud and abuse risks. We also believe this rule advances the needs of providers and patients in rural areas and expect that it will have a beneficial effect in promoting improved access to quality care in rural and other underserved areas. The transition from volume to value-based and patient-centered care requires new and changing business relationships among health care providers. Many of those new relationships do not implicate our statutes or may be structured to fit in existing exceptions and safe harbors, including those addressed in this final rule. We have taken changes in payment and delivery into account in this final rule. This final rule does not specifically address many emerging arrangements (though, as we note above, some of those arrangements can fit in existing protections). We intend to continue to monitor changes in the industry, technology, and clinical care and consider whether additional rulemaking is needed to foster high-quality, efficient, patient-centered care. We will continue to seek stakeholder input as appropriate, and we will use our authorities, as appropriate, to promote arrangements that fulfill the goals of better care and smarter spending.
Safe harbors and exceptions, along with advisory opinions, are long-standing tools for addressing the evolution of health care business arrangements under the fraud and abuse laws. More recently, Congress granted the Secretary limited authority to waive certain fraud and abuse laws under Title XI and XVIII of the Act as necessary to carry out and test new payment and delivery models and demonstration programs in Medicare and Medicaid. Specifically, under the ACA, the Secretary has such waiver authority for, among others, the Medicare Shared Savings Program (MSSP) pursuant to section 1899 of the Act and testing models under section 1115A of the Act.
We are finalizing all of the anti-kickback statute safe harbors that we proposed, with certain modifications suggested by commenters. We also are finalizing all of the beneficiary inducement CMP exceptions that we proposed. Although we did not propose regulatory text in the Proposed Rule for the exception for remuneration that promotes access to care and poses a low risk of harm, we did propose and solicit comments on interpretations of the statutory terms “promotes access to care” and “low risk of harm” to programs and beneficiaries. We are finalizing these proposals as regulatory text, as explained in greater detail below. We also note that we are removing the “or” that previously appeared between the third and fourth exceptions, now that we are adding five exceptions to the end of the definition of “remuneration.”
With respect to the Gainsharing CMP, approximately six months after the Proposed Rule was published, Congress amended the law. Congress passed the Medicare and CHIP Reauthorization Act of 2015 (MACRA) in April 2015. Section 512(a) of MACRA amended the language to insert the words “medically necessary” before “services,” so that now only payments to reduce or limit medically necessary services are prohibited by the law. Because of the amendment to the statute, we are not finalizing the regulation text, as proposed (nor are we finalizing the definition of “hospital” that we had proposed adding to section 1003.101 (as proposed to be redesignated as section 1003.110) to complement the Gainsharing CMP proposal). We note that this statutory provision is self-implementing, and no regulatory action is required to make the change enacted
We received responsive comments from 88 distinct commenters, including, but not limited to, individuals, trade associations, providers, and suppliers. Many of these individuals and entities provided comments on multiple topics. Commenters generally supported our proposals, but many commenters recommended certain changes or requested certain clarifications. We have divided the public comment summaries and our responses into sections pertaining to the individual safe harbor or CMP exception to which they apply.
We proposed to make a technical correction to the safe harbor for referral services, found at 42 CFR 1001.952(f). In 1999, we finalized a modification to the language of the safe harbor to clarify that the safe harbor precludes protection for payments from participants to referral services that are based on the volume or value of referrals to, or business otherwise generated by,
While reiterating our concerns about potentially abusive waivers of cost-sharing amounts under the anti-kickback statute, in the Proposed Rule, we proposed to modify § 1001.952(k) by adding two new subparagraphs to protect certain cost-sharing waivers that pose a low risk of harm and make technical corrections to the introductory language to account for new subparagraphs. We also noted that subsection (k) is limited to reductions or waivers of Medicare and State health care program beneficiary cost-sharing and solicited comments about expanding this safe harbor to protect waivers under all Federal health care programs, if applicable, and subject to terms of each type of cost-sharing waiver in subsection (k).
In the Proposed Rule, we proposed a new paragraph at § 1001.952(k)(3) reflecting an exception to the anti-kickback statute at section 1128B(b)(3)(G) of the Act, which was added by section 101 of the MMA. Consistent with the statute, we proposed language that would protect a pharmacy waiving Part D cost-sharing if: (1) The waiver or reduction is not advertised or part of a solicitation; (2) the pharmacy does not routinely waive or reduce the cost-sharing; and (3) before waiving or reducing the cost-sharing, the pharmacy either determines in good faith that the beneficiary is in financial need or the pharmacy fails to collect the cost-sharing amount after making a reasonable effort to do so. If, however, the waiver or reduction of cost-sharing is made on behalf of a subsidy-eligible individual (as defined in section 1860D-14(a)(3) of the Act), then conditions (2) and (3) above are not required. Because the statute incorporates by reference the three conditions stated above from section 1128A(i)(6)(A) of the Act, we proposed to interpret those conditions consistent with our regulations incorporating them in paragraph (1) of the definition of “remuneration” at 42 CFR 1003.110. We also cautioned providers, practitioners, and suppliers that safe harbors protect individuals and entities from liability only under the anti-kickback statute and the beneficiary inducements CMP, and that they still must comply with other laws, regulations, and Centers for Medicare and Medicaid Services (CMS) program rules.
In addition, we note that this safe harbor is not applicable to anything characterized as a “cost-saving program” as we understand the term. This safe harbor permits pharmacies to waive cost-sharing on an unadvertised, nonroutine basis after an individualized determination of financial need (or a failure to collect after reasonable collection efforts). It is not meant to, and would not, protect waivers that are advertised as part of a “program” to waive copayments. Finally, the safe harbor protects waivers given at the pharmacy level, not the plan level. Thus, there should be no effect on competition among plans. The safe harbor does not affect the ability of Part D plan sponsors, MA organizations offering Medicare Advantage prescription drug (MA-PD) plans, or other plans to reduce beneficiary cost-sharing obligations as a matter of plan design, nor does it affect their ability to share the cost of such reductions with pharmacies through negotiation of drug prices.
We are not specifying any particular method of determining financial need because we believe what constitutes “financial need” varies depending on the circumstances. What is important is that providers make determinations of financial need on a good faith, individualized, case-by-case basis in accordance with a reasonable set of income guidelines uniformly applied in all cases. The guidelines should be based on objective criteria and appropriate for the applicable locality. We do not believe that it is appropriate to apply inflated income guidelines that result in waivers of copayments for persons not in genuine financial need.
We proposed to establish a safe harbor to protect reductions or waivers of cost-sharing owed for emergency ambulance services for which Medicare pays under a fee-for-service payment system and meets the following conditions: (1) The ambulance provider or supplier is owned and operated by a State, a political subdivision of a State, or a federally recognized Indian tribe; (2) the ambulance provider or supplier is the
We proposed to require that the ambulance provider or supplier be owned and operated by a State, a political subdivision of a State, or a federally recognized Indian tribe
We proposed to include a requirement that the reduction or waiver not be considered the furnishing of free services paid for directly or indirectly by a government entity. We explained that items or services that are paid for directly or indirectly by a government entity generally are not reimbursable by Medicare. CMS has a policy holding that State or local government facilities (including ambulance providers or suppliers) that reduce or waive charges for patients unable to pay, or charge patients only up to their Medicare and other health insurance coverage, are not considered to be providing free services. We proposed to incorporate this condition into the safe harbor. In response to the following comment, we are modifying this condition.
We proposed to require that the ambulance provider or supplier offer the reduction or waiver on a uniform basis, without regard to patient-specific factors. We are finalizing this condition, with certain textual revisions for additional clarity.
We proposed to prohibit claiming the amount reduced or waived as bad debt for payment purposes under Medicare or a State health care program or otherwise shifting the burden of the reduction or waiver to Medicare, a State health care program, other payers, or individuals.
For purposes of this safe harbor, we proposed to interpret the term “ambulance provider or supplier” as a provider or supplier of ambulance transport services that furnishes emergency ambulance services, which would not include a provider or supplier of ambulance transport services that furnishes only nonemergency transport services. We proposed to interpret “emergency ambulance services” in a manner consistent with the definition given to that term in 42 CFR 1001.952(v)(4)(iv). After considering comments received, we are finalizing modified versions of these definitions.
We solicited comments about whether to include reductions or waivers of cost-sharing amounts owed under other Federal health care programs (
We received comments regarding two omissions in the Proposed Rule: (1) We inadvertently omitted “provider or” from the proposed text of subparagraph (iv); and (2) we inadvertently omitted tribes in one of the descriptions of ambulances operated by a State or a political subdivision of a State. We confirm that these were inadvertent and are corrected, as applicable, in this final rule.
We proposed to incorporate into our safe harbors a statutory exception to the anti-kickback statute at section 1128B(b)(3)(H) of the Act, which was added by section 237 of the MMA. This exception protects “any remuneration between a federally qualified health center (or an entity controlled by such a health center) and a MA organization pursuant to a written agreement described in section 1853(a)(4) [of the Act].” Section 1853(a)(4) of the Act (which should be read in conjunction with section 1857(e)(3) of the Act, as described below) generally describes the payment rule for FQHCs that provide services to patients enrolled in MA plans that have an agreement with the FQHC. We are finalizing the language that we proposed. Commenters generally supported the safe harbor, and specific comments are addressed below.
The first example could be protected under this safe harbor, if the commenter's use of the term “all remuneration” is understood in the context of what the safe harbor protects (payment for certain FQHC services). The statutory exception was added by section 257(d) of the MMA. Section 257(c) of the MMA specified the following payment rule (added in 1857(e)(3)): “in any written agreement described in section 1853(a)(4) between [an MA organization] and [FQHC], for a level and amount of payment to the [FQHC] for services provided by such health center that is not less than the level and amount of payment that the plan would make for such services if the services had been furnished by [an] entity providing similar services that was not a [FQHC].” The statute does not include a fair market value requirement; it provides for a minimum level of payment by the MA organization. Thus, the safe harbor protects payment for FQHC services that meet this requirement. It does not, however, protect “all remuneration” that the parties might exchange. The second example of remuneration—providing free space—would not be protected by this safe harbor. The safe harbor protects payments related to FQHCs treating MA plan enrollees, not arrangements unrelated to MA plan enrollees being treated at the FQHC. The same analysis applies to the third example: Financial support for the FQHC is outside the scope of what the safe harbor protects. Finally, we confirm that the fourth example would come within the ambit of the safe harbor with respect to the requirement that the FQHC have a written agreement with the MA plan. CMS has interpreted the requirements related to services provided to MA plan enrollees as including indirect contracts. Specifically, in a 2005 final rule, CMS stated: “[w]e interpreted section 237 of the MMA to mean that any Medicare FQHC furnishing covered FQHC services to MA plan enrollees would be eligible for supplemental payments regardless of whether they have a direct contract with a MA organization or contract with another entity (for example, a medical group) that has a direct contract with the MA organization to treat its enrollees.” 70 FR 70116, 70268 (Nov. 21, 2005). Because this safe harbor is in place largely because of a payment rule, we believe it is reasonable to rely on the interpretations applicable to that payment rule.
Section 3301 of the ACA establishes the Medicare Coverage Gap Discount Program, codified at section 1860D-14A of the Act. Under this program, prescription drug manufacturers enter into an agreement with the Secretary to provide certain beneficiaries access to discounts on drugs at the point of sale. Section 3301(d) of the ACA amends the anti-kickback statute by adding a new subparagraph (J) to section 1128B(b)(3) of the Act to protect the discounts provided for under the Medicare Coverage Gap Discount Program, which we proposed to incorporate into our safe harbor regulations.
We proposed to protect a discount in the price of an “applicable drug” of a manufacturer that is furnished to an “applicable beneficiary” under the Medicare Coverage Gap Discount Program under section 1860D-14A, as long as the manufacturer participates in and is in full compliance with all requirements of the Medicare Coverage Gap Discount Program. We proposed to incorporate by reference the definitions of the terms “applicable beneficiary” and “applicable drug” that were added by a new section 1860D-14A(g) of the Act. Commenters generally supported our proposal. Specific comments and recommendations are addressed below.
Pursuant to our authority at section 1128B(b)(3)(E) of the Act, we proposed to establish a new safe harbor at 42 CFR 1001.952(bb) to protect free or discounted local transportation services provided to Federal health care program beneficiaries.
In the Proposed Rule, we proposed to protect free or discounted local transportation made available by an “eligible entity” to established patients (and, if needed, a person to assist the patient) to obtain medically necessary items or services. We also sought comments on a second form of transportation that would be akin to a shuttle service. We proposed a number of conditions on offering or providing protected free or discounted local transportation services, and proposed definitions of certain terms, such as “eligible entity,” “established patient,” and “local.” Overall, we received substantial support for implementing a safe harbor to protect local transportation. Many commenters urged us to include (or decline to include) certain safeguards within the final regulation. With certain modifications described below in response to the comments we received, we are finalizing a safe harbor at § 1001.952(bb) for local transportation for established patients.
We received a number of comments generally in support of the proposed safe harbor, and others requesting specific changes or clarifications.
We proposed that the safe harbor protect only transportation offered or provided by an “eligible entity.” We proposed to define “eligible entity” as any individual or entity, except individuals or entities (or family members or others acting on their behalf) that primarily supply health care items (including, but not limited to, durable medical equipment (DME) suppliers or pharmaceutical companies). We specifically solicited comments on excluding other entities that provide primarily services, such as laboratories or home health agencies, that we posited might be more likely to offer transportation in return for referrals, resulting in both steering and overutilization. We stated we were considering excluding home health care providers from safe harbor protection when they furnish free or discounted local transportation to their referral sources, but not excluding them from protection when they provide such transportation to sources that do not refer to home health care providers, such as pharmacies.
We proposed to require that the free or discounted local transportation services be available only to “established patients.” We proposed that a patient would be “established” once the patient had selected a provider or supplier and had attended an appointment with that provider or supplier. In contrast, we proposed not to protect transportation offered to new patients. We received a number of comments on this proposal and have decided to modify our interpretation of the term “established” as it is used in the safe harbor.
We interpret the commenter's question about how the “established patient” requirement would work with integrated entities as asking whether a patient who is established with a particular physician practice, for example, is also established with respect to the entire integrated health care system of which that practice is a part. If so, then the system would be able to provide transportation limited to entities within the system. We understand that integrated entities, health systems, and others would prefer to transport patients only to their own affiliated locations. At this time, we are not protecting such limited transportation offers to individual patients. We will continue to monitor the changing landscape and could consider new or revised safe harbors in the future. We do note that shuttles protected under this safe harbor are not subject to the established patient requirement. Thus a health care system could offer a shuttle service to the public that made stops at its own facilities, but not at any health care facilities outside the system. We also note that an ACO or similar entity may assist its affiliates in providing transportation (
We proposed and solicited comments on conditions related to the purpose of the transportation and the location to which a patient could be transported. Specifically, we proposed that protected transportation be for “the purpose of obtaining medically necessary items or services,” but we solicited comments on whether eligible entities also should be protected under the safe harbor if they provide free or discounted local transportation for other purposes that relate to the patient's health care (
We did not propose to exclude transportation to referral sources, other than potentially in the context of entities that we were considering fully or partially excluding from the definition of “eligible entity” (
In the Proposed Rule, we sought comments on whether we should require eligible entities to maintain documented beneficiary eligibility criteria. After consideration, we are finalizing a requirement that eligible entities have a set policy regarding the availability of transportation assistance, and must apply that policy uniformly and consistently. However, eligible entities are not required to maintain individualized documentation for each patient to whom transportation is provided. While not required to be protected under the safe harbor, maintaining such documentation would be a best practice to demonstrate compliance with the requirements of the policy and the consistent and uniform application.
We proposed to limit the form of permissible transportation by excluding air, luxury, and ambulance-level transportation from safe harbor protection. Commenters generally agreed with this proposal.
We proposed several conditions related to marketing in connection with offering free or discounted local transportation. We proposed that the transportation assistance could not be publicly advertised or marketed to patients or others who are potential referral sources, that no marketing of health care items or services could occur during the course of the transportation, and that drivers or others involved in arranging the transportation could not be paid on a per-beneficiary-transported basis. We are finalizing these proposals, with certain clarifications.
As we explained in the preamble to the Proposed Rule, this safe harbor is intended to protect “local” transportation. We proposed that if the distance that the patient would be transported is no more than 25 miles, then the transportation would be deemed to be “local.” We solicited comments on whether 25 miles is an appropriate distance, whether 25 miles should be a fixed limitation rather than a distance “deemed” to comply with the safe harbor, and other reasonable methods for interpreting the term “local.” In response to comments, and as described in more detail below, we have decided to have separate distance limits for rural areas and urban areas. We defined “rural area” as an area that is not an “urban area,” as defined in this rule. We defined “urban area” as: (a) A Metropolitan Statistical Area (MSA) or New England County Metropolitan Area (NECMA), as defined by the Executive Office of Management and Budget; or (b) the following New England counties, which are deemed to be parts of urban areas under section 601(g) of the Social Security Amendments of 1983 (Pub. L. 98-21, 42 U.S.C. 1395ww (note)): Litchfield County, Connecticut; York County, Maine; Sagadahoc County, Maine; Merrimack County, New Hampshire; and Newport County, Rhode Island. These definitions are intended to be consistent with the physician self-referral law definitions of the same terms.
We arrived at our determinations of 25 and 50 miles after considering input from commenters and additional consultation with our government partners. We reviewed the United States Department of Agriculture (USDA) Economic Research Service's (ERS) data on Frontier and Remote (FAR) ZIP code areas, developed using data from the 2010 census. In an article describing these FAR levels (of which there are four), ERS explained that “[h]ealth care access is the primary policy issue motivating this research.”
We believe that a 25-mile distance should be sufficient for patients in urban areas to access quality health care, and can be fairly characterized as “local.” We recognize that there may be areas within urban areas, as we are definining that term in this regulation, that are generally underserved, or underserved as to particular types of health care services. However, we believe using definitions of “rural area” and “urban area” in this safe harbor that are consistent with definitions of the same terms used in connection with the physician self-referral law at 42 CFR 411.351 and 412.62(f)(1)(ii) will be simplest for providers to work with and encourage the widest use of this safe harbor.
Individuals and entities anticipating a need to transport over longer distances and believing that they have sufficient safeguards in place to avoid abusive outcomes, such as steering of patients and inducements to obtain unnecessary care, may seek an advisory opinion for a determination on whether the program is sufficiently low risk.
We are sensitive to the fact that patients living in rural areas may have fewer health care providers and suppliers in their immediate areas, and that transportation might provide these patients with more choices and better access to quality care. We note that the requirement for a longer distance is that the patient resides in a rural area. Thus, the eligible entity (or the provider or supplier to whom the patient is transported) may or may not be in a rural area.
We believe that other suggestions provided by commenters are not appropriate for a safe harbor. For example, eliminating any kind of mileage or other limit would not give providers any kind of certainty as to whether they were offering “local” transportation, as required by the safe harbor. We also do not believe that a requirement that transportation be to the closest facility capable of providing treatment is appropriate. There is likely to be uncertainty as to whether any facilities were closer to the patient, whether those facilities provide the needed service, whether such service is available within the time needed by the patient, and the like. We believe the two mileage limits that we are finalizing are sufficient to help patients access care while giving eligible entities a definite test to apply to determine whether their transportation assistance meets the “local” requirement of the safe harbor.
We proposed that the eligible entity bear the costs of the free or discounted local transportation services, and not shift the burden of these costs to Medicare, a State health care program, other payers, or individuals. Many commenters supported this requirement, but some asked for specific clarifications.
We sought comments on whether we should separately protect a second form of transportation akin to a shuttle service. We received a number of comments about offering a shuttle service, and which of our proposed safe harbor criteria should, or should not, apply to that form of transportation. In short, this final rule separately protects a shuttle service under the safe harbor. Some safeguards will be the same, and others will be different, compared to the more personalized form of transportation contemplated by this safe harbor. First, we interpret the term “shuttle” to be a vehicle (not air, luxury, or ambulance) that runs on a set route, on a set schedule. Second, the “established patient” requirement will not apply to shuttle services. Third, we are not mandating where the shuttle can or cannot make stops, other than continuing to require that the shuttle transportation be local. Because we anticipate that shuttle routes may include multiple stops, “local” would mean that there are no more than 25 miles between any stop on the route and any stop at a location where health care
When reviewing comment summaries and responses below, it is important to remember what the beneficiary inducements CMP prohibits, in contrast to certain other fraud and abuse laws, such as the anti-kickback statute. First, the beneficiary inducements CMP prohibits inducements only to Medicare and State health care program
We proposed to incorporate the statutory exception set forth at section 1128A(i)(6)(E), which permits hospitals to give reductions in copayment amounts for certain outpatient department (OPD) services. The statutory cite to the definition of “covered OPD services” was outdated, so we proposed to use the current statutory reference. We received no comments on this proposal, and we are finalizing it, as proposed.
Section 1128A(i)(6)(F) of the Act includes an exception that protects “any other remuneration which promotes access to care and poses a low risk of harm to patients and Federal health care programs (as defined in section 1128B(f) and designated by the Secretary under regulations).”
We note that other exceptions to the beneficiary inducements CMP, and some safe harbors to the anti-kickback statute (which are incorporated by reference as exceptions to the beneficiary inducements CMP), may cover activities or arrangements that arguably “promote access to care and pose a low risk of harm to patients and Federal health care programs.” This exception should be read in the context of those more specific exceptions and safe harbors: We would look to other applicable exceptions to consider whether the remuneration in question
For activities and arrangements that are not addressed by a more specific safe harbor or exception, anyone asserting this exception as a defense will have the burden of presenting sufficient facts and analysis for OIG to determine that the arrangement promoted access to care and posed no more than a low risk of harm to patients and the Federal health care programs, as described in this Final Rule.
In the Proposed Rule, we proposed certain interpretations of the statutory language to inform our development of regulatory text. We also solicited comments on a number of specific aspects of the statutory language. The responsive comments fall into three general categories: (1) What constitutes “care;” (2) what it means to “promote access” to care; and (3) what type of remuneration poses a low risk of harm to patients and Federal health care programs. We also received questions about types of programs or arrangements that might meet the exception, or other general questions. We address these comments in turn, and we intend to strictly interpret the language of this exception, as described in detail below.
In the Proposed Rule, we characterized “care” as “medically necessary health care items and services.” 79 FR 59717, 59725 (Oct. 3, 2014). We also solicited comments on whether we should interpret “care” more broadly to include nonclinical care that is reasonably related to medical care, such as social services.
In response to the comment regarding the Medicare Star Ratings system, we note that the activities encouraged under this system include many types of care, such as health screenings, vaccines, and managing chronic conditions. If the remuneration promotes access to care, and is low risk, it would be protected. The exception applies to a prohibition on remuneration that is likely to influence a beneficiary to order or receive items or services from a particular provider, practitioner, or supplier for which payment may be made by Medicare or Medicaid. As explained above, we believe it therefore follows that the “care” alluded to in the exception is care provided by the particular provider, practitioner, or supplier, which is payable by Medicare or a State health care program. As further noted above, we are defining the term “access to care” as access to items or services payable by Medicare or a State health care program. We decline to define “care” more broadly because the statutory exception provides no guidance as to what constitutes “care,” beyond that which is covered by these programs, or what other kinds of care should be included. Notwithstanding our conclusion on this point, we will continue to monitor the changing payment and health care delivery landscape for possible future exceptions. In addition, we emphasize that individuals and entities can still help and encourage beneficiaries to access nonpayable care without implicating the beneficiary inducements CMP. For example, individuals and entities can provide patients with objective information (such as educational materials or other resources) about community resources. Moreover, when items or services are not reimbursable by Medicare or State health care programs, the statute would be triggered only if the offeror of the remuneration knew or should have known that the remuneration was likely to influence a Medicare or State health care program beneficiary to receive reimbursable services from a particular provider, practitioner, or supplier. For example, a MA organization or a Part D plan could provide remuneration to its enrollees to help them access nonpayable care, without implicating the beneficiary inducements CMP; MA organizations and Part D plans are not providers, practitioners, or suppliers, and under ordinary circumstances remuneration from them to access nonpayable items or services would not be likely to induce a beneficiary to use a particular provider, practitioner, or supplier for an item or service payable by Medicare. Likewise, an employee in a physician's office could work with Medicare or State health care program patients to refer them to resources in
We proposed that the exception would include only remuneration that “improves a particular beneficiary's ability to obtain medically necessary items and services.” We solicited comments on multiple aspects of this proposal. We asked whether we should interpret “promotes access” more broadly, to include encouraging patients to access care, supporting or helping patients to access care, or making access to care more convenient than it otherwise would be. As we explain in greater detail below, many of the comments that we received proposing a broader interpretation sought protection for remuneration that could fit within our original proposal. After considering all of the comments, we decline to adopt a broader interpretation of “promotes access” than we proposed (subject to our revised definition of “care”), but we note that items or services that support or help patients to access care, or make access to care more convenient than it otherwise would be often would meet our original proposed interpretation. We also asked whether the remuneration would have to promote access to a particular beneficiary or whether it should also apply to a defined beneficiary population. We have determined that the exception should apply to remuneration that promotes access either to a particular individual or to a defined beneficiary population.
We also believe that the definition we are finalizing is broad enough to facilitate coordinated or integrated care. A goal of coordinated care is to improve the delivery of medically necessary care (and eliminate medically unnecessary care). If remuneration associated with a coordinated care arrangement meets the requirement of being low risk and helps the patient to access necessary care, the remuneration could fit in this exception.
As we explain in responses to the various comments below, rewards for accessing care, including compliance with a treatment plan, do not “promote access” to care. However, remuneration that helps a patient comply with a treatment plan (
In responding to various aspects of the Proposed Rule, some commenters asked about health plans providing incentives to their members to seek preventive health services, or to achieve certain health-related benchmarks. If health plans (or other entities that are not providers, practitioners, or suppliers) offer these incentives to seek particular services without influencing members to use particular providers or suppliers, the beneficiary inducements CMP is not implicated. If the incentives would influence members to use a particular provider or supplier, then the same conditions and interpretations of this exception would apply to health plans that apply to providers, practitioners and suppliers. However, all individuals and entities remain subject to the anti-kickback statute, and remuneration not prohibited under the CMP could be prohibited under the anti-kickback statute. For example, if a pharmaceutical manufacturer offered rewards or incentives for treatment compliance (without regard to any provider or supplier furnishing treatment), it might not implicate the beneficiary inducements CMP because the rewards would not incentivize the beneficiary to receive items or services from a particular provider or supplier, but it would implicate the anti-kickback statute because the remuneration could induce the beneficiary to purchase a federally reimbursable item.
We proposed that for remuneration to be a “low risk of harm to Medicare and Medicaid beneficiaries and Medicare and Medicaid programs,” the remuneration must: (1) Be unlikely to interfere with, or skew, clinical decision making; (2) be unlikely to increase costs to Federal health care programs or beneficiaries through overutilization or inappropriate utilization; and (3) not raise patient-safety or quality-of-care concerns. We received general support from commenters regarding our approach to defining what it means to be a “low risk of harm” to patients and Federal health care programs. We also received a number of more specific comments and requests for clarification, which we detail below.
In the Proposed Rule, we proposed to incorporate into our regulations the statutory exception added by section 6402(d)(2)(B) of the ACA, which creates an exception to the beneficiary inducements CMP for retailer rewards programs that meet certain criteria. We proposed to use the statutory language as the text for our regulation, and we proposed interpretations of the terms “retailer” and “coupons, rebates, or other rewards;” what it means to transfer items or services on equal terms to the general public; and what it means for items or services to not be “tied to the provision of other items or services” reimbursed in whole or in part by the Medicare or Medicaid programs. We are finalizing the language, as proposed, and we set forth responses to comments received below.
The first criterion of the statutory exception provides that the free or less-than-fair-market-value items or services must “consist of coupons, rebates, or other rewards from a retailer.” We proposed to interpret these terms as follows: We proposed to interpret “retailer” as an entity that sells items directly to consumers. We also proposed that individuals or entities that primarily provide services (
The second criterion requires that the items or services be offered or transferred on equal terms to the public, regardless of health insurance status. We proposed that this criterion would exclude programs that are targeted to patients on the basis of insurance status (
The third statutory criterion, which we are finalizing here, requires that the offer or transfer of the items or services not be tied to the provision of other items or services reimbursed in whole or in part by Medicare or an applicable State health care program. We proposed that this criterion require the rewards program to attenuate any connection between federally reimbursable items or services both in the manner in which a reward is earned and in the manner in which the reward is redeemed. Thus, we proposed that the reward could not be conditioned on the purchase of goods or services reimbursed in whole or in part by a Federal health care program and should not treat federally reimbursable items and services in a manner that is different from that in which nonreimbursable items and services are treated. On the “redeeming” end of the transaction, we proposed that rewards programs in which the rewards themselves are items or services reimbursed in whole or in part by a Federal health care program would not be protected.
We proposed to incorporate a third new statutory provision, added at 1128A(i)(6)(H) of the Act, which excepts from the definition of “remuneration” the offer or transfer of items or services for free or less than fair market value if the items and services are not advertised or tied to the provision of other items or services reimbursed by the Medicare or State health care programs (including Medicaid); there is a reasonable connection between the items or services and the medical care of the individual; and the recipient has been determined to be in financial need. We proposed, and are finalizing, regulatory text that mirrors the statutory language. We will continue to assess the need for additional flexibility in the future.
Several commenters generally supported the proposed exception and the approach OIG took when interpreting the statutory terms in the Proposed Rule. Others, while generally supporting the exception, urged OIG to interpret it more expansively, allow additional flexibility, and not include
We proposed to interpret the term “items or services” to exclude cash or instruments convertible to cash.
We proposed to include the statutory requirement that the items or services offered or transferred under the exception may not be offered as part of any advertisement or solicitation. We received some comments and questions about this requirement.
The statutory exception provides that the item or service being offered or transferred must not be tied to the provision of other reimbursed services. We proposed interpreting this limitation as not protecting offers or transfers of items or services that a provider or supplier conditions on the patient's use of other services that would be reimbursed by Medicare or a State health care program. We received comments and questions about this criterion.
We explained in the Proposed Rule that the requirement that remuneration offered have a “reasonable connection to the medical care of the individual” must be interpreted in the context of this particular exception. This exception is not designed to induce the patient to seek additional care, but rather to help financially needy individuals access items or services connected to their medical care. We proposed interpreting “medical care” as the treatment and management of illness or injury and the preservation of health through services offered by the medical, dental, pharmacy, nursing, and allied health professions. We also proposed that for remuneration to be “reasonably connected” to medical care, it must be reasonable from a medical perspective and reasonable from a financial perspective. We received comments on each of these concepts.
We proposed to incorporate the statutory requirement that the items or services may be provided only “after determining in good faith that the individual is in financial need.” We proposed to interpret this provision as requiring an individualized assessment of the patient's financial need, in good faith, on a case-by-case basis. We proposed that such an assessment would require the use of a reasonable set of income guidelines, based on objective criteria that would be uniformly applied. We further proposed that the individual or entity offering the items or services should have flexibility to consider relevant variables in setting standards. We noted that we were considering whether to require documentation of the financial need assessment as a condition of the exception.
We proposed to incorporate into our regulations the fourth new provision added at section 1128A(i)(6)(I) of the Act, which excepts from the definition of “remuneration” the waiver by a PDP sponsor of a Part D plan or MA organization offering MA-PD plans of any copayment that would be otherwise owed by their enrollees for the first fill of a covered Part D drug that is a generic drug. We proposed to rely on the definition of “generic drug” in the Part D regulations at 42 CFR 423.4. Further, because CMS already permits these waivers as part of Part D and MA plan benefit designs, we proposed that sponsors desiring to offer these waivers to their enrollees would be required to disclose this incentive program in their benefit plan package submissions to CMS. We proposed that this exception would be effective for coverage years beginning after publication of the final rule. However, because this final rule is being published after the deadline for submission to CMS of benefit plan packages for coverage year 2017), this exception is applicable to coverage years beginning on or after January 1, 2018. We have revised the regulation text accordingly.
Those who commented on this proposal generally supported it. We address some specific comments and recommendations below.
Comment: One commenter supported our proposal to require advance disclosure of any copayment waivers in Medicare plan benefit packages, as well as transparency of such programs to pharmacies, in order to allow pharmacies notice to decide if and how the pharmacies may agree to participate in Part D Plan sponsor's provider network and waiver program.
We received several comments that are outside the scope of this rulemaking. For example, some commenters requested that we initiate new safe harbors, provide guidance on issues outside of the proposed safe harbors, and protect specific programs or initiatives outside of the proposed safe harbors. While we may consider these requests in future rulemaking, we also remind stakeholders that the advisory opinion process remains available for determinations on individual arrangements.
This final rule incorporates most of the regulations we proposed in the Proposed Rule, but with some changes to the regulatory text.
We are finalizing, with certain revisions, both new safe harbors that we proposed in 42 CFR 1001.952(k): one to protect waivers or reductions in cost-sharing by pharmacies for financially needy beneficiaries, and one to protect waivers in cost-sharing for State- or municipality-owned emergency ambulance services. We also made a change was to the introductory language of subparagraph (k), expanding this safe harbor to all Federal health care programs. To implement the change where applicable, we are republishing subparagraph (k) in its entirety. We are finalizing the safe harbor to protect free or discounted local transportation, with some changes from the Proposed Rule. Two of the most frequent topics of comment were our interpretation of “established patient” and the distance limitation. In response to comments, we broadened our interpretation of “established patient” to encompass any patient who has made an appointment with the provider or supplier. We also revised our interpretation of “local” to include different distances for rural and nonrural areas, and we added a section applicable to shuttle services. We are finalizing the other safe harbors ((1) a technical correction to the referral services safe harbor; (2) arrangements between federally qualified health centers and MA organizations; and (3) discounts under the Medicare Coverage Gap Discount Program) as we proposed them in the Proposed Rule with minor, if any, changes.
We are finalizing all of the beneficiary inducements CMP exceptions, with certain changes. In the Proposed Rule, we did not propose regulatory text for the exception for remuneration that promotes access to care but poses a low risk of harm to patients and Federal health care programs. However, we proposed to interpret “promotes access to care” to mean that the remuneration improves a particular beneficiary's ability to obtain medically necessary health care items and services. We proposed to interpret the requirement that remuneration pose a low risk of harm to Federal health care program beneficiaries and programs to mean that the remuneration must: (1) Be unlikely to interfere with, or skew, clinical decision making; (2) be unlikely to increase costs to Federal health care programs or beneficiaries through overutilization or inappropriate utilization; and (3) not raise patient safety or quality-of-care concerns. We are finalizing regulatory text that mirrors these proposals. The only changes we are making to any of the other four exceptions proposed in the Proposed Rule are the following changes to the exception relating to waivers of the copayment for the first fill of a generic drug: to incorporate a definition recommended by commenters of “Part D Plan sponsor;” to include “authorized generic drugs” in the exception; and to specify when the exception becomes effective. Otherwise, the text of each exception in the final rule is the same that we proposed in the Proposed Rule.
We are not finalizing the gainsharing CMP regulation that we proposed. We had proposed to codify the gainsharing CMP set forth in section 1128A(b) of the Act, which, as of October 2014, provided penalties for hospital payments to physicians to “reduce or limit services” (not only medically necessary services) to Medicare or Medicaid beneficiaries. We solicited comments on a narrower interpretation of the term “reduce or limit services” than we have previously held. However, section 512(a) of MACRA amended the language in quotes to insert the words “medically necessary” before “services.” Because of the amendment to the statute, we are unable to finalize the rule, as proposed. However, this statutory provision is self-implementing, and no regulatory action is required to make the change enacted in MACRA effective.
We have examined the impact of this proposed rule, as required by Executive Order 12866, the Regulatory Flexibility Act (RFA) of 1980, the Unfunded Mandates Reform Act of 1995, and Executive Order 13132.
Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and,
This proposed rule would implement or codify new and existing CMP exceptions and implement new or revised anti-kickback statute safe harbors. The vast majority of providers and Federal health care programs would be minimally impacted from an economic perspective, if at all, by these proposed revisions.
The changes to the safe harbors and CMP exceptions would allow providers to enter into certain beneficial arrangements. In doing so, this regulation would impose no requirements on any party. Providers would be allowed to voluntarily seek to comply with these provisions so that they would have assurance that participating in certain arrangements would not subject them to liability under the anti-kickback statute and the beneficiary inducement CMP. These safe harbors and exceptions facilitate providers' ability to provide important health care and related services to communities in need. We believe that the aggregate economic impact of the changes to these regulations would be minimal and would have no effect on the economy or on Federal or State expenditures.
Accordingly, we believe that the likely aggregate economic effect of these regulations would be significantly less than $100 million.
The Regulatory Flexibility Act (RFA) and the Small Business Regulatory Enforcement and Fairness Act of 1996, which amended the RFA, require agencies to analyze options for regulatory relief of small businesses. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and government agencies. Most providers are considered small entities by having revenues of $7 million to $35.5 million or less in any one year. For purposes of the RFA, most physicians and suppliers are considered small entities.
The changes to the CMP exceptions and the the anti-kickback statute safe harbors would not significantly affect small providers as these changes would not impose any requirement on any party.
In summary, we have concluded that this final rule should not have a significant impact on the operations of a substantial number of small providers and that a regulatory flexibility analysis is not required for this rulemaking.
In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule under Titles XVIII or XIX or section B of Title XI of the Act may have a significant impact on the operations of a substantial number of small rural hospitals. For the reasons stated above, we do not believe that any provisions or changes finalized here would have a significant impact on the operations of rural hospitals. Thus, an analysis under section 1102(b) is not required for this rulemaking.
Section 202 of the Unfunded Mandates Reform Act of 1995, Public Law 104-4, also requires that agencies assess anticipated costs and benefits before issuing any rule that may result in expenditures in any one year by State, local, or tribal governments, in the aggregate, or by the private sector, of $100 million, adjusted for inflation. We believe that no significant costs would be associated with these revisions that would impose any mandates on State, local, or tribal governments or the private sector that would result in an expenditure of $141 million (after adjustment for inflation) in any given year.
Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a rule that imposes substantial direct requirements or costs on State and local governments, preempts State law, or otherwise has Federalism implications. In reviewing this rule under the threshold criteria of Executive Order 13132, we have determined that this rule would not significantly affect the rights, roles, and responsibilities of State or local governments.
The provisions of this final rule will not impose any new information collection and recordkeeping requirements. Consequently, it need not be reviewed by the Office of Management and Budget under the authority of the Paperwork Reduction Act of 1995.
Administrative practice and procedure, Fraud, Grant programs—health, Health facilities, Health professions, Maternal and child health, Medicaid, Medicare, Social Security.
Fraud, Grant programs—health, Health facilities, Health professions, Medicaid, Reporting and recordkeeping.
Accordingly, 42 CFR parts 1001 and 1003 are amended as set forth below:
42 U.S.C. 1302, 1320a-7, 1320a-7b, 1395u(j), 1395u(k), 1395w-104(e)(6), 1395y(d), 1395y(e), 1395cc(b)(2)(D), (E) and (F), and 1395hh; and sec. 2455, Pub. L. 103-355, 108 Stat. 3327 (31 U.S.C. 6101 note).
(f) * * *
(2) Any payment the participant makes to the referral service is assessed equally against and collected equally from all participants and is based only on the cost of operating the referral service, and not on the volume or value of any referrals to or business otherwise generated by either party for the other party for which payment may be made in whole or in part under Medicare, Medicaid, or other Federal health care programs.
(k)
(1) If the cost-sharing amounts are owed to a hospital for inpatient hospital services for which a Federal health care program pays under the prospective payment system, the hospital must comply with all of the following three standards:
(i) The hospital must not later claim the amount reduced or waived as a bad debt for payment purposes under a Federal health care program or otherwise shift the burden of the reduction or waiver onto a Federal health care program, other payers, or individuals.
(ii) The hospital must offer to reduce or waive the cost-sharing amounts without regard to the reason for admission, the length of stay of the beneficiary, or the diagnostic related group for which the claim for reimbursement is filed.
(iii) The hospital's offer to reduce or waive the cost-sharing amounts must not be made as part of a price reduction agreement between a hospital and a third-party payer (including a health plan as defined in paragraph (l)(2) of this section), unless the agreement is part of a contract for the furnishing of items or services to a beneficiary of a Medicare supplemental policy issued under the terms of section 1882(t)(1) of the Act.
(2) If the cost-sharing amounts are owed by an individual who qualifies for subsidized services under a provision of the Public Health Services Act or under Titles V or XIX of the Act to a federally qualified health care center or other health care facility under any Public Health Services Act grant program or under Title V of the Act, the health care center or facility may reduce or waive the cost-sharing amounts for items or services for which payment may be made in whole or in part by a Federal health care program.
(3) If the cost-sharing amounts are owed to a pharmacy (including, but not limited to, pharmacies of the Indian Health Service, Indian tribes, tribal organizations, and urban Indian organizations) for cost-sharing imposed under a Federal health care program, the pharmacy may reduce or waive the cost-sharing amounts if:
(i) The waiver or reduction is not offered as part of an advertisement or solicitation; and
(ii) Except for waivers or reductions offered to subsidy-eligible individuals (as defined in section 1860D-14(a)(3)) to which only requirement in paragraph (k)(3)(i) of this section applies:
(A) The pharmacy does not routinely waive or reduce cost-sharing amounts; and
(B) The pharmacy waives the cost-sharing amounts only after determining in good faith that the individual is in financial need or after failing to collect the cost-sharing amounts after making reasonable collection efforts.
(4) If the cost-sharing amounts are owed to an ambulance provider or supplier for emergency ambulance services for which a Federal health care program pays under a fee-for-service payment system and all the following conditions are met:
(i) The ambulance provider or supplier is owned and operated by a State, a political subdivision of a State, or a tribal health care program, as that term is defined in section 4 of the Indian Health Care Improvement Act;
(ii) The ambulance provider or supplier engaged in an emergency response, as defined in 42 CFR 414.605;
(iii) The ambulance provider or supplier offers the reduction or waiver on a uniform basis to all of its residents or (if applicable) tribal members, or to all individuals transported; and
(iv) The ambulance provider or supplier must not later claim the amount reduced or waived as a bad debt for payment purposes under a Federal health care program or otherwise shift the burden of the reduction or waiver onto a Federal health care program, other payers, or individuals.
(z)
(aa)
(1) The discounted drug meets the definition of “applicable drug” set forth in section 1860D-14A(g) of the Act;
(2) The beneficiary receiving the discount meets the definition of “applicable beneficiary” set forth in section 1860D-14A(g) of the Act; and
(3) The manufacturer of the drug participates in, and is in compliance with the requirements of, the Medicare Coverage Gap Discount Program.
(bb)
(1) To Federal health care program beneficiaries if all the following conditions are met:
(i) The availability of the free or discounted local transportation services—
(A) Is set forth in a policy, which the eligible entity applies uniformly and consistently; and
(B) Is not determined in a manner related to the past or anticipated volume or value of Federal health care program business;
(ii) The free or discounted local transportation services are not air, luxury, or ambulance-level transportation;
(iii) The eligible entity does not publicly market or advertise the free or discounted local transportation services, no marketing of health care items and services occurs during the course of the transportation or at any time by drivers who provide the transportation, and drivers or others arranging for the transportation are not paid on a per-beneficiary-transported basis;
(iv) The eligible entity makes the free or discounted transportation available only:
(A) To an individual who is:
(
(
(B) Within 25 miles of the health care provider or supplier to or from which the patient would be transported, or within 50 miles if the patient resides in a rural area, as defined in this paragraph (bb); and
(C) For the purpose of obtaining medically necessary items and services.
(v) The eligible entity that makes the transportation available bears the costs of the free or discounted local transportation services and does not shift the burden of these costs onto any Federal health care program, other payers, or individuals; and
(2) In the form of a “shuttle service” (as defined in this paragraph (bb)) if all of the following conditions are met:
(i) The shuttle service is not air, luxury, or ambulance-level transportation;
(ii) The shuttle service is not marketed or advertised (other than posting necessary route and schedule details), no marketing of health care items and services occurs during the course of the transportation or at any time by drivers who provide the transportation, and drivers or others arranging for the transportation are not paid on a per-beneficiary-transported basis;
(iii) The eligible entity makes the shuttle service available only within the eligible entity's local area, meaning there are no more than 25 miles from any stop on the route to any stop at a location where health care items or services are provided, except that if a stop on the route is in a rural area, the distance may be up to 50 miles between that that stop and all providers or suppliers on the route; and
(iv) The eligible entity that makes the shuttle service available bears the costs of the free or discounted shuttle services and does not shift the burden of these costs onto any Federal health care program, other payers, or individuals.
Note to paragraph (bb): For purposes of this paragraph (bb), an “eligible entity” is any individual or entity, except for individuals or entities (or family members or others acting on their behalf) that primarily supply health care items; “established patient” is a person who has selected and initiated contact to schedule an appointment with a provider or supplier to schedule an appointment, or who previously has attended an appointment with the provider or supplier; “shuttle service” is a vehicle that runs on a set route, on a set schedule; “rural area” is an area that is not an urban area, as defined in this rule;and “urban area” as: (a) A Metropolitan Statistical Area (MSA) or New England County Metropolitan Area (NECMA), as defined by the Executive Office of Management and Budget; or (b) the following New England counties, which are deemed to be parts of urban areas under section 601(g) of the Social Security Amendments of 1983 (Pub. L. 98-21, 42 U.S.C. 1395ww (note)): Litchfield County, Connecticut; York County, Maine; Sagadahoc County, Maine; Merrimack County, New Hampshire; and Newport County, Rhode Island.
42 U.S.C. 262a, 1302, 1320-7, 1320a-7a, 1320b-10, 1395u(j), 1395u(k), 1395cc(j), 1395w-141(i)(3), 1395dd(d)(1), 1395mm, 1395nn(g), 1395ss(d), 1396b(m), 11131(c), and 11137(b)(2).
(3) Differentials in coinsurance and deductible amounts as part of a benefit plan design (as long as the differentials have been disclosed in writing to all beneficiaries, third party payers and providers), to whom claims are presented;
(5) A reduction in the copayment amount for covered OPD services under section 1833(t)(8)(B) of the Act;
(6) Items or services that improve a beneficiary's ability to obtain items and services payable by Medicare or Medicaid, and pose a low risk of harm to Medicare and Medicaid beneficiaries and the Medicare and Medicaid programs by—
(i) Being unlikely to interfere with, or skew, clinical decision making;
(ii) Being unlikely to increase costs to Federal health care programs or beneficiaries through overutilization or inappropriate utilization; and
(iii) Not raising patient safety or quality-of-care concerns;
(7) The offer or transfer of items or services for free or less than fair market value by a person if—
(i) The items or services consist of coupons, rebates, or other rewards from a retailer;
(ii) The items or services are offered or transferred on equal terms available to the general public, regardless of health insurance status; and
(iii) The offer or transfer of the items or services is not tied to the provision of other items or services reimbursed in whole or in part by the program under Title XVIII or a State health care program (as defined in section 1128(h) of the Act);
(8) The offer or transfer of items or services for free or less than fair market value by a person, if—
(i) The items or services are not offered as part of any advertisement or solicitation;
(ii) The offer or transfer of the items or services is not tied to the provision of other items or services reimbursed in whole or in part by the program under Title XVIII or a State health care program (as defined in section 1128(h) of the Act);
(iii) There is a reasonable connection between the items or services and the medical care of the individual; and
(iv) The person provides the items or services after determining in good faith that the individual is in financial need;
(9) Waivers by a Part D Plan sponsor (as that term is defined in 42 CFR 423.4) of any copayment for the first fill of a covered Part D drug (as defined in section 1860D-2(e)) that is a generic drug (as defined in 42 CFR 423.4) or an authorized generic drug (as defined in 21 CFR 314.3) for individuals enrolled in the Part D plan (as that term is defined in 42 CFR 423.4), as long as such waivers are included in the benefit design package submitted to CMS. This exception is applicable to coverage years beginning on or after January 1, 2018.
This document was received by the Office of the Federal Register on November 18, 2016.
National Credit Union Administration (NCUA).
Final rule.
The NCUA Board is comprehensively amending its chartering and field of membership rules to maximize access to federal credit union services to the extent permitted by law, and to organize the rules in a more efficient framework. The amendments will implement changes in policy affecting: The definition of a local community, a rural district, and an underserved area; the chartering and expansion of a multiple common bond credit union; the expansion of a single common bond credit union that serves a trade, industry or profession; and the process for applying to charter, or to expand, a federal credit union.
The effective date of this final rule is February 6, 2017.
Matthew Biliouris, Deputy Director, or Robert Leonard, Director, Division of Consumer Access, or Rita Woods, Director, Division of Consumer Access South, Office of Consumer Protection, at the above address or telephone (703) 518-1140; or Senior Staff Attorney Steven Widerman, or Staff Attorney Marvin Shaw, Office of General Counsel, at the above address or telephone (703) 518-6540.
NCUA's Chartering and Field of Membership Manual, incorporated as Appendix B to part 701 of its regulations (“Chartering Manual”),
To facilitate consumer access to credit unions and to enhance their delivery of services as the Act contemplates, the Board periodically modifies and updates the Chartering Manual to advance certain objectives. Among these are relief from undue burdens and restrictions on an FCU's ability to provide services to consumers who are eligible for FCU membership, especially to benefit those of modest means; enhancement of the menu of strategic options for FOM expansions; and maximization of competitive parity between federal and state charters to the extent allowed by law, while respecting the national system of dual chartering. To serve those objectives, the Board published a proposed rule in December 2015 requesting public comment on fifteen substantive modifications to the rules affecting each of the three FOM types that the Act authorizes.
As explained below, this final rule will implement proposed modifications to the rule affecting: The definition of a local community, a rural district, and an underserved area; the expansion of a multiple common bond credit union; the expansion of a single common bond credit union that serves a trade, industry or profession; and the type and extent of information that must be submitted to support an application to charter or expand an FCU's FOM.
NCUA received approximately 11,380 comments on the proposed rule: 31 from national and regional credit union trade associations and leagues; 99 from individual FCUs; 14 from federally-insured state-chartered credit unions; 8291 from individual credit union members; 14 from national and regional bank trade associations; 6 from individual banks; 2925 from individual bank customers; and 6 from other commenters.
The Act limits membership in a community credit union to “[p]ersons or organizations within a well-defined local community, neighborhood, or rural district,”
To qualify as a well-defined local community (“WDLC”) or as a rural district, the Board requires a proposed area to have “specific geographic boundaries,”
1. “
The vast majority of commenters urged the Board to eliminate the population cap on statistical areas altogether because the Act does not mandate it. They maintained that an area's population is unrelated to what should be the paramount considerations in identifying a local community, namely, interaction or common interests among residents, and the FCU's ability and commitment to serve the area. The commenters also contended that, by imposing a population limit, the Board is substituting its judgment for Census data, by which CBSAs are designated without regard to population, and that population alone is not a source of undue risk to an FCU or to the National Credit Union Share Insurance Fund (“the Insurance Fund”). Finally, some commenters protested that a population cap on statistical areas puts FCUs at a competitive disadvantage compared to communities consisting of an SPJ, which are not limited by population.
Some commenters advocated increasing the present cap from 2.5 million to between 3.5 million and as much as 5 million, respectively, to ensure the long-term growth and viability of FCUs in general. Others urged increasing the population limit to match that of the most populous SPJ the Board has approved (Los Angeles County, CA, at 10 million), or that of the nation's most populous Metropolitan Statistical Area (New York-Newark-Jersey City, NY-NJ-PA Metro Area at 20 million). One commenter recommended linking the population limit to an appropriate index that would trigger periodic reevaluation and possible adjustment of the existing limit.
In contrast, dozens of commenters criticized the existing 2.5 million cap as being too high, urging that it be reduced. One insisted that the 2.5 million cap is not a credible “indicator of common, close-knit interaction.” Another predicted that an area as populous as 10 million could qualify as a local community as long as its residents “interact in some way . . . within lines drawn by NCUA.” Yet another criticized the Board for implying that the existing 2.5 million cap is too low only by comparison to the most populous SPJs the Board has approved (
The Board finds considerable merit in commenters' suggestions to eliminate the population cap, increase the present population cap to a given amount, tie the cap to the population of a certain geographic unit, or administer any cap according to a framework of oversight and internal controls. Out of concern that the public should have notice and an opportunity to address such recommendations, as the Administrative Procedure Act requires,
2. “
The majority of commenters favored repeal of the “core area” service requirement, primarily because it is not mandated by the Act and thus unnecessarily imposes an additional constraint on who credit unions can serve. They further speculated that relief from an obligation to serve a “core area” will give FCUs the flexibility to adapt to the specific area each initially is able to reasonably and safely serve, allowing it to establish and maintain a “marketplace footprint” there. Other commenters criticized the “core area” service requirement for dividing an otherwise viable community or excluding portions that would enhance its viability; for causing an FCU to sacrifice service to other areas within the chosen portion of a CBSA; and as a disincentive to serve populated urban areas due to the additional cost and resources of serving a “core area.”
A few commenters suggested alternatives in lieu of applying a “core area” service requirement to a portion of a CBSA. One is to permit an FCU to develop a presence, reputation and services to enable it to later expand into the “core area” of a CBSA. The other is to defer to the National Federation of Community Development Credit Unions and to the Community Development Financial Institutions Fund regarding how best to identify and to provide service to low-income and underserved populations.
In contrast, bank-affiliated commenters generally favored retaining the “core area” service requirement. One predicted that its absence would effectively permit “redlining” through formation of a community primarily consisting of wealthier areas within a CBSA, while excluding areas where low-income and minority populations are concentrated. Another urged the Board to retain the “core area” service requirement given that, unless expressly required by state law, credit unions typically are not subject to the Community Reinvestment Act, which requires financial institutions
What critics of repealing the “core area” service requirement overlook is that NCUA has in place a supervisory process to assess management's efforts to offer service to the entire community an FCU seeks to serve. NCUA holds credit union management accountable for the results of an annual evaluation that encompasses a community FCU's implementation of its business and marketing plans,
Another relevant part of the supervisory process is the agency's mandate to consider member complaints alleging discriminatory practices affecting low-income and underserved populations, such as redlining, and to respond as necessary when such practices are shown to exist.
Having considered the comments addressing repeal of the “core area” service requirement, and because it is not a requirement mandated by the Act, the Board has decided to repeal it in view of credit unions' success in providing financial services to low-income and underserved populations without regard to where they are located within a community,
3.
The majority of commenters supported this technical remedy in order to prevent the unintended disqualification of a portion of a CBSA that falls within the population cap solely because the CBSA as a whole exceeds it. In that event, an FCU would have no recourse but to serve an area smaller than the portion it seeks to serve (
Having considered the comments addressing this proposal, the Board considers it an appropriate remedial initiative to limit to the population cap adopted in the final rule the portion of a CBSA a credit union seeks to serve.
4. “
Scores of commenters supported the proposal to recognize Combined Statistical Areas as “presumptive communities,” concurring that OMB's approach in designating Combined Statistical Areas is consistent with NCUA's long-standing consideration of factors such as employment, commuting patterns and economic interaction to identify a WDLC. These commenters further contended that Combined Statistical Areas are appropriate “presumptive communities” according to social and economic integration among residents within them, apart from strict population and density numbers, because Combined Statistical Areas represent the same “commonality of substantial employment interchange” that an individual CBSA's residents must have.
In addition, commenters cited certain benefits of recognizing Combined Statistical Areas as “presumptive communities.” One is the flexibility to serve multiple counties located within a single Combined Statistical Area, or to expand a community beyond an individual CBSA's boundaries. Another is the opportunity for an FCU serving a single CBSA with a population less than 2.5 million to further expand in scope up to that limit. Another benefit is the addition of Combined Statistical Areas to the menu of safe and sound strategic options for an FCU to grow and survive once it reaches a saturation level within its present FOM.
Finally, one commenter supported the recognition of Combined Statistical Areas as “presumptive” communities as a “welcomed change that is obviously within the confines [of the Act].” Another cited an OMB pronouncement in support of Government agency use of Metropolitan and Micropolitan Statistical Area or Combined Statistical Area delineations to develop a non-statistical program, as long as the agency seeks public comment on the proposed use
Bank trade associations opposed recognizing Combined Statistical Areas as “presumptive communities.” One criticized the proposal as exceeding the reasonable definition of “local.” Others contended that a Combined Statistical Area necessarily is too expansive to be “local” because it “represents larger regions” that can encompass thousands of square miles crossing county and state borders. One opponent predicted that Combined Statistical Areas would be used to create state-wide FOMs, believing that this was not what Congress intended. Another claimed that Congress sought to impose narrow limits on areas a community credit union serves.
These commenters overlook certain facts that contradict the notion that a Combined Statistical Area is too expansive to be “local.” First, of the 174 designated Combined Statistical Areas, the 22 largest would not qualify as a WDLC because each, as a whole, exceeds the 2.5 million population cap. Second, the average geographic size among the 152 Combined Statistical Areas that would each qualify as a WDLC, at 4553 square miles, is comparable to the average geographic
Having considered the comments addressing the proposal to recognize a Combined Statistical Areas as a “presumptive community,” the Board adopts the proposal given that a Combined Statistical Area simply unifies, as a single community, two or more contiguous CBSAs that each independently meet the existing rule's definition of a “statistical area” that presumptively qualifies as a WDLC. Accordingly, subject to the existing 2.5 million population limit for a CBSA, the rule adds to the “statistical area” definition “all or an individual portion of . . . a Combined Statistical Area designated by the U.S. Office of Management and Budget.”
5.
Most credit union-affiliated commenters supported the proposal to permit a community credit union to add an adjacent area upon narrative proof of common interests or interaction among residents of the expanded community. They recommended that option as a logical advance in business development because it would allow an FCU to add an adjacent area without requiring it to discontinue serving its existing community. However, several commenters opposed the requirement that an FCU must support its application to add an adjacent area with a business plan demonstrating its post-expansion commitment and ability to serve the entire community.
Bank trade associations opposed the concept of permitting adjacent area additions to a community, regardless how common interests or interaction among residents is demonstrated, and in a few cases opposed it conditionally. Without specifying a substantive or procedural objection, some commenters asserted that the Board lacks statutory authority to implement the proposal. Another contended that, due to the breadth and scope of the banking industry, the adjacent areas the proposal addresses do not lack sufficient access to financial services. Still another complained that approval of an adjacent area addition on the basis of NCUA's qualitative assessment of a narrative would render the process non-transparent.
Two critical commenters conditioned their opposition to the proposal to allow adjacent area additions on certain modifications. The first would be to require the Board develop a complete record confirming that the proposed adjacent area meets six interaction or common interest characteristics among its residents, rather than accepting on its face the supporting information the credit union provides. The second would be, in each case, to require the Board to then publish a notice in the
The Act gives the Board broad discretion to define a WDLC for purposes of “making
Having considered the comments addressing the proposal to permit an adjacent area addition to a community and, for that limited purpose, to accept narrative proof of common interests and interaction among residents, the Board has decided to adopt the proposal in the final rule.
6.
At least a thousand credit union-affiliated commenters supported the proposal to recognize Congressional districts as SPJs; only one opposed it.
The Board has considered the comments addressing the proposal to recognize an individual Congressional district as a “presumptive community.” Notwithstanding certain merits of the proposal, the Board has decided to defer action on it at this time, consistent with an incremental approach to introducing, and permitting credit unions to acclimate to, other significant community common bond enhancements adopted in the final rule (
7.
The Administrative Procedure Act (“APA”) prohibits the Board from adopting these four recommendations in the final rule because the proposed rule did not introduce them for public comment, thus not “provid[ing] sufficient factual detail and rationale for the rule to permit interested parties to comment meaningfully.”
The Act does not mandate a population limit for a Rural District. However, to qualify as a Rural District, the existing rule restricts the area's total population to the
1.
Nearly all of the credit union-affiliated commenters who addressed the proposed population increase to 1 million supported it, provided the Board does not eliminate the population cap on Rural Districts altogether. They dismissed the cap as superfluous in view of other qualifying criteria—the existing minimum population density and “rural” designation options and, if it were adopted, the multi-state expansion limit. They further contend that the characteristics of a Rural District do not change much as its population fluctuates. Conversely, one commenter conditioned its support for a 1 million population cap on elimination of the population density criterion, arguing that (at 100 persons per square mile) it is unduly low in any case.
Others believed that the sole criterion to qualify as a Rural District should be a credit union's ability to serve the area, as demonstrated by business and marketing plans, including via online services to members. To expand a Rural District, these commenters urged that the decisive factor should be evidence of the contiguous area's economic and social ties to the pre-expansion Rural District. One commenter suggested permitting an area to qualify as a Rural District so long as the Census does
Apart from the preference to eliminate the Rural District population cap, several commenters predicted that a 1 million population cap would open up consumer choice for a cooperative form of financial institution, helping credit unions to serve the low wage workers who dominate certain rural markets. Others emphasized the difficulty of delineating the borders of a Rural District versus an urban community, due to scattered population hubs and widely dispersed individuals and businesses, and urged the Board to modify its rules to facilitate credit union service to those areas.
Six bank-affiliated trade associations objected to the proposal because it quadrupled the Rural District population cap. These commenters stated that the proposal was an unreasonable interpretation of the statutory terms “rural” and “local.” They expressed concern that credit unions will exploit the increased population cap to combine densely populated and thinly populated areas into a single area to meet the population density limit, and to create state-wide fields of membership.
To limit Rural District expansions, one commenter urged NCUA to require the
These views rely on a pair of misconceptions: That “local” as used in section 1759(b) and (g) modifies “rural district,” when in fact it does not; and that a “local” area and a “rural” area necessarily share similar characteristics, which they inherently do not. In any case, a Rural District by its very nature typically covers an area that is too large to be considered “local.”
As the proposed rule explained, a Rural District must have a population sufficient to enable it to provide a level of operating efficiencies and scale that will make it attractive to credit unions as a strategic option. In that regard, a commenter questioned why a population of 1 million is needed to achieve that objective when, according to the commenter, community banks manage to serve far fewer than 1 million people located in rural areas. Another commenter expressed concern that NCUA will exploit the need for “operating efficiencies” to raise the Rural District population cap beyond 1 million.
Having considered the comments addressing the Rural District population cap, the Board has decided to set the rural district population cap at 1 million, as proposed. The Board believes this higher limit will achieve a “balance . . . between permitting rural districts to be large enough to be economically viable but not unreasonably large taking into account the purpose of the rural district,”
A higher population cap is supported by the Board's experience since 2013 with eight credit unions, in four different states, serving Rural Districts with an average population of 536,646.
The existing rule provides an alternative population limit of 3 percent of the population of the state in which a majority of a rural districts residents are located. Under that alternative, the Board has approved 8 rural districts above the general population limit of 250,000. Moreover, that alternative already allows a rural district with a population of at least 1 million in one state, and of at least 800,000 in another. Having set a 1 million precedent in one state, the purpose of the alternative limit also justifies a
In view of this objective, a 1 million cap is appropriate because it strikes an appropriate balance between economic viability and an excessive population. It also leaves credit unions that already serve a Rural District, as well as those that would consider doing so, sufficient flexibility going forward to maintain economic viability and to maximize penetration of the potential membership base.
Most importantly, an increased cap will enhance consumer access to our national system of cooperative credit, particularly those of modest means in rural areas, who may otherwise lack access to a not-for-profit cooperative credit union. In this regard, the Board finds it compelling that in 97 percent of non-metropolitan counties, more than 50 percent of the population is either low, moderate, or middle income.
Bank-associated commenters speculated that larger regions would lack interaction or common interests among their residents. What these commenters overlook is that these defining characteristics of a WDLC do not apply to a Rural District. Rather, primarily due to the sparsely distributed population in rural areas,
The Board believes that increasing the population limit on rural districts is warranted by the contemporary economic realities of serving sparsely populated areas. The penetration rate among community charters typically is five percent. As a result, for a credit union serving a rural district to thrive, a sufficiently large population base is essential to enable it to offer financial services economically. Although some commenters believe that the higher limit would give credit unions an unfair
2.
Relatively few commenters addressed the proposed multi-state expansion limit. Some of the credit union-affiliated commenters opposed the multi-state expansion limit as redundant, suggesting that it should be eliminated in view of the population cap, which would function as an appropriate check on overexpansion. Conversely, others advocated retaining the multi-state expansion limit, provided the population cap on Rural Districts is eliminated. One commenter urged that the sole criterion for approving a Rural District should be the credit union's ability to serve an area lacking in access to credit union service, including by technological means. The few bank commenters who addressed the proposed multi-state expansion limit opposed the concept of multi-state Rural Districts altogether, dismissing it as a means to effectively allow state-wide and multi-state FOMs.
In contrast to these comments, the Board's purpose is to have dual limitations that each serve a unique purpose—one on population, the other on geographic area size. Therefore, having considered the comments addressing the proposed multi-state limit on Rural District expansions, the Board has decided to adopt it without alteration in the final rule. Accordingly, the final rule provides that, to qualify as a Rural District, an area's boundaries must “not exceed the outer boundaries of the states that are
The Act authorizes the Board to allow multiple common bond credit unions to serve members residing in an “underserved area,” provided the FCU establishes and maintains a facility “in” the area.
1.
Of the commenters who specifically addressed the proposed non-depository bank and non-community credit union exclusions from the COF ratio, most opposed the COF concept altogether, denouncing it as: Flawed, unduly cumbersome and incapable of producing a meaningful analysis; the cause of unnecessary disapprovals; and a disincentive to serve an Underserved Area.
Other commenters urge that once a Government agency designates an area as “underserved,” the Board should not require the FCU to also demonstrate that the area is “underserved by other depository institutions” (even though the Act mandates exactly that); should disregard the number of depository institutions already serving the area (even though the Act mandates the opposite); and should exempt underserved areas from the population cap that applies to a CBSA. These commenters maintained that greater flexibility concerning Underserved Area criteria would reduce burden—presently a disincentive for credit unions to expand service to an Underserved Area. However, these commenters overlooked the Act's explicit requirement that an area be “underserved by other depository institutions”
One commenter asked the Board to clarify how shared branches would count to determine whether an area is “underserved by other depository institutions” (
Although many bank-affiliated commenters opposed the concept of the COF ratio altogether, one supported the proposed exclusions. Having considered the comments addressing the proposed exclusions from the COF ratio, the Board considers the proposal an appropriate improvement and, therefore, implements both exclusions in the final rule.
2.
Credit union-affiliated commenters suggested various metrics to use in addition to, or instead of, the COF ratio to assess the existing level of service by depository institutions already present in a proposed Underserved Area. These included the CFPB's “underserved” county designations, and Home Mortgage Disclosure Act (“HMDA”) data indicating the number of depository institutions that meet a minimum ratio of mortgage loans extended to residents within an area versus borrowers from outside, and to persons below a certain credit score limit. In many cases, the suggested metric is generic because the commenter did not specify the data the metric would rely on and/or the source of the data.
Having considered the comments suggesting alternative metrics to determine whether a proposed area is underserved by other depository institutions, the Board has decided to accept the CFPB's “underserved county” designations as a proxy for a determination of “underservice.” The Board also will consider an FCU-chosen metric, provided it is based on NCUA or Federal banking agency data. An example of such a metric would be relevant data from the publicly available reports of Community Reinvestment Act examinations conducted by the Federal Deposit Insurance Corporation (“FDIC”), the Office of the Comptroller of the Currency or the Board of Governors of the Federal Reserve System, or from HMDA data collected by these agencies.
Accordingly, the final rule provides that “a proposed area will qualify as `underserved by other depository institutions' if it is designated as, or is within, an `underserved county' according to data produced by the CFPB. . . . NCUA will make a list of `underserved counties' available on its Web site.”
3.
The first commenter recommendation was that the Board, by regulation, permit any charter type to add an Underserved Area, whereas the existing rule permits only a multiple common bond credit union to do so. To allow any charter type to serve an Underserved Area would require Congress to amend the Act, which presently limits Underserved Area additions to FCUs in the “the field of membership category of which is described in [section 1759(b)(2)],”
The second commenter recommendation was that the Board permit “other technical means,” beyond what the existing “service facility” definition permits, to meet the Act's explicit mandate that a credit union “establish and maintain an office or facility
As amended in 1998, the Act restored the Board's multiple common bond policy, permitting a multiple common bond credit union to serve a combination of distinct, definable occupational and/or associational groups, provided each has its own common bond among group members.
1.
Scores of credit union commenters supported the proposal to modify the definition of service facility to permit use of a transactional Web site to achieve reasonable proximity between a multiple common bond credit union and members of its added groups. These commenters contented that the proposal is within the Board's authority to interpret the Act. As a practical matter, the commenters asserted that online proximity reflects the large and growing role of modern financial technology, making geographic location and physical branches less representative of the scope of a credit union's service area. Online access would allow FCUs to efficiently meet their members' needs and expectations.
Commenters stated that while an FCU's physical presence conveniently close to the groups it served may have been a practical necessity in the past, evolving technology has expanded the menu of options members have to interact with their financial institution, effectively putting them in close proximity regardless of geographic location. In contrast, scores of bank commenters opposed the proposal to amend the definition of service facility to include online access. They claimed that the proposal exceeds the Board's statutory authority and is inconsistent with Congressional intent, in that an online internet channel would “effectively remove the statutory requirement that a multiple common bond FCU be in a `reasonable proximity to the location of the group.” Moreover, they criticized the proposal as inconsistent with NCUA's prior interpretation of “reasonable proximity” as mandating an FCU branch office or mobile office physically near the group to be added. One commenter recommended that NCUA study the effect of the proposal on the wider financial services industry.
The Board has considered the comments addressing the proposal to modify the definition of service facility to permit use of a transactional Web site to achieve “reasonable proximity” between a multiple common bond credit union and members of its added groups. Notwithstanding certain merits of the proposal, the Board has decided to defer action on it at this time, consistent with an incremental approach to introducing the other FOM modifications adopted in the final rule, thus permitting credit unions to acclimate to them. The Board will further study the impact of the proposal.
2.
Scores of FCU commenters supported this proposal, believing that it better reflects today's modern workforce, in which it is not uncommon for businesses to outsource work to contractors whose employees, although not directly employed by a SEG sponsor, are integral to the sponsor's functioning and operations. In some cases, the employees of an independent contractor have worked for a SEG sponsor longer than many of the sponsor's
These commenters noted that the proposal would allow greater flexibility for potential members to join an FCU, thus easing or eliminating unnecessary administrative burdens and restrictions on FCUs. As a result, they claimed that this proposal would help to expand the multiple common bond membership base nationally, thereby making affordable financial services available to more American consumers.
In contrast, bank commenters opposed the contractor eligibility proposal, arguing that it is inconsistent with the Act and its legislative history to include within a SEG the employees of its sponsor's contractors. They asserted that the Act favors the formation of single common bond credit unions.
Having considered the comments addressing inclusion of SEG contractors in a multiple common bond, the Board has determined that the proposal not only is consistent with the statute, but reflects the modern economy's increasing reliance on contractors. Specifically, the Board notes the proposal's consistency with the Act's provisions requiring a stand-alone feasibility assessment above the 3000 member threshold. The strong mutual dependency of a SEG sponsor and its contractor on each other effectively cements the single common bond the sponsor's employees and the contractor's employees share with each other.
Despite the Act's preference for the formation of single common bond credit unions, the Act expressly permits a multiple common bond addition when a group cannot reasonably establish a single common bond credit union, or likely would be unable to successfully manage and sustain such a credit union.
Some commenters requested the Board to define what constitutes a “strong dependency relationship” between a SEG sponsor and its contractor, but cautioned against requiring either SEG sponsors or their contractors to disclose trade secrets or confidential financial information. Some suggested permitting an FCU to pledge in good faith that it can
3.
About a dozen credit union commenters specifically addressed the tenants' SEG proposal, generally favoring it as an enhancement of an FCU's ability to serve multiple businesses within an office/industrial park by leveraging its resources to provide more value to its membership. Specifically, the proposal enabled an FCU to use a park's tenant base to more efficiently identify and offer services to employees of businesses within the park.
Critics of the proposal included some credit unions and several banks that believed the proposal would create an impermissible “hybrid” charter that combined community and occupational common bond characteristics. Specifically, these commenters believed such a charter would make a SEG out of a group (
Having considered the comments addressing the tenants' SEG proposal, the Board believes it is appropriate to give the employees of a park's tenants the option to join a multiple common bond credit union. However, a SEG sponsored by a landlord and consisting of its tenants (as opposed to the landlord's
Accordingly, in lieu of the tenant SEG proposal, the final rule clarifies the current availability of the multiple common bond option for employers within an industrial park, shopping mall, office park, or office building (each a “park”) by expressly specifying it as an example within the rule; no rule change is required.
4.
Scores of comments, both in support and in opposition, addressed the proposal to streamline the documentation requirement to assess the stand-alone feasibility of ≥3000 groups. Credit union commenters generally favored the proposal, but requested modifications, particularly to increase the membership threshold and the method of quantifying group size. Most commenters recommended increasing the threshold to 5000, while others recommended increasing it to as many as 20,000 members. One commenter recommended eliminating a numerical threshold completely. Further, many credit union commenters recommended evaluating the stand-alone feasibility criteria using the number of actual rather than potential members. Acknowledging the Board's initial rationale for the streamlined approach—that 80 percent of failures occur among FCUs with fewer than
Several bank commenters criticized the proposal, claiming that it violates the Act and is inconsistent with the legislative history. These commenters stated that, with limited exceptions, the Act expressly limits to 3000 members the size of a group that can be added to an existing multiple common bond credit union. The commenters were concerned that the proposal's practical effect would be to unilaterally increase the numerical limitation prescribed by law.
In contrast, credit union commenters insisted that the proposal is within the Act's statutory authority because it does not obviate the requirement that a >3000 group demonstrate its inability to establish a new single common bond FCU. In their view, it allows NCUA to accept a group's statement of inability to form a stand-alone credit union in lieu of full supporting documentation. To the extent such documentation is absent, they noted that NCUA retains the ability to reject or to further investigate a group's statement of inability to form a stand-alone credit union.
Having considered the comments addressing the streamlined documentation proposal for assessing the stand-alone feasibility of >3000 groups, it is clear that commenters opposing the proposal relied on a fundamental misconception—that the proposal would alter the 3000 member stand-alone feasibility threshold mandated by the Act. On the contrary, the final rule merely reduces the documentation required, depending on group size, to support a stand-alone feasibility determination, while continuing to honor both the 3000 member feasibility threshold and the feasibility criteria that the Act prescribes. Further, streamlining the required documentation is a response to complaints to the agency from multiple common bond credit unions that the excessive paperwork demand on groups they seek to add has been a disincentive to those groups, causing them to withdraw in frustration.
Certain credit unions urged the Board to increase the threshold above 5000, if based on potential members or, if left at 5000, to base it on actual members. These commenters did not provide a compelling justification for adjusting this amount at this time. On the contrary, the Board has determined that the proposed 5000 member threshold is appropriate at this time, believing that it represents the minimum number of potential members needed for a credit union to maintain long-term economic viability.
The process of applying the statutory stand-alone feasibility criteria is identical under both the streamlined documentation and the standard approaches. In either case, the Board would review a >3000 group's application and determine whether to accept or reject it, or to request additional supporting information. Accordingly, the streamlined documentation proposal is consistent with the Act's stand-alone feasibility mandate.
5.
NCUA has historically recognized a variety of persons who, by virtue of their relationship to a common bond group, have been entitled to credit union membership eligibility.
Credit union commenters uniformly favored this proposal for recognizing not only the affinity that veterans share with their own active duty branch of service, but the affinity among active duty and retired military personnel generally. Some commenters supported the proposal as a means to protect military veterans from unscrupulous lenders. Another opposed it as too expansive, contending that it would justify membership eligibility for retirees of other organizations within an FOM. Conversely, yet another commenter advocated expanding the proposal to grant membership eligibility based upon the affinity of, for example, retired federal employees and retired teachers. The single bank commenter who addressed this proposal was concerned that it would enable individuals to use “creative measures” to join an FCU by group affinity generally.
Having considered the comments addressing the proposal to extend membership eligibility to honorably discharged military members, the Board believes that it is appropriate due to the unique bond that discharged veterans typically retain with their former branch of service (
A single occupational common bond within a trade, industry or profession (a “TIP”) is based on employment by any number of separately owned corporations or other legal entities that share a common bond by reason of producing similar products, providing similar services, sharing the same profession or trade, or participating in the same industry.
The proposed rule clarified that the existing definition of a TIP-based single common bond of occupation includes employees of entities that have a strong dependency relationship on, and whose employees work directly with employees of, other entities within the same industry, to the extent that a significant, if not equal, economic impact is likely if one were unable to continue in its operations without doing business with the other.
Several credit unions favored the proposal to include “strong dependency” vendors and suppliers in a TIP, stating that it would provide regulatory relief in allowing TIP credit unions to reach potential members more easily. One commenter welcomed the Board's recognition that current employment practices frequently involve outsourcing of work to independent vendors and suppliers under contract. No commenter opposed the proposal.
Some commenters expressed a mistaken belief that the existing rule restricts a TIP charter from serving the entire nation. On the contrary, the existing rule imposes no geographic limitation on service to the groups within a TIP. In fact, NCUA has approved several TIPs whose groups span the whole nation.
Having considered the comments addressing the proposal to include “strong dependency” vendors and suppliers in a TIP, the Board has decided to adopt it in the final rule.
Since publishing the December 2015 proposed rule, the Board has renamed the agency's Office of Consumer Protection as the Office of Consumer Financial Protection and Access (“OCFPA”). Accordingly, the final rule updates the agency's Chartering Manual to substitute OCFPA in place of certain references to regional office and regional director chartering responsibilities, and to substitute the Board Secretary for the former Office of Consumer Protection in reference to appeals of chartering decisions.
The Regulatory Flexibility Act requires NCUA to prepare an analysis to describe any significant economic impact a regulation may have on a substantial number of small entities.
The Paperwork Reduction Act of 1995 (“PRA”)
Notwithstanding any other provision of law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB control number. This rule involves a collection of information approved under OMB control number 3133-0015—Chartering and Field of Membership Manual.
The final rule creates new strategic options for FCUs, while requiring of them essentially the same information that the existing rule required to apply for and be granted a charter expansion or conversion, with two exceptions. It introduces a new form (NCUA 4015-A) within Appendix 4 to the Chartering and Field of Membership Manual that condenses the application process that otherwise would apply to the addition of certain groups to a multiple common bond FOM. Using this condensed version will streamline the application process and will no longer require completion of the Form 4015. By adding this option, no new burden is realized with the addition of NCUA 4015-A.
Regarding a community common bond, the final rule permits a community FCU to add an area adjacent to the perimeter of an existing community consisting of a Single Political Jurisdiction, Core Based Statistical Area or Combined Statistical Area, based upon a narrative showing that residents on both sides of the perimeter interact or share common interests. For that purpose, the rule identifies compelling indicia of interaction or common interests that would be relevant in developing and supporting a narrative to establish that the residents of the expanded community meet the requirements of a well-defined local community.
NCUA has determined that the procedure for an FCU to assemble such evidence of interaction or common interests, and to develop and submit a narrative summarizing the evidence to support its application to expand, would create a new information collection requirement. In the proposed rule, NCUA identified and described this new information collection requirement, estimating the time it would take to comply, and solicited commenters on the information collection aspects of the proposed rule. The sole commenter who addressed the information collection aspects of the proposed rule concluded without explanation that it would double the existing paperwork burden. The burden outlined in the December proposed rule revealed an increase of 26,160 hours due to the new and revised information collection requirements. With this estimated increase, the total burden
Executive Order 13132 encourages independent regulatory agencies to consider the impact of their actions on state and local interests. To adhere to fundamental federalism principles, NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies with the Executive Order. Primarily because this rule applies to FCUs exclusively, it will not have a substantial direct effect on the states, on the connection between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. NCUA has determined this rule does not constitute a policy that has federalism implications for purposes of the Executive Order 13132.
NCUA has determined that this final rule will not affect family well-being within the meaning of Section 654 of the Treasury and General Government Appropriations Act, 1999.
The Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121) (“SBREFA”) provides generally for congressional review of agency rules. A reporting requirement is triggered in instances where NCUA issues a final rule as defined by Section 551 of the Administrative Procedure Act.
Credit, Credit unions, Reporting and recordkeeping requirements.
For the reasons stated above, NCUA amends 12 CFR part 701 as follows:
12 U.S.C. 1752(5), 1755, 1756, 1757, 1758, 1759, 1761a, 1761b, 1766, 1767, 1782, 1784, 1786, 1787, 1789. Section 701.6 is also authorized by 15 U.S.C. 3717. Section 701.31 is also authorized by 15 U.S.C. 1601
The National Credit Union Administration's (NCUA) chartering and field of membership policies are directed toward achieving the following goals:
• To encourage the formation of credit unions;
• To uphold the provisions of the Federal Credit Union Act;
• To promote thrift and credit extension;
• To promote credit union safety and soundness; and
• To make quality credit union service available to all eligible persons.
NCUA may grant a charter to single occupational/associational groups, multiple groups, or communities if:
• The occupational, associational, or multiple groups possess an appropriate common bond or the community represents a well-defined local community, neighborhood, or rural district;
• The subscribers are of good character and are fit to represent the proposed credit union; and
• The establishment of the credit union is economically advisable.
Generally, these are the primary criteria that NCUA will consider. In unusual circumstances, however, NCUA may examine other factors, such as other federal law or public policy, in deciding if a charter should be approved.
Unless otherwise noted, the policies outlined in this manual apply only to federal credit unions.
The Federal Credit Union Act recognizes three types of federal credit union charters— single common bond (occupational and associational), multiple common bond (more than one group each having a common bond of occupation or association), and community.
The requirements that must be met to charter a federal credit union are described in Chapter 2. Special rules for credit unions serving low-income groups are described in Chapter 3.
If a federal credit union charter is granted, Section 5 of the charter will describe the credit union's field of membership, which defines those persons and entities eligible for membership. Generally, federal credit unions are only able to grant loans and provide services to persons within the field of membership who have become members of the credit union.
Federal credit unions are generally organized by persons who volunteer their time and resources and are responsible for determining the interest, commitment, and economic advisability of forming a federal credit union. The organization of a successful federal credit union takes considerable planning and dedication.
Persons interested in organizing a federal credit union should contact one of the credit union trade associations or the NCUA regional office serving the state in which the credit union will be organized. Lists of NCUA offices and credit union trade associations are shown in the appendices. NCUA will provide information to groups interested in pursuing a federal charter and will assist them in contacting an organizer.
While anyone may organize a credit union, a person with training and experience in chartering new federal credit unions is generally the most effective organizer. However, extensive involvement by the group desiring credit union service is essential.
The functions of the organizer are to provide direction, guidance, and advice on the chartering process. The organizer also provides the group with information about a credit union's functions and purpose as well as technical assistance in preparing and submitting the charter application. Close communication and cooperation between the organizer and the proposed members are critical to the chartering process.
The Federal Credit Union Act requires that seven or more natural persons—the “subscribers”—present to NCUA for approval a sworn organization certificate stating at a minimum:
• The name of the proposed federal credit union;
• The location of the proposed federal credit union and the territory in which it will operate;
• The names and addresses of the subscribers to the certificate and the number of shares subscribed by each;
• The initial par value of the shares;
• The detailed proposed field of membership; and
•
• The fact that the certificate is made to enable such persons to avail themselves of the advantages of the Federal Credit Union Act.
Willfully and knowingly making false statements on any of the required documentation filed in obtaining a federal credit union charter may be grounds for federal criminal prosecution under 18 U.S.C. 1001.
Before chartering a federal credit union, NCUA must be satisfied that the institution will be viable and that it will provide needed services to its members. Economic advisability, which is a key factor in determining whether a potential charter will have a reasonable opportunity to succeed, is
NCUA will conduct an independent on-site investigation of each charter application to ensure that the proposed credit union can be successful. In general, the success of any credit union depends on: (a) The character and fitness of management; (b) the depth of the members' support; and (c) present and projected market conditions.
The Federal Credit Union Act requires NCUA to ensure that the subscribers are of good “general character and fitness.” Prospective officials and employees will be the subject of credit and background investigations. The investigation report must demonstrate each applicant's ability to effectively handle financial matters. Employees and officials should also be competent, experienced, honest and of good character. Factors that may lead to disapproval of a prospective official or employee include criminal convictions, indictments, and acts of fraud and dishonesty. Further, factors such as serious or unresolved past due credit obligations and bankruptcies disclosed during credit checks may disqualify an individual.
NCUA also needs reasonable assurance that the management team will have the requisite skills—particularly in leadership and accounting—and the commitment to dedicate the time and effort needed to make the proposed federal credit union a success.
Section 701.14 of NCUA's Rules and Regulations sets forth the procedures for NCUA approval of officials of newly chartered credit unions. If the application of a prospective official or employee to serve is not acceptable to the Office of Consumer Financial Protection and Access Director, the group can propose an alternate to act in that individual's place. If the charter applicant feels it is essential that the disqualified individual be retained, the individual may appeal the Office of Consumer Financial Protection and Access Director's decision to the NCUA Board. If an appeal is pursued, action on the application may be delayed. If the appeal is denied by the NCUA Board, an acceptable new applicant must be provided before the charter can be approved.
Economic advisability is a major factor in determining whether the credit union will be chartered. An important consideration is the degree of support from the field of membership. The charter applicant must be able to demonstrate that membership support is sufficient to ensure viability.
NCUA has not set a minimum field of membership size for chartering a federal credit union. Consequently, groups of any size may apply for a credit union charter and be approved if they demonstrate economic advisability. However, it is important to note that often the size of the group is indicative of the potential for success. For that reason, a charter application with fewer than 3,000 primary potential members (
The ability to provide effective service to members, to compete in the marketplace, and to adapt to changing market conditions are key to the survival of any enterprise. Before NCUA will charter a credit union, a business plan based on realistic and supportable projections and assumptions must be submitted.
The business plan should contain, at a minimum, the following elements:
• Mission statement;
• Analysis of market conditions, including if applicable, geographic, demographic, employment, income, housing, and other economic data;
• Evidence of member support;
• Goals for shares, loans, and for number of members;
• Financial services needed/desired;
• Financial services to be provided to members of all segments within the field of membership;
• How/when services are to be implemented;
• Organizational/management plan addressing qualification and planned training of officials/employees;
• Continuity plan for directors, committee members and management staff;
•
• Operating facilities, to include office space/equipment and supplies, safeguarding of assets, insurance coverage, etc.;
• Type of record-keeping and data processing system;
• Detailed semiannual pro forma financial statements (balance sheet, income and expense projections) for 1st and 2nd year, including assumptions—
• Plans for operating independently;
• Written policies (shares, lending, investments, funds management, capital accumulation, dividends, collections, etc.);
• Source of funds to pay expenses during initial months of operation, including any subsidies, assistance, etc., and terms or conditions of such resources; and
• Evidence of sponsor commitment (or other source of support) if subsidies are critical to success of the federal credit union. Evidence may be in the form of letters, contracts, financial statements from the sponsor, and any other such document on which the proposed federal credit union can substantiate its projections.
While the business plan may be prepared with outside assistance, the subscribers and proposed officials must understand and support the submitted business plan.
Following the guidance contained throughout this policy, the organizers should submit wording for the proposed field of membership (the persons, organizations and other legal entities the credit union will serve) to NCUA early in the application process for written preliminary approval. The proposed field of membership must meet all common bond or community requirements.
Once the field of membership has been given preliminary approval, the organizer should conduct an organizational meeting to elect seven to ten persons to serve as subscribers. The subscribers should locate willing individuals capable of serving on the board of directors, credit committee, supervisory committee, and as chief operating officer/manager of the proposed credit union.
Subsequent organizational meetings may be held to discuss the progress of the charter investigation, to announce the proposed slate of officials, and to respond to any questions posed at these meetings.
If NCUA approves the charter application, the subscribers, as their final duty, will elect the board of directors of the proposed federal credit union. The new board of directors will then appoint the supervisory committee.
As discussed previously in this Chapter, the organizer of a federal credit union charter must, at a minimum, provide evidence that:
• The group(s) possess an appropriate common bond or the geographical area to be served is a well-defined local community, neighborhood, or rural district;
• The subscribers, prospective officials, and employees are of good character and fitness; and
• The establishment of the credit union is economically advisable.
As part of the application process, the organizer must submit the following forms, which are available in appendix 4 of this Manual:
• Federal Credit Union Investigation Report, NCUA 4001;
• Organization Certificate, NCUA 4008;
•
• Report of Official and Agreement To Serve, NCUA 4012;
• Application and Agreements for Insurance of Accounts, NCUA 9500; and
• Certification of Resolutions, NCUA 9501.
Each of these forms is described in more detail in the following sections.
The application for a new federal credit union will be submitted on NCUA 4001. State-chartered credit unions applying for conversion to a federal charter will use NCUA 4000. (See Chapter 4 for a full discussion.) The organizer is required to certify the information and recommend approval or disapproval, based on the investigation of the request.
This document, which must be completed by the subscribers, includes the seven criteria established by the Federal Credit Union Act. NCUA staff assigned to the case will assist in the proper completion of this document.
This form documents general background information of each official and employee of the proposed federal credit union. Each official and employee must complete and sign this form. The organizer must review each of the NCUA 4012s for elements that would prevent the prospective official or employee from serving. Further, such factors as serious, unresolved past due credit obligations and bankruptcies disclosed during credit checks may disqualify an individual.
This document contains the agreements with which federal credit unions must comply in order to obtain National Credit Union Share Insurance Fund (NCUSIF) coverage of member accounts. The document must be completed and signed by both the chief executive officer and chief financial officer. A federal credit union must qualify for federal share insurance.
This document certifies that the board of directors of the proposed federal credit union has resolved to apply for NCUSIF insurance of member accounts and has authorized the chief executive officer and recording officer to execute the Application and Agreements for Insurance of Accounts. Both the chief executive officer and recording officer of the proposed federal credit union must sign this form.
It is the responsibility of the federal credit union organizers or officials of an existing credit union to ensure that the proposed federal credit union name or federal credit union name change does not constitute an infringement on the name of any corporation in its trade area. This responsibility also includes researching any service marks or trademarks used by any other corporation (including credit unions) in its trade area. NCUA will ensure, to the extent possible, that the credit union's name:
• Is not already being officially used by another federal credit union;
• Will not be confused with NCUA or another federal or state agency, or with another credit union; and
• Does not include misleading or inappropriate language.
The last three words in the name of every credit union chartered by NCUA must be “Federal Credit Union.”
The word “community,” while not required, can only be included in the name of federal credit unions that have been granted a community charter.
Once NCUA receives a complete charter application package, an acknowledgment of receipt will be sent to the organizer. During the review process, a staff member will be assigned to perform an on-site contact with the proposed officials and others having an interest in the proposed federal credit union.
NCUA staff will review the application package and verify its accuracy and reasonableness. A staff member will inquire into the financial management experience and the suitability and commitment of the proposed officials and employees, and will make an assessment of economic advisability. The staff member will also provide guidance to the subscribers in the proper completion of the Organization Certificate, NCUA 4008.
Credit and background investigations may be conducted concurrently by NCUA with other work being performed by the organizer and subscribers to reduce the likelihood of delays in the chartering process.
The staff member will analyze the prospective credit union's business plan for realistic projections, attainable goals, adequate service to all segments of the field of membership, sufficient start-up capital, and time commitment by the proposed officials and employees. Any concerns will be reviewed with the organizer and discussed with the prospective credit union's officials. Additional on-site contacts by NCUA staff may be necessary. The organizer and subscribers will be expected to take the steps necessary to resolve any issues or concerns. Such resolution efforts may delay processing the application.
NCUA staff will then make a recommendation to the Office of Consumer Financial Protection and Access Director regarding the charter application. The recommendation may include specific provisions to be included in a Letter of Understanding and Agreement. In most cases, NCUA will require the prospective officials to adhere to certain operational guidelines. Generally, the agreement is for a limited term of two to four years. A sample Letter of Understanding and Agreement is found in appendix 2.
Once approved, the board of directors of the newly formed federal credit union will receive a signed charter and standard bylaws from the Office of Consumer Financial Protection and Access Director. Additionally, the officials will be advised of the name of the examiner assigned responsibility for supervising and examining the credit union.
When the Office of Consumer Financial Protection and Access Director disapproves any charter application, in whole or in part, the organizer will be informed in writing of the specific reasons for the disapproval. Where applicable, the Office of Consumer Financial Protection and Access Director will provide information concerning options or suggestions that the applicant could consider for gaining approval or otherwise acquiring credit union service. The letter of denial will include the procedures for appealing the decision.
If the Office of Consumer Financial Protection and Access Director denies a charter application, in whole or in part, that decision may be appealed to the NCUA Board. An appeal must be sent to the NCUA Board Secretary within 60 days of the date of denial and must address the specific reasons for denial. The appeal must be clearly identified as such and address the specific reason(s) the prospective group disagrees with the denial. A copy of the appeal must be sent to the Office of Consumer Financial Protection and Access Director. NCUA central office staff will make an independent review of the facts and present the appeal with a recommendation to the NCUA Board.
Before appealing, the prospective group may, within 30 days of the denial, provide supplemental information to the Office of Consumer Financial Protection and Access Director for reconsideration. A reconsideration will contain new and material evidence addressing the reasons for the initial denial. The Office of Consumer Financial Protection and Access Director will have 30 days from the date of the receipt of the request for reconsideration to make a final decision. If the request is again denied, the applicant may proceed with the appeal process within 60 days of the date of the last denial. A second request for reconsideration will be treated as an appeal to the NCUA Board.
Assistance in commencing operations is generally available through the various credit union trade organizations listed in appendix 5.
All new federal credit unions are also encouraged to establish a mentor relationship with a knowledgeable, experienced credit union individual or an existing, well-operated credit union. The mentor should provide guidance and assistance to the new credit union through attendance at meetings and general oversight. Upon request, NCUA will provide assistance in finding a qualified mentor.
Each federal credit union will be examined regularly by NCUA to determine that it remains in compliance with applicable laws and regulations and to determine that it does not pose undue risk to the NCUSIF. The examiner will contact the credit union officials shortly after approval of the charter in order to arrange for the initial examination (usually within the first six months of operation).
The examiner will be responsible for monitoring the progress of the credit union and providing the necessary advice and guidance to ensure it is in compliance with applicable laws and regulations. The examiner will also monitor compliance with the terms of any required Letter of
The Federal Credit Union Act requires all newly chartered credit unions, up to two years after the charter anniversary date, to obtain NCUA approval prior to appointment of any new board member, credit or supervisory committee member, or senior executive officer. Section 701.14 of the NCUA Rules and Regulations sets forth the notice and application requirements. If NCUA issues a Notice of Disapproval, the newly chartered credit union is prohibited from making the change.
NCUA may disapprove an individual serving as a director, committee member or senior executive officer if it finds that the competence, experience, character, or integrity of the individual indicates it would not be in the best interests of the members of the credit union or of the public to permit the individual to be employed by or associated with the credit union. If a Notice of Disapproval is issued, the credit union may appeal the decision to the NCUA Board.
A corporate federal credit union is one that is operated primarily for the purpose of serving other credit unions. Corporate federal credit unions are not governed by this manual, but instead operate under and are administered by the NCUA Office of National Examinations and Supervision.
NCUA will attempt to assist any group in chartering a credit union or joining an existing credit union. If the group is not eligible for federal credit union service, NCUA will refer the group to the appropriate state supervisory authority where different requirements may apply.
NCUA will designate a credit union based on the following criteria:
Single Occupational: If a credit union serves a single occupational sponsor, such as ABC Corporation, it will be designated as an occupational credit union. A single occupational common bond credit union may also serve a trade, industry, or profession (TIP), such as all teachers.
Single Associational: If a credit union serves a single associational sponsor, such as the Knights of Columbus, it will be designated as an associational credit union.
Multiple Common Bond: If a credit union serves more than one group, each of which has a common bond of occupation and/or association, it will be designated as a multiple common bond credit union.
Community: All community credit unions will be designated as such, followed by a description of their geographic boundaries, including but not limited to city or county boundaries, roadways, rivers, transportation lines.
Credit unions desiring to confirm or submit an application to change their designations should contact the Office of Consumer Financial Protection and Access.
A federal credit union is permitted to serve foreign nationals within its field of membership wherever such individuals reside if management has the ability and resources to serve them. Before a credit union opens a branch outside the United States, it must submit an application to do so and have prior written approval of the regional director or Office of National Examinations and Supervision Director. A federal credit union may establish a service facility on a United States military installation or United States embassy without prior NCUA approval.
As set forth in Chapter 1, the Federal Credit Union Act provides for three types of federal credit union charters—single common bond (occupational or associational), multiple common bond (multiple groups), and community. Section 109 (12 U.S.C. 1759) of the Federal Credit Union Act addresses the membership requirements for each type of charter.
The field of membership, which is specified in Section 5 of the charter, defines those persons and entities eligible for membership. A single common bond federal credit union consists of one group having a common bond of occupation or association. A multiple common bond federal credit union consists of more than one group, each of which has a common bond of occupation or association. A community federal credit union consists of persons or organizations within a well-defined local community, neighborhood, or rural district.
Once chartered, a federal credit union can amend its field of membership; however, the same common bond or community requirements for chartering the credit union must be satisfied. Since there are differences in the three types of charters, special rules apply to each, which are fully discussed in the following sections of this Chapter.
Generally, federal credit unions can only grant loans and provide services to persons who have joined the credit union. The Federal Credit Union Act states that one of the purposes of federal credit unions is “to serve the productive and provident credit needs of individuals of modest means.” Although field of membership requirements are applicable, special rules set forth in Chapter 3 may apply to low-income designated credit unions and those credit unions assisting low-income groups or to a federal credit union that adds an underserved community to its field of membership.
A single occupational common bond federal credit union may include in its field of membership all persons and entities who share that common bond. NCUA permits a person's membership eligibility in a single occupational common bond group to be established in five ways:
• Employment (or a contractual relationship equivalent to employment) in a single corporation or other legal entity makes that person part of a single occupational common bond;
• Employment in a corporation or other legal entity with a controlling ownership interest (which shall not be less than 10 percent) in or by another legal entity makes that person part of a single occupational common bond;
• Employment in a corporation or other legal entity which is related to another legal entity (such as a company under contract and possessing a strong dependency relationship with another company) makes that person part of a single occupational common bond;
• Employment or attendance at a school makes that person part of a single occupational common bond (see Chapter 2, Section III.A.1); or
• Employment in the same Trade, Industry, or Profession (TIP) (see Chapter 2, Section II.A.2).
A geographic limitation is not a requirement for a single occupational common bond. However, for purposes of describing the field of membership, the geographic areas being served may be included in the charter. For example:
• Employees, officials, and persons who work regularly under contract in Miami, Florida for ABC Corporation and subsidiaries;
• Employees of ABC Corporation who are paid from * * *;
• Employees of ABC Corporation who are supervised from * * *;
• Employees of ABC Corporation who are headquartered in * * *; and/or
• Employees of ABC Corporation who work in the United States.
The corporation or other legal entity (
A charter applicant must provide documentation to establish that the single occupational common bond requirement has been met.
Some examples of valid single occupational common bonds are:
• Employees of the Hunt Manufacturing Company who work in West Chester, Pennsylvania. (common bond—same employer with geographic definition);
• Employees of the Buffalo Manufacturing Company who work in the United States. (common bond—same employer with geographic definition);
• Employees, elected and appointed officials of municipal government in Parma, Ohio. (common bond—same employer with geographic definition);
• Employees of Johnson Soap Company and its majority owned subsidiary, Johnson Toothpaste Company, who work in, are paid from, are supervised from, or are headquartered in Augusta and Portland, Maine. (common bond—parent and subsidiary company with geographic definition);
•
• Employees of MMLLJS contractor who work regularly at the U.S. Naval Shipyard in
• Employees, doctors, medical staff, technicians, medical and nursing students who work in or are paid from the Newport Beach Medical Center, Newport Beach, California. (single corporation with geographic definition);
• Employees of JLS, Incorporated and MJM, Incorporated working for the LKM Joint Venture Company in Catalina Island, California. (common bond—same employer—ongoing dependent relationship);
• Employees of and students attending Georgetown University. (common bond—same occupation);
• Employees of all the schools supervised by the Timbrook Board of Education in Timbrook, Georgia. (common bond—same employer); or
• All licensed nurses in Fairfax County, Virginia. (occupational common bond TIP).
In contrast, some examples of insufficiently defined single occupational common bonds are:
• Employees of manufacturing firms in Seattle, Washington. (no defined occupational sponsor; overly broad TIP);
• Persons employed or working in Chicago, Illinois. (no occupational common bond).
A common bond based on employment in a trade, industry, or profession can include employment at any number of corporations or other legal entities that—while not under common ownership—have a common bond by virtue of producing similar products, providing similar services, or participating in the same type of business.
While proposed or existing single common bond credit unions have some latitude in defining a trade, industry, or profession occupational common bond, it cannot be defined so broadly as to include groups in fields which are not closely related. For example, the manufacturing industry, energy industry, communications industry, retail industry, or entertainment industry would not qualify as a TIP because each industry lacks the necessary commonality. However, textile workers, realtors, nurses, teachers, police officers, or U.S. military personnel are closely related and each would qualify as a TIP.
The common bond relationship must be one that demonstrates a narrow commonality of interests within a specific trade, industry, or profession. If a credit union wants to serve a physician TIP, it can serve all physicians, but that does not mean it can also serve all clerical staff in the physicians' offices. However, if the TIP is based on the health care industry, then clerical staff would be able to be served by the credit union because they work in the same industry and have the same commonality of interests.
If a credit union wants to include the airline services industry, it can serve airline and airport personnel but not passengers. Clients or customers of the TIP are not eligible for credit union membership (
Although a TIP should be narrowly defined, and ordinarily would not include third-party vendors and other suppliers, it may include, on a case by case basis, employees of types of entities that have a “strong dependency relationship” and work directly with other types of entities within the industry. In this context, a “strong dependency relationship” between a TIP entity and its supplier/vendor must be demonstrated by their reliance on each other as measured by the presence of indicators of a likelihood that the absence of one would cause the other to suffer a material decline in either revenue, functionality or productivity.
Under this definition, a firm whose employees are specially trained to protect nuclear facilities, and whose employees work primarily at such facilities, could be a part of a TIP based on the firm's participation in the nuclear energy industry.
Other “strong relationship” indicators NCUA would consider include the regularity or frequency of work that employees of the entity perform at facilities directly related to the industry, or the degree to which employees must adjust their work practices to adapt to the needs of the industry. For example, a company's focus on producing specialized confectionary products for a hotel chain could add that company to a hospitality industry TIP. A credit union seeking to include a clause of this type in its TIP charter must provide a brief narrative identifying indicators that support the existence of a strong dependency relationship between the TIP entity and its individual supplier/vendors.
Likewise, an FCU may serve employees of companies within the commercial airline industry that have a strong dependency relationship with airlines or airports, without the limitation that these employees work at an airport. However, these employees must work directly with the following: Air transportation of freight, air courier services; air passenger services; airport baggage handling; airport security; commercial airport janitorial services; maintenance, servicing, and repair services; and on board airline food services. The employees of those entities have a narrow commonality of interests, share the single occupational common bond, and can be included within the Air Transportation Industry field of membership.
In general, except for credit unions serving a national field of membership or operating in multiple states, a geographic limitation is required for a TIP credit union. The geographic limitation will be part of the credit union's charter and generally correspond to its current or planned operational area. More than one federal credit union may serve the same trade, industry, or profession, even if both credit unions are in the same geographic location.
This type of occupational common bond is only available to single common bond credit unions. A TIP cannot be added to a multiple common bond or community field of membership.
To obtain a TIP designation, the proposed or existing credit union must submit a request to the Office of Consumer Financial Protection and Access Director. New charter applicants must follow the documentation requirements in Chapter 1. New charter applicants and existing credit unions must submit a business plan on how the credit union will serve the group with the request to serve the TIP. The business plan also must address how the credit union will verify the TIP. Examples of such verification include state licenses, professional licenses, organizational memberships, pay statements, union membership, or employer certification. The Office of Consumer Financial Protection and Access Director must approve this type of field of membership before a credit union can serve a TIP. Credit unions converting to a TIP can retain members of record but cannot add new members from its previous group or groups, unless the group or groups are part of the TIP.
Section II.B on Occupational Common Bond Amendments does not apply to a TIP common bond. Removing or changing a geographical limitation will be processed as a housekeeping amendment. If safety and soundness concerns are present, the Office of Consumer Financial Protection and Access Director may require additional information before the request can be processed.
Section II.H, on Other Persons Eligible for Credit Union Membership, applies to TIP based credit unions except for the corporate account provision which only applies to industry based TIPs. Credit unions with industry based TIPs may include corporations as members because they have the same commonality of interests as all employees in the industry. For example, an airline service TIP (industry) can serve an airline carrier (corporate account); however, a nurses TIP (profession) could not serve a hospital (corporate account) because not everyone working in the hospital shares the same profession.
If a TIP designated credit union wishes to convert to a different TIP or employer-based occupational common bond, or different charter type, it only retains members of record after the conversion. The Office of Consumer Financial Protection and Access Director, for safety and soundness reasons, may approve a TIP designated credit union to convert to its original field of membership.
Section 5 of every single occupational federal credit union's charter defines the field of membership the credit union can legally serve. Only those persons or legal entities specified in the field of membership can be served. There are a number of instances in which Section 5 must be amended by NCUA.
First, a group sharing the credit union's common bond is added to the field of membership. This may occur through various ways including agreement between the group and the credit union directly, or through a
Second, if the entire field of membership is acquired by another corporation, the credit union can serve the employees of the new corporation and any subsidiaries after receiving NCUA approval.
Third, a federal credit union qualifies to change its common bond from:
• A single occupational common bond to a single associational common bond;
•
• A single occupational common bond to a community charter; or
• A single occupational common bond to a multiple common bond.
Fourth, a federal credit union removes a portion of the group from its field of membership through agreement with the group, a spin-off, or because a portion of the group is no longer in existence.
An existing single occupational common bond federal credit union that submits a request to amend its charter must provide documentation to establish that the occupational common bond requirement has been met. The Office of Consumer Financial Protection and Access Director must approve all amendments to an occupational common bond credit union's field of membership.
If the single common bond group that comprises a federal credit union's field of membership undergoes a substantial restructuring, the result is often that portions of the group are sold or spun off. This requires a change to the credit union's field of membership. NCUA will not permit a single common bond credit union to maintain in its field of membership a sold or spun-off group to which it has been providing service unless the group otherwise qualifies for membership in the credit union or the credit union converts to a multiple common bond credit union.
If the group comprising the single common bond of the credit union merges with, or is acquired by, another group, the credit union can serve the new group resulting from the merger or acquisition after receiving a housekeeping amendment.
Prior to granting a common bond expansion, NCUA will examine the amendment's likely effect on the credit union's operations and financial condition. In most cases, the information needed for analyzing the effect of adding a particular group will be available to NCUA through the examination and financial and statistical reports; however, in particular cases, the Office of Consumer Financial Protection and Access Director may require additional information prior to making a decision.
A federal credit union requesting a common bond expansion must submit an Application for Field of Membership Amendment (NCUA 4015-EZ) to the Office of Consumer Financial Protection and Access Director. An authorized credit union representative must sign the request.
All requests for approval to amend a federal credit union's charter must be submitted to the Office of Consumer Financial Protection and Access Director.
NCUA staff will review all amendment requests in order to ensure compliance with NCUA policy.
Before acting on a proposed amendment, the Office of Consumer Financial Protection and Access Director may require an on-site review. In addition, the Office of Consumer Financial Protection and Access Director may, after taking into account the significance of the proposed field of membership amendment, require the applicant to submit a business plan addressing specific issues.
The financial and operational condition of the requesting credit union will be considered in every instance. NCUA will carefully consider the economic advisability of expanding the field of membership of a credit union with financial or operational problems.
In most cases, field of membership amendments will only be approved for credit unions that are operating satisfactorily. Generally, if a federal credit union is having difficulty providing service to its current membership, or is experiencing financial or other operational problems, it may have more difficulty serving an expanded field of membership.
Occasionally, however, an expanded field of membership may provide the basis for reversing current financial problems. In such cases, an amendment to expand the field of membership may be granted notwithstanding the credit union's financial or operational problems. The applicant credit union must clearly establish that the expanded field of membership is in the best interest of the members and will not increase the risk to the NCUSIF.
If the Office of Consumer Financial Protection and Access Director approves the requested amendment, the credit union will be issued an amendment to Section 5 of its charter.
When the Office of Consumer Financial Protection and Access Director disapproves any application, in whole or in part, to amend the field of membership under this chapter, the applicant will be informed in writing of the:
• Specific reasons for the action;
• Options to consider, if appropriate, for gaining approval; and
• Appeal procedure.
If a field of membership expansion request, merger, or spin-off is denied by staff, the federal credit union may appeal the decision to the NCUA Board. An appeal must be sent to the NCUA Board Secretary within 60 days of the date of denial. The appeal must be clearly identified as such and must address the specific reason(s) the federal credit union disagrees with the denial. A copy of the appeal must be sent to the Office of Consumer Financial Protection and Access, or as applicable, the appropriate regional office or Office of National Examinations and Supervision Director. NCUA central office staff will make an independent review of the facts and present the appeal to the Board with a recommendation.
Before appealing, the credit union may, within 30 days of the denial, provide supplemental information to the office rendering the initial decision for reconsideration. A reconsideration will contain new and material evidence addressing the reasons for the initial denial. The office rendering the initial decision will have 30 days from the date of the receipt of the request for reconsideration to make a final decision. If the request is again denied, the applicant may proceed with the appeal process within 60 days of the date of the last denial. A second request for reconsideration will be treated as an appeal to the NCUA Board.
In general, other than the addition of common bond groups, there are three additional ways a federal credit union with a single occupational common bond can expand its field of membership:
• By taking in the field of membership of another credit union through a common bond or emergency merger;
• By taking in the field of membership of another credit union through a common bond or emergency purchase and assumption (P&A); or
• By taking a portion of another credit union's field of membership through a common bond spin-off.
Generally, the requirements applicable to field of membership expansions found in this chapter apply to mergers where the continuing credit union has a federal charter. That is, the two credit unions must share a common bond.
Where the merging credit union is state-chartered, the common bond rules applicable to a federal credit union apply.
Mergers must be approved by the NCUA regional director or Office of National Examinations and Supervision Director where the continuing credit union is headquartered, with the concurrence of the regional director or Office of National Examinations and Supervision Director of the merging credit union, and, as applicable, the state regulators.
If a single occupational credit union wants to merge into a multiple common bond or
An emergency merger may be approved by NCUA without regard to common bond or other legal constraints. An emergency merger involves NCUA's direct intervention and approval. The credit union to be merged must either be insolvent or in danger of insolvency, as defined in the Glossary, and NCUA must determine that:
• An emergency requiring expeditious action exists;
• Other alternatives are not reasonably available; and
• The public interest would best be served by approving the merger.
If not corrected, conditions that could lead to insolvency include, but are not limited to:
• Abandonment by management;
• Loss of sponsor;
• Serious and persistent recordkeeping problems; or
•
• Serious and persistent operational concerns.
In an emergency merger situation, NCUA will take an active role in finding a suitable merger partner (continuing credit union). NCUA is primarily concerned that the continuing credit union has the financial strength and management expertise to absorb the troubled credit union without adversely affecting its own financial condition and stability.
As a stipulated condition to an emergency merger, the field of membership of the merging credit union may be transferred intact to the continuing federal credit union without regard to any common bond restrictions. Under this authority, therefore, a single occupational common bond federal credit union may take into its field of membership any dissimilar charter type.
The common bond characteristic of the continuing credit union in an emergency merger does not change. That is, even though the merging credit union is a multiple common bond or community, the continuing credit union will remain a single common bond credit union. Similarly, if the merging credit union is also an unlike single common bond, the continuing credit union will remain a single common bond credit union. Future common bond expansions will be based on the continuing credit union's original single common bond.
Emergency mergers involving federally insured credit unions in different NCUA field regions must be approved by the regional director or Office of National Examinations and Supervision Director where the continuing credit union is headquartered, with the concurrence of the regional director or Office of National Examinations and Supervision Director of the merging credit union and, as applicable, the state regulators.
Another alternative for acquiring the field of membership of a failing credit union is through a consolidation known as a P&A. A P&A has limited application because, in most cases, the failing credit union must be placed into involuntary liquidation. In the few instances where a P&A may be appropriate, the assuming federal credit union, as with emergency mergers, may acquire the entire field of membership if the emergency merger criteria are satisfied. However, if the P&A does not meet the emergency merger criteria, it must be processed under the common bond requirements.
In a P&A processed under the emergency criteria, specified loans, shares, and certain other designated assets and liabilities, without regard to common bond restrictions, may also be acquired without changing the character of the continuing federal credit union for purposes of future field of membership amendments.
If the purchased and/or assumed credit union's field of membership does not share a common bond with the purchasing and/or assuming credit union, then the continuing credit union's original common bond will be controlling for future common bond expansions.
P&As involving federally insured credit unions in different NCUA regions must be approved by the regional director or Office of National Examinations and Supervision Director where the continuing credit union is headquartered, with the concurrence of the regional director or Office of National Examinations and Supervision Director of the purchased and/or assumed credit union and, as applicable, the state regulators.
A spin-off occurs when, by agreement of the parties, a portion of the field of membership, assets, liabilities, shares, and capital of a credit union are transferred to a new or existing credit union. A spin-off is unique in that usually one credit union has a field of membership expansion and the other loses a portion of its field of membership.
All common bond requirements apply regardless of whether the spun-off group becomes a new credit union or goes to an existing federal charter.
The request for approval of a spin-off must be supported with a plan that addresses, at a minimum:
• Why the spin-off is being requested;
• What part of the field of membership is to be spun off;
• Whether the affected credit unions have a common bond (applies only to single occupational credit unions);
• Which assets, liabilities, shares, and capital are to be transferred;
• The financial impact the spin-off will have on the affected credit unions;
• The ability of the acquiring credit union to effectively serve the new members;
• The proposed spin-off date; and
• Disclosure to the members of the requirements set forth above.
The spin-off request must also include current financial statements from the affected credit unions and the proposed voting ballot.
For federal credit unions spinning off a group, membership notice and voting requirements and procedures are the same as for mergers (see part 708 of the NCUA Rules and Regulations), except that only the members directly affected by the spin-off—those whose shares are to be transferred—are permitted to vote. Members whose shares are not being transferred will not be afforded the opportunity to vote. All members of the group to be spun off (whether they voted in favor, against, or not at all) will be transferred if the spin-off is approved by the voting membership. Voting requirements for federally insured state credit unions are governed by state law.
Spin-offs involving federally insured credit unions in different NCUA regions must be approved by all regional directors and, if applicable, Office of National Examinations and Supervision Director where the credit unions are headquartered and the state regulators, as applicable. Spin-offs in the same region also require approval by the state regulator, as applicable. Spin-offs involving the creation of a new federally insured credit union require the approval of the Office of Consumer Financial Protection and Access Director. The Office of Consumer Financial Protection and Access also provides advice regarding field of membership compatibility when appropriate.
An overlap exists when a group of persons is eligible for membership in two or more credit unions. NCUA will permit single occupational federal credit unions to overlap any other charter without performing an overlap analysis.
A federal credit union's field of membership will always be governed by the common bond descriptions contained in Section 5 of its charter. Where a sponsor organization expands its operations internally, by acquisition or otherwise, the credit union may serve these new entrants to its field of membership if they are part of the common bond described in Section 5. NCUA will permit a complete overlap of the credit unions' fields of membership.
If a sponsor organization sells off a group, new members can no longer be served unless they otherwise qualify for membership in the credit union or it converts to a multiple common bond charter.
Credit unions must submit documentation explaining the restructuring and providing information regarding the new organizational structure.
An exclusionary clause is a limitation precluding the credit union from serving the primary members of a portion of a group otherwise included in its field of membership. NCUA no longer grants exclusionary clauses. Those granted prior to the adoption of this new Chartering and Field of Membership Manual will remain in effect unless the credit unions agree to remove them or one of the affected credit unions submits a housekeeping amendment to have it removed.
A single occupational common bond federal credit union may apply to convert to a community charter provided the field of
A single occupational common bond federal credit union may apply to convert to a multiple common bond charter by adding a non-common bond group that is within a reasonable proximity of a service facility. Groups within the existing charter may be retained and continue to be served. However, future amendments, including any expansions of the original single common bond group, must be done in accordance with multiple common bond policy.
A credit union may request removal of a portion of the common bond group from its field of membership for various reasons. The most common reasons for this type of amendment are:
• The group is within the field of membership of two credit unions and one wishes to discontinue service;
• The federal credit union cannot continue to provide adequate service to the group;
• The group has ceased to exist;
• The group does not respond to repeated requests to contact the credit union or refuses to provide needed support; or
• The group initiates action to be removed from the field of membership.
When a federal credit union requests an amendment to remove a group from its field of membership, the Office of Consumer Financial Protection and Access Director will determine why the credit union desires to remove the group. If the Office of Consumer Financial Protection and Access Director concurs with the request, membership will continue for those who are already members under the “once a member, always a member” provision of the Federal Credit Union Act.
A number of persons, by virtue of their close relationship to a common bond group, may be included, at the charter applicant's option, in the field of membership. These include the following:
• Spouses of persons who died while within the field of membership of this credit union;
• Employees of this credit union;
• Persons retired as pensioners or annuitants from the above employment;
• Volunteers;
• Members of the immediate family or household;
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• Honorably discharged veterans who served in any of the Armed Services of the United States listed in this charter;
Organizations of such persons; and
• Corporate or other legal entities in this charter.
Immediate family is defined as spouse, child, sibling, parent, grandparent, or grandchild. This includes stepparents, stepchildren, stepsiblings, and adoptive relationships.
Household is defined as persons living in the same residence maintaining a single economic unit.
Membership eligibility is extended only to individuals who are members of an “immediate family or household” of a credit union member. It is not necessary for the primary member to join the credit union in order for the immediate family or household member of the primary member to join, provided the immediate family or household clause is included in the field of membership. However, it is necessary for the immediate family member or household member to first join in order for that person's immediate family member or household member to join the credit union. A credit union can adopt a more restrictive definition of immediate family or household.
Volunteers, by virtue of their close relationship with a sponsor group, may be included. Examples include volunteers working at a hospital or school.
Under the Federal Credit Union Act, once a person becomes a member of the credit union, such person may remain a member of the credit union until the person chooses to withdraw or is expelled from the membership of the credit union. This is commonly referred to as “once a member, always a member.” The “once a member, always a member” provision does not prevent a credit union from restricting services to members who are no longer within the field of membership.
A single associational federal credit union may include in its field of membership, regardless of location, all members and employees of a recognized association. A single associational common bond consists of individuals (natural persons) and/or groups (non-natural persons) whose members participate in activities developing common loyalties, mutual benefits, and mutual interests. Separately chartered associational groups can establish a single common bond relationship if they are integrally related and share common goals and purposes. For example, two or more churches of the same denomination, Knights of Columbus Councils, or locals of the same union can qualify as a single associational common bond. Individuals and groups eligible for membership in a single associational credit union can include the following:
• Natural person members of the association (for example, members of a union or church members);
• Non-natural person members of the association;
• Employees of the association (for example, employees of the labor union or employees of the church); and
• The association.
Generally, a single associational common bond does not include a geographic definition and can operate nationally. However, a proposed or existing federal credit union may limit its field of membership to a single association or geographic area. NCUA may impose a geographic limitation if it is determined that the applicant credit union does not have the ability to serve a larger group or there are other operational concerns. All single associational common bonds should include a definition of the group that may be served based on the association's charter, bylaws, and any other equivalent documentation.
Applicants for a single associational common bond federal credit union charter or a field of membership amendment to include an association must provide, at the request of NCUA, a copy of the association's charter, bylaws, or other equivalent documentation, including any legal documents required by the state or other governing authority. The associational sponsor itself may also be included in the field of membership—
As a threshold matter, when reviewing an application to include an association in a federal credit union's field of membership, NCUA will determine if the association has been formed primarily for the purpose of expanding credit union membership. If NCUA makes such a determination, then the analysis ends and the association is denied inclusion in the federal credit union's field of membership. If NCUA determines that the association was formed to serve some other separate function as an organization, then NCUA will apply the following totality of the circumstances test to determine if the association satisfies the associational common bond requirements. The totality of the circumstances test consists of the following factors:
1. Whether the association provides opportunities for members to participate in the furtherance of the goals of the association;
2. Whether the association maintains a membership list;
1.
3. Whether the association sponsors other activities;
4. Whether the association's membership eligibility requirements are authoritative;
5. Whether members pay dues;
6. Whether the members have voting rights; to meet this requirement, members need not vote directly for an officer, but may vote for a delegate who in turn represents the members' interests;
7. The frequency of meetings; and
8. Separateness—NCUA reviews if there is corporate separateness between the group and the federal credit union. The group and the federal credit union must operate in a way that demonstrates the separate corporate existence of each entity. Specifically, this means the federal credit union's and the group's respective business transactions, accounts, and corporate records are not intermingled.
No one factor alone is determinative of membership eligibility as an association. The totality of the circumstances controls over any individual factor in the test. However, NCUA's primary focus will be on factors 1-4.
NCUA automatically approves the below groups as satisfying the associational common bond provisions. NCUA only approves regular members of an approved group. Honorary, affiliate, or non-regular members do not qualify.
These groups are:
(1) Alumni associations;
(2) Religious organizations, including churches or groups of related churches;
(3) Electric cooperatives;
(4) Homeowner associations;
(1)
(5) Labor unions;
(6) Scouting groups;
(7) Parent teacher associations (PTAs) organized at the local level to serve a single school district;
(8) Chamber of commerce groups (members only and not employees of members);
(9) Athletic booster clubs whose members have voting rights;
(10) Fraternal organizations or civic groups with a mission of community service whose members have voting rights;
(11) Organizations having a mission based on preserving or furthering the culture of a particular national or ethnic origin; and
(12) Organizations promoting social interaction or educational initiatives among persons sharing a common occupational profession.
A support group whose members are continually changing or whose duration is temporary may not meet the single associational common bond criteria. Each class of member will be evaluated based on the totality of the circumstances. Individuals or honorary members who only make donations to the association are not eligible to join the credit union.
Student groups (
Tenant groups, consumer groups, and other groups of persons having an “interest in” a particular cause and certain consumer cooperatives may also qualify as an association.
Associations based primarily on a client-customer relationship do not meet associational common bond requirements. Health clubs are an example of a group not meeting associational common bond requirements, including YMCAs. However, having an incidental client-customer relationship does not preclude an associational charter as long as the associational common bond requirements are met. For example, a fraternal association that offers insurance, which is not a condition of membership, may qualify as a valid associational common bond.
If the association's membership or geographical definitions in its charter and bylaws are changed subsequent to the effective date stated in the field of membership, the credit union must submit the revised charter or bylaws for NCUA's consideration and approval prior to serving members of the association added as a result of the change.
Some examples of associational common bonds are:
• Regular members of Locals 10 and 13, IBEW, in Florida, who qualify for membership in accordance with their charter and bylaws in effect on May 20, 2001;
• Members of the Hoosier Farm Bureau in Grant, Logan, or Lee Counties of Indiana, who qualify for membership in accordance with its charter and bylaws in effect on March 7, 1997;
• Members of the Shalom Congregation in Chevy Chase, Maryland;
•
• Regular members of the Corporate Executives Association, located in Westchester, New York, who qualify for membership in accordance with its charter and bylaws in effect on December 1, 1997;
• Members of the University of Wisconsin Alumni Association, located in Green Bay, Wisconsin;
• Members of the Marine Corps Reserve Officers Association; or
• Members of St. John's Methodist Church and St. Luke's Methodist Church, located in Toledo, Ohio.
Some examples of insufficiently defined single associational common bonds are:
• All Lutherans in the United States (too broadly defined); or
• Veterans of U.S. military service (group is too broadly defined; no formal association of all members of the group).
Some examples of unacceptable single associational common bonds are:
• Alumni of Amos University (no formal association);
• Customers of Fleetwood Insurance Company (policyholders or primarily customer/client relationships do not meet associational standards);
• Employees of members of the Reston, Virginia, Chamber of Commerce (not a sufficiently close tie to the associational common bond); or
• Members of St. John's Lutheran Church and St. Mary's Catholic Church located in Anniston, Alabama (churches are not of the same denomination).
Section 5 of every associational federal credit union's charter defines the field of membership the credit union can legally serve. Only those persons who, or legal entities that, join the credit union and are specified in the field of membership can be served. There are three instances in which Section 5 must be amended by NCUA.
First, a group that shares the credit union's common bond is added to the field of membership. This may occur through various ways including agreement between the group and the credit union directly, or through a merger, purchase and assumption (P&A), or spin-off.
Second, a federal credit union qualifies to change its common bond from:
• A single associational common bond to a single occupational common bond;
• A single associational common bond to a community charter; or
• A single associational common bond to a multiple common bond.
Third, a federal credit union removes a portion of the group from its field of membership through agreement with the group, a spin-off, or a portion of the group that is no longer in existence.
An existing single associational federal credit union that submits a request to amend its charter must provide documentation to establish that the associational common bond requirement has been met. The Office of Consumer Financial Protection and Access Director must approve all amendments to an associational common bond credit union's field of membership.
If the single common bond group that comprises a federal credit union's field of membership undergoes a substantial restructuring, the result is often that portions of the group are sold or spun off. This is an event requiring a change to the credit union's field of membership. NCUA may not permit a single associational credit union to maintain in its field of membership a sold or spun-off group to which it has been providing service unless the group otherwise qualifies for membership in the credit union or the credit union converts to a multiple common bond credit union.
If the group comprising the single common bond of the credit union merges with, or is acquired by, another group, the credit union can serve the new group resulting from the merger or acquisition after receiving a housekeeping amendment.
Prior to granting a common bond expansion, NCUA will examine the amendment's likely impact on the credit union's operations and financial condition. In most cases, the information needed for analyzing the effect of adding a particular group will be available to NCUA through the examination and financial and statistical reports; however, in particular cases, the Office of Consumer Financial Protection and Access Director may require additional information prior to making a decision.
A federal credit union requesting a common bond expansion must submit an Application for Field of Membership Amendment (NCUA 4015-EZ) to the Office of Consumer Financial Protection and Access Director. An authorized credit union representative must sign the request.
All requests for approval to amend a federal credit union's charter must be submitted to the Office of Consumer Financial Protection and Access Director.
NCUA staff will review all amendment requests in order to ensure conformance to NCUA policy.
Before acting on a proposed amendment, the Office of Consumer Financial Protection and Access Director may require an on-site review. In addition, the Office of Consumer Financial Protection and Access Director may, after taking into account the significance of the proposed field of membership amendment, require the applicant to submit a business plan addressing specific issues.
The financial and operational condition of the requesting credit union will be considered in every instance. The economic advisability of expanding the field of membership of a credit union with financial or operational problems must be carefully considered.
In most cases, field of membership amendments will only be approved for credit unions that are operating satisfactorily. Generally, if a federal credit union is having difficulty providing service to its current membership, or is experiencing financial or other operational problems, it may have more difficulty serving an expanded field of membership.
Occasionally, however, an expanded field of membership may provide the basis for reversing current financial problems. In such cases, an amendment to expand the field of membership may be granted notwithstanding the credit union's financial or operational problems. The applicant credit union must clearly establish that the expanded field of membership is in the best interest of the members and will not increase the risk to the NCUSIF.
If the Office of Consumer Financial Protection and Access Director approves the requested amendment, the credit union will be issued an amendment to Section 5 of its charter.
When the Office of Consumer Financial Protection and Access Director disapproves any application, in whole or in part, to amend the field of membership under this chapter, the applicant will be informed in writing of the:
• Specific reasons for the action;
• Options to consider, if appropriate, for gaining approval; and
• Appeal procedures.
If a field of membership expansion request, merger, or spin-off is denied by staff, the federal credit union may appeal the decision to the NCUA Board. An appeal must be sent to the NCUA Board Secretary within 60 days of the date of denial and must be clearly identified as such and address the reason(s) the federal credit union disagrees with the denial. A copy of the appeal must be sent to the Office of Consumer Financial Protection and Access, or as applicable, the appropriate regional office or Office of National Examinations and Supervision Director. NCUA central office staff will make an independent review of the facts and present the appeal to the NCUA Board with a recommendation.
Before appealing, the credit union may, within 30 days of the denial, provide supplemental information to the office rendering the initial decision for reconsideration. A reconsideration will contain new and material evidence addressing the reasons for the initial denial. The office rendering the initial decision will have 30 days from the date of the receipt of the request for reconsideration to make a final decision. If the request is again denied, the applicant may proceed with the appeal process within 60 days of the date of the last denial. A second request for reconsideration will be treated as an appeal to the NCUA Board.
In general, other than the addition of common bond groups, there are three additional ways a federal credit union with a single associational common bond can expand its field of membership:
• By taking in the field of membership of another credit union through a common bond or emergency merger;
• By taking in the field of membership of another credit union through a common bond or emergency purchase and assumption (P&A); or
• By taking a portion of another credit union's field of membership through a common bond spin-off.
Generally, the requirements applicable to field of membership expansions found in this section apply to mergers where the continuing credit union is a federal charter. That is, the two credit unions must share a common bond.
Where the merging credit union is state-chartered, the common bond rules applicable to a federal credit union apply.
Mergers must be approved by the NCUA regional director or Office of National Examinations and Supervision Director where the continuing credit union is headquartered, with the concurrence of the regional director or Office of National Examinations and Supervision Director of the merging credit union, and, as applicable, the state regulators.
If a single associational credit union wants to merge into a multiple common bond or community credit union, Section IV.D or Section V.D of this Chapter, respectively, should be reviewed.
An emergency merger may be approved by NCUA without regard to common bond or other legal constraints. An emergency merger involves NCUA's direct intervention and approval. The credit union to be merged must either be insolvent or in danger of insolvency, as defined in the Glossary, and NCUA must determine that:
• An emergency requiring expeditious action exists;
• Other alternatives are not reasonably available; and
• The public interest would best be served by approving the merger.
If not corrected, conditions that could lead to insolvency include, but are not limited to:
• Abandonment by management;
• Loss of sponsor;
• Serious and persistent record-keeping problems; or
• Serious and persistent operational concerns.
In an emergency merger situation, NCUA will take an active role in finding a suitable merger partner (continuing credit union). NCUA is primarily concerned that the continuing credit union has the financial strength and management expertise to absorb the troubled credit union without adversely affecting its own financial condition and stability.
As a stipulated condition to an emergency merger, the field of membership of the merging credit union may be transferred intact to the continuing federal credit union without regard to any common bond restrictions. Under this authority, therefore, a single associational common bond federal credit union may take into its field of membership any dissimilar charter type.
The common bond characteristic of the continuing credit union in an emergency merger does not change. That is, even though the merging credit union is a multiple common bond or community, the continuing credit union will remain a single common bond credit union. Similarly, if the merging credit union is an unlike single common bond, the continuing credit union will remain a single common bond credit union. Future common bond expansions will be based on the continuing credit union's single common bond.
Emergency mergers involving federally insured credit unions in different NCUA regions must be approved by the regional director or Office of National Examinations and Supervision Director where the continuing credit union is headquartered, with the concurrence of the regional director or Office of National Examinations and Supervision Director of the merging credit union and, as applicable, the state regulators.
Another alternative for acquiring the field of membership of a failing credit union is
In a P&A processed under the emergency criteria, specified loans, shares, and certain other designated assets and liabilities, without regard to common bond restrictions, may also be acquired without changing the character of the continuing federal credit union for purposes of future field of membership amendments.
If the purchased and/or assumed credit union's field of membership does not share a common bond with the purchasing and/or assuming credit union, then the continuing credit union's original common bond will be controlling for future common bond expansions.
P&As involving federally insured credit unions in different NCUA regions must be approved by the regional director or Office of National Examinations and Supervision Director where the continuing credit union is headquartered, with the concurrence of the regional director or Office of National Examinations and Supervision Director of the purchased and/or assumed credit union and, as applicable, the state regulators.
A spin-off occurs when, by agreement of the parties, a portion of the field of membership, assets, liabilities, shares, and capital of a credit union are transferred to a new or existing credit union. A spin-off is unique in that usually one credit union has a field of membership expansion and the other loses a portion of its field of membership.
All common bond requirements apply regardless of whether the spun-off group becomes a new credit union or goes to an existing federal charter.
The request for approval of a spin-off must be supported with a plan that addresses, at a minimum:
• Why the spin-off is being requested;
• What part of the field of membership is to be spun off;
• Whether the affected credit unions have the same common bond (applies only to single associational credit unions);
• Which assets, liabilities, shares, and capital are to be transferred;
• The financial impact the spin-off will have on the affected credit unions;
• The ability of the acquiring credit union to effectively serve the new members;
• The proposed spin-off date; and
• Disclosure to the members of the requirements set forth above.
The spin-off request must also include current financial statements from the affected credit unions and the proposed voting ballot.
For federal credit unions spinning off a group, membership notice and voting requirements and procedures are the same as for mergers (see part 708 of the NCUA Rules and Regulations), except that only the members directly affected by the spin-off—those whose shares are to be transferred—are permitted to vote. Members whose shares are not being transferred will not be afforded the opportunity to vote. All members of the group to be spun off (whether they voted in favor, against, or not at all) will be transferred if the spin-off is approved by the voting membership. Voting requirements for federally insured state credit unions are governed by state law.
Spin-offs involving federally insured credit unions in different NCUA regions must be approved by all regional directors and, if applicable, Office of National Examinations and Supervision Director where the credit unions are headquartered and the state regulators, as applicable. Spin-offs in the same region also require approval by the state regulator, as applicable. Spin-offs involving the creation of a new federally insured credit union require the approval of the Office of Consumer Financial Protection and Access Director. The Office of Consumer Financial Protection and Access also provides advice regarding field of membership compatibility when appropriate.
An overlap exists when a group of persons is eligible for membership in two or more credit unions. NCUA will permit single associational federal credit unions to overlap any other charters without performing an overlap analysis.
A federal credit union's field of membership will always be governed by the common bond descriptions contained in Section 5 of its charter. Where a sponsor organization expands its operations internally, by acquisition or otherwise, the credit union may serve these new entrants to its field of membership if they are part of the common bond described in Section 5. NCUA will permit a complete overlap of the credit unions' fields of membership. If a sponsor organization sells off a group, new members can no longer be served unless they otherwise qualify for membership in the credit union or it converts to a multiple common bond.
Credit unions must submit documentation explaining the restructuring and providing information regarding the new organizational structure.
An exclusionary clause is a limitation precluding the credit union from serving the primary members of a portion of a group otherwise included in its field of membership. NCUA no longer grants exclusionary clauses. Those granted prior to the adoption of this new Chartering and Field of Membership Manual will remain in effect unless the credit unions agree to remove them or one of the affected credit unions submits a housekeeping amendment to have it removed.
A single associational common bond federal credit union may apply to convert to a community charter provided the field of membership requirements of the community charter are met. Groups within the existing charter which cannot qualify in the new charter cannot be served except for members of record, or groups or communities obtained in an emergency merger or P&A. A credit union must notify all groups that will be removed from the field of membership as a result of conversion. Members of record can continue to be served. Also, in order to support a case for a conversion, the applicant federal credit union may be required to develop a detailed business plan as specified in Chapter 2, Section V.A.3.
A single associational common bond federal credit union may apply to convert to a multiple common bond charter by adding a non-common bond group that is within a reasonable proximity of a service facility. Groups within the existing charter may be retained and continue to be served. However, future amendments, including any expansions of the original single common bond group, must be done in accordance with multiple common bond policy.
A credit union may request removal of a portion of the common bond group from its field of membership for various reasons. The most common reasons for this type of amendment are:
• The group is within the field of membership of two credit unions and one wishes to discontinue service;
• The federal credit union cannot continue to provide adequate service to the group;
• The group has ceased to exist;
• The group does not respond to repeated requests to contact the credit union or refuses to provide needed support; or
• The group initiates action to be removed from the field of membership.
When a federal credit union requests an amendment to remove a group from its field of membership, the Office of Consumer Financial Protection and Access Director will determine why the credit union desires to remove the group. If the Office of Consumer Financial Protection and Access Director concurs with the request, membership will continue for those who are already members under the “once a member, always a member” provision of the Federal Credit Union Act.
A number of persons by virtue of their close relationship to a common bond group may be included, at the charter applicant's option, in the field of membership. These include the following:
• Spouses of persons who died while within the field of membership of this credit union;
• Employees of this credit union;
• Volunteers;
• Members of the immediate family or household;
•
• Honorably discharged veterans who served in any of the Armed Services of the United States in this charter;
Organizations of such persons; and
• Corporate or other legal entities in this charter.
Immediate family is defined as spouse, child, sibling, parent, grandparent, or grandchild. This includes stepparents, stepchildren, stepsiblings, and adoptive relationships.
Household is defined as persons living in the same residence maintaining a single economic unit.
Membership eligibility is extended only to individuals who are members of an “immediate family or household” of a credit union member. It is not necessary for the primary member to join the credit union in order for the immediate family or household member of the primary member to join, provided the immediate family or household clause is included in the field of membership. However, it is necessary for the immediate family member or household member to first join in order for that person's immediate family member or household member to join the credit union. A credit union can adopt a more restrictive definition of immediate family or household.
Volunteers, by virtue of their close relationship with a sponsor group, may be included. One example is volunteers working at a church.
Under the Federal Credit Union Act, once a person becomes a member of the credit union, such person may remain a member of the credit union until the person chooses to withdraw or is expelled from the membership of the credit union. This is commonly referred to as “once a member, always a member.” The “once a member, always a member” provision does not prevent a credit union from restricting services to members who are no longer within the field of membership.
A federal credit union may be chartered to serve a combination of distinct, definable single occupational and/or associational common bonds. This type of credit union is called a multiple common bond credit union. Each group in the field of membership must have its own occupational or associational common bond. For example, a multiple common bond credit union may include two unrelated employers, or two unrelated associations, or a combination of two or more employers or associations. Additionally, these groups must be within reasonable geographic proximity of the credit union. That is, the groups must be within the service area of one of the credit union's service facilities. These groups are referred to as select groups. A multiple common bond credit union cannot include a TIP or expand using single common bond criteria.
Employment in a corporation or other legal entity which is related to another legal entity (such as a company under contract to, and possessing a strong dependency relationship with, the other company) makes that person part of the occupational common bond of a select employee group within a multiple common bond. In this context, a “strong dependency relationship” is a relationship in which the entities rely on each other as measured by a pattern of regularly doing business with each other, for example, as documented by the number, the term length, and the dollar volume of prior and pending contracts between them.
A multiple common bond credit union's charter may also combine individual occupational groups that each consist of employees of a retailer or other business tenant of an industrial park, a shopping mall, office park or office building (each “a park”). To be able to have this type of clause in its charter, the multiple common bond credit union first must receive a request from an authorized representative of the group or the park to establish credit union service. The park must be within the multiple common bond credit union's service area, and each occupational group must have fewer than 3,000 employees, who are eligible for membership only for so long as each is employed by a park tenant. Under this clause, a multiple common bond credit union can enroll group employees only while the group's retail or business employer is a park tenant, but such credit unions are free to serve employees of new groups under the above conditions as each respective employer becomes a park tenant.
A federal credit union's service area is the area that can reasonably be served by the service facilities accessible to the groups within the field of membership. The service area will most often coincide with that geographic area primarily served by the service facility. Additionally, the groups served by the credit union must have access to the service facility. The non-availability of other credit union service is a factor to be considered in determining whether the group is within reasonable proximity of a credit union wishing to add the group to its field of membership.
A service facility for multiple common bond credit unions is defined as a place where shares are accepted for members' accounts, loan applications are accepted or loans are disbursed. This definition includes a credit union owned branch, a mobile branch, an office operated on a regularly scheduled weekly basis, a credit union owned ATM, or a credit union owned electronic facility that meets, at a minimum, these requirements. A service facility also includes a shared branch or a shared branch network if either: (1) The credit union has an ownership interest in the service facility either directly or through a CUSO or similar organization; or (2) the service facility is local to the credit union and the credit union is an authorized participant in the service center. This definition does not include the credit union's Internet Web site.
The select group as a whole will be considered to be within a credit union's service area when:
• A majority of the persons in a select group live, work, or gather regularly within the service area;
• The group's headquarters is located within the service area; or
• The group's “paid from” or “supervised from” location is within the service area.
An example of a multiple common bond field of membership is:
“The field of membership of this federal credit union shall be limited to the following:
1. Employees of Teltex Corporation who work in Wilmington, Delaware;
2. Partners and employees of Smith & Jones, Attorneys at Law, who work in Wilmington, Delaware;
3. Members of the M&L Association in Wilmington, Delaware, who qualify for membership in accordance with its charter and bylaws in effect on December 31, 1997;
4. Employees of tenants of MJB Office Park under the following conditions:
Section 5 of every multiple common bond federal credit union's charter defines the field of membership and select groups the credit union can legally serve. Only those persons or legal entities specified in the field of membership can be served. There are a number of instances in which Section 5 must be amended by NCUA.
First, a new select group is added to the field of membership. This may occur through agreement between the group and the credit union directly, or through a merger, corporate acquisition, purchase and assumption (P&A), or spin-off.
Second, a federal credit union qualifies to change its charter from:
• A single occupational or associational charter to a multiple common bond charter;
• A multiple common bond to a single occupational or associational charter;
• A multiple common bond to a community charter; or
• A community to a multiple common bond charter.
Third, a federal credit union removes a group from its field of membership through agreement with the group, a spin-off, or because the group no longer exists.
An existing multiple common bond federal credit union that submits a request to amend its charter must provide documentation to establish that the multiple common bond requirements have been met. The Office of Consumer Financial Protection and Access Director must approve all amendments to a multiple common bond credit union's field of membership.
NCUA will approve groups to a credit union's field of membership if the agency determines in writing that the following criteria are met:
• The credit union has not engaged in any unsafe or unsound practice, as determined by the Office of Consumer Financial Protection and Access Director, with input from the appropriate regional director or Office of
• The credit union is “adequately capitalized” pursuant to Part 702 of NCUA's Rules and Regulations. For low-income credit unions or credit unions chartered less than ten years, the Office of Consumer Financial Protection and Access Director, with input from the appropriate regional director or Office of National Examinations and Supervision Director, may determine that a less than “adequately capitalized” credit union can qualify for an expansion if it is making reasonable progress toward becoming “adequately capitalized.” For any other credit union, the Office of Consumer Financial Protection and Access Director, with input from the appropriate regional director or Office of National Examinations and Supervision Director, may determine that a less than “adequately capitalized” credit union can qualify for an expansion if it is making reasonable progress toward becoming “adequately capitalized,” and the addition of the group would not adversely affect the credit union's capitalization level;
• The credit union has the administrative capability to serve the proposed group and the financial resources to meet the need for additional staff and assets to serve the new group;
• Any potential harm the expansion may have on any other credit union and its members is clearly outweighed by the probable beneficial effect of the expansion. With respect to a proposed expansion's effect on other credit unions, the requirements on overlapping fields of membership set forth in Section IV.E of this Chapter are also applicable; and
• If the formation of a separate credit union by such group is not practical and consistent with reasonable standards for the safe and sound operation of a credit union.
The Federal Credit Union Act presumes that a group of 3,000 or more primary potential members is able to form its own stand-alone credit union unless NCUA determines that it is infeasible to do so for reasons such as:
(i) The group lacks sufficient volunteer and other resources to support the efficient and effective operation of its own credit union;
(ii) the group does not meet criteria that the Board has determined to be an important indicator of success in establishing and managing a new credit union, including demographic characteristics such as the geographic location of members, the diversity of ages and income levels among members, and other factors that may affect such a credit union's financial viability and stability; or
(iii) the group would be unlikely to operate a safe and sound credit union.
As such, NCUA requires additional information when a multiple common bond credit union applies to add a group of 3,000 or more primary potential members. For groups between 3,000 and 4,999 potential members, NCUA requires documentation indicating the group has a lack of available subsidies, interest among the group's members, and sufficient resources. For such cases NCUA, in its discretion, will accept a written statement indicating these conditions exist as sufficient documentation the group cannot form its own credit union. Groups with 5,000 or more members will be subject to the standard document requirements as discussed later in this chapter, requiring a group to fully describe its inability to establish a new single common bond credit union.
A multiple common bond credit union requesting a select group expansion must submit a formal written request, using the Application for Field of Membership Amendment (NCUA 4015-EZ, NCUA 4015-A or NCUA 4015) to the Office of Consumer Financial Protection and Access Director. An authorized credit union representative must sign the request.
The NCUA 4015-EZ (for groups less than 3,000 potential members) must be accompanied by the following:
• A letter, or equivalent documentation, from the group requesting credit union service. This letter must indicate:
• That the group wants to be added to the applicant federal credit union's field of membership;
• The number of persons currently included within the group to be added and their locations; and
• The group's proximity to the credit union's nearest service facility.
• The most recent copy of the group's charter and bylaws or equivalent documentation (for associational groups).
The NCUA 4015-A (for groups between 3,000 and 4,999 primary potential members) must be accompanied by the following:
• A letter, or equivalent documentation, from the group requesting credit union service. This letter must indicate:
• That the group wants to be added to the federal credit union's field of membership;
• The number of persons currently included within the group to be added and their locations;
• The group's proximity to credit union's nearest service facility, and
• Why the formation of a separate credit union for the group is not practical or consistent with safety and soundness standards because of a lack of available subsidies, interest among the group's members, and sufficient resources.
The NCUA 4015 (for groups of 5,000 or more primary potential members) must be accompanied by the following:
• A letter, or equivalent documentation, from the group requesting credit union service. This letter must indicate:
• That the group wants to be added to the federal credit union's field of membership;
• Whether the group presently has other credit union service available;
• The number of persons currently included within the group to be added and their locations;
• The group's proximity to credit union's nearest service facility, and
• Why the formation of a separate credit union for the group is not practical or consistent with safety and soundness standards. A credit union need not address every item on the list, simply those issues that are relevant to its particular request:
Member location—whether the membership is widely dispersed or concentrated in a central location.
Demographics—the employee turnover rate, economic status of the group's members, and whether the group is more apt to consist of savers and/or borrowers.
Market competition—the availability of other financial services.
Desired services and products—the type of services the group desires in comparison to the type of services a new credit union could offer.
Sponsor subsidies—the availability of operating subsidies.
The desire of the sponsor—the extent of the sponsor's interest in supporting a credit union charter.
Employee interest—the extent of the employees' interest in obtaining a credit union charter.
Evidence of past failure—whether the group previously had its own credit union or previously filed for a credit union charter.
Administrative capacity to provide services—will the group have the management expertise to provide the services requested.
• If the group is eligible for membership in any other credit union, documentation must be provided to support inclusion of the group under the overlap standards set forth in Section IV.E of this Chapter; and
• The most recent copy of the group's charter and bylaws or equivalent documentation (for associational groups).
If a select group within a federal credit union's field of membership undergoes a substantial restructuring, a change to the credit union's field of membership may be required if the credit union is to continue to provide service to the select group. NCUA permits a multiple common bond credit union to maintain in its field of membership a sold, spun-off, or merged select group to which it has been providing service. This type of amendment to the credit union's charter is not considered an expansion; therefore, the criteria relating to adding new groups are not applicable.
When two groups merge and each is in the field of membership of a credit union, then both (or all affected) credit unions can serve the resulting merged group, subject to any existing geographic limitation and without regard to any overlap provisions. However, the credit unions cannot serve the other multiple groups that may be in the field of membership of the other credit union.
All requests for approval to amend a federal credit union's charter must be submitted to the Office of Consumer Financial Protection and Access Director.
NCUA staff will review all amendment requests in order to ensure conformance to NCUA policy.
Before acting on a proposed amendment, the Office of Consumer Financial Protection
The financial and operational condition of the requesting credit union will be considered in every instance. An expanded field of membership may provide the basis for reversing adverse trends. In such cases, an amendment to expand the field of membership may be granted notwithstanding the credit union's adverse trends. The applicant credit union must clearly establish that the approval of the expanded field of membership meets the requirements of Section IV.B.2 of this Chapter and will not increase the risk to the NCUSIF.
If the Office of Consumer Financial Protection and Access Director approves the requested amendment, the credit union will be issued an amendment to Section 5 of its charter.
When the Office of Consumer Financial Protection and Access Director disapproves any application, in whole or in part, to amend the field of membership under this chapter, the applicant will be informed in writing of the:
• Specific reasons for the action;
•
• Options to consider, if appropriate, for gaining approval; and
• Appeal procedure.
If a field of membership expansion request, merger, or spin-off is denied by staff, the federal credit union may appeal the decision to the NCUA Board. An appeal must be sent to the NCUA Board Secretary within 60 days of the date of denial and must be clearly identified as such and address the reason(s) the federal credit union disagrees with the denial. A copy of the appeal must be sent to the Office of Consumer Financial Protection and Access or, as applicable, the appropriate regional office or Office of National Examinations and Supervision Director. NCUA central office staff will make an independent review of the facts and present the appeal to the NCUA Board with a recommendation.
Before appealing, the credit union may, within 30 days of the denial, provide supplemental information to the office rendering the initial decision for reconsideration. A reconsideration will contain new and material evidence addressing the reasons for the initial denial. The office rendering the initial decision will have 30 days from the date of the receipt of the request for reconsideration to make a final decision. If the request is again denied, the applicant may proceed with the appeal process within 60 days of the date of the last denial. A second request for reconsideration will be treated as an appeal to the NCUA Board.
In general, other than the addition of select groups, there are three additional ways a multiple common bond federal credit union can expand its field of membership:
• By taking in the field of membership of another credit union through a merger;
• By taking in the field of membership of another credit union through a purchase and assumption (P&A); or
• By taking a portion of another credit union's field of membership through a spin-off.
A voluntary merger of two or more federal credit unions is permissible as long as each select group in the merging credit union's field of membership has less than 3,000 primary potential members. While the merger requirements outlined in Section 205 of the Federal Credit Union Act must still be met, the requirements of Chapter 2, Section IV.B.2 of this manual are not applicable.
If the merging credit unions serve the same group, and the group consists of 3,000 or more primary potential members, then the ability to form a separate credit union analysis is not required for that group. If the merging credit union has any other groups consisting of 3,000 or more primary potential members, special requirements apply. NCUA will analyze each group of 3,000 or more primary potential members, except as noted above, to determine whether the formation of a separate credit union by such a group is practical. If the formation of a separate credit union by such a group is not practical because the group lacks sufficient volunteer and other resources to support the efficient and effective operations of a credit union or does not meet the economic advisable criteria outlined in Chapter 1, the group may be merged into a multiple common bond credit union. If the formation of a separate credit union is practical, the group must be spun-off before the merger can be approved.
A financially healthy single common bond credit union with a primary potential membership of 3,000 or more cannot merge into a multiple common bond credit union, absent supervisory reasons, unless the continuing credit union already serves the same group.
If the merger is approved, the qualifying groups within the merging credit union's field of membership will be transferred intact to the continuing credit union and can continue to be served.
Where the merging credit union is state-chartered, the field of membership rules applicable to a federal credit union apply.
Mergers must be approved by the applicable NCUA regional or Office of National Examinations and Supervision Director where the continuing credit union is headquartered, with the concurrence of the regional director or Office of National Examinations and Supervision Director of the merging credit union, and, as applicable, the state regulators.
The NCUA may approve the merger of any federally insured credit union when safety and soundness concerns are present without regard to the 3,000 numerical limitation. The credit union need not be insolvent or in danger of insolvency for NCUA to use this statutory authority. Examples constituting appropriate reasons for using this authority are: abandonment of the management and/or officials and an inability to find replacements, loss of sponsor support, serious and persistent record-keeping problems, sustained material decline in financial condition, or other serious or persistent circumstances.
An emergency merger may be approved by NCUA without regard to common bond or other legal constraints. An emergency merger involves NCUA's direct intervention and approval. The credit union to be merged must either be insolvent or in danger of insolvency, as defined in the Glossary, and NCUA must determine that:
• An emergency requiring expeditious action exists;
• Other alternatives are not reasonably available; and
• The public interest would best be served by approving the merger.
If not corrected, conditions that could lead to insolvency include, but are not limited to:
• Abandonment by management;
• Loss of sponsor;
• Serious and persistent record-keeping problems; or
• Serious and persistent operational concerns.
In an emergency merger situation, NCUA will take an active role in finding a suitable merger partner (continuing credit union). NCUA is primarily concerned that the continuing credit union has the financial strength and management expertise to absorb the troubled credit union without adversely affecting its own financial condition and stability.
As a stipulated condition to an emergency merger, the field of membership of the merging credit union may be transferred intact to the continuing federal credit union without regard to any field of membership restrictions including numerical limitation requirements. Under this authority, any single occupational or associational common bond, multiple common bond, or community charter may merger into a multiple common bond credit union and that credit union can continue to serve the merging credit union's field of membership. Subsequent field of membership expansions of the continuing
Emergency mergers involving federally insured credit unions in different NCUA regions must be approved by the regional director or Office of National Examinations and Supervision Director where the continuing credit union is headquartered, with the concurrence of the regional director or Office of National Examinations and Supervision Director of the merging credit union and, as applicable, the state regulators.
Another alternative for acquiring the field of membership of a failing credit union is through a consolidation known as a P&A. Generally, the requirements applicable to field of membership expansions found in this chapter apply to purchase and assumptions where the purchasing credit union is a federal charter.
A P&A has limited application because, in most cases, the failing credit union must be placed into involuntary liquidation. However, in the few instances where a P&A may occur, the assuming federal credit union, as with emergency mergers, may acquire the entire field of membership if the emergency criteria are satisfied. Specified loans, shares, and certain other designated assets and liabilities, without regard to field of membership restrictions, may also be acquired without changing the character of the continuing federal credit union for purposes of future field of membership amendments. Subsequent field of membership expansions must be consistent with multiple common bond policies.
P&As involving federally insured credit unions in different NCUA regions must be approved by the regional director or Office of National Examinations and Supervision Director where the continuing credit union is headquartered, with the concurrence of the regional director or Office of National Examinations and Supervision Director of the purchased and/or assumed credit union and, as applicable, the state regulators.
A spin-off occurs when, by agreement of the parties, a portion of the field of membership, assets, liabilities, shares, and capital of a credit union are transferred to a new or existing credit union. A spin-off is unique in that usually one credit union has a field of membership expansion and the other loses a portion of its field of membership.
All common bond requirements apply regardless of whether the spun-off group becomes a new charter or goes to an existing federal charter.
The request for approval of a spun-off group must be supported with a plan that addresses, at a minimum:
• Why the spin-off is being requested;
• What part of the field of membership is to be spun off;
• Which assets, liabilities, shares, and capital are to be transferred;
• The financial impact the spin-off will have on the affected credit unions;
• The ability of the acquiring credit union to effectively serve the new members;
• The proposed spin-off date; and
• Disclosure to the members of the requirements set forth above.
The spin-off request must also include current financial statements from the affected credit unions and the proposed voting ballot.
For federal credit unions spinning off a group, membership notice and voting requirements and procedures are the same as for mergers (see part 708 of the NCUA Rules and Regulations), except that only the members directly affected by the spin-off—those whose shares are to be transferred—are permitted to vote. Members whose shares are not being transferred will not be afforded the opportunity to vote. All members of the group to be spun off (whether they voted in favor, against, or not at all) will be transferred if the spin-off is approved by the voting membership. Voting requirements for federally insured state credit unions are governed by state law.
Spin-offs involving federally insured credit unions in different NCUA regions must be approved by all regional directors and, if applicable, the Office of National Examinations and Supervision Director where the credit unions are headquartered and the state regulators, as applicable. Spin-offs in the same region also require approval by the state regulator, as applicable.
An overlap exists when a group of persons is eligible for membership in two or more credit unions, including state charters. An overlap is permitted when the expansion's beneficial effect in meeting the convenience and needs of the members of the group proposed to be included in the field of membership outweighs any adverse effect on the overlapped credit union.
Credit unions must investigate the possibility of an overlap with federally insured credit unions prior to submitting an expansion request if the group has 5,000 or more primary potential members. If cases arise where the assurance given to the Office of Consumer Financial Protection and Access Director concerning the unavailability of credit union service is inaccurate, the misinformation may be grounds for removal of the group from the federal credit union's charter.
When an overlap situation requiring analysis does arise, officials of the expanding credit union must ascertain the views of the overlapped credit union. If the overlapped credit union does not object, the applicant must submit a letter or other documentation to that effect. If the overlapped credit union does not respond, the expanding credit union must notify NCUA in writing of its attempt to obtain the overlapped credit union's comments.
NCUA will approve an overlap if the expansion's beneficial effect in meeting the convenience and needs of the members of the group outweighs any adverse effect on the overlapped credit union.
In reviewing the overlap, the Office of Consumer Financial Protection and Access Director will consider:
• The view of the overlapped credit union(s);
• Whether the overlap is incidental in nature—the group of persons in question is so small as to have no material effect on the original credit union;
• Whether there is limited participation by members or employees of the group in the original credit union after the expiration of a reasonable period of time;
• Whether the original credit union fails to provide requested service;
• Financial effect on the overlapped credit union;
• The desires of the group(s);
• The desire of the sponsor organization; and
• The best interests of the affected group and the credit union members involved.
Generally, if the overlapped credit union does not object, and NCUA determines that there is no safety and soundness problem, the overlap will be permitted.
Potential overlaps of a federally insured state credit union's field of membership by a federal credit union will generally be analyzed in the same way as if two federal credit unions were involved. Where a federally insured state credit union's field of membership is broadly stated, NCUA will exclude its field of membership from any overlap protection.
NCUA will permit multiple common bond federal credit unions to overlap community charters without performing an overlap analysis.
A federal credit union's field of membership will always be governed by the field of membership descriptions contained in Section 5 of its charter. Where a sponsor organization expands its operations internally, by acquisition or otherwise, the credit union may serve these new entrants to its field of membership if they are part of any select group listed in Section 5. Where acquisitions are made which add a new subsidiary, the group cannot be served until the subsidiary is included in the field of membership through a housekeeping amendment.
A federal credit union's field of membership will always be governed by the field of membership descriptions contained in Section 5 of its charter. Where a sponsor organization expands its operations internally, by acquisition or otherwise, the credit union may serve these new entrants to its field of membership if they are part of any select group listed in Section 5. Where acquisitions are made which add a new subsidiary, the group cannot be served until the subsidiary is included in the field of membership through a housekeeping amendment.
Overlaps may occur as a result of restructuring or merger of the parent organization. When such overlaps occur, each credit union must request a field of membership amendment to reflect the new groups each wishes to serve. The credit union can continue to serve any current group in its field of membership that is acquiring a new group or has been acquired by a new group.
The new group cannot be served by the credit union until the field of membership amendment is approved by NCUA.
Credit unions affected by organizational restructuring or merger should attempt to resolve overlap issues among themselves. Unless an agreement is reached limiting the overlap resulting from the corporate restructuring, NCUA will permit a complete overlap of the credit unions' fields of membership. When two groups merge, or one group is acquired by the other, and each is in the field of membership of a credit union, both (or all affected) credit unions can serve the resulting merged or acquired group, subject to any existing geographic limitation and without regard to any overlap provisions. This is accomplished through a housekeeping amendment.
Credit unions must submit to NCUA documentation explaining the restructuring and provide information regarding the new organizational structure.
An exclusionary clause is a limitation precluding the credit union from serving the primary members of a portion of a group otherwise included in its field of membership. NCUA no longer grants exclusionary clauses. Those granted prior to the adoption of this new Chartering and Field of Membership Manual will remain in effect unless the credit unions agree to remove them or one of the affected credit unions submits a housekeeping amendment to have it removed.
A multiple common bond federal credit union may apply to convert to a community charter provided the field of membership requirements of the community charter are met. Groups within the existing charter which cannot qualify in the new charter cannot be served except for members of record, or groups or communities obtained in an emergency merger or P&A. A credit union must notify all groups that will be removed from the field of membership as a result of conversion. Members of record can continue to be served. Also, in order to support a case for a conversion, the applicant federal credit union may be required to develop a detailed business plan as specified in Chapter 2, Section V.A.3.
A multiple common bond federal credit union may apply to convert to a single occupational or associational common bond charter provided the field of membership requirements of the new charter are met. Groups within the existing charter, which do not qualify in the new charter, cannot be served except for members of record, or groups or communities obtained in an emergency merger or P&A. A credit union must notify all groups that will be removed from the field of membership as a result of conversion.
A credit union may request removal of a group from its field of membership for various reasons. The most common reasons for this type of amendment are:
• The group is within the field of membership of two credit unions and one wishes to discontinue service;
• The federal credit union cannot continue to provide adequate service to the group;
• The group has ceased to exist;
• The group does not respond to repeated requests to contact the credit union or refuses to provide needed support;
• The group initiates action to be removed from the field of membership; or
• The federal credit union wishes to convert to a single common bond.
When a federal credit union requests an amendment to remove a group from its field of membership, the Office of Consumer Financial Protection and Access Director will determine why the credit union desires to remove the group. If the Office of Consumer Financial Protection and Access Director concurs with the request, membership will continue for those who are already members under the “once a member, always a member” provision of the Federal Credit Union Act.
NCUA has in place quality control processes that protect the integrity of its field of membership requirements. As part of this obligation, NCUA's Office of Consumer Financial Protection and Access will randomly select groups added through NCUA's Field of Membership Internet Application (FOMIA) system for quality assurance reviews even if the expansion application meets all the conditions for approval. Each FCU is responsible for obtaining certain documentation when seeking to add groups to its field of membership through FOMIA. In addition, as indicated in the FOMIA User Instruction Guide, available on NCUA's Web site, an FCU must permanently retain the documentation from the select group requesting service and the Confirmation Certificate generated at the time the FOMIA request is submitted to NCUA.
As part of the quality assurance process, the Office of Consumer Financial Protection and Access reserves the right to request this documentation at any time. If the FCU fails to provide this documentation when the Office of Consumer Financial Protection and Access requests it, the director of the Office of Consumer Financial Protection and Access may consider removing the group from the FCU's field of membership and restricting the FCU from using the FOMIA system for future requests. Specifically, as part of the FOMIA quality assurance process, the Office of Consumer Financial Protection and Access staff will do the following:
1. Within 10 days of receiving an application selected for a quality assurance review, notify the FCU of the documentation the Office of Consumer Financial Protection and Access requires. The FCU will have 15 days to provide the necessary documentation. the Office of Consumer Financial Protection and Access will respond to the FCU with a determination on the quality assurance review of the association within 15 days of receiving the requested information;
2. After receiving the additional documentation, if any concerns remain outstanding, the Office of Consumer Financial Protection and Access will again correspond with the FCU and provide a 15-day time frame for correcting the concern. the Office of Consumer Financial Protection and Access will respond to the FCU with a determination on the quality assurance review of the association within 15 days of receiving the requested information; and
3. If the FCU does not provide the requested documentation, or cannot correct the concern, the Office of Consumer Financial Protection and Access Director will deny the application and notify the credit union of its appeal rights.
NCUA's Office of Consumer Financial Protection and Access is responsible for investigating field of membership complaints from the public, and matters referred to it from the field. It also pursues corrective action as needed for FCUs with confirmed field of membership violations. Although circumstances can vary with each case, the Office of Consumer Financial Protection and Access will generally adhere to the following process for investigating and addressing potential field of membership violations:
1. Initially correspond with management to outline concerns and request clarifying information within 60 days. the Office of Consumer Financial Protection and Access will also provide context as to the source of NCUA's concerns, such as the discovery of new information about a particular group or an examination finding brought to the attention of the Office of Consumer Financial Protection and Access;
2. If the Office of Consumer Financial Protection and Access does not receive the requested information within 60 days, it will notify the FCU and again request the required information be provided within 30 days;
3. After receiving the additional documentation, if any concerns remain outstanding, the Office of Consumer Financial Protection and Access will again correspond with the FCU to provide a 60-day time frame for addressing the concern; and
4. If the FCU is unable to correct the concern, and after consultation with the Office of General Counsel and the appropriate Regional Office or Office of National Examinations and Supervision Director, and in accordance with agency guidelines for administrative actions, the Director of the Office of Consumer Financial Protection and Access will remove the group from the FCU's field of membership pursuant to authority delegated by the NCUA Board. Removal of a group is treated the same as an initial denial under the Chartering Manual. In any adverse final determination on removal under the above delegations, the Office of Consumer Financial Protection and Access will notify the FCU of its appeal rights.
NCUA considers the removal of an association from an FCU's field of membership as an action of last resort. If a group is removed, the FCU can no longer add new members from the group, but can
A number of persons, by virtue of their close relationship to a common bond group, may be included, at the charter applicant's option, in the field of membership. These include the following:
• Spouses of persons who died while within the field of membership of this credit union;
• Employees of this credit union;
• Persons retired as pensioners or annuitants from the above employment;
• Volunteers;
• Members of the immediate family or household;
• Honorably discharged veterans who served in any of the Armed Services of the United States in this charter;
• Organizations of such persons; and
• Corporate or other legal entities in this charter.
Immediate family is defined as spouse, child, sibling, parent, grandparent, or grandchild. This includes stepparents, stepchildren, stepsiblings, and adoptive relationships.
Household is defined as persons living in the same residence maintaining a single economic unit.
Membership eligibility is extended only to individuals who are members of an “immediate family or household” of a credit union member. It is not necessary for the primary member to join the credit union in order for the immediate family or household member of the primary member to join, provided the immediate family or household clause is included in the field of membership. However, it is necessary for the immediate family member or household member to first join in order for that person's immediate family member or household member to join the credit union. A credit union can adopt a more restrictive definition of immediate family or household.
Volunteers, by virtue of their close relationship with a sponsor group, may be included. Examples include volunteers working at a hospital or church.
Under the Federal Credit Union Act, once a person becomes a member of the credit union, such person may remain a member of the credit union until the person chooses to withdraw or is expelled from the membership of the credit union. This is commonly referred to as “once a member, always a member.” The “once a member, always a member” provision does not prevent a credit union from restricting services to members who are no longer within the field of membership
There are two types of community charters. One is based on a single, geographically well- defined local community or neighborhood; the other is a rural district. More than one credit union may serve the same community.
NCUA recognizes four types of affinity on which both a community charter and a rural district can be based—persons who live in, worship in, attend school in, or work in the community or rural district. Businesses and other legal entities within the community boundaries or rural district may also qualify for membership.
NCUA has established the following requirements for community charters:
• The geographic area's boundaries must be clearly defined; and
• The area is a well-defined local community or a rural district.
In addition to the documentation requirements in Chapter 1 to charter a credit union, a community credit union applicant must provide additional documentation addressing the proposed area to be served and community service policies.
An applicant has the burden of demonstrating to NCUA that the proposed community area meets the statutory requirements of being: (1) Well-defined, and (2) a local community or rural district.
“Well-defined” means the proposed area has specific geographic boundaries. Geographic boundaries may include a city, township, county (single, multiple, or portions of a county) or a political equivalent, school district, or a clearly identifiable neighborhood. Although state boundaries are well-defined areas, states themselves do not meet the requirement that the proposed area be a local community.
The well-defined local community requirement is met if:
• Single Political Jurisdiction—The area to be served is in a recognized Single Political Jurisdiction,
• Statistical Area—The area is a designated Core Based Statistical Area or allowing a portion thereof, or in the case of a Core Based Statistical Area with Metropolitan Divisions, the area is a Metropolitan Division or is a portion thereof; or
• The area is a designated a Combined Statistical Area or a portion thereof; AND
• The Core Based Statistical Area, Metropolitan Division or Combined Statistical Area, or the portion thereof, must have a population of 2.5 million or less people.
• Compelling Evidence of Interaction or Common Interests—In lieu of a statistical area as defined above, this option applies only to the addition of an immediately adjacent area falling outside a Single Political Jurisdiction, Core Based Statistical Area or Combined Statistical Area, and thus may demonstrate a sufficient level of interaction to qualify as a local community. For these situations, applicants have the option of submitting a narrative to NCUA to address how the residents meet the requirements for being a local community. The Office of Consumer Financial Protection and Access will issue additional guidance to help a credit union develop its written narrative. NCUA will base its decision on a consideration of the following factors with respect to the proposed service area in its entirety:
Economic Hub: Evidence indicates residents commonly travel to a geographically compact locale within the area for work and major commerce needs. Traffic flows, the presence of common or related industries, or unified economic planning demonstrate how the locales have economic interdependence.
Population Center: Area has a dominant county or municipality with a significant portion of the area's population and evidence exists to support the relevance of the population center to all residents within the area.
Isolated Areas: Areas geographically isolated, such as by mountains, bodies of water, or other prominent features.
Quasi-Governmental Agencies: A quasi-governmental agency, such as a regional planning commission, predominantly covers the proposed service area and derives its leadership from the area to advance meaningful objectives advancing the residents' common interests in economic development and/or improving quality of life. Success of agency in meeting its mission depends upon collaboration from throughout the area.
Government Designations: A division of a federal or state agency specifically designates the proposed service area as its area of coverage or as a target area for specific programs.
Shared Public Services/Facilities: Formal agreements exist that provide for a common need shared by all of the residents, such as common police or fire protection, or public utilities.
Colleges and Universities: Evidence exists to demonstrate the common relevance of an institution or institutions to the entire area, such as unique educational initiatives to support economic objectives benefiting all residents and/or partnerships with local businesses or high schools.
An area of any geographic size qualifies as a Rural District if:
• The proposed district has well-defined, contiguous geographic boundaries;
• The total population of the proposed district does not exceed 1,000,000.
• Either more than 50% of the proposed district's population resides in census blocks or other geographic units that are designated as rural by either the Consumer Financial Protection Bureau or the United States Census Bureau, OR the district has a population density of 100 persons or fewer per square mile; and
• The boundaries of the well-defined rural district do not exceed the outer boundaries of the states that are
The affinity groups that apply to well-defined local communities, found in Chapter 2, Section V.G., also apply to Rural Districts.
The OMB definitions of Core Based Statistical Area and Metropolitan Division, as
The requirements in Chapter 2, Sections V.A.4 through V.G. also apply to a credit union that serves a rural district.
If NCUA has determined that a specific geographic area is a well-defined local community, then a new applicant need not reestablish that fact as part of its application to serve the exact area. The new applicant must, however, note NCUA's previous determination as part of its overall application. An applicant applying for an area that is not exactly the same as a previously approved well defined local community must comply with the current criteria in place for determining a well-defined local community.
A community credit union is frequently more susceptible to competition from other local financial institutions and generally does not have substantial support from any single sponsoring company or association. As a result, a community credit union will often encounter financial and operational factors that differ from an occupational or associational charter. Its diverse membership may require special marketing programs targeted to different segments of the community. For example, the lack of payroll deduction creates special challenges in the development and promotion of savings programs and in the collection of loans. Accordingly, to support an application for a community charter, an applicant Federal credit union must develop a business plan incorporating the following data:
• Pro forma financial statements for a minimum of 24 months after the proposed conversion, including the underlying assumptions and rationale for projected member, share, loan, and asset growth;
• Anticipated financial impact on the credit union, including the need for additional employees and fixed assets, and the associated costs;
• A description of the current and proposed office/branch structure, including a general description of the location(s); parking availability, public transportation availability, drive-through service, lobby capacity, or any other service feature illustrating community access;
• A marketing plan addressing how the community will be served for the 24-month period after the proposed conversion to a community charter, including detailing: How the credit union will implement its business plan; the unique needs of the various demographic groups in the proposed community; how the credit union will market to each group, particularly underserved groups; which community-based organizations the credit union will target in its outreach efforts; the credit union's marketing budget projections dedicating greater resources to reaching new members; and the credit union's timetable for implementation, not just a calendar of events;
• Details, terms and conditions of the credit union's financial products, programs, and services to be provided to the entire community; and
• Maps showing the current and proposed service facilities, ATMs, political boundaries, major roads, and other pertinent information.
An existing Federal credit union may apply to convert to a community charter. Groups currently in the credit union's field of membership, but outside the new community credit union's boundaries, may not be included in the new community charter. Therefore, the credit union must notify groups that will be removed from the field of membership as a result of the conversion. Members of record can continue to be served.
Before approval of an application to convert to a community credit union, NCUA must be satisfied that the credit union will be viable and capable of providing services to its members.
Community credit unions will be expected to regularly review and to follow, to the fullest extent economically possible, the marketing and business plans submitted with their applications. Additionally, NCUA will follow-up with an FCU every year for three years after the FCU has been granted a new or expanded community charter, and at any other intervals NCUA believes appropriate, to determine if the FCU is satisfying the terms of its marketing and business plans.
An FCU failing to satisfy those terms will be subject to supervisory action. As part of this review process, the regional office or Office of National Examinations and Supervision Director will report to the NCUA Board instances where an FCU is failing to satisfy the terms of its marketing and business plan and indicate what supervisory actions the region or ONES intends to take.
The geographic boundaries of a community Federal credit union are the areas defined in its charter. The boundaries can usually be defined using political borders, streets, rivers, railroad tracks, or other static geographical feature.
A community that is a recognized legal entity may be stated in the field of membership— for example, “Gus Township, Texas,” “Isabella City, Georgia,” or “Fairfax County, Virginia.”
A community that is an entire United States Census Bureau designated Core Based Statistical Area or Combined Statistical Area may be stated in the field of membership—for example, “Fort Wayne, IN Metropolitan Statistical Area,” “Albany, GA Metropolitan Statistical Area,” or “Syracuse-Auburn, NY Combined Statistical Area.”
A community field of membership may include persons who work or attend school in a particular industrial park, shopping mall, office building or complex, or similar development. The proposed field of membership must have clearly defined geographic boundaries.
A community charter does not have to include all four affinities (
• Persons who live, work, worship, or attend school in, and businesses located in the area of Johnson City, Tennessee, bounded by Fern Street on the north, Long Street on the east, Fourth Street on the south, and Elm Avenue on the west;
• Persons who live or work in Green County, Maine;
• Persons who live, worship, work (or regularly conduct business in), or attend school on the University of Dayton campus, in Dayton, Ohio;
• Persons who work for businesses located in Clifton Country Mall, in Clifton Park, New York;
• Persons who live, work, or worship in the Binghamton, New York, Core Based Statistical Area, consisting of Broome and Tioga Counties, New York (a qualifying Core Based Statistical Area in its entirety);
• Persons who live, work, worship, or attend school in the portion of the Oklahoma City, OK Metropolitan Statistical Area that includes Canadian and Oklahoma counties, Oklahoma (two contiguous counties in a portion of a qualifying Core Based Statistical Area that has seven counties in total); or
• Persons who live, work, worship, or attend school in Uinta County or Lincoln County, Wyoming, a rural district.
Some examples of insufficiently defined local communities, neighborhoods, or rural districts are:
• Persons who live or work within and businesses located within a ten-mile radius of Washington, DC (not a permitted community);
• Persons who live or work in the industrial section of New York, New York. (not well- defined nor a permitted community); or
• Persons who live or work in the greater Boston area. (not well-defined).
Some examples of unacceptable local communities, neighborhoods, or rural districts are:
• Persons who live or work in the State of California. (not a permitted community). Persons who live in the first congressional district of Florida. (not a permitted community).
A community credit union may amend its field of membership by adding additional affinities or removing exclusionary clauses. This can be accomplished with a housekeeping amendment.
A community credit union also may expand its geographic boundaries. Persons who live, work, worship, or attend school within the proposed well-defined local community, neighborhood or rural district must have common interests and/or interact. The credit union must follow the requirements of Section V.A.4 of this chapter.
A community credit union that is based on a Single Political Jurisdiction, a Statistical Area (
• Anticipated marginal financial impact on the credit union of adding the proposed bordering area, including the need for additional employees and fixed assets, and the associated costs;
• A description of the current and, if applicable, proposed office/branch structure specific to serving the proposed bordering area;
• A marketing plan addressing how the new community will be served for the 24-month period after the proposed expansion of a community charter, including detailing how the credit union will address the unique needs of any demographic groups in the proposed bordering community not presently served by the credit union and how the credit union will market to any new groups; and
• Details, terms and conditions of any new financial products, programs, and services to be introduced as part of this expansion.
All requests for approval to amend a community credit union's charter must be submitted to the Office of Consumer Financial Protection and Access Director. If a decision cannot be made within a reasonable period of time, the Office of Consumer Financial Protection and Access Director will notify the credit union.
The financial and operational condition of the requesting credit union will be considered in every instance. The economic advisability of expanding the field of membership of a credit union with financial or operational problems must be carefully considered.
In most cases, field of membership amendments will only be approved for credit unions that are operating satisfactorily. Generally, if a federal credit union is having difficulty providing service to its current membership, or is experiencing financial or other operational problems, it may have more difficulty serving an expanded field of membership.
Occasionally, however, an expanded field of membership may provide the basis for reversing current financial problems. In such cases, an amendment to expand the field of membership may be granted notwithstanding the credit union's financial or operational problems. The applicant credit union must clearly establish that the expanded field of membership is in the best interest of the members and will not increase the risk to the NCUSIF.
If the requested amendment is approved by NCUA, the credit union will be issued an amendment to Section 5 of its charter.
When NCUA disapproves any application to amend the field of membership, in whole or in part, under this chapter, the applicant will be informed in writing of the:
• Specific reasons for the action;
• If appropriate, options or suggestions that could be considered for gaining approval; and
• Appeal procedures.
If a field of membership expansion request, merger, or spin-off is denied by staff, the federal credit union may appeal the decision to the NCUA Board. An appeal must be sent to the NCUA Board Secretary within 60 days of the date of denial and must be clearly identified as such and address the specific reason(s) the federal credit union disagrees with the denial. A copy of the appeal must be sent to the Office of Consumer Financial Protection and Access or, as applicable, the appropriate regional office or Office of National Examinations and Supervision Director. NCUA central office staff will make an independent review of the facts and present the appeal to the NCUA Board with a recommendation.
Before appealing, the credit union may, within 30 days of the denial, provide supplemental information to the office rendering the initial decision for reconsideration. A reconsideration will contain new and material evidence addressing the reasons for the initial denial. The office rendering the initial decision will have 30 days from the date of the receipt of the request for reconsideration to make a final decision. If the request is again denied, the applicant may proceed with the appeal process within 60 days of the date of the last denial. A second request for reconsideration will be treated as an appeal to the NCUA Board.
There are three additional ways a community federal credit union can expand its field of membership:
• By taking in the field of membership of another credit union through a merger;
• By taking in the field of membership through a purchase and assumption (P&A); or
• By taking a portion of another credit union's field of membership through a spin-off.
Generally, the requirements applicable to field of membership expansions apply to mergers where the continuing credit union is a community federal charter.
Where both credit unions are community charters, the continuing credit union must meet the criteria for expanding the community boundaries. A community credit union cannot merge into a single occupational/associational, or multiple common bond credit union, except in an emergency merger. However, a single occupational or associational, or multiple common bond credit union can merge into a community charter as long as the merging credit union has a service facility within the community boundaries or a majority of the merging credit union's field of membership would qualify for membership in the community charter. While a community charter may take in an occupational, associational, or multiple common bond credit union in a merger, it will remain a community charter.
Groups within the merging credit union's field of membership located outside of the community boundaries may not continue to be served. The merging credit union must notify groups that will be removed from the field of membership as a result of the merger. However, the credit union may continue to serve members of record.
Where a state-chartered credit union is merging into a community federal credit union, the continuing federal credit union's field of membership will be worded in accordance with NCUA policy. Any subsequent field of membership expansions must comply with applicable amendment procedures.
Mergers must be approved by the NCUA regional director or Office of National Examinations and Supervision Director where the continuing credit union is headquartered, with the concurrence of the regional director or Office of National Examinations and Supervision Director of the merging credit union, and, as applicable, the state regulators.
An emergency merger may be approved by NCUA without regard to common bond or other legal constraints. An emergency merger involves NCUA's direct intervention and approval. The credit union to be merged must either be insolvent or in danger of insolvency, as defined in the Glossary, and NCUA must determine that:
• An emergency requiring expeditious action exists;
• Other alternatives are not reasonably available; and
• The public interest would best be served by approving the merger.
If not corrected, conditions that could lead to insolvency include, but are not limited to:
• Abandonment by management;
• Loss of sponsor;
• Serious and persistent record-keeping problems; or
• Serious and persistent operational concerns.
In an emergency merger situation, NCUA will take an active role in finding a suitable merger partner (continuing credit union). NCUA is primarily concerned that the continuing credit union has the financial
As a stipulated condition to an emergency merger, the field of membership of the merging credit union may be transferred intact to the continuing federal credit union without regard to any field of membership restrictions, including the service facility requirement. Under this authority, a federal credit union may take in any dissimilar field of membership.
Even though the merging credit union is a single common bond credit union or multiple common bond credit union or community credit union, the continuing credit union will remain a community charter. Future community expansions will be based on the continuing credit union's original community area.
Emergency mergers involving federally insured credit unions in different NCUA regions must be approved by the regional director or Office of National Examinations and Supervision Director where the continuing credit union is headquartered, with the concurrence of the regional director or Office of National Examinations and Supervision Director of the merging credit union and, as applicable, the state regulators.
Another alternative for acquiring the field of membership of a failing credit union is through a consolidation known as a P&A. Generally, the requirements applicable to community expansions found in this chapter apply to purchase and assumptions where the purchasing credit union is a federal charter.
A P&A has limited application because, in most instances, the failing credit union must be placed into involuntary liquidation. However, in the few instances where a P&A may occur, the assuming federal credit union, as with emergency mergers, may acquire the entire field of membership if the emergency criteria are satisfied.
In a P&A processed under the emergency criteria, specified loans, shares, and certain other designated assets and liabilities may also be acquired without regard to field of membership restrictions and without changing the character of the continuing federal credit union for purposes of future field of membership amendments.
If the P&A does not meet the emergency criteria, then only members of record can be obtained unless they otherwise qualify for membership in the community charter.
P&As involving federally insured credit unions in different NCUA regions must be approved by the regional director or Office of National Examinations and Supervision Director where the continuing credit union is headquartered, with the concurrence of the regional director or Office of National Examinations and Supervision Director of the purchased and/or assumed credit union and, as applicable, the state regulators.
A spin-off occurs when, by agreement of the parties, a portion of the field of membership, assets, liabilities, shares, and capital of a credit union are transferred to a new or existing credit union. A spin-off is unique in that usually one credit union has a field of membership expansion and the other loses a portion of its field of membership.
All field of membership requirements apply regardless of whether the spun-off group goes to a new or existing federal charter.
The request for approval of a spin-off must be supported with a plan that addresses, at a minimum:
• Why the spin-off is being requested;
• What part of the field of membership is to be spun off;
• Whether the field of membership requirements are met;
• Which assets, liabilities, shares, and capital are to be transferred;
• The financial impact the spin-off will have on the affected credit unions;
• The ability of the acquiring credit union to effectively serve the new members;
• The proposed spin-off date; and
• Disclosure to the members of the requirements set forth above.
The spin-off request must also include current financial statements from the affected credit unions and the proposed voting ballot.
For federal credit unions spinning off a portion of the community, membership notice and voting requirements and procedures are the same as for mergers (see part 708 of the NCUA Rules and Regulations), except that only the members directly affected by the spin-off—those whose shares are to be transferred—are permitted to vote. Members whose shares are not being transferred will not be afforded the opportunity to vote. All members of the group to be spun off (whether they voted in favor, against, or not at all) will be transferred if the spin-off is approved by the voting membership. Voting requirements for federally insured state credit unions are governed by state law.
Generally, an overlap exists when a group of persons is eligible for membership in two or more credit unions. NCUA will permit community credit unions to overlap any other charters without performing an overlap analysis.
An exclusionary clause is a limitation precluding the credit union from serving the primary members of a portion of a group or community otherwise included in its field of membership.
NCUA no longer grants exclusionary clauses. Those granted prior to the adoption of this new Chartering and Field of Membership Manual will remain in effect unless the credit unions agree to remove them or one of the affected credit unions submits a housekeeping amendment to have it removed.
A community federal credit union may convert to a single occupational or associational, or multiple common bond credit union. The converting credit union must meet all occupational, associational, and multiple common bond requirements, as applicable. The converting credit union may continue to serve members of record of the prior field of membership as of the date of the conversion, and any groups or communities obtained in an emergency merger or P&A. A change to the credit union's field of membership and designated common bond will be necessary.
A community credit union may convert to serve a new geographical area provided the field of membership requirements of V.A.3 of this chapter are met. Members of record of the original community can continue to be served.
A number of persons who have a close relationship to the community may be included, at the charter applicant's option, in the field of membership. These include the following:
• Spouses of persons who died while within the field of membership of this credit union;
• Employees of this credit union;
• Volunteers in the community;
• Members of the immediate family or household; and
• Organizations of such persons
Immediate family is defined as spouse, child, sibling, parent, grandparent, or grandchild. This includes stepparents, stepchildren, stepsiblings, and adoptive relationships.
Household is defined as persons living in the same residence maintaining a single economic unit.
Membership eligibility is extended only to individuals who are members of an “immediate family or household” of a credit union member. It is not necessary for the primary member to join the credit union in order for the immediate family or household member of the primary member to join, provided the immediate family or household clause is included in the field of membership. However, it is necessary for the immediate family member or household member to first join in order for that person's immediate family member or household member to join the credit union. A credit union can adopt a more restrictive definition of immediate family or household.
Under the Federal Credit Union Act, once a person becomes a member of the credit union, such person may remain a member of the credit union until the person chooses to withdraw or is expelled from the membership of the credit union. This is commonly referred to as “once a member, always a member.” The “once a member, always a member” provision does not prevent a credit union from restricting services to members who are no longer within the field of membership.
One of the primary reasons for the creation of federal credit unions is to make credit available to people of modest means for
A credit union serving predominantly low-income members may be designated as a low- income credit union. Section 701.34 of NCUA's Rules and Regulations defines the term “low- income members” as those members:
• Who make less than 80 percent of the average for all wage earners as established by the Bureau of Labor Statistics; or
• Whose median family income falls at or below 80 percent of the median family income for the nation as established by the Census Bureau.
The term “low-income members” also includes members who are full-time or part-time students in a college, university, high school, or vocational school.
To obtain a low-income designation from NCUA, an existing credit union must establish that a majority of its members meet the low-income definition. An existing community credit union that serves a geographic area where a majority of residents meet the annual income standard is presumed to be serving predominantly low-income members. A low-income designation for a new credit union charter may be based on a majority of the potential membership.
A credit union with a low-income designation has greater flexibility in accepting nonmember deposits insured by the NCUSIF, are exempt from the aggregate loan limit on business loans, and may offer secondary capital accounts to strengthen its capital base. It also may participate in special funding programs such as the Community Development Revolving Loan Program for Credit Unions (CDRLP) if it is involved in the stimulation of economic development and community revitalization efforts.
The CDRLP provides both loans and grants for technical assistance to low-income credit unions. The requirements for participation in the revolving loan program are in part 705 of the NCUA Rules and Regulations. Only operating credit unions are eligible for participation in this program.
A federal credit union charter applicant or existing credit union wishing to receive a low- income designation should forward a separate request for the designation to the Office of Consumer Financial Protection and Access Director, along with appropriate documentation supporting the request.
For community charter applicants, the supporting material should include the median family income or annual wage figures for the community to be served. If this information is unavailable, the applicant should identify the individual zip codes or census tracts that comprise the community and NCUA will assist in obtaining the necessary demographic data.
Similarly, if single occupational or associational or multiple common bond charter applicants cannot supply income data on its potential members, they should provide the Office of Consumer Financial Protection and Access Director with a list which includes the number of potential members, sorted by their residential zip codes, and NCUA will assist in obtaining the necessary demographic data.
An existing credit union can perform a loan or membership survey to determine if the credit union is primarily serving low-income members.
A low-income federal credit union charter applicant may contract with a third party to assist in the chartering and low-income designation process. If the charter is granted, a low-income credit union may contract with a third party to provide necessary management services. Such contracts should not exceed the duration of one year subject to renewal.
In recognition of the unique efforts needed to help make credit union service available to low-income groups, NCUA has adopted special rules that pertain to low-income credit union charters, as well as field of membership additions for low-income credit unions. These special rules provide additional latitude to enable underserved, low-income individuals to gain access to credit union service.
NCUA permits credit union chartering and field of membership amendments based on associational groups formed for the sole purpose of making credit union service available to low- income persons. The association must be defined so that all of its members will meet the low- income definition of Section 701.34 of the NCUA Rules and Regulations. Any multiple common bond credit union can add low-income associations to their fields of membership.
A low-income designated community federal credit union has additional latitude in serving persons who are affiliated with the community. In addition to serving members who live, work, worship, or attend school in the community, a low-income community federal credit union may also serve persons who participate in programs to alleviate poverty or distress, or who participate in associations headquartered in the community.
Examples of a low-income designated community and an associational-based low-income federal credit union are as follows:
• Persons who live in [the target area]; persons who work, worship, attend school, or participate in associations headquartered in [the target area]; persons participating in programs to alleviate poverty or distress which are located in [the target area]; incorporated and unincorporated organizations located in [the target area] or maintaining a facility in [the target area]; and organizations of such persons.
• Members of the Canarsie Economic Assistance League, in Brooklyn, NY, an association whose members all meet the low-income definition of Section 701.34 of the NCUA Rules and Regulations.
A multiple common bond federal credit union may include in its field of membership, without regard to location, an “underserved area” as defined by the Federal Credit Union Act. 12
U.S.C. 1759(c)(2). The addition of an “underserved area” will not change the charter type of the multiple common bond federal credit union. More than one multiple common-bond federal credit union can serve the same “underserved area,” provided each credit union is approved as provided below.
By adding an “underserved area,” a multiple common bond federal credit union does not become eligible to receive the benefits afforded to low-income designated credit unions, such as expanded use of nonmember deposits and access to the Community Development Revolving Loan Program for Credit Unions.
The Federal Credit Union Act defines an “underserved area” as (1) a “local community, neighborhood, or rural district” that (2) meets the definition of an “investment area” under section 103(16) of the Community Development Banking and Financial Institutions Act of 1994 (“CDFI”), 12 U.S.C. 4702(16), and (3) is “underserved by other depository institutions” based on data of the NCUA Board and the federal banking agencies.
To be eligible for approval as “underserved,” a proposed area must be a well-defined local community, neighborhood, or rural district as defined in Chapter 2, sections V.A.1. and V.A.2. of this Manual.
To be approved as an “underserved area,” the proposed area must meet the CDFI definition of an “investment area.”
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A proposed area that is “distressed” also must display “significant unmet needs” for loans or for one or more of the financial services credit unions are authorized to offer. To meet this criterion, the credit union must include within its Business Plan a section, one page in length, entitled “Significant Unmet Needs for Credit Union Services” (“SUN section”) that establishes the existence of such unmet needs by identifying the credit and depository needs of the community and detailing how the credit union plans to serve those needs. The credit union may choose which among the following “credit and depository needs” to address in the SUN section: loans, share draft accounts, savings accounts, check cashing, money orders, certified checks, automated teller machines, deposit taking, safe deposit box services, and similar services. The existence of each “credit and depository need” the credit union identifies and plans to serve must be supported by objective reasons and/or accompanying documentation derived from an identified, authoritative source of the credit union's choice. Third-party documentation generally is the most compelling.
A proposed area that meets the CDFI definition of an “investment area” (
Without regard to a proposed area's location within or outside a Metropolitan Statistical Area, this criterion compares two ratios: the ratio of facilities to the population of the non- “distressed” tracts (the benchmark) versus the same facilities-to-population ratio among all the tracts of the proposed area as a whole. If the benchmark ratio is greater than the ratio for the whole area, then the area is “underserved by other depository institutions,” and vice versa.
When, as the result of an initial Concentration of Facilities ratio calculation, a proposed area does not qualify as “underserved by other depository institutions,” NCUA will exclude non- depository banks (
As one alternative to the concentration of facilities ratio, a proposed area will qualify as “underserved by other depository institutions” if it is designated an “underserved county” by NCUA based on data produced by the Consumer Financial Protection Bureau (available at:
As another alternative to the concentration of facilities ratio, a proposed area will qualify as “underserved by other depository institutions” if the credit seeking to serve it, using a metric of its own choosing, provided that it is based on NCUA or other Federal banking agency data, that establishes to NCUA that the proposed area is “underserved by other depository institutions.”
If NCUA approves the request to add an “underserved area,” the credit union will be issued an amendment to Section 5 of its charter.
Once a credit union is initially approved to serve an “underserved area,” other credit unions that subsequently apply may be approved to serve the same area. To be approved, the area must qualify as “underserved” at the time the new applicant applies. An applicant must demonstrate that the area continues to be “distressed”, as provided above, only if a new decennial Census has been published since the date the area was last approved. In any case, the applicant must demonstrate that the area still has “significant unmet needs” for loans or credit union services (to qualify as an “investment area”), and remains “underserved by other depository institutions” (to qualify as “underserved”).
A federal credit union that desires to include an underserved community in its field of membership must first develop, and submit for approval, a business plan specifying how it will serve the community. In addition, the business plan must include a SUN section as provided in section III.B.2.b. above. The credit union will be expected to regularly review the business plan to determine if the community is being adequately served. The Office of Consumer Financial Protection and Access Director may require periodic service status reports from a credit union about the “underserved area” to ensure that the needs of the community are being met, and must require such reports before NCUA allows a multiple common bond federal credit union to add an additional “underserved area.”
Once an “underserved area” has been added to a federal credit union's field of membership, the credit union must establish within two years, and maintain, an office or service facility in the community. A service facility is defined as a place where shares are accepted for members' accounts, loan applications are accepted and loans are disbursed. By definition, a service facility includes a credit union-owned branch, a shared branch, a mobile branch, or an office operated on a regularly scheduled weekly basis or a credit union owned electronic facility that meets, at a minimum, the above requirements. This definition does not include an ATM or the credit union's Internet Web site.
When NCUA disapproves any application to add an “underserved area” in whole or in part, under this chapter, the applicant will be informed in writing of the:
• Specific reasons for the action;
• Options to consider, if appropriate, for gaining approval; and
• Appeal procedures.
If the Office of Consumer Financial Protection and Access Director denies an “underserved area” request, the federal credit union may appeal the decision to the NCUA Board. An appeal must be sent to the NCUA Board Secretary within 60 days of the date of denial. The appeal must be clearly identified as such and address the specific reason(s) the federal credit union disagrees with the denial. A copy of the appeal must be sent to the Office of Consumer Financial Protection and Access. NCUA central office staff will make an independent review of the facts and present the appeal to the NCUA Board with a recommendation.
Before appealing, the credit union may, within 30 days of the denial, provide supplemental information to the Office of Consumer Financial Protection and Access Director for reconsideration. A reconsideration will contain new and material evidence addressing the reasons for the initial denial. The Office of Consumer Financial Protection and Access Director will have 30 days from the date of the receipt of the request for reconsideration to make a final decision. If the request is again denied, the applicant may proceed with the appeal process within 60 days of the date of the last denial. A second request for reconsideration will be treated as an appeal to the NCUA Board.
A charter conversion is a change in the jurisdictional authority under which a credit union operates.
Federal credit unions receive their charters from NCUA and are subject to its supervision, examination, and regulation.
State-chartered credit unions are incorporated in a particular state, receiving their charter from the state agency responsible for credit unions and subject to the state's regulator. If the state-chartered credit union's deposits are federally insured, it will also fall under NCUA's jurisdiction.
A federal credit union's power and authority are derived from the Federal Credit Union Act and NCUA Rules and Regulations. State-chartered credit unions are governed by state law and regulation. Certain federal laws and regulations also apply to federally insured state chartered credit unions.
There are two types of charter conversions: federal charter to state charter and state charter to federal charter. Common bond and community requirements are not an issue from NCUA's standpoint in the case of a federal to state charter conversion. The procedures and forms relevant to both types of charter conversion are included in appendix 4.
Any state-chartered credit union may apply to convert to a federal credit union. In order to do so it must:
• Comply with state law regarding conversion and file proof of compliance with NCUA;
• File the required conversion application, proposed federal credit union organization certificate, and other documents with NCUA;
• Comply with the requirements of the Federal Credit Union Act,
• Be granted federal share insurance by NCUA.
Conversions are treated the same as any initial application for a federal charter, including an on-site examination by NCUA where appropriate. NCUA will also consult with the appropriate state authority regarding the credit union's current financial condition, management expertise, and past performance. Since the applicant in a conversion is an ongoing credit union, the economic advisability of granting a charter is more readily determinable than in the case of an initial charter applicant.
A converting state credit union's field of membership must conform to NCUA's chartering policy. The field of membership will be phrased in accordance with NCUA chartering policy. However, if the converting credit union is a multiple group charter and the new federal charter is a multiple group, then the new federal charter may retain in its field of membership any group that the state credit union was serving at the time of conversion. Subsequent changes must conform to NCUA chartering policy in effect at that time.
If the converting credit union is a community charter and the new federal charter is community-based, it must meet the community field of membership requirements set forth in Chapter 2, Section V of this manual. If the state-chartered credit union's community boundary is more expansive than the approved federal boundary, only members of record outside of the new community boundary may continue to be served.
The converting credit union, regardless of charter type, may continue to serve members of record. The converting credit union may retain in its field of membership any group or community added pursuant to state emergency provisions.
The following documents must be submitted with the conversion proposal:
• Conversion of State Charter to Federal Charter (NCUA 4000);
• Organization Certificate (NCUA 4008). Only Part (3) and the signature/notary section should be completed and, where applicable, signed by the credit union officials.
• Report of Officials and Agreement to Serve (NCUA 4012);
• The Application to Convert From State Credit Union to Federal Credit Union (NCUA 4401);
• The Application and Agreements for Insurance of Accounts (NCUA 9500);
• Certification of Resolution (NCUA 9501);
• Written evidence regarding whether the state regulator is in agreement with the conversion proposal; and
• Business plan, as appropriate, including the most current financial report and delinquent loan schedule.
If the state charter is applying to become a federal community charter, it must also comply with the documentation requirements included in Chapter 2, Section V.A.2 of this manual.
The application will be reviewed to determine that it is complete and that the proposal is in compliance with Section 125 of the Federal Credit Union Act. This review will include a determination that the state credit union's field of membership is in compliance with NCUA's chartering policies. The Office of Consumer Financial Protection and Access Director may make further investigation into the proposal and may require the submission of additional information to support the request to convert.
NCUA may conduct an on-site examination of the books and records of the credit union. Non-federally insured credit unions will be assessed an insurance application fee.
The conversion will be approved by the Office of Consumer Financial Protection and Access Director if it is in compliance with Section 125 of the Federal Credit Union Act and meets the criteria for federal insurance. Where applicable, the Office of Consumer Financial Protection and Access Director will specify any special conditions that the credit union must meet in order to convert to a federal charter, including changes to the credit union's field of membership in order to conform to NCUA's chartering policies. Some of these conditions may be set forth in a Letter of Understanding and Agreement (LUA), which requires the signature of the officials and the appropriate NCUA regional director or Office of National Examinations and Supervision Director.
The Office of Consumer Financial Protection and Access Director will notify both the credit union and the state regulator of the decision on the conversion.
When NCUA disapproves any application to convert to a federal charter, the applicant will be informed in writing of the:
• Specific reasons for the action;
• Options to consider, if appropriate, for gaining approval; and
• Appeal procedures.
If a conversion to a federal charter is denied by the Office of Consumer Financial Protection and Access Director, the applicant credit union may appeal the decision to the NCUA Board. An appeal must be sent to the NCUA Board Secretary within 60 days of the date of denial. The appeal must be clearly identified as such and address the specific reason(s) the credit union disagrees with the denial. A copy of the appeal must be sent to the Office of Consumer Financial Protection and Access. NCUA central office staff will make an independent review of the facts and present the appeal to the NCUA Board with a recommendation.
Before appealing, the credit union may, within 30 days of the denial, provide supplemental information to the Office of Consumer Financial Protection and Access Director for reconsideration. The request will not be considered as an appeal, but a request for reconsideration by the Office of Consumer Financial Protection and Access Director. The Office of Consumer Financial Protection and Access Director will have 30 business days from the date of the receipt of the request for reconsideration to make a final decision. If the application is again denied, the credit union may proceed with the appeal process to the NCUA Board within 60 days of the date of the last denial by the Office of Consumer Financial Protection and Access Director.
Upon being informed of the Office of Consumer Financial Protection and Access Director's preliminary approval, the board must:
• Comply with all requirements of the state regulator that will enable the credit union to convert to a federal charter and cease being a state credit union;
• Obtain a letter or official statement from the state regulator certifying that the credit union has met all of the state requirements and will cease to be a state credit union upon its receiving a federal charter. A copy of this document must be submitted to the Office of Consumer Financial Protection and Access Director;
• Obtain a letter from the private share insurer (includes excess share insurers), if applicable, certifying that the credit union has met all withdrawal requirements. A copy of this document must be submitted to the Office of Consumer Financial Protection and Access Director; and
• Submit a statement of the action taken to comply with any conditions imposed by the Office of Consumer Financial Protection and Access Director in the preliminary approval of the conversion proposal and, if applicable, submit the signed LUA.
When the Office of Consumer Financial Protection and Access Director has received evidence that the board of directors has satisfactorily completed the actions described above, the federal charter and new Certificate of Insurance will be issued.
The credit union may then complete the conversion as discussed in the following section. A denial of a conversion application can be appealed. Refer to Section II.C.6 of this chapter.
The date on which the Office of Consumer Financial Protection and Access Director approves the Organization Certificate and the Application and Agreements for Insurance of Accounts is the date on which the credit union becomes a federal credit union. The Office of Consumer Financial Protection and Access Director will notify the credit union and the state regulator of the date of the conversion.
As of the effective date of the conversion, the federal credit union will be the owner of all of the assets and will be responsible for all of the liabilities and share accounts of the state credit union.
Upon receipt of its federal charter, the board will hold its first meeting as a federal credit union. At this meeting, the board will transact such business as is necessary to complete the conversion as approved and to operate the credit union in accordance with the requirements of the Federal Credit Union Act and NCUA Rules and Regulations.
As of the commencement of operations, the accounting system, records, and forms must conform to the standards established by NCUA.
Changing of the credit union's name on all signage, records, accounts, investments, and other documents should be accomplished as soon as possible after conversion. The credit union has 180 days from the effective date of the conversion to change its signage and promotional material. This requires the credit union to discontinue using any remaining stock of “state credit union” stationery immediately, and discontinue using credit cards, ATM cards, etc., within 180 days after the effective date of the conversion, or the reissue date whichever is later. The Office of Consumer Financial Protection and Access Director has the discretion to extend the timeframe for an additional 180 days. Member share drafts with the state-chartered name can be used by the members until depleted.
Within 10 business days after commencement of operations, the recently converted federal credit union must submit to the Office of Consumer Financial Protection and Access Director the following:
• Report of Officials (NCUA 4501); and
• Financial and Statistical Reports, as of the commencement of business of the federal credit union.
Any federal credit union may apply to convert to a state credit union. In order to do so, it must:
• Notify NCUA prior to commencing the process to convert to a state charter and state the reason(s) for the conversion;
• Comply with the requirements of Section 125 of the Federal Credit Union Act that
• Comply with applicable state law and the requirements of the state regulator.
It is important that the credit union provide an accurate disclosure of the reasons for the conversion. These reasons should be stated in specific terms, not as generalities. The federal credit union converting to a state charter remains responsible for the entire operating fee for the year in which it converts.
If the federal credit union intends to continue federal share insurance after the conversion to a state credit union, it must submit an Application for Insurance of Accounts (NCUA 9600) to the Office of Consumer Financial Protection and Access Director at the time it requests approval of the conversion proposal. The Office of Consumer Financial Protection and Access Director has the authority to approve or disapprove the application.
If the converting federal credit union does not intend to continue federal share insurance or if its application for continued insurance is denied, insurance will cease in accordance with the provisions of Section 206 of the Federal Credit Union Act.
If, upon its conversion to a state credit union, the federal credit union will be terminating its federal share insurance or converting from federal to non-federal share insurance, it must comply with the membership notice and voting procedures set forth in Section 206 of the Federal Credit Union Act and part 708 of NCUA's Rules and Regulations, and address the criteria set forth in Section 205(c) of the Federal Credit Union Act.
Where the state credit union will be non-federally insured, federal insurance ceases on the effective date of the charter conversion. If it will be otherwise uninsured, then federal insurance will cease one year after the date of conversion subject to the restrictions in Section 206(d)(1) of the Federal Credit Union Act. In either case, the state credit union will be entitled to a refund of the federal credit union's NCUSIF capitalization deposit after the final date on which any of its shares are federally insured.
The NCUA Board reserves the right to delay the refund of the capitalization deposit for up to one year if it determines that payment would jeopardize the NCUSIF.
Upon approval of a proposition for conversion by a majority vote of the board of directors at a meeting held in accordance with the federal credit union's bylaws, the conversion proposal will be submitted to the Office of Consumer Financial Protection and Access Director and will include:
• A current financial report;
• A current delinquent loan schedule;
• An explanation and appropriate documents relative to any changes in insurance of member accounts;
• A resolution of the board of directors;
• A proposed Notice of Special Meeting of the Members (NCUA 4221);
• A copy of the ballot to be sent to all members (NCUA 4506);
• If the credit union intends to continue with federal share insurance, an application for insurance of accounts (NCUA 9600);
• Evidence that the state regulator is in agreement with the conversion proposal; and
• A statement of reasons supporting the request to convert.
The proposal will be reviewed to determine that it is complete and is in compliance with Section 125 of the Federal Credit Union Act. The Office of Consumer Financial Protection and Access Director may make further investigation into the proposal and require the submission of additional information to support the request.
The Office of Consumer Financial Protection and Access Director will specify any special conditions that the credit union must meet in order to proceed with the conversion.
The proposal will be approved by the Office of Consumer Financial Protection and Access Director if it is in compliance with Section 125 and, in the case where the state credit union will no longer be federally insured, the notice and voting requirements of Section 206 of the Federal Credit Union Act.
The Office of Consumer Financial Protection and Access Director will notify both the credit union and the state regulator of the decision on the proposal.
When NCUA disapproves any application to convert to a state charter, the applicant will be informed in writing of the:
• Specific reasons for the action;
• If appropriate, options or suggestions that could be considered for gaining approval; and
• Appeal procedures.
If the Office of Consumer Financial Protection and Access Director denies a conversion to a state charter, the federal credit union may appeal the decision to the NCUA Board. An appeal must be sent to the NCUA Board Secretary within 60 days of the date of denial. The appeal must be clearly identified as such and address the specific reason(s) the federal credit union disagrees with the denial. A copy of the appeal must be sent to the Office of Consumer Financial Protection and Access. NCUA central office staff will make an independent review of the facts and present the appeal to the NCUA Board with a recommendation.
Before appealing, the credit union may, within 30 days of the denial, provide supplemental information to the Office of Consumer Financial Protection and Access Director for reconsideration. The request will not be considered as an appeal, but a request for reconsideration by the Office of Consumer Financial Protection and Access Director. The Office of Consumer Financial Protection and Access Director will have 30 business days from the date of the receipt of the request for reconsideration to make a final decision. If the application is again denied, the credit union may proceed with the appeal process to the NCUA Board within 60 days of the date of the last denial by the Office of Consumer Financial Protection and Access Director.
The members may not vote on the proposal until it is approved by the Office of Consumer Financial Protection and Access Director. Once approval of the proposal is received, the following actions will be taken by the board of directors:
• The proposal must be submitted to the members for approval and a date set for a meeting to vote on the proposal. The proposal may be acted on at the annual meeting or at a special meeting for that purpose. The members must also be given the opportunity to vote by written ballot to be filed by the date set for the meeting.
• Members must be given advance notice (NCUA 4221) of the meeting at which the proposal is to be submitted. The notice must:
• Specify the purpose, time and place of the meeting;
• Include a brief, complete, and accurate statement of the reasons for and against the proposed conversion, including any effects it could have upon share holdings, insurance of member accounts, and the policies and practices of the credit union;
• Specify the costs of the conversion,
• Inform the members that they have the right to vote on the proposal at the meeting, or by written ballot to be filed not later than the date and time announced for the annual meeting, or at the special meeting called for that purpose;
• Be accompanied by a Federal to State Conversion—Ballot for Conversion Proposal (NCUA 4506); and
• State in
• The proposed conversion must be approved by a majority of all of the members who vote on the proposal, a quorum being present, in order for the credit union to proceed further with the proposition, provided federal insurance is maintained. If the proposed state-chartered credit union will not be federally insured, 20 percent of the total membership must participate in the voting, and of those, a majority must vote in favor of the proposal. Ballots cast by members who did not attend the meeting but who submitted their ballots in accordance with instructions above will be counted with votes cast at the meeting. In order to have a suitable record of the vote, the voting at the meeting should be by written ballot as well.
• The board of directors shall, within 10 days, certify the results of the membership
If the proposal for conversion is approved by a majority of all members who voted, the board of directors will:
• Ensure that all requirements of state law and the state regulator have been accommodated;
• Ensure that the state charter or the license has been received within 90 days from the date the members approved the proposal to convert; and
• Ensure that the Office of Consumer Financial Protection and Access Director is kept informed as to progress toward conversion and of any material delay or of substantial difficulties which may be encountered.
If the conversion cannot be completed within the 90-day period, the Office of Consumer Financial Protection and Access Director should be informed of the reasons for the delay. The Office of Consumer Financial Protection and Access Director may set a new date for the conversion to be completed.
In order for the conversion to be completed, the following steps are necessary:
• The board of directors will submit a copy of the state charter to the Office of Consumer Financial Protection and Access Director within 10 days of its receipt. This will be accompanied by the federal charter and the federal insurance certificate. A copy of the financial reports as of the preceding month-end should be submitted at this time.
• The Office of Consumer Financial Protection and Access Director will notify the credit union and the state regulator in writing of the receipt of evidence that the credit union has been authorized to operate as a state credit union.
• The credit union shall cease to be a federal credit union as of the effective date of the state charter.
• If the Office of Consumer Financial Protection and Access Director finds a material deviation from the provisions that would invalidate any steps taken in the conversion, the credit union and the state regulator shall be promptly notified in writing. This notice may be either before or after the copy of the state charter is filed with the Office of Consumer Financial Protection and Access Director. The notice will inform the credit union as to the nature of the adverse findings. The conversion will not be effective and completed until the improper actions and steps have been corrected.
• Upon ceasing to be a federal credit union, the credit union shall no longer be subject to any of the provisions of the Federal Credit Union Act, except as may apply if federal share insurance coverage is continued. The successor state credit union shall be immediately vested with all of the assets and shall continue to be responsible for all of the obligations of the federal credit union to the same extent as though the conversion had not taken place. Operation of the credit union from this point will be in accordance with the requirements of state law and the state regulator.
• If the Office of Consumer Financial Protection and Access Director is satisfied that the conversion has been accomplished in accordance with the approved proposal, the federal charter will be canceled.
• There is no federal requirement for closing the records of the federal credit union at the time of conversion or for the manner in which the records shall be maintained thereafter. The converting credit union is advised to contact the state regulator for applicable state requirements.
• The credit union shall neither use the words “Federal Credit Union” in its name nor represent itself in any manner as being a federal credit union.
• Changing of the credit union's name on all signage, records, accounts, investments, and other documents should be accomplished as soon as possible after conversion. Unless it violates state law, the credit union has 180 days from the effective date of the conversion to change its signage and promotional material. This requires the credit union to discontinue using any remaining stock of “federal credit union” stationery immediately, and discontinue using credit cards, ATM cards, etc., within 180 days after the effective date of the conversion, or the reissue date, whichever is later. The Office of Consumer Financial Protection and Access Director has the discretion to extend the timeframe for an additional 180 days. Member share drafts with the federal chartered name can be used by the members until depleted. If the state credit union is not federally insured, it must change its name and must immediately cease using any credit union documents referencing federal insurance.
• If the state credit union is to be federally insured, the Office of Consumer Financial Protection and Access Director will issue a new insurance certificate.
These definitions apply only for use with this Manual. Definitions are not intended to be all inclusive or comprehensive. This Manual, the Federal Credit Union Act, and NCUA Rules and Regulations, as well as state laws, may be used for further reference.
1. The credit union's net worth is declining at a rate that will render it insolvent within 24 months. In projecting future net worth, NCUA may rely on data in addition to Call Report data. The trend must be supported by at least 12 months of historic data.
2. The credit union's net worth is declining at a rate that will take it under two percent (2%) net worth within 12 months. In projecting future net worth, NCUA may rely on data in addition to Call Report data. The trend must be supported by at least 12 months of historic data.
3. The credit union's net worth, as self-reported on its Call Report, is significantly undercapitalized, and NCUA determines that there is no reasonable prospect of the credit union becoming adequately capitalized in the succeeding 36 months. In making its determination on the prospect of achieving adequate capitalization, NCUA will assume that, if adverse economic conditions are affecting the value of the credit union's assets and liabilities, including property values and loan delinquencies related to unemployment, these adverse conditions will not further deteriorate.
Federal Trade Commission (“FTC” or “Commission”).
Notice of proposed rulemaking; request for public comment.
As part of its regulatory review of the Contact Lens Rule (“Rule”), and consistent with the requirements of the Fairness to Contact Lens Consumers Act (the “Act”), the Federal Trade Commission proposes to amend the Rule to require that prescribers obtain a signed acknowledgment after releasing a contact lens prescription to a patient, and maintain each such acknowledgment for a period of not less than three years. The Commission seeks comment on this proposal and several other issues.
Written comments must be received on or before January 30, 2017.
Interested parties may file a comment online or on paper by following the instructions in the Request for Comment part of the
Elizabeth Delaney, Attorney, (202) 326-2903, or Paul Spelman, Attorney, (202) 326-2487, Division of Advertising Practices, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW., Washington, DC 20580.
A. Overview of the Contact Lens Rule
B. Regulatory History
C. The Evolving Contact Lens Marketplace
In 2003, Congress enacted the Fairness to Contact Lens Consumers Act,
The Contact Lens Rule promotes competition in retail sales of contact lenses by facilitating consumers' ability to comparison shop for contact lenses. When a prescriber completes a contact lens fitting, the Rule requires that the prescriber provide the patient with a portable copy of her prescription. The Rule also requires that the prescriber verify or provide such prescriptions to authorized third parties. At the same time, the Rule requires that contact lens vendors only sell contact lenses in accordance with valid prescriptions written by licensed prescribers.
The Rule specifies that a prescriber may not require: (1) The purchase of contact lenses as a condition of providing the prescription or verification; (2) payment in addition to, or as a part of, the fee for an eye examination, fitting, and evaluation as a condition of providing the prescription or verification; or (3) the patient to sign a waiver or release as a condition of releasing or verifying the prescription.
The Rule also places certain requirements on sellers. It mandates that sellers dispense contact lenses only in accordance with a valid prescription that is either presented to the seller or verified by direct communication with the prescriber.
Sellers may not alter a prescription, but for private label contact lenses, may substitute identical contact lenses that the same company manufactures and sells under a different name.
The Contact Lens Rule sets a minimum expiration date of one year after the issue date of a prescription with an exception based on a patient's ocular health.
The FTC has more than three decades of regulatory and research experience regarding the optical goods industry. In addition to the Contact Lens Rule, the Commission enforces the Ophthalmic Practice Rules (hereinafter “Eyeglass Rule”), initially promulgated in 1978.
Consumers, sellers, and state officials complained that contact lens consumers faced similar hurdles when trying to comparison shop for contact lenses.
As specified in the Act, the Rule imposes requirements on both sellers and prescribers of contact lenses. Because the use of contact lenses involves significant health issues,
Because of concerns that many prescribers had impeded consumers' ability to comparison shop for contact lenses—even following appropriate diagnosis and fitting by the prescribers—the Act and the Rule also impose obligations on the prescribers themselves. As noted above, prescribers are required to release a copy of the prescription to the consumer, promptly upon completion of the contact lens fitting, “[w]hether or not requested by the patient.”
Prescribers also are required to provide or verify a contact lens
When contact lenses were first introduced, they were made of rigid material that required a prescriber to custom fit each pair. Beginning in the late 1980s, manufacturers began to sell disposable lenses, designed to be replaced on a daily, weekly, or monthly basis. In addition, technological advances resolved most lens-standardization issues, eliminating the need for a prescriber to fit each pair to the individual once the initial prescription had been finalized. Today, the vast majority of replacement lenses bought pursuant to an individual's prescription will be identical, regardless of whether the patient purchases them from the prescriber or a third-party seller.
These technological advances have increased the comfort and convenience of contact lenses, leading to growth in the number of contact lens wearers, and changes in the type and variety of lenses worn. According to the U.S. Centers for Disease Control and Prevention (“CDC”), there are now approximately 40.9 million contact lens wearers in the United States age 18 and older, representing more than 16% of the population.
Overall, the U.S. market for contact lenses currently is estimated to be between $4 billion and $5 billion annually.
There also are significantly more types of lenses in the U.S. now than there were 10 to 15 years ago.
On September 3, 2015, the Commission solicited comments on the Contact Lens Rule as part of its periodic review of its rules and guides.
This Notice of Proposed Rulemaking (“NPRM”) summarizes the comments received and explains the Commission's decision to retain the Contact Lens Rule. It also explains why the Commission proposes certain amendments and why it declines to propose others. Additionally, it seeks comment on certain questions. Finally, the NPRM sets forth the Commission's regulatory analyses under the Regulatory Flexibility and Paperwork Reduction Acts, as well as the text of the proposed amendments.
The Commission received 660 comments from individuals and entities representing a wide range of viewpoints, including prescribing eye care practitioners (ophthalmologists and optometrists), opticians and other eye-wear industry members, sellers of contact lenses (both online and brick-and-mortar), contact lens manufacturers, and consumer and competition advocates.
Some commenters—including contact lens sellers, opticians, state and federal legislators, consumer advocacy groups, and others—stated that the Act's intent to provide a competitive marketplace is
Many commenters discussed the fact that the use of contact lenses presents certain eye health risks. Prescribers pointed out that merely by wearing contact lenses, patients will experience an increased risk for microbial keratitis (also referred to as infectious or bacterial keratitis).
In light of the risks associated with the use of contact lenses, many commenters—including individual prescribers, optometric and ophthalmologic associations, and contact lens manufacturers—stressed the important need to adequately protect eye health and safety and argued that the current Rule framework is not sufficient to do so.
Other examples of patient harm identified by commenters were either hypothetical or anecdotal (such as case reports about the experiences of individual patients).
Other commenters argued that contact lens sales through alternative supply channels put patients at higher risk for ocular complications. The American Academy of Optometry, for example, asserted that “careful peer reviewed research over the past ten years” shows that “the development of alternative supply chains for the sale of contact lenses—and the use of those alternative supply chains by contact lens patients—has itself become an identifiable risk factor for ocular morbidity in contact lens patients.”
Some commenters merely asserted that patient eye health is being compromised because online retailers do not comply with the Rule,
The Commission does not find the evidence proffered in this Rule review sufficient to support a conclusion that the Rule inadequately protects consumer eye health. Commenters did not provide sufficient reliable empirical evidence that the current Rule leads to the increased acquisition of contact lenses without a valid prescription or increased incidence of contact lens-related eye disease or adverse eye conditions. Furthermore, despite commenters' concerns about online or mail order sales of contact lenses, the Commission has not seen reliable empirical evidence to support a finding that such sales are contributing to an increased incidence, or increased risk, of contact lens-related eye problems.
Section 315.3 of the Rule provides the framework under which prescribers are required to release contact lens prescriptions to patients and other authorized third parties. Section 315.3 also imposes limitations on the conditions prescribers may require of patients before releasing their prescription.
Section 315.3(a)(1) of the Rule requires a prescriber to provide a copy of the contact lens prescription to the patient after completing a contact lens fitting, regardless of whether it was requested by the patient. Section 315.3(a)(1) of the Rule tracks the language of the Act verbatim.
This provision, referred to as automatic prescription release, was intended to empower consumers to comparison shop for contact lenses.
Several commenters stated that prescribers routinely fail to comply with the automatic prescription release requirement: Some do not—or do not always—provide a prescription unless a consumer explicitly requests it; some do not provide complete prescriptions, as required by the Rule; and some do not provide prescriptions at all.
A number of prescribers commented, to the contrary, that they always provide contact lens prescriptions to their patients, and believe that others in their profession do so as well.
Many reports of compliance and noncompliance are anecdotal, and robust empirical data are sparse. Although the Commission would prefer better empirical evidence about compliance and noncompliance with the Rule, and about the effects of the Rule, some survey evidence has been submitted by sellers, prescribers, and manufacturers. The Commission considers these submissions to be suggestive and, to an extent, informative, but none can be regarded as definitive. It is important to note, at the outset, that all of these surveys are subject to particular methodological limitations, as well as limits commonly associated with survey evidence. For example, patients may sometimes misremember the details of any particular prior encounter with a prescriber; prescribers, for their part, may be mistaken about the particulars of a given clinical encounter, about the frequency with which they do or do not release prescriptions, or about the frequency or severity of problems they may encounter in verifying prescriptions. For the most part, the surveys do not include independent, objective tests of patient or prescriber recollections. In addition, survey responses may be sensitive to the ways in which survey questions are framed.
As part of its comment, 1-800 CONTACTS, the country's largest online seller of contact lenses, submitted a survey conducted on its behalf by a third-party research firm, Survey Sampling International. That survey found that only 35% of contact lens wearers reported receiving a copy of their prescription without having to ask for it.
Some commenters also cited a 2008 report in a contact lens industry publication which found that just half of surveyed optometrists replied, “yes, to every patient,” when asked if they routinely release contact lens prescriptions.
Other commenters stated that even when consumers receive a copy of their prescription, the prescription information is not always complete or correct. One online seller of replacement lenses contended that some prescribers deliberately render prescriptions incomplete by omitting information, in order to make it more difficult for consumers to buy lenses from third-party sellers.
Such omissions, when they occur, may be intentional, may reflect clerical or communication errors, or may reflect an imperfect understanding of the Rule's complete requirements for prescription release. All such errors could reflect failures to comply fully with the requirements of the Rule.
The sheer number of verifications conducted by third-party sellers also may suggest that many consumers are not automatically receiving their prescriptions from prescribers, or are not receiving complete prescriptions. Under Section 315.5, verifications are only necessary if a consumer fails to provide a third-party seller with a complete prescription. According to discussions with industry, roughly three-quarters of third-party contact lens sales require prescription verification, meaning that the consumer did not present a complete prescription at the time of the attempted purchase. Seemingly contrary to this data is a survey, conducted on behalf of Johnson & Johnson Vision Care, Inc., a large contact lens manufacturer, according to which 61% of consumer respondents said that they provided the retailer with their prescription the last time they purchased lenses online or by telephone.
Another concern raised by commenters is whether consumers are even fully aware of their right to their prescriptions.
Some commenters asked the Commission to take specific actions to increase compliance with the automatic prescription release requirement.
Other commenters suggested requiring patients to sign an “Acknowledgment of Release” document, confirming that they received their prescriptions.
Having considered the various comments and suggestions, the Commission believes that improving compliance with automatic prescription release would further the goals of the Act. While none of the five surveys
Having determined that it would be beneficial to increase compliance with
Several commenters suggested that one way to better ensure automatic prescription release compliance is for the Commission to become more aggressive about enforcement.
The Commission recognizes the need for increased enforcement of the automatic prescription release provision and already has taken some recent steps to achieve better compliance. For example, in April 2016, the Commission sent warning letters to 45 contact lens prescribers after receiving consumer complaints alleging that the prescribers had violated the Rule, often by failing to provide patients with their prescriptions automatically.
A number of commenters recommended that the Commission amend the Rule to require that prescribers provide patients with written notices informing them of their right to their prescription. One suggestion, proposed by three online sellers of eye wear, is that, immediately upon completion of a contact lens fitting, prescribers provide patients with a “Bill of Rights”; that is, a written notice informing patients of their rights under the Rule, including: (1) The right to receive their prescriptions; (a) provided promptly and automatically without their having to request them; (b) at no additional charge; and (2) the right to purchase their lenses from the seller of their choice.
Either of these proposals, if implemented and complied with, would notify consumers of their rights and, presumably, would increase the percentage of patients who receive prescriptions from their prescribers. Providing the required document would remind prescribers and their staffs to provide patients with their prescriptions, and it would remind patients to ask for their prescriptions in the event that the prescriber might fail to provide them initially and without a request, as the Rule and the Act already require.
Since the Commission could draft the specific language for either the “Bill of Rights” or check-in notice, it could ensure that the notice conveys an accurate explanation of the Rule's automatic prescription release requirements, something prescribers sometimes fail to do.
On the other hand, patients already receive forms and other paperwork when they visit a prescriber, increasing the possibility that patients might not read or attend to the information in the “Bill of Rights” or check-in notice.
Moreover, the Rule already requires that prescribers provide patients with copies of their prescriptions, yet diverse complaints have alleged that many prescribers do not do so. It is at least possible that many prescribers who now fail to comply with the Rule's prescription release requirements would also fail to comply with a requirement to provide a patients' “Bill of Rights” or check-in notice form. Without some mechanism to ensure compliance, a notice by itself might not provide substantial benefits. The notices recommended by these proposals would not require the type of prescriber record-keeping needed to assist the Commission in better Rule enforcement, either in its current form or as it might be amended. It is thus possible that adding this requirement would impose an increased burden on prescribers without providing many tangible, countervailing benefits to consumers. In light of these considerations, the Commission has determined not to propose to amend the Rule to require either a Bill of Rights or notice-upon-check-in.
Another amendment recommended by some commenters is to require that prescribers present, and patients sign, an “acknowledgment of release,” confirming that they received their prescription at the end of their contact lens fitting.
An acknowledgment of release would notify consumers of their prescription portability rights and, in all likelihood, increase the percentage of patients who receive their prescription from the prescriber. Providing the required form would also serve as a reminder to
Additionally, since patients would have to affirmatively sign such an acknowledgment, it is less likely that such a document would go unnoticed or unread by patients than a “Bill of Rights” or notice-upon-check-in type of document. And perhaps most importantly, requiring prescribers to retain a signed acknowledgment form would improve the Commission's ability to verify whether prescribers had complied with this requirement and had met their obligation to release prescriptions to their patients. Being able to determine more accurately whether a particular prescriber had provided a prescription in a particular case would reduce the number of instances where a filed complaint simply pits the patient's word against that of the prescriber. It would also enable the Commission to evaluate the overall rate at which both individual prescribers and the population of prescribers comply with the requirement.
One potential drawback to requiring a signed acknowledgment requirement is the increased recordkeeping burden imposed on prescribers, since they would have to provide the forms and retain the signed acknowledgments for a certain period of time.
Another possible Rule revision is to require that prescribers' offices post conspicuous signage informing consumers of their right to their prescription. Although this was not specifically suggested by commenters,
In California, the Business and Professional Code provides that each prescriber office must post, in a conspicuous place, a notice informing patients that eye doctors are required to provide patients with a copy of their ophthalmic lens prescriptions. The notice also explains that spectacle prescriptions are released upon the completion of the exam, and contact lens prescriptions are released upon the completion of the exam or upon the completion of the fitting process.
Such a requirement, if adopted in the Rule, could provide some of the same benefits of the Bill of Rights, notice-upon-check-in, and signed acknowledgment proposals in that it would, in theory, notify consumers of their rights and, presumably, increase the percentage of patients who receive their prescription from the prescriber. A sign could also serve as a reminder to patients to ask for their prescription in the event the prescriber does not provide it. Furthermore, a sign would impose less of a burden on prescribers than the other proposals, since it would only have to be posted once, as opposed to individual copies for each and every patient. Lastly, enforcing such a provision would be relatively straightforward, since the Commission could perform spot checks on prescribers' offices to ensure they have posted the required signage.
On the other hand, the Commission lacks good evidence about the effects of California's particular version of this requirement, and it is unclear how many patients actually read posted notices at doctors' offices, particularly in locations where there are already numerous ads or other postings about various rights, requirements, and obligations. It is likely that far fewer patients would learn of their rights from a single sign—competing for attention with ads and other signage—than from being handed or shown a document, particularly a document consumers are required to sign. Moreover, since a sign would not require a prescriber to interact with each patient, it would serve as less of a reminder to prescribers and their staff to provide patients with their prescriptions. And, although it would be relatively straightforward for the Commission to verify and enforce the signage requirement, such a requirement would do little to assist the Commission in verifying or enforcing compliance with the automatic prescription release provision itself. Furthermore, Commission staff would have to physically visit prescribers' offices located throughout the country to verify the signage, resulting in the expenditure of more Commission resources to monitor compliance.
After consideration of the comments and proposals, the Commission proposes to add a signed acknowledgment requirement. The Commission believes such a provision will help inform patients of their right to their prescriptions, increase the number of patients who receive their prescriptions and, consequently, increase the number of purchases made with initial presentations of complete and valid prescriptions, thus reducing the number of verifications by third-party sellers. The addition of a signed acknowledgment requirement accomplishes the desired objectives with little increased burden on prescribers. The Commission believes that implementation of signed acknowledgments would best serve several important objectives: Reminding prescribers to release prescriptions, informing patients of their rights, reducing misunderstandings, and improving the Commission's verification and enforcement ability.
The requirement that the prescriber request the patient acknowledge receipt of the contact lens prescription is triggered once the prescriber has presented the prescription to the patient. The patient shall receive the prescription prior to being asked to sign the acknowledgment form, and signing the acknowledgment form is not a condition to obtain the prescription. If the patient refuses to sign or cannot sign the acknowledgment form, the prescriber must note the refusal or
The acknowledgment form may be either paper or in electronic format. The acknowledgment form, whether paper or electronic, must be entitled “Patient Receipt of Contact Lens Prescription,” and must state, “My eye care professional provided me with a copy of my contact lens prescription at the completion of my contact lens fitting. I understand that I am free to purchase contact lenses from the seller of my choice.” The acknowledgment form shall be in a format that allows either conventional or electronic signatures. Prescribers may maintain copies of the acknowledgment forms in paper or electronically.
The Commission, therefore, proposes to amend Section 315.3 to add the requirement that upon completion of a contact lens fitting, and after providing a copy of the contact lens prescription to the patient, the prescriber shall request that the contact lens patient acknowledge receipt of the contact lens prescription by signing an acknowledgment form entitled, “Patient Receipt of Contact Lens Prescription.” This form must state, “My eye care professional provided me with a copy of my contact lens prescription at the completion of my contact lens fitting. I understand I am free to purchase contact lenses from the seller of my choice.” In addition, the form must also include the name of the patient, the patient signature, and the date the form was signed. In the event that the patient declines to sign the acknowledgment form, the prescriber shall note the patient's refusal on the form and sign it. No other statements or information, other than the address or letterhead of the prescriber, shall be placed on the acknowledgment form.
The Commission also proposes to amend Section 315.3 to add the requirement that prescribers maintain the signed acknowledgments for a period of not less than three years, so that the signed acknowledgments are available for inspection by the Federal Trade Commission. The full text of the proposed Rule amendment is located in Section X of this notice.
The increasing number of prescribers who offer patient “portals” accessible via the Internet has made it possible for prescribers to post, and patients to obtain, prescriptions online, while maintaining the security and privacy of patients' health information.
Accordingly, the Commission believes that the use of patient portals to provide patients with access to electronic copies of their prescriptions can benefit prescribers, sellers, and patients. The Commission encourages prescribers, in addition to providing patients with a copy of their prescriptions, to make prescriptions available via patient portals in accordance with federal and state law, including HHS guidance. Uploading prescriptions to patient portals will make it easier for patients to access their prescriptions and, consequently, to transmit them to sellers when purchasing lenses. This, in turn, may substantially increase the accuracy of seller-filled orders and reduce the verification burden on prescribers.
At this time, the Commission does not have enough information to determine whether solely posting a contact lens prescription to a patient portal is sufficient to satisfy the Rule's obligation for prescribers to provide copies of contact lens prescriptions to patients. However, the Commission seeks comment on the use and adoption of patient portals, as well as the potential ability for such technology to allow prescribers to comply with the automatic prescription release requirement of the Rule.
Some commenters requested that the Commission amend the Rule to expressly obligate prescribers to provide duplicate prescription copies to patients upon request.
During the initial rulemaking, the Commission stated that the Act neither requires prescribers to release, nor prohibits them from releasing, additional copies of the prescription.
Upon consideration of the comments, the rulemaking record, and a re-examination of the language of the Act itself, the Commission now clarifies that the Act and the Rule require that prescribers provide patients with additional copies of their prescriptions upon request. Accordingly, the Commission believes there is no need to amend the Rule, but seeks comment on this clarification.
This determination is supported by a number of considerations. First, as noted above, during the initial rulemaking, the Commission stated that the Act neither requires nor prohibits additional copies of the prescription. However, this statement was made in response to two commenters who recommended that the prescription release obligation be
Second, the Act and the Rule require that prescribers provide or verify the patient's prescription when so “directed by any person designated to act on behalf of the patient.”
Furthermore, as discussed earlier, because the Commission believes that many prescribers are not providing patients with their prescriptions upon completion of their contact lens fitting,
Section 315.3(a)(2) of the Rule requires that prescribers shall, as directed by any person designated to act on behalf of the patient, provide or verify the contact lens prescription by electronic or other means.
In addition to the obligation to release the prescription to the patient at the completion of a contact lens fitting, the Rule also requires prescribers to provide the contact lens prescription to third parties acting on behalf of the patient.
Because this practice historically has been a source of confusion for some eye care practitioners, the staff clarified, in a 2006 letter to the American Optometric Association, that the Rule obligates a prescriber to provide the consumer's complete prescription to a third-party seller if the consumer has authorized that seller as an agent.
This option may be gaining popularity with at least one seller. As explained by 1-800 CONTACTS, “[d]ue in large part to poor prescriber compliance with prescription release requirements, many customers cannot provide a third-party seller with [a] copy of their contact lens prescription at the time they place their order.”
In its comment, however, the American Optometric Association argued that “[r]equests by sellers directly to physicians for copies of patient prescriptions should be disfavored.”
Few other prescribers addressed this issue directly in their comments to this Rule review.
The Commission declines to adopt the American Optometric Association's suggestion that requests for copies of a prescription by a duly authorized seller be discouraged. The plain language of the Act and the Rule provide for this method of acquiring a prescription and the Association provided no evidence demonstrating that providing a copy of a prescription to a seller, rather than verifying a prescription, was significantly more burdensome to prescribers. As to the contention that the verification system contains safeguards that requests for prescriptions do not, the Commission points out that a prescription provided by a prescriber directly to the seller would necessarily include all relevant information and would avoid some of the issues raised by commenters about the flaws of the verification system. In addition, the copy of the prescription provided by the prescriber to the seller would contain an expiration date, which also serves as a safeguard against the improper dispensing of contact lenses.
Despite clarifications that prescribers must provide copies of prescriptions to sellers when authorized by the patient, 1-800 CONTACTS complained in its comment that in its experience, about half of prescribers “routinely ignore [their] requests” for a copy of a patient's prescription.
In support of its proposal, 1-800 CONTACTS stated that, “[e]vidence shows that in about half the cases, prescribers ignore and never respond to 1-800's authorized requests for a copy of a customer's prescription.”
The Act and the Rule currently require the prescriber to provide a copy of a prescription to an authorized third party, but is silent on the timing of the response. The proposed modification would require prescribers to provide a prescription within eight business hours, the same amount of time that prescribers are afforded to respond to a verification request. The Commission notes, however, that there is a qualitative difference between responding to a verification request as opposed to providing a copy of a prescription. First, if the verification request is correct, the prescriber need take no action.
At this time, the Commission has determined that the existing rulemaking record is not sufficient to support a Rule modification requiring a prescriber to respond to a request for a copy of a prescription within eight business hours. Accordingly, the Commission requests additional information from commenters on the costs and benefits of imposing a timeframe for prescribers to respond to requests from authorized third parties for a copy of a patient's prescription. The Commission also seeks comment on the appropriate amount of time for a prescriber to respond to prescription requests.
Section 315.5 of the Rule provides the framework under which sellers may dispense contact lenses to consumers and requires sellers, before selling contact lenses, to either obtain a copy of the patient's prescription or verify the prescription. Section 315.5 also sets forth the procedures for obtaining such verification as well as seller recordkeeping obligations.
Section 315.5(a) of the Rule provides that a seller may sell contact lenses only in accordance with a contact lens prescription for the patient that is presented to the seller by the patient or prescriber directly or by facsimile; or verified by direct communication. This provision was taken verbatim from the Act.
In the initial rulemaking, the Commission determined that the “directly or by facsimile” language of section 4(a)(1) of the Act allowed the
Since implementation of the Rule in 2004, technological advances—including many spurred by federal and state health information technology initiatives
Because of these potential benefits, the Commission has made an initial determination that the provision “directly or by facsimile” includes the use of online patient portals by patients and prescribers to present contact lens prescriptions to sellers. In doing so, the Commission notes that the use of a patient portal necessarily involves “an exact copy of the prescription within the scope of acceptable direct presentation mechanisms.”
Some individual commenters recommended that the Commission revise the Rule to remove verification by direct communication, and argued that the sale of contact lenses should be conditioned upon presentation of a written prescription by the consumer to the seller. These commenters noted that consumers are already being provided with a written prescription as required by the Rule, and that requiring prescribers to verify prescriptions with the seller as well was redundant, time-consuming and burdensome.
The language of Section 315.5(a)(2) was taken verbatim from the Act.
The Commission received numerous comments objecting to contact lens sellers' use of automated telephone calls as a method to communicate verification requests.
Commenters described problems arising from the use of automated telephone calls,
Other commenters mentioned that sellers provide the patient name several sentences into, or at the very end of, the verification request, making it difficult for prescribers' offices to respond efficiently and to verify the prescription in real time.
Due to the aforementioned problems with automated telephonic verification requests, the Coalition for Patient Vision Care Safety asserted that prescribers are often unable to provide the proper verification of the patient's prescription information within eight business hours, triggering the passive verification. As a result, patients may receive contact lenses based on outdated or incorrect prescription information.
On the other hand, 1-800 CONTACTS requested the Commission retain the use of automated phone systems as an acceptable form of direct communication for verification purposes. It argued that changing the status quo would be “unjustified, contrary to congressional intent and not in the interest of consumers.”
According to 1-800 CONTACTS, each week it places approximately 100,000 calls to prescribers to verify prescriptions. The complete phone script for an automated verification call from 1-800 CONTACTS is 2 minutes, 29 seconds (149 seconds) in length, and prescribers familiar with the system have the option to skip the first 48 seconds of the message to reduce the total time of the message to 1 minute, 41 seconds (101 seconds). 1-800 CONTACTS indicated that the average prescriber receives only one verification request per week from the company,
Regardless of when it places the verification call to the prescriber, however, 1-800-CONTACTS stated that it never ships an order under the passive verification system before passage of eight business hours. The company added that in almost 30% of verification requests, prescribers hang up on verification calls.
The Commission did not receive other comments from contact lens sellers about their use of automated verification systems to verify prescriptions.
The Act expressly authorizes sellers to send prescription verification requests by direct communication
For example, any automated verification request must provide complete verification request information as required under section 315.5(b),
The comments submitted in this Rule review by optometrists, students of optometry, and their trade associations provide the Commission with some evidence that some prescribers are receiving incomplete or otherwise inadequate verification requests. In addition, the Coalition for Patient Vision Care Safety asserted there is substantial evidence that verification requests are deficient and the American Optometric Association claimed that problems with 1-800 CONTACTS' automated verification systems are often reported by its members.
Incomplete or incoherent verification requests are not valid verification requests.
The Commission is sensitive to the business concerns of the prescribers who complain about the burden and inconvenience they experience from the sellers' use of automated telephone systems. However, the Commission has not seen convincing evidence that the volume of automated verification calls they receive each day presents a burden that is not outweighed by the competitive benefits of the Rule, or that these practices frequently result in illegal sales of contact lenses. If the Commission receives evidence of a compelling widespread problem, it may revisit its position on the use of automated verification requests.
Nevertheless, the Commission encourages sellers, to the extent possible, to consider whether they could alleviate some of the commenters' concerns by modifying their automated telephonic verification procedures or, alternatively, by increasing the use of other permissible communication methods. The Commission also seeks additional information on possible modifications to the Rule that, short of prohibiting automated verifications calls, could address the issues raised by commenters relating to these calls.
The Commission declines to restrict when sellers may place automated phone verification calls. As long as sellers are placing valid and complete verification requests, and are not shipping orders prior to active verification, or the passage of eight business hours, automated telephone verification requests placed outside of a prescriber's business hours comply with the Rule. Moreover, a review of the comments reveals that some prescribers object to calls during office hours, while others object to calls during evening and weekend hours. The Commission therefore does not propose, at this time, to limit the time period when sellers may place automated calls.
Section 315.5(b) delineates the information required for a prescription verification request: (1) Patient's full name and address; (2) the contact lens power, manufacturer, base curve or appropriate designation, and diameter when appropriate; (3) the quantity of lenses ordered; (4) the date of patient request; (5) the date and time of verification request; (6) the name of a contact person at the seller's company, including facsimile and telephone numbers; and (7) if the seller opts to include the prescriber's regular business hours on Saturday as “business hours” for purposes of computing the eight business hour calculation, a clear statement of the prescriber's regular Saturday business hours.
A few individual prescribers stated that they were unable to contact vendors in order to get additional information when the verification request was incomplete.
The Commission declines to propose this Rule modification. The Rule requires that the seller provide the name of a contact person at the seller's company, including facsimile and telephone numbers.
Furthermore, the Commission does not believe it is necessary to require large contact lens retailers to have more than one individual available for prescriber questions and concerns, as long as a contact person is “reasonably accessible to the prescriber.”
Moreover, as discussed earlier,
The American Optometric Association also urged the Commission to amend the Rule to require sellers to respond to prescriber questions within an eight-business-hour window, or cancel the sale without verification. The Association's comment did not explain the types of concerns that prescribers need to discuss with live agents at contact lens retailers. This proposal would require that once a prescriber contacted a seller with concerns, the seller could not assume the prescription was verified. Instead, the seller would be required to personally contact the prescriber and discuss the concerns within eight business hours, or cancel the sale.
The Commission declines to propose this modification as well. As discussed above, neither the Act nor the Rule requires contemporaneous, live communication between prescribers and sellers. Furthermore, the Commission believes that such a requirement would undercut the Act's passive verification framework. Such a mechanism could conceivably allow any prescriber to lodge a concern or question and thereby halt the passive verification mechanism. As discussed above, if the prescription verification request is incomplete or inaccurate, or if the prescription is expired or otherwise invalid, the prescriber may alert the seller. The seller cannot fill a prescription if the prescriber has indicated that the prescription is expired or otherwise invalid.
A few commenters suggested that the prescriber should have the ability to choose the method of communication sellers use to communicate verification requests with their offices.
Section 315.5(c) sets forth the three circumstances under which a seller can consider a prescription “verified by direct communication” and proceed to sell contact lenses to its customer: (1) The prescriber confirms the prescription is accurate by direct communication with the seller; (2) the prescriber informs the seller through direct communication that the prescription is inaccurate and provides the accurate prescription; and (3) the prescriber fails to communicate with the seller within eight business hours after receiving a proper verification request from the seller.
A number of commenters expressed the view that because contact lenses are restricted medical devices, they should not be dispensed unless the prescriber actively verifies the prescription.
Other commenters expressed the concern that the passive verification framework can be manipulated and, therefore, does not adequately ensure that patients receive contact lenses in accordance with proper medical
Some prescribers reported instances where some patients were never seen by a prescriber, and apparently the consumer just pulled the prescriber information from a Web site in an attempt to get a prescription verified via passive verification.
In light of these concerns, some commenters concluded that the passive verification system is not working as intended to protect patient eye health and instead, recommended that all contact lens prescriptions be actively verified.
The Commission declines to propose these Rule modifications. Issues identical to these were raised during the initial rulemaking process in 2004, when commenters either opposed or expressed significant concern about the passive verification system imposed by the Act and the Rule.
The Commission responded to concerns about passive verification by finding that “[b]ecause Congress has decided to impose a passive verification system through the Act, whether to adopt a passive verification system is not at issue in this rulemaking proceeding.”
With respect to concerns that patients are manipulating the passive verification system by deliberately providing inaccurate prescriber information, the Commission notes that if prescribers receive verification requests for individuals who are not their patients, prescribers have the ability and incentive to respond that such requests are “invalid” under section 315.5(d) of the Rule,
With regard to concerns that patients are deliberately providing fictional prescriber information and fictional contact information, commenters produced only anecdotal evidence of such actions, and did not provide empirical data regarding the frequency of these activities. Although it is possible that such activities could allow some patients to obtain contact lenses without a valid prescription, the Commission notes that in doing so, such individuals are intentionally circumventing the Rule. As discussed above, the passive verification framework has been mandated by Congress in an effort to balance the interests of consumer health and prescription portability. At the time the Act was under consideration, Congress was aware—after being informed by the Commission and the American Optometric Association, among others—that passive verification was not a foolproof method for preventing the verification of invalid prescriptions.
Some commenters stated that the current eight-business-hour window is a reasonable length of time for prescribers to respond to verification requests.
Other commenters, however, argued that the eight-business-hour time frame for passive verification does not allow enough time for doctors to notify sellers that a prescription is expired, inaccurate, or nonexistent. The American Academy of Ophthalmology, for example, stated that the eight-business-hour requirement “is far too short and ultimately imposes significant burdens on providers and in many instances eliminates a necessary patient safety check.”
Many commenters did not propose a specific extension of time to respond to a verification request,
Having considered these comments, the Commission declines to propose a Rule modification lengthening the eight-business-hour timeframe during which a prescriber must respond to a verification request. Despite comments that the timeframe is too short, the Commission believes that the current eight-business-hour time frame is adequate for the vast majority of prescribers. Commenters put forth no empirical evidence that prescriptions are being improperly verified via passive verification due to prescribers not having enough time to respond, and cited no compelling changes in the marketplace that would justify extending the time frame beyond eight business hours. If anything, because of advances in technology, electronic communications, and record-keeping, eight business hours is as appropriate, if not more so, than when implemented in 2004. As the Commission explained in the initial rulemaking, “Congress recognized that consumers may be harmed if they face undue delays in receiving their contact lenses from a seller” and balanced that consideration against the possible harm consumers may experience if sellers provide contact lenses based on invalid prescriptions.
In addition to concerns about the time prescribers have to respond, some commenters expressed concern about when verification calls are placed and received. Some optometrists expressed concern that some sellers are exploiting the Rule by placing verification requests after hours in order to circumvent the eight-business-hour window.
At this time, the Commission does not propose to amend the Rule to prohibit sellers from sending prescription verification requests after business hours and on weekends or to otherwise extend the eight-business-hour window to account for weekends and holidays. It appears that the majority of commenters suggesting this prohibition are concerned that they do not have the opportunity to verify a prescription because they believe the eight-business-hour window for verification of a contact lens order is triggered upon receipt of a verification request, no matter when that request is received. That concern is misplaced. Section 315.2 of the Rule provides that “[f]or verification requests received by a prescriber during nonbusiness hours, the calculation of `eight (8) business hours' shall begin at 9 a.m. on the next weekday that is not a Federal holiday or, if applicable, on Saturday at the beginning of the prescriber's actual business hours.”
Other commenters expressed frustration that verification requests were sent after regular business hours with the statement that the prescription would be filled unless the prescriber contacted the seller within 12 to 24 hours.
A few commenters expressed concern that some prescriptions were being automatically filled without a prescriber's oversight because the calculation of an eight-business-hour window does not take into consideration the fact that their offices may not be open or able to verify prescriptions during the Rule's established timeframe for business hours.
Similar concerns were raised by commenters in the initial rulemaking in 2004. At that time, the Commission declined to adopt an actual hours or other prescriber-specific approach to business hours, noting that “[i]t likely would be difficult and burdensome—perhaps impossible—for some sellers to determine and keep track of the actual hours of 50,000 prescribers. By contrast, a general rule using a uniform definition of business hours for all prescribers provides clarity and relative ease of compliance and enforcement.”
As set forth by Section 315.6(a) of the Rule, a contact lens prescription expires on the date specified by the law of the State in which the prescription was written, if that date is one year or more after the issue date of the prescription.
The Commission received several comments about the length of contact lens prescriptions. Some commenters expressed the view that the prescription length should be longer. For example, Consumers Union requested that the Commission “consider whether a longer minimum period is warranted in the best interests of the consumer.”
The Professional Opticians of Florida recommended that the Commission modify the Rule to prohibit the use of expiration dates on prescriptions for adult patients with low risk factors,
However, many commenters, primarily prescribers, urged the Commission not to “deregulate” prescription length
The Commission declines to propose any changes—either removing or lengthening—the Rule's prescription length provisions. As indicated above, the Rule's language closely tracks that of the Act, which set a minimum expiration date “to prevent prescribers from selecting a short expiration date for a prescription that unduly limits the ability of consumers to purchase contact lenses from other sellers, unless medical reasons justify setting such an expiration date.”
A number of prescribers reported that some of their patients are obtaining contact lenses through online vendors even though their contact lens prescriptions have expired.
After reviewing the comments, the Commission has determined that no amendment is necessary because the current regulatory framework sufficiently prohibits the use of expired prescriptions. As a threshold matter, Section 4(e) of the Act and Section 315.5(d) of the Rule clearly identify three categories of invalid prescriptions (inaccurate, expired, and otherwise invalid).
Other commenters, recognizing that selling contact lenses on an expired prescription is not allowed by the Rule, instead urged the Commission to increase enforcement.
Other commenters explained that because of flaws in the passive verification system sellers “can request verification of an otherwise expired prescription and can ship the lenses if the prescriber does not recognize within eight business hours that the expiration date has passed and inform the seller.”
In its comment, the American Optometric Association noted that “an expiration date and issue date are required elements of a prescription” and the FTC “should require the expiration date or issue date to be provided in prescription verification.”
The Commission declines to propose that the Rule be modified in this way. Similar proposals were suggested and rejected during the initial rulemaking.
For the same reasons, the Commission declines to propose to amend the Rule to reflect the American Optometric Association's proposal “to ban sellers from marketing to specific customers to reorder their lenses after the prescription has expired (more than one year after the issue date or when the customer originally ordered lenses from the seller) unless the seller has specific knowledge the customer's prescription is valid for more than one year.”
Many commenters expressed the concern that because of inadequacies in the Rule or lack of enforcement, consumers are able to obtain more than a year's supply of contact lenses.
As explained by other commenters, if patients can obtain lenses in excess of a year's supply, expiration dates on prescriptions become meaningless
To address these concerns, a number of commenters—optometric and ophthalmologic associations, individual prescribers, and contact lens manufacturers—proposed that the Commission amend the Rule to require contact lens prescriptions to include a maximum quantity of lenses that consumers can purchase prior to the prescription's expiration.
In addition to including the maximum quantity on the prescription itself, several state optometric associations also recommended that the Commission “limit the number of contact lens boxes that can be purchased from a retailer at one time.”
A number of commenters argued that contact lens prescriptions should be
However, other commenters disagreed with the proposal to include quantity limits on contact lens prescriptions. 1-800 CONTACTS argued that imposing quantity limits would “inconvenience consumers and lead to unhealthy practices, such as wearing lenses longer than recommended.”
Another contact lens retailer claimed that prescribers were circumventing the minimum one-year expiration period by “limit[ing] the quantity of replacement lenses, despite the lack of any medical reason for ever doing so” and that “a consumer's need for additional lenses could arise for a number of reasons.”
After reviewing the comments, the Commission has determined not to propose to amend the Rule to adopt any of the contact lens quantity proposals put forth by commenters. First, the Commission does not believe that there is sufficient evidence in the rulemaking record to support amending the Rule to impose the quantity limit proposals suggested by commenters. Although some commenters conducted and submitted data from online surveys for the proposition that consumers are purchasing contact lenses as their prescriptions are about to expire, this data does not show the quantity of lenses that consumers are actually purchasing. For example, even if one were to assume that the APCO online survey results were completely reliable, the survey only asked consumers whether they purchased lenses at certain points in time; it did not assess the quantity of lenses that consumers actually purchased. The fact that a consumer purchased some contact lenses just prior to a prescription expiring does not necessarily mean that the consumer has purchased an excessive amount of contact lenses, nor does it support the contention that consumers are no longer getting eye examinations. Instead, consumers could be purchasing small amounts of lenses to last until their next scheduled eye examination. When the Commission examined the contact lens industry in 2005, it found that consumers do not typically purchase a full year's supply at one time.
Nevertheless, the Commission is concerned about anecdotal reports that sellers are contacting patients and encouraging them to stockpile contact lenses prior to the expiration of their prescriptions in order to avoid visiting their eye care professionals. The Commission cautions sellers that such practices run counter to the spirit of the Act, and the Commission will look closely at these alleged practices.
The Commission also declines to propose that the Rule be amended to provide that a “contact lens prescription shall be valid for an unlimited quantity of lenses regardless of any prescriber-imposed limitation to the contrary.”
The Commission also notes that, as recognized during the initial rulemaking, some State laws or regulations may require prescribers to include quantity information on the prescription and some prescribers in other States without such requirements
Finally, the Commission also believes that the Rule, as currently drafted, is sufficient to address the quantity limit concerns posited by commenters. During the initial rulemaking, the Commission examined the issue of requiring quantity limits on prescriptions.
Other commenters encouraged the Commission to increase enforcement efforts to prevent consumers from obtaining more contact lenses than anticipated by the length of the prescription.
A few sellers commented on the Rule provision regarding private label lenses.
LD Vision Group, an online contact lens retailer, asserted that manufacturers and prescribers design anticompetitive strategies involving private label lenses to “thwart consumer freedom.”
In order to remedy the aforementioned issues, LD Vision Group proposed that the Commission amend the Rule to require prescribers to annotate a private label lens prescription with the brand-name equivalent and, if a name-brand equivalent is unavailable, the private label prescription must be medically necessary for that particular patient. It also recommended requiring manufacturers of contact lenses to disclose brand equivalency information on private label and brand-label packaging, or otherwise make it available to sellers.
The Commission declines to propose to modify the Rule to implement these recommendations. Although the Act expressly requires that, in the case of private label contact lens prescriptions, prescribers include “trade name of equivalent brand name,” the Act does
Section 315.5(e) of the Rule prohibits sellers from altering a contact lens prescription.
The Commission received a number of comments, primarily from prescribers, that complained that online contact lens sellers are selling patients lenses different from those they prescribed.
Several prescribers and a manufacturer also explained that prescribers work with patients to fit them with the most compatible, safe, and effective contact lens and that each patient's eyes react differently to individual brands.
As to the source of the alteration problem, commenters pointed to both online sellers as well as patients. Commenters, almost exclusively prescribers, asserted that sellers want to maximize their profits and may have little to no consideration for their customers' eye health,
It is unclear how frequently illegal substitutions are occurring, or how many sellers are engaged in this activity. In its comment, Johnson & Johnson Vision Care, Inc. cited to a 2015 online survey conducted on its behalf that found that “one-in-four online consumers report having received a different brand of contact lenses than they had ordered without being given advanced warning they were getting another brand.”
The Commission notes that unauthorized alterations violate the Rule as currently written, and thus there is no need to amend the Rule to address this issue.
Several commenters requested that the Commission better enforce the Rule against sellers that engage in illegal substitutions.
Lastly, one commenter, an optometrist, recommended that a retailer should be required to warn or educate patients about the potential consequences of changing brands or other parameters without a doctor's authorization through a “statement of education” with every order, warning patients that “contact lenses are a medical device and the wearing of or changing of a brand or prescription without a doctor's authorization is illegal and could result in damage, even blindness to the recipient.”
Through discussions with industry members, it has come to the Commission's attention that in addition to prescribers, some other sellers market and sell private label contact lenses that are identical to, and are made by the same manufacturer as, brand name contact lenses. As a result, when a patient presents a contact lens prescription for brand name contact lenses to certain sellers, those sellers may wish to sell, as a substitute, their own private label lenses to the patient. The language of the Act clearly permits substitution in cases where the same contact lenses are manufactured by the same company and sold under multiple labels to individual providers.
The Commission recognizes that the current construction of Section 315.5(e) of the Rule does not conform to the language or intent of the Act. The clear language of the Act allows sellers to substitute private label lenses for brand name lenses when the substituted lenses are “manufactured by the same company and sold under multiple labels to individual providers.”
The Commission received a few comments that identified concerns with how the Rule's verification framework interacts with the Health Insurance Portability and Accountability Act of 1996
Other commenters stated that some prescribers were not complying with the Contact Lens Rule and were using HIPAA to avoid doing so. One seller complained that “[s]ome prescribers will still refuse to verify even with the law in place, stating (incorrectly) that HIPAA or a state privacy rule prohibits
The Commission reiterates that the HIPAA Privacy Rule does not restrict prescribers' ability to provide or verify contact lens prescriptions under the Rule.
In addition to the comments submitted in this rule review, the Commission has received other questions and complaints related to prescribers' HIPAA obligations under the Rule. For example, one prescriber asked whether HIPAA precluded his office from emailing a copy of a prescription to a patient without written authorization if the email communication was not encrypted. Correspondingly, some consumers have complained that their eye care practitioners have refused to email contact lens prescriptions to them.
As a threshold matter, the Contact Lens Rule itself contemplates email communication, stating that the prescriber shall “provide or verify” the prescription “by electronic or other means.”
Regardless, where an individual requests that the covered entity transmit PHI by unencrypted email, as is their right under the HIPAA Privacy Rule right of access, a covered entity must do so.
In addition to proposing amendments to specific Rule provisions to further the Rule's goals of competition and patient welfare, several commenters also urged the Commission to increase its enforcement efforts and stressed the importance of enforcing the Rule to ensure that its benefits are realized and
On the other hand, online retailers such as 1-800 CONTACTS and Warby Parker recommended increased enforcement efforts against non-compliant prescribers, particularly with respect to the automatic release of prescriptions.
With respect to commenters' recommendations that the Commission increase its enforcement efforts, the Commission notes that the rule review process has been instrumental in identifying areas that need further investigation. Accordingly, the Commission will consider ways to leverage its enforcement, consumer education,
The Commission received a variety of comments suggesting proposals to improve perceived shortcomings in the agency's complaint reporting system to aid Rule enforcement efforts. Several optometric associations, for example, expressed their opinion that the Commission's consumer reporting process is not adequately designed to deal with contact lens complaints, and recommended that the Commission “develop a distinct complaint submission process for contact lens-related concerns.”
Other commenters expressed doubts that the complaint reporting system was adequate to capture specific types of complaints. For example, two State representatives, Rhode Island State Rep. Brian Patrick Kennedy and Arizona State Rep. Heather Carter, asserted that the current system favors eye care providers and their ability to file complaints against resellers of contact lenses.
After careful consideration of these comments, the Commission declines to redesign its complaint reporting mechanism. The Commission has designed the FTC Complaint Assistant, the agency's online complaint reporting system, to be responsive to consumers who wish to file complaints about more than a hundred different types of products or services, while at the same time facilitating the filing of complaints regarding the most common complaint areas. Accordingly, the home page of the complaint system contains primary links for the FTC's seven most common complaint areas. The Commission's goal is that the primary links on the home page be responsive to at least 80 percent of the consumer complaints the agency receives. Although highlighting the most frequent types of complaints necessarily means that many areas of concern cannot be listed as separate categories, users can easily submit their complaint under the category “Other” when there is no listed category for the complaint, as is the case with contact lenses. Once the “Other” category is selected, the subsequent Web page includes the “Health and Fitness” subcategory, which is described as including, “prescriptions, eye care.” After screening out complaints related to telemarketing phone calls and spam email, the first option on the following Web page asks whether the complaint relates to “Eyeglasses or Contact Lenses.” During this process, the person lodging the complaint is given ample room to describe the details of the complaint.
Instructions on the FTC Complaint Assistant page explain that the FTC will categorize a complaint even if it does not fit one of the listed categories. In addition, the Web page also informs users that if they are “having trouble categorizing [their] complaint,” they can chat online with FTC tech support. Accordingly, the Commission believes that the FTC Complaint Assistant is configured to capture and report all contact lens-related complaints, whether they originate from consumers, prescribers, sellers, or others. However, resources permitting, the Commission will explore whether a dedicated email address would also be beneficial to complement the Complaint Assistant.
You can file a comment online or on paper. For the Commission to consider your comment, we must receive it on or before January 30, 2017. Write “Contact Lens Rule, 16 CFR part 315, Project No. R511995” on the comment. Your comment, including your name and your state, will be placed on the public record of this proceeding, including, to the extent practicable, on the public Commission Web site, at
If you want the Commission to give your comment confidential treatment, you must file it in paper form, with a request for confidential treatment, and you must follow the procedure explained in FTC Rule 4.9(c), 16 CFR 4.9(c). In particular, the written request for confidential treatment that accompanies the comment must include the factual and legal basis for the request, and must identify the specific portions of the comments to be withheld from the public record. Your comment will be kept confidential only if the FTC General Counsel grants your request in accordance with the law and the public interest.
Postal mail addressed to the Commission is subject to delay due to heightened security screening. As a result, we encourage you to submit your comment online. To make sure that the Commission considers your online comment, you must file it at
If you file your comment on paper, write “Contact Lens Rule, 16 CFR Part 315, Project No. R511995” on your comment and on the envelope, and mail your comment to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW., Suite CC-5610 (Annex C), Washington, DC 20580, or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Constitution Center, 400 7th Street SW., 5th Floor, Suite 5610 (Annex C), Washington, DC 20024.
Visit the Commission Web site at
The Commission invites members of the public to comment on any issues or concerns they believe are relevant or appropriate to the Commission's consideration of proposed amendments to the Rule. The Commission requests you provide factual data, and in particular, empirical data, upon which your comments are based. In addition to the issues raised above, the Commission solicits public comment on the costs and benefits to industry members and consumers of each of the proposals as well as the specific questions identified below. These questions are designed to assist the public and should not be construed as a limitation on the issues on which public comment may be submitted.
A. General Questions on Proposed Amendments: To maximize the benefits
1. What benefits would a proposed change confer and on whom? The Commission in particular seeks information on any benefits a change would confer on consumers of contact lenses.
2. What costs or burdens would a proposed change impose and on whom? The Commission in particular seeks information on any burdens a change would impose on small businesses.
3. What regulatory alternatives to the proposed changes are available that would reduce the burdens of the proposed changes while providing the same benefits?
4. What additional information, tools, or guidance might the Commission provide to assist industry in meeting extant or proposed requirements efficiently?
5. What evidence supports your answers?
B. Acknowledgment of prescription release:
1. Would the proposed amendment to require prescribers, after the completion of a contact lens fitting, to request the contact lens patient acknowledge receipt of the contact lens prescription by signing an acknowledgment form increase, decrease, or have no effect on compliance with the Rule's requirement that patients receive a copy of their contact lens prescription after the completion of the contact lens fitting? Why?
2. Would the proposed amendment to require prescribers to maintain copies of the signed acknowledgments for a period of not less than three years increase, decrease, or have no effect on the Commission's ability to measure and enforce the Rule's automatic prescription release provision? Why?
3. Would the proposed amendment to require the acknowledgment form to inform patients that they may purchase contact lenses from the seller of their choice increase, decrease, or have no effect on the extent to which patients understand their rights under the Rule? Why?
4. Should the Commission consider other language to be included in the signed acknowledgment form? If so, what?
5. Would allowing the acknowledgment form to be in either paper or electronic format increase, decrease, or have no effect on the extent to which patients understand their rights under the Rule? What other factors should the Commission consider to lower the cost and improve the reliability of executing, storing, and retrieving the signed acknowledgment forms?
6. Should the proposed amendment contain specific language about the use of electronic acknowledgment forms and electronic signatures? If so, what? Should the proposed amendment contain particular requirements about the type of electronic acknowledgment forms and electronic signatures to be used? If so, what types should be required?
7. Are there alternate ways to structure a patient acknowledgment requirement that would reduce the burdens of the proposed amendment while providing the same, or greater, benefits?
8. What evidence supports your answers?
C. Additional mechanisms for improving prescription portability:
1. The Commission believes that the use of patient portals to provide patients with access to electronic copies of their prescriptions would benefit prescribers, sellers, and patients. The Commission seeks comment on the benefits or burdens that the use of patient portals would confer.
2. The Commission seeks comment on the level of adoption of patient portals. Do prescribers use patient portals? Do patients use them? What are the rates of patient adoption when prescribers make them available?
3. What characteristics should patient portals have in order to best promote prescription portability?
4. Do patient portals have the potential to allow prescribers to comply with the automatic prescription release requirements of the Rule? If so, how? Do patient portals have limitations that would prevent them from being used by prescribers to comply with the automatic prescription release requirements of the Rule? If so, what are they?
5. If the Commission were to determine that patient portals could be used to comply with the automatic prescription release requirements of the Rule, how would this determination affect the requirement that prescribers obtain a signed acknowledgment form from patients? Do patient portals have characteristics that could serve as a substitute for the signed acknowledgment form?
6. What other technologies are available that could be implemented to improve prescription portability and thereby increase benefits and decrease burdens related to prescription release?
7. What evidence supports your answers?
D. Additional copies of prescriptions:
1. In this NPRM, the Commission has preliminarily determined that requiring prescribers to provide additional copies of contact lens prescriptions to a patient upon request is required by the Act. How does this determination affect, if at all, the portability of contact lens prescriptions?
2. Does this determination affect the accuracy of contact lens prescriptions presented to sellers? If so, how?
3. Does this determination affect the administrative burden of prescribers? If so, how? Would any burden caused by this determination be offset by a reduced burden related to prescription verification requests? If so, how?
4. What evidence supports your answers?
E. Sellers designated to act on behalf of patients:
1. Should the Commission impose a timeframe for prescribers, under Section 315.3(a)(2) of the Rule, to respond to requests from authorized third parties for a copy of a patient's prescription?
2. If so, what would be the appropriate amount of time for a prescriber to be required to respond to a request from an authorized third party for a copy of a patient's prescription?
3. What evidence supports your answers?
F. Presentation of prescription “directly or by facsimile” under Section 315.5(a)(1):
1. The Commission has initially determined that presenting a prescription to a seller “directly or by facsimile” includes the use of online patient portals. Does this determination further the Act's goal of prescription portability? If so, how?
2. What is the impact, including costs and benefits, of this determination?
3. What evidence supports your answers?
G. Automated telephone systems as “direct communication” under Section 315.5(a)(2):
1. What modifications to automated telephone calls, short of prohibiting the use of such calls, should the Commission consider to address the concerns raised by prescribers about the burden of such calls?
H. Section 315.5(e)—No alteration of prescription provision:
1. To conform the language of the Rule to the language of the Act, the Commission proposes to amend Section 315.5(e) to strike the words “private label.” Would this proposed amendment alter the way that prescribers, sellers, or manufacturers do business, and if so, how?
2. Are there alternative proposals that the Commission should consider?
3. What evidence supports your answers?
Written communications and summaries or transcripts of oral communications respecting the merits of this proceeding, from any outside party to any Commissioner or Commissioner's advisor, will be placed on the public record. See 16 CFR 1.26(b)(5).
The existing Rule contains recordkeeping and disclosure requirements that constitute “information collection requirements” as defined by 5 CFR 1320.3(c) under Office of Management and Budget (“OMB”) regulations that implement the Paperwork Reduction Act (“PRA”), 44 U.S.C. 3501
The proposed modifications to the Rule would require that prescribers obtain from patients, and maintain for a period of not less than three years, a signed acknowledgment form, entitled “Patient Receipt of Contact Lens Prescription,” confirming that patients received their contact lens prescriptions at the completion of their contact lens fitting. The proposed recordkeeping requirement would constitute an information collection as defined by 5 CFR 1320.3(c). Accordingly, the Commission is providing PRA burden estimates for them, as set forth below. The Commission will also submit this notice of proposed rulemaking and associated Supporting Statement to OMB for review under the PRA. The proposed requirement that prescribers provide an acknowledgment form to patients, however, does not constitute an information collection under the PRA, in that the Rule specifies the language that the form must contain.
Commission staff estimates the paperwork burden of the proposed modifications based on its knowledge of the eye care industry. The staff believes there will be an additional burden on individual prescribers' offices to maintain the signed acknowledgment forms for a period of not less than three years.
The number of contact lens wearers in the United States is currently estimated to be approximately 41 million.
Maintaining the form for a period of not less than three years does not impose a substantial new burden on individual prescribers and their office staff. The majority of states already require that optometrists maintain records of eye examinations for at least three years,
As noted above, the number of contact lens wearers in the United States is currently estimated to be approximately 41 million. Therefore, assuming one signed acknowledgment form for each contact lens wearer per year, prescribers' offices, collectively, would have to spend approximately 41 million minutes, or 683,333 hours, per year maintaining records of eye examinations (recordkeeping requirement).
In all likelihood, the actual overall increased burden on prescribers may be less than 683,333 hours, because increasing the number of patients in possession of their prescriptions should correspondingly increase the number of consumers who provide their prescriptions to third-party sellers when purchasing contact lenses. This, in turn, should reduce the number of verification requests that third-party sellers would otherwise make to prescribers. Based on current estimates, responding to verification requests requires that prescribers spend approximately five minutes per request.
Commission staff derives labor costs by applying appropriate hourly cost figures to the burden hours described above. The Commission assumes that office clerks will perform most of the labor when it comes to printing, disseminating, and storing the acknowledgment forms for prescribers' offices. According to Bureau of Labor Statistics, general office clerks earn an average wage of $15.33 per hour.
While not insubstantial, this amount constitutes just under one-fourth of one percent of the estimated overall retail market for contact lens sales in the
The Commission invites comments on: (1) 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; (2) the accuracy of the FTC's burden estimates, including whether the methodology and assumptions used are valid; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of collecting information.
Comments on the information collection requirements subject to review under the PRA should also be submitted to Office of Management and Budget. If sent by U.S. mail, address comments to: Office of Information and Regulatory Affairs, Office of Management and Budget, Attention: Desk Officer for the Federal Trade Commission, New Executive Office Building, Docket Library, Room 10102, 725 17th Street NW., Washington, DC 20503. Comments sent to OMB by U.S. postal mail, however, are subject to delays due to heightened security precautions. Thus, comments instead should be sent by facsimile to (202) 395-5167.
The Regulatory Flexibility Act (“RFA”)
The Commission does not anticipate that the proposed amendments will have a significant economic impact on small entities, although they may affect a substantial number of small businesses. The proposed amendments require that prescribers obtain from patients, and maintain for a period of not less than three years, a signed acknowledgment form, entitled “Patient Receipt of Contact Lens Prescription,” confirming that patients received their contact lens prescriptions at the completion of their contact lens fitting. The Commission believes the burden of complying with this requirement likely will be relatively small. As discussed in the Paperwork Reduction Act section, the majority of states already require that optometrists maintain records of eye examinations for at least three years. The proposed amendment would require one additional page to be maintained as a record, which is likely a minimal burden. Therefore, based on available information, the Commission certifies that amending the Rule as proposed will not have a significant economic impact on a substantial number of small businesses.
Although the Commission certifies under the RFA that the proposed amendment will not, if promulgated, have a significant impact on a substantial number of small entities, the Commission has nonetheless determined it is appropriate to publish an Initial Regulatory Flexibility Analysis to inquire into the impact of the proposed amendment on small entities. Therefore, the Commission has prepared the following analysis:
In response to public comments, the Commission proposes amending the Rule to ensure that patients are receiving a copy of their contact lens prescription at the completion of a contact lens fitting.
The objective of the proposed amendment is to clarify and update the Rule in accordance with marketplace practices. The legal basis for the Rule is the Fairness to Contact Lens Consumers Act.
The proposed amendments apply to prescribers of contact lenses. The Commission believes that many prescribers will fall into the category of small entities (
As explained earlier in this document, the proposed amendments require that prescribers obtain from patients, and maintain for a period of not less than three years, a signed acknowledgment form, entitled “Patient Receipt of Contact Lens Prescription,” confirming that patients received their contact lens prescriptions at the completion of their contact lens fitting.
The small entities potentially covered by these proposed amendments will include all such entities subject to the Rule. The professional skills necessary for compliance with the Rule as modified by the proposed amendments will include office and administrative support supervisors to create the acknowledgment form and clerical personnel to collect signatures from patients and maintain records. The Commission believes the burden imposed on small businesses by these requirements is relatively small, for the reasons described previously in Section
The Commission has not identified any other federal statutes, rules, or policies duplicating, overlapping, or conflicting with the proposed amendments, but as noted previously, the majority of states already require that optometrists—of which many are most likely small businesses—maintain records of eye examinations for at least three years. The Commission invites additional comment on this issue.
The Commission has not proposed any specific small entity exemption or other significant alternatives, as the proposed amendments clarify and update the Rule in light of marketplace practices to ensure that patients are receiving a copy of their contact lens prescription at the completion of a contact lens fitting. Under these limited 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 proposed amendments. As discussed above, the proposed recordkeeping requirement likely involves minimal burden and prescribers would be permitted to maintain records in either paper or electronic format. This recordkeeping burden could be reduced to the extent that prescribers have adopted electronic medical record systems, especially those where patient signatures can be recorded electronically and input automatically into the electronic record. Furthermore, prescribers also could scan signed paper copies of the acknowledgment form and store those forms electronically to lower the costs of this recordkeeping requirement. Nonetheless, the Commission seeks comment on the need, if any, for alternative compliance methods to reduce the economic impact of the Rule on small entities. If the comments filed in response to this NPRM identify small entities affected by the proposed amendments, as well as alternative methods of compliance that would reduce the economic impact of the proposed amendments on such entities, the Commission will consider the feasibility of such alternatives and determine whether they should be incorporated into the final Rule.
Advertising, Medical devices, Ophthalmic goods and services, Trade practices.
Under 15 U.S.C 7601-7610 and as discussed in the preamble, the Federal Trade Commission proposes to amend title 16 of the Code of Federal Regulations by revising part 315 as follows:
Pub. L. 108-164, secs. 1-12; 117 Stat. 2024 (15 U.S.C. 7601-7610).
(c)
(1) Shall request that the contact lens patient acknowledge receipt of the contact lens prescription by signing an acknowledgment form entitled, “Patient Receipt of Contact Lens Prescription” that states, “My eye care professional provided me with a copy of my contact lens prescription at the completion of my contact lens fitting. I understand I am free to purchase contact lenses from the seller of my choice.”
(2) The acknowledgment form shall include, in addition to the title and statement specified in paragraph (c)(1), the name of the patient, the patient signature, and the date executed. In the event that the patient declines to sign the acknowledgment form, the prescriber shall note the patient's refusal on the form and sign it. No other statements or information, other than the address or letterhead of the prescriber, shall be placed on the acknowledgment form.
(3) The prescriber shall maintain the signed acknowledgments received under paragraph (c)(1) for a period of not less than three (3) years, and such signed acknowledgments shall be available for inspection by the Federal Trade Commission, its employees, and its representatives.
By direction of the Commission.
Internal Revenue Service (IRS), Treasury.
Notice of proposed rulemaking by cross-reference in part to temporary regulations.
This document contains proposed Income Tax Regulations under section 901(m) of the Internal Revenue Code (Code) with respect to transactions that generally are treated as asset acquisitions for U.S. income tax purposes and either are treated as stock acquisitions or are disregarded for foreign income tax purposes. In the Rules and Regulations section of this issue of the
Comments and requests for a public hearing must be received by March 7, 2017.
Send submissions to CC:PA:LPD:PR (REG-129128-14), Room 5205, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-129128-14), Courier's desk, Internal Revenue Service, 1111 Constitution Avenue NW., Washington, DC 20044, or sent electronically, via the Federal eRulemaking Portal at
Concerning the regulations, Jeffrey L. Parry, (202) 317-6936; concerning submissions of comments, Regina Johnson, (202) 317-6901 (not toll-free numbers).
Section 212 of the Education Jobs and Medicaid Assistance Act (EJMAA), enacted on August 10, 2010 (Pub. L. 111-226), added section 901(m) to the Code. Section 901(m)(1) provides that, in the case of a covered asset acquisition (CAA), the disqualified portion of any foreign income tax determined with respect to the income or gain attributable to relevant foreign assets (RFAs) will not be taken into account in determining the foreign tax credit allowed under section 901(a), and, in the case of foreign income tax paid by a section 902 corporation (as defined in section 909(d)(5)), will not be taken into account for purposes of section 902 or 960. Instead, the disqualified portion of any foreign income tax (the disqualified tax amount) is permitted as a deduction. See section 901(m)(6).
Under section 901(m)(2), a CAA is (i) a qualified stock purchase (as defined in section 338(d)(3)) to which section 338(a) applies; (ii) any transaction that is treated as an acquisition of assets for U.S. income tax purposes and as the acquisition of stock of a corporation (or is disregarded) for purposes of a foreign income tax; (iii) any acquisition of an interest in a partnership that has an election in effect under section 754; and (iv) to the extent provided by the Secretary, any other similar transaction. The Joint Committee on Taxation's technical explanation of EJMAA states that it is anticipated that the Secretary will issue regulations identifying other similar transactions that result in an increase to the basis of assets for U.S. income tax purposes without a corresponding increase for foreign income tax purposes. Staff of the Joint Committee on Taxation, Technical Explanation of the Revenue Provisions of the Senate Amendment to the House Amendment to the Senate Amendment to H.R. 1586, Scheduled for Consideration by the House of Representatives on August 10, 2010, at 14 (Aug. 10, 2010) (JCT Explanation).
Section 901(m)(3)(A) provides that the term “disqualified portion” means, with respect to any CAA, for any taxable year, the ratio (expressed as a percentage) of (i) the aggregate basis differences (but not below zero) allocable to such taxable year with respect to all RFAs; divided by (ii) the income on which the foreign income tax referenced in section 901(m)(1) is determined. If the taxpayer fails to substantiate the income on which the foreign income tax is determined to the satisfaction of the Secretary, such income will be determined by dividing the amount of such foreign income tax by the highest marginal tax rate applicable to the taxpayer's income in the relevant jurisdiction. The JCT Explanation states that for this purpose the income on which the foreign income tax is determined is the income as determined under the law of the relevant jurisdiction. See JCT Explanation at 14.
Section 901(m)(3)(B)(i) provides the general rule that the basis difference with respect to any RFA will be allocated to taxable years using the applicable cost recovery method for U.S. income tax purposes. Section 901(m)(3)(B)(ii) provides that, except as otherwise provided by the Secretary, if there is a disposition of an RFA, the basis difference allocated to the taxable year of the disposition will be the excess of the basis difference of such asset over the aggregate basis difference of such asset that has been allocated to all prior taxable years. The statute further provides that no basis difference with respect to such asset will be allocated to any taxable year thereafter.
Section 901(m)(3)(C)(i) provides that basis difference means, with respect to any RFA, the excess of: (i) The adjusted basis of such asset immediately after the CAA, over (ii) the adjusted basis of such asset immediately before the CAA. If the adjusted basis of an RFA immediately before the CAA exceeds the adjusted basis of the RFA immediately after the CAA (that is, where the adjusted basis of an asset with a built-in loss is reduced in a CAA), such excess is taken into account as a basis difference of a negative amount. See section 901(m)(3)(C)(ii).
The JCT Explanation states that, for purposes of determining basis difference, it is the tax basis for U.S. income tax purposes that is relevant and not the tax basis as determined under the law of the relevant jurisdiction. See JCT Explanation at 14. However, the JCT Explanation further states that it is anticipated that the Secretary will issue regulations identifying those circumstances in which, for purposes of determining the adjusted basis of such assets immediately before the CAA, it may be acceptable to use foreign basis or another reasonable method. Id.
Section 901(m)(4) provides that an RFA means, with respect to a CAA, any asset (including goodwill, going concern value, or other intangible) with respect to such acquisition if income, deduction, gain, or loss attributable to such asset is taken into account in determining the foreign income tax referenced in section 901(m)(1).
Section 901(m)(7) provides that the Secretary may issue regulations or other guidance as is necessary or appropriate to carry out the purposes of section 901(m), including to exempt from its application certain CAAs and RFAs with respect to which the basis difference is de minimis. The JCT
Section 901(m) generally applies to CAAs occurring after December 31, 2010. Section 901(m), however, does not apply to any CAA with respect to which the transferor and transferee are not related if the acquisition is made pursuant to a written agreement that was binding on January 1, 2011, and at all times thereafter; described in a ruling request submitted to the IRS on or before July 29, 2010; or described on or before January 1, 2011, in a public announcement or in a filing with the Securities and Exchange Commission. See EJMAA, section 212(b).
The Department of the Treasury (Treasury Department) and the IRS issued Notice 2014-44 (2014-32 I.R.B. 270 (July 21, 2014)) and Notice 2014-45 (2014-34 I.R.B. 388 (July 29, 2014)), announcing the intent to issue regulations addressing the application of section 901(m) to dispositions of RFAs following CAAs and to CAAs described in section 901(m)(2)(C) (regarding section 754 elections). In addition, the notices announced the intent to issue regulations providing successor rules for the continued application of section 901(m) after subsequent transfers of RFAs with remaining basis difference. The temporary regulations issued in the Rules and Regulations section of this issue of the
These proposed regulations provide rules for computing the disqualified portion of foreign income taxes under section 901(m). Proposed § 1.901(m)-1 provides definitions that apply for purposes of the proposed regulations. Proposed § 1.901(m)-2 identifies the transactions that are CAAs, including additional categories of transactions that are identified as CAAs pursuant to the authority granted in section 901(m)(2)(D), and provides rules for identifying assets that are RFAs with respect to a CAA. Proposed § 1.901(m)-3 provides rules for computing the disqualified portion of foreign income taxes, describes the treatment under section 901(m)(1) of the disqualified portion, and provides rules for determining whether and to what extent basis difference that is assigned to a given taxable year is carried over to subsequent taxable years. Proposed § 1.901(m)-4 provides rules for determining the basis difference with respect to an RFA, including an election to use foreign basis for purposes of this determination. Proposed § 1.901(m)-5 provides rules for taking into account basis difference under an applicable cost recovery method or as a result of a disposition of an RFA, rules for allocating that basis difference, when necessary, to one or more persons subject to section 901(m), and rules for assigning that basis difference to a U.S. taxable year. Proposed § 1.901(m)-6 provides successor rules for applying section 901(m) to subsequent transfers of RFAs that have basis difference that has not yet been fully taken into account, as well as for transferring an aggregate basis difference carryover of a person subject to section 901(m) either to another aggregate basis difference carryover account of such person or to another person subject to section 901(m). Proposed § 1.901(m)-7 provides de minimis rules under which certain basis differences are not taken into account under section 901(m). Proposed § 1.901(m)-8 provides guidance on the application of section 901(m) to pre-1987 foreign income taxes and anti-abuse rules relating to built-in loss assets.
As provided under proposed § 1.901(m)-1, a section 901(m) payor is a person that is eligible to claim the foreign tax credit allowed under section 901(a), regardless of whether the person chooses to claim the foreign tax credit, as well as a section 902 corporation. Therefore, a section 901(m) payor is the person required to compute a disqualified tax amount when section 901(m) applies. The foreign payor is the individual or entity (including a disregarded entity) subject to a foreign income tax. The RFA owner (U.S.) is the person that owns one or more RFAs for U.S. income tax purposes and therefore is required to report, or otherwise track, items of income, deduction, gain, or loss attributable to the RFAs for purposes of computing the U.S. taxable income of the RFA owner (U.S.). Similarly, the RFA owner (foreign) is the individual or entity (including a disregarded entity) that owns one or more RFAs for purposes of a foreign income tax and that therefore generally would report, or otherwise track, items of income, deduction, gain, or loss attributable to the RFAs for purposes of determining income reported on a foreign income tax return.
The section 901(m) payor may also be the foreign payor, the RFA owner (U.S.), or the RFA owner (foreign), or any combination thereof; alternatively, the section 901(m) payor may not be any of them depending upon the application of the entity classification rules for U.S. income tax purposes. Further, the foreign payor and the RFA owner (foreign) may or may not be the same person for purposes of a foreign income tax depending upon whether the RFA owner (foreign) is a fiscally transparent entity for purposes of the foreign income tax. For example, if a foreign corporation, which is a section 902 corporation, owns RFAs and is the entity that is subject to a foreign income tax under the relevant foreign law, the foreign corporation is the section 901(m) payor, foreign payor, RFA owner (U.S.), and RFA owner (foreign). As another example, if two U.S. corporations each own a 50 percent interest in a partnership and the partnership owns a disregarded entity that is subject to a foreign income tax and that, for purposes of the foreign income tax, owns one or more RFAs, the corporate partners are each a section 901(m) payor, the disregarded entity is the foreign payor and the RFA owner (foreign), and the partnership is the RFA owner (U.S.).
Finally, because the computation of a section 901(m) payor's disqualified tax amount is based on items determined at the level of the foreign payor, the RFA owner (U.S.), and the RFA owner (foreign), the regulations provide rules for allocating those items when the section 901(m) payor is not the foreign payor, the RFA owner (U.S.), or the RFA owner (foreign), or any combination thereof.
Proposed § 1.901(m)-2(b) identifies six categories of transactions that constitute CAAs, three of which are specified in the statute (incorporated by cross reference to the temporary regulations) and three of which are additional categories of transactions that are identified as CAAs pursuant to the authority granted under section 901(m)(2)(D). In addition, for transactions that occurred on or after January 1, 2011, and before the general applicability date of the temporary regulations (referred to as the “transition period” in the preamble to the temporary regulations and in this
Proposed § 1.901(m)-2(b)(1) through (4) describes four specific types of transactions that are generally expected to result in an increase in the basis of assets for U.S. income tax purposes without a corresponding increase in basis for foreign income tax purposes. This is because these transactions generally are treated as an acquisition of assets for U.S. income tax purposes and either are treated as an acquisition of stock or of a partnership interest or are disregarded for foreign income tax purposes. The other two categories of transactions described in proposed § 1.901(m)-2(b)(5) and (6), which involve an acquisition of assets for both U.S. and foreign income tax purposes, are CAAs only if the transaction results in an increase in the basis of an asset for U.S. income tax purposes but not for foreign income tax purposes. Such transactions may include, for example, an acquisition of assets that is structured to avoid the application of the Code's corporate nonrecognition provisions, such as section 332, 351, or 361, while still qualifying for nonrecognition treatment for foreign income tax purposes.
Proposed § 1.901(m)-2(c)(1) incorporates by cross reference to the temporary regulations the general definition of an RFA, which provides that an RFA means, with respect to a foreign income tax and a CAA, any asset (including goodwill, going concern value, or other intangible) subject to the CAA that is relevant in determining foreign income for purposes of the foreign income tax. In addition, for CAAs that occurred during the transition period, proposed § 1.901(m)-2(d) (incorporated by cross reference to the temporary regulations) defines RFAs by reference to the statutory definition under section 901(m)(4).
Proposed § 1.901(m)-2(c)(2) generally provides that an asset is relevant in determining foreign income if income, deduction, gain, or loss attributable to such asset is or would be taken into account in determining foreign income immediately after the CAA. Proposed § 1.901(m)-2(c)(3) provides, however, that, after a CAA, an asset will become an RFA with respect to another foreign income tax if, pursuant to a plan or series of related transactions that have a principal purpose of avoiding the application of section 901(m), an asset that is not relevant in determining foreign income for purposes of that foreign income tax immediately after the CAA later becomes relevant in determining such foreign income. A principal purpose of avoiding section 901(m) will be deemed to exist if income, deduction, gain, or loss attributable to the asset is taken into account in determining such foreign income within the one-year period following the CAA.
Proposed § 1.901(m)-3 sets forth the rules for computing the disqualified portion of foreign income taxes (referred to in the regulations as the “disqualified tax amount”). Proposed § 1.901(m)-3 also sets forth the treatment under section 901(m)(1) of the disqualified tax amount and provides rules for determining whether and to what extent basis difference that is assigned to a given U.S. taxable year is carried over to subsequent U.S. taxable years (referred to in the regulations as “aggregate basis difference carryover”).
In general, a disqualified tax amount is computed separately for each foreign tax return that takes into account income, gain, deduction, or loss from one or more RFAs in computing the foreign taxable income and for each section 901(m) payor that pays or accrues, or that is considered to pay or accrue, a portion of the foreign income taxes reflected on the foreign tax return. Furthermore, if the foreign income taxes relate to more than one separate category described in § 1.904-4(m) (including section 904(d) categories), a separate disqualified tax amount computation is done for each such separate category. Members of a U.S. affiliated group of corporations (as defined in section 1504) that file a consolidated return are each treated as a separate section 901(m) payor; therefore, disqualified tax amounts are computed at the member-level.
The proposed regulations refer to the total taxable income (or loss) that is computed under foreign law for a foreign taxable year and reflected on a foreign tax return as “foreign income” and the total amount of tax reflected on a foreign tax return as a “foreign income tax amount.” Thus, foreign income does not include income that is exempt from the foreign income tax. The proposed regulations use the term “foreign country creditable taxes” (or “FCCTs”) to refer to any foreign income taxes imposed by another foreign country or possession of the United States that were allowed under the relevant foreign law as a credit to reduce the foreign income tax amount and for which a credit is allowed under section 901 or 903. In addition, the proposed regulations define “foreign income tax ” (by cross reference to the temporary regulations) to mean any income, war profits, or excess profits tax for which a credit is allowable under section 901 or 903, other than any withholding tax determined on a gross basis as described in section 901(k)(1)(B).
The foreign income, foreign income tax amount, and any FCCTs are determined at the foreign-payor level. If the foreign payor is not a section 901(m) payor, current law provides rules for determining the person that is considered to pay or accrue a foreign income tax amount for purposes of the foreign tax credit (see, for example, §§ 1.702-1(a)(6) and 1.901-2(f)). Those rules are not changed by these proposed regulations and therefore apply for purposes of determining the extent to which a foreign income tax amount is paid or accrued by, or considered paid or accrued by, a section 901(m) payor for purposes of section 901(m).
Proposed § 1.901(m)-3(b) sets forth the treatment of the disqualified tax amount and the computation of the disqualified tax amount. Pursuant to section 901(m)(1) and proposed § 1.901(m)-3(b)(1), the disqualified tax amount is not taken into account for purposes of determining foreign tax credits under section 901, 902, or 960. A section 901(m) payor must compute a disqualified tax amount for any U.S. taxable year for which it is assigned a portion of the basis difference with respect to one or more RFAs.
The disqualified tax amount is the lesser of the tentative disqualified tax amount and the foreign income tax amount paid or accrued by, or considered paid or accrued by, a section 901(m) payor. The tentative disqualified tax amount is determined using a modified version of the formula provided in section 901(m)(3). To determine the tentative disqualified tax amount, the foreign income tax amount paid or accrued by, or considered paid or accrued by, the section 901(m) payor for its U.S. taxable year (multiplicand) is multiplied by a ratio (disqualified ratio), the numerator of which is the sum of the portion of the basis
Allocable foreign income (the denominator of the disqualified ratio) and the foreign income tax amount (the multiplicand) are determined using the total amount of foreign income and foreign income tax amount reflected on the foreign income tax return that are allocable to the section 901(m) payor, instead of by reference only to the amounts determined with respect to the RFAs. The Treasury Department and the IRS have determined that this approach appropriately carries out the purposes of section 901(m) while avoiding the administrative and compliance burdens that would result from a requirement to trace amounts of income to RFAs and identify the portion of foreign income taxes imposed on that income.
If a foreign income tax amount is computed taking into account an FCCT, the multiplicand of the tentative disqualified tax amount computation is the sum of the foreign income tax amount and any FCCTs paid or accrued by, or considered paid or accrued by, the section 901(m) payor. The Treasury Department and the IRS have determined that it is appropriate to include any FCCTs in the multiplicand to better reflect the effective tax rate imposed on the aggregate basis difference. However, the tentative disqualified tax amount is reduced (but not below zero) to the extent any portion of the FCCTs is itself treated as a disqualified tax amount of the section 901(m) payor with respect to a different foreign income tax.
The aggregate basis difference in the numerator includes cost recovery amounts and disposition amounts taken into account with respect to RFAs and assigned to the U.S. taxable year of the section 901(m) payor under proposed § 1.901(m)-5, as discussed in section VI. of this the Explanation of Provisions of this preamble. When the numerator and denominator are both positive amounts, the amount of aggregate basis difference included in the numerator is limited to the amount of foreign income in the denominator of the disqualified ratio (in other words, the allocable foreign income). This limitation ensures that multiplying the foreign income tax amount included in the multiplicand by the disqualified ratio would not produce a disqualified tax amount greater than 100 percent of the foreign income tax amount. See section IV.B. of the Explanation of Provisions section of this preamble for the treatment of any excess of the aggregate basis difference over the allocable foreign income as an aggregate basis difference carryover.
The denominator of the disqualified ratio is the allocable foreign income. When the entire foreign income tax amount reflected on a foreign tax return is paid or accrued by, or considered paid or accrued by, a single section 901(m) payor for U.S. income tax purposes, the allocable foreign income is simply the total foreign income reflected on the foreign tax return. In general, this will be the case when the section 901(m) payor is the foreign payor or owns a disregarded entity that is the foreign payor, unless there is a change in ownership or a change in entity classification in the foreign payor requiring an allocation of the foreign income tax amount of the foreign payor (a mid-year transaction).
If, however, the foreign income tax amount reflected on a foreign tax return is allocated to more than one person for U.S. income tax purposes, the allocable foreign income in the denominator of the disqualified ratio for a particular section 901(m) payor is equal to the portion of the foreign income reflected on the foreign tax return that relates to the foreign income tax amount allocated to, and considered paid or accrued by, that section 901(m) payor (and therefore that is included in the multiplicand of the tentative disqualified tax amount computation). Proposed § 1.901(m)-3(b)(2)(iii)(C) provides guidance on how to determine the allocable foreign income in three types of cases: (i) The foreign income tax amount is allocated to a section 901(m) payor because the foreign payor is involved in a mid-year transaction, such as the transfer of a disregarded entity during the disregarded entity's foreign taxable year or acquisitions involving elections under section 338 or 336(e); (ii) the foreign income tax amount is allocated to a section 901(m) payor that is a partner because the foreign payor is a partnership for U.S. income tax purposes that is legally liable for the foreign income tax amount under § 1.901-2(f)(4)(i) (or the foreign payor is a disregarded entity and its assets are owned for U.S. income tax purposes by an entity that is treated as a partnership for U.S. income tax purposes and that is legally liable for the foreign income tax amount under § 1.901-2(f)(4)(ii)); and (iii) the foreign income tax amount is allocated to a section 901(m) payor under § 1.901-2(f)(3)(i) because the section 901(m) payor is a member of a group whose income is taxed on a combined basis for foreign income tax purposes.
Notwithstanding the rules described in the two preceding paragraphs for determining allocable foreign income, if a section 901(m) payor fails to substantiate its allocable foreign income to the satisfaction of the Secretary, then proposed § 1.901(m)-3(b)(2)(iii)(D) provides that allocable foreign income will equal the amount determined by dividing the sum of the foreign income tax amount and the FCCTs that are paid or accrued by, or considered paid or accrued by, the section 901(m) payor, by the highest marginal tax rate applicable to income of the foreign payor under the relevant foreign income tax. See section 901(m)(3)(A).
If the numerator is less than zero, the denominator is less than or equal to zero, or the multiplicand is zero, the tentative disqualified tax amount (and therefore the disqualified tax amount) is zero. If the disqualified tax amount for a year either is zero or is limited by the foreign income tax amount paid or accrued by, or considered paid or accrued by, a section 901(m) payor, there will be an aggregate basis difference carryover as described in the next section.
Proposed § 1.901(m)-3(c) provides rules for determining the amount of aggregate basis difference carryover for a given U.S. taxable year of a section 901(m) payor that will be included in the section 901(m) payor's aggregate basis difference for the next U.S. taxable year (and therefore included in the numerator of the disqualified ratio for purposes of the next year's disqualified tax amount computation). The carryover reflects the extent to which the aggregate basis difference for a U.S. taxable year has not yet given rise to a disqualified tax amount.
If the disqualified tax amount is zero, none of the aggregate basis difference gives rise to a disqualified tax amount and therefore the full amount of the section 901(m) payor's aggregate basis difference for that year will be reflected in an aggregate basis difference carryover (positive or negative).
If the disqualified tax amount is not zero, an aggregate basis difference carryover may still arise in two situations. First, if the aggregate basis difference exceeds the section 901(m) payor's allocable foreign income (the denominator of the disqualified ratio) and therefore the amount of the
Proposed § 1.901(m)-4 incorporates by cross reference the general rules in the temporary regulations for determining basis difference. Under these rules, basis difference is determined separately with respect to each foreign income tax for which an asset is an RFA.
Proposed § 1.901(m)-4(c)(1) provides for a foreign basis election, pursuant to which basis difference is equal to the U.S. basis in the RFA immediately after the CAA less the foreign basis in the RFA immediately after the CAA (including any adjustments to the foreign basis resulting from the CAA). Proposed § 1.901(m)-4(c)(2) through (4) provide rules for making a foreign basis election. A foreign basis election generally is made by the RFA owner (U.S.). For example, in a section 338 CAA, the foreign basis election is made by the corporation that is the subject of the qualified stock purchase (new target as defined in § 1.338-2(c)(17)). If the RFA owner (U.S.) is a partnership, however, each partner in the partnership (and not the partnership) may independently make a foreign basis election. A foreign basis election is made separately for each CAA and with respect to each foreign income tax and each foreign payor. For this purpose, a series of CAAs occurring as part of a plan (referred to in the regulations as an “aggregated CAA transaction”) are treated as a single CAA. The proposed regulations contain examples illustrating the scope of the foreign basis election.
The election is made by using foreign basis to determine the basis differences for purposes of computing a disqualified tax amount and an aggregate basis difference carryover. The election generally must be reflected on a timely filed original federal income tax return for the first U.S. taxable year that the foreign basis election is relevant. Proposed § 1.901(m)-4(c)(5) provides an exception for certain cases in which the RFA owner (U.S.) is a partnership. This exception generally provides relief when one or more partners and the partnership have agreed that the partnership would determine whether to provide the partners with information to apply section 901(m) based on foreign basis and, in fact, the partnership provided the information to the partner using foreign basis, but when the partner timely filed its tax return it failed to report the application of section 901(m). The purpose of the relief is to address situations in which a partner must file an amended return in order to properly reflect the application of section 901(m) but does not have access to the necessary information to apply section 901(m) using U.S. basis. The criteria for qualifying for this relief should prevent partners from using hindsight in determining whether to make the foreign basis election.
Proposed § 1.901(m)-4(c)(6) provides another exception to the requirement to make the election in a timely filed original federal income tax return that applies if a taxpayer chooses to consistently apply these proposed regulations retroactively to all CAAs occurring before the regulations are issued in final form, including CAAs for which the taxpayer chooses not to make a foreign basis election. In this case, a foreign basis election may be reflected on a timely filed amended federal income tax return (or tax returns, as appropriate), provided that all amended returns are filed no later than one year following the date of publication of the Treasury decision adopting these rules as final regulations in the
Section 1.901(m)-5 provides rules for determining the amount of basis difference with respect to an RFA that is taken into account in a given U.S. taxable year (referred to in the regulations as “allocated basis difference”). This allocated basis difference is used to compute a disqualified tax amount for a U.S. taxable year. Basis difference is taken into account in two ways: under an applicable cost recovery method or as a result of a disposition of the RFA.
For purposes of the discussion under this section VI of the Explanation of Provisions section of the preamble, unless otherwise indicated, a reference to direct ownership of an interest in an entity refers to direct ownership for U.S. income tax purposes, which includes ownership through one or more disregarded entities. A reference to indirect ownership of an interest in an entity refers to ownership through one or more entities that are treated as fiscally transparent for U.S. income tax purposes, at least one of which is not a disregarded entity. Finally, a reference to indirect ownership of an interest in an entity for foreign income tax purposes means ownership through one or more entities that are treated as fiscally transparent for foreign income tax purposes.
Proposed § 1.901(m)-5(b)(2)(i) incorporates by cross reference the general rule in the temporary regulations that a cost recovery amount for an RFA is determined by applying an applicable cost recovery method to the basis difference rather than to the U.S. basis of the RFA.
Proposed § 1.901(m)-5(b)(2)(ii) provides that if the entire U.S. basis of the RFA is not subject to the same cost recovery method, the applicable cost recovery method for determining the cost recovery amount is the cost recovery method that applies to the portion of the U.S. basis that corresponds to the basis difference.
Proposed § 1.901(m)-5(b)(3) provides that, for purposes of section 901(m), an applicable cost recovery method includes any method for recovering the cost of property over time for U.S. income tax purposes (each application of a method giving rise to a “U.S. basis deduction”). Such methods include depreciation, amortization, or depletion, as well as a method that allows the cost (or a portion of the cost) of property to be expensed in the year of acquisition or in the placed-in-service year, such as under section 179. Applicable cost recovery methods do not include any provision allowing for the recovery of U.S. basis upon a disposition of an RFA.
Under proposed § 1.901(m)-5(b)(1), when an RFA owner (U.S.) is a section 901(m) payor, all of the cost recovery amount is attributed to the section 901(m) payor and assigned to the U.S. taxable year of the section 901(m) payor in which the corresponding U.S. basis deduction with respect to the RFA is taken into account under the applicable cost recovery method. This is the case regardless of whether the deduction is deferred or disallowed under other Code provisions (for example, see section 263A, which requires the capitalization of certain costs and expenses).
If instead the RFA owner (U.S.) is not a section 901(m) payor but a fiscally transparent entity for U.S. income tax
Special rules under proposed § 1.901(m)-5(e), discussed in section VI.D of the Explanation of Provisions section of this preamble, allocate a cost recovery amount that arises from an RFA with respect to certain section 743(b) CAAs. In addition, special rules under proposed § 1.901(m)-5(g), discussed in section VI.F of the Explanation of Provisions section of this preamble, allocate a cost recovery amount to a section 901(m) payor in certain cases in which the RFA owner (U.S.) either is a reverse hybrid or is a fiscally transparent entity for both U.S. and foreign income tax purposes that is directly or indirectly owned by a reverse hybrid. A reverse hybrid is an entity that is treated as a corporation for U.S. income tax purposes but as a fiscally transparent entity for foreign income tax purposes.
Proposed § 1.901(m)-1(a)(10) defines (by cross reference to the temporary regulations) a disposition for purposes of section 901(m) as an event that results in gain or loss being recognized with respect to an RFA for purposes of U.S. income tax, a foreign income tax, or both. Proposed § 1.901(m)-5(c)(2) incorporates by cross reference the rules provided in the temporary regulations for determining the amount of basis difference taken into account upon a disposition of an RFA (the disposition amount). Section 1.901(m)-5T(c)(2) provides that, if a disposition of an RFA is fully taxable for U.S. and foreign income tax purposes, the disposition amount will be any remaining unallocated basis difference (positive or negative). Section 1.901(m)-5T(c)(2) further provides that, if a disposition of an RFA is not fully taxable for both U.S. and foreign income tax purposes and the RFA has a
Under proposed § 1.901(m)-5(c)(1), when the RFA owner (U.S.) is a section 901(m) payor, all of the disposition amount is attributed to the section 901(m) payor and assigned to the U.S. taxable year of the section 901(m) payor in which the disposition occurs.
If instead the RFA owner (U.S.) is not a section 901(m) payor but a fiscally transparent entity for U.S. income tax purposes in which a section 901(m) payor directly or indirectly owns an interest, proposed § 1.901(m)-5(d), discussed in section VI.C of the Explanation of Provisions section of this preamble, allocates all or a portion of a disposition amount to the section 901(m) payor and assigns it to a U.S. taxable year of the section 901(m) payor.
Special rules under proposed § 1.901(m)-5(e), discussed in section VI.D of the Explanation of Provisions section of this preamble, allocate a disposition amount to a section 901(m) payor and assign it to a U.S. taxable year of the section 901(m) payor when the disposition amount arises from an RFA with respect to certain section 743(b) CAAs. Special rules under proposed § 1.901(m)-5(f), discussed in section VI.E of the Explanation of Provisions section of this preamble, allocate a disposition amount attributable to foreign disposition gain or foreign disposition loss to a section 901(m) payor and assign it to a U.S. taxable year of the section 901(m) payor when there is a mid-year transaction. Special rules under proposed § 1.901(m)-5(g), discussed in section VI.F of the Explanation of Provisions section of this preamble, allocate a disposition amount to a section 901(m) payor and assign it to a U.S. taxable year of the section 901(m) payor in certain cases in which the RFA owner (U.S.) either is a reverse hybrid or is a fiscally transparent entity for both U.S. and foreign income tax purposes that is directly or indirectly owned by a reverse hybrid.
This section describes the rules for allocating a disposition amount to a section 901(m) payor when the RFA owner (U.S.) is a fiscally transparent entity for U.S. income tax purposes in which a section 901(m) payor directly or indirectly owns an interest, as well as rules for assigning the allocated amount to a U.S. taxable year of the section 901(m) payor.
The allocation rules (discussed in sections VI.C.1 and 2 of the Explanation of Provisions section of this preamble) vary depending on whether the disposition amount is attributable to foreign disposition gain or loss or U.S. disposition gain or loss. The rules for determining the extent to which a disposition amount is attributable to foreign or U.S. disposition gain or loss are discussed in section VI.C.3 of the Explanation of Provisions section of this preamble. The rules for assigning allocated disposition amounts to a U.S. taxable year of a section 901(m) payor are discussed in section VI.C.4 of the Explanation of Provisions section of this preamble.
Proposed § 1.901(m)-5(d)(3) addresses the allocation of a disposition amount attributable to foreign disposition gain or foreign disposition loss of an RFA. These rules should be interpreted and applied in a manner consistent with the principle that a disposition amount attributable to foreign disposition gain or foreign disposition loss should be allocated to a section 901(m) payor in the same proportion that the gain or loss is taken into account in computing a foreign income tax amount that is paid or accrued by, or considered paid or accrued by, the section 901(m) payor. This is because, for example, if an RFA has a positive basis difference, a disposition amount attributable to foreign disposition gain represents an amount of gain in years following the CAA that is included in foreign income but never included in U.S. taxable income or earnings and profits because of the step-up in the U.S. basis of the
There are two separate rules for identifying the extent to which a foreign disposition gain or foreign disposition loss is taken into account in computing a foreign income tax amount that is paid or accrued by, or considered paid or accrued by, a section 901(m) payor that directly or indirectly owns an interest in an RFA owner (U.S.) that is a fiscally transparent entity for U.S. income tax purposes. The first rule, which is described in proposed § 1.901(m)-5(d)(3)(ii), applies when the foreign income tax amount is not allocated, for example, when the foreign payor is the section 901(m) payor. The second rule, which is described in proposed § 1.901(m)-5(d)(3)(iii), applies when the foreign income tax amount is allocated, for example, under § 1.704-1(b)(4)(viii) when the foreign payor is a partnership for U.S. income tax purposes in which the section 901(m) payor is a partner.
The first allocation rule applies when a section 901(m) payor, or a disregarded entity directly owned by a section 901(m) payor, is a foreign payor whose foreign income includes a distributive share of the foreign income (that includes the foreign disposition gain or foreign disposition loss) of the RFA owner (foreign). In this structure, the entire foreign income tax amount reflected on the foreign income tax return of the foreign payor is paid or accrued by, or considered paid or accrued by, the section 901(m) payor. This will be the case when the RFA owner (U.S.) is treated as a fiscally transparent entity not just for U.S. income tax purposes, but also for foreign income tax purposes, and the section 901(m) payor directly or indirectly owns an interest in the RFA owner (U.S.), provided that, in the case of indirect ownership, any entities in the ownership chain between the section 901(m) payor and the RFA owner (U.S), or, when one or more disregarded entities are directly owned by the section 901(m) payor, between the lowest-tier disregarded entity and the RFA owner (U.S.), are fiscally transparent for both U.S. and foreign income tax purposes. In these cases, the RFA owner (U.S.) and the RFA owner (foreign) are the same entity, except in the unusual case where the RFA owner (U.S.) is an entity that is disregarded as separate from its owner for foreign income tax purposes.
The first allocation rule allocates a portion of a disposition amount attributable to foreign disposition gain or foreign disposition loss, as applicable, to the section 901(m) payor proportionally to the amount of the foreign disposition gain or foreign disposition loss that is included in the foreign payor's (in other words, the section 901(m) payor or the disregarded entity, as the case may be) distributive share of the foreign income of the RFA owner (foreign) for foreign income tax purposes.
The following example illustrates the first allocation rule. A domestic entity that is a corporation for both U.S. and foreign income tax purposes (corporate partner) directly owns, for both U.S. and foreign income tax purposes, an interest in a foreign entity that is a partnership for both U.S. and foreign income tax purposes and that is the RFA owner (U.S.) and the RFA owner (foreign). In this case, when the partnership recognizes foreign disposition gain with respect to an RFA, the foreign income tax amount with respect to such gain is paid by the partners on their distributive shares of the foreign income of the partnership that includes the foreign disposition gain. The corporate partner, and not the partnership, is therefore a foreign payor and a section 901(m) payor. Accordingly, under the first allocation rule, a disposition amount attributable to foreign disposition gain is allocated to the corporate partner proportionally to the amount of the foreign disposition gain that is included in the corporate partner's distributive share of the foreign income of the partnership. Thus, for example, if the partnership recognizes $100 of foreign disposition gain and 50 percent of that gain is included in the corporate partner's distributive share of the foreign income of the partnership, and the disposition amount attributable to the foreign disposition gain is $40, the corporate partner would be allocated $20 of that amount (50 percent of $40). The same result would apply if the corporate partner directly owned the partnership interest through a disregarded entity that is the foreign payor.
The second allocation rule applies when, instead of a section 901(m) payor or a disregarded entity directly owned by a section 901(m) being a foreign payor, a section 901(m) payor directly or indirectly owns an interest in a fiscally transparent entity for U.S. income tax purposes (other than a disregarded entity directly owned by the section 901(m) payor) that is a foreign payor whose foreign income includes all or a portion of the foreign income (that includes the foreign disposition gain or foreign disposition loss) of the RFA owner (foreign). Therefore, the section 901(m) payor is considered to pay or accrue only an allocated portion of the foreign income tax amount reflected on the foreign income tax return of the foreign payor. This will be the case when a section 901(m) payor directly or indirectly owns an interest in the foreign payor, and the foreign payor is (i) the RFA owner (U.S.), (ii) another fiscally transparent entity for U.S. income tax purposes (other than a disregarded entity directly owned by a section 901(m) payor) that directly or indirectly owns an interest in the RFA owner (U.S.) for both U.S. and foreign income tax purposes, or (iii) a disregarded entity directly owned by the RFA owner (U.S.). In each of these cases, the entity subject to tax for purposes of the foreign income tax (that is, the foreign payor) is treated as a fiscally transparent entity for U.S. income tax purposes.
The mechanics of the second allocation rule are different than those of the first allocation rule. This is because the second allocation rule applies when neither the section 901(m) payor, nor a disregarded entity directly owned by a section 901(m) payor, is a foreign payor that takes into account a foreign disposition gain or foreign disposition loss for purposes of calculating a foreign income tax amount, but instead, for U.S. income tax purposes, a foreign income tax amount of the foreign payor is allocated to, and considered paid or accrued by, the section 901(m) payor. Accordingly, the second allocation rule allocates a portion of a disposition amount attributable to foreign disposition gain or foreign disposition loss, as applicable, to the section 901(m) payor proportionally to the amount of the foreign disposition gain or foreign disposition loss that is included in the allocable foreign income of the section 901(m) payor. As described in section IV.A of the Explanation of Provisions section of this preamble, allocable foreign income is generally the portion
The following example illustrates the second allocation rule. A domestic entity that is a corporation for both U.S. and foreign income tax purposes (corporate partner) directly owns an interest in a foreign entity, the RFA owner (U.S.) and RFA owner (foreign), that is a partnership for U.S. income tax purposes but a corporation for purposes of a foreign income tax (a hybrid partnership). In this case, when the hybrid partnership recognizes foreign disposition gain with respect to an RFA, it is the hybrid partnership, rather than the partners, that takes the gain into account for purposes of calculating a foreign income tax amount. The hybrid partnership is therefore the foreign payor. For U.S. income tax purposes, a foreign income tax amount of the hybrid partnership is allocated to, and considered paid or accrued by, its partners, including the corporate partner that is a section 901(m) payor (see §§ 1.702-1(a)(6), 1.704-1(b)(4)(viii), and 1.901-2(f)(4)(i)). Under the second allocation rule, a disposition amount attributable to foreign disposition gain is allocated to the corporate partner proportionally to the amount of the foreign disposition gain that is included in the corporate partner's allocable foreign income. Thus, for example, if the hybrid partnership pays a foreign income tax amount of $30 on $200 of foreign income that includes $100 of foreign disposition gain and $15 of the foreign income tax amount (50 percent of $30) is allocated to and considered paid by the corporate partner, the corporate partner's allocable foreign income would be $100 (50 percent of the $200 foreign income to which the foreign income tax amount relates), which would include $50 of foreign disposition gain (50 percent of $100). If the disposition amount attributable to the foreign disposition gain is $60, the corporate partner would be allocated $30 of that amount ($60 multiplied by 50 percent, the portion of the total foreign disposition gain that is included in the corporate partner's allocable foreign income).
In this example, the analysis would be similar if the corporate partner instead indirectly owned the partnership interest (for example through an upper-tier partnership), because the corporate partner would continue to be the section 901(m) payor and the hybrid partnership would continue to be the RFA owner (U.S.), the RFA owner (foreign), and the foreign payor.
Proposed § 1.901(m)-5(d)(4) addresses the allocation of a disposition amount attributable to U.S. disposition gain or U.S. disposition loss. Such disposition amounts are allocated to a section 901(m) payor based on the portion of the U.S. disposition gain or U.S. disposition loss (which are determined at the level of the RFA owner (U.S.)) that is (or will be) included in the section 901(m) payor's distributive share of the income of the RFA owner (U.S.) for U.S. income tax purposes.
When an RFA has a positive basis difference, a disposition amount arises from a disposition of the RFA only if the disposition results in a foreign disposition gain or a U.S. disposition loss (or both). To allocate such a disposition amount to a section 901(m) payor, it is necessary to determine the extent to which the disposition amount is attributable to foreign disposition gain or U.S. disposition loss.
Proposed § 1.901(m)-5(d)(5)(i) provides that if the disposition results in either a foreign disposition gain or a U.S. disposition loss, but not both, the entire disposition amount is attributable to foreign disposition gain or U.S. disposition loss, as applicable, even if the disposition amount exceeds the foreign disposition gain or the absolute value of the U.S. disposition loss. If the disposition results in both a foreign disposition gain and a U.S. disposition loss, the disposition amount is attributable first to foreign disposition gain to the extent thereof, and the excess disposition amount, if any, is attributable to the U.S. disposition loss, even if the excess disposition amount exceeds the absolute value of the U.S. disposition loss. In the case of a disposition that is fully taxable for both U.S. and foreign income tax purposes, a disposition amount may exceed the sum of the foreign disposition gain and the absolute value of the U.S. disposition loss if, immediately before the CAA, the foreign basis in the RFA was greater than the U.S basis, and a foreign basis election was not made.
When an RFA has a negative basis difference, a disposition amount arises from a disposition of the RFA only if the disposition results in a foreign disposition loss or a U.S. disposition gain (or both). To allocate such a disposition amount to a section 901(m) payor, it is necessary to determine the extent to which the disposition amount is attributable to foreign disposition loss or U.S. disposition gain.
Proposed § 1.901(m)-5(d)(5)(ii) provides rules for making this determination when there is a negative basis difference that are similar to those provided in proposed § 1.901(m)-5(d)(5)(i) for a positive basis difference.
When a disposition amount is allocated to a section 901(m) payor under proposed § 1.901(m)-5(d), proposed § 1.901(m)-5(d)(6) provides that the disposition amount is assigned to the U.S. taxable year of the section 901(m) payor that includes the last day of the U.S. taxable year of the RFA owner (U.S.) in which the disposition occurs.
Proposed § 1.901(m)-5(e) provides that when a section 901(m) payor acquires a partnership interest in a section 743(b) CAA, including a section 743(b) CAA with respect to a lower-tier partnership that results from a direct acquisition by the section 901(m) payor of an interest in an upper-tier partnership, a cost recovery amount or a disposition amount that arises from an RFA with respect to that CAA is allocated to the acquiring section 901(m) payor. These amounts are assigned to the U.S. taxable year of the section 901(m) payor that includes the last day of the U.S. taxable year of the partnership in which, in the case of a cost recovery amount, the partnership takes into account the corresponding U.S. basis deduction, or, in the case of a disposition amount, the disposition occurs.
This special rule does not apply if it is another partnership, and not a section 901(m) payor, that acquires a partnership interest in a section 743(b) CAA. In that case, the general rules for allocating a cost recovery amount or disposition amount when the RFA owner (U.S.) is a fiscally transparent entity apply.
Proposed § 1.901(m)-5(f) provides rules for allocating a disposition amount when there is a disposition of an RFA during a foreign taxable year in which the foreign payor is involved in a mid-year transaction, and the disposition
Proposed § 1.901(m)-5(g) addresses the allocation of cost recovery amounts and disposition amounts when the RFA owner (U.S.) is either a reverse hybrid or a fiscally transparent entity for both U.S. and foreign income tax purposes that is directly or indirectly owned by a reverse hybrid for U.S. and foreign income tax purposes, and in either case, a foreign payor directly or indirectly owns an interest in the reverse hybrid for foreign income tax purposes and therefore includes in its foreign income a distributive share of the foreign income (that includes the foreign disposition gain or foreign disposition loss) of the RFA owner (foreign). These allocation rules are similar to the allocation rules discussed in section VI.C.1 of the Explanation of Provisions section of this preamble that apply to allocate a disposition amount attributable to foreign disposition gain or foreign disposition loss when the RFA owner (U.S.) is a fiscally transparent entity for U.S. income tax purposes. These rules are broader in scope, however, because they apply to allocate not just foreign disposition gain or foreign disposition loss, but rather, both cost recovery amounts and entire disposition amounts (which may be attributable, in whole or in part, to U.S. disposition gain or U.S. disposition loss). This is because the basis difference giving rise to such amounts may not be taken into account in computing U.S. taxable income or earnings and profits of the owners of the reverse hybrid until one or more subsequent U.S. taxable years (for example, upon the receipt of a distribution of property from the reverse hybrid).
These rules should be interpreted and applied in a manner consistent with the principle that a cost recovery amount or a disposition amount (or both) should be allocated to a section 901(m) payor proportionally to the amount of the foreign income of the RFA owner (foreign) that is taken into account in computing a foreign income tax amount of a foreign payor that is paid or accrued by, or considered paid or accrued by, the section 901(m) payor.
There are two separate rules for allocating a cost recovery amount or disposition amount to a section 901(m) payor when the RFA owner (U.S.) either is a reverse hybrid or a fiscally transparent entity for both U.S. and foreign income tax purposes that is directly or indirectly owned by a reverse hybrid for U.S. and foreign income tax purposes. The first rule, which is described in § 1.901(m)-5(g)(2), applies when the foreign income tax amount is not allocated, for example, when the foreign payor is the section 901(m) payor. The second rule, which is described in § 1.901(m)-5(g)(3), applies when the foreign income tax amount is allocated, for example, under § 1.704-1(b)(4)(viii) when the foreign payor is a partnership for U.S. income tax purposes in which the section 901(m) payor is a partner.
The first allocation rule applies when a section 901(m) payor, or a disregarded entity directly owned by a section 901(m) payor, is the foreign payor whose foreign income includes a distributive share of the foreign income of the RFA owner (foreign). In this structure, the entire foreign income tax amount reflected on the foreign income tax return of the foreign payor is paid or accrued by, or considered paid or accrued by, the section 901(m) payor. This will be the case when a section 901(m) payor directly or indirectly owns an interest in the reverse hybrid, provided that in the case of indirect ownership, any entities in the ownership chain between the section 901(m) payor and the reverse hybrid, or, when one or more disregarded entities are directly owned by the section 901(m) payor, between the lowest-tier disregarded entity and the reverse hybird, are fiscally transparent for both U.S. and foreign income tax purposes. In these cases, the RFA owner (U.S.) and the RFA owner (foreign) are the same entity, except in the unusual case where the RFA owner (U.S.) is an entity that is disregarded as separate from its owner for foreign income tax purposes.
The first allocation rule allocates a portion of a cost recovery amount or a disposition amount to the section 901(m) payor proportionally to the amount of the foreign income of the RFA owner (foreign) that is included in the foreign income of the foreign payor (in other words, the section 901(m) payor or the disregarded entity, as the case may be).
The following example illustrates the first allocation rule. A domestic entity that is a corporation for both U.S. and foreign income tax purposes (corporate owner) owns an interest in a reverse hybrid that is the RFA owner (U.S.) and the RFA owner (foreign). A foreign income tax amount with respect to the foreign income of the reverse hybrid is paid by the owners of the reverse hybrid on their distributive shares of such foreign income. The corporate owner, and not the reverse hybrid, is therefore a foreign payor and a section 901(m) payor. Under the first allocation rule, a cost recovery amount or a disposition amount is allocated to the corporate owner proportionally to the amount of the foreign income of the reverse hybrid that is included in the foreign income of the corporate owner. Thus, for example, if 50 percent of the foreign income of the reverse hybrid is included in the foreign income of the corporate owner, the corporate owner would be allocated 50 percent of a cost recovery amount or a disposition amount with respect to an RFA owned by the reverse hybrid. The same result would apply if the corporate owner directly owned the interest in the reverse hybrid through a disregarded entity that is the foreign payor.
Alternatively, if the reverse hybrid was not the RFA owner (foreign) but instead the reverse hybrid owned an interest in the RFA owner (U.S.) and RFA owner (foreign), which is a partnership for both U.S. and foreign
The second allocation rule applies when instead of a section 901(m) payor, or a disregarded entity directly owned by a section 901(m) payor, being a foreign payor, a section 901(m) payor directly or indirectly owns an interest in the foreign payor whose foreign income includes a distributive share of the foreign income of the RFA owner (foreign). Therefore, the section 901(m) payor is considered to pay or accrue only an allocated portion of the foreign income tax amount reflected on the foreign income tax return of the foreign payor. This will be the case when the foreign payor is a fiscally transparent entity for U.S. income tax purposes (other than a disregarded entity directly owned by the section 901(m) payor) that either directly or indirectly owns an interest in the RFA owner (foreign) for foreign income tax purposes. In these cases, the RFA owner (U.S.) and the RFA owner (foreign) are the same entity, except in the unusual case where the RFA owner (U.S.) is an entity that is disregarded as separate from its owner for foreign income tax purposes.
The mechanics of the second allocation rule are different than those of the first allocation rule. This is because the second allocation rule applies when neither a section 901(m) payor, nor a disregarded entity directly owned by a section 901(m) payor, is a foreign payor that takes into account the foreign income of the RFA owner (foreign) for purposes of calculating a foreign income tax amount, but instead, for U.S. income tax purposes, a foreign income tax amount of the entity that is the foreign payor is allocated to, and considered paid or accrued by, the section 901(m) payor. Accordingly, the second allocation rule allocates a portion of cost recovery amounts and disposition amounts proportionally to the amount of the foreign income of the RFA owner (foreign) that is included in the foreign income of the foreign payor that is then included in the allocable foreign income of the section 901(m) payor. As described in section IV.A of the Explanation of Provisions section of this preamble, allocable foreign income is generally the portion of foreign income of a foreign payor that relates to the portion of the foreign income tax amount of that foreign payor that is allocated to and considered paid or accrued by a section 901(m) payor.
The following example illustrates the second allocation rule. A domestic entity that is a corporation for both U.S. and foreign income tax purposes (corporate partner) owns an interest in an entity that is a partnership for U.S. income tax purposes but a corporation for foreign income tax purposes (hybrid partnership), which, in turn, owns an interest in a reverse hybrid that is the RFA owner (U.S.) and the RFA owner (foreign). A foreign income tax amount with respect to the foreign income of the reverse hybrid is paid by the owners of the reverse hybrid on their distributive shares of such foreign income. Therefore, the hybrid partnership, rather than its partners, is the foreign payor. For U.S. income tax purposes, the foreign income tax amount paid or accrued by the hybrid partnership is allocated to, and considered paid or accrued by, the corporate partner that is the section 901(m) payor (see §§ 1.702-1(a)(6), 1.704-1(b)(4)(viii), and 1.901-2(f)(4)(i)). Under the second allocation rule, a cost recovery amount or a disposition amount with respect to an RFA owned by the reverse hybrid is allocated to the corporate partner proportionally to the amount of foreign income of the reverse hybrid that is taken into account in determining the foreign income of the hybrid partnership and then the allocable foreign income of the corporate partner. Thus, for example, if the reverse hybrid has $500 of foreign income and the hybrid partnership pays a foreign income tax amount of $30 on $200 of foreign income that includes a $100 distributive share of the foreign income of the reverse hybrid (20 percent of $500) and $15 of the foreign income tax amount (50 percent of $30) is allocated to and considered paid by the corporate partner, then the corporate partner's allocable foreign income would be $100 (50 percent of the $200 foreign income to which the foreign income tax amount relates). A cost recovery amount or disposition amount with respect to the RFAs owned by the reverse hybrid would be allocated 10 percent to the corporate partner (the corporate partner's 50 percent share of the hybrid partnership's 20 percent share of the reverse hybrid's foreign income).
Proposed § 1.901(m)-6 provides successor rules for applying section 901(m) following a transfer of RFAs that have basis difference that has not yet been fully taken into account (referred to in the regulations as “unallocated basis difference”) as well as for determining when an aggregate basis difference carryover of a section 901(m) payor either becomes an aggregate basis difference carryover of the section 901(m) payor with respect to another foreign payor or is transferred to another section 901(m) payor.
Proposed § 1.901(m)-6(b)(1) and (2) incorporate by cross reference the successor rules set forth in the temporary regulations, which provide generally that section 901(m) continues to apply to an RFA after it has been transferred for U.S. income tax purposes if the RFA continues to have unallocated basis difference following the transfer (a successor transaction).
Proposed § 1.901(m)-6(b)(3) sets forth two clarifications for applying the successor rules. First, if an asset is an RFA with respect to more than one foreign income tax, the successor rules apply separately with respect to each foreign income tax. Second, any subsequent cost recovery amount for an RFA transferred in a successor transaction will be determined based on the applicable cost recovery method that applies to the U.S. basis (or portion thereof) that corresponds to the unallocated basis difference. Thus, if a successor transaction restarts the depreciation schedule for an RFA, the transaction may result in unallocated basis difference being taken into account at a different recovery rate than otherwise would have applied.
Proposed § 1.901(m)-6(b)(4)(iii) also incorporates by cross reference the rule set forth in the temporary regulations that provides an exception to the general rule when an RFA is subject to multiple section 743(b) CAAs. See section VI.B. of the Explanation of Provisions section of the preamble to the temporary regulations for a discussion of those provisions.
Proposed § 1.901(m)-6(b)(4)(ii), which is not included in the temporary regulations, provides an exception to the general successor rule if a foreign basis election is made under proposed § 1.901(m)-4(c) with respect to a subsequent CAA that otherwise would trigger the rules for successor transactions. If a foreign basis election is made with respect to a foreign income tax, the only basis difference that will be taken into account after the subsequent CAA with respect to that foreign income tax is the basis difference determined for the subsequent CAA.
Proposed § 1.901(m)-6 provides successor rules for aggregate basis difference carryovers, the computation of which is described in section IV.B of the Explanation of Provisions section of this preamble. An aggregate basis difference carryover is treated as a tax attribute of the section 901(m) payor that retains its character as an aggregate basis difference carryover with respect to a foreign income tax and a foreign payor and with respect to a separate category, as described in § 1.904-4(m) (including the section 904(d) categories). When a section 901(m) payor transfers its assets in a transaction to which section 381 applies, proposed § 1.901(m)-6(c)(1) provides that any aggregate basis difference carryovers of the section 901(m) payor are transferred to the corporation that succeeds to the earnings and profits, if any. When substantially all of the assets of one foreign payor are transferred to another foreign payor, both of which are directly or indirectly owned by the same section 901(m) payor, proposed § 1.901(m)-6(c)(2) provides that an aggregate basis difference carryover of the section 901(m) payor with respect to the transferor foreign payor becomes an aggregate basis difference carryover of the section 901(m) payor with respect to the transferee foreign payor.
Proposed § 1.901(m)-6(c)(3) provides an anti-abuse rule that would transfer an aggregate basis difference carryover when, with a principal purpose of avoiding the application of section 901(m), there is a transfer of assets or a change in either the allocation of foreign income for foreign income tax purposes or the allocation of foreign income tax amounts for U.S. income tax purposes that is intended to separate foreign income tax amounts from the related aggregate basis difference carryover. This anti-abuse rule would apply, for example, if, with the principal purpose of avoiding the application of section 901(m), a partnership agreement is amended in order to reduce the allocation of foreign income to a partner that is a section 901(m) payor with an aggregate basis difference carryover.
Proposed § 1.901(m)-7 describes de minimis rules under which certain basis differences are not taken into account for purposes of section 901(m). This determination is made when an asset subject to a CAA first becomes an RFA. If that same asset is also an RFA by reason of being subject to a subsequent CAA, the de minimis tests are applied only to the additional basis difference, if any, that results from the subsequent CAA. Accordingly, any unallocated basis difference that arose from the prior CAA that did not qualify for the de minimis exemption at the time of the prior CAA will not be retested at the time of the subsequent CAA.
In general, a basis difference with respect to an RFA is not taken into account for purposes of section 901(m) if either (i) the sum of the basis differences for all RFAs with respect to the CAA is less than the greater of $10 million or 10 percent of the total U.S. basis of all RFAs immediately after the CAA; or (ii) the RFA is part of a class of RFAs for which the sum of the basis differences of all RFAs in the class is less than the greater of $2 million or 10 percent of the total U.S. basis of all RFAs in the class. For this purpose, the classes of RFAs are the seven asset classes defined in § 1.338-6(b).
The Treasury Department and the IRS decided that transactions between related parties should be more tightly regulated, and therefore, the threshold dollar amounts and percentages to meet the de minimis exemptions for related party CAAs are lower than those for unrelated party CAAs, replacing the terms “$10 million,” “10 percent,” and “$2 million” wherever they occur with the terms “$5 million,” “5 percent,” and “$1 million,” respectively. In addition, an anti-abuse provision at proposed § 1.901(m)-7(e) denies application of the de minimis exemptions to CAAs between related parties that are entered into or structured with a principal purpose of avoiding the application of section 901(m).
Proposed § 1.901(m)-8(b) provides that, when a foreign corporation becomes a section 902 corporation for the first time, as part of the required reconstruction of the U.S. tax history of the pre-1987 foreign income taxes of the foreign corporation, section 901(m) and these regulations must be applied to determine any disqualified tax amounts or aggregate basis difference carryovers that apply to the foreign corporation.
Proposed § 1.901(m)-8(c) provides an anti-abuse rule that applies to disregard an RFA with a built-in loss to the extent it relates to any asset acquisition structured with a principal purpose to use that RFA to avoid the application of section 901(m). This rule may apply, for example, if, with a principal purpose of avoiding the application of section 901(m), an asset is acquired in a transaction that preserves a built-in loss in the asset for U.S. income tax purposes but not for foreign income tax purposes.
Section 1.704-1(b)(4)(viii) provides a safe harbor under which allocations of creditable foreign tax expenditures (CFTEs) (as defined in § 1.704-1(b)(4)(viii)(
A CFTE may be subject to section 901(m) because it is a foreign income tax amount that is paid or accrued by a partnership. Specifically, if a partnership owns an RFA with respect to a foreign income tax and that RFA has a basis difference subject to section 901(m), a portion of a foreign income tax amount paid or accrued by the partnership that relates to that foreign income tax may be disallowed as a foreign tax credit under section 901(m) in the hands of section 901(m) payors to whom the foreign income tax amount is allocated. The disqualified tax amount is determined by taking into account cost recovery amounts and disposition amounts with respect to the RFA that are allocated to those section 901(m) payors pursuant to the rules provided in proposed § 1.901(m)-5. In order to ensure that the proper portion of a foreign income tax amount paid or accrued by a partnership is disallowed under section 901(m), adjustments to the net income (and the allocations of that income) in a CFTE category that includes items attributable to the RFA are necessary in certain cases.
To illustrate such a case, assume a domestic entity that is a partnership for U.S. income tax purposes but a corporation for purposes of a foreign income tax (a hybrid partnership) is owned by partner A and partner B, each of which is a domestic entity that is a corporation for both U.S. and foreign income tax purposes. In this case, the hybrid partnership is the foreign payor and partners A and B are section 901(m) payors. The hybrid partnership is the RFA owner (U.S.) and the RFA owner (foreign) with respect to a single asset that is an RFA. Assume that in a given
No modification to the safe harbor is necessary to address cost recovery amounts and disposition amounts attributable to section 743(b) adjustments that are allocated to partners under proposed § 1.901(m)-5(e) (which applies when a section 901(m) payor acquires a partnership interest in a section 743(b) CAA), because, in these cases, § 1.704-1T(b)(4)(viii)(
Accordingly, these proposed regulations add special rules under proposed § 1.704-1(b)(4)(viii)(
These proposed regulations will apply to CAAs occurring on or after the date of publication of the Treasury decision adopting these rules as final regulations in the
Certain IRS regulations, including these, are exempt from the requirements of Executive Order 12866, as supplemented and reaffirmed by Executive Order 13563. Therefore, a regulatory impact assessment is not required. It has also been determined that the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply because the regulations do not impose a collection of information on small entities. Pursuant to section 7805(f), these regulations will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.
Before these proposed regulations are adopted as final regulations, consideration will be given to any comments that are submitted timely to the IRS as prescribed in this preamble under
The principal author of these regulations is Jeffrey L. Parry of the Office of Associate Chief Counsel (International). However, other personnel from the Treasury Department and the IRS participated in their development.
Income taxes, Reporting and recordkeeping requirements.
Accordingly, 26 CFR part 1 is proposed to be amended as follows:
26 U.S.C. 7805 * * *
Sections 1.901(m)-1 through -8 also issued under 26 U.S.C. 901(m)(7).* * *
Section 1.901(m)-5 also issued under 26 U.S.C. 901(m)(3)(B)(ii). * * *
(b) * * *
(1) * * *
(ii) * * *
(
(
(4) * * *
(viii) * * *
(
(
(
(
(
(a)
(1) The term
(2) The term
(3) The term
(4) The term
(5) The term
(6) through (8) [The text of proposed §§ 1.901(m)-1(a)(6) through (8) is the same as the text of §§ 1.901(m)-1T(a)(6) through (8) published elsewhere in this issue of the
(9) The term
(10) through (11) [The text of proposed §§ 1.901(m)-1(a)(10) through (11) is the same as the text of §§ 1.901(m)-1T(a)(10) through (11) published elsewhere in this issue of the
(12) The term
(13) through (14) [The text of proposed §§ 1.901(m)-1(a)(13) through (14) is the same as the text of §§ 1.901(m)-1T(a)(13) through (14) published elsewhere in this issue of the
(15) The term
(16) The term
(17) The term f
(18) through (21) [The text of proposed §§ 1.901(m)-1(a)(18) through (21) is the same as the text of §§ 1.901(m)-1T(a)(18) through (21) published elsewhere in this issue of the
(22) The term
(23) The term
(24) The term
(25) The term
(26) through (28) [The text of proposed §§ 1.901(m)-1(a)(26) through (28) is the same as the text of §§ 1.901(m)-1T(a)(26) through (28) published elsewhere in this issue of the
(29) The term
(30) The term
(31) The term
(32) The term
(33) through (34) [The text of proposed §§ 1.901(m)-1(a)(33) through (34) is the same as the text of §§ 1.901(m)-1T(a)(33) through (34) published elsewhere in this issue of the
(35) The term
(36) through (38) [The text of proposed §§ 1.901(m)-1(a)(36) through (38) is the same as the text of §§ 1.901(m)-1T(a)(36) through (38) published elsewhere in this issue of the
(39) The term
(40) through (41) [The text of proposed §§ 1.901(m)-1(a)(40) through (41) is the same as the text of §§ 1.901(m)-1T(a)(40) through (41) published elsewhere in this issue of the
(42) The term
(43) through (45) [The text of proposed §§ 1.901(m)-1(a)(43) through (45) is the same as the text of §§ 1.901(m)-1T(a)(43) through (45) published elsewhere in this issue of the
(b)
(2) [The text of proposed § 1.901(m)-1(b)(2) is the same as the text of § 1.901(m)-1T(b)(2) published elsewhere in this issue of the
(3) Taxpayers may, however, rely on this section prior to the date this section is applicable provided that they both consistently apply this section, § 1.704-1(b)(4)(viii)(
(a) through (b)(3) [The text of proposed §§ 1.901(m)-2(a) through (b)(3) is the same as the text of §§ 1.901(m)-2T(a) through (b)(3) published elsewhere in this issue of the
(4) Any transaction (or series of transactions occurring pursuant to a plan) to the extent it is treated as an acquisition of assets for purposes of U.S. income tax and as the acquisition of an interest in a fiscally transparent entity for purposes of a foreign income tax;
(5) Any transaction (or series of transactions occurring pursuant to a plan) to the extent it is treated as a partnership distribution of one or more assets the U.S. basis of which is determined by section 732(b) or 732(d) or which causes the U.S. basis of the partnership's remaining assets to be adjusted under section 734(b), provided the transaction results in an increase in the U.S. basis of one or more of the assets distributed by the partnership or retained by the partnership without a corresponding increase in the foreign basis of such assets; and
(6) Any transaction (or series of transactions occurring pursuant to a plan) to the extent it is treated as an acquisition of assets for purposes of both U.S. income tax and a foreign income tax, provided the transaction results in an increase in the U.S. basis without a corresponding increase in the foreign basis of one or more assets.
(c)
(2)
(3)
(d) [The text of proposed § 1.901(m)-2(d) is the same as the text of § 1.901(m)-2T(d) published elsewhere in this issue of the
(e)
(B) Pursuant to the same transaction, USP acquires FC1's interest in FPS, and DE acquires FC2's interest in FPS. For U.S. income tax purposes, with respect to USP, the acquisition of the interests in FPS is treated as the acquisition of Asset A by USP.
(ii)
(B) In an exchange described in section 351, CFC1 transfers Asset A to CFC2 in exchange for CFC2 common stock and cash. CFC1 recognizes gain on the exchange under section 351(b). Under section 362(a), CFC2's U.S. basis in Asset A is increased by the gain recognized by CFC1. For Country F tax purposes, gain or loss is not recognized on the transfer of Asset A to CFC2, and therefore there is no increase in the foreign basis in Asset A.
(ii)
(B) On December 1 of Year 1, USSub contributes all its assets to FSub, its wholly owned subsidiary, which is a corporation for both U.S. and Country X income tax purposes, in a transfer described in section 351 (subsequent transfer). USSub recognizes no gain or loss for U.S. or Country X income tax purposes as a result of the subsequent transfer. As a result of the subsequent transfer, income, deduction, gain, or loss attributable to the assets of USSub that were transferred to FSub is taken into account in determining foreign income of FSub for Country X tax purposes.
(ii)
(B) Although the subsequent transfer is not a CAA under paragraph (b) of this section, the subsequent transfer causes the assets of USSub to become relevant in the hands of FSub in determining foreign income for Country X tax purposes. Because the subsequent transfer occurred within the one-year period following the CAA, it is presumed to have a principal purpose of avoiding section 901(m). Accordingly, under paragraph (c)(2) of this section, the assets of USSub with respect to the CAA occurring on January 1 of Year 1 become RFAs with respect to Country X tax as a result of the subsequent transfer. Thus, a basis difference with respect to Country X tax must be computed for the RFAs and taken into account under section 901(m).
(f)
(2) Paragraphs (b)(4) through (b)(6), (c)(2), (c)(3), and (e) of this section apply to CAAs occurring on or after the date of publication of the Treasury decision adopting these rules as final regulations in the
(3) Taxpayers may, however, rely on this section prior to the date this section is applicable provided that they both consistently apply this section (excluding paragraph (d) of this section) to all CAAs occurring on or after December 7, 2016 and consistently apply § 1.704-1(b)(4)(viii)(
(a)
(b)
(2)
(ii)
(A) The product of—
(
(
(B) The amount of the FCCT that is a disqualified tax amount of the section 901(m) payor with respect to another foreign income tax.
(iii)
(B)
(C)
(
(
(
(D)
(iv)
(A) The section 901(m) payor's aggregate basis difference for the U.S. taxable year is a negative amount;
(B) Foreign income is less than or equal to zero for the foreign taxable year of the foreign payor; or
(C) The foreign income tax amount that is paid or accrued by, or considered paid or accrued by, the section 901(m) payor for the U.S. taxable year is zero.
(3)
(ii)
(B) In determining aggregate basis difference under § 1.901(m)-1(a)(1) for a U.S. taxable year of CFC1, CFC1 has three computations with respect to Country F tax, because there are three foreign payors for Country F tax purposes whose foreign income tax amount, if any, is considered paid or accrued by CFC1 as the section 901(m) payor. Furthermore, for each U.S. taxable year, CFC1 will compute a separate disqualified tax amount and aggregate basis difference Carryover (if any) under paragraph (b)(2) of this section, with respect to each foreign payor.
(C) In determining aggregate basis difference for a U.S. taxable year of CFC2 under § 1.901(m)-1(a)(1), CFC2 has a single computation with respect to Country F tax, because there is a single foreign payor (CFC2) for Country F tax purposes whose foreign income tax amount, if any, is considered paid or accrued by CFC2 as the section 901(m) payor. Furthermore, for each U.S. taxable year, CFC2 will compute a disqualified tax amount and aggregate basis difference Carryover (if any) under paragraph (b)(2) of this section.
(iii)
(ii)
(B) In determining aggregate basis difference for a U.S. taxable year of CFC1, CFC1 has two computations, one with respect to Country F tax and one with respect to Country G tax. Under § 1.901(m)-1(a)(1), the aggregate basis difference for a U.S. taxable year with respect to Country F tax is equal to the sum of the allocated basis differences with respect to Assets A and B for the U.S. taxable year. Under § 1.901(m)-1(a)(5), allocated basis differences are comprised of cost recovery amounts and disposition amounts. Because there are no dispositions, the only allocated basis differences taken into account in determining an aggregate basis difference are cost recovery amounts. Under § 1.901(m)-5(b), any cost recovery amounts are attributed to CFC1, because CFC1 is the section 901(m) payor and RFA owner (U.S.) with respect to all of the Assets. For each U.S. taxable year, CFC1 will compute a separate disqualified tax amount and aggregate basis difference carryover (if any) with respect to Country F tax and Country G tax under paragraph (b)(2) of this section. For purposes of both disqualified tax amount computations, because CFC1 is the section 901(m) payor and foreign payor, the foreign income tax amount paid or accrued by CFC1 with respect to Country F tax and Country G tax, respectively, will be the entire foreign income tax amount and CFC1's allocable foreign income will be the entire foreign income.
(C) With respect to Country F tax, in U.S. taxable years 1 through 5, CFC1 has an aggregate basis difference of 20u each year (10u cost recovery amount with respect to Asset A plus 10u cost recovery amount with respect to Asset B). For U.S. taxable years 1 through 5, under paragraph (b)(2) of this section, the disqualified tax amount each year is $5, the lesser of two amounts: the tentative disqualified tax amount, in this case, $5 ($25 foreign income tax amount × (20u aggregate basis difference/100u allocable foreign income)), or the foreign income tax amount paid or accrued by CFC1, in this case, $25. After U.S. taxable year 5, Asset B has no unallocated basis difference with respect to Country F tax. Accordingly, in U.S. taxable years 6 through 15, CFC1 has an aggregate basis difference of 10u each year. Accordingly, for U.S. taxable years 6 through 15, the disqualified tax amount each year is $2.50, the lesser of two amounts: the tentative disqualified tax amount, in this case, $2.50 ($25 foreign income tax amount × (10u aggregate basis difference/100u allocable foreign income)), or the foreign income tax amount paid or accrued by CFC1, in this case, $25. After U.S. taxable year 15, Asset A has no unallocated basis difference with respect to Country F tax and, therefore, CFC1 has no disqualified tax amount with respect to Country F Tax.
(D) With respect to Country G tax, in U.S. taxable years 1 through 5, CFC1 has an aggregate basis difference of 40u each year (60u cost recovery amount with respect to Asset C + (20u) cost recovery amount with respect to Asset D). For U.S. taxable years 1 through 5, under paragraph (b)(2) of this section, the disqualified tax amount each year is $12, the lesser of two amounts: the tentative disqualified tax amount, in this case, $12 ($120 foreign income tax amount × (40u aggregate basis difference/400u allocable foreign income)), or the foreign income tax amount paid or accrued by CFC1, in this case, $120. After U.S. taxable year 5, Asset C and Asset D have no unallocated basis difference with respect to Country G
(ii)
(B) Under § 1.901(m)-1(a)(1), for each U.S. taxable year, USP will separately compute the aggregate basis difference with respect to Country F tax and with respect to Country G tax, and will use those amounts to separately compute a disqualified tax amount and aggregate basis difference carryover (if any) with respect to each foreign income tax . Because DE1 is a disregarded entity owned by USP during the entire U.S. taxable year 3, the foreign income tax amount paid or accrued by DE1 is not subject to allocation. Accordingly, for purposes of each of the disqualified tax amount computations, the foreign income tax amount paid or accrued by USP with respect to Country F tax and Country G tax, respectively, is the entire foreign income tax amount paid or accrued by DE1, and, under paragraph (b)(2)(iii)(A) of this section, USP's allocable foreign income will be equal to DE1's entire foreign income.
(C) As stated in paragraph (i) of this
(D) With respect to Country F tax, in U.S. taxable year 3, under paragraph (b)(2) of this section, the disqualified tax amount is $0, the lesser of two amounts: the tentative disqualified tax amount, in this case $0 (($30 foreign income tax amount + $30 Country G FCCT) × (100u aggregate basis difference/200u foreign income) = $30 reduced by $30 Country G FCCT that is a disqualified tax amount of USP), or the foreign income tax amount considered paid or accrued by USP, in this case, $30.
(c)
(2)
(ii) If a section 901(m) payor's disqualified tax amount is not zero, then aggregate basis difference carryover can arise in either or both of the following two situations:
(A) If a section 901(m) payor's aggregate basis difference for the U.S. taxable year exceeds its allocable foreign income, the excess gives rise to an aggregate basis difference carryover.
(B) If the tentative disqualified tax amount exceeds the disqualified tax amount, the excess tentative disqualified tax amount is converted into aggregate basis difference carryover by multiplying such excess by a fraction, the numerator of which is the allocable foreign income, and the denominator of which is the sum of the foreign income tax amount and the FCCTs that are paid or accrued by, or considered paid or accrued by, the section 901(m) payor.
(3)
(ii)
(B) Under § 1.901(m)-1(a)(1), in determining the aggregate basis difference for U.S. taxable year 1, CFC1 has one computation with respect to Country F tax. Under § 1.901(m)-1(a)(1), aggregate basis difference with respect to Country F tax is equal to the sum of allocated basis differences with respect to all RFAs, which, in this case, is only Asset A. Under § 1.901(m)-1(a)(5), allocated basis differences are comprised of cost recovery amounts and disposition amounts. Because there is no disposition of Asset A, the only allocated basis difference taken into account in determining an aggregate basis difference are cost recovery amounts with respect to Asset A. Under § 1.901(m)-5(b), any cost recovery amounts are assigned to a U.S taxable year of CFC1, because CFC1 is the section 901(m) payor and RFA owner (U.S.) with respect to Asset A. Under paragraph (b)(2) of this
(C) In U.S. taxable year 1, CFC1 has an aggregate basis difference of 9u (the 9u cost recovery amount with respect to Asset A for U.S. taxable year 1). However, because the foreign taxable year of DE1, the foreign payor, will not end between July 1 and December 31, there will not be a foreign income tax amount for U.S. taxable year 1. Because the foreign income tax amount considered paid or accrued by CFC1 for U.S. taxable year 1 is zero, under paragraph (b)(2)(iv) of this section, the disqualified tax amount for U.S. taxable year 1 of CFC1 is also zero. Furthermore, because the disqualified tax amount is zero, under paragraph (c)(2)(i) of this section, CFC1 has an aggregate basis difference carryover equal to 9u, the entire amount of the aggregate basis difference for U.S. taxable year 1. Under paragraph (c)(1) of this section, the 9u aggregate basis difference carryover is taken into account in computing CFC1's aggregate basis difference for U.S. taxable year 2. Accordingly, in U.S. taxable year 2, CFC1 has an aggregate basis difference of 27u (18u cost recovery amount for U.S. taxable year 2, plus 9u aggregate basis difference carryover from U.S. taxable year 1).
(d)
(a) through (b) [The text of proposed §§ 1.901(m)-4(a) through (b) is the same as the text of §§ 1.901(m)-4T(a) through (b) published elsewhere in this issue of the
(c)
(2) Except as otherwise provided in this paragraph (c), a foreign basis election is made by the RFA owner (U.S.). If, however, the RFA owner (U.S.) is a partnership, each partner in the partnership (and not the partnership) may independently make a foreign basis election. In the case of one or more tiered partnerships, the foreign basis election is made at the level at which a partner is not also a partnership.
(3) The election may be made separately for each CAA, and with respect to each foreign income tax and each foreign payor. For purposes of making the foreign basis election, all CAAs that are part of an aggregated CAA transaction are treated as a single CAA. Furthermore, for purposes of making the foreign basis election, if foreign law imposes tax on the combined income (within the meaning of § 1.901-2(f)(3)(ii)) of two or more foreign payors, all foreign payors whose items of income, deduction, gain, or loss for U.S. income tax purposes are included in the U.S. taxable income or earnings and profits of a single section 901(m) payor are treated as a single foreign payor.
(4) A foreign basis election is made by using foreign basis to determine basis difference for purposes of computing a disqualified tax amount and an aggregate basis difference carryover for the U.S. taxable year, as provided under § 1.901(m)-3. A separate statement or form evidencing the foreign basis election need not be filed. Except as provided in paragraph (c)(5) and (6) of this section, in order for a foreign basis election to be effective, the election must be reflected on a timely filed original federal income tax return (including extensions) for the first U.S. taxable year that the foreign basis election is relevant to the computation of any amounts reported on such return, including on any required schedules.
(5) If the RFA owner (U.S.) is a partnership, a foreign basis election reflected on a partner's timely filed amended federal income tax return is also effective if all of the following conditions are satisfied:
(i) The partner's timely filed original federal income tax return (including extensions) for the first U.S. taxable year of the partner in which a foreign basis election is relevant to the computation of any amounts reported on such return, including on any required schedules, does not reflect the application of section 901(m);
(ii) The information provided by the partnership to the partner for purposes of applying section 901(m) and any information required to be reported by the partnership is based solely on computations that use foreign basis to determine basis difference; and
(iii) Prior to the due date of the original federal income tax return (including extensions) described in paragraph (c)(5)(i) of this section, the partner delegated the authority to the partnership to choose whether to provide the partner with information to apply section 901(m) using foreign basis, either pursuant to a written partnership agreement (within the meaning of § 1.704-1(b)(2)(ii)(
(6) If, pursuant to paragraph (g)(3) of this section, a taxpayer chooses to have this section apply to CAAs occurring on or after January 1, 2011, a foreign basis election will be effective if the election is reflected on a timely filed amended federal income tax return (or tax returns, as applicable) filed no later than one year following the date of publication of the Treasury decision adopting these rules as final regulations in the
(7) The foreign basis election is irrevocable. Relief under § 301.9100-1 is not available for the foreign basis election.
(d)
(2)
(e) [The text of proposed § 1.901(m)-4(e) is the same as the text of § 1.901(m)-4T(e) published elsewhere in this issue of the
(f)
(ii)
(B) Under paragraph (c) of this section, a foreign basis election may be made by the RFA owner (U.S.). The election is made separately with respect to each CAA (for this purpose, treating all CAAs that are part of an aggregated CAA transaction as a single CAA) and with respect to each foreign income tax and foreign payor. Thus, in this case, CFC1 can make a separate foreign basis election for one or more of the following three groups of RFAs: RFAs that are relevant in determining foreign income of CFC1; RFAs that are relevant in determining foreign income of DE1; and RFAs that are relevant in determining foreign income of DE2. Furthermore, CFC2 can make a foreign basis election for all of its RFAs that are relevant in determining its foreign income.
(ii)
(g)
(2) Except for paragraphs (a), (b), (d)(1), and (e) of this section, this section applies to CAAs occurring on or after the date of publication of the Treasury decision adopting these rules as final regulations in the
(3) Taxpayers may, however, rely on this section prior to the date this section is applicable provided that they both consistently apply this section (excluding paragraph (e) of this section), § 1.704-1(b)(4)(viii)(
(a)
(b)
(2)
(ii)
(3)
(c)
(2) [The text of proposed § 1.901(m)-5(c)(2) is the same as the text of § 1.901(m)-5T(c)(2) published elsewhere in this issue of the
(d)
(2)
(3)
(ii)
(iii)
(4)
(5)
(ii)
(6)
(e)
(f)
(2)
(3)
(g)
(2)
(ii)
(3)
(ii)
(h)
(B) On July 1, Year 2, Asset A is transferred to an unrelated third party in exchange for 120u in a transaction in which all realized gain is recognized for both U.S. income tax and Country F tax purposes (subsequent transaction). For U.S. income tax purposes, CFC1 recognizes U.S. disposition gain of 50u (amount realized of 120u, less U.S. basis of 70u (100u cost basis, less 30u of accumulated depreciation)) with respect to Asset A. The 30u of accumulated depreciation is the sum of 20u of depreciation in Year 1 (100u cost basis/5 years) and 10u of depreciation in Year 2 ((100u cost basis/5 years) × 6/12). For Country F tax purposes, CFC1 recognizes foreign disposition gain of 80u (amount realized of 120u, less foreign basis of 40u) with respect to Asset A. Immediately after the subsequent transaction, Asset A has a U.S. basis and a foreign basis of 120u.
(ii)
(B) Under § 1.901(m)-1(a)(5), allocated basis differences are comprised of cost recovery amounts and disposition amounts. In Year 1, Asset A has an allocated basis difference that includes only a cost recovery amount. Under paragraph (b)(2) of this section, the cost recovery amount for Year 1 is determined by applying the applicable cost recovery method of Asset A in the hands of CFC1 to the basis difference with respect to Asset A. Accordingly the cost recovery amount is 18u (90u basis difference/5 years). Under paragraph (b)(1) of this section, all of the 18u cost recovery amount is attributed to CFC1 and assigned to Year 1, because CFC1 is a section 901(m) payor and RFA owner (U.S.) with respect to Asset A and Year 1 is the U.S. taxable year of CFC1 in which it takes into account the corresponding 20u of depreciation. Immediately after Year 1, under § 1.901(m)-1(a)(40), unallocated basis difference is 72u with respect to Asset A(90u−18u).
(C) In Year 2, Asset A has an allocated basis difference that includes both a cost recovery amount and a disposition amount. Under paragraph (b)(2) of this section, the cost recovery amount for Year 2, as of the date of the subsequent transaction, is 9u ((90u basis difference/5 years) × 6/12). Under § 1.901(m)-1(a)(10), the subsequent transaction is a disposition of Asset A, because the subsequent transaction is an event that results in an amount of gain being recognized for U.S. income tax and Country F tax purposes. Because all realized gain in Asset A is recognized for U.S. income tax and Country F tax purposes, the rule in paragraph (c)(2)(i) of this section applies to determine the disposition amount. Under that rule, the disposition amount for Year 2 is the unallocated basis difference of 63u (90u basis difference, less total 27u taken into account as cost recovery amounts in Year 1 and Year 2). Accordingly, the allocated basis difference for Year 2 is 72u (9u of cost recovery amount, plus 63u of disposition amount). Under paragraphs (b)(1) and (c)(1) of this section, all of the 72u of allocated basis difference is attributed to CFC1 and assigned to Year 2, because CFC1 is a section 901(m) payor and the RFA owner (U.S.) with respect to Asset A and Year 2 is the U.S. taxable year of CFC1 in which it takes into account the corresponding 10u of depreciation and in which the disposition occurred.
(D) Unallocated basis difference with respect to Asset A, as determined immediately after the subsequent transaction, is 0u (90u basis difference less 90u basis difference taken into account as 27u total cost recovery amount in Year 1 and Year 2 and as a 63u disposition amount in Year 2). Accordingly, because there is no unallocated basis difference with respect to Asset A attributable to the Section 338 Acquisition, the subsequent transaction is not a successor transaction as defined in § 1.901(m)-6(b)(2). Furthermore, the subsequent transaction is not a CAA under § 1.901(m)-2(b). For these reasons, section 901(m) no longer applies to Asset A.
(ii)
(B) The result for Year 1 is the same as in paragraph (ii)(B) of
(C) In Year 2, Asset A has an allocated basis difference that includes both a cost recovery amount and a disposition amount. Under paragraph (b)(2) of this section, the cost recovery amount for Year 2, as of the date of the subsequent transaction, is 9u ((90u basis difference/5 years) × 6/12). Under § 1.901(m)-1(a)(10), the Transaction is a disposition of Asset A, because the subsequent transaction is an event that results in an amount of gain being recognized for Country F tax purposes. Because the disposition is not also fully taxable for U.S. income tax purposes, the rule in paragraph (c)(2)(ii) of this section applies to determine the disposition amount. Under that rule, the disposition amount is 60u, the lesser of (i) 60u (60u foreign disposition gain plus absolute value of 0u U.S. disposition loss), and (ii) 63u unallocated basis difference (90 basis difference less total 27u taken into account as cost recovery amounts, 18u in Year 1 and 9u in Year 2). Accordingly, the allocated basis difference for the first half of Year 2 is 69u (9u of cost recovery amount, plus 60u of disposition amount). Under paragraphs (b)(1) and (c)(1) of this section, all of the 69u of allocated basis difference is attributed to CFC1 and assigned to Year 2, because CFC1 is a section 901(m) payor and the RFA owner (U.S.) with respect to Asset A and Year 2 is the U.S. taxable year of CFC1 in which it takes into account the corresponding 10u of depreciation and in which the disposition occurred.
(D) Unallocated basis difference with respect to Asset A immediately after the subsequent transaction is 3u (90u basis difference less 87u basis difference taken into account as a 27u total cost recovery amount in Year 1 and Year 2 and as a 60u disposition amount in Year 2). Accordingly, because there is unallocated basis difference of 3u with respect to Asset A attributable to the Section 338 Acquisition, as determined immediately after the subsequent transaction, the subsequent transaction is a successor transaction as defined in § 1.901(m)-6(b)(2). Following the subsequent transaction, the unallocated basis difference of 3u must be taken into account as cost recovery amounts or disposition amounts (or both) by CFC2, the new section 901(m) payor and RFA owner (U.S.) of Asset A. See § 1.901(m)-6(b)(3)(ii). Because the subsequent transaction is not a CAA under § 1.901(m)-2(b), there is no additional basis difference with respect to Asset A as a result of the subsequent transaction.
(ii)
(B) The result for Year 1 is the same as in paragraph (ii)(B) of
(C) In Year 2, Asset A has an allocated basis difference that includes only a cost recovery amount. Under paragraph (b)(2) of this section, the cost recovery amount for Year 2, as of the date of the subsequent transaction, is 9u ((90u basis difference/5 years) × 6/12). Under § 1.901(m)-1(a)(10), the subsequent transaction does not constitute a disposition of Asset A, because the subsequent transaction is not an event that results in an amount of gain or loss being recognized for U.S. income tax or for Country F tax purposes. Therefore, no disposition amount is taken into account for Asset A in Year 2. Under paragraph (b)(1) of this section, all of the 9u of allocated basis difference is attributed to CFC1 and assigned to Year 2, because CFC1 is a section 901(m) payor and RFA owner (U.S.) with respect to Asset A and Year 2 is the U.S. taxable year of CFC1 in which it takes into account the corresponding 10u of depreciation.
(D) Unallocated basis difference with respect to Asset A immediately after the subsequent transaction is 63u (90u basis difference, less 27u total cost recovery amounts, 18u in Year 1 and 9u in Year 2). Accordingly, because there is unallocated basis difference of 63u with respect to Asset A attributable to the CAA, as determined immediately after the subsequent transaction, the subsequent transaction is a successor transaction as defined in § 1.901(m)-6(b)(2). Following the subsequent transaction, the unallocated basis difference of 63u must be taken into account as cost recovery amounts or disposition amounts (or both) by CFC2, the new section 901(m) payor and RFA owner (U.S.) of Asset A. See § 1.901(m)-6(b)(3)(ii). Because the subsequent transaction is not a CAA under § 1.901(m)-2(b), there is no additional basis difference with respect to Asset A as a result of the subsequent transaction.
(i)
(2) [The text of proposed § 1.901(m)-5(i)(2) is the same as the text of § 1.901(m)-5T(i)(2) published elsewhere in this issue of the
(3) Taxpayers may, however, rely on this section prior to the date this section is applicable provided that they both consistently apply this section, § 1.704-1(b)(4)(viii)(
(a) through (b)(2) [The text of proposed §§ 1.901(m)-6(a) through (b)(2) is the same as the text of §§ 1.901(m)-6T(a) through (b)(2) published elsewhere in this issue of the
(3)
(ii) Any subsequent cost recovery amount for an RFA transferred in a successor transaction is determined based on the post-transaction applicable cost recovery method, as described in § 1.901(m)-5(b)(3), that applies to the U.S. basis (or portion thereof) that corresponds to the unallocated basis difference.
(4)(i) [The text of proposed § 1.901(m)-6(b)(4)(i) is the same as the text of § 1.901(m)-6T(b)(4)(i) published elsewhere in this issue of the
(ii)
(b)(4)(iii) [The text of proposed § 1.901(m)-6(b)(4)(iii) is the same as the text of § 1.901(m)-6T(b)(4)(iii) published elsewhere in this issue of the
(5) [The text of proposed § 1.901(m)-6(b)(5) is the same as the text of § 1.901(m)-6T(b)(5) published elsewhere in this issue of the
(c)
(2)
(3)
(4)
(d)
(2) Paragraphs (b)(3), (b)(4)(ii), and (c) of this section apply to CAAs occurring on or after the date of publication of the Treasury decision adopting these rules as final regulations in the
(3) Taxpayers may, however, rely on this section prior to the date this section is applicable provided that they both consistently apply this section, § 1.704-1(b)(4)(viii)(
(a)
(b)
(2)
(i) $10 million, or
(ii) 10 percent of the total U.S. basis of all the RFAs immediately after the CAA.
(3)
(A) $2 million, or
(B) 10 percent of the total U.S. basis of all the RFAs in that class of RFAs immediately after the CAA.
(ii) For purposes of this paragraph (b)(3), the classes of RFAs are the seven asset classes defined in § 1.338-6(b), regardless of whether the CAA is a section 338 CAA.
(c)
(2)
(d)
(1) Whether a basis difference qualifies for the cumulative basis difference exemption or the RFA class exemption is determined when an asset first becomes an RFA with respect to a CAA. In the case of a subsequent CAA described in § 1.901(m)-6(b)(4), the application of the cumulative basis difference exemption and the RFA class exemption is based on basis difference, if any, that results from the subsequent CAA.
(2) If there is an aggregated CAA transaction, the cumulative basis difference exemption and each RFA class exemption are applied by treating all CAAs that are part of the aggregated CAA transaction as a single CAA.
(3) Basis difference is computed in accordance with § 1.901(m)-4 except that a foreign basis election need not be evidenced if either the cumulative basis difference exemption or an RFA class exemption apply to all RFAs with respect to the CAA.
(4) Basis difference is translated into U.S. dollars (if necessary) using the spot rate determined under the principles of § 1.988-1(d) on the date of the CAA.
(e)
(f)
(ii)
(B) Under paragraph (b)(2) of this section, the application of the cumulative basis difference exemption is based on a single CAA and a single RFA owner (U.S.), subject to the requirements under paragraph (c)(2) of this section that apply when there is an aggregated CAA transaction. In the case of the section 338 CAA with respect to CFC1, without regard to paragraph (c)(2) of this section, the requirements of the cumulative basis difference exemption are satisfied if the sum of the basis differences is less than the threshold of $10 million, the greater of $10 million or $6 million (10% of the total U.S. basis of $60 million (60 million u translated into dollars at the exchange rate of $1 = 1u)). In this case, the sum of the basis differences is $12 million (12 million u translated into dollars at the exchange rate of $1 = 1 u). Because the sum of the basis differences of $12 million is not less than the threshold of $10 million, the requirements of the cumulative basis difference exemption are not satisfied. Because the requirements of the cumulative basis difference exemption are not satisfied, without regard to paragraph (c)(2) of this section, paragraph (c)(2) of this section is not applicable. Finally, the RFA class exemption is not relevant because all of the RFAs of CFC1 are in a single class. Accordingly, the basis differences with respect to all of the RFAs of CFC1 must be taken into account under section 901(m).
(C) In the case of the section 338 CAA with respect to CFC2, without regard to paragraph (c)(2) of this section, the requirements of the cumulative basis difference exemption are satisfied if the sum of the basis differences is less than the threshold of $10 million, the greater of $10 million or $ 9.6 million (10% of the total U.S. basis of $96 million (96 million u translated into dollars at the exchange rate of $1 = 1u)) In this case, the sum of the basis differences is ($4) million ((4) million u translated into dollars at the exchange rate of $1 = 1 u). Because the sum of the basis differences of ($4) million is less than the threshold of $10 million, the requirements of the cumulative basis difference exemption are satisfied. However, because the section 338 CAA with respect to CFC2 is part of an aggregate CAA transaction that includes the section 338 CAA with respect to CFC1, paragraph (c)(2) of this section is applicable. Under paragraph (c)(2) of this section, the requirements of the cumulative basis difference exemption must also be satisfied taking into account all of the RFAs of both CFC2 and CFC1. In this case, the requirements of the cumulative basis difference exemption for purposes of paragraph (c)(2) of this section are satisfied if the sum of the basis differences with respect to all of the RFAs of CFC2 and CFC1 is less than the threshold of $15.6 million, the greater of $10 million or $15.6 million (10% of the total U.S. basis of $156 million (156 million u translated into dollars at the exchange rate of $1 = 1u)) In this case, the sum of the basis differences is $8 million (8 million u translated into dollars at the exchange rate of $1 = 1 u). Because the sum of the basis differences of $8 million is less than the threshold of $15.6 million, the requirements of the cumulative basis difference exemption are satisfied in the case of the section 338 CAA with respect to CFC2. Accordingly, none of the basis differences with respect to the RFAs of CFC2 are taken into account under section 901(m).
(ii)
(B) Under paragraph (b)(2) of this section, the requirements of the cumulative basis difference exemption are satisfied if the sum of the basis differences is less than the threshold of $10 million, the greater of $10 million or $5.5 million (10% of the total U.S. basis of $55 million (55 million u translated into dollars at the exchange rate of $1 = 1u)). In this case, the sum of the basis differences is $12 million (12 million u translated into dollars at the exchange rate of $1 = 1 u). Because the sum of the basis differences of $12 million is not less than the threshold of $10 million, the requirements of the cumulative basis difference exemption are not satisfied.
(C) Under paragraph (b)(3) of this section, each of CFC's assets is allocated to its class under § 1.338-6(b) for purposes of the RFA class exemption. The requirements of the RFA class exemption with respect to the Class IV RFAs (in this case, inventory) are satisfied if the absolute value of the sum of the basis differences with respect to the Class IV RFAs is less than the threshold of $2
(D) The requirements of the RFA class exemption with respect to the Class V RFAs (in this case, buildings) is satisfied if the absolute value of the sum of the basis differences with respect to the Class V RFAs is less than the threshold of $3 million, the greater of $2 million or $3 million (10% of the total U.S. basis of Class V RFAs of $30 million (30 million u translated into dollars at the exchange rate of $1 = 1u)). In this case, the absolute value of the sum of the basis differences is $11 million (11 million u translated into dollars at the exchange rate of $1 = 1 u). Because the sum of the basis differences of $11 million is not less than the threshold of $3 million, the requirements of the RFA class exemption are not satisfied. Accordingly, the basis differences with respect to the Class V RFAs are taken into account under section 901(m).
(E) The Class I RFAs (in this case, cash) are irrelevant because there is no basis differences with respect to those RFAs.
(g)
(a)
(b)
(c)
(d)
Departmental Offices, Department of the Treasury.
Interim final rule with request for comment.
The Department of the Treasury (Treasury) is issuing this interim final rule as part of its implementation of changes to the Terrorism Risk Insurance Program (Program) required by the Terrorism Risk Insurance Program Reauthorization Act of 2015 (2015 Reauthorization Act). This interim final rule only addresses the process for certification of an act of terrorism, as published in proposed form on April 1, 2016, for public comment. Some clarifying changes have been made in this interim final rule in response to comments, and certain wording changes have also been made which are not intended to change the meaning of the rule as originally proposed.
The proposed rule includes a more general revision to and renumbering of the Program rules which will be issued in full at a later date. Accordingly, for now, the new subpart is renumbered to avoid duplication with the existing rule numbers. Upon issuance of the final rules for the Program, the final rules will reflect the numbering sequence in the notice of proposed rulemaking published on April 1, 2016.
Submit comments electronically through the Federal eRulemaking Portal:
In general, comments received will be posted on
Richard Ifft, Senior Insurance Regulatory Policy Analyst, Federal Insurance Office, 202-622-2922 (not a toll free number) or Kevin Meehan, Senior Insurance Regulatory Policy Analyst, Federal Insurance Office, 202-622-7009 (not a toll free number).
The Terrorism Risk Insurance Act of 2002 (the Act or TRIA)
The Program has been reauthorized three times.
To date, rules establishing general provisions implementing the Program, including key definitions, and requirements for policy disclosures and mandatory availability, are found in subparts A, B, and C of 31 CFR part 50.
No rules concerning the certification process have previously been proposed or issued by Treasury.
The proposed rule on which this interim final rule is based was published in the
Pursuant to the 2015 Reauthorization Act, Treasury submitted a report to Congress in October 2015 entitled
[T]here is no way to predict future events and ascertain a time frame that would be appropriate for all potential situations. Facts could be immediately available and, after consultation, present a clear basis for a quick determination by the Secretary; conversely, a determination could require more time to gather information and conduct an analysis of the act.
Treasury is now issuing this interim final rule concerning the certification process after careful consideration of all comments received on the proposed rule. While this interim final rule largely reflects the proposed rule, Treasury has made several revisions based on the comments received, and Treasury solicits comment on the changes to the timeline for eligibility for certification adopted in this interim final rule. Treasury expects to issue final rules based on this interim final rule and the rules proposed in the Notice of Proposed Rulemaking published on April 1, 2016 in the near future.
Ten commenters responded to the proposed rule concerning the certification process. The ten commenters included insurance industry trade associations; a trade association representing consumers of terrorism risk insurance; an insurance company; Lloyd's (an insurance and reinsurance market); a captive insurance manager; and an individual.
Proposed § 50.60 sets forth the general parameters of the certification process, as required under TRIA, as amended by the 2015 Reauthorization Act. It establishes in paragraph (b) that, from a timing standpoint, an act which satisfies the definition of an act of terrorism is eligible for certification once the Secretary has consulted with the Attorney General of the United States and the Secretary of Homeland Security, in accordance with the requirements of the Reauthorization Act. Most of the comments received by Treasury concerning the certification process involve this provision. One comment states that the proposed rule “falls short of what was required by Congress” with respect to the certification process because there is no “clear timeline for certification decisions.”
The 2015 Reauthorization Act, at Section 107(e), requires only that a final rule concerning the certification process include “a timeline for which an act is eligible for certification by the Secretary on whether an act is an act of terrorism under this paragraph.” This means that Section 107(e) requires that Treasury promulgate rules establishing a timeline for when an act is
The 2015 Reauthorization Act also does not include any requirements for including specific deadlines in the eligibility timeline. Indeed, the previously proposed version of the 2015 Reauthorization Act did contain such specific deadline requirements, s
Treasury also believes that it would not be prudent to adopt such a timeline that includes such strict deadlines. The principal problems the study identified with imposing a time by which an act must be certified are two-fold. First, certification may implicate complex issues relating to the motivation of the actor(s) involved in a particular situation or the actual facts of the situation, all of which may be subject to ongoing criminal investigations (of unknown duration), and Treasury may need to await the results of such investigations before determining whether to certify an act of terrorism.
The second problem identified in the report is that, in many cases, insurance losses may take substantial periods of time to develop before Treasury can determine whether an act is even eligible for certification.
The renewed calls for a timeline subject to precise deadlines have also been based upon arguments that insurers require a quick decision respecting certification of an act of terrorism because of the effect that this determination might have upon coverage issues, and their obligations to respond promptly to claims under state law provisions.
Although Treasury appreciates insurers have obligations to respond to claims in a timely fashion, the state law obligations that have been invoked are subject to extensions when a greater period of time is necessary to make a claims determination.
While Treasury believes, based on the statutory text and the findings in the Certification Report, that adopting strict deadlines is neither required by statute nor an appropriate policy decision, the regulations as adopted in this interim final rule have been modified to more clearly lay out a timeline for whether an act is eligible for certification by the Secretary as an act of terrorism. Each of the events outlined in this interim final rule were contemplated in the proposed rule, but are now consolidated in a single schedule to provide for greater clarity. The timeline in this interim final rule clarifies that there will be (1) a commencement to this process, subject to public notification, as discussed in proposed § 50.61(a); (2) regular public notification under the schedule set forth in proposed § 50.61(b); (3) a period of time during which the Secretary evaluates the factors relevant to the certification decision, which is subject to regular public notification of continued review, as reflected in proposed § 50.61(b); and (4) a consultation between the Secretary and the Attorney General and Secretary of Homeland Security, as required by TRIA, as reflected in proposed § 50.60(a), (b). Because the consultation required by TRIA will take place after the Secretary has obtained relevant information and completed the review identified in Step 3, the concerns militating against adoption of specific deadlines do not apply to the timing of the consultation. Therefore, Treasury can and has identified a time period of 30 days during which this action can be expected to occur. Treasury specifically
Two commenters suggested the inclusion of a provision that would permit an interested party (identified as either an insurer or a policyholder) to request that Treasury make a certification determination regarding a particular act.
Initially, the certification decision is entrusted to the Secretary, who is empowered with non-delegable authority under TRIA to determine whether to certify an act as an act of terrorism, once there has been the required consultation between the Secretary, the Attorney General, and the Secretary of Homeland Security. TRIA recognizes the high levels of sensitivity embodied in this determination by making this decision final and not subject to judicial review. The Secretary, in consultation with the Attorney General and the Secretary of Homeland Security, may, for instance, conclude that law enforcement priorities require waiting to make the certification decision. Permitting an insurer or policyholder to trigger a certification determination, or to be able to dispute the certification or non-certification of an event would be inconsistent with TRIA's delegation of authority to the Secretary to make the determination on a non-reviewable basis. Moreover, nothing in TRIA or Treasury's proposed rules prohibits a stakeholder from contacting Treasury to bring to its attention an event that the stakeholder believes might be subject to certification under TRIA, or other information relevant to that event. Treasury's adoption of proposed § 50.62(b) specifically recognizes the value that stakeholder input has to the certification process. Furthermore, a dispute resolution or notice and comment procedure would only operate to delay a certification determination, which is inconsistent with comments otherwise offered that a timeline is necessary to insure that a timely certification decision is made.
Two additional comments concerning proposed § 50.60 warrant attention. First, two commenters note that proposed § 50.60(a), as currently proposed, could be read to require that the Secretary consult with the Attorney General and the Secretary of Homeland Security even when ultimately deciding not to certify an act as an act of terrorism.
Second, another comment observes that there is circularity in the provisions of proposed § 50.60(b), respecting the timing of when a certification decision can take place, in that the cross-reference in proposed § 50.60(b) to proposed § 50.4(b) (the “act of terrorism” definition) incorporates the consultation process which then would have to take place before the consultation process identified in proposed § 50.60(b). Thus, the commenter observes, proposed § 50.60(b) could be read to suggest “that no act could ever be certified because only previously certified acts are eligible for certification,” and that the provision should just be deleted.
Proposed § 50.60(b) cannot be eliminated, as it is a necessary provision setting forth the timeline for when an act is eligible for certification by the Secretary as an act of terrorism. Treasury's modification of proposed § 50.60(b) to better reflect the timeline contemplated in the proposed rule resolves this ambiguity. As noted, this formulation is already contemplated by the proposed rules, and as expressed in this fashion provides for a clearer ordering of the relevant milestones that avoids the potential circularity issue identified in the comments.
For the reasons set forth above, Treasury will modify proposed § 50.60 as described above, and adopt in this interim final rule § 50.100 as so amended. As noted at the outset, this section of the interim final rule is for now adopted as § 50.100 to avoid duplication with existing rule numbers, and we anticipate it will be renumbered to § 50.60 in the final rule.
Proposed § 50.61 addresses the commencement of the certification process and public communication concerning the process. As Treasury explained in the Certification Report, public communication respecting the certification process provides the public with necessary information concerning the certification process in a way that is not subject to the problems inherent with a strict timeline, as addressed above.
In response to the comments, Treasury has modified proposed § 50.61(a) to provide that once the Secretary commences review, Treasury shall publish a document in the
As respects the comment that a revision to proposed § 50.61(a) may be in order to confirm that public notification should not be expected simply on account of the “routine monitoring of events” by Treasury, the proposed rule should not engender any such expectations. Notice will be
For the above reasons, Treasury will modify proposed § 50.61 as described above, and adopt in this interim final rule § 50.101 as so amended. As noted at the outset, this section of the interim final rule is for now adopted as § 50.101 to avoid duplication with existing rule numbers, and we anticipate it will be renumbered to § 50.61 in the final rule.
A few comments were received concerning proposed § 50.62, which establishes rules for the collection of data by Treasury in aid of the certification process. Under TRIA, the Secretary may not certify an act as an act of terrorism unless property and casualty insurance losses resulting from the act, in the aggregate, exceed $5 million. Treasury may need to collect data from insurers, as well as from other entities in the insurance industry, in connection with its analysis of whether the insurance losses resulting from an act under review for certification satisfy the loss threshold.
No comments were received asserting that the proposed rule was unnecessary.
Another comment observed that any certification data collection process should be “a streamlined, orderly method for collecting and organizing data from carriers and their affiliates, as well as a federal consolidation point for claims data (perhaps FIO),” and encourages that any final rules “include a centralized data collection process for purposes of the certification determination.”
Although Treasury is in agreement with the sentiments of this comment, proposed § 50.62 sets forth the sort of process identified by the commenter. The certification process is one that is solely within the responsibility of the Secretary, who is assisted by FIO in the administration of the Program. Proposed § 50.62 sets forth a process under which Treasury will collect insurance-related information relevant to the certification decision, and does not contemplate that this will be accomplished through any other federal agencies or processes. While requests are likely to be tailored to address a particular situation, such that different requests may be made from case to case, nothing in the rule contemplates any sort of process that would subject responding entities to conflicting, disparate requests for information.
For the above reasons, Treasury is adopting § 50.102 as it was proposed. As noted at the outset, this section of the interim final rule is for now adopted as § 50.102 to avoid duplication with existing rule numbers, and we anticipate it will be renumbered to § 50.62 in the final rule.
Proposed § 50.63 provides for
Treasury acknowledges that it monitors events and situations that, given their circumstances, could potentially involve the Program. The proposed certification rules address and contemplate situations in which the Secretary (1) determines that an act will or will not be certified as an act of terrorism without any prior advance notification to the public (see proposed § 50.61(d), as adopted below); or (2) commences review of whether to certify an act as an act of terrorism, as provided for in proposed § 50.61(a). The notification procedures under proposed § 50.63 govern these situations, once a decision whether to certify has been made by the Secretary.
For the above reasons, Treasury is adopting § 50.63 as it was proposed. As noted at the outset, this section of the interim final rule is for now adopted as § 50.103 to avoid duplication with existing rule numbers, and we anticipate it will be renumbered to § 50.63 in the final rule.
Insurance, Terrorism.
For the reasons stated in the preamble, 31 CFR part 50 is amended as follows:
5 U.S.C. 301; 31 U.S.C. 321; Title I, Pub. L. 107-297, 116 Stat. 2322, as amended by Pub. L. 109-144, 119 Stat. 2660, Pub. L. 110-160, 121 Stat. 1839 and Pub. L. 114-1, 129 Stat. 3 (15 U.S.C. 6701 note).
(a)
(b)
(1) The Secretary commences review of whether an act satisfies the definition in § 50.5(b);
(2) Within 30 days of the Secretary commencing review, Treasury publishes the notice required by § 50.101(a). During such review, the schedule of public notifications in § 50.101(b) shall apply, as appropriate;
(3) The Secretary's review finds that the act satisfies the elements for certification under § 50.5(b)(1)(i) through (iv), and that it is not otherwise precluded from certification by § 50.5(b)(2); and
(4) Within 30 days or as soon as otherwise practicable after the review identified in paragraph (b)(3) of this section concludes that the act satisfies the necessary criteria, the Secretary consults with the Attorney General of the United States and the Secretary of Homeland Security pursuant to section 102(1)(A) of the Act.
(c)
(d)
(e)
(a)
(b)
(c)
(d)
(e)
(a)
(2) An insurer not required by Treasury to submit information under paragraph (a)(1) of this section may voluntarily submit information to the Secretary as specified in public notifications issued by Treasury.
(b)
(a)
(b)
(c)
(d)
Departmental Offices, Department of the Treasury.
Interim final rule.
The Department of the Treasury (Treasury) is amending its regulations to adjust the civil penalty amount provided for under the Terrorism Risk Insurance Act of 2002 (TRIA). This action, including the amount of the adjustment, is required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015.
Submit comments electronically through the Federal eRulemaking Portal:
In general, comments received will be posted on
Richard Ifft, Senior Insurance Regulatory Policy Analyst, Federal Insurance Office, 202-622-2922 (not a toll free number) or Kevin Meehan, Senior Insurance Regulatory Policy Analyst, Federal Insurance Office, 202-622-7009 (not a toll free number).
TRIA
Section 104(e) of TRIA authorizes the Secretary to assess civil penalties for certain violations of statutory and regulatory provisions concerning the administration of the Terrorism Risk Insurance Program and the assertions of claims under the Program by participating insurers. The civil penalty amount under TRIA may not exceed the greater of $1,000,000 or the amount in dispute in the case of any failure to pay, charge, collect, or remit amounts in accordance with requirements of TRIA or its implementing regulations. Treasury recently proposed implementing regulations for this provision for the first time (TRIP Rule).
The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015
Section 5(b) of the Improvements Act defines the initial cost-of-living adjustment as “the percentage (if any) for each civil monetary penalty by which the Consumer Price Index for the month of October 2015 exceeds the Consumer Price Index for the month of October of the calendar year during which the amount of such civil monetary penalty was established or adjusted pursuant to law.” Section 5(a) requires that any increase be rounded to the nearest multiple of $1.
In the TRIP Rule, Treasury proposed, among other provisions, adjusting the civil penalties amount based on the formula required by the FCPIA Act before its amendment by the Improvements Act. Adoption of the amount proposed in the TRIP Rule would not comply with the requirements of the Improvement Act. Therefore, when Treasury issues the final TRIP Rule provisions respecting the assessment of civil penalties, the civil penalty amount authorized under Section 104(e) of TRIA will remain the amount reflected in this adjustment.
Because the Improvements Act requires that civil penalty amounts be adjusted by an interim final rulemaking issued no later than July 1, 2016, Treasury is issuing this interim final rule to adjust the existing civil penalty amount under TRIA from $1,000,000 to $1,311,850. This adjustment will take effect upon publication of this interim final rule.
This interim final rule also provides for the annual readjustment of the civil penalty amount under TRIA as required by the Improvements Act. Although currently numbered as 31 CFR 50.86, we anticipate that the provisions contained in this interim final rule will be renumbered as 31 CFR 50.83 and included in any TRIP final rules as ultimately issued, pursuant to Treasury's April 1, 2016 Notice of Proposed Rulemaking.
Under the Improvements Act, Treasury is required to adjust the level of the TRIA civil monetary penalty with an initial “catch up” adjustment through this interim final rulemaking. The calculation is based upon the percentage by which the Consumer Price Index (CPI-U) for October 2002 (the year the TRIA civil penalty was established) exceeds the October 2015 CPI-U. That calculation results in a multiplier of 1.31185, meaning that the CPI-U from 2015 exceeds the CPI-U from 2002 by 31.185%. Based on the original $1,000,000 civil penalty amount, Treasury is adjusting the current civil penalty amount (with an increase rounded to the nearest dollar, as required by the Improvements Act) to $1,311,850.
Treasury invites comments on this notice. Commenters are specifically encouraged to identify any technical issues raised by the rule.
Under the Improvements Act, civil penalties are to be adjusted by interim final rule. Because Treasury must adjust the civil penalties provision of TRIA according to a statutory formula and because the law mandates use of an interim final rule to make the adjustment, Treasury finds that good cause exists to forego publishing a notice of proposed rulemaking and providing opportunity for public comment under the Administrative Procedure Act. 5 U.S.C. 553(b)(3)(B). Because the statute provides for these adjustments to go into effect by August 1, 2016, Treasury finds that good cause exists for this interim final rule to go into effect upon publication. 5 U.S.C. 553(d)(3). Because these adjustments are mandated by statute and do not involve the exercise of Treasury's discretion or any policy judgments, public notice and comment before adopting these amendments as final is unnecessary. Because no general notice of proposed rulemaking is required, the requirements of the Regulatory Flexibility Act
Insurance, Terrorism.
For the reasons stated in the preamble, the Department of the Treasury amends 31 CFR part 50 as follows:
5 U.S.C. 301; 31 U.S.C. 321; Title I, Pub. L. 107-297, 116 Stat. 2322, as amended by Public Law 109-144, 119 Stat. 2660, Pub. L. 110-160, 121 Stat. 1839 and Pub. L. 114-1, 129 Stat. 3 (15 U.S.C. 6701 note); Pub. L. 114-74, 129 Stat. 601, Title VII (28 U.S.C. 2461 note).
(a)
(b)
(a) There is credible evidence that leads me to believe that: (1) Grand Chip Investment GmbH, a limited liability company organized under the laws of the Federal Republic of Germany (Grand Chip); (2) Grand Chip's parent companies Grand Chip Investment S.a.r.l., a company organized under the laws of the Grand Duchy of Luxembourg (GC Investment), and Fujian Grand Chip Investment Fund LP, a limited partnership organized under the laws of the People's Republic of China (Fujian Grand); and (3) Fujian Grand's partners, Mr. Zhendong Liu, a citizen of the People's Republic of China (Mr. Liu), and Xiamen Bohao Investment Co. Ltd., a company organized under the laws of the People's Republic of China (Xiamen Bohao and, together with Grand Chip, GC Investment, Fujian Grand, and Mr. Liu, the Purchasers), through exercising control of the U.S. business of AIXTRON SE., a company organized under the laws of the Federal Republic of Germany (Aixtron), might take action that threatens to impair the national security of the United States. The U.S. business of Aixtron consists of AIXTRON, Inc., a California corporation, the equity interests of AIXTRON, Inc., and any asset of Aixtron or AIXTRON, Inc. used in, or owned for the use in or benefit of, the activities in interstate commerce in the United States of AIXTRON, Inc., including without limitation any interest in any patents issued by, and any interest in any patent applications pending with, the United States Patent and Trademark Office (collectively, Aixtron US); and
(b) Provisions of law, other than section 721 and the International Emergency Economic Powers Act (50 U.S.C. 1701
(a) The proposed acquisition of Aixtron US by the Purchasers is hereby prohibited, and any substantially equivalent transaction, whether effected directly or indirectly through the Purchasers' shareholders, partners, subsidiaries, or affiliates is prohibited.
(b) In order to effectuate this order, the Purchasers and Aixtron shall take all steps necessary to fully and permanently abandon the proposed acquisition of Aixtron US not later than 30 days after the date of this order, unless such date is extended by the Committee on Foreign Investment in the United States (CFIUS) for a period not to exceed 90 days, on such written conditions as CFIUS may require. Immediately upon completion of all steps necessary to terminate the proposed acquisition of Aixtron US, the Purchasers and Aixtron shall certify in writing to CFIUS that such termination has been effected in accordance with this order and that all steps necessary to fully and permanently abandon the proposed acquisition of Aixtron US have been completed.
(c) From the date of this order until the Purchasers and Aixtron provide a certification of termination of the proposed acquisition to CFIUS pursuant to subsection (b) of this section, the Purchasers and Aixtron shall certify to CFIUS on a weekly basis that they are in compliance with this order and include a description of efforts to permanently abandon the proposed acquisition of Aixtron US and a timeline for projected completion of remaining actions.
(d) Any transaction or other device entered into or employed for the purpose of, or with the effect of, avoiding or circumventing this order is prohibited.
(e) The Attorney General is authorized to take any steps necessary to enforce this order.
(b) I hereby direct the Secretary of the Treasury to transmit a copy of this order to the appropriate parties named in section 1 of this order.
| 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 |