| Page Range | 27287-27503 | |
| FR Document |
| Page and Subject | |
|---|---|
| 83 FR 27287 - Continuation of the National Emergency With Respect to the Actions and Policies of Certain Members of the Government of Belarus and Other Persons To Undermine Democratic Processes or Institutions of Belarus | |
| 83 FR 27355 - Sunshine Act Meeting Notice | |
| 83 FR 27291 - Addition of Nonylphenol Ethoxylates Category; Community Right-to-Know Toxic Chemical Release Reporting | |
| 83 FR 27327 - Information Collection Approved by the Office of Management and Budget | |
| 83 FR 27328 - Information Collection Being Submitted for Review and Approval to the Office of Management and Budget | |
| 83 FR 27290 - Safety Zones; Annual Fireworks Displays Within the Sector Columbia River Captain of the Port Zone | |
| 83 FR 27354 - Notice of Intent To Seek Approval To Extend a Current Information Collection | |
| 83 FR 27314 - Study on Macroeconomic Outcomes of LNG Exports | |
| 83 FR 27366 - Agency Information Collection Activities: Requests for Comments; Clearance of Renewed Approval of Information Collection: Special Awareness Training for the Washington DC Metropolitan Area | |
| 83 FR 27365 - Agency Information Collection Activities: Requests for Comments; Clearance of Renewed Approval of Information Collection: Reduced Vertical Separation Minimum | |
| 83 FR 27362 - 30-Day Notice of Proposed Information Collection: Six DDTC Information Collections | |
| 83 FR 27353 - Notice of Intent To Seek Approval To Establish an Information Collection | |
| 83 FR 27330 - Agency Information Collection Activities; Submission for Office of Management and Budget Review; Comment Request; Qualified Facility Attestation | |
| 83 FR 27332 - Agency Information Collection Activities; Submission for Office of Management and Budget Review; Comment Request; Irradiation in the Production, Processing, and Handling of Food | |
| 83 FR 27313 - International Internet Policy Priorities | |
| 83 FR 27352 - National Council on the Arts 194th Meeting | |
| 83 FR 27344 - Notice of Public Meeting: Sierra Front-Northwestern Great Basin Resource Advisory Council, Nevada | |
| 83 FR 27343 - Notice of Public Meeting, Farmington District Resource Advisory Council, New Mexico | |
| 83 FR 27349 - Certain Infotainment Systems, Components Thereof, and Automobiles Containing the Same: Institution of investigation | |
| 83 FR 27342 - National Invasive Species Council; Notice of Public Meeting | |
| 83 FR 27333 - General Principles for Evaluating the Human Food Safety of New Animal Drugs Used in Food-Producing Animals; Guidance for Industry; Availability | |
| 83 FR 27365 - Petition for Exemption; Summary of Petition Received; John D. Odegard School of Aerospace of the University of North Dakota | |
| 83 FR 27370 - Community Development Financial Institutions Fund | |
| 83 FR 27350 - State, Local, Tribal, and Private Sector Policy Advisory Committee (SLTPS-PAC) | |
| 83 FR 27367 - Aviation Rulemaking Advisory Committee-Transport Airplane and Engine Subcommittee; Meeting | |
| 83 FR 27325 - Notice of Complaint: CPV Power Holdings, LP, Calpine Corporation, Eastern Generation, LLC v. PJM Interconnection, LLC | |
| 83 FR 27323 - Notice of Complaint: North Carolina Electric Membership Corporation v. Duke Energy Progress, LLC | |
| 83 FR 27322 - Notice of Request Under Blanket Authorization: National Fuel Gas Supply Corporation | |
| 83 FR 27324 - Notice of Request Under Blanket Authorization: Equitrans, LP | |
| 83 FR 27320 - Notice of Intent To Prepare an Environmental Assessment for the Proposed Transcontinental Gas Pipe Line Company, LLC Southeastern Trail Project, Request for Comments on Environmental Issues, and Notice of Public Scoping Sessions | |
| 83 FR 27318 - Supplemental Notice of Technical Conference: Reliability Technical Conference | |
| 83 FR 27330 - Formations of, Acquisitions by, and Mergers of Bank Holding Companies | |
| 83 FR 27310 - Utility Scale Wind Towers From the People's Republic of China: Rescission of Countervailing Duty Administrative Review; 2016 | |
| 83 FR 27311 - Certain Circular Welded Carbon Steel Pipes and Tubes From Taiwan: Preliminary Results of Antidumping Duty Administrative Review and Preliminary Determination of No Shipments; 2016-2017 | |
| 83 FR 27310 - Steel Wire Garment Hangers From the Socialist Republic of Vietnam: Rescission of Countervailing Duty Administrative Review; 2017 | |
| 83 FR 27341 - Section 8 Housing Assistance Payments Program-Fiscal Year 2018 Inflation Factors for Public Housing Agency Renewal Funding; Correction and Extension of Public Comment Due Date | |
| 83 FR 27300 - Fisheries of the Caribbean, Gulf of Mexico, and South Atlantic; 2018 Commercial Accountability Measure and Closure for South Atlantic Gray Triggerfish; January Through June Season | |
| 83 FR 27308 - Notice of Request for Reinstatement of an Information Collection; National Animal Health Monitoring System; Goat 2019 Study | |
| 83 FR 27362 - Notice of Determinations; Culturally Significant Objects Imported for Exhibition Determinations: “John Singer Sargent and Chicago's Gilded Age” Exhibition | |
| 83 FR 27313 - Notice of Opportunity To Seek Partners for a Cooperative Research and Development Agreement and Licensing Opportunity for Patent No. 9,303,932 B1, Issued April 5, 2016 Entitled “Firearm With Both Gas Delayed and Stroke Piston Action” | |
| 83 FR 27340 - Agency Information Collection Activities: Guam-CNMI Visa Waiver Information | |
| 83 FR 27307 - Submission for OMB Review; Comment Request | |
| 83 FR 27323 - Magic Reservoir Hydroelectric, Inc., Big Wood Canal Company; Notice of Application for Transfer of License and Soliciting Comments, Motions To Intervene, and Protests | |
| 83 FR 27318 - PB Energy, Inc.; Notice of Application Tendered for Filing With the Commission, Soliciting Additional Study Requests, and Intent To Waive Second Stage Consultation | |
| 83 FR 27324 - DC Energy, LLC v. PJM Interconnection, L.L.C.; Notice of Complaint | |
| 83 FR 27319 - Combined Notice of Filings #1 | |
| 83 FR 27351 - Freedom of Information Act Advisory Committee | |
| 83 FR 27375 - Open Meeting of the Taxpayer Advocacy Panel Joint Committee: Change | |
| 83 FR 27372 - Proposed Collection; Comment Request for Revenue Procedure 2003-33 | |
| 83 FR 27376 - Proposed Collection; Comment Request for Form 8858 | |
| 83 FR 27374 - Proposed Collection; Comment Request for Regulation Project | |
| 83 FR 27347 - Notice of Intent To Prepare an Environmental Impact Statement, New Mexico Unit of the Central Arizona Project; Catron, Grant, and Hidalgo Counties, New Mexico | |
| 83 FR 27375 - Proposed Collection; Comment Request for Regulation Project | |
| 83 FR 27368 - Request for Comments on the Renewal of a Previously Approved Information Collection: U.S. Merchant Marine Academy Candidate Application for Admission | |
| 83 FR 27369 - Requested Administrative Waiver of the Coastwise Trade Laws: Vessel CUT TO THE CHAISE; Invitation for Public Comments | |
| 83 FR 27370 - National Advisory Committee on Travel and Tourism Infrastructure; Notice of Public Meeting | |
| 83 FR 27339 - Center for Substance Abuse Treatment: Notice of Meeting | |
| 83 FR 27290 - Defense Information Systems Agency Freedom of Information Act Program | |
| 83 FR 27374 - Proposed Collection; Comment Request for Form 8864 | |
| 83 FR 27373 - Proposed Collection; Comment Request for Form 911 | |
| 83 FR 27373 - Proposed Collection; Comment Request for Regulation Project | |
| 83 FR 27302 - Arbitrage Investment Restrictions on Tax-Exempt Bonds | |
| 83 FR 27366 - Agency Information Collection Activities: Requests for Comments; Clearance of a Renewed Approval of Information Collection: Aviation Maintenance Technician Schools | |
| 83 FR 27368 - Agency Information Collection Activities: Requests for Comments; Clearance of a Renewed Approval of Information Collection: Protection of Voluntarily Submitted Information | |
| 83 FR 27377 - VA Prevention of Fraud, Waste, and Abuse Advisory Committee; Notice of Meeting | |
| 83 FR 27342 - Agency Information Collection Activities; Yukon-Kuskokwim Delta Berry Outlook | |
| 83 FR 27347 - Gateway National Recreation Area Fort Hancock 21st Century Advisory Committee | |
| 83 FR 27377 - Multiemployer Pension Plan Application To Reduce Benefits | |
| 83 FR 27329 - Interagency Coordination of Formal Corrective Action by the Federal Bank Regulatory Agencies; Rescission of Policy Statement | |
| 83 FR 27371 - Policy Statement on Interagency Notification of Formal Enforcement Actions | |
| 83 FR 27355 - Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Designation of a Longer Period for Commission Action on Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1 Thereto, To List and Trade Shares of Each Series of the Cboe Vest S&P 500 Buffer Protect Strategy ETF Under the ETF Series Solutions Trust Under Rule 14.11(c)(3), Index Fund Shares | |
| 83 FR 27305 - International Fisheries; Eastern Pacific Tuna Fisheries; Western and Central Pacific Fisheries for Highly Migratory Species; Area of Overlap Between the Convention Areas of the Inter-American Tropical Tuna Commission and the Western and Central Pacific Fisheries Commission | |
| 83 FR 27356 - Self-Regulatory Organizations; ICE Clear Europe Limited; Order Approving Proposed Rule Change Relating to the ICE Clear Europe CDS End-of-Day Price Discovery Policy | |
| 83 FR 27356 - Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Designation of a Longer Period for Commission Action on Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1 Thereto, To List and Trade Shares of Series of the Cboe Vest S&P 500 Enhanced Growth Strategy ETF Under the ETF Series Solutions Trust Under Rule 14.11(c)(3) | |
| 83 FR 27359 - Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Amendments to the ICC Clearing Rules To Implement the European Union General Data Protection Regulation | |
| 83 FR 27360 - Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of Filing of Proposed Rule Change Relating to Formalization of the ICC Model Validation Framework | |
| 83 FR 27297 - Fisheries of the Caribbean, Gulf of Mexico, and South Atlantic; Reef Fish Fishery of the Gulf of Mexico; Modifications to Individual Fishing Quota Programs | |
| 83 FR 27378 - Rehabilitation Research and Development Service Scientific Merit Review Board; Notice of Meetings | |
| 83 FR 27309 - Information Collection Activity; Comment Request | |
| 83 FR 27317 - State Energy Advisory Board | |
| 83 FR 27317 - Nuclear Energy Advisory Committee | |
| 83 FR 27303 - Federal Acquisition Regulation: Exception From Certified Cost or Pricing Data Requirements-Adequate Price Competition | |
| 83 FR 27289 - Inspection Application Requirements | |
| 83 FR 27330 - Formations of, Acquisitions by, and Mergers of Savings and Loan Holding Companies | |
| 83 FR 27335 - National Library of Medicine; Notice of Closed Meetings | |
| 83 FR 27336 - National Library of Medicine; Notice of Meeting | |
| 83 FR 27334 - National Library of Medicine: Notice of Meetings | |
| 83 FR 27339 - National Library of Medicine Notice of Meetings | |
| 83 FR 27337 - Eunice Kennedy Shriver National Institute of Child Health and Human Development; Notice of Closed Meetings | |
| 83 FR 27338 - National Heart, Lung, and Blood Institute; Notice of Closed Meetings | |
| 83 FR 27337 - National Heart, Lung, and Blood Institute; Notice of Closed Meetings | |
| 83 FR 27336 - National Eye Institute; Notice of Closed Meeting | |
| 83 FR 27335 - Center for Scientific Review; Notice of Closed Meetings | |
| 83 FR 27351 - Submission for OMB Review, Comment Request, Proposed Collection: IMLS 2019-2021 Museum Grants for African American Culture Program/Native American Native Hawaiian Program Notice of Funding Opportunity | |
| 83 FR 27352 - Submission for OMB Review, Comment Request, Proposed Collection: IMLS “2019-2022 National Leadership Grants for Museums and Museums for America Grants” | |
| 83 FR 27350 - Notice of Lodging of Proposed Second Amended Consent Decree Under the Clean Water Act | |
| 83 FR 27344 - Renewals of Information Collections and Request for New Collection Under the Paperwork Reduction Act | |
| 83 FR 27325 - Errata Notice | |
| 83 FR 27410 - Amendments to the Swap Data Access Provisions of Part 49 and Certain Other Matters | |
| 83 FR 27486 - Organization; Funding and Fiscal Affairs, Loan Policies and Operations, and Funding Operations; Investment Eligibility | |
| 83 FR 27444 - De Minimis Exception to the Swap Dealer Definition | |
| 83 FR 27380 - Air Cargo Advance Screening (ACAS) |
Agricultural Marketing Service
Animal and Plant Health Inspection Service
Rural Utilities Service
International Trade Administration
National Oceanic and Atmospheric Administration
National Telecommunications and Information Administration
Army Department
Federal Energy Regulatory Commission
Food and Drug Administration
National Institutes of Health
Substance Abuse and Mental Health Services Administration
Coast Guard
U.S. Customs and Border Protection
Geological Survey
Land Management Bureau
National Indian Gaming Commission
National Park Service
Reclamation Bureau
Information Security Oversight Office
Institute of Museum and Library Services
National Endowment for the Arts
Federal Aviation Administration
Maritime Administration
Community Development Financial Institutions Fund
Comptroller of the Currency
Internal Revenue Service
Consult the Reader Aids section at the end of this issue for phone numbers, online resources, finding aids, and notice of recently enacted public laws.
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Agricultural Marketing Service, USDA.
Affirmation of interim rule as final rule.
The Department of Agriculture (USDA) is adopting as a final rule, without change, an interim rule that amended the inspection, certification and standards requirements for fresh fruits, vegetables and other products and processed fruits and vegetables, processed products and certain other processed food products by adding an option to allow for electronic submissions of inspection applications. The interim rule also eliminated outdated terminology that referenced submission of inspection applications by telegraph.
Effective June 13, 2018.
Francisco Grazette, USDA, AMS, SCP, SCI Division, 1400 Independence Avenue SW, Room 1536, Stop 0240, Washington, DC 20250-0250; telephone: (202) 720-5870; fax: (202) 720-0393; email:
Section 203(c) (7 U.S.C. 1622(c)) of the Agricultural Marketing Act of 1946 (7 U.S.C. 1621-1627) (Act of 1946), as amended, directs and authorizes the Secretary of Agriculture to develop and improve standards of quality, condition, quantity, grade, and packaging, and recommend and demonstrate such standards in order to encourage uniformity and consistency in commercial practices.
Parts 51 and 52 of title 7 of the Code of Federal Regulations specify the inspection, certification and standard requirements for fresh and processed fruit, vegetable and specialty crops to ensure uniformity and consistency.
USDA is issuing this rule in conformance with Executive Orders 12866, 13563, and 13175.
This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is not intended to have retroactive effect and does not preempt any state or local law, regulation, or policy unless it presents an irreconcilable conflict with this rule. There are no administrative procedures which must be exhausted prior to any judicial challenge to the provisions of this rule.
This rule continues in effect an interim rule that amended the inspection, certification and standards requirements for fresh fruits, vegetables and other products and processed fruits and vegetables, processed products and certain other processed food products (7 CFR parts 51 and 52) by adding an option to allow for electronic submissions of inspection applications. This rule also continues in effect a change that eliminated outdated terminology referencing the telegraph. These changes were administrative in nature and did not impose any new requirements on applicants.
Pursuant to Section 8e of the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674) (Act of 1937), whenever certain commodities are regulated under Federal marketing orders, imports of those commodities into the United States are prohibited unless they meet the same or comparable grade, size, quality or maturity requirements as those in effect for domestically produced commodities. The Act of 1937 also authorizes USDA to perform inspections and other related functions (such as commodity sampling) on those commodities and to certify whether these requirements have been met.
AMS's Specialty Crops Inspection (SCI) Division performs the inspections and other related functions on Section 8e imports in accordance with its authority under the Act of 1946.
SCI Division amended 7 CFR parts 51 and 52 to add the ability to submit initial inspection requests electronically and eliminate terminology referencing the telegraph. Individuals desiring to apply for an inspection for applicable fruit, vegetable, and specialty crop imports must complete and file AMS's form SC-357,
Amending parts 51 and 52 of title 7 to provide for the electronic filing of the application for inspection supports the International Trade Data System (ITDS), a system that streamlines the export and import process for America's businesses. Implementation of ITDS allows businesses to electronically submit import and export cargo data required by U.S. Customs and Border Protection (CBP) and its Partner Government Agencies (PGAs) through a “single window” concept using CBP's Automated Commercial Environment (ACE) system.
The update to the inspection, certification and standards to allow for electronic submission of inspection applications meets CBP's requirement for ITDS.
In an interim rule published in the
Pursuant to the requirements of the Regulatory Flexibility Act (RFA), 5 U.S.C. 601-612, AMS has considered the economic impact of this action on small entities. Accordingly, AMS has prepared this final regulatory flexibility analysis.
The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions in order that small businesses will not be unduly or disproportionately burdened.
Small agricultural producers are defined by the Small Business Administration (SBA) as those having annual receipts of no more than $750,000 and small agricultural service firms are defined as those having annual receipts of no more than $7.5 million (13 CFR 121.201). Under these definitions, AMS estimates the number of companies affected is approximately 60,000 with 24,000, or 40%, of the companies considered small businesses. AMS does not foresee any effect on
AMS made these administrative changes to allow for the use of current technology by allowing the application for inspection to be submitted electronically and eliminating references to filing applications for service by telegraph.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), the information collection requirements for the SC-357,
AMS is committed to complying with the E-Government Act, to promote the use of the internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.
In addition, USDA has not identified any relevant Federal rules that duplicate, overlap or conflict with this rule.
Comments on the interim rule were required to be received on or before March 23, 2017. No comments were received. Therefore, for the reasons given in the interim rule, we are adopting the interim rule as a final rule, without change.
To view the interim rule, go to:
This action also affirms information contained in the interim rule concerning Executive Orders 12866, 12988, 13175, and 13563; the Paperwork Reduction Act (44 U.S.C. chapter 35); and the E-Gov Act (44 U.S.C. 101).
Food grades and standards, Fruits, Nuts, Reporting and recordkeeping, Vegetables.
Food grades and standards, Food labeling, Frozen foods, Fruits, Reporting and recordkeeping requirements, Vegetables.
Defense Information Systems Agency, DoD.
Final rule.
This final rule removes DoD's regulation concerning the Defense Information Systems Agency (DISA) Freedom of Information Act program. On February 6, 2018, the DoD published a FOIA program final rule as a result of the FOIA Improvement Act of 2016. When the DoD FOIA program rule was revised, it included DoD component information and removed the requirement for component supplementary rules. The DoD now has one DoD-level rule for the FOIA program that contains all the codified information required for the Department. Therefore, this part can be removed from the CFR.
This rule is effective on June 12, 2018.
Robin Berger at 301-225-6104.
It has been determined that publication of this CFR part removal for public comment is impracticable, unnecessary, and contrary to public interest since it is based on removing DoD internal policies and procedures that are publically available on the Department's website.
DISA internal guidance concerning the implementation of the FOIA within DISA will continue to be published in DISA Instruction 630-225-8 (available at
This rule is one of 14 separate DoD FOIA rules. With the finalization of the DoD-level FOIA rule at 32 CFR part 286, the Department is eliminating the need for this separate FOIA rule and reducing costs to the public as explained in the preamble of the DoD-level FOIA rule published at 83 FR 5196-5197.
This rule is not significant under Executive Order (E.O.) 12866, “Regulatory Planning and Review,” therefore, E.O. 13771, “Reducing Regulation and Controlling Regulatory Costs” does not apply.
Freedom of information.
Coast Guard, DHS.
Notice of enforcement of regulation.
The Coast Guard will enforce regulations for two safety zones at various locations in the Sector Columbia River Captain of the Port zone. This action is necessary to provide for the safety of life on these navigable waters during fireworks displays. During the times these safety zone regulations are subject to enforcement, persons and vessels are prohibited from being in the safety zone unless authorized by the Captain of the Port Sector Columbia River or a designated representative.
The regulations in 33 CFR 165.1315 will be enforced for the safety zones identified in the
If you have questions about this notice of enforcement, call or email LCDR Laura Springer, Waterways Management Division, Marine Safety Unit Portland, Coast Guard; telephone 503-240-9319, email
These following two safety zones found in 33
All coordinates are listed in reference Datum NAD 1983. These safety zones cover waters within a 450-yard radius of the barge or other launch site with a “FIREWORKS—DANGER—STAY AWAY” sign at the locations indicated by latitude and longitude coordinates listed in the table above.
In addition to this notice of enforcement in the
Environmental Protection Agency (EPA).
Final rule.
EPA is adding a nonylphenol ethoxylates (NPEs) category to the list of toxic chemicals subject to reporting under section 313 of the Emergency Planning and Community Right-to-Know Act (EPCRA) and section 6607 of the Pollution Prevention Act (PPA). EPA is adding this chemical category to the EPCRA section 313 list because EPA has determined that NPEs meet the EPCRA section 313(d)(2)(C) toxicity criteria. Specifically, EPA has determined that short-chain NPEs are highly toxic to aquatic organisms and longer chain NPEs, while not as toxic as short-chain NPEs, can break down in the environment to short-chain NPEs and nonylphenol, both of which are highly toxic to aquatic organisms.
EPA has established a docket for this action under Docket ID No. EPA-HQ-TRI-2016-0222. All documents in the docket are listed on
You may be potentially affected by this action if you manufacture, process, or otherwise use NPEs. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:
• Facilities included in the following NAICS manufacturing codes (corresponding to Standard Industrial Classification (SIC) codes 20 through 39): 311*, 312*, 313*, 314*, 315*, 316, 321, 322, 323*, 324, 325*, 326*, 327, 331, 332, 333, 334*, 335*, 336, 337*, 339*, 111998*, 211130*, 212324*, 212325*, 212393*, 212399*, 488390*, 511110, 511120, 511130, 511140*, 511191, 511199, 512230*, 512250*, 519130*, 541713*, 541715* or 811490*. *Exceptions and/or limitations exist for these NAICS codes.
• Facilities included in the following NAICS codes (corresponding to SIC codes other than SIC codes 20 through 39): 212111, 212112, 212113 (corresponds to SIC code 12, Coal Mining (except 1241)); or 212221, 212222, 212230, 212299 (corresponds to SIC code 10, Metal Mining (except 1011, 1081, and 1094)); or 221111, 221112, 221113, 221118, 221121, 221122, 221330 (limited to facilities that combust coal and/or oil for the purpose of generating power for distribution in commerce) (corresponds to SIC codes 4911, 4931, and 4939, Electric Utilities); or 424690, 425110, 425120 (limited to facilities previously classified in SIC code 5169, Chemicals and Allied Products, Not Elsewhere Classified); or 424710 (corresponds to SIC code 5171, Petroleum Bulk Terminals and Plants); or 562112 (limited to facilities primarily engaged in solvent recovery services on a contract or fee basis (previously classified under SIC code 7389, Business Services, NEC)); or 562211, 562212, 562213, 562219, 562920
• Federal facilities.
To determine whether your facility would be affected by this action, you should carefully examine the applicability criteria in part 372, subpart B of Title 40 of the Code of Federal Regulations. If you have questions regarding the applicability of this action to a particular entity, consult the person listed under
EPA is adding a NPEs category to the list of toxic chemicals subject to reporting under EPCRA section 313 and PPA section 6607. EPA is adding this chemical category to the EPCRA section 313 list because EPA believes NPEs meet the EPCRA section 313(d)(2)(C) toxicity criteria.
This action is issued under EPCRA sections 313(d) and 328, 42 U.S.C. 11023
Section 313 of EPCRA, 42 U.S.C. 11023, requires certain facilities that manufacture, process, or otherwise use listed toxic chemicals in amounts above reporting threshold levels to report their environmental releases and other waste management quantities of such chemicals annually. These facilities must also report pollution prevention and recycling data for such chemicals, pursuant to section 6607 of the PPA, 42 U.S.C. 13106. Congress established an initial list of toxic chemicals that was comprised of 308 individually listed chemicals and 20 chemical categories.
EPCRA section 313(d) authorizes EPA to add or delete chemicals from the list and sets criteria for these actions. EPCRA section 313(d)(2) states that EPA may add a chemical to the list if any of the listing criteria in EPCRA section 313(d)(2) are met. Therefore, to add a chemical, EPA must demonstrate that at least one criterion is met, but need not determine whether any other criterion is met. Conversely, to remove a chemical from the list, EPCRA section 313(d)(3) dictates that EPA must demonstrate that none of the criteria in ECPRA section 313(d)(2) are met. The listing criteria in EPCRA section 313(d)(2)(A)-(C) are as follows:
• The chemical is known to cause or can reasonably be anticipated to cause significant adverse acute human health effects at concentration levels that are reasonably likely to exist beyond facility site boundaries as a result of continuous, or frequently recurring, releases.
• The chemical is known to cause or can reasonably be anticipated to cause in humans: Cancer or teratogenic effects, or serious or irreversible reproductive dysfunctions, neurological disorders, heritable genetic mutations, or other chronic health effects.
• The chemical is known to cause or can be reasonably anticipated to cause, because of its toxicity, its toxicity and persistence in the environment, or its toxicity and tendency to bioaccumulate in the environment, a significant adverse effect on the environment of sufficient seriousness, in the judgment of the Administrator, to warrant reporting under this section.
EPA often refers to the EPCRA section 313(d)(2)(A) criterion as the “acute human health effects criterion;” the EPCRA section 313(d)(2)(B) criterion as the “chronic human health effects criterion;” and the EPCRA section 313(d)(2)(C) criterion as the “environmental effects criterion.”
EPA published in the
As discussed in the proposed rule of November 16, 2016 (81 FR 80624) (FRL-9951-01), EPA proposed to add a NPEs category to the EPCRA section 313 list of toxic chemicals. NPEs are nonionic surfactants containing a branched nine-carbon alkyl chain bound to phenol and a chain of repeating ethoxylate units (C
As discussed in the proposed rule of November 16, 2016 (81 FR 80624) (FRL-9951-01), EPA proposed to add short-chain NPEs to the EPCRA section 313 toxic chemical list because they are highly toxic to aquatic organisms with toxicity values well below 1 mg/L. Therefore, EPA believed that the evidence was sufficient for listing short-chain NPEs on the EPCRA section 313 toxic chemical list pursuant to EPCRA section 313(d)(2)(C) based on the available ecological toxicity data. Long-chain NPEs, while not as toxic as short-chain NPEs, are known to become more toxic as they degrade in the environment to produce products that include highly toxic short-chain NPEs and nonylphenol. Nonylphenol is even more toxic to aquatic organisms than short-chain NPEs and was added to the EPCRA section 313 toxic chemical list based on its toxicity to aquatic organisms of September 30, 2014 (79 FR 58686) (FRL-9915-59-OEI). As long-chain NPEs are a source of degradation products that are highly toxic to aquatic organisms, EPA believed that the evidence was also sufficient for listing long-chain NPEs on the EPCRA section 313 toxic chemical list pursuant to
EPA stated that it did not believe that it was appropriate to consider exposure for chemicals that are highly toxic based on a hazard assessment when determining if a chemical can be added for environmental effects pursuant to EPCRA section 313(d)(2)(C) (
EPA received six comments on the proposed rule to add a NPEs category to the EPCRA section 313 list of toxic chemicals, three were anonymously submitted (References (Refs.) 1, 2, and 3). The comments received that were not anonymously submitted are from the following groups, the Alkylphenols & Ethoxylates Research Council (APERC) (Ref. 4), American Coatings Association (ACA) (Ref. 5), and Women's Voices for the Earth (Ref. 6). Two of the anonymous commenters supported the listing as did the Women's Voices for the Earth. One anonymous commenter only asked whether there were any exemptions or exceptions to the rule given its particular low-level use of NPEs (Ref. 2). ACA's comment requested that EPA delay the effective date of the final rule. The only extensive comments received were submitted by APERC, which opposes the listing based on their technical and legal interpretations. Summaries of the most significant comments and EPA's response are discussed here. The complete set of comments and EPA's detailed responses can be found in the response to comments document in the docket for this rulemaking (Ref. 7).
APERC stated that long-chain NPEs are not “highly toxic” to the aquatic environment, which EPA defined in the proposed rule and its supporting documents as ecotoxicity values below aquatic concentrations of 1 mg/L.
As EPA has previously stated, when considering toxicity alone under EPCRA 313(d)(2)(C), EPA typically limits it's consideration of highly toxic to those chemicals that cause acute aquatic toxicity at about 1 mg/L or less and chronic aquatic toxicity at 0.1 mg/L or less (76 FR 64022, October 17, 2011). The purpose of these values is not to determine which chemicals are toxic but rather to determine if exposure should be part of EPA's listing decision per its established exposure policy (59 FR 61432, November 30, 1994). However, these are not absolute values and they do not preclude consideration of other factors such as the environmental fate of the chemical. While not as toxic to aquatic organisms as nonylphenol and short-chain NPEs, as noted by the commenter, long-chain NPEs are still toxic to aquatic organisms. As EPA cited in the proposed rule, the longer-chain NPEs are toxic to aquatic organisms (Refs. 8 and 9). For an ethoxylate chain length of 5 reported toxicity values include a LC
It is well documented that long-chain NPEs can readily degrade to nonylphenol and short-chain NPEs and thus are a primary source of these chemicals found in the environment (Ref. 10). As noted in the proposed rule:
Nonylphenol ethoxylate biodegradation products include shorter chain NPEs and ethoxycarboxylates. (Refs. 9, 10, and 20). Nonylphenol ethoxycarboxylates are NPEs that terminate with a carboxylate group (-CO2H) rather than an alcohol group (-OH). Although not commonly observed under aerobic conditions, nonylphenol is a major metabolite of NPEs under anaerobic conditions (Refs. 9, 10, 21, 22, 23, 24, 25, 26, and 27) (81 FR 80626, November 16, 2016).
APERC stated that listing the long-chain NPEs on the basis that they are a source of degradation products that are highly toxic to aquatic organisms is not consistent with the statutory language in EPCRA section 313(d)(2)(C). APERC stated that the language in EPCRA section 313(d)(2)(C) is clear in stating that only the hazard of the chemical to be listed is to be considered. APERC notes that the statutory language specifies that significant adverse effects to the environment should be based on a compound's toxicity, or its toxicity and persistence or its toxicity and bioaccumulation. APERC stated that the statutory language does not portend that listing of a chemical should be based on its degradation pathways or the toxicity of its degradation products. APERC also stated that where degradation intermediates themselves represent the hazard of interest that hazard is contingent on the conditions of disposal and treatment and ultimately the occurrence of those degradants in emissions and the receiving environment. They stated that disposal of long-chain NPEs in one treatment scenario may generate degradation products of concern whereas disposal in another treatment scenario may not generate any degradants of concern. APERC noted that reporting is already required for nonylphenol, which is the degradant of highest concern.
As noted in the previous comment response, long-chain NPEs are toxic to aquatic organisms and become more toxic as they degrade. In the 1994 chemical expansion final rule EPA made the following statements regarding degradation products:
The EPCRA section 313(d)(2) listing criteria each state that EPA may list a chemical that it determines “causes or may reasonably be anticipated to cause” the relevant adverse human health or environmental effects. EPA believes that this language allows EPA to consider the effects
Therefore, to meet its obligation under section 313(d)(2)(C), in cases where a chemical is low or moderately ecotoxic, EPA may look at certain exposure factors (including pollution controls, the volume and pattern of production, use, and release,
APERC's statement that TRI reporting is already required for nonylphenol, which is the degradant of highest concern, is irrelevant to the issue of listing NPEs. The reports of releases of nonylphenol do not provide any information related to the presence of nonylphenol in the environment that results from the release and degradation of NPEs. Nonylphenol was not listed because it is a degradation product of NPEs, it is also used in the chemical industry, including as the starting material for the production of NPEs. Since nonylphenol is used in the chemical industry there is the potential for releases to the environment. With regard to listing chemicals that are degradation products, EPA has stated:
If the degradation product meets the toxicity criteria of EPCRA section 313, the precursor chemical may be considered for listing on EPCRA section 313. The degradation product would not be considered for listing on EPCRA section 313 because a facility subject to EPCRA section 313 is only required to file a TRI report for a chemical that it manufactures, processes, or otherwise uses, within the facility boundaries (59 FR 1788, January 12, 1994).
ACA requested that EPA adopt a January 1, 2020 effective date for the addition of a NPEs category. ACA stated that their members require sufficient lead time to ensure that all facilities are able to comply with changes in regulations. ACA stated that even though some of their industry members are already subject to reporting, a significant amount of other industry members would now fall under the scope of the proposed rule and have to comply. ACA claimed that the January 1, 2018 compliance date would not give their members adequate time to account for and report NPEs under the regulations. ACA also stated that several of their industry members are planning on reformulating their products to lower or eliminate the use of designated NPEs altogether, rather than become subject to the new reporting requirements. ACA stated that those facilities intend to phase out the use of NPEs and replace them with safer alternative chemicals, or lower their usage below the reporting threshold. ACA noted that regardless of the reasoning, reformulation takes a substantial amount of time and increases cost for companies. ACA claims that therefore, their industry members need an extended effective date of January 1, 2020 to reformulate their products.
EPCRA 313(d)(4) provides the timing for the effective date for a change to the EPCRA section 313 list of toxic chemicals:
(4) Effective Date.—Any revision made on or after January 1 and before December 1 of any calendar year shall take effect beginning with the next calendar year. Any revision made on or after December 1 of any calendar year and before January 1 of the next calendar year shall take effect beginning with the calendar year following such next calendar year.
Further, reports from facilities that choose to reformulate products to lower or eliminate the use of NPEs would provide useful information to data users, including industry stakeholders. A key component of EPCRA section 313 reporting includes information on source reduction activities that reduce the amount of any hazardous substance, pollutant, or contaminant entering any waste stream or otherwise released into the environment (including fugitive emissions) prior to recycling, energy recovery, treatment, or disposal. Data that demonstrates or fails to demonstrate anticipated downward trends alongside information on activities conducted to phase out the use of NPEs is information of high utility and can help spur other facilities to reduce their use of NPEs.
EPA is finalizing the addition of a NPEs category to the EPCRA section 313 list of toxic chemicals. EPA has determined that NPEs meet the listing criteria under EPCRA section 313(d)(2)(C). The NPEs category will be defined as: Nonylphenol Ethoxylates (This category includes only those chemicals covered by the CAS numbers listed here):
The following is a listing of the documents that are specifically referenced in this document. The docket includes these documents and other information considered by EPA, including documents that are referenced within the documents that are included in the docket, even if the referenced document is not itself physically located in the docket. For assistance in locating these other documents, please consult the person listed under
Additional information about these statutes and Executive Orders can be found at
This action is not a significant regulatory action and was therefore not submitted to the Office of Management and Budget (OMB) for review under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011).
This action does not contain any new information collection requirements that require additional approval by OMB under the PRA, 44 U.S.C. 3501
OMB has approved the reporting and recordkeeping requirements related to Forms A and R, supplier notification, and petitions under OMB Control number 2025-0009 (EPA Information Collection Request (ICR) No. 1363) and those related to trade secret designations under OMB Control 2050-0078 (EPA ICR No. 1428). As provided in 5 CFR 1320.5(b) and 1320.6(a), an Agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The OMB control numbers relevant to EPA's regulations are listed in 40 CFR part 9 or 48 CFR chapter 15, and displayed on the information collection instruments (
I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA, 5 U.S.C. 601
This action does not contain an unfunded mandate of $100 million or more as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. This action is not subject to the requirements of UMRA because it contains no regulatory requirements that might significantly or uniquely affect small governments. EPA did not identify any small governments that would be impacted by this action. EPA's economic analysis indicates that the
This action does not have federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). It will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.
This action does not have tribal implications as specified in Executive Order 13175 (65 FR 67249, November 9, 2000). This action relates to toxic chemical reporting under EPCRA section 313, which primarily affects private sector facilities. Thus, Executive Order 13175 does not apply to this action.
EPA interprets Executive Order 13045 (62 FR 19885, April 23, 1997) as applying only to those regulatory actions that concern environmental health or safety risks that EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2-202 of the Executive Order. This action is not subject to Executive Order 13045 because it does not concern an environmental health risk or safety risk.
This action is not subject to Executive Order 13211 (66 FR 28355, May 22, 2001), because it is not a significant regulatory action under Executive Order 12866.
This rulemaking does not involve technical standards and is therefore not subject to considerations under section 12(d) of NTTAA, 15 U.S.C. 272 note.
The EPA believes that this action is not subject to Executive Order 12898 (59 FR 7629, February 16, 1994) because it does not establish an environmental health or safety standard. This regulatory action adds an additional chemical category to the EPCRA section 313 reporting requirements; it does not have any impact on human health or the environment. This action does not address any human health or environmental risks and does not affect the level of protection provided to human health or the environment. This action adds an additional chemical category to the EPCRA section 313 reporting requirements which provides information that government agencies and others can use to identify potential problems, set priorities, and help inform activities.
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, Community right-to-know, Reporting and recordkeeping requirements, and Toxic chemicals.
Therefore, 40 CFR chapter I is amended as follows:
42 U.S.C. 11023 and 11048.
(c) * * *
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Final rule.
NMFS implements management measures described in Amendment 36A to the Fishery Management Plan (FMP) for the Reef Fish Resources of the Gulf of Mexico (Gulf) (Amendment 36A), as prepared by the Gulf of Mexico Fishery Management Council (Council). This final rule requires owners or operators of federally permitted commercial Gulf reef fish vessels landing any commercially harvested, federally managed reef fish from the Gulf to provide notification prior to landing and to land at approved locations; requires shares from the red snapper individual fishing quota (IFQ) (RS-IFQ) program and the groupers and tilefishes IFQ (GT-IFQ) program that are in non-activated IFQ accounts to be returned to NMFS for redistribution; and allows NMFS to withhold a portion of IFQ allocation at the start of a fishing year equal to an anticipated commercial quota reduction. The purpose of this final rule is to improve compliance and increase management flexibility in the RS-IFQ and GT-IFQ programs, and increase the likelihood of achieving optimum yield (OY) for Gulf reef fish stocks managed under these programs.
This final rule is effective July 12, 2018, except for the addition of § 622.26(a)(2), which is effective on January 1, 2019.
Electronic copies of Amendment 36A, which includes an environmental assessment, a fishery impact statement, a regulatory impact review, and a Regulatory Flexibility Act (RFA) analysis may be obtained from the Southeast Regional Office website at
Written comments regarding the burden-hour estimates or other aspects of the collection-of-information requirement contained in this final rule may be submitted to Adam Bailey, NMFS Southeast Regional Office, 263 13th Avenue South, St. Petersburg, FL 33701; or to the Office of Management and Budget (OMB) by email to
Peter Hood, NMFS Southeast Regional Office, telephone: 727-824-5305, email:
NMFS and the Council manage the Gulf reef fish fishery under the FMP. The FMP was prepared by the Council and is implemented by NMFS through regulations at 50 CFR part 622 under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) (16 U.S.C. 1801
On February 21, 2018, NMFS published a notice of availability (NOA) for Amendment 36A and requested public comment (83 FR 7447). On March 21, 2018, NMFS published a proposed rule for Amendment 36A and requested public comment (83 FR 12326). The proposed rule and Amendment 36A outline the rationale for the actions contained in this final rule. A summary of the management measures described in Amendment 36A and implemented by this final rule is provided below.
This final rule requires that the owner or operator of a commercial reef fish permitted vessel landing any commercially harvested Gulf reef fish, or Florida Keys/East Florida hogfish harvested in the Gulf, to notify NMFS between 3 and 24 hours in advance of landing and to land at approved locations. In addition, this final rule permanently returns to NMFS any IFQ shares contained in RS-IFQ or GT-IFQ accounts that have not been activated since the current web-based system was put in place on January 1, 2010. Finally, this final rule allows NMFS to withhold distribution of IFQ allocation on January 1, the beginning of the fishing year, if a reduction in the commercial quota for any IFQ species or multi-species group is expected to be implemented in that same fishing year. The amount of IFQ allocation withheld from distribution would equal the amount of the expected commercial quota reduction.
This final rule expands the requirement for an advance landing notification to all commercial trips that land Gulf reef fish species or Florida Keys/East Florida hogfish harvested in the Gulf even if no IFQ species are on board.
The vessel owner or operator is required to notify NMFS at least 3 hours, but no more than 24 hours, in advance of landing on each trip. The landing notification will report the vessel identification number, the date and time of landing, and the approved landing location. This notification will be submitted via the vessel's existing onboard vessel monitoring system (VMS), but could also be submitted by other NMFS approved methods (
Additional information about approved landing locations and submitting additional landing locations to NMFS for approval is described later in this final rule.
This final rule also addresses RS-IFQ and GT-IFQ shareholder accounts that received shares through the initial apportionment when each IFQ program began, but the accounts have never been accessed by the shareholder since January 1, 2010, the initiation of the current IFQ system. NMFS and the Council have attempted to notify account holders with these non-activated IFQ accounts through phone calls, certified letters, and discussion at public meetings. Although shares in the non-activated accounts represent a small fraction of the total shares, annual allocation assigned to these non-activated IFQ accounts is not landed, and therefore, may prevent achieving
For more information on how to activate an existing non-activated IFQ account before this final rule is effective, persons may call the IFQ Customer Service line at 1-866-425-7627, and select option 2 during weekday business hours of 8 a.m. to 4:30 p.m., eastern time (see
Finally, this final rule addresses how to distribute allocation to IFQ shareholders in years in which there is an anticipated reduction of the commercial quota. As a result of the time involved to develop documents, consider alternatives, and solicit public feedback, this situation would generally occur if the Council approved an action to reduce the commercial quota of any IFQ species or multi-species share category but NMFS could not complete the associated rulemaking before January 1, the start of the fishing year. Under the IFQ programs, annual allocation is distributed to IFQ shareholders on January 1, and most IFQ program participants begin to use or transfer their allocation early in each year. After shareholders begin transferring or landing allocation, NMFS is not able to retroactively withdraw allocation from shareholder accounts if a quota decrease became effective after the beginning of the fishing year. This final rule allows NMFS to anticipate a decrease in the quota of any IFQ species or multi-species share categories after the start of a fishing year and withhold distribution of quota equal to the amount of the expected decrease in commercial quota. NMFS would distribute the remaining portion of the annual allocation to shareholders on January 1. If a final rule to implement the associated commercial quota reduction is not effective by June 1 in the same fishing year, then NMFS would distribute the withheld quota back to the current shareholders, as determined on the date the withheld IFQ allocation is distributed.
As explained previously, this final rule requires vessel owners or operators on commercial trips who harvest non-IFQ Gulf reef fish species or Florida Keys/East Florida hogfish harvested in the Gulf to land at an approved landing location. To comply with this requirement, current and potential fishery participants may submit additional landing locations to NMFS for approval. Landing locations can be submitted by calling IFQ Customer Service at any time (see contact information above), or by submitting a Landing Location Request Form to NMFS, which is available from
A list of currently approved landing locations for the IFQ programs can be found at the IFQ website (
Approved landing locations must be publicly and freely accessible by land and water, and must have a street address or, if a particular landing location has no street address on record, global positioning system (GPS) coordinates for an identifiable geographic location provided in degrees and decimal minutes. Other criteria used by NOAA's Office of Law Enforcement (OLE) when approving locations are listed at 50 CFR 622.21(b)(5)(v) and 622.22(b)(5)(v), and are added by reference to § 622.26(a)(2)(v) through this final rule.
A total of 12 comments from 11 individuals were received on the notice of availability and proposed rule for Amendment 36A. Three comments supported the actions in Amendment 36A and the proposed rule and four comments were not relevant to Amendment 36A or the proposed rule. Specific comments related to the actions in Amendment 36A and the proposed rule are grouped as appropriate and summarized below, followed by NMFS' respective responses.
NMFS estimates that an advance notice of landing will take approximately 3 minutes to complete for each trip. Therefore, NMFS does not expect the advance landing notification to substantially affect fishing operations for Gulf reef fish. The landing notification may be amended, if necessary, as provided for in the regulatory text of this final rule at 50 CFR 622.26(a)(2)(iv). In addition, because the window for an advance landing notification is from 3 to 24 hours prior to landing, flexibility is provided for fishermen that make only daily trips to complete the advance landing notification when time permits.
The Regional Administrator for the NMFS Southeast Region has determined that this final rule is consistent with Amendment 36A, the FMP, the Magnuson-Stevens Act, and other applicable laws.
This final rule has been determined to be not significant for purposes of Executive Order 12866.
The Magnuson-Stevens Act provides the statutory basis for this final rule. No duplicative, overlapping, or conflicting Federal rules have been identified. A description of this final rule, why it is being implemented, and the purposes of this final rule are contained in the
The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration (SBA) during the proposed rule stage that this final rule, if adopted, would not have a significant economic impact on a substantial number of small entities. NMFS did not receive any comments from SBA's Office of Advocacy or the public regarding the economic analysis of Amendment 36A or the certification in the proposed rule. No changes to this final rule were made in response to public comments. The factual basis for the certification was published in the proposed rule and is not repeated here. Because this final rule is not expected to have a significant economic impact on a substantial number of small entities, a final regulatory flexibility analysis is not required and none has been prepared.
This final rule contains a collection-of-information requirement that has been approved by OMB under the Paperwork Reduction Act (PRA), temporary control number 0648-0761. NMFS will merge the collection-of-information requirement implemented by this final rule with the existing, approved information collection under OMB Control Number 0648-0551, Southeast Region IFQ Programs. This final rule requires an owner or operator of a vessel with a commercial Gulf reef fish permit to submit a notification to NMFS on each trip prior to landing exclusively non-IFQ Gulf reef fish species or Florida Keys/East Florida hogfish harvested in the Gulf. Public reporting burden for the requirement is estimated to average 3 minutes per applicable trip, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection information. Send comments on this burden estimate or any other aspects of the collection of information, including suggestions for reducing the burden, to the NMFS Southeast Regional Office at the
Notwithstanding any other provision of the law, no person is required to respond to, and no person will be subject to 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. All currently approved collections of information may be viewed at
In this final rule, NMFS modifies the language in §§ 622.21(a)(4) and 622.22(a)(4) to more succinctly explain the amount of IFQ allocation that NMFS may withhold at the beginning of a fishing year if a reduction in the commercial quota of an IFQ species or multi-species share category is expected to be implemented between January 1 and June 1 in the same fishing year. If this situation is expected to occur, then the amount withheld will be equal to the expected reduction of the commercial quota.
Commercial, Fisheries, Fishing, Grouper, Gulf of Mexico, Individual fishing quota, Red snapper, Tilefish.
For the reasons set out in the preamble, 50 CFR part 622 is amended as follows:
16 U.S.C. 1801
(a) * * *
(4)
(6)
(a) * * *
(4)
(9)
(a)
(2)
(ii)
(iii)
(iv)
(v)
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Temporary rule; closure.
NMFS implements accountability measures for commercial gray triggerfish in the exclusive economic zone (EEZ) of the South Atlantic. NMFS projects commercial landings for gray triggerfish will reach the commercial annual catch limit (ACL) for the January through June period by June 13, 2018. Therefore, NMFS is closing the commercial sector for gray triggerfish in the South Atlantic EEZ on June 13, 2018. This closure is necessary to protect the gray triggerfish resource.
This rule is effective 12:01 a.m., local time, June 13, 2018, until July 1, 2018.
Mary Vara, NMFS Southeast Regional Office, telephone: 727-824-5305, email:
The snapper-grouper fishery of the South Atlantic includes gray triggerfish and is managed under the Fishery Management Plan for the Snapper-Grouper Fishery of the South Atlantic Region (FMP). The FMP was prepared by the South Atlantic Fishery Management Council and is implemented by NMFS under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) by regulations at 50 CFR part 622.
The commercial ACL (equal to the commercial quota) for gray triggerfish in the South Atlantic is divided into two 6-month fishing seasons and allocates 50 percent, 156,162 lb (70,834 kg), round weight, of the total commercial ACL of 312,324 lb (141,668 kg), round weight, to each fishing season, January through June, and July through December, as specified in 50 CFR 622.190(a)(8)(i) and (ii).
Under 50 CFR 622.193(q)(1)(i), NMFS is required to close the commercial sector for gray triggerfish when either commercial quota specified in § 622.190(a)(8)(i) or (ii) is reached, or is projected to be reached, by filing a notification to that effect with the Office of the Federal Register. NMFS has determined that the commercial quota for South Atlantic gray triggerfish for the January through June fishing season will be reached by June 13, 2018. Accordingly, the commercial sector for South Atlantic gray triggerfish is closed effective at 12:01 a.m., local time, June 13, 2018, until the start of the July through December fishing season on July 1, 2018.
The operator of a vessel with a valid Federal commercial vessel permit for South Atlantic snapper-grouper having gray triggerfish on board must have landed and bartered, traded, or sold such gray triggerfish prior to 12:01 a.m., local time, June 13, 2018. During the closure, the bag limit specified in 50 CFR 622.187(b)(8), and the possession limits specified in 50 CFR 622.187(c), apply to all harvest or possession of gray triggerfish in or from the South Atlantic EEZ. Also, during the closure, the sale or purchase of gray triggerfish taken from the South Atlantic EEZ is prohibited. The prohibition on the sale or purchase does not apply to gray triggerfish that were harvested, landed ashore, and sold prior to 12:01 a.m., local time, June 13, 2018, and were held in cold storage by a dealer or processor.
For a person on board a vessel for which a valid Federal commercial or charter vessel/headboat permit for the South Atlantic snapper-grouper fishery has been issued, the bag and possession limits and sale and purchase provisions of the commercial closure for gray triggerfish apply regardless of whether the fish are harvested in state or Federal waters, as specified in 50 CFR 622.190(c)(1)(ii).
The Regional Administrator, NMFS Southeast Region, has determined this temporary rule is necessary for the conservation and management of gray triggerfish and the South Atlantic snapper-grouper fishery and is consistent with the Magnuson-Stevens Act and other applicable laws.
This action is taken under 50 CFR 622.193(q)(1)(i) and is exempt from review under Executive Order 12866.
These measures are exempt from the procedures of the Regulatory Flexibility Act because the temporary rule is issued without opportunity for prior notice and comment.
This action responds to the best scientific information available. The Assistant Administrator for NOAA Fisheries (AA), finds that the need to immediately implement this action to close the commercial sector for gray triggerfish constitutes good cause to waive the requirements to provide prior notice and opportunity for public comment pursuant to the authority set forth in 5 U.S.C. 553(b)(B), as such procedures are unnecessary and contrary to the public interest. Such procedures are unnecessary because the rule that established the split commercial season for gray triggerfish and the rule that established the closure provisions have already been subject to notice and comment, and all that remains is to notify the public of the closure. Such procedures are contrary to the public interest because of the need to immediately implement this action to protect gray triggerfish since the capacity of the fishing fleet allows for rapid harvest of the commercial quota. Prior notice and opportunity for public comment would require time and would potentially result in a harvest well in excess of the established commercial quota.
For the aforementioned reasons, the AA also finds good cause to waive the 30-day delay in the effectiveness of this action under 5 U.S.C. 553(d)(3).
16 U.S.C. 1801
Internal Revenue Service (IRS), Treasury.
Notice of proposed rulemaking.
This document contains proposed regulations regarding the arbitrage investment restrictions under section 148 of the Internal Revenue Code (Code) applicable to tax-exempt bonds and other tax-advantaged bonds issued by State and local governments. The proposed regulations would clarify existing regulations regarding the definition of “investment-type property” covered by arbitrage restrictions by expressly providing an exception for investments in capital projects that are used in furtherance of the public purposes of the bonds. The proposed regulations affect State and local governmental issuers of these bonds and potential investors in capital projects financed with these bonds.
Comments and requests for a public hearing must be received by September 10, 2018.
Send submissions to: CC:PA:LPD:PR (REG-106977-18), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-106977-18), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue NW, Washington, DC 20224, or sent electronically via the Federal eRulemaking Portal at
Concerning the proposed regulations, Spence Hanemann, (202) 317-6980; concerning submissions of comments and requesting a hearing, Regina L. Johnson, (202) 317-6901 (not toll-free numbers).
This document contains proposed amendments to the Income Tax Regulations (26 CFR part 1) on the arbitrage investment restrictions under section 148 of the Code (Proposed Regulations).
In general, under section 103, interest received by holders of eligible bonds issued by State and local governments is exempt from Federal income tax. As a result, tax-exempt State or local bonds generally have lower borrowing costs. To qualify for the tax exemption, State or local bonds must satisfy various eligibility requirements under sections 141 to 150, including the arbitrage investment restrictions under section 148. The arbitrage investment restrictions under section 148 limit the investment of proceeds of tax-exempt bonds in higher yielding investments and require rebate to the Federal government of certain excess earnings on higher yielding investments.
On June 18, 1993, the Department of the Treasury (Treasury Department) and the IRS published comprehensive final regulations in the
Section 148(a) defines a taxable “arbitrage bond” generally to mean any bond issued as part of an issue any portion of the proceeds of which are reasonably expected to be used or are intentionally used to acquire “higher yielding investments” or to replace funds so used. Section 148(b)(1) defines the term “higher yielding investments” to mean any “investment property” that produces a yield over the term of the issue that is materially higher than the yield on the issue. Section 148(b)(2) defines the term “investment property” to include any security (within the meaning of section 165(g)(2)(A) or (B)), any obligation, any annuity contract, certain residential real property for family units located outside the jurisdiction of the issuer that is financed with bonds other than private activity bonds, and any “investment-type property.”
Section 1.148-1(e)(1) of the Existing Regulations defines a catch-all category of “investment-type property” to include any property (other than securities, obligations, annuity contracts, and covered residential real property for family units under section 148(b)(2)(A), (B), (C), and (E)) “that is held principally as a passive vehicle for the production of income.” For this purpose, § 1.148-1(e)(1) of the Existing Regulations provides that the production of income includes any benefit based on the time value of money.
Institutional investors have suggested clarification of the scope of the regulatory definition of investment-type property under § 1.148-1(e)(1) to ensure that the definition does not impede greater capital investment in public infrastructure.
The legislative history to the Tax Reform Act of 1986, Public Law 99-514, 100 Stat. 2085, indicates that Congress intended to limit the scope of the arbitrage restriction on investment-type property so that it did not extend to investments in capital projects in furtherance of the public purposes of the bonds. In this regard, the House Report to the Tax Reform Act of 1986 included the following statement about the intended scope of the definition of investment-type property: “The restriction would not apply, however, to real or tangible personal property acquired with bond proceeds for reasons other than investment (
To clarify the scope of the investment-type property definition consistent with Congressional intent reflected in the legislative history, the Proposed Regulations would provide an express exception to the definition of investment-type property for capital projects that further the public purposes for which the tax-exempt bonds were issued. For example, investment-type property does not include a courthouse financed with governmental bonds or an eligible exempt facility under section 142, such as a public road, financed with private activity bonds.
The proposed amendments to the definition of investment-type property in the Proposed Regulations are proposed to apply to bonds sold on or after the date that is 90 days after the date of publication of a Treasury Decision adopting these rules as final regulations in the
This regulation is not subject to review under section 6(b) of Executive Order 12866 pursuant to the Memorandum of Agreement (April 11, 2018) between the Department of the Treasury and the Office of Management and Budget regarding review of tax regulations. Because these regulations do not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Code, this notice of proposed rulemaking will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small entities.
Before the 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
The principal authors of these regulations are Spence Hanemann of the Office of Associate Chief Counsel (Financial Institutions and Products) and Vicky Tsilas, formerly of the Office of Associate Chief Counsel (Financial Institutions and Products). 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 * * *
(c) * * *
(e) * * *
(4) Exception for certain capital projects.
(n) Investment-type property.
The revision and addition read as follows:
(e)
(4)
(n)
Department of Defense (DoD), General Services Administration (GSA), and the National Aeronautics and Space Administration (NASA).
Proposed rule.
DoD, GSA, and NASA are proposing to amend the Federal Acquisition Regulation (FAR) to provide guidance to DoD, NASA, and the Coast Guard, consistent with a section of the National Defense Authorization Act for
Interested parties should submit written comments to the Regulatory Secretariat at one of the addresses shown below on or before August 13, 2018 to be considered in the formation of the final rule.
Submit comments in response to FAR Case 2017-006 by any of the following methods:
Mr. Michael O. Jackson, Procurement Analyst, at 202-208-4949 for clarification of content. For information pertaining to status or publication schedules, contact the Regulatory Secretariat at 202-501-4755. Please cite FAR Case 2017-006.
DoD, GSA, and NASA are proposing to provide a separate standard for “adequate price competition” in the FAR, applicable only to DoD, NASA, and the Coast Guard, consistent with the requirements of section 822 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2017 (Pub. L. 114-328). Setting forth the separate standard for DoD, NASA, and the Coast Guard in the FAR provides a top-level framework to facilitate consistent implementation of section 822 at the agency level by DoD, NASA, and the Coast Guard. Section 822 modifies 10 U.S.C. 2306a, the Truth in Negotiations Act, which is applicable only to DoD, NASA, and the Coast Guard. Section 822 limits the exception for price based on adequate price competition to circumstances in which there is adequate competition that results in at least two or more responsive and viable competing bids.
This proposed rule modifies the standard for adequate price competition at FAR 15.403-1(c)(1), to provide a separate standard for DoD, NASA, and the Coast Guard. There are also conforming changes to the cross references at FAR 15.305(a)(1) and 15.404-1(b)(2)(i).
This rule does not contain any provision or clause that applies to contracts or subcontracts at or below the simplified acquisition threshold or contracts or subcontracts for the acquisition of commercial items, including commercially available off-the-shelf items.
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under Section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.
This proposed rule is not expected to be an E.O. 13771 regulatory action, because this proposed rule is not significant under E.O. 12866.
DoD, GSA, and NASA do not expect this rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601,
This rule proposes to provide a separate standard for “adequate price competition” in the FAR for DoD, NASA, and the Coast Guard, consistent with the requirements of section 822 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2017 (Pub. L. 114-328).
The objective of this rule is to clarify that there is a different standard applicable to DoD, NASA, and the Coast Guard, and to provide a top-level framework to facilitate consistent implementation of section 822 at the agency level by DoD, NASA, and the Coast Guard. The statutory basis is 10 U.S.C. 2306a, as amended by section 822 of the NDAA for FY 2017.
This rule only provides a statement of internal guidance to DoD, NASA, and the Coast Guard,
There are no projected reporting, recordkeeping, or other compliance requirements of the rule. The rule amends the standards for adequate price competition for DoD, NASA, and the Coast Guard. However, the corollary of this FAR change is that DoD, NASA, and the Coast Guard will be required to obtain certified cost or pricing data from an offeror when only one offer is received and no other exception applies. The rule does not duplicate, overlap, or conflict with any other Federal rules.
Since this rule does not impose a burden on small entities, DoD, GSA, and NASA were unable to identify any alternatives that would reduce burden on small business and still meet the requirements of the statute.
The Regulatory Secretariat Division has submitted a copy of the IRFA to the Chief Counsel for Advocacy of the Small Business Administration. A copy of the IRFA may be obtained from the Regulatory Secretariat Division. DoD, GSA, and NASA invite comments from small business concerns and other interested parties on the expected impact of this rule on small entities.
DoD, GSA, and NASA will also consider comments from small entities concerning the existing regulations in subparts affected by the rule consistent with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 610 (FAR Case 2017-006), in correspondence.
The rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).
Government procurement.
Therefore, DoD, GSA, and NASA proposes to amend 48 CFR part 15 as set forth below:
40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 U.S.C. 20113.
(c)
(1)
(A) Two or more responsible offerors, competing independently, submit priced offers that satisfy the Government's expressed requirement and if—
(
(
(B) There was a reasonable expectation, based on market research or other assessment, that two or more responsible offerors, competing independently, would submit priced offers in response to the solicitation's expressed requirement, even though only one offer is received from a responsible offeror and if—
(
(
(
(
(C) Price analysis clearly demonstrates that the proposed price is reasonable in comparison with current or recent prices for the same or similar items, adjusted to reflect changes in market conditions, economic conditions, quantities, or terms and conditions under contracts that resulted from adequate price competition.
(ii) For DoD, NASA, and the Coast Guard, a price is based on adequate price competition only if two or more responsible offerors, competing independently, submit responsive and viable offers. (10 U.S.C. 2306a(b)(1)(A)(i)).
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Advance notice of proposed rulemaking; request for comments.
NMFS is considering whether to continue, or to revise, the management regime for fishing vessels that target tuna and other highly migratory fish species (HMS) in the area of overlapping jurisdiction between the Inter-American Tropical Tuna Commission (IATTC) and the Commission for the Conservation and Management of Highly Migratory Fish Stocks in the Western and Central Pacific Ocean (WCPFC) in the tropical Pacific Ocean. To that end, we are issuing this advance notice of proposed rulemaking to seek public input about whether U.S. fishing vessels fishing in that area should be governed by conservation measures adopted by IATTC or conservation measures adopted by WCPFC.
Comments on this advance notice of proposed rulemaking must be submitted in writing by July 12, 2018.
You may submit comments on this document, identified by NOAA-NMFS-2018-0049, by any of the following methods:
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The United States is a member of both the IATTC and WCPFC. The convention areas for the IATTC and WCPFC overlap in the Pacific Ocean waters within a rectangular area bounded by 50° S latitude, 150° W longitude, 130° W longitude, and 4° S latitude (“overlap area”). Historically, regulations implementing the conservation measures adopted by the IATTC (see 50
In accordance with the WCPFC decision and IATTC recommendation regarding the overlap area, NMFS issued a final rule on April 26, 2016 (see 81 FR 24501, effective May 26, 2016; hereafter “2016 final rule”), excluding the overlap area from the description of the IATTC Convention Area for the purpose of the regulations implementing conservation measures of the IATTC (50 CFR part 300, subpart C), except that IATTC Regional Vessel Register regulations at 50 CFR 300.22(b) continue to apply in the overlap area. Under the 2016 final rule regulations implementing conservation measures of the WCPFC continue to apply in the overlap area to vessels of all gear types listed in both WCPFC record and IATTC register. The requirement for U.S. vessels that fish for tuna and other HMS to be listed on the IATTC Regional Vessel Register continues to apply in the overlap area because the IATTC Regional Vessel Register is used to implement the Agreement on the International Dolphin Conservation Program (AIDCP), which is a separate international agreement that applies to purse seine vessels that fish in the eastern Pacific, including the overlap area. The AIDCP has not adopted a decision that would allow the United States to exempt vessels from AIDCP requirements even if only WCPFC requirements apply in the overlap area.
Before the 2016 final rule was issued, NMFS evaluated the expected impacts of the rule by reviewing fishing activity in the overlap area and concluded that U.S. vessels did not often fish for HMS in the overlap area. The rule simplified regulations for U.S. vessels fishing in the area because, aside from the IATTC Regional Vessel Register requirements, affected vessels would be required to follow only the measures of the WCPFC rather than those of both the WCPFC and the IATTC.
NMFS implements decisions of the WCPFC under the authority of the Western and Central Pacific Fisheries Convention Implementation Act (16 U.S.C. 6901
NMFS seeks to better understand the effects of the 2016 final rule and the potential effects of applying the IATTC versus the WCPFC management measures for the overlap area. NMFS is interested in public comment on whether and, if so, how fishing effort by U.S. vessels fishing under the IATTC and WCPFC convention areas has changed since the 2016 final rule was issued and whether and how fishing effort might change in the foreseeable future. NMFS is interested in receiving any information, including but not limited to the impacts of the 2016 final rule on the fishing patterns of U.S.-flagged fishing vessels, their costs of fishing, the expected locations of fishing grounds in the foreseeable future, particularly with respect to the WCPO versus the EPO, and the expected costs to U.S. fishing businesses of applying IATTC versus WCPFC management measures to the overlap area.
This advance notice of proposed rulemaking solicits information from the public that would be useful in evaluating the effects of the IATTC versus the WCPFC management measures for the overlap area. If warranted by the findings of this examination, NMFS may propose re-applying IATTC management measures in the overlap area while removing WCPFC management measures.
This advance notice of proposed rulemaking has been determined to be not significant for the purposes of Executive Order 12866.
16 U.S.C. 6901
The Department of Agriculture has submitted the following information collection requirement(s) to OMB for review and clearance under the Paperwork Reduction Act of 1995, Public Law 104-13. Comments are requested regarding (1) whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) the accuracy of the agency's estimate of burden including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.
Comments regarding this information collection received by July 12, 2018 will be considered. Written comments should be addressed to: Desk Officer for Agriculture, Office of Information and Regulatory Affairs, Office of Management and Budget (OMB), New Executive Office Building, 725 17th Street NW, Washington, DC 20502. Commenters are encouraged to submit their comments to OMB via email to:
An agency may not conduct or sponsor a collection of information unless the collection of information displays a currently valid OMB control number and the agency informs potential persons who are to respond to the collection of information that such persons are not required to respond to the collection of information unless it displays a currently valid OMB control number.
The owner must also certify as to whether the fish are subject to a mortgage. Without the information it would be impossible for APHIS to launch its program to contain and prevent ISA outbreaks in the United States.
Animal and Plant Health Inspection Service, USDA.
Reinstatement of an information collection; comment request.
In accordance with the Paperwork Reduction Act of 1995, this notice announces the Animal and Plant Health Inspection Service's intention to request the reinstatement of an information collection to conduct the National Animal Health Monitoring System's Goat 2019 Study.
We will consider all comments that we receive on or before August 13, 2018.
You may submit comments by either of the following methods:
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Supporting documents and any comments we receive on this docket may be viewed at
For information on the Goat 2019 Study, contact Mr. Bill Kelley, Program Analyst, Science, Technology, and Analysis Services, VS, 2150 Centre Avenue, Building B, Fort Collins, CO 80524; (970) 494-7207. For copies of more detailed information on the information collection, contact Ms. Kimberly Hardy, APHIS' Information Collection Coordinator, at (301) 851-2483.
In connection with this mission, APHIS operates the National Animal Health Monitoring System (NAHMS), which collects, on a national basis, statistically valid and scientifically sound data on the prevalence and economic importance of livestock, poultry, and aquaculture disease risk factors.
NAHMS' studies have evolved into a collaborative industry and government initiative to help determine the most effective means of preventing and controlling diseases of livestock. APHIS
APHIS plans to conduct the Goat 2019 Study as part of an ongoing series of NAHMS studies on the U.S. livestock population. The purpose of the study is to collect information to describe changes in animal health, nutrition, and management practices in the U.S. goat industry from 2009-2019; describe practices producers use to control internal parasites and reduce anthelmintic resistance; describe antimicrobial stewardship on goat operations and provide information on the prevalence of enteric pathogens and antimicrobial resistance patterns; describe management practices associated with, and producer-reported occurrence of, economically important goat diseases; and provide a serologic bank to meet the future research needs of the goat industry.
The study will consist of two phases. In Phase I, a National Agricultural Statistics Service (NASS) enumerator will contact and conduct interviews with goat producers from 26 States who have 5 or more goats. These respondents will be asked to sign a consent form allowing NASS to present their names to APHIS-designated data collectors for further consideration in the study. In Phase II, which we consider the APHIS phase, the respondents will complete the producer agreement and up to three on-farm questionnaires. In addition, biologic sampling will be available to selected participants that complete the initial visit questionnaire.
The information collected through the Goat 2019 Study will be analyzed and organized into descriptive reports. Several information sheets will be derived from these reports and disseminated by APHIS to producers, stakeholders, academia, veterinarians, and other interested parties. The collected data will be used to establish national and regional production measures for producer, veterinary, and industry references; predict or detect national and regional trends in disease emergence and movement; address emerging issues; examine the economic impact of health management practices; provide estimates of both outcome (disease or other parameters) and exposure (risks and components) variables that can be used in analytic studies in the future by APHIS; provide input into the design of surveillance systems for specific diseases; and provide parameters for animal disease spread models.
We are asking the Office of Management and Budget (OMB) to approve our use of these information collection activities for 3 years.
The purpose of this notice is to solicit comments from the public (as well as affected agencies) concerning our information collection. These comments will help us:
(1) Evaluate whether the collection of information is necessary for the proper performance of the functions of the Agency, including whether the information will have practical utility;
(2) Evaluate the accuracy of our estimate of the burden of the collection of information, including the validity of the methodology and assumptions used;
(3) Enhance the quality, utility, and clarity of the information to be collected; and
(4) Minimize the burden of the collection of information on those who are to respond, through use, as appropriate, of automated, electronic, mechanical, and other collection technologies;
All responses to this notice will be summarized and included in the request for OMB approval. All comments will also become a matter of public record.
Rural Utilities Service, USDA.
Notice and request for comments.
In accordance with the Paperwork Reduction Act of 1995, the Rural Utilities Service (RUS) invites comments on this information collection for which the RUS intends to request approval from the Office of Management and Budget (OMB).
Comments on this notice must be received by August 13, 2018.
Thomas P. Dickson, Acting Director, Program Development and Regulatory Analysis, USDA Rural Development, 1400 Independence Avenue SW, STOP 1522, Room 5164 South Building, Washington, DC 20250-1522. Telephone: (202) 690-4492. Fax: (202) 720-8435 or email to:
The Office of Management and Budget's (OMB) regulation (5 CFR part 1320) implementing provisions of the Paperwork Reduction Act of 1995 (Pub. L. 104-13) requires that interested members of the public and affected agencies have an opportunity to comment on information collection and recordkeeping activities (see 5 CFR 1320.8(d)). This notice identifies an information collection that RUS is submitting to OMB as extension to an existing collection with Agency adjustment.
Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the Agency, including whether the information will have practical utility; (b) the accuracy of the Agency's estimate of the burden of the proposed collection of information including the validity of the methodology and assumptions used; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology. Comments may be sent to: Thomas P. Dickson, Acting Director, Program Development and Regulatory Analysis, Rural Utilities Service, U.S. Department of Agriculture, STOP 1522, Room 5164, 1400 Independence Avenue SW, Washington, DC 20250-1522. Telephone: (202) 690-4492; Fax: (202) 720-8435.
Copies of this information collection can be obtained from Rebecca Hunt, Program Development and Regulatory Analysis, Telephone: (202) 205-3660, Fax: (202) 720-8435.
All responses to this notice will be summarized and included in the request for OMB approval. All comments will also become a matter of public record.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (Commerce) is rescinding its administrative review of the countervailing duty (CVD) order on utility scale wind towers (wind towers) from the People's Republic of China (China) for the period January 1, 2016, through December 31, 2016.
Applicable June 12, 2018.
Kristen Johnson, AD/CVD Operations, Office III, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-4793.
Commerce initiated an administrative review of the CVD order on wind towers from China with respect to 56 companies for the period January 1, 2016, through December 31, 2016,
Pursuant to 19 CFR 351.213(d)(1), Commerce will rescind an administrative review in whole or in part, if the party that requested a review withdraws its request within 90 days of the date of publication of the notice of initiation of the requested review. In this case, the petitioner withdrew its request for review within the 90-day deadline, and no other party requested an administrative review of the CVD order. Therefore, in accordance with 19 CFR 351.213(d)(1), we are rescinding this review in its entirety.
Commerce will instruct U.S. Customs and Border Protection (CBP) to assess CVDs on all entries of wind towers from China during the period January 1, 2016, through December 31, 2016, at rates equal to the cash deposit of estimated CVDs required at the time of entry, or withdrawal from warehouse, for consumption, in accordance with 19 CFR 351.212(c)(1)(i). Commerce intends to issue appropriate assessment instructions to CBP 15 days after the publication of this notice in the
This notice serves as a final reminder to parties subject to administrative protective order (APO) of their responsibility concerning the return or destruction of proprietary information disclosed under APO, in accordance with 19 CFR 351.305(a)(3). Timely written notification of the return or destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and the terms of an APO is a violation which is subject to sanction.
This notice is issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Tariff Act of 1930, as amended, and 19 CFR 351.213(d)(4).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (Commerce) is rescinding the administrative review of the countervailing duty order (CVD) on steel wire garment hangers from the Socialist Republic of Vietnam (Vietnam) for the period January 1, 2017 through December 31, 2017.
Applicable June 12, 2018.
John Conniff, AD/CVD Operations, Office III, Enforcement and Compliance, International Trade Administration, Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-1009.
On April 16, 2018, based on a timely request for review by M&B Metal Products Company, Inc. (the petitioner),
Pursuant to 19 CFR 351.213(d)(1), Commerce will rescind an administrative review, in whole or in part, if the party that requested the review withdraws its request within 90 days of the publication of the notice of initiation of the requested review. In this case, the petitioner timely withdrew its request by the 90-day deadline, and no other party requested an administrative review of the CVD order. As a result, pursuant to 19 CFR 351.213(d)(1), we are rescinding the administrative review of the CVD order on steel wire garment hangers from Vietnam for the period January 1, 2017, through December 31, 2017, in its entirety.
Commerce will instruct U.S. Customs and Border Protection (CBP) to assess CVDs on all appropriate entries. Because Commerce is rescinding this administrative review in its entirety, the entries to which this administrative review pertained shall be assessed CVDs at rates equal to the cash deposit of estimated CVDs required at the time of entry, or withdrawal from warehouse, for consumption, in accordance with 19 CFR 351.212(c)(1)(i). Commerce intends to issue appropriate assessment instructions to CBP 15 days after the publication of this notice in the
This notice also serves as a final reminder to parties subject to administrative protective order (APO) of their responsibility concerning the return or destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3), which continues to govern business proprietary information in this segment of the proceeding. Timely written notification of the return or destruction of APO materials, or conversion to judicial protective order, is hereby requested. Failure to comply with the regulations and terms of an APO is a violation which is subject to sanction.
This notice is issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Tariff Act of 1930, as amended, and 19 CFR 351.213(d)(4).
Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce.
The Department of Commerce (Commerce) preliminarily determines that Shin Yang Steel Co., Ltd. (Shin Yang), a producer/exporter of merchandise subject to this administrative review, made sales of subject merchandise at less than normal value. Interested parties are invited to comment on these preliminary results of review.
Applicable June 12, 2018.
Scott Hoefke or Erin Kearney, AD/CVD Operations, Office VI, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-4947 or (202) 482-0167, respectively.
Commerce is conducting an administrative review of the antidumping duty order on certain circular welded carbon steel pipes and tubes from Taiwan. The period of review (POR) is May 1, 2016, to April 30, 2017. This review covers Shin Yang Steel Co., Ltd. (Shin Yang) and Yieh Hsing Enterprise Co., Ltd. (Yieh Hsing). Commerce published the notice of initiation of this administrative review
On January 23, 2018, Commerce exercised its discretion to toll all deadlines for the duration of the closure of the Federal Government from January 20, 2018, through January 22, 2018.
For a complete description of the events that followed the initiation of this administrative review,
The merchandise subject to the order is certain circular welded carbon steel pipes and tubes from Taiwan. The product is currently classified under the Harmonized Tariff Schedule of the United States (HTSUS) item numbers 7306.30.5025, 7306.30.5032, 7306.30.5040, and 7306.30.5055. Although the HTSUS numbers are provided for convenience and customs purposes, the written product description remains dispositive.
Commerce is conducting this review in accordance with section 751(a)(1)(B) and (2) of the Tariff Act of 1930, as amended (the Act). Export price is calculated in accordance with section 772 of the Act. Normal value (NV) is calculated in accordance with section 773 of the Act.
For a full description of the methodology underlying our
On July 21, 2017, Yieh Hsing reported that it made no shipments of subject merchandise to the United States during the POR.
Given that Yieh Hsing certified that it made no shipments of subject merchandise to the United States during the POR, and there is no information calling its claim into question, we preliminarily determine that Yieh Hsing did not have any reviewable transactions during the POR. Consistent with Commerce's practice, we will not rescind the review with respect to Yieh Hsing but, rather, will complete the review and issue instructions to CBP based on the final results.
As a result of this review, we preliminarily determine that the following weighted-average dumping margin exists for the period May 1, 2016, through April 30, 2017:
Commerce intends to disclose to interested parties the calculations performed in connection with these preliminary results within five days of the date of publication of this notice.
Pursuant to 19 CFR 351.310(c), interested parties who wish to request a hearing must submit a written request to the Assistant Secretary for Enforcement and Compliance, filed electronically via ACCESS, within 30 days after the date of publication of this notice.
Unless otherwise extended, Commerce intends to issue the final results of this administrative review, including the results of its analysis of the issues raised in any written briefs, not later than 120 days after the date of publication of this notice, pursuant to section 751(a)(3)(A) of the Act.
Upon completion of the administrative review, Commerce shall determine, and CBP shall assess, antidumping duties on all appropriate entries in accordance with 19 CFR 351.212(b)(1). We intend to issue instructions to CBP 15 days after the date of publication of the final results of this review.
If the weighted-average dumping margin for Shin Yang is not zero or
With respect to Yieh Hsing, if we continue to find that Yieh Hsing had no shipments of subject merchandise in the final results, we will instruct CBP to liquidate any existing entries of merchandise produced by Yieh Hsing, but exported by other parties, at the rate for the intermediate reseller, if available, or at the all-others rate.
The following cash deposit requirements will be effective for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of this administrative review, as provided by section 751(a)(2)(C) of the Act: (1) The cash deposit rate for Shin Yang will be equal to the weighted-average dumping margin established in the final results of this review, except if the rate is zero or
This notice also serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.
We are issuing and publishing these results in accordance with sections 751(a)(1) and 777(i)(1) of the Act.
National Telecommunications and Information Administration, U.S. Department of Commerce.
Notice; Extension of comment period.
In response to requests for additional time, the Department of Commerce is extending the closing deadline for submitting comments to a request for public comments entitled “International Internet Policy Priorities” published in the
Comments are due on July 17, 2018, at 5:00 p.m. Eastern Daylight Time (EDT).
Written comments may be submitted by email to
Fiona Alexander, National Telecommunications and Information Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Room 4706, Washington, DC 20230; telephone (202) 482-1866; email
On June 5, 2018, NTIA published a Notice of Inquiry seeking comments and recommendations from all interested stakeholders on its international Internet policy priorities for 2018 and beyond. See NTIA, Notice of Inquiry, International Internet Policy Priorities, 83 FR 26036 (June 5, 2018). These comments will help inform NTIA to identify priority issues and help NTIA effectively leverage its resources and expertise to address those issues. The original deadline for submission of comments was July 2, 2018. With this notice, NTIA announces the extension of the closing deadline for submission of comments until July 17, 2018, at 5:00 p.m. EDT. All other instructions to commenters provided in the original notice remain unchanged.
Department of the Army, DoD.
Notice of intent.
The U.S. Army Aviation and Missile Command (AMRDEC) is seeking Cooperative Research and Development Agreement (CRADA) partners to collaborate in transitioning firearm with both gas delayed and stroke piston action into commercial and/or government application(s). Interested potential CRADA collaborators will receive detailed information on the current status of the project after signing a confidentiality disclosure agreement (CDA) with AMRDEC.
Under the CRADA, further research, development and testing will be conducted to further refine the principles and prototypes. Based on the results of these experiments a refined fully functioning firearm action could be designed and manufactured. The developed principles and designs might be further modified for other uses outside of the firearms industry.
Interested candidate partners must submit a statement of interest and capability to the AMRDEC point of contact before July 13, 2018 for consideration.
Comments and questions may be submitted to: Department of the Army, U.S. Army Research Development and Engineering Command, Aviation and Missile Research Development, and Engineering Center, ATTN: RDMR-CST (Ms. Wallace—Rm B300Q), 5400 Fowler Road, Redstone Arsenal, AL 35898-5000, or Email:
Questions about the proposed action can be directed to Ms. Cindy Wallace, (256) 313-0895, Office of Research and Technology Applications, email:
Collaborators should have experience in the development and testing of firearms. The target end products include government and commercial applications and unique applications identified by the CRADA partner.
The full CRADA proposal should include a capability statement with a detailed description of collaborators' expertise in the following and related technology areas: (1) Gas and/or blowback operated automatic firearms; (2) collaborators' expertise in successful technology transition; and (3) collaborator's ability to provide adequate funding to support some project studies is strongly encouraged. A preference will be given to collaborators who shall manufacture automatic or semi-automatic firearms in the United States. Collaborators are encouraged to properly label any proprietary material in their CRADA proposal as PROPRIETARY. Do not use the phrase “company confidential.”
Guidelines for the preparation of a full CRADA proposal will be communicated shortly thereafter to all respondents with whom initial confidential discussions will have established sufficient mutual interest. CRADA applications submitted after the due date may be considered if a suitable CRADA collaborator has not been identified by AMRDEC among the initial by AMRDEC are expeditiously commercialized and brought to practical use. The purpose of a CRADA is to find partner(s) to facilitate the development and commercialization of a technology that is in an early phase of development. Respondents interested in submitting a CRADA proposal should be aware that it may be necessary for them to secure a patent license to the above-mentioned patent pending technology in order to be able to commercialize products arising from a CRADA. CRADA partners are afforded an option to negotiate an exclusive license from the AMRDEC for inventions arising from the performance of the CRADA research plan.
By utilizing the principles of a gas delayed system to retain the bolt until safe extraction is possible and a stroke piston action to facilitate case extraction/ejection a simpler mechanism may be used for a high-powered automatic firearm. Two separate barrel ports, one near the chamber for the gas delaying function and the other near the muzzle for the stroke piston action, allow propellant gasses to act upon one piston. The piston is directly connected to the firearm's bolt via a linkage. Upon firing, the port near the chamber is utilized first causing gasses to hold the piston forward. Once propellant gasses reach the port near the muzzle the piston is forced rearward. The barrel port diameters will determine the forces acting upon the piston and bolt. Two prototypes of advancing design, detailed within the patent, were developed for initial testing and showed promising results.
Office of Fossil Energy, Department of Energy.
Notice of availability of the 2018 LNG Export Study and request for comments.
The Office of Fossil Energy (FE) of the Department of Energy (DOE) gives notice (Notice) of the availability
Comments are to be filed using procedures detailed in the Public Comment Procedures section no later than 4:30 p.m., Eastern time, July 27, 2018. DOE will not accept reply comments.
Robert Smith or Amy Sweeney, U.S. Department of Energy (FE-34), Office of Oil and Natural Gas, Office of Fossil Energy, Forrestal Building, Room 3E-042, 1000 Independence Avenue SW, Washington, DC 20585, (202) 586-7241; (202) 586-2627.
Cassandra Bernstein or Ronald (R.J.) Colwell, U.S. Department of Energy (GC-76), Office of the Assistant General Counsel for Electricity and Fossil Energy, Forrestal Building, 1000 Independence Avenue SW, Washington, DC 20585, (202) 586-9793; (202) 586-8499.
Pursuant to section 3 of the Natural Gas Act (NGA), 15 U.S.C. 717b, exports of natural gas, including LNG, must be authorized by DOE/FE.
In evaluating the public interest under NGA section 3(a), DOE reviews factors including economic impacts, international impacts, security of natural gas supply, and environmental impacts, among others.
To date, DOE/FE has issued 29 final long-term authorizations to export LNG and compressed natural gas to non-FTA countries in a cumulative volume totaling 21.35 billion cubic feet (Bcf) per day (Bcf/d) of natural gas (approximately 7.79 trillion cubic feet per year).
To date, DOE/FE has commissioned five studies to examine the effects of U.S. LNG exports on the U.S. economy and energy markets.
DOE/FE invited public comment on each of the four prior studies, and received comments representing a diverse range of interests and perspectives. DOE/FE considered the comments received on each study, as applicable, in its review of the non-FTA export applications then-pending before it. As noted above, DOE/FE has relied
The two most recent studies, the 2014 and 2015 LNG Export Studies, examined the domestic macroeconomic impacts of increasing exports of LNG at levels from 12 to 20 Bcf/d of natural gas. Specifically, the 2014 LNG Export Study served as an update of EIA's 2012 Study and used baseline cases from EIA's
The 2018 LNG Export Study, performed by NERA Economic Consulting (NERA), examines the probability and macroeconomic impact of various U.S. LNG export scenarios and includes alternative baseline scenarios based on the U.S. Energy Information Administration's (EIA)
The 25 proceedings identified above involve pending applications seeking authorization to export domestically produced LNG to non-FTA countries. In light of both the cumulative volume of exports to non-FTA countries authorized to date (equivalent to 21.35 Bcf/d of natural gas) and the volume of LNG requested for export in those pending applications, DOE/FE determined that a new macroeconomic study was warranted. DOE therefore commissioned NERA to conduct the 2018 LNG Export Study.
Like the four prior studies, the 2018 LNG Export Study examines the impacts of varying levels of LNG exports on domestic energy markets. The 2018 LNG Export Study also assesses the likelihood of different levels of “unconstrained” LNG exports (defined as market determined levels of exports), and analyzes the outcomes of different LNG export levels on the U.S. natural gas markets and the U.S. economy as a whole, over the 2020 to 2050 time period.
Specifically, the 2018 LNG Export Study develops 54 scenarios by identifying various assumptions for domestic and international supply and demand conditions to capture a wide range of uncertainty in the natural gas markets.
As part of this analysis, the 2018 LNG Export Study examines the likelihood of conditions leading to various export scenarios—making it the first DOE macroeconomic study to consider this issue. Specifically, the 2018 LNG Export Study includes peer-reviewed probabilities of uncertainties surrounding developments in the international and domestic natural gas markets that were, in turn, combined to develop the 54 export scenarios and their associated macroeconomic impacts.
To summarize, the 2018 LNG Export Study differs from DOE/FE's previous macroeconomic studies in the following ways:
(i) Includes a larger number of scenarios (54 scenarios) to capture a wider range of uncertainty in four natural gas market conditions than examined in the previous studies;
(ii) Includes LNG exports in all 54 scenarios that are market-determined levels, including the three alternative baseline scenarios that are based on the AEO 2017 projections;
(iii) Examines unconstrained LNG export volumes beyond the levels examined in the previous studies;
(iv) Examines the likelihood of those market-determined LNG export volumes; and
(v) Provides macroeconomic projections associated with several of the scenarios lying within the more likely range.
The 2018 LNG Export Study and the comments that DOE/FE receives in response to this Notice will help to inform DOE/FE's determination of the public interest in pending and future non-FTA application proceedings. Comments must be limited to the methodology, results, and conclusions of the 2018 LNG Export Study on the factors evaluated. These factors include the potential impact of LNG exports on domestic energy consumption, production, and prices; the macroeconomic factors identified in the Study, including gross domestic product, consumption, U.S. economic sector analysis, and U.S. LNG export feasibility analysis; and any other factors included in the Study. In addition, comments may be directed toward the feasibility of various scenarios used in the Study. While this invitation to comment covers a broad range of issues, DOE may disregard comments that are not germane to the present inquiry. Due to the complexity of the issues raised in the 2018 LNG Export Study, interested parties will be provided 45 days from the date of publication of this Notice in which to submit their comments.
DOE is not establishing a new proceeding or docket in this Notice, and the submission of comments in response to this Notice will not make commenters parties to any of the 25 export proceedings identified by docket number above. Persons with an interest in the outcome of one or more of those proceedings have been given an opportunity to comment, protest, and/or intervene in those applications by complying with the procedures established in the respective notices of application published in the
Comments may be submitted using one of the following supplemental methods:
(1) Submitting the comments using the online form at
(2) Mailing an original and three paper copies of the filing to the Office of Regulation and International Engagement at the address listed in
(3) Hand delivering an original and three paper copies of the filing to the Office of Regulation and International Engagement at the address listed in
For administrative efficiency, DOE/FE prefers comments to be filed electronically using the online form (method 1). All comments must include a reference to the “2018 LNG Export Study” in the title line.
The 2018 LNG Export Study is available for inspection and copying in the Division of Natural Gas Regulation docket room, Room 3E-042, 1000 Independence Avenue SW, Washington, DC 20585. The docket room is open between the hours of 8:00 a.m. and 4:30 p.m., Monday through Friday, except Federal holidays. The Study and any comments filed in response to this Notice will be available electronically at the following DOE/FE website:
Office of Energy Efficiency and Renewable Energy, Department of Energy.
Notice of open meeting.
This notice announces a meeting of the State Energy Advisory Board (STEAB). The Federal Advisory Committee Act requires that public notice of these meetings be announced in the
July 12, 2018, 9:00 a.m. to 5:30 p.m. ET, July 13, 2018, 9:00 a.m. to 3:30 p.m. ET.
The meeting will be held at the U.S. Department of Energy, 1000 Independence Ave. SW, Washington, DC 20585.
Michael Li, Senior Policy Advisor, Office of Energy Efficiency and Renewable Energy, U.S. Department of Energy, 1000 Independence Ave. SW, Washington, DC 20585. Phone number 202-287-5189, and email:
The Chair of the Board is empowered to conduct the meeting in a fashion that will facilitate the orderly conduct of business.
Office of Nuclear Energy, Department of Energy.
Notice of open meeting.
This notice announces a meeting of the Nuclear Energy Advisory Committee (NEAC). The Federal Advisory Committee Act requires that public notice of these meetings be announced in the
Monday July 9, 2018, 9:00 a.m.-4:30 p.m.
Crowne Plaza Washington National Airport, 1480 Crystal Drive, Arlington, VA 22202.
Bob Rova, Designated Federal Officer, U.S. Department of Energy, 19901
Take notice that the Federal Energy Regulatory Commission (Commission) will hold a Technical Conference on Tuesday, July 31, 2018, from 9:00 a.m. to 5:00 p.m. This Commissioner-led conference will be held in the Commission Meeting Room at the Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426. The purpose of the conference is to discuss policy issues related to the reliability of the Bulk-Power System. Attached is an agenda for this event.
The conference will be open for the public to attend. There is no fee for attendance. However, members of the public are encouraged to preregister online at:
Information on this event will be posted on the Calendar of Events on the Commission's website,
Commission conferences are accessible under section 508 of the Rehabilitation Act of 1973. For accessibility accommodations, please send an email to
For more information about this technical conference, please contact Lodie White (202) 502-8453,
Take notice that the following hydroelectric application has been filed with the Commission and is available for public inspection.
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k. Pursuant to section 4.32(b)(7) of 18 CFR of the Commission's regulations, if any resource agency, Indian Tribe, or person believes that an additional scientific study should be conducted in order to form an adequate factual basis
The Commission strongly encourages electronic filing. Please file additional study requests and requests for cooperating agency status using the Commission's eFiling system at
m. Due to the small size and remote location of this project, the applicant's coordination with tribal, state, and federal agencies during the preparation of the application, and the lack of interest during pre-filing consultation, we intend to accept the consultation that has occurred on this project during the pre-filing period as satisfying our requirements for the standard 3-stage consultation process under 18 CFR 4.38.
n. The application is not ready for environmental analysis at this time.
o. The hydroelectric project includes: A 920-foot-long, 50-foot-wide ditch diverting water from an unnamed stream to an upper pond; a 12.59-acre upper pond created by A 200-foot-long, 50-foot-wide, 5-foot-high earthen dam with a spillway and a 200-foot-long overflow ditch; a short metal flume and a 275-foot-long, 12-inch-diameter wood stave pipe conveying water from the upper pond to the lower pond; a 1000-foot-long, 50-foot-wide ditch diverting water from an unnamed stream to the lower pond; a 2.2-acre lower pond created by a 200-foot-long, 50-foot-wide, 5-foot-high earthen dam; a 6,772-foot-long PVC and steel penstock conveying water from the lower pond to the powerhouse; a steel powerhouse with a 75-kilowatt Pelton turbine; a short transmission line; and appurtenant facilities. The annual generation is 3,000 megawatt-hours.
p. A copy of the application is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's website at
You may also register online at
q.
Take notice that the Commission received the following exempt wholesale generator filings:
Take notice that the Commission received the following electric rate filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
The staff of the Federal Energy Regulatory Commission (FERC or Commission) will prepare an environmental assessment (EA) that will discuss the environmental impacts of the Southeastern Trail Project involving construction and operation of facilities by Transcontinental Gas Pipe Line Company, LLC (Transco) across Virginia, South Carolina, Georgia, and Louisiana. The Commission will use this EA in its decision-making process to determine whether the project is in the public convenience and necessity.
This notice announces the opening of the scoping process the Commission will use to gather input from the public and interested agencies on the project. You can make a difference by providing us with your specific comments or concerns about the project. Your comments should focus on the potential environmental effects, reasonable alternatives, and measures to avoid or lessen environmental impacts. Your input will help the Commission staff determine what issues they need to evaluate in the EA. To ensure that your comments are timely and properly recorded, please send your comments so that the Commission receives them in Washington, DC on or before 5:00 p.m. Eastern Daylight Time on July 2, 2018.
If you sent comments on this project to the Commission before the opening of this docket on April 11, 2018, you will need to file those comments in Docket No. CP18-186-000 to ensure they are considered as part of this proceeding.
This notice is being sent to the Commission's current environmental mailing list for this project. State and local government representatives should notify their constituents of this proposed project and encourage them to comment on their areas of concern.
If you are a landowner receiving this notice, a pipeline company representative may contact you about the acquisition of an easement to construct, operate, and maintain the proposed facilities. The company would seek to negotiate a mutually acceptable agreement. However, if the Commission approves the project, that approval conveys with it the right of eminent domain. Therefore, if easement negotiations fail to produce an agreement, the pipeline company could initiate condemnation proceedings where compensation would be determined in accordance with state law.
Transco provided landowners with a fact sheet prepared by the FERC entitled “An Interstate Natural Gas Facility On My Land? What Do I Need To Know?” This fact sheet addresses a number of typically asked questions, including the use of eminent domain and how to participate in the Commission's proceedings. It is also available for viewing on the FERC website (
For your convenience, there are four methods you can use to submit your comments to the Commission. The Commission will provide equal consideration to all comments received, whether filed in written form or provided verbally. The Commission encourages electronic filing of comments and has expert staff available to assist you at (202) 502-8258 or
(1) You can file your comments electronically using the
(2) You can file your comments electronically by using the
(3) You can file a paper copy of your comments by mailing them to the following address. Be sure to reference the project docket number (CP18-186-000) with your submission: Kimberly D. Bose, Secretary, Federal Energy Regulatory Commission, 888 First Street NE, Room 1A, Washington, DC 20426.
(4) In lieu of sending written or electronic comments, the Commission invites you to attend one of the public scoping sessions its staff will conduct in the project area, scheduled as follows:
The primary goal of these scoping sessions is to have you identify the specific environmental issues and concerns that should be considered in the EA to be prepared for this Project. Individual verbal comments will be taken on a one-on-one basis with a court reporter. This format is designed to receive the maximum amount of verbal comments, in a convenient way during the timeframe allotted.
Each scoping session is scheduled from 4:30 p.m. to 8:00 p.m. EDT. You may arrive at any time after 4:30 p.m. There will not be a formal presentation by Commission staff when the session opens. If you wish to speak, the Commission staff will hand out numbers in the order of your arrival. Comments will be taken until 8:00 p.m. However, if no additional numbers have been handed out and all individuals who wish to provide comments have had an opportunity to do so, staff may conclude the session at 7:30 p.m. Please see appendix 1 for additional information on the session format and conduct.
Your scoping comments will be recorded by the court reporter (with FERC staff or representative present) and become part of the public record for this proceeding. Transcripts will be publicly available on FERC's eLibrary system (see below for instructions on using eLibrary). If a significant number of people are interested in providing verbal comments in the one-on-one settings, a time limit of 5 minutes may be implemented for each commentor.
It is important to note that verbal comments hold the same weight as written or electronically submitted comments. Although there will not be a formal presentation, Commission staff will be available throughout the comment session to answer your questions about the environmental review process. Representatives from Transco will also be present to answer project-specific questions.
Please note this is not your only public input opportunity; please refer to the review process flow chart in appendix 2.
Transco proposes to construct and operate about 7.7 miles of new natural gas pipeline (Manassas Loop) located along the existing Transco Mainline, expand three existing compressor stations in Virginia (Stations 185, 175, and 165), and modify 21 existing facilities in South Carolina, Georgia, and Louisiana as part of the Southeastern Trail Project. According to Transco, its project would provide 296.4 million standard cubic feet of natural gas per day (MMcf/d) of additional firm transportation capacity from the Pleasant Valley Interconnect facility in Fairfax County, Virginia to the existing Station 65 pooling point in St. Helena Parish, Louisiana, to serve the following customers: Public Service Company of North Carolina Incorporated (60 MMcf/d), South Carolina Electric and Gas (215 MMcf/d), Virginia Natural Gas (14.6 MMcf/d), and the cities of Buford (3.8 MMcf/d) and LaGrange (3 MMcf/d) in Georgia.
The specific facilities proposed as part of the Southeastern Trail Project are as follows:
• Construction of approximately 7.7 miles of new 42-inch-diameter pipeline loop
• Expansion of existing compressor stations in Virginia
○ Uprating the existing electric-driven compression unit driver from 25,000 to 30,000 horsepower (HP) and re-gearing the associated variable speed drive at Station 185 in Prince William County.
○ Addition of one new 22,490 HP turbine-driven compression unit and station cooling, and uprating of the existing electric driven compression unit driver from 33,000- to 41,250-HP and rewheeling the associated centrifugal compressor at Station 175 in Fluvanna County.
○ Addition of two new 22,490 HP turbine-driven compression units, station cooling, and miscellaneous piping modifications; the abandonment and removal of ten reciprocating compressor units totaling 20,000 HP; and demolition of an existing compressor building at Station 165 in Pittsylvania County.
• Mainline Facility Modifications in South Carolina, Georgia, and Louisiana
○ Flow reversal modifications to existing Station 65 in St. Helena Parish, Louisiana and existing Station 140 in Spartanburg County, South Carolina.
○ Flow reversal modifications and installation of deodorization at existing Station 130 in Madison County, Georgia and existing Station 115 in Coweta County, Georgia.
○ Installation of deodorization at existing Stations 116, 120, and 125 in Carroll, Henry, and Walton Counties, Georgia and Station 135 in Anderson County, South Carolina.
○ Installation of deodorization at 13 existing mainline valve facilities in South Carolina and Georgia along the Transco Mainline.
The general location of the project facilities is shown in appendix 3.
Construction of the proposed facilities would disturb about 185 acres of land for the aboveground facilities and the pipeline, the majority of which is associated with the Manassas Loop (76.4 acres) in Fauquier and Prince William Counties, Virginia, and the Station 165 expansion (72.8 acres) in Pittsylvania County, Virginia. About 96 percent of the proposed Manassas Loop pipeline route would be co-located at a 25-foot offset from the existing Transco Mainline C pipeline, expanding the existing permanent right-of-way by 25 feet. In addition, one new permanent access road would be constructed and maintained to provide access to the new mainline valve for the Manassas Loop at Station 180. In total, Transco would maintain about 34.2 acres for permanent operation of the project's facilities, including 24.0 acres for the Manassas Loop and 10.0 acres for the Station 165 expansion. The remaining acreage would be restored and revert to former uses.
The National Environmental Policy Act (NEPA) requires the Commission to take into account the environmental impacts that could result from an action whenever it considers the issuance of a Certificate of Public Convenience and Necessity. NEPA also requires us
In the EA we will discuss impacts that could occur as a result of the construction and operation of the proposed project under these general headings:
• Geology and soils;
• Land use;
• Water resources, fisheries, and wetlands;
• Cultural resources;
• Vegetation and wildlife;
• Air quality and noise;
• Endangered and threatened species;
• Public safety; and
• Cumulative impacts
We will also evaluate reasonable alternatives to the proposed project or portions of the project, and make recommendations on how to lessen or avoid impacts on the various resource areas.
The EA will present our independent analysis of the issues. The EA will be available in the public record through eLibrary. We will publish and distribute the EA to the public for an allotted comment period. We will consider all comments on the EA before making our recommendations to the Commission. To ensure we have the opportunity to consider and address your comments, please carefully follow the instructions in the Public Participation section, beginning on page 2.
With this notice, we are asking agencies with jurisdiction by law and/or special expertise with respect to the environmental issues of this project to formally cooperate with us in the preparation of the EA.
In accordance with the Advisory Council on Historic Preservation's implementing regulations for section 106 of the National Historic Preservation Act, we are using this notice to initiate consultation with the applicable State Historic Preservation Offices (SHPO), and to solicit their views and those of other government agencies, interested Indian tribes, and the public on the project's potential effects on historic properties.
The environmental mailing list includes federal, state, and local government representatives and agencies; elected officials; environmental and public interest groups; Native American Tribes; other interested parties; and local libraries and newspapers. This list also includes all affected landowners (as defined in the Commission's regulations) who are potential right-of-way grantors, whose property may be used temporarily for project purposes, or who own homes within certain distances of aboveground facilities, and anyone who submits comments on the project. We will update the environmental mailing list as the analysis proceeds to ensure that we send the information related to this environmental review to all individuals, organizations, and government entities interested in and/or potentially affected by the proposed project.
Copies of the EA will be sent to the environmental mailing list for public review and comment. If you would prefer to receive a paper copy of the document instead of the CD version or would like to remove your name from the mailing list, please return the attached Information Request (appendix 2).
On June 18-20, 2018, the Office of Energy Projects staff will be in Fauquier, Prince William, Fluvanna, and Pittsylvania Counties, Virginia to gather data related to the environmental analysis of the Southeastern Trail Project. Staff will review environmental resources on the proposed Manassas Loop and visit Stations 175 and 165 to review the extent of proposed ground-disturbing activities. This will assist staff in completing its comparative evaluation of environmental impacts of the proposed project. Viewing of these facilities is anticipated to be from existing Transco right-of-way and at existing Transco stations.
Additional information about the project is available from the Commission's Office of External Affairs, at (866) 208-FERC, or on the FERC website at
In addition, the Commission offers a free service called eSubscription which allows you to keep track of all formal issuances and submittals in specific dockets. This can reduce the amount of time you spend researching proceedings by automatically providing you with notification of these filings, document summaries, and direct links to the documents. Go to
Finally, public sessions or site visits will be posted on the Commission's calendar located at
Take notice that on May 24, 2018, National Fuel Gas Supply Corporation (National Fuel), 6363 Main Street, Williamsville, New York 14221, filed in the above referenced docket, a prior notice request pursuant to sections 157.205, 157.208, and 157.210 of the Commission's regulations under the Natural Gas Act (NGA) and National Fuel's blanket certificate issued in Docket No. CP83-4-000, for authorization to (1) increase certificated maximum allowable operating pressure (MAOP) of a 10.6-mile-long portion of existing 16-inch-diameter Line KNYS, (2) install a new Over Pressure Protection Station, and (3) install appurtenances, all located in Cattaraugus County, New York and McKean County, Pennsylvania (Line KNYS Update Project). Increasing MAOP from 335 pounds per square inch
The filing may also be viewed on the web at
Any questions regarding this application may be directed to Margaret Sroka, Attorney, National Fuel Gas Supply Corporation, 6363 Main Street, Williamsville, New York 14221, by telephone at (716) 857-7066 or by email at
Pursuant to section 157.9 of the Commission's rules, 18 CFR 157.9, within 90 days of this Notice the Commission staff will either: Complete its environmental assessment (EA) and place it into the Commission's public record (eLibrary) for this proceeding; or issue a Notice of Schedule for Environmental Review. If a Notice of Schedule for Environmental Review is issued, it will indicate, among other milestones, the anticipated date for the Commission staff's issuance of the EA for this proposal. The filing of the EA in the Commission's public record for this proceeding or the issuance of a Notice of Schedule for Environmental Review will serve to notify federal and state agencies of the timing for the completion of all necessary reviews, and the subsequent need to complete all federal authorizations within 90 days of the date of issuance of the Commission staff's EA.
Any person may, within 60 days after the issuance of the instant notice by the Commission, file pursuant to Rule 214 of the Commission's Procedural Rules (18 CFR 385.214) a motion to intervene or notice of intervention. Any person filing to intervene or the Commission's staff may, pursuant to section 157.205 of the Commission's Regulations under the NGA (18 CFR 157.205) file a protest to the request. If no protest is filed within the time allowed therefore, the proposed activity shall be deemed to be authorized effective the day after the time allowed for protest. If a protest is filed and not withdrawn within 30 days after the time allowed for filing a protest, the instant request shall be treated as an application for authorization pursuant to section 7 of the NGA.
The Commission strongly encourages electronic filings of comments, protests, and interventions via the internet in lieu of paper. See 18 CFR 385.2001(a)(1)(iii) and the instructions on the Commission's website (
On May 10, 2018, Magic Reservoir Hydroelectric, Inc. (transferor) and Big Wood Canal Company (transferee) filed an application for the transfer of license of the Magic Dam Project No. 3407. The project is located on the Big Wood River in Blaine and Camas counties, Idaho and occupies Federal lands managed by the Bureau of Land Management.
The applicants seek Commission approval to transfer the license for the Magic Dam Project from the transferor to the transferee.
Deadline for filing comments, motions to intervene, and protests: 30 days from the date that the Commission issues this notice. The Commission strongly encourages electronic filing. Please file comments, motions to intervene, and protests using the Commission's eFiling system at
Take notice that on May 31, 2018, pursuant to sections 206, 306, and 309 of the Federal Power Act, 16 U.S.C. 824e, 825e, and 825h and Rule 206 of the Federal Energy Regulatory Commission's (Commission) Rules of Practice and Procedure, 18 CFR 385.206, North Carolina Electric Membership Corporation (Complainant) filed a formal challenge and complaint against Duke Energy Progress, LLC (Respondent) alleging that Respondent is violating its formula rate, its Joint Open Access Transmission Tariff and Commission orders, regulations and generally applicable ratemaking policies by failing to reflect in its Annual Updates of wholesale transmission charges, the reduction in the federal corporate income tax rate that went into effect January 1, 2018 and the adjustments to the Accumulated Deferred Income Tax balances, as more fully explained in the complaint.
Complainant certifies that copies of the complaint were served on contacts for the Respondent listed on the Commission's list of Corporate Officials and the North Carolina Utilities Commission and the South Carolina Public Service Commission.
Any person desiring to intervene or to protest this filing must file in accordance with Rules 211 and 214 of the Commission's Rules of Practice and
The Commission encourages electronic submission of protests and interventions in lieu of paper using the “eFiling” link at
This filing is accessible on-line at
Take notice that on May 23, 2018, Equitrans, L.P. (Equitrans), 625 Liberty Avenue, Pittsburgh, Pennsylvania 15222, filed in Docket No. CP18-489-000, a prior notice request pursuant to sections 157.205, 157.208(c) and 157.210 of the Federal Energy Regulatory Commission's (Commission) regulations under the Natural Gas Act (NGA) and Equitrans' blanket authorizations issued in Docket No. CP96-523-000. Equitrans seeks authorization to construct and operate its H-320 Pipeline Project (Project) located in Harrison County, West Virginia. Specifically, Equitrans proposes to install five miles of 12-inch-diameter pipeline to provide 85,000 dekatherms per day of increased capacity to the proposed ESC Harrison Country Power Plant. Equitrans estimates the cost of the Project to be $21,000,000, all as more fully set forth in the application which is on file with the Commission and open to public inspection.
The filing may also be viewed on the web at
Any questions regarding this application should be directed to Paul W. Diehl, Senior Counsel—Midstream, Equitrans, L.P., 625 Liberty Avenue, Suite 1700, Pittsburgh, Pennsylvania 15222, by phone (412) 395-5540 or by email at
Any person or the Commission's Staff may, within 60 days after the issuance of the instant notice by the Commission, file pursuant to Rule 214 of the Commission's Procedural Rules (18 CFR 385.214) a motion to intervene or notice of intervention and, pursuant to section 157.205 of the Commission's Regulations under the NGA (18 CFR 157.205) a protest to the request. If no protest is filed within the time allowed therefore, the proposed activity shall be deemed to be authorized effective the day after the time allowed for protest. If a protest is filed and not withdrawn within 30 days after the time allowed for filing a protest, the instant request shall be treated as an application for authorization pursuant to section 7 of the NGA.
Pursuant to section 157.9 of the Commission's rules, 18 CFR 157.9, within 90 days of this Notice the Commission staff will either: Complete its environmental assessment (EA) and place it into the Commission's public record (eLibrary) for this proceeding, or issue a Notice of Schedule for Environmental Review. If a Notice of Schedule for Environmental Review is issued, it will indicate, among other milestones, the anticipated date for the Commission staff's issuance of the final environmental impact statement (FEIS) or EA for this proposal. The filing of the EA in the Commission's public record for this proceeding or the issuance of a Notice of Schedule for Environmental Review will serve to notify federal and state agencies of the timing for the completion of all necessary reviews, and the subsequent need to complete all federal authorizations within 90 days of the date of issuance of the Commission staff's FEIS or EA.
Persons who wish to comment only on the environmental review of this project should submit an original and two copies of their comments to the Secretary of the Commission. Environmental commenters will be placed on the Commission's environmental mailing list, will receive copies of the environmental documents, and will be notified of meetings associated with the Commission's environmental review process. Environmental commenters will not be required to serve copies of filed documents on all other parties. However, the non-party commenters will not receive copies of all documents filed by other parties or issued by the Commission (except for the mailing of environmental documents issued by the Commission) and will not have the right to seek court review of the Commission's final order.
The Commission strongly encourages electronic filings of comments, protests, and interventions via the internet in lieu of paper. See 18 CFR 385.2001(a)(1)(iii) and the instructions on the Commission's website (
Take notice that on June 4, 2018, pursuant to sections 206 and 306 of the Federal Power Act, 16 U.S.C. 824e and 825e (2018) and Rule 206 of the Federal Energy Regulatory Commission's (Commission) Rules of Practice and Procedure, 18 CFR 385.206 (2018), DC Energy, LLC (Complainant) filed a formal complaint against PJM
The Complainant certifies that copies of the complaint were served on the contacts for Respondent as listed on the Commission's list of Corporate Officials.
Any person desiring to intervene or to protest this filing must file in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211, 385.214). Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceeding. Any person wishing to become a party must file a notice of intervention or motion to intervene, as appropriate. The Respondent's answer and all interventions, or protests must be filed on or before the comment date. The Respondent's answer, motions to intervene, and protests must be served on the Complainants.
The Commission encourages electronic submission of protests and interventions in lieu of paper using the “eFiling” link at
This filing is accessible on-line at
Take notice that on May 31, 2018, pursuant to sections 206 and 306 of the Federal Power Act, 16 U.S.C. 824e, 825e (2012), and Rule 206 of the Federal Energy Regulatory Commission's (Commission) Rules of Practice and Procedure, 18 CFR 385.206 (2017), CPV Power Holdings, L.P., Calpine Corporation and Eastern Generation, LLC (collectively, Complainants), filed a formal complaint against PJM Interconnection, L.L.C. (Respondent) alleging that Respondent's Open Access Transmission Tariff is unjust and unreasonable because it does not include any provisions to effectively prevent the suppression of prices by resources receiving state subsidies, all as more fully explained in the complaint.
Complainants certify that copies of the complaint were served on the contacts for Respondent, as listed on the Commission's list of Corporate Officials, and on persons listed on the official service lists compiled by the Secretary in Docket Nos. EL16-49 and ER18-1314.
Any person desiring to intervene or to protest this filing must file in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceeding. Any person wishing to become a party must file a notice of intervention or motion to intervene, as appropriate. The Respondent's answer and all interventions, or protests must be filed on or before the comment date. The Respondent's answer, motions to intervene, and protests must be served on the Complainants.
The Commission encourages electronic submission of protests and interventions in lieu of paper using the “eFiling” link at
This filing is accessible on-line at
Federal Energy Regulatory Commission.
Errata and comment request.
In compliance with the requirements of the Paperwork Reduction Act (PRA) of 1995, the Federal Energy Regulatory Commission (Commission or FERC) is submitting the information collections FERC-917 (Non-discriminatory Open Access Transmission Tariff) and FERC-918 (Information to be posted on OASIS & Auditing Transmission Service Information) to the Office of Management and Budget (OMB) for review of the information collection requirements. Any interested person may file comments directly with OMB and should address a copy of those comments to the Commission as explained below.
Comments on the collections of information are due by June 27, 2018.
Comments filed with OMB, identified by the OMB Control No. 1902-0233 (FERC-917 and FERC-918) should be sent via email to the Office of Information and Regulatory Affairs:
A copy of the comments should also be sent to the Federal Energy Regulatory Commission, identified by the Docket No. IC18-5-000, by one of the following methods:
•
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Ellen Brown may be reached by email at
The Commission published 60-day
The corrected table follows.
Legal (Occupation Code: 23-0000): $143.68.
Consulting (Occupation Code: 54-1600): $89.00.
Management Analyst (Occupation Code: 13-1111): $63.49.
Office and Administrative Support (Occupation Code: 43-000): $40.89.
Electrical Engineer (Occupation Code: 17-2071): $68.12.
Information Security Analyst (Occupation Code: 15-1122): $66.34.
File Clerk (Occupation Code: 43-4071): $32.74.
The skill sets are assumed to contribute equally, so the hourly cost is an average [($143.68 + $89.00 + $63.49 + $40.89 + $68.12 + $66.34 + 32.74) ÷ 7 = $72.04]. The figure is rounded to $72.00 per hour.
Federal Communications Commission.
Notice.
The Federal Communications Commission (FCC) has received Office of Management and Budget (OMB) approval for a revision of a currently approved public information collection pursuant to the Paperwork Reduction Act of 1995. An agency may not conduct or sponsor a collection of information unless it displays a currently valid OMB control number, and no person is required to respond to a collection of information unless it displays a currently valid control number. Comments concerning the accuracy of the burden estimates and any suggestions for reducing the burden should be directed to the person listed in the
Cathy Williams, Office of the Managing Director, at (202) 418-2918, or email:
The total annual reporting burdens and costs for the respondents are as follows:
This collection is necessary to implement certain disclosure requirements that are part of the Commission's wireless hearing aid compatibility rule. In a Report and Order in WT Docket No. 01-309, FCC 03-168, adopted and released in September 2003, implementing a mandate under the Hearing Aid Compatibility Act of 1988, the Commission required digital wireless phone manufacturers and service providers to make certain digital wireless phones capable of effective use with hearing aids, label certain phones they sold with information about their compatibility with hearing aids, and report to the Commission (at first every six months, then on an annual basis) on the numbers and types of hearing aid-compatible phones they were producing or offering to the public. These reporting requirements were subsequently amended on several occasions, and the previous OMB-approved collection under this OMB control number included these modifications.
On November 19, 2015, the Commission adopted final rules in a Fourth Report and Order, FCC 15-155 (Fourth Report and Order), that, among other changes, expanded the scope of the Commission's hearing aid compatibility provisions to cover handsets used with any digital terrestrial mobile service that enables two-way real-time voice communications among members of the public or a substantial portion of the public, including through the use of pre-installed software applications. Prior to 2018, the hearing aid compatibility provisions were limited only to handsets used with two-way switched voice or data services classified as Commercial Mobile Radio Service, and only to the extent they were provided over networks meeting certain architectural requirements that enable frequency reuse and seamless handoff. As a result of the Fourth Report and Order, beginning January 1, 2018, all device manufacturers and Tier I carriers that offer handsets falling under the expanded scope of covered handsets are required to comply with the Commission's hearing aid compatibility provisions, including annual reporting requirements on FCC Form 655. For other service providers that are not Tier I carriers, the expanded scope of the Commission's hearing aid compatibility provisions applies beginning April 1, 2018.
Following release of the Fourth Report and Order, the Commission was required to amend FCC Form 655 to reflect the newly expanded scope of handsets covered by the hearing aid compatibility provisions, as well as to capture information regarding existing disclosure requirements clarified by the Commission in the Fourth Report and Order. As a consequence of the Fourth Report and Order, FCC Form 655 filing and other requirements will apply to those newly-covered handsets offered by device manufacturers and service providers that have already been reporting annually on their compliance with the Commission's hearing aid compatibility provisions, as well to any device manufacturers and service providers that were previously exempt because they did not offer any covered handsets or services prior to 2018.
As a result, the Commission requested a revision of this collection in order to implement the final rules promulgated in the Fourth Report and Order, which expanded the scope of the rules due to a shift from Commercial Mobile Radio Services (CMRS) to digital mobile service. We estimate that the expanded scope will increase the potential number of respondents subject to this collection and correspondingly increase the responses and burden hours. The minor language changes to the instructions to FCC Form 655 and to the form itself clarifying this expanded scope will help the Commission compile data and monitor compliance with the current version of the hearing aid compatibility rules while making more complete and accessible information available to consumers.
Federal Communications Commission.
Notice and request for comments.
As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act (PRA) of 1995, the Federal Communications Commission (FCC or the Commission) invites the general public and other Federal agencies to take this opportunity to comment on the following information collection. Comments are requested concerning: Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; the accuracy of the Commission's burden estimate; ways to enhance the quality, utility, and clarity of the information collected; ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology; and ways to further reduce the information collection burden on small business concerns with fewer than 25 employees.
The Commission may not conduct or sponsor a collection of information unless it displays a currently valid Office of Management and Budget (OMB) control number. No person shall be subject to any penalty for failing to comply with a collection of information subject to the PRA that does not display a valid OMB control number.
Written comments should be submitted on or before July 12, 2018. If you anticipate that you will be submitting comments, but find it difficult to do so within the period of time allowed by this notice, you should advise the contacts listed below as soon as possible.
Direct all PRA comments to Nicholas A. Fraser, OMB, via email
For additional information or copies of the information collection, contact Nicole Ongele at (202) 418-2991. To view a copy of this information collection request (ICR) submitted to OMB: (1) Go to the web page
As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3520), the Federal Communications Commission (FCC or the Commission) invites the general public and other Federal agencies to take this opportunity to comment on the following information collection.
Comments are requested concerning: Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; the accuracy of the Commission's burden estimate; ways to enhance the quality, utility, and clarity of the information collected; ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology; and ways to further reduce the information collection burden on small business concerns with fewer than 25 employees.
The Commission will use the information contained in FCC/WCB-1 to cover the personally identifiable information (PII) that is required as part of the Lifeline Program (“Lifeline”). As required by the Privacy Act of 1974, as amended, 5 U.S.C. 552a, the Commission published FCC/WCB-1 “Lifeline Program” in the
Also, respondents may request materials or information submitted to the Commission or to the Universal Service Administrative Company (USAC or Administrator) be withheld from public inspection under 47 CFR 0.459 of the FCC's rules. We note that USAC must preserve the confidentiality of all data obtained from respondents; must not use the data except for purposes of administering the universal service programs; and must not disclose data in company-specific form unless directed to do so by the Commission.
On November 16, 2017, the Commission adopted the
Federal Financial Institutions Examination Council (FFIEC).
Rescission of policy statement.
The FFIEC is rescinding its policy statement titled “Interagency Coordination of Formal Corrective Action by the Federal Bank Regulatory Agencies” that was issued on February 20, 1997 (the “1997 Policy Statement”). This action is being coordinated with the publication of a new policy statement in the
The policy is rescinded as of June 12, 2018.
The 1997 Policy Statement principally addressed the requirement for each federal banking agency that proposed to take a formal enforcement action against a federally regulated financial institution, or institution-affiliated party, to provide written notice of such action to the other federal and state banking agencies.
The companies listed in this notice have applied to the Board for approval, pursuant to the Bank Holding Company Act of 1956 (12 U.S.C. 1841
The applications listed below, as well as other related filings required by the Board, are available for immediate inspection at the Federal Reserve Bank indicated. The applications will also be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing on the standards enumerated in the BHC Act (12 U.S.C. 1842(c)). If the proposal also involves the acquisition of a nonbanking company, the review also includes whether the acquisition of the nonbanking company complies with the standards in section 4 of the BHC Act (12 U.S.C. 1843). Unless otherwise noted, nonbanking activities will be conducted throughout the United States.
Unless otherwise noted, comments regarding each of these applications must be received at the Reserve Bank indicated or the offices of the Board of Governors not later than July 5, 2018.
1.
The companies listed in this notice have applied to the Board for approval, pursuant to the Home Owners' Loan Act (12 U.S.C. 1461
The applications listed below, as well as other related filings required by the Board, are available for immediate inspection at the Federal Reserve Bank indicated. The application also will be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing on the standards enumerated in the HOLA (12 U.S.C. 1467a(e)). If the proposal also involves the acquisition of a nonbanking company, the review also includes whether the acquisition of the nonbanking company complies with the standards in section 10(c)(4)(B) of the HOLA (12 U.S.C. 1467a(c)(4)(B)). Unless otherwise noted, nonbanking activities will be conducted throughout the United States.
Unless otherwise noted, comments regarding each of these applications must be received at the Reserve Bank indicated or the offices of the Board of Governors not later than July 6, 2018.
1.
In connection with the proposal, Banks of Chesapeake M.H.C will convert from mutual to stock form.
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA or we) is announcing that a proposed collection of information has been submitted to the Office of Management and Budget (OMB) for review and clearance under the Paperwork Reduction Act of 1995.
Fax written comments on the collection of information by June 12, 2018.
To ensure that comments on the information collection are received, OMB recommends that written comments be faxed to the Office of Information and Regulatory Affairs, OMB, Attn: FDA Desk Officer, Fax: 202-395-7285, or emailed to
Domini Bean, Office of Operations, Food and Drug Administration, Three
In compliance with 44 U.S.C. 3507, FDA has submitted the following proposed collection of information to OMB for review and clearance.
The FDA Food Safety Modernization Act (FSMA) (Pub. L. 111-353) enables FDA to better protect public health by helping to ensure the safety and security of the food supply. It enables FDA to focus more on preventing food safety problems rather than relying primarily on reacting to problems after they occur. FSMA recognizes the important role industry plays in ensuring the safety of the food supply, including the adoption of modern systems of preventive controls in food production.
Section 103 of FSMA amended the Federal Food, Drug, and Cosmetic Act (the FD&C Act) by adding section 418 (21 U.S.C. 350g) with requirements for hazard analysis and risk-based preventive controls for facilities that produce food for humans or animals. We have established regulations to implement these requirements primarily within subparts C and G, with associated requirements in subparts A, D, E, and F, of the rule entitled “Current Good Manufacturing Practice, Hazard Analysis, and Risk-Based Preventive Controls for Human Food” (Preventive Controls for Human Food Rule) (21 CFR part 117) and primarily within subparts C and E, with associated requirements in subparts A, D, and F, of the rule entitled “Current Good Manufacturing Practice, Hazard Analysis, and Risk-Based Preventive Controls for Food for Animals” (Preventive Controls for Animal Food Rule) (21 CFR part 507). A business that meets the definition of a “qualified facility” (see 21 CFR 117.3 or 21 CFR 507.3) is subject to modified requirements in § 117.201 of the Preventive Controls for Human Food Rule or in § 507.7 of the Preventive Controls for Animal Food Rule. These modified requirements require the business to submit a form to FDA, attesting to its status as a qualified facility.
Section 418(
In the
(Comment 1) One comment suggests that Forms FDA 3942a and FDA 3942b could be organized differently to help respondents. Specifically, the suggestion offered that the forms themselves should follow the submission type order as provided in section 2 of both forms so that the “Status Change” section is at the end of each form.
(Response) FDA agrees and will reorganize Forms FDA 3942a and FDA 3942b so that the “Status Change” section will now be section 6.
(Comment 2) One comment recommends changing the term “Biennial Submission” to “Biennial (Renewal) Submission” or in some way to indicate that biennial submission happens in the years after the “Initial Submission.”
(Response) FDA agrees and will change “Biennial Submission” to “Biennial (Renewal) Submission” for both forms.
(Comment 3) One comment suggests that any revisions applied to either the forms or instructions should be consistent between all the documents.
(Response) FDA agrees and will make sure that revisions to the forms and instructions are consistent.
(Comment 4) One comment suggests that, for clarity, the instructions direct respondents to the guidance for additional reference.
(Response) FDA agrees and will include a reference to the guidance document in each section of the instruction document.
(Comment 5) One comment suggests that, for clarity, Question II.A.1 (and III.A. 1) of the guidance should advise respondents that the definition for “very small business” is forthcoming in the next question.
(Response) FDA agrees, and for clarity, will revise the final guidance to indicate that the definition for “very small business” is provided in the next question in the guidance.
(Comment 6) One comment suggests that Question II.A. 2 (and III.A.2) in the guidance should provide clarity as to the two options for meeting the qualified facility definition.
(Response) FDA agrees and will revise the final guidance to provide clarity as to the two options for meeting the qualified facility definition.
(Comment 7) One comment suggests that the guidance should provide more details about what other documentation FDA would accept as to support the first and second attestation options.
(Response) FDA agrees and will provide more details about the types of documentation FDA would accept to support the first attestation option. FDA will also include a list of examples of documents that FDA would accept to support the second attestation option consistent with the preamble discussions for §§ 117.201(a)(2)(ii) and 507.7(a)(2)(ii).
(Comment 8) One comment suggests that Question II.C.6 (and III.C.6) of the guidance oversimplifies the definition of farm and should clarify that farms that satisfy FDA's definition of “farm” need not submit Form FDA 3942a.
(Response) FDA agrees and will revise our responses to clarify that farms that satisfy FDA's definition of “farm” need not submit Form FDA 3942a or Form FDA 3942b.
(Comment 9) One comment suggests that Question II.C.7 (and III.C 7) of the guidance related to farm mixed-type facilities is missing certain information to assist farm mixed-type facilities to determine their level of coverage and compliance under regulations.
(Response) FDA agrees and will revise our response to provide greater clarity for farm mixed-type facilities to determine their level of coverage and compliance under the regulations.
FDA estimates the burden of this collection of information as follows:
Consistent with the estimates found in our Preventive Controls for Human Food Rule, we estimate that approximately 37,134 human food facilities will each spend approximately 30 minutes (0.5 hour) reporting their status as a qualified facility to FDA every 2 years. Thus, dividing this figure by two to determine the annual burden, we estimate there will be 18,567 responses and 9,284 burden hours associated with this information collection element.
Similarly, and consistent with the estimates found in our Preventive Controls for Animal Food Rule, we estimate that approximately 1,120 animal food facilities will each spend approximately 30 minutes (0.5 hour) reporting their status as a qualified facility to FDA every 2 years. Thus, dividing this figure by two to determine the annual burden, we estimate there will be 560 responses and 280 burden hours associated with this information collection element.
The draft guidance also refers to previously approved collections of information found in FDA regulations. The collections of information in 21 CFR part 117 have been approved under OMB control number 0910-0751. The collections of information in 21 CFR part 507 have been approved under OMB control number 0910-0789.
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA or we) is announcing that a proposed collection of information has been submitted to the Office of Management and Budget (OMB) for review and clearance under the Paperwork Reduction Act of 1995.
Fax written comments on the collection of information by July 12, 2018.
To ensure that comments on the information collection are received, OMB recommends that written comments be faxed to the Office of Information and Regulatory Affairs, OMB, Attn: FDA Desk Officer, Fax: 202-395-7285, or emailed to
Ila Mizrachi, Office of Operations, Food and Drug Administration, Three White Flint North, 10A-12M, 11601 Landsdown St., North Bethesda, MD 20852, 301-796-7726,
In compliance with 44 U.S.C. 3507, FDA has submitted the following proposed collection of information to OMB for review and clearance.
This information collection supports FDA regulations. Specifically, under sections 201(s) and 409 of the Federal Food, Drug, and Cosmetic Act (FD&C Act) (21 U.S.C. 321(s) and 348), food irradiation is subject to regulation under the food additive premarket approval provisions of the FD&C Act. The regulations providing for uses of irradiation in the production, processing, and handling of food are found in part 179 (21 CFR part 179). To ensure safe use of a radiation source, § 179.21(b)(1) requires that the label of sources bear appropriate and accurate information identifying the source of radiation and the maximum (or minimum and maximum) energy of the emitted radiation. Section 179.21(b)(2) requires that the label or accompanying labeling bear adequate directions for installation and use and a statement supplied by FDA that indicates maximum dose of radiation allowed. Section 179.26(c) requires that the label or accompanying labeling bear a logo and a radiation disclosure statement. Section 179.25(e) requires that food processors who treat food with radiation make and retain, for 1 year past the expected shelf life of the products up to a maximum of 3 years, specified records relating to the irradiation process (
In the
FDA estimates the burden of this collection of information as follows:
Upon review of the information collection we have retained the currently approved burden estimate. FDA's estimate of the recordkeeping burden under § 179.25(e) is based on experience regulating the safe use of radiation as a direct food additive. The number of firms who process food using irradiation is extremely limited. We estimate that there are four irradiation plants whose business is devoted primarily (
Food and Drug Administration, HHS.
Notice of availability.
The Food and Drug Administration (FDA or Agency) is announcing the availability of a final guidance for industry (GFI) #3 entitled “General Principles for Evaluating the Human Food Safety of New Animal Drugs Used in Food-Producing Animals.” This guidance describes the type of information that the FDA's Center for Veterinary Medicine (CVM) recommends sponsors provide to address the human food safety of new animal drugs used in food-producing animals. The human food safety evaluation of new animal drugs used in food-producing animals helps ensure that food derived from treated animals is safe for human consumption. CVM developed this guidance to inform sponsors of the scientific data and/or information that may provide an acceptable basis to determine that the residue of a new animal drug in or on food, when consumed, presents a reasonable certainty of no harm to humans.
The announcement of the guidance is published in the
You may submit either electronic or written comments on Agency guidances at any time 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 Dockets Management Staff, 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
You may submit comments on any guidance at any time (see 21 CFR 10.115(g)(5)).
Submit written requests for single copies of the guidance to the Policy and Regulations Staff (HFV-6), Center for Veterinary Medicine, Food and Drug Administration, 7500 Standish Pl., Rockville, MD 20855. Send one self-addressed adhesive label to assist that office in processing your request. See the
Julia Oriani, Center for Veterinary Medicine (HFV-151), Food and Drug Administration, 7500 Standish Pl., Rockville, MD 20855, 240-402-0788,
In the
This level 1 guidance is being issued consistent with FDA's good guidance practices regulation (21 CFR 10.115). The guidance represents the current thinking of FDA on “General Principles for Evaluating the Human Food Safety of New Animal Drugs Used in Food-Producing Animals.” It does not establish any rights for any person and is not binding on FDA or the public. You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations. This guidance is not subject to Executive Order 12866.
This guidance refers to previously approved collections of information found in FDA regulations. These collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). The collections of information in 21 CFR part 514 have been approved under OMB control number 0910-0032.
Persons with access to the internet may obtain the guidance at either
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of a meeting of the Board of Scientific Counselors, Lister Hill National Center for Biomedical Communications.
The meeting will be open to the public as indicated below, with attendance limited to space available. Individuals who plan to attend and need special assistance, such as sign language interpretation or other reasonable accommodations, should notify the Contact Person listed below in advance of the meeting.
The meeting will be closed to the public as indicated below in accordance with the provisions set forth in section 552b(c)(6), Title 5 U.S.C., as amended for review, discussion, and evaluation of individual intramural programs and projects conducted by the National Library of Medicine, including consideration of personnel qualifications and performance, and the competence of individual investigators, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Any interested person may file written comments with the committee by forwarding the statement to the Contact Person listed on this notice. The statement should include the name, address, telephone number and when applicable, the business or professional affiliation of the interested person.
In the interest of security, NIH has instituted stringent procedures for entrance onto the NIH campus. All visitor vehicles, including taxicabs, hotel, and airport shuttles will be inspected before being allowed on campus. Visitors will be asked to show one form of identification (for example, a government-issued photo ID, driver's license, or passport) and to state the purpose of their visit.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable materials, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of a meeting of the Literature Selection Technical Review Committee.
The meeting will be open to the public as indicated below, with attendance limited to space available. Individuals who plan to attend and need special assistance, such as sign language interpretation or other reasonable accommodations, should notify the Contact Person listed below in advance of the meeting.
The portions of the meeting devoted to the review and evaluation of journals for potential indexing by the National Library of Medicine will be closed to the public in accordance with the provisions set forth in section 552b(c)(9)(B), Title 5 U.S.C., as amended. Premature disclosure of the titles of the journals as potential titles to be indexed by the National Library of Medicine, the discussions, and the presence of individuals associated with these publications could significantly frustrate the review and evaluation of individual journals.
Any interested person may file written comments with the committee by forwarding the statement to the Contact Person listed on this notice. The statement should include the name, address, telephone number and when applicable, the business or professional affiliation of the interested person.
In the interest of security, NIH has instituted stringent procedures for entrance onto the NIH campus. All visitor vehicles, including taxicabs, hotel, and airport shuttles will be inspected before being allowed on campus. Visitors will be asked to show one form of identification (for example, a government-issued photo ID, driver's license, or passport) and to state the purpose of their visit.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, 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.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of a meeting of the Board of Scientific Counselors, National Center for Biotechnology Information.
The meeting will be open to the public as indicated below, with attendance limited to space available. Individuals who plan to attend and
The meeting will be closed to the public as indicated below in accordance with the provisions set forth in section 552b(c)(6), Title 5 U.S.C., as amended for review, discussion, and evaluation of individual intramural programs and projects conducted by the National Library of Medicine, including consideration of personnel qualifications and performance, and the competence of individual investigators, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Any interested person may file written comments with the committee by forwarding the statement to the Contact Person listed on this notice. The statement should include the name, address, telephone number and when applicable, the business or professional affiliation of the interested person.
In the interest of security, NIH has instituted stringent procedures for entrance onto the NIH campus. All visitor vehicles, including taxicabs, hotel, and airport shuttles will be inspected before being allowed on campus. Visitors will be asked to show one form of identification (for example, a government-issued photo ID, driver's license, or passport) and to state the purpose of their visit.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of a meeting of the Board of Regents of the National Library of Medicine.
The meeting will be open to the public as indicated below, with attendance limited to space available. Individuals who plan to attend and need special assistance, such as sign language interpretation or other reasonable accommodations, should notify the Contact Person listed below in advance of the meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable materials, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Any interested person may file written comments with the committee by forwarding the statement to the Contact Person listed on this notice. The statement should include the name, address, telephone number and when applicable, the business or professional affiliation of the interested person.
In the interest of security, NIH has instituted stringent procedures for entrance onto the NIH campus. All visitor vehicles, including taxicabs, hotel, and airport shuttles will be inspected before being allowed on campus. Visitors will be asked to show one form of identification (for example, a government-issued photo ID, driver's license, or passport) and to state the purpose of their visit.
Information is also available on the Institute's/Center's home page:
Pursuant to Public Law 92-463, notice is hereby given that the Substance Abuse and Mental Health Services Administration's (SAMHSA's) Center for Substance Abuse Treatment (CSAT) National Advisory Council will meet on July 16, 2018, 2:00 p.m.-3:00 p.m. (EDT) in a closed teleconference meeting.
The meeting will include discussions and evaluations of grant applications reviewed by SAMHSA's Initial Review Groups, and involve an examination of confidential financial and business information as well as personal information concerning the applicants. Therefore, the meeting will be closed to the public as determined by the SAMHSA Assistant Secretary for Mental Health and Substance Use in accordance with Title 5 U.S.C. 552b(c)(4) and (6) and Title 5 U.S.C. App. 2, 10(d).
Meeting information and a roster of Council members may be obtained by accessing the SAMHSA Committee website at
U.S. Customs and Border Protection (CBP), Department of Homeland Security.
60-Day notice and request for comments; revision and extension of an existing collection of information.
The Department of Homeland Security, U.S. Customs and Border Protection will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995 (PRA). The information collection is published in the
Written comments and/or suggestions regarding the item(s) contained in this notice must include the OMB Control Number 1651-0109 in the subject line and the agency name. To avoid duplicate submissions, please use only
(1)
(2)
Requests for additional PRA information should be directed to Seth Renkema, Chief, Economic Impact Analysis Branch, U.S. Customs and Border Protection, Office of Trade, Regulations and Rulings, 90 K Street NE, 10th Floor, Washington, DC 20229-1177, Telephone number (202) 325-0056 or via email
CBP invites the general public and other Federal agencies to comment on the proposed and/or continuing information collections pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
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6.
7. Gender.
8. Country of Citizenship.
9. What is your National Identification Number?
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11. Have you ever been a citizen or national of any other country? (Y/N) If yes:
12. Have you ever been issued a passport or national identity card for travel by any other country? (Y/N) If yes;
13. Are you now a citizen or national of any other country? (Y/N) If yes, then
14. How did you acquire citizenship/nationality from this country?
15.
has your Visa ever been cancelled?
16. Are you a member of the CBP Global Entry Program? (Y/N) If yes, provide the PASSID/Membership Number.
17. Are you under the age of fourteen (14)? (Y/N) If yes:
18. PERSONAL CONTACT INFORMATION.
19. ADDRESS WHILE IN Guam/CNMI.
20. EMERGENCY CONTACT INFORMATION IN OR OUT OF THE United States.
21. Do you have a physical or mental disorder; or are you a drug abuser or addict; or do you currently have any of
22. Have you ever been arrested or convicted for a crime that resulted in serious damage to property, or serious harm to another person or government authority? (Y/N)
23. Have you ever violated any law related to possessing, using, or distributing illegal drugs? (Y/N)
24. Do you seek to engage in or have you ever engaged in terrorist activities, espionage, sabotage, or genocide? (Y/N)
25. Have you ever committed fraud or misrepresented yourself or others to obtain, or assist others to obtain, a visa or entry into the United States? (Y/N)
26. Have you ever stayed in the United States longer than the admission period granted to you by the U.S. government? (Y/N)
27. Are you currently seeking employment in Guam or CNMI? (Y/N)
28. Were you previously employed in the United States without prior permission from the U.S. government? (Y/N)
29. Have you traveled to, or been present in Iraq, Syria, Iran, Sudan, Libya, Somalia, or Yemen on or after March 1, 2011? (Y/N)
Office of the Assistant Secretary for Policy Development and Research, HUD.
Notice; correction and extension of public comment due date.
On May 30, 2018, HUD published a notice establishing Renewal Funding Inflation Factors (RFIFs) to adjust Fiscal Year 2018 renewal funding for the Housing Choice Voucher (HCV) program of each public housing agency (PHA), as required by the Consolidated Appropriations Act, 2018. HUD requested comments on potential RFIF methodology changes related to the use of ad hoc surveys conducted for purposes of reevaluating FMRs and their effect on the calculation of RFIFs. HUD did not include information directing the public where to submit public comments. This document extends the public comment deadline by one week and provides the instructions for submitting public comments.
The comment due date for the notice published at 83 FR 24815 on May 30, 2018, is July 6, 2018. The applicability date remains May 30, 2018.
With respect to this supplementary document, contact Aaron Santa Anna, Assistant General Counsel for Regulations, Department of Housing and Urban Development, 451 7th Street SW, Room 10238, Washington, DC 20410; telephone number 202-708-1793 (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.
In notice FR Doc. 2018-11587, beginning on page 24815 in the
Interested persons are invited to submit comments regarding this notice to the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 7th Street SW, Room 10276, Washington, DC 20410-0500. Communications must refer to the original docket number and title. There are two methods for submitting public comments. All submissions must refer to the original docket number and title.
1.
2.
To receive consideration as public comments, comments must be submitted through one of the two methods specified above. Again, all submissions must refer to the docket number and title of the rule.
U.S. Geological Survey, Interior.
Notice of information collection; request for comment.
In accordance with the Paperwork Reduction Act of 1995, the U.S. Geological Survey (USGS) is proposing to renew an information collection (IC) with revisions.
Interested persons are invited to submit comments on or before August 13, 2018.
Send your comments on the information collection request (ICR) by mail to the U.S. Geological Survey, Information Collections Clearance Officer, 12201 Sunrise Valley Drive, MS 159, Reston, VA 20192; or by email to
To request additional information about this ICR, contact Nicole Herman-Mercer by email at
We, the U.S. Geological Survey, in accordance with the Paperwork Reduction Act of 1995, provide the general public and other Federal agencies with an opportunity to comment on proposed, revised, and continuing collections of information. This helps us assess the impact of our information collection requirements and minimize the public's reporting burden. It also helps the public understand our information collection requirements and provide the requested data in the desired format.
We are soliciting comments on the proposed ICR that is described below. We are especially interested in public comment addressing the following issues: (1) Is the collection necessary to the proper functions of the USGS; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the USGS enhance the quality, utility, and clarity of the information to be collected; and (5) how might the USGS minimize the burden of this collection on the respondents, including through the use of information technology.
Comments that you submit in response to this notice are a matter of public record. We will include or summarize each comment in our request to OMB to approve this ICR. Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you may 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.
Personally Identifiable Information (PII) will be limited to four elements: Names, phone numbers, emails, and the name of the village they reside in. This PII will be collected so that researchers may communicate project results and solicit feedback on the project itself for evaluation purposes. Statistical analysis will be performed on the survey responses in to ascertain if a consensus exists among participants within villages and among villages.
The USGS mission is to serve the Nation by providing reliable scientific information to describe and understand the Earth. This project will collect information from individuals to better understand the abundance, distribution, and variability of berry resources in the Yukon-Kuskokwim Delta region of Alaska. The people of the YK delta hold information about the long-term distribution and abundance of berries that is useful for understanding current and future changes to berry habitat that has the potential to impact wildlife populations of the Yukon Delta region and the Yukon Delta National Wildlife Refuge.
An agency may not conduct or sponsor and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number.
The authorities for this action are the Paperwork Reduction Act of 1995 (44 U.S.C. 3501,
Policy and International Affairs, Interior.
Notice of public meeting.
Pursuant to the provisions of the Federal Advisory Committee Act, notice is hereby given of a meeting of the Invasive Species Advisory Committee.
Teleconference Meeting of the Invasive Species Advisory Committee: Thursday, July 19, 2018; 1:00-3:00 p.m. (EDT).
U.S. Department of the Interior, Stuart Udall Building (MIB), 1849 C Street NW, Rachel Carson Room (basement level), Washington, DC 20240.
Kelsey Brantley, Coordinator for NISC and ISAC Operations, National Invasive Species Council Secretariat, (202) 208-4122; Fax: (202) 208-4118, email:
The purpose of the Advisory Committee (ISAC) is to provide advice to the National Invasive Species Council (NISC), as authorized by Executive Orders 13112 and 13751, on a broad array of issues related to preventing the introduction of invasive species and providing for their control and minimizing the economic, ecological, and human health impacts that invasive species cause. The Council is co-chaired by the Secretary of the Interior, the Secretary of Agriculture, and the Secretary of Commerce. The duty of the Council is to provide national leadership regarding invasive species issues. The purpose of a meeting on Thursday, July 19, 2018
5 U.S.C. Appendix 2.
Bureau of Land Management, Interior.
Notice of public meeting.
In accordance with the Federal Land Policy and Management Act of 1976 and the Federal Advisory Committee Act of 1972, the U.S. Department of the Interior, Bureau of Land Management (BLM) Farmington District Resource Advisory Council (RAC) will meet as indicated below.
The Farmington District RAC will hold a public meeting on Tuesday, July 10, 2018, from 8:00 a.m. to 4:00 p.m., and a field trip on Wednesday, July 11, 2018, from 8:00 a.m. to 12:00 p.m.
The Farmington District RAC will meet at the Kit Carson Electrical Cooperative Boardroom at 118 Cruz Alta Road, Taos, NM 87571. The field trip participants will depart from the BLM Taos Field Office at 226 Cruz Alta Road, Taos, NM 87571.
Zach Stone, Public Affairs Specialist, BLM Farmington District Office, 6251 College Blvd., Suite A, Farmington, NM 87402, (505) 564-7677, or
The Farmington District RAC consists of 10 members chartered and appointed by the Secretary of the Interior. Their diverse perspectives are represented in commodity, conservation, and general interests. They provide advice to BLM resource managers regarding management plans and proposed resource actions on public land in the BLM's Farmington District. Both the field trip and meeting are open to the public. However, the public is required to provide its own transportation for the field trip. Information to be distributed to the Farmington District RAC is requested prior to the start of each meeting.
Agenda items for the July 10 meeting include updates on: The 2017/2018 RAC nominations; the RAC charter; Farmington Field Office Resource Management Plan Amendment; updates in the Taos planning area; general recreation planning for the Taos and Farmington Field Offices; updates in the San Pedro Area; BLM efforts to gather additional cultural/ethnographic data for cultural site protection; the postponement of the 2018 spring oil and gas leasing in the Farmington Field Office area; and the methane emission rules. There will be a discussion on the Rio Grande Trail/State Partnership and a potential event scheduled for October 2, 2018, to celebrate the 50th Anniversary of the National Trails System Act of 1968; and any other topics that may reasonably come before the Farmington District RAC may also be addressed. On July 11, the RAC will participate in a field trip to the Rio Grande Trail improvement areas. More information is available at
The July 10, 2018, meeting will include a public comment period from 3:00 p.m. to 3:30 p.m. Depending on the number of persons wishing to comment and time available, the amount of time for individual oral comments may be limited. The public may also submit written comments to Zach Stone, Farmington District, New Mexico, 6251 College Blvd., Suite A, Farmington, NM 87402; or by email at
Before including your address, phone number, email address, or other personal identifying information in your comments, please be aware that your entire comment, including your personal identifying information, may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so. Individuals who plan to attend and need special assistance, such as sign language interpretation, tour transportation or other reasonable accommodations, should contact the BLM as provided above.
43 CFR 1784.4-2.
Bureau of Land Management, Interior.
Notice.
In accordance with the Federal Land Policy and Management Act of 1976 and the Federal Advisory Committee Act of 1972, the U.S. Department of the Interior, the Bureau of Land Management (BLM) Sierra Front-Northwestern Great Basin Resource Advisory Council (RAC) will meet as indicated below.
The SFNW RAC will hold a public meeting on Thursday, July 26, 2018, from 8 a.m. to 4 p.m. and a field trip to the Pine Forest Wilderness on Friday, July 27, 2018, from 7:00 a.m. to 4 p.m. Public comment periods will be held on July 26 at 8:05 a.m. and 3:30 p.m.
The July 26, 2018, meeting will be held at the BLM Winnemucca District Office, 5100 East Winnemucca Boulevard, Winnemucca, Nevada, 89445. Field trip participants will meet at the BLM Winnemucca District Office at 7:00 a.m. on July 27, 2018.
Lisa Ross, Public Affairs Specialist, at 775-885-6107, Carson City District Office, 5665 Morgan Mill Road, Carson City, NV 89701, or
The 15-member Sierra Front-Northwestern Great Basin RAC was chartered to serve in an advisory capacity concerning the planning and management of the public land resources located within Nevada. Members represent an array of stakeholder interests in the land and resources from within the local area and statewide. Both the meeting and field trip are open to the public. However, the public is required to provide its own transportation for the field trip.
Topics for discussion at each meeting will include, but are not limited to:
• July 26, 2018—Planned agenda items at the meeting include, but are not limited to district manager and subcommittee reports, wildlife management, and updates on energy and mineral development and Burning Man.
• July 27, 2018—Field trip to the Pine Forest Wilderness.
The RAC may raise other topics at the meetings. Final agendas are posted online two weeks prior to the meeting on the BLM Sierra Front-Northwestern Great Basin RAC website at
Individuals who plan to attend and need special assistance, such as sign language interpretation or other reasonable accommodations, or who wish to receive a copy of each agenda, may contact the person listed above no later than 10 days prior to the meeting.
Persons wishing to make comments during the public comment period of the meeting should register in person with the BLM, at the meeting location, before the meeting's public comment period. Depending on the number of persons wishing to comment, the amount of time for individual oral comments may be limited. The public may also submit written comments to the person listed above no later than July 20 to be made available to the RAC at the July 26, 2018, meeting. All written comments received will be provided to the council members. Before including your address, phone number, email address, or other personal information in your comments, please be aware that your entire comment, including your personal identifying information, may be made publicly available at any time. While you can ask us in your comment to withhold your personal information from public review, we cannot guarantee that we will be able to do so.
43 CFR 1784.4-2.
National Indian Gaming Commission.
Notice of request for comments.
In compliance with the Paperwork Reduction Act of 1995, the National Indian Gaming Commission (NIGC or Commission) is seeking comments on the renewal of information collections for the following activities: Indian gaming management contract-related submissions, as authorized by Office of Management and Budget (OMB) Control Number 3141-0004 (expires on November 30, 2018); Indian gaming fee payments-related submissions, as authorized by OMB Control Number 3141-0007 (expires on November 30, 2018); minimum internal control standards for class II gaming submission and recordkeeping requirements, as authorized by OMB Control Number 3141-0009 (expires on November 30, 2018); facility license-related submission and recordkeeping requirements, as authorized by OMB Control Number 3141-0012 (expires on November 30, 2018); and minimum technical standards for class II gaming systems and equipment submission and recordkeeping requirements, as authorized by OMB Control Number 3141-0014 (expires on November 30, 2018).
Submit comments on or before August 13, 2018.
Comments can be mailed, faxed, or emailed to the attention of: Tim Osumi, National Indian Gaming Commission, 1849 C Street NW, Mail Stop #1621, Washington, DC 20240. Comments may be faxed to (202) 632-7066 and may be sent electronically to
Tim Osumi at (202) 632-7054; fax (202) 632-7066 (not toll-free numbers).
You are invited to comment on these collections concerning: (i) Whether the collections of information are 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 estimates of the burdens (including the hours and cost) of the proposed collections of information,
It is the Commission's policy to make all comments available to the public for review at its headquarters, located at 90 K Street NE, Suite 200, Washington, DC 20002. Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you may ask in your comment that the Commission withhold your personal identifying information from public review, the Commission cannot guarantee that it will be able to do so.
Section 533.2 requires a tribe or management contractor to submit a management contract for review within 60 days of execution, and to submit all of the items specified in § 533.3. Section 535.1 requires a tribe to submit an amendment to a management contract within 30 days of execution, and to submit all of the items specified in § 535.1(c). Section 535.2 requires a tribe or a management contractor, upon execution, to submit the assignment by a management contractor of its rights under a previously approved management contract. Section 537.1 requires a management contractor to submit all of the items specified in § 537.1(b),(c) in order for the Commission to conduct background investigations on: Each person with management responsibility for a management contract; each person who is a director of a corporation that is a party to a management contract; the ten persons who have the greatest direct or indirect financial interest in a management contract; any entity with a financial interest in a management contract; and any other person with a direct or indirect financial interest in a management contract, as otherwise designated by the Commission. This collection is mandatory, and the benefit to the respondents is the approval of Indian gaming management contracts, and any amendments thereto.
Section 514.6 requires a tribe to submit, along with its fee payments, quarterly fee statements (worksheets) showing its assessable gross revenues for the previous fiscal year in order to support the computation of fees paid by each gaming operation. Section 514.7 requires a tribe to submit a notice within 30 days after a gaming operation changes its fiscal year. Section 514.15 allows a tribe to submit fingerprint cards to the Commission for processing by the Federal Bureau of Investigation (FBI), along with a fee to cover the NIGC's and FBI's cost to process the fingerprint cards on behalf of the tribes. Part of this collection is mandatory and the other part is voluntary. The required submission of the fee worksheets allows the Commission to both set and adjust fee rates, and to support the computation of fees paid by each gaming operation. In addition, the voluntary submission of fingerprint cards allows a tribe to conduct statutorily mandated background investigations on applicants for key employee and primary management official positions.
Section 543.3 requires a tribal gaming regulatory authority (TGRA) to submit to the Commission a notice requesting an extension to the deadline (by an additional six months) to achieve compliance with the requirements of the new tier after a gaming operation has moved from one tier to another. Section 543.5 requires a TGRA to submit a detailed report after the TGRA has approved an alternate standard to any of the NIGC's minimum internal control standards, and the report must contain all of the items specified in § 543.5(a)(2). Section 543.23(c) requires a tribe to maintain internal audit reports and to make such reports available to the Commission upon request. Section 543.23(d) requires a tribe to submit two copies of the agreed-upon procedures (AUP) report within 120 days of the gaming operation's fiscal year end. This collection is mandatory and allows the NIGC to confirm tribal compliance with the minimum internal control standards in the AUP reports.
Section 559.2 requires a tribe to submit a notice (that a facility license is under consideration for issuance) at least 120 days before opening any new facility on Indian lands where class II and/or class III gaming will occur, with the notice containing all of the items specified in § 559.2(b). Section 559.3 requires a tribe to submit a copy of each newly issued or renewed facility license within 30 days of issuance. Section 559.4 requires a tribe to submit an attestation certifying that by issuing the facility license, the tribe has determined that the construction, maintenance, and operation of that gaming facility is conducted in a manner that adequately protects the environment and the public health and safety. Section 559.5 requires a tribe to submit a notice within 30 days if a facility license is terminated or expires or if a gaming operation closes or reopens. Section 559.6 requires a tribe to maintain and provide applicable and available Indian lands or environmental and public health and safety documentation, if requested by the NIGC. This collection is mandatory and enables the Commission to perform its statutory duty by ensuring that tribal gaming facilities on Indian lands are properly licensed by the tribes.
Section 547.5(a)(2) requires that, for any grandfathered class II gaming system made available for use at any tribal gaming operation, the tribal gaming regulatory authority (TGRA): Must retain copies of the gaming system's testing laboratory report, the TGRA's compliance certificate, and the TGRA's approval of its use; and must maintain records identifying these grandfathered class II gaming systems and their components. Section 547.5(b)(2) requires that, for any class II gaming system generally, the TGRA must retain a copy of the system's testing laboratory report, and maintain records identifying the system and its components. As long as a class II gaming system is available to the public for play, section 547.5(c)(3) requires a TGRA to maintain records of any modification to such gaming system and a copy of its testing laboratory report. Section 547.5(d)(3) requires a TGRA to maintain records of approved emergency hardware and software modifications to a class II gaming system (and a copy of the testing laboratory report) so long as the gaming system remains available to the public for play, and must make the records available to the Commission upon request. Section 547.5(f) requires a TGRA to maintain records of its following determinations: (i) Regarding a testing laboratory's (that is owned or operated or affiliated with a tribe) independence from the manufacturer and gaming operator for whom it is providing the testing, evaluating, and
National Park Service, Interior.
Notice of renewal.
The Secretary of the Interior is giving notice of renewal of the Gateway National Recreation Area Fort Hancock 21st Century Advisory Committee. The Committee provides advice on the development of a specific reuse plan and on matters relating to the future uses of the Fort Hancock Historic Landmark District within the Sandy Hook Unit of Gateway National Recreation Area.
Daphne Yun, Acting Public Affairs Officer, Gateway National Recreation Area, 210 New York Avenue, Staten Island, New York 10305, or by telephone (718) 354-4602, or by email
This notice is published in accordance with Section 9(a)(2) of the Federal Advisory Committee Act of 1972 (Pub. L. 92-463, as amended). The certification of renewal is published below.
54 U.S.C. 100906; 54 U.S.C. 100101(a)
Bureau of Reclamation, Interior.
Notice of intent; request for comments.
The Bureau of Reclamation (Reclamation), as the lead Federal agency, and the New Mexico Interstate Stream Commission (ISC), as joint lead agency, intend to gather information necessary for preparing an Environmental Impact Statement (EIS) to evaluate the effects of the construction and operation of a New Mexico Unit (NM Unit) of the Central Arizona Project (CAP). Reclamation and the ISC will work with land owners that may be impacted by construction and operation of the NM Unit. Reclamation and the ISC will evaluate and disclose the potential environmental effects on these lands to determine consistency with any applicable land use plans or other guiding documents. This notice also opens public scoping to identify potential issues, concerns, and alternatives to be considered in the EIS.
Comments on the scope of the EIS are due 30 days after publication of this notice in the
Eight public scoping meetings will be held to solicit comments on the scope of the EIS and the issues and alternatives that should be analyzed. The dates and locations of the scoping meetings will be announced at least 15 days in advance through local media, newspapers, and the project website at:
Send written comments on the scope of the EIS to the Phoenix Area Office, Bureau of Reclamation (ATTN: NM Unit EIS), 6150 West Thunderbird Road, Glendale, Arizona 85306, or by email to
Mr. Sean Heath at (623) 773-6250, or by email at
Pursuant to the National Environmental Policy Act of 1969, as amended (NEPA), 42 U.S.C. 4231-4347; the Council on Environmental Quality's Regulations for Implementing the Procedural Provisions of NEPA, 40 CFR parts 1500 through 1508; and the Department of the Interior's regulations, 43 CFR part 46, Reclamation and the ISC, as joint lead agencies, intend to prepare an EIS on the NM Unit of the CAP. The Proposed Action would develop a NM Unit of the CAP to permit the consumptive use of Gila River water, diverted in accordance with the Consumptive Use and Forbearance Agreement (CUFA), and pursuant to the terms of the Arizona Water Settlements Act, Public Law 108-451 (AWSA).
The Colorado River Basin Project Act of 1968, Public Law 90-537, 43 U.S.C. Ch. 32, as amended by the AWSA, authorizes the Secretary of the Interior (Secretary) to contract with water users in New Mexico for water from the Gila River, its tributaries and underground
A NM Unit is the infrastructure that would divert Gila River water in New Mexico for this purpose. The AWSA contains specific requirements for the Secretary regarding the possible construction, operation, and maintenance of a NM Unit on the Gila River.
The Secretary is authorized to design, build, operate, and maintain a NM Unit. A NM Unit is defined in the New Mexico Unit Agreement, which the Secretary executed on November 23, 2015. The Secretary is directed to carry out all necessary environmental compliance required by Federal law in implementing the CUFA and the New Mexico Unit Agreement. Reclamation and the ISC are the joint lead agencies for environmental compliance regarding the Unit pursuant to Section 212(h) of the AWSA.
The purpose of the Proposed Action is to develop a NM Unit of the CAP to allow for consumptive use of water from the Gila River, its tributaries or underground water sources in southwestern New Mexico, diverted in accordance with the CUFA, and pursuant to the terms of the AWSA. The water developed via a NM Unit pursuant to the AWSA and the CUFA is for the benefit of the New Mexico CAP Entity.
The needs for the Proposed Action are as follows: (a) To develop water for delivery at the times, locations, and in quantities that will improve agricultural use within the Cliff-Gila, Virden, and/or San Francisco River valleys; and (b) to provide capability for future expansion for the beneficial purposes authorized by the Colorado River Basin Project Act of 1968 and the AWSA. The Proposed Action identified in this EIS is needed for agricultural use and does not include or preclude the independent development of subsequent projects to address these future needs; however, future projects involving water developed pursuant to the AWSA and the CUFA will be subject to all environmental compliance required by law.
Reclamation has concluded that an EIS is required for the proposed project, pursuant to the statutory requirements of the AWSA. The EIS will evaluate direct, indirect, and cumulative effects of the Proposed Action. In addition, the EIS will include a No Action alternative. For purposes of analysis and scoping, the No Action alternative represents the conditions that exist in the absence of the Federal action. It will provide the basis for comparison with the Proposed Action that includes the construction and operation of a NM Unit.
The NM Unit would be a water diversion, storage, conveyance, and delivery system for agricultural use and to provide capability for future expansion for other beneficial purposes as authorized by the Colorado River Basin Project Act of 1968 and the AWSA. The study area for the EIS comprises portions of Catron, Grant, and Hidalgo counties in southwest New Mexico. The Project would divert AWSA water from the Gila River or its tributaries in New Mexico pursuant to the provisions of the AWSA and the CUFA, convey it for storage in off-stream storage sites in the Upper Gila Valley, along the San Francisco River and in the Virden Valley, and deliver it to the target water users. The Proposed Action would only use a portion of the 14,000 acre-feet allowed under the AWSA, while not precluding the future development of the full amount. The exact amounts of water that would be diverted are unknown at this time and will be determined as the Proposed Action is refined prior to the publication of the Draft EIS. The Proposed Action includes diverting, conveying, and storing other water rights, except for Globe Equity water rights. Possible components of the NM Unit include the following:
• A surface water diversion structure on the Gila River, in the Cliff-Gila Valley;
• Storage ponds in the Gila River floodplain and in a side drainage of the Cliff-Gila Valley, providing approximately 4,000 acre-feet of storage;
• Aquifer storage with recovery wells in the Cliff-Gila Valley;
• Gravity flow and pumped delivery of diverted water to storage facilities in the Cliff-Gila Valley;
• Pumping facilities associated with delivery of stored water in the Cliff-Gila Valley;
• Ditch improvements, including increased capacity and lining of about one-third of existing ditches in the Cliff-Gila Valley;
• Surface storage ponds in the Gila River floodplain or side channels, providing approximately 500 acre-feet of storage in the Virden Valley;
• Improvements to existing ditches for water conveyance in the Virden Valley;
• Pumping facilities associated with delivery of stored water in the Virden Valley;
• A surface water diversion structure on the San Francisco River, near Alma;
• Pumping facility for delivery of diverted water to the proposed reservoir near Alma;
• Conveyance (
• Construction of an approximately 1,900 acre-foot off-stream reservoir near Alma, to store water diverted from the San Francisco River;
• Construction of water conveyance facilities from the reservoir to points of use.
Reclamation and the ISC will use the public scoping period, previous studies, and stakeholder input to fully identify the range of potentially significant issues, actions, alternatives, and impacts to be considered in the EIS.
Resource areas analyzed in the EIS may include air quality; cultural resources; geology and soils; hazardous substances and waste; land use; noise; socioeconomics; recreation; utilities and infrastructure; vegetation; water; wetlands and floodplains; fisheries and wildlife; and special status species. The range of issues and alternatives addressed in the EIS may be expanded or reduced based on comments received in response to this notice and at the public scoping meetings. Additional information is available by contacting the person listed in the
As part of the environmental analysis process, the Federal Principles, Requirements, and Guidelines for Water and Land Related Resources Implementation Studies (PR&Gs) will be applied to examine the various technical, economic, hydrologic, recreation and ecosystem services considerations of each alternative, as well as a No Action alternative. The requirements of a PR&G analysis are unique to that process and are not included in the Council of Environmental Quality or Department of
If, based on the Proposed Action, your agency believes it has special expertise or jurisdiction by law, as defined in 40 CFR 1508.15 and 1508.26, please respond within 30 days of the date of publication of this notice to the person listed in the
If special assistance is required at the scoping meetings, please contact Mr. Sean Heath at (623) 773-6250, or email your assistance needs to
Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
U.S. International Trade Commission.
Notice.
Notice is hereby given that a complaint was filed with the U.S. International Trade Commission on May 7, 2018, under section 337 of the Tariff Act of 1930, as amended, on behalf of Broadcom Corporation of San Jose, California. Supplements to the complaint were filed on May 18, 2018 and May 30, 2018. The complaint alleges violations of section 337 based upon the importation into the United States, the sale for importation, and the sale within the United States after importation of certain infotainment systems, component thereof, and automobiles containing the same by reason of infringement of U.S. Patent No. 6,937,187 (“the '187 patent”); U.S. Patent No. 8,902,104 (“the '104 patent”); U.S. Patent No. 7,512,752 (“the '752 patent”); U.S. Patent No. 7,530,027 (“the '027 patent”); U.S. Patent No. 8,284,844 (“the '844 patent”); and U.S. Patent No. 7,437,583 (“the '583 patent”). The complaint further alleges that an industry in the United States exists as required by the applicable Federal Statute.
The complainant requests that the Commission institute an investigation and, after the investigation, issue a limited exclusion order and cease and desist orders.
The complaint, except for any confidential information contained therein, is available for inspection during official business hours (8:45 a.m. to 5:15 p.m.) in the Office of the Secretary, U.S. International Trade Commission, 500 E Street SW, Room 112, Washington, DC 20436, telephone (202) 205-2000. Hearing impaired individuals are advised that information on this matter can be obtained by contacting the Commission's TDD terminal on (202) 205-1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at (202) 205-2000. General information concerning the Commission may also be obtained by accessing its internet server at
Katherine Hiner, The Office of Docket Services, U.S. International Trade Commission, telephone (202) 205-1802.
(1) Pursuant to subsection (b) of section 337 of the Tariff Act of 1930, as amended, an investigation be instituted to determine whether there is a violation of subsection (a)(1)(B) of section 337 in the importation into the United States, the sale for importation, or the sale within the United States after importation of products identified in paragraph (2) by reason of infringement of one or more of claims 1-10 of the '187 patent; claims 1, 2, 5-13, 15, and 16 of the '104 patent; claims 1-10 of the '752 patent; claims 11-20 of the '027 patent; claims 1-14 of the '844 patent; and claims 17-26 of the '583 patent; and whether an industry in the United States exists as required by subsection (a)(2) of section 337;
(2) Pursuant to section 210.10(b)(1) of the Commission's Rules of Practice and Procedure, 19 CFR 210.10(b)(1), the plain language description of the accused products or category of accused products, which defines the scope of the investigation, is “head units, rear seat entertainment units, units for displaying information or entertainment, and cameras, controllers, processing components, modules, chips, GNSS processing devices, and circuits used therein or therewith and automobiles that contain such infotainment systems and components”;
(3) For the purpose of the investigation so instituted, the following are hereby named as parties upon which this notice of investigation shall be served:
(a) The complainant is: Broadcom Corporation, 1320 Ridder Park Drive, San Jose, CA 95131.
(b) The respondents are the following entities alleged to be in violation of section 337, and are the parties upon which the complaint is to be served:
(4) For the investigation so instituted, the Chief Administrative Law Judge, U.S. International Trade Commission, shall designate the presiding Administrative Law Judge.
The Office of Unfair Import Investigations will not be named as a party to this investigation.
Responses to the complaint and the notice of investigation must be submitted by the named respondents in accordance with section 210.13 of the Commission's Rules of Practice and Procedure, 19 CFR 210.13. Pursuant to 19 CFR 201.16(e) and 210.13(a), such responses will be considered by the Commission if received not later than 20 days after the date of service by the Commission of the complaint and the notice of investigation. Extensions of time for submitting responses to the complaint and the notice of investigation will not be granted unless good cause therefor is shown.
Failure of a respondent to file a timely response to each allegation in the complaint and in this notice may be deemed to constitute a waiver of the right to appear and contest the allegations of the complaint and this notice, and to authorize the administrative law judge and the Commission, without further notice to the respondent, to find the facts to be as alleged in the complaint and this notice and to enter an initial determination and a final determination containing such findings, and may result in the issuance of an exclusion order or a cease and desist order or both directed against the respondent.
By order of the Commission.
On June 5, 2018, the Department of Justice lodged a proposed Second Amended Consent Decree with the United States District Court for the Northern District of Ohio in the lawsuit entitled
In this action the United States, and the State of Ohio in a cross-claim, sought civil penalties and injunctive relief for violations of the Clean Water Act, 33 U.S.C. 1251
The proposed amendment modifies provisions of the 2014 Consent Decree that are set forth in the City's LTCP Update. Specifically, the proposed amendment would permit the City to install a different biologically enhanced high rate treatment technology to address remaining secondary bypasses at its wastewater treatment plant; the 2014 Consent Decree requires the City to use a BioActiflo system, whereas the proposed amendment would allow it to use a BioCEPT system instead. The proposed amendment also addresses requirements for four storage basins in the City's sewer collection system. The City would increase the size of one of the storage basins, and would not be required to build the remaining basins. Instead, it would expand existing “underflow” pipes at those combined sewer overflow (“CSO”) locations, which would allow it to optimize flow, increasing the amount of wastewater that it sends to the wastewater treatment plant. In addition, at three of the CSO locations, the City would install a variety of green infrastructure projects that are collectively capable of addressing specified volumes of stormwater.
The publication of this notice opens a period for public comment on the Second Amended 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 Second Amendment to the Consent Decree may be examined and downloaded at this Justice Department website:
Please enclose a check or money order for $7.25 (25 cents per page reproduction cost) payable to the United States Treasury.
National Archives and Records Administration (NARA).
Notice of Advisory Committee Meeting.
In accordance with the Federal Advisory Committee Act (5 U.S.C. app 2) and implementing regulation 41 CFR 101-6, NARA announces the following committee meeting.
The meeting will be on July 25, 2018, from 10:00 a.m. to 12:00 p.m.
National Archives and Records Administration; 700 Pennsylvania Avenue NW, Jefferson Room; Washington, DC 20408.
Robert J. Skwirot, Senior Program Analyst, by mail at ISOO, National Archives Building; 700 Pennsylvania Avenue NW; Washington, DC 20408, by telephone at (202) 357-5398, or by email at
The purpose of this meeting is to discuss matters relating to the Classified National Security Information Program for State, Local, Tribal, and Private Sector entities.
The meeting will be open to the public. However, due to space limitations and access procedures, you must submit the name and telephone number of individuals planning to attend to the Information Security Oversight Office (ISOO) no later than Wednesday, July 18, 2018. ISOO will provide additional instructions for accessing the meeting's location.
National Archives and Records Administration.
Charter Renewal of the Freedom of Information Act Advisory Committee.
The National Archives and Records Administration (NARA) has renewed the Freedom of Information Act (FOIA) Advisory Committee charter. The FOIA Advisory Committee is a Federal advisory committee established in accordance with section 9(a)(2) of the Federal Advisory Committee Act to advise NARA's Office of Government Information Services (OGIS) on improvements to the FOIA and to study the current FOIA landscape across the executive branch.
The charter will be applicable for two years from May 20, 2018, unless otherwise extended.
Amy Bennett by phone at 202-741-5782, by mail at National Archives and Records Administration; Office of Government Information Services, 8601 Adelphi Road, College Park, MD 20740-6001, or by email at
Institute of Museum and Library Services, National Foundation on the Arts and the Humanities.
Submission for OMB review, comment request.
The Institute of Museum and Library Services announces the following information collection has been submitted to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act. 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. This notice proposes the clearance of the instructions for the IMLS Museum Grants for African American Culture Program/Native American Native Hawaiian Program Notice of Funding Opportunity.
A copy of the proposed information collection request can be obtained by contacting the individual listed below in the
Comments must be submitted to the office listed in the
OMB is particularly interested in comments that help the agency to:
• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
• Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
• Enhance the quality, utility, and clarity of the information to be collected; and
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology (
Comments should be sent to Office of Information and Regulatory Affairs,
Dr. Sandra Webb, Director of Grant Policy and Management, Institute of Museum and Library Services, 955 L'Enfant Plaza North SW, Suite 4000, Washington, DC 20024-2135. Dr. Webb can be reached by Telephone: 202-653-4718, Fax: 202-653-4608, or by email at
The Institute of Museum and Library Services is the primary source of federal support for the nation's libraries and museums. We advance, support, and empower America's museums, libraries, and related organizations through grant making, research, and policy development. Our vision is a nation where museums and libraries work together to transform the lives of individuals and communities. To learn more, visit
Institute of Museum and Library Services, National Foundation on the Arts and the Humanities.
Submission for OMB review, comment request.
The Institute of Museum and Library Services announces the following information collection has been submitted to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act. 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. This notice proposes the clearance of the instructions for the “IMLS National Leadership Grants for Museums and Museums for America Grants.”
A copy of the proposed information collection request can be obtained by contacting the individual listed below in the
Comments must be submitted to the office listed in the
OMB is particularly interested in comments that help the agency to:
• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
• Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
• Enhance the quality, utility, and clarity of the information to be collected; and
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology (
Comments should be sent to Office of Information and Regulatory Affairs,
Dr. Sandra Webb, Director of Grant Policy and Management, Institute of Museum and Library Services, 955 L'Enfant Plaza North SW, Suite 4000, Washington, DC 20024-2135. Dr. Webb can be reached by Telephone: 202-653-4718 Fax: 202-653-4608, or by email at
The Institute of Museum and Library Services is the primary source of federal support for the nation's libraries and museums. We advance, support, and empower America's museums, libraries, and related organizations through grant making, research, and policy development. Our vision is a nation where museums and libraries work together to transform the lives of individuals and communities. To learn more, visit
National Endowment for the Arts, National Foundation on the Arts and Humanities.
Notice of meeting.
Pursuant to the Federal Advisory Committee Act, notice is hereby given that a meeting of the
See the
Huntington Museum of Art, 2033 McCoy Road, Huntington, West Virginia 25701; Keith-Albee Theater, 925 Fourth Avenue, Huntington, West Virginia 25701; West Virginia State Museum, 1900 Kanawha Boulevard East, Charleston, West Virginia 25305.
Victoria Hutter, Office of Public Affairs, National Endowment for the Arts, Washington, DC 20506, at 202/682-5570.
If, in the course of the open session discussion, it becomes necessary for the Council to discuss non-public commercial or financial information of intrinsic value, the Council will go into closed session pursuant to subsection (c)(4) of the Government in the Sunshine Act, 5 U.S.C. 552b, and in accordance with the July 5, 2016 determination of the Chairman. Additionally, discussion concerning purely personal information about individuals, such as personal biographical and salary data or medical information, may be conducted by the Council in closed session in accordance with subsection (c)(6) of 5 U.S.C. 552b.
Any interested persons may attend, as observers, to Council discussions and reviews that are open to the public. If you need special accommodations due to a disability, please contact Beth Bienvenu, Office of Accessibility, National Endowment for the Arts, Constitution Center, 400 7th St. SW, Washington, DC 20506, 202/682-5733, Voice/T.T.Y. 202/682-5496, at least seven (7) days prior to the meeting.
This meeting and activities will be open.
June 28, 2018; 12:00 p.m. to 12:20 p.m.
June 28, 2018; 12:30 p.m. to 1:30 p.m.
June 29, 2018; 9:00 a.m. to 11:30 a.m.
There will be opening remarks and voting on recommendations for grant funding and rejection, followed by updates from the Acting Chairman and guest presentations.
National Science Foundation.
Notice and request for comments.
The National Science Foundation (NSF) is announcing plans to request establishment and clearance of this collection. In accordance with the requirements of the Paperwork Reduction Act of 1995, we are providing opportunity for public comment on this action. After obtaining and considering public comment, NSF will prepare the submission requesting that OMB approve clearance of this collection for no longer than one year.
Written comments on this notice must be received by August 13, 2018 to be assured of consideration. Comments received after that date will be considered to the extent practicable.
Suzanne H. Plimpton, Reports Clearance Officer, National Science Foundation, 2415 Eisenhower Avenue, Room W18000, Alexandria, Virginia 22314; or send email to
Data from the survey will provide NSF with critical information about the impact of networked, collaborative approaches on broadening participation in STEM. These data will also provide an understanding of the specific ways in which the change process of a networked, collaborative approach meets NSF's goal of scaling innovative solutions to this pervasive and complex problem. Additionally, these data will provide an understanding for how the NSF INCLUDES approach can be used by other federal agencies to address similarly difficult problems. This survey is one component of a research design that includes extensive analysis of secondary data; however, an understanding of network formation and interaction requires primary data collection from network participants. This type of data is not currently being collected elsewhere and is critical to developing a real-world understanding of how organizations work together within a federally funded collaborative.
The survey will collect the following data on entities within the Alliances:
• Partnerships and partnership history
• Frequency of interactions
• Types of interactions (goal alignment, activity coordination, etc.)
Respondents will be informed in advance that they will be receiving surveys, and they will be sent URL information for completing the surveys through email communication.
The survey will take an estimated 120 minutes for each respondent to complete. Surveys will be tailored to each of the three Alliances to only include the portion of the approximately 100 organizations with which the respondent organization has partnered. Each Alliance is composed of an estimated 30 organizations.
National Science Foundation.
Notice and request for comments.
The National Science Foundation (NSF) is announcing plans to request renewal of the National Survey of College Graduates (OMB Control Number 3145-0141). In accordance with the requirements of the Paperwork Reduction Act of 1995, we are providing opportunity for public comment on this action. After obtaining and considering public comment, NSF will prepare the submission requesting that OMB approve clearance of this collection for three years.
Written comments on this notice must be received by August 13, 2018 to be assured of consideration. Comments received after that date will be considered to the extent practicable.
Contact Ms. Suzanne H. Plimpton, Reports Clearance Officer, National Science Foundation, 2415 Eisenhower Ave., Suite W18253, Alexandria, Virginia 22314; telephone (703) 292-7556; or send email to
The National Science Foundation Act of 1950, as subsequently amended, includes a statutory charge to “. . . provide a central clearinghouse for the collection, interpretation, and analysis of data on scientific and engineering resources, and to provide a source of information for policy formulation by other agencies of the Federal Government.” The NSCG is designed to comply with these mandates by providing information on the supply and utilization of the nation's scientists and engineers.
The U.S. Census Bureau, as the agency responsible for the ACS, will serve as the NSCG data collection contractor for NSF. The survey data collection will begin in February 2019 using web and mail questionnaires.
Weeks of June 11, 18, 25, July 2, 9, 16, 2018.
Commissioners' Conference Room, 11555 Rockville Pike, Rockville, Maryland.
Public and Closed.
There are no meetings scheduled for the week of June 11, 2018.
This meeting will be webcast live at the Web address—
This meeting will be webcast live at the Web address—
There are no meetings scheduled for the week of June 25, 2018.
There are no meetings scheduled for the week of July 2, 2018.
There are no meetings scheduled for the week of July 9, 2018.
There are no meetings scheduled for the week of July 16, 2018.
The schedule for Commission meetings is subject to change on short notice. For more information or to verify the status of meetings, contact Denise McGovern at 301-415-0681 or via email at
The NRC Commission Meeting Schedule can be found on the internet at:
The NRC provides reasonable accommodation to individuals with disabilities where appropriate. If you need a reasonable accommodation to participate in these public meetings, or need this meeting notice or the transcript or other information from the public meetings in another format (
Members of the public may request to receive this information electronically. If you would like to be added to the distribution, please contact the Nuclear Regulatory Commission, Office of the Secretary, Washington, DC 20555 (301-415-1969), or you may email
On November 21, 2017, Cboe BZX Exchange, Inc. (“Exchange” or “BZX”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
Section 19(b)(2) of the Act
The Commission finds it appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider the proposed rule change, as modified by Amendment No. 1. Accordingly, pursuant to Section 19(b)(2) of the Act,
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On November 21, 2017, Cboe BZX Exchange, Inc. (“Exchange” or “BZX”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
On April 13, 2018, the Exchange filed Amendment No. 1 to the proposed rule change.
Section 19(b)(2) of the Act
The Commission finds it appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider the proposed rule change, as modified by Amendment No. 1. Accordingly, pursuant to Section 19(b)(2) of the Act,
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On April 5, 2018, ICE Clear Europe Limited (“ICE Clear Europe”) filed with the Securities and Exchange
As part of its pricing process, on a daily basis, ICE Clear Europe uses intraday quotes submitted by its CDS Clearing Members to determine the bid-offer width (“BOW”) for each eligible CDS instrument. The BOW is then used in ICE Clear Europe's price discovery process as an input to determine, among other things, end-of-day price levels. These levels are, in turn, used for mark-to-market and risk management purposes.
ICE Clear Europe's clearing risk department is permitted to make adjustments to the calculated end-of-day BOWs based on volatile or “fast-moving” market conditions that may cause BOWs, according to ICE Clear Europe, to be temporarily wider than those observed in intraday quotes.
For index CDS instruments, this new calculation would take a time series of intraday mid-levels from member quotes and compare the last mid-level for the most actively traded instrument for a considered risk factor to the end-of-day level from the prior day.
In addition to proposing to implement a new variability level calculation, ICE Clear Europe also proposes to group CDS risk factors into “market proxy groups.” The market proxy groups for CDS index instruments would consist of CDX, which would cover North American Investment Grade and High Yield indices, and iTraxx, which could cover the iTraxx Main, Crossover, Senior Financial, Sub Financials, and High Volatility indices. In connection with establishing these market proxy groups, ICE Clear Europe also proposes to implement “variability bands” that would apply to the market proxy groups and correspond to specified ranges of variability level determined by the new variability level calculation described above. Under the proposed changes, the variability band applicable to a market proxy group would be equal to the largest variability band of the individual risk factors within the group. Depending on the market proxy group variability band, ICE Clear Europe would adjust the selected market Regime BOW by increasing it either one or two Regimes (
With respect to single name CDS instruments, ICE Clear Europe proposes to adopt a new scaling factor, denoted the “SN variability factor,” that would be applied to the consensus BOW for single name CDS instruments. The SN variability factor applied to the consensus BOW is determined using the same new variability calculation methodology described above, and the variability factor for single name instruments will range from 1 to 1.5 depending on the applicable market proxy variability band. As with the index instruments, ICE Clear Europe proposes to group single name instruments into market proxy groups (the CDX market proxy group for Standard North American Corporate Single Names, and the iTraxx market proxy group for European Corporate and Standard Western European Sovereign Single Names). ICE Clear Europe would then apply variability bands to the market proxy groups for single names in the same way that such variability bands are determined for index instruments.
ICE Clear Europe also proposes to make certain typographical corrections, as well as updates to cross-references, and other minor clarifications.
Section 19(b)(2)(C) of the Act directs the Commission to approve a proposed rule change of a self-regulatory organization if it finds that such proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder
Section 17A(b)(3)(F) of the Act requires, among other things, that the rules of a registered clearing be designed to promote the prompt and accurate clearance and settlement of securities transactions and, to the extent applicable, derivatives agreements, contracts and transactions, and to assure the safeguarding of securities and funds which are in the custody or control of the clearing agency or for which it is responsible.
By automating the process for widening BOWs through applying pre-determined and well-defined criteria for evaluating and responding to market volatility that will be consistently applied over time for each CDS instrument that ICE Clear Europe clears, the Commission believes that the proposed rule changes will reduce the risk of human error associated with ICE Clear Europe's determination of BOWs. As a result of the likely reduction in human error and the more consistent application over time and across CDS instruments of the BOW widening process, the Commission believes the proposed rule change will promote the prompt and accurate clearance and settlement of CDS instruments by ICE Clear Europe.
Moreover, by systematically taking into account market variability and automatically widening BOWs in response, the Commission believes that the proposed changes will enhance ICE Clear Europe's ability to more consistently and efficiently determine appropriate end-of-day BOWs for the CDS instruments it clears. This improvement in determining end-of-day BOWs for CDS instruments, in turn, should improve ICE Clear Europe's ability to determine more accurate end-of-day price levels for the purposes of mark-to-market and risk management of positions it clears in CDS instruments, thereby improving ICE Clear Europe's ability to safeguard the securities and funds which are in its custody or control or for which it is responsible. Therefore, the Commission finds that the proposed rule changes are consistent with the requirements of Section 17A(b)(3)(F) of the Act.
Rule 17Ad-22(e)(6)(iv) requires, in relevant part, that a covered clearing agency establish, implement, maintain and enforce written policies and procedures reasonably designed to cover, if the covered clearing agency provides central counterparty services, its credit exposures to its participants by establishing a risk-based margin system that uses reliable sources of timely price data and uses procedures and sound valuation models for addressing circumstances in which pricing data are not readily available or reliable.
Rule 17Ad-22(e)(17)(i) requires a covered clearing agency, in relevant part, to establish, implement, maintain and enforce written policies and procedures reasonably designed to manage the covered clearing agency's operational risk by, among other things, identifying the plausible sources of operational risk, both internal and external, and mitigating their impact through the use of appropriate systems, policies, procedures, and controls.
On the basis of the foregoing, the Commission finds that the proposed rule change is consistent with the requirements of Section 17A of the Act,
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The principal purpose of the proposed change is to make changes to the ICC Clearing Rules (the “ICC Rules”) to comply with certain requirements of the European Union (“EU”) General Data Protection Regulation (“GDPR”).
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.
ICC proposes revisions to Rule 407 to update its policies on data protection to facilitate compliance with the requirements of the GDPR, which took effect on May 25, 2018. The proposed revisions are described in detail as follows.
The amendments reflect that ICC's policies on use of personal data will now primarily be stated in a privacy notice made available to Clearing Participants (“CPs”) and other market participants, and accordingly certain existing provisions in the Rules relating to personal data will be removed or modified, as discussed herein. ICC proposes minor changes to terminology in Rule 407(a)(iv) to replace the term Data Protection Directive with Data Protection Regulation, which will refer to the GDPR. ICC proposes corresponding changes throughout the document. Under the proposed revisions, Rule 407(i) states that subsections (i) through (m) apply to the extent that ICC is within scope of the GDPR, and notes ICC's right to process “Personal Data” (as defined in the GDPR)
Section 17A(b)(3)(F) of the Act
ICC does not believe the proposed rule change would have any impact, or impose any burden, on competition not necessary or appropriate in furtherance of the purposes of the Act. The amendments are being adopted to facilitate compliance with EU requirements applicable to Personal Data under the GDPR, and apply to all CPs and market participants. Although the amendments could impose certain additional costs on CPs, these result from the requirements imposed by the GDPR, and are generally applicable throughout the EU. As a result, ICC does not believe the amendments would adversely affect competition among CPs, the market for clearing services generally or access to clearing in cleared products by CPs or other market participants.
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.
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 if consistent with the protection of
A proposed rule change filed under Rule 19b-4(f)(6)
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: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-ICC-2018-005 and should be submitted on or before July 3, 2018.
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 formalize the ICC Model Validation Framework. This change does not require any revisions to the ICC Clearing Rules.
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.
ICC proposes to formalize the ICC Model Validation Framework, which sets forth ICC's model validation procedures. ICC has developed a proprietary risk management system that models the risk of credit default swap based portfolios and determines appropriate Initial Margin and Guaranty Fund requirements. The risk management system is composed of risk modeling components (“Model Components”) which employ a combination of statistical analysis of credit spread time series and stress test simulation scenarios to address different risk drivers. The risk drivers addressed by the Model Components constitute the foundation of total Initial Margin and Guaranty Fund requirements for cleared portfolios. The ICC Model Validation Framework provides assurances as to the appropriateness of its risk requirements. ICC's Risk Oversight Officer is the ICC Model Validation Framework owner and is responsible to the ICC President for the successful operation and maintenance of the ICC Model Validation Framework.
ICC considers both new Model Components and enhancements to Model Components as part of its Model Validation Framework (collectively, “Model Change”). New Model Components consider risk drivers that are not currently included in the risk management system; enhanced Model Components improve upon the methodologies used by the risk management system to consider a given risk driver or drivers. ICC classifies Model Changes as either Materiality A or Materiality B, depending on how substantially the Model Change affects the risk management system's assessment of risk for the related risk driver or drivers. The ICC Chief Risk Officer and the ICC Risk Oversight Officer will review all enhancements to ICC's risk management system and decide which enhancements qualify as Model Changes, and which qualifying enhancements should be classified as Materiality A versus Materiality B. Materiality A Model Changes receive a higher control standard than Materiality B Model Changes. The ICC Risk Committee reviews the materiality classifications and provides feedback as necessary.
The ICC Model Validation Framework sets forth the process for selecting Model Validators and describes the independent validator criteria, including technical expertise and independence requirements. The ICC Model Validation Framework also describes the Model Inventory which is maintained by the ICC Risk Department and which contains key information about all ICC Model Components and Model Changes. The ICC Risk Oversight Officer will review the model inventory at least quarterly to ensure that it contains accurate and up to date information relating to ICC's Model Components and Model Changes.
The ICC Model Validation Framework consists of four controls: Initial validation; ongoing monitoring and validation; investigation; and independent periodic review. Before going live with a Model Change, ICC must successfully complete an initial validation of the conceptual soundness of the methodology and the proposed ongoing monitoring and validation approach. All Model Changes are subject to internal initial validation. In addition, Materiality A Model Changes are subject to an additional independent initial validation.
Ongoing monitoring and validation provides assurances that ICC has appropriately configured and calibrated the risk management system, including any recent Model Change, and that the risk management system is achieving the desired level of performance. The ongoing monitoring and validation control consists of three areas: Parameter setting, execution monitoring, and outcome analysis.
If ongoing monitoring and validation identifies features of the risk management system that might indicate a Model Component weakness, ICC investigates and identifies the root cause. If a model weakness is discovered during investigation, the ICC Chief Risk Officer informs the ICC Risk Committee of the ongoing monitoring and validation results which triggered the investigation. If ICC is satisfied that the identified features do not represent a model weakness, the ICC Chief Risk Officer will present the results of the investigation demonstrating no model weakness exists. If ICC identifies a model weakness during the investigation, the ICC Chief Risk Officer will present the results of the investing demonstrating a model weakness, and ICC will remediate the identified weakness through an appropriate Model Change, which passes through the ICC Model Validation Framework starting with an Initial validation.
The ICC Chief Risk Officer provides support and information to allow the independent validators to perform periodic reviews of all ICC Model Components and related practices at least once in every calendar year. At ICC's choosing, the scope of an independent periodic review may cover all Model Components used by the risk management system, or a subset of Model Components, as long as all Model Components are included in one or more independent periodic reviews each year. The independent periodic review will demonstrate that the Model Components remain fit for purpose; that the Model Components assumptions are valid; that ICC has adequately addressed any medium priority open items from Model Change initial validations and any other implementation conditions; and that ICC has been complying with its ongoing monitoring and validation requirements and the Model Components are performing without any significant weakness. The deliverables from the independent periodic review must include a report from the independent validator providing a summary of the completed evaluation and details of any remaining open items, classified by priority. The ICC Chief Risk Officer will present the periodic review to the ICC Risk Committee and describe ICC's plans in relation to any open high or medium priority items in the report.
Section 17A(b)(3)(F) of the ActHD1
ICC does not believe the proposed rule change would have any impact, or impose any burden, on competition. The ICC Model Validation Framework applies uniformly across all market participants. Therefore, ICC does not believe the proposed rule change impose any burden on competition that is inappropriate 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 such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Notice is hereby given of the following determinations: I hereby determine that certain objects to be included in the exhibition “John Singer Sargent and Chicago's Gilded Age,” imported from abroad for temporary exhibition within the United States, are of cultural significance. The objects are imported pursuant to loan agreements with the foreign owners or custodians. I also determine that the exhibition or display of the exhibit objects at The Art Institute of Chicago, in Chicago, Illinois, from on or about July 1, 2018, until on or about September 30, 2018, and at possible additional exhibitions or venues yet to be determined, is in the national interest. I have ordered that Public Notice of these determinations be published in the
Elliot Chiu, Attorney-Adviser, Office of the Legal Adviser, U.S. Department of State (telephone: 202-632-6471; email:
The foregoing determinations were made pursuant to the authority vested in me by the Act of October 19, 1965 (79 Stat. 985; 22 U.S.C. 2459), E.O. 12047 of March 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. 2681,
Notice of request for public comments.
The Department of State has submitted the information collection
Submit comments directly to the Office of Management and Budget (OMB) up to July 12, 2018.
Direct comments to the Department of State Desk Officer in the Office of Information and Regulatory Affairs at the Office of Management and Budget (OMB). You may submit comments by the following methods:
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Direct requests for additional information regarding the collection listed in this notice, including requests for copies of the proposed collection instrument and supporting documents, to Andrea Battista, SA-1, 12th Floor, Directorate of Defense Trade Controls, Bureau of Political Military Affairs, U.S. Department of State, Washington, DC 20522-0112, via phone at (202) 663-3136, or via email at
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We are soliciting public comments to permit the Department to:
• Evaluate whether the proposed information collection is necessary for the proper functions of the Department.
• Evaluate the accuracy of our estimate of the time and cost burden for this proposed collection, including the validity of the methodology and assumptions used.
• Enhance the quality, utility, and clarity of the information to be collected.
• Minimize the reporting burden on those who are to respond, including the use of automated collection techniques or other forms of information technology.
Please note that comments submitted in response to this Notice are public record. Before including any detailed personal information, you should be aware that your comments as submitted,
The export, temporary import, and brokering of defense articles, including technical data, and defense services are authorized by The Department of State, Directorate of Defense Trade Controls (DDTC) in accordance with the International Traffic in Arms Regulations (“ITAR,” 22 CFR parts 120-130) and section 38 of the Arms Export Control Act. Those who manufacture, broker, export, or temporarily import defense articles, including technical data, or defense services must register with the Department of State and obtain a decision from the Department as to whether it is in the interests of U.S. foreign policy and national security to approve covered transactions. Also, registered brokers must submit annual reports regarding all brokering activity that was transacted, and registered manufacturers and exporter must maintain records of defense trade activities for five years.
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Federal Aviation Administration (FAA), DOT.
Notice.
This notice contains a summary of a petition seeking relief from specified requirements of Federal Aviation Regulations. The purpose of this notice is to improve the public's awareness of, and participation in, the FAA's exemption process. Neither publication of this notice nor the inclusion or omission of information in the summary is intended to affect the legal status of the petition or its final disposition.
Comments on this petition must identify the petition docket number and must be received on or before July 2, 2018.
Send comments identified by docket number FAA-2018-0400 using any of the following methods:
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Keira Jones (202) 267-9677, Office of Rulemaking, Federal Aviation Administration, 800 Independence Avenue SW, Washington, DC 20591.
This notice is published pursuant to 14 CFR 11.85.
Federal Aviation Administration (FAA), DOT.
Notice and request for comments.
In accordance with the Paperwork Reduction Act of 1995, FAA invites public comments about our intention to request the Office of Management and Budget (OMB) approval to renew an information collection. The
Written comments should be submitted by July 12, 2018.
Interested persons are invited to submit written comments on the proposed information collection to the Office of Information and Regulatory Affairs, Office of Management and Budget. Comments should be addressed to the attention of the Desk Officer, Department of Transportation/FAA, and sent via electronic mail to
Barbara Hall at (940) 594-5913, or by email at:
Federal Aviation Administration (FAA), DOT.
Notice and request for comments.
In accordance with the Paperwork Reduction Act of 1995, FAA invites public comments about our intention to request the Office of Management and Budget (OMB) approval to renew an information collection. The
Written comments should be submitted by July 12, 2018.
Interested persons are invited to submit written comments on the proposed information collection to the Office of Information and Regulatory Affairs, Office of Management and Budget. Comments should be addressed to the attention of the Desk Officer, Department of Transportation/FAA, and sent via electronic mail to
Barbara Hall at (940) 594-5913, or by email at:
Federal Aviation Administration (FAA), DOT.
Notice and request for comments.
In accordance with the Paperwork Reduction Act of 1995, FAA invites public comments about our intention to request the Office of Management and Budget (OMB) approval to revise an information collection. The
Written comments should be submitted by July 12, 2018.
Interested persons are invited to submit written comments on the proposed information collection to the Office of Information and Regulatory Affairs, Office of Management and Budget. Comments should be addressed to the attention of the Desk Officer, Department of Transportation/FAA, and sent via electronic mail to
Barbara Hall at (940) 594-5913, or by email at:
• First, due to program changes implemented by FAA Notice N 8900.278, dated November 21, 2014, operations specifications (OpSpecs) were introduced to Title 14 of the Code of Federal Regulations (14 CFR) part 147 AMTSs. OpSpecs must be issued to institutions with part 147 certificates by July 21, 2015. This correction includes the burden added by OpSpecs not addressed in the 2016 information collection.
• Second, the current enrollment figures cited in 2016 were 12,500 students but are now 17,800 students.
• Third, some sections of part 147 were not represented as collecting information and to correct the record, the FAA is including them in this revised report.
The respondents to this information collection are part 147 certificate holders or applicants. Currently, there are 177 FAA certificated AMTSs. The information collected determines compliance with applicant eligibility and ensures that certificated AMTSs meet the minimum requirements of part 147. The information collected is focused on an AMTS' initial curriculum, instructor's qualifications, maintenance of curriculum, facilities, instructional equipment, and change of location, if applicable. Recordkeeping requirements address student attendance, tests, grades, any instruction credited under section 147.31(c), and authenticated transcripts of student's grades when credit was given based on training from a previous school. An AMTS must also keep a current progress chart for each student showing practical projects completed or to be completed in each subject.
Federal Aviation Administration (FAA), Department of Transportation (DOT).
Notice of public meeting.
This notice announces a public meeting of the FAA's Aviation Rulemaking Advisory Committee (ARAC) Transport Airplane and Engine (TAE) Subcommittee to discuss TAE issues.
The meeting will be held on Wednesday, July 25, 2018, starting at 1:00 p.m. Eastern Daylight Time.
This is a public teleconference.
Lakisha Pearson, Office of Rulemaking, ARM-209, FAA, 800 Independence Avenue SW, Washington, DC 20591, Telephone (202) 267-4191, Fax (202) 267-5075, or email at
Pursuant to Section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463; 5 U.S.C. app. III), notice is given of an ARAC Subcommittee meeting to be held on July 25, 2018.
The agenda for the teleconference is as follows:
• Transport Airplane Metallic and Composite Structures workgroup final report.
• Avionics Systems Harmonization workgroup work plan.
• Flight Test Harmonization workgroup One Engine Inoperative Controllability on Slippery Surfaces final report.
• Transport Airplane Crashworthiness and Ditching workgroup Final Report Executive Summary.
Participation is open to the public, but will be limited to the availability of teleconference lines. Participation will
To participate, please contact the person listed in
The public must make arrangements by July 16, 2018, to present oral or written statements at the meeting. Written statements may be presented to the Subcommittee by providing a copy to the person listed in the
If you need assistance or require a reasonable accommodation for the meeting or meeting documents, please contact the person listed in the
Issued in Washington, DC.
Federal Aviation Administration (FAA), DOT.
Notice and request for comments.
In accordance with the Paperwork Reduction Act of 1995, FAA invites public comments about our intention to request the Office of Management and Budget (OMB) approval to renew an information collection. The
Written comments should be submitted by July 12, 2018.
Interested persons are invited to submit written comments on the proposed information collection to the Office of Information and Regulatory Affairs, Office of Management and Budget. Comments should be addressed to the attention of the Desk Officer, Department of Transportation/FAA, and sent via electronic mail to
Barbara Hall at (940) 594-5913, or by email at:
The purpose of part 193 is to encourage the aviation community to voluntarily share information with the FAA so that the agency may work cooperatively with industry to identify modifications to rules, policies, and procedures needed to improve safety, security, and efficiency of the National Airspace System. FAA programs that are covered under part 193 are Voluntary Safety Reporting Programs, Air Traffic and Technical Operations Safety Action programs, the Flight Operational Quality Assurance program, the Aviation Safety Action Program, and the Voluntary Disclosure Reporting Program. This rule imposes a negligible paperwork burden for certificate holders and factional ownership programs that choose to submit a letter notifying the Administrator that they wish to participate in a current program.
The number of respondents has greatly increased since the initial approval of this information collection. In order to accurately reflect the burden of this information collection going forward, the FAA has included total current participants in the programs.
Maritime Administration.
Notice and request for comments.
The Maritime Administration (MARAD) invites public comments on
Comments must be submitted on or before August 13, 2018.
You may submit comments identified by Docket No. MARAD-2018-0094 through one of the following methods:
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CDR Mike Bedryk, CDR USMS, Director of Admissions, 516.726.5641, U.S. Merchant Marine Academy, 300 Steamboat Road, New York, NY 11024,
By Order of the Maritime Administrator.
Maritime Administration.
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 July 12, 2018.
Comments should refer to docket number MARAD-2018-0086. 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 CUT TO THE CHAISE is:
The complete application is given in DOT docket MARAD-2018-0086 at
In accordance with 5 U.S.C. 553(c), DOT/MARAD solicits comments from the public to better inform its rulemaking process. DOT/MARAD posts these comments, without edit, to
By Order of the Maritime Administrator.
Department of Transportation.
Notice of public meeting.
This notice announces a meeting of the National Advisory Committee on Travel and Tourism Infrastructure (NACTTI).
The meeting will be held on June 27, 2018, from 9:30 a.m. to 5:00 p.m., EDT.
The meeting will be held at the U.S. Department of Transportation, 1200 New Jersey Avenue SE, Washington, DC 20590. Individuals wishing for audio participation and any person requiring accessibility accommodations should contact the Official listed in the next section.
Laura Remo, Designated Federal Officer, U.S. Department of Transportation, at
NACTTI was created in accordance with Section 1431 of the
At the June 27, 2018, meeting, the agenda will cover the following topics:
The meeting will be open to the public on a first-come, first served basis, as space is limited. Members of the public who wish to attend in-person are asked to register, including name and affiliation, to
There will be 30 minutes allotted for oral comments from members of the public joining the meeting. To accommodate as many speakers as possible, the time for public comments may be limited to five minutes per person. Individuals wishing to reserve speaking time during the meeting must submit a request at the time of registration, as well as the name, address, and organizational affiliation of the proposed speaker. If the number of registrants requesting to make statements is greater than can be reasonably accommodated during the meeting, the Office of the Secretary may conduct a lottery to determine the speakers. Speakers are requested to submit a written copy of their prepared remarks by 5:00 p.m. EDT on June 18, 2018, for inclusion in the meeting records and for circulation to NACTTI members.
Persons who wish to submit written comments for consideration by NACTTI during the meeting must submit them no later than 5:00 p.m. EDT on June 18, 2018, to ensure transmission to NACTTI prior to the meeting. Comments received after that date and time will be distributed to the members but may not be reviewed prior to the meeting.
Copies of the meeting minutes will be available on the NACTTI internet website at
Qualified Issuer Applications and Guarantee Applications may be submitted to the CDFI Fund starting on the date of publication of this Notice of Guarantee Availability (NOGA). In order to be considered for the issuance of a Guarantee in fiscal year (FY) 2018, Qualified Issuer and Guarantee Applications must be submitted by 11:59 p.m. EST on July 12, 2018. If applicable, CDFI Certification Applications must be received by the CDFI Fund by 11:59 p.m. EST on July 12, 2018. Under the Congressional authorization in the Consolidated Appropriations Act, 2018, the amount of FY 2018 Guarantee Authority available is up to $500 million. Bond Documents and Bond Loan documents must be executed, and Guarantees will be provided, in the order in which Guarantee Applications are approved or by such other criteria that the CDFI Fund may establish, in its sole
This revised NOGA is re-opening the FY 2018 Application round of the CDFI Bond Guarantee Program with an application submission deadline of 11:59 p.m. EST on July 12, 2018 to provide interested parties with the opportunity to participate in the CDFI Bond Guarantee Program. The NOGA published on November 2, 2017, (82 FR 50944) explains application submission and evaluation requirements and processes. Parties interested in being approved for a Guarantee under the CDFI Bond Guarantee Program must submit Qualified Issuer Applications and Guarantee Applications for consideration in accordance with this NOGA.
Capitalized terms used in this NOGA and not defined elsewhere are defined in the CDFI Bond Guarantee Program regulations (12 CFR 1808.102) and the CDFI Program Regulations (12 CFR 1805.104).
All other information and requirements set forth in the NOGA published November 2, 2017, (82 FR 50944) as amended, shall remain effective, as published.
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Pub. L. 111-240; 12 U.S.C. 4701,
Board of Governors of the Federal Reserve System (Board); Federal Deposit Insurance Corporation (FDIC); and Office of the Comptroller of the Currency (OCC), Treasury.
Notice of policy statement.
The Federal Financial Institutions Examination Council has rescinded its Revised Policy Statement on “Interagency Coordination of Formal Corrective Action by the Federal Bank Regulatory Agencies” dated February 20, 1997. To assure onging coordination, the Board, the FDIC, and the OCC (collectively, “the Federal Banking Agencies” or “FBAs”) are issuing this policy statement concerning Federal Banking Agency coordination of formal corrective action.
Applicable on June 12, 2018.
The Federal Banking Agencies are issuing this policy statement concerning their coordination of formal corrective action.
The text of the policy statement is as follows:
The FBAs are issuing this policy statement to promote notification of, and coordination on, formal enforcement actions among the FBAs at the earliest practicable date. This statement replaces the existing policy statement
When an FBA determines it will take a formal enforcement action against any federally insured depository institution, depository institution holding company, non-bank affiliate, or institution-affiliated party, it should evaluate whether the enforcement action involves the interests of another FBA. Examples of such interests include unsafe or unsound practices or significant violations of law by an insured depository institution, non-bank affiliate, or depository institution holding company or misconduct by an institution-affiliated party that may have significant connections with an institution regulated by another FBA.
If it is determined that one or more other FBAs have an interest in the enforcement action, the FBA proposing the enforcement action should notify the other FBA(s). Notification should be provided at the earlier of the FBA's written notification to the federally insured depository institution, depository institution holding company, non-bank affiliate, or institution-affiliated party against which the FBA is considering an enforcement action or when the appropriate responsible agency official, or group of officials, determines that formal enforcement action is expected to be taken.
The scope of the information shared by the notification may depend on the gravity of the interests of the other FBA(s) and be determined on a case-by-case basis by the FBA providing the notification. The information shared, however, should be appropriate to allow the other FBA(s) to take necessary action in examining or investigating the financial institution or institution-affiliated party over which they have jurisdiction.
If two or more FBAs consider bringing a complementary action (
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Internal Revenue Service (IRS), 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 information collections, as required by the Paperwork Reduction Act of 1995. The IRS is soliciting comments concerning Section 9100 Relief for 338 Elections.
Written comments should be received on or before August 13, 2018 to be assured of consideration.
Direct all written comments to Laurie Brimmer, Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW, Washington, DC 20224.
Requests for additional information or copies of the Rev. Proc. should be directed to Martha R. Brinson, at (202) 317-5753, or at Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW, Washington, DC 20224, or through the internet at
The following paragraph applies to all of the collections of information covered by this notice:
An agency may not conduct or sponsor, and a person is not required to
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Internal Revenue Service (IRS), 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 information collections, as required by the Paperwork Reduction Act of 1995. The IRS is soliciting comments concerning Excise Tax Relating to Gain or Other Income Realized by Any Person on Receipt of Greenmail.
Written comments should be received on or before August 13, 2018 to be assured of consideration.
Direct all written comments to Laurie Brimmer, Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW, Washington, DC 20224.
Requests for additional information or copies of the regulation should be directed to Martha R. Brinson, at (202) 317-5753, or at Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW, Washington, DC 20224, or through the internet at
The following paragraph applies to all of the collections of information covered by this notice:
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Internal Revenue Service (IRS), 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 information collections, as required by the Paperwork Reduction Act of 1995. The IRS is soliciting comments concerning Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order).
Written comments should be received on or before August 13, 2018 to be assured of consideration.
Direct all written comments to Laurie Brimmer, Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW, Washington, DC 20224.
Requests for additional information or copies of the form and instructions should be directed to Martha R. Brinson, at (202) 317-5753, or at Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW, Washington, DC 20224, or through the internet at
The following paragraph applies to all of the collections of information covered by this notice:
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Internal Revenue Service, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995. The IRS is soliciting comments concerning Form 8864, Biodiesel and Renewable Diesel Fuels Credit.
Written comments should be received on or before August 13, 2018 to be assured of consideration.
Direct all written comments to Roberto Mora-Figueroa, Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW, Washington, DC 20224.
Requests for additional information or copies of the form and instructions should be directed to Sara Covington, Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW, Washington, DC 20224, or at (202) 317-6038 or through the internet at
The following paragraph applies to all of the collections of information covered by this notice:
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Internal Revenue Service, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995. The IRS is soliciting comments concerning Guidance regarding Charitable
Written comments should be received on or before August 13, 2018 to be assured of consideration.
Direct all written comments to Roberto Mora-Figueroa, Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW, Washington, DC 20224.
Requests for additional information or copies of this regulation should be directed to Sara Covington, Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW, Washington, DC 20224, or at (202) 317-6038 or through the internet at
The following paragraph applies to all of the collections of information covered by this notice:
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
Internal Revenue Service (IRS) Treasury.
Notice of meeting: Change.
In the
The meeting will be held Thursday, June 28, 2018.
Lisa Billups at 1-888-912-1227 or (214) 413-6523.
Notice is hereby given pursuant to Section 10(a)(2) of the Federal Advisory Committee Act, 5 U.S.C. App. (1988) that an open meeting of the Taxpayer Advocacy Panel Joint Committee will be held Thursday, June 28, 2018, at 1:00 p.m. Eastern Time via teleconference. The public is invited to make oral comments or submit written statements for consideration. For more information please contact Lisa Billups at 1-888-912-1227 or (214) 413-6523, or write TAP Office, 1114 Commerce Street, Dallas, TX 75242-1021, or post comments to the website:
The agenda will include various committee issues for submission to the IRS and other TAP related topics. Public input is welcomed.
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Internal Revenue Service, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995. The IRS is soliciting comments concerning Form 1098, Mortgage Interest Statement and TD 8571 (IA-17-90), Reporting Requirements for Recipients of Points Paid on Residential Mortgages.
Written comments should be received on or before August 13, 2018 to be assured of consideration.
Direct all written comments to Laurie Brimmer, Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW, Washington, DC 20224.
Requests for additional information or copies of this form and regulation should be directed to Sara Covington, at (202) 317 6038, Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW, Washington, DC 20224, or through the internet at
The following paragraph applies to all of the collections of information covered by this notice:
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Internal Revenue Service (IRS), 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 information collections, as required by the Paperwork Reduction Act of 1995. The IRS is soliciting comments concerning Information Return of U.S. Persons With Respect To Foreign Disregarded Entities (FDEs) and Foreign Branches (FBs).
Written comments should be received on or before August 13, 2018 to be assured of consideration.
Direct all written comments to Laurie Brimmer, Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW, Washington, DC 20224.
Requests for additional information or copies of the form and instructions should be directed to Martha R. Brinson, at (202) 317-5753, or at Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW, Washington, DC 20224, or through the internet at
A third column heading was added to report transactions of an FDE or FB of a U.S. tax owner with corresponding changes to columns (a)-(e). The instructions will clarify that the Schedule M (Form 8858) must be completed and attached to the Form 8858 to report transactions between the FB or FDE and the filer of Form 8858 or other related entity, regardless of the tax owner of the FB or FDE.
The following paragraph applies to all of the collections of information covered by this notice:
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
Department of the Treasury.
Notice of availability; request for comments.
The Board of Trustees of the Western States Office and Professional Employees Pension Fund (WSOPE Pension Fund), a multiemployer pension plan, has submitted an application to reduce benefits under the fund in accordance with the Multiemployer Pension Reform Act of 2014 (MPRA). The purpose of this notice is to announce that the application submitted by the Board of Trustees of the WSOPE Pension Fund has been published on the website of the Department of the Treasury (Treasury), and to request public comments on the application from interested parties, including participants and beneficiaries, employee organizations, and contributing employers of the WSOPE Pension Fund.
Comments must be received by July 27, 2018.
You may submit comments electronically through the Federal eRulemaking Portal at
Comments may also be mailed to the Department of the Treasury, MPRA Office, 1500 Pennsylvania Avenue NW, Room 1224, Washington, DC 20220, Attn: Danielle Norris. Comments sent via facsimile and email will not be accepted.
For information regarding the application from the WSOPE Pension Fund, please contact Treasury at (202) 622-1534 (not a toll-free number).
MPRA amended the Internal Revenue Code to permit a multiemployer plan that is projected to have insufficient funds to reduce pension benefits payable to participants and beneficiaries if certain conditions are satisfied. In order to reduce benefits, the plan sponsor is required to submit an application to the Secretary of the Treasury, which must be approved or denied in consultation with the Pension Benefit Guaranty Corporation (PBGC) and the Department of Labor.
On May 15, 2018, the Board of Trustees of the WSOPE Pension Fund submitted an application for approval to reduce benefits under the fund. As required by MPRA, that application has been published on Treasury's website at
Comments are requested from interested parties, including participants and beneficiaries, employee organizations, and contributing employers of the WSOPE Pension Fund. Consideration will be given to any comments that are timely received by Treasury.
The Department of Veterans Affairs (VA) gives notice under the Federal Advisory Committee Act, that the VA Prevention of Fraud, Waste, and Abuse Advisory Committee will meet virtually on July 19, 2018 from 9:00 a.m. until 12:00 p.m. (EST). The toll-free telephone number for this meeting is (844) 825-8490, access code: 332244674#.
The purpose of the Committee is to advise the Secretary, through the Assistant Secretary for Management and Chief Financial Officers, on matters relating to improving and enhancing VA's efforts to identify, prevent, and mitigate fraud, waste, and abuse across VA in order to improve the integrity of
The agenda will include detailed discussions on Committee recommendations surrounding VA's community care programs.
No time will be allocated at this meeting for receiving oral presentations from the public. Members of the public may submit written statements for the Committee's review to Karida Palmer via email at
The Department of Veterans Affairs (VA) gives notice under the Federal Advisory Committee Act that the subcommittees of the Rehabilitation Research and Development Service Scientific Merit Review Board will meet from 8:00 a.m. to 5:00 p.m. on the dates indicated below:
The address of the meetings site is: Crowne Plaza Washington National Airport Hotel, 1480 Crystal Drive, Arlington, VA 22202.
The purpose of the Board is to review rehabilitation research and development applications and advise the Director, Rehabilitation Research and Development Service, and the Chief Research and Development Officer on the scientific and technical merit, the mission relevance, and the protection of human and animal subjects.
The subcommittee meetings will be open to the public for approximately one-half hour at the start of each meeting to cover administrative matters and to discuss the general status of the program. Members of the public who wish to attend the open portion of the teleconference sessions may dial 1 (800) 767-1750, participant code 35847. The remaining portion of each subcommittee meeting will be closed to the public for the discussion, examination, reference to, and oral review of the research applications and critiques. During the closed portion of each subcommittee meeting, discussion and recommendations will include qualifications of the personnel conducting the studies (the disclosure of which would constitute a clearly unwarranted invasion of personal privacy), as well as research information (the premature disclosure of which would likely compromise significantly the implementation of proposed agency action regarding such research projects). As provided by subsection 10(d) of Public Law 92-463, as amended by Public Law 94-409, closing the meeting is in accordance with 5 U.S.C. 552b(c)(6) and (9)(B).
No oral or written comments will be accepted from the public for either portion of the meetings. Those who plan to attend (by phone or in person) the open portion of a subcommittee meeting must contact Kristy Benton-Grover, Designated Federal Officer, Rehabilitation Research and Development Service, at Department of Veterans Affairs (10P9R), 810 Vermont Avenue NW, Washington, DC 20420, or email
U.S. Customs and Border Protection, DHS.
Interim final rule; request for comments.
To address ongoing aviation security threats, U.S. Customs and Border Protection (CBP) is amending its regulations pertaining to the submission of advance air cargo data to implement a mandatory Air Cargo Advance Screening (ACAS) program for any inbound aircraft required to make entry under the CBP regulations that will have commercial cargo aboard. The ACAS program requires the inbound carrier or other eligible party to electronically transmit specified advance cargo data (ACAS data) to CBP for air cargo transported onboard U.S.-bound aircraft as early as practicable, but no later than prior to loading of the cargo onto the aircraft. The ACAS program enhances the security of the aircraft and passengers on U.S.-bound flights by enabling CBP to perform targeted risk assessments on the air cargo prior to the aircraft's departure for the United States. These risk assessments will identify and prevent high-risk air cargo from being loaded on the aircraft that could pose a risk to the aircraft during flight.
Please submit any comments, identified by docket number [USCBP-2018-0019], by one of the following methods:
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Craig Clark, Cargo and Conveyance Security, Office of Field Operations, U.S. Customs and Border Protection, by telephone at 202-344-3052 and email at
Interested persons are invited to participate in this rulemaking by submitting written data, views, or arguments on all aspects of this interim final rule. The Department of Homeland Security (DHS) and CBP also invite comments that relate to the economic, environmental, or federalism effects that might result from this interim final rule. Comments that will provide the most assistance to CBP will reference a specific portion of the interim final rule, explain the reason for any recommended change, and include data, information, or authority that support such recommended change.
Terrorist attacks on international aviation, particularly while the aircraft is in flight, are a very real threat. In the past few years, terrorists have made several significant attempts to attack commercial aircraft. These attempts include the Christmas Day 2009 attempt to bring down a U.S.-bound passenger plane via the use of plastic explosives hidden in a terrorist's underwear, the explosion aboard Russian Metrojet Flight 9268 above Egypt's Sinai Peninsula in October 2015, and the attempted onboard suicide attack on a commercial aircraft in February 2016 after takeoff in Mogadishu, Somalia. These incidents underscore the persistent threat to commercial aviation and emphasize the importance of aviation security.
The Department of Homeland Security (DHS) was established, in part, to prevent such attacks, and to ensure aviation safety and security. It is essential that DHS constantly adapt its policies and regulations and use shared intelligence to address these terrorist threats since terrorists continue to seek out and develop innovative ways to thwart security measures. Global terrorist organizations such as Al Qaeda and the Islamic State of Iraq and the Levant (ISIL), as well as their offshoots and associates, remain committed to targeting international commercial airline operations in order to maximize the effects of their terror campaigns. They aim to exploit any security vulnerability.
In October 2010, a new aviation security vulnerability was exposed. Terrorists placed concealed explosive devices in cargo onboard two aircraft destined to the United States. The explosive devices were expected to explode mid-air over the continental United States, which could have caused catastrophic damage to the aircraft, the passengers, crew, and persons and property on the ground. In materials published by a terrorist organization shortly after the October 2010 incident, it was noted that due to the increased
In order to deter and disrupt terrorist threats to U.S.-bound aircraft via air cargo, DHS must ensure that high-risk cargo is identified prior to the aircraft's departure for the United States. Within DHS, two components, U.S. Customs and Border Protection (CBP) and the Transportation Security Administration (TSA), have responsibilities for securing inbound air cargo bound for the United States. CBP and TSA employ a layered security approach to secure inbound air cargo, including using various risk assessment methods to identify high-risk cargo and to mitigate any risks posed.
For the reasons discussed below, DHS believes that the current regulatory requirements should be enhanced to address the ongoing threats to in-flight aviation security, particularly concerning air cargo. DHS is making regulatory changes to ensure that DHS has the necessary tools to address these threats and ensure the safety of U.S.-bound flights.
TSA regulations require carriers to apply security measures, including screening, to all cargo inbound to the United States from the last point of departure.
CBP performs an additional risk assessment to identify inbound cargo that may pose a security risk using advance air cargo data and intelligence related to specific air cargo. Under current CBP regulations, an inbound air carrier or other eligible party must transmit specified advance air cargo data to CBP for any inbound aircraft required to make entry under 19 CFR 122.41 that will have commercial cargo aboard.
Under the current CBP regulatory time frames for transmitting air cargo data, CBP may not be able to identify high-risk cargo such as unauthorized weapons, explosives, chemical and/or biological weapons, WMDs, or other destructive substances or items in the cargo until it is already en route to the United States. This is because the 19 CFR 122.48a time frames do not provide CBP adequate time to perform targeted risk assessments on the air cargo
To address this situation, CBP and TSA determined that, in order to best identify high-risk air cargo, it is essential to perform a risk assessment earlier in the air cargo supply chain, prior to the aircraft's departure. This risk assessment must be based on real-time data and intelligence available to determine if the cargo posed a risk to the aircraft in flight. CBP and TSA concluded that such a risk assessment should be performed at a centralized location and with input from both CBP and TSA, rather than at individual U.S. ports of entry. As a result, CBP and TSA formed a joint CBP-TSA targeting operation in a centralized location to allow collaboration between the DHS components. The joint CBP-TSA targeting operation utilizes CBP's ATS and other available intelligence as a risk targeting tool to leverage data and information already collected in order to secure international inbound air cargo. This allows CBP and TSA to address specific threat information in real time.
In addition, CBP, in collaboration with TSA and the air cargo industry, began operating a voluntary Air Cargo Advance Screening (ACAS) pilot in December 2010 to collect certain advance air cargo data earlier in the supply chain. Pilot participants voluntarily provide CBP with a subset of the 19 CFR 122.48a data, (referred to hereafter as the “ACAS pilot data”) as early as practicable prior to loading the cargo onto the aircraft. This allows sufficient time for targeting before the departure of the aircraft. Based on the ACAS pilot data, when CBP determines that cargo is high-risk, that cargo will require screening pursuant to TSA-approved screening methods for high-risk cargo.
The ACAS pilot has been successful in enabling CBP to identify a substantial amount of high-risk cargo. Significantly, CBP has identified a substantial number of air cargo shipments that have potential ties to terrorism and, therefore, may represent a threat. When this high-
During the ACAS pilot, air cargo that may have only received baseline screening per the carriers' TSA-approved or accepted security programs could be identified as high-risk through ACAS, triggering enhanced screening under the air carrier's security program-requirements. Through joint agency management and information sharing, the ACAS pilot uses tactical and real-time data to enhance the security of the air cargo supply chain. However, because the pilot is voluntary, it does not completely address the existing security vulnerability.
To address the continuing security threats, DHS is amending the CBP regulations to add a new section, 19 CFR 122.48b, to implement a mandatory ACAS program. CBP's objective for the ACAS program is to obtain the most accurate data at the earliest time possible with as little impact to the flow of commerce as possible. The new ACAS requirements apply to any inbound aircraft required to make entry under 19 CFR 122.41 that will have commercial cargo aboard. These are the same aircraft that are subject to the current 19 CFR 122.48a requirements. Under the amendments, an inbound air carrier and/or other eligible ACAS filer
Under the new time frame, CBP will have sufficient time before the aircraft departs to analyze the data, identify if the cargo has a nexus to terrorism, and, with TSA, take the necessary action to thwart a potential terrorist attack or other threat. Just like the ACAS pilot, the ACAS program will allow CBP to issue referrals and/or Do-Not-Load (DNL) instructions. Specifically, under the ACAS program, CBP will issue ACAS referrals when clarifying information and/or enhanced screening of high-risk cargo is needed to mitigate any risk. Referrals for screening will be issued pursuant to CBP authorities and resolved using TSA-approved or accepted security programs. The ACAS program will enable CBP to issue DNL instructions when a combination of ACAS data and intelligence points to a threat or terrorist plot in progress. As with the pilot, this rule and corresponding TSA-approved or accepted security program requirements will enhance the ability to prevent air cargo that may contain a potential bomb, improvised explosive device, or other material that may pose an immediate, lethal threat to the aircraft and/or its vicinity from being loaded aboard the aircraft and will allow law enforcement authorities to coordinate with necessary parties. Under the new regulations, CBP will be able to take appropriate enforcement action against ACAS filers who do not comply with the ACAS requirements. Upon issuance of changes to security program requirements under 49 CFR parts 1544 and 1546, TSA will enforce implementation of enhanced screening methods in response to an ACAS referral.
The new 19 CFR 122.48b specifies the general ACAS requirements, the eligible filers, the ACAS data, the time frame for providing the data to CBP, and the responsibilities of the filers, and explains the process regarding ACAS referrals and DNL instructions. The ACAS data is a subset of the data currently collected under 19 CFR 122.48a and is generally the same data that is currently collected in the ACAS pilot. However, the new regulation adds a new conditional data element, the master air waybill number, which is not required in the ACAS pilot. This data element will provide the location of the high-risk cargo and will allow CBP to associate the cargo with an ACAS submission.
CBP is also amending 19 CFR 122.48a to reference the ACAS requirements and to incorporate a few additional changes. Specifically, CBP is amending 19 CFR 122.48a to revise the definition of one of the data elements (consignee name and address) to provide a more accurate and complete definition, and to add a new data element requirement, the flight departure message (FDM), to enable CBP to determine the timeliness of ACAS submissions. CBP is also amending the applicable bond provisions in 19 CFR part 113 to incorporate the ACAS requirements.
In order to provide the trade sufficient time to adjust to the new requirements and in consideration of the business process changes that may be necessary to achieve full compliance, CBP will show restraint in enforcing the data submission requirements of this rule for twelve months after the effective date. While full enforcement will be phased in over this twelve month period, willful and egregious violators will be subject to enforcement actions at all times. In accordance with TSA regulations, inbound air carriers will be required to comply with their respective TSA-approved or accepted security program, including the changes being implemented for purposes of the ACAS program.
The chart below includes a summary of the current 19 CFR 122.48a advance air cargo data requirements, the requirements under the ACAS pilot, and the regulatory changes that are being promulgated by this rulemaking.
The Homeland Security Act
Within DHS, two components, CBP and TSA, have responsibilities for securing inbound air cargo bound for the United States. Under the current regulatory framework, TSA has responsibility for ensuring the security of the nation's transportation of cargo by air into the United States while CBP has responsibility for securing the nation's borders by preventing high-risk cargo
Section 343(a) of the Trade Act of 2002, Public Law 107-210, 116 Stat. 981 (August 6, 2002), as amended (Trade Act) (19 U.S.C. 2071 note), authorizes CBP to promulgate regulations providing for the mandatory transmission of cargo information by way of a CBP-approved electronic data interchange (EDI) system before the cargo is brought into or departs the United States by any mode of commercial transportation. The required cargo information is that which is reasonably necessary to enable high-risk cargo to be identified for purposes of ensuring cargo safety and security pursuant to the laws enforced and administered by CBP.
On December 5, 2003, CBP published a final rule in the
Under 19 CFR 122.48a, the following advance air cargo data is required to be transmitted to CBP no later than the specified time frames:
Paragraph (d) of 19 CFR 122.48a specifies, based on the type of shipment, what data the inbound carrier must transmit to CBP and what data other eligible filers may elect to transmit to CBP. There are different requirements for consolidated and non-consolidated shipments. A consolidated shipment consists of a number of separate shipments that have been received and consolidated into one shipment by a party such as a freight forwarder for delivery as a single shipment to the inbound carrier. Each of the shipments in the consolidated shipment has its own air waybill, referred to as the house air waybill (HAWB). The HAWB provides the information specific to the individual shipment that CBP needs for targeting purposes. The HAWB does not include the flight and routing information for the consolidated shipment. Generally speaking, a master air waybill (MAWB) is an air waybill that is generated by the inbound carrier for a consolidated shipment. For consolidated shipments, the inbound carrier must transmit to CBP the above cargo data that is applicable to the MAWB, and the inbound carrier must transmit a subset of the above data for all associated HAWBs, unless another eligible filer transmits this data to CBP. For non-consolidated shipments, the inbound carrier must transmit to CBP the above cargo data for the air waybill record. For split shipments,
The method and time frames for presenting the data are specified in 19 CFR 122.48a(a) and (b). These provisions specify that CBP must electronically receive the above data through a CBP-approved EDI system no later than the time of the departure of the aircraft for the United States from any foreign port or place in North America, including locations in Mexico, Central America, South America (from north of the Equator only), the Caribbean, and Bermuda; or no later than four hours prior to the arrival of the aircraft in the United States for aircraft departing for the United States from any other foreign area.
CBP uses a risk assessment strategy to target cargo that may pose a security risk. Upon receipt of the advance air cargo data in the specified time frames, CBP analyzes the data at the U.S. port of entry where the cargo is scheduled to arrive utilizing ATS to identify potential threats. Upon the arrival of the cargo at the U.S. port of entry, CBP inspects all air cargo identified as high-risk to ensure that dangerous cargo does not enter the United States.
With respect to air cargo security, TSA is charged, among other things, with ensuring and regulating the security of inbound air cargo, including the screening of 100% of international air cargo inbound to the United States on passenger aircraft. This screening mandate, established by the Implementing Recommendations of the 9/11 Commission Act (9/11 Act) of August 2007, requires that TSA ensure all cargo transported onboard passenger aircraft operating to, from, or within the United States is physically screened at a level commensurate with the screening of passenger checked baggage. To achieve this, TSA is authorized to issue security requirements for U.S. and foreign air carriers at non-U.S. locations for flights inbound to the United States.
TSA's regulatory framework consists of security programs that TSA issues and the air carriers adopt to carry out certain security measures, including screening requirements for cargo inbound to the United States from non-U.S. locations. Details related to the security programs are considered Sensitive Security Information (SSI),
NCSP Recognition is a key component of TSA's effort to achieve 100% screening of inbound cargo. NCSP Recognition is TSA's process that recognizes a partner country's air cargo supply chain security system as being commensurate with TSA's domestic and international air cargo security requirements. NCSP Recognition reduces the burden on industry resulting from applying essentially duplicative measures under two different security programs (
TSA regulations and security programs require carriers to perform screening procedures and security measures on all cargo inbound to the United States. TSA requires aircraft operators and foreign air carriers to determine the appropriate level of screening (baseline versus enhanced) to apply to the cargo, in accordance with the cargo acceptance methods and risk determination criteria contained within their TSA security programs. The difference between baseline and enhanced screening is the level to which the cargo must be screened and the procedures by which the specific screening technology must be applied as outlined in the carrier's security program.
Baseline air cargo screening requirements (standard screening) depend on multiple factors, outlined in the carrier's security program. Baseline screening procedures for passenger air carriers require that 100% of cargo loaded onboard the aircraft must be screened by TSA-approved methods. These TSA-approved methods are set forth in the carrier's security program. Baseline screening procedures for all-cargo operations of inbound air cargo are different from the baseline screening procedures applied to air cargo in passenger operations because of the differing level of risk associated with all-cargo flights. The baseline screening measures applied to cargo on an all-cargo aircraft are dependent on the types of cargo, among other factors. Enhanced security screening measures are for higher risk cargo. Cargo that the carrier determines is higher risk pursuant to the risk determination criteria in their security program must be screened via TSA-approved enhanced screening methods as set forth in the carrier's security program.
TSA periodically inspects carriers' cargo facilities to ensure compliance with the required measures of the carriers' security programs. If TSA determines that violations of the requirements have occurred, appropriate measures will be taken and penalties may be levied.
A terrorist attack on an international commercial flight via its air cargo continues to be a very real threat. DHS has received specific, classified intelligence that certain terrorist organizations seek to exploit vulnerabilities in international air cargo security to cause damage to infrastructure, injury, or loss of life in the United States or onboard aircraft. Enhancements to the current CBP regulations and TSA security programs will help address the in-flight risk and evolving threat posed by air cargo. While TSA requires carriers to perform air cargo screening in accordance with their security program prior to the cargo departing for the United States, ACAS enables an analysis of data and intelligence pertaining to a particular cargo shipment. As a result, additional high-risk cargo may be identified. Under current CBP regulations, a 19 CFR 122.48a filer is not required to transmit data to CBP until the aircraft departs for the United States or four hours prior to arrival in the United States. While this requirement provides CBP with the necessary data to target high-risk cargo prior to the aircraft's arrival in the United States, it does not allow sufficient time for targeting prior to the cargo being loaded onto a U.S.-bound aircraft. Therefore, additional time to target air cargo shipments would increase the ability of CBP and TSA to identify high-risk cargo that otherwise might not be identified until it was already en route to the United States.
As explained in detail in the Executive Summary, terrorists have already exploited this security vulnerability by placing explosive devices aboard aircraft destined to the United States. After the October 2010 incident in which explosive devices concealed in two shipments of Hewlett-Packard printers addressed for delivery to Jewish organizations in Chicago, Illinois were discovered in cargo onboard aircraft destined to the United States, CBP and TSA determined that these evolving terrorist threats require a more systematic and targeted approach to identify high-risk cargo. With the existing security vulnerability, unauthorized weapons; explosive devices; WMDs; chemical, biological or radiological weapons; and/or other destructive items could be placed in air cargo on an aircraft destined to the United States, and potentially, be detonated in flight. The resulting terrorist attack could cause destruction of the aircraft, loss of life or serious injuries to passengers and crew, additional casualties on the ground, and disruptions to the airline industry.
Since terrorists continue to seek out and develop innovative ways to thwart security measures, it is essential that CBP and TSA adapt their policies and use shared intelligence to address these evolving terrorist threats. To address the terrorist threat in 2010, CBP and TSA determined that it was essential to combine efforts to establish a coordinated policy to address aviation security. After consulting industry representatives and international partners, they decided that a risk-based assessment strategy utilizing real-time data and intelligence to target high-risk cargo earlier in the supply chain was essential. Such a strategy would deter terrorists from placing high-risk, dangerous cargo on an aircraft, enable CBP and TSA to detect explosives, WMDs, chemical and/or biological weapons before they are loaded aboard aircraft, and reduce the threat of a terrorist attack from occurring in-flight.
Specifically, CBP and TSA determined that certain advance air cargo data needs to be transmitted to CBP at the earliest point practicable in the supply chain, before the cargo is loaded onto the aircraft. This earlier time frame would provide sufficient time to target and identify high-risk cargo so that the relevant parties can take action as directed to mitigate the risk prior to the aircraft's departure. It was concluded that TSA's screening authority could be utilized to mitigate these risks. Therefore, in 2010, CBP and TSA established a joint CBP-TSA targeting operation and launched an
The joint CBP-TSA targeting operation utilizes CBP's ATS and other available intelligence as a dynamic risk targeting tool to leverage the data and information already collected in order to secure inbound air cargo. This allows CBP and TSA to address specific threat information in real time and identify any cargo that has a nexus to terrorism. This cooperative targeting, in combination with the existing CBP and TSA air cargo risk assessment measures, increases the security of the global supply chain. The CBP-TSA joint targeting operation continues to operate today and together with the ACAS pilot, and now this rule, serves as an important additional layer of security to address the new and emerging threats to air cargo.
To collect advance air cargo data earlier in the supply chain, CBP, in collaboration with TSA and the air cargo industry, established the ACAS pilot in December 2010.
Many different entities are participating in the pilot including express consignment air courier companies, passenger carriers, all-cargo carriers, and freight forwarders. Pilot participants volunteer to electronically provide CBP with a specified subset of 19 CFR 122.48a data (ACAS pilot data) as early as possible prior to loading of the cargo onto an aircraft destined to the United States.
To determine what data would be effective to target, identify, and mitigate high-risk cargo prior to loading, CBP evaluated the advance air cargo data that is currently transmitted under 19 CFR 122.48a. While the 19 CFR 122.48a data and the ACAS pilot data are used in conjunction to ensure the safety and security of air cargo throughout the supply chain, they are collected at different time frames for different risk assessments. The 19 CFR 122.48a data is used to evaluate risk prior to arrival at a U.S. port of entry to prevent high-risk cargo from entering the United States. ACAS pilot data is essential to ensure that high-risk cargo that poses a risk to the aircraft during flight is not loaded. Accordingly, CBP evaluated each 19 CFR 122.48a data element to determine whether the data would be effective in assessing the cargo's risk prior to loading of the cargo onto the aircraft, and whether the data was consistently available and predictable early in the lifecycle of the cargo in the global supply chain. CBP also consulted with the industry about what data would be available and predictable at an earlier time frame. CBP concluded that some of the 19 CFR 122.48a data, including the mandatory flight and routing information, was too unpredictable to effectively target high-risk cargo under the earlier time frame.
CBP determined that six of the mandatory 19 CFR 122.48a data elements, when viewed together, met its criteria and would be included in the ACAS pilot. This subset of 19 CFR 122.48a is the ACAS pilot data. The ACAS pilot data elements are: Air waybill number, total quantity based on the smallest external packing unit, total weight of cargo, cargo description, shipper name and address, and consignee name and address.
CBP determined that the data described above would enable the agency to more effectively conduct database searches aimed at identifying possible discrepancies and high-risk cargo. When taken together, the six data elements would provide CBP with pertinent information about the cargo and enable CBP to better evaluate the cargo's threat level prior to loading.
While the ACAS pilot data only consists of six elements, CBP encourages participants to provide any additional available data. Any additional available data that is provided enhances the accuracy of the targeting.
Upon receipt of the ACAS pilot data, the joint CBP-TSA targeting operation utilizes CBP's ATS and other intelligence to analyze the ACAS data to better identify cargo that has a nexus to terrorism and poses a high security risk. CBP issues an ACAS referral for any air cargo identified as high-risk and specifies what action the ACAS filer needs to take to address the referral and mitigate the risk. There are two types of referrals that may be issued after a risk assessment of the ACAS pilot data: Referrals for information and referrals for screening. The mitigation of these referrals depends on the directions provided by CBP and/or TSA. A referral for information is usually mitigated when the ACAS filer provides clarifying information related to the required ACAS pilot data. Referrals for screening are issued pursuant to CBP authorities and resolved using TSA-approved or accepted security programs.
Based on the risk assessment, if CBP and TSA determine that the cargo may contain a potential bomb, improvised explosive device, or other material that may pose an immediate, lethal threat to the aircraft and/or its vicinity, CBP issues a DNL instruction. Cargo receiving a DNL instruction must not be transported. Such cargo requires adherence to the appropriate protocols and directions provided by the applicable law enforcement authority.
The ACAS pilot has proven to be extremely beneficial. Most importantly, it has enabled CBP to identify numerous instances of high-risk cargo prior to the cargo being loaded onto an aircraft destined to the United States. Although to date CBP has not had to issue a DNL instruction, CBP has identified a significant number of air cargo shipments that have potential ties to terrorism and, therefore, may represent a threat to aviation security. In each instance, enhanced cargo screening pursuant to the TSA-approved screening methods was required to ensure that the cargo presented no risk to the safety and security of the aircraft.
Another benefit of the ACAS pilot is that an ACAS referral may require enhanced screening on cargo that otherwise would have received only baseline screening pursuant to TSA-approved screening methods in the carrier's security program. The ACAS pilot program is an additional layer of security in DHS's air cargo security approach. An additional benefit of the pilot is that it has allowed the industry to test the collection of the ACAS pilot data in the earlier time frame and the technological capacity to collect and transmit the data electronically.
Despite the benefits, the pilot has certain limitations which stem from the fact that it is a voluntary program. Because the pilot is voluntary, not all inbound air carriers participate; thus, there is a data collection gap. Also, because the pilot is voluntary, not all ACAS pilot data is transmitted in a timely manner and not all ACAS referrals are resolved prior to departure. This means that high-risk cargo may be transported aboard U.S.-bound aircraft, placing the aircraft, passengers and crew at risk. Finally, because the pilot is voluntary, CBP cannot take enforcement action against participants who fail to transmit ACAS data in a timely manner, do not address an ACAS referral, or otherwise fail to comply with the requirements. While ACAS pilot participants usually transmit ACAS data in a timely manner, and take the necessary action to comply with ACAS referrals and other requirements, voluntary compliance is not always sufficient to ensure aviation security. Due to these limitations, air cargo continues to pose a security threat that can be exploited by terrorists. Therefore, CBP is establishing a mandatory ACAS program.
To fulfill the Trade Act mandate to ensure air cargo safety and security, CBP is establishing a mandatory ACAS program that will require the submission of certain advance air cargo data earlier than is required under 19 CFR 122.48a. This will enable CBP to identify, target and mitigate high-risk cargo before the cargo is transported aboard an aircraft destined to the United States. CBP's objective for the ACAS program is to obtain the most accurate data at the earliest time possible with as little impact to the flow of commerce as possible. CBP believes that the ACAS program, in conjunction with the current CBP 19 CFR 122.48a regulations and TSA's updated security programs, will significantly enhance air cargo safety and security as mandated by the Trade Act.
In order to implement ACAS as a mandatory program, CBP must adhere to the parameters applicable to the development of regulations under section 343(a) of the Trade Act. While aviation security and securing the air cargo supply chain are paramount, these Trade Act parameters require CBP to give due consideration to the concerns of the industry and the flow of commerce. These parameters include, among others, provisions requiring consultation with the industry and consideration of the differences in commercial practices and operational practices among the different parties. In addition, the parameters require that the information collected pursuant to the regulations be used for ensuring cargo safety and security, preventing smuggling, and commercial risk assessment targeting, and require CBP to balance the impact on the flow of commerce with the impact on cargo safety and security. The parameters also require that the obligations imposed must generally be upon the party most likely to have direct knowledge of the required information and if not, then mandate that the obligations imposed take into account ordinary commercial practices for receiving data and what the party transmitting the information reasonably believes to be true. In developing the ACAS regulations, CBP considered all of the parameters. The adherence to these parameters is noted throughout the document.
Throughout the development of the ACAS pilot and this interim final rule, CBP consulted extensively with the air cargo industry about their business practices and how to best formulate the ACAS program to take these business practices into consideration in developing a regulatory program that addressed the security concerns. As a result of these industry consultations, CBP has been able to develop ACAS regulations that, in accordance with the parameters of the Trade Act, balance the impact on the flow of commerce with the impact on cargo safety and security and take into consideration existing standard business practices and interactions among stakeholders. This allows CBP to target data earlier while minimizing negative impacts on operations, the air cargo business model, and the movement of legitimate goods.
In developing these regulations, CBP also considered international efforts to develop advance air cargo information security programs. The ACAS program is part of a global effort to develop advance cargo information programs with agreed-upon international standards that collect and analyze the information prior to loading. CBP has participated in the World Customs Organization (WCO) Technical Experts Group Meeting on Air Cargo Security, the WCO/ICAO Joint Working Group on Advance Cargo Information and the WCO SAFE
In developing the program, CBP also considered the results of the ACAS pilot. While the ACAS pilot has been operating successfully, CBP has noted a few areas for improvement. The ACAS program addresses these shortcomings. They include minor changes to the definition of consignee name and
To implement the ACAS program, CBP is adding a new section, 19 CFR 122.48b, titled Air Cargo Advance Screening (ACAS), and making certain revisions to 19 CFR 122.48a. Additionally, CBP is revising the relevant bond provisions in 19 CFR part 113 to incorporate the ACAS requirements.
The new ACAS regulation provides that, pursuant to section 343(a) of the Trade Act, for any inbound aircraft required to make entry under 19 CFR 122.41 that will have commercial cargo aboard, CBP must electronically receive from the inbound air carrier and/or another eligible ACAS filer the ACAS data no later than the specified ACAS time frame.
The new 19 CFR 122.48b(c) specifies which parties are eligible to file ACAS data. Eligible parties include the inbound air carrier and other parties as specified below. The inbound air carrier is required to file the ACAS data if no other eligible party elects to file. CBP is allowing parties other than the inbound air carrier to file because, in some cases, these other parties will have access to accurate ACAS data sooner. For effective targeting to occur prior to loading, it is essential that the most accurate ACAS data be filed at the earliest point possible in the supply chain. This approach is consistent with the Trade Act parameters that require CBP to obtain data from the party most likely to have direct knowledge of the data and to balance the impact on the flow of commerce with the impact on cargo safety and security.
In addition to the inbound air carrier, the other parties that may elect to file the ACAS data are all the parties eligible to elect to file advance air cargo data under 19 CFR 122.48a(c), as well as foreign indirect air carriers, a term which encompasses freight forwarders. Parties eligible to elect to file advance air cargo data under 19 CFR 122.48a(c) include an Automated Broker Interface (ABI) filer (importer or its Customs broker) as identified by its ABI filer code; a Container Freight Station/deconsolidator as identified by its FIRMS (Facilities Information and Resources Management System) code; an Express Consignment Carrier Facility as identified by its FIRMS code; or, an air carrier as identified by its carrier IATA (International Air Transport Association) code, that arranged to have the inbound air carrier transport the cargo to the United States.
Freight forwarders (also referred to as foreign indirect air carriers) are generally ineligible to directly file the advance air cargo data required under 19 CFR 122.48a. CBP decided to allow freight forwarders to participate in the ACAS pilot because HAWB data is generally available to the freight forwarder earlier than it is available to the inbound air carrier. CBP has concluded that the inclusion of freight forwarders in the ACAS pilot has resulted in CBP's receipt of the data earlier in some cases. Therefore, CBP is including freight forwarders as eligible filers under 19 CFR 122.48b.
For purposes of ACAS, foreign indirect air carrier (FIAC) is defined as any person, not a citizen of the United States, that undertakes indirectly to engage in the air transportation of property. This is consistent with the definitions in the regulations of the Department of Transportation (14 CFR 297.3(d)) and the TSA (
Under the new 19 CFR 122.48b(c)(3), all inbound air carriers and other eligible entities electing to be ACAS filers must meet the following prerequisites to file the ACAS data:
• Establish the communication protocol required by CBP for properly transmitting an ACAS filing through a CBP-approved EDI system.
• Provide 24 hours/7 days a week contact information consisting of a telephone number and email address. CBP will use the 24 hours/7 days a week contact information to notify, communicate, and carry out response protocols for a DNL instruction, even if an electronic status message is sent.
• Report all of the originator codes that will be used to file ACAS data. (Originator codes are unique to each filer to allow CBP to know who initiated the filing and to identify the return address to provide status messages.) If, at any time, an ACAS filer wishes to utilize additional originator codes to file ACAS data, the originator codes must be reported to CBP prior to their use to ensure that CBP can link the ACAS data to the complete set of advance data transmitted pursuant to 19 CFR 122.48a. This will allow CBP to easily identify all the ACAS and 19 CFR 122.48a filers for one shipment.
• Possess the appropriate bond containing all the necessary provisions of 19 CFR 113.62, 113.63, or 113.64. CBP is amending the regulations covering certain bond conditions, as described in Section IV.I., to incorporate the ACAS requirements.
The new 19 CFR 122.48b(b) sets forth the time frame for submission of the ACAS data. As noted previously, the ACAS filing requirements are applicable to any inbound aircraft required to make entry under 19 CFR 122.41 that will have commercial cargo aboard. (These same aircraft are subject to the requirements in 19 CFR 122.48a). For such aircraft, the ACAS data must be transmitted as early as practicable, but no later than prior to loading of the cargo onto the aircraft.
Although CBP has determined that it is not commercially feasible to require the submission of the ACAS data a specified number of hours prior to loading of the cargo onto the aircraft, CBP encourages filers to transmit the required data as early as practicable. The earlier the ACAS data is filed, the sooner CBP can perform its targeting and the more time the filer or other responsible party will have to address any ACAS referral or DNL instruction. If the ACAS data is transmitted at the last minute and CBP issues an ACAS referral or DNL instruction, the scheduled departure of the flight could be delayed.
The ACAS data for the ACAS program is a subset of the 19 CFR 122.48a data.
The definitions of the ACAS data elements are set forth in 19 CFR 122.48a. The relevant definitions for non-consolidated shipments are set forth in 19 CFR 122.48a(d)(1) and the relevant definitions for consolidated shipments are set forth in both 19 CFR 122.48a(d)(1) and (d)(2).
The new 19 CFR 122.48b(d)(1) sets forth the mandatory ACAS data required in all circumstances. The mandatory ACAS data elements are the same six data elements as the ACAS pilot data. They are: shipper name and address, consignee name and address, cargo description, total quantity based on the smallest external packing unit, total weight of cargo, and air waybill number. As explained above in Section III.C., each of these six data elements provides CBP with crucial information needed to target and identify high-risk cargo before it is loaded onto an aircraft destined to the United States. CBP has determined that when taken together, these six data elements, if provided within the ACAS time frame, will enable CBP to perform an effective risk assessment. Based on the ACAS pilot, CBP believes that ACAS filers will be able to provide this data in a consistent, timely, and reasonably accurate manner.
The ACAS data is required to be transmitted at the lowest air waybill level (
(1)
(2)
(3)
(4)
(5)
(6)
In addition to the mandatory ACAS data, CBP is adding the MAWB number as a conditional ACAS data element. As provided by 19 CFR 122.48a(d) and (d)(1)(i), the MAWB number is the IATA standard 11-digit number. Although the MAWB number is one of the required 19 CFR 122.48a data elements for consolidated shipments, it is not an ACAS pilot data element. Based on CBP's experience with the pilot, CBP is including the MAWB number as an ACAS data element in certain situations. The new 19 CFR 122.48b(d)(2) lists those situations. The inclusion of the MAWB number in the ACAS data will address several issues that have arisen during the pilot.
CBP has found that oftentimes the transmitted ACAS pilot data by itself is insufficient to fully analyze whether the required ACAS data has been transmitted for a particular flight. This is because the ACAS pilot data only requires the data at the HAWB level. As a result, it provides data about the cargo and the relevant parties for a specific shipment but does not provide any data about the flight and routing of that shipment. Without that information, it is difficult to link the ACAS data with a particular flight and to estimate the time and airport of departure to the United States. This makes it difficult to
CBP also found that without the ability to link the HAWB number to a MAWB, the inbound air carrier might not be able to verify whether an ACAS assessment was performed for the cargo before it is accepted and loaded.
CBP is requiring the MAWB number in the following situations:
(1) When the ACAS filer is a different party from the party that will file the 19 CFR 122.48a data. The MAWB number is required in this situation because CBP needs a way to link the associated HAWBs transmitted as part of the ACAS data with the relevant MAWB provided by the 19 CFR 122.48a filer. To allow for earlier submission, an initial ACAS filing may be transmitted without the MAWB number, as long as the MAWB number is transmitted by the ACAS filer or the inbound air carrier according to the applicable ACAS time frame.
(2) When the ACAS filer transmits all the 19 CFR 122.48a data in the applicable ACAS time frame through a single filing. Since the MAWB number is required 19 CFR 122.48a data for consolidated shipments, the ACAS filer will be providing the MAWB number by default in this single filing.
(3) When the inbound air carrier would like to receive a status check from CBP on the ACAS assessment of specific cargo. If the MAWB number is transmitted, either by the ACAS filer or the inbound air carrier, CBP will be able to provide this information to the inbound air carrier upon request. If the MAWB number is not transmitted, CBP has no means of linking the ACAS data to a particular flight, as explained above, and cannot accurately respond to the query.
CBP believes that requiring the MAWB number in these three situations and encouraging it in other situations, best balances the need to collect this important data without negatively impacting trade operations.
When the MAWB number is required, it must be provided for each leg of the flight for any inbound aircraft required to make entry under 19 CFR 122.41 that will have commercial cargo aboard.
The new 19 CFR 122.48b(d)(3) lists optional data that may be provided by ACAS filers. ACAS filers may choose to designate a “Second Notify Party,” which is any secondary stakeholder or interested party in the importation of goods to the United States, to receive shipment status messages from CBP. This party does not have to be the inbound air carrier or eligible ACAS filer. Allowing ACAS filers the option of electing a “Second Notify Party” enables other relevant stakeholders to receive shipment status messages from CBP. This functionality will increase the ability to respond expeditiously to DNL instructions by warning additional stakeholders of such a situation through direct contact and automated data.
ACAS filers are also encouraged to file additional information regarding any of the ACAS data (
CBP and/or TSA may also require additional information such as flight numbers and routing information to address ACAS referrals for screening. This information will be requested in a referral message, when necessary.
CBP's objective for the ACAS program is to obtain the most accurate data at the earliest time possible with as little impact to the flow of commerce as possible. To achieve this objective, CBP is allowing multiple parties to file the ACAS data, allowing flexibility in how the ACAS data is filed, and requiring that the ACAS data be disclosed to the filer by the parties in the supply chain with the best knowledge of the data.
The eligible ACAS filers and the prerequisites to be an ACAS filer are described above in Section IV.B. If no other eligible filer elects to file, the inbound air carrier must file the ACAS data. Even if another eligible party does elect to file the ACAS data, the inbound air carrier may also choose to file.
CBP allows flexibility in how the ACAS data is filed. As explained above in Section IV.D.3, an ACAS filer, who is also a 19 CFR 122.48a eligible filer, may choose to file the 19 CFR 122.48a filing in accordance with the ACAS time frame. This would be a single filing and would satisfy both the 19 CFR 122.48a and the ACAS filing requirements. Regardless of which party chooses to file or how they choose to file, the ACAS data must be transmitted to CBP within the ACAS time frame.
To ensure that an ACAS filer has the most accurate ACAS data at the time of submission, CBP requires certain parties, with knowledge of the cargo, to provide the ACAS filer with the ACAS data.
While CBP emphasizes the need for the ACAS data as early as possible in the supply chain, the ACAS filer is also responsible for updating the ACAS data, if any of the data changes or more accurate data becomes available. Updates are required up until the time the 19 CFR 122.48a filing is required.
When the ACAS filing is transmitted to CBP, the ACAS filer receives a status message confirming the submission. If the ACAS filer designates a Second Notify Party, that party will also receive the status notification (and any subsequent status notifications).
After CBP conducts a risk assessment of the ACAS filing, an ACAS referral may be issued for cargo deemed high-risk or determined to have insufficient data. An ACAS referral is a designation attached to cargo to indicate that CBP and TSA need more accurate or more complete information, and/or that the information provided indicates a risk that requires mitigation pursuant to TSA-approved enhanced screening methods. CBP will send a shipment status message to the ACAS filer about the referral. The new 19 CFR 122.48b(e)(1) describes two types of potential ACAS referrals: referrals for information and referrals for screening.
Referrals for information will be issued if a risk assessment of the cargo cannot be conducted due to non-descriptive, inaccurate, or insufficient data. This can be due to typographical errors, vague cargo descriptions, and/or unverifiable data. Referrals for screening will be issued if the potential risk of the cargo is deemed high enough to warrant enhanced security screening. The screening must be performed in accordance with the appropriate TSA-approved screening methods contained in the carrier's security program. For more information about TSA's screening requirements, see Section III.A.2.
A DNL instruction will be issued if it is determined, based on the risk assessment and other intelligence, that the cargo may contain a potential bomb, improvised explosive device, or other material that may pose an immediate, lethal threat to the aircraft, persons aboard, and/or the vicinity. Because a DNL instruction will be issued when it appears that a terrorist plot is in progress, all ACAS filers must provide a telephone number and email address that is monitored 24 hours/7 days a week. All ACAS filers must respond and fully cooperate when the entity is reached by phone and/or email when a DNL instruction is issued.
Filing the ACAS data comes with certain responsibilities. Failure to fulfill these responsibilities could result in CBP issuing liquidated damages and/or assessing penalties. The inbound air carrier and/or the other eligible ACAS filer have the responsibility to provide accurate data to CBP in the ACAS filing and to update that data if necessary, to transmit the data within the ACAS time frame to CBP, to resolve ACAS referrals prior to departure of the aircraft and to respond to a DNL instruction in an expedited manner.
CBP needs accurate and timely data to perform effective targeting. To ensure this, the inbound air carrier and/or other eligible ACAS filer is liable for the timeliness and accuracy of the data that they transmit. Accurate data is the best data available at the time of filing. The same considerations will apply here as for the current Trade Act requirements.
As stated in the new 19 CFR 122.48b(c)(6), CBP will take into consideration how, in accordance with ordinary commercial practices, the ACAS filer acquired such data, and whether and how the filer is able to verify this data. Where the ACAS filer is not reasonably able to verify such information, CBP will permit the filer to electronically present the data on the basis of what that filer reasonably believes to be true. This is in accordance with the Trade Act parameters that require CBP to take these factors into account when promulgating regulations.
The new 19 CFR 122.48b(e)(2) specifies the requirements for resolving ACAS referrals. This section describes the responsibilities of the inbound air carrier and/or other eligible ACAS filer to take the necessary action to respond to and address any outstanding ACAS referrals no later than prior to departure of the aircraft.
Each of the two types of ACAS referrals results in different responsibilities for the ACAS filer and/or inbound air carrier. The responsible party must address any ACAS referrals within the specified time frame. The new 19 CFR 122.48b(e)(3) specifies that the inbound air carrier is prohibited from transporting cargo on an aircraft destined to the United States until any and all referrals issued for that cargo have been resolved and CBP has provided an “ACAS assessment complete” clearance message.
For referrals for information, the party who filed the ACAS data must resolve the referral by providing CBP with the requested clarifying data. This responsibility is imposed on the party who filed the ACAS data because they are in the best position to correct any data inconsistencies or errors. The last party to file the ACAS data must address the referral. For instance, when the inbound air carrier retransmits an original ACAS filer's data and a referral for information is issued after this retransmission, the inbound air carrier is responsible for taking the necessary action to address the referral.
All in-bound cargo must be screened in accordance with the TSA-approved or accepted enhanced screening methods contained in the carrier's security program. If operating under an approved amendment to the security program, the measures specified in that amendment will apply whether that be a NCSP amendment or other amendment. TSA will amend security program requirements to be consistent with ACAS. Upon receipt of a referral for screening, the ACAS filer and/or inbound air carrier is required to respond with information on how the cargo was screened in accordance with TSA-approved or accepted enhanced screening methods.
The ACAS filer can perform the necessary screening provided it is a party recognized by TSA to perform screening. If the filer chooses not to perform the screening or is not a party recognized by TSA to perform screening, the ACAS filer must notify the inbound air carrier of the referral for screening. Once the inbound air carrier is notified of the unresolved referral for screening, the inbound air carrier must perform the enhanced screening required, and/or provide the necessary information to TSA and/or CBP to resolve the referral for screening. The ultimate responsibility to resolve any outstanding referral for screening is placed on the inbound air carrier because that is the party with physical possession of the cargo prior to departure of the aircraft.
The new 19 CFR 122.48b(f) specifies the requirements for a DNL instruction. A DNL instruction cannot be mitigated or resolved because of its urgency and the grave circumstances under which it is issued. A DNL instruction will be issued if it is determined that the cargo
As described above, all ACAS filers have certain responsibilities under the ACAS program including the timely submission of ACAS data, and addressing ACAS referrals and DNL instructions prior to departure, among others. Under the ACAS program, failure to adhere to the ACAS requirements may result in CBP assessing liquidated damages and/or penalties. To ensure a proper enforcement mechanism exists, CBP is amending the relevant bond provisions to incorporate the ACAS requirements and to require all ACAS filers to have a bond. Although 19 CFR 122.48a filers are already required to have a bond, freight forwarders, currently unregulated entities, will also be required to obtain a bond if they elect to file the ACAS data.
Accordingly, CBP is adding a new condition to the relevant bond provisions in 19 CFR 113.62 (basic importation and entry bond) and in 19 CFR 113.63 (basic custodial bond) to cover the ACAS requirements. Specifically, CBP is amending 19 CFR 113.62 and 113.63 to add a new paragraph that includes a bond condition whereby the principal agrees to comply with all ACAS requirements set forth in 19 CFR 122.48a and 122.48b including, but not limited to, providing ACAS data to CBP in the manner and in the time period prescribed by regulation and taking the necessary action to address ACAS referrals and DNL instructions as prescribed by regulation.
The amendments further provide that if the principal fails to comply with the requirements, the principal and surety (jointly and severally) agree to pay liquidated damages of $5,000 for each violation. CBP may also assess penalties for violation of the new ACAS regulations where CBP deems that such penalties are appropriate,
The amendments also add a new condition to those provisions in 19 CFR 113.64 required to be included in an international carrier bond. Specifically, CBP is amending 19 CFR 113.64 to add a new paragraph to include conditions whereby the principal, be it the inbound air carrier or other party providing ACAS data, agrees to comply with the ACAS requirements set forth in 19 CFR 122.48a and 122.48b including, but not limited to, providing ACAS data to CBP in the manner and in the time period prescribed by regulation and taking the necessary action to address ACAS referrals and DNL instructions as prescribed by regulation.
This new paragraph further provides that if the principal fails to comply with the requirements, the principal and surety (jointly and severally) agree to pay liquidated damages of $5,000 for each violation, to a maximum of $100,000 per conveyance arrival. CBP may also assess penalties for violation of the new ACAS regulations where appropriate,
Due to the addition of the new ACAS paragraphs in 19 CFR 113.62, 113.63, and 113.64, some of the other paragraphs in those sections are redesignated. Specifically, 19 CFR 113.62(l) and (m) are redesignated as 19 CFR 113.62(m) and (n); 19 CFR 113.63(h) and (i) are redesignated as 19 CFR 113.63(i) and (j), and 19 CFR 113.64(i) through (l) are redesignated as 19 CFR 113.64(j) through (m). Conforming changes are also made to 19 CFR 12.3, 141.113 and 192.
As discussed throughout this document, several revisions to 19 CFR 122.48a are required to properly implement the ACAS program. This is because the ACAS regulation cites to provisions in 19 CFR 122.48a including the definitions of the ACAS data and the parties that are eligible to file the ACAS data. Additionally, as described below in Section IV.J.1., a new 19 CFR 122.48a data element, the FDM, is necessary to enforce the ACAS program.
The FDM is an electronic message sent by the inbound air carrier to CBP when a flight leaves a foreign airport and is en route to the United States. Although neither the 19 CFR 122.48a regulations nor the ACAS pilot currently requires the submission of the FDM, some inbound air carriers voluntarily provide it.
CBP is requiring the FDM as a mandatory 19 CFR 122.48a data element. The inbound air carrier is required to transmit the FDM to CBP for each leg of a flight en route to the United States within the specified time frames for transmitting 19 CFR 122.48a data. CBP welcomes comments on the timing of the FDM submission.
The FDM is necessary for the proper enforcement of the ACAS program. It will provide CBP with the liftoff date and time from each foreign airport for a flight en route to the United States. This will allow CBP to easily assess whether an ACAS filing has been transmitted within the ACAS time frame and whether ACAS referrals and/or DNL instructions were addressed prior to the aircraft's departure. As a result, this will provide CBP with the information needed to determine whether an ACAS filer has complied with the ACAS requirements and responsibilities and whether to impose liquidated damages and/or assess penalties.
Specifically, CBP is adding a new paragraph 19 CFR 122.48a(d)(1)(xviii) that lists the FDM as a mandatory 19 CFR 122.48a data element. It further provides that the FDM includes the liftoff date and liftoff time using the Greenwich Mean Time (GMT)/Universal Time, Coordinated (UTC) at the time of departure from each foreign airport. It further provides that if an aircraft en route to the United States stops and cargo is loaded onboard at one or more foreign airports, the FDM must be provided for each departure.
CBP is making several other revisions to 19 CFR 122.48a. These include revisions to 19 CFR 122.48a(a), (c), and (d). Specifically, in 19 CFR 122.48a(a), detailing general requirements, CBP is adding a sentence stating that the subset of data elements known as ACAS data is also subject to the requirements and time frame described in 19 CFR 122.48b. Also, in 19 CFR 122.48a(a), CBP is making a minor change to the language regarding the scope of the advance data requirement. The current text states that
In 19 CFR 122.48a(c), in order to more accurately reflect the obligations of the parties, CBP is making a minor change in the text. The current text states that where the inbound carrier receives advance cargo information from certain nonparticipating parties, the inbound carrier, on behalf of the party, must present this information electronically to CBP. CBP is of the view that the clause “on behalf of the party” improperly implies that the carrier is acting as the agent for the nonparticipating party and is therefore removing this clause.
Additionally, in 19 CFR 122.48a(d), CBP is also adding the notation of an “A” next to any listed data element that is also an ACAS data element. This notated data is required during both the ACAS filing and the 19 CFR 122.48a filing.
As discussed in Section IV.D., based on the operation of the ACAS pilot, CBP is amending the definition of consignee in order to have more information for risk assessment purposes. The current definition asks for the name and address of the party to whom the cargo will be delivered, and makes an exception for “FROB” (Foreign Cargo Remaining On Board). In the case of consolidated shipments, the current definition asks specifically for the address of the party to whom the cargo will be delivered in the United States. Due to the FROB exception and the United States address limitation, CBP may not know the ultimate destination of some cargo transiting the United States. The amendment removes the FROB exception and United States address limitation, and requires the name and address of the consignee regardless of the location of the party. This will allow for better targeting because it provides more complete information about where the cargo is going.
In order to provide the trade sufficient time to adjust to the new requirements and in consideration of the business process changes that may be necessary to achieve full compliance, CBP will show restraint in enforcing the data submission requirements of the rule, taking into account difficulties that inbound air carriers and other eligible ACAS filers, particularly those that did not participate in the ACAS pilot, may face in complying with the rule, so long as inbound air carriers and other eligible ACAS filers are making significant progress toward compliance and are making a good faith effort to comply with the rule to the extent of their current ability. This CBP policy will last for twelve months after the effective date. While full enforcement will be phased in over this twelve month period, willful and egregious violators will be subject to enforcement actions at all times. CBP welcomes comments on this enforcement policy.
The Administrative Procedure Act (APA) generally requires agencies to publish a notice of proposed rulemaking in the
DHS has determined that the potential exploitation by terrorists of existing inbound air cargo security arrangements exposes the United States to a significant new and emerging terrorist threat that would be effectively mitigated by the new ACAS rule. The intelligence community continues to acknowledge credible threats in the air environment, including the continued desire by terrorists to exploit the global air cargo supply chain. Moreover, DHS has received specific, classified intelligence that certain terrorist organizations seek to exploit vulnerabilities in international air cargo security to cause damage to infrastructure, injury, or loss of life in the United States or onboard aircraft. This ACAS rule mitigates these identified risks by providing CBP with the necessary data and additional time to perform necessary targeted risk assessments of air cargo before the aircraft departs for the United States. The rule strengthens DHS' ability to identify attempts by global terrorist organizations to exploit vulnerabilities in the air cargo as a means of conducting an attack. Delaying this rule to undertake notice and comment rulemaking would leave the United States unnecessarily vulnerable to a specific terrorist threat during the interval between the publication of the proposed and final rules and would be contrary to the public interest. Therefore, prompt implementation of this new ACAS rule is critical to reduce the terrorism risk to the United States and thereby protect the public safety. DHS has engaged in extensive consultation with stakeholders and has worked closely with the air cargo industry to address operational and logistical issues in the context of a voluntary pilot program in advance of this rulemaking, and has determined that this rule effectively addresses existing risks and emerging threats.
For the reasons stated above, DHS has determined that this rule is not subject to a 30-day delayed effective date requirement pursuant to 5 U.S.C. 553(d). Delaying this for 30 days after publication would leave the United States unnecessarily vulnerable to a specific terrorist threat and would be contrary to the public interest. Therefore, this rule is effective upon publication.
Accordingly, DHS finds that it would be contrary to the public interest to delay the implementation of this rule to provide for prior public notice and comment and delayed effective date procedures. As such, DHS finds that under the good cause exception, this rule is exempt from the notice and comment and delayed effective date requirements of the APA. DHS is providing the public with the opportunity to comment without delaying implementation of this rule. DHS will respond to the comments received when it issues a final rule.
Executive Orders 12866 (“Regulatory Planning and Review”) and 13563 (“Improving Regulation and Regulatory Review”) 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 (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. Executive Order 13771 (“Reducing Regulation and Controlling Regulatory Costs”) directs
As this rule has an impact of over $100 million in the first year, this rule is a significant regulatory action under section 3(f) of Executive Order 12866. Accordingly, OMB has reviewed this rule. Although this rule is a significant regulatory action, it is a regulation where a cost benefit analysis demonstrates that the primary, direct benefit is national security and the rule qualifies for a “good cause” exception under 5 U.S.C. 553(b)(B). The rule is thus exempt from the requirements of Executive Order 13771.
CBP has identified a notable threat to global security in the air environment—the potential for terrorists to use the international air cargo system to place high-risk cargo, such as unauthorized weapons, explosives, or chemical and/or biological weapons, on a United States-bound aircraft with the intent of bringing down the aircraft. In recent years, there have been several terrorist actions that highlighted this threat. In one notable incident in October 2010, concealed explosive devices that were intended to detonate during flight over the continental United States were discovered in cargo on board two aircraft destined to the United States. The exposure of international air cargo to such a threat requires a security strategy to detect, identify, and deter this threat at the earliest point in the international supply chain, before the cargo departs on an aircraft destined to the United States.
The ACAS rule represents an important component of the U.S. Department of Homeland Security (DHS's) evolving layered strategy for securing the cargo supply chain from terrorist-related activities. The rule is designed to extend security measures out beyond the physical borders of the United States so that domestic ports and borders are not the first line of defense, with the objective of having better and more detailed information about all cargo prior to loading. The principal security benefit of the new rule will be a targeted risk assessment using real-time data and intelligence to make a more precise identification of high-risk shipments at an earlier time in the supply chain, prior the aircraft's departure. This information will allow for better targeting of cargo with potential ties to terrorist activity, reducing the risk of in-flight terrorist attacks intended to cause extensive casualties and inflict catastrophic damage to aircraft and other private property, and allowing sufficient time to take the necessary action to thwart a potential terrorist attack.
In December 2010, CBP and TSA launched the Air Cargo Advance Screening (ACAS) pilot program. Participants in this pilot program transmit a subset of the 19 CFR 122.48a data as early as possible prior to loading of the cargo onto an aircraft destined to the United States. CBP and pilot participants believe this pilot program has proven successful by not only mitigating risks to the United States, but also minimizing costs to the private sector. As such, CBP is transitioning the ACAS pilot program into a permanent, mandatory program with only minimal changes from the pilot program.
To give the reader a full understanding of the impacts of ACAS so they can consider the effect of the ACAS program as a whole, our analysis separately considers the impacts of ACAS during the pilot period (2011-2017), the regulatory period (2018-2027), and the combined period. For each time period, the baseline scenario is defined as the “world without ACAS.” During the pilot period (2011-2017), the baseline includes non-ACAS-related costs incurred by industry and CBP in the absence of the pilot program. During the first ten years the interim final rule is likely to be in effect (2018-2027), the baseline similarly includes costs incurred by industry and CBP in the absence of any ACAS implementation (pilot program or interim final rule). For an accounting of the costs of the entire ACAS time period, including the pilot period and the regulatory period, see Table 3.
During the pilot period, CBP estimates that CBP and 38 pilot participants incurred costs totaling between $112.8 million and $122.7 million (in 2016 dollars) over the 6 years depending on the discount rate used (3 and 7 percent, respectively). CBP estimates that the rule will affect an estimated 215 entities and have an approximate total present value cost ranging from $245.7 million and $297.9 million (in 2016 dollars) over the 10-year period of analysis, depending on the discount rate used (seven and three percent, respectively). As shown below in Table 1, the estimated annualized costs of ACAS range from $25.2 million to $26.1 million (in 2016 dollars) depending on the discount rate used. The cost estimates include both the one-time, upfront costs and recurring costs of the activities undertaken by the affected entities to comply with the rule, both in the pilot and the post-pilot periods.
Due to data limitations, CBP is unable to monetize the benefits of the rule. Instead, CBP has conducted a “break-even” analysis, which shows how often a terrorist event must be avoided due to the rule for the benefits to equal or exceed the costs of the ACAS program. Table 1, below, shows the results of the break-even analysis under lower and higher consequence estimates of terrorist events. For the low cost consequence estimate, CBP estimates that ACAS must result in the avoidance of a terrorist attack event about every 7.7 to 8.0 months for the benefits of ACAS to equal the costs. For the higher cost consequence estimate, CBP estimates that the rule must result in the avoidance of a terrorist attack event about every 90.4 to 94 years for the benefits of ACAS to equal the costs.
Although the annualized costs of this rule are estimated to be less than $100 million dollars, the estimated first year costs are estimated to be approximately $104.1 million dollars. As such, the rule is considered an economically significant rulemaking, and, in accordance with OMB Circular A-4 and Executive Order 12866, CBP has provided accounting statements in Tables 2 and 3 reporting the estimated costs and benefits of the rule. Table 2 includes the costs and benefits for the post-pilot period (2018-2027) and Table 3 includes the costs and benefits across the entire ACAS period (2011-2027).
In December 2010, CBP and TSA launched the Air Cargo Advance Screening (ACAS) pilot program. Participants in this pilot program transmit a subset of air manifest data elements (19 CFR 122.48a), as early as possible prior to loading of the cargo onto an aircraft destined to the United States. CBP believes this pilot program has proven successful by not only mitigating risks to the United States, but also minimizing costs to the private sector. CBP is, therefore, formalizing the pilot and making the ACAS program mandatory for any inbound aircraft required to make entry under 19 CFR 122.41 that will have commercial cargo aboard. CBP has, however, identified minor changes to the ACAS program that will increase the efficiency of targeting and mitigation of risks to air cargo destined to the United States. Specifically, CBP is making the following modifications from the pilot: (1) Minor modifications to the definition of the consignee name and address data element required under the pilot (see Table 4 for a description of each data element under the rule); (2) requiring the master air waybill (MAWB) number in certain circumstances (see Table 4 for a more detailed explanation); (3) requiring inbound air carriers to provide the flight departure message (FDM) under the 19 CFR 122.48a time frames;
To give the reader a full understanding of the impacts of ACAS so they can consider the effect of the ACAS program as a whole, our analysis separately considers the impacts of ACAS during the pilot period (2011-2017), the regulatory period (2018-2027), and the combined period. For each time period, the baseline scenario is defined as the “world without ACAS.” During the pilot period (2011-2017), the baseline includes non-ACAS-related costs incurred by industry and CBP in the absence of the pilot program. During the first ten years the interim final rule is likely to be in effect (2018-2027), the baseline similarly includes costs incurred by industry and CBP in the absence of any ACAS implementation (pilot program or interim final rule). For an accounting of the costs of the entire ACAS time period, including the pilot period and the regulatory period, see Table 3.
To estimate the number of businesses affected by the pilot program we use historic data pilot participation. Table 5 shows 2015 ACAS participation by entity type. As shown, in 2015, 32 pilot participants combined to file over 80 million ACAS filings.
To estimate the number of filers who would be affected by ACAS in the post-pilot period, we use the data on 19 CFR 122.48a filings for any inbound aircraft required to make entry under 19 CFR 122.41 that will have commercial cargo aboard. As the ACAS filing is a subset of the 19 CFR 122.48a data, these data serve as a good representation of the number of entities that would be affected by the rule. As shown in Table 6 below, using 2015 19 CFR 122.48a data, CBP has identified 293 19 CFR 122.48a data filers that have filed approximately 93.6 million air waybills.
Please see chapter 2 of the full regulatory impact analysis included in the docket of this rulemaking for additional information on the baseline analysis.
During interviews with pilot program participants, key activities necessary for pilot participation were identified. As discussed in the full regulatory impact analysis, we developed a methodology for estimating associated pilot program costs, which are sunk costs for the purpose of deciding whether to continue the ACAS program in the future and are thus reported separately from costs in the 10-year period of analysis for the post-pilot period. These costs are useful when evaluating the effectiveness of the ACAS program as a whole, including the pilot and the post-pilot periods. Our methodology looked at the following activities: (1) Developing information and communication systems required to transmit the ACAS data elements as early as practicable; (2) training staff and providing outreach to trade partners on the ACAS requirements; (3) developing and implementing business protocols and operations to respond to and resolve ACAS referrals and address DNL instructions issued by CBP and establishing and providing 24 × 7 point of contact capabilities; and (4) responding to and resolving ACAS referrals issued by CBP (
Given that the requirements of the rule are similar to those of the pilot program, the methodology developed to assess pilot program costs is used to estimate the incremental costs of the rule for both pilot program participants and non-participants over a 10-year post-pilot period of analysis (2018-2027). The most significant costs are the one-time, upfront and recurring costs associated with developing and implementing the necessary protocols and operations to respond to and take the necessary action to address ACAS referrals. Total costs to industry are greatest for the passenger carriers, followed by cargo carriers, express carriers, and freight forwarders. The costs are greatest for passenger carriers, as a group, because they account for more than half of all regulated entities, and they tend not to be already fully operational under the ACAS pilot. In future years, express carriers and large freight forwarders are likely to experience higher costs on a per entity basis due to a higher transaction volume (
As shown in Table 8, CBP estimates that over a 10-year post-pilot period of analysis, the rule will approximately cost between a total present value of $245.7 million and $297.9 million (in 2016 dollars) assuming discount rates of seven and three percent, respectively. Annualized, it is estimated that this rule will cost between $36.0 million and $37.4 million (in 2016 dollars) depending on the discount rate used. The cost estimates include both the one-time, upfront costs and recurring costs of the activities undertaken by the affected entities to comply with the rule.
Please see chapter 3 of the full regulatory impact analysis included in the docket of this rulemaking for additional information on the cost analysis.
The purpose and intended benefit of this rule is that it would help prevent unauthorized weapons, explosives, chemical and/or biological weapons, weapons of mass destruction (WMDs) and other dangerous items from being loaded onto aircraft destined to the United States. As mentioned above, several incidents over the last several years have demonstrated the continued focus of terrorist actors to exploit vulnerabilities within the global supply chain. In order to continue to meet this threat, CBP and TSA must combine capabilities and scopes of authority to implement a comprehensive and tactical risk assessment capability. CBP needs certain information earlier in the process so that it can work with TSA to identify high-risk cargo before it is loaded onto an aircraft. The ACAS program is intended to satisfy this need. The results of the ACAS pilot program demonstrate that CBP is receiving actionable information in time to prevent dangerous cargo from being loaded onto an aircraft. Since the inception of the ACAS pilot program, CBP has identified a significant number of air cargo shipments that have potential ties to terrorism and, therefore, may represent a threat to the safety and security of the aircraft. In each instance, CBP issued ACAS referrals and the inbound air carrier or other eligible ACAS filer performed or confirmed the prior performance of enhanced cargo screening pursuant to TSA-approved methods.
Ideally, the quantification and monetization of the benefits of this regulation would involve estimating the current baseline level of risk of a successful terrorist attack, absent this regulation, and the incremental reduction in risk resulting from implementation of the regulation. We would then multiply the change by an estimate of the value individuals place on such a risk reduction to produce a monetary estimate of benefits. However, existing data limitations prevent us from quantifying the incremental risk reduction attributable to this rule. As a result, we performed a “break-even” analysis to inform decision-makers of the frequency at which an attack would need to be averted for the avoided consequences of a successful terrorist attack to equal the costs of the rule (also referred to as the critical event avoidance rate).
In the break-even analysis, we identified possible terrorist attack scenarios that may be prevented by the regulation. These scenarios and corresponding consequence data are identified using TSA's Transportation Sector Security Risk Assessment (TSSRA) 4.0 model. TSSRA 4.0 is a Sensitive Security Information (SSI)
To allow the reader to evaluate the benefits of ACAS against both the post-pilot costs of the rule and the ACAS program as a whole, we include two break even analyses. Table 9, below, indicates what would need to occur for the post-pilot costs of the rule to equal the avoided consequences of a successful terrorist attack, assuming the rule only reduces the risk of a single type of attack. For the lower consequence estimate, CBP estimates the regulation must result in the avoidance of a terrorist attack event about every 5.4 to 5.6 months for the avoided consequences of a successful terrorist attack to equal the costs of the rule. For the higher consequence estimate, CBP estimates that the regulation must result in the avoidance of a terrorist attack event in a time period of about every 63.1 years to 65.7 years for the avoided consequences of a successful terrorist attack to equal the costs of the rule. These estimates reflect property loss, nonfatal injuries, and fatalities assumed in the TSSRA model. The value of avoided fatalities substantially increases the consequence estimates relative to the value of the other consequences such as nonfatal injury and property loss. Table 10 shows the same information for the entire ACAS period (2011-2027).
Please see chapter 4 of the full regulatory impact analysis included in the docket of this rulemaking for additional information on the break-even analysis.
In accordance with Executive Order 12866, the following three alternatives have been considered:
(1)
(2)
(3)
These three alternatives represent adjusting the required timing for ACAS transmittal and excluding a particular ACAS data element, namely the MAWB number. In comparison to Alternative 1 (the preferred alternative), Alternative 2 advances (makes earlier) the required time frame for ACAS transmission, which would provide CBP more time to conduct its risk assessment and mitigate any identified risk prior to aircraft departure. In comparison to Alternative 1, Alternative 3 excludes the MAWB number data element for any shipment. In general, CBP needs to receive the MAWB number so that it can provide the location of the high-risk cargo and will allow CBP to associate the cargo with an ACAS submission. Some inbound carriers also prefer that the forwarder-issued HAWB and carrier-issued MAWB numbers be linked so that they can verify that an ACAS assessment for a particular shipment they accepted from an ACAS-filing freight forwarder has been completed. However, some freight forwarders expressed issues with providing the MAWB number in time for the ACAS filings because they may not be finalized until just prior to aircraft departure. By evaluating these three alternatives, CBP is seeking the most favorable balance between security outcomes and impacts to air transportation. Based on this analysis of alternatives, CBP has determined that Alternative 1 provides the most favorable balance between security outcomes and impacts to air transportation.
Please see chapter 5 of the full regulatory impact analysis included in the docket of this rulemaking for additional information on the alternatives analysis.
The Regulatory Flexibility Act (5 U.S.C. 601
Nonetheless, in the docket of this rulemaking (docket number [USCBP-2018-0019]), CBP has included a regulatory impact analysis entitled
The threshold analysis identified that out of 215 total affected entities, 86 are U.S. entities and 61 U.S. entities of the 86 U.S. entities affected by this rule may be small businesses. These small entities are in 4 distinct industries and generally represent 50 percent or more of their respective industries. As such, CBP believes that a substantial number of small entities may be affected by this rule. The threshold analysis also identified that the percentage of first-year costs relative to the average annual revenue of the small entities potentially affected by this rule range from a low of 0.4 percent to a high of 1.3 percent. CBP believes that impacts identified in the threshold analysis may be considered a significant economic impact.
CBP has prepared the following initial regulatory flexibility analysis. Please see chapter 5 of the full regulatory impact analysis included in the docket of this rulemaking for additional information on the threshold analysis.
In October 2010, concealed explosive devices were discovered in cargo onboard two aircraft destined to the United States. This incident provides evidence of the potential for terrorists to use the international air cargo system to place high-risk cargo such as unauthorized weapons, explosives, chemical and/or biological weapons, WMDs, or other destructive substances or items in the cargo of a United States-bound aircraft with the intent of bringing down the aircraft. The exposure from international air cargo requires a security strategy to detect, identify, and deter this threat at the earliest point in the international supply chain, before the cargo departs for the United States.
Current CBP regulations require air carriers to electronically transmit air manifest data in advance of their cargo's arrival in the United States (codified in 19 CFR 122.48a). These 19 CFR 122.48a data are required to be provided to CBP no later than the time of aircraft departure for the United States (from foreign ports in all of North America, including Mexico, Central America, the Caribbean, and Bermuda as well as South America north of the equator), or no later than four hours prior to aircraft arrival in the United States (from foreign ports located everywhere else). CBP determined, however, that it is necessary to receive a subset of the 122.48a data prior to loading of the cargo aboard the aircraft in order to more effectively complete its risk targeting and identification, and mitigate any identified risk, prior to aircraft departure.
The rule, which was developed by CBP in coordination with the trade, including consultation with the Commercial Customs Operations Advisory Committee (COAC), represents an important component of DHS's evolving layered strategy for securing the cargo supply chain from terrorist-related activities. The rule is designed to identify high-risk air cargo, such as unauthorized weapons, explosives, chemical and/or biological weapons, WMDs, or other destructive substances or items prior to the aircraft's departure for the United States through a targeted intelligence-based risk assessment. The principal security benefit of the new rule will be more precise identification and mitigation of at-risk shipments prior to the departure of the U.S.-bound aircraft. This information will allow for better targeting and will increase the safety of the aircraft during flight.
As discussed earlier in this section, the rule applies to 129 passenger carriers, 56 cargo carriers, 22 air express couriers, and 8 freight forwarders. Of these, 86 entities are U.S.-owned companies. Among the U.S.-owned companies, 61 meet SBA's definition of a small entity (See Table 11).
The rule requires the transmission of six mandatory ACAS data elements to CBP as early as practicable, but no later than prior to loading of the cargo onto any inbound aircraft required to make entry under 19 CFR 122.41 that will have commercial cargo aboard. The six ACAS data elements include: (1) Shipper name and address; (2) consignee name and address; (3) cargo description; (4) total quantity based on the smallest external packing unit; (5) total weight of cargo; and (6) air waybill number. The rule also requires the ACAS filer to transmit a MAWB number under certain conditions, as described in Chapter 1 of the full regulatory impact analysis.
Generally, regulated entities will meet this requirement using existing information and communication systems; however, these systems, along with certain business processes, may require modification. In addition, some entities may purchase new systems or adopt new processes. In either case, new training will be required for existing staff (generally logistics professionals and support staff). In addition, entities will need to designate a 24/7 point of contact to respond to DNL instructions issued by CBP. Costs that may be incurred by these small entities in the first year of the rule are summarized in Table 12. For a detailed discussion of the derivation of the cost estimates, see Chapter 3 of the full regulatory impact analysis.
The data elements required to be transmitted in this rule are, largely, already required under existing Federal rules (
CBP does not identify any significant alternatives to the rule that specifically address small entities. Due to the security nature of the regulation, CBP is unable to provide an alternative regulatory framework for small entities that would not jeopardize the security of the United States. Excluding small entities would undermine the rule and increase in-flight security risks for aircraft operated by small entities. We evaluate two alternatives in our analysis, in addition to the chosen alternative; however as discussed in Chapter 3 of the full regulatory impact analysis, these alternatives affect all regulated entities.
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) requires agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. The regulation is exempt from these requirements under 2 U.S.C. 1503 (Exclusions) which states that the UMRA “shall not apply to any provision in a bill, joint resolution, amendment, motion, or conference report before Congress and any provision in a proposed or final Federal regulation” that “is necessary for the national security or the ratification or implementation of international treaty obligations.”
CBP will ensure that all Privacy Act requirements and policies are adhered to in the implementation of this rule, and will issue or update any necessary Privacy Impact Assessment and/or Privacy Act System of Records notice to fully outline processes that will ensure compliance with Privacy Act protections.
An agency may not conduct, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number assigned by OMB. The collection of information regarding electronic information for air cargo required in advance of arrival under 19 CFR 122.48a was previously reviewed and approved by OMB in accordance with the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) under OMB Control Number 1651-0001. When CBP began the ACAS pilot, however, CBP did not publish the collection of information specific to the pilot for notice and comment under the Paperwork Reduction Act because there is no new burden associated with ACAS, just a change in when the data is submitted. Any additional cost to file the ACAS subset of the 19 CFR 122.48a filing on the ACAS time frame was not captured under the OMB Control Number mentioned above. CBP requests comment on what, if any, additional burden ACAS represents. CBP notes that when this rule is implemented, carriers will have the option to file the full 19 CFR 122.48a filing withn the ACAS time frame to satisfy both requirements in a single filing. Many carriers are able to submit their 19 CFR 122.48a information well in advance of the flight and this would allow them to only file once, if they choose to do so. This document adds an additional data element, the flight departure message, to 19 CFR 122.48a and this collection. This data element is readily accessible for those filers for whom it is required and it is already routinely provided. The collection of information for ACAS under 19 CFR 122.48b is comprised of a subset of information already collected pursuant to 19 CFR 122.48a under this approval, but information for ACAS will be now be collected earlier. Filers will need to modify their systems in order to provide these data earlier in an automated manner, but as the only new required data element (the flight departure message) is already routinely provided on a voluntary basis and is readily available, CBP does not estimate any change in the burden hours as a result of this rule.
The resulting estimated burden associated with the electronic information for air cargo required in advance of arrival under this rule is as follows:
Comments concerning the accuracy of this cost estimate and suggestions for reducing this burden should be directed to the Office of Management and Budget, Attention: Desk Officer for the Department of Homeland Security, Office of Information and Regulatory Affairs, at
The list of approved information collections contained in 19 CFR part 178 is revised to add an appropriate reference to section 122.48b to reflect the approved information collection.
The signing authority for this document falls under 19 CFR 0.2(a). Accordingly, this document is signed by the Secretary of Homeland Security.
Customs duties and inspection, Reporting and recordkeeping requirements.
Common carriers, Customs duties and inspection, Exports, Freight, Laboratories, Reporting and recordkeeping requirements, Surety bonds.
Administrative practice and procedure, Air carriers, Aircraft, Airports, Alcohol and alcoholic beverages, Cigars and cigarettes, Customs duties and inspection, Drug traffic control, Freight, Penalties,
Customs duties and inspection, Reporting and recordkeeping requirements.
Reporting and recordkeeping requirements.
Aircraft, Exports, Motor vehicles, Penalties, Reporting and recordkeeping requirements, Vessels.
For the reasons set forth above, CBP amends parts 12, 113, 122, 141, 178, and 192 of title 19 of the Code of Federal Regulations (19 CFR parts 12, 113, 122, 141, 178, and 192) as follows:
5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 3(i), Harmonized Tariff Schedule of the United States (HTSUS)), 1624.
Section 12.3 also issued under 7 U.S.C. 135h, 21 U.S.C. 381;
19 U.S.C. 66, 1623, 1624.
The addition reads as follows:
(l)
(h)
(i)
(2) If a party specified in § 122.48b(c)(2) of this chapter provides the ACAS data to CBP, that party, as principal under this bond, agrees to comply with all ACAS requirements set forth in §§ 122.48a and 122.48b of this chapter including, but not limited to, providing ACAS data to CBP in the manner and in the time period prescribed by regulation and taking the necessary action to address ACAS referrals and Do-Not-Load (DNL) instructions as prescribed by regulation. If the principal defaults with regard to these obligations, the principal and surety (jointly and severally) agree to pay liquidated damages of $5,000 for each violation, to a maximum of $100,000 per conveyance arrival.
5 U.S.C. 301; 19 U.S.C. 58b, 66, 1431, 1433, 1436, 1448, 1459, 1590, 1594, 1623, 1624, 1644, 1644a, 2071 note.
The revisions and additions read as follows:
(a)
(d) * * *
(1) * * *
(xi) Consignee name and address (M) (A) (for consolidated shipments, the identity of the container station (see 19 CFR 19.40-19.49), express consignment or other carrier is sufficient for the master air waybill record; for non-consolidated shipments, the name and address of the party to whom the cargo will be delivered is required regardless of the location of the party; this party need not be located at the arrival or destination port);
(xviii) Flight departure message (M) (this data element includes the liftoff date and liftoff time using the Greenwich Mean Time (GMT)/Universal Time, Coordinated (UTC) at the time of departure from each foreign airport en route to the United States; if an aircraft en route to the United States stops at one or more foreign airports and cargo is loaded on board, the flight departure message must be provided for each departure).
(2) * * *
(vii) Consignee name and address (M) (A) (the name and address of the party to whom the cargo will be delivered is required regardless of the location of the party; this party need not be located at the arrival or destination port); and
(a)
(b)
(2)
(c)
(2)
(i) All parties eligible to elect to file advance electronic cargo data listed in § 122.48a(c); and
(ii) Foreign Indirect Air Carriers. For purposes of this section, “foreign indirect air carrier” (FIAC) is defined as any person, not a citizen of the United States, who undertakes indirectly to engage in the air transportation of property. A FIAC may volunteer to be an ACAS filer and accept responsibility for the submission of accurate and timely ACAS filings, as well as for taking the necessary action to address any referrals and Do-Not-Load (DNL) instructions when applicable.
(3)
(i) Establish the communication protocol required by CBP for properly transmitting an ACAS filing through a CBP-approved electronic data interchange system;
(ii) Possess the appropriate bond containing all the necessary provisions of § 113.62, § 113.63, or § 113.64 of this chapter;
(iii) Report all of the originator codes that will be used to file ACAS data. If at any time, ACAS filers wish to utilize additional originator codes to file ACAS data, the originator code must be reported to CBP prior to its use; and
(iv) Provide 24 hours/7 days a week contact information consisting of a telephone number and email address. CBP will use the 24 hours/7 days a week contact information to notify, communicate, and carry out response protocols for Do-Not-Load (DNL) instructions, even if an electronic message is sent.
(4)
(5)
(6)
(d)
(1)
(i) Shipper name and address;
(ii) Consignee name and address;
(iii) Cargo description;
(iv) Total quantity based on the smallest external packing unit;
(v) Total weight of cargo; and
(vi) Air waybill number. The air waybill number must be the same in the filing required by this section and the filing required by § 122.48a.
(2)
(i) When the ACAS filer is a different party than the party that will file the advance electronic air cargo data required by § 122.48a. To allow for earlier submission of the ACAS filing, the initial ACAS filing may be submitted without the MAWB number, as long as the MAWB number is later submitted by the ACAS filer or the inbound air carrier according to the applicable ACAS time frame for data submission in paragraph (b) of this section; or
(ii) When the ACAS filer is transmitting all the data elements required by § 122.48a according to the applicable ACAS time frame for data submission; or
(iii) When the inbound air carrier would like to receive from CBP a check on the ACAS status of a specific shipment. If the MAWB number is submitted, either by the ACAS filer or the inbound air carrier, CBP will provide this information to the inbound air carrier upon request.
(3)
(ii) Any additional data elements listed in § 122.48a or any additional information regarding ACAS data elements (
(e)
(i)
(ii)
(2)
(i)
(ii)
(3)
(f)
(2) As provided in paragraph (c)(3)(iv) of this section, all ACAS filers must provide a telephone number and email address that is monitored 24 hours/7 days a week in case a Do-Not-Load (DNL) instruction is issued. All ACAS filers and/or inbound air carriers, as applicable, must respond and fully cooperate when the entity is reached by phone and/or email when a Do-Not-Load (DNL) instruction is issued. The party with physical possession of the cargo will be required to carry out the Do-Not-Load (DNL) protocols and the directions provided by law enforcement authorities.
(3) The inbound air carrier may not transport cargo with a Do-Not-Load (DNL) instruction.
19 U.S.C. 66, 1448, 1484, 1498, 1624.
Section 141.113 also issued under 19 U.S.C. 1499, 1623.
5 U.S.C. 301; 19 U.S.C. 1624; 44 U.S.C. 3501
19 U.S.C. 66, 1624, 1646c. Subpart A also issued under 19 U.S.C. 1627a, 1646a, 1646b; subpart B also issued under 13 U.S.C. 303; 19 U.S.C. 2071 note; 46 U.S.C. 91.
Commodity Futures Trading Commission.
Final rule.
Pursuant to Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”), as amended by the Fixing America's Surface Transportation Act of 2015 (“FAST Act”), the Commodity Futures Trading Commission (“Commission” or “CFTC”) is amending the Commission's regulations relating to access to swap data held by swap data repositories (“SDRs”). The amendments implement pertinent provisions of the FAST Act and make associated changes to the Commission's regulations governing the grant of access to swap data to certain foreign and domestic authorities by SDRs, as well as changes to certain other regulations unrelated to such access.
The effective date for this final rule is August 13, 2018. For compliance dates, see
Daniel Bucsa, Deputy Director, Division of Market Oversight—Data and Reporting Branch (“DMO-DAR”), (202) 418-5435,
The compliance date for an SDR to comply with its obligation under § 49.17(d)(5)(iii) of the Commission's regulations
Title VII of the Dodd-Frank Act
As originally enacted, CEA sections 21(d)(1) and (2), respectively, mandated that, prior to receipt of any requested data or information from an SDR, a 21(c)(7) entity agree in writing to abide by the confidentiality requirements described in CEA section 8 and, separately, to indemnify the SDR and the Commission for any expenses arising from litigation relating to the information provided under section 8.
In 2011, the Commission adopted rules implementing the requirements for SDRs in CEA section 21.
The Commission defined the other category, AFRs,
An ADR or AFR seeking access to SDR swap data is required by current § 49.17(d)(1) to file an access request with the SDR certifying that it is acting within the scope of its jurisdiction and is required by current § 49.17(d)(6) to execute a “Confidentiality and Indemnification Agreement” with the SDR.
In the preamble to the SDR Final Rules, the Commission acknowledged commenters' concerns that compliance with the statutory and regulatory requirements to indemnify the Commission, and the SDR providing access to swap data, for any expenses arising from litigation relating to the information provided under section 8 of the CEA, would be difficult for certain domestic and foreign regulators, due to various home country laws and other regulations prohibiting such arrangements.
Since concerns about the scope of the indemnification requirement persisted, the Commission issued an interpretative statement designed to provide guidance and greater clarity to interested members of the public and foreign regulators with respect to the scope and application of CEA section 21(d) and the part 49 rules.
Congress responded to regulators' access concerns by including in the FAST Act a repeal of the indemnification requirement in CEA section 21(d)(2).
The FAST Act also modified CEA section 21(c)(7)(A) by clarifying that SDRs must make available the “swap” data they obtain to 21(c)(7) entities, and added to CEA section 21(c)(7)(E)'s non-exclusive list of persons that the Commission may determine to be appropriate recipients of SDR swap data the new category “other foreign authorities.”
CEA section 8 governs the Commission's treatment of nonpublic information in its possession in a number of circumstances. CEA section 8(e) permits the Commission to furnish to the specified types of domestic or foreign entities—upon their request and acting within the scope of their jurisdiction—any information in its possession obtained in connection with the administration of the Act.
CEA sections 21(c)(7) and 21(d) incorporate CEA section 8 in establishing the disclosure restrictions and confidentiality standards that apply to SDRs when providing swap data to regulators. The Commission interprets these provisions as requiring consistency with the principles underlying CEA section 8(e) and therefore being fundamental to the access standards and confidentiality provisions adopted in this release. In adopting revised §§ 49.17 and 49.18, the Commission is mindful of these foundational principles: Where information is sought to be accessed, the information must relate to the scope of the requesting entity's jurisdiction; and information provided by the SDR shall not be further disclosed except in limited, defined circumstances.
Pursuant to its authority under the Act,
The Commission has determined to rescind the Interpretative Statement. References to the indemnification requirement in the Interpretative Statement are no longer necessary, as the FAST Act repealed the indemnification requirement in CEA section 21(d). Additionally, the modifications to § 49.17(d)(3) that are adopted by the Commission in this release are not inconsistent with the clarifications provided in the Interpretative Statement.
As originally adopted, § 49.2(a)(5) defined the term “Foreign Regulator” to include a foreign futures authority as defined in CEA section 1a(26), foreign financial supervisors, foreign central banks and foreign ministries.
Commission regulation 49.17(d)(2) currently provides that an ADR with regulatory jurisdiction over an SDR that is registered with the ADR pursuant to a separate statutory authority and that is also registered with the Commission does not need to apply to the SDR for access to swap data and execute a confidentiality and indemnification agreement, as required by §§ 49.17(d) and 49.18(b), as long as the following conditions are met: (i) The ADR executes an MOU or similar information sharing arrangement with the Commission; and (ii) the Commission, consistent with CEA section 21(c)(4)(A), designates the ADR to receive direct electronic access. The Commission provided in the SDR Final Rules that these ADRs may be provided access to the swap data reported and maintained by SDRs without being subject to the notice and indemnification provisions of CEA sections 21(c)(7) and (d).
Commission regulation 49.17(d)(3) currently provides that an AFR with supervisory authority over an SDR registered with it pursuant to foreign law and/or regulation that is also registered with the Commission is not subject to the requirements of § 49.17(d) and § 49.18(b). As described in the SDR Final Rules and the Interpretative Statement, the Commission believes that swap data reported to, and maintained, by an SDR may be appropriately accessed by an AFR without the execution of a confidentiality and indemnification agreement when the AFR is acting in a regulatory capacity with respect to an SDR that is also registered with the AFR, and the swap data was reported to such SDR pursuant to such AFR's regulatory regime.
With respect to domestic regulators with regulatory jurisdiction over an SDR, the Commission proposed in the NPRM to remove: (1) The reference to “Appropriate Domestic Regulator” in § 49.17(d)(2) and replace it with the term “domestic regulator” to clarify that all domestic regulators, and not just ADRs, would fall under § 49.17(d)(2); (2) § 49.17(d)(2)(i) (information sharing arrangement condition); and (3) § 49.17(d)(2)(ii) (direct electronic access condition). Based on its experience with SDR swap data access, the Commission believed an additional refinement of these rules was necessary in order to promote greater efficiency and cooperation among domestic regulators. Accordingly, the Commission proposed that a domestic regulator that has regulatory responsibility over an SDR registered with it pursuant to a separate statutory authority should be able to access SDR data reported to such SDR pursuant to such separate statutory authority irrespective of whether such domestic regulator has executed an MOU or similar information sharing arrangement with the Commission or been designated to receive direct electronic access by the Commission.
In connection with foreign regulatory authorities that have supervisory authority over an SDR, the Commission proposed in the NPRM to (i) replace the reference to “Appropriate Foreign Regulator” in § 49.17(d)(3) with the term “Foreign Regulator,” as defined in § 49.2, to clarify that all Foreign Regulators, not only those that have been determined “appropriate” by the Commission, would fall under § 49.17(d)(3); and (ii) add qualifying language to § 49.17(d)(3) so that § 49.17(d)(3) applies not only to SDRs that are “registered” with the Foreign Regulator but also to those SDRs that are “recognized or otherwise authorized” by the Foreign Regulator, where the swap data being accessed has been reported to the SDR pursuant to the Foreign Regulator's regulatory regime.
The Commission received one comment, from Chicago Mercantile Exchange Inc. (“CME”), DTCC Data Repository (U.S.) LLC (“DDR”), and ICE Trade Vault, LLC (“ICETV” and, collectively with CME and DDR, the “SDR Commenters”), on its proposed modifications to § 49.17(d)(2) and (3).
After considering the comments it received with respect to its proposed amendments to § 49.17(d)(2) and (3), and for the reason stated above in section II.B.2., the Commission continues to believe that swap data
CEA section 21(c)(7) specifies U.S. entities to which swap data must be released by an SDR, provided certain prerequisites are satisfied. Because Congress has determined that access to SDR swap data by these entities is appropriate when the prerequisites are satisfied, no appropriateness determination by the Commission is necessary. These U.S. entities, along with any others the Commission determines to be appropriate pursuant to CEA section 21(c)(7)(E), are identified in § 49.17(b)(1) as ADRs. The current part 49 rules do not include a process for how the Commission would determine a domestic regulator to be “appropriate” within the meaning of CEA section 21(c)(7)(E).
Under current § 49.17(b)(2)(i), in order for a Foreign Regulator that does not have a current MOU with the Commission to be determined to be an AFR,
The Commission proposed to eliminate the current filing requirements set forth in current § 49.17(b)(2)(i) and establish new filing requirements in proposed new § 49.17(h) that would apply to both Foreign Regulators and domestic regulators. The Commission also proposed to include, in § 49.17(h), CEA-section-8-related confidentiality considerations and the ability for the Commission to revisit or reassess appropriateness determinations. As proposed, new § 49.17(h) would apply to each Foreign Regulator regardless of whether there was a current MOU or similar information sharing arrangement in place between such Foreign Regulator and the Commission, and to any domestic regulator other than an ADR enumerated in § 49.17(b)(1)(i) through (vi) (“Enumerated ADR”).
Proposed § 49.17(h)(3) specified two threshold requirements for a finding of appropriateness: (i) The requesting entity has in place appropriate safeguards to maintain the confidentiality of swap data received from an SDR; and (ii) such entity is acting within the scope of its jurisdiction in seeking access to swap data maintained by an SDR. Because the Commission stated that these requirements are necessary, but may or may not be sufficient to support an appropriateness determination, the Commission proposed to evaluate each filing on a case-by-case basis with reference to these and other factors that the Commission may find germane to its determination. The Commission proposed that, were it to find, based on information submitted to it, that an entity's access to SDR swap data was appropriate, the Commission would issue an order confirming the entity's status as an ADR or AFR and setting forth any conditions or limitations on access consistent with the relevant statutory and regulatory requirements (a “Determination Order”).
The Commission also proposed in § 49.17(h)(4) to be able to revisit, reassess, limit, suspend or revoke a previously issued Determination Order. That proposal was based on the Commission's belief that it is necessary to reserve the authority to revisit an appropriateness determination, and potentially take one of the foregoing remedial actions, in order to be able to address situations that may arise subsequent to the determination, such as where an AFR or ADR violates the terms of a Determination Order or fails to keep SDR swap data confidential.
CEA section 21(c)(7) directs SDRs to provide swap data to regulators on a confidential basis pursuant to section 8.
In this regard, the Commission proposed to add new § 49.17(h)(2), which would require an applicant seeking a Determination Order to provide the Commission sufficient information to permit the Commission to analyze whether the applicant is acting within the scope of its jurisdiction in seeking access to swap data maintained by an SDR. As part of this information, the Commission stated that it expected that an applicant would explain the relationship between its jurisdiction and its request for access to swap data maintained by SDRs, including an explanation of the applicant's need for swap data to carry out its regulatory mandate, legal authority or responsibility.
The Commission proposed in new § 49.17(h)(3) that the Commission would not issue a Determination Order unless it were satisfied that an applicant was acting within the scope of its jurisdiction in seeking access to SDR swap data. The Commission also stated in the NPRM that it expected that each Determination Order would further require, as a condition of the appropriateness determination set forth therein, that a regulator that received a Determination Order promptly notify the Commission, and each SDR from which it received swap data, of any change to its jurisdiction that would relate to the swap data access requested.
CEA section 21(c)(7) requires that SDRs make swap data available on a confidential basis pursuant to CEA section 8. Proposed § 49.17(h)(2) accordingly would require that an applicant for a Determination Order submit to the Commission information sufficient to permit the Commission to analyze whether the applicant employs appropriate confidentiality safeguards to ensure that swap data the applicant receives from an SDR would not be disclosed other than as permitted by the confidentiality arrangement required by proposed § 49.18(a). The Commission anticipated that this analysis would involve the Commission considering whether the applicant's confidentiality protocols, system safeguards and security compliance procedures could be expected to ensure the confidentiality of the swap data, and whether the applicant had in place protections sufficient to prevent unauthorized intrusions into the systems that maintain the swap data. In this regard, the Commission stated in the NPRM that it would also expect to consider the applicant's processes for limiting internal access to swap data to those persons with a need to know, as well as how the swap data would be stored and whether the swap data would be segregated from other information.
The Commission stated in the NPRM its view that the confidentiality protections set forth in proposed § 49.17(h)(2) strike an appropriate tradeoff between realizing the benefits of data access by regulators,
The Commission stated in the NPRM that other considerations not proposed to be codified may also contribute to the Commission's appropriateness analysis. Although the Commission proposed to eliminate the current regulatory provision conferring AFR status on a Foreign Regulator with an existing MOU or other similar type of information sharing arrangement executed with the Commission,
Similarly, when assessing appropriateness, the Commission expected to consider whether it receives access to swap data maintained by trade repositories subject to the applicant's jurisdiction. The Commission stated in the NPRM that it is mindful of the Dodd-Frank Act's encouragement of coordination and cooperation with foreign regulatory authorities.
The Commission stated in the NPRM its preliminary belief that the Determination Order process and factors discussed above offer a reasonable approach to providing requesting entities access to SDR swap data based on clearly articulated factors and any additional considerations or circumstances the Commission may deem relevant on a case-by-case basis. The Commission added that both the required factors and the additional considerations support the mandates of CEA sections 8, 21(c)(7) and 21(d) and are consistent with the express intent of Congress that the Commission coordinate and cooperate with foreign regulatory authorities on matters related to the regulation of swaps. Through the issuance of Determination Orders, the Commission expected to be able to impose appropriate conditions or restrictions on an entity's access to SDR swap data such that the entity's access would be linked to its jurisdictional scope. Pursuant to proposed § 49.17(h)(3), the Commission could, in its discretion, issue a Determination Order of limited duration. The Commission stated in the NPRM that it would expect SDRs to take into account any conditions or restrictions contained in a Determination Order when providing access to swap data to an ADR or AFR.
The Commission further believed it appropriate to make the process and factors proposed in § 49.17(h) applicable to any domestic entities that are not enumerated as ADRs in § 49.17(b)(1)(i) through (vi), as scope of jurisdiction and confidentiality considerations are equally applicable to U.S. entities, and drafted proposed § 49.17(h) accordingly.
After considering the comments received in the SDR Letter, and for the reasons stated in the NPRM, stated above in sections II.C.2.-4. and stated in this section, the Commission is adopting amendments to § 49.17(b) and new § 49.17(h) as proposed.
The Commission requested comment on all aspects of proposed § 49.17(h), particularly on whether the proposed regulatory and other factors are sufficient to determine whether access to SDR swap data is appropriate. The Commission received one comment in response, from the SDR Commenters. The SDR Commenters expressed support for the § 49.17(h) appropriateness determination process proposed in the NPRM with respect to
The SDR Commenters also suggested that the Commission revise proposed § 49.17(h)(4), which provides that the Commission reserves the right to revisit, reassess, limit, suspend or revoke any appropriateness determination with respect to an ADR or AFR, consistent with the CEA, to require the Commission to provide a written notice to SDRs of such action to ensure that all SDRs are aware of any changes in status with respect to an appropriateness determination.
Accordingly, for the reasons stated in the NPRM, stated above in sections II.C.2.-4. and stated in this section, the Commission is adopting amendments to § 49.17(b) and new § 49.17(h) as proposed.
CEA section 21(c)(7) requires each SDR to notify the Commission of a swap data request received from an ADR or AFR.
To reduce the burden on SDRs and provide greater operational efficiency consistent with the intent of CEA section 21(c)(7), the Commission proposed to amend the SDR notification requirement in current § 49.17(d)(4)(i) to require an SDR to notify the Commission (i) at the time that it receives the first request for access to swap data from a particular ADR or AFR and (ii) at any time that a swap data request from an ADR or AFR does not comport with the scope of the ADR's or AFR's jurisdiction, as described in the confidentiality arrangement required by proposed § 49.18(a). As proposed, the amendment provided that, upon receiving either such request for data by a particular ADR or AFR, the SDR would be required to provide prompt electronic notification to the Commission of the request, in a format specified by the Secretary of the Commission, pursuant to proposed § 49.17(d)(4)(ii). The SDR would be required to keep such notification and related requests confidential consistent with the requirements of CEA sections 21(c)(6) and (7) and related regulatory requirements set forth in §§ 49.16 and 49.17.
The Commission stated in the NPRM its belief that the proposed approach to SDR notification supports the Commission's need to be aware of who is able to access SDR swap data and what data has been accessed, while eliminating potentially costly, unwieldy and inefficient notice of every swap data request. Under the proposal, the Commission would be notified that a particular ADR or AFR has requested access to SDR swap data and would be able to examine SDR records of the ADR's or AFR's individual swap data requests, and the swap data provided, as the Commission deemed necessary.
The Commission also proposed to amend § 49.17(d)(4) by adding new paragraph (iii) to require each SDR that receives a request for access to its swap data from an ADR or AFR to determine, prior to providing such access, that the request is consistent with the scope of the ADR's or AFR's jurisdiction, as described in the confidentiality arrangement required by proposed § 49.18(a).
The Commission also proposed to require an ADR or AFR that has executed a confidentiality arrangement with the Commission pursuant to § 49.18(a) and provided such confidentiality arrangement to one or more SDRs to notify the Commission and each such SDR of any change to such ADR's or AFR's scope of jurisdiction as described in such confidentiality arrangement. Additionally, the proposal enabled the Commission to direct an SDR to suspend, limit, or revoke access to swap data maintained by such SDR based on any such change to an ADR's or AFR's scope of jurisdiction, and required that, if so directed, such SDR must suspend, limit, or revoke such access.
Proposed § 49.17(d)(4)(iv) required SDR verification only once with respect to a request for ongoing or recurring access to particular data. Additionally, if there was a change in the request, the ADR or AFR would be obligated to make a new determination pursuant to proposed § 49.17(d)(4)(iii). The Commission recognized that the proposed requirement would impose a burden on SDRs but noted that SDRs are obliged by CEA section 21(c)(7) to provide access “pursuant to section 8” of the CEA, which, as discussed above, the Commission interprets as requiring a jurisdictional nexus to the information requested, consistent with CEA section 8(e). The Commission stated that it believed that, in such circumstances, SDRs must take a role in ensuring
The Commission received several comments from the SDR Commenters on the proposed amendments to § 49.17(d)(4). For the reasons stated above in section II.D.1. and stated in this section II.D.2., the Commission is adopting § 49.17(d)(4)(i) through (iv) as proposed, with one exception. Specifically, the Commission is adopting § 49.17(d)(4)(iii) with one modification suggested by the SDR Commenters, as discussed below in section II.D.2.c.iii. In response to the SDR Commenters' comments, the Commission is also clarifying the guidance provided in the NPRM on
The SDR Commenters supported the proposed amendment to the notification provisions in current § 49.17(d)(4)(i) to require SDRs to notify the Commission only of an initial ADR or AFR request for access to swap data (rather than every request for swap data), stating that this would reduce reporting burdens and increase operational efficiencies. However, the SDR Commenters stated that “subsection § 49.17(d)(4)(i) and (iii) should be modified to remove the requirement that an SDR determine whether swap data to which the ADR or AFR seeks access is within the then-current scope of such ADR's or AFR's jurisdiction.”
The Commission declines to modify § 49.17(d)(4)(i) to provide that an SDR does not need to determine whether swap data to which an ADR or AFR seeks access is within the then-current scope of such ADR's or AFR's jurisdiction. As noted above, SDRs are obliged by CEA section 21(c)(7) to provide access “pursuant to section 8” of the CEA, which the Commission interprets as requiring a jurisdictional nexus to the information requested, consistent with CEA section 8(e). However, for the reasons discussed below in response to the SDR Commenters' comments on proposed § 49.17(d)(4)(iii) in relation to determining whether an ADR's or AFR's request for swap data is within the scope of its jurisdiction, the Commission expects SDRs' role in applying § 49.17(d)(4)(i) to be straightforward. As discussed below, the Commission will ensure that each ADR and AFR seeking swap data access provides each SDR from which it seeks such access a description, appended to the confidentiality arrangement required by proposed § 49.18(a), of the ADR's or AFR's scope of jurisdiction in a form that will lend itself to SDRs being readily able to determine whether a particular data request falls within the described scope of jurisdiction. As the Commission will have previously reviewed the described scope of jurisdiction before it is provided to an SDR as part of the confidentiality arrangement required by proposed § 49.18(a), the SDR's role in ensuring that ADRs' and AFRs' swap data access is limited to swap data within the then-current scope of such ADR's or AFR's jurisdiction would be limited to appropriately circumscribing the scope of the swap data to which an ADR or AFR obtains access to match the ADR's or AFR's scope of jurisdiction, as described in the appendix to the confidentiality arrangement required by § 49.18(a), and notifying the Commission if the SDR determines that a particular data request does not comport with the described scope of jurisdiction.
Finally, § 49.17(d)(4)(i) requires an SDR to notify the Commission of initial requests for data by an ADR or AFR and of requests for data that do not comport with the scope of jurisdiction of an ADR or AFR. These notifications are required to be provided, pursuant to § 49.17(d)(4)(ii), in the format specified by the Secretary of the Commission. In response to a request from the SDR Commenters to specify that format, the Secretary of the Commission is now specifying that these notices should be provided to Commission staff at the email address
Proposed § 49.17(d)(4)(i) required each SDR to maintain records, pursuant to § 49.12,
The SDR Commenters stated that “the proposed requirement for SDRs to maintain copies of data reports and other aggregation of data provided in connection with the request [f]or access should be amended to avoid imposing unnecessary costs.”
As an alternative to maintaining such reports, the SDR Commenters suggested that they create pre-formatted data
After the NPRM was published in the
In response to the SDR Letter, and for the reasons explained by the SDR Commenters and described in this section, the Commission confirms that, as represented by the SDRs and consistent with the reasoning discussed in the NPRM,
The SDR Commenters also expressed concerns that the Commission's statement that proposed § 49.17(d)(4)(i) and existing § 42.5 would require retention of copies of all other aggregation of data provided in connection with the request for access was intended to impose a requirement to provide aggregated data to ADRs or AFRs. To address that concern, the SDR Commenters asked the Commission to specify that SDRs would not be required to provide ADRs or AFRs with aggregated data and that SDRs are required to provide only raw swap transaction data, in the form of, for example, pre-formatted reports or via Web-based portal access.
In response to the foregoing comment, and for the reasons explained by the SDR Commenters and described in this section, the Commission clarifies that SDRs are required to provide ADRs and AFRs only raw swap transaction data in the form in which SDRs maintain such data. The Commission further clarifies that SDRs are not required to aggregate or manipulate raw swap transaction data to provide it to ADRs or AFRs in customized formats or reports requested thereby. Through its consultations with certain ADRs as required by section 712(a)(1) of the Dodd-Frank Act,
After considering the comments on proposed § 49.17(d)(4)(i), for the reasons described above, the Commission is adopting the amendments to § 49.17(d)(4)(i) as proposed.
The Commission proposed only minor, clarifying changes to § 49.17(d)(4)(ii) and did not receive any comments thereon. The Commission is adopting the amendments to § 49.17(d)(4)(ii) as proposed.
The SDR Commenters commented that “the determination as to scope of jurisdiction must rest solely with the Commission”
On this point, the SDR Commenters explained that “[t]he current Part 43 and Part 45 data fields do not yield information that would allow an SDR to identify trades that fall within an ADR['s] or AFR's jurisdiction definitively.”
The SDR Commenters contended that the benefits of their proposed approach would include ensuring that SDRs grant access in a consistent manner and that the security controls established by an SDR according to Part 43 or 45 parameters would prevent access to swap data outside the scope of an ADR's or AFR's jurisdiction. The SDR
• Removing proposed § 49.17(d)(4)(iv) completely;
• removing the requirement in proposed § 49.17(d)(4)(i) and (iii) that an SDR determine whether swap data to which an ADR or AFR seeks access is within the then-current scope of such ADR's or AFR's jurisdiction;
• replacing the “negative requirement” not to provide access unless such a determination has been made with a “positive requirement” to provide access that comports with the jurisdictional determination made by the Commission, which determination is clearly spelled out in the confidentiality arrangement;
• modifying paragraph § 49.17(d)(4)(iii) to state that any requested change in an ADR's or AFR's scope of jurisdiction, as described in the confidentiality arrangement required by proposed § 49.18(a), should be agreed to between the Commission and the ADR or AFR and the information appended to the confidentiality arrangement should be amended accordingly and provided to the SDRs for implementation; and
• revising the description of Exhibit A in the confidentiality arrangement to state that the “description of scope of jurisdiction” must include a list of part 43 and part 45 fields and specific parameters.
After considering the SDR Commenters' comments and consulting with certain ADRs as required by section 712(a)(1) of the Dodd-Frank Act, the Commission agrees with the SDR Commenters that SDRs should not be responsible for determining the scope of an ADR's or AFR's jurisdiction, for the reasons explained by the SDR Commenters and described in this section. The Commission believes, however, that SDRs should be responsible for limiting ADRs' and AFRs' access to swap data to those swap data within ADRs' and AFRs' then-current scopes of jurisdiction, as described in the appendix to the confidentiality arrangement required by § 49.18(a). As noted above, SDRs are obligated by CEA section 21(c)(7) to provide access “pursuant to section 8” of the CEA, which the Commission interprets as requiring a jurisdictional nexus to the information requested, consistent with CEA section 8(e).
For the swap data sharing goal of CEA section 21(c)(7) to be achieved, an ADR's or AFR's description of its scope of jurisdiction must allow the SDRs to establish objective parameters for determining whether a particular data request falls within such scope of jurisdiction, without undue obstacles. The Commission believes that a system requiring legal analysis by the SDRs (a possible result, depending on how ADRs and AFRs describe their scopes of jurisdiction) for each ADR/AFR swap data request is impractical at best and could lead to very slow data access and disparate results across SDRs. Consequently, the Commission supports the spirit of the SDR Commenters' proposal that relevant Part 43/45 data fields could be used to assist in clarifying an ADR's or AFR's scope of jurisdiction, for purposes of SDR swap data access.
The Commission intends to review each ADR's and AFR's description of its scope of jurisdiction and ensure that such descriptions are presented in the confidentiality arrangement in a form SDRs can readily adapt to SDR-developed swap data reports and/or search parameters. The Commission also interprets CEA section 21(c)(7) as imposing on SDRs the duty to limit ADRs' and AFRs' access to swap data to those swap data within ADRs' and AFRs' scope of jurisdiction. The description of an ADR's or AFR's scope of jurisdiction will be appended to the confidentiality arrangement that is executed between the ADR or AFR and the Commission and provided to SDRs. An SDR's duty with respect to this description of the ADR's or AFR's scope of jurisdiction is to ensure that the swap data provided to the ADR or AFR is limited to those records that fall within the description appended to the confidentiality arrangement. For example, if the description is based on a list of LEIs representing entities that a particular ADR regulates, then the SDR's duty would be to provide all swap data associated with the fields in which those LEIs appear (
The Commission anticipates that, as a practical matter, ADRs and AFRs generally will describe their then-current scopes of jurisdiction, as appended to the confidentiality arrangement required by § 49.18(a), in terms of LEIs and possibly also UPIs or other product identifiers. Although there may be some limitations of using LEIs and product identifiers (
It also is possible that an ADR or AFR will be able to convey its scope of jurisdiction without using part 43 or part 45 data fields in a way that SDRs will be able to easily apply. The SDR Letter itself acknowledged the possibility that other part 43 or part 45 data fields may be relevant in describing ADRs' and AFRs' scopes of jurisdiction.
The Commission also declines to act on the SDR Commenters' request to delete proposed § 49.17(d)(4)(iv), which provides that SDRs need only make a jurisdictional determination with respect to an ADR's or AFR's swap data access request once for a recurring request and once each time the parameters of the access requests change. The SDR Commenters expressed support in the SDR Letter for that single determination concept and appear to have requested the deletion of
For the reasons described below in section II.D.2.c.ii., the Commission declines to modify proposed § 49.17(d)(4)(iii) to state that any change in an ADR's or AFR's swap data access based on a change in its scope of jurisdiction should be agreed to between the Commission and the ADR or AFR, and the jurisdictional description appended to the confidentiality arrangement should be amended accordingly and provided to the SDRs for implementation.
The SDR Commenters stated that the Commission should amend § 49.17(d)(4)(iii) to require that the Commission and an ADR or AFR agree to any change to the SDR swap data that an ADR or AFR may access based on a change in the ADR's or AFR's scope of jurisdiction, which should then be reflected in an updated confidentiality arrangement provided to the SDRs.
The Commission believes § 49.17(d)(4)(iii), as proposed, addresses the SDR Commenters' comment. The first sentence states that an SDR shall not grant an ADR or AFR access to swap data maintained by the SDR unless the SDR has determined that the swap data to which the ADR or AFR seeks access is within the then-current scope of such ADR's or AFR's jurisdiction, as described and appended to the confidentiality arrangement required by § 49.18(a). Accordingly, once an SDR receives that jurisdictional description, it can rely on that description until it either receives a new jurisdictional description or is directed by the Commission to suspend, limit, or revoke an ADR's or AFR's swap data access.
The second sentence of § 49.17(d)(4)(iii), as proposed, requires that each ADR or AFR that has executed a confidentiality arrangement with the Commission pursuant to § 49.18(a) and provided it to one or more SDRs shall notify the Commission and each such SDR of any change to such ADR's or AFR's scope of jurisdiction, as described in such confidentiality arrangement. This puts the burden on each ADR and AFR to inform the Commission, and each SDR from which an ADR and AFR receives swap data, of changes to such ADR's or AFR's jurisdiction.
If the ADR's or AFR's scope of jurisdiction were to become more narrow, the Commission could use its authority pursuant to the third sentence of proposed § 49.17(d)(4)(iii) to direct the relevant SDRs to suspend, limit, or revoke access to swap data maintained by such SDR based on any such change to such ADR's or AFR's scope of jurisdiction, in which case such SDR shall so suspend, limit, or revoke such access. If the ADR's or AFR's scope of jurisdiction were to expand, as a practical matter, the ADR or AFR could not obtain swap data relevant to such expanded jurisdiction until the SDRs could update the parameters of their means of providing access accordingly, which the Commission would expect them to do no later than the earlier of (1) the earliest date such SDR, exercising commercially reasonable efforts in light of its obligations under the CEA and the Commission's regulations, is able to update the parameters of swap data access to match the ADR's or AFR's new scope of jurisdiction and (2) 180 days after the SDR receives those new parameters.
The SDR Commenters contended that “[p]roposed § 49.17(d)(4)(iii) should specify that any request by the Commission to the SDR to suspend, limit, or revoke access to swap data should be provided in writing.”
The Commission proposed in § 49.17(d)(4)(iv) that an SDR need not make the scope of jurisdiction determination required pursuant to proposed § 49.17(d)(4)(iii) more than once with respect to a recurring swap data request but that, if such request changed, the SDR would have to make a new determination pursuant to § 49.17(d)(4)(iii). The SDR Commenters requested that the Commission remove proposed § 49.17(d)(4)(iv), but the Commission understands this request to have been rooted in the SDR Commenters' concern that SDRs are not well suited to make a jurisdictional determination with respect to an ADR's or AFR's request for swap data, as discussed above in section II.D.4.c.i. For the reasons discussed therein, the Commission considers those concerns otherwise addressed and is adopting § 49.17(d)(4)(iv) as proposed.
In the interest of expedience and efficiency in determining appropriateness of access by ADRs and AFRs, the Commission proposed (1) to delegate all functions reserved to the Commission in § 49.17 to the Director of the Division of Market Oversight (“DMO”) and to such members of the Commission's staff acting under his or her direction as he or she may designate from time to time and (2) that the DMO Director could submit any such delegated matter to the Commission for its consideration and that nothing prevents the Commission from exercising the delegated authority. The Commission received no comments in response to proposed § 49.17(i) and is adopting it as proposed.
CEA section 21(d), as amended by the FAST Act, requires that, prior to providing swap data to a 21(c)(7) entity, an SDR shall receive a written agreement from each entity stating that the entity shall abide by the
Based on its experience with SDRs and swap data access since the adoption of part 49 in 2011, and on further consideration of the relationship between CEA sections 21 and 8, the Commission believed this change was consistent with the statutory framework established by Congress in CEA sections 21(d) and 21(c)(7) and more directly conforms to the confidentiality mandate of CEA section 8. The Commission stated its belief that this change would promote regulatory efficiency and reduce costs to SDRs, ADRs and AFRs while ensuring the confidentiality of SDR swap data.
To further promote regulatory efficiency, the Commission proposed a Confidentiality Arrangement Form for use by ADRs and AFRs. The Commission expects its use by ADRs and AFRs to significantly reduce the need for these entities to negotiate separate, SDR-specific confidentiality arrangements with the Commission. The Confidentiality Arrangement Form also will benefit the Commission by allowing it to use a single form of confidentiality arrangement rather than a different version for each ADR and AFR. This Confidentiality Arrangement Form also will eliminate the costs and potential inefficiencies for the SDRs that are inherent in requiring each SDR to negotiate confidentiality arrangements with a potentially large number of ADRs and AFRs. Similarly, the Confidentiality Arrangement Form will also eliminate costs and inefficiencies for ADRs and AFRs that would be incurred if each ADR and AFR has to negotiate and execute a unique confidentiality arrangement with each SDR. Finally, the Commission believes that widespread use of the Confidentiality Arrangement Form will facilitate timely access to SDR swap data by ADRs and AFRs by reducing or eliminating instances in which the Commission and its staff need to devote time and resources to developing and reviewing individualized confidentiality arrangements.
The Commission adopted § 49.18 to implement CEA sections 21(d)(1) and (2) as originally enacted. Accordingly, the current rule obligates SDRs to execute a “Confidentiality and Indemnification Agreement” before providing SDR swap data to an ADR or AFR. In the FAST Act, Congress repealed the indemnification requirement in CEA section 21(d)(2), and the Commission proposed in the NPRM certain conforming amendments to § 49.18 to remove references to indemnification.
Separately, the Commission proposed in the NPRM to amend § 49.18 to modify the substantive requirements of the confidentiality arrangement and the parties to the confidentiality arrangement, to establish conditions for restricting or revoking access to SDR swap data, and to clarify the confidentiality obligations of ADRs and AFRs with regulatory responsibility over an SDR.
The Commission proposed to remove existing § 49.18(a)
The Commission proposed to amend § 49.18(b)
As proposed, paragraph 6 of the Confidentiality Arrangement Form required ADR and AFR signatories to employ the following safeguards to maintain the confidentiality of the Confidential Information:
• To the maximum extent practicable, maintain Confidential Information received from SDRs separately from other data and information;
• protect such Confidential Information from misappropriation and misuse;
• ensure that only ADR or AFR personnel with a need to access particular Confidential Information to perform their job functions related to such Confidential Information have access thereto and that such access is permitted only to the extent necessary to perform such job functions;
• prevent the disclosure of aggregated Confidential Information, unless sufficiently aggregated and anonymized to prevent identification, through disaggregation or otherwise, of a market participant's business transactions, trade data, market positions, customers or counterparties;
• prohibit the use of Confidential Information by ADR or AFR personnel for any improper purpose; and
• include a process for monitoring compliance with the confidentiality safeguards described in the Confidentiality Arrangement Form and for promptly notifying the CFTC and each relevant SDR of any violation of the safeguards or failure to fulfill the terms of the confidentiality arrangement.
As proposed, paragraph 7 of the Confidentiality Arrangement Form also precluded, with limited exceptions, ADRs and AFRs from disclosing any Confidential Information, via onward sharing
As proposed, paragraphs 8.a through 8.c. of the Confidentiality Arrangement Form required specified federal, state or local U.S. ADRs and specified foreign AFRs to undertake that they will not disclose Confidential Information except in specified actions, adjudicatory actions or proceedings under relevant law.
As proposed, paragraph 9 of the Confidentiality Arrangement Form contained certain provisions requiring ADRs and AFRs to notify the Commission, and take certain protective actions, prior to disclosing Confidential Information in circumstances where an ADR or AFR receives a legally enforceable demand to disclose Confidential Information.
As proposed, paragraph 11 of the Confidentiality Arrangement Form required ADRs and AFRs accessing swap data from SDRs to comply with all applicable security-related requirements imposed by an SDR in connection with access to such swap data, as such requirements may be revised from time to time. Because, subject to specified conditions, CEA sections 21(c)(7) and 21(d) require SDRs to provide ADRs and AFRs access to swap data, the Commission expects that SDRs will not impose security-related access requirements beyond those that are necessary to ensure the privacy and confidentiality of SDR swap data. The Commission further expects that SDRs' security-related access requirements for ADRs and AFRs would be akin, if not identical, to the requirements SDRs impose on others (
To further protect the confidentiality of SDR swap data, paragraph 12 of the Confidentiality Arrangement Form, as proposed, required ADR and AFR signatories to promptly destroy all Confidential Information for which they no longer have a need or which no longer falls within their scope of jurisdiction.
The proposed rule required that a confidentiality arrangement include an exhibit (Exhibit A) describing the scope of jurisdiction of the ADR or AFR signatory. If such signatory is not an Enumerated ADR, the ADR or AFR would attach the Commission Determination Order described in § 49.17(h) as Exhibit A to the confidentiality arrangement.
While the Confidentiality Arrangement Form, as proposed, would
The Commission proposed removing current § 49.18(c), which provides that the indemnification and confidentiality requirements established in § 49.18(b) do not apply to certain ADRs and AFRs with regulatory responsibility over an SDR, but requires such regulators to comply with CEA section 8 and any other relevant statutory confidentiality authorities. As noted above in section II.B. relating to § 49.17(d)(2) and (3), the Commission believed that those domestic regulators and Foreign Regulators that have regulatory responsibility over an SDR should be able to access swap data reported to such SDR pursuant to such other regulator's regulatory regime, without the limitations set out in current § 49.18(c). Therefore, the Commission submitted in the NPRM that § 49.18(c) is not appropriate. In addition, the Commission noted that § 49.17(d)(2) and (3) already provided that the confidentiality and indemnification requirements of § 49.18(b) do not apply to these domestic regulators and Foreign Regulators with regulatory responsibility over SDRs. However, the Commission stated that insofar as such a regulator sought swap data that was not reported to the SDR pursuant to that regulator's regulatory regime, the exclusions set forth within §§ 49.17(d)(2) and (3) would not apply. The Commission accordingly proposed to eliminate § 49.18(c).
The Commission proposed new § 49.18(c) to require SDRs to immediately report to the Commission any known failure to fulfill the terms of a confidentiality arrangement that they receive pursuant to § 49.18(a). The Commission also proposed new § 49.18(d), which authorizes the Commission to direct an SDR to limit, suspend or revoke an ADR's or AFR's access to swap data, if the Commission determines that the ADR or AFR has failed to fulfill the terms of its confidentiality arrangement with the Commission.
The Commission proposed to add new § 49.18(e)(1) to delegate to the DMO Director, and to such Commission staff acting under his or her direction as he or she may designate from time to time, all functions reserved to the Commission in § 49.18. Proposed 49.18(e)(2) reserved to the DMO Director the authority to submit to the Commission for its consideration any matter that has been delegated under § 49.18(e)(1). Proposed § 49.18(e)(3) expressly permitted the Commission, at its election, to exercise the authority delegated under § 49.18(e)(1).
This delegation is intended to conserve Commission resources and increase the effectiveness and efficiency of the Commission's oversight and supervision of SDR swap data access. The Commission anticipates that the delegation of authority will help facilitate timely access to SDR swap data by ADRs and AFRs consistent with the requirements set forth in part 49 of the Commission's regulations. However, the DMO Director may submit matters to the Commission for its consideration, as he or she deems appropriate.
As a result of the FAST Act Amendments, the Commission proposed conforming changes to § 49.17(d)(6) to delete references to an Indemnification Agreement. As a result of the amendments to § 49.18, and in particular, § 49.18(a), the Commission proposed conforming changes to § 49.22(d)(4) relating to chief compliance officer compliance responsibilities and duties so that the appropriate rule provision reflecting the confidentiality arrangement is referenced.
The Commission received comments related to proposed § 49.18 from the SDR Commenters. The SDR Commenters supported the Commission's proposed transfer of responsibility for the execution of the confidentiality arrangement with the ADRs and AFRs from the SDRs to the Commission. The SDR Commenters advised that such transfer will significantly reduce regulatory costs and inefficiencies for the SDRs.
In response to the Commission's proposal to remove previously adopted § 49.18(c), which, in part, applied the conditions of CEA section 8 to those ADRs and AFRs with regulatory responsibility over an SDR, the SDR Commenters agreed with the Commission that it is not appropriate to require a domestic regulator or Foreign Regulator to comply with CEA section 8 where such domestic regulator or Foreign Regulator has regulatory responsibility over an SDR and seeks access to SDR data that was reported pursuant to the regulator's supervisory authority.
Proposed § 49.18(a) and (d) both contemplated notifications being sent to the SDRs. Proposed § 49.18(a) required an SDR that received a notice that an ADR's or AFR's confidentiality arrangement was no longer in effect to no longer provide swap data access to such ADR or AFR. Proposed § 49.18(d) stated that the Commission may, if an ADR or AFR fails to fulfill the terms of a confidentiality arrangement described in § 49.18(a), direct each registered SDR to limit, suspend or revoke such ADR's or AFR's access to swap data held by such SDR. The SDR Commenters recommended that the Commission modify proposed § 49.18(a) and (d) to specify that the notifications contemplated in these provisions be in writing.
After consideration of the comments that it received, and for the reasons set forth in sections II.F.1. through II.F.8. above and in this section the Commission is adopting § 49.18 with modifications. First, as discussed above,
The Commission is also modifying proposed § 49.18(a) to promote the use of the Confidentiality Arrangement Form set forth in Appendix B. Specifically, as adopted, § 49.18(a) provides that, prior to providing an ADR or AFR access to any requested swap data, an SDR shall receive therefrom an executed confidentiality arrangement, between the Commission and the ADR or AFR, in the form set out in Appendix B to this part 49. The Commission may, in its discretion, however, agree to execute an alternate confidentiality arrangement with an ADR or AFR if the confidentiality arrangement is consistent with the requirements set forth in § 49.18(a).
The Commission is adopting all other modifications to § 49.18 as proposed in the NPRM.
In addition to those changes discussed throughout this release, the Commission proposed other changes to part 49, including a number of ministerial changes. The Commission proposed to amend § 49.9(a)(9) to change the reference therein from “certain appropriate domestic regulators and foreign regulators” to “Appropriate Domestic Regulators and Appropriate Foreign Regulators” to make clear that an SDR is required to provide access to swap data, pursuant to § 49.17, only to ADRs and AFRs. The Commission proposed to make a number of other changes to part 49 to more consistently refer to the defined term “swap data.” The Commission proposed to modify: The references in existing §§ 49.9(a)(9) and 49.17(b)(2)(i) to “swap data or information”; the reference in existing § 49.17(d)(4)(i) to “swaps transaction data”; and the reference in existing § 49.17(d)(6) to “requested data,” to be, in each case, references to “swap data,” as that term is defined in § 49.2(a)(15). The Commission proposed these changes to eliminate confusion and to conform part 49 to the FAST Act's amendment of CEA section 21(c)(7) to refer to “swap data.”
The Commission also proposed to replace the reference in § 49.17(a) to “swaps data” with a reference to “swap data” and to replace the reference in § 49.17(a) to “Regulation” with a reference to “§ 49.17” to match the format of the reference in § 49.17(b). The Commission did not intend to effect any substantive changes with these proposed amendments.
The Commission proposed to change the references to “swap transaction data” in §§ 49.17(c)(2) and 49.17(c)(3) to “swap data” as defined in § 49.2(a)(15). The Commission also proposed to change the references to “data” in § 49.17(d)(5) and (6), (e) introductory text, and (e)(1) to “swap data” in order to clarify the Commission's intent to refer to “swap data” within the meaning of § 49.2(a)(15). For the same reason, the Commission also proposed to add “swap data and” before “information” in § 49.17(e)(2) to conform it to § 49.17(e)(1), as proposed to be amended.
In § 49.17(f)(2), the Commission proposed to change both references to “data and information” to “swap data and information” in order to clarify, in each case, that the intended reference is to “swap data” as defined in § 49.2(a)(15).
In addition to those changes related to references to “swap data,” the Commission also proposed to amend § 49.17(b)(1)(vii) to change the references to any other person the Commission deems appropriate to any other person the Commission determines to be appropriate pursuant to the process set forth in § 49.17(h) to match the language in CEA section 21(c)(7).
Commission regulation 49.17(f)(1) currently states that access of swap data maintained by the registered swap data repository to market participants is generally prohibited. The Commission proposed to amend § 49.17(f)(1) to state that access by market participants to swap data maintained by the registered swap data repository is prohibited other than as set forth in § 49.17(f)(2) in order to clarify its meaning. The Commission did not intend this to be a substantive change to § 49.17(f)(1).
Finally, the Commission proposed several minor clarifying changes to § 49.18(b).
The Commission received comment on only two of the proposed changes described in this section II.G. For the reasons set forth above in section II.G.1. and in this section, with one exception (
The SDR Commenters generally supported the proposed changes to part 49 to more consistently refer to the defined term “swap data,” stating their belief that the consistency “will promote clarity as to the data to which ADRs and AFRs may be granted access[.]”
In response to this comment, the Commission confirms that SDRs may provide ADRs and AFRs with Part 43 data in addition to Part 45 data. The Commission observes that most data reported pursuant to Part 43 is publicly disseminated and that, to the extent certain data is not publicly disseminated, such data is reported in equal or greater detail pursuant to part 45.
The SDR Commenters also noted that, “[u]nder § 49.17(e), the Commission proposes to amend `data and information' to `swap data and information[ ]” and commented that, in their view, the more appropriate term “to ensure a third-party Service Provider may have access to all necessary data and information” is “swap data and SDR Information” (as SDR Information is defined in § 49.2).
In addition to these final rule changes, the Commission is adopting three ministerial changes to the proposed rule text, each for greater clarity, and one ministerial change to the existing rule text, also for greater clarity. First, the Commission is changing the phrase “as directed by the Commission” in proposed § 49.17(d)(5) to “if directed by the Commission”. Second, the Commission is changing the phrase “as described and appended to the confidentiality arrangement required by § 49.18(a)” to “as described in the appendix to the confidentiality arrangement required by § 49.18(a)” in both proposed § 49.17(d)(4)(i) and (iii).
Third, the Commission is adding bracketed text at the end of Appendix B to part 49 (describing Exhibit A to the Confidentiality Arrangement Form) in response to the SDR Commenters comment discussed in section II.D.2.c.i. This additional bracketed text provides that in both cases, the description of the scope of jurisdiction must include elements allowing SDRs to establish, without undue obstacles, objective parameters for determining whether a particular Swap Data request falls within such scope of jurisdiction. Such elements could include LEIs of all jurisdictional entities and could also include UPIs of all jurisdictional products or, if no CFTC-approved UPI and product classification system is yet available, the internal product identifier or product description used by an SDR from which Swap Data is to be sought.
Fourth, the Commission is amending existing § 49.17(d)(1), which the Commission had not proposed to amend to provide a brief overview in one paragraph to those persons seeking to obtain swap data access from SDRs, both ADRs and AFRs and those seeking to become ADRs or AFRs, of the requirements to obtain such access and to alert such persons to exceptions to the otherwise applicable requirements. The Commission is also adopting these changes to § 49.17(d)(1) to provide the aforementioned persons citations to the regulations relevant to obtaining SDR swap data access and to relevant exceptions to those regulations. These changes provide that except as set forth in § 49.17(d)(2) or (3), a person who is not an Appropriate Domestic Regulator or an Appropriate Foreign Regulator and who seeks to gain access to the swap data maintained by a swap data repository is required to first become an Appropriate Domestic Regulator or Appropriate Foreign Regulator through the process set forth in § 49.17. Additionally, these changes provide that Appropriate Domestic Regulators and Appropriate Foreign Regulators seeking to gain access to the swap data maintained by a swap data repository are required to comply with § 49.17(d)(6) prior to receiving such access and, if applicable after receiving such access, comply with the notification requirement in § 49.17(d)(4)(iii) applicable to Appropriate Domestic Regulators and Appropriate Foreign Regulators.
In addition to the specific questions set forth throughout the NPRM, the Commission requested comment on all aspects of the proposal and on several specific questions set forth in section III of the NPRM. The Commission received some responsive comments, which it has summarized and responded to in the relevant sections of this adopting release, and two comments that were not responsive.
The Commission received one comment related to the compliance date of the final rules. The SDR Commenters suggested that the Commission work with the SDRs to set an appropriately mutually agreeable timeframe for the compliance date.
The Regulatory Flexibility Act (“RFA”) requires federal agencies, in promulgating rules, to consider the impact of those rules on small entities.
The Commission has previously established certain definitions of “small entities” to be used by the Commission in evaluating the impact of its rules on small entities in accordance with the RFA.
For purposes of the RFA, the definition of “small entity” encompasses “small governmental jurisdictions,” which in relevant part means governments of locales with a population of less than fifty thousand.
The amendments to part 49 result in new “collection of information” requirements within the meaning of the Paperwork Reduction Act of 1995 (“PRA”).
The modifications to part 49 require SDRs to make swap data available to requesting entities (
The modifications also require SDRs to report to the Commission: (1) Each initial request from an ADR or AFR for access to swap data; (2) all ADR or AFR requests for swap data that do not comport with the described scope of the ADR's or AFR's jurisdiction that is appended to the confidentiality arrangement; and (3) failures to fulfill the terms of confidentiality arrangements. The modifications additionally require each SDR to maintain records of each initial, and all subsequent, requests from an ADR or AFR for access to swap data.
Currently, the Information Collection sets out burden estimates relating to a broad range of SDR obligations associated with registration requirements, reporting requirements, recordkeeping requirements, and disclosure requirements. Where the information collection associated with those obligations is modified by this rule, the Commission is revising the Information Collection accordingly. To the extent this rule introduces new information collections that were not previously incorporated into the Information Collection, the Commission is revising the Information Collection to account for the new information collections. Finally, many of the information collections discussed in the Information Collection are not implicated or modified by the Commission's revisions to part 49 in this release. The Commission, therefore, is not revising the estimated burdens associated with such information collections. New or revised information collections contained in these revisions to part 49 will affect SDRs as well as entities that request access to SDR swap data pursuant to part 49, as revised.
As discussed above, the modifications to part 49 set out in this release are intended to provide a process by which other regulatory authorities may obtain access to SDR swap data. The information collections associated with this process are intended to ensure that SDR swap data is accessed only by appropriate entities and that the confidentiality of any accessed SDR swap data is adequately protected. The ultimate result of this process is intended to provide other regulatory authorities with information to assist with the oversight of the global swaps market and market participants.
Pursuant to § 49.18(a), every requesting entity seeking access to SDR swap data must execute a confidentiality arrangement with the Commission prior to receiving access. This requirement applies to both those entities that are Enumerated ADRs, and those entities, whether foreign or domestic, that require a determination from the Commission that they are appropriate entities to receive access to SDR swap data. The Commission believes the use of the Confidentiality Arrangement Form, or a similar form, if permitted by the Commission, will provide an efficient means to satisfy the requirements of § 49.18(a).
In addition to executing a confidentiality arrangement, requesting entities that are not Enumerated ADRs will be required to seek a Determination Order from the Commission to obtain access to SDR swap data. The Commission is requiring that an Enumerated ADR attach to the confidentiality arrangement a detailed description of its scope of jurisdiction, as it relates to the swap data maintained by SDRs that the Enumerated ADR seeks to access.
The Commission, for PRA purposes, continues to believe that it is reasonable
Although the Commission may, in its discretion, execute a confidentiality arrangement with one or more ADRs/AFRs that is not in the form of the Confidentiality Arrangement Form, § 49.18(b) requires that such alternative confidentiality arrangement include all elements of in the Confidentiality Arrangement Form. Consequently, the Commission is estimating the burden on ADRs and AFRs of negotiating the confidentiality arrangement required by § 49.18(a) based on its estimate of the burden involved for an ADR or AFR to put in place the Confidentiality Arrangement Form. The Commission estimates that the review and execution of each confidentiality arrangement by an ADR or AFR will take approximately 40 hours, for a total burden of 12,000 hours. The burden estimates associated with entering into the confidentiality arrangement required by § 49.18(a) are addressed in the revised Information Collection.
Any requesting entity, other than an Enumerated ADR, that seeks access to SDR swap data must be determined by the Commission to be an appropriate recipient of such access. For Enumerated ADRs, there is no burden associated with seeking to be determined appropriate by the Commission because Enumerated ADRs have already been determined by Congress in CEA section 21(c)(7), or by the Commission through its adoption of § 49.17(b)(1), to be appropriate recipients of SDR swap data access. Those entities that are not Enumerated ADRs and that seek SDR swap data access will be required to receive a Determination Order prior to receiving access to SDR swap data. The process for obtaining such a Determination Order is set out in general terms in § 49.17(h) and requires the requesting entity to prepare and submit an application to the Commission. The preparation and submission of this application constitutes an information collection under the PRA.
As discussed above, the Commission believes that for PRA purposes it is reasonable to assume that 300 domestic and foreign entities will seek access to SDR swap data. Very few of these entities have already been specifically identified by Congress in CEA section 21(c)(7), or by the Commission through its adoption of § 49.17(b)(1), as appropriate recipients of SDR swap data access. The Commission estimates, for PRA purposes, that each entity seeking a Determination Order would expend 100 hours in connection with filing the necessary application with the Commission, for a total initial burden of no more than 30,000 hours (calculated as the product of 300 domestic and foreign entities seeking access to SDR swap data and 100 hours per application). This estimate considers the relevant information that would be required to be provided in such an application, including information regarding the entity's scope of jurisdiction, confidentiality safeguards, as well as any other information the Commission deems relevant to its determination. This burden estimate is included in the Commission's revisions to the Information Collection.
The Commission expects SDRs to incur burdens and costs associated with setting up access to SDR swap data that is consistent with an ADR's or AFR's scope of jurisdiction, as described in the appendix to the confidentiality arrangement required by § 49.18(a). The Commission expects that each confidentiality arrangement will identify, either directly or through an attached Determination Order, the scope of access that is appropriate for a given requesting entity. The Commission expects SDRs to use these limitations to program their systems to reflect the scope of the ADR's or AFR's access to SDR swap data. These limits set out in the confidentiality arrangement are expected to reduce the burdens on SDRs of assessing whether a particular SDR swap data request falls within the scope of an ADR's or AFR's jurisdiction.
The Commission received one comment estimating the burden on SDRs associated with setting up access restrictions to match an ADR's or AFR's scope of jurisdiction.
SDRs will also be required to provide electronic notice to the Commission of the first request for access to swap data from a particular ADR or AFR, and promptly after receiving any request that does not comport with the scope of the ADR's or AFR's jurisdiction, as described in the appendix to the confidentiality arrangement required by § 49.18(a). In addition to notifying the Commission of the foregoing, the Commission is requiring, in § 49.17(d)(4)(i), SDRs to maintain records of the details of the initial and all subsequent requests for swap data from an ADR or AFR. The SDR shall maintain this information for a period of no less than five years after the date of such request and shall provide this information to the Commission upon request, pursuant to § 1.31.
Currently, the Information Collection estimates burdens associated with the various registration, reporting, recordkeeping, and disclosure requirements to which SDRs are subject. The reporting and recordkeeping requirements relating to ADR and AFR data requests constitute an information collection for PRA purposes and require the Commission to revise the reporting and recordkeeping burden estimates contained in the Information Collection. The reporting and recordkeeping requirements in this release may potentially impact each SDR.
SDRs already have the ability to communicate electronically with the Commission and are subject to significant recordkeeping requirements pursuant to §§ 45.2(f) and 49.12. Therefore, the requirements adopted herein should not result in SDRs having to incur initial costs to implement systems to notify the Commission when an ADR or AFR submits a data request for the first time that are in excess of what is already accounted for in the Information Collection.
The Commission estimates that each SDR would incur an annual burden of 480 hours associated with the requirement to maintain records of the details of the initial and all subsequent requests for data from an ADR or AFR, for a total of 1,920 hours annually (
The Commission received one comment related to setup costs associated with its proposed recordkeeping requirements.
Finally, the current Information Collection accounts for the costs to SDRs of executing a “Confidentiality and Indemnification Agreement” with each requesting ADR and AFR. Under the Commission's final rule adopted herein, the SDR is no longer required to execute such an agreement with ADRs or AFRs. The confidentiality arrangements will be between each requesting ADR or AFR and the Commission. Accordingly, the total burden to SDRs, as currently reflected in the Information Collection, is reduced by the cost to execute such agreements. The reduction in burden associated with this change in the confidentiality arrangement requirement is addressed in the revised Information Collection.
As discussed in Section I above (“Background and Introduction”), the Commission is amending Part 49 to (i) implement the statutory changes mandated by the FAST Act amendments; (ii) make certain conforming and clarifying changes related to such implementation; (iii) revise the process by which a regulator is determined appropriate to receive access to SDR swap data; (iv) clarify the standards in connection with the Commission's appropriateness determinations; and (v) establish the form and substance of the written agreement mandated by CEA section 21(d), as amended.
In the sections that follow, the Commission discusses the costs and benefits associated with the final rule and reasonable alternatives considered. Comments from commenters addressing the associated costs and benefits of the rule are addressed in the appropriate sections. Wherever possible, the Commission has considered the costs and benefits of the final rule in quantitative terms. Given, however, that SDRs do not yet have a history of providing swap data to other regulators, and the final rule does not dictate the means by which SDRs may provide such swap data access in the future, the availability to the Commission of relevant or useful quantitative terms to assess the potential costs and benefits of the final rule is limited. Accordingly, where a quantitative discussion is not feasible, the Commission has considered the costs and benefits of this rulemaking in qualitative terms.
The baseline against which the costs and benefits of this final rule are being compared is the existing status quo for SDR swap data access under CEA section 21, as amended by the FAST Act, taken together with the swap data access requirements in the current Part 49 rules. As a general matter, the Commission recognizes that there are inherent costs and benefits to domestic and foreign regulators having access to SDR swap data. As discussed above, the Commission expects that access to SDR data by ADRs and AFRs will not only assist those regulators in fulfilling their own supervisory and regulatory functions but facilitate greater cooperation and collaboration among regulators across jurisdictions, promoting effective and consistent oversight of the global swaps market. At the same time, however, opening access to SDR data to other regulators may increase opportunities for unauthorized or unnecessary data disclosures, which could negatively impact swap market participants. Congress took into account these costs and benefits associated with broader SDR data access in adopting and amending CEA section 21, which supports access to swap data by appropriate regulators provided that, consistent with CEA section 8, the data accessed falls within their scope of jurisdiction and the data is provided on a confidential basis. In formulating the amendments to Part 49 that make up this final rule, the Commission has been mindful of the tradeoff between these dual objectives embodied in the
In the fall of 2008, a series of large financial institution failures triggered a financial and economic crisis that threatened global financial markets. As a result of these failures, the government intervened to ensure the stability of the U.S. financial system. These failures revealed the vulnerability of the U.S. financial system and economy to widespread systemic risk resulting from, among other things, poor risk management practices of financial firms and the lack of supervisory oversight—specifically data concerning over-the-counter (“OTC”) derivatives activity—for a financial institution as a whole.
The financial crisis also illustrated the significant risks that an uncleared, OTC derivatives market can pose to the financial system. Swap markets were opaque, and financial institutions were significantly interconnected through counterparty credit risk. This exposed the financial system to contagion through spreading defaults and losses. For example, concerned with the size of AIG's credit default swap exposure, the Federal government infused $180 billion of taxpayer money into AIG in order to prevent AIG's failure, which the Federal government was concerned may have led to cascading defaults by AIG creditors and counterparties and other creditors and counterparties indirectly exposed to AIG through credit and swap transactions. The legislative response to the Great Recession, the Dodd-Frank Act, stipulated that data representing OTC derivatives, in general, be reported to SDRs in order to cultivate robust oversight of financial entities and identify risks to the liquidity, stability, and functioning of the financial system.
At a high level, this rulemaking is expected to assist other regulators in performing their supervisory and regulatory functions by providing them, for the first time, access to SDR swap data, which would help regulators better understand the risks their regulated entities are assuming and the impact of such risks on the broader markets. These supervisory and regulatory functions may include: Monitoring and mitigating systemic risk; ensuring financial stability; registration and oversight of financial market infrastructures, trading venues and/or market participants; central bank activities; prudential supervision; restructuring or resolution of infrastructures and firms; and regulation of cash markets, in some of which swap counterparties are active.
Access to SDR swap data may also facilitate collaboration among the Commission, ADRs and AFRs in comparing the results of their respective SDR swap data analyses. Providing regulators access to SDR swap data should also facilitate cooperation among market and prudential regulators, which sometimes view data in isolation, given their different responsibilities, regulated entities, missions, and—as it relates to this rule making—data sets. In particular, such access may improve early warning systems that might ultimately reduce the probability or severity of a crisis, or both. The benefits of regulatory collaboration and broader access to swap data are likely to persist, if not expand, over time as regulators gain experience working together, while the burden required for establishing access to swap data includes an upfront commitment of time and money that is likely to diminish over time (although some increased operating costs resulting from this rulemaking will remain).
The Commission believes that the implementation of this rulemaking represents a critical element of effective financial market oversight by providing access to SDR data to ADRs and AFRs. The Commission acknowledges that performing systemic risk analysis is very difficult as a result of the fragmented regulatory structure that exists both domestically and internationally. The financial markets are global in nature and contain correlated instruments dispersed across different regulatory authorities and jurisdictions. Regulating such markets utilizing only the data and information available through one particular regulator's regime is suboptimal. For instance, when conducting oversight of treasury futures and interest rate swap markets, it is not sufficient to only assess the available futures and swaps data at the Commission's disposal. Oversight of activity in those markets and associated risk also requires trading activity and position information regarding treasury bonds, repurchase agreements and reverse repurchase agreements. Similarly, regulating the credit and equity asset classes would benefit from information concerning related cash market activity in equity securities, corporate bonds, derivatives (on broad and narrow CDS and equity indexes, single-name CDS and equities, and bespoke transactions), securitizations, repurchase agreements and securities lending. The same applies to conducting comprehensive risk analysis and oversight of other asset classes. Similarly, in regulating swap dealers, the Commission would benefit from obtaining visibility into their positions in other jurisdictions to form a complete picture of their risk profiles.
The Commission may face challenges in analyzing overall market, counterparty, or systemic risk accurately with only the data at its disposal via recordkeeping and reporting pursuant to the CEA and the Commission's regulations promulgated thereunder.
In light of the issues flowing from incomplete data, the Commission expects this rule to generate substantial benefits by fostering a regulatory environment that supports broader data access across the regulatory community and expands the accessibility of SDR swap data to other regulators, thereby supporting holistic oversight and data driven policy making at the regulatory level. The probability of successfully overseeing the prevailing market structure of the financial system and preventing another crisis increases as more ADRs and AFRs access SDR swap data and incorporate it into their existing analysis and workflows. Although this rule only provides other regulators access to swap data maintained at SDRs regulated by the Commission, the Commission expects the rulemaking to encourage similar access by the Commission to swap data maintained at trade repositories regulated by other authorities, which would increase the benefits of the rule discussed above accordingly.
Under current § 49.17(b)(2), the existence of a current MOU or similar type of information sharing arrangement with the Commission automatically qualifies a Foreign Regulator as an AFR. The Commission is amending § 49.17(b)(2) to require all “Foreign Regulators” who wish to receive swap data from SDRs to file an application with the Commission to be Commission-determined “Appropriate Foreign Regulators” and requires the Commission to issue an order finding each Foreign Regulator to be an “appropriate” recipient of SDR swap data. The Commission believes that this modification will ensure that Foreign Regulators are acting within the scope of their jurisdiction, consistent with CEA sections 21(c)(7) and 8(e) and should reduce the risk of unauthorized disclosure, misappropriation or misuse of swap data. The SDR Commenters also commented that an MOU or other information sharing agreement alone potentially could have imprecise language and bespoke arrangements that would not provide sufficient indication of a regulator's appropriateness.
Current § 49.17(d)(4)(i) requires an SDR to promptly notify the Commission regarding any request from an ADR or AFR for access to swap data. The Commission is amending current § 49.17(d)(4)(i) to require such notices only promptly after the SDR receives an
Current § 49.17(d)(4)(ii) requires an SDR to notify the Commission, electronically in a format specified by the Secretary of the Commission, of any request from an ADR or AFR for access to swap data. The Commission is specifying the format in the adopting release. This will benefit SDRs by providing clarity and specificity as to the particular means of notice required such that they can develop such means of notice expeditiously so that SDRs can provide such notices soon after they receive requests for SDR swap data from ADRs and AFRs. This, in turn, might benefit ADRs and AFRs by expediting their access to such swap data.
In the NPRM, the Commission explained that an SDR's obligation to maintain records of all information related to the initial and all subsequent requests by an ADR or AFR for swap data access would require retaining records including, among other things, copies of all data reports and other aggregation of data provided in connection with the request for access.
As an alternative to maintaining such reports, the SDR Commenters offered to create pre-formatted data reports, which they would make available for download by ADRs and AFRs “so that the record of access to such reports [would] be easily identifiable, in lieu of maintaining logs of queries and query conditions . . . .”
As discussed above in section II.D.2.ii., the SDR Commenters explained in discussions with staff that they plan to provide swap data access to ADRs and AFRs in one of two ways: (1) Via pre-formatted reports that the SDR Commenters would make available for download by ADRs and AFRs or send to ADRs and AFRs, in each case on a regular basis; or (2) via a Web-based portal through which ADRs and AFRs could conduct customized searches of swap data.
As discussed above in section II.D.2.ii., the Commission is confirming that SDRs may satisfy their recordkeeping duties under § 49.17(d)(4)(i) by maintaining records of, as applicable: (1) Their pre-formatted swap data reports; or (2)(a) the parameters of Web portal swap data access and (b) queries run by ADRs and AFRs using such access. This confirmation should lower costs to the SDRs by decreasing financial costs thereto, making recordkeeping simpler and decreasing cybersecurity risks, as the SDR Commenters noted.
The Commission is requiring, in § 49.17(d)(4)(iii), an SDR to limit, suspend, or revoke an ADR's or AFR's swap data access if the ADR's or AFR's scope of jurisdiction changes and the Commission directs the SDR to limit, suspend, or revoke the ADR's or AFR's swap data access.
Current §§ 49.17(d)(6) and 49.18(b) require the confidentiality agreement required by CEA section 21(d) to be entered into between an ADR or AFR seeking SDR swap data access and each SDR from which the ADR or AFR seeks such access. The Commission is amending those rules to require that such confidentiality arrangements be entered into between an ADR or AFR, as one party, and the Commission, rather than an SDR, as the other party. This will benefit SDRs by shifting from SDRs to the Commission the costs of negotiating confidentiality arrangements with an estimated 300
The Commission also is requiring the use of the Confidentiality Arrangement Form, unless the Commission waives this requirement. The Commission expects this to benefit ADRs and AFRs by allowing them to avoid expending resources coming up with their own confidentiality arrangement forms and avoid the uncertainty of not knowing what provisions the Commission would accept, reject or negotiate. The Commission expects this to benefit SDRs as well in that most, if not all, confidentiality arrangements will be the same, making them easier to incorporate into their policies and procedures and build swap data access around. Overall, the Commission believes that this rule will increase the potential benefits and cost savings associated with use of the Confidentiality Arrangement Form while still providing ADRs and AFRs the flexibility to use an alternate arrangement if necessary, in consultation with the Commission.
The Commission is not requiring SDRs to provide access to swap data to ADRs and AFRs through a specific technological means. Each SDR operates with different legacy systems and infrastructure, preferred data formats and delivery methods, and unique change management processes. The Commission prescribing a specific means of access for the swap data could subject different SDRs to greater/lesser costs, thereby disadvantaging one/some over other(s). Presumably, SDRs will choose the least costly means of access, all else being equal, as a result of the flexibility provided by the Commission. Thus, the flexibility afforded SDRs to choose the means of access through which they provide swap data access to ADRs and AFRs will benefit SDRs.
More ADRs and AFRs accessing SDR swap data (as a result of the removal of the statutory and regulatory indemnification requirements that ADRs and AFRs refused to submit to) also has the potential to improve the quality of swap data. For instance, ADRs and AFRs might assert their authority over the entities that they regulate to require or encourage them to submit better and/or more data. If swap data quality improves, ADRs and AFRs can make better-informed supervisory decisions to reduce risks. Although the Commission is not mandating the use of LEIs to delineate an ADR's or AFR's scope of jurisdiction for purposes of SDR swap data access, the Commission anticipates the use of LEIs to that end. If ADRs and AFRs do use LEIs for that purpose, the Commission believes that it will be relatively straightforward for SDRs to provide ADRs and AFRs access to appropriate swap data, relative to alternatives such as ADRs and AFRs providing legal memoranda describing the scope of their jurisdictions, which SDRs would then need to parse and translate into field descriptions, which is how SDR swap data are organized. Similarly, although the Commission is not mandating the use of UPIs (or if no CFTC-approved UPI and product classification system is yet available, the internal product identifier or product description used by the SDR) to delineate an ADR's or AFR's scope of jurisdiction, the Commission anticipates the potential use of UPIs to that end. If ADRs and AFRs do use UPIs for that purpose, the Commission believes that it will be relatively easier for SDRs to provide ADRs and AFRs access to appropriate swap data, relative to the
The Commission recognizes that there are different types of costs associated with this rulemaking. In the NPRM, the Commission stated that:
[o]ne cost is the potential harm to market participants and the public if swap data is misused—for example, inappropriately disclosed by ADRs and AFRs. Or, another harmful scenario might involve misappropriated data where hackers pilfer swap data from ADRs and AFRs to learn the positions of market participants so that the hackers, or other interested parties who may even pay for such information, scam the market. Such bad actors might be able to anticipate such market participants' trades and trade in front of them, raising swap trading costs to market participants, thereby reducing their profits.
It is difficult to discern the likelihood of this misuse occurring, rendering it difficult to quantify related costs, for at least four reasons. First, data breaches can have different causes, from not upgrading to the most current software, to software glitches, to successful cyber attacks and improper procedures and protocols. Thus, it is difficult to develop a homogenous sample to use to analyze data breaches and what might reasonably be done to mitigate them (
At a high level regarding costs to ADRs and AFRs, the less access to SDR swap data granted to ADRs and AFRs, the less such swap data would help in performing ADRs' and AFRs' supervisory and other regulatory functions. Similarly, the more impediments to swap data access, the longer it would take ADRs and AFRs to use, or the less use ADRs and AFRs could make of, such swap data. It is not mandatory for ADRs and AFRs to ask for access to SDR swap data, however. Thus, ADRs and AFRs can reduce their costs by not asking for swap data or by limiting the swap data they seek and/or the frequency with which they seek it.
The Commission is imposing several new obligations on Foreign Regulators and certain domestic regulators that will trigger costs for such regulators.
Currently, § 49.17(b)(2) defines Foreign Regulators with either an MOU or a similar information sharing agreement in place with the Commission as “Appropriate Foreign Regulators.” As amended, however, § 49.17(b)(2) replaces such automatic AFR status with a requirement that Foreign Regulators be determined by the Commission to be AFRs before such Foreign Regulators can obtain swap data from SDRs. This change will impose costs on each Foreign Regulator with an MOU, or similar information sharing agreement, seeking AFR status. The obligation for Foreign Regulators, and domestic regulators that are not enumerated in § 49.17(b)(1)(i) through (vi), to apply for a Determination Order conferring AFR or ADR status in order for such Foreign Regulators and unenumerated domestic regulators to be eligible to receive access to SDR swap data will, at a minimum, require such applicants to draft an application. Some applicants for ADR and AFR status may choose to retain outside counsel or another third party to draft the application, thereby incurring related costs; others might use their own staff. There also may be additional costs associated with the complexity of the application, because applicants for ADR and AFR status will have to explain their jurisdiction and link it to their requests for access to SDR swap data.
The Commission estimates that each requesting entity would on average expend 100 hours in connection with filing an application to receive a Determination Order. This estimate considers the relevant information that would be required to be provided in such an application, including information regarding the entity's scope of jurisdiction, confidentiality safeguards, as well as any other information relevant for the Commission's determination. The Commission monetizes the 30,000 burden hours by multiplying by a wage rate of $85
The requirement in § 49.18(a) that SDRs receive an executed
Section 6 of the Confidentiality Arrangement Form contains a number of undertakings designed to prevent unauthorized disclosure of swap data. Given that ADRs and AFRs already likely have existing data security policies, procedures and safeguards, the Commission continues to believe that the costs of developing safeguards in response to such undertakings would likely be only a incremental addition to their existing data security costs, and the other costs of complying with these burdens, such as the costs to develop policies, procedures and safeguards, are within the scope of ADRs' and AFRs' expertise (and thus would likely not require ADRs or AFRs to retain outside experts to develop).
Section 7 of the Confidentiality Arrangement Form would prohibit ADRs and AFRs from onward sharing Confidential Information with other parties, with limited exceptions. This could impose some costs in that ADRs and AFRs would not be able to freely share swap data among themselves, which could reduce the utility of the swap data to ADRs and AFRs, possibly reducing the effectiveness thereof. However, because CEA section 21(c)(7) requires that SDRs share swap data with ADRs and AFRs on a confidential basis pursuant to CEA section 8,” and CEA section 8(e) also prohibits onward sharing, the onward sharing prohibition in section 7 of the Confidentiality Arrangement Form is required by the CEA.
In addition, the fact that the Commission is electing not to specify a particular means of ADRs and AFRs accessing swap data could result in SDRs providing a means of access other than a means preferred by ADRs and AFRs. This might impose additional costs on ADRs and AFRs relative to the potentially lesser costs of their preferred means of access.
The Commission prescribing a particular means of access could result in costs to either ADRs/AFRs or SDRs. Specifically, costs borne by ADRs/AFRs might be shifted to SDRs or vice versa as a particular means of access changes. The Commission chooses to not force all SDRs to use a single means of providing access, thus requiring some or all SDRs to alter their systems, since it is not possible to distinguish a single means of access that would be preferable to all ADRs, AFRs and SDRs. Because of these uncertainties, the Commission is unable to quantify these costs but is able to identify such costs qualitatively. The Commission recognizes that allowing SDRs to choose the means by which they provide swap data access may impose costs of adapting to a particular means of access on ADRs and AFRs. However, given the large number of ADRs and AFRs who may seek SDR swap data access and the large potential variation in their preferred means of access, and given the limited number of SDRs and potential means of access, the Commission believes that ADRs and AFRs, in general, can more easily bear the burden of adapting to SDRs' choices of means of access than vice versa.
For SDRs, providing swap data access to so many potential ADRs and AFRs may be expensive. For example, SDRs may be forced to purchase new servers, hire new system administrators to oversee the new swap data/system usage and troubleshoot related problems that may arise. Maintaining new records pursuant to new recordkeeping requirements also could require more resources. The requirement for an SDR not to provide swap data to an ADR or AFR unless the SDR has determined that the swap data is within the then-current scope of the ADR's or AFR's jurisdiction, as described in the appendix to the confidentiality arrangement required by § 49.18(a), may cause SDRs to elect to create new methods for parsing swap data to comply with the requirement to so limit swap data access. Further, if the SDRs send data to ADRs and AFRs, then they will incur costs to transmit the data. These costs include the cost of expanding their capacity to disseminate data as well as the cost to parse existing data to verify that it is within the then-current scope of the ADR's or AFR's jurisdiction, as described in the appendix to the confidentiality arrangement required by § 49.18(a).
Current § 49.17(d)(4)(i) requires SDRs to notify the Commission of any request for access to swap data from a particular ADR or AFR. The Commission's amendments would reduce that burden by permitting SDRs to notify the Commission only of the first such request by each ADR or AFR and of any request that does not comport with the scope of the ADR's or AFR's jurisdiction, as described in the appendix to the confidentiality arrangement required by § 49.18(a). The obligation to notify the Commission of various other actions also will increase SDRs' costs, although to the extent that such notice obligations are not triggered, such cost increases would be tempered accordingly. Nevertheless, SDRs presumably would need to incur some costs to develop policies and procedures, and build out systems, to monitor potential events that would trigger the new notice requirements.
Other SDR costs will include those related to SDRs determining that each access request by an ADR or AFR is within the scope of the ADR's or AFR's
The Commission believes that the use of LEIs, and potentially UPIs, to effectively determine which SDR swap data should be provided to ADRs/AFRs is a reasonable option, although it has some relatively minor drawbacks unrelated to the amendments in this final rule (
The Commission acknowledges that lists of LEIs of ADRs' and AFRs' regulated entities and lists of UPIs or other product identifiers of swaps within ADRs' and AFRs' jurisdiction may have to be updated from time to time as regulated entities move in and out of ADRs' and AFRs' jurisdiction, ADRs' and AFRs' jurisdiction expands or contracts, swaps evolve, and new types of swaps are introduced. In these cases, for example, an ADR or AFR likely would have to modify periodically the list of LEIs and UPIs or product identifiers it gives to SDRs, imposing some costs on SDRs as they incorporate such changes (and imposing some costs on ADRs and AFRs to monitor their LEI and UPI or product identifier lists and update SDRs and the Commission periodically regarding any changes).
The Commission continues to believe that the rule would further mitigate the costs to SDRs by permitting them to verify that a data access request falls within the scope of an ADR's or AFR's jurisdiction just once for a recurring request the details of which do not change. SDRs might incur additional costs, however, if the scope of an ADR's or AFR's jurisdiction, or other factors discussed in the prior paragraph, change. Such additional costs include some fraction of the costs, discussed above, of verifying that an ADR's or AFR's swap data access request falls within the scope of the ADR's or AFR's jurisdiction. Additionally, ADRs and AFRs would incur some costs to notify the Commission of changes in jurisdiction.
The Commission is not requiring SDRs to use a particular means of providing access to swap data to ADRs and AFRs. The Commission is not specifying a means of access because the Commission has allowed SDRs to build their systems as they saw fit and does not want to impose undue costs by requiring SDRs to all grant access via a specific means, which could impose greater costs on certain SDRs based on how they chose to build their systems.
The Commission notes that SDRs already provide the Commission and the National Futures Association (“NFA”) with swap data access. Given that SDRs have already incurred many fixed costs in granting access to the Commission and NFA, in providing ADRs and AFRs access, the SDRs may benefit from economies of scale, reducing SDRs' costs. The rule would also mitigate SDRs' costs by permitting them to choose the means by which they will provide access to swap data to ADRs and AFRs. The Commission expects that SDRs would choose the lowest cost means of access consistent with their statutory obligation to provide ADRs and AFRs access to swap data and other constraints. The Commission continues to believe that it cannot forecast what these costs are because they depend on particulars of each SDR that the Commission still does not know. Further, the Commission anticipates that many of these particulars will change over time as various parties adapt to technological changes. However, the Commission has estimated costs where it can, based in part on comments it received in the SDR Letter, as discussed below.
The Commission is amending current § 49.17(d)(4)(i) to require SDRs to maintain records of the details of the initial, and all subsequent, requests for access to swap data from an ADR or AFR. Each SDR would have to maintain this information for the same period required for other SDR records. The Commission anticipates that such costs will be relatively small and anticipates using such data to, for example, monitor ADRs' and AFRs' access requests from time to time to ensure that they remain within the scope of their jurisdiction and, relatedly, to ensure that SDRs have been monitoring this access issue.
The Commission requested comments on all aspects of the NPRM and further requested that commenters provide any data or other information that would be useful in the estimation of the quantifiable costs and benefits of this rulemaking. The Commission received substantive comments from the SDR Commenters on the Commission's PRA burden hour estimates provided in the NPRM. Those comments are incorporated in the Commission's cost estimates for the burdens on SDRs, ADRs, and AFRs.
The Commission is requiring, in § 49.17(d)(4)(iii), that an SDR not provide an ADR or AFR access to swap data, unless the SDR has determined that the swap data is within the then-current scope of the ADR's or AFR's jurisdiction, as described in the appendix to the confidentiality
As noted in the PRA discussion above, the Commission estimates that each SDR would incur an annual burden of 480 hours associated with the requirement to maintain records of the details of the initial and all subsequent requests for data from an ADR or AFR, for a total of 1,920 hours annually (
As one alternative to comprehensive swap data safeguards, the Commission instead could have chosen to merely delete the indemnification references in its regulations. While that approach could have avoided imposing on ADRs, AFRs, and SDRs many of the costs related to protection of confidentiality discussed herein, it would have dramatically increased the risk of imposing on market participants and the public the costs discussed above in the first paragraph of section IV.C.4. and below in section IV.C.7.a.-c., which the Commission continues to believe is inconsistent with the historical importance Congress and the Commission have placed on protecting information covered by CEA section 8. Consequently, the Commission has determined to take the selected approach.
The Commission also considered and rejected the idea of specifying a means of ADRs and AFRs accessing swap data. The Commission rejected this as being too prescriptive, given that the Commission previously permitted SDRs the discretion to build their systems as they saw fit and for the other reasons discussed above in the means of access discussion.
The Commission also considered prohibiting SDRs from continuing to provide ADRs and AFRs swap data access during the period commencing with a contraction in an ADR's or AFR's scope of jurisdiction and considered reducing the time SDRs are permitted to update their systems to reflect the new jurisdiction. While the Commission retains the authority to do so, as stated above, it expects ADRs and AFRs will notify the Commission upon learning of a potential jurisdictional restriction. The Commission expects that, with such advance notice, SDRs can be more prepared to adjust their systems accordingly shortly after an ADR's or AFR's jurisdiction is limited. The Commission prefers to retain the discretion to address these situations, which it expects to be rare, case-by-case.
CEA section 15(a) requires the Commission to consider the costs and benefits of its actions before promulgating a regulation under the CEA or issuing certain orders. CEA section 15(a) further specifies that the costs and benefits shall be evaluated in light of the following five broad areas of market and public concern: (1) Protection of market participants and the public; (2) efficiency, competitiveness, and financial integrity of futures markets; (3) price discovery; (4) sound risk management practices; and (5) other public interest considerations. The Commission considers the costs and benefits resulting from its discretionary determinations with respect to the CEA section 15(a) factors.
The Commission believes that the final rules will equip ADRs and AFRs to better understand the risks that are undertaken by their regulated entities, and thus be better positioned to take appropriate action as needed, because they will be able to better understand their regulatees' swap transactions by virtue of having access to SDR swap data.
The Commission is adopting a number of safeguards to prevent market participants' swap data maintained at SDRs from being misappropriated or misused as a result of ADR and AFR access to such swap data. The safeguards include: Modifying the requirements for being an AFR; a requirement that the Commission issue a Determination Order for unenumerated authorities to obtain SDR swap data access; requiring authorities applying for a Determination Order to demonstrate that they are acting within the scope of their jurisdiction in seeking access to SDR swap data; imposing on ADRs and AFRs seeking access to swap data maintained by SDRs a number of required confidentiality safeguards; barring onward sharing of swap data; imposing on SDRs certain recordkeeping and reporting requirements; and ensuring the Commission's ability to revoke an ADR's or AFR's swap data access.
The Commission continues to believe that there will be little effect on efficiency, competiveness, and financial integrity of futures markets if swap data is properly protected from being
The Commission continues to believe that price discovery would not be affected by this rulemaking, provided that swap data is properly protected. However, the Commission notes that there might be some indirect effects on price discovery if the swap data protection safeguards in this rulemaking are ineffective. If such protections prove ineffective, market participants may be less willing to execute swaps, as their identities, strategies, and/or positions may be revealed. Ineffective data safeguards might harm price discovery if bid/ask spread widens as a result. If so, observed prices might become more volatile because they would oscillate between a wider bid/ask spread.
Access to SDR swap data will help ADRs and AFRs to better understand the risks posed by their regulated entities. With access to such swap data, ADRs and AFRs can more comprehensively supervise entities that engage in swap trading and better understand their exposure to losses. Allowing more ADRs and AFRs to access SDR swap data may improve SDR data, too. This improvement might occur by facilitating research and analysis that ultimately leads to better risk management by market participants. This can occur through ADR/AFR research directed at improving the risk management techniques through, for instance, better metrics, instruments, and hedging techniques. Further, swaps data reporting may also be improved by ADRs and AFRs asserting their authority over their regulated entities to encourage or compel them to improve their swap data reporting and risk management.
The Commission finds that the ministerial changes to § 49.17(d)(1) discussed above in section II.G.2. may benefit ADRs, AFRs and those persons seeking to become ADRs and AFRs by providing, in one place, a brief overview of all of the requirements applicable to such persons obtaining access to SDR swap data and the circumstances in which such requirements are not applicable.
The Commission also finds that the ministerial changes that it is adopting to the bracketed text at the end of Appendix B to part 49 (describing Exhibit A to the Confidentiality Arrangement Form), drawn from section II.D.2.c.i. of the preamble, may benefit ADRs and AFRs by also including in part 49 of the Commission regulations the instructions and guidance provided in the preamble as to how to describe their scopes of jurisdiction in practical terms SDRs can implement. As with the Commission's ministerial changes to § 49.17(d)(1), such simplification should make obtaining SDR swap data modestly less burdensome and costly for ADRs and AFRs by reducing their staff time needed to go through the process.
The Commission is also making changes to §§ 49.17(d)(6) and 49.18(a) to promote the use of the Confidentiality Arrangement Form set forth in Appendix B, providing that the ability of an ADR or AFR to execute a confidentiality arrangement that is not in the form set forth in Appendix B to this part 49 is at the discretion of the Commission. To the extent that this clarification results in more ADRs and AFRs executing the Confidentiality Arrangement Form, the Commission expects that this could result in modest savings for ADRs and AFRs. The Commission also expects that using the Confidentiality Arrangement Form will save staff time in the negotiation and execution of alternative arrangements.
Other than the foregoing, the Commission has not found any other public interest considerations to be implicated by this rulemaking.
CEA section 15(b) requires the Commission to take into consideration the public interest to be protected by the antitrust laws and endeavor to take the least anticompetitive means of achieving the objectives of the CEA, in issuing any order or adopting any Commission rule or regulation.
The Commission does not anticipate that the amendments to part 49 that it is adopting today will result in anticompetitive behavior because, among other things, the Commission is allowing SDRs to determine which means of access they will use to provide ADRs and AFRs swap data access (thus, allowing SDRs to “compete” on that basis). However, in the NPRM the Commission encouraged comments from the public on any aspect of the proposal that may have had the potential to be inconsistent with the antitrust laws or be anticompetitive in nature.
The Commission received no antitrust-related comments. Consequently, the Commission continues to not anticipate that the amendments to part 49 that it is adopting today will result in anticompetitive behavior.
Swap data repositories; Registration and regulatory requirements; Access to swap data; Confidentiality; Commodity Exchange Act section 8.
For the reasons stated in the preamble, the Commodity Futures Trading Commission amends 17 CFR part 49 as set forth below:
7 U.S.C. 12a, and 24a, unless otherwise noted.
(a) * * *
(5)
(a) * * *
(9) Upon request of Appropriate Domestic Regulators and Appropriate Foreign Regulators, provide access to swap data held and maintained by the swap data repository, as prescribed in § 49.17;
The revisions and addtions read as follows:
(a)
(b) * * *
(1) * * *
(vii) Any other person the Commission determines to be appropriate pursuant to the process set forth in paragraph (h) of this section.
(2)
(c) * * *
(2)
(3)
(d)
(i) A person who is not an Appropriate Domestic Regulator or an Appropriate Foreign Regulator and who seeks to gain access to the swap data maintained by a swap data repository is required to first become an Appropriate Domestic Regulator or Appropriate Foreign Regulator through the process set forth in paragraph (h) of this section, and
(ii) Appropriate Domestic Regulators and Appropriate Foreign Regulators seeking to gain access to the swap data maintained by a swap data repository are required to apply for access by filing a request for access with the registered swap data repository and certifying that it is acting within the scope of its jurisdiction, comply with paragraph (d)(6) of this section prior to receiving such access and, if applicable after receiving such access, comply with the notification requirement in paragraph (d)(4)(iii) of this section applicable to Appropriate Domestic Regulators and Appropriate Foreign Regulators.
(2)
(3)
(4) * * *
(i) A registered swap data repository shall notify the Commission promptly after receiving an initial request from an Appropriate Domestic Regulator or Appropriate Foreign Regulator to gain access to swap data maintained by such swap data repository and promptly after receiving any request that does not comport with the scope of the Appropriate Domestic Regulator's or Appropriate Foreign Regulator's jurisdiction, as described and appended to the confidentiality arrangement required by § 49.18(a). Each registered swap data repository shall maintain records thereafter, pursuant to § 49.12, of the details of such initial request and of all subsequent requests by such Appropriate Domestic Regulator or Appropriate Foreign Regulator for such access.
(ii) The registered swap data repository shall notify the Commission electronically, in a format specified by the Secretary of the Commission, of the receipt of a request specified in paragraph (d)(4)(i) of this section.
(iii) The registered swap data repository shall not provide an Appropriate Domestic Regulator or Appropriate Foreign Regulator access to swap data maintained by the swap data repository unless the swap data repository has determined that the swap data to which the Appropriate Domestic Regulator or Appropriate Foreign Regulator seeks access is within the then-current scope of such Appropriate Domestic Regulator's or Appropriate Foreign Regulator's jurisdiction, as described and appended to the confidentiality arrangement required by § 49.18(a). An Appropriate Domestic Regulator or Appropriate Foreign Regulator that has executed a confidentiality arrangement with the Commission pursuant to § 49.18(a) and provided such confidentiality arrangement to one or more swap data repositories shall notify the Commission and each such swap data repository of any change to such Appropriate Domestic Regulator's or Appropriate Foreign Regulator's scope of jurisdiction as described in such confidentiality arrangement. The Commission may direct a swap data repository to suspend, limit, or revoke access to swap data maintained by such swap data repository based on any such change to such Appropriate Domestic Regulator's or Appropriate Foreign Regulator's scope of jurisdiction, and, if so directed in writing, such swap data repository shall so suspend, limit, or revoke such access.
(iv) The registered swap data repository need not make the determination required pursuant to paragraph (d)(4)(iii) of this section more than once with respect to a recurring swap data request. If such request changes, the swap data repository must make a new determination pursuant to paragraph (d)(4)(iii) of this section.
(5)
(i) Notified the Commission, pursuant to paragraphs (d)(4)(i) and (ii) of this section, of an initial request for swap data access by an Appropriate Domestic Regulator or Appropriate Foreign Regulator, as applicable, that was submitted pursuant to paragraph (d)(1) of this section,
(ii) Received from such Appropriate Domestic Regulator or Appropriate Foreign Regulator a confidentiality arrangement executed by the Commission and such Appropriate Domestic Regulator or Appropriate Foreign Regulator as required by § 49.18(a), and
(iii) Satisfied its obligations under paragraph (d)(4)(iii) of this section, such swap data repository shall provide access to the requested swap data;
(6)
(e)
(1) Both the registered swap data repository and the third party service provider shall have strict confidentiality procedures that protect swap data and SDR Information from improper disclosure.
(2) Prior to a registered swap data repository granting access to swap data or SDR Information to a third-party service provider, the third-party service provider and the registered swap data repository shall execute a confidentiality agreement setting forth minimum confidentiality procedures and permissible uses of the swap data and SDR Information maintained by the swap data repository that are equivalent to the privacy procedures for swap data repositories outlined in § 49.16.
(f)
(2)
(h)
(2) Each applicant seeking an appropriateness determination shall provide sufficient detail in its application to permit the Commission to analyze whether the applicant is acting within the scope of its jurisdiction in seeking access to swap data maintained by a registered swap data repository, and whether the applicant employs appropriate confidentiality safeguards to ensure that any swap data such applicant receives from a registered swap data repository will not, except as allowed for in the form of confidentiality arrangement set forth in Appendix B to this part 49, be disclosed.
(3) If the Commission determines that an applicant pursuant to this paragraph is, conditionally or unconditionally, appropriate for purposes of CEA section 21(c)(7), the Commission shall issue an order setting forth its appropriateness determination. The Commission shall not determine that an applicant pursuant to this paragraph is appropriate unless the Commission is satisfied that—
(i) The applicant employs appropriate confidentiality safeguards to ensure that any swap data such applicant receives from a registered swap data repository will not be disclosed, except as allowed for in the form of confidentiality arrangement set forth in Appendix B to this part 49 or, in the Commission's discretion as set forth in paragraph (d)(6) of this section, in a different form, provided that such confidentiality arrangement contains the elements required in § 49.18(b), and
(ii) Such applicant is acting within the scope of its jurisdiction in seeking access to swap data from a registered swap data repository.
(4) The Commission reserves the right, in connection with any appropriateness determination with respect to an Appropriate Domestic Regulator or Appropriate Foreign Regulator, to revisit, reassess, limit, suspend or revoke such determination consistent with the Act.
(i)
(2) The Director of the Division of Market Oversight may submit any matter which has been delegated under paragraph (i)(1) of this section to the Commission for its consideration.
(3) Nothing in this section may prohibit the Commission, at its election, from exercising the authority delegated under paragraph (i)(1) of this section.
(a)
(b)
(c)
(d)
(e)
(2) The Director of the Division of Market Oversight may submit any matter which has been delegated under paragraph (e)(1) of this section to the Commission for its consideration.
(3) Nothing in this section may prohibit the Commission, at its election, from exercising the authority delegated under paragraph (e)(1) of this section.
(d) * * *
(4) Taking reasonable steps to ensure compliance with the Act and Commission regulations relating to agreements, contracts, or transactions, and with Commission regulations under Section 21 of the Act, including confidentiality arrangements received by the chief compliance officer's registered swap depository pursuant to § 49.18(a);
The U.S. Commodity Futures Trading Commission (“CFTC”) and the [
1. ABC is permitted to request and receive swap data directly from a registered SDR (“Swap Data”) on the terms and subject to the conditions of this Arrangement.
2. This Arrangement is entered into to fulfill the requirements under Section 21(d) of the Commodity Exchange Act (“Act”) and CFTC Regulation 49.18. Upon receipt by a registered SDR, this Arrangement will satisfy the requirement for a written agreement pursuant to Section 21(d) of the Act and CFTC Regulation 49.17(d)(6). This Arrangement does not apply to information that is [reported to a registered SDR pursuant to [ABC]'s regulatory regime where the SDR also is registered with [ABC] pursuant to separate statutory authority, even if such information also is reported pursuant to the Act and CFTC regulations][reported to a registered SDR pursuant to [ABC]'s regulatory regime where the SDR also is registered with, or recognized or otherwise authorized by, [ABC], which has supervisory authority over the repository pursuant to foreign law and/or regulation, even if such information also is reported pursuant to the Act and CFTC regulations.]
3. This Arrangement is not intended to limit or condition the discretion of an Authority in any way in the discharge of its regulatory responsibilities or to prejudice the individual responsibilities or autonomy of any Authority.
4. This Arrangement does not alter the terms and conditions of any existing arrangements.
5. ABC will be acting within the scope of its jurisdiction in requesting Swap Data and employs procedures to maintain the confidentiality of Swap Data and any information and analyses derived therefrom (collectively, the “Confidential Information”). ABC undertakes to notify the CFTC and each relevant SDR promptly of any change to ABC's scope of jurisdiction.
6. ABC undertakes to treat Confidential Information as confidential and will employ safeguards that:
a. To the maximum extent practicable, identify the Confidential Information and maintain it separately from other data and information;
b. Protect the Confidential Information from misappropriation and misuse;
c. Ensure that only authorized ABC personnel with a need to access particular Confidential Information to perform their job
d. Prevent the disclosure of aggregated Confidential Information; provided, however, that ABC is permitted to disclose any sufficiently aggregated Confidential Information that is anonymized to prevent identification, through disaggregation or otherwise, of a market participant's business transactions, trade data, market positions, customers or counterparties;
e. Prohibit use of the Confidential Information by ABC personnel for any improper purpose, including in connection with trading for their personal benefit or for the benefit of others or with respect to any commercial or business purpose; and
f. Include a process for monitoring compliance with the confidentiality safeguards described herein and for promptly notifying the CFTC, and each SDR from which ABC has received Swap Data, of any violation of such safeguards or failure to fulfill the terms of this Arrangement.
7. Except as provided in Paragraphs 6.d. and 8, ABC will not onward share or otherwise disclose any Confidential Information.
8. ABC undertakes that:
a. If a department, central bank, or agency of the Government of the United States, it will not disclose Confidential Information except in an action or proceeding under the laws of the United States to which it, the CFTC, or the United States is a party;
b. If a department or agency of a State or political subdivision thereof, it will not disclose Confidential Information except in connection with an adjudicatory action or proceeding brought under the Act or the laws of [
c. If a foreign futures authority or a department, central bank, ministry, or agency of a foreign government or subdivision thereof, or any other Foreign Regulator, as defined in Commission Regulation 49.2(a)(5), it will not disclose Confidential Information except in connection with an adjudicatory action or proceeding brought under the laws of [
9. Prior to complying with any legally enforceable demand for Confidential Information, ABC will notify the CFTC of such demand in writing, assert all available appropriate legal exemptions or privileges with respect to such Confidential Information, and use its best efforts to protect the confidentiality of the Confidential Information.
10. ABC acknowledges that, if it does not fulfill the terms of this Arrangement, the CFTC may direct any registered SDR to suspend or revoke ABC's access to Swap Data.
11. ABC will comply with all applicable security-related requirements imposed by an SDR in connection with access to Swap Data maintained by the SDR, as such requirements may be revised from time to time.
12. ABC will promptly destroy all Confidential Information for which it no longer has a need or which no longer falls within the scope of its jurisdiction, and will certify to the CFTC, upon request, that ABC has destroyed such Confidential Information.
13. This Arrangement may be amended with the written consent of the Authorities.
14. The text of this Arrangement will be executed in English, and may be made available to the public.
15. On the date this Arrangement is signed by the Authorities, it will become effective and may be provided to any registered SDR that holds and maintains Swap Data that falls within the scope of ABC's jurisdiction.
16. This Arrangement will expire 30 days after any Authority gives written notice to the other Authority of its intention to terminate the Arrangement. In the event of termination of this Arrangement, Confidential Information will continue to remain confidential and will continue to be covered by this Arrangement.
This Arrangement is executed in duplicate, this ___ day of ___.
[Exhibit A: Description of Scope of Jurisdiction. If ABC is not enumerated in Commission Regulations 49.17(b)(1)(i)-(vi), it must attach the Determination Order received from the Commission pursuant to Commission Regulation 49.17(h). If ABC is enumerated in Commission Regulations 49.17(b)(1)(i)-(vi), it must attach a sufficiently detailed description of the scope of ABC's jurisdiction as it relates to Swap Data maintained by SDRs. In both cases, the description of the scope of jurisdiction must include elements allowing SDRs to establish, without undue obstacles, objective parameters for determining whether a particular Swap Data request falls within such scope of jurisdiction. Such elements could include LEIs of all jurisdictional entities and could also include UPIs of all jurisdictional products or, if no CFTC-approved UPI and product classification system is yet available, the internal product identifier or product description used by an SDR from which Swap Data is to be sought.]
The following appendicies will not appear in the Code of Federal Regulations.
On this matter, Chairman Giancarlo and Commissioners Quintenz and Behnam voted in the affirmative. No Commissioner voted in the negative.
Eight years ago, Congress included in the Dodd-Frank Act a requirement that foreign and domestic regulators indemnify SDRs and the Commission for any expenses arising from litigation relating to the information provided by SDRs. Foreign and domestic regulators were unable or unwilling to provide this indemnification hindering the ability to share swaps data. The indemnification requirement also hindered the ability of foreign and domestic regulators to access SDR data to assess risks their regulated entities are assuming, and the impact of such risks on the broader markets.
I am pleased that Congress has since amended the Dodd-Frank Act to take out the indemnification requirement. We therefore can change our regulations accordingly, which we propose to do today.
In addition to the removal of the indemnification requirement, the final rule adds a category of “other regulators” that the Commission may deem to be appropriate to receive access to SDR swap data.
The final rule sets out the process by which appropriateness is determined for those entities that are not already specifically enumerated. This process is a change to current Commission regulations, as it would apply to any such entity, including domestic regulators not enumerated in Commission regulations and foreign regulators.
The statute also now requires a SDR to receive a written agreement from each requesting entity stating that the entity shall abide by the confidentiality requirements described in the CEA prior to sharing information with the requesting entity. Commission regulations currently require the SDR and the requesting regulator to execute a confidentiality agreement, but do not provide a form or details of such an agreement.
The final rule modifies the current Commission regulations by providing a form of confidentiality arrangement, as Appendix B to part 49, and by requiring the confidentiality arrangement to be between the requesting regulator and the Commission. The Commission expects that this will benefit SDRs in that most, if not all, confidentiality arrangements will be exactly the same, and the Commission will be in the place of entering into the confidentiality agreements with regulators.
We received comments from the affected CFTC-registered SDRs on the proposed rule that I believe that we have sufficiently addressed. The final regulations provide
In my experience as a Commissioner and Chairman of the CFTC, I have found, as have other foreign and domestic regulators, that conducting oversight of global derivatives markets can be difficult as a result of the current fragmented financial regulatory structure. In this regard, I expect that the final rule will enable authorities to enhance their oversight of derivatives markets across product and asset classes by marrying up the trading and position data they receive from regulated entities with the data sets obtained directly from SDRs. In so doing, I believe we have made significant progress towards cross-border data sharing and enhancing transparency in the global swaps market.
Because today's swaps markets are global in scope, utilizing the data and information available in only one jurisdiction does not provide a complete picture of cross border trading activity and systemic risk. To that end, I expect that CFTC staff will seek to facilitate access to SDR data for authorities with which we have a history of regulatory assistance and that similarly seek to facilitate CFTC access to data maintained by trade repositories in their jurisdiction. Such data sharing represents an opportunity for greater cooperation among market and prudential regulators, as well as among foreign and domestic regulators, providing more effective financial market oversight, expanding data driven policymaking, and improving early warning systems to reduce the probability or severity of a financial crisis.
These regulations will have a direct positive impact on the operational readiness of the official sector, providing authorities with critical information to make sound near-term and long-term policy and oversight decisions.
I am particularly pleased that this rule represents a final step in eliminating a major legal impediment to sharing swaps market data with overseas regulators. The Dodd-Frank Act's original insistence on an indemnification requirement may have been well-intentioned to protect the safety of data held in SDRs, but Congress wisely determined that any such benefit is outweighed by the greater public interest of allowing international regulators to share and access information to carry out the regulatory and supervisory functions necessary to protect the global financial markets.
It is essential that policymakers in other jurisdictions make determinations similar to these before us today concerning current legal barriers to information sharing. Even a law, like the new EU General Data Protection Regulation (GDPR), which has laudable objectives, must not be applied in ways that hinder the sharing and access of information between European and U.S. regulators for regulatory and supervisory purposes. Such a result could have dangerous implications for our global markets. I hope today's action by the CFTC will encourage international regulators and policymakers to take affirmative steps to address other existing legal barriers to information sharing and access.
I support today's final rule addressing indemnification and amendments to the swap data access provisions of Part 49. I would like to thank the staff in our Division of Market Oversight for their work to amend Part 49 of the Commission's Regulations to implement provisions of the Fixing America's Surface Transportation Act of 2015 (Fast Act)
The Fast Act amended provisions of Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act)
Commodity Futures Trading Commission.
Notice of proposed rulemaking.
The Commodity Futures Trading Commission (“Commission” or “CFTC”) is proposing to amend the de minimis exception within the “swap dealer” definition in the Commission's regulations by: Setting the aggregate gross notional amount threshold for the de minimis exception at $8 billion in swap dealing activity entered into by a person over the preceding 12 months; excepting from consideration when calculating the aggregate gross notional amount of a person's swap dealing activity for purposes of the de minimis threshold: Swaps entered into with a customer by an insured depository institution in connection with originating a loan to that customer; swaps entered into to hedge financial or physical positions; and swaps resulting from multilateral portfolio compression exercises; and providing that the Commission may determine the methodology to be used to calculate the notional amount for any group, category, type, or class of swaps, and delegating to the Director of the Division of Swap Dealer and Intermediary Oversight (“DSIO”) the authority to make such determinations (collectively, the “Proposal”). In addition, the Commission is seeking comment on the following additional potential changes to the de minimis exception: Adding a minimum dealing counterparty count threshold and a minimum dealing transaction count threshold; excepting from consideration when calculating the aggregate gross notional amount for purposes of the de minimis threshold swaps that are exchange-traded and/or cleared; and excepting from consideration when calculating the aggregate gross notional amount for purposes of the de minimis threshold swaps that are categorized as non-deliverable forward transactions.
Comments must be received on or before August 13, 2018.
You may submit comments, identified by RIN 3038-AE68, by any of the following methods:
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•
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Please submit your comments using only one of these methods. To avoid possible delays with mail or in-person deliveries, submissions through the CFTC Comments Portal are encouraged.
All comments must be submitted in English, or if not, accompanied by an English translation. Comments will be posted as received to
The Commission reserves the right, but shall have no obligation, to review, pre-screen, filter, redact, refuse, or remove any or all of your submission from
Matthew Kulkin, Director, 202-418-5213,
The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) was signed into law on July 21, 2010.
CEA section 1a(49) defines the term “swap dealer” to include any person who: (1) Holds itself out as a dealer in swaps; (2) makes a market in swaps; (3) regularly enters into swaps with counterparties as an ordinary course of business for its own account; or (4) engages in any activity causing the person to be commonly known in the trade as a dealer or market maker in swaps (collectively referred to as “swap dealing,” “swap dealing activity,” or “dealing activity”).
Pursuant to the statutory requirements, in December 2010, the Commissions issued a proposing release further defining, among other things, the term “swap dealer” (“SD Definition Proposing Release”).
When the $3 billion de minimis exception threshold was established, the Commissions explained that the information then available regarding certain portions of the swap market was limited, and that they expected more information to be available in the future (following the implementation of swap data reporting), which would enable the Commissions to make a more informed assessment of the proper level for the de minimis exception and to revise it as appropriate.
In recognition of these limitations and in anticipation of additional swap market data becoming available to the CFTC through the reporting of transactions to swap data repositories (“SDRs”), paragraph (4)(ii)(B) of the SD Definition was adopted, which directed CFTC staff to complete and publish for public comment a report on topics relating to the definition of the term “swap dealer” and the de minimis threshold as appropriate, based on the availability of data and information.
In the interest of providing ample opportunity for public input on the relevant policy considerations, as well as on staff's preliminary analysis of the SDR data, and to ensure that the Commission had as much information and data as practicable for purposes of its determinations with respect to the de minimis exception, in November 2015 staff issued a preliminary report concerning the de minimis exception (“Preliminary Staff Report”).
After consideration of the public comments received in response to the Preliminary Staff Report, and further data analysis, in August 2016 staff issued a final staff report
The data analysis in the Staff Reports provided some insights into the effectiveness of the de minimis exception as currently implemented. For example, staff analyzed the number of swap transactions involving at least one registered SD,
To provide additional time for more information to become available to reassess the de minimis exception, in October 2016 the Commission issued an order, pursuant to paragraph (4)(ii)(C)(1) of the SD Definition, establishing December 31, 2018, as the new termination date for the $8 billion phase-in period.
In adopting the SD Definition, the Commissions identified the policy goals underlying SD registration and regulation generally to include reducing systemic risk, increasing counterparty protections, and increasing market efficiency, orderliness, and transparency.
The Commissions also recognized that, consistent with Congressional intent, “an appropriately calibrated de minimis exception has the potential to advance other interests.”
The Commissions explained that “implementing the de minimis exception requires a careful balancing that considers the regulatory interests that could be undermined by an unduly broad exception as well as those regulatory interests that may be promoted by an appropriately limited exception.”
Whether a person's activities constitute swap dealing is based on a facts and circumstances analysis. Generally, a person must count towards its AGNA de minimis threshold all swaps it enters into for dealing purposes over any rolling 12-month period. In addition, each person whose own swaps do not exceed the de minimis threshold must also include in its de minimis calculation the AGNA of swaps of any other unregistered affiliate controlling, controlled by, or under common control with that person (referred to as “aggregation”).
Pursuant to various CFTC regulations, certain swaps, subject to specific conditions, need not be considered in determining whether a person is an SD, including: (1) Swaps entered into by an insured depository institution (“IDI”) with a customer in connection with originating a loan to that customer;
Given the more complete information now available regarding certain portions of the swap market, the data analytical capabilities developed since the SD regulations were adopted, and five years of implementation experience, the Commission believes that modifications to the de minimis exception are necessary to increase efficiency, flexibility, and clarity in the application of the SD Definition.
Additionally, in March 2017, Chairman Giancarlo initiated an agency-wide internal review of CFTC regulations and practices to identify those areas that could be simplified to make them less burdensome and costly
The amendments proposed herein support a clearer and more streamlined application of the SD Definition. They also provide greater clarity regarding which swaps need to be counted towards the de minimis threshold and consider the practical application of swaps in different circumstances. This Proposal includes amendments regarding: (1) The appropriate de minimis threshold level; and (2) the swap transactions that are not required to be counted towards that threshold.
With respect to the appropriate threshold level, the Commission is proposing to amend the de minimis exception in paragraph (4) of the SD Definition by setting the AGNA threshold at $8 billion in swap dealing activity. Additionally, to complement the Commission's definitions of the types of activities that do not constitute swap dealing, the Commission is proposing to add specific exceptions from the de minimis threshold calculation for certain swaps entered into: (1) By IDIs in connection with loans to customers; and (2) to hedge financial or physical positions.
The proposed rule changes would amend the de minimis exception provision in paragraph (4) of the SD Definition, pursuant to the Commission's authority under CEA section 1a(49), which requires the Commission to promulgate regulations to establish factors with respect to the making of this determination to exempt a de minimis quantity of swap dealing.
Although this Proposal includes several potential rule amendments in a single notice, the CFTC may in the future issue separate adopting releases for any aspect of this Proposal that is finalized.
As discussed above, the de minimis threshold for the AGNA of a person's swap dealing activity is scheduled to decrease to $3 billion on December 31, 2019, requiring persons to begin calculating towards the lower threshold on January 1, 2019. Based on the data and analysis described below, the Commission is proposing to amend paragraph (4)(i)(A) of the SD Definition by setting the de minimis threshold at $8 billion. For added clarity, the Commission is also proposing to change the term “swap positions” to “swaps” in paragraph (4)(i)(A). Additionally, the Commission is proposing to delete a parenthetical clause in paragraph (4)(i)(A) referring to the period after adoption of the rule further defining the term “swap,” and to remove and reserve paragraph (4)(ii) of the SD Definition, which addresses the phase-in procedure and staff report requirements of the de minimis exception (discussed above in section I.B), since both of those provisions would no longer be applicable.
The Commission recognizes the benefits and drawbacks of an SD Definition that relies upon AGNA for SD registration purposes. The Commission is aware of potential viable alternative metrics and remains open to the possibility of relying on a different approach in the future, such as a threshold based on entity-netted notional amounts
For this Proposal, CFTC staff conducted an analysis of SDR data from January 1, 2017, through December 31, 2017 (the “review period”).
Given improvements in the quality of data being reported to SDRs since the Staff Reports were issued, Commission staff was able to analyze the AGNA of swaps activity for interest rate swaps (“IRS”), credit default swaps (“CDS”), FX swaps,
As noted above, for purposes of this Proposal, staff utilized assumptions and methodologies similar to those detailed in the Staff Reports to approximate potential swap dealing activity.
With the benefits of improved data quality and analytical tools, staff was able to conduct a more granular analysis, as compared to the Staff Reports, in order to more accurately identify those entities that, based on their observable business activities, are potentially engaged in swap dealing activity (“In-Scope Entities”)
The updated analysis largely confirmed the analysis conducted for the Staff Reports;
With respect to NFC swaps, Commission staff encountered a number of challenges in calculating notional amounts. These included: (1) The vast array of underlying commodities with differing characteristics; (2) the multiple types of swaps (
To assess the relative impact on the swap market of potential changes to the de minimis exception, CFTC staff analyzed the extent to which the swap market was subject to SD regulation during the review period because at least one counterparty to a swap was a registered SD (“2017 Regulatory Coverage”). For purposes of this analysis, any person listed as a provisionally registered SD on December 31, 2017, was considered to be a registered SD. Specifically, with regard to 2017 Regulatory Coverage, staff identified the extent to which: (1) Swaps activity, measured in terms of AGNA, was subject to SD regulation during the review period because at least one counterparty to a swap was a registered SD (“2017 AGNA Coverage”); (2) swaps activity, measured in terms of number of transactions, was subject to SD regulation during the review period because at least one counterparty to a swap was a registered SD (“2017 Transaction Coverage”); and (3) swaps activity was subject to SD regulation during the review period, measured in terms of number of counterparties who transacted with at least one registered SD (“2017 Counterparty Coverage”).
Additionally, staff estimated regulatory coverage by assessing the extent to which the swap market would have been subject to SD regulation at different de minimis thresholds because at least one counterparty to a swap was identified as a “Likely SD” (“Estimated Regulatory Coverage”). For purposes of this analysis, the term “Likely SD” refers to an In-Scope Entity that exceeds a specified AGNA threshold level, and trades with at least 10 counterparties. With regard to Estimated Regulatory Coverage, staff identified the extent to which: (1) Swaps activity, measured in terms of AGNA, would have been subject to SD regulation during the review period, at a specified de minimis threshold, because at least one counterparty to a swap was identified as a Likely SD at that de minimis threshold (“Estimated AGNA Coverage”); (2) swaps activity, measured in terms of number of transactions, would have been subject to SD regulation during the review period, at a specified de minimis threshold, because at least one counterparty to a swap was identified as a Likely SD at that de minimis threshold (“Estimated Transaction Coverage”); and (3) counterparties in the swap market would have transacted with at least one Likely SD during the review period, at a specified de minimis threshold (“Estimated Counterparty Coverage”).
For this Proposal, the Commission considered reducing the AGNA de minimis threshold to $3 billion, maintaining the threshold at $8 billion, or increasing the threshold. Based on the data and related policy considerations discussed below, the Commission is of the view that maintaining the current $8 billion AGNA de minimis threshold is appropriate. The policy objectives underlying SD regulation—reducing systemic risk, increasing counterparty protections, and increasing market efficiency, orderliness, and transparency—would not be significantly advanced if the threshold were to decrease to $3 billion or to increase from the current $8 billion level.
Analysis of the data indicates that: (1) The current $8 billion threshold subjects almost all swap transactions (as measured by AGNA or transaction count) to SD regulations;
The analysis below is based on a January 1, 2017, through December 31, 2017, review period, and includes swap transactions reported to SDRs, excluding inter-affiliate and non-U.S. transactions.
As shown below, the data indicates that, at the $8 billion threshold, there was nearly complete 2017 Regulatory Coverage as measured by 2017 AGNA Coverage and 2017 Transaction Coverage.
As seen in Table 1, at the $8 billion threshold, almost all swap transactions involved at least one registered SD as a counterparty, greater than 99 percent for IRS, CDS, FX swaps, and equity swaps. For NFC swaps, approximately 86 percent of transactions involved at least one registered SD as a counterparty. As discussed in more detail in section II.A.2.iv, although that percentage is lower than the approximately 99 percent for the other asset classes, the Commission is of the view that with respect to NFC swaps, lower SD regulatory coverage is acceptable given the unique characteristics of the NFC swap market. Overall, approximately 98 percent of transactions involved at least one registered SD.
As seen
The 2017 Transaction Coverage and 2017 AGNA Coverage ratios indicate that SD regulations covered nearly all swaps in these asset classes, signifying that nearly all swaps already benefited from the policy considerations discussed above (
The Commission notes the 2017 Counterparty Coverage was approximately 83.5 percent—
The Commission also believes that this limited activity indicates that, to the extent these 6,440 entities are engaging in swap dealing activities, such activity is likely ancillary and in connection with other client services, potentially advancing the policy rationales behind a de minimis exception. For example, of the 6,440 entities, 5,302 are active in IRS, indicating that these entities may be entering into loan-related swaps with banks. These banks may be entering into an outright amount of swap dealing activity at a level below the de minimis threshold, or do not have to register because of the exclusion for swaps entered into by IDIs in connection with originating loans.
Generally, the Commission is of the view that the policy considerations underlying SD regulation—reducing systemic risk, increasing counterparty protections, and increasing market efficiency, orderliness, and
Given the high percentage of swaps that were subject to SD regulation at the existing $8 billion threshold during the review period, a lower threshold of $3 billion would result in only a small amount of additional activity being directly subjected to SD regulation. To estimate the effect of a lower de minimis threshold during the review period, staff compared the number of Likely SDs and the Estimated AGNA Coverage, Estimated Transaction Coverage, and Estimated Counterparty Coverage at $8 billion and $3 billion thresholds.
Table 3 estimates the percentage of IRS, CDS, FX swaps, and equity swaps that would involve at least one Likely SD at de minimis thresholds of $3 billion and $8 billion. To make these calculations, staff used the methodology described in section II.A.1 to determine Likely SDs at the indicated thresholds.
Column 1 of Table 3 lists the AGNA thresholds for which information is being presented. Column 2 is the number of Likely SDs at each given threshold as determined using the methodology described above, including a 10 counterparty minimum. Column 3 is the change in the number of Likely SDs, as compared to the current $8 billion threshold. Columns 4, 5, and 6 illustrate the Estimated Regulatory Coverage, in percentage terms, for the $3 billion and $8 billion de minimis thresholds during the review period. The percentages are based on a total market size in IRS, CDS, FX swaps, and equity swaps of approximately $221.1 trillion in AGNA of swaps activity, 3.8 million transactions, and 34,774 counterparties, after excluding inter-affiliate and non-U.S. transactions.
As columns 2 and 3 indicate, the number of Likely SDs increases from 108 at an $8 billion AGNA threshold to 121 at a $3 billion AGNA threshold—an increase of 13 entities. However, as columns 4 through 6 indicate, and as explained in more detail below in Tables 4 through 6, if these 13 entities were all registered as SDs, the increase in Estimated Regulatory Coverage would be small.
As seen in Table 4, at a $3 billion threshold, the Estimated AGNA Coverage would have increased from approximately $221,020 billion (99.95 percent) to $221,039 billion (99.96 percent)—an increase of $19 billion (a 0.01 percentage point increase).
As seen in Table 5, at a $3 billion threshold, the Estimated Transaction Coverage would have increased from 3,795,330 trades (99.77 percent) to 3,797,734 trades (99.83 percent)—an increase of 2,404 trades (a 0.06 percentage point increase).
As seen in Table 6, at a $3 billion threshold, the Estimated Counterparty Coverage would have increased from 30,879 counterparties (88.80 percent) to 31,559 counterparties (90.75 percent)—an increase of 680 counterparties (a 1.96 percentage point increase).
The Commission is of the view that these small increases in Estimated AGNA Coverage, Estimated Transaction Coverage, and Estimated Counterparty Coverage indicate that the systemic risk mitigation, counterparty protection, and market efficiency benefits of SD regulation would be enhanced in only a very limited manner if the de minimis threshold decreased from $8 billion to $3 billion. Additionally, the limited regulatory and market benefits of a $3 billion threshold should be considered in conjunction with the costs associated with a lower threshold. In particular, the persons required to register would incur the likely significant costs of implementing, among other things, policies and procedures, technology systems, and training programs to address requirements imposed by SD regulations.
Further, if the de minimis threshold decreases to $3 billion, it is possible that the number of Likely SDs would be smaller than estimated because the analysis includes swaps that would not be required to be counted under the SD Definition (
To more fully understand the potential market impact of a lower threshold, the Commission also analyzed the 13 entities that were identified as Likely SDs at a $3 billion threshold but not at an $8 billion threshold.
As seen in Table 7, for IRS, CDS, FX swaps, and equity swaps, entities that would potentially have to register at a lower threshold primarily include banks or bank affiliates, 10 of the 13 entities in total. In the aggregate, these 13 entities have only approximately $19 billion in AGNA of swaps activity (approximately 0.01 percent of the overall market) and 2,406 transactions (approximately 0.06 percent of the overall market) with currently unregistered market participants, further indicating that decreasing the threshold to $3 billion would yield only a small increase in Estimated Regulatory Coverage. After reviewing the list of the 10 banking entities' counterparties, it is also likely that some of the activity for the 10 banking entities consists of swaps that would be excluded from the de minimis calculation pursuant to the exclusion for swaps entered into by IDIs in connection with loans to customers (as provided for in paragraph (5) of the SD Definition), potentially reducing the likelihood that all or some of these entities would be required to register at a lower threshold.
In addition to a negligible increase in the AGNA or number of transactions that would be subject to SD regulation at a $3 billion threshold, policy considerations may indicate that lowering the threshold would not be beneficial to the market. A number of Project KISS suggestions addressed these policy-related concerns.
The Commission believes that a $3 billion AGNA de minimis threshold could lead certain entities to reduce or cease swap dealing activity to avoid registration and its related costs. Generally, the costs associated with registering as an SD may exceed the revenue from dealing swaps for many small or mid-sized banks and non-financial entities. Additionally, some persons engaged in swap dealing activities below the current $8 billion threshold have indicated that swap dealing is not a major source of revenue and is only complementary to other client-facing businesses, suggesting that these smaller dealing entities could reduce or eliminate their swap dealing activities if the threshold is lowered. Although the magnitude of this effect is not certain, reduced swap dealing activity could lead to increased concentration in the swap dealing market, reduced availability of potential swap counterparties, reduced liquidity, increased volatility, higher fees, wider bid/ask spreads, or reduced competitive pricing. The end-user counterparties of these smaller swap dealing entities may be adversely impacted by the above consequences and could face a reduced ability to use swaps to manage their business risks.
Based on the likely small increase in regulatory coverage, and the potential negative market effects of a $3 billion de minimis threshold, the Commission is of the view that, on balance, the overall policy goals of SD registration and the de minimis exception would not be advanced by lowering the threshold from $8 billion.
To assess the effect of a higher de minimis threshold, staff compared the number of Likely SDs and the Estimated AGNA Coverage, Estimated Transaction Coverage, and Estimated Counterparty Coverage at $8 billion, $20 billion, $50 billion, and $100 billion thresholds. As with the analysis above regarding $3 billion and $8 billion thresholds, to make these calculations, staff used the methodology described in section II.A.1 to determine Likely SDs at the indicated thresholds.
As seen in Table 8, the number of Likely SDs decreases from 108 at an $8 billion AGNA threshold to 93, 81, and 72 Likely SDs, at the $20 billion, $50 billion, and $100 billion thresholds, respectively. As columns 4 and 5 indicate, and as explained in more detail below in Tables 9 and 10, the reduction in the number of Likely SDs would lead to only a relatively small decrease in Estimated AGNA Coverage and Estimated Transaction Coverage at higher AGNA thresholds of up to $100 billion. However, as column 6 indicates, and as explained in more detail below in Table 11, there would potentially be a more pronounced reduction in Estimated Counterparty Coverage at higher AGNA thresholds.
As seen in Table 9, at a $100 billion threshold, the Estimated AGNA Coverage would have decreased from approximately $221,020 billion (99.95 percent) to $220,877 billion (99.88 percent)—a decrease of $143 billion (a 0.06 percentage point decrease). The decrease would be lower at thresholds of $20 billion and $50 billion, at 0.01 percentage points and 0.04 percentage points, respectively.
As seen in Table 10, at a $100 billion threshold, the Estimated Transaction Coverage would have decreased from 3,795,330 trades (99.77 percent) to 3,773,440 trades (99.20 percent)—a decrease of 21,890 trades (a 0.58 percentage point decrease). The decrease would be lower at thresholds of $20 billion and $50 billion, at 0.05 percentage points and 0.42 percentage points, respectively.
As seen in Table 11, at a $100 billion threshold, the Estimated Counterparty Coverage would have decreased from 30,879 counterparties (88.80 percent) to 28,234 counterparties (81.19 percent)—a decrease of 2,645 counterparties (a 7.61 percentage point decrease). The decrease would be lower at thresholds of $20 billion and $50 billion, at 2.80 percentage points and 5.71 percentage points, respectively.
The small decrease in Estimated AGNA Coverage and Estimated Transaction Coverage at higher thresholds potentially indicates that increasing the threshold to up to $100 billion may have a limited effect on the systemic risk and market efficiency policy considerations of SD regulation. Additionally, a higher threshold could enhance the benefits associated with a de minimis exception, for example by allowing entities to increase ancillary dealing activity. However, the decrease in Estimated Counterparty Coverage indicates that fewer entities would be transacting with registered SDs, and therefore, the counterparty protection benefits of SD regulation might be reduced if the de minimis threshold increased from $8 billion to $20 billion, $50 billion, or $100 billion.
Also, the Commission is preliminarily of the view that maintaining the status quo signals long-term stability of the de minimis threshold. This should provide for the efficient application of the SD Definition as it allows for long-term planning based on the current AGNA de minimis threshold.
As indicated in Table 1 above, approximately 86 percent of NFC swaps involved at least one registered SD. Although that percentage is lower than the approximately 99 percent for other asset classes, as discussed below, the Commission is of the view that lower SD regulatory coverage is acceptable given the unique characteristics of the NFC swap market. Table 12 presents information on the category and SD registration status of In-Scope Entities with at least 10 NFC swap counterparties.
Analysis of SDR data indicates that were 86 In-Scope Entities with 10 or more NFC swap counterparties during the review period. As seen in Table 12, of these 86 entities, 44 are registered SDs and 42 are unregistered entities. Of the 42 unregistered entities, 22 have a primary business that is non-financial in nature. Specifically, these are commercial entities, such as consumers, merchants, producers, or traders of physical commodities, who appear to be engaging in some swap dealing activity. Moreover, half of the 12 unregistered banks or bank affiliates active in the NFC swap market are small or mid-sized in nature. Further, of the 42 unregistered entities, only seven have AGNA of swaps activity greater than $3 billion in IRS, CDS, FX swaps, and equity swaps, indicating that the majority of these entities are primarily or exclusively active in NFC swaps.
Table 13 indicates that registered SDs with 10 or more counterparties entered into 86 percent of the transactions in the NFC swap market, and faced 83 percent of counterparties in at least one transaction,
Lacking notional-equivalent data for NFC swaps, it is unclear how many of the 42 entities would actually be subject to SD registration at any given de minimis threshold. It is possible that a portion of the swaps activity for some or all of these entities qualifies for the physical hedging exclusion in paragraph (6)(iii) of the SD Definition or is
The Commission believes that the available data, related policy considerations, and comments from market participants
First, a reduced de minimis threshold likely would have negative impacts on NFC swap liquidity. Specifically, some entities may reduce dealing to avoid registration and its related costs. Many of the entities identified in Table 12 that are not registered as SDs are non-financial in nature and trade in physical commodity markets, or are small or mid-sized banks. Based on analysis of data and comments from swap market participants, it is likely that much of the swap dealing by these entities serves small or mid-sized end-users in their localized markets. Often, the end-users served by these entities do not have trading relationships with larger, financial-entity SDs, and the end-users rely on these small to mid-sized and/or non-financial entities to access liquidity provided by larger dealers.
For example, the 42 unregistered In-Scope Entities described above entered into NFC swaps with 1,207 counterparties, 1,174 of which were not registered SDs. Of these 1,174 entities, 705 had no transactions with registered SDs. Almost all of the 705 entities are commercial end-users.
If the de minimis threshold is decreased, the Commission is of the view that this would negatively affect swap market access and liquidity for commercial end-user counterparties of currently unregistered entities that are active in NFC swaps. Specifically, these entities may reduce or stop dealing activity if a lower threshold would subject them to SD registration.
Generally, a reduction in the threshold could negatively affect the ability of these entities to provide ancillary services involving swap transactions, a stated benefit for having a de minimis exception. Further, if the threshold is maintained at $8 billion, it is possible that unregistered entities that currently limit trading activity to below $3 billion may increase dealing volumes to levels closer to $8 billion, potentially increasing liquidity in the NFC swap market. As the Commission has stated:
The futures and swaps markets are essential to our economy and the way that businesses and investors manage risk. Farmers, ranchers, producers, commercial companies, municipalities, pension funds, and others use these markets to lock in a price or a rate. This helps them focus on what they do best: innovating, producing goods and services for the economy, and creating jobs. The CFTC works to ensure these hedgers and other market participants can use markets with confidence.
Allowing small to mid-sized non-financial entities with a presence in the physical commodity markets to provide ancillary services involving swap transactions helps fulfill this goal.
Second, even if the threshold were decreased, it is unclear if or to what extent the 2017 Counterparty Coverage statistic of 86 percent would increase for NFC swaps since several of those entities likely already have less than $3 billion in AGNA of swap dealing activity. Additionally, as discussed above, many of these entities would likely reduce activity to remain below the SD de minimis threshold, further reducing any increase in Estimated Counterparty Coverage from a lower threshold.
Third, many of the entities engaged in limited swap dealing activity for NFC swaps appear to have a unique role in the market in that their primary business is generally non-financial in nature and the swap dealing activity is ancillary to their primary role in the market. Further, these firms generally pose less systemic risk than financial market SDs.
Fourth, although it has not conducted an analysis of AGNA activity in NFC swaps,
Preliminarily, the Commission does not believe that decreasing or increasing the de minimis threshold would have much benefit for the NFC swap market. Rather, there is a concern that a change in the threshold would cause harm to that market.
The Commission notes that setting the de minimis threshold at $8 billion would allow persons to continue to use existing calculation procedures and business processes that are geared towards the $8 billion threshold. Modifying the threshold could require entities to revise monitoring processes, modify internal systems, and amend policies and procedures tied to an $8 billion threshold, leading to increased costs. Further, as discussed, the Commission expects that maintaining an $8 billion threshold would foster the efficient application of the SD Definition by providing continuity and addressing the uncertainty associated with the end of the phase-in period.
Based on the available data and policy considerations discussed above, the Commission proposes to maintain the de minimis threshold for AGNA of swap dealing at $8 billion.
The Commission requests comments on the following questions. To the extent possible, please quantify the impact of issues discussed in comments, including costs and benefits, as applicable.
(1) Based on the data and related policy considerations, is an $8 billion de minimis threshold appropriate? Why or why not?
(2) Should the de minimis threshold be reduced to $3 billion? Why or why not?
(3) Should the de minimis threshold be increased? If so, to what threshold? Why or why not?
(4) Are the assumptions discussed above regarding a $3 billion de minimis threshold, an $8 billion de minimis threshold, or a higher de minimis threshold accurate, including, but not limited to, compliance costs and market liquidity assumptions?
(5) As an alternative or in addition to maintaining an $8 billion threshold, should the Commission consider a tiered SD registration structure that would establish various exemptions from SD compliance requirements for SDs whose AGNA of swap dealing activity is between the $3 billion and $8 billion?
(6) What is the impact of the de minimis threshold level on market liquidity? Are there entities that would increase their swap dealing activities if the Commission raised the de minimis exception, or decrease their swap dealing activities if the Commission lowered the threshold? How might these changes affect the swap market?
(7) Are there additional policy or statutory considerations underlying SD regulation or the de minimis exception that the Commission should consider?
(8) Have there been any structural changes to the swap market such that the policy considerations have evolved since the adoption of the SD Definition?
(9) Are entities curtailing their swap dealing activity to avoid SD registration at $8 billion or $3 billion thresholds, and if so, what impact is that having on the swap market? Are certain asset classes or product types more affected by such curtailed dealing activity than others?
(10) Does registration as an SD allow persons to substantially increase their swap dealing activity, or is increased swap dealing activity constrained by capital requirements at the firm level and other considerations?
(11) Should an entity's AGNA of swap dealing activity continue to be tested against the de minimis threshold for any rolling 12-month period, only for calendar year periods, or for some other regular 12-month period such as quarterly or semi-annual testing?
(12) What are the benefits and detriments to using AGNA of swap dealing activity as the relevant criterion for SD registration, as compared to other options, including, but not limited to, entity-netted notional amounts or credit exposures?
The CEA provides that in no event shall an IDI be considered to be an SD to the extent it offers to enter into a swap with a customer in connection with originating a loan with that customer.
For a swap to be considered to have “been entered into . . . in connection with originating a loan,” the IDI Swap Dealing Exclusion requires that: (1) The IDI enter into the swap no earlier than 90 days before and no later than 180 days after execution of the loan agreement (or transfer of principal);
Based on information gained from market participants,
The Commission is not at this time proposing to amend the IDI Swap Dealing Exclusion in paragraph (5) of the SD Definition. As discussed above, pursuant to requirements of section 712(d)(1) of the Dodd-Frank Act, the CFTC and SEC jointly adopted the IDI Swap Dealing Exclusion in paragraph (5) as part of the definition of what constitutes swap dealing activity. Rather than proposing to revise the scope of activity that constitutes swap dealing, the Commission is proposing to amend paragraph (4) of the SD Definition, which addresses the de minimis exception.
Specifically, the Commission is proposing new paragraph (4)(i)(C) of the SD Definition, which would except from the calculation of the de minimis threshold certain loan-related swaps entered into by IDIs (the “IDI De Minimis Provision”). The IDI De Minimis Provision would have requirements that are similar to the IDI Swap Dealing Exclusion, but would encompass a broader scope of loan-related swaps. The proposed IDI De Minimis Provision includes: (1) A lengthier timing requirement for when the swap must be entered into; (2) an expansion of the types of swaps that are eligible; (3) a reduced syndication percentage requirement; (4) an elimination of the notional amount cap; and (5) a refined explanation of the types of loans that would qualify.
The Commission notes that any swap that meets the requirements of the IDI Swap Dealing Exclusion in paragraph (5) of the SD Definition would also meet the requirements of the proposed IDI De Minimis Provision. However, proposed paragraph (4)(i)(C) provides additional flexibility as to what swaps need to be counted towards an IDI's de minimis calculation. The Commission believes that the broader scope of the proposed IDI De Minimis Provision, described in further detail below, may advance the policy objectives of the de minimis exception by allowing some IDIs to provide swaps to customers in connection with loans without having to register as an SD. In other words, the proposed provision would facilitate swap dealing in connection with other client services and may encourage more IDIs to participate in the swap market—two policy objectives of the de minimis exception. Greater availability of loan-related swaps may also improve the ability of customers to hedge their loan-related exposure. The Commission also believes that the more flexible provisions of the proposed IDI De Minimis Provision may allow for more focused, efficient application of the SD Definition to the activities of IDIs that offer swaps in connection with loans.
Commission staff reviewed data to assess the potential impact of the IDI De Minimis Provision. Table 14 below provides information regarding the AGNA of swaps activity entered into by entities that were identified as IDIs
As seen
As Table 14 indicates, the AGNA of swaps activity that these unregistered IDIs enter into with other non-registered entities is low relative to the total swap market analyzed. For example, there are 10 IDIs that have between $3 billion and $8 billion each in AGNA of swaps activity—none of which are registered SDs. In aggregate, these IDIs entered into approximately $54.0 billion in AGNA of swaps activity. However, only $16.5 billion of that activity was between two entities not registered as SDs, representing only 0.007 percent of the total AGNA of swaps activity during the review period. Depending on the range of AGNA of swaps activity examined, the level of activity occurring between two entities not registered as SDs (at least one of which is an IDI) varies between only approximately 0.003 percent and 0.007 percent of the total AGNA of swaps activity.
Given those low percentages, the Commission is of the view that the policy benefits of SD regulation likely would not be significantly diminished if the proposed IDI De Minimis Provision
The proposed rule text described below may provide greater ability for IDIs to not count loan-related swaps towards their de minimis threshold calculations, potentially increasing the availability of loan-related swaps for their borrowers and advancing the stated policy goals of the de minimis exception.
Pursuant to the IDI Swap Dealing Exclusion in paragraph (5) of the SD Definition, if an IDI enters into a swap in connection with originating a loan to a customer, that swap must be entered into no more than 90 days before or 180 days after the date of execution of the loan agreement (or date of transfer of principal to the customer) for the IDI Swap Dealing Exclusion to apply.
The Commission is proposing new paragraph (4)(i)(C)(
The Commission believes that the timing restrictions in the IDI Swap Dealing Exclusion limit the ability of IDIs to effectively provide hedging solutions to end-user borrowers. Depending on market conditions or business needs, it is not uncommon for a borrower to wait for a period of time greater than 180 days after a loan is originated to enter into a hedging transaction. For example, if an IDI provides a loan with a 10-year term, and the borrower chooses to wait until 181 days after the loan to hedge interest rate risk underlying that loan, the swap would not qualify for the IDI Swap Dealing Exclusion. However, under the proposed IDI De Minimis Provision, if the borrower entered into the hedge 181 days after execution, the swap would not have to be counted towards an IDI's de minimis calculation. Given that many of the entities that the Commission expects to utilize the IDI De Minimis Provision are small and mid-sized banks, not including this timing restriction could lead to increased swap availability for the borrowing customers that rely on such IDIs for access to swaps (and thereby advance a policy objective of the de minimis exception).
For a swap to be considered “in connection with” a loan for the purposes of the IDI De Minimis Provision, the Commission believes there should be a reasonable expectation that the loan will be entered into with a customer. Therefore, the proposed 90-day restriction is suitable because it requires that the swap be entered into within an appropriate period of time prior to the execution of the loan. However, where an executed commitment or forward agreement to loan money exists between the IDI and the borrower prior to the 90-day limit, the Commission believes a reasonable expectation for the loan is demonstrated. Accordingly, for purposes of the IDI De Minimis Provision, the Commission is proposing that an IDI may enter into a swap with a customer, in connection with a loan to that customer, more than 90 days prior to the execution of the loan where there is an executed commitment or forward agreement to loan money.
The IDI Swap Dealing Exclusion requires that the rate, asset, liability, or other notional item underlying such swap is, or is directly related to, a financial term of such loan or that such swap is required, as a condition of the loan under the insured depository institution's loan underwriting criteria, to be in place in order to hedge price risks incidental to the borrower's business and arising from potential changes in the price of a commodity (other than an excluded commodity).
The Commission is proposing new paragraph (4)(i)(C)(
The Commission is of the view that the proposed language would further the policy objectives of the de minimis exception by providing flexibility to reflect the actual market practices of end-users who hedge their risk. The first provision refers to a “term” rather than a “notional item,” and does not include the word “directly,” for added flexibility. Because the second provision in the proposed language allows for swaps that are not explicitly required as a condition of the IDI's underwriting criteria, it provides flexibility for IDIs to enter into certain swaps with borrowers to hedge risks (
For a loan-related swap with a notional amount equal to the full principal amount of the loan to qualify for the IDI Swap Dealing Exclusion, an IDI must be responsible for at least 10 percent of a syndicated loan.
For loans that are widely syndicated, lenders may not have control over their final share of the syndication. It is not uncommon for borrowers to enter into negotiations regarding related swaps before the underlying loan has been executed. The need to have at least a 10 percent share of the syndicate can make it more difficult for IDIs to determine, in advance, whether a swap they have negotiated with a borrower will qualify for the IDI Swap Dealing Exclusion. The lower syndication threshold of five percent in this Proposal provides additional flexibility for IDIs to enter into a greater range of loan-related swaps without having those swaps count towards their de minimis calculations.
The Commission is also proposing to add paragraph (4)(i)(C)(
The IDI Swap Dealing Exclusion requires that the AGNA of swaps entered into in connection with the loan not exceed the principal amount outstanding.
The requirements of the IDI Swap Dealing Exclusion do not account for types of credit financings that are similar to loans (
Similarly, to prevent evasion, the Commission is proposing new paragraph (4)(i)(C)(
The Commission is of the view that swaps entered into in connection with non-synthetic lending arrangements that are commonly known in the market as “loans” would generally not need to be counted towards an IDI's de minimis calculation if the other requirements of the IDI De Minimis Provision are also met. Although the Commission is not proposing to assess individual categories of transactions to determine whether they qualify as loans, it recognizes the common law definition cited in the SD Definition Adopting Release. Additionally, the Commission's regulations in part 75 (regarding “Proprietary Trading and Certain Interests in and Relationships with Covered Funds”) define a loan as any loan, lease, extension of credit, or
The remaining requirements for the IDI De Minimis Provision are substantively identical to the IDI Swap Dealing Exclusion provisions in paragraph (5) of the SD Definition.
Proposed paragraph (4)(i)(C)(
Proposed paragraph (4)(i)(C)(
The Commission requests comments on the following questions. To the extent possible, please quantify the impact of issues discussed in the comments, including costs and benefits, as applicable.
(1) Based on the data and related policy considerations, is the proposed IDI De Minimis Provision appropriate? Why or why not?
(2) How will the proposed IDI De Minimis Provision impact IDIs who enter into swaps with customers in connection with loans? Will IDIs enter into more swaps with loan customers as result of the proposed IDI De Minimis Provision?
(3) If the underlying loan is called, put, accelerated, or if it goes into default before the scheduled termination date, should the related swap be required to be terminated to remain eligible for the IDI De Minimis Provision?
(4) Are there circumstances that can be anticipated at the time of loan origination that would support permitting the termination date of the swap to extend beyond termination of the loan?
(5) Does the provision in proposed paragraph (4)(i)(C)(
(6) Is it common for an IDI to have as low as five percent participation in a syndicated loan and also provide swaps in connection with the loan?
(7) Is it common for the AGNA of loan-related swaps to exceed the outstanding principal amount of the loan? In what circumstances?
(8) Should the Commission define “synthetic loan”? How should that term be defined?
(9) Are there circumstances in which a loan credit default swap or loan total return swap would not be considered a synthetic lending arrangement?
(10) If an IDI would have to register as an SD but for the IDI De Minimis Provision, should that IDI be required to provide notice to the Commission, Commission staff, or the National Futures Association? Alternatively, to utilize the proposed IDI De Minimis Provision, should IDIs be required to directly reference the related loan in the written swap confirmation?
In adopting the SD Definition, the Commission provided that, subject to certain requirements, swaps entered into by a person for purposes of hedging physical positions are not considered in determining whether the person is an SD (the “Physical Hedging Exclusion”).
Based on feedback from swap market participants during implementation of the SD regulations and in connection with Project KISS,
The Commission is of the view that an explicit statement of the factors that indicate when a swap entered into to hedge financial or physical positions (“hedging swap”) is excluded from counting towards the de minimis threshold would help swap market participants know with greater certainty what swaps have to be counted towards the de minimis threshold, and thereby help market participants apply the SD Definition more efficiently. The Commission is proposing to add a hedging exception in new paragraph (4)(i)(D) of the SD Definition, permitting entities to not count towards their de minimis calculations hedging swaps, when such swaps meet certain conditions (the “Hedging De Minimis Provision”). Similar to the proposed IDI De Minimis Provision, the Hedging De Minimis Provision does not revise the scope of activity that constitutes swap dealing. Rather, the new provision would set out explicit factors an entity can consider for purposes of assessing whether hedging swaps must be counted towards the de minimis
Proposed paragraph (4)(i)(D) states that to qualify for the Hedging De Minimis Provision, a swap must be entered into by a person for the primary purpose of reducing or otherwise mitigating one or more of the specific risks to which it is subject, including, but not limited to, market risk, commodity price risk, rate risk, basis risk, credit risk, volatility risk, correlation risk, foreign exchange risk, or similar risks arising in connection with existing or anticipated identifiable assets, liabilities, positions, contracts or other holdings of the person or any affiliate. Additionally, the person entering into the hedging swap must not: (1) Be the price maker of the hedging swap; (2) receive or collect a bid/ask spread, fee, or commission for entering into the hedging swap; and (3) receive other compensation separate from the contractual terms of the hedging swap in exchange for entering into the hedging swap.
The requirements that the person not be a price maker of the swap or receive compensation for the swap should ensure that the Hedging De Minimis Provision does not improperly exclude swap dealing activity. As discussed in the SD Definition Adopting Release, in connection with swaps that hedge physical positions:
When a person enters into a swap for the purpose of hedging the person's own risks in specified circumstances, an element of the [SD] definition—the accommodation of the counterparty's needs or demands—is absent. Therefore, consistent with our overall interpretive approach to the definition, the activity of entering into such swaps (in the particular circumstances defined in the rule) does not constitute swap dealing. Providing an exception for such swaps from the [SD] analysis reduces costs that persons using such swaps would incur in determining if they are [SDs].
The Commission believes that this rationale applies broadly to swaps that hedge both financial and physical positions. When the person is not the price maker of the hedging swap, or otherwise receiving compensation, the person is not accommodating the needs of a counterparty, such swap is generally not swap dealing activity, and therefore should not be counted for purposes of the de minimis exception. Adding this specific exception as a factor to be considered for purposes of the de minimis calculation provides additional clarity which advances the policy objectives of the de minimis threshold. In particular, the Commission believes that the scope of the Hedging De Minimis Provision would encourage greater use of swaps (
The SD Definition Adopting Release also states that, generally, swaps that hedge positions that were entered into as part of swap dealing activity would also not need to be counted towards a person's de minimis threshold calculation if they meet the requirements of the proposed exception.
Lastly, the proposed Hedging De Minimis Provision also includes, in paragraphs (D)(
The Commission requests comments on the following questions. To the extent possible, please quantify the impact of issues discussed in the comments, including costs and benefits as applicable.
(1) Based on the policy considerations, is the proposed Hedging De Minimis Provision appropriate? Why or why not?
(2) Is the proposed Hedging De Minimis Provision too narrowly or broadly tailored?
(3) How will the proposed Hedging De Minimis Provision impact entities that enter into swaps to hedge financial or physical positions?
(4) The proposed Hedging De Minimis Provision would be used to determine whether a person has exceeded the AGNA threshold set forth in paragraph (4)(i)(A) of the SD Definition, whereas the Physical Hedging Exclusion in paragraph (6)(iii) of the SD Definition addresses when a swap is not considered in determining whether a person is an SD. How might this distinction impact how entities analyze their swap dealing activity and whether they would exceed the de minimis threshold?
The Commission is proposing new paragraph (4)(i)(E) of the SD Definition, which would allow a person to exclude from its de minimis calculation swaps that result from multilateral portfolio compression exercises (“MPCE De
The Commission concurs with the position taken in Staff Letter 12-62. Generally, multilateral portfolio compression allows swap market participants with large portfolios to “net down” the size and number of outstanding swaps between them. The Commission is of the view that this advances the policy considerations behind SD regulation by reducing counterparty credit risk, lowering the AGNA of outstanding swaps, and reducing operational risks by decreasing the number of outstanding swaps. The Commission understands that multilateral portfolio compression exercises do not permit participants to provide liquidity or set prices in the market. A participant in a multilateral portfolio compression exercise submits some criteria for its participation in the exercise (
To advance the policy objectives of the de minimis exception discussed above, proposed paragraph (4)(i)(E) would allow a person to exclude from its de minimis calculation swaps that result from multilateral portfolio compression exercises. In particular, the MPCE De Minimis Provision's explicit statement that such swaps do not need to be counted towards the de minimis threshold would facilitate efficient application of the SD Definition. Moreover, adding this proposed exception to the regulatory text would therefore be consistent with the goals of Project KISS. Additionally, to ensure that the scope of this exception is not improperly exceeded, the proposed rule includes an anti-evasion provision.
The Commission requests comments on the following questions. To the extent possible, please quantify the impact of issues discussed in the comments, including costs and benefits, as applicable.
(1) Is the proposed MPCE De Minimis Provision appropriate? Why or why not?
(2) Is the proposed MPCE De Minimis Provision too narrowly or broadly tailored? Are there additional restrictions or conditions that should apply in order for swaps resulting from multilateral portfolio compression exercises to not count towards a person's de minimis threshold?
(3) How will the proposed MPCE De Minimis Provision impact entities that enter into multilateral portfolio compression exercises?
Given the potential variety of methods that could be used to calculate the notional amount for certain swaps, particularly for swaps where notional amount is not a contractual term of the transaction (
In the SD Definition Adopting Release, the Commission did not prescribe specific calculation methodologies for notional amounts (except for leveraged swaps),
Further, for purposes of reporting swaps to trade repositories, the Committee on Payments and Market Infrastructures (“CPMI”) and the Board of the International Organization of Securities Commissions (“IOSCO”) recently issued guidance regarding the definition, format, and usage of key over-the-counter derivative data elements, which included guidance on calculating certain notional amounts (the “Technical Guidance”).
The Commission notes that market participants have already requested clarity regarding how notional amounts should be calculated for NFC swaps for purposes of determining whether a person exceeds the AGNA de minimis
From time to time, DSIO issues interpretive guidance or no-action letters to registrants on a variety of issues, often to address uncertainty regarding the application of Commission regulations (
Rather than codifying all permitted notional amount calculation methodologies for purposes of the AGNA de minimis threshold, or requiring other Commission action each time new methodologies are approved, the Commission believes that providing delegated authority gives the Commission and staff appropriate flexibility to promptly respond to future market developments regarding notional amount calculation methodologies. The Commission expects that subsequent to adopting this delegation of authority, either the Commission or the Director of DSIO will determine methodologies for calculating notional amounts for certain categories of swaps.
The Commission welcomes comments on the following questions regarding the proposed process for determining methodologies for calculating notional amounts, and the proposed delegation of authority. To the extent possible, please quantify the impact of issues discussed in the comments, including costs and benefits, as applicable.
(1) Is the proposed process to determine the methodology to be used to calculate the notional amount for any group, category, type, or class of swaps appropriate? Why or why not?
(2) Is the proposed process too narrowly or broadly tailored?
(3) Is the restriction that a methodology be economically reasonable and analytically supported appropriate? Why or why not? What other standards may be appropriate for this purpose?
(4) How will the proposed process impact persons that enter into swaps where notional amount is not a stated contractual term?
(5) Is the proposed delegation of authority too narrowly or broadly tailored?
(6) How will the proposed delegation of authority impact persons that enter into swaps where notional amount is not a stated contractual term?
(7) Is there a better alternative to this proposed process? If so, please describe.
The Commission also welcomes comments on the following questions regarding calculation of notional amounts for purposes of the de minimis exception. Comments regarding the calculation of notional amounts should focus on the de minimis exception (rather than other Commission regulations, such as the reporting requirements in part 45). To the extent possible, please quantify the comments, including costs and benefits, as applicable.
(1) Should the notional amount (either stated or calculated) for transactions with embedded optionality be delta-adjusted by the delta of the underlying options, provided that the methods are economically reasonable and analytically supported? Should delta-adjusted notional amounts be used for all asset classes and product types, or only some?
(2) For swaps without stated contractual notional amounts, should “price times volume” generally be used
(3) What other notional amount calculation methods, aside from “price times volume,” could be used for swaps without a stated notional amount that renders a calculated notional amount equivalent more directly comparable to the stated contractual notional amount typically available in IRS, CDS, and FX swaps?
(4) For swaps without a stated contractual notional amount, does calculation guidance exist in other jurisdictions and/or regulatory frameworks, such as in banking, insurance, or energy market regulations? Should persons be permitted to use such guidance to calculate notional amounts for purposes of a de minimis threshold calculation?
(5) What should be used for “price” when calculating notional amounts for swaps without a stated contractual notional? Contractual stated price, such as a fixed price, spread, or option strike? The spot price of the underlying index or reference? The implied forward price of the underlying? A different measure of price not listed here? Should the price of the last available transaction in the commodity at the time the swap is entered into be used for this calculation? Is it appropriate to use a “waterfall” of prices to calculate notional amount, depending on the availability of a price type?
(6) What metric should be used for “price” for certain basis swaps with no fixed price or fixed spread?
(7) How should the “price” of swaps be calculated for swaps with varying prices per leg, such as a predetermined rising or falling price schedule?
(8) What metric should be used for “volume” when calculating notional amounts for swaps without a stated contractual notional amount? Should the Commission assume that swaps with volume optionality will be exercised for the full quantity or should volume options be delta-adjusted, too?
(9) Should the total quantity for a “leg” be used, or an approximation for a pre-determined time period, such as a monthly or annualized quantity approximation?
(10) How should the “volume” of swaps be calculated for swaps with varying notional amount or volume per leg, such as amortizing or accreting swaps?
(11) Should the U.S. dollar equivalent notional amount be calculated across all “legs” of a swap by calculating the U.S. dollar equivalent notional amount for each leg and then calculating the minimum, median, mean, or maximum notional amount of all legs of the swap?
(12) Should the absolute value of a price times volume calculation be used, or should the calculation allow for negative notional amounts?
(13) Given that a derivatives clearing organization (“DCO”) has to mark a swap to market on a daily basis, it may be possible to determine “implied volatilities” for swaptions and options that are regularly marked-to-market, such as cleared swaps, in order to delta-adjust them. Should DCO evaluations be used when there are not better market prices available?
In addition to the proposed rule amendments discussed above, the Commission is seeking comment on other potential considerations for the de minimis threshold, including: (1) Adding a minimum dealing counterparty count and a minimum dealing transaction count threshold; (2) excepting from the de minimis threshold calculation swaps that are exchange-traded and/or cleared; and (3) excepting from the de minimis threshold calculation swaps that are categorized as non-deliverable forwards. The Commission may take into consideration comments received regarding any of these factors in formulating the final rule or may in the future consider proposing an amendment to the SD Definition to reflect any of these factors for purposes of the de minimis threshold calculation.
The Commission is re-considering the merits of using AGNA, by itself, to determine if an entity's swap dealing activity is de minimis. Specifically, the Commission is seeking comment on whether an entity should be able to qualify for the de minimis exception if its level of swap dealing activity is below
Section 1a(49)(D) of the CEA directs the Commission to exempt from designation as an SD an entity that engages in a de minimis quantity of swap dealing, and provides the Commission with broad discretion to promulgate regulations to establish factors with respect to the making of this determination to exempt.
The Commission seeks comment on whether and how the inclusion of these additional factors might account for modest variations in an entity's level of dealing activity that occur over time and provide entities with enhanced flexibility to manage their dealing activity below the registration threshold. The Commission also seeks comment on whether these additional criteria could better assist the Commission in identifying those entities whose dealing activity is limited and reduce instances of “false positives” of any one measure of activity, such as where an entity's dealing activity may marginally exceed
For example, the inclusion of dealing counterparty count and dealing transaction count thresholds in the de minimis exception could help account for differences in transaction sizes across asset classes. As commenters have noted, certain asset classes tend to have higher average notional amounts per swap than others.
In addition to differences across asset classes, the Commission recognizes that an entity's swap dealing volume may fluctuate over time. For example, as compared to the first quarter of 2017, during the first quarter of 2018, overall IRS notional amount activity rose by approximately 25 percent, while trade count grew by approximately 16 percent.
The Commission seeks comment on whether including dealing counterparty count and dealing transaction count thresholds in the de minimis exception, in conjunction with an AGNA calculation, would further the policy goals underlying the exception. The Commission also seeks comment on whether adding minimum dealing counterparty count and dealing transaction count thresholds would be consistent with the Commission's goal of ensuring that person's engaged in more than a de minimis level of dealing are subject to SD regulation.
The Commission recognizes the importance of appropriately calibrating potential dealing counterparty count and dealing transaction count thresholds in order to further the Commission's interest in identifying and exempting de minimis dealing activity. As part of its preliminary consideration of this approach, the Commission performed an analysis of the counterparty counts and transaction counts of Likely SDs and registered SDs to determine at what thresholds certain entities might be required to register using a multi-factor approach. The Commission notes that it was unable to exclude non-dealing counterparties and non-dealing trades.
As discussed above in section II.A.2.ii, there were 108 Likely SDs at the $8 billion AGNA threshold with at least 10 counterparties (in IRS, CDS, FX swaps, and equity swaps). The median counterparty count for these 108 Likely SDs was 132 counterparties and the median transaction count was 5,233 trades. Of these 108 Likely SDs with at least 10 counterparties, 106 also had at least 100 transactions, and there were 88 Likely SDs that had at least 15 counterparties and 500 transactions.
There were 78 registered SDs that had at least $8 billion in AGNA of swaps activity. The median counterparty count for these 78 entities was 186 counterparties and the median transaction count was 12,004 trades. Of these 78 registered SDs, 72 had at least 10 counterparties and at least 100 transactions. Additionally, 70 of the 78 registered SDs had at least 15 counterparties and 500 transactions.
Based on this preliminary analysis, the Commission is seeking comment on whether it would be appropriate to establish a dealing counterparty count threshold of 10 counterparties and a dealing transaction count threshold of 500 transactions.
For purposes of calculating a person's counterparty count under this approach, the Commission seeks comment on whether it should allow counterparties that are members of a single group of persons under common control to be treated as a single counterparty. In addition, the Commission seeks comment whether it should consider excluding registered SDs and MSPs from an entity's counterparty count. Similar to the current dealing AGNA threshold, the de minimis calculation for counterparty counts and transaction counts could also incorporate aggregation (after application of relevant de minimis calculation-related exclusions) of the counterparty counts and transaction counts of affiliated entities that are not registered SDs.
The Commission understands that the use of additional criteria could lead to entities that engage in high levels of AGNA of swap dealing activity not having to register as SDs if they have low counterparty counts or low transaction counts. In order to account for this possibility, the Commission seeks comment on whether it would be appropriate to include an AGNA backstop above which entities would have to register as SDs, regardless of their counterparty counts or transaction counts. For example, under this approach, if an entity exceeds some level of AGNA of dealing activity greater than $8 billion, it would be required to register as an SD, regardless of its number of dealing counterparties or dealing transactions. With respect to a potential AGNA backstop, the Commission seeks comment on whether a $20 billion AGNA threshold would be appropriate.
A minimum dealing counterparty and dealing transaction threshold, in combination with an AGNA amount backstop, might provide a higher AGNA de minimis threshold to small dealers that only plan to occasionally deal swaps with a limited number of counterparties or execute a limited number of transactions. As noted above,
Given these considerations, the Commission welcomes comments on the following:
(1) Taking into account the Commission's policy objectives, should minimum dealing counterparty counts and minimum dealing transaction counts be considered in determining an entity's eligibility for the de minimis exception?
(2) Would a dealing counterparty count threshold of 10 dealing counterparties be appropriate? Why or why not? Is another dealing counterparty count threshold more appropriate?
(3) Would a dealing transaction count threshold of 500 dealing transactions be appropriate? Why or why not? Is another dealing transaction count threshold more appropriate?
(4) Under what circumstances might entities have a relatively high AGNA of swap dealing activity, but low dealing counterparty counts or low dealing transaction counts?
(5) Would an AGNA backstop of $20 billion be appropriate? Why or why not? Is another AGNA backstop level more appropriate?
(6) Would adding dealing counterparty count and dealing transaction count thresholds simplify the SD analysis for certain market participants, and if so, how and for which categories of participants?
(7) Would adding dealing counterparty count and dealing transaction count thresholds complicate the SD analysis for certain market participants, and if so, how and for which categories of participants?
(8) Should registered SDs or MSPs be counted towards the dealing counterparty count threshold?
(9) Should dealing counterparty and dealing transaction counts be aggregated across multiple potential swap dealing entities, similar to the existing AGNA aggregation standard?
(10) For counterparty count purposes, should counterparties that are all part of one corporate family be counted as distinct counterparties, or as one counterparty?
(11) Should a facts and circumstances analysis apply to determine if an amendment or novation to an existing swap is swap dealing activity that counts towards a person's dealing transaction count? Why or why not?
(12) Would adding dealing counterparty count and dealing transaction count thresholds address the impact of differences in transaction sizes across asset classes?
(13) Would it be more appropriate for a multi-factor threshold to only include a dealing counterparty count threshold
(14) Are there other criteria that should be included in the de minimis exception? If so, what are they and how could the Commission efficiently collect, calculate, and track them?
The Commission is seeking comment on whether an exception from the de minimis calculation for swaps that are executed on an exchange (
The Commission believes that excepting such swaps from the de minimis calculation could improve utilization of exchanges and/or clearing.
Additionally, counterparty protection policy considerations for SD regulation may be less significant for exchange-traded swaps because the counterparty protections and trade terms would generally be provided by the exchange. Through execution of swaps on exchanges, counterparties benefit from viewing the prices of available bids and offers and from having access to transparent and competitive trading systems or platforms. Further, a number of the external business conduct standard requirements otherwise applicable to SDs do not apply when a swap is executed anonymously on an exchange. These requirements are either inapplicable to such transactions by their terms (because, for example, the counterparty is anonymous), or do not apply to the SD because the exchange fulfills the requirements.
In addition to the benefits described above, the market efficiency, orderliness, and transparency goals of SD regulation would also potentially be enhanced since the obligations of, for example, reporting trade information and engaging in portfolio reconciliation and compression exercises would be centrally (and more efficiently) managed by the exchange and/or DCO, as applicable.
The Commission notes that an exclusion exists in paragraph (6)(iv) of the SD Definition for certain exchange-traded and cleared swaps entered into by floor traders (“Floor Trader Exclusion”). In the SD Definition Adopting Release, the Commission declined to distinguish exchange-traded swaps under the SD Definition, noting, among other things, that:
[A] variety of exchanges, markets, and other facilities for the execution of swaps are likely to evolve in response to the requirements of the Dodd-Frank Act, and there is no basis for any bright-line rule excluding swaps executed on an exchange, given the impossibility of obtaining information about how market participants will interact and execute swaps in the future, after the requirements under the Dodd-Frank Act are fully in effect.
Nonetheless, the Commission created a carve-out for exchange-traded and cleared swaps executed by floor traders. Subject to certain conditions, the Floor Trader Exclusion allows registered floor traders who trade swaps solely using proprietary funds for their own account to exclude exchange-traded and cleared swaps from their de minimis calculation. Therefore, while execution and clearing are factors in the Floor Trader Exclusion, they are not the sole basis for it. The Floor Trader Exclusion enables floor traders to provide liquidity to exchanges in non-dealing capacities, such as proprietary trading, without potentially triggering SD regulation. However, the Commission notes that the market benefits of the Floor Trader Exclusion may be complemented if the de minimis exception also applied to all exchange-traded and/or cleared swaps.
The CFTC has not conducted robust data analysis regarding the potential impact of an exception from the de minimis calculation for swaps that are exchange-traded and/or cleared. However, excepting such swaps from the de minimis calculation would also likely lead to adjustments in how the swap market operates; therefore, it is difficult to forecast what percentage of transactions would ultimately be exchange-traded and/or cleared if such an exception were implemented. The Commission also notes that clearing is a post-execution activity and is not tied to the pre-execution swap dealing activities that determine whether a person needs to register as an SD. Therefore, adding a clearing-related factor to the de minimis exception may cause conflation between swap dealing and clearing.
The Commission understands that this exception could result in entities that engage in a significant amount of swap dealing activity in exchange-traded and/or cleared swaps not having to register as SDs. In order to account for this possibility, the Commission seeks comment on whether it would be appropriate to establish a AGNA backstop such that once an entity's swap dealing activity in exchange-traded and/or cleared swaps exceeds a certain notional amount, it would be required to register as an SD. Alternatively, the Commission is also considering whether it may be appropriate to apply a haircut to the notional amounts of exchange-traded and/or cleared swaps for purposes of the de minimis calculation. Under this approach, persons would only need to count a certain percentage of their total notional amount of exchange-traded and/or cleared swaps towards their de minimis threshold. These alternatives would ensure that persons with significant amounts of exchange-traded and cleared swaps would still likely be required to register as SDs.
Given these considerations, the Commission welcomes comments on the following:
(1) How would an exception for exchange-traded swaps from a person's de minimis calculation impact the policy considerations underlying SD regulation and the de minimis exception?
(2) How would an exception for cleared swaps from a person's de minimis calculation impact the policy considerations underlying SD regulation and the de minimis exception?
(3) How would an exception for exchange-traded and cleared swaps from a person's de minimis calculation impact the policy considerations underlying SD regulation and the de minimis exception?
(4) Should all exchange-traded swaps be excepted from the de minimis calculation, or only certain transactions? If so, which transactions? Should only those trades that are anonymously executed be excepted? How would the Commission judiciously differentiate, monitor, and track such transactions apart from other exchange-traded swaps?
(5) Should all cleared swaps be excepted from the de minimis calculation, or only certain transactions? If so, which transactions? Should the Commission differentiate between trades that are intended to be cleared and trades that are actually cleared? How would the Commission judiciously differentiate, monitor, and track such transactions apart from other cleared swaps?
(6) Should all exchange-traded and cleared swaps be excepted from the de minimis calculation, or only certain transactions? If so, which transactions? How would the Commission judiciously differentiate, monitor, and track such transactions apart from other exchange-traded and cleared swaps?
(7) If exchange-traded swaps are excepted from a person's de minimis calculation, what other conditions, if any, should apply for the trade to qualify for the exception?
(8) If cleared swaps are excepted from a person's de minimis calculation, what other conditions, if any, should apply for the trade to qualify for the exception?
(9) If exchange-traded and cleared swaps are excepted from a person's de minimis calculation, what other conditions, if any, should apply for the trade to qualify for the exception?
(10) If exchange-traded swaps are excepted from the de minimis calculation, should the Commission establish a notional backstop above which an entity must register? If so, what is the appropriate level for the backstop?
(11) If cleared swaps are excepted from the de minimis calculation, should the Commission establish a notional backstop above which an entity must register? If so, what is the appropriate level for the backstop?
(12) If exchange-traded and cleared swaps are excepted from the de minimis calculation, should the Commission establish a notional backstop above which an entity must register? If so, what is the appropriate level for the backstop?
(13) Should persons be able to haircut the notional amounts of their exchange-traded swaps for purposes of the de minimis calculation? If so, would a 50 percent haircut be appropriate? Why or why not?
(14) Should persons be able to haircut the notional amounts of their cleared swaps for purposes of the de minimis calculation? If so, would a 50 percent haircut be appropriate? Why or why not?
(15) Should persons be able to haircut the notional amounts of their exchange-traded and cleared swaps for purposes of the de minimis calculation? If so, would a 50 percent haircut be appropriate? Why or why not?
(16) Would an exception for exchange-traded swaps increase the volume of swaps executed on SEFs or DCMs?
(17) Would an exception for cleared swaps increase the volume of swaps that are cleared?
(18) Would an exception for exchange-traded and cleared swaps increase the volume of swaps executed on SEFs or DCMs and the volume of swaps that are cleared?
(19) Are there any unique costs or benefits associated with excepting exchange-traded swaps from an entity's de minimis calculation?
(20) Are there any unique costs or benefits associated with excepting cleared swaps from an entity's de minimis calculation?
(21) Are there any unique costs or benefits associated with excepting exchange-traded and cleared swaps from an entity's de minimis calculation?
(22) Has the Floor Trader Exclusion encouraged additional trading on SEFs and DCMs?
(23) Has the Floor Trader Exclusion encouraged additional clearing of swaps?
(24) Should the Commission consider additional modifications to the Floor Trader Exclusion in lieu of a broader exception for all exchange-traded and/or cleared swaps?
(25) How should transactions executed on exempt multilateral trading facilities, exempt organized trading facilities, and/or exempt DCOs be treated?
Section 1a(47) of the CEA defines the term “swap,”
In November 2012, the Secretary of the Treasury signed a determination that exempts both foreign exchange swaps and foreign exchange forwards from the definition of “swap,” in accordance with the CEA (“Treasury Determination”).
[A]n NDF is a swap that is cash-settled between two counterparties, with the value of the contract determined by the movement of exchange rates between two currencies. On the contracted settlement date, the profit to one party is paid by the other based on the difference between the contracted NDF rate (set at the trade's inception) and the prevailing NDF fix (usually a close approximation of the spot foreign exchange rate) on an agreed notional amount. NDF contracts do not involve an exchange of the agreed-upon notional amounts of the currencies involved. Instead, NDFs are cash settled in a single currency, usually a reserve currency. NDFs generally are used when international trading of a physical currency is relatively difficult or prohibited.
The Commission understands from market participants that NDFs provide an important market function because they are used to hedge exposures to restricted currencies when the exposure is held by someone outside of the home jurisdiction. The Commission also understands that NDFs are economically and functionally similar to deliverable foreign exchange forwards in that the same net value is transmitted in either structure.
Further, the Commission has learned from market participants that markets continue to treat both NDFs and deliverable foreign exchange forwards as the same functional product. Like deliverable foreign exchange forwards, NDFs settle on a net rather than gross basis, which significantly mitigates counterparty risk in this context. In some cases, market participants that previously had settled deliverable foreign exchange forwards on a net basis (whether to minimize counterparty risk or for other reasons) now take steps so as to ensure they are able to avail themselves of the exemption from swap status afforded by the Treasury Determination, including settlement of foreign exchange forwards on a gross basis.
The Commission could determine to amend the de minimis exception in paragraph (4) of the “swap dealer” definition in § 1.3 of the Commission's regulations by excepting NDFs from consideration when calculating the AGNA of swap dealing activity for purposes of the de minimis threshold. Excepting NDFs would result in a more comparable regulatory treatment for these transactions when compared with foreign exchange swaps and foreign exchange forwards pursuant to the Treasury Determination.
Given these considerations, the Commission welcomes comments on the following:
(1) Should the Commission except NDFs from consideration when calculating the AGNA of swap dealing activity for purposes of the de minimis exception? Why or why not?
(2) Are there other foreign exchange derivatives that the Commission should except from consideration for counting towards the de minimis threshold?
(3) Do NDFs pose any particular systemic risk in a manner distinct from foreign exchange swaps and foreign exchange forwards?
(4) If the Commission were to except NDFs from consideration when calculating the AGNA for purposes of the de minimis exception, are there particular limits that the Commission should consider in connection with this exception?
(5) What would be the market liquidity impact if the Commission were to except NDFs from counting towards the de minimis threshold?
(6) Is there material benefit to the market in requiring participants that transact in NDFs to register with the Commission, while not imposing similar obligations on participants that transact in deliverable foreign exchange forwards? If so, what benefits accrue from imposing such registration obligations?
(7) Please provide any relevant data that may assist the Commission in evaluating whether to except NDFs from counting towards the de minimis threshold.
(8) Please provide any additional comments on other factors or issues the Commission should consider when evaluating whether to except NDFs from counting towards the de minimis threshold.
The Regulatory Flexibility Act (“RFA”) requires that agencies consider
Accordingly, the Chairman, on behalf of the Commission, hereby certifies pursuant to 5 U.S.C. 605(b) that this Proposal will not have a significant economic impact on a substantial number of small entities. The Commission invites comment on the impact of this Proposal on small entities.
The Paperwork Reduction Act of 1955 (“PRA”)
The Commission notes that all reporting and recordkeeping requirements applicable to SDs result from other rulemakings, for which the CFTC has sought OMB approval, and are outside the scope of rulemakings related to the SD Definition.
Section 15(a) of the CEA requires the Commission to consider the costs and benefits of its actions before promulgating a regulation under the CEA or issuing certain orders.
The Proposal amends the de minimis exception in paragraph (4) of the SD Definition in § 1.3 by: (1) Setting the de minimis exception threshold at $8 billion in AGNA of swap dealing activity, the same as the current phase-in level, and removing the phase-in process; (2) adding an exception from the de minimis threshold calculation for swaps entered into by IDIs in connection with originating loans to customers; (3) adding an exception from the de minimis threshold calculation for swaps entered into by a person for purposes of hedging financial or physical positions; (4) codifying prior DSIO guidance regarding the treatment of swaps that result from multilateral portfolio compression exercises; and (5) providing that the Commission may determine the methodology to be used to calculate the notional amount for any group, category, type, or class of swaps, and delegating to the Director of DSIO the authority to make such determinations.
As part of this cost-benefit consideration, the Commission will: (1) Discuss the costs and benefits of each of the proposed changes; and (2) analyze the proposed amendments as they relate to each of the 15(a) factors.
As discussed above, the SD Definition provides an exception from the SD Definition for persons who engage in a de minimis amount of swap dealing activity. Currently, a person shall not be deemed to be an SD unless swaps entered into in connection with swap dealing activity exceed an AGNA threshold of $3 billion (measured over the prior 12-month period), subject to a phase-in period that is currently in effect, during which the AGNA threshold is set at $8 billion. The Commission is proposing to amend the de minimis exception to the SD Definition to set the de minimis threshold at the current $8 billion phase-in level.
There are general policy-related costs and benefits associated with the proposal to set the de minimis threshold at $8 billion. In addition to these policy considerations, the proposal to set the de minimis threshold at $8 billion would also have specific monetary costs and benefits as compared to a lower or higher threshold. The current $8 billion phase-in level threshold, along with the prospect that the threshold would decrease to $3 billion after December 31, 2019 in the absence of further Commission action, sets the baseline for the Commission's consideration of the costs and benefits of the proposed alternatives. Accordingly, the Commission considers the costs and benefits that would result from maintaining the current $8 billion phase-in level threshold, or alternatively, a threshold level below or above the current $8 billion threshold. The status quo baseline also includes other aspects of existing rules related to the de minimis exception. The analysis also takes into account any no-action relief, to the extent such relief is being relied upon. As the Commission is of the preliminary belief that the existing no-action relief related to the de minimis exception is being fully relied upon by market participants, the cost-benefit discussion that follows also considered the effects of that relief.
There are several policy objectives underlying SD regulation and the de minimis exception to SD registration. As discussed above in section I.C, the primary policy objectives of SD regulation include reducing systemic risk, increasing counterparty protections, and increasing market efficiency, orderliness, and transparency.
As noted in the SD Definition Adopting Release, generally, the lower the de minimis threshold, the greater the number of entities that are subject to the SD-related regulatory requirements, which could decrease systemic risk, increase counterparty protections, and promote swap market efficiency, orderliness, and transparency.
At the $8 billion threshold, the 2017 Transaction Coverage and 2017 AGNA Coverage ratios indicate that nearly all swaps were covered by SD regulation, giving rise to the benefits from the policy objectives of SD regulation discussed above. Specifically, as seen in Table 1 in section II.A.2.i, almost all swap transactions involved at least one registered SD as a counterparty, approximately 99 percent or greater for IRS, CDS, FX swaps, and equity swaps. For NFC swaps, approximately 86 percent of transactions involved at least one registered SD as a counterparty. Overall, approximately 98 percent of all swap transactions involved at least one registered SD. As seen in Table 2, almost all AGNA of swaps activity included at least one registered SD, approximately 99 percent or greater for IRS, CDS, FX swaps, and equity swaps.
Further, the Commission notes that the 6,440 entities that did not enter into any transactions with a registered SD had limited activity overall. As discussed in section II.A.2.i, the 6,440 entities entered into 77,333 transactions, representing approximately 1.7 percent of the overall number of transactions during the review period. Additionally, collectively, the 6,440 entities had $68 billion in AGNA of swaps activity, representing approximately 0.03 percent of the overall AGNA of swaps activity during the review period. The Commission believes that this limited activity indicates that to the extent these entities are engaging in swap dealing activities, such activity is likely ancillary and in connection with other client services, potentially indicating that the policy rationales behind a de minimis exception are being advanced at the current $8 billion threshold.
Additionally, with respect to NFC swaps, Table 13 in section II.A.2.iv indicates that registered SDs still entered into the significant majority (86 percent) of the overall market's total transactions and faced 83 percent of counterparties in at least one transaction, indicating that the existing $8 billion de minimis threshold has helped extend the benefits of SD registration to much of the NFC swap market. The trading activity of the 42 unregistered entities with 10 or more NFC swap counterparties represents approximately 13 percent of the overall NFC swap market by transaction count. However, as compared to the existing 44 registered SDs with at least 10 counterparties, these 42 In-Scope Entities have significantly lower mean transaction and counterparty counts, indicating that they may only be providing ancillary dealing services to accommodate commercial end-user clients, also potentially indicating that the policy rationales behind a de minimis exception are being advanced at the current $8 billion threshold.
The Commission is of the view that the systemic risk mitigation, counterparty protection, and market efficiency benefits of SD regulation would be enhanced in only a very limited manner if the de minimis threshold decreased from $8 billion to $3 billion, as would be the case if the current regulation and the existing Commission order establishing an end to the phase-in period on December 31, 2019 were left unchanged. As seen in Table 4 in section II.A.2.ii, the Estimated AGNA Coverage would increase from approximately $221,020 billion (99.95 percent) to $221,039 billion (99.96 percent), an increase of $19 billion (a 0.01 percentage point increase). As seen in Table 5, the Estimated Transaction Coverage would increase from 3,795,330 trades (99.77 percent) to 3,797,734 trades (99.83 percent), an increase of 2,404 trades (a 0.06 percentage point increase). As seen in Table 6, the Estimated Counterparty Coverage would increase from 30,879 counterparties (88.80 percent) to 31,559 counterparties (90.75 percent), an increase of 680 counterparties (a 1.96 percentage point increase). The effect of these limited increases is further mitigated by the fact that at the current $8 billion phase-in threshold, the substantial majority of transactions are already covered by SD regulation—and related counterparty protection requirements—because they include at least one registered SD as a counterparty.
For NFC swaps, as discussed in section II.A.2.iv, without notional-equivalent data, it is unclear how many of the 42 In-Scope Entities with 10 or more counterparties that are not registered SDs would actually be subject to SD registration at a $3 billion de minimis threshold. It is possible that a portion of the swaps activity for some or all of these entities qualifies for the physical hedging exclusion in paragraph (6)(iii) of the SD Definition, and therefore would not be considered swap dealing activity, regardless of the de minimis threshold level.
As discussed in section II.A.2.ii with respect to IRS, CDS, FX swaps, and equity swaps, and section II.A.2.iv with respect to NFC swaps, the Commission also notes that it is possible that a lower de minimis threshold could lead to certain entities reducing or ceasing swaps activity to avoid registration and its related costs. Although the magnitude of this effect is unclear, reduced swap dealing activity could lead to increased concentration in the swap dealing market, reduced availability of potential swap counterparties, reduced liquidity, increased volatility, higher fees, wider bid/ask spreads, or reduced competitive pricing. The end-user counterparties of these smaller swap dealing entities may be adversely impacted by the above consequences and could face a reduced ability to use swaps to manage their business risks.
Conversely, a higher de minimis threshold would potentially decrease the number of registered SDs, which could have a negative impact on
As seen in Table 9 in section II.A.2.iii, in comparison to an $8 billion threshold, a $100 billion threshold would reduce the Estimated AGNA Coverage from approximately $221,020 billion (99.95 percent) to $220,877 billion (99.88 percent), a decrease of $143 billion (a 0.06 percentage point decrease). As seen in Table 10, in comparison to an $8 billion threshold, a $100 billion threshold would reduce the Estimated Transaction Coverage from 3,795,330 trades (99.77 percent) to 3,773,440 trades (99.20 percent), a decrease of 21,890 trades (a 0.58 percentage point decrease). The decreases would be more limited at higher thresholds of $20 billion or $50 billion. The data also indicates that at higher thresholds, there is a more pronounced decrease in Estimated Counterparty Coverage. As seen in Table 11, the Estimated Counterparty Coverage would decrease from 30,879 counterparties (88.80 percent) to 28,234 counterparties (81.19 percent), a decrease of 2,645 counterparties (a 7.61 percentage point decrease). The decrease would be lower at thresholds of $20 billion and $50 billion, at 2.80 percentage points and 5.71 percentage points, respectively.
Although it has not conducted an analysis of AGNA activity in NFC swaps, the Commission is of the preliminary view that increasing the de minimis threshold could potentially lead to fewer registered SDs participating in in the NFC swap market, similar to its observations with respect to IRS, CDS, FX swaps, and equity swaps discussed above in section II.A.2.iii. This could reduce the number of entities transacting with registered SDs.
The cost of reduced protections for counterparties would be realized to the extent a higher threshold would result in fewer swaps involving at least one registered SD. Additionally, depending on how the swap market adapts to a higher threshold, it is also possible that the reduction in Estimated Regulatory Coverage would be greater than the data indicates to the extent that a higher de minimis threshold leads to an increased amount of swap dealing activity between entities that are not registered SDs. In such a scenario, Estimated Regulatory Coverage could potentially decrease more than the data indicates, negatively impacting the policy goals of SD regulation.
As previously discussed, analysis indicates that the Estimated AGNA Coverage is not very sensitive to changes in de minimis threshold level. Staff also conducted a preliminary analysis of the sensitivity of entity-netted notional amounts (“ENNs”)
The preliminary analysis indicates that IRS ENNs are generally not overly sensitive to the de minimis threshold levels between $3 billion and $50 billion, providing additional support for staff's preliminary consideration of the policy-related costs and benefits discussed above. Table 15 shows the results of an analysis of the de minimis threshold in terms of ENNs for the IRS market.
The 108 Likely SDs at $8 billion identified by the AGNA analysis in section II.A.2.ii above represented approximately $9.8 trillion of long ENNs and $8.2 trillion of short ENNs on December 15, 2017. A reduction in the de minimis threshold from $8 billion to $3 billion would have only a modest effect on the coverage of risk transfer as measured by IRS ENNs, adding only 0.6 percent of additional long ENNs and 1.1 percent of additional short ENNs. Similarly, an increase in the de minimis threshold from $8 billion to $50 billion would modestly decrease long ENNs by 1.4 percent and short ENNs by 1.4 percent. The decrease would be more limited at a threshold of $20 billion.
It is likely that for any de minimis threshold, some firms will have AGNA of swap dealing activity sufficiently close to the threshold so as to require analysis to determine whether their AGNA qualifies as de minimis. Hence, with a $3 billion threshold, some set of entities will likely have to incur the direct costs of analyzing whether they
Based on the available data, the Commission estimates that if the de minimis threshold were set at $3 billion, approximately 22 currently unregistered entities would need to conduct an initial analysis of whether they would be above the threshold.
The estimates of the hourly costs for these personnel are from SIFMA's Management & Professional Earnings in the Securities Industry 2013 survey, modified to account for an 1,800-hour work-year and multiplied by 5.35 to account for firm size, employee benefits, and overhead, which is the same multiplier that was used when the SD Definition was adopted.
The Commission recognizes that particular entities may, based on their circumstances, incur costs substantially greater or less than the estimated averages.
Conversely, the Commission assumes that a higher threshold would permit certain entities to no longer incur ongoing costs of assessing whether they are above the threshold. The Commission estimated the savings that would result from a higher de minimis threshold of $20 billion. Based on the available data, the Commission estimates that if the de minimis threshold were set at $20 billion, approximately 29 entities would no longer need to conduct an ongoing analysis of whether they would be above the new threshold, while 4 entities may begin conducting such an analysis.
Section 15(a) of the CEA requires the Commission to consider the effects of its actions in light of the following five factors:
Providing regulatory protections for swap counterparties who may be less experienced or knowledgeable about the swap products offered by SDs (particularly end-users who use swaps for hedging or investment purposes) is a fundamental policy goal advanced by the regulation of SDs.
The Commission is proposing to maintain the current de minimis phase-in threshold of $8 billion in AGNA of swap dealing activity. As discussed above, the Commission recognizes that a $3 billion de minimis threshold may result in more entities being required to register as SDs compared to the proposed (and currently in-effect) $8 billion threshold, thereby extending counterparty protections to a greater number of market participants. However, this benefit is relatively small because, at the current $8 billion phase-in threshold, the substantial majority of transactions are already covered by SD regulation—and related counterparty protection requirements—since they include at least one registered SD as a counterparty.
On the other hand, as noted above, a threshold above $8 billion may result in fewer entities being required to register as SDs, thus extending counterparty protections to a fewer number of market participants. Although the Estimated Transaction Coverage and Estimated AGNA Coverage would not decrease much at higher thresholds of up to $100 billion, the decrease in Estimated Counterparty Coverage is more pronounced at higher de minimis thresholds, potentially indicating that the benefit of SD counterparty protections requirements could be reduced at higher thresholds.
SD regulation is also intended to reduce systemic risk in the swap market. Pursuant to the Dodd-Frank Act, the Commission has proposed or adopted regulations for SDs, including margin and risk management requirements, designed to mitigate the potential systemic risk inherent in the swap market. Therefore, the Commission recognizes that a lower de minimis threshold may result in more entities being required to register as SDs, thereby potentially further reducing systemic risk. Conversely, a higher de minimis threshold may result in fewer entities being required to register an SD and, thus, possibly increase systematic risk.
However, the Commission's data appears to indicate that the additional entities that would need to register at the $3 billion de minimis threshold are engaged in a comparatively smaller amount of swap dealing activity. Many of these entities might be expected to have fewer counterparties and smaller overall risk exposures as compared to the SDs that engage in swap dealing in excess of the $8 billion level. Accordingly, the Commission believes that that the incremental reduction in systemic risk that may be achieved by registering dealers that engage in dealing between the $3 billion and $8 billion thresholds is limited.
The data also indicates that at higher thresholds of $20 billion, $50 billion, or $100 billion, fewer entities would be
Additionally, as discussed above, the ENNs analysis suggests that the change in the extent to which market risk is held by persons identified as Likely SDs is not very sensitive to the changes in the thresholds considered here.
The Commission preliminarily believes that setting the de minimis threshold at $8 billion will not substantially diminish the protection of market participants and the public as compared to a $3 billion threshold. Further, as discussed, the Commission does not expect that an increase in the threshold would increase the protection of market participants and the public.
Another goal of SD regulation is swap market efficiency, orderliness, and transparency. These market benefits are achieved through regulations requiring, for example, SDs to keep detailed daily trading records, report trade information, provide counterparty disclosures about swap risks and pricing, and engage in portfolio reconciliation and compression exercises.
As compared to a $3 billion de minimis threshold, an $8 billion threshold may have a negative effect on the efficiency and integrity of the markets as fewer entities are required to register as SDs and fewer transactions become subject to SD-related regulations. However, the Commission also recognizes that the efficiency and competitiveness of the swap market may be negatively impacted if the de minimis threshold is set too low, by potentially increasing barriers to entry that may stifle competition and reduce swap market efficiency. For example, if entities choose to reduce or cease their swap dealing activities in response to the $3 billion de minimis threshold, the number or availability of market makers for swaps may be reduced, which could lead to increased costs for potential counterparties and end-users. Conversely, a higher threshold may increase market liquidity, efficiency, and competition as more entities engage in swap dealing without SD registration as a barrier to entry. However, a higher threshold may also result in fewer swaps being subject to SD-related regulations requiring, for example, disclosures, portfolio reconciliation, portfolio, compression, potentially reducing the financial integrity of markets.
Considering these countervailing factors, the Commission believes that setting the de minimis threshold at $8 billion will not significantly diminish the efficiency, competitiveness, and financial integrity of markets as compared to a $3 billion threshold. Further, as discussed, an increase in the threshold would potentially have both positive and negative effects to the efficiency, competitiveness, and financial integrity of the markets.
All else being equal, the Commission preliminarily believes that price discovery will not be harmed and might be improved if there are more entities engaging in ancillary dealing due to increased competitiveness among swap counterparties. The Commission is preliminarily of the view that, as compared to a $3 billion threshold, an $8 billion de minimis threshold would encourage participation of new SDs and promote ancillary dealing because those entities engaged in swap dealing activities below the threshold would not need to incur the direct costs of registration until they exceeded a higher threshold.
Similarly, raising the threshold above $8 billion could lead to even more entities engaging in ancillary dealing.
The Commission notes that a higher de minimis threshold could lead to impaired risk management practices because a lower number of entities would be required by regulation to: (1) Develop and implement detailed risk management programs; (2) adhere to business conduct standards that reduce operational and other risks; and (3) satisfy margin requirements for uncleared swaps. For the same reason, a lower threshold could positively impact risk management since more entities would be required to comply with the above mentioned risk-related SD regulations.
The Commission has not identified any other public interest considerations with respect to setting the de minimis threshold at $8 billion in AGNA of swap dealing activity.
The proposed IDI De Minimis Provision would require that the loans and related swaps generally meet requirements that, as compared to the requirements of the IDI Swap Dealing Exclusion in paragraph (5) of the SD Definition, reflect: (1) A revised timing requirement for when the swap must be entered into; (2) an expansion of the types of swaps that are eligible; (3) a reduced syndication percentage requirement; (4) an elimination of the notional amount cap; and (5) a refined explanation of the types of loans that would qualify. Any swap that meets the requirements of the IDI Swap Dealing Exclusion in paragraph (5) of the SD Definition would also meet the requirements of this new IDI De Minimis Provision.
Similar to the IDI Swap Dealing Exclusion in paragraph (5) of the SD Definition, the IDI De Minimis Provision allows IDIs to tailor the risks of a loan to the loan customer's and the lender's needs and promotes the risk-mitigating effects of swaps. The IDI De Minimis Provision, however, allows more flexibility, which should expand the universe of swaps that do not have to be counted towards the de minimis threshold, as well as decrease concentration in the markets for swaps and loans. For example, the different requirements for both timing and the relationship of the swap to the loan will increase the ability of IDIs to enter into certain swaps and not be concerned that they would have to be counted towards the de minimis threshold. This should enhance market liquidity, which is helpful for customers of IDIs that may not have access to larger SDs. Conversely, expanding the universe of swaps not required to be counted towards the de minimis threshold also expands the number of swaps potentially not subject to SD regulation and consequently, could decrease customer protections. As mentioned in section II.B.1, however, the proposed IDI De Minimis Provision will likely benefit mostly small and mid-sized IDIs, which mitigates the concern that systemic risk will increase as a result of the proposed change.
As indicated by Table 14 in section II.B.1, the level of activity between unregistered IDIs and other unregistered persons is between only approximately 0.003 percent and 0.007 percent of the total AGNA of swaps activity, depending on the range of AGNA of
The Commission believes that the benefits of added market liquidity may be more significant than the costs of potentially reduced customer protections. The cost of reduced customer protections is mitigated because such swaps would still be required to be reported to the CFTC and IDIs would still be subject to prudential regulatory requirements, thereby providing oversight with respect to such swaps.
Section 15(a) of the CEA requires the Commission to consider the effects of its actions in light of the following five factors:
The IDI De Minimis Provision proposed amendment may expand the universe of swaps that fall outside the scope of SD regulations, potentially increasing systemic risk and reducing counterparty protections. However, the IDIs would still be subject to prudential regulatory requirements, potentially mitigating this concern.
The efficiency, competitiveness, and financial integrity of the markets may also be affected by the addition of the IDI De Minimis Provision since it provides IDIs more flexibility to enter into swaps in connection with loans without registering as SDs. With the added flexibility, the number of IDIs offering swaps in connection with loans may increase, which might have a positive impact on the efficiency and competiveness of the market for swaps and loans. However, the added flexibility may also result in fewer swaps being subject to SD-related regulations.
The IDI De Minimis Provision could lead to better price discovery as small and mid-sized banks increase their level of ancillary dealing activity, which might increase the frequency of swap transaction pricing.
The proposed IDI De Minimis Provision should increase the usage of swaps for risk mitigation, which might reduce the risk resulting from the defaulting of loan customers. Additionally, having more IDIs offering swaps in connection with loans might decrease concentration in the market for loan-related swaps and thereby decrease risk as well.
The Commission has not identified any other public interest considerations with respect to the proposed IDI De Minimis Provision.
The Commission is proposing new paragraph (4)(D), which provides a general exception from the SD de minimis threshold calculation for certain hedging swaps. To meet the requirements of the Hedging De Minimis Provision, a swap must be entered into by a person for the primary purpose of reducing or otherwise mitigating one or more of its specific risks, including, but not limited to, market risk, commodity price risk, rate risk, basis risk, credit risk, volatility risk, correlation risk, foreign exchange risk, or similar risks arising in connection with existing or anticipated identifiable assets, liabilities, positions, contracts, or other holdings of the person or any affiliate. Additionally, the entity entering into the hedging swap must not: (1) Be the price maker of the hedging swap; (2) receive or collect a bid/ask spread, fee, or commission for entering into the hedging swap; and (3) receive other compensation separate from the contractual terms of the hedging swap in exchange for entering into the hedging swap.
Generally, the proposed Hedging De Minimis Provision is not expected to impact how such swaps are treated for purposes of the de minimis threshold calculation, but rather provides additional clarity to market participants, which allows them to determine more easily whether swaps entered into for purposes of hedging financial or physical positions are counted towards the de minimis threshold. The Commission believes that the clarity will benefit certain entities by encouraging economically-appropriate risk mitigation, potentially reducing systemic risk broadly. The proposed exception should reduce costs that persons engaging in such swaps would incur in determining if they are SDs. Such added clarity may also improve market liquidity as entities feel more comfortable entering into a swap for the purpose of hedging, knowing that the swap would not necessarily constitute swap dealing. In addition to increased market liquidity, the additional clarity should encourage economically appropriate risk mitigation.
Conversely, it is possible that improper application of the Hedging De Minimis Provision could lead to certain swap dealing activity being treated as hedging activity that does not need to be counted towards the de minimis threshold. This may reduce the level of the Commission's regulatory coverage of the swap market. However, the Commission believes that the requirements of the proposed Hedging De Minimis Provision limit the likelihood that dealing activity would be treated as hedging activity by market participants.
Section 15(a) of the CEA requires the Commission to consider the effects of its actions in light of the following five factors:
The Commission notes that certain swaps that are now currently counted towards the de minimis threshold could now be hedging swaps that would not be counted, which could potentially mean less regulatory coverage and protection for market participants. However, as discussed, the Commission believes that the proposed exception for swaps entered into to hedge financial or physical positions has a number of requirements that greatly reduce the likelihood that swap dealing activity would improperly not be counted towards an entity's de minimis threshold calculation, reducing the potential impact to systemic risk and counterparty protections.
With respect to the Hedging De Minimis Provision, market liquidity may improve as entities would be able to execute hedging swaps knowing that the swaps would not necessarily constitute swap dealing that counts towards the de minimis threshold.
The Hedging De Minimis Provision could lead to better price discovery as more entities gain certainty that hedging swaps are not considered dealing activity, and therefore increase their hedging-related activity because they are less likely to have to register as an SD.
The added clarity that certain hedging swaps need not be counted towards an entity's de minimis calculation could lead to improved risk management as certain entities increase their hedging activities.
The Commission has not identified any other public interest considerations with respect to the proposed Hedging De Minimis Provision.
The Commission believes that swaps which result from multilateral portfolio compression exercises and which meet the requirements of the existing Staff Letter No. 12-62 would also meet the requirements of the proposed rule amendment, and are already not considered swaps that have to count towards a person's de minimis threshold. The Commission is of the preliminary belief that the existing no-action relief is being fully relied upon by market participants, and therefore, this proposed change could lead to increased certainty for market participants, without any significant policy-related costs for the swap market.
Section 15(a) of the CEA requires the Commission to consider the effects of its actions in light of the following five factors:
Multilateral portfolio compression exercises help to better align initial margin between appropriate counterparties when, for example, a swap with a compression exercise participant has been backed-to-backed between two SD affiliates in the same holding company. In such cases, the original outward facing swap with the first affiliate and the back-to-back affiliate swap may be replaced with an outward facing swap with the second affiliate. Thus, having SDs engage in compression exercises may increase the protections that posting initial margin provides market participants and the public, namely, a counterparty has a senior claim to posted initial margin and may not have to become a general creditor in a bankruptcy. To the extent that a provision explicitly excepting multilateral portfolio compression exercise swaps from the de minimis calculation encourages more participation in compression exercises, market participants and the public may be better protected.
The increased certainty that swaps resulting from multilateral portfolio compression exercises do not need to be counted towards a person's de minimis threshold could encourage persons to enter into multilateral portfolio compression exercises on a more regular basis, potentially increasing the financial integrity of the markets.
Prices from swap compression exercises are not publicly reported because they are not price-forming trades. As such, the Commission has not identified any price discovery considerations with respect to the MPCE De Minimis Provision.
The increased certainty that swaps resulting from multilateral portfolio compression exercises do not need to be counted towards a person's de minimis threshold could encourage persons to enter into multilateral portfolio compression exercises on a more regular basis, potentially reducing risk.
The Commission has not identified any other public interest considerations with respect to the MPCE De Minimis Provision.
To allow for more timely clarity to market participants, the Commission is proposing new paragraph (4)(vii) of the SD Definition, which provides that the Commission may determine the methodology to be used to calculate the notional amount for any group, category, type, or class of swaps, and delegates to the Director of DSIO the authority to determine methodologies for calculating notional amounts. Additionally, any such methodology shall be economically reasonable and analytically supported, and be made publicly available on the CFTC website. The Commission believes that this proposed amendment would facilitate timely clarity regarding notional amount calculation methodologies for purposes of the de minimis threshold, and help ensure that persons are fully aware of whether their activities could lead to (or presently entail) SD registration requirements in the event of market or regulatory changes. As is the case with existing delegations to staff, the Commission would continue to reserve the right to exercise the delegated authority itself at any time.
The Commission has not identified any protection of market participants and the public considerations with respect to the proposed rule for determining the methodology for calculating notional amounts and the delegation of authority.
The Commission has not identified any efficiency, competitiveness, and financial integrity of the markets considerations with respect to the proposed rule for determining the methodology for calculating notional amounts and the delegation of authority.
The Commission has not identified any price discovery considerations with respect to the proposed rule for determining the methodology for calculating notional amounts and the delegation of authority.
The Commission believes that most market participants understand the risks of the swaps they engage in. To the extent that the proposed amendment compels SDs to assess the deltas of embedded options in swaps, however, the proposed amendment could lead to an audit trail for SDs that might ultimately improve risk management (if estimated deltas did not exist already).
The Commission believes that the proposed rule for determining the methodology for calculating notional amounts and the delegation of authority will ensure that persons are fully aware of whether their activities could lead to (or presently entail) SD registration requirements in the event of market or regulatory changes.
The Commission invites comments from the public on all aspects of its
(1) What are the costs and benefits to market participants associated with each proposed change? Please explain and, to the extent possible, quantify these costs and benefits.
(2) What are the direct costs associated with SD registration and compliance? What is the smallest notional amount of dealing swaps that an entity must enter into in order for the profitability of its swap dealing activity to exceed SD registration and compliance costs?
(3) Are there indirect benefits to registering as an SD? For example, does being a registered SD make an entity a more desirable counterparty? Are many of the benefits of transacting with an SD not relevant because many requirements are part of standard ISDA agreements?
(4) Besides the direct costs of registration and compliance, are there any indirect costs to becoming a registered SD? What are these costs?
(5) Would the entities with dealing activity between $3 billion and $8 billion incur similar registration and compliance costs as compared to entities with dealing activity above $8 billion? Would those dealers be impacted differently by those costs?
(6) What are the costs and benefits to the public associated with each proposed change? Please explain and, to the extent possible, quantify these costs and benefits.
(7) How does each proposed change affect the efficiency, competitiveness, and financial integrity of markets?
(8) How does each proposed change affect price discovery for the swap market?
(9) How does each proposed change affect sound risk management for swap market participants?
(10) How does each proposed change affect other public interests that the Commission may elect to consider?
(11) Has the Commission identified all of the relevant categories of costs and benefits in its preliminary consideration of the costs and benefits? Please describe any additional categories of costs or benefits that the Commission should consider.
(12) The Commission preliminarily believes that cross-border aspects of this rulemaking are similar to domestic applications. Do the costs and benefits of the proposed changes, as applied in cross-border contexts, differ from those costs and benefits resulting from their domestic application, and, if so, in what ways and to what extent?
Section 15(b) of the CEA requires the Commission to take into consideration the public interest to be protected by the antitrust laws and endeavor to take the least anticompetitive means of achieving the purposes of the CEA, in issuing any order or adopting any Commission rule or regulation (including any exemption under section 4(c) or 4c(b)), or in requiring or approving any bylaw, rule, or regulation of a contract market or registered futures association established pursuant to section 17 of the CEA.
The Commission believes that the public interest to be protected by the antitrust laws is generally to protect competition. The Commission requests comment on whether this Proposal implicates any other specific public interest to be protected by the antitrust laws.
The Commission has considered this Proposal to determine whether it is anticompetitive and has preliminarily identified no anticompetitive effects. The Commission requests comment on whether this Proposal is anticompetitive and, if it is, what the anticompetitive effects are.
Because the Commission has preliminarily determined that this Proposal is not anticompetitive and has no anticompetitive effects, the Commission has not identified any less anticompetitive means of achieving the purposes of the CEA. The Commission requests comment on whether there are less anticompetitive means of achieving the relevant purposes of the CEA that would otherwise be served by adopting this Proposal.
Commodity futures, Definitions, De minimis exception, Insured depository institutions, Swaps, Swap dealers.
For the reasons stated in the preamble, the Commodity Futures Trading Commission proposes to amend 17 CFR part 1 as follows:
7 U.S.C. 1a, 2, 5, 6, 6a, 6b, 6c, 6d, 6e, 6f, 6g, 6h, 6i, 6k, 6
The revisions and additions read as follows:
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(E)
(ii) [Reserved]
(vii)
(B)
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The following appendices will not appear in the Code of Federal Regulations.
On this matter, Chairman Giancarlo and Commissioner Quintenz voted in the affirmative. Commissioner Behnam voted in the negative.
Since becoming Chairman, I have committed to resolving this outstanding issue and giving market participants the regulatory certainty they need. Still, as you know, last year I requested that the Commission postpone a decision on the de minimis threshold for a year. That decision was understandably disappointing to some, including my fellow Commissioners, who said they were then ready to vote on it.
Yet, as I told Congress at the time, I did not just want to address the de minimis threshold; I wanted to get it right.
Today, I believe the staff has had adequate time to analyze the most current and comprehensive trading data and arrive at a recommendation for the best path forward in terms of managing risk to the financial system. The staff has provided
The data shows quite clearly that a drop in the de minimis definition from $8 billion to $3 billion would not have an appreciable impact on coverage of the marketplace. In fact, any impact would be less than one percent—an amount that is truly de minimis.
On the other hand, the drop in the threshold would pose unnecessary burdens for non-financial companies that engage in relatively small levels of swap dealing to manage business risk for themselves and their customers. That would likely cause non-financial companies to curtail or terminate risk-hedging activities with their customers, limiting risk-management options for end-users and ultimately consolidating marketplace risk in only a few large, Wall Street swap dealers.
In my travels around the country over the past four years on the Commission, I have met numerous small swaps trading firms that make markets in local markets or in select asset classes. These firms are often housed in small community banks, local energy utilities or commodity trading houses. They all trade below the $8 billion threshold. Almost all of them say that if the de minimis threshold were to drop to $3 billion, they would reduce their trading accordingly. They just cannot afford to be registered as swap dealers.
Who are the winners if these small firms reduce their market making activities? Big Wall Street banks. Who are the losers if these small firms reduce their market making activities? Small regional lenders, energy hedgers and Ag producers, who become more dependent on Wall Street trading liquidity. Who is the really big loser? The U.S. economy, which becomes more financially concentrated and less economically diverse.
That is why I think the proposed rule rightly balances the mandate to register swap dealers whose activity is large enough in size and scope to warrant oversight without detrimentally affecting community banks and agricultural co-ops that engage in limited swap dealing activity and do not pose systemic risk. Leaving the threshold at the $8 billion level allows firms to avoid incurring new costs for overhauling their existing procedures for monitoring and maintaining compliance with the threshold. It fosters increased certainty and efficiency in determining swap dealer registration by utilizing a simple objective test with a limited degree of complexity. And it ensures that smaller market makers and the counterparties with which they trade can engage in limited swap dealing without the high costs of registration and compliance as intended by Congress when it established the de minimis dealing exception to begin with.
The changes proposed today will also not count swaps of Insured Depository Institutions (IDIs) made in connection with loans. They would allow, for example, an insured depository institution swap dealer to write a swap with a customer 181 days after entering into a loan without counting it towards the $8 billion threshold. These types of changes will allow small and regional banks to further serve customers' needs without the added burden of unnecessary regulation and associated compliance costs.
This proposal incorporates feedback and input from my two fellow Commissioners and their fine staffs. We now look forward to feedback from the public and market participants. We ask numerous questions about whether any additional exceptions or calculations should be included in the final rule. Three years ago, I raised the question of whether there should be an exclusion from counting cleared swaps towards the registration threshold and that question is asked again. Your response to questions regarding adding other potential components will help the Commission assess whether further adjustments to the de minimis exception may be appropriate in the final rule.
As discussed in the adopting release, staff continues to consult with the SEC and prudential regulators regarding the changes in the proposal in particular some of the questions regarding exclusions. I remain committed to working with Chair Jay Clayton and the SEC in areas where harmonization is necessary and appropriate.
I also remain committed to finalizing this rule before the end of the year. I recognize that market participants need certainty. Today's proposal is a major step forward in doing just that. I applaud staff for this proposal and look forward to feedback.
I support this proposed rulemaking governing swap dealer registration, which is fundamental to the Commission's effective oversight of the swaps market.
Swap dealers are subject to extensive and costly regulatory requirements: Registration fees; minimum capital requirements; posting margin for uncleared swaps; IT costs for trade processing, reporting, confirmation, and reconciliation activities; costs to create and send clients daily valuation reports; costs for recordkeeping obligations; third party audit expenses; legal fees to develop and implement business conduct rules and many, many more. If that sounds like a big bill, it is. A prominent economic research firm estimated the present value of the cost for swap dealer registration compliance at $390 million per firm.
Those significant requirements and costs are imposed to advance equally significant policy objectives, such as the reduction of systemic risk, increased counterparty protections, and enhanced market efficiency and integrity. Therefore, the registration threshold, as the trigger mechanism for those costs and objectives, must be appropriately and specifically calibrated to ensure that the correct market group shoulders the burdens of swap dealer regulations because they are best situated to realize the corresponding policy goals of that registration.
I have stated previously, in great detail and with considerable evidence, the importance of appropriately calibrating the de minimis threshold so that entities posing no systemic risk and with a relatively small market footprint are not regulated under a regime that is more appropriate for the world's largest, most complex financial institutions.
From my first confirmation hearing in 2016 to the present day,
I still, and will continue to, believe that the criteria for determining swap dealer registration should be more closely correlated to risk. However, if any final rule is going to
While it would have been my preference that this concept appear in this proposal's rule text as the operative standard, I am very grateful to the Chairman and the Division of Swap Dealer and Intermediary Oversight (DSIO) for including a robust discussion in the preamble on the merits of replacing the current notional value de minimis threshold with a three-prong test. Specifically, the preamble suggests an entity could qualify for the de minimis exception if its dealing activity is below
I have included several questions in the proposal that ask for feedback on this approach, particularly with respect to the dealing counterparty and transaction count thresholds which I believe would provide market participants with additional flexibility to serve their clients' needs without triggering a very costly and burdensome registration process. I thank the staff of DSIO for including my questions in the proposal and welcome market participant's feedback on this potential approach.
I also welcome comments on the Proposed Rule's preamble discussion on accounting for exchange-traded or cleared swaps in an entity's de minimis calculation. Many of the policy goals of swap dealer regulation are accomplished when a swap is exchange-traded and cleared. For example, systemic risk concerns are diminished with respect to cleared swaps: The swaps are standardized, the executing counterparties do not incur counterparty credit risk because they face the clearinghouse and not each other, and each side is required to post margin that helps guarantee performance and prevent unfunded losses from accumulating. Removing such swaps from the de minimis calculation would better align the registration threshold with risk and would also, I believe, encourage additional liquidity on SEFs. I am hopeful that with the benefit of additional industry comment and further Commission analysis, the Commission will either adopt an exclusion for exchange-traded and cleared swaps or adjust their notional weighting in an entity's de minimis calculation.
We must remember, the Commission is not establishing the de minimis exception in a vacuum. Subsequent to the adoption of the swap dealer definition, other regulatory requirements have gone into effect which also advance the goals of swap dealer registration, such as mandatory clearing, SEF trading, reporting swap data to repositories, and margin requirements for uncleared swaps. For example, regardless of whether an entity is registered as a swap dealer, its swap activity is transparent to the Commission because of the swap data and real-time reporting requirements that apply to all market participants.
When the Commission first established the $8 billion de minimis threshold in 2012, it did so without the benefit of swap data.
Finally, I would like to commend the Chairman and DSIO for including many important improvements to the de minimis exception in this proposal which I fully support. For instance, I support an appropriate Insured Depository Institution exception that will allow for banks to serve their clients' needs. By removing unnecessary timing restrictions and expanding the types of credit extensions that qualify for the exception, the proposal should improve the ability of IDIs to help their customers hedge loan-related risks as the statute intended. I also support the proposed rule's clarification that swaps that hedge financial risks may be excluded from an entity's de minimis count. Market participants should be able to use swaps to manage their financial and physical risks without concern that such activity may trigger swap dealer registration.
I will vote in favor of issuing this proposal to the public for feedback and look forward to hearing from market participants about how these proposed amendments may be further refined or calibrated to increase the efficacy of the de minimis threshold to meet the goals of swap dealer registration.
I respectfully dissent from the Commodity Futures Trading Commission's (the “Commission” or “CFTC”) notice of proposed rulemaking addressing the de minimis exception to the swap dealer definition (the “Proposal”). I have a number of concerns with specific criteria of the various exceptions proposed and contemplated in the Proposal. However, my gravest concern is that the Commission is moving far beyond the task before it—setting the aggregate gross notional amount threshold for the de minimis exception—to redefine swap dealing activity absent meaningful collaboration with the Securities and Exchange Commission (“SEC”), as required by the Dodd-Frank Act,
As discussed in the preamble to the Proposal, the regulatory history sets forth a clear path towards—and a deadline to complete—today's determination to propose an amendment that would set the aggregate gross notional amount (“AGNA”) threshold for the de minimis exception at $8 billion in swap dealing activity entered into by a person over the preceding 12 months prior to the termination of the phase-in period on December 31, 2019.
It is now June 2018. Given the twelve month lookback for calculating the AGNA, absent Commission action, market participants will need to start tracking their swap dealing activity on January 1, 2019 to determine whether their dealing activity would require registration when the phase-in period ends on December 31, 2019. The Commission has less than six months to either finalize the Proposal or kick it down the road again by issuing a third order establishing yet another phase-in termination date sometime in the future.
Six months is an ambitious time frame for even a simple rule. While CFTC-specific data is not available, at least one study concluded that the average amount of time for federal regulatory agencies to finalize rules is generally between 14 and 20 months.
Instead, the Commission, having waited too long to address these critical issues jointly with the SEC, veered off course, and relies too heavily on an alternative means to reach its destination: The de minimis exception.
Under paragraph 4(v) of the swap dealer definition, the Commission may change the requirements of the de minimis exception by rule or regulation, and may do so independent of the SEC (“De Minimis Exception Authority”).
While the Commission's authority with respect to the de minimis exception is broad, the Commission cannot lose sight of its purpose, as set forth in the CEA,
Turning to the Proposal, and the critical issues, I am concerned with the Commission's use of its De Minimis Exception Authority to address longstanding concerns that the IDI Swap Dealing Exclusion, which was jointly adopted with the SEC as paragraph (5) to the swap dealer definition (“SD Definition), is unnecessarily restrictive, lacks clarity, and limits the ability of IDIs to serve customers in connection with their lending activity—which is inconsistent with the CEA.
Conducting a side-by-side comparison of the current text of paragraph (5) and proposed paragraph (4)(i)(C) of the SD Definition, it is difficult to understand what hurdles may have prevented the CFTC and SEC from engaging in a joint rulemaking to address these relatively modest differences, which are generally well supported by the record. It's especially noteworthy given the close working relationship between the two agencies and ongoing harmonization efforts.
I am similarly concerned that the Commission's use of its De Minimis Exception Authority to provide greater regulatory certainty with respect to swaps entered to hedge physical or financial exposures (the “Hedging De Minimis Provision”) will—out of an abundance of caution—be utilized by market participants
An exception, as proposed for the Hedging De Minimis Provision, ostensibly creates a precise rule, leaving compliance staff or even regulatory enforcement agencies with limited discretion when evaluating difficult scenarios. As the Commission has stated, “In general, entering into a swap for the purpose of hedging is inconsistent with swap dealing.”
The Proposal purports to create Commission authority to determine the methodology to be used to calculate the notional amount for any group, category, type, or class of swaps for purposes of the AGNA de minimis threshold calculation and immediately delegates that authority to the Director of the Division of Swap Dealer and Intermediary Oversight (“DSIO”). The Commission has, to my knowledge, not released public guidance on this issue since 2012.
For most swaps, calculation of notional amount is a matter of standard industry practice. There is not any controversy as to how notional amount is calculated. Giving the Director of DSIO broad authority to determine how this calculation is made for all categories of swaps is a remedy that is not commensurate to the limited issue of how to determine the notional value of commodity swaps. It also provides an opportunity for mischief. This provision could subsume the entire de minimis threshold by giving the Director of DSIO broad authority to determine what swaps count toward the threshold—and perhaps more importantly, what swaps do not.
I'm concerned that the Commission is proposing to both establish its authority and immediately delegate such authority without any internal discussion, without any public deliberation, and within this Proposal. The Commission has simply not articulated a sound rationale for moving abruptly forward on this rule proposal without fulsome consideration of its legal authority, potential risks, and possible alternatives. Indeed, upon review of the Proposal, it came to my attention that the Commission's proposed delineation of authority to determine the methodology for calculating notion amounts in proposed paragraph (D)(vii)(A) of the SD Definition may contradict its De Minimis Exception Authority.
The De Minimis Exception Authority provides that the Commission may by rule or regulation change the requirements of the de minimis exception. Given that the methodology for calculating notional amounts for purposes of the AGNA for the de minimis threshold would be a “requirement” of that exception, one could assume that the authority to alter it resides with the Commission, and that the Commission would need to engage in rulemaking to establish a methodology. Of course, the De Minimis Exception Authority includes a “may” versus a “shall,” and therefore the Commission has discretion to engage in rulemaking, but I believe the “may” applies more generally to suggest that the Commission may change the requirements of the de minimis exception, and if it chooses to do so, rulemaking is the vehicle. My point is that the Commission's precise authority and attendant parameters are unclear, and it would therefore be more prudent to first, define the parameters of the notional amount calculation issue, conduct additional research and explore our options to address it, and then propose a more cogent solution in a separate rulemaking so as not to further detract from the more salient and critical issues before the Commission as part of this Proposal.
Having become comfortable with using its De Minimis Exception Authority, the Commission appears to have determined to use this Proposal to seek comment on “other potential considerations for the de minimis threshold.” These considerations run the gamut from re-considering the merits of using AGNA by itself by seeking comment on adding alternative criteria in the form of a dealing counterparty or dealing transaction count threshold to excepting from consideration when calculating the AGNA for purposes of the de minimis threshold (1) swaps that are exchange-traded and/or cleared and (2) swaps that are categorized as non-deliverable forward transactions. These “considerations” result in the combined inclusion of more than 50 individual requests for comment, detracting from any reasonable market participant's (or the public's) ability to provide comments on the more critical issues raised by this Proposal. Moreover, each “potential consideration” raises individual concerns as to whether the Commission is attempting to undermine the swap dealer definition and circumvent Congressional intent.
The Commission is seeking comment on whether an entity should be able to qualify for the de minimis exception if its level of swap dealing activity is below any one of three criteria: (1) An AGNA threshold; (2) a proposed dealing counterparty count threshold; or (3) a proposed dealing transaction count threshold. In support of its request for comment, already limited Commission staff resources were utilized to construct an alternative to the proposal aimed at suggesting that, despite its analysis in the Proposal in support of setting the AGNA threshold for the de minimis exception at $8 billion, a $20 billion AGNA “backstop” threshold was appropriate. This analysis and attendant request for comment suddenly appeared in the Proposal after hours on May 31, 2018, providing my office less than 17 hours to respond before DSIO intended to submit a final voting copy to the Commission's Office of the Secretariat.
Not only is the inclusion of this request for comment in this Proposal overwhelmingly misplaced, but its inclusion at such a late hour in the process undermines the inherent fairness of the rulemaking process. Foremost, the Commission already rejected the use of counterparty and transaction count thresholds as determinative criteria for the de minimis threshold.
While I believe it may be appropriate for the Commission to explore other factors or criteria in defining the scope of the de minimis threshold, inclusion of even a request for comments on dealing counterparty count and dealing transaction count thresholds should be out of scope—even as a request for comment—for this Proposal, which speaks directly to the end of the phase-in, and is proceeding on a constrained time schedule such that even providing Commissioners the courtesy of ample opportunity to evaluate the merits of including this line of questioning was dispensed with.
Similar to the dealing counterparty and transaction count threshold, the Commission has already rejected arguments that swaps executed on an exchange should not be considered in determining if a person is a swap dealer.
Similarly, I believe that the issue of whether the Commission should consider an exception for NDFs from consideration when calculating the AGNA of swap dealing activity for purposes of the de minimis threshold is inappropriate. Such an exception ignores that the SD Definition is activities-based.
I am disappointed with today's Proposal and would have liked to been able to support the portions that were well supported by the data and analysis and could lead to a clear and legally sound resolution of the de minimis threshold, providing much needed regulatory certainty for a critical cohort of market participants. I am hopeful that market participants have sufficient time to evaluate and respond to the most critical aspects of this Proposal and do not get overwhelmed or overly optimistic with regard to lines of questioning that take us further afield from Congressional intent and therefore are less likely to come to fruition. I understand that messaging creates expectations; sometimes, we must focus on what's right and not what seems easy.
Farm Credit Administration.
Final rule.
The Farm Credit Administration (FCA, Agency, us, our, or we) adopts a final rule that amends our regulations governing investments of both Farm Credit System (FCS or System) banks and associations. The final rule strengthens eligibility criteria for investments that FCS banks purchase and hold, and implements section 939A of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act or DFA) by removing references to and requirements for credit ratings and substituting other appropriate standards of creditworthiness. The final rule revises FCA's regulatory approach to investments by FCS associations by limiting the type and amount of investments that an association may hold for risk management purposes.
This regulation shall become effective on January 1, 2019.
The final rule objectives are to:
• Strengthen investment practices at Farm Credit banks
• Ensure that Farm Credit banks hold sufficient high-quality liquid investments for liquidity purposes;
• Enhance the ability of the Farm Credit banks and associations to supply credit to agricultural and aquatic producers and their cooperatives in times of financial stress;
• Comply with section 939A of the Dodd-Frank Act;
• Modernize the investment eligibility criteria for Farm Credit banks; and
• Revise the investment regulation for associations to improve their investment management practices so they are more resilient to risk.
Congress created the Farm Credit System, which consists of Farm Credit banks, associations, service corporations,
Farm Credit banks depend on investments to provide liquidity and to manage surplus short-term funds and interest rate risk. Investments also help enable associations to manage the risks they confront.
FCA regulations in subpart E of part 615 impose comprehensive requirements on investment practices at all System institutions except Farmer Mac. We first proposed revisions to our investment regulations in 2011.
A major reason that we engaged in this rulemaking is that investment products are becoming increasingly complex, and some investments are riskier and less liquid than previously believed. Section 939A of the DFA requires each Federal agency to review all its regulations that reference or require the use of credit ratings issued by a Nationally Recognized Statistical Rating Organization (NRSRO) to assess the creditworthiness of an instrument. Under this provision of the Dodd-Frank Act, Federal agencies must also remove references to NRSRO credit ratings from their regulations and substitute other appropriate creditworthiness standards in their place. As a result, FCA is removing the actual references to NRSRO credit ratings in our regulations in subpart E of part 615.
FCA received over 1250 comment letters about our 2014 proposed regulations. FCS banks and associations submitted 12 comment letters, and we received separate comment letters from a System trade association and Farmer Mac. Commercial banks, and their various trade associations, as well as their directors, officers, and employees submitted the remaining comment letters. Most of the letters from bank commenters were form letters, and several individuals associated with the same bank submitted multiple or
After reviewing and considering the comment letters, FCA now enacts a final rule that governs investment activities at System banks, associations, and service corporations. The final rule: (1) Implements section 939A of the DFA; (2) strengthens investment management practices at FCS institutions, other than Farmer Mac; (3) improves the quality of System bank investments and streamlines the list of eligible investments; (4) revises the investment purposes and types associations may hold; and (5) clarifies the rules of divestiture of ineligible investments, and establishes new transition rules. Additionally, we updated the definitions for investments in subpart E of part 615, and we made conforming amendments to other regulations. FCA plans to rescind two Informational Memoranda, revise a third Informational Memorandum, and updating FCA Bookletter BL-064 so that FCA guidance conforms with this final rule.
FCA notes that all regulations in part 615, subpart E, together create a regulatory investment management framework for System institutions. In this context, System institutions need to consider and follow all requirements specified in §§ 615.5132, 615.5133, 615.5134, and 615.5140, as applicable. A System institution's decision to purchase and hold investments must be driven by an internal assessment of their risk tolerances and liquidity needs, plus eligible investments held.
The definitions in § 615.5131 apply to all our investment regulations in subpart E of part 615. We proposed to remove or revise several definitions in § 615.5131 that pertain to eligible investments and credit ratings. These amendments align the definitions in FCA's investment regulations with other FCA regulations, or with the definitions that other Federal agencies, such as the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and Securities and Exchange Commission use in their regulations.
We received a comment from a bank trade association about the proposed definition of “asset class.” Under the proposal, “asset class means a group of securities that exhibit similar characteristics and behave similarly in the marketplace.” As we noted in the preamble to the proposed rule, asset classes for bank investments include, but are not limited, to money market instruments, municipal securities, corporate bonds, mortgage-backed securities (MBS), asset-backed securities (ABS) (excluding MBS), and “any other asset class as determined by FCA.” The commenter opposed this provision because it authorizes FCA to approve other asset class types. The commenter asserted that FCA should not approve new asset classes except through a formal rulemaking. FCA responds that it has authority under various provisions of section 5.17 of the Farm Credit Act of 1971, as amended, (Act) to approve new investments, including new asset classes. As appropriate, FCA will decide how best to approve any new asset classes based on the circumstances and characteristics of the instrument when the issue arises. Sometimes, a notice and comment rulemaking is appropriate, while at other times, FCA may decide to issue a bookletter or informational memorandum, or approve such instruments under case-by-case authority. We adopt this definition as proposed.
The same bank trade association also commented on the definition of “obligor” in the proposed regulation. The commenter expressed concerns that the definition of “obligor” would permit System institutions to make loans to ineligible persons, businesses, agencies, or corporations under their investment authorities. Our investment regulations cannot confer authority on System institutions that exceed their powers under the Act. The Act separates the System's lending authorities from its investment authorities. Therefore, our investment regulations cannot authorize System institutions to make loans to ineligible borrowers disguised as investments. We adopt this definition as proposed.
We proposed to define a collateralized debt obligation (CDO) as a debt security collateralized by mortgage-backed securities (MBS) or asset-backed securities (ABS, or trust-preferred securities). Farmer Mac claimed that this definition was inconsistent with how the security markets defined CDOs. FCA agrees with the commenter. We addressed this concern by deleting the term “collateralized debt obligation” in final § 615.5131, and adding the term “resecuritization.” Section 628.2 already defines “resecuritization” to mean “a securitization which has more than one underlying exposure and in which one or more of the underlying exposures is a securitization exposure.” We will further discuss in greater detail why resecuritizations are ineligible investments for System banks below.
We proposed to delete the definition of “eurodollar time deposit”, “final maturity”, “general obligations”, “Government agency”, “Government-sponsored agency”, “liquid investments”, “mortgage securities”, “Nationally Recognized Statistical Rating Organization (NRSRO)”, “revenue bond”, and “weighted average life (WAL)” in § 615.5131. We received no comments on these revisions. Accordingly, the final rule deletes these definitions for the reasons explained in the preamble to the proposed rule.
The proposal added definitions of “asset-backed securities (ABS)”, “Country risk classification (CRC)”, “Diversified investment fund (DIF)”, “Government-sponsored enterprise (GSE)”, “Mortgage-backed securities (MBS)”, “sponsor”, and “United States (U.S.) Government agency.” We received no comments on these new definitions, and we incorporate them into final § 615.5131 without revision. However, we made a technical, non-substantive revision by replacing the definition of “Country risk classification (CRC)” in final § 615.5131 with a cross-reference to the identical definition in our Capital Adequacy regulations, § 628.2. The preamble to the proposed rule explains our reasoning for adopting these definitions.
Under the existing rule, System banks may continue to buy and hold eligible investments to fulfill liquidity requirements, manage short-term funds, and manage interest rate risk, under § 615.5132(a). A System trade association and a Farm Credit Bank interpret our regulations as requiring each System bank to designate a specific purpose under § 615.5132(a) for every investment it purchases and holds. The commenter claims that this is inconsistent with the approach that FCA proposed for System associations, and the approach that the Federal Banking Regulatory Agencies (FBRAs)
FCA responds to this comment even though we proposed no change to § 615.5132. We note that § 615.5132(a) does not restrict System banks to holding each investment for only one purpose. In fact, § 615.5140(a)(1)(i) states that eligible investments may be held for one or more of the investment purposes authorized in § 615.5132(a). However, the preamble to the proposed rule notes that certain investments, such as private placements, are not suitable for liquidity and, therefore, a System bank would need to document the specific purpose or reason for holding such investments. FCA finds no reason to revise either § 615.5132(a) or § 615.5140(a)(1) to address the commenters concerns.
Section 615.5133 governs investment management practices at Farm Credit banks, associations, and service corporations. System institutions hold investments for different purposes and, therefore, investment practices will vary. This regulation requires the boards of directors of System institutions to adopt an internal control framework that protects their institutions from potential losses. Under this regulation, the policies must establish risk tolerance parameters that address credit, market, liquidity and operational risks. Additionally, this regulation requires the institution to set up delegations of authority, internal controls, portfolio diversification requirements, obligor limits, due diligence requirements, and to report regularly to the board of directors.
Except for a few minor stylistic changes, we proposed no substantive changes to § 615.5133(a), (b), (d), and (e), which respectively addresses the responsibilities of the boards of directors, general requirements for investment policies, delegation of authority, and internal controls. We received no comments on these provisions, which we now adopt as a final rule. We proposed to redesignate § 615.5133(f), which addresses due diligence, and § 615.5133(g), which address reports to the board, as § 615.5133(h) and (i), respectively. We proposed to enhance the portfolio diversification and the counterparty (
Proposed § 615.5133(c)(1)(ii) would address concentration risk. It would require that an institution's investment policies establish concentration limits for single or related obligors, sponsors, geographical areas, industries, unsecured exposures, and asset classes or obligations with similar characteristics. We proposed to add sponsors and unsecured investments to this regulatory provision because we believe undue concentration in a sponsor or unsecured investments could present excessive risk. Concentration limits should be commensurate with the types and complexity of investments that an institution holds.
We received a comment about proposed § 615.5133(c)(1)(ii) from a bank trade association. This commenter opined that FCA should establish a specific concentration limit by regulation, rather than allowing FCS institutions to set their own concentration limits. Both FCA and the FBRAs no longer prescribe concentration limits by regulation because each financial institution has its own business model and risk appetite. Financial institution regulators examine each regulated institution for robust risk management practices. The commenter has not identified any compelling reasons FCS institutions should not be subject to the same supervisory framework as banks.
FCA proposed to revise § 615.5133(c)(3), which governs how System institutions manage the liquidity characteristics of investments they hold. Specifically, we proposed to separately address the different liquidity needs of System banks and associations. Proposed § 615.5133(c)(3)(i) would address liquidity in the investment policies of Farm Credit banks, while proposed § 615.5133(c)(3)(ii) would address the liquid characteristics of investments that associations hold. We proposed this revision because of the differences in how Farm Credit banks and associations manage liquidity. Farm Credit banks hold liquidity reserves to manage funding and liquidity risks for themselves, their affiliated associations, and certain service corporations. In contrast, System associations have more limited funding and liquidity risk exposure because their only substantial liability is their debt obligation to their funding bank. We received no comments on proposed § 615.5133(c)(3), and we now adopt it as a final rule with minor stylistic changes.
As discussed above, proposed § 615.5133(f) emphasized the importance of a well-diversified investment portfolio. This provision would require System banks to adopt policies that prevent their investment portfolios from posing significant risk of loss due to excessive concentrations in asset classes, maturities, industries, geographic areas, and obligors. The proposed rule retained the provisions of the previous regulations that imposed no concentration limits on securities issued or guaranteed by the U.S. government and its agencies, and kept a 50-percent cap on MBS securities issued or guaranteed by a Government-sponsored enterprise (GSE). In 2014, we proposed a 15-percent portfolio cap on all other eligible asset classes. Under our proposal, no Farm Credit bank could invest more than 10 percent of total capital in a single obligor, and the securities of a single obligor could not exceed 3 percent of the bank's total outstanding investments.
System commenters asked us to remove the portfolio limit on money market funds. The commenters stressed that money market funds are diversified in nature and they are an effective vehicle for liquidity risk management, and the short-term maturities make these investments self-liquidating, which provide the banks with a reliable source of liquidity during periods of market stress. We are persuaded by this logic and, therefore, we omit the portfolio limit on money market funds in final § 615.5133(f)(3)(iii).
System commenters also claimed that the limit of 3 percent in the overall investment portfolio for each obligor is unnecessary because the proposed rule reduced the regulatory obligor limit from 20 percent to 10 percent of total capital. According to the commenters,
We proposed technical, non-substantive revisions to the terms “Government-sponsored enterprise (GSE)” and “U.S. Government agency” in our liquidity reserve regulation in § 615.5134. These changes conform to the definitions in § 615.5131. We received no comments about this change. This change is consistent with recent changes to FCA's capital regulations as well as guidance from the FBRAs. For these reasons, we adopt the proposed provision as a final rule without change.
We proposed to clarify that MBS
We made a clarifying change to the table “to omit two lines: In Level 2 “Additional Levels 1 investments”, and in Level 3 “Additional Level 1 or 2 investments” as well as the accompanying discount factors. We determined these two provisions are confusing and difficult to follow and are redundant given the preceding section of the regulation dealing with day counts.
Proposed § 615.5140(a)(2) sets forth the types of eligible investments that Farm Credit banks may purchase and hold. The intent of this provision is to ensure that System banks invest only in high-quality investments. We received comments on each investment type, which we now discuss.
The proposed rule would continue to authorize FCS banks to invest in non-convertible senior debt securities. A bank trade association questioned whether System institutions should have authority to invest in corporate bonds. The commenter claims that corporate bonds are not as high quality as government bonds, and expose investors to greater interest rate risk. The commenter's concern is that a corporate bond could allow System banks to become the only, or the majority, investor, which the commenter believes could enable the System to exceed the lending constraints in the Act.
FCA is not willing to ban investments in all corporate bonds, as the commenter requests. Our regulations have allowed FCS institutions to invest in high-quality corporate bonds since 1993. System institutions use these high-quality corporate bonds to build and diversify their liquidity portfolios. This regulatory provision imposes high credit quality standards, portfolio and obligor limits, and purpose restrictions on non-convertible senior debt securities. These restrictions mean that the FCS may purchase and hold only publicly traded debt securities. Under proposed § 615.5140(a)(2)(i), which is redesignated as final § 615.5140(a)(1)(ii)(A), investments in corporate debt securities fall under an institution's investment authority and, therefore, they do not violate the lending restrictions of the Act. Accordingly, final § 615.5140(a)(1)(ii)(A) will allow FCS banks to buy and hold a non-convertible, senior debt security, which includes corporate bonds.
Under proposed § 615.5140(a)(2)(i), System banks could not invest in senior debt securities that can convert into another debt or equity security.
As under our previous rule, investments in money market instruments would be eligible under the proposed rule. Money market instruments include short-term instruments such as (1) Federal funds, (2) negotiable certificates of deposit, (3) bankers' acceptances, (4) commercial paper, (5) non-callable term Federal funds (6) Eurodollar time deposits, (7) master notes, and (8) repurchase agreements collateralized by eligible investments as money market instruments. A money market instrument is an eligible security if it matures in 1 year or less.
Two System commenters asked that we remove the asset class limit for money market instruments because their short-term maturities make them self-liquidating. FCA agrees with the commenters that money market instruments are liquid due to their short maturities and, therefore, no longer warrant a portfolio limit. However, the 10-percent obligor limit would still apply for these investments. Accordingly, FCA has removed the 15-percent portfolio diversification requirement for money market instruments in final § 615.5133(f)(3)(iii).
Under proposed § 615.5140(a)(2)(iii), MBS and ABS that are fully guaranteed as to the timely payment of principal and interest by a U.S. Government agency would remain eligible securities because of their high credit quality. As we explained in the preamble to the proposed rule, securities labeled “government guaranteed” satisfy this criterion only if they are fully guaranteed as to the timely payment of principal and interest.
Under the proposed rule, MBS and ABS that are fully and explicitly guaranteed as to the timely payment of principal and interest by GSEs would
Previous § 615.5140(a)(5) and (6) classified non-agency mortgage-backed securities (including non-agency commercial mortgage-backed securities), and asset-backed securities as eligible investments. In 2014, FCA proposed restricting that provision by only allowing an institution to buy the senior-most position of a tranched non-agency MBS or ABS as an eligible security.
During this rulemaking, FCA used the term “private placement” securities when referring to privately placed bonds or debt securities. Private placement refers to the sale of securities to a few sophisticated investors without registration with the Securities and Exchange Commission, and often without a prospectus. As a result, a private placement security normally is not a liquid security and not held for liquidity purposes; however, they may be appropriate for risk management. A bank trade association opined that FCA should not authorize any System institution to purchase private placement securities. This comment letter, however, focused on FCA approval of private placement securities on a case-by case basis. Since private placements are not liquid, they need to be approved by FCA on a case-by-case basis under § 615.5140(e). We discuss this issue in greater detail below.
Proposed § 615.5140(a)(2)(vi) retained the previous authority of Farm Credit banks to invest in obligations of international and multilateral development banks, if the United States is a voting shareholder. We received no comment on this provision and, therefore, we adopt this provision as final and redesignate it as § 615.5140(a)(1)(i)(F).
For many years, these regulations have authorized System banks to invest in several types of money market funds offered by investment companies registered under section 8 of the Investment Company Act of 1940, 15 U.S.C. 80a-1
FCA received no comments about what constitutes a DIF. However, we wish to clarify that a diversified investment fund consists of any of three categories of investment funds, which are mutual funds,
A bank trade association objected to DIFs as eligible investments for FCS institutions. The commenter claimed that the proposed rule did not limit the scope of investments in DIFs, so this authority could be very broad and exceed the lending constraints of the Act. FCA disagrees and points out that both §§ 615.5134 and 615.5140 impose very stringent criteria for investments in DIFs. Furthermore, our regulations have allowed investments in DIFs for over 20 years, and the proposed rule did not expand this authority, or permit System banks to invest in DIFs for purposes that are beyond managing liquidity, short-term surplus funds, or interest rate risks. Additionally, this regulation still requires the portfolio of any eligible DIF to be comprised solely of investments authorized by §§ 615.5140 and 615.5174. System banks can only invest in DIFs by buying shares of investment companies registered under section 8 of the Investment Company Act of 1940. Contrary to the commenter's claim, DIFs are eligible only if System banks exclusively hold the liquid, low-risk assets found in final and redesignated § 615.5140(a)(1)(ii)(G). Because DIFs are investments, they do not enable the FCS to exceed the lending constraints of the Act.
Previous § 615.5140 relied on NRSRO credit ratings to determine the eligibility of investments in many asset classes, including municipal securities, certain money market instruments, non-agency mortgage-backed securities, asset-backed securities, and corporate debt securities.
Our proposed rule would have required at least one obligor of the investment to have “very strong capacity” to meet its financial commitment for the expected life of the investment. If a Farm Credit bank is relying upon an obligor located outside of the United States to meet its financial commitment, the proposal required:
That obligor's sovereign host country to have the highest or second-highest consensus Country Risk Classification (CRC) (a 0 or a 1) as published by the Organization of Economic Cooperation Development (OECD or must be an OECD member that is unrated; or the investment must be fully guaranteed as to the timely payment of principle and interest.
A System trade association, an FCS association, and Farmer Mac commented that the proposed creditworthiness standard for obligors was too stringent. These commenters suggested that the final rule should require at least one obligor to have a “strong” capacity to meet its financial commitment for the expected life of the investment, rather than the “very strong” capacity referred to in the proposed rule. One of these commenters asked FCA to provide further clarification about how “very strong capacity to meet its financial commitments” is related to a “very low probability of default.” These commenters also urged FCA to adopt the FBRA's creditworthiness standard of “investment grade.”
FCA declined the commenters' request to relax the creditworthiness standard for obligors. FCA believes a security with “low credit risk” is one where the Farm Credit bank determines the issuer has a “very strong” capacity to meet all financial commitments under the security's projected life even under adverse economic conditions. Securities that exhibit these characteristics are liquid and marketable. Farm Credit banks primarily hold securities for liquidity purposes and, therefore, the creditworthiness standards for these securities ensure that they are marketable and readily convertible into cash in a crisis at minimum costs.
We recognize our regulations governing margin and capital requirements for covered swap entities, and capital adequacy for all System institutions use the “investment grade” standard. However, we determine that “investment grade” is not appropriate for these investment regulations. FCA believes not all securities that meet the “investment grade” requirements would be of suitable high credit quality and marketable for liquidity purposes. Therefore, FCA declines to lower its proposed investment creditworthiness standard.
We now respond to the comment requesting clarification about the relationship between “very strong capacity to meet its financial commitments” and a “very low probability of default.” In evaluating the creditworthiness of a security, a Farm Credit bank should consider any of the following factors as well as any additional factors it deems appropriate:
• Credit spreads (
• Securities-related research (
• Internal or external credit risk assessments;
• Default statistics (
• Inclusion on an index (
• Priorities and enhancements (
• Price, yield, and volume (
• Asset class-specific factors (
In addition to imposing creditworthiness standards on obligors, we also proposed that an eligible investment must exhibit low credit risk and other risk characteristics consistent with the purposes for which it is held, such as interest rate risk. Institutions must consider other risks but are not limited to just those listed in § 615.5133(c). FCA received a System comment that proposed § 615.5140(a)(4) limits the ability of System banks to use an investment for more than one investment purpose. We already responded to that comment above in the preamble discussion of final § 615.5132. In addition, our discussion in the preamble about the creditworthiness of the obligor explains our position of credit quality, and this provision requires no revision. Therefore, we adopt this provision as final and redesignate it as § 615.5140(a)(1)(iv).
Since 1993, § 615.5140(a) has required all investments at System institutions to be denominated in U.S. dollars. We proposed no change to this requirement, and we received no comments about it. Accordingly, we retain this requirement in the final rule without revision, but redesignate it as § 615.5140(a)(v).
The proposed rule, § 615.5140(c), would have prohibited Farm Credit banks from purchasing collateralized debt obligations (CDOs), as originally defined in § 615.5131. As discussed in the preamble to the definitions section above, Farmer Mac objected to our definition of “CDO,” and we responded by substituting the term “resecuritization” for “CDO.”
However, the final rule would prohibit System banks from purchasing and holding resecuritizations as we originally proposed. During the financial crisis of 2008-2009, many risky securitization exposures were resecuritized into new complex securities where not all buyers fully understood the risks in the different tranches of these new resecuritization exposures. These securities, which were sometimes known as CDO-squared, CDO-cubed, or reperformers, exposed investors to higher risk than the basic securitization structure. Basel III and the FBRAs recognized the higher risk posed by resecuritizations, and assigned a higher risk weight to them than basic
Proposed § 615.5140(d) would have made explicit our authority, on a case-by-case basis, to determine that an investment poses inappropriate risk, notwithstanding that it satisfies the investment eligibility criteria. The proposal also provides that FCA would notify a Farm Credit bank as to the proper treatment of any such investment. We received no comment on this provision. We retain this provision to safeguard the safety and soundness of banks, and we redesignate it as § 615.5140(c).
FCA proposed to substantially revise § 615.5142, which governed association investments. Previously, § 615.5142 did not impose a portfolio limit on the total amount of association investments. Additionally, our former regulation permitted associations to hold the same types of investments as Farm Credit banks even though associations are not subject to the liquidity reserve requirement in § 615.5134, and they are not exposed to the same liquidity and market (interest rate) risks as their funding banks. Previously, § 615.5142 authorized each association to hold eligible investments listed in § 615.5140, with the approval of its funding bank, for the purposes of reducing interest rate risk and managing surplus short-term funds. The regulation also required each Farm Credit bank to review annually the investment portfolio of every association it funds.
The proposed rule would limit association investments to securities that are issued or fully guaranteed or insured as to the timely payment of principal and interest by the United States or any of its agencies in an amount that does not exceed 10 percent of its total outstanding loans. The proposed rule also addresses: (1) Investment and risk management practices at System associations; (2) funding bank supervision of association investments; (3) requests by associations to FCA to hold other investments; and (4) transition requirements for System associations to come into compliance with the new rule.
We proposed these changes because most System associations have increased in size and complexity over the past two decades, offering a diversity of products and services to adapt to a changing and increasingly competitive agricultural sector. The changes in agriculture have introduced new risks to the associations. For example, while the associations have adopted adequate risk management strategies to effectively adapt to this changing environment, they remain concentrated in agriculture and have limited ability to manage concentration risk. Although the previous regulation allowed the associations to use investments for managing surplus short-term funds and reducing interest rate risk, they could not use investments to manage concentration risk. For these reasons, we designed the proposed rule to strike a balance by granting associations greater flexibility in the purposes for which they may hold investments, while placing new limits on the amounts and types of investments they may hold. Under the proposed rule, associations would have the flexibility to manage concentration risks with securities that are issued or fully guaranteed or insured as to the timely payment of principal and interest by the U.S. Government or its agencies. The Act specifically authorizes System associations to buy and sell obligations of, or insured by, the United States or any agency thereof, and make other investments as may be approved by their respective funding banks under regulations issued by FCA.
Before we address the substantive comments that we have received, we notify the public that we have consolidated all the provisions governing eligible investments for all System institutions into a single regulation, § 615.5140. Accordingly, FCA has removed § 615.5142 concerning association investments, and redesignated it as final § 615.5140(b). Proposed § 615.5142(d) would have redesignated, but not substantively changed, § 615.5140(e) concerning other association investments approved by FCA. The final rule restores case-by case approvals for both banks and associations to § 615.5140(e). Although we received, no comments about restructuring final § 615.5140, we consolidated the two sections for greater uniformity in the rule. Addressing eligible investments in a single regulation will make it easier for both FCA examiners and System institutions to use and apply this rule.
The proposed rule would remove the requirements in the previous regulation that authorize associations to hold investments for the purposes of reducing interest rate risk and managing surplus short-term funds. The preamble to the proposed rule explained that these requirements may be too restrictive and too inflexible for associations to effectively manage their risks in today's environment. For many associations, a limited portfolio of high-quality investments could help diversify risks they experience as lenders that primarily lend to a single-industry agriculture.
We invited comments about whether this rule should identify specific purposes for associations to purchase and hold investments, and we asked the commenters to expressly identify any specific purposes that the final regulation should retain or require, and why. Two bank trade associations stated that the final rule should identify specific risk management purposes for associations to purchase and hold investments. One commenter asked if associations are no longer required to manage surplus short-term funds and reduce interest rate risks, what is the reason for these investments?
FCA responded that System institutions face four broad types of risks: (1) Credit; (2) market (interest rate); (3) liquidity; and (4) operational. Although the previous regulation allowed associations to hold investments only for managing surplus short-term funds (liquidity), and reducing interest rate risk (market risk), the associations remain exposed to broader risk both in individual investments and in their overall portfolios. Additionally, the prior regulation permitted associations to hold the same investments as FCS banks, which exposed them to the same four risks. For this reason, § 615.5133 requires all FCS banks and association to address these four risks in their
As stated above, FCA seeks to grant associations greater flexibility in investment purposes, while placing more restrictions on the types and amount of investments they may hold. Contrary to claims in banker comment letters, this rule restricts, rather than expands the types of investments that associations may purchase and hold. This rule no longer authorizes associations to hold the same investments as FCS banks, such as money market instruments, corporate bonds, and certain asset-backed securities.
In contrast, a System association asked FCA to retain the investment list in the previous regulation, which it claims associations need to manage “prepayment [extension or contraction] risk, credit risk, liquidity risk and yield risk.” However, FCA determines that the new regulation provides sufficient risk management tools for associations, and their need for investments is different from their funding banks. By only authorizing associations to hold securities issued or unconditionally guaranteed by the U.S. Government and its agencies, the regulation eliminates most credit risk associated with such assets, and helps mitigate risk in their overall portfolios. Securities issued or unconditionally guaranteed by the U.S Government and its agencies still present market (interest rate), liquidity, and operational risks to associations. As discussed elsewhere in this preamble, placing a 10-percent portfolio cap on associations for the first time, and limiting the types of investments that associations may hold, result in a conservative and risk-adverse regulatory approach. The low credit risk in these investments offer the opportunity to diversify the balance sheet credit risks for those associations that choose to exercise their investment authorities.
Proposed § 615.5142(a) would authorize System associations to invest solely in obligations that the United States Government and its agencies issue, fully guarantee, or insure as to the timely payment of principal and interest. Sections 2.2(11) and 2.2(17) expressly authorize System associations to invest in such obligations of the United States and its agencies. Such obligations are usually liquid and marketable. Although MBS issued by the U.S. Government and its agencies pose almost no credit risk to investors, they potentially expose investors to other risks, especially market (interest rate and prepayment risk). We find that these investments are suitable for managing risk at associations because they have no credit risk and they enable associations to diversify their portfolios. Additionally, all System institutions may hold Farmer Mac AMBS as eligible investments.
Bankers and their trade associations commented that this provision would allow System associations to buy ineligible loans that are guaranteed by the United States and its agencies in contravention of the Act. FCA revised this provision to address these concerns. FCA has addressed the commenters' concerns by changing the term “obligations” to “securities” in the third sentence of the final rule. If an association purchases the government-guaranteed portions of individual loans, such purchases do not meet the criteria for an investment security under the final rule.
For further clarification, FCA notes that pool assemblers purchase guaranteed portions of loans in the secondary market, and securitize these assets. In this context, not all these securitizations will be eligible investments for associations. We anticipate that System associations most likely will purchase and hold either securities guaranteed by SBA or issued by Farmer Mac.
Proposed § 615.5142(a) limits association investments to 10 percent of total outstanding loans. This portfolio limit ensures that loans to eligible borrowers always comprise most of the assets of FCS associations, which is consistent with the System's mission. Our regulations authorize Farm Credit banks to hold significantly larger investment portfolios than System associations because the: (1) Banks maintain liquidity and manage interest rate risk for all but a few affiliated associations; and (2) associations borrow almost exclusively from their funding banks.
The proposed 10-percent portfolio limit on investments should be sufficient to enable associations to develop robust strategies to manage risks if association investment policies, management practices and procedures, and appropriate internal controls support those investment activities. Furthermore, the proposed 10-percent limit should help associations manage their concentration risk as single-industry lenders. FCA believes that the proposed 10-percent portfolio limit on investments strikes an appropriate balance by enabling associations to appropriately manage and diversify risks while continuing to serve their primary mission of lending to farmers and other eligible borrowers.
We received comments about the proposed portfolio limits from both System and non-System commenters. The principal concerns raised by the commenters focused on: (1) How FCA would apply the 10-percent limit; (2) which investments the portfolio limit covered, and (3) whether the 10-percent limit is prudent.
System commenters raised three primary issues about the proposed portfolio limit for association investments. Several System commenters inquired whether the 10-percent limit on investments applies to
Bankers and their trade associations commenters opposed the proposed portfolio limit on association investments for other reasons. First, these commenters wanted FCA to base the portfolio limit on association capital levels, not total outstanding loans. One of the bank trade association commenters misinterpreted the proposed portfolio limit for associations by assuming that it established two separate 10-percent limits; one for U.S. Government-guaranteed investments, and one for “all other association investments.” This commenter requested that FCA limit eligible investments to 10 percent of capital (5 percent for guaranteed investments and 5 percent for non-guaranteed investments), which would include 1 percent of capital for “other investments” which are “for purposes that are [consistent] with the Act's lending constraints.” Second, these commenters claim that the proposed portfolio limit was too high because investments at most associations would rarely equal or exceed 10 percent of total outstanding loans. Third, bank commenters claimed that if loan volume declines at an association, it should then liquidate investments to comply with the portfolio limit, which would expose it to losses on their required sale due to their presumed illiquidity.
We now respond to requests that we either increase or decrease the portfolio limit for investments. As stated above, System commenters claimed that a 10-percent limit was too restrictive, and they request that we increase it to 15 percent. System commenters have not convinced us that the 10-percent limit is too restrictive. FCA notes that the policies at some System associations with active investment programs establish a 15-percent portfolio limit for investments, while in practice, investments at most associations rarely equal or exceed 10 percent of total outstanding loans. In contrast, bank trade associations commenters asked us to significantly lower the proposed 10-percent limit. However, a lower limit would not provide meaningful risk diversification, or the necessary economies of scale for associations to justify the added costs of establishing and maintaining the infrastructure and internal controls for holding and managing an investment portfolio of securities unconditionally guaranteed by the United States Government and its agencies. Reducing the portfolio limit below 10 percent could hamper associations from holding such investments, thereby denying them more diversified and better quality asset portfolios. For this reason, we decline both requests.
We now address requests from bank commenters that FCA change the denominator for the portfolio limit calculation from total outstanding loans to capital. These commenters stated that all FRBAs impose investment limits that are based on references to capital, rather than loans or other assets. Additionally, these commenters assert that a limit tied to capital would more effectively reduce the risk exposure to System associations. FCA responds that the purpose of the portfolio limit is to ensure that most association assets are loans to eligible agricultural and aquatic producers while promoting portfolio diversity. Under the final rule, associations may hold only securities that are unconditionally guaranteed by the U.S. Government and its agencies for risk management purposes, which effectively eliminates the credit risk exposure that the commenters fear. Furthermore, § 615.5182 requires associations to manage interest rate risk associated with such Government-guaranteed investments. For these reasons, a portfolio limit based on a reference to capital is unnecessary. In this context, the statutory framework for the FCS is different than that for banks. FBRAs do not tie investments at banks to loans or other assets because their statutes do not limit their lending activity to a single economic sector.
As noted earlier, a bank trade association asked that the final rule limit non-guaranteed investments to 5 percent of capital, and “other investments” to 1 percent of capital. The commenter also suggested that the final rule prohibit associations from holding non-guaranteed and “other investments” for purposes that are inconsistent with the Act's lending constraints. FCA already addressed the comment about using capital as the reference for a portfolio limit. More importantly, the final rule does not allow associations to disguise ineligible loans as investments in violation of the Act, and as explained elsewhere in this preamble, we amended the final rule to address this specific concern.
We now respond to System commenters who asked us to change the portfolio limit from “total outstanding loans” to either “earning assets,” or “total assets.” We decline this request because “total outstanding loans” is a standard that provides associations with a sufficient level of investments to manage their risks prudently and economically. Our investment regulations use the same standard for calculating the limit for Farm Credit banks, which play a far greater role in managing liquidity and market risk for the entire System than associations. Under the circumstances, FCA finds no compelling reason for enacting a permissive standard for System associations, and a more stringent one for Farm Credit banks. Separately, FCA has consistently held that the principal statutory mission of the System is lending to agricultural and aquatic producers, and their cooperatives. A portfolio limit tied to loans ensures that agricultural credits remain the primary assets of all System banks and associations. A portfolio limit based on either “earning” or “total” assets could permit associations to hold a greater amount of assets that are unrelated to agriculture.
Several System commenters asked that the portfolio limit calculation exclude equity investments in Rural Business Investment Companies (RBICs), an Unincorporated Business Entities (UBEs), or Farmer Mac Class B stock (held only by System investors) from its numerator. FCA agrees with System commenters, and the final rule excludes both debt and equity investments in these three entities from the calculation of the 10-percent limit. The amount that System institutions, either alone or together, may invest in RBICs are limited by statute.
Several System institutions suggested that the calculation for the portfolio limit revealed a potential conflict because the numerator would use a 30-
The final rule requires System associations to compute the 10-percent limit based upon a total amount for investments on a specific date in the numerator, divided by a 90-day average daily balance of loans outstanding in the denominator. This calculation values investments at amortized cost. Loans, as defined in § 615.5131, are calculated quarterly (as of the last day of March, June, September, and December) by using the average daily balance of loans during the quarter. For this calculation, loans would include accrued interest, but would not include allowances for loan loss adjustments.
FCA changes the 30-day average daily balance in proposed § 615.5142(a) to a date specific amount in final and redesignated § 615.5140(b)(3). FCA has made a conforming change to the final rule, which requires associations to compute the limit using for the numerator, the date-specific amount of investments divided by the denominator, using the amount of the 90-day average balance reported in the most recent call report. Unless otherwise directed by FCA, associations should calculate this limit quarterly.
A bank trade association asserted that if loan volume declines at an association, the association should liquidate investments to stay within the 10-percent limitation. FCA notes that proposed § 615.5142(e)(2) expressly stated that an association would not need to divest of investments that were eligible when purchased even if a decline in total outstanding loans causes it to exceed the 10-percent portfolio limit. However, the rule would prohibit associations from purchasing additional investments until their total amount is equal to or less than the 10-percent limit. FCA retains this approach in the final rule and redesignate it as § 615.5140(b)(5). Requiring liquidation of investments when total outstanding loans decline could expose associations to unnecessary losses due to fluctuations in investment prices and associated transaction costs.
After reviewing all the comments, FCA has decided to retain the proposed portfolio limit of 10 percent of total outstanding loans, although the final rule contains some minor adjustments, which we explained earlier. This new regulation imposes a portfolio limit on association investments, whereas the former regulation had none. As we explained in the preamble to the proposed rule, the 10-percent limit on investments ensures that loans to agricultural producers and other eligible borrowers constitute most of association assets. In this context, the primary purpose of the portfolio limit is to ensure that System associations adhere to their statutory mission as a GSE to finance agriculture. Additionally, the 10-percent portfolio limit strikes an appropriate balance that enables associations to effectively manage and diversify risks while staying within the boundaries of the Act. Since associations may hold only investments issued, guaranteed or insured by the United States Government and its agencies, and investments approved by FCA on a case-by-case basis, a portfolio limit that does not exceed 10 percent of loans allows an appropriate economy of scale based on expected overhead costs and compliance with investment management requirements in § 615.5133.
Both System institutions and bank commenters asked whether the 10-percent limit applied to investments that FCA approves on a case-by-case basis. FCA confirms that the final regulation will apply an aggregate limit of 10 percent to investments authorized in § 615.5140.
The proposed rule addressed risk management practices that associations must follow if they select, purchase, and hold investments. We designed these provisions to ensure that System associations comply with prudent investment management practices. The proposed rule would have required each association to evaluate its investment management policies, and determine and document how its investment activities adhere to prudent risk management processes and procedures. Under the proposed rule, each association must comply with proposed § 615.5133(a), (b), (c), (d), (e), (h), and (i), which govern investment management practices at all System institutions.
We asked for comments on whether these new requirements would impose undue regulatory burden on System associations and their funding banks. FCA received no comments about risk management practices at associations. Since these risk management practices enhance safety and soundness at System associations, we adopt the proposed regulatory requirements without substantive revision.
The rule requires each association to assess how investments that they purchase and hold impact the association's credit risk profile, and affect its risk-bearing capacity. Such factors that associations should consider and evaluate include, but are not limited to, its management experience
Sections 2.2(10) and 2.12(18) of the Farm Credit Act require each association to obtain its funding bank's approval of the association's investment activities under FCA regulations. Proposed § 615.5142(c) sets forth the requirements for funding banks to review, approve, and oversee the investment activities of its affiliated associations. As required by statute, each association must request from its funding bank prior approval to buy and hold investments under this section. FCA structured the proposed rule to provide flexibility so that funding banks could approve types or classes of investments, rather than each individual investment. However, the proposed rule, would require funding banks to review and approve prospective association investments, prior to submission to FCA for case-by-case approval. The FCA Board continues to be the final authority for approving all association case-by-case investments. The proposed rule would require each bank to explain in writing its reasons for approving or denying the association's investment requests.
Once an association has established a satisfactory investment management program that its funding bank has approved, the association could purchase and hold investments that the Act and this regulation authorize. The intent of this provision is to balance the association investment activities with the funding and oversight role of the bank. As part of the approval, the funding bank must evaluate, determine and document that the association has: (1) Adequate policies, procedures, internal controls, and accounting and reporting systems for its investments; (2) the capability and expertise to effectively manage risks in investments; and (3) complied with requirements of proposed § 615.5142(b). Any prior System association investment management program that the funding bank previously approved would need to be reviewed and re-approved once proposed § 615.5142 becomes final and effective. FCA notes that the General Financing Agreement (GFA) (including any attached, referenced, or related documents) could establish covenants governing the investment activities of an affiliated association. As such, the GFA can be a useful tool for funding banks to review and monitor the investment activities of their affiliated associations.
Finally, the proposed rule would keep the previous requirement that each System bank annually review the investment portfolio of every affiliated association.
FCA received comments from System institutions and commercial banks about funding bank approval of investments on a program rather than individual basis. We have already addressed this issue in a preceding section. Commercial bank trade associations claimed that FCA was abdicating its responsibilities by authorizing the funding banks to approve classes of association investments. We respond that sections 2.2(10) and 2.12(18) of the Act authorize associations to hold investments as may be approved by their funding bank under the regulations of FCA. This regulation meets this statutory requirement. Additionally, the final regulation only allows associations to invest in obligations issued, guaranteed, or insured by the U.S. Government and its agencies. As stated above, case-by-case investments must be approved by FCA. For these reasons, we adopt proposed § 615.5142(c)(1) as final and redesignate it as § 615.5140(b)(4).
Proposed § 615.5142(e)(1), would not require an association to divest of any investments held before the effective date of this rule provided we previously authorized the investment under former § 615.5140 or by official written Agency action. As we explained in the preamble to the proposed rule, this transition rule would allow an association to continue to hold previous investments that would no longer be authorized by the final rule. After this final rule is effective, institutions may not extend or renew investments past their maturity unless they are authorized by regulation or FCA approval.
Proposed § 615.5142(e)(3) would apply to all investments that an association acquires after the new regulation becomes effective. Specifically, all investments that an association purchases after proposed § 615.5142 becomes effective as a final rule would be subject to § 615.5143 of this part, which governs the managing and divesting of ineligible investments.
A bank trade association opposed this provision because it believes that FCA should not permit associations to hold investments that the final rule no longer authorizes. The commenter claimed that FCA should require immediate divestiture of these readily marketable investments. FCA responds that these investments were eligible when purchased under regulations and a pilot program that were then in effect. It is customary and accepted practice among financial institution regulators to allow institutions to retain investments until maturity, if prior regulations or agency action authorized their purchase unless a statute requires immediate divestiture or there is a compelling safety and soundness reason. As noted above, institutions cannot renew or extend such investments after they mature. Accordingly, we adopt proposed § 615.5142(e)(1) as final and redesignate it as § 615.5140(b)(5).
Since 1999, our investment regulations have allowed all System institutions to purchase and hold other investments (not listed in our regulation) that FCA approves. The regulation requires that all requests for our approval must explain the risk characteristics of the investment and the institution's purpose and objectives for making the investment. We proposed no changes to this provision of our regulation, which still can be found at § 615.5140(e), and the final rule retains this authority without revision. Case-by case approvals enable System institutions to purchase and hold other investments that are consistent with their statutory authorities and the objectives of the Act. Currently, FCA requires System institutions to submit information and analysis with each approval request that demonstrates that
The bankers and their trade associations opposed the case-by-case approval authority. These commenters claim that the case-by-case approval authority in the regulation goes beyond the investment provisions in the Act and Congressional intent. They further claimed that this regulatory provision enables FCA to approve “illegal” loans to ineligible borrowers and classify them as investments. Specifically, these commenters claim that the proposed rule and guidance provided by the Informational Memorandum dated September 4, 2014, would permit FCS institutions to evade lending restrictions by buying instruments that are improperly labeled as “debt securities,” “obligations,” or “bonds.” The commenters state that the proposed rule and the Information Memorandum dated September 4, 2014, does not state that “investments” explicitly exclude commercial business loans. A related complaint was that the proposed rule did not identify specific criteria that FCA would use to distinguish loans from investments and that the approval of private placements would further blur this distinction. According to the commenters, such approvals would enable System institutions to impermissibly compete with tax-paying banks. Another concern of banks and their trade associations is that the case-by-case approvals lack transparency.
FCA proposed no changes to the regulation governing case-by-case approvals of investments by System banks and associations. Accordingly, this final rule makes no changes to this existing regulatory provision. Therefore, FCA is not required to respond to the issues raised above by commercial bankers because they are not relevant to this rulemaking. However, FCA will address each of these issues to be responsive to the bankers and their trade associations, and transparent to the public.
Several provisions of the Farm Credit Act allow FCA to approve new investments at the request of System institutions. Sections 1.5(15), 2.2(10), 2.12(18), and 3.0(13)(A) expressly authorize Farm Credit banks and associations to make other investments as may be authorized under FCA regulations.
In exercising its explicit statutory authority to approve System investments, FCA remains within the Act. The statute grants System institutions both lending and investment authorities, although it does not always establish specific criteria that distinguish loans from investments. As the Agency charged with interpreting, administering, and implementing the Act, FCA must look to caselaw, other statutes, accounting conventions, and guidance from the FBRAs to properly distinguish loans from investments. FCA does not have authority to approve, nor does it approve, “illegal” loans to ineligible borrowers and classify them as investments, as the commenters allege. As stated earlier, FCA, pursuant to the Informational Memorandum of September 4, 2014, only approves obligations that qualify as investments under GAAP. Additionally, FCA will also analyze whether a proposed investment meets the necessary criteria under Federal Securities statutes, such as the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Company Act of 1940. As part of its analysis, FCA will also consider relevant Federal caselaw such as Reves v.
In response to bank concerns about whether private placements are investments or loans, FCA notes that the same logic also applies to case-by-case approval of private placements. We observe that private placements are not liquid, but they are often suitable for other risk management purposes. Private placement securities may be appropriate in limited circumstances for interest rate risk management purposes. Bank commenters point out that private placements are not widely sold to public investors. FCA responds that it has authority to approve such private placement securities on a limited basis under specific conditions provided they meet the criteria of an investment. FCA intends to look at all relevant facts when it determines whether a private placement is an investment, not a loan to an ineligible borrower.
A bank trade association raised concerns that investments approved on a case-by-case basis would be subject to a favorable tax treatment, which would enable System banks and associations to earn additional income. The arguments of the bankers and their trade associations have not persuaded us that case-by-case approval of investments allows System institutions to “unfairly” compete with tax-paying banks. We note that many community banks, which submitted comments, may organize as Subchapter S corporations. The tax treatment for System institutions under the Internal Revenue Code for subchapter T
FCS debt usually trades close to Treasuries. We note that commercial banks may pay the same costs for funds as the System by funding or discounting their agricultural loans through two GSEs—Farmer Mac or the Federal Home Loan Banks. Also, System banks must hold large liquidity portfolios consisting of cash and high-quality investments. Although System banks may deposit cash at a Federal Reserve bank, they do not earn interest on their deposits in contrast to Federal Reserve member banks. In addition, most Treasuries are “negative carry-trades” for System institutions because they funded these investments at a debt price slightly above Treasury rates.
Commercial bankers also claimed that case-by-case approvals lack transparency. The FCA Board must decide whether to approve any investments that are not expressly authorized by regulation. All resolutions that the FCA Board votes on are public
Commercial bank commenters requested that FCA publish a list of the potential investments it would approve on a case-by-case basis under the final rule. We believe that the bankers' approach would deny FCA and the System the flexibility to respond to changing market circumstances. As discussed earlier, sections 1.5(15), 2.2(11), 2.12(18), 3.1(13)(A), and 5.17(a)(5) expressly authorize System banks and associations to hold other investments that FCA approves by regulation. FCA exercises its express statutory authority in a manner that is consistent with law, and safety and soundness.
Commercial bank commenters noted that proposed § 615.5142(a) stated that associations may hold investments only for risk management purposes. They disputed that investments approved by FCA on a case-by-case purposes are for risk management. Under existing § 615.5140(e), case-by-case approvals have not been subject to the existing purpose requirements for association investments. This will continue unchanged in this final rule because FCA proposed no changes, and has made no changes to the case-by-case authority. We note, however, that the purposes for the investments and the risk characteristics of the investment are part of what FCA evaluates in its approval process.
Our divestiture regulations have long required System institutions to: (1) Quickly divest of investments that were ineligible when purchased; and (2) effectively mitigate the risk associated with investments that became ineligible when their credit quality deteriorated. FCA expects that System institutions will rarely find themselves holding ineligible investments in their portfolio except potentially in times of a widespread financial crisis. Under our regulatory framework, institutions must report investments that are ineligible when purchased immediately to FCA and divest within 60 calendar days or pursuant to a divestiture plan approved by FCA. If an eligible investment later deteriorates and poses additional risk to the institution, the focus of the institution becomes risk mitigation. FCA reserves authority to require divestiture in specific circumstances.
The proposed rule would retain most of the substantive divestiture requirements in previous § 615.5143. However, the proposed rule identified which divestiture requirements apply to banks, and which ones apply to associations. More specifically, final and redesignated § 615.5140(b)(5) addresses how the new 10-percent portfolio limit for associations pertains to these divestiture requirements.
A bank trade association commented that FCA should not allow System institutions to hold any investment that becomes ineligible. This commenter asked FCA to require System institutions to divest of such investments within 6 months. FCA finds this suggestion to be unduly inflexible. Requiring automatic divestiture within 6 months seems punitive because it may not allow FCA to consider the least costly remedy for the institution. The commenter's suggestion that the final regulation should require institutions to divest of investments that later became ineligible due to a credit downgrade does not consider that some of these investments may later experience a credit upgrade. In these cases, mandatory divestiture within 6 months may expose the System institution to unnecessary losses.
A comment from a bank trade association asked whether FCA is requiring FCS institutions to divest of investments approved under the Investment in Rural America—Pilot Programs after discontinuing those programs. The commenter also questioned why FCA would allow a System institution to continue to hold any investment approved under the pilot program after the program ended. Investments held under the Pilot Programs were designated as rural community investments that furthered the System's mission to increase the flow of funds into rural areas. In response to the commenter's question, we cite the FCA News Release NR 13-15(11-14-13) which states:
“ . . . [T]he Farm Credit Administration Board voted to conclude effective December 31, 2014, each pilot program approved after 2004 as part of the investments in Rural America program. The Board's action permits each Farm Credit System (System) institution that is participating in a pilot program to continue to hold its investments through the maturity dates for the investments, provided the institution continues to meet all conditions.”
For these reasons, FCA adopts proposed § 615.5143 as a final regulation without substantive change. However, we made some minor stylistic changes which primarily included revising cross references to association investments which are now in final § 615.5140 instead of § 615.5142.
Derivatives can be appropriate and useful for hedging and risk management. While our regulations do not prohibit a System bank from using derivatives to build an investment portfolio, use of these derivatives must be consistent with an authorized investment purpose and not used for speculative purposes. We note that most cleared derivative contracts are very liquid, while many non-cleared derivative contracts are less liquid.
We received no comments about provisions in the proposed rule that made conforming changes to references in §§ 611.1153, 611.1155, 615.5174, and 615.5180. Accordingly, we will incorporate these changes into the final rule.
We recognize that Farm Credit banks may require time to bring their policies and procedures into compliance with the new requirements of the final rule. A passage in the preamble to the proposed rule stated that we were contemplating whether the compliance date of the final rule for Farm Credit banks should be 6 months after its effective date. We invited comments as to whether this delayed compliance timeframe would be appropriate. We also asked for comments on whether a delayed compliance date would be appropriate for associations.
An FCS bank claimed that System institutions would need 12 months to make the necessary changes to come into compliance with the final rule. We believe that the changes in this rule for both banks and associations are not so extensive that System institutions need a full 12 months to come into
Pursuant to section 605(b) of the Regulatory Flexibility Act (5 U.S.C. 601
Agriculture, Banks, banking, Rural areas.
Accounting, Agriculture, Banks, banking, Government securities, Investments, Rural areas.
For the reasons stated in the preamble, parts 611 and 615 of chapter VI, title 12 of the Code of Federal Regulations are amended as follows:
Secs. 1.2, 1.3, 1.4, 1.5, 1.12, 1.13, 2.0, 2.1, 2.2, 2.10, 2.11, 2.12, 3.0, 3.1, 3.2, 3.3, 3.7, 3.8, 3.9, 3.21, 4.3A, 4.12, 4.12A, 4.15, 4.20, 4.21, 4.25, 4.26, 4.27, 4.28A, 5.9, 5.17, 5.25, 7.0-7.13, 8.5(e) of the Farm Credit Act (12 U.S.C. 2002, 2011, 2012, 2013, 2020, 2021, 2071, 2072, 2073, 2091, 2092, 2093, 2121, 2122, 2123, 2124, 2128, 2129, 2130, 2142, 2154a, 2183, 2184, 2203, 2208, 2209, 2211, 2212, 2213, 2214, 2243, 2252, 2261, 2279a-2279f-1, 2279aa-5(e)); secs. 411 and 412 of Pub. L. 100-233, 101 Stat. 1568, 1638; sec. 414 of Pub. L. 100-399, 102 Stat. 989, 1004.
Secs. 1.5, 1.7, 1.10, 1.11, 1.12, 2.2, 2.3, 2.4, 2.5, 2.12, 3.1, 3.7, 3.11, 3.25, 4.3, 4.3A, 4.9, 4.14B, 4.25, 5.9, 5.17, 6.20, 6.26, 8.0, 8.3, 8.4, 8.6, 8.7, 8.8, 8.10, 8.12 of Pub. L. 92-181, 85 Stat. 583 (12 U.S.C. 2013, 2015, 2018, 2019, 2020, 2073, 2074, 2075, 2076, 2093, 2122, 2128, 2132, 2146, 2154, 2154a, 2160, 2202b, 2211, 2243, 2252, 2278b, 2278b-6, 2279aa, 2279aa-3, 2279aa-4, 2279aa-6, 2279aa-7, 2279aa-8, 2279aa-10, 2279aa-12); sec. 301(a), Pub. L. 100-233, 101 Stat. 1568, 1608; sec. 939A, Pub. L. 111-203, 124 Stat. 1326, 1887 (15 U.S.C. 78o-7 note).
The additions read as follows:
(1) Pass-through securities or participation certificates that represent ownership of a fractional undivided interest in a specified pool of residential (excluding home equity loans), multifamily or commercial mortgages; or
(2) A multiclass security (including collateralized mortgage obligations and real estate mortgage investment conduits) that is backed by a pool of residential, multifamily or commercial real estate mortgages, pass through MBS, or other multiclass MBSs.
(a)
(b)
(c)
(1)
(i)
(ii)
(iii)
(iv)
(2)
(3)
(ii)
(4)
(d)
(e)
(1) Establish appropriate internal controls to detect and prevent loss, fraud, embezzlement, conflicts of interest, and unauthorized investments.
(2) Establish and maintain a separation of duties between personnel who supervise or execute investment transactions and personnel who supervise or engage in all other investment-related functions.
(3) Maintain records and management information systems that are appropriate for the level and complexity of the institution's investment activities.
(4) Implement an effective internal audit program to review, at least annually, the investment management practices including internal controls, reporting processes, and compliance with FCA regulations. This annual review's scope must be appropriate for the size, risk and complexity of the investment portfolio.
(f)
(2)
(3)
(i) Investments that are fully guaranteed as to the timely payment of principal and interest by a U.S. Government agency;
(ii) Investments that are fully and explicitly guaranteed as to the timely payment of principal and interest by a GSE, except that no more than 50 percent of the investment portfolio may be comprised of GSE MBS. Investments in Farmer Mac securities are governed by § 615.5174 and are not subject to this limitation; and
(iii) Money market instruments identified in § 615.5131.
(g)
(h)
(ii)
(iii)
(2)
(3)
(4)
(ii) The institution's stress tests must be defined in a board-approved policy and must include defined parameters for the security types purchased. The stress tests must be comprehensive and appropriate for the institution's risk profile. At a minimum, the stress tests must be able to measure the price sensitivity of investments over a range of possible interest rates and yield curve scenarios. The stress test methodology must be appropriate for the complexity, structure, and cash flows of the investments in the institution's portfolio. The institution must rely to the maximum extent practicable on verifiable information to support all its stress test assumptions, including prepayment and interest rate volatility assumptions. The institution must document the basis for all assumptions used to evaluate the security and its underlying collateral. The institution must also document all subsequent changes in its assumptions.
(5)
(i)
(1) Plans and strategies for achieving the board's objectives for the investment portfolio;
(2) Whether the investment portfolio effectively achieves the board's objectives;
(3) The current composition, quality, and the risk and liquidity profiles of the investment portfolio;
(4) The performance of each class of investments and the entire investment portfolio, including all gains and losses realized during the quarter on individual investments that the institution sold before maturity and why they were liquidated;
(5) Potential risk exposure to changes in market interest rates as identified through quarterly stress testing and any other factors that may affect the value of its investment holdings;
(6) How investments affect its capital, earnings, and overall financial condition;
(7) Any deviations from the board's policies (must be specifically identified);
(8) The status and performance of each investment described in § 615.5143(a) and (b) or that does not comply with the institution's investment policies; including the expected effect of these investments on its capital, earnings, liquidity, as applicable, and collateral position; and
(9) The terms and status of any required divestiture plan or risk reduction plan.
(b) * * *
(a)
(i) The investment must be purchased and held for one or more investment purposes authorized in § 615.5132.
(ii) The investment must be one of the following:
(A) A non-convertible senior debt security;
(B) A money market instrument with a maturity of 1 year or less;
(C) A portion of an MBS or ABS that is fully guaranteed as to the timely payment of principal and interest by a U.S. Government agency;
(D) A portion of an MBS or ABS that is fully and explicitly guaranteed as to the timely payment of principal and interest by a GSE;
(E) The senior-most position of an MBS or ABS that a U.S. Government agency does not fully guarantee as to the timely payment of principal and interest or a GSE does not fully and explicitly guarantee as to the timely payment of principal and interest, provided that the MBS satisfies the definition of “mortgage related security” in 15 U.S.C. 78c(a)(41);
(F) An obligation of an international or multilateral development bank in which the U.S. is a voting member; or
(G) Shares of a diversified investment fund registered under the Investment Company Act of 1940, if its portfolio consists solely of securities that satisfy paragraph (a)(1)(ii)(A), (B), (C), (D), (E), or (F) of this section, or are eligible under § 615.5174. The investment company's risk and return objectives and use of derivatives must be consistent with the Farm Credit bank's investment policies.
(iii) At least one obligor of the investment must have very strong capacity to meet its financial commitment for the expected life of the investment. If any obligor whose capacity to meet its financial commitment is being relied upon to satisfy this requirement is located outside the U.S., either:
(A) That obligor's sovereign host country must have the highest or second-highest consensus Country Risk Classification (0 or 1) as published by the Organization for Economic Cooperation and Development (OECD) or be an OECD member that is unrated; or
(B) The investment must be fully guaranteed as to the timely payment of principal and interest by a U.S. Government agency.
(iv) The investment must exhibit low credit risk and other risk characteristics consistent with the purpose or purposes for which it is held.
(v) The investment must be denominated in U.S. dollars.
(2)
(b)
(2)
(3)
(i) Complies with § 615.5133(a), (b), (c), (d), and (e). These investment management processes must be appropriate for the size, risk and complexity of the association's investment portfolio.
(ii) Complies with § 615.5182 for investments that exhibit interest rate risk that could lead to significant declines in net income or in the market value of capital.
(iii) Assesses how these investments impact the association's overall credit risk profile and how these investment purchases aid in diversifying, hedging, or mitigating overall credit risk.
(iv) Considers and evaluates any other relevant factors unique to the association or to the nature of the investments that could affect the association's overall risk-bearing capacity, including but not limited to management experience and capability to understand and manage unique risks in investments purchased.
(4)
(i) Include in the numerator the daily (point-in-time) balance of all investments purchased and held under this section. Unless otherwise directed by FCA, associations must use the investment balance on the last business day of the quarter when calculating the numerator of the portfolio limit under this paragraph. For this calculation, value investments at amortized cost and accrued interest.
(ii) Include in the denominator the 90-day average daily balance of total outstanding loans as defined in § 615.5132. For this calculation, value loans at amortized cost and include accrued interest. The denominator does not include any allowance for loan loss adjustments.
(iii) Exclude from the numerator the following:
(A) Equity investments in unincorporated business entities authorized in § 611.1150 of this chapter;
(B) Equity investments in Rural Business Investment Companies organized under 7 U.S.C. 2009cc
(C) Equity investments in Class B Farmer Mac stock authorized in § 615.5173; and
(D) Farmer Mac agricultural mortgage-backed securities under § 615.5174.
(5)
(ii) In deciding whether to approve an association's request to purchase and hold investments, the bank must evaluate and document that the association:
(A) Has adequate policies, procedures, and controls, in place for its investment accounting and reporting;
(B) Has capable staff with the necessary expertise to manage the risks in investments; and
(C) Complies with paragraph (b)(3) of this section.
(iii) The bank must review annually the investment portfolio of every association that it funds. This annual review must evaluate whether the association's investments manage risks over time, and the continued adequacy of the associations' risk management practices.
(6)
(ii) No association is required to divest of investments if a decline in total outstanding loans causes it to exceed the portfolio limit in paragraph (b)(3) of this section. However, the institution must not purchase new investments unless, after they are purchased, the total amount of investments held falls within the portfolio limit.
(c)
(d) [Reserved]
(e)
(a)
(1) A Farm Credit bank must not use the ineligible investment to satisfy its liquidity requirement(s) under § 615.5134;
(2) The institution must include the ineligible investment in the portfolio limit calculation defined in § 615.5132 or § 615.5140(b)(3), as applicable; and
(3) A Farm Credit bank must exclude the ineligible investment as collateral under § 615.5050.
(b)
(1) The institution must notify FCA within 15 calendar days after such determination;
(2) A Farm Credit bank must not use the ineligible investment to satisfy its liquidity requirement(s) under § 615.5134;
(3) The institution must include the ineligible investment in the portfolio limit calculation defined in § 615.5132 or § 615.5140(b)(3), as applicable;
(4) A Farm Credit bank may continue to include the investment as collateral under § 615.5050 at the lower of cost or market value; and
(5) The institution must develop a plan to reduce the investment's risk to the institution.
(c)
| 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 |