Vol. 76 Wednesday, No. 91 May 11, 2011 Pages 27217–27602

Vol. 76 Wednesday, No. 91 May 11, 2011

Pages 27217–27602

OFFICE OF THE FEDERAL REGISTER

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The FEDERAL REGISTER (ISSN 0097–6326) is published daily, SUBSCRIPTIONS AND COPIES Monday through Friday, except official holidays, by the Office of the Federal Register, National Archives and Records PUBLIC Administration, Washington, DC 20408, under the Federal Register Subscriptions: Act (44 U.S.C. Ch. 15) and the regulations of the Administrative Paper or fiche 202–512–1800 Committee of the Federal Register (1 CFR Ch. I). The Assistance with public subscriptions 202–512–1806 Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402 is the exclusive distributor of the official General online information 202–512–1530; 1–888–293–6498 edition. Periodicals postage is paid at Washington, DC. Single copies/back copies: The FEDERAL REGISTER provides a uniform system for making Paper or fiche 202–512–1800 available to the public regulations and legal notices issued by Assistance with public single copies 1–866–512–1800 Federal agencies. These include Presidential proclamations and (Toll-Free) Executive Orders, Federal agency documents having general FEDERAL AGENCIES applicability and legal effect, documents required to be published Subscriptions: by act of Congress, and other Federal agency documents of public interest. Paper or fiche 202–741–6005 Documents are on file for public inspection in the Office of the Assistance with Federal agency subscriptions 202–741–6005 Federal Register the day before they are published, unless the issuing agency requests earlier filing. For a list of documents currently on file for public inspection, see www.ofr.gov. The seal of the National Archives and Records Administration authenticates the Federal Register as the official serial publication established under the Federal Register Act. Under 44 U.S.C. 1507, the contents of the Federal Register shall be judicially noticed. The Federal Register is published in paper and on 24x microfiche. It is also available online at no charge at www.fdsys.gov, a service of the U.S. Government Printing Office. The online edition of the Federal Register is issued under the authority of the Administrative Committee of the Federal Register as the official legal equivalent of the paper and microfiche editions (44 U.S.C. 4101 and 1 CFR 5.10). It is updated by 6:00 a.m. each day the Federal Register is published and includes both text and graphics from Volume 59, 1 (January 2, 1994) forward. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202-512-1800 or 866-512-1800 (toll free). E-mail, [email protected]. The annual subscription price for the Federal Register paper edition is $749 plus postage, or $808, plus postage, for a combined Federal Register, Federal Register Index and List of CFR Sections Affected (LSA) subscription; the microfiche edition of the Federal Register including the Federal Register Index and LSA is $165, plus postage. Six month subscriptions are available for one-half the annual rate. The prevailing postal rates will be applied to orders according to the delivery method requested. The price of a single copy of the daily Federal Register, including postage, is based on the number of pages: $11 for an issue containing less than 200 pages; $22 for an issue containing 200 to 400 pages; and $33 for an issue containing more than 400 pages. Single issues of the microfiche edition may be purchased for $3 per copy, including postage. Remit check or money order, made payable to the Superintendent of Documents, or charge to your GPO Deposit Account, VISA, MasterCard, American Express, or Discover. Mail to: U.S. Government Printing Office—New Orders, P.O. Box 979050, St. Louis, MO 63197-9000; or call toll free 1- 866-512-1800, DC area 202-512-1800; or go to the U.S. Government Online Bookstore site, see bookstore.gpo.gov. There are no restrictions on the republication of material appearing in the Federal Register. How To Cite This Publication: Use the volume number and the page number. Example: 76 FR 12345. Postmaster: Send address changes to the Superintendent of Documents, Federal Register, U.S. Government Printing Office, Washington, DC 20402, along with the entire mailing label from the last issue received.

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Contents Federal Register Vol. 76, No. 91

Wednesday, May 11, 2011

Agency for Healthcare Research and Quality In the Bering Strait, 27287–27288 NOTICES Special Local Regulartions: Agency Information Collection Activities; Proposals, Partnership in Education, Dragon Boat Race; Maumee Submissions, and Approvals, 27323–27325 River, Toledo, OH, 27284–27287 NOTICES Agriculture Department Meetings: See Animal and Plant Health Inspection Service Houston Galveston Navigation Safety Advisory See Forest Service Committee, 27337–27338 NOTICES Agency Information Collection Activities; Proposals, Commerce Department Submissions, and Approvals, 27301 See International Trade Administration See National Institute of Standards and Technology Alcohol, Tobacco, Firearms, and Explosives Bureau See National Oceanic and Atmospheric Administration NOTICES Agency Information Collection Activities; Proposals, Comptroller of the Currency Submissions, and Approvals: PROPOSED RULES Race and National Origin Identification, 27350–27351 Margin and Capital Requirements for Covered Swap Entities Agencies, 27564–27596 Animal and Plant Health Inspection Service RULES Defense Acquisition Regulations System Quarantined Areas: RULES Plum Pox Virus, 27219–27220 Defense Federal Acquisition Regulation Supplement: NOTICES Rules of the Armed Services Board of Contract Appeals, Environmental Assessments; Availability, etc.: 27274–27280 Monsanto Co., Nonregulated Status for Corn Genetically Defense Federal Acquisition Regulation Supplement; Engineered for Drought Tolerance; Petition, Plant Technical Amendments, 27274 Pest Risk Assessment, 27303–27304 Syngenta Biotechnology, Inc.; Determination of Defense Department Nonregulated Status for Lepidopteran-Resistant See Defense Acquisition Regulations System Cotton, Petition, Plant Pest Risk Assessment, 27301– 27303 Department of Transportation See Pipeline and Hazardous Materials Safety Antitrust Division Administration NOTICES National Cooperative Research and Production Act of 1993: Drug Enforcement Administration American Society of Mechanical Engineers, 27351–27352 NOTICES Marine Well Containment Venture, 27351 Agency Information Collection Activities; Proposals, National Biodiesel Accreditation Commission, 27351 Submissions, and Approvals: Application for Permit to Export Controlled Substances/ Centers for Disease Control and Prevention Export Controlled Substances for Reexport, 27352– NOTICES 27353 Agency Information Collection Activities; Proposals, Dispensing Records of Individual Practitioners, 27352 Submissions, and Approvals, 27325–27326 Meetings: Education Department Advisory Council for Elimination of Tuberculosis, 27327– NOTICES 27328 Meetings: Disease, Disability, and Injury Prevention and Control Committee on Measures of Student Success, 27309 Special Emphasis Panel; Correction, 27327 Employee Benefits Security Administration Coast Guard NOTICES RULES Exemptions from Certain Prohibited Transaction Drawbridge Operation Regulations: Restrictions, 27356–27363 Atlantic Intracoastal Waterway, Albemarle and Chesapeake Canal, Chesapeake, VA, 27250–27251 Employment and Training Administration Hackensack River, Jersey City, NJ, 27250 NOTICES Safety Zones: Agency Information Collection Activities; Proposals, Catawba Island Club Fireworks, Catawba Island Club, Submissions, and Approvals: Port Clinton, OH, 27253–27255 Impact Evaluation of the YouthBuild Program, 27363– Coughlin Wedding Fireworks, Lake St. Clair, Harrison 27365 Township, MI, 27251–27253 Applications for Reconsideration; Affirmative PROPOSED RULES Determinations: Port Access Route Study: West, Thomson Reuters Business, Thomson Reuters Legal Atlantic Coast from Maine to Florida, 27288–27290 Division et al., Albuquerque, NM, 27365–27366

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Eligibility to Apply for Worker Adjustment Assistance; PROPOSED RULES Amended Certifications: Airworthiness Directives: Blue Heron Paper Co. et al., Oregon City, OR, 27366– Dowty Propellers Type R212/4–30–4/22 and R251/4–30– 27367 4/49 Propeller Assemblies, 27281–27282 CEVA Freight, LLC, Dell Logistics Division, et al., General Electric Co. CF34–10E2A1; CF34–10E5, CF34– Winston–Salem, NC, 27366 10E5A1; CF34–10E6; CF34–10E6A1; CF34–10E7 and Chrysler Group, LLC, Power Train Division, Mack CF34–10E7–B Turbofan Engines, 27282–27284 Avenue Engine Plant No. 1 et al., Detroit, MI, 27366 Federal Bureau of Investigation Energy Department NOTICES See Federal Energy Regulatory Commission Agency Information Collection Activities; Proposals, Submissions, and Approvals: Environmental Protection Agency National Instant Criminal Background Check System RULES Point of Contact State Final Determination Electronic Pesticide Tolerances: Submission, 27354 Glyphosate, 27268–27271 Propiconazole, 27261–27268 Federal Communications Commission Saflufenacil, 27256–27261 PROPOSED RULES TSCA Inventory Update Reporting Modifications: Private Land Mobile Radio Service Regulations, 27296– Submission Period Suspension, 27271–27274 27300 PROPOSED RULES Approval and Promulgation of Air Quality Implementation Federal Deposit Insurance Corporation Plans: PROPOSED RULES West Virginia; Kentucky; Ohio; Huntington–Ashland Margin and Capital Requirements for Covered Swap Nonattainment Area; Determinations of Attainment Entities Agencies, 27564–27596 of the 1997 Annual Fine Particulate Standard, NOTICES 27290–27294 Determination of Insufficient Assets to Satisfy Claims Revocation of Significant New Use Rule on Certain Against Financial Institution in Receivership, 27320 Chemical Substance, 27294–27296 NOTICES Federal Emergency Management Agency Meetings: NOTICES Advisory Council on Clean Air Compliance Analysis Major Disaster Declarations: Augmented for Review of Report on Black Carbon; Alabama; Amendment No. 7, 27341 Public Teleconference, 27316–27317 Alabama; Amendment No. 8, 27339 Public Involvement in EPA Advisory Activities Alabama; Amendment No. 9, 27339 Supported by SAB Staff Office, 27315–27316 Georgia; Amendment No. 4, 27340 Orders for Amendments to Terminate Uses: Massachusetts; Amendment No. 1, 27340 Ziram, Diquat Dibromide, and Chloropicrin, 27317–27319 Missouri; Amendment No. 2, 27340 Tennessee; Amendment No. 1, 27338 Executive Office of the President Wisconsin; Amendment No. 1, 27339 See Presidential Documents Federal Energy Regulatory Commission Farm Credit Administration NOTICES PROPOSED RULES Applications for License Amendments: Margin and Capital Requirements for Covered Swap Union Electric Co., dba AmerenUE, 27309–27310 Entities Agencies, 27564–27596 Applications for License Transfers: Janet A. Boyd, Boyd Hydro, LLC, 27310 Federal Aviation Administration Applications: RULES Coleman Hydro LLC, 27310–27311 Airworthiness Directives: Complaints: Airbus Model A300 B4–600, B4–600R, and F4–600R BG Energy Merchants, LLC and EXCO Operating Co., LP Series Airplanes, and Model C4–605R Variant F v. Crosstex LIG, LLC, 27312 Airplanes, 27242–27244 Cobb Customer Requesters v. Cobb Electric Membership Airbus Model A310 Series Airplanes, 27220–27237 Corp., Cobb Energy Management Corp., et al., 27311– Airbus Model A310–203, –204, –222, –304, –322, and 27312 –324 Airplanes, 27246–27250 Effectiveness of Exempt Wholesale Generator Status: Boeing Co. Model 747–400, 747–400D, and 747–400F Settlers Trail Wind Farm, LLC, Avenal Park LLC, Sand Series Airplanes Equipped with General Electric Drag LLC, Sun City Project LLC, Coyote Canyon CF6–80C2 or Pratt and Whitney PW4000 Series Energy LLC, et al., 27312 Engines, 27244–27246 Environmental Assessments; Availability, etc.: BURKHART GROB LUFT–UND Model G 103 C Twin III Transcontinental Gas Pipe Line Co., LLC, Mid-Atlantic SL Gliders, 27240–27242 Connector Expansion Project, 27312–27313 Cessna Aircraft Co. Model 172 Airplanes Modified by Filings: Supplemental Type Certificate SA01303WI; East Ohio Gas Co., 27313 Correction, 27239 Petitions for Rate Approvals: Empresa Brasileira de Aeronautica S.A. Model ERJ 170 DCP Guadalupe Pipeline, LLC, 27314 Airplanes; and Model ERJ 190–100 STD, ERJ 190– Records Governing Off-the-Record Communications, 27314– 100 LR, etc., Airplanes, 27237–27239 27315

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Federal Housing Finance Agency Interior Department PROPOSED RULES See National Park Service Margin and Capital Requirements for Covered Swap See Surface Mining Reclamation and Enforcement Office Entities Agencies, 27564–27596 NOTICES Intents to Accept Proposals, Select Potential Lessees, and Federal Motor Carrier Safety Administration Contracts for Hydroelectric Power Development: NOTICES Spanish Fork Flow Control Structure, Central Utah Meetings: Project Completion Act, 27342–27344 Medical Review Board, 27375–27376 Qualification of Drivers; Exemption Applications; Diabetes International Trade Administration Mellitus, 27376–27377 NOTICES Federal Reserve System Amended Antidumping Duty Order Pursuant to Court Decision: PROPOSED RULES Certain Steel Threaded Rod from the People’s Republic of Margin and Capital Requirements for Covered Swap China, 27304–27305 Entities Agencies, 27564–27596 Regulation Z; Truth in Lending, 27390–27506 NOTICES Justice Department Formations of, Acquisitions by, and Mergers of Bank See Alcohol, Tobacco, Firearms, and Explosives Bureau Holding Companies, 27320 See Antitrust Division See Drug Enforcement Administration Federal Trade Commission See Federal Bureau of Investigation NOTICES See Justice Programs Office Early Termination of Waiting Period under Premerger NOTICES Rules, 27320–27323 Agency Information Collection Activities; Proposals, Submissions, and Approvals: Food and Drug Administration Semi-Annual Progress Report for Grantees from State NOTICES Sexual Assault and Domestic Violence Coalitions Agency Information Collection Activities; Proposals, Program, 27347–27348 Submissions, and Approvals: Semi-Annual Progress Report for Grantees of Reduce Investigational New Drug Regulations, 27328–27331 Violent Crimes Against Women on Campus Program, Draft Guidance for Industry and Food and Drug 27348–27349 Administration Staff; Availability: Semi-Annual Progress Report for Grants to State Sexual Establishing Performance Characteristics of In Vitro Assault and Domestic Violence, 27349–27350 Diagnostic Devices for Chlamydia Trachomatis, etc., Semi-Annual Progress Report for Safe Havens, 27331–27332 Supervised Visitation and Safe Exchange, 27347 Proposal to Withdraw Approval for Breast Cancer Lodging of Consent Decrees under Clean Water Act, 27350 Indication for Bevacizumab; Hearing, 27332–27335 Foreign Assets Control Office Justice Programs Office NOTICES NOTICES Blocking Property of Certain Persons with Respect to 2011 National Institute of Justice Body Armor Workshop, Human Rights Abuses in Syria: 27355 Additional Identifying Information, 27377–27378 Law Enforcement Vehicular Digital Multimedia Evidence Recording System Selection and Application Guide, Forest Service 27355 NOTICES Meetings: Labor Department Pike and San Isabel Resource Advisory Committee, 27304 See Employee Benefits Security Administration See Employment and Training Administration Health and Human Services Department See Occupational Safety and Health Administration See Agency for Healthcare Research and Quality NOTICES See Centers for Disease Control and Prevention Agency Information Collection Activities; Proposals, See Food and Drug Administration Submissions, and Approvals: See National Institutes of Health Mine Accident, Injury and Illness Report and Quarterly NOTICES Mine Employment and Coal Production Report, Meetings: 27355–27356 Presidential Advisory Council on HIV/AIDS, 27323 Homeland Security Department National Council on Disability See Coast Guard NOTICES See Federal Emergency Management Agency Meetings; Sunshine Act, 27369

Housing and Urban Development Department National Institute of Standards and Technology NOTICES NOTICES Agency Information Collection Activities; Proposals, Agency Information Collection Activities; Proposals, Submissions, and Approvals: Submissions, and Approvals: Indian Housing Block Grant Program Reporting, 27341– Summer Institute for Middle School Science Teachers, 27342 etc., 27305–27306

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National Institutes of Health Small Business Administration NOTICES NOTICES Laboratory Animal Welfare: Small Business Size Standards; Waivers of Proposed Adoption and Implementation of Eighth Edition Nonmanufacturer Rule: of Guide for Care and Use of Laboratory Animals, GEN II and GEN III Image Intensifier Tubes, 27372–27373 27335–27336 Meetings: State Department National Center for Research Resources, 27337 NOTICES National Institute on Aging, 27336–27337 Agency Information Collection Activities; Proposals, Submissions, and Approvals: Medical Examination Forms for Immigrant or Refugee National Oceanic and Atmospheric Administration Applicants, 27373–27374 RULES Determination Concerning Government of Iraq’s Support for Fisheries Off West Coast States: Iraq Police Program, 27374 Pacific Coast Groundfish Fishery; Biennial Specifications Determination to Transfer Title of Selected Aircraft to and Management Measures, 27508–27562 Government of Mexico, 27374 NOTICES Determinations of Largest Exporting and Importing Endangered Species; Applications: Countries of Certain Precursor Chemicals, 27374 File No. 15661, 27306 Determinations under Foreign Assistance Act to Support Grays Reef National Marine Sanctuary Advisory Council Near East Regional Democracy, 27374 Seats; Availability, 27307 Meetings: Marine Mammals: Advisory Committee for Study of Eastern Europe and Photography Permit Application No. 16360, 27307 Independent States of Former Soviet Union, 27375 Taking and Importing Marine Mammals: Space Vehicle and Missile Launch Operations at Kodiak Surface Mining Reclamation and Enforcement Office Launch Complex, AK, 27308–27309 NOTICES Agency Information Collection Activities; Proposals, National Park Service Submissions, and Approvals, 27346–27347 NOTICES Environmental Impact Statements; Availability, etc.: Thrift Supervision Office Mojave National Preserve, San Bernardino County, CA, NOTICES 27344–27345 Agency Information Collection Activities; Proposals, National Register of Historic Places; Pending Nominations Submissions, and Approvals: and Related Actions, 27345–27346 Branch Offices, 27378–27379 Request for Service Corporation Activity, 27378

National Science Foundation Transportation Department NOTICES See Federal Aviation Administration Agency Information Collection Activities; Proposals, See Federal Motor Carrier Safety Administration Submissions, and Approvals, 27369–27370 See Pipeline and Hazardous Materials Safety Administration Occupational Safety and Health Administration NOTICES Treasury Department Agency Information Collection Activities; Proposals, See Comptroller of the Currency Submissions, and Approvals: See Foreign Assets Control Office Slings, 27367–27369 See Thrift Supervision Office NOTICES List of Countries Requiring Cooperation with an Pipeline and Hazardous Materials Safety Administration International Boycott, 27377 PROPOSED RULES Hazardous Materials: Veterans Affairs Department Cargo Tank Motor Vehicle Loading and Unloading NOTICES Operations, 27300 Agency Information Collection Activities; Proposals, Submissions, and Approvals, 27379 Agency Information Collection Activities; Proposals, Presidential Documents Submissions, and Approvals: PROCLAMATIONS Cooperative Studies Program, Site Survey and Meeting Special Observances: Evaluation, 27386–27387 Military Spouse Appreciation Day (Proc. 8669), 27217– Eligibility Verification Reports, 27383–27384 27218 Employment Questionnaire, 27386 Mother’s Day (Proc. 8671), 27601–27602 Financial Statement, 27381–27382 National Women’s Health Week (Proc. 8670), 27597– Forms for Grants to States for Construction and 27600 Acquisition of State Home Facilities, 27385 Lenders Staff Appraisal Reviewer Application, 27387 Securities and Exchange Commission Offer to Purchase and Contract of Sale, 27380 NOTICES Report of Medical Examination for Disability Evaluation, Self-Regulatory Organizations; Proposed Rule Changes: 27380–27381 EDGA Exchange, Inc., 27370–27372 REPS Annual Eligibility Report, 27385–27386

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Statement in Support of Claim, 27383 Part IV VBA Loan Guaranty Service Lender Satisfaction Survey, Farm Credit Administration, 27564–27596 27382 Federal Deposit Insurance Corporation, 27564–27596 Veteran Suicide Prevention Online Quantitative Surveys, Federal Housing Finance Agency, 27564–27596 27384–27385 Federal Reserve System, 27564–27596 Waiver of VA Compensation or Pension to Receive Treasury Department, Comptroller of the Currency, 27564– Military Pay and Allowances, 27381 27596 Meetings: Advisory Committee on Disability Compensation, 27387– Part V 27388 Presidential Documents, 27597–27602 Special Medical Advisory Group, 27388

Reader Aids Separate Parts In This Issue Consult the Reader Aids section at the end of this page for phone numbers, online resources, finding aids, reminders, and notice of recently enacted public laws. Part II Federal Reserve System, 27390–27506 To subscribe to the Federal Register Table of Contents LISTSERV electronic mailing list, go to http:// Part III listserv.access.gpo.gov and select Online mailing list Commerce Department, National Oceanic and Atmospheric archives, FEDREGTOC-L, Join or leave the list (or change Administration, 27508–27562 settings); then follow the instructions.

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CFR PARTS AFFECTED IN THIS ISSUE

A cumulative list of the parts affected this month can be found in the Reader Aids section at the end of this issue.

3 CFR Proclamations: 8669...... 27217 8669...... 27599 8669...... 27601 7 CFR 301...... 27219 12 CFR Proposed Rules: 45...... 27564 226...... 27390 237...... 27564 324...... 27564 624...... 27564 1221...... 27564 14 CFR 39 (9 documents) ...... 27220, 27227, 27232, 27237, 27239, 27240, 27242, 27244, 27246 Proposed Rules: 39 (2 documents) ...... 27281, 27282 33 CFR 117 (2 documents) ...... 27250 165 (2 documents) ...... 27251, 27253 Proposed Rules: 100...... 27284 167 (2 documents) ...... 27287, 27288 40 CFR 180 (3 documents) ...... 27256, 27261, 27268 710...... 27271 Proposed Rules: 52...... 27290 721...... 27294 47 CFR Proposed Rules: 90...... 27296 48 CFR Ch. 2 ...... 27274 209...... 27274 225...... 27274 49 CFR Proposed Rules: 172...... 27300 177...... 27300 50 CFR 660...... 27508

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Federal Register Presidential Documents Vol. 76, No. 91

Wednesday, May 11, 2011

Title 3— Proclamation 8669 of May 5, 2011

The President Military Spouse Appreciation Day, 2011

By the President of the United States of America

A Proclamation

Military spouses serve as steady and supportive partners to the heroes in uniform who protect and defend our great Nation every day. Across America and around the world, military spouses serve our country in their own special way, helping families and friends through the stress of a deployment, caring for our wounded warriors, and supporting each other when a loved one has made the ultimate sacrifice. Our service members and their families seldom ask for support or recognition. They carry out their duties to family and country with the quiet courage and strength that has always exemplified the American spirit. On Military Spouse Appreciation Day, we have an opportunity to not only honor the husbands and wives of our service members, but also thank them by actively expressing our gratitude in both word and deed. When a member of our Armed Forces is deployed, an entire family is called to serve. The readiness of our troops depends on the readiness of our military families, as millions of parents, children, and loved ones sacrifice as well. This means supporting our military spouses is also a national security imperative. Earlier this year, my Administration released the report on military families, Strengthening our Military Families: Meeting America’s Commitment, which marshaled resources from across our Government to identify new opportunities to support these patriots. First Lady Michelle Obama and Dr. Jill Biden are working tirelessly to enlist all sectors of American life to address the unique challenges of military families. Their national initiative, ‘‘Joining Forces,’’ mobilizes Americans to give our service members and their families the opportunities and support they have earned. Americans can find service projects, send messages of thanks to military families, and learn more about this initiative by visiting: www.JoiningForces.gov. On Military Spouse Appreciation Day, let us join together to show our service members we are taking care of their families back home as they serve our Nation across the globe. As neighbors, teachers, parents, and fellow citizens, we can reach out to military husbands and wives in our communities. We can show our appreciation in countless ways, from offering to help with household maintenance and childcare to encouraging the community involvement and career development of military spouses. It is through our actions that we show our commitment to our service members and their spouses. By embracing military families, we demonstrate our partnership in the defense of our freedom and the security of the United States. NOW, THEREFORE, I, BARACK OBAMA, President of the United States of America, by virtue of the authority vested in me by the Constitution and the laws of the United States, do hereby proclaim May 6, 2011, as Military Spouse Appreciation Day. I call upon the people of the United States to honor military spouses with appropriate ceremonies and activities.

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IN WITNESS WHEREOF, I have hereunto set my hand this fifth day of May, in the year of our Lord two thousand eleven, and of the Independence of the United States of America the two hundred and thirty-fifth.

[FR Doc. 2011–11629 Filed 5–10–11; 8:45 am] Billing code 3195–W1–P

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Rules and Regulations Federal Register Vol. 76, No. 91

Wednesday, May 11, 2011

This section of the FEDERAL REGISTER the fruit that is produced is often Effective Date contains regulatory documents having general misshapen and blemished. PPV is Pursuant to the administrative applicability and legal effect, most of which transmitted under natural conditions by are keyed to and codified in the Code of procedure provisions in 5 U.S.C. 553, several species of aphids. The long- we find good cause for making this rule Federal Regulations, which is published under distance spread of PPV occurs by 50 titles pursuant to 44 U.S.C. 1510. effective less than 30 days after budding and grafting with infected plant publication in the Federal Register. The The Code of Federal Regulations is sold by material and through movement of farm interim rule adopted as final by this rule the Superintendent of Documents. Prices of tools, equipment, and infected became effective on December 27, 2010. new books are listed in the first FEDERAL budwood, nursery stock, and other plant This rule corrects the description of the REGISTER issue of each week. parts. quarantined area in the interim rule. The regulations in ‘‘Subpart—Plum Immediate action is necessary to ensure DEPARTMENT OF AGRICULTURE Pox’’ (7 CFR 301.74 through 301.74–5, that the description of the quarantined referred to below as the regulations) area is accurate in order to prevent the Animal and Plant Health Inspection quarantine areas of the United States artificial spread of PPV to uninfected Service where PPV has been detected and areas of the United States. Therefore, the restrict the interstate movement of Administrator of the Animal and Plant 7 CFR Part 301 regulated articles from quarantined Health Inspection Service has areas to prevent the spread of PPV into determined that this rule should be [Docket No. APHIS–2010–0089] uninfected areas of the United States. effective upon publication in the Plum Pox Virus; Update of In an interim rule 1 that became Federal Register. Quarantined Areas effective upon publication in the List of Subjects in 7 CFR Part 301 Federal Register on December 27, 2010 AGENCY: Animal and Plant Health (75 FR 81087–81089, Docket No. Agricultural commodities, Plant Inspection Service, USDA. APHIS–2010–0089), we amended the diseases and pests, Quarantine, ACTION: Final rule. regulations by adding portions of Reporting and recordkeeping Niagara, Orleans, and Wayne Counties, requirements, Transportation. SUMMARY: We are adopting as a final NY, to the list of quarantined areas and Accordingly, the interim rule rule, with one change, an interim rule removing the townships of Latimore and amending 7 CFR part 301 that was that amended the plum pox virus (PPV) Huntington in Adams County, PA, from published at 75 FR 81087–81089 on regulations by removing portions of that list. December 27, 2010, is adopted as a final Adams County, PA, from the list of rule with the following change: quarantined areas and by adding Comments on the interim rule were portions of Niagara, Orleans, and Wayne required to be received on or before PART 301—DOMESTIC QUARANTINE Counties, NY, to the list of quarantined February 25, 2011. We did not receive NOTICES areas and restricted the interstate any comments by that date. movement of regulated articles from In the interim rule, we incorrectly ■ 1. The authority citation for part 301 these quarantined areas. The interim described one of the borders of the continues to read as follows: rule was necessary to prevent the spread quarantined area in the Town of Sodus Authority: 7 U.S.C. 7701–7772 and 7781– of PPV from the quarantined areas of in Wayne County. Therefore, in this 7786; 7 CFR 2.22, 2.80, and 371.3. New York to uninfected areas of the final rule, we are amending § 301.74– Section 301.75–15 issued under Sec. 204, United States and to relieve restrictions 3(c), under New York for the entry Title II, Pub. L. 106–113, 113 Stat. 1501A– in Pennsylvania that are no longer Wayne County, paragraph (3), to correct 293; sections 301.75–15 and 301.75–16 necessary. issued under Sec. 203, Title II, Pub. L. 106– the description of that quarantined area. 224, 114 Stat. 400 (7 U.S.C. 1421 note). DATES: Effective Date: May 11, 2011. Therefore, for the reasons given in the ■ 2. In § 301.74–3, paragraph (c), under FOR FURTHER INFORMATION CONTACT: Dr. interim rule and this document, we are ‘‘ ’’ S. Anwar Rizvi, Senior Plant adopting the interim rule as a final rule, the heading New York, in the entry for Pathologist/National Program Manager, with the change discussed in this Wayne County, paragraph (3) is revised Plant Pathogen and Weed Programs, document. to read as follows: EDP, PPQ, APHIS, 4700 River Road Unit This final rule also affirms the § 301.74–3 Quarantined areas. 160, Riverdale, MD 20737; (301) 734– information contained in the interim * * * * * 4313. rule concerning Executive Order 12866 New York SUPPLEMENTARY INFORMATION: and the Regulatory Flexibility Act, Executive Orders 12372 and 12988, and * * * * * Background the Paperwork Reduction Act. (c) Wayne County. *** The plum pox virus (PPV) is an Further, for this action, the Office of (3) That area of Wayne County in the extremely serious viral disease of plants Management and Budget has waived its Town of Sodus beginning on the Sodus that can affect many Prunus (stone fruit) review under Executive Order 12866. Bay shoreline at Ridge Road; then west species, including plum, peach, apricot, on Ridge Road to Boyd Road; then north almond, nectarine, and sweet and tart 1 To view the interim rule, go to http:// on Boyd Road to Sergeant Road; then cherry. Infection eventually results in www.regulations.gov/fdmspublic/component/ north on Sergeant Road to Morley Road; severely reduced fruit production, and main?main=DocketDetail&d=APHIS-2010-0089. then east on Morley Road to State Route

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14; then north on State Route 14 to 1200 New Jersey Avenue, SE., • For certain Model A310–203, South Shore Road; then east on South Washington, DC. A310–204, A310–222, A310–304, A310– Shore Road and continuing to the FOR FURTHER INFORMATION CONTACT: 322, A310–324, and A310–325 shoreline of Sodus Bay. Dan Rodina, Aerospace Engineer, airplanes: Repetitive external detailed Done in Washington, DC, this 4th day of International Branch, ANM–116, inspections for cracking of the top skin May 2011. Transport Airplane Directorate, FAA, at ribs 13–14, repetitive internal Kevin Shea, 1601 Lind Avenue, SW., Renton, detailed inspections for cracking of Acting Administrator, Animal and Plant Washington 98057–3356; telephone stringer 7 and stringer 8 of the overwing Health Inspection Service. (425) 227–2125; fax (425) 227–1149. refuel aperture, and repair if necessary. • For certain Model A310–203 and [FR Doc. 2011–11489 Filed 5–10–11; 8:45 am] SUPPLEMENTARY INFORMATION: A310–222 airplanes: Repetitive detailed BILLING CODE 3410–34–P Discussion inspections for cracking around the bolts in the wing top skin upper surface We issued a notice of proposed of the front spar between rib 7 and rib rulemaking (NPRM) to amend 14 CFR DEPARTMENT OF TRANSPORTATION 28, and repair if necessary. part 39 to include an AD that would • For certain Model A310–203 and Federal Aviation Administration apply to the specified products. That A310–222 airplanes: Repetitive high NPRM was published in the Federal frequency eddy current (HFEC) or X-ray 14 CFR Part 39 Register on January 3, 2011 (76 FR 34). inspections to detect cracking of the [Docket No. FAA–2010–1275; Directorate That NPRM proposed to correct an stringer runouts inboard and outboard Identifier 2010–NM–091–AD; Amendment unsafe condition for the specified of rib 14 at stringers 6, 7, 8, and 9, and 39–16688; AD 2011–10–07] products. The MCAI states: repair if necessary. RIN 2120–AA64 DGAC [Direction Ge´ne´rale de l’Aviation • For certain Model A310–203, Civile] France Airworthiness Directive (AD) A310–204, A310–222, A310–304, A310– Airworthiness Directives; Airbus Model 1992–106–132(B) original issue up to 322, and A310–324 airplanes: Repetitive A310 Series Airplanes revision 7 was issued to require a set of ultrasonic inspections for cracking in inspection- and modification tasks which certain bolt holes where the main AGENCY: Federal Aviation addressed JAR/FAR [Joint Aviation landing gear forward pick-up fitting is Administration (FAA), Department of Regulation/Federal Aviation Regulation] 25– attached to the rear spar, and repair if Transportation (DOT). 571 requirements related to damage-tolerance and fatigue evaluation of structure [FAA AD necessary. ACTION: Final rule. 98–26–01 corresponds to DGAC AD 1992– You may obtain further information 106–132(B)R4, dated June 5, 1996]. SUMMARY: We are adopting a new by examining the MCAI in the AD Following the Extended Design Service docket. airworthiness directive (AD) for the Goal activities as part of the Structure Task products listed above. This AD results Group for the Airbus A310 program, EASA Comments from mandatory continuing issued AD 2007–0053 which replaced DGAC We gave the public the opportunity to airworthiness information (MCA I) France AD F–1992–106–132R7. Since the participate in developing this AD. We originated by an aviation authority of issuance of that AD, the thresholds and the received no comments on the NPRM or another country to identify and correct intervals of some Airbus Service Bulletins on the determination of the cost to the an unsafe condition on an aviation (SBs which address structure fatigue related public. product. The MCAI describes the unsafe areas on the wing parts), until now part of condition as: the requirements of AD 2007–0053, have Explanation of Changes to This AD been updated. DGAC [Direction Ge´ne´rale de l’Aviation For the reasons stated above, this new We have moved the parenthetical Civile] France Airworthiness Directive (AD) [EASA] AD requires the accomplishment of information from paragraphs (g), (i), (j), 1992–106–132(B) * * * was issued to the structural fatigue-related corrective (o), and (q)(1), (q)(2), and (q)(3) of this require a set of inspection- and modification actions in accordance with the latest revision AD. Instead, we have provided that tasks which addressed JAR/FAR [Joint of these SBs which have been reviewed in information in Note 1, Note 3, Note 4, Aviation Regulation/Federal Aviation the context of the A310 Extended Service Note 6, and Note 8 of this AD. Regulation] 25–571 requirements related to Goal activities. Consequently, this new AD damage-tolerance and fatigue evaluation of supersedes the requirements of paragraphs We have also revised tables 3 and 4 structure. 1.8, 1.9, 1.10, 1.13, 1.18 of EASA AD 2007– of this AD to refer to Model ‘‘A310–322’’ * * * * * 0053, which has been revised accordingly. instead of ‘‘A310A–322.’’ We The unsafe condition is reduced inadvertently referred to ‘‘A310A–322’’ The unsafe condition is reduced in the NPRM. structural integrity of the wings. We are structural integrity of the wings. The issuing this AD to require actions to required corrective actions are as Conclusion correct the unsafe condition on these follows, depending on airplane We reviewed the available data and products. configuration: determined that air safety and the DATES: This AD becomes effective June • For certain Model A310–203 and public interest require adopting the AD 15, 2011. A310–222 airplanes: Repetitive detailed with the changes described previously. The Director of the Federal Register inspections for cracking of the leading We determined that these change will approved the incorporation by reference edge access panels around the bolt not increase the economic burden on of certain publications listed in this AD holes, and repair if necessary. any operator or increase the scope of the as of June 15, 2011. • For certain Model A310–203, AD. ADDRESSES: You may examine the AD A310–204, A310–222, A310–304, A310– docket on the Internet at http:// 322, A310–324, and A310–325 Differences Between This AD and the www.regulations.gov or in person at the airplanes: Repetitive eddy current MCAI or Service Information U.S. Department of Transportation, inspections to detect cracks in the holes We have reviewed the MCAI and Docket Operations, M–30, West around the overwing refueling aperture related service information and, in Building Ground Floor, Room W12–140, at ribs 13–14, and repair if necessary. general, agree with their substance. But

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we might have found it necessary to use on a substantial number of small entities 1992–106–132(B) * * * was issued to require different words from those in the MCAI under the criteria of the Regulatory a set of inspection- and modification tasks to ensure the AD is clear for U.S. Flexibility Act. which addressed JAR/FAR [Joint Aviation operators and is enforceable. In making We prepared a regulatory evaluation Regulation/Federal Aviation Regulation] 25– of the estimated costs to comply with 571 requirements related to damage-tolerance these changes, we do not intend to differ and fatigue evaluation of structure. substantively from the information this AD and placed it in the AD docket. * * * * * provided in the MCAI and related Examining the AD Docket The unsafe condition is reduced structural service information. integrity of the wings. We might also have required different You may examine the AD docket on actions in this AD from those in the the Internet at http:// Compliance MCAI in order to follow our FAA www.regulations.gov; or in person at the (f) You are responsible for having the policies. Any such differences are Docket Operations office between 9 a.m. actions required by this AD performed within highlighted in a NOTE within the AD. and 5 p.m., Monday through Friday, the compliance times specified, unless the except Federal holidays. The AD docket actions have already been done. Costs of Compliance contains the NPRM, the regulatory Restatement of Certain Requirements of AD We estimate that this AD will affect evaluation, any comments received, and 98–26–01, Amendment 39–10942 (63 FR 44 products of U.S. registry. We also other information. The street address for 69179, December 16, 1998), With Reduced estimate that it will take about 97 work- the Docket Operations office (telephone Compliance Times hours per product to comply with the (800) 647–5527) is in the ADDRESSES Leading Edge Access Panels Landing— basic requirements of this AD. The section. Comments will be available in Lower Skin—Inspection for Cracks at Bolt average labor rate is $85 per work-hour. the AD docket shortly after receipt. Holes Based on these figures, we estimate the List of Subjects in 14 CFR Part 39 (g) For Model A310–203 and A310–222 cost of this AD to the U.S. operators to airplanes listed in Airbus Service Bulletin be $362,780, or $8,245 per product. Air transportation, Aircraft, Aviation A310–57–2002, Revision 2, dated January 4, safety, Incorporation by reference, 1996, except airplanes on which Airbus Authority for This Rulemaking Safety. modification No. 05101 has been embodied Title 49 of the United States Code Adoption of the Amendment in production, or on which Airbus Service specifies the FAA’s authority to issue Bulletin A310–57–2003 has been embodied rules on aviation safety. Subtitle I, Accordingly, under the authority in service before the accumulation of 9,400 section 106, describes the authority of delegated to me by the Administrator, total flight cycles and 18,800 total flight the FAA Administrator. ‘‘Subtitle VII: the FAA amends 14 CFR part 39 as hours: At the times specified in paragraph (h) follows: of this AD, perform a detailed visual Aviation Programs,’’ describes in more inspection to detect cracks in the external detail the scope of the Agency’s PART 39—AIRWORTHINESS surface of the wing lower skin around the authority. DIRECTIVES landing access panel holes of the leading We are issuing this rulemaking under edge, in accordance with the Airbus Service the authority described in ‘‘Subtitle VII, ■ 1. The authority citation for part 39 Bulletin A310–57–2002, Revision 1, dated Part A, Subpart III, Section 44701: continues to read as follows: July 2, 1992; Airbus Service Bulletin A310– General requirements.’’ Under that 57–2002, Revision 2, dated January 4, 1996; section, Congress charges the FAA with Authority: 49 U.S.C. 106(g), 40113, 44701. or Airbus Mandatory Service Bulletin A310– 57–2002, Revision 03, dated November 28, promoting safe flight of civil aircraft in § 39.13 [Amended] air commerce by prescribing regulations 2006. If any discrepancy is found, prior to ■ 2. The FAA amends § 39.13 by adding further flight, repair in accordance with a for practices, methods, and procedures the following new AD: method approved by either the Manager, the Administrator finds necessary for 2011–10–07 Airbus: Amendment 39–16688. International Branch, ANM–116, FAA, safety in air commerce. This regulation Docket No. FAA–2010–1275; Directorate Transport Airplane Directorate, or the is within the scope of that authority Identifier 2010–NM–091–AD. Direction Ge´ne´rale de l’Aviation Civile because it addresses an unsafe condition (DGAC) (or its delegated agent) or EASA (or that is likely to exist or develop on Effective Date its delegated agent). Except as required by products identified in this rulemaking (a) This airworthiness directive (AD) paragraph (n) of this AD, repeat the detailed action. becomes effective June 15, 2011. inspection specified in this paragraph at the earlier of the times specified in paragraphs Regulatory Findings Affected ADs (g)(1) and (g)(2) of this AD; and thereafter at (b) This AD affects AD 90–19–07, intervals not to exceed 2,300 flight cycles or We determined that this AD will not Amendment 39–6731 (55 FR 37455, 4,700 flight hours, whichever occurs first. As have federalism implications under September 12, 1990); and AD 91–06–18, of the effective date of this AD, use only Executive Order 13132. This AD will Amendment 39–6940 (56 FR 10796, March Airbus Mandatory Service Bulletin A310–57– not have a substantial direct effect on 14, 1991). 2002, Revision 03, dated November 28, 2006. the States, on the relationship between Applicability Accomplishment of Airbus Modification the national government and the States, 05101 before the effective date of this AD (c) This AD applies to Airbus Model A310– terminates the repetitive inspection or on the distribution of power and 203, –204, –221, –222, –304, –322, –324, and responsibilities among the various requirements of this paragraph; however, –325 airplanes, certificated in any category, airplanes identified in paragraph (n) of this levels of government. all certified models, all serial numbers. For the reasons discussed above, I AD are applicable to the new inspections Subject required by paragraph (n) of this AD. As of certify this AD: the effective date of this AD: (d) Air Transport Association (ATA) of 1. Is not a ’’significant regulatory Accomplishment of Airbus Modification America Code 57: Wings. action’’ under Executive Order 12866; 05101 before the accumulation of 9,400 total 2. Is not a ’’significant rule’’ under the Reason flight cycles and 18,800 total flight hours DOT Regulatory Policies and Procedures (e) The mandatory continuing terminates the repetitive inspection (44 FR 11034, February 26, 1979); and airworthiness information (MCAI) states: requirements of this paragraph. 3. Will not have a significant DGAC [Direction Ge´ne´rale de l’Aviation Note 1: Airbus Service Bulletin A310–57– economic impact, positive or negative, Civile] France Airworthiness Directive (AD) 2003, Revision 03, dated October 16, 2006, is

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an additional source of guidance for further flight, repair in accordance with a airplanes identified in paragraph (p) of this accomplishing Airbus Modification 05101. method approved by either the Manager, AD are applicable to the new inspections International Branch, ANM–116, FAA, required by paragraph (p) of this AD. As of Note 2: As of the effective date of this AD, Transport Airplane Directorate, or the DGAC the effective date of this AD: if Airbus Service Bulletin A310–57–2003 is (or its delegated agent) or EASA (or its Accomplishment of Airbus Modification done on or after the accumulation of 9,400 delegated agent). Repeat the inspection total flight cycles or on or after the 05026H0878 before the accumulation of specified in this paragraph at the earlier of accumulation of 18,800 total flight hours, the 10,500 total flight cycles and 21,000 total the times specified in paragraphs (i)(1) and actions specified in paragraph (g) of this AD flight hours terminates the repetitive (i)(2) of this AD, and thereafter at intervals are still required. inspection requirements of this paragraph. not to exceed 2,300 flight cycles or 4,600 (1) Within 4,500 flight cycles after doing (1) Within 3,000 flight cycles after doing flight hours, whichever occurs first. As of the the last inspection required by paragraph (j) the detailed inspection specified in effective date of this AD, use only Airbus of this AD. paragraph (g) of this AD. Mandatory Service Bulletin A310–57–2006, (2) At the later of the times specified in (2) At the later of the times specified in Revision 04, dated May 21, 2007. paragraphs (j)(2)(i) and (j)(2)(ii) of this AD. paragraphs (g)(2)(i) and (g)(2)(ii) of this AD. Accomplishment of Airbus Modification (i) Within 3,900 flight cycles or 7,900 flight (i) Within 2,300 flight cycles or 4,700 flight 05891H5128 terminates the repetitive hours, whichever occurs first, after doing the hours, whichever occurs first, after doing the inspections required by this paragraph. most recent inspection required by paragraph detailed inspection required by paragraph (g) (1) Within 3,000 flight cycles after doing (j) of this AD. of this AD. the last inspection required by paragraph (i) (ii) Within 850 flight cycles or 1,700 flight (ii) Within 1,500 flight cycles or 3,000 of this AD. hours, whichever occurs first, after the flight hours, whichever occurs first, after the (2) At the later of the times specified in effective date of this AD. effective date of this AD. paragraphs (i)(2)(i) and (i)(2)(ii) of this AD. Note 4: Airbus Service Bulletin A310–57– (h) For Model A310–203 and A310–222 (i) Within 2,300 flight cycles or 4,600 flight 2005, Revision 03, dated October 2, 2006, is airplanes listed in Airbus Service Bulletin hours, whichever occurs first, after doing the an additional source of guidance for A310–57–2002, Revision 2, dated January 4, most recent inspection required by paragraph accomplishing Airbus Modification 1996, except airplanes on which Airbus (i) of this AD. 05026H0878. modification No. 05101 has been embodied (ii) Within 380 flight cycles or 770 flight in production, or on which Airbus Service hours, whichever occurs first, after the Note 5: As of the effective date of this AD, Bulletin A310–57–2003 has been embodied effective date of this AD. if Airbus Service Bulletin A310–57–2005 is in service before the accumulation of 9,400 Note 3: Airbus Service Bulletin A310–57– done on or after the accumulation of 10,500 total flight cycles and 18,800 total flight 2020, Revision 07, dated June 5, 2006, is an total flight cycles or on or after the hours: At the earlier of the times specified in additional source of guidance for accumulation of 21,000 total flight hours, the paragraphs (h)(1) and (h)(2) of this AD, do the accomplishing Airbus Modification actions specified in paragraph (j) of this AD detailed inspection required by paragraph (g) 05891H5128. are still required. of this AD. (1) Prior to the accumulation of 12,000 (k) For Model A310–203 and A310–222 Upper Skin Forward of Front Spar— airplanes listed in Airbus Service Bulletin total flight cycles, or within 1,000 flight Inspection for Cracks cycles after January 20, 1999 (the effective A310–57–2032, Revision 3, dated January 4, date of AD 98–26–01, amendment 39–10942), (j) For Model A310–203 and A310–222 1996, except airplanes on which Airbus whichever occurs later. airplanes listed in Airbus Service Bulletin modification 05026 has been embodied in (2) At the later of the times specified in A310–57–2032, Revision 3, dated January 4, production, or on which Airbus Service paragraph (h)(2)(i) and (h)(2)(ii) of this AD. 1996, except airplanes on which Airbus Bulletin A310–57–2005 has been done in (i) Prior to the accumulation of 9,400 total modification 05026 has been embodied in service before the accumulation of 10,500 flight cycles or 18,800 total flight hours, production, or on which Airbus Service total flight cycles and 21,000 total flight whichever occurs first. Bulletin A310–57–2005 has been done in hours: At the earlier of the times specified in (ii) Within 1,500 flight cycles or 3,000 service before the accumulation of 10,500 paragraphs (k)(1) and (k)(2) of this AD, do the flight hours, whichever occurs first, after the total flight cycles and 21,000 total flight detailed inspection required by paragraph (j) effective date of this AD. hours: At the times specified in paragraph (k) of this AD. of this AD, perform a detailed visual (1) Prior to the accumulation of 12,000 Inspect Area around Overwing Refueling inspection to detect cracks around the bolts total flight cycles, or within 1,000 flight Aperture at Ribs 13–14 in the wing top skin upper surface of the cycles after January 20, 1999, whichever (i) For Model A310–203, A310–204, A310– front spar between rib 7 and rib 28, in occurs later. 222, A310–304, A310–322, A310–324, and accordance with the Accomplishment (2) At the later of the times specified in A310–325 airplanes that are listed in Airbus Instructions of Airbus Service Bulletin A310– paragraphs (k)(2)(i) and (k)(2)(ii) of this AD. Service Bulletin A310–57–2006, Revision 3, 57–2032, Revision 3, dated January 4, 1996; (i) Prior to the accumulation of 10,500 total dated May 2, 1996, and are identified as or Airbus Mandatory Service Bulletin A310– flight cycles or 21,000 total flight hours, Configuration 1 in Airbus Mandatory Service 57–2032, Revision 04, dated December 1, whichever occurs first. Bulletin A310–57–2006, Revision 04, dated 2006. If any discrepancy is found, prior to (ii) Within 850 flight cycles or 1,700 flight May 21, 2007: Prior to the accumulation of further flight, repair in accordance with a hours, whichever occurs first, after the 6,000 total flight cycles, or within 1,000 flight method approved by either the Manager, effective date of this AD. cycles after January 20, 1999, whichever International Branch, ANM–116, FAA, Stringer Flanges at Rib 14 Wing Bottom occurs later, perform an eddy current Transport Airplane Directorate, or DGAC (or Skin—Inspect for Cracks inspection to detect cracks in the holes its delegated agent) or EASA (or its delegated around the overwing refueling aperture at agent). Except as required by paragraph (p) of (l) For Model A310–203 and A310–222 ribs 13–14, in accordance with Airbus this AD, repeat the detailed inspection airplanes listed in Airbus Service Bulletin Service Bulletin A310–57–2006, Revision 3, specified in this paragraph at the earlier of A310–57–2038, Revision 2, dated January 4, dated May 2, 1996; or Airbus Mandatory the times specified in paragraphs (j)(1) and 1996, except airplanes on which Airbus Service Bulletin A310–57–2006, Revision 04, (j)(2) of this AD, and thereafter at intervals modification 04987 has been done in dated May 21, 2007. If any discrepancy is not to exceed 3,900 flight cycles or 7,900 production: At the compliance time specified found, prior to further flight, perform follow- flight hours, whichever occurs first. As of the in paragraph (m) of this AD, perform a high on corrective actions, as applicable, in effective date of this AD, use only Airbus frequency eddy current (HFEC) or X-ray accordance with Airbus Service Bulletin Mandatory Service Bulletin A310–57–2032, inspection to detect cracking of the stringer A310–57–2006, Revision 3, dated May 2, Revision 04, dated December 1, 2006. runouts inboard and outboard of rib 14 at 1996; or Airbus Mandatory Service Bulletin Accomplishment of Airbus Modification stringers 6, 7, 8, and 9, in accordance with A310–57–2006, Revision 04, dated May 21, 05026H0878 before the effective date of this the Accomplishment Instructions of Airbus 2007; except where the service bulletin AD terminates the repetitive inspection Service Bulletin A310–57–2038, Revision 2, specifies to contact Airbus for repair, before requirements of this paragraph; however, dated January 4, 1996; or Airbus Mandatory

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Service Bulletin A310–57–2038, Revision 04, this AD, perform an inspection required by (o)(1) or (o)(2) of this AD, in accordance with dated October 19, 2006. Do the next paragraph (l) of this AD. the Accomplishment Instructions of Airbus inspection at the earlier of the times specified (1) Prior to the accumulation of 12,000 Mandatory Service Bulletin A310–57–2006, in paragraph (l)(1) and (l)(2) of this AD, and total flight cycles, or within 1,500 flight Revision 04, dated May 21, 2007. If any repeat the inspection thereafter at intervals cycles after January 20, 1999, whichever cracking is found, before further flight, repair not to exceed the applicable times specified occurs later. in accordance with the Accomplishment in table 1 of this AD. If any crack is detected, (2) At the later of the times specified in Instructions of Airbus Mandatory Service prior to further flight, repair in accordance paragraphs (m)(2)(i) and (m)(2)(ii) of this AD. Bulletin A310–57–2006, Revision 04, dated (i) Prior to the accumulation of 12,000 total with a method approved by either the May 21, 2007; except where this service flight cycles or 24,000 total flight hours, Manager, International Branch, ANM–116, bulletin specifies to contact Airbus for repair, whichever occurs first. before further flight, repair in accordance FAA, Transport Airplane Directorate, or (ii) Within 1,100 flight cycles or 2,300 DGAC (or its delegated agent) or EASA (or its with a method approved by either the flight hours after the effective date of this AD, Manager, International Branch, ANM–116, delegated agent). As of the effective date of whichever occurs first. this AD, use only Airbus Mandatory Service FAA, Transport Airplane Directorate, or Bulletin A310–57–2038, Revision 04, dated New Requirements of This AD EASA (or its delegated agent). Repeat the October 19, 2006. inspections thereafter at the applicable Leading Edge Access Panels Landing— interval specified in table 2 of this AD. (1) Within the applicable interval specified Lower Skin—Inspection for Cracks at Bolt Certain compliance times specified in table 2 in paragraph 1.B.(5) of Airbus Service Holes—Additional Inspections for Certain of this AD are applicable to short range use, Bulletin A310–57–2038, Revision 2, dated Airplanes average flight time (AFT) equal to or less than January 4, 1996. (n) For Model A310–203 and A310–222 4.0 hours, or long range use, AFT exceeding (2) At the later of the times specified in airplanes, on which Airbus Service Bulletin 4.0 hours. For airplanes identified as paragraph (l)(2)(i) and (l)(2)(ii) of this AD. A310–57–2003 has been done in service on Configuration 01 in Airbus Mandatory (i) Within the applicable interval specified or after the accumulation of 9,400 total flight Service Bulletin A310–57–2006, Revision 04, in table 1 of this AD after doing the most cycles or on or after the accumulation of dated May 21, 2007, accomplishment of recent inspection specified in paragraph (l) of 18,800 total flight hours: Do the inspection Airbus Modification 05891H5128 terminates this AD. required by paragraph (g) of this AD at the the repetitive inspections required by this (ii) Within 1,100 flight cycles or 2,300 later of the times specified in paragraphs paragraph for Configuration 01 airplanes; flight hours, whichever occurs first, after the (n)(1) and (n)(2) of this AD. Repeat the thereafter do the applicable actions specified effective date of this AD. inspection required by paragraph (g) of this in paragraph (o)(2) of this AD at the times AD thereafter at intervals not to exceed 2,300 specified in table 2 of this AD. flight cycles or 4,700 flight hours, whichever TABLE 1—REPETITIVE INTERVALS, Note 6: Airbus Service Bulletin A310–57– occurs first. DEPENDING ON INSPECTION TYPE 2020, Revision 07, dated June 5, 2006, is an (1) Within 2,300 flight cycles or 4,700 additional source of guidance for flight hours, whichever occurs first, after accomplishing Airbus Modification Type of Repetitive interval doing the most recent detailed inspection inspection (not to exceed) 05891H5128. required by paragraph (g) of this AD. (1) For Configuration 01 airplanes, as X-Ray ...... 7,200 flight cycles or 14,500 (2) Within 1,500 flight cycles or 3,000 flight hours, after the effective date of this identified in Airbus Mandatory Service flight hours, whichever oc- AD, whichever occurs first. Bulletin A310–57–2006, Revision 04, dated curs first. May 21, 2007: Do a rotating probe eddy HFEC ...... 9,400 flight cycles or 18,800 Inspect Area Around Overwing Refueling current inspection for cracking in the holes flight hours, whichever oc- Aperture at Ribs 13–14 for Additional around the overwing refueling aperture at curs first. Airplanes ribs 13–14. (o) For Model A310–203, A310–204, A310– (2) For Configuration 02 through 06 (m) For Model A310–203 and A310–222 222, A310–304, A310–322, A310–324, and airplanes, as identified in Airbus Mandatory airplanes listed in Airbus Service Bulletin A310–325 airplanes, except for airplanes Service Bulletin A310–57–2006, Revision 04, A310–57–2038, Revision 2, dated January 4, identified in paragraph (i) of this AD on dated May 21, 2007: Do an external detailed 1996, except airplanes on which Airbus which Airbus Modification 05891H5128 has inspection for cracking of the top skin at ribs modification 04987 has been done in not been done: At the applicable compliance 13–14, and an internal detailed inspection for production: At the earlier of the times time specified in table 2 of this AD, do the cracking of string 7 and string 8 of the specified in paragraphs (m)(1) and (m)(2) of applicable actions specified in paragraph overwing refuel aperture.

TABLE 2—COMPLIANCE TIMES FOR CONFIGURATION 01 THROUGH 06 AIRPLANES

Airplanes as Identified in Airbus Compliance time (whichever occurs later) Repetitive interval (not to exceed) Mandatory Service Bulletin A310–57–2006, revision 04, dated May 21, 2007

Configuration 01 airplanes ...... Prior to the accumulation of 6,000 Within 380 flight cycles or 770 2,300 flight cycles or 4,600 flight total flight cycles. flight hours, whichever occurs hours, whichever occurs first. first, after the effective date of this AD. Configuration 02 airplanes...... Within 30,900 flight cycles or Within 1,500 flight cycles or 18 11,300 flight cycles or 22,600 61,900 flight hours, whichever months, whichever occurs first, flight hours, whichever occurs occurs first, after accomplishing after the effective date of this first. Airbus Service Bulletin A310– AD. 57–2020. Configuration 03 airplanes...... Within 30,900 flight cycles or Within 1,500 flight cycles or 18 12,000 flight cycles or 24,000 61,900 flight hours, whichever months, whichever occurs first, flight hours, whichever occurs occurs first, after Airbus Modi- after the effective date of this first. fication 05891H5128 is done or AD. Airbus Service Bulletin A310– 57–2020 is accomplished.

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TABLE 2—COMPLIANCE TIMES FOR CONFIGURATION 01 THROUGH 06 AIRPLANES—Continued Configuration 04 and 05 short Before the accumulation of Within 1,500 flight cycles or 18 12,000 flight cycles or 33,600 range airplanes. 25,900 total flight cycles or months, whichever occurs first, flight hours, whichever occurs 72,500 total flight hours, which- after the effective date of this first. ever occurs first. AD. Configuration 04 and 05 long Before the accumulation of Within 1,500 flight cycles or 18 9,400 flight cycles or 47,200 flight range airplanes. 18,800 total flight cycles or months, whichever occurs first, hours, whichever occurs first. 94,200 total flight hours, which- after the effective date of this ever occurs first. AD. Configuration 06...... Before the accumulation of Within 1,500 flight cycles or 18 12,000 flight cycles or 24,000 30,900 total flight cycles or months, whichever occurs first, flight hours, whichever occurs 61,900 total flight hours, which- after the effective date of this first. ever occurs first. AD.

Upper Skin Forward of Front Spar— Inspection of Rear Spar at Selected Bolt landing gear forward pick-up fitting is Inspection for Cracks—Additional Locations for Attachment of Main landing attached to the rear spar, in accordance with Inspections for Certain Airplanes Gear Forward Pick-Up Fitting the Accomplishment Instructions of Airbus Mandatory Service Bulletin A310–57–2046, (p) For Model A310–203 and A310–222 (q) For Model A310–203, A310–204, A310– Revision 08, dated December 1, 2006. Repeat airplanes on which Airbus Service Bulletin 222, A310–304, A310–322, and A310–324 the inspection thereafter at the applicable A310–57–2005 has been done in service on airplanes, except airplanes on which Airbus modification 07601 has been done in interval specified in table 3 of this AD until or after the accumulation of 10,500 total production: Do the applicable actions Airbus Modification 07925H1113 or flight cycles or on or after 21,000 total flight specified in paragraphs (q)(1), (q)(2), and 11578H5436 has been done. After doing hours: Do the inspection required by (q)(3) of this AD. If any cracking is found Airbus Modification 07925H1113 or paragraph (j) of this AD at the later of the during any inspection, before further flight, 11578H5436 do the applicable actions times specified in paragraphs (p)(1) and repair in accordance with a method approved specified in paragraph (q)(2) or (q)(3) of this (p)(2) of this AD. Repeat the inspection by either the Manager, International Branch, AD at the times specified in paragraph (q)(2) specified in paragraph (j) of this AD ANM–116, FAA, Transport Airplane or (q)(3) of this AD, as applicable. Certain thereafter at intervals not to exceed 3,900 Directorate, or EASA (or its delegated agent). compliance times specified in table 3 of this flight cycles or 7,900 flight hours, whichever Note 7: For Model A310–304, A310–322, AD are applicable to short range use, average flight time (AFT) equal to or less than 4.0 occurs first. and A310–324 airplanes on which Airbus hours, or long range use, AFT exceeding 4.0 (1) Within 3,900 flight cycles or 7,900 modification 07601 has been done, guidance for post-modification inspections can be hours. flight hours, whichever occurs first, after found in Structure Significant Item (SSI) Note 8: Airbus Service Bulletin A310–57– doing the most recent inspection required by 57.21.16 of the Maintenance Review Board 2049, Revision 6, dated November 26, 1997, paragraph (j) of this AD. Document (MRBD). is an additional source of guidance for (2) Within 850 flight cycles or 1,700 flight (1) For airplanes on which Airbus accomplishing Airbus Modification hours, whichever occurs first, after the Modification 07925H1113 and Modification 07925H1113. Airbus Service Bulletin A310– effective date of this AD. 11578H5436 have not been done: At the 57–2074, Revision 03, dated July 3, 2006, is applicable time specified in table 3 of this an additional source of guidance for AD, perform an ultrasonic inspection for accomplishing Airbus Modification cracking in certain bolt holes where the main 11578H5436.

TABLE 3—COMPLIANCE TIMES FOR AIRPLANES PRE-MOD 07925 AND PRE-MOD 11578

Airplanes Compliance time (whichever occurs later) Repetitive interval (not to exceed)

Model A310–203, A310–204, and Prior to the accumulation of 9,800 Within 750 flight cycles or 1,500 2,800 flight cycles or 5,700 flight A310–222 airplanes. total flight cycles or 19,600 total flight hours, whichever occurs hours, whichever occurs first. flight hours, whichever occurs first, after the effective date of first. this AD. Model A310–304, A310–322, and Prior to the accumulation of 7,100 Within 750 flight cycles or 1,500 2,400 flight cycles or 6,900 flight A310–324 short range airplanes. total flight cycles or 20,100 total flight hours, whichever occurs hours, whichever occurs first. flight hours, whichever occurs first, after the effective date of first. this AD. Model A310–304, A310–322, and Prior to the accumulation of 5,700 Within 750 flight cycles or 1,500 1,900 flight cycles or 9,800 flight A310–324 long range airplanes. total flight cycles or 28,600 total flight hours, whichever occurs hours, whichever occurs first. flight hours, whichever occurs first, after the effective date of first. this AD.

(2) For airplanes on which Airbus attached to the rear spar, in accordance with Certain compliance times specified in table 4 Modification 07925H1113 has been done: At the Accomplishment Instructions of Airbus of this AD are applicable to short range use, the applicable time specified in table 4 of this Mandatory Service Bulletin A310–57–2046, AFT equal to or less than 4.0 hours, or long AD, perform an ultrasonic inspection for Revision 08, dated December 1, 2006. Repeat range use, AFT exceeding 4.0 hours. cracking in certain bolt holes where the main the inspection thereafter at the applicable landing gear forward pick-up fitting is interval specified in table 4 of this AD.

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TABLE 4—COMPLIANCE TIMES FOR AIRPLANES POST-MOD 07925

Airplanes Compliance time (whichever occurs later) Repetitive interval (not to exceed)

Model A310–203, A310–204, and Prior to the accumulation of Within 750 flight cycles or 1,500 9,400 flight cycles or 18,900 flight A310–222 airplanes. 14,700 total flight cycles or flight hours, whichever occurs hours, whichever occurs first. 29,400 total flight hours, which- first, after the effective date of ever occurs first. this AD. Model A310–304, A310–322, and Prior to the accumulation of Within 750 flight cycles or 1,500 5,000 flight cycles or 14,000 flight A310–324 short range airplanes. 11,900 total flight cycles or flight hours, whichever occurs hours, whichever occurs first. 33,500 total flight hours, which- first, after the effective date of ever occurs first. this AD. Model A310–304, A310–322, and Prior to the accumulation of 9,500 Within 750 flight cycles or 1,500 4,000 flight cycles or 20,000 flight A310–324 long range airplanes. total flight cycles or 47,700 total flight hours, whichever occurs hours, whichever occurs first. flight hours, whichever occurs first, after the effective date of first. this AD.

(3) For airplanes on which Airbus attached to the rear spar, in accordance with Certain compliance times specified in table 5 Modification 11578H5436 has been done: At the Accomplishment Instructions of Airbus of this AD are applicable to short range use, the applicable time specified in table 5 of this Mandatory Service Bulletin A310–57–2046, average flight time (AFT) equal to or less than AD, perform an ultrasonic inspection for Revision 08, dated December 1, 2006. Repeat 4.0 hours, or long range use, AFT exceeding cracking in certain bolt holes where the main the inspection thereafter at the applicable 4.0 hours. landing gear forward pick-up fitting is interval specified in table 5 of this AD.

TABLE 5—COMPLIANCE TIMES FOR AIRPLANES POST-MOD 11578

Airplanes Compliance time (whichever occurs later) Repetitive interval (not to exceed)

Model A310–203, A310–204, and Within 29,600 flight cycles or Within 750 flight cycles or 1,500 9,400 flight cycles or 18,900 flight A310–222 airplanes. 59,200 flight hours, whichever flight hours, whichever occurs hours, whichever occurs first. occurs first, after Airbus Modi- first, after the effective date of fication 11578H5436 has been this AD. done. Model A310–304, A310–322, and Within 24,200 flight cycles or Within 750 flight cycles or 1,500 5,000 flight cycles or 14,000 flight A310–324 short range airplanes. 67,900 flight hours, whichever flight hours, whichever occurs hours, whichever occurs first. occurs first, after Airbus Modi- first, after the effective date of fication 11578H5436 has been this AD. done. Model A310–304, A310–322, and Within 19,300 flight cycles or Within 750 flight cycles or 1,500 4,000 flight cycles or 20,000 flight A310–324 long range airplanes. 96,800 flight hours, whichever flight hours, whichever occurs hours, whichever occurs first. occurs first, after Airbus Modi- first, after the effective date of fication 11578H5436 has been this AD. done.

Credit for Actions Accomplished in Airbus Mandatory Service Bulletin A310–57– October 16, 1996, is referred to in paragraph Accordance With Previous Service 2038, Revision 04, dated October 19, 2006; (n) of AD 98–26–01. Information are referred to in paragraph (l) of this AD. FAA AD Differences (r) Actions done before the effective date of Airbus Service Bulletin A310–57–2038, this AD in accordance with Airbus Service Revision 03, dated September 4, 1998, is Note 11: This AD differs from the MCAI Bulletin A310–57–2038, Revision 03, dated referred to in paragraph (r) of this AD. and/or service information as follows: September 4, 1998, are acceptable for Although the MCAI or service information compliance with the corresponding actions Terminating Action for AD 91–06–18 allows further flight after cracks are found specified in paragraph (l) of this AD. (u) Accomplishing an inspection in during compliance with the required action, (s) Actions done before the effective date accordance with Airbus Service Bulletin paragraph (j) of this AD requires that you of this AD in accordance with Airbus Service A310–57–2046, Revision 4, dated October 16, repair the crack(s) before further flight. Bulletin A310–57–2046, Revision 07, dated 1996, as revised by Airbus Service Bulletin Other FAA AD Provisions April 2, 1999, are acceptable for compliance Change Notice 4A, dated October 16, 1996; with the corresponding actions specified in Airbus Service Bulletin A310–57–2046, (v) The following provisions also apply to paragraph (q) of this AD. Revision 07, dated April 2, 1999; or Airbus this AD: Terminating Action for Paragraph (a) of AD Mandatory Service Bulletin A310–57–2046, (1) Alternative Methods of Compliance 90–19–07 Revision 08, dated December 1, 2006; (AMOCs): The Manager, International terminates the requirements of AD 91–06–18. Branch, ANM–116, Transport Airplane (t) Accomplishing an inspection in Directorate, FAA, has the authority to accordance with Airbus Service Bulletin Note 10: Airbus Mandatory Service approve AMOCs for this AD, if requested A310–57–2038, Revision 2, dated January 4, Bulletin A310–57–2046, Revision 08, dated using the procedures found in 14 CFR 39.19. 1996, or Revision 03, dated September 4, December 1, 2006, is referred to in paragraph In accordance with 14 CFR 39.19, send your 1998; or Airbus Mandatory Service Bulletin (q) of this AD. Airbus Service Bulletin A310– request to your principal inspector or local A310–57–2038, Revision 04, dated October 57–2046, Revision 07, dated April 2, 1999, is Flight Standards District Office, as 19, 2006; terminates the requirements of referred to in paragraph (s) of this AD. Airbus appropriate. If sending information directly paragraph (a) of AD 90–19–07. Service Bulletin A310–57–2046, Revision 4, to the International Branch, send it to ATTN: Note 9: Airbus Service Bulletin A310–57– dated October 16, 1996, as revised by Airbus Dan Rodina, Aerospace Engineer, 2038, Revision 2, dated January 4, 1996; and Service Bulletin Change Notice 4A, dated International Branch, ANM–116, Transport

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Airplane Directorate, FAA, 1601 Lind letter must specifically reference this AD. (or their delegated agent). You are required Avenue, SW., Renton, Washington 98057– AMOCs approved previously in accordance to assure the product is airworthy before it 3356; telephone (425) 227–2125; fax (425) with AD 98–26–01, are approved as AMOCs is returned to service. 227–1149. Information may be e-mailed to: for the corresponding provisions of this AD. [email protected]. (2) Airworthy Product: For any requirement Related Information Before using any approved AMOC, notify in this AD to obtain corrective actions from (w) Refer to MCAI EASA Airworthiness your principal inspector or lacking a a manufacturer or other source, use these Directive 2007–0242, dated September 4, principal inspector, the manager of the local actions if they are FAA-approved. Corrective flight standards district office/certificate actions are considered FAA-approved if they 2007, and the Airbus service bulletins listed holding district office. The AMOC approval are approved by the State of Design Authority in table 6 of this AD for related information.

TABLE 6—RELATED SERVICE INFORMATION

Service Bulletin Revision Date

Airbus Mandatory Service Bulletin A310–57–2002 ...... 03 ...... November 28, 2006. Airbus Mandatory Service Bulletin A310–57–2006 ...... 04 ...... May 21, 2007. Airbus Mandatory Service Bulletin A310–57–2032 ...... 04 ...... December 1, 2006. Airbus Mandatory Service Bulletin A310–57–2038 ...... 04 ...... October 19, 2006. Airbus Mandatory Service Bulletin A310–57–2046 ...... 08 ...... December 1, 2006. Airbus Service Bulletin A310–57–2038 ...... 2 ...... January 4, 1996. Airbus Service Bulletin A310–57–2038 ...... 03 ...... September 4, 1998 Airbus Service Bulletin A310–57–2046 ...... 4 ...... October 16, 1996. Airbus Service Bulletin A310–57–2046 ...... 07 ...... April 2, 1999. Airbus Service Bulletin A310–57–2046, Change Notice 4A ...... Original ...... October 16, 1996.

Material Incorporated by Reference actions required by this AD, unless the AD contained in table 7 of this AD to perform (x) You must use the service bulletins specifies otherwise. If you accomplish the those actions unless the AD specifies optional terminating actions specified by this otherwise. contained in table 7 of this AD to do the AD, you must use the service information

TABLE 7—ALL MATERIAL INCORPORATED BY REFERENCE

Service Bulletin Revision Date Required/optional action

Airbus Mandatory Service Bulletin A310–57–2002 ...... 03 ...... November 28, 2006 ...... Required. Airbus Mandatory Service Bulletin A310–57–2006 ...... 04 ...... May 21, 2007 ...... Required. Airbus Mandatory Service Bulletin A310–57–2032 ...... 04 ...... December 1, 2006 ...... Required. Airbus Mandatory Service Bulletin A310–57–2038 ...... 04 ...... October 19, 2006 ...... Required and optional. Airbus Mandatory Service Bulletin A310–57–2046 ...... 08 ...... December 1, 2006 ...... Required and optional. Airbus Service Bulletin A310–57–2038 ...... 2 ...... January 4, 1996 ...... Optional. Airbus Service Bulletin A310–57–2038 ...... 03 ...... September 4, 1998 ...... Optional. Airbus Service Bulletin A310–57–2046 ...... 4 ...... October 16, 1996 ...... Optional. Airbus Service Bulletin A310–57–2046 ...... 07 ...... April 2, 1999 ...... Optional. Airbus Service Bulletin A310–57–2046, Change Notice Original ...... October 16, 1996 ...... Optional. 4A.

(1) The Director of the Federal Register of this AD under 5 U.S.C. 552(a) and 1 CFR approved the incorporation by reference of part 51. the service information contained in table 8

TABLE 8—NEW MATERIAL INCORPORATED BY REFERENCE

Service Bulletin Revision Date

Airbus Mandatory Service Bulletin A310–57–2002 ...... 03 November 28, 2006. Airbus Mandatory Service Bulletin A310–57–2006 ...... 04 May 21, 2007. Airbus Mandatory Service Bulletin A310–57–2032 ...... 04 December 1, 2006. Airbus Mandatory Service Bulletin A310–57–2038 ...... 04 October 19, 2006. Airbus Mandatory Service Bulletin A310–57–2046 ...... 08 December 1, 2006. Airbus Service Bulletin A310–57–2038 ...... 03 September 4, 1998. Airbus Service Bulletin A310–57–2046 ...... 07 April 2, 1999.

(2) The Director of the Federal Register contained in table 9 of this AD on January previously approved the incorporation by 20, 1999 (63 FR 69179, December 16, 1998). reference of the service information

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TABLE 9—MATERIAL PREVIOUSLY INCORPORATED BY REFERENCE

Service Bulletin Revision Date

Airbus Service Bulletin A310–57–2038 ...... 2 ...... January 4, 1996. Airbus Service Bulletin A310–57–2046 ...... 4 ...... October 16, 1996. Airbus Service Bulletin A310–57–2046, Change Notice 4A ...... Original ...... October 16, 1996.

(3) For service information identified in was issued to require a set of inspection and Since the issuance of AD 2007–0053R1, the this AD, contact Airbus SAS—EAW modification tasks which addressed JAR/FAR thresholds and the intervals of Airbus (Airworthiness Office), 1 Rond Point Maurice [Joint Aviation Regulation/Federal Aviation Service Bulletins (SB) A310–57–2050 and Bellonte, 31707 Blagnac Cedex, France; Regulation] 25–571 requirements related to A310–57–2064 have been updated. telephone +33 5 61 93 36 96; fax +33 5 61 damage-tolerance and fatigue evaluation of Consequently, this new [EASA] AD takes 93 44 51; e-mail account.airworth- structure. over the requirements of paragraphs 1.15 and [email protected]; Internet http:// * * * * * 1.17 of EASA AD 2007–0053R1, which has www.airbus.com. been revised accordingly * * * and requires (4) You may review copies of the service The unsafe condition is reduced the accomplishment of Airbus SB A310–57– information at the FAA, Transport Airplane structural integrity of the wings. We are 2048 at revision 01. Directorate, 1601 Lind Avenue, SW., Renton, issuing this AD to require actions to The unsafe condition is reduced Washington. For information on the correct the unsafe condition on these availability of this material at the FAA, call structural integrity of the wings. The 425–227–1221. products. required actions are as follows, (5) You may also review copies of the DATES: This AD becomes effective June depending on airplane configuration: • service information that is incorporated by 15, 2011. Cold working of trellis boom reference at the National Archives and The Director of the Federal Register drainage holes. Records Administration (NARA). For • Repetitive detailed or rotating probe information on the availability of this approved the incorporation by reference of certain publications listed in this AD inspections for cracking in the drain material at NARA, call 202–741–6030, or go holes on the lower skin panel in the to: http://www.archives.gov/federal_register/ as of June 15, 2011. _ _ _ center wing box between frames 42 and code of federal regulations/ ADDRESSES: You may examine the AD ibr_locations.html. 46 and corrective actions if necessary. docket on the Internet at http:// Corrective actions include repairing Issued in Renton, Washington, on April 22, www.regulations.gov or in person at the 2011. cracking and contacting the FAA or U.S. Department of Transportation, EASA for repair and doing the repair. Ali Bahrami, Docket Operations, M–30, West • Repetitive eddy current inspections Manager, Transport Airplane Directorate, Building Ground Floor, Room W12–140, for cracking of the upper corner angle Aircraft Certification Service. 1200 New Jersey Avenue, SE., fitting and the vertical tee fitting at left [FR Doc. 2011–10684 Filed 5–10–11; 8:45 am] Washington, DC. and right frame 40, and corrective BILLING CODE 4910–13–P FOR FURTHER INFORMATION CONTACT: actions if necessary. Corrective actions Dan Rodina, Aerospace Engineer, include repairing, replacing the internal International Branch, ANM–116, angle fitting, and contacting the FAA or DEPARTMENT OF TRANSPORTATION Transport Airplane Directorate, FAA, EASA for repair and doing the repair. Federal Aviation Administration 1601 Lind Avenue, SW., Renton, You may obtain further information Washington 98057–3356; telephone by examining the MCAI in the AD 14 CFR Part 39 (425) 227–2125; fax (425) 227–1149. docket. SUPPLEMENTARY INFORMATION: [Docket No. FAA–2010–1274; Directorate Comments Identifier 2010–NM–090–AD; Amendment Discussion We gave the public the opportunity to 39–16687; AD 2011–10–06] participate in developing this AD. We We issued a notice of proposed considered the comment received. RIN 2120–AA64 rulemaking (NPRM) to amend 14 CFR part 39 to include an AD that would Request To Revise Paragraph Header Airworthiness Directives; Airbus Model apply to the specified products. That A310 Series Airplanes An anonymous commenter requested NPRM was published in the Federal that the paragraph reference in the AGENCY: Federal Aviation Register on January 3, 2011 (76 FR 50). paragraph header between table 5 and Administration (FAA), Department of That NPRM proposed to correct an paragraph (k) of the NPRM be revised Transportation (DOT). unsafe condition for the specified from ‘‘paragraph (h)’’ to ‘‘paragraph (j)’’. ACTION: Final rule. products. The MCAI states: The commenter believed the intent was DGAC [Direction Ge´ne´rale de l’Aviation to reference paragraph (j) of the NPRM. SUMMARY: We are adopting a new Civile] France AD 1992–106–132(B) original We agree with the commenter’s airworthiness directive (AD) for the issue up to revision 7 was issued to require request. We have revised the paragraph products listed above. This AD results a set of inspection and modification tasks header between table 5 and paragraph from mandatory continuing which addressed JAR/FAR [Joint Aviation (k) of this AD. airworthiness information (MCAI) Regulation/Federal Aviation Regulation] 25– originated by an aviation authority of 571 requirements related to damage-tolerance Conclusion another country to identify and correct and fatigue evaluation of structure. We reviewed the available data, Following the Extended Design Service an unsafe condition on an aviation including the comment received, and product. The MCAI describes the unsafe Goal activities as part of the Structure Task Group for the Airbus A310 program, EASA determined that air safety and the condition as: [European Aviation Safety Agency] public interest require adopting the AD DGAC [Direction Ge´ne´rale de l’Aviation published AD 2007–0053, which replaced with the change described previously. Civile] France AD 1992–106–132(B) * * * DGAC France AD F–1992–106–132R7. We determined that this change will not

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increase the economic burden on any Regulatory Findings § 39.13 [Amended] operator or increase the scope of the AD. We determined that this AD will not ■ 2. The FAA amends § 39.13 by adding Differences Between This AD and the have federalism implications under the following new AD: MCAI or Service Information Executive Order 13132. This AD will not have a substantial direct effect on 2011–10–06 Airbus: Amendment 39–16687. We have reviewed the MCAI and the States, on the relationship between Docket No. FAA–2010–1274; Directorate Identifier 2010–NM–090–AD. related service information and, in the national government and the States, general, agree with their substance. But or on the distribution of power and Effective Date we might have found it necessary to use responsibilities among the various (a) This airworthiness directive (AD) different words from those in the MCAI levels of government. becomes effective June 15, 2011. to ensure the AD is clear for U.S. For the reasons discussed above, I operators and is enforceable. In making certify this AD: Affected ADs these changes, we do not intend to differ 1. Is not a ‘‘significant regulatory (b) None. substantively from the information action’’ under Executive Order 12866; Applicability provided in the MCAI and related 2. Is not a ‘‘significant rule’’ under the service information. DOT Regulatory Policies and Procedures (c) This AD applies to Airbus Model A310– 203, –204, –221, –222, –304, –322, –324, and We might also have required different (44 FR 11034, February 26, 1979); and 3. Will not have a significant –325 airplanes, certificated in any category, actions in this AD from those in the all serial numbers. MCAI in order to follow our FAA economic impact, positive or negative, policies. Any such differences are on a substantial number of small entities Subject highlighted in a Note within the AD. under the criteria of the Regulatory (d) Air Transport Association (ATA) of Flexibility Act. America Code 57: Wings. Costs of Compliance We prepared a regulatory evaluation Reason We estimate that this AD will affect of the estimated costs to comply with 44 products of U.S. registry. We also this AD and placed it in the AD docket. (e) The mandatory continuing airworthiness information (MCAI) states: estimate that it will take about 137 Examining the AD Docket work-hours per product to comply with DGAC [Direction Ge´ne´rale de l’Aviation the basic requirements of this AD. The You may examine the AD docket on Civile] France AD 1992–106–132(B) * * * was issued to require a set of inspection and average labor rate is $85 per work-hour. the Internet at http:// www.regulations.gov; or in person at the modification tasks which addressed JAR/FAR Based on these figures, we estimate the [Joint Aviation Regulation/Federal Aviation cost of this AD to the U.S. operators to Docket Operations office between 9 a.m. and 5 p.m., Monday through Friday, Regulation] 25–571 requirements related to be $512,380, or $11,645 per product. damage-tolerance and fatigue evaluation of except Federal holidays. The AD docket structure. Authority for This Rulemaking contains the NPRM, the regulatory * * * * * Title 49 of the United States Code evaluation, any comments received, and other information. The street address for The unsafe condition is reduced structural specifies the FAA’s authority to issue integrity of the wings. rules on aviation safety. Subtitle I, the Docket Operations office (telephone section 106, describes the authority of (800) 647–5527) is in the ADDRESSES Compliance the FAA Administrator. ‘‘Subtitle VII: section. Comments will be available in (f) You are responsible for having the Aviation Programs,’’ describes in more the AD docket shortly after receipt. actions required by this AD performed within the compliance times specified, unless the detail the scope of the Agency’s List of Subjects in 14 CFR Part 39 authority. actions have already been done. Air transportation, Aircraft, Aviation Cold Working of Trellis Boom Drainage We are issuing this rulemaking under safety, Incorporation by reference, ‘‘ Holes the authority described in Subtitle VII, Safety. Part A, Subpart III, Section 44701: (g) For Model A310–203, –204, –222, –304, General requirements.’’ Under that Adoption of the Amendment –322 and –324 airplanes, except airplanes section, Congress charges the FAA with Accordingly, under the authority identified in paragraphs (g)(1), (g)(2), and promoting safe flight of civil aircraft in delegated to me by the Administrator, (g)(3) of this AD: Within the applicable time air commerce by prescribing regulations specified in Table 1 of this AD, cold work the the FAA amends 14 CFR part 39 as trellis boom drainage holes, in accordance for practices, methods, and procedures follows: the Administrator finds necessary for with the Accomplishment Instructions of Airbus Mandatory Service Bulletin A310–57– PART 39—AIRWORTHINESS safety in air commerce. This regulation 2048, Revision 01, dated May 22, 2007. is within the scope of that authority DIRECTIVES Certain compliance times specified in Table because it addresses an unsafe condition 1 of this AD are applicable to short range use, ■ 1. The authority citation for part 39 that is likely to exist or develop on average flight time (AFT) equal to or less than products identified in this rulemaking continues to read as follows: 3.6 hours; or long range use, AFT exceeding action. Authority: 49 U.S.C. 106(g), 40113, 44701. 3.6 hours.

TABLE 1—COMPLIANCE TIMES FOR PARAGRAPH (g) OF THIS AD

Airplanes, as identified in Airbus Mandatory Compliance time (whichever occurs later) Service Bulletin A310–57–2048, Revision 01, dated May 22, 2007

Configuration 01 airplanes ...... Prior to the accumulation of 31,800 total flight Within 6 months after the effective date of this cycles or 63,600 total flight hours, which- AD. ever occurs first.

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TABLE 1—COMPLIANCE TIMES FOR PARAGRAPH (g) OF THIS AD—Continued Configuration 02 airplanes ...... Prior to the accumulation of 40,000 total flight Within 6 months after the effective date of this cycles or 80,000 total flight hours, which- AD. ever occurs first. Configuration 03 short range airplanes ...... Prior to the accumulation of 30,950 total flight Within 6 months after the effective date of this cycles or 86,750 total flight hours, which- AD. ever occurs first. Configuration 03 long range airplanes ...... Prior to the accumulation of 24,100 total flight Within 6 months after the effective date of this cycles or 120,600 total flight hours, which- AD. ever occurs first.

(1) Airplanes on which Airbus Inspection of Trellis Boom Drainage Holes 2050, Revision 02, dated August 27, 2009. modification 06130 was done in production. (h) For all airplanes: Within the applicable Repeat the inspections thereafter at intervals (2) Airplanes on which Airbus Mandatory intervals specified in Table 2 of this AD, not to exceed the applicable times specified Service Bulletin A310–57–2048 was done in perform a detailed or rotating probe in Table 3 of this AD. Certain compliance service. inspection for cracking in the drain holes on times specified in Tables 2 and 3 of this AD (3) Airplanes on which rework of cracked the lower skin panel in the center wing box are applicable to short range use, average drain holes was done in accordance with between frames 42 and 46, in accordance flight time (AFT) equal to or less than 3.6 Airbus Mandatory Service Bulletin A310–57– with the Accomplishment Instructions of hours; or long range use, AFT exceeding 3.6 2050. Airbus Mandatory Service Bulletin A310–57– hours.

TABLE 2—COMPLIANCE TIMES FOR PARAGRAPH (h) OF THIS AD

Airplanes, as identified in Airbus Mandatory Compliance time (whichever occurs later) Service Bulletin A310–57–2050, Revision 02, dated August 27, 2009

Configuration 01 airplanes ...... Prior to the accumulation of 17,800 total flight Within 1,000 flight cycles or 2,000 flight hours, cycles or 35,600 total flight hours, which- whichever occurs first, after the effective ever occurs first. date of this AD. Configuration 02 airplanes on which Airbus Within 32,850 flight cycles or 65,700 flight Within 1,000 flight cycles or 2,000 flight hours, Mandatory Service Bulletin A310–57–2048 hours, whichever occurs first, after accom- whichever occurs first, after the effective has been done within the ‘‘recommended’’ plishing Airbus Mandatory Service Bulletin date of this AD. compliance times specified in paragraph A310–57–2048. 1.E.(2), ‘‘Accomplishment Timescale,’’ of Air- bus Mandatory Service Bulletin A310–57– 2048, Revision 01, dated May 22, 2007. Configuration 02 airplanes on which Airbus Within 8,600 flight cycles or 17,250 flight Within 1,000 flight cycles or 2,000 flight hours, Mandatory Service Bulletin A310–57–2048 hours, whichever occurs first, after accom- whichever occurs first, after the effective has not been done within the ‘‘rec- plishing the detailed inspection specified in date of this AD. ommended’’ compliance times specified in Airbus Mandatory Service Bulletin A310– paragraph 1.E.(2), ‘‘Accomplishment 57–2048; Timescale,’’ of Airbus Mandatory Service Bul- OR letin A310–57–2048, Revision 01, dated May Within 11,400 flight cycles or 22,800 flight 22, 2007. hours, whichever occurs first, after accomplishing the rotating probe inspection specified in Airbus Mandatory Service Bulletin A310–57–2048. Configuration 03 airplanes ...... Prior to the accumulation of 22,300 total flight Within 1,000 flight cycles or 2,000 flight hours, cycles or 44,550 total flight hours, which- whichever occurs first, after the effective ever occurs first. date of this AD. Configuration 04 airplanes ...... Prior to the accumulation of 41,550 total flight Within 1,000 flight cycles or 2,000 flight hours, cycles or 83,100 total flight hours, which- whichever occurs first, after the effective ever occurs first. date of this AD. Configuration 05 airplanes on which Airbus Prior to the accumulation of 40,000 total flight Within 1,000 flight cycles or 2,000 flight hours, Mandatory Service Bulletin A310–57–2048 cycles or 80,000 total flight hours, which- whichever occurs first, after the effective has been done within the ‘‘recommended’’ ever occurs first. date of this AD. compliance times specified in paragraph 1.E.(2), ‘‘Accomplishment Timescale,’’ of Air- bus Mandatory Service Bulletin A310–57– 2048, Revision 01, dated May 22, 2007. Configuration 05 airplanes on which Airbus Within 10,600 flight cycles or 21,150 flight Within 1,000 flight cycles or 2,000 flight hours, Mandatory Service Bulletin A310–57–2048 hours, whichever occurs first, after accom- whichever occurs first, after the effective has not been done within the ‘‘rec- plishing the detailed inspection specified in date of this AD. ommended’’ compliance times specified in Airbus Mandatory Service Bulletin A310– paragraph 1.E.(2), ‘‘Accomplishment 57–2048; Timescale,’’ of Airbus Mandatory Service Bul- OR letin A310–57–2048, Revision 01, dated May Within 13,900 flight cycles or 27,800 flight 22, 2007. hours, whichever occurs first, after accomplishing the rotating probe inspection specified in Airbus Mandatory Service Bulletin A310–57–2048.

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TABLE 2—COMPLIANCE TIMES FOR PARAGRAPH (h) OF THIS AD—Continued Configuration 06 short range airplanes ...... Prior to the accumulation of 17,250 total flight Within 1,000 flight cycles or 2,800 flight hours, cycles or 48,400 total flight hours, which- whichever occurs first, after the effective ever occurs first. date of this AD. Configuration 06 long range airplanes ...... Prior to the accumulation of 13,450 total flight Within 800 flight cycles or 4,000 flight hours, cycles or 67,250 total flight hours, which- whichever occurs first, after the effective ever occurs first. date of this AD. Configuration 07 short range airplanes ...... Prior to the accumulation of 32,150 total flight Within 1,000 flight cycles or 2,800 flight hours, cycles or 90,050 total flight hours, which- whichever occurs first, after the effective ever occurs first. date of this AD. Configuration 07 long range airplanes ...... Prior to the accumulation of 25,050 total flight Within 800 flight cycles or 4,000 flight hours, cycles or 125,150 total flight hours, which- whichever occurs first, after the effective ever occurs first. date of this AD. Configuration 08 short range airplanes on Prior to the accumulation of 30,950 total flight Within 1,000 flight cycles or 2,800 flight hours, which Airbus Mandatory Service Bulletin cycles or 86,750 total flight hours, which- whichever occurs first, after the effective A310–57–2048 has been done within the ever occurs first. date of this AD. ‘‘recommended’’ compliance times specified in paragraph 1.E.(2), ‘‘Accomplishment Timescale,’’ of Airbus Mandatory Service Bul- letin A310–57–2048, Revision 01, dated May 22, 2007. Configuration 08 short range airplanes on Within 8,200 flight cycles or 23,000 flight Within 1,000 flight cycles or 2,800 flight hours, which Airbus Mandatory Service Bulletin hours, whichever occurs first, after accom- whichever occurs first, after the effective A310–57–2048 has not been done within the plishing the detailed inspection specified in date of this AD. ‘‘recommended’’ compliance times specified Airbus Mandatory Service Bulletin A310– in paragraph 1.E.(2), ‘‘Accomplishment 57–2048; Timescale,’’ of Airbus Mandatory Service Bul- OR letin A310–57–2048, Revision 01, dated May Within 10,800 flight cycles or 30,300 flight 22, 2007. hours, whichever occurs first, after accomplishing the rotating probe inspection specified in Airbus Mandatory Service Bulletin A310–57–2048. Configuration 08 long range airplanes on which Prior to the accumulation of 24,100 total flight Within 800 flight cycles or 4,000 flight hours, Airbus Mandatory Service Bulletin A310–57– cycles or 120,600 total flight hours, which- whichever occurs first, after the effective 2048 has been done within the ‘‘rec- ever occurs first. date of this AD. ommended’’ compliance times specified in paragraph 1.E.(2), ‘‘Accomplishment Timescale,’’ of Airbus Mandatory Service Bul- letin A310–57–2048, Revision 01, dated May 22, 2007. Configuration 08 long range airplanes on which Within 6,400 flight cycles or 31,950 flight Within 800 flight cycles or 4,000 flight hours, Airbus Mandatory Service Bulletin A310–57– hours, whichever occurs first, after accom- whichever occurs first, after the effective 2048 has not been done within the ‘‘rec- plishing the detailed inspection specified in date of this AD. ommended’’ compliance times specified in Airbus Mandatory Service Bulletin A310– paragraph 1.E.(2), ‘‘Accomplishment 57–2048; Timescale,’’ of Airbus Mandatory Service Bul- OR letin A310–57–2048, Revision 01, dated May Within 8,400 flight cycles or 42,150 flight 22, 2007. hours, whichever occurs first, after accomplishing the rotating probe inspection specified in Airbus Mandatory Service Bulletin A310–57–2048.

TABLE 3—REPETITIVE INTERVALS FOR PARAGRAPH (h) OF THIS AD, DEPENDING ON MOST RECENT INSPECTION TYPE

Airplanes, as identified in Airbus Mandatory Service Bul- Type of inspection done letin A310–57–2050, Revision 02, dated August 27, during most recent Repetitive interval 2009 inspection (not to exceed)

Configuration 01 and 02 airplanes ...... Detailed inspection ...... 8,600 flight cycles or 17,250 flight hours, whichever occurs first. Rotating probe inspection .. 11,400 flight cycles or 22,800 flight hours, whichever occurs first. Configurations 03, 04, and 05 airplanes ...... Detailed inspection ...... 10,600 flight cycles or 21,150 flight hours, whichever occurs first. Rotating probe inspection .. 13,900 flight cycles or 27,800 flight hours, whichever occurs first. Configurations 06, 07, and 08 short range airplanes ...... Detailed inspection ...... 8,200 flight cycles or 23,000 flight hours, whichever occurs first. Rotating probe inspection .. 10,800 flight cycles or 30,300 flight hours, whichever occurs first. Configurations 06, 07, and 08 long range airplanes ...... Detailed inspection ...... 6,400 flight cycles or 31,950 flight hours, whichever occurs first.

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TABLE 3—REPETITIVE INTERVALS FOR PARAGRAPH (h) OF THIS AD, DEPENDING ON MOST RECENT INSPECTION TYPE— Continued

Rotating probe inspection .. 8,400 flight cycles or 42,150 flight hours, whichever occurs first.

Corrective Actions for Paragraph (h) of This accordance with a method approved by in accordance with the Accomplishment AD either the Manager, International Branch, Instructions of Airbus Mandatory Service (i) If any cracking is found during any ANM–116, FAA, Transport Airplane Bulletin A310–57–2064, Revision 02, dated Directorate, or European Aviation Safety inspection required by paragraph (h) of this December 21, 2007. Repeat the inspections Agency (EASA) (or its delegated agent). AD, before further flight, do all applicable thereafter at intervals not to exceed the corrective actions, in accordance with the Inspection of Fuselage Frame 40 Upper applicable times specified in Table 5 of this Accomplishment Instructions of Airbus Corner Fitting AD. Certain compliance times specified in Mandatory Service Bulletin A310–57–2050, (j) For all airplanes: Within the applicable Tables 4 and 5 of this AD are applicable to Revision 02, dated August 27, 2009; except time specified in Table 4 of this AD, perform short range use, average flight time (AFT) where the service bulletin specifies to contact an eddy current inspection for cracking of the equal to or less than 3.23 hours; or long range Airbus, before further flight, repair in upper corner fitting at left and right frame 40, use, AFT exceeding 3.23 hours.

TABLE 4—COMPLIANCE TIMES FOR PARAGRAPH (j) OF THIS AD

Airplane configurations identified in Airbus Compliance time Mandatory Service Bulletin A310–57–2064, (whichever occurs later) Revision 02, dated December 21, 2007

Model A310–203, –204, –221, and –222 air- Prior to the accumulation of 15,100 total flight Within 1,300 flight cycles or 2,700 flight hours, planes identified as Configuration 01. cycles or 30,300 total flight hours, which- whichever occurs first, after the effective ever occurs first. date of this AD. Model A310–203, –204, –221, and –222 air- Prior to the accumulation of 21,400 total flight Within 1,300 flight cycles or 2,700 flight hours, planes identified as Configurations 02 and 03. cycles or 42,800 total flight hours, which- whichever occurs first, after the effective ever occurs first. date of this AD. Model A310–304, –322, –324, and –325 short Prior to the accumulation of 14,700 total flight Within 600 flight cycles or 1,800 flight hours, range airplanes identified as Configuration 01. cycles or 41,300 total flight hours, which- whichever occurs first, after the effective ever occurs first. date of this AD. Model A310–304, –322, –324, and –325 short Prior to the accumulation of 20,700 total flight Within 600 flight cycles or 1,800 flight hours, range airplanes identified as Configurations cycles or 58,300 total flight hours, which- whichever occurs first, after the effective 02 and 03. ever occurs first. date of this AD. Model A310–304, –322, –324, and –325 long Prior to the accumulation of 12,800 total flight Within 500 flight cycles or 2,650 flight hours, range airplanes identified as Configuration 01. cycles or 64,000 total flight hours, which- whichever occurs first, after the effective ever occurs first. date of this AD. Model A310–304, –322, –324, and –325 long Prior to the accumulation of 18,000 total flight Within 500 flight cycles or 2,650 flight hours, range airplanes identified as Configurations cycles or 90,400 total flight hours, which- whichever occurs first, after the effective 02 and 03. ever occurs first. date of this AD.

TABLE 5—REPETITIVE INTERVALS FOR PARAGRAPH (j) OF THIS AD

Repetitive interval Airplanes (not to exceed)

Model A310–203, –204, –221, and –222 airplanes ...... 8,750 flight cycles or 17,550 flight hours, whichever occurs first. Model A310–304, –322, –324, and –325 short range airplanes ...... 5,800 flight cycles or 16,300 flight hours, whichever occurs first. Model A310–304, –322, –324, and –325 long range airplanes ...... 4,800 flight cycles or 24,050 flight hours, whichever occurs first.

Corrective Actions for Paragraph (j) of This ANM–116, FAA, Transport Airplane Airbus Service Bulletin A310–57–2050, AD Directorate, or EASA (or its delegated agent). dated April 23, 1990; or Airbus Mandatory Service Bulletin A310–57–2050, Revision 01, (k) If, during any inspection required by Credit for Actions Accomplished in dated May 22, 2007; are considered paragraph (j) of this AD, any crack is found, Accordance With Previous Service acceptable for compliance with the prior to further flight, do all applicable Information corresponding actions specified in corrective actions, in accordance with the (l) Actions accomplished before the paragraphs (h) and (i) of this AD. Accomplishment Instructions of Airbus effective date of this AD in accordance with (n) Actions done before the effective date Mandatory Service Bulletin A310–57–2064, Airbus Service Bulletin A310–57–2048, of this AD in accordance with Airbus Service Revision 02, dated December 21, 2007; dated April 23, 1990, are considered Bulletin A310–57–2064, dated August 24, except where the service bulletin specifies to acceptable for compliance with the 1995; or, Airbus Mandatory Service Bulletin contact Airbus, before further flight, repair in corresponding action specified in paragraph A310–57–2064, Revision 01, dated January 5, (g) of this AD. 2001; are acceptable for compliance with the accordance with a method approved by (m) Actions accomplished before the corresponding actions specified in either the Manager, International Branch, effective date of this AD in accordance with paragraphs (j) and (k) of this AD.

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FAA AD Differences Flight Standards District Office, as (2) Airworthy Product: For any requirement appropriate, or if sending information in this AD to obtain corrective actions from Note 1: This AD differs from the MCAI and/or service information as follows: No directly to the International Branch, send it a manufacturer or other source, use these Differences. to ATTN: Dan Rodina, Aerospace Engineer, actions if they are FAA-approved. Corrective International Branch, ANM–116, Transport actions are considered FAA-approved if they Other FAA AD Provisions Airplane Directorate, FAA, 1601 Lind are approved by the State of Design Authority (o) The following provisions also apply to Avenue, SW., Renton, Washington 98057– (or their delegated agent). You are required this AD: 3356; telephone (425) 227–2125; fax (425) to assure the product is airworthy before it 227–1149. Information may be e-mailed to: (1) Alternative Methods of Compliance is returned to service. (AMOCs): The Manager, International [email protected]. Before Branch, ANM–116, Transport Airplane using any approved AMOC, notify your Related Information principal inspector, or lacking a principal Directorate, FAA, has the authority to (p) Refer to MCAI EASA Airworthiness inspector, the manager of the local flight approve AMOCs for this AD, if requested Directive 2009–0057, dated March 13, 2009, using the procedures found in 14 CFR 39.19. standards district office/certificate holding In accordance with 14 CFR 39.19, send your district office. The AMOC approval letter and the service bulletins listed in Table 6 of request to your principal inspector or local must specifically reference this AD. this AD, for related information.

TABLE 6—SERVICE INFORMATION

Service Bulletin Revision Date

Airbus Mandatory Service Bulletin A310–57–2048 ...... 01 May 22, 2007. Airbus Mandatory Service Bulletin A310–57–2050 ...... 02 August 27, 2009. Airbus Mandatory Service Bulletin A310–57–2064 ...... 02 December 21, 2007.

Material Incorporated by Reference to do the actions required by this AD, unless (q) You must use the applicable service the AD specifies otherwise. information contained in Table 7 of this AD

TABLE 7—ALL MATERIAL INCORPORATED BY REFERENCE

Service Bulletin Revision Date

Airbus Mandatory Service Bulletin A310–57–2048 ...... 01 May 22, 2007. Airbus Mandatory Service Bulletin A310–57–2050, excluding Appendix 01 ...... 02 August 27, 2009. Airbus Mandatory Service Bulletin A310–57–2064, excluding Appendix 1 ...... 02 December 21, 2007.

(1) The Director of the Federal Register DEPARTMENT OF TRANSPORTATION has been issued in order to mandate a set of approved the incorporation by reference of inspections/modifications which address the service information under 5 U.S.C. 552(a) Federal Aviation Administration JAR/FAR [Joint Aviation Regulation/Federal and 1 CFR part 51. Aviation Regulation] 25–571 requirements (2) For service information identified in 14 CFR Part 39 related to damage-tolerance and fatigue this AD, contact Airbus SAS—EAW evaluation of structure. (Airworthiness Office), 1 Rond Point Maurice [Docket No. FAA–2010–1276; Directorate * * * * * Bellonte, 31707 Blagnac Cedex, France; Identifier 2010–NM–092–AD; Amendment telephone +33 5 61 93 36 96; fax +33 5 61 39–16689; AD 2011–10–08] The unsafe condition is reduced 93 44 51; e-mail account.airworth- structural integrity of the wings, [email protected]; Internet http:// RIN 2120–AA64 fuselage, and stabilizers. We are issuing www.airbus.com. this AD to require actions to correct the (3) You may review copies of the service Airworthiness Directives; Airbus Model unsafe condition on these products. information at the FAA, Transport Airplane A310 Series Airplanes Directorate, 1601 Lind Avenue, SW., Renton, DATES: This AD becomes effective June Washington. For information on the AGENCY: Federal Aviation 15, 2011. availability of this material at the FAA, call Administration (FAA), Department of The Director of the Federal Register 425–227–1221. Transportation (DOT). approved the incorporation by reference (4) You may also review copies of the of certain publications listed in this AD service information that is incorporated by ACTION: Final rule. reference at the National Archives and as of June 15, 2011. Records Administration (NARA). For SUMMARY: We are adopting a new The Director of the Federal Register information on the availability of this airworthiness directive (AD) for the approved the incorporation by reference material at NARA, call 202–741–6030, or go products listed above that would of certain other publications listed in to: http://www.archives.gov/federal_register/ supersede two existing ADs. This AD this AD as of January 20, 1999 (63 FR code_of_federal_regulations/ results from mandatory continuing 69179, December 16, 1998). ibr_locations.html. airworthiness information (MCAI) ADDRESSES: You may examine the AD Issued in Renton, Washington, on April 22, originated by an aviation authority of docket on the Internet at http:// 2011. another country to identify and correct www.regulations.gov or in person at the Ali Bahrami, an unsafe condition on an aviation U.S. Department of Transportation, Manager, Transport Airplane Directorate, product. The MCAI describes the unsafe Docket Operations, M–30, West Aircraft Certification Service. condition as: Building Ground Floor, Room W12–140, [FR Doc. 2011–10685 Filed 5–10–11; 8:45 am] DGAC [Direction Ge´ne´rale de l’Aviation 1200 New Jersey Avenue, SE., BILLING CODE 4910–13–P Civile] France AD 1992–106–132(B) * * * Washington, DC.

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FOR FURTHER INFORMATION CONTACT: The NPRM also proposed to expand Differences Between This AD and the Dan Rodina, Aerospace Engineer, the inspection area of the high MCAI or Service Information International Branch, ANM–116, frequency eddy current rototest We have reviewed the MCAI and Transport Airplane Directorate, FAA, inspection required by paragraph (g) of related service information and, in 1601 Lind Avenue, SW., Renton, AD 98–26–01. The required actions are general, agree with their substance. But Washington 98057–3356; telephone as follows, depending on airplane we might have found it necessary to use (425) 227–2125; fax (425) 227–1149. configuration: different words from those in the MCAI SUPPLEMENTARY INFORMATION: • A defectoscope or rototest to ensure the AD is clear for U.S. operators and is enforceable. In making Discussion inspection to detect cracks in the area of frame 47 and frame 54, install new these changes, we do not intend to differ We issued a notice of proposed doublers, and repair if necessary. substantively from the information rulemaking (NPRM) to amend 14 CFR provided in the MCAI and related • Repetitive visual inspections to part 39 to include an AD that would service information. detect cracks on frame 46 between the apply to the specified products. That We might also have required different left- and right-hand sides of stringers 21 NPRM was published in the Federal actions in this AD from those in the and 22 on the forward and aft faces, and Register on January 3, 2011 (76 FR 42), MCAI in order to follow our FAA repair if necessary. and proposed to supersede AD 98–26– policies. Any such differences are 01, Amendment 39–10942 (63 FR • Repetitive visual inspections to highlighted in a NOTE within the AD. detect cracks at the T-section connecting 69179, December 16, 1998), and AD 91– Costs of Compliance 13–01, Amendment 39–7032 (56 FR frame 50A to the beam between the left- 26602, June 10, 1991). and right-hand sides of frames 50 and We estimate that this AD will affect 44 products of U.S. registry. The actions The NPRM proposed to correct an 51, and modification if necessary. that are required by AD 98–26–01 and unsafe condition for the specified • Repetitive visual inspections to are retained in this AD take about 1,087 products. The MCAI states: detect cracks in the lower milled side work-hours per product, at an average DGAC [Direction Ge´ne´rale de l’Aviation panel at the lap joint with the upper labor rate of $85 per work hour. Civile] France AD 1992–106–132(B) original side panel at frame 47 and stringer 22, Required parts cost about $81,973 per issue up to revision 7 has been issued in left- and right-hand sides, and repair if product. Based on these figures, the order to mandate a set of inspections/ necessary. estimated cost of the currently required modifications which address JAR/FAR [Joint • Aviation Regulation/Federal Aviation An eddy current inspection to actions is $174,368 per product. Regulation] 25–571 requirements related to detect cracks on the upper integral part We also estimate that it will take damage-tolerance and fatigue evaluation of adjacent to the rear attach fittings on the about 3 work-hours per product to structure [FAA AD 98–26–01 corresponds to horizontal stabilizer, modification of the comply with the basic requirements of DGAC AD 1992–106–132(B)R4, dated June 5, horizontal stabilizer, and repair if this AD. The average labor rate is $85 1996]. necessary. per work-hour. Based on these figures, Following the Extended Design Service we estimate the cost of this AD to the • Repetitive high frequency eddy Goal activities part of the Structure Task U.S. operators to be $11,220, or $255 per current rototest inspections for cracking Group for the A310 program, EASA AD product. 2007–0053 superseded DGAC France AD of the doubler plate edge, rear spar area, F–1992–106–132R7 in order to take into and at specified fastener holes in the top Authority for This Rulemaking account the publication of Airbus Service skin chordwise splice along the contour Title 49 of the United States Code Bulletins (SB) A310–55–2004 at Revision 5 of the steel doubler between ribs 3 and specifies the FAA’s authority to issue and Airbus SB A310–53–2074 at Revision 3, 4 on the left- and right-hand center and whose inspection thresholds and/or intervals rules on aviation safety. Subtitle I, had been reduced. side boxes on the horizontal stabilizer, section 106, describes the authority of Revision 1 of this AD was issued to remove installing new fasteners if no cracking is the FAA Administrator. ‘‘Subtitle VII: the mandatory requirements related to the found, and repair if necessary. Aviation Programs,’’ describes in more wings (i.e. § 1.8, 1.9, 1.10, 1.13, and 1.18) • Repetitive inspections, either an detail the scope of the Agency’s from the Compliance section, which have eddy current or visual inspection, to authority. been transferred to EASA AD 2007–0242. detect cracks on the left and right We are issuing this rulemaking under Revision 2 of this AD has been issued to vertical posts, numbers 1 through 5 the authority described in ‘‘Subtitle VII, remove the mandatory requirements of Part A, Subpart III, Section 44701: paragraph 1.15, 1.16 and 1.17 which have inclusive, in the wing center box at now been transferred to EASA AD 2009–0057 frame 40/41, and modification if General requirements.’’ Under that (§ 1.15 and 1.17) and 2009–0058 (§ 1.16) necessary. You may obtain further section, Congress charges the FAA with respectively. information by examining the MCAI in promoting safe flight of civil aircraft in Revision 3 of this AD is issued to add a the AD docket. air commerce by prescribing regulations Note to the Applicability and amend the for practices, methods, and procedures Required Action(s) and Compliance Time(s) Comments the Administrator finds necessary for section of this AD to clarify the allowed use safety in air commerce. This regulation We gave the public the opportunity to of the referenced SBs by operators. In is within the scope of that authority participate in developing this AD. We addition, a note has been added to paragraph because it addresses an unsafe condition 1.7 and the notes associated to paragraphs received no comments on the NPRM or that is likely to exist or develop on 1.1, 1.2, 1.3, 1.4, 1.5 and 1.12 have been on the determination of the cost to the products identified in this rulemaking clarified. public. action. The unsafe condition is reduced Conclusion structural integrity of the wings, Regulatory Findings fuselage, and stabilizers. We reviewed the available data and We determined that this AD will not This NPRM proposed to continue to determined that air safety and the have federalism implications under require certain actions specified in AD public interest require adopting the AD Executive Order 13132. This AD will 98–26–01. as proposed. not have a substantial direct effect on

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the States, on the relationship between Affected ADs sides of stringers 21 and 22 on the forward the national government and the States, (b) This AD supersedes AD 98–26–01, and aft faces, in accordance with Airbus or on the distribution of power and Amendment 39–10942, and AD 91–13–01, Service Bulletin A310–53–2054, Revision 2, responsibilities among the various Amendment 39–7032. dated May 22, 1990. If any crack is found, levels of government. prior to further flight, repair in accordance Applicability with Airbus Service Bulletin A310–53–2054, For the reasons discussed above, I (c) This AD applies to Airbus Model A310– Revision 2, dated May 22, 1990. certify this AD: 203, –204, –221, –222, –304, –322, –324, and Note 2: Airplanes on which Airbus ’’ 1. Is not a significant regulatory –325 airplanes, certificated in any category, modification 05254 is done in production; or all certified models, all serial numbers. action’’ under Executive Order 12866; on which Airbus Service Bulletin A310–53– 2. Is not a ’’significant rule’’ under the Subject 2019, Revision 2, dated May 22, 1990, or DOT Regulatory Policies and Procedures (d) Air Transport Association (ATA) of Revision 3, dated February 28, 1991, is done (44 FR 11034, February 26, 1979); and America Codes 53: Fuselage, 55: Stabilizers, in service; are not affected by paragraph (h) 3. Will not have a significant and 57: Wings. of this AD. economic impact, positive or negative, (1) Prior to the effective date of this AD: Reason on a substantial number of small entities Accomplishment of the repair required by under the criteria of the Regulatory (e) The mandatory continuing paragraph (h) of this AD; or modification of Flexibility Act. airworthiness information (MCAI) states: the reinforcement angle runout in accordance ´ ´ We prepared a regulatory evaluation DGAC [Direction Generale de l’Aviation with Airbus Service Bulletin A310–53–2019, Civile] France AD 1992–106–132(B) * * * Revision 2, dated May 22, 1990, or Revision of the estimated costs to comply with has been issued in order to mandate a set of this AD and placed it in the AD docket. 3, dated February 28, 1991; terminates the inspections/modifications which address repetitive inspection requirements of Examining the AD Docket JAR/FAR [Joint Aviation Regulation/Federal paragraph (h) of this AD. Aviation Regulation] 25–571 requirements (2) On or after the effective date of this AD: related to damage-tolerance and fatigue You may examine the AD docket on Accomplishment of the repair required by evaluation of structure. the Internet at http:// paragraph (h) of this AD; or modification of www.regulations.gov; or in person at the * * * * * the reinforcement angle runout in accordance Docket Operations office between 9 a.m. The unsafe condition is reduced structural with Airbus Service Bulletin A310–53–2019, and 5 p.m., Monday through Friday, integrity of the wings, fuselage, and Revision 3, dated February 28, 1991; stabilizers. except Federal holidays. The AD docket terminates the repetitive inspection contains the NPRM, the regulatory Compliance requirements of paragraph (h) of this AD. evaluation, any comments received, and (f) You are responsible for having the Actions for Service Bulletin A310–53–2057— other information. The street address for actions required by this AD performed within No Changes the Docket Operations office (telephone the compliance times specified, unless the (i) For airplanes listed in Airbus Service (800) 647–5527) is in the ADDRESSES actions have already been done. Bulletin A310–53–2057, Revision 1, dated section. Comments will be available in Restatement of Certain Requirements of AD April 30, 1992: Perform a visual inspection the AD docket shortly after receipt. 98–26–01 to detect cracks at the T-section connecting List of Subjects in 14 CFR Part 39 Actions for Service Bulletin A310–53–2016— frame 50A to the beam between the left- and No Changes right-hand sides of frames 50 and 51, in Air transportation, Aircraft, Aviation accordance with Airbus Service Bulletin safety, Incorporation by reference, (g) For airplanes listed in Airbus Service Bulletin A310–53–2016, Revision 5, dated A310–53–2057, Revision 1, dated April 30, Safety. December 7, 1992: Prior to the accumulation 1992. Perform the inspection at the time Adoption of the Amendment of 12,000 total flight cycles, or within 1,000 specified in paragraph (i)(1) or (i)(2) of this flight cycles after January 20, 1999 (the AD, as applicable. If any crack is found, prior Accordingly, under the authority effective date of AD 98–26–01), whichever to further flight, accomplish Airbus delegated to me by the Administrator, occurs later, perform a defectoscope or Modifications No. 4853 and No. 5273, in the FAA amends 14 CFR part 39 as rototest inspection to detect cracks in the accordance with Airbus Service Bulletin follows: area of frame 47 and frame 54, and install A310–53–2057, Revision 1, dated April 30, new doublers, in accordance with Airbus 1992. Accomplishment of these PART 39—AIRWORTHINESS Service Bulletin A310–53–2016, Revision 5, modifications terminates the requirements of DIRECTIVES dated December 7, 1992. Except as provided this paragraph. by paragraph (m) of this AD, if any Note 3: Airplanes on which Airbus ■ 1. The authority citation for part 39 discrepancy is found, prior to further flight, modification 4853 is done are affected by perform follow-on corrective actions, as paragraph (i) of this AD, except those continues to read as follows: applicable, in accordance with Airbus airplanes on which Airbus Modification 5273 Authority: 49 U.S.C. 106(g), 40113, 44701. Service Bulletin A310–53–2016, Revision 5, has been done or on which Airbus Service dated December 7, 1992. § 39.13 [Amended] Bulletin A310–53–2011 has been done in Note 1: Airplanes on which Airbus service. ■ 2. The FAA amends § 39.13 by Modification 04980 is done in production are not affected by paragraph (g) of this AD. (1) For the airplane having manufacturer’s removing Amendment 39–10942 (63 FR serial number (MSN) 191: Prior to the 69179, December 16, 1998) and Actions for Service Bulletin A310–53–2054, accumulation of 24,000 total flight cycles, or Amendment 39–7032 (56 FR 26602, With Latest Optional Modification within 1,000 flight cycles after January 20, June 10, 1991) and adding the following (h) For airplanes listed in Airbus Service 1999, whichever occurs later; and thereafter new AD: Bulletin A310–53–2054, Revision 2, dated at intervals not to exceed 6,000 flight cycles. 2011–10–08 Airbus: Amendment 39–16689. May 22, 1990: Prior to the accumulation of (2) For airplanes other than the airplane Docket No. FAA–2010–1276; Directorate 12,000 total flight cycles, or within 1,000 identified in paragraph (i)(1) of this AD: Prior Identifier 2010–NM–092–AD. flight cycles after January 20, 1999, to the accumulation of 12,000 total flight whichever occurs later, and thereafter at cycles, or within 1,000 flight cycles after Effective Date intervals not to exceed 3,000 flight cycles, January 20, 1999, whichever occurs later; and (a) This airworthiness directive (AD) perform a visual inspection to detect cracks thereafter at intervals not to exceed 6,000 becomes effective June 15, 2011. on frame 46 between the left- and right-hand flight cycles.

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Actions for Service Bulletin A310–53–2059— further flight, perform follow-on corrective between ribs 3 and 4 on the left-and right- No Changes actions, as applicable, in accordance with hand center and side boxes on the horizontal (j) For airplanes listed in Airbus Service Airbus Service Bulletin A310–55–2002, stabilizer, in accordance with the Bulletin A310–53–2059, Revision 1, dated Revision 4, dated April 28, 1989. Accomplishment Instructions of Airbus January 4, 1996: Perform a visual inspection Actions for Service Bulletin A310–57–2039— Mandatory Service Bulletin A310–55–2004, to detect cracks in the lower milled side No Changes Revision 05, dated October 13, 2006. If any panel at the lap joint with the upper side cracking is found, before further flight, repair (l) For airplanes listed in Airbus Service panel at frame 47 and stringer 22, left- and in accordance with the Accomplishment Bulletin A310–57–2039, dated September 24, right-hand sides, in accordance with Airbus Instructions of Airbus Mandatory Service 1990: Perform either an eddy current or Service Bulletin A310–53–2059, Revision 1, Bulletin A310–55–2004, Revision 05, dated visual inspection to detect cracks on the left dated January 4, 1996. Perform the inspection October 13, 2006; except where this service and right vertical posts, numbers 1 through at the time specified in paragraph (j)(1) or bulletin specifies to contact Airbus, before 5 inclusive, in the wing center box at frame (j)(2) of this AD, as applicable. Except as 40/41, in accordance with Airbus Service further flight, repair in accordance with a provided by paragraph (m) of this AD, if any Bulletin A310–57–2039, dated September 24, method approved by either the Manager, crack is found, prior to further flight, repair 1990. Perform the inspection at the time International Branch, ANM–116, FAA, or in accordance with Airbus Service Bulletin specified in paragraph (l)(1) or (l)(2) of this EASA (or its delegated agent). Thereafter, A310–53–2059, Revision 1, dated January 4, AD, as applicable. Except as provided by repeat the inspections at intervals not to 1996. Thereafter, repeat the inspections at paragraph (m) of this AD, if any crack is exceed 9,700 flight cycles or 19,500 flight intervals not to exceed 9,000 flight cycles, or found, prior to further flight, accomplish the hours, whichever occurs first; except as accomplish Airbus Modification 5997 modification specified in Airbus Service required by paragraph (o) of this AD for the (Airbus Service Bulletin A310–53–2058). Bulletin A310–57–2041, dated September 24, rear spar area. Accomplishment of either the repair or 1990, in accordance with Airbus Service Airbus Modification 5997 constitutes Note 6: Airplanes on which Airbus Bulletin A310–57–2039, dated September 24, terminating action for the repetitive Modification 06070 has been done in 1990. inspections required by this paragraph. production are not affected by the actions Note 5: Airplanes on which Airbus specified in paragraph (l) of this AD. Note 4: Airplanes on which Airbus Modification 04977 has been done in Modification 5997 has been done completely (1) For airplanes on which Airbus Service production are not affected by the actions in production, or on which Airbus Service Bulletin A310–55–2002 was accomplished specified in paragraph (l) of this AD. Bulletin A310–53–2058 has been done in prior to the accumulation of 6,000 total flight service, are not affected by the actions in (1) For airplanes on which Airbus cycles on the airplane; and for airplanes paragraph (j) of this AD. Modification 7541/S7973 (reference Airbus having MSN 311 through 400 inclusive on Service Bulletin A310–57–2041) has not been (1) For Model A310–200 series airplanes, which Airbus Modification 4933 was accomplished: Inspect prior to the accomplish the inspection at the time accomplished during production: Do the accumulation of 21,000 total flight cycles, or specified in paragraph (j)(1)(i) or (j)(1)(ii) of inspection at the later of the compliance within 1,000 flight cycles after January 20, this AD, as applicable. times specified in paragraphs (l)(1)(i) and 1999, whichever occurs later; and thereafter (i) For airplanes that have accumulated less (l)(1)(ii) of this AD. at intervals not to exceed 4,200 flight cycles than 20,000 total flight cycles as of January (i) Prior to the accumulation of 14,400 total (for a visual inspection), or 7,500 flight cycles 20, 1999: Prior to the accumulation of 18,000 flight cycles or 28,500 total flight hours, (for an eddy current inspection). total flight cycles, or within 2,000 flight whichever occurs first. (2) For airplanes on which Airbus cycles after January 20, 1999, whichever (ii) Within 1,500 flight cycles or 18 months Modification 7541/S7973 (reference Airbus occurs later. after the effective date of this AD, whichever Service Bulletin A310–57–2041) has been (ii) For airplanes that have accumulated occurs first. accomplished: Inspect at the time specified 20,000 or more total flight cycles as of in the graph contained in Note 1 of paragraph (2) For airplanes on which Airbus Service January 20, 1999: Within 1,000 flight cycles 1.A.(2) of Airbus Service Bulletin A310–57– Bulletin A310–55–2002 was accomplished after January 20, 1999. 2039, dated September 24, 1990, or within on or after the accumulation of 6,000 total (2) For Model A310–300 series airplanes, 1,000 flight cycles after January 20, 1999, flight cycles: Do the inspection at the later of accomplish the inspection at the time whichever occurs later; and thereafter at the times specified in paragraph (l)(2)(i) and specified in paragraph (j)(2)(i) or (j)(2)(ii) of intervals not to exceed 5,000 flight cycles (for (l)(2)(ii) of this AD. this AD, as applicable. a visual inspection), or 8,600 flight cycles (for (i) Within 9,700 flight cycles or 19,500 (i) For airplanes that have accumulated less an eddy current inspection). flight hours after accomplishing the than 19,700 total flight cycles as of January modification, whichever occurs first. 20, 1999: Prior to the accumulation of 18,000 Exception to Certain Service Bulletin (ii) Within 1,500 flight cycles or 18 months total flight cycles, or within 1,700 flight Repairs after the effective date of this AD, whichever cycles after January 20, 1999, whichever (m) If any crack is found during any occurs first. occurs later. inspection required by paragraph (g), (j), (k), (o) For airplanes on which the initial (ii) For airplanes that have accumulated or (l) of this AD, and the applicable service inspection required by paragraph (n) of this 19,700 or more total flight cycles as of bulletin specifies to contact Airbus for an AD has been done and on which a repair was January 20, 1999: Within 850 flight cycles appropriate action: Prior to further flight, installed at fastener position A in accordance after January 20, 1999. repair in accordance with a method approved with Airbus Service Bulletin A310–55–2002: Actions for Service Bulletin A310–55–2002— by either the Manager, International Branch, At the later of the times specified in No Changes ANM–116, or the DGAC (or its delegated paragraphs (o)(1) and (o)(2) of this AD, do a agent), or European Aviation Safety Agency (k) For airplanes listed in Airbus Service high frequency eddy current inspection for (EASA) (or its delegated agent). Bulletin A310–55–2002, Revision 4, dated cracking of the rear spar area as specified in April 28, 1989: Prior to the accumulation of New Requirements of This AD: Actions paragraph (n) of this AD, and repeat the high 12,000 total flight cycles, or within 1,000 frequency eddy current inspection of the rear flight cycles after January 20, 1999, Actions for Service Bulletin A310–55–2004 spar area thereafter at intervals not to exceed whichever occurs later, perform an eddy (n) For airplanes listed in Airbus 4,800 flight cycles or 9,700 flight hours, current inspection to detect cracks on the Mandatory Service Bulletin A310–55–2004, whichever occurs first. upper integral part adjacent to the rear attach Revision 05, dated October 13, 2006: At the (1) Within 4,800 flight cycles or 9,700 fittings on the horizontal stabilizer, and applicable time specified in paragraph (n)(1) flight hours, whichever occurs first, after modify the horizontal stabilizer, in or (n)(2) of this AD, do a high frequency eddy doing the repair in accordance with Airbus accordance with Airbus Service Bulletin current inspection for cracking of the doubler Service Bulletin A310–55–2002. A310–55–2002, Revision 4, dated April 28, plate edge, the rear spar area, and specified (2) Within 400 flight cycles or 800 flight 1989. Except as provided by paragraph (m) of fastener holes in the top skin chordwise hours, whichever occurs first, after the this AD, if any discrepancy is found, prior to splice along the contour of the steel doubler effective date of this AD.

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Credit for Actions Accomplished in (1) Alternative Methods of Compliance district office. The AMOC approval letter Accordance With Previous Service (AMOCs): The Manager, International must specifically reference this AD. AMOCs Information Branch, ANM–116, Transport Airplane approved previously in accordance with AD Directorate, FAA, has the authority to (p) Actions accomplished before the 98–26–01, amendment 39–10942, are approve AMOCs for this AD, if requested effective date of this AD in accordance with approved as AMOCs for the corresponding using the procedures found in 14 CFR 39.19. provisions of this AD. Airbus Service Bulletin A310–55–2004, In accordance with 14 CFR 39.19, send your Revision 2, dated February 7, 1991; Revision (2) Airworthy Product: For any requirement request to your principal inspector or local in this AD to obtain corrective actions from 3, dated April 16, 1997; and Revision 04, Flight Standards District Office, as a manufacturer or other source, use these dated April 17, 2001; are acceptable for appropriate. If sending information directly actions if they are FAA-approved. Corrective compliance with the corresponding actions to the International Branch, send it to ATTN: actions are considered FAA-approved if they specified in paragraph (n) of this AD. Dan Rodina, Aerospace Engineer, International Branch, ANM–116, Transport are approved by the State of Design Authority FAA AD Differences Airplane Directorate, FAA, 1601 Lind (or their delegated agent). You are required to assure the product is airworthy before it Note 7: This AD differs from the MCAI Avenue, SW., Renton, Washington 98057– 3356; telephone (425) 227–2125; fax (425) is returned to service. and/or service information as follows: No 227–1149. Information may be e-mailed to: Related Information Differences. [email protected]. Before using any approved AMOC, notify your (r) Refer to MCAI EASA Airworthiness Other FAA AD Provisions principal inspector or lacking a principal Directive 2007–0053R3, dated December 17, (q) The following provisions also apply to inspector, the manager of the local flight 2009, and the service bulletins listed in Table this AD: standards district office/certificate holding 1 of this AD, for related information.

TABLE 1—RELATED INFORMATION

Service Bulletin Revision Date

Airbus Mandatory Service Bulletin A310–55–2004 ...... 05 ...... October 13, 2006. Airbus Service Bulletin A310–53–2016 ...... 5 ...... December 7, 1992. Airbus Service Bulletin A310–53–2019 ...... 3 ...... February 28, 1991. Airbus Service Bulletin A310–53–2054 ...... 2 ...... May 22, 1990. Airbus Service Bulletin A310–53–2057 ...... 1 ...... April 30, 1992. Airbus Service Bulletin A310–53–2059 ...... 1 ...... January 4, 1996. Airbus Service Bulletin A310–55–2002 ...... 4 ...... April 28, 1989. Airbus Service Bulletin A310–57–2039 ...... Original ...... September 24, 1990. Airbus Service Bulletin A310–57–2041 ...... Original ...... September 24, 1990.

Material Incorporated by Reference do the actions required by this AD, unless the (s) You must use the applicable service AD specifies otherwise. bulletins contained in Table 2 of this AD, to

TABLE 2—ALL MATERIAL INCORPORATED BY REFERENCE

Service Bulletin Revision Date

Note 8: Only pages 1 and 6 of Airbus pages of this document show the original the service information contained in Table 3 Service Bulletin A310–53–2019, Revision 3, issue date of February 8, 1985. of this AD under 5 U.S.C. 552(a) and 1 CFR dated February 28, 1991, show revision level (1) The Director of the Federal Register part 51. 3 and issue date February 28, 1991. All other approved the incorporation by reference of

TABLE 3—NEW MATERIAL INCORPORATED BY REFERENCE

Service Bulletin Revision Date

Airbus Mandatory Service Bulletin A310–55–2004, excluding Appendix 01 ...... 05 ...... October 13, 2006. Airbus Service Bulletin A310–53–2019 ...... 3 ...... February 28, 1991. Airbus Service Bulletin A310–57–2041 ...... Original ...... September 24, 1990.

Note 9: Only pages 1 and 6 of Airbus dated February 28, 1991, show revision level pages of this document show the original Service Bulletin A310–53–2019, Revision 3, 3 and issue date February 28, 1991. All other issue date of February 8, 1985.

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(2) The Director of the Federal Register contained in Table 4 of this AD on January previously approved the incorporation by 20, 1999 (63 FR 69179, December 16, 1998). reference of the service information

TABLE 4—MATERIAL PREVIOUSLY INCORPORATED BY REFERENCE

Service Bulletin Revision Date

Airbus Service Bulletin A310–53–2016 ...... 5 ...... December 7, 1992. Airbus Service Bulletin A310–53–2054 ...... 2 ...... May 22, 1990. Airbus Service Bulletin A310–53–2057 ...... 1 ...... April 30, 1992. Airbus Service Bulletin A310–53–2059 ...... 1 ...... January 4, 1996. Airbus Service Bulletin A310–55–2002 ...... 4 ...... April 28, 1989. Airbus Service Bulletin A310–57–2039 ...... Original ...... September 24, 1990.

(3) For service information identified in SUMMARY: We are adopting a new Register on February 10, 2011 (76 FR this AD, contact Airbus SAS—EAW airworthiness directive (AD) for the 7511). That NPRM proposed to correct (Airworthiness Office), 1 Rond Point Maurice products listed above. This AD results an unsafe condition for the specified Bellonte, 31707 Blagnac Cedex, France; from mandatory continuing products. The MCAI states: telephone +33 5 61 93 36 96; fax +33 5 61 93 44 51; e-mail account.airworth- airworthiness information (MCAI) [T]he occurrence of drill marks [has been [email protected]; Internet http:// originated by an aviation authority of found] at the lower ring region of the rear www.airbus.com. another country to identify and correct pressure bulkhead between [the] (4) You may review copies of the service an unsafe condition on an aviation circumferential splice joint and rear skin information at the FAA, Transport Airplane product. The MCAI describes the unsafe located between stringers 12 and 13. These Directorate, 1601 Lind Avenue, SW., Renton, condition as: marks may result in formation of fatigue Washington. For information on the [T]he occurrence of drill marks [has been cracks accelerated by corrosion reducing the availability of this material at the FAA, call found] at the lower ring region of the rear structural strength of the rear pressure 425–227–1221. pressure bulkhead between [the] bulkhead, which may cause a sudden (5) You may also review copies of the circumferential splice joint and rear skin decompression of the passenger cabin. service information that is incorporated by located between stringers 12 and 13. These reference at the National Archives and * * * * * marks may result in formation of fatigue Records Administration (NARA). For The required actions include doing a cracks accelerated by corrosion reducing the information on the availability of this structural strength of the rear pressure detailed inspection for signs of drill material at NARA, call 202–741–6030, or go bulkhead, which may cause a sudden marks and repairing if necessary. You to: http://www.archives.gov/federal_register/ _ _ _ decompression of the passenger cabin. may obtain further information by code of federal regulations/ examining the MCAI in the AD docket. ibr_locations.html. * * * * * Issued in Renton, Washington, on April 22, We are issuing this AD to require Comments 2011. actions to correct the unsafe condition We gave the public the opportunity to Ali Bahrami, on these products. DATES: This AD becomes effective June participate in developing this AD. We Manager, Transport Airplane Directorate, received no comments on the NPRM or Aircraft Certification Service. 15, 2011. on the determination of the cost to the [FR Doc. 2011–10687 Filed 5–10–11; 8:45 am] The Director of the Federal Register approved the incorporation by reference public. BILLING CODE 4910–13–P of certain publications listed in this AD Conclusion as of June 15, 2011. DEPARTMENT OF TRANSPORTATION ADDRESSES: You may examine the AD We reviewed the available data and docket on the Internet at http:// determined that air safety and the Federal Aviation Administration www.regulations.gov or in person at the public interest require adopting the AD U.S. Department of Transportation, as proposed. 14 CFR Part 39 Docket Operations, M–30, West Differences Between This AD and the Building Ground Floor, Room W12–140, MCAI or Service Information [Docket No. FAA–2011–0038; Directorate 1200 New Jersey Avenue, SE., Identifier 2010–NM–153–AD; Amendment 39–16684; AD 2011–10–03] Washington, DC. We have reviewed the MCAI and FOR FURTHER INFORMATION CONTACT: related service information and, in RIN 2120–AA64 Cindy Ashforth, Aerospace Engineer, general, agree with their substance. But International Branch, ANM–116, we might have found it necessary to use Airworthiness Directives; Empresa Transport Airplane Directorate, FAA, different words from those in the MCAI Brasileira de Aeronautica S.A. 1601 Lind Avenue, SW., Renton, to ensure the AD is clear for U.S. (EMBRAER) Model ERJ 170 Airplanes; Washington 98057–3356; telephone operators and is enforceable. In making and Model ERJ 190–100 STD, ERJ 190– 425–227–2768; fax 425–227–1149. these changes, we do not intend to differ 100 LR, ERJ 190–100 IGW, ERJ 190– SUPPLEMENTARY INFORMATION: substantively from the information 200 STD, ERJ 190–200 LR, and ERJ provided in the MCAI and related 190–200 IGW Airplanes Discussion service information. AGENCY: Federal Aviation We issued a notice of proposed We might also have required different Administration (FAA), Department of rulemaking (NPRM) to amend 14 CFR actions in this AD from those in the Transportation (DOT). part 39 to include an AD that would MCAI in order to follow our FAA apply to the specified products. That policies. Any such differences are ACTION: Final rule. NPRM was published in the Federal highlighted in a NOTE within the AD.

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Costs of Compliance Examining the AD Docket 19000279 through 19000286 inclusive, 19000288 through 19000295 inclusive, We estimate that this AD will affect You may examine the AD docket on 19000297 through 19000304 inclusive, and 241 products of U.S. registry. We also the Internet at http:// 19000309. estimate that it will take about 1 work- www.regulations.gov; or in person at the hour per product to comply with the Docket Operations office between 9 a.m. Subject basic requirements of this AD. The and 5 p.m., Monday through Friday, (d) Air Transport Association (ATA) of average labor rate is $85 per work-hour. except Federal holidays. The AD docket America Code 53: Fuselage. Based on these figures, we estimate the contains the NPRM, the regulatory Reason cost of this AD to the U.S. operators to evaluation, any comments received, and (e) The mandatory continuing be $20,485, or $85 per product. other information. The street address for airworthiness information (MCAI) states: In addition, we estimate that any the Docket Operations office (telephone [T]he occurrence of drill marks [has been necessary follow-on actions would take (800) 647–5527) is in the ADDRESSES found] at the lower ring region of the rear about 2 work-hours and require parts section. Comments will be available in pressure bulkhead between [the] costing $20, for a cost of $190 per the AD docket shortly after receipt. circumferential splice joint and rear skin located between stringers 12 and 13. These product. We have no way of List of Subjects in 14 CFR Part 39 determining the number of products marks may result in formation of fatigue that may need these actions. Air transportation, Aircraft, Aviation cracks accelerated by corrosion reducing the safety, Incorporation by reference, structural strength of the rear pressure Authority for This Rulemaking Safety. bulkhead, which may cause a sudden decompression of the passenger cabin. Title 49 of the United States Code Adoption of the Amendment specifies the FAA’s authority to issue * * * * * Accordingly, under the authority rules on aviation safety. Subtitle I, Compliance delegated to me by the Administrator, section 106, describes the authority of (f) You are responsible for having the the FAA Administrator. ‘‘Subtitle VII: the FAA amends 14 CFR part 39 as follows: actions required by this AD performed within Aviation Programs,’’ describes in more the compliance times specified, unless the detail the scope of the Agency’s PART 39—AIRWORTHINESS actions have already been done. authority. DIRECTIVES Actions We are issuing this rulemaking under (g) Before the accumulation of 20,000 flight the authority described in ‘‘Subtitle VII, ■ 1. The authority citation for part 39 cycles, do a detailed inspection for signs of Part A, Subpart III, Section 44701: continues to read as follows: drill marks at the left and right lower ring General requirements.’’ Under that Authority: 49 U.S.C. 106(g), 40113, 44701. region of the rear pressure bulkhead between section, Congress charges the FAA with the circumferential splice joint and rear skin promoting safe flight of civil aircraft in § 39.13 [Amended] between stringers 12 and 13, in accordance air commerce by prescribing regulations ■ 2. The FAA amends § 39.13 by adding with EMBRAER Service Bulletin 170–53– 0082 or 190–53–0042, both Revision 01, both for practices, methods, and procedures the following new AD: the Administrator finds necessary for dated April 28, 2010, as applicable. If drill safety in air commerce. This regulation 2011–10–03 Empresa Brasileira de marks are found, repair before further flight, is within the scope of that authority Aeronautica S.A. (EMBRAER): in accordance with EMBRAER Service Amendment 39–16684. Docket No. Bulletin 170–53–0082 or 190–53–0042, both because it addresses an unsafe condition FAA–2011–0038; Directorate Identifier Revision 01, both dated April 28, 2010, as that is likely to exist or develop on 2010–NM–153–AD. applicable. products identified in this rulemaking Effective Date Note 1: For the purposes of this AD, a action. detailed inspection is: ‘‘An intensive (a) This airworthiness directive (AD) Regulatory Findings examination of a specific item, installation, becomes effective June 15, 2011. or assembly to detect damage, failure, or We determined that this AD will not Affected ADs irregularity. Available lighting is normally have federalism implications under supplemented with a direct source of good (b) None. Executive Order 13132. This AD will lighting at an intensity deemed appropriate. not have a substantial direct effect on Applicability Inspection aids such as mirror, magnifying the States, on the relationship between (c) This AD applies to Empresa Brasileira lenses, etc., may be necessary. Surface the national government and the States, de Aeronautica S.A. (EMBRAER) Model ERJ cleaning and elaborate procedures may be required.’’ or on the distribution of power and 170–100 LR, –100 STD, –100 SE, and –100 responsibilities among the various SU airplanes; and Model ERJ 170–200 LR, FAA AD Differences levels of government. –200 SU, and –200 STD airplanes; Note 2: This AD differs from the MCAI For the reasons discussed above, I certificated in any category; serial numbers 17000002, 17000004 through 17000013 and/or service information as follows: certify this AD: inclusive, 17000015 through 17000212 Although EMBRAER Service Bulletins 1. Is not a ’’significant regulatory inclusive, 17000216 through 17000233 170–53–0082 and 190–53–0042, both action’’ under Executive Order 12866; inclusive, 17000236, 17000269, 17000281 Revision 01, both dated April 28, 2010, 2. Is not a ’’significant rule’’ under the through 17000291 inclusive, and 17000293; specify doing a general visual inspection, this DOT Regulatory Policies and Procedures and Model ERJ 190–100 STD, ERJ 190–100 AD requires doing a detailed inspection. (44 FR 11034, February 26, 1979); and LR, ERJ 190–100 IGW, ERJ 190–200 STD, ERJ Other FAA AD Provisions 3. Will not have a significant 190–200 LR, and ERJ 190–200 IGW airplanes economic impact, positive or negative, ; certificated in any category; serial numbers (h) The following provisions also apply to on a substantial number of small entities 19000002, 19000004, 19000006 through this AD: 19000108 inclusive, 19000110 through (1) Alternative Methods of Compliance under the criteria of the Regulatory 19000139 inclusive, 19000141 through (AMOCs): The Manager, International Flexibility Act. 19000157 inclusive, 19000160, 19000165, Branch, ANM–116, Transport Airplane We prepared a regulatory evaluation 19000167 through 19000176 inclusive, Directorate, FAA, has the authority to of the estimated costs to comply with 19000178 through 19000199 inclusive, approve AMOCs for this AD, if requested this AD and placed it in the AD docket. 19000273 through 19000276 inclusive, using the procedures found in 14 CFR 39.19.

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In accordance with 14 CFR 39.19, send your Issued in Renton, Washington, on April 20, control (FADEC) backup battery, request to your principal inspector or local 2011. replacing the supplement pilot’s Flight Standards District Office, as Kalene C. Yanamura, operating handbook and FAA approved appropriate. If sending information directly Acting Manager, Transport Airplane airplane flight manual, and replacing to the International Branch, send it to Attn: Directorate, Aircraft Certification Service. Cindy Ashforth, Aerospace Engineer, the FADEC backup battery every 12 [FR Doc. 2011–10693 Filed 5–10–11; 8:45 am] International Branch, ANM–116, Transport calendar months for Cessna Aircraft Airplane Directorate, FAA, 1601 Lind BILLING CODE 4910–13–P Company (Cessna) Model 172 Airplanes Avenue, SW., Renton, Washington 98057– modified by Supplemental Type 3356; telephone 425–227–2768; fax 425–227– Certificate (STC) SA01303WI. DEPARTMENT OF TRANSPORTATION 1149. Information may be e-mailed to: As published, the numbering of [email protected]. Before using any approved AMOC, notify Federal Aviation Administration paragraphs (j)(3), (j)(4), and (j)(5) in the your appropriate principal inspector, or Material Incorporated by Reference lacking a principal inspector, the manager of 14 CFR Part 39 section is incorrect. the local flight standards district office/ [Docket No. FAA–2010–1243; Directorate No other part of the preamble or certificate holding district office. The AMOC Identifier 2010–CE–058–AD; Amendment regulatory information has been approval letter must specifically reference 39–16626; AD 2011–06–02] changed; therefore, only the changed this AD. (2) Airworthy Product: For any requirement RIN 2120–AA64 portion of the final rule is being in this AD to obtain corrective actions from published in the Federal Register. a manufacturer or other source, use these Airworthiness Directives; Cessna The effective date of this AD remains actions if they are FAA-approved. Corrective Aircraft Company (Cessna) Model 172 May 26, 2011. actions are considered FAA-approved if they Airplanes Modified by Supplemental are approved by the State of Design Authority Type Certificate (STC) SA01303WI Correction of Regulatory Text (or their delegated agent). You are required to assure the product is airworthy before it AGENCY: Federal Aviation § 39.13 [Corrected] Administration (FAA), DOT. is returned to service. In the Federal Register of April 21, ACTION: Final rule; correction. Related Information 2011, on page 22301, in the right (i) Refer to MCAI Brazilian Airworthiness SUMMARY: The FAA is correcting an column, paragraph (j) of AD 2011–06–02 Directives 2010–06–01R1 and 2010–06–02R1, airworthiness directive (AD) that is corrected to read as follows: both dated August 25, 2010; and EMBRAER published in the Federal Register. That * * * * * Service Bulletins 170–53–0082 and 190–53– AD applies to the products listed above. 0042, both Revision 01, both dated April 28, The numbering of paragraphs (j)(3), (1) For service information identified 2010; for related information. (j)(4), and (j)(5) in the Material in this AD, contact Thielert Aircraft Engines Service GmbH, Platanenstra+e Material Incorporated by Reference Incorporated by Reference section is incorrect. This document corrects that 14, D–09350 Lichtenstein, Deutschland; (j) You must use EMBRAER Service error. In all other respects, the original telephone: +49 (37204) 696–1474; fax: Bulletin 170–53–0082, Revision 01, dated +49 (37204) 696–1910; Internet: http:// April 28, 2010; or EMBRAER Service Bulletin document remains the same. www.thielert.com/. 190–53–0042, Revision 01, dated April 28, DATES: This final rule is effective May 2010; as applicable; to do the actions 26, 2011. (2) You may review copies of the required by this AD, unless the AD specifies ADDRESSES: You may examine the AD service information at the FAA, Small otherwise. docket on the Internet at http:// Airplane Directorate, 901 Locust, (1) The Director of the Federal Register www.regulations.gov; or in person at the Kansas City, Missouri 64106. For approved the incorporation by reference of Docket Management Facility between information on the availability of this this service information under 5 U.S.C. 9 a.m. and 5 p.m., Monday through 552(a) and 1 CFR part 51. material at the FAA, call 816–329–4148. Friday, except Federal holidays. The AD (2) For service information identified in (3) You may also review copies of the docket contains this AD, the regulatory this AD, contact Empresa Brasileira de service information that is incorporated evaluation, any comments received, and Aeronautica S.A. (EMBRAER), Technical by reference at the National Archives other information. The address for the Publications Section (PC 060), Av. Brigadeiro and Records Administration (NARA). Faria Lima, 2170—Putim—12227–901 Sa˜o Docket Office (phone: 800–647–5527) is Jose dos Campos—SP—BRASIL; telephone Document Management Facility, U.S. For information on the availability of +55 12 3927–5852 or +55 12 3309–0732; fax Department of Transportation, Docket this material at an NARA facility, call +55 12 3927–7546; e-mail Operations, M–30, West Building 202–741–6030, or go to http:// _ [email protected]; Internet http:// Ground Floor, Room W12–140, 1200 www.archives.gov/federal register/ _ _ _ www.flyembraer.com. New Jersey Avenue SE., Washington, code of federal regulations/ (3) You may review copies of the service DC 20590. ibr_locations.html. information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, FOR FURTHER INFORMATION CONTACT: * * * * * Washington. For information on the Richard Rejniak, Aerospace Engineer, Issued in Kansas City, Missouri, on May 3, availability of this material at the FAA, call Wichita Aircraft Certification Office 2011. 425–227–1221. (ACO), FAA, 1801 Airport Road, Room Earl Lawrence, (4) You may also review copies of the 100; phone: (316) 946–4128; fax: (316) service information that is incorporated by 946–4107; e-mail: Manager, Small Airplane Directorate, Aircraft reference at the National Archives and [email protected]. Certification Service. Records Administration (NARA). For [FR Doc. 2011–11260 Filed 5–10–11; 8:45 am] SUPPLEMENTARY INFORMATION: information on the availability of this BILLING CODE 4910–13–P material at NARA, call 202–741–6030, or go Airworthiness Directive 2011–06–02, to: http://www.archives.gov/federal_register/ amendment 39–16626 (76 FR 22298, code_of_federal_regulations/ April 21, 2011), currently requires ibr_locations.html. installing a full authority digital engine

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DEPARTMENT OF TRANSPORTATION Internet: http://www.grob-aircraft.eu. substantively from the information You may review copies of the provided in the MCAI and related Federal Aviation Administration referenced service information at the service information. FAA, Small Airplane Directorate, 901 We might also have required different 14 CFR Part 39 Locust, Kansas City, Missouri 64106. actions in this AD from those in the [Docket No. FAA–2011–0127; Directorate For information on the availability of MCAI in order to follow FAA policies. Identifier 2010–CE–065–AD; Amendment this material at the FAA, call (816) 329– Any such differences are highlighted in 39–16681; AD 2011–09–19] 4148. a NOTE within the AD. FOR FURTHER INFORMATION CONTACT RIN 2120–AA64 : Jim Costs of Compliance Rutherford, Aerospace Engineer, FAA, We estimate that this AD will affect 4 Airworthiness Directives; BURKHART Small Airplane Directorate, 901 Locust, products of U.S. registry. We also GROB LUFT-UND Model G 103 C Twin Room 301, Kansas City, Missouri 64106; estimate that it would take about 2 III SL Gliders telephone: (816) 329–4165; fax: (816) 329–4090. work-hours per product to comply with AGENCY: the basic requirements of this AD. The Federal Aviation SUPPLEMENTARY INFORMATION: Administration (FAA), Department of average labor rate is $85 per work-hour. Transportation (DOT). Discussion Based on these figures, we estimate ACTION: Final rule. We issued a notice of proposed the cost of this AD on U.S. operators to rulemaking (NPRM) to amend 14 CFR be $680, or $170 per product. SUMMARY: We are adopting a new In addition, we estimate that any part 39 to include an AD that would airworthiness directive (AD) for the necessary follow-on actions would take apply to the specified products. That products listed above. This AD results about 6 work-hours and require parts NPRM was published in the Federal from mandatory continuing costing $100, for a cost of $610 per Register on February 18, 2011 (76 FR airworthiness information (MCAI) product. We have no way of 9513). That NPRM proposed to correct issued by an aviation authority of determining the number of products an unsafe condition for the specified another country to identify and correct that may need these actions. products. The MCAI states: an unsafe condition on an aviation Authority for This Rulemaking product. The MCAI describes the unsafe The in-flight loss of a propeller and pulley condition as: wheel from the engine of a Grob G 103 C Title 49 of the United States Code Twin III SL powered sailplane has been specifies the FAA’s authority to issue The in-flight loss of a propeller and pulley reported. wheel from the engine of a Grob G 103 C rules on aviation safety. Subtitle I, Grob Aircraft AG suspects that the possible section 106, describes the authority of Twin III SL powered sailplane has been reasons for this loss can be due to an reported. incorrect propeller track (the play at the the FAA Administrator. ‘‘Subtitle VII: Grob Aircraft AG suspects that the possible propeller tip) and/or to a damaged propeller Aviation Programs,’’ describes in more reasons for this loss can be due to an nut securing plate. detail the scope of the Agency’s incorrect propeller track (the play at the Those conditions, if not corrected, could authority. propeller tip) and/or to a damaged propeller also result in loosening of parts and, We are issuing this rulemaking under nut securing plate. consequently could result in damage to the the authority described in ‘‘Subtitle VII, Those conditions, if not corrected, could sailplane and possible injury to persons on Part A, Subpart III, Section 44701: also result in loosening of parts and, the ground. ’’ consequently could result in damage to the General requirements. Under that For the reasons stated above, this AD section, Congress charges the FAA with sailplane and possible injury to persons on requires to inspect the propeller assembly the ground. attachment, to verify that the propeller track promoting safe flight of civil aircraft in air commerce by prescribing regulations We are issuing this AD to require is within the allowable tolerances and, for practices, methods, and procedures actions to correct the unsafe condition depending on findings, to accomplish the the Administrator finds necessary for on these products. relevant corrective actions. safety in air commerce. This regulation DATES: This AD becomes effective June Comments is within the scope of that authority 15, 2011. We gave the public the opportunity to because it addresses an unsafe condition On June 15, 2011, the Director of the participate in developing this AD. We that is likely to exist or develop on Federal Register approved the received no comments on the NPRM or products identified in this rulemaking incorporation by reference of certain on the determination of the cost to the action. publications listed in this AD. public. ADDRESSES: You may examine the AD Regulatory Findings docket on the Internet at http:// Conclusion We determined that this AD will not www.regulations.gov or in person at We reviewed the available data and have federalism implications under Document Management Facility, U.S. determined that air safety and the Executive Order 13132. This AD will Department of Transportation, Docket public interest require adopting the AD not have a substantial direct effect on Operations, M–30, West Building as proposed. the States, on the relationship between Ground Floor, Room W12–140, 1200 the national government and the States, Differences Between This AD and the New Jersey Avenue, SE., Washington, or on the distribution of power and MCAI or Service Information DC 20590. responsibilities among the various For service information identified in We have reviewed the MCAI and levels of government. this AD, contact GROB Aircraft AG, related service information and, in For the reasons discussed above, I Lettenbachstrasse 9, 86874 general, agree with their substance. But certify this AD: Tussenhausen-Mattsies, Head of we might have found it necessary to use (1) Is not a ‘‘significant regulatory Customer Service and Support, different words from those in the MCAI action’’ under Executive Order 12866; Germany; telephone: +49 (0) 8268–998– to ensure the AD is clear for U.S. (2) Is not a ‘‘significant rule’’ under 139; fax: +49 (0) 8268–998–200; e-mail operators and is enforceable. In making DOT Regulatory Policies and Procedures [email protected]; these changes, we do not intend to differ (44 FR 11034, February 26, 1979); and

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(3) Will not have a significant Twin III SL powered sailplane has been AG G 103 C TWIN III SL POH, Date of Issue economic impact, positive or negative, reported. December, 1991, Revision 6, dated July 20, on a substantial number of small entities Grob Aircraft AG suspects that the possible 2009, as specified in Grob Aircraft Service under the criteria of the Regulatory reasons for this loss can be due to an Letter SL 869–01, dated June 9, 2009. If the incorrect propeller track (the play at the propeller track is out of the allowable Flexibility Act. propeller tip) and/or to a damaged propeller tolerance, then contact GROB for further We prepared a regulatory evaluation nut securing plate. instructions. of the estimated costs to comply with Those conditions, if not corrected, could (5) If any crack is found in the bent area this AD and placed it in the AD Docket. also result in loosening of parts and, of the engaged tooth of the upper pulley consequently could result in damage to the wheel securing plate per the inspection in Examining the AD Docket sailplane and possible injury to persons on paragraph (f)(2) of this AD, before further You may examine the AD docket on the ground. flight, do the following actions: the Internet at http:// For the reasons stated above, this AD (i) Remove the upper pulley wheel grooved www.regulations.gov; or in person at the requires to inspect the propeller assembly nut and then look at the securing plate to Docket Management Facility between attachment, to verify that the propeller track identify if other teeth are available to be bent is within the allowable tolerances and, to secure the grooved nut. Do not bend an 9 a.m. and 5 p.m., Monday through depending on findings, to accomplish the already bent tooth. If all teeth of the securing Friday, except Federal holidays. The AD relevant corrective actions. plate are already bent, replace the securing docket contains the NPRM, the plate with a serviceable one. regulatory evaluation, any comments Actions and Compliance (ii) Screw back the upper pulley wheel received, and other information. The (f) Unless already done, within 30 days grooved nut (and its securing plate) and street address for the Docket Office after the effective date of this AD, do the tighten it, applying the torque following page (telephone (800) 647–5527) is in the following actions: 6.12 of the Grob Aircraft AG G 103 C TWIN (1) Update the glider documentation ADDRESSES section. Comments will be III SL Maintenance Manual, Date of Issue following Grob Aircraft Service Bulletin No. December, 1991, Revision 9, dated May 24, available in the AD docket shortly after MSB–869–24/1, dated July 20, 2009, by 2002, as specified in Grob Aircraft Service receipt. inserting the following revised pages from Letter SL 869–01, dated June 9, 2009. Ensure List of Subjects in 14 CFR Part 39 Grob Aircraft AG: accordingly that the propeller track is within (i) Into the Grob Aircraft AG G 103 C Twin the allowable tolerances following the Air transportation, Aircraft, Aviation III SL Pilot’s Operating Handbook (POH) procedure on page 4.9 of the Grob Aircraft safety, Incorporation by reference, (dated December 1991): Pages 0.2A, 0.3, 0.4, AG G 103 C TWIN III SL POH, Date of Issue Safety. and 4.9, Revision 6, dated July 20, 2009. December, 1991, Revision 6, dated July 20, (ii) Into the Grob Aircraft AG G 103 C Twin 2009, as specified in Grob Aircraft Service Adoption of the Amendment III SL Maintenance Manual (dated December, Letter SL 869–01, dated June 9, 2009. If the Accordingly, under the authority 1991) or FAA-approved maintenance propeller track is out of the allowable delegated to me by the Administrator, program: pages 0.1A, 0.2, 0.3, 4.2, and 6.6, tolerances, then contact GROB for further Revision 10, dated December 15, 2006. instructions. the FAA amends 14 CFR part 39 as (2) Inspect for cracks at the bent area of the follows: engaged tooth of the upper pulley wheel FAA AD Differences securing plate following the procedure to PART 39—AIRWORTHINESS Note 2: This AD differs from the MCAI access the area found on page 6.12 of the and/or service information as follows: No DIRECTIVES Grob Aircraft AG G 103 C TWIN III SL differences. Maintenance Manual, Date of Issue ■ 1. The authority citation for part 39 December, 1991, Revision 9, dated May 24, Other FAA AD Provisions continues to read as follows: 2002, as specified in Grob Aircraft Service (g) The following provisions also apply to Authority: 49 U.S.C. 106(g), 40113, 44701. Letter SL 869–01, dated June 9, 2009. this AD: (3) Verify that the propeller track (the play (1) Alternative Methods of Compliance § 39.13 [Amended] at the propeller tip) is within the allowable (AMOCs): The Manager, Standards Office, ■ tolerances following the procedure on page FAA, has the authority to approve AMOCs 2. The FAA amends § 39.13 by adding 4.9 of the Grob Aircraft AG G 103 C TWIN the following new AD: for this AD, if requested using the procedures III SL POH, Date of Issue December, 1991, found in 14 CFR 39.19. Send information to 2011–09–19 BURKHART GROB LUFT- Revision 6, dated July 20, 2009, as specified Attn: Jim Rutherford, Aerospace Engineer, UND: Amendment 39–16681; Docket No. in Grob Aircraft Service Letter SL 869–01, FAA, Small Airplane Directorate, 901 Locust, FAA–2011–0127; Directorate Identifier dated June 9, 2009. Room 301, Kansas City, Missouri 64106; 2010–CE–065–AD. Note 1: The torque values and tolerances telephone: (816) 329–4165; fax: (816) 329– Effective Date of the upper pulley wheel grooved nut have 4090. Before using any approved AMOC on been standardized in the POH and any airplane to which the AMOC applies, (a) This airworthiness directive (AD) maintenance manual. notify your appropriate principal inspector becomes effective June 15, 2011. (4) If the bent area of the engaged tooth of (PI) in the FAA Flight Standards District Affected ADs the upper pulley wheel securing plate has no Office (FSDO), or lacking a PI, your local (b) None. crack found per the inspection of paragraph FSDO. (f)(2) of this AD, but the propeller track value (2) Airworthy Product: For any requirement Applicability measured is not within the allowable in this AD to obtain corrective actions from (c) This AD applies to BURKHART GROB tolerances per paragraph (f)(3) of this AD, a manufacturer or other source, use these LUFT-UND G 103 C Twin III SL gliders, all before further flight, readjust the torque of actions if they are FAA-approved. Corrective serial numbers, certificated in any category. the upper pulley wheel grooved nut using the actions are considered FAA-approved if they updated aircraft technical documentation are approved by the State of Design Authority Subject following the procedure on page 6.12 of the (or their delegated agent). You are required (d) Air Transport Association of America Grob Aircraft AG G 103 C TWIN III SL to assure the product is airworthy before it (ATA) Code 61: Propellers/Propulsors. Maintenance Manual, Date of Issue is returned to service. December, 1991, Revision 9, dated May 24, (3) Reporting Requirements: For any Reason 2002, as specified in Grob Aircraft Service reporting requirement in this AD, a Federal (e) The mandatory continuing Letter SL 869–01, dated June 9, 2009. Ensure agency may not conduct or sponsor, and a airworthiness information (MCAI) states: accordingly that the propeller track is within person is not required to respond to, nor The in-flight loss of a propeller and pulley the allowable tolerances following the shall a person be subject to a penalty for wheel from the engine of a Grob G 103 C procedure on page 4.9 of the Grob Aircraft failure to comply with a collection of

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information subject to the requirements of 998–139; fax: +49 (0) 8268–998–200; e-mail During improvement of the protection of the Paperwork Reduction Act unless that [email protected]; Internet: fuel pump wiring against short-circuit by collection of information displays a current http://www.grob-aircraft.eu. accomplishment of Airbus Service Bulletin valid OMB Control Number. The OMB (3) You may review copies of the (SB) A300–24–6094, a study led by the Control Number for this information referenced service information at the FAA, manufacturer concluded that the harness, collection is 2120–0056. Public reporting for Small Airplane Directorate, 901 Locust, installed through the wing panel needed to this collection of information is estimated to Kansas City, Missouri 64106. For information be protected to prevent possible damage in be approximately 5 minutes per response, on the availability of this material at the case of chafing which could potentially lead including the time for reviewing instructions, FAA, call (816) 329–4148. to short-circuit [and intermittent function or completing and reviewing the collection of (4) You may also review copies of the loss of the inner tank fuel pump. Loss of both information. All responses to this collection service information incorporated by reference inner tank fuel pumps could result in of information are mandatory. Comments for this AD at the National Archives and inability to use the remaining fuel supply in concerning the accuracy of this burden and Records Administration (NARA). For the inner tank. A short-circuit could also suggestions for reducing the burden should information on the availability of this result in an ignition source in a flammable be directed to the FAA at: 800 Independence material at NARA, call (202) 741–6030, or go leakage zone]. Ave. SW., Washington, DC 20591, Attn: to: http://www.archives.gov/federal_register/ * * * * * _ _ _ Information Collection Clearance Officer, code of federal regulations/ We are issuing this AD to require AES–200. ibr_locations.html. actions to correct the unsafe condition Related Information Issued in Kansas City, Missouri, on April on these products. 22, 2011. (h) Refer to the following documents for DATES: This AD becomes effective June related information: John Colomy, 15, 2011. (1) MCAI EASA AD No.: 2010–0107, dated Acting Manager, Small Airplane Directorate, The Director of the Federal Register June 11, 2010; Aircraft Certification Service. approved the incorporation by reference (2) Grob Aircraft Service Bulletin MSB [FR Doc. 2011–10388 Filed 5–10–11; 8:45 am] of a certain publication listed in this AD 869–24/1, dated July 20, 2009; BILLING CODE 4910–13–P as of June 15, 2011. (3) Grob Aircraft Service Letter SL–869–01, dated June 9, 2009; ADDRESSES: You may examine the AD (4) Grob Aircraft AG G 103 C Twin III SL docket on the Internet at http:// Pilot’s Operating Handbook (POH) (dated DEPARTMENT OF TRANSPORTATION www.regulations.gov or in person at the December 1991), pages 0.2A, 0.3, 0.4, and Federal Aviation Administration U.S. Department of Transportation, 4.9, Revision 6, dated July 20, 2009; and Docket Operations, M–30, West (5) Grob Aircraft AG G 103 C Twin III SL 14 CFR Part 39 Building Ground Floor, Room W12–140, Maintenance Manual (dated December 1991), 1200 New Jersey Avenue, SE., page 6.12, Revision 9, dated May 24, 2002; [Docket No. FAA–2011–0037; Directorate and pages 0.1A, 0.2, 0.3, 4.2, and 6.6, Washington, DC. Identifier 2010–NM–273–AD; Amendment FOR FURTHER INFORMATION CONTACT: Dan Revision 10, dated December 15, 2006. 39–16691; AD 2011–10–10] (i) For service information related to this Rodina, Aerospace Engineer, AD, contact GROB Aircraft AG, RIN 2120–AA64 International Branch, ANM–116, Lettenbachstrasse 9, 86874 Tussenhausen- Transport Airplane Directorate, FAA, Mattsies, Head of Customer Service and Airworthiness Directives; Airbus Model 1601 Lind Avenue, SW., Renton, Support, Germany; telephone: +49 (0) 8268– A300 B4–600, B4–600R, and F4–600R Washington 98057–3356; telephone 998–139; fax: +49 (0) 8268–998–200; e-mail Series Airplanes, and Model C4–605R (425) 227–2125; fax (425) 227–1149. [email protected]; Internet: Variant F Airplanes (Collectively Called SUPPLEMENTARY INFORMATION: http://www.grob-aircraft.eu. You may review A300–600 Series Airplanes) copies of the referenced service information Discussion at the FAA, Small Airplane Directorate, 901 AGENCY: Federal Aviation Locust, Kansas City, Missouri 64106. For Administration (FAA), Department of We issued a notice of proposed information on the availability of this Transportation (DOT). rulemaking (NPRM) to amend 14 CFR material at the FAA, call 816–329–4148. part 39 to include an AD that would ACTION: Final rule. Material Incorporated by Reference apply to the specified products. That SUMMARY: We are adopting a new NPRM was published in the Federal (i) You must use Grob Aircraft Service Register on February 7, 2011 (76 FR Bulletin No. MSB–869–24/1, dated July 20, airworthiness directive (AD) for the 2009; Grob Aircraft Service Letter SL–869– products listed above. This AD results 6581). That NPRM proposed to correct 01, dated June 9, 2009; Grob Aircraft AG G from mandatory continuing an unsafe condition for the specified 103 C Twin III SL Pilot’s Operating airworthiness information (MCAI) products. The MCAI states: Handbook (POH) (dated December 1991), originated by an aviation authority of [T]he FAA has published SFAR 88 (Special pages 0.2A, 0.3, 0.4, and 4.9, Revision 6, another country to identify and correct Federal Aviation Regulation 88). dated July 20, 2009; and Grob Aircraft AG G an unsafe condition on an aviation In their letters referenced 04/00/02/07/01– 103 C Twin III SL Maintenance Manual product. The MCAI describes the unsafe L296, dated March 4th, 2002, and 04/00/02/ (dated December 1991), page 6.12, Revision condition as: 07/03–L024, dated February 3rd, 2003, the 9, dated May 24, 2002; and pages 0.1A, 0.2, JAA [Joint Aviation Authorities] 0.3, 4.2, and 6.6, Revision 10, dated [T]he FAA has published SFAR 88 (Special recommended the application of a similar December 15, 2006; to do the actions Federal Aviation Regulation 88). regulation to the National Aviation required by this AD, unless the AD specifies In their letters referenced 04/00/02/07/01– Authorities (NAA). otherwise. L296, dated March 4th, 2002, and 04/00/02/ Under this regulation, all holders of type (1) The Director of the Federal Register 07/03–L024, dated February 3rd, 2003, the certificates for passenger transport aircraft approved the incorporation by reference of JAA [Joint Aviation Authorities] with either a passenger capacity of 30 or this service information under 5 U.S.C. recommended the application of a similar more, or a payload capacity of 3,402 kg 552(a) and 1 CFR part 51. regulation to the National Aviation (7,500 lb) or more, which have received their (2) For service information identified in Authorities (NAA). certification since January 1st, 1958, are this AD, contact GROB Aircraft AG, Under this regulation, all holders of type required to conduct a design review against Lettenbachstrasse 9, 86874 Tussenhausen- certificates for passenger transport aircraft explosion risks. Mattsies, Head of Customer Service and * * * are required to conduct a design During improvement of the protection of Support, Germany; telephone: +49 (0) 8268– review against explosion risks. fuel pump wiring against short-circuit by

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accomplishment of Airbus Service Bulletin Authority for This Rulemaking List of Subjects in 14 CFR Part 39 (SB) A300–24–6094, a study led by the manufacturer concluded that the harness, Title 49 of the United States Code Air transportation, Aircraft, Aviation installed through the wing panel needed to specifies the FAA’s authority to issue safety, Incorporation by reference, be protected to prevent possible damage in rules on aviation safety. Subtitle I, Safety. case of chafing which could potentially lead section 106, describes the authority of to short-circuit [and intermittent function or Adoption of the Amendment ‘‘ loss of the inner tank fuel pump. Loss of both the FAA Administrator. Subtitle VII: Accordingly, under the authority ’’ inner tank fuel pumps could result in Aviation Programs, describes in more delegated to me by the Administrator, inability to use the remaining fuel supply in detail the scope of the Agency’s the FAA amends 14 CFR part 39 as the inner tank. A short-circuit could also authority. follows: result in an ignition source in a flammable We are issuing this rulemaking under leakage zone]. PART 39—AIRWORTHINESS For the reasons stated above, this [EASA] the authority described in ‘‘Subtitle VII, AD requires the replacement of bushes in the Part A, Subpart III, Section 44701: DIRECTIVES General requirements.’’ Under that hydraulic reservoir panel. ■ section, Congress charges the FAA with 1. The authority citation for part 39 You may obtain further information continues to read as follows: by examining the MCAI in the AD promoting safe flight of civil aircraft in docket. air commerce by prescribing regulations Authority: 49 U.S.C. 106(g), 40113, 44701. for practices, methods, and procedures § 39.13 [Amended] Comments the Administrator finds necessary for ■ We gave the public the opportunity to safety in air commerce. This regulation 2. The FAA amends § 39.13 by adding participate in developing this AD. We is within the scope of that authority the following new AD: received no comments on the NPRM or because it addresses an unsafe condition 2011–10–10 Airbus: Amendment 39–16691. on the determination of the cost to the that is likely to exist or develop on Docket No. FAA–2011–0037; Directorate public. products identified in this rulemaking Identifier 2010–NM–273–AD. action. Conclusion Effective Date Regulatory Findings (a) This airworthiness directive (AD) We reviewed the available data and becomes effective June 15, 2011. determined that air safety and the We determined that this AD will not Affected ADs public interest require adopting the AD have federalism implications under as proposed. Executive Order 13132. This AD will (b) None. Differences Between This AD and the not have a substantial direct effect on Applicability MCAI or Service Information the States, on the relationship between (c) This AD applies to all Airbus Model We have reviewed the MCAI and the national government and the States, A300 B4–601, B4–603, B4–620, B4–622, B4– related service information and, in or on the distribution of power and 605R, B4–622R, F4–605R, F4–622R, and C4– 605R Variant F airplanes, certificated in any general, agree with their substance. But responsibilities among the various levels of government. category, all certified models, all serial we might have found it necessary to use numbers, except airplanes on which Airbus different words from those in the MCAI For the reasons discussed above, I Mandatory Service Bulletin A300–24–6102 to ensure the AD is clear for U.S. certify this AD: (Airbus Modification 13381) has been operators and is enforceable. In making 1. Is not a ’’significant regulatory embodied. these changes, we do not intend to differ action’’ under Executive Order 12866; Subject substantively from the information provided in the MCAI and related 2. Is not a ‘‘significant rule’’ under the (d) Air Transport Association (ATA) of America Code 24: Electrical Power. service information. DOT Regulatory Policies and Procedures We might also have required different (44 FR 11034, February 26, 1979); and Reason actions in this AD from those in the 3. Will not have a significant (e) The mandatory continuing MCAI in order to follow our FAA economic impact, positive or negative, airworthiness information (MCAI) states: policies. Any such differences are on a substantial number of small entities [T]he FAA has published SFAR 88 (Special highlighted in a NOTE within the AD. under the criteria of the Regulatory Federal Aviation Regulation 88). Flexibility Act. In their letters referenced 04/00/02/07/01– Costs of Compliance L296, dated March 4th, 2002, and 04/00/02/ We estimate that this AD will affect We prepared a regulatory evaluation 07/03–L024, dated February 3rd, 2003, the 120 products of U.S. registry. We also of the estimated costs to comply with JAA [Joint Aviation Authorities] estimate that it will take about 13 work- this AD and placed it in the AD docket. recommended the application of a similar regulation to the National Aviation hours per product to comply with the Examining the AD Docket basic requirements of this AD. The Authorities (NAA). Under this regulation, all holders of type average labor rate is $85 per work-hour. You may examine the AD docket on certificates for passenger transport aircraft Required parts will cost about $266 per the Internet at http:// * * * are required to conduct a design product. Where the service information www.regulations.gov; or in person at the review against explosion risks. lists required parts costs that are Docket Operations office between 9 a.m. During improvement of the protection of covered under warranty, we have and 5 p.m., Monday through Friday, fuel pump wiring against short-circuit by assumed that there will be no charge for except Federal holidays. The AD docket accomplishment of Airbus Service Bulletin these parts. As we do not control contains the NPRM, the regulatory (SB) A300–24–6094, a study led by the warranty coverage for affected parties, evaluation, any comments received, and manufacturer concluded that the harness, installed through the wing panel needed to some parties may incur costs higher other information. The street address for be protected to prevent possible damage in than estimated here. Based on these the Docket Operations office (telephone case of chafing which could potentially lead figures, we estimate the cost of this AD (800) 647–5527) is in the ADDRESSES to short-circuit [and intermittent function or to the U.S. operators to be $164,520, or section. Comments will be available in loss of the inner tank fuel pump. Loss of both $1,371 per product. the AD docket shortly after receipt. inner tank fuel pumps could result in

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inability to use the remaining fuel supply in dated November 5, 2010; and Airbus system wiring to the flap control unit the inner tank. A short-circuit could also Mandatory Service Bulletin A300–24–6102, (FCU). This AD was prompted by a result in an ignition source in a flammable Revision 01, dated September 24, 2010; for report of automatic retraction of the leakage zone]. related information. leading edge flaps due to indications * * * * * Material Incorporated by Reference transmitted to the FCU from the thrust Compliance (k) You must use Airbus Mandatory reverser control system during takeoff. (f) You are responsible for having the Service Bulletin A300–24–6102, Revision 01, We are issuing this AD to prevent actions required by this AD performed within dated September 24, 2010, to do the actions automatic retraction of the leading edge the compliance times specified, unless the required by this AD, unless the AD specifies flaps during takeoff, which could result actions have already been done. otherwise. in reduced climb performance and (1) The Director of the Federal Register Actions consequent collision with terrain and approved the incorporation by reference of obstacles or forced landing of the (g) Within 30 months after the effective this service information under 5 U.S.C. airplane. date of this AD, install Teflon bushes in the 552(a) and 1 CFR part 51. hydraulic reservoir panel at the lower left- (2) For service information identified in DATES: This AD is effective June 15, hand side in accordance with the this AD, contact Airbus SAS–EAW 2011. Accomplishment Instructions of Airbus (Airworthiness Office), 1 Rond Point Maurice The Director of the Federal Register Mandatory Service Bulletin A300–24–6102, Bellonte, 31707 Blagnac Cedex, France; approved the incorporation by reference Revision 01, dated September 24, 2010. telephone +33 5 61 93 36 96; fax +33 5 61 of certain publications listed in the AD Credit for Actions Accomplished in 93 44 51; e-mail account.airworth- as of June 15, 2011. [email protected]; Internet http:// Accordance With Previous Service ADDRESSES: For service information Information www.airbus.com. (3) You may review copies of the service identified in this AD, contact Boeing (h) Actions done before the effective date information at the FAA, Transport Airplane Commercial Airplanes, Attention: Data of this AD in accordance with Airbus Directorate, 1601 Lind Avenue, SW., Renton, & Services Management, P.O. Box 3707, Mandatory Service Bulletin A300–24–6102, Washington. For information on the MC 2H–65, Seattle, Washington 98124– dated August 13, 2009, are acceptable for availability of this material at the FAA, call 2207; telephone 206–544–5000, compliance with the corresponding 425–227–1221. requirements of this AD. extension 1; fax 206–766–5680; e-mail (4) You may also review copies of the [email protected]; Internet FAA AD Differences service information that is incorporated by https://www.myboeingfleet.com. You reference at the National Archives and may review copies of the referenced Note 1: This AD differs from the MCAI Records Administration (NARA). For and/or service information as follows: No information on the availability of this service information at the FAA, differences. material at NARA, call 202–741–6030, or go Transport Airplane Directorate, 1601 _ Lind Avenue, SW., Renton, Washington. Other FAA AD Provisions to: http://www.archives.gov/federal register/ code_of_federal_regulations/ For information on the availability of (i) The following provisions also apply to ibr_locations.html. this material at the FAA, call 425–227– this AD: (1) Alternative Methods of Compliance Issued in Renton, Washington, on April 26, 1221. (AMOCs): The Manager, International 2011. Examining the AD Docket Branch, ANM–116, Transport Airplane Kalene C. Yanamura, Directorate, FAA, has the authority to You may examine the AD docket on Acting Manager, Transport Airplane the Internet at http:// approve AMOCs for this AD, if requested Directorate, Aircraft Certification Service. using the procedures found in 14 CFR 39.19. www.regulations.gov; or in person at the In accordance with 14 CFR 39.19, send your [FR Doc. 2011–10817 Filed 5–10–11; 8:45 am] Docket Management Facility between request to your principal inspector or local BILLING CODE 4910–13–P 9 a.m. and 5 p.m., Monday through Flight Standards District Office, as Friday, except Federal holidays. The AD appropriate. If sending information directly docket contains this AD, the regulatory to the International Branch, send it to Attn: DEPARTMENT OF TRANSPORTATION Dan Rodina, Aerospace Engineer, evaluation, any comments received, and International Branch, ANM–116, Transport Federal Aviation Administration other information. The address for the Airplane Directorate, FAA, 1601 Lind Docket Office (phone: 800–647–5527) is Avenue, SW., Renton, Washington 98057– 14 CFR Part 39 Document Management Facility, U.S. 3356; telephone (425) 227–2125; fax (425) Department of Transportation, Docket 227–1149. Information may be e-mailed to: [Docket No. FAA–2010–0706; Directorate Operations, M–30, West Building [email protected]. Identifier 2010–NM–064–AD; Amendment Ground Floor, Room W12–140, 1200 Before using any approved AMOC, notify 39–16683; AD 2011–10–02] your appropriate principal inspector, or New Jersey Avenue, SE., Washington, lacking a principal inspector, the manager of RIN 2120–AA64 DC 20590. the local flight standards district office/ FOR FURTHER INFORMATION CONTACT: certificate holding district office. The AMOC Airworthiness Directives; The Boeing Tung Tran, Aerospace Engineer, approval letter must specifically reference Company Model 747–400, 747–400D, Propulsion Branch, ANM–140S, FAA, this AD. and 747–400F Series Airplanes Seattle Aircraft Certification Office, (2) Airworthy Product: For any requirement Equipped With General Electric CF6– in this AD to obtain corrective actions from 1601 Lind Avenue, SW., Renton, 80C2 or Pratt & Whitney PW4000 Washington 98057–3356; phone: 425– a manufacturer or other source, use these Series Engines actions if they are FAA-approved. Corrective 917–6505; fax 425–917–6590; e-mail: actions are considered FAA-approved if they AGENCY: Federal Aviation [email protected]. are approved by the State of Design Authority Administration (FAA), DOT. SUPPLEMENTARY INFORMATION: (or their delegated agent). You are required ACTION: to assure the product is airworthy before it Final rule. Discussion is returned to service. SUMMARY: We are adopting a new We issued a notice of proposed Related Information airworthiness directive (AD) for the rulemaking (NPRM) to amend 14 CFR (j) Refer to MCAI European Aviation Safety products listed above. This AD requires part 39 to include an airworthiness Agency Airworthiness Directive 2010–0225, modifying certain thrust reverser control directive (AD) that would apply to the

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specified products. That NPRM and minor editorial changes. We have (4) Will not have a significant published in the Federal Register on determined that these minor changes: economic impact, positive or negative, August 5, 2010 (75 FR 47245). That • Are consistent with the intent that on a substantial number of small entities NPRM proposed to require modifying was proposed in the NPRM for under the criteria of the Regulatory certain thrust reverser control system correcting the unsafe condition; and Flexibility Act. wiring to the flap control unit (FCU). • Do not add any additional burden upon the public than was already List of Subjects in 14 CFR Part 39 Comments proposed in the NPRM. Air transportation, Aircraft, Aviation We gave the public the opportunity to We also determined that these safety, Incorporation by reference, participate in developing this AD. The changes will not increase the economic Safety. following presents the comments burden on any operator or increase the Adoption of the Amendment received on the proposal and the FAA’s scope of the AD. response to each comment. Accordingly, under the authority Costs of Compliance delegated to me by the Administrator, Support for the NPRM We estimate that this AD affects 98 the FAA amends 14 CFR part 39 as Boeing, Airline Pilots Association, airplanes of U.S. registry. We estimate follows: International (ALPA), and Japan that it will take 1 work-hour per product Airlines International (JAL) support the to comply with this AD. The average PART 39—AIRWORTHINESS intent of the NPRM. labor rate is $85 per work-hour. DIRECTIVES Required parts would cost $0 per Requests To Use Latest Service ■ 1. The authority citation for part 39 product. Based on these figures, we Information continues to read as follows: estimate the cost of this AD to the U.S. JAL and All Nippon Airways (ANA) operators to be $8,330, or $85 per Authority: 49 U.S.C. 106(g), 40113, 44701. requested that we update the NPRM to product. § 39.13 [Amended] reference Boeing Special Attention Service Bulletin 747–78–2183, Revision Authority for This Rulemaking ■ 2. The FAA amends § 39.13 by adding 1, dated December 23, 2010. The Title 49 of the United States Code the following new airworthiness commenters stated that Boeing has specifies the FAA’s authority to issue directive (AD): issued Boeing Service Bulletin rules on aviation safety. Subtitle I, 2011–10–02 The Boeing Company: Information Notice 747–78–2183 IN 01, section 106, describes the authority of Amendment 39–16683; Docket No. dated May 6, 2010, to correct the the FAA Administrator. Subtitle VII: FAA–2010–0706; Directorate Identifier operational test procedure. The NPRM Aviation Programs, describes in more 2010–NM–064–AD. referred to Boeing Special Attention detail the scope of the Agency’s Effective Date Service Bulletin 747–78–2183, dated authority. (a) This AD is effective June 15, 2011. January 12, 2010. We are issuing this rulemaking under We agree to reference the latest the authority described in Subtitle VII, Affected ADs service information and have changed Part A, Subpart III, Section 44701: (b) None. paragraph (h) of this AD to reference ‘‘General requirements.’’ Under that Applicability Boeing Special Attention Service section, Congress charges the FAA with Bulletin 747–78–2183, Revision 1, dated (c) This AD applies to The Boeing promoting safe flight of civil aircraft in Company Model 747–400, 747–400D, and December 23, 2010. We have also air commerce by prescribing regulations 747–400F series airplanes; certificated in any changed paragraph (g) of this AD to for practices, methods, and procedures category; equipped with General Electric reference Boeing Alert Service Bulletin the Administrator finds necessary for CF6–80C2 series engines or Pratt & Whitney 747–78A2184, Revision 1, dated safety in air commerce. This regulation PW4000 series engines, as applicable. December 23, 2010, which was also is within the scope of that authority Subject revised (the NPRM referred to Boeing because it addresses an unsafe condition Alert Service Bulletin 747–78A2184, that is likely to exist or develop on (d) Air Transport Association (ATA) of America Code 78: Engine exhaust. dated January 12, 2010). Changes to products identified in this rulemaking these service bulletins include changes action. Unsafe Condition to the functional test tasks to better Regulatory Findings (e) This AD was prompted by a report of describe the use of pneumatic and automatic retraction of the leading edge flaps electrical power, and to provide a better This AD will not have federalism due to indications transmitted to the flap sequence of test tasks. implications under Executive Order control unit (FCU) from the thrust reverser We have also added paragraph (i) to 13132. This AD will not have a control system during takeoff. The Federal this AD to give credit to operators for substantial direct effect on the States, on Aviation Administration is issuing this AD to accomplishing the actions specified in the relationship between the national prevent automatic retraction of the leading edge flaps during takeoff, which could result Boeing Special Attention Service government and the States, or on the in reduced climb performance and Bulletin 747–78–2183 and Boeing Alert distribution of power and consequent collision with terrain and Service Bulletin 747–78A2184, both responsibilities among the various obstacles or forced landing of the airplane. dated January 12, 2010. We have re- levels of government. identified subsequent paragraphs For the reasons discussed above, I Compliance accordingly. certify that this AD: (f) You are responsible for having the (1) Is not a ‘‘significant regulatory actions required by this AD performed within Conclusion action’’ under Executive Order 12866, the compliance times specified, unless the We reviewed the relevant data, (2) Is not a ‘‘significant rule’’ under actions have already been done. considered the comments received, and DOT Regulatory Policies and Procedures Modification determined that air safety and the (44 FR 11034, February 26, 1979), (g) For Model 747–400 and –400F airplanes public interest require adopting the AD (3) Will not affect intrastate aviation equipped with Pratt & Whitney Model with the changes described previously— in Alaska, and PW4000 series engines: Within 36 months

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after the effective date of this AD, modify the (1) The Director of the Federal Register are issuing this AD to require actions to thrust reverser control system wiring to the approved the incorporation by reference of correct the unsafe condition on these FCU in the P252 and P253 thrust reverser the service information under 5 U.S.C. 552(a) products. relay panels, in accordance with the and 1 CFR part 51. Accomplishment Instructions of Boeing Alert (2) For service information identified in DATES: This AD becomes effective June Service Bulletin 747–78A2184, Revision 1, this AD, contact Boeing Commercial 15, 2011. dated December 23, 2010. Airplanes, Attention: Data & Services The Director of the Federal Register (h) For Model 747–400, –400D, and –400F Management, P.O. Box 3707, MC 2H–65, approved the incorporation by reference airplanes equipped with General Electric Seattle, Washington 98124–2207; telephone of a certain publication listed in this AD Model CF6–80C2 series engines: Within 36 206–544–5000, extension 1; fax 206–766– as of June 15, 2011. 5680; e-mail [email protected]; months after the effective date of this AD, ADDRESSES: You may examine the AD modify the thrust reverser control system Internet https://www.myboeingfleet.com. (3) You may review copies of the service docket on the Internet at http:// wiring to the FCU in the P414 and P415 www.regulations.gov or in person at the power distribution panels, in accordance information at the FAA, Transport Airplane with Boeing Special Attention Service Directorate, 1601 Lind Avenue, SW., Renton, U.S. Department of Transportation, Bulletin 747–78–2183, Revision 1, dated Washington. For information on the Docket Operations, M–30, West December 23, 2010. availability of this material at the FAA, call Building Ground Floor, Room W12–140, 425–227–1221. 1200 New Jersey Avenue, SE., Credit for Actions Accomplished in (4) You may also review copies of the Washington, DC. Accordance With Previous Service service information that is incorporated by Information reference at the National Archives and FOR FURTHER INFORMATION CONTACT: Dan Rodina, Aerospace Engineer, (i) Modifying the thrust reverser control Records Administration (NARA). For system wiring before the effective date of this information on the availability of this International Branch, ANM–116, AD, in accordance with Boeing Special material at an NARA facility, call 202–741– Transport Airplane Directorate, FAA, Attention Service Bulletin 747–78–2183 or 6030, or go to http://www.archives.gov/ 1601 Lind Avenue, SW., Renton, federal_register/code_of_federal_regulations/ Washington 98057–3356; telephone Boeing Alert Service Bulletin 747–78A2184, _ both dated January 12, 2010, as applicable, is ibr locations.html. (425) 227–2125; fax (425) 227–1149. acceptable for compliance with the Issued in Renton, Washington, on April 20, SUPPLEMENTARY INFORMATION: corresponding modification required by 2011. paragraph (g) or (h) of this AD. Kalene C. Yanamura, Discussion Alternative Methods of Compliance Acting Manager, Transport Airplane We issued a notice of proposed (AMOCs) Directorate, Aircraft Certification Service. rulemaking (NPRM) to amend 14 CFR (j)(1) The Manager, Seattle Aircraft [FR Doc. 2011–10692 Filed 5–10–11; 8:45 am] part 39 to include an AD that would Certification Office (ACO), FAA, has the BILLING CODE 4910–13–P apply to the specified products. That authority to approve AMOCs for this AD, if NPRM was published in the Federal requested using the procedures found in 14 Register on January 3, 2011 (76 FR 46). CFR 39.19. In accordance with 14 CFR 39.19, DEPARTMENT OF TRANSPORTATION That NPRM proposed to correct an send your request to your principal inspector unsafe condition for the specified or local Flight Standards District Office, as Federal Aviation Administration products. The MCAI states: appropriate. If sending information directly A specific area, the lower tail plane cut-out to the manager of the ACO, send it to the 14 CFR Part 39 attention of the person identified in the located in the tail cone is subject to an Related Information section of this AD. [Docket No. FAA–2010–1273; Directorate inspection programme specified in the Information may be e-mailed to: 9-ANM- Identifier 2010–NM–089–AD; Amendment Airbus Service Bulletin (SB) A310–53–2074. [email protected]. 39–16686; AD 2011–10–05] EASA issued AD 2007–0053 [which (2) Before using any approved AMOC, superseded French AD 1992–106–132 R6; notify your appropriate principal inspector, RIN 2120–AA64 French AD 1992–106–132 corresponds to or lacking a principal inspector, the manager FAA AD 98–26–01] to require the of the local flight standards district office/ Airworthiness Directives; Airbus Model accomplishment of this SB at Revision 03. certificate holding district office. A310–203, –204, –222, –304, –322, and Airbus has established that this SB needed –324 Airplanes to be revised in order to state correct Related Information threshold and intervals due to errors (k) For more information about this AD, AGENCY: Federal Aviation introduced at revision 03. Consequently, contact Tung Tran, Aerospace Engineer, Administration (FAA), Department of revision 04 of this SB has been issued, and Propulsion Branch, ANM–140S, FAA, Seattle Transportation (DOT). opportunity was taken: Aircraft Certification Office, 1601 Lind ACTION: Final rule. —To clarify the inspection area and Avenue, SW., Renton, Washington 98057– associated threshold and intervals 3356; phone: 425–917–6505; fax: 425–917– SUMMARY: We are adopting a new —To take aeroplane utilisation into 6590; e-mail: [email protected]. airworthiness directive (AD) for the consideration, in accordance with the (l) For information about AMOCs, contact products listed above. This AD results A310 life extension programme. Tung Tran, Aerospace Engineer, Propulsion from mandatory continuing For the reasons stated above, this EASA AD takes over the requirements of paragraph Branch, ANM–140S, FAA, Seattle Aircraft airworthiness information (MCAI) Certification Office, 1601 Lind Avenue, SW., 1.16 of EASA AD 2007–0053R1 [currently at Renton, Washington 98057–3356; phone: originated by an aviation authority of R3], which has been revised accordingly, and 425–917–6505; fax: 425–917–6590; e-mail: another country to identify and correct requires accomplishment of the instructions [email protected]. an unsafe condition on an aviation contained in Airbus SB A310–53–2074 at product. The MCAI describes the unsafe Revision 04. Material Incorporated by Reference condition as: The unsafe condition is reduced (m) You must use Boeing Special Attention A specific area, the lower tail plane cut-out structural integrity of the tail cone. The Service Bulletin 747–78–2183, Revision 1, located in the tail cone is subject to an dated December 23, 2010; or Boeing Alert required actions include repetitive and inspection programme [for cracking] * * *. Service Bulletin 747–78A2184, Revision 1, one-time inspections, depending on the dated December 23, 2010; as applicable; to do * * * * * area, of the lower tail plane cut-out, and the actions required by this AD, unless the The unsafe condition is reduced corrective actions if necessary. The AD specifies otherwise. structural integrity of the tail cone. We inspections include the following:

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• Detailed inspections in areas 1, 2, estimate that it will take about 36 work- the Docket Operations office (telephone and 3 for cracking and corrosion of the hours per product to comply with the (800) 647–5527) is in the ADDRESSES lower horizontal stabilizer cutout basic requirements of this AD. The section. Comments will be available in longeron, the corner fitting, the skin average labor rate is $85 per work-hour. the AD docket shortly after receipt. strap, and the skin. Based on these figures, we estimate the List of Subjects in 14 CFR Part 39 • Detailed inspections in areas 1, 2, cost of this AD to the U.S. operators to and 3 for damaged sealant. be $134,640, or $3,060 per product. Air transportation, Aircraft, Aviation • Eddy current inspections in area 1 safety, Incorporation by reference, Authority for This Rulemaking for cracking. Safety. • Title 49 of the United States Code Eddy current inspections in area 2 Adoption of the Amendment for cracking. specifies the FAA’s authority to issue • Rotating probe inspection for rules on aviation safety. Subtitle I, Accordingly, under the authority cracking of specified fastener holes in section 106, describes the authority of delegated to me by the Administrator, Area 3. the FAA Administrator. ‘‘Subtitle VII: the FAA amends 14 CFR part 39 as The corrective actions, depending on Aviation Programs,’’ describes in more follows: the conditions found, include the detail the scope of the Agency’s PART 39—AIRWORTHINESS following: authority. DIRECTIVES • Repairing corrosion. We are issuing this rulemaking under • Contacting Airbus for repair the authority described in ‘‘Subtitle VII, ■ 1. The authority citation for part 39 instructions. Part A, Subpart III, Section 44701: continues to read as follows: • Replacing damaged sealant. General requirements.’’ Under that • Removing cracking. section, Congress charges the FAA with Authority: 49 U.S.C. 106(g), 40113, 44701. • Doing an eddy current inspection promoting safe flight of civil aircraft in § 39.13 [Amended] for cracking of the reworked area. air commerce by prescribing regulations ■ • Installing a new corner fitting. for practices, methods, and procedures 2. The FAA amends § 39.13 by adding • Doing a rotating probe inspection the Administrator finds necessary for the following new AD: for cracking of fastener holes. safety in air commerce. This regulation 2011–10–05 Airbus: Amendment 39–16686. • Doing an eddy current inspection of is within the scope of that authority Docket No. FAA–2010–1273; Directorate the longeron and outer skin. because it addresses an unsafe condition Identifier 2010–NM–089–AD. • Drilling or reaming fastener holes. that is likely to exist or develop on Effective Date You may obtain further information products identified in this rulemaking (a) This airworthiness directive (AD) by examining the MCAI in the AD action. becomes effective June 15, 2011. docket. Regulatory Findings Affected ADs Comments This AD will not have federalism (b) None. We gave the public the opportunity to implications under Executive Order Applicability participate in developing this AD. We 13132. This AD will not have a (c) This AD applies to Model A310–203, received no comments on the NPRM or substantial direct effect on the States, on –204, –222, –304, –322, and –324 airplanes, on the determination of the cost to the the relationship between the national certificated in any category, all serial public. government and the States, or on the numbers, except airplanes on which Airbus distribution of power and modification 06146 has been done in Conclusion responsibilities among the various production. We reviewed the available data and levels of government. Subject determined that air safety and the For the reasons discussed above, I public interest require adopting the AD (d) Air Transport Association (ATA) of certify this AD: America Code 53: Fuselage. as proposed. 1. Is not a ’’significant regulatory action’’ under Executive Order 12866; Reason Differences Between This AD and the 2. Is not a ’’significant rule’’ under the MCAI or Service Information (e) The mandatory continuing DOT Regulatory Policies and Procedures airworthiness information (MCAI) states: We have reviewed the MCAI and (44 FR 11034, February 26, 1979); and A specific area, the lower tail plane cut-out related service information and, in 3. Will not have a significant located in the tail cone is subject to an general, agree with their substance. But economic impact, positive or negative, inspection programme [for cracking] * * *. we might have found it necessary to use on a substantial number of small entities * * * * * different words from those in the MCAI under the criteria of the Regulatory The unsafe condition is reduced structural to ensure the AD is clear for U.S. Flexibility Act. integrity of the tail cone. operators and is enforceable. In making We prepared a regulatory evaluation Compliance these changes, we do not intend to differ of the estimated costs to comply with (f) You are responsible for having the substantively from the information this AD and placed it in the AD docket. actions required by this AD performed within provided in the MCAI and related Examining the AD Docket the compliance times specified, unless the service information. actions have already been done. You may examine the AD docket on We might also have required different Initial Inspections of the Lower Tail Plane actions in this AD from those in the the Internet at http:// Cut-out Area and Corrective Actions MCAI in order to follow our FAA www.regulations.gov; or in person at the Docket Operations office between 9 a.m. (g) Within the applicable time specified in policies. Any such differences are Table 1 of this AD, do the inspections of the highlighted in a NOTE within the AD. and 5 p.m., Monday through Friday, lower tail plane cut-out area in the tail cone except Federal holidays. The AD docket Costs of Compliance specified in paragraphs (g)(1), (g)(2), (g)(3), contains the NPRM, the regulatory (g)(4), (g)(5), and (g)(6) of this AD, as We estimate that this AD will affect evaluation, any comments received, and applicable, in accordance with the 44 products of U.S. registry. We also other information. The street address for Accomplishment Instructions of Airbus

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Mandatory Service Bulletin A310–53–2074, Inspection areas are specified in Airbus from the take-off up to the landing) and Revision 04, dated October 24, 2008. Certain Mandatory Service Bulletin A310–53–2074, divide by the number of accumulated flight compliance times are applicable to short- Revision 04, dated October 24, 2008. cycles. This gives the average flight time per range use (i.e., average flight time (AFT) flight cycle. equal to or less than 4 flight hours), or long- Note 1: To establish the average flight time, range use (i.e., AFT exceeding 4 flight hours). take the accumulated flight time (counted

TABLE 1—INITIAL COMPLIANCE TIME

Airplanes Inspection Compliance time (whichever occurs later) areas

Model A310–203, A310–204, and A310– 1 and 2 ...... Prior to the accumulation of 18,000 total Within 1,500 flight cycles or 3,000 flight 222 airplanes. flight cycles or 36,000 total flight hours, whichever occurs first, after the hours, whichever occurs first. effective date of this AD. Model A310–203, A310–204, and A310– 3 ...... Prior to the accumulation of 24,000 total Within 1,500 flight cycles or 3,000 flight 222 airplanes. flight cycles or 48,000 total flight hours, whichever occurs first, after the hours, whichever occurs first. effective date of this AD. Model A310–304, A310–322, and A310– 1 and 2 ...... Prior to the accumulation of 12,000 total Within 1,200 flight cycles or 3,300 flight 324 short range airplanes. flight cycles or 33,750 total flight hours, whichever occurs first, after the hours, whichever occurs first. effective date of this AD. Model A310–304, A310–322, and A310– 3 ...... Prior to the accumulation of 18,000 total Within 1,200 flight cycles or 3,300 flight 324 short range airplanes. flight cycles or 50,500 total flight hours, whichever occurs first, after the hours, whichever occurs first. effective date of this AD. Model A310–304, A310–322, and A310– 1 and 2 ...... Prior to the accumulation of 7,500 total Within 750 flight cycles or 3,750 flight 324 long range airplanes. flight cycles or 37,500 total flight hours, whichever occurs first, after the hours, whichever occurs first. effective date of this AD. Model A310–304, A310–322, and A310– 3 ...... Prior to the accumulation of 11,250 total Within 750 flight cycles or 3,750 flight 324 long range airplanes. flight cycles or 56,000 total flight hours, whichever occurs first, after the hours, whichever occurs first. effective date of this AD.

(1) For areas 1, 2, and 3: Do a detailed peen the reworked area, in accordance with cracks; or if there are more than 2 cracks with inspection for cracking and corrosion of the the Accomplishment Instructions of Airbus less than a minimum distance of 50.0 mm lower horizontal stabilizer cutout longeron, Mandatory Service Bulletin A310–53–2074, (1.969 inch) between the cracks: Before the corner fitting, the skin strap, and the skin, Revision 04, dated October 24, 2008. further flight, remove the corner fitting, and in accordance with the Accomplishment (A) If cracking is found and the radius of do the applicable actions specified in Instructions of Airbus Mandatory Service the rework is less than 20.0 mm (0.787 inch), paragraph (g)(3)(ii)(A) or (g)(3)(ii)(B) of this Bulletin A310–53–2074, Revision 04, dated before further flight, increase the radius and AD. October 24, 2008. do an eddy current inspection for cracking of (A) If any cracking is found and area 3 has (i) If any corrosion is found, before further the reworked area, in accordance with the not been cold expanded, before further flight, flight, repair in accordance with the Accomplishment Instructions of Airbus install a new corner fitting, in accordance Accomplishment Instructions of Airbus Mandatory Service Bulletin A310–53–2074, with the Accomplishment Instructions of Mandatory Service Bulletin A310–53–2074, Revision 04, dated October 24, 2008. If no Airbus Mandatory Service Bulletin A310–53– Revision 04, dated October 24, 2008. cracking is found, before further flight, shot 2074, Revision 04, dated October 24, 2008; (ii) If any cracking is found, before further peen the reworked area, in accordance with and do the rotating probe inspection in area flight, contact Airbus for repair instructions the Accomplishment Instructions of Airbus 3 specified in paragraph (g)(5) of this AD. and do the repair. Mandatory Service Bulletin A310–53–2074, (B) If any cracking is found and area 3 has (2) For areas 1, 2, and 3 on which cracking Revision 04, dated October 24, 2008. been cold expanded, before further flight, do is not found during the inspection required (1) If any cracking is found in the outer the eddy current inspection of the longeron by paragraph (g)(1) of this AD: Do a detailed skin, before further flight, contact Airbus for and outer skin specified in paragraph (g)(6) inspection for damaged sealant; and, if any repair instructions and do the repair. of this AD. damaged sealant is found, before further (2) If any cracking is found in the corner (4) For area 2: Do an eddy current flight, replace the sealant; in accordance with fitting and area 3 has not been cold inspection for cracking of area 2, in the Accomplishment Instructions of Airbus expanded, before further flight, install new accordance with the Accomplishment Mandatory Service Bulletin A310–53–2074, corner fitting, in accordance with the Instructions of Airbus Mandatory Service Revision 04, dated October 24, 2008. Accomplishment Instructions of Airbus Bulletin A310–53–2074, Revision 04, dated (3) For area 1: Do an eddy current Mandatory Service Bulletin A310–53–2074, October 24, 2008. If any cracking is found, inspection for cracking in area 1; and, if no Revision 04, dated October 24, 2008, and do before further flight, contact Airbus for repair cracking is found, before further flight, apply the rotating probe inspection in area 3 instructions and do the repair. sealant and corrosion compound, as specified in paragraph (g)(5) of this AD. (5) For area 3: Do a rotating probe applicable; in accordance with the (3) If any cracking is found in the corner inspection for cracking of specified fastener Accomplishment Instructions of Airbus fitting and area 3 has been cold expanded, holes in area 3, in accordance with the Mandatory Service Bulletin A310–53–2074, before further flight, do the eddy current Accomplishment Instructions of Airbus Revision 04, dated October 24, 2008. inspection of the longeron and outer skin Mandatory Service Bulletin A310–53–2074, (i) If cracking is equal to or less than 2.0 specified in paragraph (g)(6) of this AD. Revision 04, dated October 24, 2008. mm (0.079 inch) long and not more than 2 (B) If cracking is found and the radius of (i) If no cracking is found, before further cracks with a minimum distance of 50.0 mm the rework is 20.0 mm (0.787 inch) or more, flight, drill or ream fastener holes, cold (1.969 inch) between the cracks: Before before further flight, repair in accordance expand the fastener holes and countersinks, further flight, remove any cracking and do an with a method approved by either the and wet install with sealant, in accordance eddy current inspection for cracking of the Manager, International Branch, ANM–116, with the Accomplishment Instructions of reworked area, in accordance with the FAA, Transport Airplane Directorate, or the Airbus Mandatory Service Bulletin A310–53– Accomplishment Instructions of the Airbus European Aviation Safety Agency (EASA) (or 2074, Revision 04, dated October 24, 2008; Mandatory Service Bulletin A310–53–2074, its delegated agent) except where this service bulletin specifies to Revision 04, dated October 24, 2008. If no (ii) If cracking is greater than 2.0 mm contact Airbus if the fastener diameter does cracking is found, before further flight, shot (0.079 inch) long or there are more than 2 not meet specifications or if the distance

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between the hole center and material edge is inspection required by paragraph (g)(3) of (1) If no cracking is found, cold expand the less than specifications, before further flight, this AD and area 3 is cold-expanded: Do an fastener holes and countersinks, and wet contact Airbus for repair instructions and do eddy current inspection for cracking of the install with sealant, in accordance with the the repair. longeron and outer skin, in accordance with Accomplishment Instructions of Airbus (ii) If cracking is found, before further the Accomplishment Instructions of Airbus Mandatory Service Bulletin A310–53–2074, flight, drill or ream fastener holes, and do a Mandatory Service Bulletin A310–53–2074, Revision 04, dated October 24, 2008. rotating probe inspection for cracking of the Revision 04, dated October 24, 2008. (2) If cracking is found, before further fastener holes in accordance with the (i) If no cracking is found, before further flight, contact Airbus for repair instructions Accomplishment Instructions of Airbus flight, install a new corner fitting and do a and do the repair. Mandatory Service Bulletin A310–53–2074, rotating probe inspection for cracking of the (C) If cracking is found and the hole Revision 04, dated October 24, 2008. fastener holes, in accordance with the diameter is equal to or greater than the (A) If no cracking is found, cold expand the Accomplishment Instructions of Airbus maximum oversize specification, before fastener holes and countersinks, drill or ream Mandatory Service Bulletin A310–53–2074, further flight, contact Airbus for repair fastener holes, and wet install with sealant, Revision 04, dated October 24, 2008. instructions and do the repair. in accordance with the Accomplishment (A) If no cracking is found, before further (ii) If cracking is found, before further Instructions of Airbus Mandatory Service flight, contact Airbus for repair instructions flight, drill or ream fastener holes, cold Bulletin A310–53–2074, Revision 04, dated and do the repair. October 24, 2008; except where this service expand the fastener holes and countersinks, bulletin specifies to contact Airbus if the and wet install with sealant, in accordance Repetitive Inspections of the Lower Tail fastener diameter does not meet with the Accomplishment Instructions of Plane Cut-Out Area specifications or if the distance between the Airbus Mandatory Service Bulletin A310–53– (h) Repeat the inspections for area 1 hole center and material edge is less than the 2074, Revision 04, dated October 24, 2008. required by paragraphs (g)(1) and (g)(3) of specifications, before further flight, contact (B) If cracking is found and the hole this AD thereafter at the applicable intervals Airbus for repair instructions and do the diameter is less than the maximum oversize specified in Table 2 of this AD. Certain repair. specification, before further flight, drill or compliance times are applicable to short- (B) If cracking is found, before further ream holes and do a rotating probe range use (AFT equal to or less than 4 flight flight, contact Airbus for repair instructions inspection for cracking of the fastener holes, hours), or long-range use (AFT exceeding 4 and do the repair. in accordance with Airbus Mandatory flight hours). Inspection areas are specified in (6) For airplanes on which cracking is Service Bulletin A310–53–2074, Revision 04, Airbus Mandatory Service Bulletin A310–53– found in the corner fitting during any dated October 24, 2008. 2074, Revision 04, dated October 24, 2008.

TABLE 2—REPETITIVE INTERVAL FOR AREAS 1 AND 2

Interval Affected airplanes (not to exceed)

(1) Model A310–203, A310–204, and A310–222 airplanes that have ac- 6,000 flight cycles or 12,000 flight hours, whichever occurs first, until cumulated less than 30,000 total flight cycles and 60,000 total flight the airplane accumulates 30,000 total flight cycles or 60,000 total hours, as of the effective date of this AD. flight hours; then perform the inspections within the interval specified in paragraph (h)(2) of this AD. (2) Model A310–203, A310–204, and A310–222 airplanes that have ac- 3,900 flight cycles or 7,800 flight hours, whichever occurs first. cumulated 30,000 total flight cycles or more or 60,000 total flight hours or more, as of the effective date of this AD. (3) Model A310–304, A310–322 and A310–324 short range airplanes 4,800 flight cycles or 13,500 flight hours, whichever occurs first, until that have accumulated less than 24,000 total flight cycles and 67,500 the airplane accumulates 24,000 total flight cycles or 67,500 total total flight hours, as of the effective date of this AD. flight hours; then perform the inspections within the interval specified in paragraph (h)(4) of this AD. (4) Model A310–304, A310–322 and A310–324 short range airplanes 3,100 flight cycles or 8,750 flight hours, whichever occurs first. that have accumulated 24,000 total flight cycles or more or 67,500 total flight hours or more, as of the effective date of this AD. (5) Model A310–304, A310–322 and A310–324 long range airplanes 3,000 flight cycles or 15,000 flight hours, whichever occurs first, until that have accumulated less than 15,000 total flight cycles and 75,000 the airplane accumulates 15,000 total flight cycles or 75,000 total total flight hours, as of the effective date of this AD. flight hours; then perform the inspections within the interval specified in paragraph (h)(6) of this AD. (6) Model A310–304, A310–322 and A310–324 long range airplanes 1,950 flight cycles or 9,750 flight hours, whichever occurs first. that have accumulated 15,000 total flight cycles or more or 75,000 total flight hours or more, as of the effective date of this AD.

(i) Repeat the inspections for area 2 Airbus Mandatory Service Bulletin A310–53– Transport Airplane Directorate, or EASA (or required by paragraphs (g)(1) and (g)(4) of 2074, Revision 03, dated October 13, 2006, its delegated agent). this AD thereafter at the applicable intervals are considered acceptable for compliance specified in Table 2 of this AD. Certain with the corresponding action specified in Other FAA AD Provisions compliance times are applicable to short- this AD. (k) The following provisions also apply to range use (AFT equal to or less than 4 flight this AD: FAA AD Differences hours), or long-range use (AFT exceeding 4 (1) Alternative Methods of Compliance flight hours). Inspection areas are specified in Note 2: This AD differs from the MCAI (AMOCs): The Manager, International Airbus Mandatory Service Bulletin A310–53– and/or service information as follows: The Branch, ANM–116, Transport Airplane 2074, Revision 04, dated October 24, 2008. MCAI and service information do not specify Directorate, FAA, has the authority to a corrective action if cracking is found and approve AMOCs for this AD, if requested Credit for Actions Accomplished in the radius of the rework is 20.0 mm (0.787 using the procedures found in 14 CFR 39.19. Accordance With Previous Service inch) or more. Paragraph (g)(3)(i)(B) of this In accordance with 14 CFR 39.19, send your Information AD requires repair in accordance with a request to your principal inspector or local (j) Inspections accomplished before the method approved by either the Manager, Flight Standards District Office, as effective date of this AD in accordance with International Branch, ANM–116, FAA, appropriate. If sending information directly

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to the International Branch, send it to Attn: DEPARTMENT OF HOMELAND to facilitate necessary structural steel Dan Rodina, Aerospace Engineer, SECURITY repairs at the bridge. International Branch, ANM–116, Transport Under this temporary deviation the Airplane Directorate, FAA, 1601 Lind Coast Guard Lower Hack Bridge, across the Avenue, SW., Renton, Washington 98057– Hackensack River at mile 3.4, may 3356; telephone (425) 227–2125; fax (425) 33 CFR Part 117 remain in the closed position from 227–1149. Information may be e-mailed to: 9- 10 p.m. on May 26, 2011 through 5 a.m. [email protected]. [Docket No. USCG–2011–0330] on May 27, 2011. Vessels that can pass Before using any approved AMOC, notify your appropriate principal inspector, or Drawbridge Operation Regulations; under the bridge without a bridge lacking a principal inspector, the manager of Hackensack River, Jersey City, NJ opening may do so at all times. the local flight standards district office/ In accordance with 33 CFR 117.35(e), AGENCY: Coast Guard, DHS. certificate holding district office. The AMOC the bridge must return to its regular approval letter must specifically reference ACTION: Notice of temporary deviation operating schedule immediately at the this AD. from regulations. end of the designated time period. This (2) Airworthy Product: For any requirement deviation from the operating regulations SUMMARY: The Commander, First Coast in this AD to obtain corrective actions from is authorized under 33 CFR 117.35. Guard District, has issued a temporary a manufacturer or other source, use these Dated: May 2, 2011. actions if they are FAA-approved. Corrective deviation from the regulation governing Gary Kassof, actions are considered FAA-approved if they the operation of the Lower Hack Bridge are approved by the State of Design Authority across the Hackensack River, mile 3.4, at Bridge Program Manager, First Coast Guard (or their delegated agent). You are required Jersey City, New Jersey. The deviation is District. to assure the product is airworthy before it necessary to repair structural steel [FR Doc. 2011–11545 Filed 5–10–11; 8:45 am] is returned to service. members on the lift span. This deviation BILLING CODE 9110–04–P allows the bridge to remain in the Related Information closed position to facilitate the above (l) Refer to MCAI EASA Airworthiness repairs. DEPARTMENT OF HOMELAND Directive 2009–0058, dated March 13, 2009; SECURITY and Airbus Mandatory Service Bulletin DATES: This deviation is effective from A310–53–2074, Revision 04, dated October 10 p.m. on May 26, 2011 through 5 a.m. Coast Guard 24, 2008; for related information. on May 27, 2011. ADDRESSES: Material Incorporated by Reference Documents mentioned in 33 CFR Part 117 this preamble as being available in the (m) You must use Airbus Mandatory docket are part of docket USCG–2011– [Docket No. USCG–2011–0291] Service Bulletin A310–53–2074, Revision 04, 0330 and are available online at dated October 24, 2008, to do the actions Drawbridge Operation Regulation; http://www.regulations.gov, inserting required by this AD, unless the AD specifies Atlantic Intracoastal Waterway, ‘‘ ’’ otherwise. USCG–2011–0330 in the Keyword and Albemarle and Chesapeake Canal, (1) The Director of the Federal Register then clicking ‘‘Search.’’ They are also Chesapeake, VA approved the incorporation by reference of available for inspection or copying at this service information under 5 U.S.C. the Docket Management Facility (M–30), AGENCY: Coast Guard, DHS. 552(a) and 1 CFR part 51. U.S. Department of Transportation, ACTION: Notice of temporary deviation (2) For service information identified in West Building Ground Floor, Room from regulations. this AD, contact Airbus SAS—EAW W12–140, 1200 New Jersey Avenue, SE., (Airworthiness Office), 1 Rond Point Maurice Washington, DC 20590, between 9 a.m. SUMMARY: The Commander, Fifth Coast Bellonte, 31707 Blagnac Cedex, France; and 5 p.m., Monday through Friday, Guard District, has issued a temporary telephone +33 5 61 93 36 96; fax +33 5 61 except Federal holidays. deviation from the regulations 93 44 51; e-mail account.airworth- FOR FURTHER INFORMATION CONTACT: If governing the operation of the SR170 [email protected]; Internet http:// you have questions on this rule, call or Centerville Turnpike Bridge across the www.airbus.com. e-mail Mr. Joe Arca, Project Officer, Atlantic Intracoastal Waterway, (3) You may review copies of the service Albemarle and Chesapeake Canal, mile information at the FAA, Transport Airplane First Coast Guard District, [email protected], telephone (212) 15.2, at Chesapeake, VA. The deviation Directorate, 1601 Lind Avenue, SW., Renton, is necessary to facilitate urgent Washington. For information on the 668–7165. If you have questions on availability of this material at the FAA, call viewing the docket, call Renee V. mechanical structural repairs to the 425–227–1221. Wright, Program Manager, Docket swing span. Under this deviation, the (4) You may also review copies of the Operations, telephone 202–366–9826. drawbridge will be allowed to operate on a limited schedule for the extent of service information that is incorporated by SUPPLEMENTARY INFORMATION: The Lower the effective period, specifically reference at the National Archives and Hack Bridge, across the Hackensack affecting four specific dates during the Records Administration (NARA). For River at mile 3.4, has a vertical information on the availability of this effective time-period: May 14, 2011; clearance in the closed position of 40 material at NARA, call 202–741–6030, or go May 15, 2011; June 4, 2011; and June 5, feet at mean high water and 45 feet at to: http://www.archives.gov/federal_register/ 2011. _ _ _ mean low water. The existing code of federal regulations/ DATES: This deviation is effective from ibr_locations.html. drawbridge operation regulations are listed at 33 CFR 117.723(b). 8 a.m. on May 14, 2011 to 8 p.m. on Issued in Renton, Washington, on April 22, The waterway accommodates both June 5, 2011. 2011. commercial and recreational vessels of ADDRESSES: Documents mentioned in Ali Bahrami, various sizes. Recreational navigation this preamble as being available in the Manager, Transport Airplane Directorate, passes under the bridge without docket USCG–2011–0291 and are Aircraft Certification Service. requiring any drawbridge openings. available online by going to http:// [FR Doc. 2011–10688 Filed 5–10–11; 8:45 am] The owner of the bridge, New Jersey www.regulations.gov, inserting USCG– BILLING CODE 4910–13–P Transit, requested a temporary deviation 2011–0291 in the ‘‘Keyword’’ box, and

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then clicking ‘‘Search’’. This material is closed position to vessels of four feet box, and then clicking ‘‘Search.’’ They also available for inspection or copying above mean high water. Vessels may not are also available for inspection or the Docket Management Facility (M–30), transit under the bridge while it is in the copying at the Docket Management U.S. Department of Transportation, closed position. Facility (M–30), U.S. Department of West Building Ground Floor, Room The Atlantic Intracoastal Waterway Transportation, West Building Ground W12–140, 1200 New Jersey Avenue, SE., caters to a variety of vessels from tug Floor, Room W12–140, 1200 New Jersey Washington, DC 20590, between 9 a.m. and barge traffic to recreational vessels Avenue SE., Washington, DC 20590, and 5 p.m., Monday through Friday, traveling from Florida to Maine. The between 9 a.m. and 5 p.m., Monday except Federal Holidays. Coast Guard has carefully coordinated through Friday, except Federal holidays. FOR FURTHER INFORMATION CONTACT: If the restrictions with commercial and FOR FURTHER INFORMATION CONTACT: If you have questions on this rule, call or recreational waterway users. you have questions on this temporary e-mail Mr. Waverly W. Gregory, Jr., Additionally, the Coast Guard will rule, call or e-mail LT Katie Stanko, Bridge Administrator, Fifth Coast Guard inform unexpected users of the Prevention Department, Sector Detroit, District; telephone (757) 398–6222, waterway through our local and Coast Guard; telephone (313) 568–9508, e-mail [email protected]. If broadcast Notices to Mariners of the e-mail [email protected]. If you you have questions on reviewing the limited operating schedules for the have questions on viewing the docket, docket, call Renee V. Wright, Program bridge so that vessels can arrange their call Renee V. Wright, Program Manager, Manager, Docket Operations, (202) 366– transits to minimize any impacts caused Docket Operations, telephone 202–366– 9826. by the temporary deviation. The 9826. SUPPLEMENTARY INFORMATION: The City Atlantic Ocean is the alternate route for SUPPLEMENTARY INFORMATION: of Chesapeake, who owns and operates vessels and the bridge will be able to this swing-type bridge, has requested a open in the event of an emergency. Regulatory Information temporary deviation from the current In accordance with 33 CFR 117.35(e), The Coast Guard is issuing this operating regulations set out in 33 CFR the draw must return to its original temporary final rule without prior 117.997(i), to facilitate urgent operating schedule immediately at the notice and opportunity to comment mechanical and structural repairs to the end of the designated time period. This pursuant to authority under section 4(a) swing span mechanism. deviation from the operating regulations of the Administrative Procedure Act The deviation will not affect the is authorized under 33 CFR 117.35. (APA) (5 U.S.C. 553(b)). This provision current scheduled openings for Dated: April 28, 2011. authorizes an agency to issue a rule weekdays, as laid out in 33 CFR Waverly W. Gregory, Jr., without prior notice and opportunity to 117.997(i). The deviation will only Chief, Bridge Administration Branch, Fifth comment when the agency for good affect the scheduled openings on the Coast Guard District. cause finds that those procedures are following weekend dates: Saturday May [FR Doc. 2011–11546 Filed 5–10–11; 8:45 am] ‘‘impracticable, unnecessary, or contrary 14, 2011; Sunday May 15, 2011; BILLING CODE 9110–04–P to the public interest.’’ Under 5 U.S.C. Saturday June 4, 2011; and Sunday June 553(b)(B), the Coast Guard finds that 5, 2011. good cause exists for not publishing a Under this temporary deviation, on DEPARTMENT OF HOMELAND notice of proposed rulemaking (NPRM) the four specific dates listed above, the SECURITY with respect to this rule because waiting drawbridge will operate on a 4-hour for a notice and comment period to run opening schedule. This schedule is Coast Guard would be impracticable and contrary to meant to facilitate urgent mechanical the public interest because it would and structural repairs. Accordingly, on 33 CFR Part 165 inhibit the Coast Guard’s ability to Saturday May 14, 2011, the drawbridge [Docket No. USCG–2011–0164] protect the public from the hazards will open on signal at: 8 a.m., 12 p.m., associated with maritime fireworks 4 p.m., and 8 p.m. On Sunday May 15, RIN 1625–AA00 displays. 2011, the drawbridge will open on Under 5 U.S.C. 553(d)(3), the Coast signal at: midnight, 4 a.m., 8 a.m., 12 Safety Zone; Coughlin Wedding Guard finds that good cause exists for p.m., 4 p.m., and 8 p.m. On Saturday Fireworks, Lake St. Clair, Harrison making this rule effective less than 30 June 4, 2011, the drawbridge will open Township, MI days after publication in the Federal on signal at: 8 a.m., 12 p.m., 4 p.m., and AGENCY: Coast Guard, DHS. Register. Delaying the effective date of 8 p.m. And, on Sunday June 5, 2011, the this rule would be impracticable and ACTION: drawbridge will open on signal at: Temporary final rule. contrary to the public interest because it midnight, 4 a.m., 8 a.m., 12 p.m., 4 p.m., SUMMARY: The Coast Guard is would inhibit the Coast Guard from and 8 p.m. establishing a temporary safety zone on ensuring the safety of vessels and the If all of the mechanical and structural Lake St. Clair, Harrison Township, MI. public during the fireworks display. work is completed on May 14–15, 2011, This safety zone is intended to restrict Background and Purpose then the deviation will not be enforced vessels from a portion of Lake St. Clair for June 4–5, 2011. A notice will be during the Coughlin Wedding On July 2, 2011, a private party is released for mariners should the Fireworks. holding a land based wedding that will deviation be cancelled for June 4–5, include fireworks launched from a point 2011. DATES: This rule is effective from 10 on Lake St. Clair. This temporary safety Other than the four specific dates p.m. through 10:20 p.m. on July 2, 2011. zone is necessary to ensure the safety of listed in this section, the drawbridge ADDRESSES: Documents indicated in this vessels and spectators from hazards will operate in accordance with the preamble as being available in the associated with that fireworks display. operating regulations set out in 33 CFR docket are part of docket USCG–2011– Such hazards include obstructions to 117.997(i). 0164 and are available online by going the waterway that may cause marine The SR170 Centerville Turnpike to http://www.regulations.gov, inserting casualties, explosive danger of Bridge has a vertical clearance in the USCG–2011–0164 in the ‘‘Keyword’’ fireworks, debris falling into the water

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that may cause death, serious bodily relatively small and exist for only a Collection of Information harm or property damage. Establishing a minimal time. Thus, restrictions on This rule calls for no new collection safety zone to control vessel movement vessel movement within any particular of information under the Paperwork around the location of the launch area of Lake St. Clair are expected to be Reduction Act of 1995 (44 U.S.C. 3501– platform will help ensure the safety of minimal. Under certain conditions, 3520). persons and property in the vicinity of moreover, vessels may still transit this event and help minimize the through the safety zone when permitted Federalism associated risks. by the Captain of the Port. A rule has implications for federalism Discussion of Rule Small Entities under Executive Order 13132, A temporary safety zone is necessary Federalism, if it has a substantial direct Under the Regulatory Flexibility Act effect on State or local governments and to ensure the safety of spectators and (5 U.S.C. 601–612), we have considered vessels during the setup, loading, and would either preempt State law or whether this rule would have a impose a substantial direct cost of launching of the Coughlin Wedding significant economic impact on a Fireworks Display. The fireworks compliance on them. We have analyzed substantial number of small entities. this rule under that Order and have display will occur between 10 p.m. and The term ‘‘small entities’’ comprises 10:20 p.m., July 2, 2011. determined that it does not have small businesses, not-for-profit implications for federalism. The safety zone will encompass all organizations that are independently waters on Lake St. Clair within a 300 owned and operated and are not Unfunded Mandates Reform Act foot radius of the fireworks barge launch dominant in their fields, and site located off the shore of Harrison The Unfunded Mandates Reform Act ° ′ ″ governmental jurisdictions with of 1995 (2 U.S.C. 1531–1538) requires Township, MI at position 42 34 52 N, populations of less than 50,000. 082°47′12″ W from 10 p.m. until 10:20 Federal agencies to assess the effects of p.m. on July 2, 2011. All geographic The Coast Guard certifies under 5 their discretionary regulatory actions. In coordinates are North American Datum U.S.C. 605(b) that this rule will not have particular, the Act addresses actions of 1983 (NAD 83). a significant economic impact on a that may result in the expenditure by a All persons and vessels shall comply substantial number of small entities. State, local, or Tribal government, in the with the instructions of the Coast Guard This rule will affect the following aggregate, or by the private sector of Captain of the Port or the designated on- entities, some of which may be small $100,000,000 (adjusted for inflation) or scene representative. Entry into, entities: the owners and operators of more in any one year. Though this rule transiting, or anchoring within the vessels intending to transit or anchor in will not result in such an expenditure, safety zone is prohibited unless this portion of Lake St. Clair between 10 we do discuss the effects of this rule authorized by the Captain of the Port p.m. through 10:20 p.m. on July 2, 2011. elsewhere in this preamble. Detroit or his designated on-scene This safety zone will not have a Taking of Private Property representative. The Captain of the Port significant economic impact on a This rule will not cause a taking of or his designated on-scene substantial number of small entities private property or otherwise have representative may be contacted via because vessels can easily transit taking implications under Executive VHF Channel 16. around the zone. The Coast Guard will Order 12630, Governmental Actions and give notice to the public via a Broadcast Regulatory Analyses Interference with Constitutionally Notice to Mariners that the regulation is Protected Property Rights. We developed this rule after in effect. considering numerous statutes and Civil Justice Reform executive orders related to rulemaking. Assistance for Small Entities Below we summarize our analyses This rule meets applicable standards Under section 213(a) of the Small based on 13 of these statutes or in sections 3(a) and 3(b)(2) of Executive Business Regulatory Enforcement executive orders. Order 12988, Civil Justice Reform, to Fairness Act of 1996 (Pub. L. 104–121), minimize litigation, eliminate Regulatory Planning and Review we offer to assist small entities in ambiguity, and reduce burden. This rule is not a significant understanding the rule so that they can Protection of Children regulatory action under section 3(f) of better evaluate its effects on them and Executive Order 12866, Regulatory participate in the rulemaking process. We have analyzed this rule under Planning and Review, and does not Small businesses may send comments Executive Order 13045, Protection of require an assessment of potential costs on the actions of Federal employees Children from Environmental Health and benefits under section 6(a)(3) of that who enforce, or otherwise determine Risks and Safety Risks. This rule is not Order. The Office of Management and compliance with, Federal regulations to an economically significant rule and Budget has not reviewed it under that the Small Business and Agriculture does not create an environmental risk to Order. It is not ‘‘significant’’ under the Regulatory Enforcement Ombudsman health or risk to safety that may regulatory policies and procedures of and the Regional Small Business disproportionately affect children. the Department of Homeland Security Regulatory Fairness Boards. The Indian Tribal Governments (DHS). Ombudsman evaluates these actions We conclude that this rule is not a annually and rates each agency’s This rule does not have Tribal significant regulatory action because we responsiveness to small business. If you implications under Executive Order anticipate that it will have minimal wish to comment on actions by 13175, Consultation and Coordination impact on the economy, will not employees of the Coast Guard, call with Indian Tribal Governments, interfere with other agencies, will not 1–888–REG–FAIR (1–888–734–3247). because it does not have a substantial adversely alter the budget of any grant The Coast Guard will not retaliate direct effect on one or more Indian or loan recipients, and will not raise any against small entities that question or Tribes, on the relationship between the novel legal or policy issues. The safety complain about this rule or any policy Federal Government and Indian Tribes, zone around the launch platform will be or action of the Coast Guard. or on the distribution of power and

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responsibilities between the Federal List of Subjects in 33 CFR Part 165 them by the Captain of the Port or his Government and Indian Tribes. Harbors, Marine safety, Navigation on-scene representative. Energy Effects (water), Reporting and recordkeeping Dated: April 26, 2011. requirements, Security measures, E.J. Marohn, We have analyzed this rule under Waterways. Commander, U.S. Coast Guard, Acting Executive Order 13211, Actions For the reasons discussed in the Captain of the Port Detroit. Concerning Regulations That preamble, the Coast Guard amends 33 [FR Doc. 2011–11484 Filed 5–10–11; 8:45 am] Significantly Affect Energy Supply, CFR Part 165 as follows: Distribution, or Use. We have BILLING CODE 9110–04–P determined that it is not a ‘‘significant PART 165—REGULATED NAVIGATION energy action’’ under that order because AREAS AND LIMITED ACCESS AREAS DEPARTMENT OF HOMELAND it is not a ‘‘significant regulatory action’’ SECURITY under Executive Order 12866 and is not ■ 1. The authority citation for part 165 likely to have a significant adverse effect continues to read as follows: Coast Guard on the supply, distribution, or use of Authority: 33 U.S.C. 1231; 46 U.S.C. energy. The Administrator of the Office Chapter 701, 3306, 3703; 50 U.S.C. 191, 195; 33 CFR Part 165 of Information and Regulatory Affairs 33 CFR 1.05–1, 6.04–1, 6.04–6, and 160.5; has not designated it as a significant Pub. L. 107–295, 116 Stat. 2064; Department [Docket No. USCG–2011–0216] energy action. Therefore, it does not of Homeland Security Delegation No. 0170.1. require a Statement of Energy Effects ■ 2. Add 165.T09–0164 to read as RIN 1625–AA00 under Executive Order 13211. follows: Safety Zone; Catawba Island Club Technical Standards § 165. T09–0164 Safety zone; Coughlin Fireworks, Catawba Island Club, Port The National Technology Transfer Wedding Fireworks, Lake St. Clair, Harrison Clinton, OH Township, MI. and Advancement Act (NTTAA) (15 AGENCY: Coast Guard, DHS. U.S.C. 272 note) directs agencies to use (a) Location. The safety zone will ACTION: Temporary final rule. voluntary consensus standards in their encompass all U. S. navigable waters on Lake St. Clair within a 300-foot radius regulatory activities unless the agency SUMMARY: The Coast Guard is of the fireworks barge launch site provides Congress, through the Office of establishing a temporary safety zone in located off the shore of Harrison Management and Budget, with an the Captain of the Port Detroit Zone on Township, MI at position 42°34′52″ N, explanation of why using these Lake Erie, Port Clinton, Ohio. This zone 082°47′12″ W. All geographic standards would be inconsistent with is intended to restrict vessels from coordinates are North American Datum applicable law or otherwise impractical. portions of Lake Erie for the Catawba Voluntary consensus standards are of 1983 (NAD 83). (b) Effective and enforcement period. Island Club Memorial Day Fireworks. technical standards (e.g., specifications This rule is effective and will be This temporary safety zone is necessary of materials, performance, design, or enforced from 10 p.m. through 10:20 to protect spectators and vessels from operation; test methods; sampling p.m. on July 2, 2011. the hazards associated with fireworks procedures; and related management (c) Regulations. (1) In accordance with display. systems practices) that are developed or the general regulations in § 165.23 of DATES: This rule is effective from 9:15 adopted by voluntary consensus this part, entry into, transiting, or p.m. through 9:45 p.m. on May 29, 2011. standards bodies. anchoring within this safety zone is ADDRESSES: Documents indicated in this This rule does not use technical prohibited unless authorized by the standards. Therefore, we did not preamble as being available in the Captain of the Port Detroit, or his docket are part of docket USCG–2011– consider the use of voluntary consensus designated on-scene representative. standards. 0216 and are available online by going (2) This safety zone is closed to all to http://www.regulations.gov, inserting Environment vessel traffic, except as may be USCG–2011–0216 in the ‘‘keyword’’ box, permitted by the Captain of the Port and then clicking ‘‘search’’. They are We have analyzed this rule under Detroit or his designated on-scene Department of Homeland Security also available for inspection or copying representative. at the Docket Management Facility (M– Management Directive 023–01 and (3) The ‘‘on-scene representative’’ of Commandant Instruction M16475.lD, 30), U.S. Department of Transportation, the Captain of the Port is any Coast West Building Ground Floor, Room which guide the Coast Guard in Guard commissioned, warrant, or petty complying with the National W12–140, 1200 New Jersey Avenue, SE., officer who has been designated by the Washington, DC 20590, between 9 a.m. Environmental Policy Act of 1969 Captain of the Port to act on his behalf. (NEPA) (42 U.S.C. 4321–4370f), and and 5 p.m., Monday through Friday, The on-scene representative of the except Federal holidays. have concluded this action is one of a Captain of the Port will be aboard either category of actions that do not a Coast Guard or Coast Guard Auxiliary FOR FURTHER INFORMATION CONTACT: If individually or cumulatively have a vessel. The Captain of the Port or his you have questions on this temporary significant effect on the human designated on scene representative may rule, call or e-mail BM1 Tracy Girard, environment. This rule is categorically be contacted via VHF Channel 16. Response Department, Marine Safety excluded, under figure 2–1, paragraph (4) Vessel operators desiring to enter Unit Toledo, Coast Guard; telephone (34)(g) of the Instruction because it or operate within the safety zone shall (419) 418–6036, e-mail involves the establishment of a contact the Captain of the Port Detroit [email protected]. If you have temporary safety zone. An or his on-scene representative to obtain questions on viewing the docket, call environmental analysis checklist and a permission to do so. Renee V. Wright, Program Manager, categorical exclusion determination will (5) Vessel operators given permission Docket Operations, telephone 202–366– be available in the docket where to enter or operate in the safety zone 9826. indicated under ADDRESSES. must comply with all directions given to SUPPLEMENTARY INFORMATION:

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Regulatory Information All persons and vessels shall comply This rule will affect the following The Coast Guard is issuing this with the instructions of the Coast Guard entities, some of which may be small temporary final rule without prior Captain of the Port, Sector Detroit or entities: The owners and operators of notice and opportunity to comment designated on-scene representative. vessels intending to transit or anchor in pursuant to authority under section 4(a) Entry into, transiting, or anchoring a portion of the Lake Erie, Catawba of the Administrative Procedure Act within the safety zone is prohibited Island, Port Clinton, OH between 9:15 (APA) (5 U.S.C. 553(b)). This provision unless authorized by the Captain of the p.m. through 9:45 p.m. on May 29, 2011. authorizes an agency to issue a rule Port, Sector Detroit or designated on- This safety zone will not have a without prior notice and opportunity to scene representative. The Captain of the significant economic impact on a comment when the agency for good Port, Sector Detroit or designated on- substantial number of small entities for cause finds that those procedures are scene representative may be contacted the following reasons: This rule will ‘‘impracticable, unnecessary, or contrary via VHF Channel 16. only be in effect for thirty minutes. In the event that this temporary safety zone to the public interest.’’ Under 5 U.S.C. Regulatory Analyses 553(b)(B), the Coast Guard finds that affects shipping, commercial vessels good cause exists for not publishing a We developed this rule after may request permission from the notice of proposed rulemaking (NPRM) considering numerous statutes and Captain of the Port, Sector Detroit to with respect to this rule because waiting executive orders related to rulemaking. transit through the safety zone. The for a comment period to run would be Below we summarize our analyses Coast Guard will give notice to the impractical and contrary to the public based on 13 of these statutes or public via a Broadcast Notice to interest in that it would prevent the executive orders. Mariners that the regulation is in effect. Captain of the Port Detroit from Regulatory Planning and Review Assistance for Small Entities performing the function of keeping the boating public safe from the hazards This rule is not a significant Under section 213(a) of the Small associated with a maritime fireworks regulatory action under section 3(f) of Business Regulatory Enforcement display. Executive Order 12866, Regulatory Fairness Act of 1996 (Pub. L. 104–121), Under 5 U.S.C. 553(d)(3), the Coast Planning and Review, and does not we offer to assist small entities in Guard finds that good cause exists for require an assessment of potential costs understanding the rule so that they can making this rule effective less than 30 and benefits under section 6(a)(3) of that better evaluate its effects on them and days after publication in the Federal Order. The Office of Management and participate in the rulemaking process. Register. Waiting for a 30 day effective Budget has not reviewed it under that Small businesses may send comments period to run is impracticable and Order. It is not ‘‘significant’’ under the on the actions of Federal employees contrary to the public interest in that it regulatory policies and procedures of who enforce, or otherwise determine would prevent the Captain of the Port the Department of Homeland Security compliance with, Federal regulations to Detroit from protecting persons and (DHS). We conclude that this rule is not the Small Business and Agriculture vessels involved in and observing this a significant regulatory action because Regulatory Enforcement Ombudsman event. we anticipate that it will have minimal and the Regional Small Business Regulatory Fairness Boards. The Background and Purpose impact on the economy, will not interfere with other agencies, will not Ombudsman evaluates these actions This temporary safety zone is adversely alter the budget of any grant annually and rates each agency’s necessary to ensure the safety of vessels or loan recipients, and will not raise any responsiveness to small business. If you and spectators from hazards associated novel legal or policy issues. The safety wish to comment on actions by with a fireworks display. Such hazards zone around the bridge project will be employees of the Coast Guard, call include obstructions to the waterway relatively small and exist for a relatively 1–888–REG–FAIR (1–888–734–3247). that may cause marine casualties and short time. Thus, restrictions on vessel The Coast Guard will not retaliate the explosive danger of fireworks and movement within that particular area against small entities that question or debris falling into the water that may are expected to be minimal. Under complain about this rule or any policy cause death or serious bodily harm. certain conditions, moreover, vessels or action of the Coast Guard. Establishing a safety zone to control may still transit through the safety zone Collection of Information vessel movement around the location of when permitted by the Captain of the the launch platform will help ensure the This rule calls for no new collection Port. safety of persons and property at these of information under the Paperwork events and help minimize the associated Small Entities Reduction Act of 1995 (44 U.S.C. 3501– risks. 3520). Under the Regulatory Flexibility Act Discussion of Rule (5 U.S.C. 601–612), we have considered Federalism A temporary safety zone is necessary whether this rule would have a A rule has implications for federalism to ensure the safety of spectators and significant economic impact on a under Executive Order 13132, vessels during the setup, loading, and substantial number of small entities. Federalism, if it has a substantial direct launching of the Catawba Island Club The term ‘‘small entities’’ comprises effect on State or local governments and Memorial Day Fireworks Display. The small businesses, not-for-profit would either preempt State law or fireworks display will occur between organizations that are independently impose a substantial direct cost of 9:15 p.m. and 9:45 p.m., May 29, 2011. owned and operated and are not compliance on them. We have analyzed The safety zone will encompass all dominant in their fields, and this rule under that Order and have U.S. navigable waters of Lake Erie governmental jurisdictions with determined that it does not have within a 250-yard radius of the populations of less than 50,000. implications for federalism. fireworks launch site located at position The Coast Guard certifies under 5 41°34′18.10″ N, 082°51′18.70″ W. All U.S.C. 605(b) that this rule will not have Unfunded Mandates Reform Act geographic coordinates are North a significant economic impact on a The Unfunded Mandates Reform Act American Datum of 1983 (NAD 83). substantial number of small entities. of 1995 (2 U.S.C. 1531–1538) requires

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Federal agencies to assess the effects of Technical Standards Pub. L. 107–295, 116 Stat. 2064; Department of Homeland Security Delegation No. 0170.1. their discretionary regulatory actions. In The National Technology Transfer particular, the Act addresses actions and Advancement Act (NTTAA) (15 ■ 2. Add § 165.T09–0216 as follows: that may result in the expenditure by a U.S.C. 272 note) directs agencies to use State, local, or Tribal government, in the voluntary consensus standards in their § 165.T09–0216 Safety Zone; Catawba aggregate, or by the private sector of regulatory activities unless the agency Island Club Memorial Day Fireworks, $100,000,000 adjusted for inflation) or provides Congress, through the Office of Catawba Island; Port Clinton, OH. more in any one year. Though this rule Management and Budget, with an (a) Location. The following area is a will not result in such an expenditure, explanation of why using these temporary safety zone: all U.S. we do discuss the effects of this rule standards would be inconsistent with navigable waters of Lake Erie, Catawba elsewhere in this preamble. applicable law or otherwise impractical. Island, Port Clinton, OH within a 250- Taking of Private Property Voluntary consensus standards are yard radius of the fireworks launch site technical standards (e.g., specifications located at position 41°34′18.10″ N, This rule will not affect a taking of of materials, performance, design, or 082°51′18.70″ W. All geographic private property or otherwise have operation; test methods; sampling coordinates are North American Datum taking implications under Executive procedures; and related management of 1983 (NAD 83). Order 12630, Governmental Actions and systems practices) that are developed or (b) Effective and enforcement period. Interference with Constitutionally adopted by voluntary consensus Protected Property Rights. This regulation is effective and will be standards bodies. enforced from 9:15 p.m. through 9:45 Civil Justice Reform This rule does not use technical p.m. on May 29, 2011. The Captain of standards. Therefore, we did not This rule meets applicable standards the Port, Sector Detroit, or his on-scene consider the use of voluntary consensus representative may suspend in sections 3(a) and 3(b)(2) of Executive standards. Order 12988, Civil Justice Reform, to enforcement of the safety zone at any minimize litigation, eliminate Environment time. ambiguity, and reduce burden. We have analyzed this proposed rule (c) Regulations. (1) In accordance with Protection of Children under Commandant Instruction the general regulations in § 165.23 of M16475.lD and Department of this part, entry into, transiting, or We have analyzed this rule under Homeland Security Management anchoring within this safety zone is Executive Order 13045, Protection of Directive 023–01, which guide the Coast prohibited unless authorized by the Children from Environmental Health Guard in complying with the National Captain of the Port, Sector Detroit, or his Risks and Safety Risks. This rule is not Environmental Policy Act of 1969 designated on-scene representative. an economically significant rule and (NEPA) (42 U.S.C. 4321–4370f), and (2) This safety zone is closed to all does not create an environmental risk to have concluded this action is one of a vessel traffic, except as may be health or risk to safety that may category of actions which do not permitted by the Captain of the Port, disproportionately affect children. individually or cumulatively have a Sector Detroit or his designated on- Indian Tribal Governments significant effect on the human scene representative. environment. This rule is categorically This rule does not have Tribal (3) The ‘‘on-scene representative’’ of excluded, under figure 2–1, paragraph the Captain of the Port, Sector Detroit is implications under Executive Order (34)(g) of the Instruction because it 13175, Consultation and Coordination any Coast Guard commissioned, involves the establishment of a warrant, or petty officer who has been with Indian Tribal Governments, temporary safety zone. This rule because it does not have a substantial designated by the Captain of the Port, involves the establishment of a safety Sector Detroit to act on his behalf. The direct effect on one or more Indian zone and is therefore categorically Tribes, on the relationship between the on-scene representative of the Captain excluded under paragraph 34(g) of the of the Port, Sector Detroit will be aboard Federal Government and Indian Tribes, Instruction. An environmental analysis or on the distribution of power and either a Coast Guard or Coast Guard checklist and a categorical exclusion Auxiliary vessel. The Captain of the responsibilities between the Federal determination are available in the Government and Indian Tribes. Port, Sector Detroit or his designated on- docket where indicated under scene representative may be contacted Energy Effects ADDRESSES. via VHF Channel 16. We have analyzed this rule under List of Subjects in 33 CFR Part 165 (4) Vessel operators desiring to enter Executive Order 13211, Actions Harbors, Marine safety, Navigation or operate within the safety zone shall Concerning Regulations That (water), Reporting and recordkeeping contact the Captain of the Port, Sector Significantly Affect Energy Supply, requirements, Security measures, Detroit or his on-scene representative to Distribution, or Use. We have Waterways. obtain permission to do so. determined that it is not a ‘‘significant For the reasons discussed in the Vessel operators given permission to energy action’’ under that order because preamble, the Coast Guard amends 33 enter or operate in the safety zone must it is not a ‘‘significant regulatory action’’ CFR part 165 as follows: comply with all directions given to under Executive Order 12866 and is not them by the Captain of the Port, Sector likely to have a significant adverse effect PART 165—REGULATED NAVIGATION Detroit or his on-scene representative. on the supply, distribution, or use of AREAS AND LIMITED ACCESS AREAS energy. The Administrator of the Office Dated: April 26, 2011. of Information and Regulatory Affairs ■ 1. The authority citation for part 165 E.J. Marohn, has not designated it as a significant continues to read as follows: Commander, U.S. Coast Guard, Acting Captain of the Port Detroit. energy action. Therefore, it does not Authority: 33 U.S.C. 1231; 46 U.S.C. require a Statement of Energy Effects Chapter 701, 3306, 3703; 50 U.S.C. 191, 195; [FR Doc. 2011–11487 Filed 5–10–11; 8:45 am] under Executive Order 13211. 33 CFR 1.05–1, 6.04–1, 6.04–6, and 160.5; BILLING CODE 9110–04–P

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ENVIRONMENTAL PROTECTION I. General Information may be disclosed publicly by EPA without prior notice. Submit a copy of AGENCY A. Does this action apply to me? your non-CBI objection or hearing 40 CFR Part 180 You may be potentially affected by request, identified by docket ID number this action if you are an agricultural EPA–HQ–OPP–2010–0755, by one of [EPA–HQ–OPP–2010–0755; FRL–8872–7] producer, food manufacturer, or the following methods: pesticide manufacturer. Potentially • Federal eRulemaking Portal: http:// Saflufenacil; Pesticide Tolerances affected entities may include, but are www.regulations.gov. Follow the on-line not limited to those engaged in the instructions for submitting comments. AGENCY: Environmental Protection following activities: • Mail: Office of Pesticide Programs Agency (EPA). • Crop production (NAICS code 111). (OPP) Regulatory Public Docket (7502P), • Animal production (NAICS code Environmental Protection Agency, 1200 ACTION: Final rule. 112). Pennsylvania Ave., NW., Washington, • Food manufacturing (NAICS code SUMMARY: This regulation revises or DC 20460–0001. 311). • Delivery: OPP Regulatory Public removes certain established tolerances • Pesticide manufacturing (NAICS Docket (7502P), Environmental and establishes new tolerances for code 32532). Protection Agency, Rm. S–4400, One residues of saflufenacil in or on This listing is not intended to be Potomac Yard (South Bldg.), 2777 S. multiple commodities which are exhaustive, but rather to provide a guide Crystal Dr., Arlington, VA. Deliveries identified and discussed later in this for readers regarding entities likely to be are only accepted during the Docket document. BASF Corporation requested affected by this action. Other types of Facility’s normal hours of operation these tolerances under the Federal Food, entities not listed in this unit could also (8:30 a.m. to 4 p.m., Monday through Drug, and Cosmetic Act (FFDCA). be affected. The North American Friday, excluding legal holidays). DATES: This regulation is effective May Industrial Classification System Special arrangements should be made 11, 2011. Objections and requests for (NAICS) codes have been provided to for deliveries of boxed information. The hearings must be received on or before assist you and others in determining Docket Facility telephone number is July 11, 2011, and must be filed in whether this action might apply to (703) 305–5805. accordance with the instructions certain entities. If you have any II. Summary of Petitioned-For provided in 40 CFR part 178 (see also questions regarding the applicability of Tolerance Unit I.C. of the SUPPLEMENTARY this action to a particular entity, consult INFORMATION). the person listed under FOR FURTHER In the Federal Register of September INFORMATION CONTACT. 23, 2010 (75 FR 57942) (FRL–8845–4), ADDRESSES: EPA has established a EPA issued a notice pursuant to section docket for this action under docket B. How can I get electronic access to 408(d)(3) of FFDCA, 21 U.S.C. identification (ID) number EPA–HQ– other related information? 346a(d)(3), announcing the filing of OPP–2010–0755. All documents in the You may access a frequently updated pesticide petitions (PP 0F7744 and PP docket are listed in the docket index electronic version of EPA’s tolerance 0F7766) by BASF Corporation, 26 Davis available at http://www.regulations.gov. regulations at 40 CFR part 180 through Drive, P.O. Box 13528, Research Although listed in the index, some the Government Printing Office’s e-CFR Triangle Park, NC 27709–3528. The information is not publicly available, site at http://www.gpoaccess.gov/ecfr. petitions requested that 40 CFR 180.649 e.g., Confidential Business Information be amended by establishing tolerances (CBI) or other information whose C. How can I file an objection or hearing for residues of the herbicide disclosure is restricted by statute. request? saflufenacil, 2-chloro-5-[3,6-dihydro-3- Certain other material, such as Under FFDCA section 408(g), 21 methyl-2,6-dioxo-4-(trifluoromethyl)-1(2 copyrighted material, is not placed on U.S.C. 346a, any person may file an H)-pyrimidinyl]-4-fluoro- N-[[methyl(1- the Internet and will be publicly objection to any aspect of this regulation methylethyl)amino]sulfonyl]benzamide, available only in hard copy form. and may also request a hearing on those and its metabolites N-[2-chloro-5-(2,6- Publicly available docket materials are objections. You must file your objection dioxo-4-(trifluoromethyl)-3,6-dihydro- available in the electronic docket at or request a hearing on this regulation 1(2 H)-pyrimidinyl)-4-fluorobenzoyl]- http://www.regulations.gov, or, if only in accordance with the instructions N-′isopropylsulfamide and N-[4-chloro- available in hard copy, at the OPP provided in 40 CFR part 178. To ensure 2-fluoro-5-({[(isopropylamino) Regulatory Public Docket in Rm. S– proper receipt by EPA, you must sulfonyl]amino}carbonyl)phenyl]urea, 4400, One Potomac Yard (South Bldg.), identify docket ID number EPA–HQ– calculated as the stoichiometric 2777 S. Crystal Dr., Arlington, VA. The OPP–2010–0755 in the subject line on equivalent of saflufenacil, in or on Docket Facility is open from 8:30 a.m. the first page of your submission. All oilseeds, cottonseed subgroup 20C, gin to 4 p.m., Monday through Friday, objections and requests for a hearing byproducts at 3.5 parts per million excluding legal holidays. The Docket must be in writing, and must be (ppm); oilseeds, cottonseed subgroup Facility telephone number is (703) 305– received by the Hearing Clerk on or 20C, undelinted seed at 0.2 ppm; 5805. before July 11, 2011. Addresses for mail oilseeds, sunflower subgroup 20B, seed FOR FURTHER INFORMATION CONTACT: and hand delivery of objections and at 1.0 ppm; pea, vines at 8.0 ppm; Susan Stanton, Registration Division hearing requests are provided in 40 CFR soybean, aspirated grain fractions at (7505P), Office of Pesticide Programs, 178.25(b). 4.52 ppm; soybean, hulls at 0.42 ppm; Environmental Protection Agency, 1200 In addition to filing an objection or soybean, seed at 0.1 ppm; vegetable, Pennsylvania Ave., NW., Washington, hearing request with the Hearing Clerk legume, subgroup 6C, beans, dry at 0.5 DC 20460–0001; telephone number: as described in 40 CFR part 178, please ppm; and vegetable, legume, subgroup (703) 305–5218; e-mail address: submit a copy of the filing that does not 6C, peas, dry at 0.1 ppm (PP 0F7744); [email protected]. contain any CBI for inclusion in the and in or on oilseeds, rapeseed public docket. Information not marked subgroup 20A, seed at 0.8 ppm (PP SUPPLEMENTARY INFORMATION: confidential pursuant to 40 CFR part 2 0F7766). That notice referenced

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summaries of the petitions prepared by Saflufenacil has low acute toxicity via decreased pre-weaning body weight BASF Corporation, the registrant, which the oral, dermal, and inhalation routes and/or body-weight gain, and changes are available in the docket, http:// of exposure. It is slightly irritating to the in hematological parameters were www.regulations.gov. There were no eye but is neither a dermal irritant nor observed at a dose resulting in less comments received in response to the sensitizer. severe maternal toxicity (decreased food notice of filing. Short-term, subchronic, and chronic intake, body weight/weight gain and Based upon review of the data toxicity studies in rats, mice, and dogs changes in hematological parameters supporting the petition, EPA has revised identified the hematopoietic system as and organ weights indicative of anemia), the proposed commodity terms and the target organ of saflufenacil. indicating increased qualitative tolerance levels for several commodities Protoporphyrinogen oxidase inhibition susceptibility. and determined that established in the mammalian species may result in There was no evidence of tolerances for certain livestock disruption of heme synthesis which in neurotoxicity or neuropathology in the commodities should be increased. The turn causes anemia. In these studies, toxicity database for saflufenacil. In the reasons for these changes are explained decreased hematological parameters acute neurotoxicity study, a decrease in in Unit IV.C. [red blood cells (RBC), hematocrit (Ht), motor activity was observed on the first mean corpuscular volume (MCV), mean day of dosing at the limit dose in males III. Aggregate Risk Assessment and corpuscular hemoglobin (MCH), and only. The finding was not accompanied Determination of Safety mean corpuscular hemoglobin by any other neuropathological changes Section 408(b)(2)(A)(i) of FFDCA concentration (MCHC)] were seen at and was considered a reflection of a allows EPA to establish a tolerance (the about the same dose level across mild and transient general systemic legal limit for a pesticide chemical species, except in the case of the dog, toxicity and not a substance-specific residue in or on a food) only if EPA where the effects were seen at a slightly neurotoxic effect. In the subchronic determines that the tolerance is ‘‘safe.’’ higher dose. These effects occurred neurotoxicity study, systemic toxicity Section 408(b)(2)(A)(ii) of FFDCA around the same dose level from the (anemia), but no evidence of defines ‘‘safe’’ to mean that ‘‘there is a short- through long-term exposures neurotoxicity, was seen in males and reasonable certainty that no harm will without increasing in severity. Effects females. There is no evidence of immunotoxity result from aggregate exposure to the were also seen in the liver (increased in the saflufenacil database. The pesticide chemical residue, including weight, centrilobular fatty change, and lymphoid infiltrate) in mice, the spleen increase in spleen weight seen only in all anticipated dietary exposures and all (increased spleen weight and rats in the 90-day oral toxicity study is other exposures for which there is extramedullary hematopoiesis) in rats, attributable to an increased clearance of reliable information.’’ This includes and in both these organs (increased iron defective RBCs (i.e., defective exposure through drinking water and in storage in the liver and extramedullary hemoglobin synthesis) and is thus an residential settings, but does not include hematopoiesis in the spleen) in dogs. No indication of toxicity to the occupational exposure. Section dermal toxicity was seen at the limit hematopoietic system rather than to the 408(b)(2)(C) of FFDCA requires EPA to dose in a 28-day dermal toxicity study immune system. In a recently submitted give special consideration to exposure in rats. 28-day immunotoxicity study, of infants and children to the pesticide Carcinogenicity studies in rats and saflufenacil failed to induce toxicity chemical residue in establishing a mice showed no evidence of increased specific to the immune system at the tolerance and to ‘‘ensure that there is a incidence of tumors at the tested doses. highest dose tested (i.e., 52 milligrams/ reasonable certainty that no harm will Saflufenacil is weakly clastogenic in the kilogram/bodyweight/day (mg/kg bw/ result to infants and children from in vitro chromosomal aberration assay day)), indicating that saflufenacil does aggregate exposure to the pesticide in V79 cells in the presence of S9 not directly target the immune system at chemical residue.’’ activation; however, the response was the dose levels being used for risk Consistent with section 408(b)(2)(D) not evident in the absence of S9 assessment. of FFDCA, and the factors specified in activation. It is neither mutagenic in Specific information on the studies section 408(b)(2)(D) of FFDCA, EPA has bacterial cells nor clastogenic in rodents received and the nature of the adverse reviewed the available scientific data in vivo. Saflufenacil is classified as ‘‘not effects caused by saflufenacil as well as and other relevant information in likely to be carcinogenic to humans.’’ the no-observed-adverse-effect-level support of this action. EPA has Increased fetal and offspring (NOAEL) and the lowest-observed- sufficient data to assess the hazards of susceptibility to saflufenacil were adverse-effect-level (LOAEL) from the and to make a determination on observed in the developmental toxicity toxicity studies can be found at http:// aggregate exposure for saflufenacil studies in the rat and rabbit and in the www.regulations.gov in the document including exposure resulting from the 2-generation reproduction study in the ‘‘Saflufenacil. Human-Health Risk tolerances established by this action. rat. Developmental effects such as Assessment for Proposed Uses in/on EPA’s assessment of exposures and risks decreased fetal body weights and Vegetable, Legume, Subgroup 6C, pea associated with saflufenacil follows. increased skeletal variations occurred at and bean (except soybean); Soybean; doses that were not maternally toxic in A. Toxicological Profile Rapeseed Subgroup 20A; Sunflower the developmental study in rats, Subgroup 20B; and Cottonseed EPA has evaluated the available indicating increased quantitative Subgroup 20C’’ at page 31 in docket ID toxicity data and considered its validity, susceptibility. In rabbits, developmental number EPA–HQ–OPP–2010–0755. completeness, and reliability as well as effects such as increased liver the relationship of the results of the porphyrins were observed at doses that B. Toxicological Points of Departure/ studies to human risk. EPA has also were not maternally toxic, indicating Levels of Concern considered available information increased quantitative susceptibility. In Once a pesticide’s toxicological concerning the variability of the the 2-generation reproduction study in profile is determined, EPA identifies sensitivities of major identifiable rats, offspring effects such as increased toxicological points of departure (POD) subgroups of consumers, including number of stillborn pups, decreased and levels of concern to use in infants and children. viability and lactation indices, evaluating the risk posed by human

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exposure to the pesticide. For hazards safety factors are used in conjunction information on the general principles that have a threshold below which there with the POD to calculate a safe EPA uses in risk characterization and a is no appreciable risk, the toxicological exposure level—generally referred to as complete description of the risk POD is used as the basis for derivation a population-adjusted dose (PAD) or a assessment process, see http:// of reference values for risk assessment. reference dose (RfD)—and a safe margin www.epa.gov/pesticides/factsheets/ PODs are developed based on a careful of exposure (MOE). For non-threshold riskassess.htm. analysis of the doses in each risks, the Agency assumes that any toxicological study to determine the amount of exposure will lead to some A summary of the toxicological dose at which no adverse effects are degree of risk. Thus, the Agency endpoints for saflufenacil used for observed (the NOAEL) and the lowest estimates risk in terms of the probability human risk assessment is shown in the dose at which adverse effects of concern of an occurrence of the adverse effect following Table. are identified (the LOAEL). Uncertainty/ expected in a lifetime. For more

TABLE—SUMMARY OF TOXICOLOGICAL DOSES AND ENDPOINTS FOR SAFLUFENACIL FOR USE IN HUMAN HEALTH RISK ASSESSMENT

Point of departure and Exposure/scenario uncertainty/safety RfD, PAD, LOC for Study and toxicological effects factors risk assessment

Acute dietary (General population including NOAEL = 500 mg/kg/ Acute RfD = 5.0 mg/ Acute Neurotoxicity Study in the Rat. infants and children). day. kg/day. LOAEL = 2,000 mg/kg/day based on de- UFA = 10x ...... aPAD = 5.0 mg/kg/day creased motor activity representing mild UFH = 10x and transient systemic toxicity in males. A FQPA SF = 1x LOAEL was not established for females. Chronic dietary (All populations) ...... NOAEL= 4.6 mg/kg/ Chronic RfD = 0.046 Chronic/Carcinogenicity in the Mouse. day. mg/kg/day. LOAEL = 13.8 mg/kg/day based on de- UFA = 10x ...... cPAD = 0.046 mg/kg/ creased red blood cells, hemoglobin, and UFH = 10x day. Ht and porphyria observed in the satellite FQPA SF = 1x group.

Cancer (Oral, dermal, inhalation) ...... Classification: Not likely carcinogenic to humans based on the lack of tumors in the mouse and rat carcinogenicity studies and lack of mutagenicity.

UFA = extrapolation from animal to human (interspecies). UFH = potential variation in sensitivity among members of the human population (intraspecies). FQPA SF = Food Quality Protection Act Safety Factor. PAD = population-adjusted dose (a = acute, c = chronic). RfD = reference dose. LOC = level of concern.

C. Exposure Assessment soybean); and rapeseed subgroup 20A, 2. Dietary exposure from drinking for which the tolerance levels were water. The Agency used screening level 1. Dietary exposure from food and multiplied by a correction factor to water exposure models in the dietary feed uses. In evaluating dietary account for a metabolite of concern exposure analysis and risk assessment exposure to saflufenacil, EPA which is not included in the tolerance for saflufenacil in drinking water. These considered exposure under the expression. simulation models take into account petitioned-for tolerances as well as all ii. Chronic exposure. In conducting data on the physical, chemical, and fate/ existing saflufenacil tolerances in 40 transport characteristics of saflufenacil. CFR 180.649. EPA assessed dietary the chronic dietary exposure assessment EPA used the food consumption data Further information regarding EPA exposures from saflufenacil in food as drinking water models used in pesticide follows: from the USDA 1994–1996 and 1998 CSFII. Chronic dietary exposure was exposure assessment can be found at i. Acute exposure. Quantitative acute http://www.epa.gov/oppefed1/models/ dietary exposure and risk assessments assessed using the same food residue assumptions as in the acute dietary water/index.htm. are performed for a food-use pesticide, Based on the First Index Reservoir if a toxicological study has indicated the exposure assessment discussed in Unit III.C.1.i. Screening Tool (FIRST) and Pesticide possibility of an effect of concern Root Zone Model/Ground Water occurring as a result of a 1-day or single iii. Cancer. Based on the data (PRZM/GW), the estimated drinking exposure. Such effects were identified summarized in Unit III.A., EPA has water concentrations (EDWCs) of for saflufenacil. In estimating acute concluded that saflufenacil does not saflufenacil for acute exposures are dietary exposure, EPA used food pose a cancer risk to humans. Therefore, estimated to be 37.3 parts per billion consumption information from the U.S. a dietary exposure assessment for the (ppb) for surface water and 180 ppb for Department of Agriculture (USDA) purpose of assessing cancer risk is ground water. EDWCs for chronic 1994–1996 and 1998 Nationwide unnecessary. exposures for non-cancer assessments Continuing Surveys of Food Intake by iv. Anticipated residue and percent are estimated to be 23.8 ppb for surface Individuals (CSFII). The unrefined crop treated (PCT) information. EPA did water and 173 ppb for ground water. assessment assumed 100% crop treated not use anticipated residue or PCT Modeled estimates of drinking water (CT), Dietrary Exposure Evaluation information in the dietary assessment concentrations were directly entered Model (DEEMTM 7.81) default for saflufenacil. Tolerance level residues into the dietary exposure model. For concentration factors, and tolerance- (or, for some commodities, tolerance- acute dietary risk assessment, the water level residues for all commodities, level residues adjusted to account for an concentration value of 180 ppb was except cottonseed; sunflower subgroup additional metabolite of concern) and used to assess the contribution to 20B; soybean, seed; vegetable, legume, 100% CT were assumed for all food drinking water. For chronic dietary risk subgroup 6C, pea and bean (except commodities. assessment, the water concentration of

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value 173 ppb was used to assess the rats. As discussed in Unit III.A., there conservative (protective) assumptions in contribution to drinking water. was evidence of quantitative the ground- and surface water modeling 3. From non-dietary exposure. The susceptibility of fetuses to saflufenacil used to assess exposure to saflufenacil term ‘‘residential exposure’’ is used in exposure in the developmental toxicity in drinking water. These assessments this document to refer to non- studies in rats and rabbits and evidence will not underestimate the exposure and occupational, non-dietary exposure of qualitative susceptibility of offspring risks posed by saflufenacil. (e.g., for lawn and garden pest control, in the rat reproduction study. indoor pest control, termiticides, and An analysis was performed to E. Aggregate Risks and Determination of flea and tick control on pets). determine the degree of concern for the Safety Saflufenacil is not registered for any effects observed in the developmental EPA determines whether acute and specific use patterns that would result and reproduction toxicity studies when chronic dietary pesticide exposures are in residential exposure. considered in the context of all available safe by comparing aggregate exposure 4. Cumulative effects from substances toxicity data, and to identify any estimates to the acute PAD (aPAD) and with a common mechanism of toxicity. residual uncertainties after establishing chronic PAD (cPAD). For linear cancer Section 408(b)(2)(D)(v) of FFDCA toxicity endpoints and traditional UFs risks, EPA calculates the lifetime requires that, when considering whether to be used in the risk assessment of probability of acquiring cancer given the to establish, modify, or revoke a saflufenacil. The degree of concern is estimated aggregate exposure. Short-, tolerance, the Agency consider low and there are no residual intermediate-, and chronic-term risks ‘‘available information’’ concerning the uncertainties for the increased are evaluated by comparing the cumulative effects of a particular susceptibility since: estimated aggregate food, water, and pesticide’s residues and ‘‘other i. Clear NOAELs/LOAELs were residential exposure to the appropriate substances that have a common established for the developmental PODs to ensure that an adequate MOE mechanism of toxicity.’’ effects seen in rats and rabbits as well exists. EPA has not found saflufenacil to as for the offspring effects seen in the 2- 1. Acute risk. An acute aggregate risk share a common mechanism of toxicity generation reproduction study; assessment takes into account acute with any other substances, and ii. Dose-response relationships for the exposure estimates from dietary saflufenacil does not appear to produce effects of concern are well consumption of food and drinking a toxic metabolite produced by other characterized; water. Using the exposure assumptions substances. For the purposes of this iii. None of the effects in the discussed in this unit for acute tolerance action, therefore, EPA has developmental or reproduction studies assumed that saflufenacil does not have exposure, the acute dietary exposure were attributable to a single exposure from food and water to saflufenacil will a common mechanism of toxicity with and, therefore, are not of concern for other substances. For information occupy less than 1% of the aPAD for all acute risk assessment; and population subgroups, including infants regarding EPA’s efforts to determine iv. The dose used to evaluate chronic and children. which chemicals have a common dietary risks is lower than the NOAELs 2. Chronic risk. Using the exposure mechanism of toxicity and to evaluate for fetal/offspring effects in the assumptions described in this unit for the cumulative effects of such developmental and reproduction studies chronic exposure, EPA has concluded chemicals, see EPA’s Web site at and is, therefore, protective of the that chronic exposure to saflufenacil http://www.epa.gov/pesticides/ developmental and offspring effects from food and water will utilize 30% of cumulative. observed in these studies. 3. Conclusion. EPA has determined the cPAD for infants less than 1 year D. Safety Factor for Infants and old, the population group receiving the Children that reliable data show the safety of infants and children would be greatest exposure. There are no 1. In general. Section 408(b)(2)(C) of adequately protected if the FQPA SF residential uses for saflufenacil. FFDCA provides that EPA shall apply were reduced to 1x. That decision is 3. Short- and intermediate-term risk. an additional tenfold (10X) margin of based on the following findings: Short- and intermediate-term aggregate safety for infants and children in the i. The toxicity database for exposure take into account short- or case of threshold effects to account for saflufenacil is complete. intermediate-term residential exposure prenatal and postnatal toxicity and the ii. There is no indication that plus chronic exposure from food and completeness of the database on toxicity saflufenacil is a neurotoxic chemical water (considered to be a background and exposure unless EPA determines and there is no need for a exposure level). Short- and based on reliable data that a different developmental neurotoxicity study or intermediate-term adverse effects were margin of safety will be safe for infants additional UFs to account for identified; however, saflufenacil is not and children. This additional margin of neurotoxicity. registered for any use patterns that safety is commonly referred to as the iii. Although there is evidence of would result in short- or intermediate- FQPA Safety Factor (SF). In applying increased quantitative and qualitative term residential exposure. Short- and this provision, EPA either retains the susceptibility of offspring in the intermediate-term risks are assessed default value of 10X, or uses a different developmental and reproduction studies based on short- or intermediate-term additional safety factor when reliable for saflufenacil, the degree of concern is residential exposure plus chronic data available to EPA support the choice low and the Agency did not identify any dietary exposure. Because there is no of a different factor. residual uncertainties after establishing short- or intermediate-term residential 2. Prenatal and postnatal sensitivity. toxicity endpoints and traditional UFs exposure and chronic dietary exposure The prenatal and postnatal toxicity to be used in the risk assessment of has already been assessed under the database for saflufenacil includes rat saflufenacil. appropriately protective cPAD (which is and rabbit developmental toxicity iv. There are no residual uncertainties at least as protective as the POD used to studies, a two-generation reproduction identified in the exposure databases. assess short- and intermediate-term toxicity study in rats, acute and The dietary food exposure assessments risk), no further assessment of short- or subchronic neurotoxicity studies in rats, were performed based on 100% CT and intermediate-term risk is necessary, and and a 28-day immunotoxicity study in tolerance-level residues. EPA made EPA relies on the chronic dietary risk

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assessment for evaluating short- and ‘‘oilseeds, sunflower subgroup 20B, V. Conclusion intermediate-term risk for saflufenacil. seed’’ was changed to ‘‘sunflower Therefore, tolerances are established 5. Aggregate cancer risk for U.S. subgroup 20B;’’ ‘‘soybean, aspirated or revised for residues of saflufenacil, population. Based on the lack of grain fractions’’ was changed to ‘‘grain, including its metabolites and ’’ ‘‘ ’’ evidence of carcinogenicity in two aspirated fractions; pea, vines was degradates, in or on the commodities as ‘‘ ’’ ‘‘ adequate rodent carcinogenicity studies, changed to pea, hay; and oilseeds, codified in the regulatory text in ’’ saflufenacil is not expected to pose a rapeseed subgroup 20A, seed was § 180.649(a)(1) and (a)(2). cancer risk to humans. changed to ‘‘rapeseed subgroup 20A.’’ 6. Determination of safety. Based on EPA has also revised most of the VI. Statutory and Executive Order these risk assessments, EPA concludes proposed tolerance levels. Based on Reviews that there is a reasonable certainty that analysis of the field trial data using the This final rule establishes tolerances no harm will result to the general Agency’s tolerance/MRL calculator in under section 408(d) of FFDCA in population, or to infants and children accordance with the Agency’s response to a petition submitted to the ‘‘ from aggregate exposure to saflufenacil Guidance for Setting Pesticide Agency. The Office of Management and Tolerances Based on Field Trial Data,’’ residues. Budget (OMB) has exempted these types proposed tolerances were revised for of actions from review under Executive IV. Other Considerations cotton, gin byproducts from 3.5 ppm to Order 12866, entitled Regulatory 0.45 ppm; for pea, hay from 8.0 ppm to A. Analytical Enforcement Methodology Planning and Review (58 FR 51735, 17 ppm; and for rapeseed subgroup 20A October 4, 1993). Because this final rule Adequate enforcement methodology from 0.8 ppm to 0.45 ppm. Proposed has been exempted from review under (liquid chromatography/mass tolerances for grain, aspirated fractions Executive Order 12866, this final rule is spectroscopy/mass spectroscopy (LC– and soybean, seed were increased from not subject to Executive Order 13211, MS/MS) methods D0603/02 (plants) and 4.52 ppm to 10 ppm and 0.42 ppm to entitled Actions Concerning Regulations L0073/01 (livestock)) is available to 0.50 ppm, respectively, based on enforce the tolerance expression. The processing factors (150x for aspirated That Significantly Affect Energy Supply, methods may be requested from: Chief, grain fractions and 6x for soybean hulls) Distribution, or Use (66 FR 28355, May Analytical Chemistry Branch, derived from a soybean processing 22, 2001) or Executive Order 13045, Environmental Science Center, 701 study in conjunction with the highest entitled Protection of Children from Mapes Rd., Ft. Meade, MD 20755–5350; average field trial (HAFT) residue of Environmental Health Risks and Safety telephone number: (410) 305–2905; e- 0.07 ppm from soybean residue studies. Risks (62 FR 19885, April 23, 1997). mail address: [email protected]. In addition, EPA determined that This final rule does not contain any information collections subject to OMB B. International Residue Limits separate tolerances were not needed for dry peas and beans, proposed at 0.1 approval under the Paperwork In making its tolerance decisions, EPA ppm and 0.5 ppm, respectively. A single Reduction Act, 44 U.S.C. 3501 et seq., seeks to harmonize U.S. tolerances with tolerance of 0.30 ppm on ‘‘pea and bean, nor does it require any special international standards whenever dried shelled, except soybean, subgroup considerations under Executive Order possible, consistent with U.S. food 6C’’ was determined to be appropriate 12898, entitled Federal Actions To safety standards and agricultural based on analysis of the dry bean field Address Environmental Justice in practices. EPA considers the trial data using the Agency’s tolerance/ Minority Populations and Low-Income international maximum residue limits MRL calculator. Since residues were Populations (59 FR 7629, February 16, (MRLs) established by the Codex significantly lower in dried peas, they 1994). Alimentarius Commission (Codex), as were not used in calculating the Since tolerances and exemptions that required by FFDCA section 408(b)(4). subgroup 6C tolerance. Finally, based are established on the basis of a petition The Codex Alimentarius is a joint U.N. on calculated livestock dietary burdens under section 408(d) of FFDCA, such as Food and Agriculture Organization/ in light of the new tolerances and data the tolerances in this final rule, do not World Health Organization food from a cattle feeding study, EPA has require the issuance of a proposed rule, standards program, and it is recognized determined that established tolerances the requirements of the Regulatory as an international food safety for liver and meat byproducts, except Flexibility Act (RFA) (5 U.S.C. 601 et standards-setting organization in trade liver, of cattle, goats, horses, and sheep seq.) do not apply. agreements to which the United States should be increased from 0.80 ppm to This final rule directly regulates is a party. EPA may establish a tolerance 2.5 ppm and 0.02 ppm to 0.05 ppm, growers, food processors, food handlers, that is different from a Codex MRL; respectively. and food retailers, not States or Tribes, however, FFDCA section 408(b)(4) In conjunction with establishing these nor does this action alter the requires that EPA explain the reasons tolerances, the existing tolerance for relationships or distribution of power for departing from the Codex level. ‘‘vegetable, foliage of legume, group 7’’ is and responsibilities established by The Codex has not established a MRL being revised to read ‘‘vegetable, foliage Congress in the preemption provisions for saflufenacil. of legume, group 7 (except pea, hay)’’; of section 408(n)(4) of FFDCA. As such, the existing tolerance for ‘‘vegetable, the Agency has determined that this C. Revisions to Petitioned-For legume, group 6’’ at 0.03 ppm is being action will not have a substantial direct Tolerances replaced with tolerances on ‘‘vegetable, effect on States or Tribal governments, EPA has revised the proposed legume, edible podded, subgroup 6A’’ on the relationship between the national commodity terms as follows to agree and ‘‘pea and bean, succulent shelled, government and the States or Tribal with the Agency’s Food and Feed subgroup 6B’’ at the same level (0.03 governments, or on the distribution of Commodity Vocabulary: ‘‘oilseeds, ppm); and the existing tolerances for power and responsibilities among the cottonseed subgroup 20C, gin ‘‘sunflower, seed’’ and ‘‘cotton, various levels of government or between byproducts’’ was changed to ‘‘cotton, gin undelinted seed,’’ which are superseded the Federal Government and Indian byproducts;’’ ‘‘oilseeds, cottonseed by tolerances on cottonseed subgroup Tribes. Thus, the Agency has subgroup 20C, undelinted seed’’ was 20C and sunflower subgroup 20B, are determined that Executive Order 13132, changed to ‘‘cottonseed subgroup 20C;’’ being deleted. entitled Federalism (64 FR 43255,

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August 10, 1999) and Executive Order § 180.649 Saflufenacil; tolerances for * * * * * 13175, entitled Consultation and residues. [FR Doc. 2011–11553 Filed 5–10–11; 8:45 am] Coordination with Indian Tribal (a) * * * (1) * * * BILLING CODE 6560–50–P Governments (65 FR 67249, November 9, 2000) do not apply to this final rule. In addition, this final rule does not ENVIRONMENTAL PROTECTION AGENCY impose any enforceable duty or contain Commodity Parts per any unfunded mandate as described million 40 CFR Part 180 under Title II of the Unfunded Mandates Almond, hulls ...... 0 .10 [EPA–HQ–OPP–2009–1009; FRL–8873–2] Reform Act of 1995 (Pub. L. 104–4). Cotton, gin byproducts ...... 0 .45 This action does not involve any Cottonseed subgroup 20C ...... 0 .20 Propiconazole; Pesticide Tolerances technical standards that would require Fruit, citrus, group 10 ...... 0.03 Agency consideration of voluntary Fruit, pome, group 11 ...... 0 .03 AGENCY: Environmental Protection consensus standards pursuant to section Fruit, stone, group 12 ...... 0 .03 Agency (EPA). Grain, aspirated fractions ...... 10 12(d) of the National Technology ACTION: Final rule. Transfer and Advancement Act of 1995, Grain, cereal, forage, fodder Public Law 104–113, section 12(d) (15 and straw group 16 ...... 0 .10 SUMMARY: This regulation establishes U.S.C. 272 note). Grain, cereal, group 15 ...... 0 .03 tolerances for residues of propiconazole Grape ...... 0 .03 in or on multiple commodities which VII. Congressional Review Act Nut, tree, group 14 ...... 0 .03 Pea and bean, dried shelled, are identified and discussed later in this The Congressional Review Act, 5 except soybean, subgroup document. Interregional Research U.S.C. 801 et seq., generally provides 6C ...... 0.30 Project #4 (IR–4) requested these that before a rule may take effect, the Pea and bean, succulent tolerances under the Federal Food, agency promulgating the rule must shelled, subgroup 6B ...... 0 .03 Drug, and Cosmetic Act (FFDCA). In submit a rule report to each House of Pea, hay ...... 17 addition, this action establishes a time- the Congress and to the Comptroller Pistachio ...... 0 .03 limited tolerance for residues of General of the United States. EPA will Rapeseed subgroup 20A ...... 0 .45 propiconazole in or on avocado, in Sunflower subgroup 20B ...... 1 .0 response to the approval of a quarantine submit a report containing this rule and Soybean, hulls ...... 0 .50 other required information to the U.S. Soybean, seed ...... 0 .10 exemption under the Federal Senate, the U.S. House of Vegetable, foliage of legume, Insecticide, Fungicide, and Rodenticide Representatives, and the Comptroller group 7 (except pea, hay) .... 0 .10 Act (FIFRA) authorizing use to control General of the United States prior to Vegetable, legume, edible pod- the disease, laurel wilt (caused by publication of this final rule in the ded, subgroup 6A ...... 0.03 Raffaelea lauricola) in the state of Federal Register. This final rule is not Florida. This regulation establishes a a ‘‘major rule’’ as defined by 5 U.S.C. (2) * * * maximum permissible level of residues 804(2). of propiconazole in this food commodity. The time-limited tolerance List of Subjects in 40 CFR Part 180 expires and is revoked on December 31, 2013. Environmental protection, Commodity Parts per Administrative practice and procedure, million DATES: This regulation is effective May Agricultural commodities, Pesticides 11, 2011. Objections and requests for and pests, Reporting and recordkeeping ***** hearings must be received on or before requirements. Cattle, liver ...... 2.5 July 11, 2011, and must be filed in Dated: May 3, 2011. accordance with the instructions provided in 40 CFR part 178 (see also Lois Rossi, ***** Cattle, meat byproducts, except Unit I.C. of the SUPPLEMENTARY Director, Registration Division, Office of liver ...... 0.05 INFORMATION). Pesticide Programs. ADDRESSES: Therefore, 40 CFR chapter I is ***** EPA has established a amended as follows: Goat, liver ...... 2 .5 docket for this action under docket identification (ID) number EPA–HQ– PART 180—[AMENDED] ***** OPP–2009–1009. All documents in the Goat, meat byproducts, except docket are listed in the docket index ■ 1. The authority citation for part 180 liver ...... 0.05 available at http://www.regulations.gov. continues to read as follows: Although listed in the index, some ***** Authority: 21 U.S.C. 321(q), 346a and 371. information is not publicly available, Horse, liver ...... 2.5 e.g., Confidential Business Information ■ 2. Section 180.649 is amended as (CBI) or other information whose follows: ***** Horse, meat byproducts, except disclosure is restricted by statute. ■ a. Revise the table in paragraph (a)(1). liver ...... 0.05 Certain other material, such as ■ b. In the table in paragraph (a)(2), copyrighted material, is not placed on revise the entries for cattle, liver; cattle, ***** the Internet and will be publicly meat byproducts, except liver; goat, Sheep, liver ...... 2.5 available only in hard copy form. liver; goat, meat byproducts, except Publicly available docket materials are liver; horse, liver; horse, meat ***** available in the electronic docket at byproducts, except liver; sheep, liver; Sheep, meat byproducts, ex- http://www.regulations.gov, or, if only and sheep, meat byproducts, except cept liver ...... 0 .05 available in hard copy, at the OPP liver. ***** Regulatory Public Docket in Rm. S– The revised texts read as follows: 4400, One Potomac Yard (South Bldg.),

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2777 S. Crystal Dr., Arlington, VA. The or request a hearing on this regulation subgroup 3–07B at 9.0 ppm; caneberry Docket Facility is open from 8:30 a.m. in accordance with the instructions subgroup 13–07A at 1.0 ppm; bushberry to 4 p.m., Monday through Friday, provided in 40 CFR part 178. To ensure subgroup 13–07B at 1.0 ppm; and low excluding legal holidays. The Docket proper receipt by EPA, you must growing berry subgroup 13–07G, except Facility telephone number is (703) 305– identify docket ID number EPA–HQ– cranberry at 1.3 ppm. The petition also 5805. OPP–2009–1009 in the subject line on proposed to amend the tolerances in 40 FOR FURTHER INFORMATION CONTACT: the first page of your submission. All CFR 180.434 by increasing the Andrew Ertman, Registration Division objections and requests for a hearing tolerances in or on peppermint, tops (7505P), Office of Pesticide Programs, must be in writing, and must be and spearmint, tops from 3.5 ppm to 10 Environmental Protection Agency, 1200 received by the Hearing Clerk on or ppm; and by removing the tolerances for Pennsylvania Ave., NW., Washington, before July 11, 2011. Addresses for mail berry group 13 at 1.0 ppm; onion, bulb DC 20460–0001; telephone number: and hand delivery of objections and at 0.2 ppm; onion, green at 9.0 ppm and (703) 308–9367; e-mail address: hearing requests are provided in 40 CFR strawberry at 1.3 ppm. That notice [email protected]. 178.25(b). referenced a summary of the petition In addition to filing an objection or prepared by Syngenta, the registrant, SUPPLEMENTARY INFORMATION: hearing request with the Hearing Clerk which is available in the docket, I. General Information as described in 40 CFR part 178, please http://www.regulations.gov. Comments submit a copy of the filing that does not were received on the notice of filing. A. Does this action apply to me? contain any CBI for inclusion in the EPA’s response to these comments is You may be potentially affected by public docket. Information not marked discussed in Unit IV.C. this action if you are an agricultural confidential pursuant to 40 CFR part 2 EPA is also establishing a time- producer, food manufacturer, or may be disclosed publicly by EPA limited tolerance for residues of pesticide manufacturer. Potentially without prior notice. Submit a copy of propiconazole in or on avocado at 10 affected entities may include, but are your non-CBI objection or hearing ppm. This tolerance expires and is not limited to those engaged in the request, identified by docket ID number revoked on December 31, 2013. The following activities: EPA–HQ–OPP–2009–1009, by one of Agency is establishing this time-limited • Crop production (NAICS code 111). the following methods: tolerance in response to a quarantine • Animal production (NAICS code • Federal eRulemaking Portal: http:// exemption request under FIFRA section 112). www.regulations.gov. Follow the on-line 18 on behalf of the Florida Department • Food manufacturing (NAICS code instructions for submitting comments. of Agriculture and Consumer Services 311). • Mail: Office of Pesticide Programs for emergency use of propiconazole to • Pesticide manufacturing (NAICS (OPP) Regulatory Public Docket (7502P), control the disease, laurel wilt, in code 32532). Environmental Protection Agency, 1200 avocado. This listing is not intended to be Pennsylvania Ave., NW., Washington, According to the applicant, an exhaustive, but rather to provide a guide DC 20460–0001. emergency situation exists due to the for readers regarding entities likely to be • Delivery: OPP Regulatory Public introduction of laurel wilt, a disease affected by this action. Other types of Docket (7502P), Environmental affecting avocado trees caused by the entities not listed in this unit could also Protection Agency, Rm. S–4400, One pathogenic fungus Raffaelea lauricola. be affected. The North American Potomac Yard (South Bldg.), 2777 S. This fungus is vectored by the redbay Industrial Classification System Crystal Dr., Arlington, VA. Deliveries ambrosia beetle, a newly introduced (NAICS) codes have been provided to are only accepted during the Docket species, native to Asia, which has assist you and others in determining Facility’s normal hours of operation moved rapidly toward the avocado whether this action might apply to (8:30 a.m. to 4 p.m., Monday through production area since its initial certain entities. If you have any Friday, excluding legal holidays). discovery in Georgia in 2002. Avocado questions regarding the applicability of Special arrangements should be made tree death from laurel wilt has been this action to a particular entity, consult for deliveries of boxed information. The documented and research has the person listed under FOR FURTHER Docket Facility telephone number is demonstrated that the redbay ambrosia INFORMATION CONTACT. (703) 305–5805. beetle attacks healthy avocado trees from all 22 cultivars tested so far. II. Summary of Petitioned-For B. How can I get electronic access to Control of the vector, the redbay Tolerance other related information? ambrosia beetle, is problematic since You may access a frequently updated In the Federal Register of March 19, inoculation of a tree requires only 1 electronic version of EPA’s tolerance 2010 (75 FR 13277) (FRL–8813–2), EPA beetle, the beetle is capable of flight to regulations at 40 CFR part 180 through issued a notice pursuant to section escape insecticide treatments, and the the Government Printing Office’s e-CFR 408(d)(3) of FFDCA, 21 U.S.C. two currently registered insecticides site at http://www.gpoaccess.gov/ecfr. 346a(d)(3), announcing the filing of a will not provide the necessary year- To access the harmonized test pesticide petition (PP 9E7659) by IR–4, round control due to limits in residual guidelines referenced in this document 500 College Road East, Suite 201W, activity and number of applications electronically, please go to http:// Princeton, NJ 08540. The petition allowed. Once a tree is infected with the www.epa.gov/ocspp and select ‘‘Test requested that 40 CFR 180.434 be disease, there is no cure and the tree Methods and Guidelines.’’ amended by establishing tolerances for will die. For these reasons, the applicant residues of the fungicide propiconazole, states that the potential impact of this C. How can I file an objection or hearing (1-[[2-(2,4-dichlorophenyl)-4-propyl-1,3- disease on avocado growing and request? dioxolan-2-yl] methyl]-1H–1,2,4- production could be devastating. The Under FFDCA section 408(g), 21 triazole) and its metabolites determined applicant states that the avocado U.S.C. 346a, any person may file an as 2,4-dichlorobenzoic acid and producing areas are under severe threat objection to any aspect of this regulation expressed as parent compound, in or on from laurel wilt, and control through a and may also request a hearing on those onion, bulb, subgroup 3–07A at 0.2 suitable fungicide, such as the requested objections. You must file your objection parts per million (ppm); onion, green, material, is essential to protecting

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continued production of avocado in III. Aggregate Risk Assessment and vacuolation of hepatocytes, ballooned Florida as well as protecting other Determination of Safety liver cells, foci of enlarged hepatocytes, susceptible tree species in the U.S. EPA Section 408(b)(2)(A)(i) of FFDCA hypertrophy and necrosis are has authorized under FIFRA section 18 allows EPA to establish a tolerance (the characteristic of propiconazole toxicity the use of propiconazole on avocado in legal limit for a pesticide chemical in rats and mice. Mice appear to be Florida. After having reviewed the residue in or on a food) only if EPA more susceptible to its toxicity than rats. submission, EPA concurs that determines that the tolerance is ‘‘safe.’’ Decreased body weight gain in emergency conditions exist for this Section 408(b)(2)(A)(ii) of FFDCA experimental animals was seen in state. defines ‘‘safe’’ to mean that ‘‘there is a subchronic, chronic, developmental and As part of its assessment of the reasonable certainty that no harm will reproductive studies. Dogs appeared to emergency exemption request, EPA result from aggregate exposure to the be more sensitive to the localized assessed the potential risks presented by pesticide chemical residue, including toxicity of propiconazole as manifested the residues of propiconazole in all anticipated dietary exposures and all by stomach irritation at 6 mg/kg/day and above. avocado, as discussed below. In doing other exposures for which there is so, EPA considered the safety standard reliable information.’’ This includes In rabbits, developmental toxicity in section 408(b)(2) of the FFDCA and exposure through drinking water and in occurred at a higher dose than the EPA decided that the necessary time- residential settings, but does not include maternal toxic dose, while in rats, limited tolerance under section 408(l)(6) occupational exposure. Section developmental toxicity occurred at lower doses than maternal toxic doses. of the FFDCA would be consistent with 408(b)(2)(C) of FFDCA requires EPA to Increased incidences of rudimentary the safety standard and with FIFRA give special consideration to exposure ribs occurred in rat and rabbit fetuses. section 18. Consistent with the need to of infants and children to the pesticide Increased cleft palate malformations move quickly on the emergency chemical residue in establishing a were noted in two studies in rats. In one exemption in order to address the tolerance and to ‘‘ensure that there is a published study in rats developmental urgent non-routine situation and to reasonable certainty that no harm will effects (incomplete ossification of the ensure that the resulting food is safe and result to infants and children from skull, caudal vertebrae and digits, extra lawful, EPA is issuing this time-limited aggregate exposure to the pesticide rib (14th rib) and missing sternebrae, tolerance without notice and chemical residue. * * *’’ malformations of the lung and kidneys) opportunity for public comment as Consistent with section 408(b)(2)(D) of FFDCA, and the factors specified in were reported at doses that were not provided in section 408(l)(6) of the maternally toxic. FFDCA. Although, this time-limited section 408(b)(2)(D) of FFDCA, EPA has In the 2-generation reproduction tolerance expires and is revoked on reviewed the available scientific data study in rats, offspring toxicity occurred December 31, 2013, under section and other relevant information in at a higher dose than the parental toxic 408(l)(5) of the FFDCA, residues of the support of this action. EPA has dose suggesting lower susceptibility of pesticide not in excess of the amount sufficient data to assess the hazards of and to make a determination on the offspring to the toxic doses of specified in the tolerance remaining in propiconazole in this study. or on avocado after that date will not be aggregate exposure for propiconazole Propiconazole was negative for unlawful provided the pesticide is including exposure resulting from the mutagenicity in the in vitro BALB/C 3T3 applied in a manner that was lawful tolerances established by this action. cell transformation assay, bacterial under FIFRA, and the residues do not EPA’s assessment of exposures and risks associated with propiconazole follows. reverse mutation assay, Chinese hamster exceed a level that was authorized by bone marrow chromosomal aberration this time-limited tolerance at the time of A. Toxicological Profile assay, unscheduled DNA synthesis application. EPA will take action to EPA has evaluated the available studies in human fibroblasts and revoke this time-limited tolerance toxicity data and considered its validity, primary rat hepatocytes, mitotic gene earlier if any experience with, scientific completeness, and reliability as well as conversion assay and the dominant data, or other relevant information on the relationship of the results of the lethal assay in mice. Hepatocellular this pesticide indicates that the residues studies to human risk. EPA has also proliferation studies in mice suggest are not safe. considered available information that propiconazole induces cell Because this time-limited tolerance is concerning the variability of the proliferation followed by treatment- being approved under emergency sensitivities of major identifiable related hypertrophy in a manner similar conditions, EPA has not made any subgroups of consumers, including to the known hypertrophic agent decision about whether propiconazole infants and children. phenobarbital. meets EPA’s registration requirements Propiconazole has low to moderate Propiconazole was carcinogenic to for use on avocado or whether a toxicity in experimental animals by the male mice. Propiconazole was not permanent tolerance for this use would oral, dermal and inhalation routes. It is carcinogenic to rats nor to female mice. be appropriate. Under this moderately irritating to the eyes, and The Agency classified propiconazole as circumstance, EPA does not believe that minimally irritating to the skin. It is a Group C possible human carcinogen and the time-limited tolerance serves as a dermal sensitizer. Propiconazole is recommended that for the purpose of basis for registration of propiconazole readily absorbed by the rat skin with risk characterization the reference dose by a State for special local needs under 40% absorption within 10 hours of (RfD) approach be used for FIFRA section 24(c). Nor does the time- dermal application. quantification of human risk. limited tolerance serve as the basis for The primary target organ for Propiconazole is not genotoxic and this any State other than Florida to use this propiconazole toxicity in animals is the fact, together with special mechanistic pesticide on this crop under section 18 liver. Increased liver weights were seen studies, indicate that propiconazole is a of FIFRA without following all in mice after subchronic or chronic oral threshold carcinogen. Propiconazole provisions of EPA’s regulations exposures to propiconazole at doses produced liver tumors in male mice implementing FIFRA section 18 as greater than 50 milligrams/kilograms/ only at a high dose that was toxic to the identified in 40 CFR part 166. day (mg/kg/day). Liver lesions such as liver. At doses below the RfD liver

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toxicity is not expected, and therefore B. Toxicological Points of Departure/ with the POD to calculate a safe tumors are also not expected. Levels of Concern exposure level—generally referred to as Specific information on the studies a population-adjusted dose (PAD) or a Once a pesticide’s toxicological reference dose (RfD)—and a safe margin received and the nature of the adverse profile is determined, EPA identifies effects caused by propiconazole as well of exposure (MOE). For non-threshold toxicological points of departure (POD) risks, the Agency assumes that any as the no-observed-adverse-effect-level and levels of concern to use in amount of exposure will lead to some (NOAEL) and the lowest-observed- evaluating the risk posed by human degree of risk. Thus, the Agency adverse-effect-level (LOAEL) from the exposure to the pesticide. For hazards estimates risk in terms of the probability toxicity studies can be found at http:// that have a threshold below which there of an occurrence of the adverse effect www.regulations.gov in docket ID is no appreciable risk, the toxicological expected in a lifetime. For more number EPA–HQ–OPP–2009–1009 on POD is used as the basis for derivation information on the general principles pages 34–40 in the document titled of reference values for risk assessment. EPA uses in risk characterization and a ‘‘Revised Propiconazole Human Health PODs are developed based on a careful complete description of the risk Risk Assessment for a Section 3 analysis of the doses in each assessment process, see http:// Registration on Mint, Bulb Vegetables, toxicological study to determine the www.epa.gov/pesticides/factsheets/ Caneberry Subgroup 13–07A, Bushberry dose at which no adverse effects are riskassess.htm. Subgroup 13–07B, and Low Growing observed (the NOAEL) and the lowest A summary of the toxicological Berry Subgroup 13–07G’’ dose at which adverse effects of concern endpoints for propiconazole used for are identified (the LOAEL). Uncertainty/ human risk assessment is shown in the safety factors are used in conjunction following Table:

TABLE—SUMMARY OF TOXICOLOGICAL DOSES AND ENDPOINTS FOR PROPICONAZOLE FOR USE IN HUMAN HEALTH RISK ASSESSMENT

Point of departure and Exposure/scenario uncertainty/safety RfD, PAD, LOC for Study and toxicological effects factors risk assessment

Acute dietary (Females 13–50 years of age) .. NOAEL = 30 milli- Acute RfD =0.3 mg/kg/ DNT Study—Rat. grams/kilograms/day day. LOAEL = 90 mg/kg/day based on increased (mg/kg/day). aPAD = 0.3 mg/kg/day incidence of rudimentary ribs, un-ossified UFA = 10x sternebrae, as well as increased incidence UFH = 10x of shortened and absent renal papillae and FQPA SF = 1x increased cleft palate. Acute dietary (General population including in- NOAEL = 30 mg/kg/ Acute RfD = 0.3 mg/ Acute neurotoxicity study Rat. fants and children). day. kg/day. LOAEL = 100 mg/kg/day based on clinical UFA = 10x aPAD = 0.3 mg/kg/day signs of toxicity (piloerection in one male, UFH = 10x diarrhea in one female, tip toe gait in 3 fe- FQPA SF = 1x males). Chronic dietary (All populations) ...... NOAEL= 10 mg/kg/ Chronic RfD = 0.1 mg/ 24-month oncogenicity study on CD–1 mice. day. kg/day. LOAEL = 50 mg/kg/day based on non-neo- UFA = 10x cPAD = 0.1 mg/kg/day plastic liver effects (increased liver weight UFH = 10x in males and increase in liver lesions: FQPA SF = 1x masses/raised areas/swellings/nodular areas mainly). Incidental Oral Exposure (Short-Term) and Oral study ...... LOC for MOE = 100 ... Acute Neurotoxicity Study—Rats. Dermal short-term (1 to 30 days). NOAEL = 30 mg/kg/ LOAEL = 100 mg/kg/day based on clinical day dermal absorp- signs of toxicity (piloerection in one male, tion rate = 40% ex- diarrhea in one female, tip toe gait in 3 fe- posures. males). UFA = 10x UFH = 10x FQPA SF = 1x Incidental Oral Exposure (Intermediate-Term) Oral study ...... LOC for MOE = 100 ... 24 Month Oncogenicity Study—Mice. and Dermal intermediate-term (1 to 6 NOAEL= 10 mg/kg/ LOAEL = 50 mg/kg/day based on non-neo- months). day dermal absorp- plastic liver effects (increased liver weight tion rate = 40% for in males and increase in liver lesions: dermal exposures. masses/raised areas/swellings/nodular UFA = 10x areas mainly). UFH = 10x FQPA SF = 1x Inhalation short-term (1 to 30 days) ...... Inhalation (or oral) LOC for MOE = 100 ... Acute Neurotoxicity Study—Rats. study. LOAEL = 100 mg/kg/day based on clinical NOAEL= 30 mg/kg/ signs of toxicity (piloerection in one male, day (inhalation ab- diarrhea in one female, tip toe gait in 3 fe- sorption rate = males). 100%). UFA = 10x UFH = 10x FQPA SF = 1x

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TABLE—SUMMARY OF TOXICOLOGICAL DOSES AND ENDPOINTS FOR PROPICONAZOLE FOR USE IN HUMAN HEALTH RISK ASSESSMENT—Continued

Point of departure and Exposure/scenario uncertainty/safety RfD, PAD, LOC for Study and toxicological effects factors risk assessment

Cancer (Oral, dermal, inhalation) ...... Classification: Group C, possible human carcinogen, RfD approach for risk characterization.

UFA = extrapolation from animal to human (interspecies). UFH = potential variation in sensitivity among members of the human population (intraspecies). FQPA SF = Food Quality Protection Act Safety Factor. PAD = population adjusted dose (a = acute, c = chronic). RfD = reference dose. MOE = margin of exposure. LOC = level of concern.

C. Exposure Assessment risk was assessed using the same Propiconazole is currently registered for 1. Dietary exposure from food and exposure estimates as discussed in Unit the following uses that could result in feed uses. In evaluating dietary III.C.1.ii., chronic exposure. residential exposures: Turf, ornamentals exposure to propiconazole, EPA iv. Anticipated residue and PCT and in paint. EPA assessed residential considered exposure under the information. EPA did not use exposure using the following petitioned-for tolerances as well as all anticipated residue and/or PCT assumptions: Short-term risk to toddlers existing propiconazole tolerances in 40 information in the dietary assessment was assessed for incidental oral and CFR 180.434. EPA assessed dietary for propiconazole. Tolerance level dermal exposure. The highest incidental exposures from propiconazole in food as residues and/or 100 PCT were assumed oral and dermal exposure scenarios are follows: for all food commodities. expected from residential use on turf. i. Acute exposure. Quantitative acute 2. Dietary exposure from drinking Short-term risk to adults was assessed dietary exposure and risk assessments water. The Agency used screening level for dermal and inhalation residential are performed for a food-use pesticide, water exposure models in the dietary handler exposure as well as dermal if a toxicological study has indicated the exposure analysis and risk assessment exposure for residential post- possibility of an effect of concern for propiconazole in drinking water. application. Adult handlers have some occurring as a result of a 1-day or single These simulation models take into inhalation exposure however, based on exposure. account data on the physical, chemical, the low vapor pressure of Such effects were identified for and fate/transport characteristics of propiconazole, negligible post propiconazole. In estimating acute propiconazole. Further information application inhalation exposure is dietary exposure, EPA used food regarding EPA drinking water models anticipated to occur. The highest post consumption information from the U.S. used in pesticide exposure assessment application exposure from residential Department of Agriculture (USDA) can be found at http://www.epa.gov/ use on turf was used to assess risk to 1994–1996 and 1998 Nationwide oppefed1/models/water/index.htm. short term aggregate exposures. Continuing Surveys of Food Intake by Based on the Pesticide Root Zone The only residential use scenario that Individuals (CSFII). As to residue levels Model/Exposure Analysis Modeling will result in potential intermediate- in food, EPA used tolerance levels and System (PRZM/EXAMS) and Screening term exposure to propiconazole is 100 percent crop treated (PCT) for all Concentration in Ground Water (SCI– dermal and incidental oral post existing and proposed uses. GROW) models, the estimated drinking application exposure to children from ii. Chronic exposure. In conducting water concentrations (EDWCs) of wood treatment (antimicrobial use). the chronic dietary exposure assessment propiconazole for acute exposures are Further information regarding EPA EPA used the food consumption data estimated to be 55.78 parts per billion standard assumptions and generic from the USDA 1994–1996 and 1998 (ppb) for surface water and 0.64 ppb for inputs for residential exposures may be CSFII. As to residue levels in food, EPA ground water, for chronic exposures for found at http://www.epa.gov/pesticides/ used tolerance levels and 100 PCT for non-cancer assessments are estimated to trac/science/trac6a05.pdf. all existing and proposed uses. be 21.61 ppb for surface water and 0.64 4. Cumulative effects from substances iii. Cancer. EPA determines whether ppb for ground water and for chronic with a common mechanism of toxicity. quantitative cancer exposure and risk exposures for cancer assessments are Section 408(b)(2)(D)(v) of FFDCA assessments are appropriate for a food- estimated to be 13.24 ppb for surface requires that, when considering whether use pesticide based on the weight of the water and 0.64 ppb for ground water. to establish, modify, or revoke a evidence from cancer studies and other Modeled estimates of drinking water tolerance, the Agency consider relevant data. Cancer risk is quantified concentrations were directly entered ‘‘available information’’ concerning the using a linear or nonlinear approach. If into the dietary exposure model. For cumulative effects of a particular sufficient information on the acute dietary risk assessment, the water pesticide’s residues and ‘‘other carcinogenic mode of action is available, concentration value of 55.8 ppb was substances that have a common a threshold or non-linear approach is used to assess the contribution to mechanism of toxicity.’’ used and a cancer RfD is calculated drinking water. For chronic dietary risk Propiconazole is a member of the based on an earlier noncancer key event. assessment, the water concentration of triazole-containing class of pesticides. If carcinogenic mode of action data are value 21.6 ppb was used to assess the Although conazoles act similarly in not available, or if the mode of action contribution to drinking water. plants (fungi) by inhibiting ergosterol data determines a mutagenic mode of 3. From non-dietary exposure. The biosynthesis, there is not necessarily a action, a default linear cancer slope term ‘‘residential exposure’’ is used in relationship between their pesticidal factor approach is utilized. Based on the this document to refer to non- activity and their mechanism of toxicity data summarized in Unit III.A., EPA has occupational, non-dietary exposure in mammals. Structural similarities do concluded that a nonlinear RfD (e.g., for lawn and garden pest control, not constitute a common mechanism of approach is appropriate for assessing indoor pest control, termiticides, and toxicity. Evidence is needed to establish cancer risk to propiconazole. Cancer flea and tick control on pets). that the chemicals operate by the same,

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or essentially the same, sequence of (Food + Water) Exposure and Risk performed a Degree of Concern Analysis major biochemical events (EPA, 2002). Assessment to Address The Section 3 and concluded that the degree of In conazoles, however, a variable Request for Propiconazole on Mint, Bulb concern for the effects observed in this pattern of toxicological responses is Vegetables Subgroups 3–07A and 3– study was low and no residual found. Some are hepatotoxic and 07B, Caneberry Subgroup 13–07A, uncertainties were identified, for the hepatocarcinogenic in mice. Some Bushberry Subgroup 13–07B, and Low reasons explained in this Unit. induce thyroid tumors in rats. Some growing Berry Subgroup 13–07G’’ and 3. Conclusion. EPA has determined induce developmental, reproductive, ‘‘Common Triazole Metabolites: that reliable data show the safety of and neurological effects in rodents. Updated Dietary (Food + Water) infants and children would be Furthermore, the conazoles produce a Exposure and Risk Assessment to adequately protected if the FQPA SF diverse range of biochemical events Address The Section 18 Request for were reduced to 1x. That decision is including altered cholesterol levels, Propiconazole on Avocado in Florida.’’ based on the following findings: stress responses, and altered DNA D. Safety Factor for Infants and i. The toxicity database for methylation. It is not clearly understood Children propiconazole is complete except for the whether these biochemical events are lack of immunotoxicity and subchronic 1. In general. Section 408(b)(2)(C) of directly connected to their toxicological neutotoxicity studies. In the absence of FFDCA provides that EPA shall apply outcomes. Thus, there is currently no specific immunotoxicity studies, EPA an additional tenfold (10X) margin of evidence to indicate that conazoles has evaluated the available safety for infants and children in the share common mechanisms of toxicity propiconazole toxicity data to determine case of threshold effects to account for and EPA is not following a cumulative whether an additional database prenatal and postnatal toxicity and the risk approach based on a common uncertainty factor is needed to account completeness of the database on toxicity mechanism of toxicity for the conazoles. for potential immunotoxicity. There was and exposure unless EPA determines For information regarding EPA’s no evidence of adverse effects on the based on reliable data that a different procedures for cumulating effects from organs of the immune system in any margin of safety will be safe for infants substances found to have a common propiconazole study. In addition, mechanism of toxicity, see EPA’s Web and children. This additional margin of safety is commonly referred to as the propiconazole does not belong to a class site at http://www.epa.gov/pesticides/ of chemicals (e.g., the organotins, heavy cumulative. FQPA SF. In applying this provision, EPA either retains the default value of metals, or halogenated aromatic Propiconazole is a triazole-derived 10X, or uses a different additional safety hydrocarbons) that would be expected pesticide. This class of compounds can factor when reliable data available to to be immunotoxic. Based on the form the common metabolite 1,2,4- EPA support the choice of a different considerations in this Unit, EPA does triazole and two triazole conjugates factor. not believe that conducting a special (triazolylalanine and triazolylacetic 2. Prenatal and postnatal sensitivity. Harmonized Guideline 870.7800 acid). To support existing tolerances There is low concern for prenatal and/ immunotoxicity study will result in a and to establish new tolerances for or postnatal toxicity resulting from POD less than the NOAEL of 10.0 mg/ triazole-derivative pesticides, including exposure to propiconazole. In the kg/day used in calculating the cPAD for propiconazole, U.S. EPA conducted a developmental toxicity study in rats, propiconazole, and therefore, an human health risk assessment for fetal effects observed in this study at a additional database uncertainty factor is exposure to 1,2,4-triazole, dose lower than that evoking maternal not needed to account for potential triazolylalanine, and triazolylacetic acid toxicity are considered to be immunotoxicity. resulting from the use of all current and quantitative evidence of increased In the absence of the subchronic pending uses of any triazole-derived susceptibility of fetuses to in utero neurotoxicity study, EPA has evaluated fungicide. The risk assessment is a exposure to propiconazole. In the the available propiconazole toxicity data highly conservative, screening-level developmental toxicity study in rabbits, to determine whether an additional evaluation in terms of hazards neither quantitative nor qualitative database uncertainty factor is needed to associated with common metabolites evidence of increased susceptibility of account for potential neurotoxicity after (e.g., use of a maximum combination of fetuses to in utero exposure to repeated exposures. With the exception uncertainty factors) and potential propiconazole was observed in this of the developmental studies in the rat, dietary and non-dietary exposures (i.e., study. In the 2-generation reproduction there were no indications in any of the high end estimates of both dietary and study in rats, neither quantitative nor repeated dose studies that non-dietary exposures). In addition, the qualitative evidence of increased propiconazole is neurotoxic. In the Agency retained the additional 10X susceptibility of neonates (as compared developmental studies in the rat, there Food Quality Protection Act (FQPA) to adults) to prenatal and/or postnatal were some clinical signs of safety factor (SF) for the protection of exposure to propiconazole was observed neurotoxicity at 300 mg/kg/day but not infants and children. The assessment in this study. There is no evidence of at lower doses. Based on the includes evaluations of risks for various neuropathology or abnormalities in the considerations in this Unit, EPA does subgroups, including those comprised development of the fetal nervous system not believe that conducting a of infants and children. The Agency’s from the available toxicity studies Harmonized Guideline 870.6200b complete risk assessment is found in the conducted with propiconazole. In the subchronic neurotoxicity study will propiconazole reregistration docket at rat acute neurotoxicity study, there was result in a POD less than the NOAEL of http://www.regulations.gov, Docket evidence of mild neurobehavioral 10 mg/kg/day used in calculating the Identification (ID) Number EPA–HQ– effects at 300 mg/kg, but no evidence of cPAD for propiconazole, and therefore, OPP–2005–0497 and an update to assess neuropathology from propiconazole an additional database uncertainty the addition of the commodities administration. Since there was factor is not needed to account for included in this action may be found in quantitative evidence of increased potential neurotoxicity from repeated docket ID number EPA–HQ–OPP–2009– susceptibility of the young following exposures. There is no indication in the 1009 in the documents titled ‘‘Common exposure to propiconazole in the developmental and reproduction Triazole Metabolites: Updated Dietary developmental rat study, the Agency studies, or in the acute neurotoxicity

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study that a developmental chronic exposure, EPA has concluded population, or to infants and children neurotoxicity study should be required. that chronic exposure to propiconazole from aggregate exposure to ii. There is no evidence of from food and water will utilize 18% of propiconazole residues. neuropathology or abnormalities in the the cPAD for children 1 to 2 years old, IV. Other Considerations development of the fetal nervous system the population group receiving the from the available toxicity studies greatest exposure. Based on the A. Analytical Enforcement Methodology conducted with propiconazole. In the explanation in Unit III.C.3., regarding Adequate enforcement methodology rat acute neurotoxicity study, there was residential use patterns, chronic (HPLC/UV Method AG–671A) is evidence of mild neurobehavioral residential exposure to residues of available to enforce the tolerance effects at 300 mg/kg, but no evidence of propiconazole is not expected. expression. The method may be neuropathology from propiconazole 3. Short-term risk. Short-term requested from: Chief, Analytical administration. aggregate exposure takes into account Chemistry Branch, Environmental iii. Although an apparent increased short-term residential exposure plus Science Center, 701 Mapes Rd., Ft. quantitative susceptibility was observed chronic exposure to food and water Meade, MD 20755–5350; telephone in fetuses and offspring based on (considered to be a background number: (410) 305–2905; e-mail address: minimal toxicity at high doses of exposure level). [email protected]. administration, clear NOAELs and Propiconazole is currently registered LOAELs have been identified for all for uses that could result in short-term B. International Residue Limits effects of concern, and a clear dose- residential exposure, and the Agency In making its tolerance decisions, EPA response has been well defined. Since has determined that it is appropriate to seeks to harmonize U.S. tolerances with this increased susceptibility is occurring aggregate chronic exposure through food international standards whenever at high doses and a clear dose response and water with short-term residential possible, consistent with U.S. food has been well defined for all effects of exposures to propiconazole. safety standards and agricultural concern, residual uncertainties or Using the exposure assumptions practices. EPA considers the concerns for prenatal and/or postnatal described in this unit for short-term international maximum residue limits toxicity are minimal. exposures, EPA has concluded the (MRLs) established by the Codex iv. There are no residual uncertainties combined short-term food, water, and Alimentarius Commission (Codex), as identified in the exposure databases. residential exposures result in aggregate required by FFDCA section 408(b)(4). The dietary food exposure assessments MOEs of 160 for toddlers (children 1 to The Codex Alimentarius is a joint U.N. were performed based on 100 PCT and 2 years old), between 120 and 4,400 for Food and Agriculture Organization/ tolerance-level residues. EPA made adults from handler activities, and 330 World Health Organization food conservative (protective) assumptions in for adults from post-application standards program, and it is recognized the ground and surface water modeling activities. Because EPA’s level of as an international food safety used to assess exposure to concern for propiconazole is a MOE of standards-setting organization in trade propiconazole in drinking water. EPA 100 or below, these MOEs are not of agreements to which the United States used similarly conservative assumptions concern. is a party. EPA may establish a tolerance to assess postapplication exposure of 4. Intermediate-term risk. that is different from a Codex MRL; children as well as incidental oral Intermediate-term aggregate exposure however, FFDCA section 408(b)(4) exposure of toddlers. These assessments takes into account intermediate-term requires that EPA explain the reasons will not underestimate the exposure and residential exposure plus chronic for departing from the Codex level. risks posed by propiconazole. exposure to food and water (considered The Codex has not established a MRL to be a background exposure level). E. Aggregate Risks and Determination of for propiconazole for any of the subject Propiconazole is currently registered crops in this document. Safety for uses that could result in EPA determines whether acute and intermediate-term residential exposure, C. Response to Comments chronic dietary pesticide exposures are and the Agency has determined that it A comment was received from a safe by comparing aggregate exposure is appropriate to aggregate chronic private citizen objecting to estimates to the acute population exposure through food and water with establishment of tolerances stating that adjusted dose (aPAD) and chronic PAD intermediate-term residential exposures residues should be zero. The Agency (cPAD). For linear cancer risks, EPA to propiconazole. has received similar comments from this calculates the lifetime probability of Using the exposure assumptions commenter on numerous previous acquiring cancer given the estimated described in this unit for intermediate- occasions. Refer to Federal Register 70 aggregate exposure. Short-, term exposures, EPA has concluded that FR 37686, June 30, 2005; 70 FR 1354, intermediate-, and chronic-term risks the combined intermediate-term food, January 7, 2005; 69 FR 63096, October are evaluated by comparing the water, and residential exposures result 29, 2004 for the Agency’s response to estimated aggregate food, water, and in an aggregate MOE of 120 for toddlers these objections. residential exposure to the appropriate (children 1 to 2 years old). Because V. Conclusion PODs to ensure that an adequate MOE EPA’s level of concern for exists. propiconazole is a MOE of 100 or below, Therefore, tolerances are established 1. Acute risk. Using the exposure these MOEs are not of concern. for residues of propiconazole, (1-[[2- assumptions discussed in this unit for 5. Aggregate cancer risk for U.S. (2,4-dichlorophenyl)-4-propyl-1,3- acute exposure, the acute dietary population. The Agency considers the dioxolan-2-yl] methyl]-1H-1,2,4-triazole) exposure from food and water to chronic aggregate risk assessment, and its metabolites determined as 2,4- propiconazole will occupy 17% of the making use of the cPAD, to be protective dichlorobenzoic acid and expressed as aPAD for children 1 to 2 years old, the of any aggregate cancer risk. parent compound as set forth in the population group receiving the greatest 6. Determination of safety. Based on regulatory text. In addition this exposure. these risk assessments, EPA concludes regulation establishes a time-limited 2. Chronic risk. Using the exposure that there is a reasonable certainty that tolerance for residues of propiconazole assumptions described in this unit for no harm will result to the general in or on avocado at 10 ppm.

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VI. Statutory and Executive Order under Title II of the Unfunded Mandates Reviews Reform Act of 1995 (Pub. L. 104–4). This action does not involve any Parts per This final rule establishes tolerances Commodity million under section 408(d) of FFDCA in technical standards that would require response to a petition submitted to the Agency consideration of voluntary Agency. The Office of Management and consensus standards pursuant to section ***** Budget (OMB) has exempted these types 12(d) of the National Technology Bushberry, subgroup 13–07B ... 1 .0 of actions from review under Executive Transfer and Advancement Act of 1995, Caneberry, subgroup 13–07A .. 1.0 Order 12866, entitled Regulatory Public Law 104–113, section 12(d) (15 Planning and Review (58 FR 51735, U.S.C. 272 note). ***** October 4, 1993). Because this final rule Low growing berry subgroup VII. Congressional Review Act 13–07G, except cranberry .... 1 .3 has been exempted from review under Executive Order 12866, this final rule is The Congressional Review Act, 5 U.S.C. 801 et seq., generally provides ***** not subject to Executive Order 13211, Onion, bulb subgroup 3–07A ... 0.2 entitled Actions Concerning Regulations that before a rule may take effect, the Onion, green, subgroup 3–07B 9.0 That Significantly Affect Energy Supply, agency promulgating the rule must Distribution, or Use (66 FR 28355, May submit a rule report to each House of ***** 22, 2001) or Executive Order 13045, the Congress and to the Comptroller Peppermint, tops ...... 10 .0 entitled Protection of Children from General of the United States. EPA will Environmental Health Risks and Safety submit a report containing this rule and ***** Spearmint, tops ...... 10 .0 Risks (62 FR 19885, April 23, 1997). other required information to the U.S. Senate, the U.S. House of This final rule does not contain any ***** information collections subject to OMB Representatives, and the Comptroller General of the United States prior to approval under the Paperwork (b) * * * Reduction Act, 44 U.S.C. 3501 et seq., publication of this final rule in the nor does it require any special Federal Register. This final rule is not considerations under Executive Order a ‘‘major rule’’ as defined by 5 U.S.C. 804(2). 12898, entitled Federal Actions to Parts per Expiration/ Address Environmental Justice in List of Subjects in 40 CFR Part 180 Commodity million revocation Minority Populations and Low-Income date Environmental protection, Populations (59 FR 7629, February 16, Avocado ...... 10 12/31/13 1994). Administrative practice and procedure, Agricultural commodities, Pesticides Since tolerances and exemptions that ***** are established on the basis of a petition and pests, Reporting and recordkeeping requirements. under section 408(d) of FFDCA, such as * * * * * the tolerance in this final rule, do not Dated: May 2, 2011. [FR Doc. 2011–11564 Filed 5–10–11; 8:45 am] require the issuance of a proposed rule, Lois Rossi, BILLING CODE 6560–50–P the requirements of the Regulatory Director, Registration Division, Office of Flexibility Act (5 U.S.C. 601 et seq.) do Pesticide Programs. not apply. Therefore, 40 CFR chapter I is ENVIRONMENTAL PROTECTION This final rule directly regulates amended as follows: AGENCY growers, food processors, food handlers, and food retailers, not States or Tribes, PART 180—[AMENDED] 40 CFR Part 180 nor does this action alter the [EPA–HQ–OPP–2010–0938; FRL–8872–6] relationships or distribution of power ■ 1. The authority citation for part 180 and responsibilities established by continues to read as follows: Glyphosate; Pesticide Tolerance Congress in the preemption provisions Authority: 21 U.S.C. 321(q), 346a and 371. of section 408(n)(4) of FFDCA. As such, AGENCY: Environmental Protection the Agency has determined that this ■ 2. Amend § 180.434 as follows: Agency (EPA). action will not have a substantial direct ■ i. In the table to paragraph (a), remove ACTION: Final rule. effect on States or Tribal governments, the entries for ‘‘berry group 13,’’ ‘‘onion, SUMMARY: This regulation increases the on the relationship between the national bulb,’’ ‘‘onion, green,’’ and ‘‘strawberry’’; established tolerance for residues of government and the States or Tribal revise the entries for ‘‘peppermint, tops’’ glyphosate in or on corn, field, forage. governments, or on the distribution of and ‘‘spearmint, tops’’, and add Monsanto Company requested this power and responsibilities among the alphabetically entries for ‘‘bushberry, tolerance under the Federal Food, Drug, various levels of government or between subgroup 13–07B,’’ ‘‘caneberry, and Cosmetic Act (FFDCA). the Federal Government and Indian subgroup 13–07A,’’ ‘‘low growing berry DATES: This regulation is effective May Tribes. Thus, the Agency has ’’ subgroup 13–07G, except cranberry, 11, 2011. Objections and requests for determined that Executive Order 13132, ‘‘ ’’ onion, bulb subgroup 3–07A, and hearings must be received on or before entitled Federalism (64 FR 43255, ‘‘ ’’ onion, green, subgroup 3–07B. July 11, 2011, and must be filed in August 10, 1999) and Executive Order ■ ii. In the table to paragraph (b) add accordance with the instructions 13175, entitled Consultation and alphabetically and entry for ‘‘avocado.’’ Coordination with Indian Tribal provided in 40 CFR part 178 (see also The added and revised text reads as Unit I.C. of the SUPPLEMENTARY Governments (65 FR 67249, November follows: 9, 2000) do not apply to this final rule. INFORMATION). In addition, this final rule does not § 180.434 Propiconazole; tolerances for ADDRESSES: EPA has established a impose any enforceable duty or contain residues. docket for this action under docket any unfunded mandate as described (a) * * * identification (ID) number EPA–HQ–

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OPP–2010–0938. All documents in the B. How can I get electronic access to issued a notice pursuant to section docket are listed in the docket index other related information? 408(d)(3) of FFDCA, 21 U.S.C. available at http://www.regulations.gov. You may access a frequently updated 346a(d)(3), announcing the filing of a Although listed in the index, some electronic version of EPA’s tolerance pesticide petition (PP 0F7741) by information is not publicly available, regulations at 40 CFR part 180 through Monsanto Company, 1300 I St., NW., Suite 450 East, Washington, DC 20052. e.g., Confidential Business Information the Government Printing Office’s e-CFR The petition requested that 40 CFR (CBI) or other information whose site at http://www.gpoaccess.gov/ecfr. disclosure is restricted by statute. 180.364 be amended by establishing a Certain other material, such as C. How can I file an objection or hearing tolerance for residues of the herbicide copyrighted material, is not placed on request? glyphosate, N-(phosphonomethyl) the Internet and will be publicly Under FFDCA section 408(g), 21 glycine, in or on corn, field, forage at 13 available only in hard copy form. U.S.C. 346a, any person may file an parts per million (ppm). That notice Publicly available docket materials are objection to any aspect of this regulation referenced a summary of the petition available in the electronic docket at and may also request a hearing on those prepared by Monsanto Company, the http://www.regulations.gov, or, if only objections. You must file your objection registrant, which is available in the docket, http://www.regulations.gov. available in hard copy, at the OPP or request a hearing on this regulation Comments were received on the notice Regulatory Public Docket in Rm. S– in accordance with the instructions of filing. EPA’s response to these 4400, One Potomac Yard (South Bldg.), provided in 40 CFR part 178. To ensure comments is discussed in Unit IV.C. 2777 S. Crystal Dr., Arlington, VA. The proper receipt by EPA, you must Docket Facility is open from 8:30 a.m. identify docket ID number EPA–HQ– III. Aggregate Risk Assessment and to 4 p.m., Monday through Friday, OPP–2010–0938 in the subject line on Determination of Safety excluding legal holidays. The Docket the first page of your submission. All Section 408(b)(2)(A)(i) of FFDCA Facility telephone number is (703) 305– objections and requests for a hearing 5805. allows EPA to establish a tolerance (the must be in writing, and must be legal limit for a pesticide chemical FOR FURTHER INFORMATION CONTACT: received by the Hearing Clerk on or residue in or on a food) only if EPA Susan Stanton, Registration Division before July 11, 2011. Addresses for mail determines that the tolerance is ‘‘safe.’’ (7505P), Office of Pesticide Programs, and hand delivery of objections and Section 408(b)(2)(A)(ii) of FFDCA Environmental Protection Agency, 1200 hearing requests are provided in 40 CFR defines ‘‘safe’’ to mean that ‘‘there is a Pennsylvania Ave., NW., Washington, 178.25(b). reasonable certainty that no harm will DC 20460–0001; telephone number: In addition to filing an objection or result from aggregate exposure to the (703) 305–5218; e-mail address: hearing request with the Hearing Clerk pesticide chemical residue, including [email protected]. as described in 40 CFR part 178, please all anticipated dietary exposures and all submit a copy of the filing that does not other exposures for which there is SUPPLEMENTARY INFORMATION: contain any CBI for inclusion in the reliable information.’’ This includes I. General Information public docket. Information not marked exposure through drinking water and in confidential pursuant to 40 CFR part 2 residential settings, but does not include A. Does this action apply to me? may be disclosed publicly by EPA occupational exposure. Section without prior notice. Submit a copy of You may be potentially affected by 408(b)(2)(C) of FFDCA requires EPA to your non-CBI objection or hearing this action if you are an agricultural give special consideration to exposure request, identified by docket ID number producer, food manufacturer, or of infants and children to the pesticide EPA–HQ–OPP–2010–0938, by one of pesticide manufacturer. Potentially chemical residue in establishing a the following methods: ‘‘ affected entities may include, but are tolerance and to ensure that there is a • Federal eRulemaking Portal: http:// not limited to those engaged in the reasonable certainty that no harm will www.regulations.gov. Follow the on-line result to infants and children from following activities: instructions for submitting comments. aggregate exposure to the pesticide • Crop production (NAICS code 111). • Mail: Office of Pesticide Programs chemical residue.’’ • Animal production (NAICS code (OPP) Regulatory Public Docket (7502P), Consistent with section 408(b)(2)(D) 112). Environmental Protection Agency, 1200 of FFDCA, and the factors specified in • Food manufacturing (NAICS code Pennsylvania Ave., NW., Washington, section 408(b)(2)(D) of FFDCA, EPA has DC 20460–0001. reviewed the available scientific data 311). • • Delivery: OPP Regulatory Public and other relevant information in Pesticide manufacturing (NAICS Docket (7502P), Environmental support of this action. EPA has code 32532). Protection Agency, Rm. S–4400, One sufficient data to assess the hazards of This listing is not intended to be Potomac Yard (South Bldg.), 2777 S. and to make a determination on exhaustive, but rather to provide a guide Crystal Dr., Arlington, VA. Deliveries aggregate exposure for glyphosate for readers regarding entities likely to be are only accepted during the Docket including exposure resulting from the affected by this action. Other types of Facility’s normal hours of operation tolerances established by this action. entities not listed in this unit could also (8:30 a.m. to 4 p.m., Monday through EPA’s assessment of exposures and risks be affected. The North American Friday, excluding legal holidays). associated with glyphosate follows. Industrial Classification System Special arrangements should be made In the Federal Register of April 8, (NAICS) codes have been provided to for deliveries of boxed information. The 2011 (76 FR 19701) (FRL–8866–8), EPA assist you and others in determining Docket Facility telephone number is issued a final rule establishing a whether this action might apply to (703) 305–5805. tolerance for residues of glyphosate in certain entities. If you have any or on sweet corn and reducing the questions regarding the applicability of II. Summary of Petitioned-For established tolerance for residues of this action to a particular entity, consult Tolerance glyphosate and N-acetyl-glyphosate in the person listed under FOR FURTHER In the Federal Register of February 4, or on poultry meat. When the Agency INFORMATION CONTACT. 2011 (76 FR 6465) (FRL–8858–7), EPA conducted the risk assessment in

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support of the April 8, 2011 tolerance The Codex Alimentarius is a joint U.N. the tolerance level from 6 ppm to 13 action, it considered secondary residues Food and Agriculture Organization/ ppm, as proposed, but is retaining the of glyphosate in livestock commodities World Health Organization food current tolerance expression to clarify from consumption of glyphosate-treated standards program, and it is recognized the chemical moieties that are covered feed items, including corn forage. The as an international food safety by the tolerance and specify how Agency has determined that increasing standards-setting organization in trade compliance with the tolerance is to be the tolerance on corn forage from 6 ppm agreements to which the United States measured. is a party. EPA may establish a tolerance to 13 ppm will not increase residues of V. Conclusion glyphosate in livestock commodities that is different from a Codex MRL; above those assumed in the previous however, FFDCA section 408(b)(4) Therefore, the previously established risk assessment. The livestock dietary requires that EPA explain the reasons tolerance for residues of glyphosate, burdens for glyphosate were calculated for departing from the Codex level. including its metabolites and assuming the roughage portion of the The Codex has established an MRL for degradates, in or on corn, field, forage diet for beef and dairy cattle consisted residues of glyphosate in or on maize at is amended as set forth in the regulatory of nongrass animal feed and grass 5 ppm. The MRL for maize would cover text. forage, which have much higher residues of glyphosate on corn (maize) VI. Statutory and Executive Order tolerances (400 and 300 ppm, forage. This MRL is different than the Reviews respectively) than corn forage. tolerance being established for This final rule establishes tolerances Therefore, increasing the tolerance for glyphosate on field corn forage in the under section 408(d) of FFDCA in corn forage from 6 to 13 ppm will not United States due to differences in Codex and U.S. residue definitions. The response to a petition submitted to the affect the estimated livestock dietary Agency. The Office of Management and burden or expected residues of U.S. tolerance of 13 ppm for corn, field, forage is necessarily higher than the Budget (OMB) has exempted these types glyphosate in livestock commodities of actions from review under Executive and will not change the estimated Codex MRL to account for residues of both glyphosate and its metabolite N- Order 12866, entitled Regulatory aggregate risks resulting from use of Planning and Review (58 FR 51735, glyphosate, as discussed in the April 8, acetyl glyphosate. N-acetyl glyphosate is found in genetically modified (GMO) October 4, 1993). Because this final rule 2011 (76 FR 19701; FRL–8866–8) has been exempted from review under Federal Register. Refer to the Federal glyphosate-resistant commodities, including corn, grown in the U.S. Executive Order 12866, this final rule is Register document, available at http:// not subject to Executive Order 13211, www.regulations.gov, for a detailed Therefore, it is included in the U.S. tolerance but not the Codex expression, entitled Actions Concerning Regulations discussion of the aggregate risk That Significantly Affect Energy Supply, assessment and determination of safety. accounting for the difference in the established MRLs. Distribution, or Use (66 FR 28355, May Therefore, based on the risk 22, 2001) or Executive Order 13045, assessment discussed in the final rule C. Response to Comments entitled Protection of Children from published in the Federal Register of EPA received comments from two Environmental Health Risks and Safety April 8, 2011 (76 FR 19701; FRL–8866– individuals expressing concerns about Risks (62 FR 19885, April 23, 1997). 8) EPA concludes that there is a pesticides generally and objecting to the This final rule does not contain any reasonable certainty that no harm will presence of any pesticide residues in information collections subject to OMB result to the general population, or to food. The Agency understands the approval under the Paperwork infants and children from aggregate commenters’ concerns and recognizes Reduction Act (PRA), 44 U.S.C. 3501 et exposure to glyphosate residues. that some individuals believe that seq., nor does it require any special IV. Other Considerations pesticides should be banned considerations under Executive Order completely. However, the existing legal 12898, entitled Federal Actions to A. Analytical Enforcement Methodology framework provided by section 408 of Address Environmental Justice in Adequate enforcement methodology the Federal Food, Drug and Cosmetic Minority Populations and Low-Income (high-performance liquid Act (FFDCA) contemplates that Populations (59 FR 7629, February 16, chromatography (HPLC) equipped with tolerances greater than zero may be set 1994). a fluorescence detector method; LOQ = when persons seeking such tolerances Since tolerances and exemptions that 0.05 ppm) is available to enforce the or exemptions have demonstrated that are established on the basis of a petition tolerance expression. The method may the pesticide meets the safety standard under section 408(d) of FFDCA, such as be requested from: Chief, Analytical imposed by that statute. The submitted the tolerance in this final rule, do not Chemistry Branch, Environmental comments appear to be directed at the require the issuance of a proposed rule, Science Center, 701 Mapes Rd., Ft. underlying statute and not EPA’s the requirements of the Regulatory Meade, MD 20755–5350; telephone implementation of it; the commenters Flexibility Act (RFA) (5 U.S.C. 601 et number: (410) 305–2905; e-mail address: made no contention that EPA has acted seq.) do not apply. [email protected]. in violation of the statutory framework. This final rule directly regulates growers, food processors, food handlers, B. International Residue Limits D. Revisions to Petitioned-For and food retailers, not States or Tribes, In making its tolerance decisions, EPA Tolerances nor does this action alter the seeks to harmonize U.S. tolerances with Monsanto Company proposed a relationships or distribution of power international standards whenever tolerance for residues of glyphosate on and responsibilities established by possible, consistent with U.S. food corn, field, forage at 13 ppm. The Congress in the preemption provisions safety standards and agricultural current tolerance is expressed in terms of section 408(n)(4) of FFDCA. As such, practices. EPA considers the of glyphosate, including its metabolites the Agency has determined that this international maximum residue limits and degradates; and compliance with action will not have a substantial direct (MRLs) established by the Codex the tolerance level is determined by effect on States or Tribal governments, Alimentarius Commission (Codex), as measuring glyphosate and its N-acetyl- on the relationship between the national required by FFDCA section 408(b)(4). glyphosate metabolite. EPA is increasing government and the States or Tribal

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governments, or on the distribution of § 180.364 Glyphosate; tolerances for information is not publicly available, power and responsibilities among the residues. e.g., Confidential Business Information various levels of government or between (a) * * * (CBI) or other information whose the Federal Government and Indian * * * * * disclosure is restricted by statute. Tribes. Thus, the Agency has (2) * * * Certain other material, such as determined that Executive Order 13132, copyrighted material, is not placed on entitled Federalism (64 FR 43255, Commodity Parts per the Internet and will be publicly August 10, 1999) and Executive Order million available only in hard copy form. 13175, entitled Consultation and Publicly available docket materials are Coordination with Indian Tribal ***** available in the electronic docket at Governments (65 FR 67249, November Corn, field, forage ...... 13 http://www.regulations.gov, or, if only 9, 2000) do not apply to this final rule. available in hard copy, at the OPPT In addition, this final rule does not ***** Docket. The OPPT Docket is located in impose any enforceable duty or contain the EPA Docket Center (EPA/DC) at any unfunded mandate as described * * * * * Rm. 3334, EPA West Bldg., 1301 under Title II of the Unfunded Mandates [FR Doc. 2011–11205 Filed 5–10–11; 8:45 am] Constitution Ave., NW., Washington, Reform Act of 1995 (UMRA) (Pub. L. BILLING CODE 6560–50–P DC. The EPA/DC Public Reading Room 104–4). hours of operation are 8:30 a.m. to This action does not involve any 4:30 p.m., Monday through Friday, technical standards that would require ENVIRONMENTAL PROTECTION excluding legal holidays. The telephone Agency consideration of voluntary AGENCY number of the EPA/DC Public Reading Room is (202) 566–1744, and the consensus standards pursuant to section 40 CFR Part 710 12(d) of the National Technology telephone number for the OPPT Docket Transfer and Advancement Act of 1995 [EPA–HQ–OPPT–2009–0187; FRL–8874–2] is (202) 566–0280. Docket visitors are required to show photographic (NTTAA), Public Law 104–113, section RIN 2070–AJ43 12(d) (15 U.S.C. 272 note). identification, pass through a metal detector, and sign the EPA visitor log. VII. Congressional Review Act TSCA Inventory Update Reporting Modifications; Submission Period All visitor bags are processed through The Congressional Review Act, 5 Suspension an X-ray machine and subject to search. U.S.C. 801 et seq., generally provides Visitors will be provided an EPA/DC AGENCY: Environmental Protection that before a rule may take effect, the badge that must be visible at all times Agency (EPA). agency promulgating the rule must in the building and returned upon submit a rule report to each House of ACTION: Final rule. departure. FOR FURTHER INFORMATION CONTACT: For the Congress and to the Comptroller SUMMARY: EPA is amending the Toxic technical information contact: Chenise General of the United States. EPA will Substances Control Act (TSCA) section Farquharson, Chemical Control Division submit a report containing this rule and 8(a) Inventory Update Reporting (IUR) (7405M), Office of Pollution Prevention other required information to the U.S. regulations by suspending the next IUR and Toxics, Environmental Protection Senate, the U.S. House of submission period. The IUR requires Agency, 1200 Pennsylvania Ave., NW., Representatives, and the Comptroller manufacturers (including importers) of Washington, DC 20460–0001; telephone General of the United States prior to certain chemical substances included on number: (202) 564–7768; e-mail address: publication of this final rule in the the TSCA Chemical Substance Federal Register. This final rule is not [email protected]. Inventory (TSCA Inventory) to report For general information contact: The a ‘‘major rule’’ as defined by 5 U.S.C. current data on the manufacturing, 804(2). TSCA-Hotline, ABVI-Goodwill, 422 processing, and use of the chemical South Clinton Ave., Rochester, NY List of Subjects in 40 CFR Part 180 substances. In the Federal Register of 14620; telephone number: (202) 554– August 13, 2010, EPA published Environmental protection, 1404; e-mail address: TSCA- proposed modifications to the IUR [email protected]. Administrative practice and procedure, regulations. EPA is suspending the next Agricultural commodities, Pesticides submission period to allow additional SUPPLEMENTARY INFORMATION: and pests, Reporting and recordkeeping time to finalize the proposed I. Does this action apply to me? requirements. modifications to the IUR regulations, You may be potentially affected by and to avoid finalizing changes to the Dated: May 2, 2011. this action if you manufacture reporting requirements in the midst of Lois Rossi, (including manufacture as a byproduct) the 2011 submission period. EPA Director, Registration Division, Office of or import chemical substances listed on expects to finalize, in the near future, Pesticide Programs. the TSCA Inventory. Potentially affected changes to the IUR reporting entities may include, but are not limited Therefore, 40 CFR chapter I is requirements which will supersede this to: amended as follows: action. • Chemical manufacturers and PART 180—[AMENDED] DATES: This final rule is effective May importers (NAICS codes 325 and 11, 2011. 324110; e.g., chemical manufacturing ■ 1. The authority citation for part 180 ADDRESSES: EPA has established a and processing and petroleum continues to read as follows: docket for this action under docket refineries). identification (ID) number EPA–HQ– • Chemical users and processors who Authority: 21 U.S.C. 321(q), 346a and 371. OPPT–2009–0187. All documents in the may manufacture a byproduct chemical ■ 2. Section 180.364 is amended by docket are listed in the docket index substance (NAICS codes 22, 322, 331, revising the following entry in the table available at http://www.regulations.gov. and 3344; e.g., utilities, paper in paragraph (a)(2) to read as follows: Although listed in the index, some manufacturing, primary metal

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manufacturing, and semiconductor and information collection procedures. At 2. To accommodate the promulgation other electronic component the same time, EPA acknowledges the of a final rule which EPA expects will manufacturing). comments it received on behalf of modify the IUR reporting requirements This listing is not intended to be numerous environmental and public in the near future, without having such exhaustive, but rather provides a guide health advocates, emphasizing the finalization occur in the midst of an for readers regarding entities likely to be criticality of the information to be active submission period. The next affected by this action. Other types of collected under a modified IUR, for applicable reporting period would run entities not listed in this unit could also purposes of informing future risk-based from June 1, 2011 to September 30, 2011 be affected. The North American decisionmaking. While EPA cannot if not suspended. Industrial Classification System fully respond to comments about the If EPA were to delay this action (NAICS) codes have been provided to appropriate timing for implementing pending further opportunity for public assist you and others in determining IUR modifications until those comment, the action to suspend the next whether this action might apply to modifications have been finalized, EPA submission period would itself be certain entities. If you have any believes that a suspension of the next postponed, and likely could not be questions regarding the applicability of submission period is necessary at this finalized until the latter part of the this action to a particular entity, consult time given the pending proposed submission period, by which point it the technical person listed under FOR changes. When EPA completes its work would be too late to avoid the confusion FURTHER INFORMATION CONTACT. to modify the IUR, the Agency expects, and duplication of effort that EPA in a final rule, to establish the next anticipates would likely occur if this II. Background applicable submission period and submission period were to open prior to A. What action is the agency taking? supersede the suspension that this the completion of work on the proposed action puts in place. modifications of the submission EPA is amending 40 CFR 710.53 to requirements. suspend the next submission period B. What is the agency’s authority for Similarly, under section 553(d) of the within which manufacturers and taking this action? APA, 5 U.S.C. 553(d), the Agency may importers must report IUR data to EPA. The IUR rule is issued pursuant to the make a rule immediately effective The IUR final rule, published in the authority of section 8(a) of TSCA, 15 ‘‘which grants or recognizes an Federal Register issue of December 19, U.S.C. 2607(a). exemption or relieves a restriction,’’ or 2005 (70 FR 75059) (FRL–7743–9), Consistent with section 553 of the otherwise ‘‘for good cause found and established June 1, 2011 to September Administrative Procedure Act (APA), 5 published with the rule.’’ For the 30, 2011, as the second of a series of U.S.C. 553, EPA is finalizing this action following reasons, EPA has determined recurring submission periods for the based on public notice and opportunity that this action ‘‘relieves a restriction,’’ IUR. to comment afforded with respect to the that there is also ‘‘good cause’’ to make In the Federal Register issue of August 13, 2010 proposed rule. See the this amendment effective upon August 13, 2010 (75 FR 49656) (FRL– August 13, 2010 proposed rule publication in the Federal Register, and 8833–5), EPA published proposed (soliciting comment on the transition to that this action will be effective modifications to the IUR regulations. new IUR requirements). Alternatively, immediately upon publication in the This action suspends the second IUR under section 553(b)(3)(B) of the APA, Federal Register. submission period, which is the next the Agency may issue a final rule Without immediate amendment, 40 IUR submission period. Thus, the without providing for notice and CFR 710.53 would provide that the next submission of IUR data for the next comment if it demonstrates that it has submission period for the IUR would submission period will be neither good cause to do so by finding that run from June 1, 2011 to September 30, required nor accepted until the notice and comment are impracticable, 2011. The immediately effective upon suspension has been lifted or unnecessary, or contrary to the public publication in the Federal Register superseded by subsequent EPA action. interest. For this final rule suspending amendment to 40 CFR 710.53 suspends This action to suspend the next the next submission period, the Agency the upcoming submission period. The submission period is needed due to the finds that the opportunity for notice and Agency has determined that an length of time which has been necessary comment already afforded on the immediate suspension of the next to complete work on the proposed August 13, 2010 proposed rule met the submission period is warranted because modifications and to avoid finalizing APA requirement for notice and it gives affected parties additional time changes to the reporting requirements in comment. However, even if it had not, to adjust their behavior in response to the midst of the 2011 submission notice and comments on this specific other portions of the proposed rule that period. This is a one-time suspension of suspension would be impracticable. EPA expects will soon be finalized and the next submission period only, and it The Agency believes that it would be because it averts potential confusion does not alter the timing of subsequent impracticable to afford further and duplication of effort, which could submission periods (e.g., the submission opportunity for public comment occur if other portions of the proposed period from June 1, 2016 to September respecting the suspension of the next rule, substantively affecting the 30, 2016). submission period, because doing so submission requirements of the IUR, This action also addresses, in part, would defeat the two chief purposes of become effective in the midst of the IUR concerns raised by the regulated the action: submission period itself. community (in their comments on the 1. To address, before the current August 13, 2010 proposed rule) about submission period begins to run, the C. What is the status of the proposed the span of time between the issuance concerns of regulated industry IUR modifications rule? of a final rule modifying the IUR and the respecting the span of time that will be EPA proposed to amend the TSCA close of the next submission period. available between the expected section 8(a) IUR rule in the Federal EPA received numerous comments finalization of the proposed Register issue of August 13, 2010. The requesting that the span be sufficient to modifications of the IUR and the close IUR enables EPA to collect and publish accommodate the commenters’ of the currently applicable submission information on the manufacturing, adjustments to their internal period. processing, and use of commercial

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chemical substances on the TSCA D. Unfunded Mandates Reform Act H. Executive Order 13211 Inventory. This includes current This action does not impose any Because this final rule is exempt from information on chemical production enforceable duty or contain any review under Executive Order 12866 volumes, manufacturing sites, and how unfunded mandate as described under due to its lack of significance, this final the chemical substances are used. This Title II of the Unfunded Mandates rule is not subject to Executive Order information helps the Agency determine Reform Act of 1995 (UMRA) (Pub. L. 13211, entitled Actions Concerning whether people or the environment are 104–4). Regulations That Significantly Affect potentially exposed to reported Energy Supply, Distribution, or Use (66 E. Executive Order 13132 chemical substances. In the August 13, FR 28355, May 22, 2001). 2010 document EPA proposed to amend The Agency has determined that this the IUR rule to require submission of action will not have a substantial direct I. National Technology Transfer information that will better address effect on States, on the relationship Advancement Act Agency and public information needs, between the national government and This action does not involve any improve the usability and reliability of the States, or on the distribution of technical standards that would require the reported data, and ensure that data power and responsibilities among the Agency consideration of voluntary are available in a timely manner. EPA various levels of government, as consensus standards pursuant to section also proposed to require electronic specified in Executive Order 13132, 12(d) of the National Technology reporting of IUR information and to entitled Federalism (64 FR 43255, Transfer and Advancement Act of 1995 modify IUR reporting requirements, August 10, 1999). Executive Order (NTTAA), Public Law 104–113, section including certain circumstances that 13132 requires EPA to develop an 12(d) (15 U.S.C. 272 note). trigger reporting, the specific data to be accountable process to ensure J. Executive Order 12898 reported, the reporting standard for ‘‘meaningful and timely input by State processing and use information, and CBI and local officials in the development of This action does not involve special reporting procedures. The public regulatory policies that have federalism considerations of environmental justice comment period for the August 13, 2010 implications.’’ ‘‘Policies that have related issues as required by Executive proposed rule closed on October 12, federalism implications’’ is defined in Order 12898, entitled Federal Actions to 2010. EPA is completing work on the the Executive Order to include Address Environmental Justice in August 13, 2010 proposed rule and regulations that have ‘‘substantial direct Minority Populations and Low-Income expects to promulgate, in the near effects on the States, on the relationship Populations (59 FR 7629, February 16, future, a final rule addressing IUR between the national government and 1994). modifications. the States, or on the distribution of IV. Congressional Review Act III. Statutory and Executive Order power and responsibilities among the Reviews various levels of government.’’ This The Congressional Review Act, 5 action does not alter the relationships or U.S.C. 801 et seq., generally provides A. Executive Order 12866 distribution of power and that before a rule may take effect, the This action is classified as a final rule responsibilities established by Congress. agency promulgating the rule must because it makes an amendment to the submit a rule report to each House of F. Executive Order 13175 Code of Federal Regulations (CFR). The the Congress and the Comptroller amendment to the CFR is necessary to The Agency has determined that this General of the United States. EPA will allow for a one-time postponement to rule does not have any ‘‘Tribal submit a report containing this rule and the 2011 reporting IUR period. This implications’’ as described in Executive other required information to the U.S. action does not impose any new Order 13175, entitled Consultation and Senate, the U.S. House of requirements or amend substantive Coordination with Indian Tribal Representatives, and the Comptroller requirements. This action is not subject Governments (65 FR 22951, November General of the United States prior to to review by the Office of Management 9, 2000). Executive Order 13175, publication of the rule in the Federal and Budget (OMB) under Executive requires EPA to develop an accountable Register. This rule is not a ‘‘major rule’’ Order 12866, entitled Regulatory process to ensure ‘‘meaningful and as defined by 5 U.S.C. 804(2). timely input by Tribal officials in the Planning and Review (58 FR 51735, List of Subjects in 40 CFR Part 710 November 4, 1993). development of regulatory policies that have Tribal implications.’’ This final Environmental protection, Chemicals, B. Paperwork Reduction Act rule will not have substantial direct Hazardous materials, Inventory update This final rule does not contain any effects on Tribal governments, on the reporting, IUR, Reporting and information collections subject to OMB relationship between the Federal recordkeeping requirements, TSCA. approval under the Paperwork Government and Indian Tribes, or on Dated: May 2, 2011. Reduction Act (PRA), 44 U.S.C. 3501 et the distribution of power and Stephen A. Owens, seq. responsibilities between the Federal Assistant Administrator, Office of Chemical Government and Indian Tribes, as C. Regulatory Flexibility Act Safety and Pollution Prevention. specified in Executive Order 13175. Because this action does not impose Thus, Executive Order 13175 does not Therefore, 40 CFR chapter I is any new requirements or amend apply to this rule. amended as follows: substantive requirements, EPA certifies this action will not have a significant G. Executive Order 13045 PART 710—[AMENDED] economic impact on a substantial This action does not require OMB ■ 1. The authority citation for part 710 number of small entities and there will review or any other Agency action continues to read as follows: be no adverse impact on small entities under Executive Order 13045, entitled resulting from this action under section Protection of Children from Authority: 15 U.S.C. 2607(a). 605(b) of the Regulatory Flexibility Act Environmental Health Risks and Safety ■ 2. Add the following sentence to the (RFA) (5 U.S.C. 601 et seq.) Risks (62 FR 19885, April 23, 1997). end of § 710.53 to read as follows:

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§ 710.53 When to report. Authority: 41 U.S.C. 1303 and 48 CFR exercises/training, base operations, and * * * Notwithstanding the foregoing, chapter 1. weapons procurement. and without any alteration of the status ■ 2. In section 209.405 revise paragraph List of Subjects in 48 CFR Part 225 or timing of any subsequent submission (a) introductory text to read as follows: period, the second submission period Government procurement. § 209.405 Effect of listing. (which would otherwise be from June 1, Ynette R. Shelkin, 2011 to September 30, 2011) is (a) Under 10 U.S.C. 2393(b), when a Editor, Defense Acquisition Regulations suspended. department or agency determines that a System. compelling reason exists for it to [FR Doc. 2011–11562 Filed 5–10–11; 8:45 am] Therefore, 48 CFR part 225 is conduct business with a contractor that BILLING CODE 6560–50–P amended as follows: is debarred or suspended from procurement programs, it must provide PART 225—FOREIGN ACQUISITION DEPARTMENT OF DEFENSE written notice of the determination to the General Services Administration ■ 1. The authority citation for 48 CFR Defense Acquisition Regulations (GSA), GSA Suspension and Debarment part 225 continues to read as follows: System Official, Office of Acquisition Policy, Authority: 41 U.S.C. 1303 and 48 CFR 1275 First Street, NE., Washington, DC chapter 1. 20417. Examples of compelling reasons 48 CFR Part 209 ■ are— 2. Add section 225.7404 to read as follows: Defense Federal Acquisition * * * * * Regulation Supplement; Technical [FR Doc. 2011–10264 Filed 5–10–11; 8:45 am] § 225.7404 Contract administration in Amendment BILLING CODE 5001–08–P support of contingency operations. For additional guidance on contract AGENCY: Defense Acquisition administration considerations when Regulations System, Department of DEPARTMENT OF DEFENSE Defense (DoD). supporting contingency operations, see PGI 225.7404. ACTION: Defense Acquisition Regulations Final rule. ■ System 3. Add subpart 225.78 to read as SUMMARY: DoD is making a technical follows: amendment to the Defense Federal 48 CFR Part 225 Subpart 225.78—Acquisitions in Support of Acquisition Regulation Supplement Geographic Combatant Command’s Theater (DFARS) to add a mailing address Defense Federal Acquisition Security Cooperation Efforts DATES: Effective Date: May 11, 2011. Regulation Supplement; Technical Sec. FOR FURTHER INFORMATION CONTACT: Ms. Amendments 225.7801 Policy. Ynette Shelkin, Defense Acquisition AGENCY: Defense Acquisition Subpart 225.78—Acquisitions in Regulations System, OUSD (AT&L) Regulations System, Department of DPAP (DARS), Room 3B855, 3060 Support of Geographic Combatant Defense (DoD). Command’s Theater Security Defense Pentagon, Washington, DC ACTION: Final rule. 20301–3060. Telephone 703–602–8384; Cooperation Efforts facsimile 703–602–0350. SUMMARY: DoD is making technical § 225.7801 Policy. SUPPLEMENTARY INFORMATION: This final amendments to the Defense Federal For guidance on procurement support rule amends DFARS by adding the full Acquisition Regulation Supplement of the geographic combatant command’s mailing address of the General Services (DFARS) to direct contracting officers to theater security cooperation efforts, see Administration (GSA) Debarment and additional guidance on supporting PGI 225.78. contingency operations and in-theater Suspension Official to the DFARS at [FR Doc. 2011–10085 Filed 5–10–11; 8:45 am] 209.405(a). Under 10 U.S.C. 2393(b), security cooperation efforts. BILLING CODE 5001–08–P when a department or agency DATES: Effective Date: May 11, 2011. determines that a compelling reason FOR FURTHER INFORMATION CONTACT: Ms. exists for it to conduct business with a Ynette Shelkin, Defense Acquisition DEPARTMENT OF DEFENSE contractor that is debarred or suspended Regulations System, from procurement programs, it must OUSD(AT&L)DPAP(DARS), Room Defense Acquisition Regulations provide written notice of the 3B855, 3060 Defense Pentagon, System determination to the GSA Suspension Washington, DC 20301–3060. and Debarment Official. Telephone 703–602–8384; facsimile 48 CFR Chapter 2 List of Subjects in 48 CFR Part 209 703–602–0350. SUPPLEMENTARY INFORMATION: This final Defense Federal Acquisition Government procurement. rule amends DFARS by adding language Regulation Supplement; Rules of the Armed Services Board of Contract Ynette R. Shelkin, at 225.7404 to direct contracting officers Appeals Editor, Defense Acquisition Regulations to additional guidance available on System. contract administration considerations AGENCY: Defense Acquisition Therefore, 48 CFR part 209 is when supporting contingency Regulations System, Department of amended as follows: operations. The rule also adds language Defense (DoD). and a new subpart at 225.78 directing ACTION: Final rule. PART 209—CONTRACTOR contracting officers to guidance on QUALIFICATIONS theater security cooperation efforts SUMMARY: DoD is issuing a final rule to conducted in support of the geographic update the Rules of the Armed Services ■ 1. The authority citation for 48 CFR combatant commander, which may Board of Contract Appeals (ASBCA). part 209 continues to read as follows: include support such as military The final rule implements statutory

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increases in the thresholds relating to Æ Rule 28, subsection (b), implements appeals, primarily adjusting current the submission and processing of section 4322(b)(7) of Public Law 104– dollar limits affecting the processing of contract appeals and updates statutory 106, 110 Stat. 677 (1996). Section contract appeals to keep pace with references and other administrative 4322(b)(7) amended 41 U.S.C. 612 to inflation. Therefore, the adjustment of information. update statutory references relating to thresholds just maintains the status quo. payment of claims. Rule 28, subsection DATES: Effective Date: May 11, 2011. (b), also contains changes for IV. Paperwork Reduction Act FOR FURTHER INFORMATION CONTACT: consistency with the judgment fund The rule does not impose any Catherine Stanton, Executive Director, certification process specified in the information collection requirements that ASBCA, 703–681–8503, Internet Treasury Financial Manual, Financial require the approval of the Office of address: [email protected]; Management Service, Department of the Management and Budget under the or David Houpe, Chief Counsel, ASBCA, U.S. Treasury. Paperwork Reduction Act (44 U.S.C. 703–681–8510, Internet address: Æ Minor changes have been made chapter 35). [email protected]. throughout the Rules to ensure List of Subjects in 48 CFR, Appendix A, uniformity and to correct typographical SUPPLEMENTARY INFORMATION: Part 2 errors. I. Background A proposed rule was published in the Government procurement. Federal Register at 76 FR 7782 on This final rule is being issued on Ynette R. Shelkin, behalf of Mr. Paul Williams, Chairman, February 11, 2011. No comments were received in response to the proposed Editor, Defense Acquisition Regulations Armed Services Board of Contract System. rule. Appeals. It amends DFARS Appendix Therefore, 48 CFR chapter 2 is A, Armed Services Board of Contract II. Executive Order 12866 and amended as follows: Appeals, Part 2—Rules, to update Executive Order 13563 Chapter 2—Defense Acquisition thresholds related to requirements for Executive Orders 12866 and 13563 Regulations System, Department of contractor claims and to update direct agencies to assess all costs and Defense information as follows: benefits of available regulatory ■ Æ The Preface, section I, has been 1. The authority citation for 48 CFR alternatives and, if regulation is chapter 2 continues to read as follows: amended to implement section 3 of necessary, to select regulatory Public Law 111–350, 124 Stat. 3677 approaches that maximize net benefits Authority: 41 U.S.C. 1707 and 48 CFR chapter 1. (2011), which, inter alia, revised and (including potential economic, renumbered 41 U.S.C. 601–613 to 41 environmental, public health and safety ■ 2. Appendix A to Chapter 2 is U.S.C. 7101–7109. effects, distributive impacts, and amended by revising Part 2—Rules to Æ The Preface, section II(a), has been equity). Executive Order 13563 read as follows: amended to update the Board’s address emphasizes the importance of Appendix A to Chapter 2—Armed and telephone number. quantifying both costs and benefits, of Æ Services Board of Contract Appeals In Rule 1, subsections (b) and (c) reducing costs, of harmonizing rules, implement section 2351(b) of Public and of promoting flexibility. This is not Law 103–355, 108 Stat. 3322 (1994). * * * * * a significant regulatory action and, Part 2—Rules Section 2351(b) amended 41 U.S.C. therefore, was not subject to review Approved 15 July 1963 605(c) to increase, from $50,000 to under Section 6(b) of Executive Order Revised 1 May 1969 $100,000, the threshold relating to 12866, Regulatory Planning and Review, Revised 1 September 1973 certification, decision, and notification dated September 30, 1993. This rule is Revised 30 June 1980 requirements for contractor claims. not a major rule under 5 U.S.C. 804. Revised 11 May 2011 Æ Rule 12.1, subsection (a), and Rule III. Regulatory Flexibility Act RULES OF THE ARMED SERVICES BOARD 12.3, subsection (b), implement section OF CONTRACT APPEALS 2351(d) of Public Law 103–355, 108 DoD does not expect this rule to have Stat. 3322 (1994). Section 2351(d) a significant economic impact on a PREFACE amended 41 U.S.C. 608(a) to increase, substantial number of small entities I. Jurisdiction for Considering Appeals from $10,000 to $50,000, the threshold within the meaning of the Regulatory The Armed Services Board of Contract for applicability of small claims Flexibility Act, 5 U.S.C. 601, et seq., Appeals (referred to herein as the Board) has procedures for disposition of appeals. because the rule implements current jurisdiction to decide any appeal from a Æ Rule 12.1, subsection (a) statutory provisions relating to the decision of a contracting officer, pursuant to implements section 857 of Public Law submission and processing of contract the Contract Disputes Act, 41 U.S.C. §§ 7101– 109–364, 120 Stat. 2349 (2006). Section appeals, primarily adjusting current 7109, or its Charter, relative to a contract 857 amended 41 U.S.C. 608(a) to insert dollar limits affecting the processing of made by (i) the Department of Defense, the after $50,000 or less’’ the following Department of the Army, the Department of contract appeals to keep pace with the Navy, and the Department of the Air language: ‘‘Or, in the case of a small inflation. Therefore, the adjustment of Force or the National Aeronautics and Space business concern (as defined in the thresholds just maintains the status quo. Administration or (ii) any other department Small Business Act and regulations Accordingly, DoD has not performed a or agency, as permitted by law. under that Act), $150,000 or less.’’ final regulatory flexibility analysis. DoD II. Location and Organization of the Board Æ Rule 12.1, subsection (b), certifies that this final rule will not have implements section 2351(c) of Public a significant economic impact on a (a) The Board’s address is Skyline Six, Law 103–355, 108 Stat. 3322 (1994). substantial number of small entities Room 703, 5109 Leesburg Pike, Falls Church, VA 22041–3208, telephone 703–681–8500 Section 2351(c) amended 41 U.S.C. within the meaning of the Regulatory (receptionist), 703–681–8502 (Recorder). 607(f) to increase, from $50,000 to Flexibility Act, 5 U.S.C. 601, et seq., (b) The Board consists of a Chairman, two $100,000, the threshold for applicability because the rule implements current or more Vice Chairmen, and other members, of accelerated procedures for statutory provisions relating to the all of whom are attorneys at law duly disposition of appeals. submission and processing of contract licensed by a State, commonwealth, territory,

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or the District of Columbia. Board members MOTION FOR RECONSIDERATION representative or attorney. The complaint are designated Administrative Judges. Rule 29 Motion for Reconsideration referred to in Rule 6 may be filed with the (c) There are a number of divisions of the SUSPENSIONS, DISMISSALS, DEFAULTS, notice of appeal, or the appellant may Armed Services Board of Contract Appeals, REMANDS designate the notice of appeal as a complaint, established by the Chairman of the Board in Rule 30 Suspensions; Dismissal Without if it otherwise fulfills the requirements of a such manner as to provide for the most Prejudice complaint. effective and expeditious handling of Rule 31 Dismissal or Default for Failure to appeals. The Chairman and a Vice Chairman Prosecute or Defend Rule 3. Docketing of Appeals of the Board act as members of each division. Rule 32 Remand from Court When a notice of appeal in any form has Appeals are assigned to the divisions for TIME, COMPUTATION, AND EXTENSIONS been received by the Board, it shall be decision without regard to the military Rule 33 Time, Computation and Extensions docketed promptly. Notice in writing shall be department or other procuring agency which EX PARTE COMMUNICATIONS given to the appellant with a copy of these entered into the contract involved. Hearings Rule 34 Ex parte Communications Rules, and to the contracting officer. may be held by a designated member SANCTIONS (Administrative Judge), or by a duly Rule 4. Preparation, Content, Organization, Rule 35 Sanctions Forwarding, and Status of Appeal File authorized examiner. Except for appeals EFFECTIVE DATE AND APPLICABILITY processed under the expedited or accelerated Rule 36 Effective Date (a) Duties of Contracting Officer—Within procedure, the decision of a majority of a RULES 30 days of receipt of an appeal, or notice that division constitutes the decision of the PRELIMINARY PROCEDURES an appeal has been filed, the contracting Board, unless the Chairman refers the appeal officer shall assemble and transmit to the to the Board’s Senior Deciding Group Rule 1. Appeals, How Taken Board an appeal file consisting of all (consisting of the Chairman, Vice Chairmen (a) Notice of an appeal shall be in writing documents pertinent to the appeal, and all division heads), in which event a and mailed or otherwise furnished to the including: decision of a majority of that group Board within 90 days from the date of receipt (1) The decision from which the appeal is constitutes the decision of the Board. of a contracting officer’s decision. A copy taken; Appeals referred to the Senior Deciding thereof shall be furnished to the contracting (2) The contract, including pertinent Group are those of unusual difficulty or officer from whose decision the appeal is specifications, amendments, plans, and significant precedential importance, or which taken. drawings; have occasioned serious dispute within the (b) Where the contractor has submitted a (3) All correspondence between the parties normal division decision process. For claim of $100,000 or less to the contracting relevant to the appeal, including the letter or decisions of appeals processed under the officer and has requested a written decision letters of claim in response to which the expedited or accelerated procedure, see Rules within 60 days from receipt of the request, decision was issued; 12.2(c) and 12.3(b). and the contracting officer has not provided (4) Transcripts of any testimony taken one within the period required, the during the course of proceedings, and Table of Contents contractor may file a notice of appeal as affidavits or statements of any witnesses on Rules of the Armed Services Board of provided in subparagraph (a) of this Rule, the matter in dispute made prior to the filing Contract Appeals citing the failure of the contracting officer to of the notice of appeal with the Board; and Preliminary Procedures issue a decision. (5) Any additional information considered Rule 1 Appeals, How Taken (c) Where the contractor has submitted a relevant to the appeal. Rule 2 Notice of Appeal, Contents of properly certified claim over $100,000 to the Within the same time specified in Rule 3 Docketing of Appeals contracting officer or has requested a paragraph (a) of this Rule, the contracting Rule 4 Preparation, Content, Organization, decision by the contracting officer which officer shall furnish the appellant a copy of Forwarding, and Status of Appeal File presently involves no monetary amount each document the contracting officer Rule 5 Motions pursuant to the Disputes clause, and the transmits to the Board, except those in Rule 6 Pleadings contracting officer has failed to issue a subparagraph (a)(2) of this Rule. As to the Rule 7 Amendments of Pleadings or Record decision within a reasonable time, taking into latter, a list furnished the appellant Rule 8 Hearing Election account such factors as the size and indicating specific contractual documents Rule 9 Prehearing Briefs complexity of the claim, the contractor may transmitted will suffice. Rule 10 Prehearing or Presubmission file a notice of appeal as provided in (b) Duties of the Appellant—Within 30 Conference subparagraph (a) of this Rule, citing the days after receipt of a copy of the appeal file Rule 11 Submission Without a Hearing failure of the contracting officer to issue a assembled by the contracting officer, the Rule 12 Optional Small Claims (Expedited) decision. appellant shall transmit to the Board any and Accelerated Procedures (d) Upon docketing of appeals filed documents not contained therein which the Rule 13 Settling the Record pursuant to (b) or (c) of this Rule, the Board appellant considers relevant to the appeal, Rule 14 Discovery—Depositions may, at its option, stay further proceedings and furnish two copies of such documents to Rule 15 Interrogatories to Parties, pending issuance of a final decision by the the Government trial attorney. Admission of Facts, and Production and contracting officer within such period of time (c) Organization of Appeal File— Inspection of Documents as is determined by the Board. Documents in the appeal file may be Rule 16 Service of Papers Other than (e) In lieu of filing a notice of appeal under originals or legible facsimiles or Subpoenas (b) or (c) of this Rule, the contractor may authenticated copies, and shall be arranged HEARINGS request the Board to direct the contracting in chronological order where practicable, Rule 17 Where and When Held officer to issue a decision in a specified numbered sequentially, tabbed, and indexed Rule 18 Notice of Hearings period of time, as determined by the Board, to identify the contents of the file. Rule 19 Unexcused Absence of a Party in the event of undue delay on the part of the (d) Lengthy Documents—Upon request by Rule 20 Hearings: Nature, Examination of contracting officer. either party, the Board may waive the Witnesses requirement to furnish to the other party Rule 21 Subpoenas Rule 2. Notice of Appeal, Contents of copies of bulky, lengthy, or out-of-size Rule 22 Copies of Papers A notice of appeal should indicate that an documents in the appeal file when inclusion Rule 23 Post-Hearing Briefs appeal is being taken and should identify the would be burdensome. At the time a party Rule 24 Transcript of Proceedings contract (by number), the department and/or files with the Board a document for which Rule 25 Withdrawal of Exhibits agency involved in the dispute, the decision such a waiver has been granted, the party REPRESENTATION from which the appeal is taken, and the shall notify the other party that the document Rule 26 The Appellant amount in dispute, if known. The notice of or a copy is available for inspection at the Rule 27 The Government appeal should be signed personally by the offices of the Board or of the filing party. DECISIONS appellant (the contractor taking the appeal), (e) Status of Documents in Appeal File— Rule 28 Decisions or by the appellant’s duly authorized Documents contained in the appeal file are

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considered, without further action by the give notice in its pleadings or other (2) The possibility of obtaining parties, as part of the record upon which the reasonable written notice. The Board, in stipulations, admissions, agreements, and Board will render its decision. However, a determining foreign law, may consider any rulings on admissibility of documents, party may object, for reasons stated, to relevant material or source, including understandings on matters already of record, consideration of a particular document or testimony, whether or not submitted by a or similar agreements that will avoid documents reasonably in advance of hearing party or admissible under Rules 11, 13, or 20. unnecessary proof; or, if there is no hearing, of settling the The determination of foreign law shall be (3) Agreements and rulings to facilitate record. If such objection is made, the Board treated as a ruling on a question of law. discovery; shall remove the document or documents (4) Limitation of the number of expert from the appeal file and permit the party Rule 7. Amendments of Pleadings or Record witnesses, or avoidance of similar cumulative offering the document to move its admission The Board upon its own initiative or upon evidence; as evidence in accordance with Rules 13 and application by a party may order a party to (5) The possibility of agreement disposing 20. make a more definite statement of the of any or all of the issues in dispute; and (f) Notwithstanding the foregoing, the filing complaint or answer, or to reply to an (6) Such other matters as may aid in the of the Rule 4(a) and (b) documents may be answer. The Board may, in its discretion, and disposition of the appeal. dispensed with by the Board either upon within the proper scope of the appeal, permit (b) The Administrative Judge or examiner request of the appellant in its notice of either party to amend its pleading upon of the Board shall make such rulings and appeal or thereafter upon stipulation of the conditions fair to both parties. When issues orders as may be appropriate to aid in the parties. within the proper scope of the appeal, but disposition of the appeal. The results of pre- not raised by the pleadings, are tried by trial conferences, including any rulings and Rule 5. Motions express or implied consent of the parties, or orders, shall be reduced to writing by the (a) Any motion addressed to the by permission of the Board, they shall be Administrative Judge or examiner and this jurisdiction of the Board shall be promptly treated in all respects as if they had been writing shall thereafter constitute a part of filed. Hearing on the motion shall be afforded raised therein. In such instances, motions to the record. on application of either party. However, the amend the pleadings to conform to the proof Rule 11. Submission Without a Hearing Board may defer its decision on the motion may be entered, but are not required. If Either party may elect to waive a hearing pending hearing on both the merits and the evidence is objected to at a hearing on the and to submit its case upon the record before motion. The Board shall have the right at any ground that it is not within the issues raised the Board, as settled pursuant to Rule 13. time and on its own initiative to raise the by the pleadings, it may be admitted within issue of its jurisdiction to proceed with a Submission of a case without hearing does the proper scope of the appeal, provided not relieve the parties from the necessity of particular appeal, and shall do so by an however, that the objecting party may be appropriate order, affording the parties an proving the facts supporting their allegations granted a continuance, if necessary, to enable or defenses. Affidavits, depositions, opportunity to be heard thereon. it to meet such evidence. (b) The Board may entertain and rule upon admissions, answers to interrogatories, and other appropriate motions. Rule 8. Hearing Election stipulations may be employed to supplement other documentary evidence in the Board After filing of the Government’s answer or Rule 6. Pleadings record. The Board may permit such notice from the Board that it has entered a submissions to be supplemented by oral (a) Appellant—Within 30 days after receipt general denial on behalf of the Government, argument (transcribed if requested), and by of notice of docketing of the appeal, the each party shall advise whether it desires a briefs arranged in accordance with Rule 23. appellant shall file with the Board an original hearing as prescribed in Rules 17 through 25, and two copies of a complaint setting forth or whether it elects to submit its case on the Rule 12. Optional SMALL CLAIMS simple, concise, and direct statements of record without a hearing, as prescribed in (EXPEDITED) and ACCELERATED each of its claims. The appellant shall also Rule 11. Procedures (These procedures are available set forth the basis, with appropriate reference solely at the election of the appellant.) to contract provisions, of each claim and the Rule 9. Prehearing Briefs dollar amount claimed, to the extent known. Based on an examination of the pleadings, 12.1 Elections to Utilize SMALL CLAIMS This pleading shall fulfill the generally and its determination of whether the (EXPEDITED) and ACCELERATED recognized requirements of a complaint, arguments and authorities addressed to the Procedures although no particular form is required. issues are adequately set forth therein, the (a) In appeals where the amount in dispute Upon receipt of the complaint, the Board Board may, in its discretion, require the is $50,000 or less, or in the case of a small shall serve a copy of it upon the Government parties to submit prehearing briefs in any business concern (as defined in the Small unless a copy has been provided directly by case in which a hearing has been elected Business Act and regulations under that Act), the appellant. Should the complaint not be pursuant to Rule 8. If the Board does not $150,000 or less, the appellant may elect to received within 30 days, the appellant’s require prehearing briefs, either party may, in have the appeal processed under a SMALL claim and appeal may, if in the opinion of its discretion and upon appropriate and CLAIMS (EXPEDITED) procedure requiring the Board the issues before the Board are sufficient notice to the other party, furnish a decision of the appeal, whenever possible, sufficiently defined, be deemed to set forth prehearing brief to the Board. In any case within 120 days after the Board receives its complaint and the Government shall be so where a prehearing brief is submitted, it shall written notice of the appellant’s election to notified. be furnished so as to be received by the utilize this procedure. The details of this (b) Government—Within 30 days from Board at least 15 days prior to the date set procedure appear in section 12.2 of this Rule. receipt of the complaint, or the aforesaid for hearing, and a copy shall simultaneously An appellant may elect the ACCELERATED notice from the Board, the Government shall be furnished to the other party as previously procedure rather than the SMALL CLAIMS prepare and file with the Board an original arranged. (EXPEDITED) procedure for any appeal and two copies of an answer thereto. The where the amount in dispute is $50,000 or answer shall set forth simple, concise, and Rule 10. Prehearing or Presubmission less. direct statements of the Government’s Conference (b) In appeals where the amount in dispute defenses to each claim asserted by the (a) Whether the case is to be submitted is $100,000 or less, the appellant may elect appellant, including any affirmative defenses pursuant to Rule 11, or heard pursuant to to have the appeal processed under an available. Upon receipt of the answer, the Rules 17 through 25, the Board may upon its ACCELERATED procedure requiring decision Board shall serve a copy upon the appellant. own initiative, or upon the application of of the appeal, whenever possible, within 180 Should the answer not be received within 30 either party, arrange a telephone conference days after the Board receives written notice days, the Board may, in its discretion, enter or call upon the parties to appear before an of the appellant’s election to utilize this a general denial on behalf of the Government, Administrative Judge or examiner of the procedure. The details of this procedure and the appellant shall be so notified. Board for a conference to consider: appear in section 12.3 of this Rule. (c) A party who intends to raise an issue (1) Simplification, clarification, or severing (c) The appellant’s election of either the concerning the law of a foreign country shall of the issues; SMALL CLAIMS (EXPEDITED) procedure or

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the ACCELERATED procedure may be made precedent, and in the absence of fraud, shall record, after notification by the Board that by written notice within 60 days after receipt be final and conclusive and may not be the case is ready for decision. of notice of docketing, unless such period is appealed or set aside. (c) The weight to be attached to any extended by the Board for good cause. The evidence of record will rest within the sound 12.3 The ACCELERATED Procedure election, once made, may not be withdrawn discretion of the Board. The Board may in except with permission of the Board and for (a) In appeals proceeding under the any case require either party, with good cause. ACCELERATED procedure, the parties are appropriate notice to the other party, to encouraged, to the extent possible consistent submit additional evidence on any matter 12.2 The SMALL CLAIMS (EXPEDITED) with adequate presentation of their factual relevant to the appeal. Procedure and legal positions, to waive pleadings, (a) In appeals proceeding under the discovery, and briefs. The Board, in its Rule 14. Discovery—Depositions SMALL CLAIMS (EXPEDITED) procedure, discretion, may shorten time periods (a) General Policy and Protective Orders— the following time periods shall apply: prescribed or allowed elsewhere in these The parties are encouraged to engage in (1) Within 10 days from the Government’s Rules, including Rule 4, as necessary, to voluntary discovery procedures. In first receipt from either the appellant or the enable the Board to decide the appeal within connection with any deposition or other Board of a copy of the appellant’s notice of 180 days after the Board has received the discovery procedure, the Board may make election of the SMALL CLAIMS appellant’s notice of election of the any order required to protect a party or (EXPEDITED) procedure, the Government ACCELERATED procedure, and may reserve person from annoyance, embarrassment, or shall send the Board a copy of the contract, 30 days for preparation of the decision. undue burden or expense. Those orders may the contracting officer’s final decision, and (b) Written decision by the Board in include limitations on the scope, method, the appellant’s claim letter or letters, if any; appeals processed under the ACCELERATED time, and place for discovery, and provisions remaining documents required under Rule 4 procedure will normally be short and contain for protecting the secrecy of confidential shall be submitted in accordance with times only summary findings of fact and information or documents. specified in that Rule unless the Board conclusions. Decisions will be rendered for (b) When Depositions Permitted—After an otherwise directs. the Board by a single Administrative Judge appeal has been docketed and complaint (2) Within 15 days after the Board has with the concurrence of a Vice Chairman, or filed, the parties may mutually agree to, or acknowledged receipt of the appellant’s by a majority among these two and the the Board may, upon application of either notice of election, the assigned Chairman in case of disagreement. party, order the taking of testimony of any Administrative Judge shall take the following Alternatively, in an appeal where the amount person by deposition upon oral examination actions, if feasible, in an informal meeting or in dispute is $50,000 or less as to which the or written interrogatories before any officer a telephone conference with both parties: (i) ACCELERATED procedure has been elected authorized to administer oaths at the place of identify and simplify the issues; (ii) establish and in which there has been a hearing, the a simplified procedure appropriate to the examination, for use as evidence or for single Administrative Judge presiding at the purpose of discovery. The application for particular appeal involved; (iii) determine hearing may, with the concurrence of both whether either party wants a hearing, and if order shall specify whether the purpose of parties, at the conclusion of the hearing and the deposition is discovery or for use as so, fix a time and place therefor; (iv) require after entertaining such oral arguments as are evidence. the Government to furnish all the additional deemed appropriate, render on the record (c) Orders on Depositions—The time, documents relevant to the appeal; and (v) oral summary findings of fact, conclusions, place, and manner of taking depositions shall establish an expedited schedule for and a decision of the appeal. Whenever such be as mutually agreed by the parties, or resolution of the appeal. an oral decision is rendered, the Board will failing such agreement, governed by order of (b) Pleadings, discovery, and other subsequently furnish the parties a typed copy the Board. prehearing activity will be allowed only as of such oral decision for record and payment (d) Use as Evidence—No testimony taken consistent with the requirement to conduct purposes, and to establish the starting date by depositions shall be considered as part of the hearing on the date scheduled, or if no for the period for filing a motion for the evidence in the hearing of an appeal until hearing is scheduled, to close the record on reconsideration under Rule 29. a date that will allow decisions within the such testimony is offered and received in 120-day limit. The Board, in its discretion, 12.4 Motions for Reconsideration in Rule 12 evidence at such hearing. It will not may impose shortened time periods for any Appeals ordinarily be received in evidence if the actions prescribed or allowed under these Motions for reconsideration of appeals deponent is present and can testify at the Rules, as necessary, to enable the Board to decided under either the SMALL CLAIMS hearing. In such instances, however, the decide the appeal within the 120-day limit, (EXPEDITED) procedure or the deposition may be used to contradict or allowing whatever time, up to 30 days, that ACCELERATED procedure need not be impeach the testimony of the deponent given the Board considers necessary for the decided within the original 120-day or 180- at the hearing. In cases submitted on the preparation of the decision after closing the day limit, but all such motions shall be record, the Board may, in its discretion, record and the filing of briefs, if any. processed and decided rapidly so as to fulfill receive depositions to supplement the record. (c) Written decision by the Board in the intent of this Rule. (e) Expenses—Each party shall bear its own appeals processed under the SMALL expenses associated with the taking of any CLAIMS (EXPEDITED) procedure will be Rule 13. Settling the Record deposition. short and will contain only summary (a) The record upon which the Board’s (f) Subpoenas—Where appropriate, a party findings of fact and conclusions. Decisions decision will be rendered consists of the may request the issuance of a subpoena will be rendered for the Board by a single documents furnished under Rules 4 and 12, under the provisions of Rule 21. Administrative Judge. If there has been a to the extent admitted in evidence, and the Rule 15. Interrogatories to Parties, hearing, the Administrative Judge presiding following items, if any: pleadings, prehearing Admission of Facts, and Production and at the hearing may, in the judge’s discretion, conference memoranda or orders, prehearing Inspection of Documents at the conclusion of the hearing and after briefs, depositions or interrogatories received entertaining such oral arguments as are in evidence, admissions, stipulations, After an appeal has been docketed and deemed appropriate, render on the record transcripts of conferences and hearings, complaint filed with the Board, a party may oral summary findings of fact, conclusions, hearing exhibits, post-hearing briefs, and serve on the other party: (a) Written and a decision of the appeal. Whenever such documents which the Board has specifically interrogatories to be answered separately in an oral decision is rendered, the Board will designated to be made a part of the record. writing, signed under oath and answered or subsequently furnish the parties a typed copy The record will, at all reasonable times, be objected to within 45 days after service; (b) of such oral decision for record and payment available for inspection by the parties at the a request for the admission of specified facts purposes and to establish the starting date for office of the Board. and/or of the authenticity of any documents, the period for filing a motion for (b) Except as the Board may otherwise to be answered or objected to within 45 days reconsideration under Rule 29. order in its discretion, no proof shall be after service; the factual statements and/or (d) A decision against the Government or received in evidence after completion of an the authenticity of the documents to be the appellant shall have no value as oral hearing or, in cases submitted on the deemed admitted upon failure of a party to

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respond to the request; and (c) a request for under oath or affirmation, unless the (e) Form: Issuance— the production, inspection, and copying of presiding Administrative Judge or examiner (1) Every subpoena shall state the name of any documents or objects not privileged, shall otherwise order. If the testimony of a the Board and the title of the appeal, and which reasonably may lead to the discovery witness is not given under oath, the Board shall command each person to whom it is of admissible evidence, to be answered or may advise the witness that his or her directed to attend and give testimony, and if objected to within 45 days after service. The statements may be subject to the provisions appropriate, to produce specified books and Board may allow a shorter or longer time. of Title 18, United States Code, sections 287 papers at a time and place therein specified. Any discovery engaged in under this Rule and 1001, and any other provision of law In issuing a subpoena to a requesting party, shall be subject to the provisions of Rule imposing penalties for knowingly making the Administrative Judge shall sign the 14(a) with respect to general policy and false representations in connection with subpoena and may, in his or her discretion, protective orders, and of Rule 35 with respect claims against the United States or in any enter the name of the witness and otherwise to sanctions. matter within the jurisdiction of any leave it blank. The party to whom the department or agency thereof. subpoena is issued shall complete the Rule 16. Service of Papers Other Than subpoena before service. Subpoenas Rule 21. Subpoenas (2) Where the witness is located in a Papers shall be served personally or by (a) General—Upon written request of either foreign country, a letter rogatory or subpoena mail, addressed to the party upon whom party filed with the Recorder, or on his or her may be issued and served under the service is to be made. Copies of complaints, own initiative, the Administrative Judge to circumstances and in the manner provided in answers, and briefs shall be filed directly whom an appeal is assigned or who is 28 U.S.C. 1781–1784. with the Board. The party filing any other otherwise designated by the Chairman may (f) Service— paper with the Board shall send a copy issue a subpoena requiring: (1) The party requesting issuance of a thereof to the opposing party, noting on the (1) Testimony at a deposition—the subpoena shall arrange for service. paper filed with the Board that a copy has deposing of a witness in the city or county (2) A subpoena requiring the attendance of been so furnished. Subpoenas shall be served where the witness resides or is employed or a witness at a deposition or hearing may be as provided in Rule 21. transacts business in person, or at another served at any place. A subpoena may be location convenient for the witness that is served by a United States marshal or deputy HEARINGS specifically determined by the Board; marshal, or by any other person who is not Rule 17. Where and When Held (2) Testimony at a hearing—the attendance a party and not less than 18 years of age. Service of a subpoena upon a person named Hearings will be held at such places of a witness for the purpose of taking therein shall be made by personally determined by the Board to best serve the testimony at a hearing; and delivering a copy to that person and interests of the parties and the Board. (3) Production of books and papers—in tendering the fees for one day’s attendance Hearings will be scheduled at the discretion addition to (1) or (2), the production by the witness at the deposition or hearing of books and the mileage provided by 28 U.S.C. 1821 of the Board with due consideration to the or other applicable law; however, where the regular order of appeals, Rule 12 and papers (including electronically stored information and other tangible things) subpoena is issued on behalf of the requirements, and other pertinent factors. On Government, money payments need not be request or motion by either party and for designated in the subpoena. (b) Voluntary Cooperation—Each party is tendered in advance of attendance. good cause, the Board may, in its discretion, (3) The party at whose instance a subpoena adjust the date of a hearing. expected (i) to cooperate and make available witnesses and evidence under its control as is issued shall be responsible for the payment Rule 18. Notice of Hearings requested by the other party, without of fees and mileage of the witness and of the officer who serves the subpoena. The failure The parties shall be given at least 15 days issuance of a subpoena, and (ii) to secure to make payment of such charges on demand notice of the time and place set for hearings. voluntary attendance of desired third-party witnesses and production of desired third- may be deemed by the Board as a sufficient In scheduling hearings, the Board will ground for striking the testimony of the consider the desires of the parties and the party books, papers, documents, or tangible things whenever possible. witness and the books or papers the witness requirement for just and inexpensive has produced. determination of appeals without (c) Requests for Subpoena— (1) A request for subpoena shall normally (g) Contumacy or Refusal to Obey a unnecessary delay. Notices of hearings shall Subpoena—In case of contumacy or refusal be promptly acknowledged by the parties. be filed at least: (i) 15 days before a scheduled deposition to obey a subpoena by a person who resides, Rule 19. Unexcused Absence of a Party where the attendance of a witness at a is found, or transacts business within the jurisdiction of a United States District Court, The unexcused absence of a party at the deposition is sought; or (ii) 30 days before a scheduled hearing the Board will apply to the Court through the time and place set for hearing will not be Attorney General of the United States for an where the attendance of a witness at a occasion for delay. In the event of such order requiring the person to appear before hearing is sought. absence, the hearing will proceed and the the Board or a member thereof to give In its discretion, the Board may honor case will be regarded as submitted by the testimony or produce evidence or both. Any requests for subpoenas not made within these absent party as provided in Rule 11. failure of any such person to obey the order time limitations. of the Court may be punished by the Court Rule 20. Hearings: Nature, Examination of (2) A request for a subpoena shall state the as a contempt thereof. Witnesses reasonable scope and general relevance to the (a) Nature of Hearings—Hearings shall be case of the testimony and of any books and Rule 22. Copies of Papers as informal as may be reasonable and papers sought. When books, records, papers, or appropriate under the circumstances. The (d) Requests to Quash or Modify—Upon documents have been received in evidence, appellant and the Government may offer written request by the person subpoenaed or a true copy thereof or of such part thereof as such evidence as they deem appropriate and by a party, made within 10 days after service may be material or relevant may be as would be admissible under the Federal but in any event not later than the time substituted therefor, during the hearing or at Rules of Evidence or in the sound discretion specified in the subpoena for compliance, the the conclusion thereof. of the presiding Administrative Judge or Board may (i) quash or modify the subpoena examiner. Stipulations of fact agreed upon by if it is unreasonable and oppressive or for Rule 23. Post-Hearing Briefs the parties may be regarded and used as other good cause shown, or (ii) require the Post-hearing briefs may be submitted upon evidence at the hearing. The parties may person in whose behalf the subpoena was such terms as may be directed by the stipulate the testimony that would be given issued to advance the reasonable cost of presiding Administrative Judge or examiner by a witness if the witness were present. The producing subpoenaed books and papers. at the conclusion of the hearing. Board may require evidence in addition to Where circumstances require, the Board may that offered by the parties. act upon such a request at any time after a Rule 24. Transcript of Proceedings (b) Examination of Witnesses—Witnesses copy of the request has been served upon the Testimony and argument at hearings shall before the Board will be examined orally opposing party. be reported verbatim, unless the Board

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otherwise orders. Waiver of transcript may be will execute the waiver forms which so state. consider the reports and enter special orders especially suitable for hearings under Rule The Government agency will forward the governing the handling of the remanded case. 12.2. Transcripts of the proceedings shall be waiver and other forms with a copy of the To the extent the court’s directive and time supplied to the parties at such rates as may decision to the Department of the Treasury limitations permit, such orders shall conform be established by contract between the Board for certification of payment. to these Rules. and the reporter, provided that ordinary copy MOTION FOR RECONSIDERATION of transcript shall be supplied to the TIME, COMPUTATION, AND EXTENSIONS appellant at an amount no greater than the Rule 29. Motion for Reconsideration Rule 33. Time, Computation, and Extensions cost of duplication. A motion for reconsideration may be filed (a) Where possible, procedural actions Rule 25. Withdrawal of Exhibits by either party. It shall set forth specifically should be taken in less time than the the grounds relied upon to sustain the After a decision has become final the Board maximum time allowed. Where appropriate motion. The motion shall be filed within 30 may, upon request and after notice to the and justified, however, extensions of time days from the date of the receipt of a copy other party, in its discretion permit the will be granted. All requests for extensions of of the decision of the Board by the party withdrawal of original exhibits, or any part time shall be in writing. filing the motion. thereof, by the party entitled thereto. The (b) In computing any period of time, the substitution of true copies of exhibits or any SUSPENSIONS, DISMISSALS, DEFAULTS, day of the event from which the designated part thereof may be required by the Board in REMANDS period of time begins to run shall not be its discretion as a condition of granting included, but the last day of the period shall permission for such withdrawal. Rule 30. Suspensions; Dismissal Without be included unless it is a Saturday, Sunday, Prejudice or a Federal legal public holiday, in which REPRESENTATION The Board may suspend the proceedings event the period shall run to the end of the Rule 26. The Appellant by agreement of counsel for settlement next business day. discussions, or for good cause shown. In An individual appellant may appear before EX PARTE COMMUNICATIONS the Board in person; a corporation by one of certain cases, appeals docketed before the its officers; and a partnership or joint venture Board are required to be placed in a suspense Rule 34. Ex Parte Communications status and the Board is unable to proceed by one of its members; or any of these by an No member of the Board or of the Board’s with disposition thereof for reasons not attorney at law duly licensed in any State, staff shall entertain, nor shall any person within the control of the Board. Where the commonwealth, territory, the District of directly or indirectly involved in an appeal, suspension has continued, or may continue, Columbia, or in a foreign country. An submit to the Board or the Board’s staff, off attorney representing an appellant shall file for an inordinate length of time, the Board may, in its discretion, dismiss such appeals the record, any evidence, explanation, a written notice of appearance with the analysis, or advice, whether written or oral, Board. from its docket without prejudice to their restoration when the cause of suspension has regarding any matter at issue in an appeal. Rule 27. The Government been removed. Unless either party or the This provision does not apply to consultation among Board members or to ex parte Government counsel may, in accordance Board acts within three years to reinstate any appeal dismissed without prejudice, the communications concerning the Board’s with their authority, represent the interest of administrative functions or procedures. the Government before the Board. They shall dismissal shall be deemed to be with file notices of appearance with the Board, prejudice. SANCTIONS and notice thereof will be given the appellant Rule 31. Dismissal or Default for Failure To Rule 35. Sanctions or the appellant’s attorney in the form Prosecute or Defend specified by the Board from time to time. If any party fails or refuses to obey an order Whenever a record discloses the failure of issued by the Board, the Board may then DECISIONS either party to file documents required by make such order as it considers necessary to these Rules, respond to notices or Rule 28. Decisions the just and expeditious conduct of the correspondence from the Board, comply with appeal. (a) Decisions of the Board will be made in orders of the Board, or otherwise indicates an writing and authenticated copies of the intention not to continue the prosecution or EFFECTIVE DATE AND APPLICABILITY decision will be forwarded simultaneously to defense of an appeal, the Board may, in the both parties. The Rules of the Board and all case of a default by the appellant, issue an Rule 36. Effective Date final orders and decisions (except those order to show cause why the appeal should These Rules shall apply required for good cause to be held not be dismissed or, in the case of a default (a) Mandatorily, to all appeals relating to confidential and not cited as precedents) by the Government, issue an order to show contracts entered into on or after 1 March shall be open for public inspection at the cause why the Board should not act thereon 1979, and offices of the Board. Decisions of the Board pursuant to Rule 35. If good cause is not (b) At the contractor’s election, to appeals will be made solely upon the record, as shown, the Board may take appropriate relating to earlier contracts, with respect to described in Rule 13. action. claims pending before the contracting officer (b) Any monetary award to a contractor by on 1 March 1979 or initiated thereafter. Rule 32. Remand From Court the Board shall be promptly paid in PAUL WILLIAMS MAY 11, 2011 accordance with the procedures provided by Whenever any court remands a case to the CHAIRMAN 31 U.S.C. 1304, as amended. To assure Board for further proceedings, each of the ARMED SERVICES BOARD OF CONTRACT prompt payment the Recorder will forward parties shall, within 20 days of such remand, APPEALS the required forms to each party with the submit a report to the Board recommending decision. If the parties do not contemplate an procedures to be followed so as to comply [FR Doc. 2011–9910 Filed 5–10–11; 8:45 am] appeal or motion for reconsideration, they with the court’s order. The Board shall BILLING CODE 5001–08–P

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Proposed Rules Federal Register Vol. 76, No. 91

Wednesday, May 11, 2011

This section of the FEDERAL REGISTER Ground Floor, Room W12–140, site, anyone can find and read the contains notices to the public of the proposed Washington, DC 20590–0001. comments in any of our dockets, issuance of rules and regulations. The • Hand Delivery: Deliver to Mail including, if provided, the name of the purpose of these notices is to give interested address above between 9 a.m. and individual who sent the comment (or persons an opportunity to participate in the 5 p.m., Monday through Friday, except signed the comment on behalf of an rule making prior to the adoption of the final rules. Federal holidays. association, business, labor union, etc.). • Fax: (202) 493–2251. You may review the DOT’s complete Contact Dowty Propellers, 114 Powers Privacy Act Statement in the Federal DEPARTMENT OF TRANSPORTATION Court, Sterling, VA 20166, telephone Register published on April 11, 2000 (703) 421–4434; fax (703) 450–0087, for (65 FR 19477–78). Federal Aviation Administration the service information identified in this proposed AD. Discussion 14 CFR Part 39 The European Aviation Safety Agency Examining the AD Docket (EASA), which is the Technical Agent [Docket No. FAA–2011–0033; Directorate You may examine the AD docket on for the Member States of the European Identifier 2011–NE–01–AD] the Internet at http:// Community, has issued EASA www.regulations.gov; or in person at the Airworthiness Directive 2011–0012, RIN 2120–AA64 Docket Operations office between 9 a.m. dated January 20, 2011 (referred to after and 5 p.m., Monday through Friday, ‘‘ ’’ Airworthiness Directives; Dowty this as the MCAI ), to correct an unsafe except Federal holidays. The AD docket Propellers Type R212/4–30–4/22 and condition for the specified products. contains this proposed AD, the R251/4–30–4/49 Propeller Assemblies The MCAI states: regulatory evaluation, any comments Reports have been received from a small AGENCY: Federal Aviation received, and other information. The number of HS.748 operators of finding cracks Administration (FAA), DOT. street address for the Docket Operations in the propeller hub port buttress threads of ACTION: Notice of proposed rulemaking office (phone (800) 647–5527) is the R212 and R251 propellers. The affected hubs (NPRM). same as the Mail address provided in had accumulated in excess of 6,000 flight the ADDRESSES section. Comments will hours. This condition, if not detected and corrected, could lead to propeller blade SUMMARY: We propose to adopt a new be available in the AD docket shortly separation, possibly resulting in damage to airworthiness directive (AD) for the after receipt. the aeroplane and/or injury to persons on the products listed above. This proposed FOR FURTHER INFORMATION CONTACT: ground. AD results from mandatory continuing Michael Schwetz, Aerospace Engineer, The cracks originating from the root of airworthiness information (MCAI) Boston Aircraft Certification Office, issued by an aviation authority of the buttress threads in the blade ports, FAA, Engine and Propeller Directorate, are caused by high-cycle fatigue. You another country to identify and correct 12 New England Executive Park, an unsafe condition on an aviation may obtain further information by Burlington, MA 01803; e-mail: examining the MCAI in the AD docket. product. The MCAI describes the unsafe [email protected]; telephone condition as: (781) 238–7761; fax (781) 238–7170. Relevant Service Information Reports have been received from a small SUPPLEMENTARY INFORMATION: Dowty Propellers has issued Alert number of HS.748 operators of finding cracks Service Bulletin (ASB) No. 61–1043, Comments Invited in the propeller hub port buttress threads of Revision 6, dated January 5, 2011. The R212 and R251 propellers. The affected hubs We invite you to send any written actions described in this service had accumulated in excess of 6,000 flight relevant data, views, or arguments about information are intended to correct the hours. This condition, if not detected and this proposed AD. Send your comments corrected, could lead to propeller blade unsafe condition identified in the separation, possibly resulting in damage to to an address listed under the MCAI. ADDRESSES section. Include ‘‘Docket No. the aeroplane and/or injury to persons on the FAA’s Determination and Requirements ground. FAA–2011–0033; Directorate Identifier 2011–NE–01–AD’’ at the beginning of of This Proposed AD We are proposing this AD to prevent your comments. We specifically invite This product has been approved by propeller hub failure due to cracks in comments on the overall regulatory, the aviation authority of the United the hub, which could result in damage economic, environmental, and energy Kingdom, and is approved for operation to the airplane. aspects of this proposed AD. We will in the United States. Pursuant to our DATES: We must receive comments on consider all comments received by the bilateral agreement with the United this proposed AD by June 27, 2011. closing date and may amend this Kingdom, EASA has notified us of the ADDRESSES: You may send comments by proposed AD based on those comments. unsafe condition described in the MCAI any of the following methods: We will post all comments we and service information referenced • Federal eRulemaking Portal: Go to receive, without change, to http:// above. We are proposing this AD http://www.regulations.gov and follow www.regulations.gov, including any because we evaluated all information the instructions for sending your personal information you provide. We provided by EASA and determined the comments electronically. will also post a report summarizing each unsafe condition exists and is likely to • Mail: Docket Management Facility, substantive verbal contact with FAA exist or develop in other products of the U.S. Department of Transportation, 1200 personnel concerning this proposed AD. same type design. This proposed AD New Jersey Avenue, SE., West Building Using the search function of the Web would require initial and repetitive

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inspections of the buttress threads in the List of Subjects in 14 CFR Part 39 unless the propeller hub and driving center propeller hub ports for cracks. has passed the inspections required by this Air transportation, Aircraft, Aviation AD. Costs of Compliance safety, Incorporation by reference, Safety. FAA AD Differences Based on the service information, we (f) This AD differs from the service estimate that this proposed AD would The Proposed Amendment information as follows: affect about 2 propellers installed on Accordingly, under the authority (1) Although the service bulletin tells you one airplane of U.S. registry. We also delegated to me by the Administrator, to return the affected parts to the estimate that it would take about 1 the FAA proposes to amend 14 CFR part manufacturer, this AD does not require that work-hour per propeller to comply with 39 as follows: action. this proposed AD. The average labor (2) Although the service bulletin tells you rate is $85 per work-hour. Required PART 39—AIRWORTHINESS to submit information to the manufacturer, parts would cost about $20,000 per DIRECTIVES this AD does not require that action. propeller. Based on these figures, we Alternative Methods of Compliance estimate the cost of the proposed AD on 1. The authority citation for part 39 (AMOCs) continues to read as follows: U.S. operators to be $40,170. (g) The Manager, Boston Aircraft Authority: 49 U.S.C. 106(g), 40113, 44701. Authority for This Rulemaking Certification Office, FAA, has the authority to approve AMOCs for this AD, if requested Title 49 of the United States Code § 39.13 [Amended] using the procedures found in 14 CFR 39.19. 2. The FAA amends § 39.13 by adding specifies the FAA’s authority to issue Related Information rules on aviation safety. Subtitle I, the following new AD: (h) Refer to MCAI European Aviation section 106, describes the authority of Dowty Propellers (formerly Dowty ‘‘ Safety Agency AD 2011–0012, dated January the FAA Administrator. Subtitle VII: Aerospace; Dowty Rotol Limited; and 20, 2011, and Dowty Propellers Alert Service Aviation Programs,’’ describes in more Dowty Rotol): Docket No. FAA–2011– Bulletin No. 61–1043, Revision 6, dated detail the scope of the Agency’s 0033; Directorate Identifier 2011–NE– January 5, 2011, for related information. authority. 01–AD. Contact Dowty Propellers, 114 Powers Court, We are issuing this rulemaking under Comments Due Date Sterling, VA 20166, telephone (703) 421– the authority described in ‘‘Subtitle VII, 4434; fax (703) 450–0087, for a copy of this (a) We must receive comments by June 27, service information. Part A, Subpart III, Section 44701: 2011. General requirements.’’ Under that (i) Contact Michael Schwetz, Aerospace section, Congress charges the FAA with Affected Airworthiness Directives (ADs) Engineer, Boston Aircraft Certification Office, promoting safe flight of civil aircraft in (b) None. FAA, Engine and Propeller Directorate, 12 New England Executive Park, Burlington, air commerce by prescribing regulations Applicability MA 01803; e-mail: [email protected]; for practices, methods, and procedures telephone (781) 238–7761; fax (781) 238– the Administrator finds necessary for (c) This AD applies to Dowty Propellers type R212/4–30–4/22 propeller assemblies 7170, for more information about this AD. safety in air commerce. This regulation with hub and driving center assembly part Issued in Burlington, Massachusetts, on is within the scope of that authority number (P/N) 601022105, 601022211, April 28, 2011. because it addresses an unsafe condition 601022294, 601021426, 601021858, or Peter A. White, that is likely to exist or develop on 601021859 installed, and type R251/4–30–4/ products identified in this rulemaking 49 propeller assemblies with hub and driving Acting Manager, Engine and Propeller Directorate, Aircraft Certification Service. action. center assembly P/N 660207202 or P/N 660207203 installed. [FR Doc. 2011–11480 Filed 5–10–11; 8:45 am] Regulatory Findings BILLING CODE 4910–13–P Reason We determined that this proposed AD would not have federalism implications (d) This AD results from mandatory continuing airworthiness information (MCAI) DEPARTMENT OF TRANSPORTATION under Executive Order 13132. This issued by an aviation authority of another proposed AD would not have a country to identify and correct an unsafe Federal Aviation Administration substantial direct effect on the States, on condition on an aviation product. We are the relationship between the national issuing this AD to prevent propeller hub 14 CFR Part 39 government and the States, or on the failure due to cracks in the hub, which could distribution of power and result in damage to the airplane. [Docket No. FAA–2011–0187; Directorate responsibilities among the various Actions and Compliance Identifier 2011–NE–07–AD] levels of government. (e) Unless already done, do the following: RIN 2120–AA64 For the reasons discussed above, I (1) Within 500 flight hours after the certify this proposed regulation: effective date of this AD, and thereafter at Airworthiness Directives; General 1. Is not a ‘‘significant regulatory intervals not exceeding 500 flight hours, Electric Company CF34–10E2A1; action’’ under Executive Order 12866; inspect the buttress threads in the propeller CF34–10E5, CF34–10E5A1; CF34– 2. Is not a ‘‘significant rule’’ under the hub and driving center assembly, for cracks. 10E6; CF34–10E6A1; CF34–10E7; and DOT Regulatory Policies and Procedures (2) Use paragraphs 2.A.(1) through CF34–10E7–B Turbofan Engines (44 FR 11034, February 26, 1979); and 2.A.(4)(a) of Accomplishment Instructions of 3. Will not have a significant Dowty Propellers Alert Service Bulletin No. AGENCY: Federal Aviation economic impact, positive or negative, 61–1043, Revision 6, dated January 5, 2011, Administration (FAA), DOT. and NDT Technique NDT 175U (Appendix A on a substantial number of small entities ACTION: Notice of proposed rulemaking under the criteria of the Regulatory of Dowty Propellers Alert Service Bulletin No. 61–1043, Revision 6, dated January 5, (NPRM). Flexibility Act. 2011), to do the inspection. We prepared a regulatory evaluation (3) If a crack is found, remove the propeller SUMMARY: We propose to adopt a new of the estimated costs to comply with assembly from service before further flight. airworthiness directive (AD) for the this proposed AD and placed it in the (4) After the effective date of this AD, do products listed above with certain part AD docket. not install this propeller on any airplane number (P/N) fan rotor spinners

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installed. This proposed AD would Comments Invited retainers, P/N 2050M56P02, and require removing from service certain We invite you to send any written removing from service the fan rotor fan rotor blade retainers, and removing relevant data, views, or arguments about spinner support that was installed with from service the fan rotor spinner this proposal. Send your comments to those fan rotor blade retainers. support that was installed with those an address listed under the ADDRESSES Costs of Compliance fan rotor blade retainers. This proposed section. Include ‘‘Docket No. FAA– AD was prompted by a fan rotor spinner 2011–0187; Directorate Identifier 2011– We estimate that this proposed AD support found cracked at the attachment NE–07–AD’’ at the beginning of your would affect 164 engines installed on lugs. We are proposing this AD to comments. We specifically invite airplanes of U.S. registry. We also prevent high-cycle fatigue cracking of comments on the overall regulatory, estimate that it would take about 2 the fan rotor spinner support attachment economic, environmental, and energy work-hours per engine to perform the lugs, leading to separation of the fan aspects of this proposed AD. We will actions required by this proposed AD, rotor spinner assembly, uncontained consider all comments received by the and that the average labor rate is $85 per failure of the engine, and damage to the closing date and may amend this work-hour. If all removed parts get airplane. proposed AD because of those replaced, required parts would cost DATES: We must receive comments on comments. about $10,458 per engine. Based on this proposed AD by June 27, 2011. We will post all comments we these figures, we estimate the total cost receive, without change, to http:// of the proposed AD to U.S. operators to ADDRESSES: You may send comments by be $1,742,992. any of the following methods: www.regulations.gov, including any personal information you provide. We • Federal eRulemaking Portal: Go to Authority for This Rulemaking will also post a report summarizing each http://www.regulations.gov. Follow the substantive verbal contact we receive Title 49 of the United States Code instructions for submitting comments. specifies the FAA’s authority to issue • about this proposed AD. Fax: 202–493–2251. rules on aviation safety. Subtitle I, • Mail: U.S. Department of Discussion section 106, describes the authority of Transportation, Docket Operations, M– Investigation of a General Electric the FAA Administrator. Subtitle VII: 30, West Building Ground Floor, Room Company (GE) CF34–10E turbofan Aviation Programs, describes in more W12–140, 1200 New Jersey Avenue, SE., engine experiencing high fan frame detail the scope of the Agency’s Washington, DC 20590. vibrations led to removal of the fan rotor authority. • Hand Delivery: Deliver to Mail spinner. Eight of the twelve attachment We are issuing this rulemaking under address above between 9 a.m. and lugs on the fan rotor spinner support the authority described in Subtitle VII, 5 p.m., Monday through Friday, except were found cracked. The cause of the Part A, Subpart III, Section 44701: Federal holidays. vibration was determined to be a non- ‘‘General requirements.’’ Under that For service information identified in synchronous vibration induced by a section, Congress charges the FAA with this proposed AD, contact GE-Aviation, spinner redesign that removed an promoting safe flight of civil aircraft in M/D Rm. 285, One Neumann Way, interference between the fan blade air commerce by prescribing regulations Cincinnati, OH 45215, telephone 513– retainers and the spinner. This for practices, methods, and procedures 552–3272; e-mail: [email protected]. condition, if not corrected, could result the Administrator finds necessary for You may review copies of the in high-cycle fatigue cracking of the fan safety in air commerce. This regulation referenced service information at the rotor spinner support attachment lugs, is within the scope of that authority FAA, Engine & Propeller Directorate, leading to separation of the fan rotor because it addresses an unsafe condition 12 New England Executive Park, spinner assembly, uncontained failure that is likely to exist or develop on Burlington, MA. For information on the of the engine, and damage to the products identified in this rulemaking availability of this material at the FAA, airplane. action. call 781–238–7125. Relevant Service Information Regulatory Findings Examining the AD Docket We reviewed GE Service Bulletin (SB) We determined that this proposed AD You may examine the AD docket on No. CF34–10E–S/B 72–0186, dated would not have federalism implications the Internet at http:// January 31, 2011. The SB describes under Executive Order 13132. This www.regulations.gov; or in person at the procedures for replacement of the fan proposed AD would not have a Docket Management Facility between rotor blade retainers with redesigned substantial direct effect on the States, on 9 a.m. and 5 p.m., Monday through retainers that reintroduce the the relationship between the national Friday, except Federal holidays. The AD interference between the fan blade Government and the States, or on the docket contains this proposed AD, the retainers and the spinner. The SB also distribution of power and regulatory evaluation, any comments describes procedures for replacement of responsibilities among the various received, and other information. The the fan rotor spinner support, with a levels of government. street address for the Docket Office new support of the same P/N. For the reasons discussed above, I (phone: 800–647–5527) is in the FAA’s Determination certify this proposed regulation: ADDRESSES section. Comments will be We are proposing this AD because we (1) Is not a ‘‘significant regulatory available in the AD docket shortly after action’’ under Executive Order 12866, receipt. evaluated all the relevant information and determined the unsafe condition (2) Is not a ‘‘significant rule’’ under the FOR FURTHER INFORMATION CONTACT: John described previously is likely to exist or DOT Regulatory Policies and Procedures Frost, Aerospace Engineer, Engine develop in other products of the same (44 FR 11034, February 26, 1979), Certification Office, FAA, 12 New type design. (3) Will not affect intrastate aviation England Executive Park, Burlington, MA in Alaska, and 01803; phone: 781–238–7756; fax: 781– Proposed AD Requirements (4) Will not have a significant 238–7199; e-mail: [email protected]. This proposed AD would require economic impact, positive or negative, SUPPLEMENTARY INFORMATION: removing from service fan rotor blade on a substantial number of small entities

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under the criteria of the Regulatory attempt to repair, make serviceable, or re- DATES: Comments and related material Flexibility Act. install, this part. must be received by the Coast Guard on (i) After the effective date of this AD, do or before June 10, 2011. List of Subjects in 14 CFR Part 39 not install any fan rotor spinner support removed in paragraph (g) of this AD, into any ADDRESSES: You may submit comments Air transportation, Aircraft, Aviation engine. Do not attempt to repair, make identified by docket number USCG– safety, Safety. serviceable, or re-install, this part. 2011–0211 using any one of the The Proposed Amendment following methods: Alternative Methods of Compliance (1) Federal eRulemaking Portal: (AMOCs) Accordingly, under the authority http://www.regulations.gov. delegated to me by the Administrator, (j) The Manager, Engine Certification (2) Fax: 202–493–2251. the FAA proposes to amend 14 CFR part Office, FAA, has the authority to approve (3) Mail: Docket Management Facility 39 as follows: AMOCs for this AD, if requested using the (M–30), U.S. Department of procedures found in 14 CFR 39.19. Transportation, West Building Ground PART 39—AIRWORTHINESS Related Information Floor, Room W12–140, 1200 New Jersey DIRECTIVES (k) For more information about this AD, Avenue, SE., Washington, DC 20590– 1. The authority citation for part 39 contact John Frost, Aerospace Engineer, 0001. Engine Certification Office, FAA, 12 New continues to read as follows: (4) Hand delivery: Same as mail England Executive Park, Burlington, MA address above, between 9 a.m. and 5 Authority: 49 U.S.C. 106(g), 40113, 44701. 01803; phone: 781–238–7756; fax: 781–238– p.m., Monday through Friday, except 7199; e-mail: [email protected]. Federal holidays. The telephone number § 39.13 [Amended] (l) Refer to GE Service Bulletin No. CF34– is 202–366–9329. 2. The FAA amends § 39.13 by adding 10E–S/B 72–0186, dated January 31, 2011, for related information. Contact GE-Aviation, To avoid duplication, please use only the following new airworthiness one of these four methods. See the directive (AD): M/D Rm. 285, One Neumann Way, Cincinnati, OH 45215, telephone 513–552– ‘‘Public Participation and Request for General Electric Company: Docket No. FAA– 3272; e-mail: [email protected], for a copy of Comments’’ portion of the 2011–0187; Directorate Identifier 2011– this service information. You may review SUPPLEMENTARY INFORMATION section NE–07–AD. copies of the referenced service information below for instructions on submitting Comments Due Date at the FAA, Engine & Propeller Directorate, comments. 12 New England Executive Park, Burlington, (a) We must receive comments by June 27, MA. For information on the availability of FOR FURTHER INFORMATION CONTACT: If 2011. this material at the FAA, call 781–238–7125. you have questions on this proposed Affected ADs Issued in Burlington, Massachusetts, on rule, call or e-mail BM1 Tracy Girard, Response Department, MSU Toledo, (b) None. April 28, 2011. Peter A. White, Coast Guard; telephone (419) 418–6036, Applicability e-mail [email protected]. If you Acting Manager, Engine & Propeller (c) This AD applies to General Electric Directorate, Aircraft Certification Service. have questions on viewing or submitting Company (GE) CF34–10E2A1; CF34–10E5, material to the docket, call Renee V. [FR Doc. 2011–11481 Filed 5–10–11; 8:45 am] CF34–10E5A1; CF34–10E6; CF34–10E6A1; Wright, Program Manager, Docket CF34–10E7; and CF34–10E7–B turbofan BILLING CODE 4910–13–P Operations, telephone 202–366–9826. engines, with a fan rotor spinner part number SUPPLEMENTARY INFORMATION: (P/N) 2050M34G03; 2050M34G04; 2050M34G05; 2050M34G06; 2437M60G01; or DEPARTMENT OF HOMELAND Public Participation and Request for 2437M60G02, installed. SECURITY Comments Unsafe Condition We encourage you to participate in Coast Guard (d) This AD was prompted by a fan rotor this rulemaking by submitting spinner support found cracked at the comments and related materials. All 33 CFR Part 100 attachment lugs. We are issuing this AD to comments received will be posted prevent high-cycle fatigue cracking of the fan [Docket No. USCG–2011–0211] without change to http:// rotor spinner support attachment lugs, www.regulations.gov and will include leading to separation of the fan rotor spinner RIN 1625–AA08 assembly, uncontained failure of the engine, any personal information you have and damage to the airplane. Special Local Regulation; Partnership provided. Compliance in Education, Dragon Boat Race; Submitting Comments Maumee River, Toledo, OH (e) Comply with this AD within 1,800 If you submit a comment, please hours-in-service after the effective date of AGENCY: Coast Guard, DHS. include the docket number for this this AD, unless already done. ACTION: Notice of proposed rulemaking. rulemaking (USCG–2011–0211), Removal of Fan Rotor Blade Retainers indicate the specific section of this SUMMARY: (f) Remove from service the 24 fan rotor The Coast Guard proposes document to which each comment blade retainers, P/N 2050M56P02. establishing a permanent Special Local applies, and provide a reason for each Regulation on the Maumee River, suggestion or recommendation. You Removal of Fan Rotor Spinner Support Toledo, Ohio. This regulation is may submit your comments and (g) Remove from service the fan rotor intended to restrict vessels from material online (via http:// spinner support that operated with the fan portions of the Maumee River during www.regulations.gov) or by fax, mail, or rotor blade retainers removed in paragraph (f) the Dragon Boat Races which take place hand delivery, but please use only one of this AD. during the third or fourth weekend in of these means. If you submit a Installation Prohibition July each year. This special local comment online via (h) After the effective date of this AD, do regulated area is necessary to protect www.regulations.gov, it will be not install any fan rotor blade retainer, P/N race participants from other vessel considered received by the Coast Guard 2050M56P02, into any engine. Do not traffic. when the comment is successfully

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transmitted; a comment submitted via Public Meeting at position 41°38′38.943″ N; fax, hand delivery, or mail, will be 083°32′3.980″ W. considered as having been received by We do not now plan to hold a public The Captain of the Port will notify the the Coast Guard when the comment is meeting. But you may submit a request affected segments of the public of the received at the Docket Management for one using one of the four methods enforcement of this Special Local Facility. We recommend that you specified under ADDRESSES. Please Regulation by all appropriate means. include your name and a mailing explain why you believe a public Means of notification may include address, an e-mail address, or a meeting would be beneficial. If we publication of Notice of Enforcement telephone number in the body of your determine that one would aid this (NOE) in the Federal Register, document so that we can contact you if rulemaking, we will hold one at a time Broadcast Notice to Mariners, and Local we have questions regarding your and place announced by a later notice Notice to Mariners. in the Federal Register. submission. Regulatory Analyses Basis and Purpose To submit your comment online, go to We developed this proposed rule after http://www.regulations.gov, click on the This special local regulated area is considering numerous statutes and ‘‘submit a comment’’ box, which will necessary to protect race participants executive orders related to rulemaking. then become highlighted in blue. In the from other vessel traffic. The Captain of Below we summarize our analyses ‘‘Document Type’’ drop down menu, the Port Detroit has determined dragon based on 13 of these statutes or select ‘‘Proposed Rule’’ and insert boat races in close proximity to executive orders. ‘‘USCG–2011–0211’’ in the ‘‘Keyword’’ watercraft and in the shipping channel Regulatory Planning and Review box. Click ‘‘Search’’ then click on the pose a significant risk to public safety balloon shape in the ‘‘Actions’’ column. and property. Establishing a Special This proposed rule is not a significant If you submit your comments by mail or Local Regulation around the location of regulatory action under section 3(f) of hand delivery, submit them in an the race’s course will help ensure the Executive Order 12866, Regulatory unbound format, no larger than 81⁄2 by safety of persons and property at these Planning and Review, as supplemented 11 inches, suitable for copying and events and help minimize the associated by Executive Order 13563, Improving electronic filing. If you submit risks. Regulation and Regulatory Review, and comments by mail and would like to does not require an assessment of know that they reached the Facility, Discussion of Proposed Rule potential costs and benefits under section 6(a)(3) of that Executive Order please enclose a stamped, self-addressed This proposed rule is intended to 12866 or under section 1 of Executive postcard or envelope. We will consider ensure safety of the public and vessels Order 13563. The Office of Management all comments and material received during the Dragon Boat Races. This and Budget has not reviewed it under during the comment period and may proposed rule will become effective 30 that those Orders. It is not ‘‘significant’’ change the rule based on your days after the final rule is published in under the regulatory policies and comments. the Federal Register. However, the procedures of the Department of Special Local Regulation will only be Viewing Comments and Documents Homeland Security (DHS). We conclude enforced annually on the third or fourth that this proposed rule is not a To view comments, as well as Saturday in July from 6 a.m. until 6 p.m. significant regulatory action because we documents mentioned in this preamble Vessels seeking to transit through the anticipate that it will have minimal as being available in the docket, go to area of the race should contact the impact on the economy, will not http://www.regulations.gov, click on the Captain of the Port or his or her on- interfere with other agencies, will not ‘‘read comments’’ box, which will then scene representative. The on-scene adversely alter the budget of any grant become highlighted in blue. In the representative may be present on any or loan recipients, and will not raise any ‘‘Keyword’’ box insert ‘‘USCG–2011– Coast Guard, state or local law novel legal or policy issues. The Special 0211’’ and click ‘‘Search.’’ Click the enforcement, or sponsor provided vessel Local Regulation will be relatively small ‘‘Open Docket Folder’’ in the ‘‘Actions’’ assigned to patrol the event. The on- and exist for a relatively short time. column. You may also visit the Docket scene representatives may permit Thus, restrictions on vessel movement Management Facility in Room W12–140 vessels to transit the area when no race within that particular area are expected on the ground floor of the Department activity is occurring. Vessel traffic may to be minimal. Under certain of Transportation West Building, 1200 proceed down the West side of the river conditions, moreover, vessels may still New Jersey Avenue, SE., Washington, at a no wake speed during racing. The transit through the area when permitted DC 20590, between 9 a.m. and 5 p.m., races will stop for oncoming freighter or by the Captain of the Port. Monday through Friday, except Federal commercial traffic. holidays. We have an agreement with This Special Local Regulation will Small Entities the Department of Transportation to use encompass all navigable waters of the Under the Regulatory Flexibility Act the Docket Management Facility. United States on the Maumee River, (5 U.S.C. 601–612), we have considered Privacy Act Toledo, OH, bound by a line extending whether this proposed rule would have from a point on land just south of the a significant economic impact on a Anyone can search the electronic Cherry Street bridge at position substantial number of small entities. form of comments received into any of 41°39′04.00″ N; 083°31′35.78″ W The term ‘‘small entities’’ comprises our dockets by the name of the straight across the river along the Cherry small businesses, not-for-profit individual submitting the comment (or Street bridge to position 41°39′11.44″ N; organizations that are independently signing the comment, if submitted on 083°31′44.36″ W and a line extending owned and operated and are not behalf of an association, business, labor from a point of land just north of the dominant in their fields, and union, etc.). You may review a Privacy bow of the SS Boyer museum ship at governmental jurisdictions with Act notice regarding our public dockets position 41°38′37.26″ N; 083°31′ 53.86″ populations of less than 50,000. in the January 17, 2008, issue of the W straight across the river to the shore The Coast Guard certifies under 5 Federal Register (73 FR 3316). adjacent to the Owens Corning building U.S.C. 605(b) that this proposed rule

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would not have a significant economic have determined that it does not have under Executive Order 12866 and is not impact on a substantial number of small implications for federalism. likely to have a significant adverse effect entities. on the supply, distribution, or use of Unfunded Mandates Reform Act This rule will affect the following energy. The Administrator of the Office entities, some of which might be small The Unfunded Mandates Reform Act of Information and Regulatory Affairs entities: The owners or operators of of 1995 (2 U.S.C. 1531–1538) requires has not designated it as a significant vessels intending to transit or anchor in Federal agencies to assess the effects of energy action. Therefore, it does not the portion of the Maumee River their discretionary regulatory actions. In require a Statement of Energy Effects discussed above between 6 a.m. and 6 particular, the Act addresses actions under Executive Order 13211. p.m. on Saturdays in July. that may result in the expenditure by a Technical Standards This Special Local Regulation will not State, local, or Tribal government, in the have a significant economic impact on aggregate, or by the private sector of The National Technology Transfer a substantial number of small entities $100,000,000 (adjusted for inflation) or and Advancement Act (NTTAA) (15 for the following reasons: This rule will more in any one year. Though this U.S.C. 272 note) directs agencies to use be enforced for approximately twelve proposed rule would not result in such voluntary consensus standards in their hours during the one day each year that an expenditure, we do discuss the regulatory activities unless the agency it is enforced. In addition, on-scene effects of this rule elsewhere in this provides Congress, through the Office of representatives will allow vessels to preamble. Management and Budget, with an transit along the Western side of the explanation of why using these Taking of Private Property river at a slow speed. The race standards would be inconsistent with committee will stop the races to allow This proposed rule would not cause a applicable law or otherwise impractical. commercial traffic to transit. taking of private property or otherwise Voluntary consensus standards are If you think that your business, have taking implications under technical standards (e.g., specifications organization, or governmental Executive Order 12630, Governmental of materials, performance, design, or jurisdiction qualifies as a small entity Actions and Interference with operation; test methods; sampling and that this rule would have a Constitutionally Protected Property procedures; and related management significant economic impact on it, Rights. systems practices) that are developed or please submit a comment (see adopted by voluntary consensus Civil Justice Reform ADDRESSES) explaining why you think it standards bodies. qualifies and how and to what degree This proposed rule meets applicable This proposed rule does not use this rule would economically affect it. standards in sections 3(a) and 3(b)(2) of technical standards. Therefore, we did Executive Order 12988, Civil Justice not consider the use of voluntary Assistance for Small Entities Reform, to minimize litigation, consensus standards. Under section 213(a) of the Small eliminate ambiguity, and reduce Environment Business Regulatory Enforcement burden. Fairness Act of 1996 (Pub. L. 104–121), We have analyzed this proposed rule Protection of Children we want to assist small entities in under Department of Homeland understanding this proposed rule so that We have analyzed this proposed rule Security Management Directive 023–01 they can better evaluate its effects on under Executive Order 13045, and Commandant Instruction them and participate in the rulemaking. Protection of Children from M16475.lD, which guide the Coast If the rule would affect your small Environmental Health Risks and Safety Guard in complying with the National business, organization, or governmental Risks. This rule is not an economically Environmental Policy Act of 1969 jurisdiction and you have questions significant rule and would not create an (NEPA) (42 U.S.C. 4321–4370f), and concerning its provisions or options for environmental risk to health or risk to have made a preliminary determination compliance, please contact BM1 Tracy safety that might disproportionately that this action is one of a category of Girard, Response Department, MSU affect children. actions that do not individually or cumulatively have a significant effect on Toledo, Coast Guard; telephone Indian Tribal Governments (419) 418–6036, e-mail the human environment. This rule [email protected]. The Coast This proposed rule does not have involves the establishment of a Special Guard will not retaliate against small Tribal implications under Executive Local Regulation and is therefore entities that question or complain about Order 13175, Consultation and categorically excluded under figure 2–1, this proposed rule or any policy or Coordination with Indian Tribal paragraph (34)(h), of the Instruction. action of the Coast Guard. Governments, because it would not have During the permitting process for this a substantial direct effect on one or Dragon Boat Race event an Collection of Information more Indian Tribes, on the relationship environmental analysis is conducted, This proposed rule would call for no between the Federal Government and and thus, no preliminary environmental new collection of information under the Indian Tribes, or on the distribution of analysis checklist or Categorical Paperwork Reduction Act of 1995 (44 power and responsibilities between the Exclusion Determination (CED) are U.S.C. 3501–3520). Federal Government and Indian Tribes. required for this rulemaking action. We seek any comments or information that Federalism Energy Effects may lead to the discovery of a A rule has implications for federalism We have analyzed this proposed rule significant environmental impact from under Executive Order 13132, under Executive Order 13211, Actions this proposed rule. Federalism, if it has a substantial direct Concerning Regulations That effect on State or local governments and Significantly Affect Energy Supply, List of Subjects in 33 CFR Part 100 would either preempt State law or Distribution, or Use. We have Harbors, Marine Safety, Navigation impose a substantial direct cost of determined that it is not a ‘‘significant (water), Reporting and recordkeeping compliance on them. We have analyzed energy action’’ under that order because requirements, Security measures, this proposed rule under that Order and it is not a ‘‘significant regulatory action’’ Waterways.

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For the reasons discussed in the action, USCG is providing notice that Public Participation and Request for preamble, the Coast Guard proposes to the public comment period is extended Comments amend 33 CFR Part 100 as follows: until September 6, 2011. This action We encourage you to participate in will provide the public with additional this study by submitting comments and PART 100—SAFETY OF LIFE ON time and opportunity to provide the NAVIGABLE WATERS related materials. All comments Coast Guard with information regarding received will be posted, without change, 1. The authority citation for part 100 the Port Access Route Study: In the to http://www.regulations.gov and will continues to read as follows: Bering Strait. include any personal information you Authority: 33 U.S.C. 1233. DATES: Comments and related material have provided. Submitting comments: If you submit 2. Add § 100.902 to read as follows: must either be submitted to our online docket via http://www.regulations.gov comments, please include the docket § 100.902 Partnership in Education Dragon on or before September 6, 2011, or reach number for this notice (USCG–2010– Boat Festival, Toledo, OH. the Docket Management Facility by that 0833), indicate the specific section of (a) Regulated area. The regulated area date. this document to which each comment includes all U.S. navigable waters of the applies, and provide a reason for each Maumee river, Toledo, OH, within an ADDRESSES: You may submit comments suggestion or recommendation. You area bound on the north by a line identified by docket number USCG– may submit your comments and extending from a point on land just 2010–0833 using any one of the material online, or by fax, mail or hand south of the Cherry Street bridge at following methods: delivery, but please use only one of position 41°39′04.00″ N; 083°31′35.78″ (1) Federal eRulemaking Portal: these means. We recommend that you W straight across the river along the http://www.regulations.gov. include your name and a mailing address, an e-mail address, or a Cherry Street bridge to position (2) Fax: 202–493–2251. 41°39′11.44″ N; 083°31′44.36″ W and telephone number in the body of your bound on the south by a line extending (3) Mail: Docket Management Facility document so that we can contact you if from a point of land just north of the (M–30), U.S. Department of we have questions regarding your bow of the SS Boyer museum ship at Transportation, West Building Ground submission. position 41°38′37.26″ N; 083°31′53.86″ Floor, Room W12–140, 1200 New Jersey To submit your comment online, go to W straight across the river to the shore Avenue, SE., Washington, DC 20590– http://www.regulations.gov, click on the adjacent to the Owens Corning building 0001. ‘‘submit a comment’’ box, which will at position 41°38′38.943″ N; (4) Hand delivery: Same as mail then become highlighted in blue. In the 083°32′3.980″ W. (DATUM: NAD 83). address above, between 9 a.m. and 5 ‘‘Document Type’’ drop down menu (b) Special local regulations. The p.m., Monday through Friday, except select ‘‘Notices’’ and insert ‘‘USCG– regulations of § 100.901 apply. No Federal holidays. The telephone number 2010–0833’’ in the ‘‘Keyword’’ box. Click vessel may enter, transit through, or is 202–366–9329. ‘‘Search’’ then click on the balloon shape anchor within the regulated area in the ‘‘Actions’’ column. If you submit To avoid duplication, please use only without the permission of the Coast your comments by mail or hand one of these four methods. See the Guard Patrol Commander. delivery, submit them in an unbound ‘‘Public Participation and Request for 1 (c) Enforcement period. These Special format, no larger than 8 ⁄2 by 11 inches, ’’ Local Regulations will be enforced Comments portion of the suitable for copying and electronic annually on the third or fourth Saturday SUPPLEMENTARY INFORMATION section filing. If you submit your comments by of July from 6 a.m. until 6 p.m. below for instructions on submitting mail or hand delivery, submit them in comments. an unbound format, no larger than 81⁄2 Dated: April 26, 2011. by 11 inches, suitable for copying and E.J. Marohn, FOR FURTHER INFORMATION CONTACT: If you have questions on this notice of electronic filing. If you submit them by Commander, U.S. Coast Guard, Acting mail and would like to know that they Captain of the Port Detroit. study, call or e-mail Lieutenant Faith Reynolds, Project Officer, Seventeenth reached the Facility, please enclose a [FR Doc. 2011–11543 Filed 5–10–11; 8:45 am] stamped, self-addressed postcard or BILLING CODE 9110–04–P Coast Guard District, telephone 907– 463–2270; e-mail envelope. We will consider all [email protected]; or George comments and material received during Detweiler, Office of Waterways the comment period. DEPARTMENT OF HOMELAND Viewing comments and documents: Management, Coast Guard, telephone SECURITY To view comments and documents 202–372–1566, e-mail mentioned in this preamble as being Coast Guard [email protected]. If you available in the docket, go to http:// have questions on viewing or submitting www.regulations.gov, click on the ‘‘read 33 CFR Part 167 material to the docket, call Ms. Renee K. comments’’ box, which will then Wright, Program Manager, Docket [USCG–2010–0833] become highlighted in blue. In the Operations, telephone 202–366–9826. ‘‘Keyword’’ box insert ‘‘USCG–2010– Port Access Route Study: In the Bering SUPPLEMENTARY INFORMATION: On 0833’’ and click ‘‘Search.’’ Click the Strait; Extension of Comment Period November 8, 2010, USCG published a ‘‘Open Docket Folder’’ in the ‘‘Actions’’ AGENCY: Coast Guard, DHS. Notice of Study and request for column. If you do not have access to the ACTION: Notice of extension of public comments for the Port Access Route Internet, you may view the docket comment period. Study: In the Bering Strait (75 FR online by visiting the Docket 68568). The comment period in that Management Facility in Room W12–140 SUMMARY: On November 8, 2010, USCG document closed May 9, 2011. In this on the ground floor of the Department published a Notice of Study and request action, USCG is providing notice that of Transportation West Building, 1200 for comments for the Port Access Route the public comment period is extended New Jersey Avenue, SE., Washington, Study: In the Bering Strait. In this until September 6, 2011. DC 20590, between 9 a.m. and 5 p.m.,

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Monday through Friday, except Federal DATES: Comments and related material then become highlighted in blue. In the holidays. We have an agreement with must reach the Docket Management ‘‘Document Type’’ drop down menu the Department of Transportation to use Facility on or before August 9, 2011. select ‘‘Notice’’ and insert ‘‘USCG–2011– the Docket Management Facility. ADDRESSES: You may submit comments 0351’’ in the ‘‘Keyword’’ box. Click Privacy Act: Anyone can search the identified by docket number USCG– ‘‘Search’’ then click on the balloon shape electronic form of comments received 2011–0351 using any one of the in the ‘‘Actions’’ column. If you submit into any of our dockets by the name of following methods: your comments by mail or hand the individual submitting the comment (1) Federal eRulemaking Portal: delivery, submit them in an unbound (or signing the comment, if submitted http://www.regulations.gov. format, no larger than 81⁄2 by 11 inches, on behalf of an association, business, (2) Fax: 202–493–2251. suitable for copying and electronic labor union, etc.). You may review a (3) Mail: Docket Management Facility filing. If you submit them by mail and Privacy Act, system of records notice (M–30), U.S. Department of would like to know that they reached regarding our public dockets in the Transportation, West Building Ground the Facility, please enclose a stamped, January 17, 2008, issue of the Federal Floor, Room W12–140, 1200 New Jersey self-addressed postcard or envelope. We Register (73 FR 3316). Avenue, SE., Washington, DC 20590– will consider all comments and material This notice is issued under authority 0001. received during the comment period. of 33 U.S.C. 1223(c) and 5 U.S.C. 552. (4) Hand delivery: Same as mail B. Viewing the comments and Christopher C. Colvin, address above, between 9 a.m. and documents: To view the comments and Rear Admiral, U.S. Coast Guard, Commander, 5 p.m., Monday through Friday, except documents mentioned in this preamble Seventeenth Coast Guard District. Federal holidays. The telephone number as being available in the docket, go to [FR Doc. 2011–11544 Filed 5–10–11; 8:45 am] is 202–366–9329. To avoid duplication, http://www.regulations.gov, click on the BILLING CODE 4910–15–P please use only one of these four ‘‘read comments’’ box, which will then methods. See the ‘‘Public Participation become highlighted in blue. In the and Request for Comments’’ portion of ‘‘Keyword’’ box insert ‘‘USCG–2011– DEPARTMENT OF HOMELAND the SUPPLEMENTARY INFORMATION section 0351’’ and click ‘‘Search.’’ Click the SECURITY below for instructions on submitting ‘‘Open Docket Folder’’ in the ‘‘Actions’’ comments. column. If you do not have access to the Coast Guard FOR FURTHER INFORMATION CONTACT: If Internet, you may view the docket you have questions on this notice of online by visiting the Docket 33 CFR Part 167 study contact George Detweiler, Office Management Facility in Room W12–140 [USCG–2011–0351] of Navigation Systems, Coast Guard, on the ground floor of the Department telephone 202–372–1566, e-mail of Transportation West Building, 1200 Port Access Route Study: The Atlantic [email protected]. If you New Jersey Avenue, SE., Washington, Coast From Maine to Florida have questions on viewing or submitting DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal AGENCY: Coast Guard, DHS. material to the docket, call Ms. Renee K. Wright, Program Manager, Docket holidays. We have an agreement with ACTION: Notice of study; request for the Department of Transportation to use comments. Operations, telephone 202–366–9826. SUPPLEMENTARY INFORMATION: the Docket Management Facility. SUMMARY: In order to provide safe access C. Privacy Act: Anyone can search the routes for the movement of vessel traffic I. Public Participation and Request for electronic form of comments received proceeding to or from ports or places Comments into any of our dockets by the name of along the eastern seaboard of the United We encourage you to participate in the individual submitting the comment States, the Coast Guard is conducting a this study by submitting comments and (or signing the comment, if submitted Port Access Route Study (PARS) to related materials. All comments on behalf of an association, business, evaluate the continued applicability of, received will be posted, without change, labor union, etc.). You may review a and the need for modifications to, to http://www.regulations.gov and will Privacy Act, system of records notice current vessel routing measures. The include any personal information you regarding our public dockets in the data gathered during this Atlantic Coast have provided. January 17, 2008, issue of the Federal PARS may result in establishment of A. Submitting comments: If you Register (73 FR 3316). one or more new vessel routing submit comments, please include the II. Definitions measures, modification of existing docket number for this rulemaking routing measures, or disestablishment of (USCG–2011–0351), indicate the The following definitions (except as existing routing measures off the specific section of this document to noted by an asterisk) are from the Atlantic Coast between Maine and which each comment applies, and International Maritime Organization’s Florida. The goal of the Atlantic Coast provide a reason for each suggestion or (IMO’s) publication ‘‘Ships’ Routeing,’’ PARS is to enhance navigational safety recommendation. You may submit your Tenth Edition, 2010, and should help by examining existing shipping routes comments and material online, or by you review this notice: and waterway uses, and, to the extent fax, mail or hand delivery, but please Area to be avoided (ATBA) means a practicable, reconciling the paramount use only one of these means. We routing measure comprising an area right of navigation within designated recommend that you include your name within defined limits in which either port access routes with other reasonable and a mailing address, an e-mail navigation is particularly hazardous or waterway uses such as the leasing of address, or a telephone number in the it is exceptionally important to avoid outer continental shelf blocks for the body of your document so that we can casualties and which should be avoided construction and operation of offshore contact you if we have questions by all vessels, or certain classes of renewable energy facilities. The regarding your submission. vessels. recommendations of the study may lead To submit your comment online, go to Deep-water route means a route to future rulemaking action or http://www.regulations.gov, click on the within defined limits, which has been appropriate international agreements. ‘‘submit a comment’’ box, which will accurately surveyed for clearance of sea

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bottom and submerged obstacles as may interfere with or restrict marine United States Exclusive Economic Zone indicated on nautical charts. navigation. (EEZ). Exclusive economic zone (EEZ)* Traffic lane means an area within C. Necessity for a new port access means the zone established by defined limits in which one-way traffic route study: Given the current desire to Presidential Proclamation 5030, dated is established. Natural obstacles, identify alternative energy sites on the March 10, 1983. including those forming separation Atlantic Coastal Continental Shelf, the Fairway or shipping safety fairway* zones may constitute a boundary. leasing of Outer Continental Shelf (OCS) (33 CFR 166) means a lane or corridor Traffic Separation Scheme (TSS) blocks by the Bureau of Ocean Energy in which no artificial island or fixed means a routing measure aimed at the Management, Regulation and structure, whether temporary or separation of opposing streams of traffic Enforcement (BOEMRE), and the permanent, will be permitted. by appropriate means and by the nascent Coastal and Marine Spatial Temporary underwater obstacles may be establishment of traffic lanes. Planning (CMSP) effort, the Coast Guard permitted under certain conditions Two-way route means a route within has determined that a PARS for the described for specific areas in Title 33 defined limits inside which two-way entire Atlantic Coast (Maine to Florida) CFR 166, Subpart B. Aids to navigation traffic is established, aimed at providing needs to be conducted. This PARS will approved by the U.S. Coast Guard may safe passage of ships through waters not focus on the many port areas from be established in a fairway. where navigation is difficult or the sea buoy into the ports. Rather, it Inshore traffic zone means a routing dangerous. will focus on the coastwise shipping Vessel routing system means any measure comprising a designated area routes and near coastal users of the system of one or more routes or routing between the landward boundary of a Western Atlantic Ocean between the measure aimed at reducing the risk of traffic separation scheme and the coastal ports, and the approaches to casualties; it includes traffic separation adjacent coast, to be used in accordance coastal ports within the EEZ. This schemes, two-way routes, recommended with the provisions of Rule 10(d), as Atlantic Coast PARS will identify all tracks, areas to be avoided, no anchoring amended, of the International current and new users of the Western areas, inshore traffic zones, Regulations for Preventing Collisions at Atlantic near coastal zone, and help the roundabouts, precautionary areas, and Sea, 1972 (COLREGS). Coast Guard determine what impact, if deep-water routes. Obstruction* (33 CFR 64.06) means any, the siting, construction and anything that restricts, endangers, or III. Background and Purpose operation of proposed alternative energy interferes with navigation. facilities may have on existing near A. Requirement for port access route coastal users of the Western Atlantic Precautionary area means a routing studies: Under the Ports and Waterways Ocean. measure comprising an area within Safety Act (PWSA) (33 U.S.C. 1223(c)), In November 2010, the Secretary of defined limits where vessels must the Commandant of the Coast Guard the Department of the Interior (DOI) navigate with particular caution and shall designate necessary fairways and announced Wind Energy Areas (WEAs) within which the direction of traffic traffic separation schemes (TSSs) to off the coasts of Massachusetts, New flow may be recommended. provide safe access routes for vessels Jersey, Delaware, Maryland, Rhode Recommended route means a route of proceeding to and from United States Island and Virginia, and the intention to undefined width, for the convenience of ports. The designation of fairways and identify other areas off New York, vessels in transit, which is often marked TSSs recognizes the paramount right of Maine, North Carolina, South Carolina, by centerline buoys. navigation over all other uses in the and Georgia in 2011. These WEAs are Recommended track is a route which designated areas. offshore locations that appear most has been specially examined to ensure The PWSA requires the Coast Guard suitable for wind energy development. so far as possible that it is free of to conduct a port access route study All of the identified WEAs are located dangers and along which vessels are (PARS), i.e. a study of potential traffic at or near the entrances to major ports advised to navigate. density and the need for safe access as the wind energy in these areas is Regulated Navigation Area (RNA)* routes for vessels, before establishing or suitable for possible commercial means a water area within a defined adjusting fairways or TSSs. Through the exploitation, the depth of water is boundary for which regulations for study process, we must coordinate with adequate for wind farm construction, vessels navigating within the area have Federal, State, and foreign state agencies and there is landside electrical energy been established under 33 CFR 165. (as appropriate) and consider the views infrastructure to connect the wind Roundabout means a routing measure of maritime community representatives, farms. comprising a separation point or environmental groups, and other The locations of some of the circular separation zone and a circular interested stakeholders. A primary identified WEAs are at the seaward traffic lane within defined limits. Traffic purpose of this coordination is, to the terminus of existing navigational TSSs. within the roundabout is separated by extent practicable, to reconcile the need Other WEAs are located in or very near moving in a counterclockwise direction for safe access routes with other the traditional routes used by vessels in around the separation point or zone. reasonable waterway uses such as foreign trade and on Atlantic coastwise Separation Zone or separation line construction and operation of renewable transits. The impact to safe and efficient means a zone or line separating the energy facilities and other uses of the navigation appears to be significant; traffic lanes in which vessels are Atlantic Ocean in the study area. although not yet characterized. proceeding in opposite or nearly B. Previous port access route studies: To ensure safety of navigation, the opposite directions; or separating a A number of port-specific studies have Coast Guard needs to fully characterize traffic lane from the adjacent sea area; been conducted for the major ports the impacts of rerouting traffic, or separating traffic lanes designated for along the Atlantic seaboard of the funneling traffic, and placement of particular classes of vessels proceeding United States. However, there has never structures (e.g., wind turbines) that may in the same direction. been a PARS conducted for the entire obstruct navigation. Some of the Structure* (33 CFR 64.06) means any Atlantic coast designed to analyze all impacts may include increased vessel fixed or floating obstruction, vessel traffic proceeding to and from all traffic density, more restricted offshore intentionally placed in the water, which the ports and transiting through the vessel routing (seaward of pilotage

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areas), fixed navigation obstructions, • Use this study to inform other SUMMARY: EPA is proposing to make two underwater cable hazards, and agencies concerning the impacts of their determinations regarding the tri-state economic impacts. Analyzing the future endeavors. Huntington-Ashland, West Virginia- various impacts will require a thorough Kentucky-Ohio fine particulate matter Questions understanding of the interrelationships (PM2.5) nonattainment Area (hereafter of shipping, other commercial and To help us conduct the port access referred to as ‘‘the Huntington-Ashland recreational uses, and port operations. route study, we request information that Area’’ or ‘‘Area’’). First, EPA is proposing will help answer the following to determine that the Area has attained IV. This PARS: Timeline, Study Area, questions, although comments on other the 1997 annual average PM National and Process 2.5 issues addressed in this notice are also Ambient Air Quality Standard The Coast Guard’s Atlantic Area welcome. In responding to a question, (NAAQS). This proposed determination Command will conduct this PARS. The please explain your reasons for each of attainment is based upon complete, study will begin upon publication of answer and follow the instructions quality-assured and certified ambient air this notice and should take under ‘‘Public Participation and Request monitoring data for the 2007–2009 approximately 12 months to complete. for Comments’’ above. period showing that the Area has The study area will encompass the 1. What navigational hazards do attained the 1997 annual PM2.5 NAAQS, entire EEZ of the Atlantic Coast from vessels operating in the study area face? and data available to date for 2010 in Maine to Florida and will encompass Please describe. EPA’s Air Quality System (AQS) coastwise routes and the approaches to 2. Are there strains on the current database that show the area continues to all Atlantic coastal ports. vessel routing systems, such as attain. If EPA finalizes this proposed As part of this study, we will analyze increasing traffic density associated determination of attainment, the vessel traffic density, fishing vessel with future growth, e.g., impact of the requirements for the Area to submit information, and agency and Panama Canal expansion project? Please attainment demonstrations and stakeholder experience in vessel traffic describe. associated reasonably available control management, navigation, ship handling, 3. Are modifications to existing vessel measures (RACM), a reasonable further and effects of weather. We encourage routing measures needed to address progress (RFP) plan, contingency you to participate in the study process hazards and improve traffic efficiency in measures, and other planning State by submitting comments in response to the study area? If so, please describe. Implementation Plan (SIP) revisions this notice. 4. What costs and benefits are related to attainment of the standard We will publish the results of the associated with the measures listed as shall be suspended for so long as the PARS in the Federal Register. It is potential study recommendations? What Area continues to attain the annual possible that the study may validate measures do you think are most cost- PM2.5 NAAQS. Second, EPA is also existing vessel routing measures and effective? proposing to determine, based on conclude that no changes are necessary. 5. What impacts, both positive and quality-assured and certified monitoring It is also possible that the study may negative, would changes to existing data for the 2007–2009 monitoring recommend one or more changes to routing measures or new routing period, that the Area has attained the enhance navigational safety and the measures have on the study area? 1997 annual PM2.5 NAAQS by its efficiency of vessel traffic. The 6. Where do you transit? Where are applicable attainment date of April 5, recommendations may lead to future your transit routes? What criteria are 2010. rulemakings or appropriate used in determining your transit routes? international agreements. DATES: Comments must be received on This notice is issued under authority or before June 10, 2011. of 33 U.S.C. 1223(c) and 5 U.S.C. 552. Possible Scope of the Recommendations ADDRESSES: Submit your comments We are attempting to determine the Dated: May 3, 2011. regarding the tri-state Huntington- scope of any safety problems associated Robert C. Parker, Ashland Area, identified by Docket ID with vessel transits in the study area. Vice Admiral, U.S. Coast Guard, Commander, No. EPA–R04–OAR–2010–0255, by one We expect that information gathered Atlantic Area. of the following methods: during the study will help us identify [FR Doc. 2011–11483 Filed 5–10–11; 8:45 am] 1. http://www.regulations.gov: Follow any problems and appropriate solutions. BILLING CODE 9110–04–P the on-line instructions for submitting The study may recommend that we— comments. • Maintain the current vessel routing 2. E-mail: [email protected]. measures; ENVIRONMENTAL PROTECTION 3. Fax: (404) 562–9040. • 4. Mail: EPA–R04–OAR–2010–0255, Modify the existing traffic AGENCY separation schemes; Regulatory Development Section, Air • Create one or more precautionary 40 CFR Part 52 Planning Branch, Air, Pesticides and areas; Toxics Management Division, U.S. • Create one or more inshore traffic [EPA–R04–OAR–2010–0255–201050; FRL– Environmental Protection Agency, zones; 9303–8] Region 4, 61 Forsyth Street, SW., • Establish area(s) to be avoided; Atlanta, Georgia 30303–8960. Approval and Promulgation of Air • Create deep-draft routes; 5. Hand Delivery: Lynorae Benjamin, Quality Implementation Plans; West • Establish Regulated Navigation Regulatory Development Section, Air Virginia; Kentucky; Ohio; Huntington- Areas (RNA) with specific vessel Planning Branch, Air, Pesticides and Ashland Nonattainment Area; operating requirements to ensure safe Toxics Management Division, U.S. Determinations of Attainment of the navigation near shallow water; and Environmental Protection Agency, • Identify any other appropriate 1997 Annual Fine Particulate Standard Region 4, 61 Forsyth Street, SW., ships’ routing measures. AGENCY: Environmental Protection Atlanta, Georgia 30303–8960. Such • Use this study for future decisions Agency (EPA). deliveries are only accepted during the on routing measures or other maritime Regional Office normal hours of ACTION: Proposed rule. traffic considerations. operation, and special arrangements

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should be made for deliveries of boxed schedule your inspection. The Regional with EPA’s PM2.5 Implementation Rule information. The Regional Office official Office’s official hours of business are of April 25, 2007 (72 FR 20664), that the hours of business are Monday through Monday through Friday, 8:30 to 4:30, Huntington-Ashland Area has attained Friday, 8:30 to 4:30, excluding Federal excluding Federal holidays. the 1997 annual PM2.5 NAAQS by its holidays. FOR FURTHER INFORMATION CONTACT: In applicable attainment date of April 5, Instructions: Direct your comments to Region 3, Ellen Wentworth, Office of Air 2010. Docket ID No. EPA–R04–OAR–2010– Program Planning, U.S. Environmental 0255. EPA’s policy is that all comments II. What is the background for these Protection Agency, Region 3, 1650 Arch actions? received will be included in the public Street, Philadelphia, Pennsylvania docket without change and may be 19103–2023. The telephone number is On July 18, 1997 (62 FR 36852), EPA made available online at http:// (215) 814–2034. Ms. Wentworth can established an annual PM2.5 NAAQS at www.regulations.gov, including any 15.0 micrograms per cubic meter (μg/ also be reached via electronic mail at 3 personal information provided, unless [email protected]. In Region 4, m ) based on a 3-year average of annual the comment includes information Joel Huey or Sara Waterson, Regulatory mean PM2.5 concentrations (hereafter ‘‘ claimed to be Confidential Business Development Section, Air Planning referred to as the annual PM2.5 ’’ ‘‘ ’’ Information (CBI) or other information Branch, Air, Pesticides and Toxics NAAQS or the annual standard ). At whose disclosure is restricted by statute. Management Division, U.S. that time, EPA also established a 24- hour standard of 65 μg/m3 (the ‘‘1997 Do not submit information that you Environmental Protection Agency, 24-hour standard’’). See 40 CFR 50.7. On consider to be CBI or otherwise Region 4, 61 Forsyth Street, SW, January 5, 2005 (70 FR 944), EPA protected through http:// Atlanta, Georgia 30303–8960. Mr. published its air quality designations www.regulations.gov or e-mail. The Huey’s telephone number is (404) 562– and classifications for the 1997 PM http://www.regulations.gov Web site is 9104. Mr. Huey can also be reached via 2.5 ‘‘ ’’ NAAQS based upon air quality an anonymous access system, which electronic mail at [email protected]. monitoring data from those monitors for means EPA will not know your identity Ms. Waterson may be reached by phone calendar years 2001–2003. These or contact information unless you at (404) 562–9061 or via electronic mail designations became effective on April provide it in the body of your comment. at [email protected]. In Region 5, 5, 2005. The Huntington-Ashland Area If you send an e-mail comment directly John Summerhays, Air Planning and to EPA without going through http:// was designated nonattainment for the Maintenance Section, Air Programs www.regulations.gov your e-mail 1997 PM2.5 NAAQS during this Branch (AR–18J), U.S. Environmental address will be automatically captured designations process. See 40 CFR 81.349 Protection Agency, Region 5, 77 West and included as part of the comment (West Virginia), 40 CFR 81.318 Jackson Boulevard, Chicago, Illinois that is placed in the public docket and (Kentucky), and 40 CFR 81.336 (Ohio). 60604–3507. Mr. Summerhays’ made available on the Internet. If you The Huntington-Ashland Area is telephone number is (312) 886–6067. submit an electronic comment, EPA composed of Cabell and Wayne Mr. Summerhays can also be reached recommends that you include your Counties in their entireties and a via electronic mail at name and other contact information in portion of Mason County (Graham Tax [email protected]. the body of your comment and with any District) in West Virginia; Boyd County disk or CD–ROM you submit. If EPA SUPPLEMENTARY INFORMATION: in its entirety and a portion of Lawrence cannot read your comment due to I. What actions is EPA taking? County in Kentucky; and a portion of technical difficulties and cannot contact II. What is the background for these actions? Adams, a portion of Gallia, Lawrence, you for clarification, EPA may not be III. Has the Huntington-Ashland area attained and Scioto Counties in Ohio. able to consider your comment. the 1997 annual PM2.5 standard? On October 17, 2006 (71 FR 61144), Electronic files should avoid the use of A. Criteria EPA retained the 1997 annual PM2.5 special characters, any form of B. Huntington-Ashland Area Air Quality NAAQS at 15.0 μg/m3 based on a 3-year C. How did EPA address air quality in encryption, and be free of any defects or average of annual mean PM2.5 Lawrence County? concentrations, and promulgated a 24- viruses. D. Has the Huntington-Ashland area met Docket: All documents in the hour standard of 35 μg/m3 based on a the 1997 annual PM2.5 air quality electronic docket are listed in the standard? 3-year average of the 98th percentile of http://www.regulations.gov index. IV. What is the effect of these actions? 24-hour concentrations (the ‘‘2006 24- Although listed in the index, some V. Statutory and Executive Order Reviews hour standard’’). On November 13, 2009, information is not publicly available, EPA designated the Huntington- I. What actions is EPA taking? i.e., CBI or other information whose Ashland Area as attainment for the 2006 disclosure is restricted by statute. In accordance with Section 179(c)(1) 24-hour standard (74 FR 58688). In that Certain other material, such as of the Clean Air Act (CAA), 42 U.S.C. action, EPA also clarified the copyrighted material, is not placed on 7509(c)(1), and 40 CFR 51.1004(c), EPA designations for the NAAQS the Internet and will be publicly is proposing to determine that the promulgated in 1997, stating that the available only in hard copy form. Huntington-Ashland Area (which Huntington-Ashland Area was Publicly available docket materials are consists of portions in West Virginia, designated as nonattainment for the available either electronically in http:// Kentucky, and Ohio) has attained the annual standard but attainment for the www.regulations.gov or in hard copy at 1997 annual PM2.5 NAAQS. The 1997 24-hour standard. Thus, today’s the Regulatory Development Section, proposal is based upon quality-assured action does not address attainment of Air Planning Branch, Air, Pesticides and and certified ambient air monitoring either the 1997 or the 2006 24-hour Toxics Management Division, U.S. data for the 2007–2009 monitoring standard. Environmental Protection Agency, period that show that the Area has In response to legal challenges of the Region 4, 61 Forsyth Street, SW., monitored attainment of the 1997 annual standard promulgated in 2006, Atlanta, Georgia 30303–8960. EPA annual PM2.5 NAAQS, and data the U.S. Court of Appeals for the District requests that if at all possible, you available to date for 2010 that show the of Columbia Circuit (DC Circuit) contact the person listed in the FOR Area continues to attain. EPA is also remanded this standard to EPA for FURTHER INFORMATION CONTACT section to proposing to determine, in accordance further consideration. See American

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Farm Bureau Federation and National whether the Area attained that NAAQS PM2.5 NAAQS for the Huntington- Pork Producers Council, et al. v. EPA, by its applicable attainment date of Ashland Area monitors for the years 559 F.3d 512 (DC Cir. 2009). However, April 5, 2010. 2007–2009. All data considered have given that the 1997 and 2006 annual Under EPA regulations at 40 CFR been quality-assured, certified, and standards are essentially identical, 50.7, the 1997 annual primary and recorded in AQS. The highest 3-year attainment of the 1997 annual standard secondary PM2.5 standards are met when average annual concentration for 2007– would also indicate attainment of the the annual arithmetic mean 2009 on this table was recorded in remanded 2006 annual standard. concentration, as determined in Cabell County, West Virginia at the On April 25, 2007 (72 FR 20664), EPA accordance with 40 CFR part 50, Huntington site—54–011–0006, promulgated its PM2.5 Implementation Appendix N, is less than or equal to recording a 3-year average annual Rule, codified at 40 CFR part 51, subpart 15.0 μg/m3 at all relevant monitoring concentration of 14.3 μg/m3. Z, in which the Agency provided sites in the subject area. EPA’s review of these data indicates guidance for state and Tribal plans to B. Huntington-Ashland Area Air Quality that the Huntington-Ashland Area has implement the 1997 PM2.5 standard. met the 1997 annual PM2.5 NAAQS. This rule, at 40 CFR 51.1004(c), EPA has determined that the PM2.5 Table 1 and the related discussion specifies some of the regulatory monitoring network for the Huntington- below and in the technical support consequences of attaining the standard, Ashland Area is adequate based on the document (TSD) show that, based on as discussed below. following reasons. First, the number of EPA’s analysis of data for 2007–2009, III. Has the Huntington-Ashland area monitors in the Area meets the the Area attained the 1997 annual PM2.5 attained the 1997 annual PM2.5 minimum regulatory requirements given standard by its attainment date of April standard? in 40 CFR 58 Appendix D. Second, the 5, 2010. In addition, Table 2 and the monitoring is in accordance with state related discussion below and in the TSD A. Criteria monitoring plans that have been show that the Area continues to attain Today’s proposed rulemaking assesses reviewed and approved by the the standard based on data available to whether (1) the Huntington-Ashland respective EPA regional offices. date for 2010. EPA is soliciting public Area has attained the 1997 annual PM2.5 Table 1 shows the design values (i.e., comments on the issues discussed in NAAQS, based on the most recent three the 3-year average of annual mean PM2.5 this document. These comments will be years of quality-assured data, and (2) concentrations) for the 1997 annual considered before taking final action.

TABLE 1—2007–2009 ANNUAL AVERAGE CONCENTRATIONS IN THE HUNTINGTON-ASHLAND AREA

Annual average Site name County Site No. concentration (μg/m3)

Huntington ...... Cabell ...... 54–011–0006 1 14.3 Ashland Primary (FIVCO) ...... Boyd ...... 21–019–0017 12.4 Lawrence County Hospital (LCH) ...... Lawrence ...... 39–087–0010 2 13.3 Ironton Department of Transportation (DOT) 3 ...... Lawrence ...... 39–087–0012 12.2

C. How did EPA address the air quality meets EPA data completeness may not be suitable for other areas with in Lawrence County? requirements when at least 75 percent of less than complete data. EPA will the scheduled sampling days for each Monitoring Network evaluate the appropriateness of this quarter have valid data. See 40 CFR part analytical approach on a case-by-case The LCH site was demolished on 50, Appendix N, section 4.1(b). The use basis for determinations regarding each February 12, 2008, and a new site in the of less than complete data is subject to area with less than complete data. Lawrence County, Ohio portion of the the approval of EPA, which may The first step in the analysis was to Huntington-Ashland Area, known as the consider factors such as monitoring site assess the correlation of concentrations Ironton DOT site, began operation on closures/moves, monitoring diligence, at the LCH site with concentrations at the same day. As a consequence of the and nearby concentrations in shutdown of the LCH site, the site was determining whether to use such data other sites in the Area. The monitor in not able to meet the data completeness (40 CFR part 50, Appendix N, section the Area that had the highest correlation requirements for 2007–2009 because it 4.1(c)). The Ironton DOT site was a new with the LCH site was the Ashland was not operating for the entire 2007– site in 2008 and thus did not collect Primary site; therefore, subsequent 2009 monitoring period. A year during data for 2007 and part of the first quarter analyses used data from this site. The which monitoring data is collected of 2008; however, the data are complete second step was to develop a regression for the remainder of 2008 and 2009. equation expressing the relationship 1 West Virginia has a collocated monitor in place Because this was a new monitor during between concentrations at the LCH and at the same site for quality assurance purposes. The primary monitor, and not the collocated monitor, is the 2007–2009 period, these data are the Ashland Primary sites. This used to determine compliance with the PM2.5 considered supplemental to the data regression equation was used to NAAQS. Since the collocated monitor takes fewer provided from the other monitors in the estimate values at the LCH site on days readings than the primary monitor, its average during quarters with incomplete data annual values may be unrepresentatively high. See Area. 40 CFR part 50, Appendix N, 3(d)(1). To evaluate air quality at the LCH site, when the LCH site did not measure 2 The Lawrence County Hospital Site was shut EPA applied statistical analysis using concentrations because the site was no down in February 2008. The Ironton DOT site began data from other sites in the Area. The longer operating. A 2007–2009 design operation on the same day the Lawrence County Hospital Site ceased monitoring. approach, summarized in this section value for the LCH site was then 3 The Ironton DOT site did not begin operation and further described in the TSD, is calculated using these estimated values. until February 2008. appropriate for this Area but may or Under this method, the 2007–2009

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design value for the LCH site was Although the LCH monitor does not additional quality-assured data, to the estimated to be 13.3 μg/m3. have complete data for the 2007–2009 extent that quality-assured data exist. In This estimated design value was then monitoring period, the historical accordance with Appendix N and analyzed using a statistical method that certified data recorded at the monitor standard EPA practice, this review of involved the use of regression residuals, provide additional support for EPA’s data is based on the three most recent referred to as the bootstrap method. In proposed determination that the years of complete data, generally 2007– this analysis, EPA repeated the Huntington-Ashland Area has attained 2009. Quality-assured data are now regression analysis 1,000 times with the 1997 annual PM2.5 NAAQS. The available for 2010, which EPA used to different values within the probability annual average design values for the two compute preliminary design values. The distribution of LCH concentrations that years preceding the demolition of the Huntington site has a preliminary 2008– could be associated with given site (2006 and 2007) were below the 2010 design value of 13.1 μg/m3, the concentrations at the Ashland Primary NAAQS and the monitor met data site. From this analysis, as described in completeness requirements. EPA is also Ashland site has a preliminary 2008– μ 3 detail in the TSD, EPA determined that approving the use of these data for 2010 design value of 11.4 g/m , and the upper end of the range of potential consideration in this determination the Ironton DOT site has a preliminary μ 3 2007–2009 design values obtained did because it finds that West Virginia and 2008–2010 design value of 12.2 g/m . not exceed the NAAQS. No exceedances Kentucky have exercised diligence in On the basis of this review, EPA is of the NAAQS resulted from application monitoring in the Huntington-Ashland proposing to determine that the of the statistical analysis. Therefore, Area. Huntington-Ashland Area has attained EPA concluded that for 2007–2009, the Determinations of attainment are the 1997 annual PM2.5 NAAQS, and is annual average concentrations of all of based on three years of complete, soliciting public comments on its the monitors in the Huntington-Ashland quality-assured data. Nevertheless, any proposed determination. Area are below the NAAQS. such assessment should consider

TABLE 2—2008–2010 ANNUAL AVERAGE CONCENTRATIONS IN THE HUNTINGTON-ASHLAND AREA

Annual average Site name County Site No. concentration (μg/m3)

Huntington ...... Cabell ...... 54–011–0006 13.1 Ashland Primary (FIVCO) ...... Boyd ...... 21–019–0017 11.4 Ironton DOT 4 ...... Lawrence ...... 39–087–0012 12.2

D. Has the Huntington-Ashland area IV. What is the effect of these actions? Area to attainment of the 1997 annual met the 1997 annual PM2.5 air quality If EPA’s proposed determination of PM2.5 NAAQS under section 107(d)(3) of standard? attainment, based on the most recent the CAA. Further, finalizing this proposed action does not involve EPA has reviewed the ambient air three years of quality-assured data, is made final, the requirements for the approving maintenance plans for the monitoring data for PM , consistent 2.5 Huntington-Ashland Area to submit Area as required under section 175A of with the requirements contained in 40 attainment demonstrations and the CAA, nor would it find that the Area CFR part 50 and recorded the data in the associated RACM, a RFP plan, has met all other requirements for EPA AQS database, for the Huntington- contingency measures, and any other redesignation. Even if EPA finalizes the Ashland Area from 2007 through the planning SIPs related to attainment of proposed action, the designation status present time. of the Huntington-Ashland Area would the 1997 annual PM2.5 NAAQS would On the basis of that review, EPA be suspended for so long as the remain nonattainment for the 1997 proposes to determine that this Area has Huntington-Ashland Area continues to annual PM2.5 NAAQS until such time as EPA determines that the Area meets the attained and continues to attain the attain the 1997 annual PM2.5 NAAQS. CAA requirements for redesignation to 1997 annual PM NAAQS based on the See 40 CFR 51.1004(c). Notably, as 2.5 attainment and takes action to quality-assured data for the 2007–2009, described below, any such determination would not be equivalent redesignate the Huntington-Ashland which demonstrates attainment by April Area. 5, 2010, and 2008–2010 monitoring to the redesignation of the Huntington- In addition, if EPA’s separate and periods. In addition, based on EPA’s Ashland Area to attainment for the 1997 independent proposed determination review of the data for 2007–2009, and in annual PM2.5 NAAQS. that the Area has attained the 1997 accordance with section 179(c)(1) of the If this proposed determination of annual PM2.5 standard by its applicable CAA and EPA’s regulations, EPA attainment is finalized and EPA subsequently determines, after notice- attainment date (April 5, 2010) is proposes to determine that the Area and-comment rulemaking in the Federal finalized, EPA will have met its attained the 1997 annual PM NAAQS 2.5 Register, that the Area has violated the requirement pursuant to section by its applicable attainment date of 1997 annual PM2.5 NAAQS, the basis for 179(c)(1) of the CAA to make a April 5, 2010. the suspension of the specific determination based on the Area’s air requirements would no longer exist for quality data as of the attainment date 4 The Ironton DOT site began operation in the Huntington-Ashland Area, and the whether the Area attained the standard February 2008 and thus did collect 75 percent for Area would thereafter have to address by that date. the first quarter of 2008. However, this was a new site and monitoring data did meet 75 percent the applicable requirements. See 40 CFR These two actions described above are completeness for the remainder of the quarter and 51.1004(c). proposed determinations regarding the for the subsequent quarters. As such, EPA does not Finalizing this proposed action would Huntington-Ashland Area’s attainment consider the first quarter data to be incomplete. not constitute a redesignation of the only with respect to the 1997 annual

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PM2.5 NAAQS. Today’s actions do not relations, Particulate matter, Reporting Monday through Friday, excluding legal address the 24-hour PM2.5 NAAQS. and recordkeeping requirements. holidays. The telephone number for the V. Statutory and Executive Order Dated: April 13, 2011. DCO is (202) 564–8930. Such deliveries Reviews Gwendolyn Keyes Fleming, are only accepted during the DCO’s normal hours of operation, and special These actions propose to make Regional Administrator, Region 4. arrangements should be made for determinations of attainment based on Dated: April 26, 2011. deliveries of boxed information. air quality, and would, if finalized, Susan Hedman, result in the suspension of certain Regional Administrator, Region 5. Instructions: Direct your comments to Federal requirements, and it would not Dated: April 6, 2011. docket ID number EPA–HQ–OPPT– impose additional requirements beyond W.C. Early, 2011–0109. EPA’s policy is that all those imposed by state law. For that Acting Regional Administrator, Region III. comments received will be included in reason, these proposed actions: the docket without change and may be [FR Doc. 2011–11355 Filed 5–10–11; 8:45 am] • Are not ‘‘significant regulatory made available on-line at http:// actions’’ subject to review by the Office BILLING CODE 6560–50–P www.regulations.gov, including any of Management and Budget under personal information provided, unless Executive Order 12866 (58 FR 51735, the comment includes information October 4, 1993); ENVIRONMENTAL PROTECTION • Do not impose an information AGENCY claimed to be Confidential Business collection burden under the provisions Information (CBI) or other information of the Paperwork Reduction Act (44 40 CFR Part 721 whose disclosure is restricted by statute. U.S.C. 3501 et seq.); [EPA–HQ–OPPT–2011–0109; FRL–8871–3] Do not submit information that you • Are certified as not having a consider to be CBI or otherwise significant economic impact on a RIN 2070–AB27 protected through regulations.gov or substantial number of small entities Proposed Revocation of the Significant e-mail. The regulations.gov Web site is under the Regulatory Flexibility Act New Use Rule on a Certain Chemical an ‘‘anonymous access’’ system, which (5 U.S.C. 601 et seq.); means EPA will not know your identity • Substance Do not contain any unfunded or contact information unless you mandate or significantly or uniquely AGENCY: Environmental Protection provide it in the body of your comment. affect small governments, as described Agency (EPA). If you send an e-mail comment directly in the Unfunded Mandates Reform Act ACTION: Proposed rule. to EPA without going through of 1995 (Pub. L. 104–4); regulations.gov, your e-mail address • Do not have Federalism SUMMARY: EPA is proposing to revoke a implications as specified in Executive significant new use rule (SNUR) will be automatically captured and Order 13132 (64 FR 43255, August 10, promulgated under section 5(a)(2) of the included as part of the comment that is 1999); Toxic Substances Control Act (TSCA) placed in the docket and made available • Are not economically significant for a chemical substance identified on the Internet. If you submit an regulatory actions based on health or generically as substituted electronic comment, EPA recommends safety risks subject to Executive Order ethoxyethylamine phosphonate, which that you include your name and other 13045 (62 FR 19885, April 23, 1997); contact information in the body of your • was the subject of premanufacture Are not significant regulatory notice (PMN) P–95–1950. EPA issued a comment and with any disk or CD–ROM actions subject to Executive Order ‘‘non-5(e)’’ SNUR (i.e. SNUR on a you submit. If EPA cannot read your 13211 (66 FR 28355, May 22, 2001); substance that is not subject to a TSCA comment due to technical difficulties • Are not subject to requirements of section 5(e) consent order), designating and cannot contact you for clarification, Section 12(d) of the National certain activities as significant new uses Technology Transfer and Advancement EPA may not be able to consider your based on the concern criteria. EPA has Act of 1995 (15 U.S.C. 272 note) because comment. Electronic files should avoid received and reviewed new information application of those requirements would the use of special characters, any form and test data for the chemical substance be inconsistent with the CAA; and of encryption, and be free of any defects • Do not provide EPA with the and proposes to revoke the SNUR. or viruses. discretionary authority to address, as DATES: Comments must be received on Docket: All documents in the docket appropriate, disproportionate human or before June 10, 2011. are listed in the docket index available health or environmental effects, using ADDRESSES: Submit your comments, at http://www.regulations.gov. Although practicable and legally permissible identified by docket identification (ID) listed in the index, some information is methods, under Executive Order 12898 number EPA–HQ–OPPT–2011–0109, by not publicly available, e.g., CBI or other (59 FR 7629, February 16, 1994). In one of the following methods: • information whose disclosure is addition, these proposed 1997 annual Federal eRulemaking Portal: http:// restricted by statute. Certain other www.regulations.gov. Follow the on-line PM2.5 NAAQS determinations for the material, such as copyrighted material, instructions for submitting comments. Huntington-Ashland Area do not have will be publicly available only in hard Tribal implications as specified by • Mail: Document Control Office (7407M), Office of Pollution Prevention copy. Publicly available docket Executive Order 13175 (65 FR 67249, materials are available electronically at November 9, 2000), because the SIP is and Toxics (OPPT), Environmental http://www.regulations.gov, or, if only not approved to apply in Indian country Protection Agency, 1200 Pennsylvania available in hard copy, at the OPPT located in the state, and EPA notes that Ave., NW., Washington, DC 20460– Docket. The OPPT Docket is located in it will not impose substantial direct 0001. • costs on Tribal governments or preempt Hand Delivery: OPPT Document the EPA Docket Center (EPA/DC) at Rm. Tribal law. Control Office (DCO), EPA East Bldg., 3334, EPA West Bldg., 1301 Rm. 6428, 1201 Constitution Ave., NW., Constitution Ave., NW., Washington, List of Subjects in 40 CFR Part 52 Washington, DC. Attention: Docket ID DC. The EPA/DC Public Reading Room Environmental protection, Air Number EPA–HQ–OPPT–2011–0109. hours of operation are 8:30 a.m. to pollution control, Intergovernmental The DCO is open from 8 a.m. to 4 p.m.,

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excluding legal holidays. The telephone subject to the TSCA section 13 (15 vi. Provide specific examples to number of the EPA/DC Public Reading U.S.C. 2612) import certification illustrate your concerns and suggest Room is (202) 566–1744, and the requirements promulgated at 19 CFR alternatives. telephone number for the OPPT Docket 12.118 through 12.127; see also 19 CFR vii. Explain your views as clearly as is (202) 566–0280. Docket visitors are 127.28. Chemical importers must certify possible, avoiding the use of profanity required to show photographic that the shipment of the chemical or personal threats. identification, pass through a metal substance complies with all applicable viii. Make sure to submit your detector, and sign the EPA visitor log. rules and orders under TSCA. The EPA comments by the comment period All visitor bags are processed through policy in support of import certification deadline identified. an X-ray machine and subject to search. appears at 40 CFR part 707, subpart B. II. Background Visitors will be provided an EPA/DC Importers of the chemical, the subject of badge that must be visible at all times this action, would no longer be required A. What action is the agency taking? in the building and returned upon to certify compliance with the SNUR In the Federal Register of January 22, departure. requirements if the revocation becomes 1998 (63 FR 3393) (FRL–5720–3), EPA FOR FURTHER INFORMATION CONTACT: For effective. In addition, if this proposed promulgated a SNUR at 40 CFR technical information contact: Virginia SNUR revocation becomes effective, 721.6078 for the chemical substance Lee, Chemical Control Division (7405 persons who export or intend to export identified generically as substituted M), Office of Pollution Prevention and the chemical that is the subject of this ethoxyethylamine phosphonate (PMN Toxics, Environmental Protection action would no longer be subject to the P–95–1950). This SNUR designated Agency, 1200 Pennsylvania Ave., NW., TSCA section 12(b) (15 U.S.C. 2611(b)) certain activities as significant new uses Washington, DC 20460–0001; telephone export notification requirements at 40 based on the environmental effect number: (202) 564–4142; e-mail address: CFR part 707, that are currently criteria identified in § 721.170(b)(4)(ii) [email protected]. triggered by the SNUR. for analogous polyanionic monomers. For general information contact: The B. What should I consider as I prepare EPA has received and reviewed aquatic TSCA-Hotline, ABVI-Goodwill, 422 my comments for EPA? toxicity test data for the chemical South Clinton Ave., Rochester, NY substance and based on its review of 1. Submitting CBI. Do not submit this 14620; telephone number: (202) 554– these data, EPA now proposes to revoke information to EPA through 1404; e-mail address: TSCA– the SNUR pursuant to § 721.185. In this regulations.gov or e-mail. Clearly mark [email protected]. unit, EPA provides a brief description of the part or all of the information that this chemical substance, including the SUPPLEMENTARY INFORMATION: you claim to be CBI. For CBI PMN number, generic chemical name, I. General Information information in a disk or CD–ROM that the Federal Register publication date you mail to EPA, mark the outside of the and reference, the docket number, the A. Does this action apply to me? disk or CD–ROM as CBI and then basis for revoking the SNUR under You may be potentially affected by identify electronically within the disk or § 721.185, and the CFR citation of the this action if you manufacture, import, CD–ROM the specific information that SNUR. process, or use the chemical substance is claimed as CBI. In addition to one contained in this proposed rule. complete version of the comment that PMN Number P–95–1950 Potentially affected entities may includes information claimed as CBI, a Chemical name: Substituted include, but are not limited to: copy of the comment that does not ethoxyethylamine phosphonate • Manufacturers, importers, or contain the information claimed as CBI (generic). processors of the subject chemical must be submitted for inclusion in the CAS number: Not available. substance (NAICS codes 325 and public docket. Information so marked Federal Register publication date and 324110), e.g., chemical manufacturers will not be disclosed except in reference: January 22, 1998 (63 FR and petroleum refineries. This listing is accordance with procedures set forth in 3393). not intended to be exhaustive, but rather 40 CFR part 2. Docket number: OPPTS–50628. provides a guide for readers regarding 2. Tips for preparing your comments. Basis for revocation of SNUR: EPA entities likely to be affected by this When submitting comments, remember issued a SNUR for this substance based action. Other types of entities not listed to: on the environmental effect criteria at in this unit could also be affected. The i. Identify the document by docket ID § 721.170(b)(4)(ii) for analogous North American Industrial number and other identifying polyanionic monomers. Subsequently, Classification System (NAICS) codes information (subject heading, Federal the PMN submitter petitioned EPA to have been provided to assist you and Register date and page number). revoke the SNUR based on the results of others in determining whether this ii. Follow directions. The Agency may submitted aquatic toxicity testing in action might apply to certain entities. ask you to respond to specific questions fish, daphnids, and algae. The aquatic To determine whether you or your or organize comments by referencing a toxicity testing demonstrated that the business may be affected by this action, Code of Federal Regulations (CFR) part substance has inherently low toxicity, you should carefully examine the or section number. mitigating EPA’s concern for toxicity to applicability provisions in § 721.5. If iii. Explain why you agree or disagree; aquatic organisms. Therefore, EPA you have any questions regarding the suggest alternatives and substitute rescinds its finding that releases to applicability of this action to a language for your requested changes. water resulting in stream concentrations particular entity, consult the technical iv. Describe any assumptions and that exceed 30 parts per billion (ppb) person listed under FOR FURTHER provide any technical information and/ may cause significant adverse INFORMATION CONTACT. or data that you used. environmental effects. Based on This action may also affect certain v. If you estimate potential costs or available information, the substance no entities because of import certification burdens, explain how you arrived at longer meets the concern criteria at and export notification requirements your estimate in sufficient detail to § 721.170(b)(4)(ii). Therefore, EPA under TSCA. Chemical importers are allow for it to be reproduced. proposes that the SNUR for this

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chemical substance be revoked pursuant proposed SNUR revocation would not action does not involve special to § 721.185(a)(4). have any adverse impacts, economic or considerations of environmental justice CFR citation: 40 CFR 721.6078. otherwise. related issues as required by Executive The Office of Management and Budget B. What is the agency’s authority for Order 12898, entitled Federal Actions to (OMB) has exempted these types of taking this action? Address Environmental Justice in regulatory actions from review under Minority Populations and Low-Income Section 5(a)(2) of TSCA (15 U.S.C. Executive Order 12866, entitled Populations (59 FR 7629, February 16, 2604(a)(2)) authorizes EPA to determine Regulatory Planning and Review (58 FR 1994). that a use of a chemical substance is a 51735, October 4, 1993). This proposed ‘‘significant new use.’’ EPA must make rule does not contain any information List of Subjects in 40 CFR Part 721 this determination by rule after collections subject to approval under Environmental protection, Chemicals, considering all relevant factors, the Paperwork Reduction Act (PRA), (44 Hazardous substances, Reporting and including those listed in TSCA section U.S.C. 3501 et seq.). Since this proposed recordkeeping requirements. 5(a)(2). Once EPA determines that a use rule eliminates a reporting requirement, Dated: April 29, 2011. of a chemical substance is a significant the Agency certifies pursuant to section Wendy C. Hamnett, new use, TSCA section 5(a)(1)(B) 605(b) of the Regulatory Flexibility Act Director, Office of Pollution Prevention and requires persons to submit a significant (RFA) (5 U.S.C. 601 et seq.), that this Toxics. new use notice (SNUN) to EPA at least SNUR revocation would not have a 90 days before they manufacture, significant economic impact on a Therefore, it is proposed that 40 CFR import, or process the chemical substantial number of small entities. part 721 be amended as follows: substance for that use. The mechanism For the same reasons, this action does PART 721—[AMENDED] for reporting under this requirement is not require any action under Title II of established under § 721.5. the Unfunded Mandates Reform Act of 1. The authority citation for part 721 Upon conclusion of the review for P– 1995 (UMRA) (Pub. L. 104–4). This continues to read as follows: 95–1950, based on the concern criteria proposed rule has neither Federalism Authority: 15 U.S.C. 2604, 2607, and in § 721.170(b)(4)(ii) discussed in Unit implications, because it would not have 2625(c). II.A., EPA determined that there was a substantial direct effects on States, on concern for potential environmental the relationship between the national § 721.6078 [Removed] effects of the substance at a government and the States, or on the 2. Remove § 721.6078. concentration as low as 30 ppb of the distribution of power and [FR Doc. 2011–11208 Filed 5–10–11; 8:45 am] PMN substance in surface waters and responsibilities among the various BILLING CODE 6560–50–P promulgated a non-5(e) SNUR for this levels of government, as specified in chemical substance. Executive Order 13132, entitled Under § 721.185, EPA may at any time Federalism (64 FR 43255, August 10, FEDERAL COMMUNICATIONS revoke a SNUR for a chemical substance 1999), nor Tribal implications, because COMMISSION which has been added to subpart E of it would not have substantial direct 40 CFR part 721 if EPA makes one of the effects on one or more Indian Tribes, on 47 CFR Part 90 determinations set forth in the relationship between the Federal § 721.185(a)(1) through (a)(6). Government and Indian Tribes, or on [WT Docket No. 11–69, ET Docket No. 09– 234; FCC 11–63] Revocation may occur on EPA’s the distribution of power and initiative or in response to a written responsibilities between the Federal Private Land Mobile Radio Service request. Under § 721.185(b)(3), if EPA Government and Indian Tribes, as Regulations concludes that a SNUR should be specified in Executive Order 13175, revoked, the Agency will propose the entitled Consultation and Coordination AGENCY: Federal Communications changes in the Federal Register, briefly with Indian Tribal Governments (65 FR Commission. describe the grounds for the action, and 67249, November 9, 2000). ACTION: Proposed rule. provide interested parties an This action is not subject to Executive SUMMARY: This document proposes to opportunity to comment. Order 13045, entitled Protection of EPA has determined that the criteria Children from Environmental Health modify our rules to permit the set forth in § 721.185(a)(4) have been Risks and Safety Risks (62 FR 19885, implementation of Terrestrial Trunked Radio (TETRA) technology in the satisfied for the chemical substance; April 23, 1997), because this is not an United States. We also seek comment on therefore, EPA is proposing to revoke economically significant regulatory our proposed technical rules that would the SNUR for this chemical substance. action as defined under Executive Order enable digital technologies like TETRA The significant new use notification and 12866, and it does not address to operate without causing interference the recordkeeping requirements at 40 environmental health or safety risks to existing systems, and on how the CFR 721.6078 would terminate if and disproportionately affecting children. It deployment of TETRA technology may when this proposed revocation becomes is not subject to Executive Order 13211, affect public safety interoperability. effective. In addition, export notification entitled Actions Concerning Regulations Comments on these proposed rule under TSCA section 12(b) and 40 CFR That Significantly Affect Energy Supply, changes will aid the Commission in part 707, subpart D triggered by the Distribution, or Use (66 FR 28355, May determining whether or not it is in the SNUR would no longer be required. 22, 2001), because this action is not expected to affect energy supply, public interest to make TETRA III. Statutory and Executive Order distribution, or use. Because this action technology available to private wireless Reviews does not involve any technical users, especially those that must comply This proposed rule would revoke or standards, section 12(d) of the National with the upcoming narrowbanding eliminate an existing regulatory Technology Transfer and Advancement requirements. requirement and does not contain any Act of 1995 (NTTAA), Public Law 104– DATES: Submit comments on or before new or amended requirements. As such, 113, section 12(d) (15 U.S.C. 272 note), June 27, 2011 and reply comments are the Agency has determined that this does not apply to this action. This due on or before August 9, 2011.

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ADDRESSES: You may submit comments, be filed using: (1) The Commission’s II. Initial Regulatory Flexibility identified by WT Docket No. 11–69 and Electronic Comment Filing System Analysis ET Docket No. 09–234; FCC 11–63, by (ECFS), (2) the Federal Government’s 4. As required by the Regulatory any of the following methods: eRulemaking Portal, or (3) by filing Flexibility Act (RFA), the Commission • Federal eRulemaking Portal: http:// paper copies. See Electronic Filing of has prepared this present Initial www.regulations.gov. Follow the Documents in Rulemaking Proceedings, Regulatory Flexibility Analysis (IRFA) instructions for submitting comments. 63 FR 24121 (1998). of the possible significant economic • Federal Communications • Electronic Filers: Comments may be impact on small entities by the policies Commission’s Web Site: http:// filed electronically using the Internet by and rules proposed and set forth in www.fcc.gov/cgb/ecfs/. Follow the accessing the ECFS: http:// Appendix B. We request written public instructions for submitting comments. • fjallfoss.fcc.gov/ecfs2/or the Federal comments on this IRFA which must be People With Disabilities: Contact eRulemaking Portal: http:// the FCC to request reasonable filed in accordance with the same filing www.regulations.gov. deadlines as the comments on the rest accommodations (accessible format • Paper Filers: Parties who choose to documents, sign language interpreters, of the NPRM. The Commission shall file by paper must file an original and send a copy of this NPRM, including the CART, etc.) by e-mail: [email protected] four copies of each filing. If more than or phone 202–418–0530 or TTY: 202– IRFA, to the Chief Counsel for Advocacy one docket or rulemaking number of the Small Business Administration. 418–0432. appears in the caption of this For detailed instructions for In addition, a copy of this NPRM and proceeding, filers must submit two submitting comments and additional IRFA (or summaries thereof) will also be additional copies for each additional information on the rulemaking process, published in the Federal Register. docket or rulemaking number. Filings see the SUPPLEMENTARY INFORMATION 5. The proposed rules in the NPRM can be sent by hand or messenger section of this document. are intended to permit the delivery, by commercial overnight implementation in the United States of FOR FURTHER INFORMATION CONTACT: Tim courier, or by first-class or overnight land mobile radio equipment utilizing Maguire, Mobility Division, Wireless U.S. Postal Service mail. All filings Terrestrial Trunked Radio (TETRA) Telecommunications Bureau, (202) 418– must be addressed to the Commission’s technology. TETRA is a spectrally 2155. Secretary, Office of the Secretary, efficient digital technology that we SUPPLEMENTARY INFORMATION: This is a Federal Communications Commission. believe can provide valuable benefits to summary of the Commission’s Notice of • All hand-delivered or messenger- land mobile radio users. Proposed Rulemaking and Order delivered paper filings for the (‘‘NPRM’’) in WT Docket No. 11–69 and Commission’s Secretary must be A. Legal Basis ET Docket No. 09–234, FCC 11–63, delivered to FCC Headquarters at 445 6. Authority for issuance of this item adopted April 18, 2011, and released 12th St., SW., Room TW–A325, is contained in Sections 4(i), 303(r), and April 26, 2011. The full text of this Washington, DC 20554. The filing hours 403 of the Communications Act of 1934, document is available for inspection are 8 a.m. to 7 p.m. All hand deliveries as amended, 47 U.S.C. 154(i), 303(r), and copying during normal business must be held together with rubber bands and 403. hours in the FCC Reference Center, 445 or fasteners. Any envelopes must be B. Description and Estimate of the 12th Street, SW., Washington, DC disposed of before entering the building. Number of Small Entities to Which the 20554. The complete text may be • Commercial overnight mail (other Proposed Rules Will Apply purchased from the Commission’s copy than U.S. Postal Service Express Mail contractor, Best Copy and Printing, Inc., and Priority Mail) must be sent to 9300 7. Pursuant to 5 U.S.C. 603(b)(3), the 445 12th Street, SW., Room CY–B402, East Hampton Drive, Capitol Heights, RFA directs agencies to provide a Washington, DC 20554. The full text MD 20743. description of and, where feasible, an may also be downloaded at: http:// • U.S. Postal Service first-class, estimate of the number of small entities www.fcc.gov. Alternative formats are Express, and Priority mail must be that may be affected by the proposed available to persons with disabilities by addressed to 445 12th Street, SW., rules, if adopted. The RFA generally sending an e-mail to [email protected] or Washington DC 20554. defines the term ‘‘small entity’’ as having by calling the Consumer & People With Disabilities: To request the same meaning as the terms ‘‘small Governmental Affairs Bureau at 202– materials in accessible formats for business,’’ ‘‘small organization,’’ and 418–0530 (voice), 202–418–0432 (tty). people with disabilities (braille, large ‘‘small governmental jurisdiction.’’ Id. In I. Procedural Matters print, electronic files, audio format), addition, according to 5 U.S.C. 601(3), send an e-mail to [email protected] or call the term ‘‘small business’’ has the same A. Ex Parte Rules-Permit-But-Disclose the Consumer & Governmental Affairs meaning as the term ‘‘small business Proceeding Bureau at 202–418–0530 (voice), 202– concern’’ under the Small Business Act. 1. This is a permit-but-disclose notice 418–0432 (tty). A small business concern is one that: (1) Is independently owned and and comment rulemaking proceeding. C. Paperwork Reduction Act Ex parte presentations are permitted, operated; (2) is not dominant in its field except during the Sunshine Agenda 3. This NPRM does not contain any of operation; and (3) satisfies any period, provided they are disclosed as proposed information collection(s) additional criteria established by the provided in the Commission’s Rules. subject to the Paperwork Reduction Act SBA at 5 U.S.C. 632. Pursuant to 5 of 1995, Public Law 104–13. In addition, U.S.C. 601(3), the statutory definition of B. Comment Dates it does not contain any new or modified a small business applies ‘‘unless an 2. Pursuant to sections 1.415 and ‘‘information collection burden for small agency after consultation with the Office 1.419 of the Commission’s rules, 47 CFR business concerns with fewer than 25 of Advocacy of the SBA, and after 1.415, 1.419, interested parties may file employees,’’ pursuant to the Small opportunity for public comment, comments and reply comments on or Business Paperwork Relief Act of 2002, establishes one or more definitions of before the dates indicated on the first Public Law 107–198, see 44 U.S.C. such term which are appropriate to the page of this document. Comments may 3506(c)(4). activities of the agency and publishes

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such definition(s) in the Federal epcd/naics02/def/ coverage of the rule, or any part thereof, Register.’’ Below, we further describe NDEF334.HTM#N3342. The SBA small for small entities.1 and estimate the number of small entity business size standard for Radio and 13. We hereby invite interested licensees and regulatees that may be Television Broadcasting and Wireless parties to address any or all of these affected by the rules changes proposed Communications Equipment regulatory alternatives and to suggest in this NPRM. Manufacturing is all such firms having additional alternatives to minimize any 8. Private Land Mobile Radio 750 or fewer employees. See 13 CFR significant economic impact on small Licensees. PLMR systems serve an 121.201, NAICS code 334220. entities. Any significant alternative essential role in a range of industrial, According to Census Bureau data for presented in the comments will be business, land transportation, and 2002, there were a total of 1,041 considered. public safety activities. These radios are establishments in this category that used by companies of all sizes operating operated for the entire year. See U.S. E. Federal Rules That May Duplicate, in all U.S. business categories, and are Census Bureau, American FactFinder, Overlap, or Conflict With the Proposed often used in support of the licensee’s 2002 Economic Census, Industry Series, Rules primary (non-telecommunications) Industry Statistics by Employment Size, 14. None. business operations. For the purpose of NAICS code 334220 (released May 26, determining whether a licensee of a 2005); http://factfinder.census.gov. The III. Ordering Clauses PLMR system is a small business as number of ‘‘establishments’’ is a less 15. Pursuant to sections 1, 4(i), 303(f), defined by the SBA, we use the broad helpful indicator of small business 303(g), and 303(r) of the census category, Wireless prevalence in this context than would Communications Act of 1934, as Telecommunications Carriers (except be the number of ‘‘firms’’ or amended, 47 U.S.C. 151, 154(i), 303(f), Satellite). This definition provides that ‘‘companies,’’ because the latter take into 303(g), and 303(r), this Notice of a small entity is any such entity account the concept of common Proposed Rule Making is adopted. employing no more than 1,500 persons. ownership or control. Any single 16. The Commission’s Consumer and See 13 CFR 121.201, NAICS code physical location for an entity is an Governmental Affairs Bureau, Reference 517210. The Commission does not establishment, even though that location Information Center, shall send a copy of require PLMR licensees to disclose may be owned by a different this Notice of Proposed Rule Making, information about number of establishment. Thus, the numbers given including the Initial Regulatory employees, so the Commission does not may reflect inflated numbers of Flexibility Analysis, to the Chief have information that could be used to businesses in this category, including Counsel for Advocacy of the Small determine how many PLMR licensees the numbers of small businesses. In this Business Administration. constitute small entities under this category, the Census breaks-out data for 17. Pursuant to sections 4(i), 302, and definition. We note that PLMR licensees firms or companies only to give the total generally use the licensed facilities in 303(e), of the Communications Act of number of such entities for 2002, which 1934, as amended, 47 U.S.C. 154(i), 302, support of other business activities, and were 929. Of this total, 1,010 had therefore, it would also be helpful to and 303(e), and § 1.925 of the employment of fewer than 500, and an Commission’s rules, 47 CFR 1.925, the assess PLMR licensees under the additional 13 had employment of 500 to standards applied to the particular Request for Waiver filed by the TETRA 999. An additional 18 establishments Association on November 20, 2009, is industry subsector to which the licensee had employment of 1,000 or more. belongs. See generally 13 CFR 121.201. granted in part and denied in part to the Thus, under this size standard, the 9. As of March 2010, there were extent set forth above. This action is majority of firms can be considered 424,162 PLMR licensees operating effective upon release of this Order. small. 921,909 transmitters in the PLMR bands List of Subjects in 47 CFR Part 90 below 512 MHz. We note that any entity C. Description of Projected Reporting, engaged in a commercial activity is Recordkeeping, and Other Compliance Communications equipment, Private eligible to hold a PLMR license, and that Requirements for Small Entities land mobile, Radio. any revised rules in this context could Federal Communications Commission. therefore potentially impact small 11. There are no projected reporting, recordkeeping or other compliance Bulah P. Wheeler, entities covering a great variety of Deputy Manager. industries. requirements. 10. RF Equipment Manufacturers. The D. Steps Taken To Minimize Significant For the reasons discussed in the Census Bureau defines this category as Economic Impact on Small Entities and preamble, the Federal Communications follows: ‘‘This industry comprises Significant Alternatives Considered Commission proposes to amend 47 CFR establishments primarily engaged in part 90 as follows: manufacturing radio and television 12. The RFA requires an agency to broadcast and wireless communications describe any significant alternatives that PART 90—PRIVATE LAND MOBILE equipment. Examples of products made it has considered in reaching its RADIO SERVICES by these establishments are: proposed approach, which may include the following four alternatives: (1) The 1. The authority citation for part 90 transmitting and receiving antennas, continues to read as follows: cable television equipment, GPS establishment of differing compliance or equipment, pagers, cellular phones, reporting requirements or timetables Authority: Sections 4(i), 11, 303(g), 303(r), mobile communications equipment, and that take into account the resources and 332(c)(7) of the Communications Act of available to small entities; (2) the 1934, as amended, 47 U.S.C. 154(i), 161, radio and television studio and 303(g), 303(r), 332(c)(7). broadcasting equipment.’’ See U.S. clarification, consolidation, or Census Bureau, 2002 NAICS simplification of compliance or 2. Section 90.209 is amended in the Definitions, ‘‘334220 Radio and reporting requirements under the rule table in paragraph (b)(5) by adding Television Broadcasting and Wireless for small entities; (3) the use of footnote 6 to read as follows: Communications Equipment performance, rather than design, Manufacturing’’; http://www.census.gov/ standards; and (4) an exemption from 1 5 U.S.C. 603(c)(1)–(4).

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§ 90.209 Bandwidth limitations. (b) * * * * * * * * (5) * * *

STANDARD CHANNEL SPACING/BANDWIDTH

Channel Frequency band spacing Authorized bandwidth (MHz) (kHz) (kHz)

******* 406–512 2 ...... 1 6 .25 13620/11.25/6 806–809/851–854 ...... 12 .5 6 20 809–824/854–869 ...... 25 6 20

******* 929–930 ...... 25 6 20

******* 1 For stations authorized on or after August 18, 1995. 2 Bandwidths for radiolocation stations in the 420–450 MHz band and for stations operating in bands subject to this footnote will be reviewed and authorized on a case-by-case basis. 3 Operations using equipment designed to operate with a 25 kHz channel bandwidth will be authorized a 20 kHz bandwidth. Operations using equipment designed to operate with a 12.5 kHz channel bandwidth will be authorized a 11.25 kHz bandwidth. Operations using equipment designed to operate with a 6.25 kHz channel bandwidth will be authorized a 6 kHz bandwidth. All stations must operate on channels with a bandwidth of 12.5 kHz or less beginning January 1, 2013, unless the operations meet the efficiency standard of § 90.203(j)(3). ***** 6 Operations using equipment designed to operate with a 25 kHz channel bandwidth may be authorized up to a 22 kHz bandwidth if the equipment meets the Adjacent Channel Power limits of § 90.221. *****

3. Section 90.210 is amended by § 90.210 Emission masks. adding footnote 5 to the table to read as * * * * * follows:

APPLICABLE EMISSION MASKS

Mask for equipment Mask for equipment Frequency band with audio low pass without audio low (MHz) filter pass filter

******* 421–512 2, 5 ...... B, D, or E ...... C, D, or E.

******* 809–824/854–869 3, 5 ...... B ...... G.

******* ***** 2 Equipment designed to operate with a 25 kHz channel bandwidth must meet the requirements of Emission Mask B or C, as applicable. Equipment designed to operate with a 12.5 kHz channel bandwidth must meet the requirements of Emission Mask D, and equipment designed to operate with a 6.25 kHz channel bandwidth must meet the requirements of Emission Mask E. 3 Equipment used in this licensed to EA or non-EA systems shall comply with the emission mask provisions of § 90.691. ***** 5 Equipment in the 450–470 MHz and 817–824/862–869 MHz bands may alternatively meet the Adjacent Channel Power Limits of § 90.221. *****

4. Section 90.221 is added to subpart (b)(1) Maximum adjacent power levels Maximum ACP Maximum ACP I to read as follows: for frequencies below 700 MHz: Frequency (dBc) for de- (dBc) for de- offset vices less than vices 15 watts § 90.221 Adjacent channel power limits. Maximum ACP Maximum ACP 15 watts and above (a) For the frequency bands indicated Frequency (dBc) for de- (dBc) for de- ¥ ¥ in 90.209, operations using equipment offset vices 1 watt vices above 25 kHz ..... 55 dBc ...... 55 dBc. ¥ ¥ designed to operate with a 25 kHz and less 1 watt 50 kHz ..... 65 dBc ...... 65 dBc. 75 kHz ..... ¥65 dBc ...... ¥70 dBc. channel bandwidth may be authorized 25 kHz ..... ¥55 dBc ...... ¥60 dBc. up to a 22 kHz bandwidth if the 50 kHz ..... ¥70 dBc ...... ¥70 dBc. equipment meets the adjacent channel 75 kHz ..... ¥70 dBc ...... ¥70 dBc. (2) In any case, no requirement in power (ACP) limits below. The table excess of ¥36 dBm shall apply. specifies a value for the ACP as a (2) In any case, no requirement in ¥ (d) On any frequency removed from function of the displacement from the excess of 36 dBm shall apply. the assigned frequency by more than 75 channel center frequency and a (c)(1) Maximum adjacent power levels measurement bandwidth of 25 kHz. for frequencies above 700 MHz:

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kHz, the attenuation of any emission • Mail: Docket Operations, U.S. unloading operations. Specifically, the must be at least 43 + 10 log (P) dB. Department of Transportation, West NPRM amendments included [FR Doc. 2011–11136 Filed 5–10–11; 8:45 am] Building, Ground Floor, Room W12– requirements to: BILLING CODE 6712–01–P 140, Routing Symbol M–30, 1200 New • Assess the risks of loading and Jersey Avenue, SE., Washington, DC unloading operations and develop 20590. written operating procedures based on • Hand Delivery: To Docket DEPARTMENT OF TRANSPORTATION the risk assessment; Operations, Room W12–140 on the • ground floor of the West Building, 1200 Train hazmat employees in the Pipeline and Hazardous Materials relevant aspects of the operational Safety Administration New Jersey Avenue, SE., Washington, DC 20590, between 9 a.m. and 5 p.m., procedures; • Qualify annually hazmat employees 49 CFR Parts 172 and 177 Monday through Friday, except Federal Holidays. who perform loading and unloading [Docket Number PHMSA–2007–28119 (HM– Instructions: All submissions must operations; 247)] include the agency name and docket • Develop and implement a periodic RIN 2137–AE37 number for this notice at the beginning maintenance schedule for equipment of the comment. Note that all comments and conduct periodic operational tests Hazardous Materials: Cargo Tank received will be posted without change of equipment; and Motor Vehicle Loading and Unloading to the docket management system, • Ensure that the equipment meets Operations including any personal information the performance standards. provided. AGENCY: Pipeline and Hazardous Docket: For access to the dockets to In the NPRM, we invited comment on Materials Safety Administration read background documents or a number of provisions as well as (PHMSA), DOT. comments received, go to http:// comment on the methodology used to ACTION: Notice of proposed rulemaking; www.regulations.gov, or DOT’s Docket develop the regulatory evaluation extension of comment period. Operations Office (see ADDRESSES). supporting the NPRM. See the March 11, 2011 NPRM for a complete FOR FURTHER INFORMATION CONTACT: Kurt SUMMARY: On March 11, 2011, PHMSA Eichenlaub or Dirk Der Kinderen, discussion of the proposals and requests published a notice of proposed Standards and Rulemaking Division, for comment and information. rulemaking (NPRM) seeking public Pipeline and Hazardous Materials Safety II. Comment Period Extension comment on a proposal to amend the Administration, telephone (202) 366– HMR requirements for cargo tank 8553. Given the abundance of requests for loading or unloading operations. comment and data contained in this PHMSA is notifying the public of our SUPPLEMENTARY INFORMATION: Privacy NPRM as well as our consideration of a intent to extend the comment period by Act: Anyone is able to search the number of other proposed rulemakings 30 days for a notice of proposed electronic form of any written concurrently impacting interested rulemaking published on March 11, communications and comments parties affected by the cargo tank motor 2011. received into any of our dockets by the vehicle proposals in this notice, we are name of the individual submitting the providing affected entities as well as the DATES: The comment period for the document (or signing the document, if NPRM closing on May 10, 2011, is general public an additional 30 days to submitted on behalf of an association, allow for thorough review, analysis, and extended until June 9, 2011. To the business, labor union, etc.). You may extent possible, PHMSA will consider response to the NPRM. Thus, the review DOT’s complete Privacy Act comment period for the HM–247 NPRM late-filed comments during the next Statement in the Federal Register stage of the rulemaking process. is extended from May 10, 2011 until published on April 11, 2000 (65 FR June 9, 2011. ADDRESSES: You may submit comments 19477) or you may visit http:// identified by the docket number www.regulations.gov. Issued in Washington, DC, on May 5, 2011 (PHMSA–2007–28119) by any of the under authority delegated in 49 CFR part following methods: I. Background 106. • Federal eRulemaking Portal: Go to On March 11, 2011, PHMSA Magdy El-Sibaie, http://www.regulations.gov. Follow the published an NPRM (HM–247; 76 FR Associate Administrator for Hazardous online instructions for submitting 13313) seeking public comment on a Materials Safety. comments. proposal to amend the HMR [FR Doc. 2011–11494 Filed 5–10–11; 8:45 am] • Fax: 1–202–493–2251. requirements for cargo tank loading or BILLING CODE 4910–60–P

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Notices Federal Register Vol. 76, No. 91

Wednesday, May 11, 2011

This section of the FEDERAL REGISTER the collection of information unless it Total Burden Hours: 1,492. contains documents other than rules or displays a currently valid OMB control Charlene Parker, proposed rules that are applicable to the number. public. Notices of hearings and investigations, Departmental Information Collection committee meetings, agency decisions and Rural Housing Service Clearance Officer. rulings, delegations of authority, filing of [FR Doc. 2011–11491 Filed 5–10–11; 8:45 am] petitions and applications and agency Title: 7 CFR Part 3565, ‘‘Guaranteed BILLING CODE 3410–XT–P statements of organization and functions are Rural Rental Housing Program’’ and Its’ examples of documents appearing in this Supporting Handbook. section. OMB Control Number: 0575–0174. DEPARTMENT OF AGRICULTURE Summary of Collection: On March 26, Animal and Plant Health Inspection DEPARTMENT OF AGRICULTURE 1996, the Housing Opportunity Program Service Extension Act of 1996 was signed. One Submission for OMB Review; [Docket No. APHIS–2007–0130] of the provisions of the Act was the Comment Request authorization of the section 538 Syngenta Biotechnology, Inc.; May 5, 2011. Guaranteed Rural Rental Housing Availability of Petition, Plant Pest Risk The Department of Agriculture has Program (GRRHP), adding the program Assessment, and Environmental submitted the following information to the Housing Act of 1949. The purpose Assessment of Determination of collection requirement(s) to OMB for of the GRRHP is to increase the supply Nonregulated Status for Lepidopteran- review and clearance under the of affordable rural rental housing Resistant Cotton Paperwork Reduction Act of 1995, through the use of loan guarantees that Public Law 104–13. Comments AGENCY: Animal and Plant Health encourage partnerships between the Inspection Service, USDA. regarding (a) Whether the collection of Rural Housing Service (RHS), private ACTION: Notice. information is necessary for the proper lenders and public agencies. RUS will performance of the functions of the approve qualified lenders to participate SUMMARY: We are advising the public agency, including whether the and monitor lender performance to that the Animal and Plant Health information will have practical utility; ensure program requirements are met. Inspection Service has received a (b) the accuracy of the agency’s estimate RHS will collect information from petition from Syngenta Biotechnology, of burden including the validity of the Inc., seeking a determination of methodology and assumptions used; (c) lenders on the eligibility cost, benefits, nonregulated status for cotton ways to enhance the quality, utility and feasibility, and financial performance of designated as event COT67B, which has clarity of the information to be the proposed project. been genetically engineered to express a collected; (d) ways to minimize the Need and Use of the Information: protein to protect cotton plants from burden of the collection of information RHS will collect information from lepidopteran insect damage. The on those who are to respond, including lenders to manage, plan, evaluate, and petition has been submitted in through the use of appropriate account for Government resources and accordance with our regulations automated, electronic, mechanical, or from time to time, propose other technological collection concerning the introduction of certain demonstration programs that use loan genetically engineered organisms and techniques or other forms of information guarantees or interest credit. The technology should be addressed to: Desk products. We are soliciting comments GRRHP regulation and handbook will on whether this genetically engineered Officer for Agriculture, Office of provide lenders and agency staff with Information and Regulatory Affairs, cotton is likely to pose a plant pest risk. guidance on the origination, and Office of Management and Budget We are making available for public servicing of GRRHP loans and the (OMB), comment the Syngenta petition, our [email protected] or approval of qualified lenders. RHS will plant pest risk assessment, and our draft fax (202) 395–5806 and to Departmental use the information to evaluate a environmental assessment for the Clearance Office, USDA, OCIO, Mail lender’s request and make proposed determination of nonregulated Stop 7602, Washington, DC 20250– determination that the interests of the status. 7602. Comments regarding these government are protected. Failure to DATES: We will consider all comments information collections are best assured collect information could have an that we receive on or before July 11, of having their full effect if received adverse impact on the agency ability to 2011. within 30 days of this notification. monitor lenders and assess program ADDRESSES: You may submit comments Copies of the submission(s) may be effectiveness and effectively guarantee by either of the following methods: obtained by calling (202) 720–8681. loans. • Federal eRulemaking Portal: Go to An agency may not conduct or Description of Respondents: Business http://www.regulations.gov/fdmspublic/ sponsor a collection of information or other for-profit; Not-for-profit component/main?main=DocketDetail& unless the collection of information Institutions. d=APHIS–2007-0130 to submit or view displays a currently valid OMB control comments and to view supporting and number and the agency informs Number of Respondents: 150. related materials available potential persons who are to respond to Frequency of Responses: Reporting: electronically. the collection of information that such Quarterly; Monthly; Annually. • Postal Mail/Commercial Delivery: persons are not required to respond to Please send one copy of your comment

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to Docket No. APHIS–2007–0130, be regulated under 7 CFR part 340. which it presents two alternatives based Regulatory Analysis and Development, Paragraphs (b) and (c) of § 340.6 on its analyses of data submitted by PPD, APHIS, Station 3A–03.8, 4700 describe the form that a petition for a Syngenta, a review of other scientific River Road Unit 118, Riverdale, MD determination of nonregulated status data, and field tests conducted under 20737–1238. Please state that your must take and the information that must APHIS oversight. APHIS is considering comment refers to Docket No. APHIS– be included in the petition. the following alternatives: (1) Take no 2007–0130. APHIS has received a petition (APHIS action, i.e., APHIS would not change the Reading Room: You may read any Petition Number 07–108–01p) from regulatory status of cotton event comments that we receive on this Syngenta Biotechnology, Inc. COT67B and it would continue to be a docket in our reading room. The reading (Syngenta), seeking a determination of regulated article, or (2) approve the room is located in room 1141 of the nonregulated status for cotton petition based on a determination of the USDA South Building, 14th Street and (Gossypium spp.) designated as nonregulated status of cotton event Independence Avenue SW., COT67B, which has been genetically COT67B in whole. Washington, DC. Normal reading room engineered to express a Cry1Ab protein The draft EA has been prepared to hours are 8 a.m. to 4:30 p.m., Monday to protect cotton plants from provide the APHIS decisionmaker with through Friday, except holidays. To be lepidopteran insect damage, stating that a review and analysis of any potential sure someone is there to help you, cotton event COT67B is unlikely to pose environmental impacts associated with please call (202) 690–2817 before a plant pest risk and, therefore, should the proposed determination of coming. not be a regulated article under APHIS’ nonregulated status for cotton event Availability of Documents: The regulations in 7 CFR part 340. COT67B. The draft EA was prepared in petition, draft environmental As described in the petition, COT67B accordance with (1) The National assessment, and plant pest risk cotton produces a full-length Cry1Ab Environmental Policy Act of 1969 assessment are available on the protein originally derived from Bacillus (NEPA), as amended (42 U.S.C. 4321 et Regulations.gov Web site (see link thuringiensis subsp. kurstaki HD–1 seq.), (2) regulations of the Council on above) or on the APHIS Web site at which has activity against several Environmental Quality for http://www.aphis.usda.gov/brs/ important lepidopteran pest species of implementing the procedural provisions aphisdocs/07_10801p.pdf, http:// cotton. These include, but are not of NEPA (40 CFR parts 1500–1508), (3) www.aphis.usda.gov/brs/aphisdocs/ limited to, Helicoverpa zea (cotton USDA regulations implementing NEPA 07_10801p _dea.pdf, and http:// bollworm), Heliothis virescens (tobacco (7 CFR part 1b), and (4) APHIS’ NEPA www.aphis.usda.gov/brs/aphisdocs/ budworm), Pectinophora gossypiella Implementing Procedures (7 CFR part 07_10801p _dpra.pdf. (pink bollworm), and Trichoplusia ni 372). (cabbage looper). Cotton event COT67B In accordance with § 340.6(d) of the FOR FURTHER INFORMATION CONTACT: Mr. is currently regulated under 7 CFR part regulations, we are publishing this Rick Coker, Biotechnology Regulatory 340. Interstate movements and field notice to inform the public that APHIS Services, APHIS, 4700 River Road Unit tests of cotton event COT67B have been will accept written comments regarding 147, Riverdale, MD 20737–1236; (301) conducted under notifications the petition for a determination of 734–5720, e-mail: acknowledged by APHIS. nonregulated status from interested or [email protected]. To Field tests conducted under APHIS affected persons for a period of 60 days obtain copies of the petition, draft oversight allowed for evaluation in a from the date of this notice. We are also environmental assessment, or plant pest natural agricultural setting while soliciting written comments from risk assessment, contact Ms. Cindy Eck imposing measures to minimize the risk interested or affected persons on the at (301) 734–0667, e-mail: of persistence in the environment after plant pest risk assessment and the draft [email protected]. completion of the test. Data are gathered EA prepared to examine any potential SUPPLEMENTARY INFORMATION: on multiple parameters and used by the environmental impacts of the proposed applicant to evaluate agronomic determination of the nonregulated status Background characteristics and product of the subject cotton line. The petition, Under the authority of the plant pest performance. These data are used by draft EA, and plant pest risk assessment provisions of the Plant Protection Act (7 APHIS to determine if the new variety are available for public review, and U.S.C. 7701 et seq.), the regulations in poses a plant pest risk. Syngenta has copies of the petition, draft EA, and 7 CFR part 340, ‘‘Introduction of petitioned APHIS to make a plant pest risk assessment are available Organisms and Products Altered or determination that cotton event COT67B as indicated under ADDRESSES and FOR Produced Through Genetic Engineering should not be regulated under 7 CFR FURTHER INFORMATION CONTACT above. Which Are Plant Pests or Which There part 340. After the comment period closes, Is Reason to Believe Are Plant Pests,’’ In section 403 of the Plant Protection APHIS will review all written comments regulate, among other things, the Act, ‘‘plant pest’’ is defined as any living received during the comment period introduction (importation, interstate stage of any of the following that can and any other relevant information. All movement, or release into the directly or indirectly injure, cause comments received regarding the environment) of organisms and products damage to, or cause disease in any plant petition, draft EA, and plant pest risk altered or produced through genetic or plant product: A protozoan, a assessment will be available for public engineering that are plant pests or that nonhuman animal, a parasitic plant, a review as indicated under ADDRESSES there is reason to believe are plant pests. bacterium, a fungus, a virus or viroid, an above. After reviewing and evaluating Such genetically engineered organisms infectious agent or other pathogen, or the comments on the petition, the draft and products are considered ‘‘regulated any article similar to or allied with any EA, plant pest risk assessment, and articles.’’ of the foregoing. APHIS has prepared a other data, APHIS will furnish a The regulations in § 340.6(a) provide plant pest risk assessment to determine response to the petitioner, either that any person may submit a petition if cotton event COT67B is unlikely to approving or denying the petition. to the Animal and Plant Health pose a plant pest risk. APHIS will also publish a notice in the Inspection Service (APHIS) seeking a APHIS has also prepared a draft Federal Register announcing the determination that an article should not environmental assessment (EA) in regulatory status of cotton event

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COT67B and the availability of APHIS’ Regulatory Analysis and Development, be regulated under 7 CFR part 340. written environmental decision and PPD, APHIS, Station 3A–03.8, 4700 Paragraphs (b) and (c) of § 340.6 regulatory determination. River Road, Unit 118, Riverdale, MD describe the form that a petition for a Authority: 7 U.S.C. 7701–7772 and 7781– 20737–1238. Please state that your determination of nonregulated status 7786; 31 U.S.C. 9701; 7 CFR 2.22, 2.80, and comment refers to Docket No. APHIS– must take and the information that must 371.3. 2011–0023. be included in the petition. Reading Room: You may read any APHIS has received a petition (APHIS Done in Washington, DC this 4th day of Petition Number 09–055–01p) from the May 2011. comments that we receive on this docket in our reading room. The reading Monsanto Company (Monsanto) of St. Kevin Shea, room is located in room 1141 of the Louis, MO, seeking a determination of Acting Administrator, Animal and Plant USDA South Building, 14th Street and nonregulated status for corn (Zea mays Health Inspection Service. Independence Avenue SW., L.) designated as event MON 87460, [FR Doc. 2011–11519 Filed 5–10–11; 8:45 am] Washington, DC. Normal reading room which has been genetically engineered BILLING CODE 3410–34–P hours are 8 a.m. to 4:30 p.m., Monday for drought tolerance, stating that this through Friday, except holidays. To be corn is unlikely to pose a plant pest risk and, therefore, should not be a regulated DEPARTMENT OF AGRICULTURE sure someone is there to help you, please call (202) 690–2817 before article under APHIS’ regulations in 7 Animal and Plant Health Inspection coming. CFR part 340. As described in the petition, an Service Availability of Documents: The petition, draft environmental introduced gene called cold shock [Docket No. APHIS–2011–0023] assessment, and plant pest risk protein B, derived from the bacterium assessment are on available on the Bacillus subtilis, appears to help Monsanto Co.; Availability of Petition, Regulations.gov Web site (see link maintain plant cellular functions and is Plant Pest Risk Assessment, and above) or on the APHIS Web site at expected to reduce yield loss under Environmental Assessment for http://www.aphis.usda.gov/brs/ water-limited conditions compared to Determination of Nonregulated Status aphisdocs/09_05501p.pdf, http:// conventional corn. Corn event MON for Corn Genetically Engineered for www.aphis.usda.gov/brs/aphisdocs/ 87460 is currently regulated under 7 Drought Tolerance 09_05501p _dea.pdf, and http:// CFR part 340. Interstate movements and field tests of corn event MON 87460 AGENCY: Animal and Plant Health www.aphis.usda.gov/brs/aphisdocs/ Inspection Service, USDA. 09_05501p _dpra.pdf. have been conducted under permits issued or notifications acknowledged by FOR FURTHER INFORMATION CONTACT: Mr. ACTION: Notice. APHIS. Evan Chestnut, Policy Analyst, Field tests conducted under APHIS SUMMARY: We are advising the public Biotechnology Regulatory Services, that the Animal and Plant Health oversight allowed for evaluation in a APHIS, 4700 River Road, Unit 147, natural agricultural setting while Inspection Service has received a Riverdale, MD 20737–1236; (301) 734– petition from the Monsanto Company imposing measures to minimize the risk 0942, e-mail: of persistence in the environment after seeking a determination of nonregulated [email protected]. To status for corn designated as MON completion of the test. Data are gathered obtain copies of the petition, draft on multiple parameters and used by the 87460, which has been genetically environmental assessment, or plant pest engineered for drought tolerance. The applicant to evaluate agronomic risk assessment, contact Ms. Cindy Eck characteristics and product petition has been submitted in at (301) 734–0667, e-mail: accordance with our regulations performance. These data are used by [email protected]. APHIS to determine if the new variety concerning the introduction of certain SUPPLEMENTARY INFORMATION: poses a plant pest risk. Monsanto has genetically engineered organisms and petitioned APHIS to make a products. We are soliciting comments Background determination that corn event MON on whether this genetically engineered Under the authority of the plant pest 87460 should not be regulated under 7 corn is likely to pose a plant pest risk. provisions of the Plant Protection Act (7 CFR part 340. We are making available for public U.S.C. 7701 et seq.), the regulations in In section 403 of the Plant Protection comment the Monsanto petition, our 7 CFR part 340, ‘‘Introduction of Act, ‘‘plant pest’’ is defined as any living plant pest risk assessment, and our draft Organisms and Products Altered or stage of any of the following that can environmental assessment for the Produced Through Genetic Engineering directly or indirectly injure, cause proposed determination of nonregulated Which Are Plant Pests or Which There damage to, or cause disease in any plant status. Is Reason to Believe Are Plant Pests,’’ or plant product: A protozoan, a DATES: We will consider all comments regulate, among other things, the nonhuman animal, a parasitic plant, a that we receive on or before July 11, introduction (importation, interstate bacterium, a fungus, a virus or viroid, an 2011. movement, or release into the infectious agent or other pathogen, or ADDRESSES: You may submit comments environment) of organisms and products any article similar to or allied with any by either of the following methods: altered or produced through genetic of the foregoing. APHIS has prepared a • Federal eRulemaking Portal: Go to engineering that are plant pests or that plant pest risk assessment to determine http://www.regulations.gov/fdmspublic/ there is reason to believe are plant pests. if corn event MON 87460 is unlikely to component/ Such genetically engineered organisms pose a plant pest risk. main?main=DocketDetail&d=APHIS- and products are considered ‘‘regulated APHIS has also prepared a draft 2011-0023 to submit or view comments articles.’’ environmental assessment (EA) in and to view supporting and related The regulations in § 340.6(a) provide which it presents two alternatives based materials available electronically. that any person may submit a petition on its analyses of data submitted by • Postal Mail/Commercial Delivery: to the Animal and Plant Health Monsanto, a review of other scientific Please send one copy of your comment Inspection Service (APHIS) seeking a data, and field tests conducted under to Docket No. APHIS-2011–0023, determination that an article should not APHIS oversight. APHIS is considering

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the following alternatives: (1) Take no Done in Washington, DC, this 4th day of projects to the Designated Federal action, i.e., APHIS would not change the May 2011. Official, (3) Receive public comment. regulatory status of corn event MON Kevin Shea, Persons who wish to bring related 87460 and it would continue to be a Acting Administrator, Animal and Plant matters to the attention of the regulated article, or (2) approve the Health Inspection Service. Committee may file written statements petition based on a determination of the [FR Doc. 2011–11485 Filed 5–10–11; 8:45 am] with the Committee staff before or after nonregulated status of corn event MON BILLING CODE 3410–34–P the meeting. Public input sessions will 87460 in whole. be provided and individuals who made The draft EA has been prepared to written requests by August 5, 2011 will provide the APHIS decisionmaker with DEPARTMENT OF AGRICULTURE have the opportunity to address the a review and analysis of any potential Committee at those sessions. environmental impacts associated with Forest Service Dated: April 26, 2011. the proposed determination of nonregulated status for corn event MON Pike & San Isabel Resource Advisory John F. Peterson, 87460. The draft EA was prepared in Committee Designated Federal Official. accordance with (1) The National AGENCY: Forest Service, USDA. [FR Doc. 2011–11524 Filed 5–10–11; 8:45 am] Environmental Policy Act of 1969 ACTION: Notice of meeting. BILLING CODE 3410–11–P (NEPA), as amended (42 U.S.C. 4321 et seq.), (2) regulations of the Council on SUMMARY: The Pike & San Isabel Environmental Quality for Resource Advisory Committee will meet DEPARTMENT OF COMMERCE implementing the procedural provisions in Pueblo, Colorado. The committee is of NEPA (40 CFR parts 1500–1508), (3) meeting as authorized under the Secure International Trade Administration Rural Schools and Community Self- USDA regulations implementing NEPA [A–570–932] (7 CFR part 1b), and (4) APHIS’ NEPA Determination Act (Pub. L. 110–343) Implementing Procedures (7 CFR part and in compliance with the Federal Certain Steel Threaded Rod From the 372). Advisory Committee Act. The purpose People’s Republic of China: Notice of In accordance with § 340.6(d) of the of the meeting is to vote on and Court Decision Not in Harmony With regulations, we are publishing this recommend projects for funding. the Final Determination of Sales at notice to inform the public that APHIS DATES: The meeting will be held on Less-Than-Fair-Value and Notice of will accept written comments regarding August 10, 2011, and will begin at 9 Amended Final Determination of Sales the petition for a determination of a.m. at Less-Than-Fair-Value and Amended nonregulated status from interested or ADDRESSES: The meeting will be held at Antidumping Duty Order Pursuant to affected persons for a period of 60 days Court Decision from the date of this notice. We are also the Supervisor’s Office of the Pike & San Isabel National Forests, Cimarron and soliciting written comments from AGENCY: Import Administration, interested or affected persons on the Comanche National Grasslands (PSICC) International Trade Administration, plant pest risk assessment and the draft at 2840 Kachina Dr., Pueblo, Colorado. Department of Commerce. Written comments should be sent to EA prepared to examine any potential SUMMARY: On April 21, 2011, in environmental impacts of the proposed Barbara Timock, PSICC, 2840 Kachina Dr., Pueblo, CO 81008. Comments may litigation arising out of the Department determination for the deregulation of of Commerce’s (‘‘Department’’) final the subject corn line. The petition, draft also be sent via e-mail to [email protected], or via facsimile to determination in the less-than-fair-value EA, and plant pest risk assessment are (‘‘LTFV’’) investigation of certain steel available for public review, and copies 719–553–1416. All comments, including names and threaded rod (‘‘steel threaded rod’’) from of the petition, draft EA, and plant pest the People’s Republic of China (‘‘PRC’’),1 risk assessment are available as addresses when provided, are placed in the record and are available for public the United States Court of International indicated under ADDRESSES and FOR Trade (‘‘CIT’’) sustained the FURTHER INFORMATION CONTACT above. inspection and copying. The public may inspect comments received at PSICC, Department’s results of redetermination. After the comment period closes, Pursuant to the CIT’s remand order in APHIS will review all written comments 2840 Kachina Dr., Pueblo, CO 81008. Visitors are encouraged to call ahead to Jiaxing Brother Fastener Co., Ltd. v. received during the comment period United States, Consol. Court No. 09– and any other relevant information. All 719–553–1415 to facilitate entry into the 00205, Slip Op. 10–128 (November 16, comments received regarding the building. 2010) (‘‘Jiaxing Brother’’), the petition, draft EA, and plant pest risk FOR FURTHER INFORMATION CONTACT: Department found that the financial assessment will be available for public Barbara Timock, RAC coordinator, statements of the Indian company, review. After reviewing and evaluating USDA, Pike & San Isabel National Rajratan Global Wire Ltd. (‘‘Rajratan’’), the comments on the petition, the draft Forests, 2840 Kachina Dr., Pueblo, CO are an appropriate source of data for EA, plant pest risk assessment, and 81008; (719) 553–1415; E-mail calculating the surrogate financial other data, APHIS will furnish a [email protected]. ratios. See Jiaxing Brother Fastener Co., response to the petitioner, either Individuals who use Ltd. v. United States, Consol. Court No. approving or denying the petition. telecommunication devices for the deaf APHIS will also publish a notice in the (TDD) may call the Federal Information 09–00205, Slip Op. 11–44 (April 21, Relay Service (FIRS) at 1–800–877–8339 Federal Register announcing the 1 between 8 a.m. and 8 p.m., Eastern See Certain Steel Threaded Rod from the regulatory status of corn event MON People’s Republic of China: Final Determination of 87460 and the availability of APHIS’ Standard Time, Monday through Friday. Sales at Less Than Fair Value, 74 FR 8907 written environmental decision and SUPPLEMENTARY INFORMATION: The (February 27, 2009) (‘‘Final Determination’’) and regulatory determination. August 10 meeting is open to the public. Certain Steel Threaded Rod from the People’s Republic of China: Notice of Antidumping Duty Authority: 7 U.S.C. 7701–7772 and 7781– The following business will be Order, 74 FR 17154 (April 14, 2009) (‘‘Antidumping 7786; 31 U.S.C. 9701; 7 CFR 2.22, 2.80, and conducted: (1) Review, discuss and vote Duty Order’’). 371.3. on proposed projects, (2) Recommend .

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2011) (‘‘Jiaxing Brother II’’). Consistent as an input in the production of steel Amended Final Determination and with the decision of the United States threaded rod. See Jiaxing Brother at 27– Order Court of Appeals for the Federal Circuit 28. The CIT thus remanded the issue to (‘‘CAFC’’) in Timken Co. v. United the Department with instructions to Because there is now a final court States, 893 F.2d 337 (Fed. Cir. 1990) reconsider the appropriateness of using decision with respect to the inclusion of (‘‘Timken’’), as clarified by Diamond Rajratan’s financial statement in the Rajratan in the average calculation of Sawblades Mfrs. Coalition v. United calculation of surrogate financial ratios surrogate financial ratios, RMB/IFI States, 626 F.3d 1374 (Fed. Cir. 2010) by analyzing the comparability of Group’s revised cash deposit rate is (‘‘Diamond Sawblades’’), the Department Rajratan’s merchandise to the subject 47.37%. In accordance with sections is notifying the public that the final merchandise. Id. at 30. 735(c)(1)(B) of the Act, the Department judgment in this case is not in harmony On December 16, 2010, the will instruct U.S. Customs and Border with the Department’s Final Department issued its final results of Protection to collect cash deposits at the Determination and is amending its Final redetermination pursuant to Jiaxing rate indicated. Determination and Antidumping Duty Brother. Pursuant to the CIT’s remand This notice is issued and published in Order. order in Jiaxing Brother, we reexamined accordance with sections 516A(c)(1), DATES: Effective Date: May 2, 2011. the Rajratan financial statements and 735(d), 736(a), and 777(i)(1) of the Act. found that Rajratan purchases wire rod, FOR FURTHER INFORMATION CONTACT: Toni Dated: May 4, 2011. in addition to other raw materials, and Dach, AD/CVD Operations, Office 9, produces downstream products from Ronald K. Lorentzen, Import Administration, International that wire rod input, namely p.c. wire Deputy Assistant Secretary for Import Trade Administration, U.S. Department and tyre bead wire. Thus, we Administration. of Commerce, 14th Street and determined on remand that Rajratan [FR Doc. 2011–11571 Filed 5–10–11; 8:45 am] Constitution Avenue, NW., Washington further manufactures wire rod into BILLING CODE 3510–DS–P DC 20230; telephone (202) 482–1655. finished (or semi-finished) steel SUPPLEMENTARY INFORMATION: products in a manner similar to steel DEPARTMENT OF COMMERCE Background threaded rod and found that Rajratan is a producer of steel products comparable National Institute of Standards and On February 27, 2009, the Department to the subject merchandise. As a Technology published the Final Determination of consequence, because Rajratan is a the investigation of steel threaded rod producer of comparable steel products, Proposed Information Collection; from the PRC. See Final Determination. we find that its production experience, In calculating surrogate financial ratios, Comment Request; the NIST Summer and therefore financial experience, is Institute for Middle School Science pursuant to section 773(c) of the Tariff comparable to that of steel threaded rod Act of 1930, as amended (the ‘‘Act’’), the Teachers (NIST Summer Institute) and producers, and included its financial the NIST Research Experience for Department used financial statements ratios in the average calculation of for three Indian companies found by the Teachers (NIST RET) Application surrogate financial ratios. Requirements Department to be producers of The CIT sustained the Department’s merchandise comparable to steel remand redetermination on April 21, AGENCY: National Institute of Standards threaded rod. The Department 2011. See Jiaxing Brother II. determined not to use Rajratan’s and Technology (NIST), Commerce. financial statement as part of that Timken Notice ACTION: Notice. calculation upon concluding that In its decision in Timken, 893 F.2d at Rajratan produced wire rod, a material 341, as clarified by Diamond Sawblades, SUMMARY: The Department of input in the production of subject the CAFC has held that, pursuant to Commerce, as part of its continuing merchandise, which the Department section 516A(e) of the Act, the effort to reduce paperwork and found not to be comparable to finished Department must publish a notice of a respondent burden, invites the general steel products such as steel threaded court decision that is not ‘‘in harmony’’ public and other Federal agencies to rod. See Final Determination and with a Department determination and take this opportunity to comment on accompanying Issues and Decision must suspend liquidation of entries proposed and/or continuing information Memorandum at Comment 1. pending a ‘‘conclusive’’ court decision. collections, as required by the After the Department published the The CIT’s April 21, 2011, judgment Paperwork Reduction Act of 1995. Antidumping Duty Order, the RMB/IFI sustaining the Department’s remand DATES: Written comments must be Group and its producer, Jiaxing Brother redetermination that Rajratan is a submitted on or July 11, 2011. Fastener Co., Ltd. (collectively, ‘‘the producer of steel products comparable RMB/IFI Group’’), filed a timely action to the subject merchandise constitutes a ADDRESSES: Direct all written comments with the CIT challenging the final decision of that court that is not in to Diana Hynek, Departmental Department’s selection of financial harmony with the Department’s Final Paperwork Clearance Officer, statements in calculating surrogate Determination. This notice is published Department of Commerce, Room 6616, financial ratios. in fulfillment of the publication 14th and Constitution Avenue, NW., On November 16, 2010, the CIT requirements of Timken. Accordingly, Washington, DC 20230 (or via the issued its decision sustaining the the Department will suspend Internet at [email protected]). Department’s Final Determination liquidation of the subject merchandise FOR FURTHER INFORMATION CONTACT: except for the determination to reject effective May 2, 2011, pending the Requests for additional information or the financial statement of Rajratan as expiration of the period of appeal or, if copies of the information collection part of its calculation of surrogate appealed, pending a final and instrument and instructions should be financial ratios. The CIT found that conclusive court decision or pending directed to Barbara Lambis, 301–975– record evidence did not support the establishment of a new cash deposit rate 4447, [email protected]. Department’s conclusion that Rajratan in a completed administrative review of manufactured wire rod, which is used the Antidumping Duty Order. SUPPLEMENTARY INFORMATION:

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I. Abstract ways to enhance the quality, utility, and Written comments on this application The NIST Summer Institute and the clarity of the information to be should be submitted to the Chief, NIST RET are competitive financial collected; and (d) ways to minimize the Permits, Conservation and Education assistance (cooperative agreement) burden of the collection of information Division on respondents, including through the programs designed to support middle • By e-mail to use of automated collection techniques school science teachers to participate in [email protected] (include or other forms of information hands-on workshops, lectures, tours, the File No. in the subject line of the e- visits, or in scientific research with technology. Comments submitted in response to mail), scientists and engineers in NIST this notice will be summarized and/or • laboratories in Gaithersburg, Maryland. by facsimile to (301) 713–0376, or included in the request for OMB The workshops provide teachers with • at the address listed above. approval of this information collection; instructional information and ideas to they also will become a matter of public Those individuals requesting a public use in their teaching, and emphasize the record. hearing should submit a written request measurement science done at NIST. The to the Chief, Permits, Conservation and Dated: May 6, 2011. Program provides a world-class Education Division at the address listed Gwellnar Banks, opportunity for those teaching our above. The request should set forth the nation’s next generation of scientists to Management Analyst, Office of the Chief Information Officer. specific reasons why a hearing on this learn more about the subjects they teach application would be appropriate. and the research in those subjects at [FR Doc. 2011–11482 Filed 5–10–11; 8:45 am] NIST, and to offer a platform from BILLING CODE 3510–13–P FOR FURTHER INFORMATION CONTACT: which teachers can inspire their Amy Hapeman or Colette Cairns, (301) students to pursue careers in science, 713–2289. technology, engineering, and DEPARTMENT OF COMMERCE SUPPLEMENTARY INFORMATION: mathematics (STEM). The To receive funding, nominated National Oceanic and Atmospheric subject permit is requested under the teachers must submit applications Administration authority of the Endangered Species Act through their U.S. public school RIN 0648–XA425 of 1973, as amended (ESA; 16 U.S.C. districts or U.S. accredited private 1531 et seq.) and the regulations educational institutions for potential Endangered Species; File No. 15661 governing the taking, importing, and exporting of endangered and threatened selection to participate in the NIST AGENCY: National Marine Fisheries species (50 CFR 222–226). Summer Institute or the NIST RET. This Service (NMFS), National Oceanic and request is for the information collection Atmospheric Administration (NOAA), The CNMI Division of Fish and requirements associated with applying Commerce. Wildlife proposes to conduct research for funding. The information is used to ACTION: Notice; receipt of application. on sea turtles to characterize population perform the requisite reviews of the structure, size class composition, applications to determine if an award SUMMARY: Notice is hereby given that foraging ecology, and migration patterns should be granted. the Commonwealth of the Northern for green and hawksbill sea turtles in II. Method of Collection Mariana Islands (CNMI) Division of Fish the Northern Mariana Islands with an and Wildlife, (Ignacion dela Cruz, eye toward identifying potential Applications may be submitted Responsible Party), has applied in due conservation or critical habitat areas for electronically via http:// form for a permit to take green (Chelonia www.grants.gov. mydas) and hawksbill (Eretmochelys immature and adult green and hawksbill turtles. The project would consist of III. Data imbricata) sea turtles for purposes of scientific research. counts and hand captures of sea turtles OMB Control Number: 0693–0059. during vessel surveys. Up to 300 green DATES: Written, telefaxed, or e-mail Form Number: NIST–1103. and 50 hawksbill sea turtles would be Type of Review: Regular submission. comments must be received on or before June 10, 2011. captured, measured, weighed, flipper Affected Public: Middle school tagged, passive integrated transponder (Grades 6–8) science teachers in a U.S. ADDRESSES: The application and related tagged, temporarily marked, tissue public school district or U.S. accredited documents are available for review by sampled, photographed, and released private educational institution. selecting ‘‘Records Open for Public Estimated Number of Respondents: Comment’’ from the Features box on the annually. A subset of the turtles would 100. Applications and Permits for Protected be satellite tagged before release and Estimated Time per Response: 1 hour. Species (APPS) home page, https:// then tracked from the vessel. A small Estimated Total Annual Burden apps.nmfs.noaa.gov, and then selecting number of sea turtle carcasses, tissues or Hours: 100. File No. 15661 from the list of available parts would also be opportunistically Estimated Total Annual Cost to applications. salvaged each year. The permit would Public: $0. These documents are also available be valid for five years. upon written request or by appointment IV. Request for Comments Dated: May 5, 2011. in the following offices: Comments are invited on: (a) Whether Permits, Conservation and Education Tammy C. Adams, the proposed collection of information Division, Office of Protected Resources, Acting Chief, Permits, Conservation and is necessary for the proper performance NMFS, 1315 East-West Highway, Room Education Division, Office of Protected of the functions of the agency, including 13705, Silver Spring, MD 20910; phone Resources, National Marine Fisheries Service. whether the information shall have (301) 713–2289; fax (301) 713–0376; and [FR Doc. 2011–11567 Filed 5–10–11; 8:45 am] practical utility; (b) the accuracy of the Pacific Islands Region, NMFS, 1601 BILLING CODE 3510–22–P agency’s estimate of the burden Kapiolani Blvd., Rm 1110, Honolulu, HI (including hours and cost) of the 96814–4700; phone (808) 944–2200; fax proposed collection of information; (c) (808) 973–2941.

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DEPARTMENT OF COMMERCE Dated: April 29, 2011. [email protected]. Include Daniel J. Basta, in the subject line of the e-mail National Oceanic and Atmospheric Director, Office of National Marine comment the following document Administration Sanctuaries, National Ocean Service, identifier: File No. 16360. National Oceanic and Atmospheric Availability of Seats for the Gray’s Reef Administration. FOR FURTHER INFORMATION CONTACT: National Marine Sanctuary Advisory [FR Doc. 2011–11304 Filed 5–10–11; 8:45 am] Carrie Hubard or Laura Morse, (301) Council BILLING CODE 3510–NK–M 713–2289. SUPPLEMENTARY INFORMATION: The AGENCY: Office of National Marine subject permit is requested under the DEPARTMENT OF COMMERCE Sanctuaries (ONMS), National Ocean authority of § 104(c)(6) of the Marine Service (NOS), National Oceanic and Mammal Protection Act of 1972, as Atmospheric Administration (NOAA), National Oceanic and Atmospheric Administration amended (16 U.S.C. 1361 et seq.), the Department of Commerce (DOC). regulations governing the taking and RIN 0648–XA426 ACTION: Notice and request for importing of marine mammals (50 CFR applications. Marine Mammals; Photography Permit part 216). Section 104(c)(6) provides for Application No. 16360 photography for educational or SUMMARY: The ONMS is seeking commercial purposes involving non- applications for the following vacant AGENCY: National Marine Fisheries endangered and non-threatened marine seat on the Gray’s Reef National Marine Service (NMFS), National Oceanic and mammals in the wild. Atmospheric Administration (NOAA), Sanctuary Advisory Council: Georgia Commerce. The applicant requests a four-month conservation. Applicants are chosen photography permit to film cetaceans in ACTION: Notice; receipt of application. based upon their particular expertise the waters off Kona, Hawaii. Using one and experience in relation to the seat for SUMMARY: Notice is hereby given that or two sailing catamarans as a base, which they are applying; community Oceanic Nature Film Productions filmmakers would conduct surface and and professional affiliations; philosophy (Responsible Party: Dietrich Paulmann), underwater photography. Additionally, regarding the protection and P.O. Box 301 722, Albany 0752, a passive acoustic array would be towed management of marine resources; and Auckland, New Zealand has applied in to obtain marine mammal vocalizations. possibly the length of residence in the due form for a permit to conduct The applicant has identified 12 species area affected by the sanctuary. commercial/educational photography of of cetaceans that would be approached Applicants who are chosen as members cetaceans off Hawaii. for filming. The permit would not should expect to serve 3-year terms, DATES: Written, telefaxed, or e-mail authorize approaches of species listed as pursuant to the council’s Charter. comments must be received on or before threatened or endangered. Up to 50 June 10, 2011. DATES: Applications are due by June 30, animals from each species may be ADDRESSES: The application and related 2011. harassed as a result of filming. Footage documents are available for review would be used in a feature film ADDRESSES: Application kits may be upon written request or by appointment intended to educate the public about obtained from Becky Shortland, Council in the following offices: marine mammal conservation issues, as Coordinator ([email protected], Permits, Conservation and Education well as the importance of the Pacific 10 Ocean Science Circle, Savannah, GA Division, Office of Protected Resources, islands to the oceans. Filming would 31411; 912–598–2381). Completed NMFS, 1315 East-West Highway, Room occur over a four-month period in 13705, Silver Spring, MD 20910; phone applications should be sent to the same summer and fall 2011. address. (301) 713–2289; fax (301) 713–0376; and Pacific Islands Region, NMFS, 1601 In compliance with the National FOR FURTHER INFORMATION CONTACT: Kapiolani Blvd., Rm 1110, Honolulu, HI Environmental Policy Act of 1969 (42 Becky Shortland, Council Coordinator 96814–4700; phone (808) 944–2200; fax U.S.C. 4321 et seq.), an initial ([email protected], 10 Ocean (808) 973–2941. determination has been made that the Science Circle, Savannah, GA 31411; Written comments or requests for a activity proposed is categorically 912–598–2381. public hearing on this application excluded from the requirement to should be mailed to the Chief, Permits, prepare an environmental assessment or SUPPLEMENTARY INFORMATION: The Conservation and Education Division, environmental impact statement. sanctuary advisory council was F/PR1, Office of Protected Resources, Concurrent with the publication of established in August 1999 to provide NMFS, 1315 East-West Highway, Room this notice in the Federal Register, advice and recommendations on 13705, Silver Spring, MD 20910. Those NMFS is forwarding copies of this management and protection of the individuals requesting a hearing should sanctuary. The advisory council, set forth the specific reasons why a application to the Marine Mammal through its members, also serves as hearing on this particular request would Commission and its Committee of liaison to the community regarding be appropriate. Scientific Advisors. sanctuary issues and represents Comments may also be submitted by Dated: May 5, 2011. community interests, concerns, and facsimile at (301) 713–0376, provided Tammy C. Adams, management needs to the sanctuary and the facsimile is confirmed by hard copy Acting Chief, Permits, Conservation and NOAA. submitted by mail and postmarked no Education Division, Office of Protected later than the closing date of the Resources, National Marine Fisheries Service. Authority: 16 U.S.C. Sections 1431, et seq. comment period. [FR Doc. 2011–11566 Filed 5–10–11; 8:45 am] (Federal Domestic Assistance Catalog Comments may also be submitted by Number 11.429 Marine Sanctuary Program) e-mail. The mailbox address for BILLING CODE 3510–22–P providing e-mail comments is

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DEPARTMENT OF COMMERCE kill, or attempt to harass, hunt, capture, vehicle engines produce substantial or kill marine mammals. sound pressures. Generally, four types National Oceanic and Atmospheric Authorization for incidental takings of noise occur during a launch: (1) Administration shall be granted if NMFS finds that the Combustion noise; (2) jet noise from RIN 0648–XA216 taking will have a negligible impact on interaction of combustion exhaust gases the identified species or stock(s), will with the atmosphere; (3) combustion Taking and Importing Marine not have an unmitigable adverse impact noise proper; and (4) sonic booms. Mammals; Taking Marine Mammals on the availability of the species or Sonic booms are not a concern for Incidental to Space Vehicle and Missile stock(s) for subsistence uses (where pinnipeds on Ugak Island, as sonic Launch Operations at Kodiak Launch relevant), and if the permissible booms created by ascending rockets Complex, Alaska methods of taking and requirements launched from the KLC reach the Earth’s pertaining to the mitigation, monitoring surface over deep ocean, well past the AGENCY: National Marine Fisheries and reporting of such takings are set edge of the outer continental shelf (FAA Service (NMFS), National Oceanic and forth in the regulations. NMFS has 1996). The noise generated by Atmospheric Administration (NOAA), defined ‘‘negligible impact’’ in 50 CFR operations at the KLC may result in the Commerce. 216.103 as ‘‘* * * an impact resulting incidental harassment of pinnipeds, ACTION: Notice of issuance of a Letter of from the specified activity that cannot both behaviorally and in terms of Authorization. be reasonably expected to, and is not physiological (auditory) impacts. The reasonably likely to, adversely affect the noise and visual disturbances from SUMMARY: In accordance with the species or stock through effects on space vehicle and missile launch Marine Mammal Protection Act annual rates of recruitment or survival.’’ operations may cause the animals to (MMPA), as amended, and Regulations governing the taking of move towards or enter the water. If implementing regulations, notification Steller sea lions (Eumetopias jubatus), launches occur during the harbor seal is hereby given that a Letter of by harassment, and harbor seals (Phoca pupping season, it is possible that Authorization (LOA) has been issued to vitulina), adults by harassment and harbor seal pups could be injured or the Alaska Aerospace Corporation pups by injury or mortality, incidental killed as a result of the adults flushing (AAC) to take two species of seals and to space vehicle and missile launch in response to the rocket noise, or the sea lions incidental to space vehicle and operations at the KLC, were issued on mother/pup bond could be permanently missile launch operations at the Kodiak March 22, 2011 (76 FR 16311, March 23, broken. Launch Complex (KLC) in Kodiak, 2011), and remain in effect until March However, NMFS does not expect Alaska. 21, 2016. For detailed information on harbor seal pup injury and mortality to DATES: Effective from April 30, 2011, this action, please refer to that occur to a great degree due to the pups’ through April 29, 2012. document. The regulations include precociousness and the mothers’ overt ADDRESSES: The LOA and supporting mitigation, monitoring, and reporting attention. Furthermore, take of any documentation are available for review requirements for the incidental take of pinnipeds will be minimized through by writing to P. Michael Payne, Chief, marine mammals during space vehicle implementation of the following Permits, Conservation and Education and missile launch operations at the mitigation measures: (1) Security Division, Office of Protected Resources, KLC. overflights immediately associated with National Marine Fisheries Service, 1315 This LOA is effective from April 30, the launch will not approach occupied East-West Highway, Silver Spring, MD 2011, through April 29, 2012, and pinniped haulouts on Ugak Island by 20910–3225, by telephoning the contact authorizes the incidental take of the two closer than 0.25 mile (0.4 km), and will listed under FOR FURTHER INFORMATION marine mammal species listed above maintain a vertical distance of 1,000 ft CONTACT, or on the Internet at: http:// that may result from the launching of up (305 m) from the haulouts when within www.nmfs.noaa.gov/pr/permits/ to 12 space launch vehicles, long-range 0.5 miles (0.8 km), unless indications of incidental.htm#applications. ballistic target missiles, and other human presence or activity warrant Documents cited in this notice may also smaller missile systems at the KLC. closer inspection of the area to assure be viewed, by appointment, during Steller sea lion and harbor seal haulouts that national security interests are regular business hours at the above exist on Ugak Island, which lies protected in accordance with law; (2) approximately 3.4 miles to the southeast address. the AAC will avoid launches during the of the launch site. The KLC primarily harbor seal pupping season (May 15 to FOR FURTHER INFORMATION CONTACT: supports launches of small to medium June 30), unless constrained by factors Michelle Magliocca, Office of Protected space launch vehicles—which by including, but not limited to, human Resources, NMFS, 301–713–2289, ext definition are those used to boost safety and national security; and (3) if 123. satellites to orbit—ranging in size from launch monitoring detects pinniped SUPPLEMENTARY INFORMATION: the small space-launch Castor 120 motor injury or death, or if long-term trend (used in the Athena, Minotaur IV, counts from quarterly aerial surveys Background Minotaur V, and Taurus I systems) to indicate that the distribution, size, or Sections 101(a)(5)(A) of the MMPA the under-development medium-lift productivity of the potentially affected (16 U.S.C. 1361 et seq.) directs the Taurus II. The KLC is also configured to pinniped populations has been affected Secretary of Commerce to allow, upon support launch of the Minuteman I- due to the specified activity, the launch request, the incidental, but not derived Minotaur I Space Launch procedures and the monitoring methods intentional, taking of small numbers of System, and to support launch of long- will be reviewed, in cooperation with marine mammals by U.S. citizens who range ballistic systems such as the NMFS. engage in a specified activity (other than Polaris derived A–3 STARS, the The AAC will also use audio- commercial fishing) within a specified Minuteman-derived Minotaur II and III, recording equipment and a remote live- geographical region if certain findings and the C–4. streaming video system to monitor a are made and either regulations are The activities under these regulations harbor seal haulouts before, after, and issued. Under the MMPA, the term are a major source of noise on Kodiak during the first five launches. After the ‘‘take’’ means to harass, hunt, capture, or Island, as the operation of launch first five launches with harbor seal

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presence, the AAC and NMFS will rates of entering certificate/degree- Access at: http://www.gpoaccess.gov/nara/ reassess the efficiency of the video seeking, full-time, undergraduate index.html. system before potentially relocating or students by two-year degree granting re-aiming it to another haulout. Reports institutions of higher education. The John Q. Easton, will be submitted to NMFS at the time Committee may also recommend Director, Institute of Education Sciences. of request for a renewal of the LOA, and additional or alternative measures of [FR Doc. 2011–11555 Filed 5–10–11; 8:45 am] a final comprehensive report, which student success that are comparable BILLING CODE 4000–01–P will summarize all previous reports and alternatives to the completion or assess cumulative impacts, will be graduation rates of entering degree- submitted before the rule expires. This seeking full-time undergraduate DEPARTMENT OF ENERGY LOA will be renewed annually based on students and that consider the mission review of the annual monitoring report. and role of two-year degree granting Federal Energy Regulatory Commission Dated: April 29, 2011. higher education institutions. These James H. Lecky, recommendations shall be provided to [Project No. 459–303] the Secretary no later than April 2012. Director, Office of Protected Resources, National Marine Fisheries Service. The agenda for the Committee’s third Union Electric Company, dba meeting will include Committee AmerenUE; Notice of Application for [FR Doc. 2011–11453 Filed 5–10–11; 8:45 am] member discussions of the Committee Amendment of License and Soliciting BILLING CODE 3510–22–P working groups’ preliminary findings Comments, Motions To Intervene, and and recommendations regarding Protests progression, completion, and alternative DEPARTMENT OF EDUCATION measures and other related topics. Take notice that the following hydroelectric application has been filed Individuals interested in attending the Committee on Measures of Student with the Commission and is available meeting must register in advance Success for public inspection: because of limited space issues. To a. Application Type: Non-project use AGENCY: National Center for Education register, please send an e-mail request to of project lands and waters. Statistics, Institute of Education [email protected]. Individuals Sciences, Department of Education. b. Project No: 459–303. who will need accommodations for a c. Date Filed: April 19, 2011. ACTION: Notice of an open meeting. disability in order to attend the meeting d. Applicant: Union Electric (e.g., interpreting services, assistive Company, dba AmerenUE. SUMMARY: This notice sets forth the listening devices, or materials in schedule and proposed agenda of an e. Name of Project: Osage alternative format) should notify Archie Hydroelectric Project. upcoming meeting of the Committee on Cubarrubia at (202) 502–7601 no later Measures of Student Success f. Location: The proposed non-project than May 26, 2011. We will attempt to use would be located near mile marker (Committee). The notice also describes meet requests for accommodations after the functions of the Committee. Notice 18.8 + 0.5 of the Grand Glaize Arm of this date but cannot guarantee their the Lake of the Ozarks, in Camden of this meeting is required by section availability. The meeting site is 10(a)(2) of the Federal Advisory County, Missouri. accessible to individuals with g. Filed Pursuant to: Federal Power Committee Act (FACA) and is intended disabilities. to notify the public of their opportunity Act, 16 U.S.C. 791a–825r. Opportunities for public comment are h. Applicant Contact: Mr. Jeff Green, to attend. available through the Committee’s Web Shoreline Supervisor, AmerenUE, P.O. DATES: June 2–3, 2011. site at http://www2.ed.gov/about/ Box 993, Lake Ozark, MO 65049, (573) Time: June 2, 2011: 1 p.m. to 5 p.m.; bdscomm/list/acmss.html. Records are 365–9214. June 3, 2011: 9 a.m. to 1 p.m. kept of all Committee proceedings and i. FERC Contact: Shana High at (202) ADDRESSES: The Committee will meet in are available for public inspection on 502–8674, or e-mail: Washington, DC at 1990 K Street, NW., the Web site and at the National Center [email protected]. Washington, DC 20006, 8th Floor for Education Statistics, 1990 K Street, j. Deadline for filing comments, Conference Center. NW., Washington, DC 20006 from the motions to intervene, and protest: June FOR FURTHER INFORMATION CONTACT: hours of 9 a.m. to 5 p.m. E.S.T. 6, 2011. Archie Cubarrubia, Designated Federal Electronic Access to This Document: All documents may be filed Official, Committee on Measures of You may view this document, as well as electronically via the Internet. See, 18 Student Success, U.S. Department of all other documents of this Department CFR 385.2001(a)(1)(iii) and the Education, 1990 K Street, NW., published in the Federal Register, in instructions on the Commission’s Web Washington, DC 20006. E-mail: text or Adobe Portable Document site at http://www.ferc.gov/docs-filing/ [email protected]. Telephone: Format (PDF) on the Internet at the efiling.asp. If unable to be filed (202) 502–7601. following site: http://www.ed.gov/news/ electronically, documents may be paper- SUPPLEMENTARY INFORMATION: The fed-register/index.html. To use PDF you filed. To paper-file, an original and Committee is established to advise the must have Adobe Acrobat Reader, seven copies should be mailed to: Secretary of Education in assisting two- which is available free at this site. If you Secretary, Federal Energy Regulatory year degree-granting institutions of have questions about using PDF, call the Commission, 888 First Street, NE., higher education in meeting the U.S. Government Printing Office (GPO), Washington, DC 20426. Commenters completion or graduation rate disclosure toll free at 1–866–512–1830; or in the can submit brief comments up to 6,000 requirements outlined in section 485 of Washington, DC, area at (202) 512–0000. characters, without prior registration, the Higher Education Act of 1965, as Note: The official version of this document using the eComment system at http:// amended. Specifically, the Committee is the document published in the Federal www.ferc.gov/docs-filing/ shall develop recommendations Register. Free Internet access to the official ecomment.asp. You must include your regarding the accurate calculation and edition of the Federal Register and the Code name and contact information at the end reporting of completion or graduation of Federal Regulations is available on GPO of your comments. Please include the

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project number (P–459–303) on any number of the person protesting or electronically via the Internet. See 18 comments, motions, or intervening; and (4) otherwise comply CFR 385.2001(a)(1) and the instructions recommendations filed. with the requirements of 18 CFR on the Commission’s Web site under k. Description of Request: The 385.2001 through 385.2005. All http://www.ferc.gov/docs-filing/ licensee requests Commission comments, motions to intervene, or efiling.asp. Commenters can submit authorization to permit Lakeport Marina protests must set forth their evidentiary brief comments up to 6,000 characters, and Condominiums to add eight basis and otherwise comply with the without prior registration, using the commercial docks, modify eight existing requirements of 18 CFR 4.34(b). eComment system at http:// docks, and add 1,330 feet of breakwater. Agencies may obtain copies of the www.ferc.gov/docs-filing/ The completed development would application directly from the applicant. ecomment.asp. You must include your have 18 docks (16 boat docks, 1 swim A copy of any protest or motion to name and contact information at the end dock, and 1 fishing dock) with 240 boat intervene must be served upon each of your comments. If unable to be filed slips and 156 personal watercraft lifts; representative of the applicant specified electronically, documents may be paper- boat fueling facilities are located on an in the particular application. If an filed. To paper-file, an original plus existing dock. intervener files comments or documents seven copies should be mailed to: l. Locations of the Application: A with the Commission relating to the Kimberly D. Bose, Secretary, Federal copy of the application is available for merits of an issue that may affect the Energy Regulatory Commission, 888 inspection and reproduction at the responsibilities of a particular resource First Street, NE., Washington, DC 20426. Commission’s Public Reference Room, agency, they must also serve a copy of More information about this project can located at 888 First Street, NE., Room the document on that resource agency. be viewed or printed on the eLibrary 2A, Washington, DC 20426, or by calling A copy of all other filings in reference link of Commission’s Web site at http:// (202) 502–8371. This filing may also be to this application must be accompanied www.ferc.gov/docs-filing/elibrary.asp. viewed on the Commission’s Web site at by proof of service on all persons listed Enter the docket number (P–7269) in the http://www.ferc.gov using the ‘‘eLibrary’’ in the service list prepared by the docket number field to access the link. Enter the docket number excluding Commission in this proceeding, in document. For assistance, call toll-free the last three digits in the docket accordance with 18 CFR 4.34(b) and 1–866–208–3372. number field to access the document. 385.2010. You may also register online at http:// Dated: May 4, 2011. www.ferc.gov/docs-filing/ Dated: May 5, 2011. Kimberly D. Bose, esubscription.asp to be notified via Kimberly D. Bose, Secretary. e-mail of new filings and issuances Secretary. [FR Doc. 2011–11498 Filed 5–10–11; 8:45 am] related to this or other pending projects. [FR Doc. 2011–11537 Filed 5–10–11; 8:45 am] BILLING CODE 6717–01–P For assistance, call 1–866–208–3676 or BILLING CODE 6717–01–P e-mail [email protected], for TTY, call (202) 502–8659. A copy is DEPARTMENT OF ENERGY also available for inspection and DEPARTMENT OF ENERGY reproduction at the address in item (h) Federal Energy Regulatory above. Federal Energy Regulatory Commission Commission m. Individuals desiring to be included [Project No. 13629–002] on the Commission’s mailing list should [Project No. 7269–028] so indicate by writing to the Secretary Coleman Hydro LLC; Notice of of the Commission. Janet A. Boyd, Boyd Hydro, LLC; Application Tendered for Filing With n. Comments, Protests, or Motions to Notice of Application for Transfer of the Commission and Soliciting Intervene: Anyone may submit License, and Soliciting Comments and Additional Study Requests comments, a protest, or a motion to Motions To Intervene intervene in accordance with the Take notice that the following requirements of Rules of Practice and On March 25, 2011, Janet A. Boyd hydroelectric application has been filed Procedure, 18 CFR 385.210, .211, .214. (transferor) and Boyd Hydro, LLC with the Commission and is available In determining the appropriate action to (transferee) filed an application for for public inspection. take, the Commission will consider all transfer of license for the Jim Boyd a. Type of Application: Original minor protests or other comments filed, but Hydroelectric Project No. 7269, located water power project. only those who file a motion to on the Umatilla River in Umatilla b. Project No.: 13629–002. intervene in accordance with the County, Oregon. c. Date filed: April 22, 2011. Commission’s Rules may become a Applicants seek Commission approval d. Applicant: Coleman Hydro LLC. party to the proceeding. Any comments, to transfer the license for the Jim Boyd e. Name of Project: Coleman protests, or motions to intervene must Hydroelectric Project from transferor to Hydroelectric Project. be received on or before the specified transferee. f. Location: On Little Timber Creek in comment date for the particular Applicants’ Contact: Transferor: Janet Lemhi County near Leadore, Idaho. The application. A. Boyd, 78855 Quick Road, Hermiston, project does not affect Federal lands. o. Filing and Service of Responsive OR 97838. For Transferee: Ted S. g. Filed Pursuant to: Federal Power Documents: Any filing must (1) bear in Sorenson, Manager, Boyd Hydro, LLC, Act 16 U.S.C. 791 (a)–825(r.) all capital letters the title 5203 South 11th East, Idaho Falls, Idaho h. Applicant Contact: Nick Josten, ‘‘COMMENTS’’, ‘‘PROTEST’’, or 83404, (208) 522–8069. Geosense, 2742 Saint Charles Ave., ‘‘MOTION TO INTERVENE’’ as FERC Contact: Patricia W. Gillis, (202) Idaho Falls, ID 83404. (208) 528–6152. applicable; (2) set forth in the heading 502–8735, [email protected]. i. FERC Contact: Joseph Hassell, (202) the name of the applicant and the Deadline for filing comments and 502–8079, [email protected]. project number of the application to motions to intervene: 30 days from the j. Cooperating agencies: Federal, state, which the filing responds; (3) furnish issuance date of this notice. Comments local, and Tribal agencies with the name, address, and telephone and motions to intervene may be filed jurisdiction and/or special expertise

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with respect to environmental issues in the Public Reference Room or may be (Cobb EMC), Cobb Energy Management that wish to cooperate in the viewed on the Commission’s Web site at Corporation (Cobb Energy), Cooperative preparation of the environmental http://www.ferc.gov using the ‘‘eLibrary’’ Energy Inc. (CEI), Power4Georgians LLC document should follow the link. Enter the docket number excluding (P4G), Mr. Dwight T. Brown and Mr. instructions for filing such requests the last three digits in the docket W.T. Nelson III (Respondents). CCR described in item l below. Cooperating number field to access the document. requests the Commission institute an agencies should note the Commission’s For assistance, contact FERC Online investigation into alleged acts involving policy that agencies that cooperate in Support. A copy is also available for the failure to comply with the Federal the preparation of the environmental inspection and reproduction at the Power Act and the Commission’s document cannot also intervene. See, 94 address in item h above. regulations. In support of its complaint FERC ¶ 61,076 (2001). You may also register online at and request for investigation, CCR k. Pursuant to section 4.32(b)(7) of 18 http://www.ferc.gov/docs-filing/ points to what it identifies as a series of CFR of the Commission’s regulations, if esubscription.asp to be notified via e- misstatements, omissions and any resource agency, Indian Tribe, or mail of new filings and issuances inaccurate filings with the Commission person believes that an additional related to this or other pending projects. in relation to Cobb EMC’s, and its scientific study should be conducted in For assistance, contact FERC Online affiliate, CEI’s, request for and the order to form an adequate factual basis Support. Commission’s authorization of market- for a complete analysis of the p. With this notice, we are initiating based rate authorization, and the request application on its merit, the resource consultation with the Idaho State for and the Commission’s authorization agency, Indian Tribe, or person must file Historic Preservation Officer (SHPO), as of the holding of interlocking positions a request for a study with the required by 106, National Historic by an official of both Cobb EMC and Commission not later than 60 days from Preservation Act, and the regulations of CEI. CCR also points to what it describes the date of filing of the application, and the Advisory Council on Historic as violations of the Commission’s rules serve a copy of the request on the Preservation, 36 CFR 800.4. prohibiting affiliate cross-subsidization applicant. q. Procedural schedule: The and other affiliate abuses associated l. Deadline for filing additional study application will be processed according with dealings among the respondents. requests and requests for cooperating to the following preliminary Hydro Any person desiring to intervene or to agency status: June 22, 2011. Licensing Schedule. Revisions to the protest this filing must file in All documents may be filed schedule will be made as appropriate. electronically via the Internet. See 18 accordance with Rules 211 and 214 of CFR 385.2001(a)(1)(iii) and the the Commission’s Rules of Practice and Issue Notice of Acceptance July 2011. Procedure (18 CFR 385.211, 385.214). instructions on the Commission’s Web Issue Scoping Document 1 August 2011. site http://www.ferc.gov/docs-filing/ for comments. Protests will be considered by the efiling.asp. Commenters can submit Comments on Scoping September Commission in determining the brief comments up to 6,000 characters, Document 1. 2011. appropriate action to be taken, but will without prior registration, using the Issue Scoping Document 2 December 2011. not serve to make protestants parties to eComment system at http:// Issue notice of ready for December 2011. the proceeding. Any person wishing to environmental analysis. become a party must file a notice of www.ferc.gov/docs-filing/ Commission issues EA or May 2012. ecomment.asp. You must include your intervention or motion to intervene, as draft EA. appropriate. The Respondent’s answer name and contact information at the end Comments on EA or draft June 2012. of your comments. For assistance, EA. and all interventions, or protests must please contact FERC Online Support at Commission issues final July 2012. be filed on or before the comment date. [email protected] or toll EA. The Respondent’s answer, motions to free at 1–866–208–3676, or for TTY, intervene, and protests must be served (202) 502–8659. Although the Dated: May 4, 2011. on the Complainant. The Commission encourages Commission strongly encourages Kimberly D. Bose, electronic submission of protests and electronic filing, documents may also be Secretary. paper-filed. To paper-file, mail an interventions in lieu of paper using the [FR Doc. 2011–11499 Filed 5–10–11; 8:45 am] ‘‘eFiling’’ link at http://www.ferc.gov. original and seven copies to: Kimberly BILLING CODE 6717–01–P D. Bose, Secretary, Federal Energy Persons unable to file electronically Regulatory Commission, 888 First should submit an original and 14 copies of the protest or intervention to the Street, NE., Washington, DC 20426. DEPARTMENT OF ENERGY m. The application is not ready for Federal Energy Regulatory Commission, environmental analysis at this time. Federal Energy Regulatory 888 First Street, NE., Washington, DC n. The proposed Coleman Commission 20426. Hydroelectric Project would consist of: This filing is accessible on-line at (1) A new screened intake structure on [Docket No. EL11–38–000] http://www.ferc.gov, using the Little Timber Creek that consolidates Cobb Customer Requesters v. Cobb ‘‘eLibrary’’ link and is available for the withdrawals of the existing second Electric Membership Corporation, review in the Commission’s Public and third ditches; (2) a 26,700-foot-long Cobb Energy Management Reference Room in Washington, DC. penstock; (3) a powerhouse with an Corporation, Cooperative Energy Inc., There is an ‘‘eSubscription’’ link on the installed capacity of 750 kilowatts; (4) a Power4Georgians LLC, Dwight T. Web site that enables subscribers to 6.7-mile-long, 12.5-kv transmission line; Brown, W.T. Nelson III; Notice of receive e-mail notification when a and (5) appurtenant facilities. The Complaint document is added to a subscribed applicant estimates that the total docket(s). For assistance with any FERC average annual generation would be Take notice that on April 26, 2011, Online service, please e-mail 2,200 megawatt hours. Cobb Customer Requesters (CCR or [email protected], or call o. A copy of the application is Complainant) filed a complaint against (866) 208–3676 (toll free). For TTY, call available for review at the Commission Cobb Electric Membership Corporation (202) 502–8659.

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Comment Date: 5 p.m. Eastern Time of the protest or intervention to the DEPARTMENT OF ENERGY on May 16, 2011. Federal Energy Regulatory Commission, Federal Energy Regulatory Dated: May 5, 2011. 888 First Street, NE., Washington, DC Commission Kimberly D. Bose, 20426. Secretary. This filing is accessible on-line at [Docket No. CP11–31–000] [FR Doc. 2011–11536 Filed 5–10–11; 8:45 am] http://www.ferc.gov, using the ‘‘eLibrary’’ link and is available for Transcontinental Gas Pipe Line BILLING CODE 6717–01–P Company, LLC; Notice of Availability review in the Commission’s Public of the Environmental Assessment for Reference Room in Washington, DC. the Proposed Mid-Atlantic Connector DEPARTMENT OF ENERGY There is an ‘‘eSubscription’’ link on the Expansion Project Web site that enables subscribers to Federal Energy Regulatory receive e-mail notification when a The staff of the Federal Energy Commission document is added to a subscribed Regulatory Commission (FERC or [Docket No. PR11–107–000] docket(s). For assistance with any FERC Commission) has prepared an Online service, please e-mail environmental assessment (EA) for the BG Energy Merchants, LLC, EXCO [email protected], or call Mid-Atlantic Connector Expansion Operating Company, LP, v. Crosstex (866) 208–3676 (toll free). For TTY, call Project (MAC Expansion Project) LIG, LLC, Notice of Complaint (202) 502–8659. proposed by Transcontinental Gas Pipe Line Company, LLC (Transco) in the Take notice that on May 3, 2011, Comment Date: 5 p.m. Eastern Time above-referenced docket. Transco pursuant to Rules 206 and 212 of the on May 23, 2011. requests authorization to abandon, Rules of Practice and Procedure of the Dated: May 4, 2011. construct, and operate certain natural Federal Energy Regulatory Commission gas pipeline facilities on its existing (Commission), 18 CFR 385.206 and Kimberly D. Bose, mainline system in Prince William, 385.212 (2010) and the Commission’s Secretary. Fairfax, Fluvanna, and Pittsylvania regulations of rates and charges for [FR Doc. 2011–11500 Filed 5–10–11; 8:45 am] Counties, Virginia. The purpose of the transportation services under section BILLING CODE 6717–01–P MAC Expansion Project is to increase 311 of the Natural Gas Policy Act of capacity by 142,000 dekatherms per day 1978 (NGPA), 18 CFR 284.123 (2010), from Transco’s Cascade Creek BG Energy Merchants, LLC and EXCO DEPARTMENT OF ENERGY Interconnect in Rockingham County, Operating Company, LP (Complainants) North Carolina, to delivery points in filed a formal complaint against Federal Energy Regulatory Commission Virginia and Maryland. Crosstex LIG, LLC (Respondent), The EA assesses the potential alleging that Crosstex LIG, LLC assessed environmental effects of the a fuel rate in violation of a stated Notice of Effectiveness of Exempt Wholesale Generator Status construction and operation of the MAC contract rate resulting in unfair and Expansion Project in accordance with inequitable charges. Docket Nos. the requirements of the National Complainants state that copies of the Environmental Policy Act of 1969 complaint were served upon the Settlers Trail Wind Farm, (NEPA). The FERC staff concludes that Respondent’s representatives as noted approval of the proposed project, with on the certificate of service and upon LLC ...... EG11–52–000. Avenal Park LLC ...... EG11–53–000. appropriate mitigating measures, would the Commissioner of Conservation of Sand Drag LLC ...... EG11–54–000. not constitute a major Federal action the State of Louisiana as an affected Sun City Project LLC ...... EG11–55–000. significantly affecting the quality of the regulatory agency. Coyote Canyon Energy LLC EG11–56–000. human environment. Any person desiring to intervene or to Rinehart Solar Farm LLC ..... EG11–57–000. The National Park Service (NPS) protest this filing must file in Sorrento Solar Farm LLC ..... EG11–58–000. participated as a cooperating agency in accordance with Rules 211 and 214 of Alta Wind VI, LLC ...... EG11–59–000. the preparation of the EA. Cooperating the Commission’s Rules of Practice and Alta Wind VIII, LLC ...... EG11–60–000. agencies have jurisdiction by law or Procedure (18 CFR 385.211, 385.214). special expertise with respect to Protests will be considered by the resources potentially affected by the Commission in determining the Take notice that during the month of April 2011, the status of the above- proposal and participate in the NEPA appropriate action to be taken, but will analysis. The NPS will adopt and use not serve to make protestants parties to captioned entities as Exempt Wholesale Generators became effective by the EA to consider the issuance of a the proceeding. Any person wishing to right-of-way grant for the portion of the operation of the Commission’s become a party must file a notice of MAC Expansion Project on Federal regulations. 18 CFR 366.7(a). intervention or motion to intervene, as lands. appropriate. The Respondent’s answer Dated: May 5, 2011. Transco’s proposed MAC Expansion and all interventions, or protests must Kimberly D. Bose, Project includes the following facilities: be filed on or before the comment date. • Secretary. Installation of about 2.8 miles of The Respondent’s answer, motions to new 42-inch-diameter pipeline looping 1 [FR Doc. 2011–11535 Filed 5–10–11; 8:45 am] intervene, and protests must be served and replacement in Prince William and on the Complainants. BILLING CODE 6717–01–P Fairfax Counties; The Commission encourages • Modifications at Transco’s existing electronic submission of protests and Compressor Stations 165 and 175 in interventions in lieu of paper using the Pittsylvania and Fluvanna Counties; ‘‘eFiling’’ link at http://www.ferc.gov. Persons unable to file electronically 1 A pipeline loop is constructed parallel to an should submit an original and 14 copies existing pipeline to increase capacity.

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• Installation and relocation of project is considered a ‘‘Comment on a DEPARTMENT OF ENERGY various appurtenant underground and Filing’’; or aboveground facilities; and (3) You may file a paper copy of your Federal Energy Regulatory • Abandonment of certain facilities. comments at the following address: Commission The EA has been placed in the public Kimberly D. Bose, Secretary, Federal [Docket No. PR11–81–001] files of the FERC and is available for Energy Regulatory Commission, 888 public viewing on the FERC’s Web site First Street NE., Room 1A, Washington, The East Ohio Gas Company; Notice of at http://www.ferc.gov using the DC 20426. Filing eLibrary link. A limited number of Although your comments will be copies of the EA are available for considered by the Commission, simply Take notice that on May 4, 2011, The distribution and public inspection at: filing comments will not serve to make East Ohio Gas Company (East Ohio) Federal Energy Regulatory Commission, the commenter a party to the filed a supplemental filing to clarify Public Reference Room, 888 First Street proceeding. Any person seeking to certain aspects of its Operating NE., Room 2A, Washington, DC 20426, become a party to the proceeding must Statement filed on January 12, 2011, as (202) 502–8371. file a motion to intervene pursuant to more fully detailed in the petition. Copies of the EA have been mailed to Rule 214 of the Commission’s Rules of Any person desiring to participate in Federal, state, and local government Practice and Procedures (18 CFR this rate filing must file in accordance representatives and agencies; elected 385.214).2 Only intervenors have the with Rules 211 and 214 of the officials; environmental and public right to seek rehearing of the Commission’s Rules of Practice and interest groups; Native American Tribes; Commission’s decision. Procedure (18 CFR 385.211 and other interested individuals and groups; Affected landowners and parties with 385.214). Protests will be considered by newspapers and libraries in the project environmental concerns may be granted the Commission in determining the area; and parties to this proceeding. intervenor status upon showing good appropriate action to be taken, but will Any person wishing to comment on cause by stating that they have a clear not serve to make protestants parties to the EA may do so. Your comments and direct interest in this proceeding the proceeding. Any person wishing to should focus on the potential which would not be adequately become a party must file a notice of environmental effects, reasonable represented by any other parties. You do intervention or motion to intervene, as alternatives, and measures to avoid or not need intervenor status to have your appropriate. Such notices, motions, or lessen environmental impacts. The more protests must be filed on or before the specific your comments, the more useful comments considered. Additional information about the date as indicated below. Anyone filing they will be. To ensure that your an intervention or protest must serve a comments are properly recorded and project is available from the Commission’s Office of External Affairs, copy of that document on the Applicant. considered prior to a Commission Anyone filing an intervention or protest decision on the proposal, it is important at (866) 208–FERC or on the FERC Web site (http://www.ferc.gov) using the on or before the intervention or protest that the FERC receives your comments date need not serve motions to intervene in Washington, DC on or before June 3, eLibrary link. Click on the eLibrary link, click on ‘‘General Search’’ and enter the or protests on persons other than the 2011. Applicant. For your convenience, there are three docket number excluding the last three digits in the Docket Number field (i.e., The Commission encourages methods you can use to submit your electronic submission of protests and comments to the Commission. In all CP11–31). Be sure you have selected an appropriate date range. For assistance, interventions in lieu of paper using the instances, please reference the project ‘‘ ’’ please contact FERC Online Support at eFiling link at http://www.ferc.gov. docket number (CP11–31–000) with Persons unable to file electronically your submission. The Commission [email protected] or toll free at (866) 208–3676, or for TTY, contact should submit an original and 7 copies encourages electronic filing of of the protest or intervention to the comments and has dedicated eFiling (202) 502–8659. The eLibrary link also provides access to the texts of formal Federal Energy Regulatory Commission, expert staff available to assist you at 888 First Street, NE., Washington, DC (202) 502–8258 or [email protected]. documents issued by the Commission, such as orders, notices, and 20426. (1) You may file your comments This filing is accessible on-line at rulemakings. electronically by using the eComment http://www.ferc.gov, using the In addition, the Commission offers a feature, which is located on the ‘‘eLibrary’’ link and is available for free service called eSubscription which Commission’s Web site at http:// review in the Commission’s Public allows you to keep track of all formal www.ferc.gov under the link to Reference Room in Washington, DC. issuances and submittals in specific Documents and Filings. An eComment There is an ‘‘eSubscription’’ link on the dockets. This can reduce the amount of is an easy method for interested persons Web site that enables subscribers to time you spend researching proceedings to submit brief, text-only comments on receive e-mail notification when a by automatically providing you with a project; document is added to a subscribed notification of these filings, document (2) You may file your comments docket(s). For assistance with any FERC summaries, and direct links to the electronically by using the eFiling Online service, please e-mail documents. Go to http://www.ferc.gov/ feature, which is located on the [email protected], or call esubscribenow.htm. Commission’s Web site at http:// (866) 208–3676 (toll free). For TTY, call www.ferc.gov under the link to Dated: May 4, 2011, (202) 502–8659. Documents and Filings. With eFiling, Kimberly D. Bose, Comment Date: 5 p.m. Eastern Time you can provide comments in a variety Secretary. on Friday, May 13, 2011. of formats by attaching them as a file [FR Doc. 2011–11497 Filed 5–10–11; 8:45 am] with your submission. New eFiling Dated: May 5, 2011. users must first create an account by BILLING CODE 6717–01–P Kimberly D. Bose, ‘‘ ’’ Secretary. clicking on eRegister. You will be 2 Interventions may also be filed electronically via asked to select the type of filing you are the Internet in lieu of paper. See the previous [FR Doc. 2011–11538 Filed 5–10–11; 8:45 am] making. A comment on a particular discussion on filing comments electronically. BILLING CODE 6717–01–P

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DEPARTMENT OF ENERGY 888 First Street, NE., Washington, DC decisional record of the proceeding. 20426. Unless the Commission determines that Federal Energy Regulatory This filing is accessible on-line at the prohibited communication and any Commission http://www.ferc.gov, using the responses thereto should become a part ‘‘ ’’ [Docket No. PR11–106–000] eLibrary link and is available for of the decisional record, the prohibited review in the Commission’s Public off-the-record communication will not DCP Guadalupe Pipeline, LLC; Notice Reference Room in Washington, DC. be considered by the Commission in of Petition for Rate Approval There is an ‘‘eSubscription’’ link on the reaching its decision. Parties to a Web site that enables subscribers to proceeding may seek the opportunity to Take notice that on May 3, 2011, DCP receive e-mail notification when a respond to any facts or contentions Guadalupe Pipeline, LLC (‘‘Guadalupe’’) document is added to a subscribed made in a prohibited off-the-record filed, pursuant to section 284.123(b)(2) docket(s). For assistance with any FERC communication, and may request that of the Commission’s regulations, a Online service, please e-mail the Commission place the prohibited petition for rate approval requesting that [email protected], or call communication and responses thereto the Commission approve as fair and (866) 208–3676 (toll free). For TTY, call equitable a rate of $0.1911 per MMBtu in the decisional record. The (202) 502–8659. Commission will grant such a request and a 1.87 percent fuel charge for firm Comment Date: 5 p.m. Eastern Time only when it determines that fairness so and interruptible transportation and on Monday, May 16, 2011. requires. Any person identified below as parking and lending services. All of Dated: May 5, 2011. these services will be performed under having made a prohibited off-the-record Kimberly D. Bose, section 311(a)(2) of the Natural Gas communication shall serve the Policy Act of 1978 (‘‘NGPA’’). Secretary. document on all parties listed on the Any person desiring to participate in [FR Doc. 2011–11534 Filed 5–10–11; 8:45 am] official service list for the applicable this rate filing must file in accordance BILLING CODE 6717–01–P proceeding in accordance with Rule with Rules 211 and 214 of the 2010, 18 CFR 385.2010. Commission’s Rules of Practice and Exempt off-the-record DEPARTMENT OF ENERGY Procedure (18 CFR 385.211 and communications are included in the 385.214). Protests will be considered by Federal Energy Regulatory decisional record of the proceeding, the Commission in determining the Commission unless the communication was with a appropriate action to be taken, but will cooperating agency as described by 40 not serve to make protestants parties to [Docket No. RM98–1–000] CFR 1501.6, made under 18 CFR the proceeding. Any person wishing to 385.2201(e) (1) (v). become a party must file a notice of Records Governing Off-the-Record Communications; Public Notice The following is a list of off-the- intervention or motion to intervene, as record communications recently appropriate. Such notices, motions, or This constitutes notice, in accordance received by the Secretary of the protests must be filed on or before the with 18 CFR 385.2201(b), of the receipt Commission. The communications date as indicated below. Anyone filing of prohibited and exempt off-the-record listed are grouped by docket numbers in an intervention or protest must serve a communications. ascending order. These filings are copy of that document on the Applicant. Order No. 607 (64 FR 51222, available for review at the Commission Anyone filing an intervention or protest September 22, 1999) requires in the Public Reference Room or may be on or before the intervention or protest Commission decisional employees, who viewed on the Commission’s Web site at date need not serve motions to intervene make or receive a prohibited or exempt http://www.ferc.gov using the eLibrary or protests on persons other than the off-the-record communication relevant link. Enter the docket number, Applicant. to the merits of a contested proceeding, excluding the last three digits, in the The Commission encourages to deliver to the Secretary of the electronic submission of protests and Commission, a copy of the docket number field to access the interventions in lieu of paper using the communication, if written, or a document. For assistance, please contact ‘‘eFiling’’ link at http://www.ferc.gov. summary of the substance of any oral FERC, Online Support at Persons unable to file electronically communication. [email protected] or toll should submit an original and 7 copies Prohibited communications are free at (866)208–3676, or for TTY, of the protest or intervention to the included in a public, non-decisional file contact (202)502–8659. Federal Energy Regulatory Commission, associated with, but not a part of, the Exempt:

Docket No. File date Presenter or requester

1. CP11–56–000 ...... 4–19–11 Hon. Scott M. Stringer. 2. ER11–2224–000 ...... 4–19–11 Hon. William Colton. 3. ER11–2224–000 ...... 4–19–11 Hon. Kirsten Gillibrand. 4. Project No. 12611–005 ...... 4–28–11 Mary Ann Adonizio.1 5. Project No. 12737–002 ...... 4–28–11 Tylan Dean.2 6. Project No. 12737–002 ...... 4–28–11 William Hester.3 7. Project No. 12737–002 ...... 4–28–11 James B. Price.4 1 Record of e-mail correspondence. 2 Record of e-mail correspondence. 3 Record of e-mail correspondence. 4 Record of telephone call to Commission staff.

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Dated: May 4, 2011. consider this feedback as it develops (4) ‘‘Recent Happenings’’ and ‘‘Recent Kimberly D. Bose, additional policies and procedures to Additions’’ sections and related ‘‘really Secretary. support Council, CASAC, and SAB simple syndication’’ (RSS) feeds that [FR Doc. 2011–11496 Filed 5–10–11; 8:45 am] advisory activities. highlight opportunities for public input, Established by statute, the Council (42 BILLING CODE 6717–01–P most recent draft and final reports, and U.S.C 7612), the CASAC (42 U.S.C. recent Agency responses; (5) a search 7409), and the SAB (42 U.S.C. 4365) are function that identifies Council, EPA’s chartered Federal Advisory CASAC, and SAB final reports, draft ENVIRONMENTAL PROTECTION Committees that provide independent reports, advisory activities, Federal AGENCY scientific and technical peer review, Register notices, meetings, committees [FRL–9304–5] consultation, advice and and panels, and special-purpose Web recommendations directly to the EPA pages; and (6) electronic nomination of EPA Science Advisory Board Staff Administrator on the scientific bases for experts for committees and panels. The Invitation to a Session on Public EPA’s actions and programs. Members SAB Staff Office is seeking public Involvement in EPA Advisory Activities of the SAB, CASAC, and the Council are comment on strengthening the clarity, Supported by the SAB Staff Office appointed by the EPA Administrator. As navigability, and usefulness of the Web Federal Advisory Committees, the sites. AGENCY: Environmental Protection Council, CASAC, and SAB conduct Agency (EPA). business in accordance with the Federal Public Involvement in Nomination of ACTION: Notice. Advisory Committee Act (FACA) (5 Experts for Committees and Panels U.S.C. App. 2) and related regulations. The EPA Administrator appoints SUMMARY: The EPA Science Advisory Generally, Council, CASAC and SAB members to the Council, CASAC, the Board (SAB) Staff Office announces a meetings are announced in the Federal chartered SAB and SAB Standing public session on public involvement in Register, conducted in public view, and Committees. Members of advisory activities related to the Advisory provide opportunities for public input committees and panels are non-EPA Council on Clean Air Compliance during deliberations. Additional scientists, engineers, and economists Analysis (the Council), Clean Air information about these Federal and other social scientists who are Scientific Advisory Committee Advisory Committees may be found at recognized experts in their respective (CASAC), and the SAB. http://www.epa.gov/advisorycouncilcaa, fields. They may come from academia, DATES: The public session will be held http://www.epa.gov/casac and http:// industry, state, and tribal governments, on Wednesday, June 1, 2011 from 1 p.m. www.epa.gov/sab, respectively. research institutes and non- to 5 p.m. (Eastern Daylight Time). The SAB Staff Office is holding a governmental organizations throughout ADDRESSES: The session will be held at public session to receive public input the United States. EPA chooses them for Potomac Yard Conference Center, One and feedback in four areas: (1) The their demonstrated ability to examine Potomac Yard, 2777 S. Crystal Dr., public access Web sites supporting the and analyze environmental issues with Arlington, Fourth Floor Conference Council, CASAC and SAB; (2) public objectivity and integrity and for their Center South (S–4370–80). involvement in nomination of experts interpersonal, oral and written for committees and panels; (3) public communication, and consensus- FOR FURTHER INFORMATION CONTACT: involvement in meeting and report building skills. Members of the public who wish to development; and (4) other topics of The SAB Staff annually requests attend must register by contacting Dr. interest to the public. nominations from the public for Angela Nugent, Designated Federal membership on the chartered SAB and Officer (DFO), EPA Science Advisory Public Access Web Sites Supporting the SAB Standing Committees. The latest Board (1400R), U.S. Environmental Council, CASAC and SAB request was published in the Federal Protection Agency, 1200 Pennsylvania Three inter-related public access Web Register on April 15, 2011 (76 FR Avenue, NW., Washington, DC 20460; sites (http://www.epa.gov/ 21349–21350). Members of the public via telephone/voice mail (202) 564– advisorycouncilcaa, http:// may nominate experts as part of this 2218, fax (202) 565–2098; or e-mail at www.epa.gov/casac and http:// annual process through the ‘‘Nomination [email protected], by May 27, www.epa.gov/sab) have been developed of experts’’ link on the blue navigation 2011. Persons unable to attend the to communicate current information bar at http://www.epa.gov/sab. public session may send written about the membership, activities, and The SAB Staff Office also forms ad comments to Dr. Angela Nugent by May reports of the Council, CASAC and SAB hoc subcommittees and panels under 27, 2011. and to facilitate public involvement in the auspices of the Council, CASAC, SUPPLEMENTARY INFORMATION: advisory activities. and SAB on environmental science Background: The SAB Staff Office The Web sites were designed with the topics. As additional expertise is provides management and technical following features: (1) Integration of all needed, the SAB Staff Office requests support to the Council, CASAC, and the information relevant to a specific for nominations are published in the SAB and their committees and panels. advisory activity on a single page (e.g. Federal Register and posted on the The SAB Staff also provides information key information related to Agency public access Web sites. Members of the to the public about committee activities requests for advice, advisory committee public may nominate experts for ad hoc and how the public can provide input or panel membership, Federal Register sub committees and panels, again into the science advice process. As part Notices, related meetings, draft and final through the ‘‘Nomination of experts’’ of its effort to continuously strengthen reports, Agency responses to advice); (2) link on the blue navigation bar at policies and procedures for informing integration of all information relevant http://www.epa.gov/sab and may the public and involving them in for a specific meeting on a single page comment on candidates being advisory processes, the SAB Staff Office (e.g. Federal Register Notices, meeting considered for ad hoc committees and is holding a public session to receive agendas, materials, and minutes); (3) a panels. public input and feedback on current calendar of meetings that can be To describe these processes, the SAB processes. The SAB Staff Office will organized by day, week, month, or year; Staff has developed: (1) A general

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overview of the panel formation process Council committees work and how the the EPA Science Advisory Board [Overview of the Panel Formation public can participate through the steps (1400R), U.S. Environmental Protection Process at the Environmental Protection outlined above (A Report of the Science Agency, 1200 Pennsylvania Avenue, Agency Science Advisory Board, Advisory Board Staff Office; Advisory NW., Washington, DC 20460; or by September 2002 (EPA–SAB–EC–02– Committee Meetings and Report telephone/voice mail at (202) 564–2067; 010), on the Web at http:// Development: Process for Public fax at (202) 565–2098; or e-mail at yosemite.epa.gov/sab/sabproduct.nsf/ Involvement, EPA–SABSO–04–001, [email protected]. General WebFiles/OverviewPanelForm/$File/ available on the Web at http:// information concerning the Council can ec02010.pdf)]; and (2) ‘‘Frequently yosemite.epa.gov/sab/ be found at the EPA Council Web site Asked Questions about SAB, CASAC, SABPRODUCT.NSF/WEBSABSO/ at http://www.epa.gov/ and Council Membership and participatemeetingsreports? advisorycouncilcaa. Any inquiry Establishment of Ad Hoc Panels and OpenDocument). regarding EPA’s Draft Report to Committees’’ (on the Web at http:// The SAB Staff Office is seeking public Congress on Black Carbon should be yosemite.epa.gov/sab/sabproduct.nsf/ comment on ways to strengthen public directed to Erika Sasser, EPA Office of WebSABSO/QsandAsRefMembership? access to information about and public Air Quality Planning and Standards OpenDocument). involvement in advisory meetings and (OAQPS), at [email protected] or The SAB Staff Office is seeking public report development. (919) 541–3889. comment on the current process Availability of Meeting Materials: A regarding public nomination of experts. meeting agenda and other materials for SUPPLEMENTARY INFORMATION: Public Involvement in Meeting and the meeting will be placed on the SAB Background: The Advisory Council Report Development Web site at http://epa.gov/sab. on Clean Air Compliance Analysis Accessibility: For information on (Council) was established pursuant to FACA and General Services access or services for individuals with Section 812 of the Clean Air Act (CAA) Administration regulations mandate disabilities, please contact Dr. Nugent at Amendments of 1990 (codified as 42 public involvement in committee the phone number or e-mail address U.S.C. 7612) to provide independent activities primarily by open access to noted above, preferably at least ten days advice to the Administrator on technical meetings and records and by providing prior to the meeting, to give EPA as and economic aspects of analyses and the public opportunity to submit much time as possible to process your reports EPA prepares on the impacts of comments to the advisory committee or request. the CAA on the public health, economy, panel. Public comment for and environment of the United States. consideration by EPA’s Federal advisory Dated: May 4, 2011. Anthony F. Maciorowski, The Council is a Federal Advisory committees and panels has a different Committee chartered under the Federal purpose from public comment provided Deputy Director, EPA Science Advisory Board Staff Office. Advisory Committee Act (FACA), 5 to EPA program offices. Therefore, the U.S.C., App. 2. Pursuant to FACA and process for submitting comments to a [FR Doc. 2011–11560 Filed 5–10–11; 8:45 am] EPA policy, notice is hereby given that Federal advisory committee is different BILLING CODE 6560–50–P the Council augmented with additional from the process used to submit experts (hereafter referred to as the comments to an EPA program office. Black Carbon Review Panel) will hold a Members of the public can submit ENVIRONMENTAL PROTECTION public teleconference to discuss a draft comments for a Federal advisory AGENCY advisory report, Review of EPA’s Draft committee to consider as it develops [FRL–9304–6] Report to Congress on Black Carbon. advice for EPA. Public comments are The Panel will comply with the sent to the Designated Federal Officer. Science Advisory Board Staff Office provisions of FACA and all appropriate The contact information for the Notification of a Public Teleconference SAB Staff Office procedural policies. Designated Federal Officer is identified of the Advisory Council on Clean Air in the Federal Register notice for Compliance Analysis Augmented for The October 2009 Interior committee meetings and is made Review of the Report to Congress on Appropriations bill (Pub. L. 111–88) publicly available on the public access Black Carbon requires the EPA, in consultation with Web site. other Federal agencies, to prepare a To participate in advisory activities of AGENCY: Environmental Protection comprehensive report to Congress on the SAB, CASAC, and Council, Agency (EPA). the climate and public health effects of members of the public can: (1) Contact ACTION: Notice. black carbon and the potential utility the appropriate Designated Federal and cost-effectiveness of mitigation SUMMARY: Officer (DFO) or the SAB Staff Office to The Environmental Protection options. EPA’s Office of Air Quality obtain information on or provide Agency (EPA or Agency) Science Planning and Standards (OAQPS) comments about committee activities; Advisory Board (SAB) Staff Office requested that the Council review the (2) attend and observe public meetings announces a public teleconference of draft Report to Congress on Black and teleconferences; (3) review the Black Carbon Review Panel. Carbon to evaluate the report’s scientific materials used by committee members DATES: The meeting will be held on June rigor, completeness, and technical in their deliberations; (4) provide 27, 2011, from 12 p.m. to 4 p.m. Eastern accuracy. To conduct this review, the written comments for consideration by Time. Council was augmented with additional committee member; (5) present oral ADDRESSES: The public teleconference experts in climate modeling and black statements for consideration by will be conducted by telephone only. carbon emissions, impacts, and control committee members at public meetings FOR FURTHER INFORMATION CONTACT: strategies. The Council’s Black Carbon during time periods set aside for that Members of the public who wish to Review Panel met on April 18–19, 2011 purpose; and (6) review minutes of obtain further information regarding this (76 FR 17123–17124, March 28, 2011), committee meeting and deliberations. meeting must contact Ms. Stephanie to review the draft Report to Congress. The SAB Staff has developed a Sanzone, Designated Federal Officer The purpose of the June 27, 2011, description of how SAB, CASAC, and (DFO). Ms. Sanzone may be contacted at teleconference is to discuss the

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Council’s draft report, Review of EPA’s included in any written comments, may each contact person by mail at Pesticide Report to Congress on Black Carbon. be posted to the SAB Web site. Re-evaluation Division, (7508P) Office Availability of Meeting Materials: The Copyrighted material will not be posted of Pesticide Programs, Environmental agenda, the draft Council report, and without explicit permission of the Protection Agency, 1200 Pennsylvania other meeting materials will be available copyright holder. Ave., NW., Washington, DC 20460– on the Council Web site at http:// Accessibility: For information on 0001. For pesticide-specific information yosemite.epa.gov/sab/sabproduct.nsf/ access or services for individuals with contact: The Chemical Review Manager fedrgstr_activites/BC%20Report%20to disabilities, please contact Ms. identified in the table below for the %20Congress?OpenDocument in Stephanie Sanzone at the phone number pesticide of interest. advance of the meeting. or e-mail address noted above, Procedures for Providing Public Input: preferably at least ten days prior to the Chemical Review Manager, tele- Active ingredient phone number, e-mail address Public comment for consideration by meeting, to give EPA as much time as EPA’s Federal advisory committees and possible to process your request. Chloropicrin ...... Andrea Mojica, (703) 308–0122, panels has a different purpose from [email protected]. Dated: May 5, 2011. Diquat dibromide Eric Miederhoff, (703) 347–8028, public comment provided to EPA Anthony F. Maciorowski, [email protected]. program offices. Therefore, the process Deputy Director, EPA Science Advisory Board Ziram ...... Kelly Ballard, (703) 305–8126, for submitting comments to a Federal Staff Office. [email protected]. advisory committee is different from the [FR Doc. 2011–11561 Filed 5–10–11; 8:45 am] process used to submit comments to an BILLING CODE 6560–50–P SUPPLEMENTARY INFORMATION: EPA program office. Federal advisory committees and I. General Information panels, including scientific advisory ENVIRONMENTAL PROTECTION A. Does this action apply to me? committees, provide independent AGENCY advice to EPA. Members of the public This action is directed to the public can submit comments for a Federal [EPA–HQ–OPP–2010–0887; FRL–8871–2] in general, and may be of interest to a advisory committee to consider as it wide range of stakeholders including Ziram, Diquat Dibromide, and develops advice for EPA. Input from the environmental, human health, and Chloropicrin; Order for Amendments public to the Council will have the most agricultural advocates; the chemical To Terminate Uses impact if it provides specific scientific industry; pesticide users; and members or technical information or analysis for AGENCY: Environmental Protection of the public interested in the sale, Council panels to consider or if it relates Agency (EPA). distribution, or use of pesticides. Since to the clarity or accuracy of the ACTION: Notice. others also may be interested, the technical information. Members of the Agency has not attempted to describe all public wishing to provide comment SUMMARY: This notice announces EPA’s the specific entities that may be affected should contact the Designated Federal order for the amendments to terminate by this action. If you have any questions Officer for the relevant advisory uses, voluntarily requested by the regarding the applicability of this action committee directly. Oral Statements: In registrants and accepted by the Agency, to a particular entity, consult one of the general, individuals or groups of products containing ziram, diquat persons listed under FOR FURTHER requesting an oral presentation at this dibromide, and chloropicrin, pursuant INFORMATION CONTACT. public meeting will be limited to three to section 6(f)(1) of the Federal Insecticide, Fungicide, and Rodenticide B. How can I get copies of this document minutes per speaker. Interested parties and other related information? should contact Ms. Stephanie Sanzone, Act (FIFRA), as amended. This DFO, in writing (preferably via e-mail) cancellation order follows a December EPA has established a docket for this at the contact information noted above 1, 2010 Federal Register Notice of action under docket identification (ID) by June 20, 2011, to be placed on the list Receipt of Requests from the registrants number EPA–HQ–OPP–2010–0887. of public speakers for the meeting. listed in Table 2 of Unit II. to Publicly available docket materials are Written Statements: Written statements voluntarily amend to terminate uses of available either in the electronic docket should be received in the SAB Staff all these product registrations. These are at http://www.regulations.gov, or, if only Office by June 20, 2011, so that the not the last products containing these available in hard copy, at the Office of information can be made available to pesticides registered for use in the Pesticide Programs (OPP) Regulatory the Panel for their consideration. United States. In the December 1, 2010 Public Docket in Rm. S–4400, One Written statements should be supplied notice, EPA indicated that it would Potomac Yard (South Bldg.), 2777 S. to the DFO in electronic format via e- issue an order implementing the Crystal Dr., Arlington, VA. The hours of mail (acceptable file formats: Adobe amendments to terminate uses, unless operation of this Docket Facility are Acrobat PDF, WordPerfect, MS Word, the Agency received substantive from 8:30 a.m. to 4 p.m., Monday MS PowerPoint, or Rich Text files in comments within the 30-day comment through Friday, excluding legal IBM–PC/Windows 98/2000/XP format). period that would merit its further holidays. The Docket Facility telephone It is the SAB Staff Office general policy review of these requests, or unless the number is (703) 305–5805. registrants withdrew their requests. The to post written comments on the Web II. What Action is the Agency taking? page for the advisory meeting or Agency did not receive any comments teleconference. Submitters are requested on the notice. This notice announces the to provide an unsigned version of each DATES: The amendments are effective amendments to delete uses, as requested document because the SAB Staff Office May 11, 2011. by registrants, of products registered does not publish documents with FOR FURTHER INFORMATION CONTACT: A under section 3 of FIFRA. These signatures on its Web sites. Members of contact person, with telephone number registrations are listed in sequence by the public should be aware that their and e-mail address, is listed in the registration number in Table 1 of this personal contact information, if following table. You may also reach unit.

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TABLE 1—ZIRAM, DIQUAT DIBROMIDE, AND CHLOROPICRIN PRODUCT REGISTRATION AMENDMENTS TO DELETE USES

EPA Registration Product name Chemical Uses to be deleted No.

228–675 ...... Nufarm Diquat SPC 2 L Her- Diquat Dibromide ...... Sorghum and soybean. bicide. 2749–530 ...... Diquat Dibromide 37.3% SL Diquat Dibromide ...... Sorghum and soybean (seed crop only). AG. 2749–531 ...... Diquat Manufacturing Con- Diquat Dibromide ...... Sorghum and soybean (seed crop only). centrate. 5785–17 ...... Chlor-O–Pic ...... Chloropicrin ...... Mushroom casing soil, potting soil, and small area seed beds using handheld fumigation devices. 8536–2 ...... Chloropicrin 100 Fumigant ..... Chloropicrin ...... Mushroom casing soil, potting soil, and small area seed beds using handheld fumigation devices. 8622–43 ...... Metapicrin ...... Chloropicrin ...... Mushroom casing soil, potting soil, and small area seed beds using handheld fumigation devices. 8853–4 ...... HD–Pic Fumigant ...... Chloropicrin ...... Mushroom casing soil, potting soil, and small area seed beds using handheld fumigation devices. 8853–6 ...... Pic Plus Fumigant ...... Chloropicrin ...... Mushroom casing soil, potting soil, and small area seed beds using handheld fumigation devices. 45728–12 ...... Ziram Granuflo Fungicide ...... Ziram ...... Blackberries. 58266–2 ...... Tri-Clor Fumigant ...... Chloropicrin ...... Mushroom casing soil, potting soil, and small area seed beds using handheld fumigation devices. 62531–2 ...... ASHTA Gold ...... Chloropicrin ...... Mushroom casing soil, potting soil, and small area seed beds using handheld fumigation devices. 66330–47 ...... TM–442 ...... Chloropicrin ...... Mushroom casing soil, potting soil, and small area seed beds using handheld fumigation devices. 70506–173 ...... Ziram 76DF Fungicide ...... Ziram ...... Blackberries. 82542–15 ...... Solear Diquat 2L Desiccant ... Diquat Dibromide ...... Sorghum and soybean (seed crop only). 82633–2 ...... Sharda Diquat Concentrate .... Diquat Dibromide ...... Sorghum and soybean (seed crop only). 83529–13 ...... Diquash Ag ...... Diquat Dibromide ...... Sorghum and soybean (seed crop only). 83979–2 ...... Rowrunner Ag Herbicide ...... Diquat Dibromide ...... Sorghum and soybean. 85607–1 ...... Reddick PIC C–100...... Chloropicrin ...... Mushroom casing soil, potting soil, and small area seed beds using handheld fumigation devices.

Table 2 of this unit includes the this unit, in sequence by EPA company numbers of the products listed in Table names and addresses of record for all number. This number corresponds to 1. registrants of the products in Table 1 of the first part of the EPA registration

TABLE 2—REGISTRANTS OF AMENDED PRODUCTS

EPA Company Company name and address No.

228 ...... Nufarm Americas, Inc., 150 Harvester Drive, Suite 200, Burr Ridge, IL 60527. 2749 ...... Aceto Agricultural Chemicals Corporation, One Hollow Lane, Lake Success, NY 11042–1215. 5785 ...... Chemtura Corporation, 1801 Highway 52 West, P.O. Box 2200, West Lafayette, IN 47906. 8536 ...... Soil Chemicals Corporation dba Cardinal Professional Products, P.O. Box 782, 8770 Highway 25, Hollister, CA 95024–0782. 8622 ...... ICL–IP America, Inc., 95 MacCorkle Avenue, SW., South Charleston, WV 25303. 8853 ...... Hendrix and Dail, Inc., P.O. Box 648, Greenville, NC 27835–0648. 45728 ...... Taminco, Inc., 21320 Sweet Clover Place, Ashburn, VA 20147. 58266 ...... Shadow Mountain Products Corporation, 8770 Highway 25, P.O. Box 1327, Hollister, CA 95024–1327.

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TABLE 2—REGISTRANTS OF AMENDED PRODUCTS—Continued

EPA Company Company name and address No.

62531 ...... ASHTA Chemicals Inc., 3509 Middle Road, P.O. Box 858, Ashtabula, OH 44005–0858. 66330 ...... Arysta LifeScience North America, LLC, 15401 Weston Parkway, Suite 150, Cary, NC 27513. 70506 ...... United Phosphorus, Inc., 630 Freedom Business Center, Suite 402, King of Prussia, PA 19406. 82542 ...... Source Dynamics, 10039 E. Troon North Drive, Scottsdale, AZ 85262. 82633 ...... Sharda Worldwide Exports Pvt. Ltd., Domnic Holm, 29th Road, Bandra (West) Mumbai-400050. 83979 ...... Rotam North America, Inc., 1400 N.W. 107th Avenue Suite 310, Miami, FL 33172. 85607 ...... Reddick Fumigants of NC, LLC, 3002 W. Main Street, Williamston, NC 27892.

III. Summary of Public Comments in the Federal Register. Thereafter, once EPA has approved product labels Received and Agency Response to following the public comment period, reflecting the requested amendments to Comments the EPA Administrator may approve delete uses, registrants will be permitted During the public comment period such a request. The notice of receipt for to sell or distribute products under the provided, EPA received no comments in this action was published for comment previously approved labeling for a response to the December 1, 2010 on December 1, 2010 (75 FR 74714) period of 12 months after the date of Federal Register notice announcing the (FRL–8854–3). The comment period Federal Register publication of the Agency’s receipt of the requests for closed on January 3, 2011. order terminating certain uses, unless voluntary amendments to delete uses of VI. Provisions for Disposition of other restrictions have been imposed. products listed in Table 1 of Unit II. Existing Stocks Thereafter, registrants will be prohibited IV. Termination Order Existing stocks are those stocks of from selling or distributing the products registered pesticide products which are whose labels include the deleted uses Pursuant to FIFRA section 6(f), EPA identified in Table 1 of Unit II, except hereby approves the requested currently in the United States and for export consistent with FIFRA section amendments to terminate uses of ziram, which were packaged, labeled, and diquat dibromide, and chloropicrin released for shipment prior to the 17 or for proper disposal. registrations identified in Table 1 of effective date of the action. The existing Persons other than the registrant may Unit II. Accordingly, the Agency hereby stocks provision for the products subject sell, distribute, or use existing stocks of orders that the product registrations to this order is as follows. products whose labels include the identified in Table 1 of Unit II are The registrants of the chloropicrin deleted uses until supplies are amended to terminate the affected uses. products listed in Table 1 of Unit II exhausted, provided that such sale, The effective date of the terminations were permitted to sell and distribute distribution, or use is consistent with that are the subject of this notice is May products under the previously approved the terms of the previously approved 11, 2011. Any distribution, sale, or use labeling until December 1, 2010, or a labeling on, or that accompanied, the revised date if product labels with the of existing stocks of the products deleted uses. identified in Table 1 of Unit II in a 2010 changes (i.e., Phase I) had not been manner inconsistent with any of the accepted in all states. The labels were List of Subjects provisions for disposition of existing not accepted in all states until after stocks set forth in Unit VI. will be a December 1, 2010 and so registrants Environmental protection, Pesticides violation of FIFRA. were permitted by EPA to sell and and pests. distribute products under previously V. What is the Agency’s authority for Dated: May 2, 2011. approved labeling until December 31, Richard P. Keigwin, taking this action? 2010. After December 31, 2010, these Section 6(f)(1) of FIFRA provides that registrants are prohibited from selling or Director, Pesticide Re-evaluation Division, Office of Pesticide Programs. a registrant of a pesticide product may distributing the products under at any time request that any of its previously approved labels that include [FR Doc. 2011–11206 Filed 5–10–11; 8:45 am] pesticide registrations be canceled or the deleted uses identified in Table 1 of BILLING CODE 6560–50–P amended to terminate one or more uses. Unit II, except for export consistent with FIFRA further provides that, before FIFRA section 17 or for proper disposal. acting on the request, EPA must publish For the ziram and diquat dibromide a notice of receipt of any such request products listed in Table 1 of Unit II,

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FEDERAL DEPOSIT INSURANCE on claims against directors, officers, and must be received at the Reserve Bank CORPORATION other professionals, claims in indicated or the offices of the Board of bankruptcy, and refunds of Federal and Governors not later than June 6, 2011. Determination of Insufficient Assets To state taxes, was $3,102,153,098. As of A. Federal Reserve Bank of Chicago Satisfy Claims Against Financial the same date, administrative expenses (Colette A. Fried, Assistant Vice Institution in Receivership and depositor liabilities equaled President), 230 South LaSalle Street, AGENCY: Federal Deposit Insurance $4,555,852,340, exceeding available Chicago, Illinois 60690–1414: Corporation (FDIC). assets by $1,453,699,242. Accordingly, the FDIC has determined that 1. North Central Bancshares, Inc., Fort ACTION: Notice. insufficient assets exist to make any Dodge, Iowa; to become a bank holding company following the conversion of its SUMMARY: The FDIC has determined that distribution on general unsecured subsidiary, First Federal Savings Bank insufficient assets exist in the creditor claims (and any lower priority of Iowa, Fort Dodge, Iowa, from a receivership of AmTrust Bank, claims) and therefore all such claims, Federally chartered savings bank to a Cleveland, Ohio, to make any asserted or unasserted, will recover state chartered bank. distribution to general unsecured nothing and have no value. Board of Governors of the Federal Reserve claims, and therefore such claims will Dated: May 5, 2011. System, May 6, 2011. recover nothing and have no value. Robert E. Feldman, Robert deV. Frierson, DATES: The FDIC made its determination Executive Secretary. on April 30, 2011. Deputy Secretary of the Board. [FR Doc. 2011–11415 Filed 5–10–11; 8:45 am] FOR FURTHER INFORMATION CONTACT: If [FR Doc. 2011–11527 Filed 5–10–11; 8:45 am] BILLING CODE 6714–01–P you have questions regarding this BILLING CODE 6210–01–P notice, you may contact an FDIC Claims Agent at (904) 256–3925. Written FEDERAL RESERVE SYSTEM correspondence may also be mailed to FEDERAL TRADE COMMISSION FDIC as Receiver of AmTrust Bank, Formations of, Acquisitions by, and Attention: Claims Agent, 7777 Mergers of Bank Holding Companies Baymeadows Way West, Jacksonville, Granting of Request for Early Florida 32256. The companies listed in this notice Termination of the Waiting Period Under the Premerger Notification SUPPLEMENTARY INFORMATION: On have applied to the Board for approval, Rules December 4, 2009, AmTrust Bank, pursuant to the Bank Holding Company Cleveland, Ohio, (FIN #10155) was Act of 1956 (12 U.S.C. 1841 et seq.) Section 7A of the Clayton Act, 15 closed by the Office of Thrift (BHC Act), Regulation Y (12 CFR part U.S.C. 18a, as added by Title II of the Supervision (‘‘OTS’’), and the Federal 225), and all other applicable statutes Hart-Scott-Rodin Antitrust Deposit Insurance Corporation (‘‘FDIC’’) and regulations to become a bank Improvements Act of 1976, requires was appointed as its receiver holding company and/or to acquire the persons contemplating certain mergers (‘‘Receiver’’). In complying with its assets or the ownership of, control of, or or acquisitions to give the Federal Trade statutory duty to resolve the institution the power to vote shares of a bank or Commission and the Assistant Attorney in the method that is least costly to the bank holding company and all of the General advance notice and to wait deposit insurance fund, see 12 U.S.C. banks and nonbanking companies designated periods before 1823(c)(4), the FDIC facilitated a owned by the bank holding company, transaction with New York Community including the companies listed below. consummation of such plans. Section Bank, Westbury, New York, to acquire The applications listed below, as well 7A(b)(2) of the Act permits the agencies, the deposits and most of the assets of as other related filings required by the in individual cases, to terminate this the failed institution. Board, are available for immediate waiting period prior to its expiration Section 11(d)(11)(A) of the Federal inspection at the Federal Reserve Bank and requires that notice of this action be Deposit Insurance Act, 12 U.S.C. indicated. The application also will be published in the Federal Register. 1821(d)(11)(A), sets forth the order of available for inspection at the offices of The following transactions were priority for distribution of amounts the Board of Governors. Interested granted early termination—on the dates realized from the liquidation or other persons may express their views in indicated—of the waiting period resolution of an insured depository writing on the standards enumerated in provided by law and the premerger institution to pay claims. Under the the BHC Act (12 U.S.C. 1842(c)). If the notification rules. The listing for each statutory order of priority, proposal also involves the acquisition of transaction includes the transaction administrative expenses and deposit a nonbanking company, the review also number and the parties to the liabilities must be paid in full before includes whether the acquisition of the transaction. The grants were made by any distribution may be made to general nonbanking company complies with the the Federal Trade Commission and the unsecured creditors or any lower standards in section 4 of the BHC Act Assistant Attorney General for the priority claims. (12 U.S.C. 1843). Unless otherwise Antitrust Division of the Department of As of December 31, 2010, the value of noted, nonbanking activities will be Justice. Neither agency intends to take assets available for distribution by the conducted throughout the United States. any action with respect to these Receiver, together with anticipated Unless otherwise noted, comments proposed acquisitions during the recovery sources, including recoveries regarding each of these applications applicable waiting period.

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EARLY TERMINATIONS GRANTED [April 1, 2011 thru April 29, 2011]

ET req ET date Trans. No. status Party name

04/01/2011 ...... 20110676 G Epiq Systems, Inc.; Frontenac VIII Limited Partnership; Epiq Sys- tems, Inc. 20110678 G EMC Corporation; NetWitness Corporation; EMC Corporation 20110681 G Sidney B. DeBoer; Gregory S. Rasmussen; Sidney B. DeBoer 20110689 G International Petroleum Investment Company; Compania Espanola de Petroleos, S.A.; International Petroleum Investment Company 20110690 G Mr. Yitshak Sharon (Tshuva); Ergon, Inc.; Mr. Yitshak Sharon (Tshuva) 04/04/2011 ...... 20110703 G Cephalon, Inc.; Gemin X Pharmaceuticals, Inc.; Cephalon, Inc. 04/05/2011 ...... 20110679 G Brazos Equity Fund III, L.P.; TLC Holdings, LLC; Brazos Equity Fund III, L.P. 20110700 G Friedman Fleischer & Lowe Capital Partners III, L.P.; Thoma Cressey Fund VIII, L.P.; Friedman Fleischer & Lowe Capital Partners III, L.P. 04/07/2011 ...... 20110697 G Cowen Group, Inc.; LaBranche & Co. Inc.; Cowen Group, Inc. 04/08/2011 ...... 20110557 G James Ratcliffe; Styrolution; James Ratcliffe 20110558 G BASF SE; Styrolution; BASF SE 20110567 G Kindred Healthcare, Inc.; RehabCare Group, Inc.; Kindred Healthcare, Inc. 20110693 G Berkshire Hathaway Inc.; The Lubrizol Corporation; Berkshire Hathaway Inc. 20110701 G International Business Machines Corporation; The AM3 Irrevocable Trust; International Business Machines Corporation 20110702 G Gores Capital Partners III, L.P.; The Azalea Fund III, L.P.; Gores Capital Partners III, L.P. 20110708 G Wellspring Capital Partners IV, L.P.; Wells Fargo & Company; Wellspring Capital Partners IV, L.P. 20110710 G Charles W. Ergen; DBSD North America, Inc.; Charles W. Ergen. 20110712 G CB Richard Ellis Group, Inc.; ING Groep N.V.; CB Richard Ellis Group, Inc. 20110720 G Dr. Patrick Soon-Shiong, M.D.; Celgene Corporation; Dr. Patrick Soon-Shiong, M.D. 20110722 G Schneider Electric SA; Weston Presidio V, L.P.; Schneider Electric SA. 20110728 G Charles W. Ergen; Blockbuster Inc.—Debtor-in-Possession; Charles W. Ergen. 04/11/2011 ...... 20110718 G Carl C. Icahn; Blockbuster Inc.—Debtor-in-Possession; Carl C. Icahn. 04/13/2011 ...... 20110716 G Align Technology, Inc.; Cadent Holdings, Inc.; Align Technology, Inc. 20110717 G Kirby Corporation; First Reserve Fund XI, L.P.; Kirby Corporation. 20110719 G Carlyle U.S. Growth Fund III, L.P.; Redflex Holdings Limited; Carlyle U.S. Growth Fund III, L.P. 20110723 G Highstar Capital IV Prism, L.P.; LS Power Equity Partners, L.P.; Highstar Capital IV Prism, L.P. 04/14/2011 ...... 20110666 G James River Coal Company; International Resource Partners LP; James River Coal Company. 04/15/2011 ...... 20110724 G London Stock Exchange Group plc; TMX Group Inc.; London Stock Exchange Group plc. 20110725 G PerkinElmer, Inc.; CambridgeSoft Corporation; PerkinElmer, Inc. 20110737 G LLR Equity Partners III, L.P.; Tom Gores; LLR Equity Partners III, L.P. 20110739 G Bernard Arnault; Bulgari S.p.A.; Bernard Arnault. 20110744 G Apax Europe VII–B, L.P.; Epicor Software Corporation; Apax Eu- rope VII–B, L.P.

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EARLY TERMINATIONS GRANTED—Continued [April 1, 2011 thru April 29, 2011]

ET req ET date Trans. No. status Party name

20110745 G Apax Europe VII–B, L.P.; Hellman & Friedman Capital Partners V, L.P.; Apax Europe VII–B, L.P. 04/18/2011 ...... 20110732 G Michael G. Rubin; eBay Inc.; Michael G. Rubin. 20110733 G eBay Inc.; GSI Commerce, Inc.; eBay Inc. 20110734 G AGL Resources Inc.; Nicor Inc.; AGL Resources Inc. 20110743 G Warburg Pincus Private Equity X, L.P.; Rural/Metro Corporation; Warburg Pincus Private Equity X, L.P. 04/19/2011 ...... 20110735 G Chicago Growth Partners II, L.P.; Richard Stamper; Chicago Growth Partners II, L.P. 20110738 G Arlington Capital Partners H, L.P.; Jeffrey D. Smock; Arlington Capital Partners II, L.P. 04/22/2011 ...... 20110682 G Manulife Financial Corporation; Electric Power Development Co., Ltd.; Manulife Financial Corporation. 20110731 G The Charles Schwab Corporation; optionsXpress, Holdings, Inc.; The Charles Schwab Corporation. 20110736 G AMETEK, Inc.; River V. L.P.; AMETEK, Inc. 20110741 G Cephalon, Inc.; ChemGenex Pharmaceuticals Limited; Cephalon, Inc. 20110748 G Genpact Limited; Headstrong Corporation; Genpact Limited. 20110752 G Andrea Pignataro; Warburg Pincus Private Equity IX, L.P.; Andrea Pignataro. 20110753 G Parkway Properties, Inc.; James R. Heistand; Parkway Properties, Inc. 20110756 G SEI, Inc.; Retail Ventures, Inc.; SEI, Inc. 20110757 G Schottenstein RVI, LLC; Retail Ventures, Inc.; Schottenstein RVI, LLC. 20110758 G Terry Taylor; Estate of R.C. Alexander; Terry Taylor. 20110760 G TCV VII, L.P.; K12 Inc.; TCV VII, L.P. 20110761 G Klockner & Co. SE; The Second Dave Samson Trust; Klockner & Co. SE. 20110765 G JSM Acquisition, L.P.; Padres L.P.; JSM Acquisition, L.P. 04/25/2011 ...... 20110751 G Walter Investment Management Corp.; Centerbridge Capital Part- ners AIV II, L.P.; Walter Investment Management Corp. 04/26/2011 ...... 20110278 G Hikma Pharmaceuticals PLC; Baxter International Inc.; Hikma Pharmaceuticals PLC. 04/29/2011 ...... 20110709 G Bronson Healthcare Group, Inc.; Trinity Health Corporation; Bronson Healthcare Group, Inc. 20110770 G Frac Tech International, LLC; World Investment Group, LLC; Frac Tech International, LLC. 20110775 G Investindustrial III, L.P.; Momentive Performance Materials Hold- ings LLC; Investindustrial III, L.P. 20110780 G Jefferies Group, Inc.; Prudential Financial, Inc.; Jefferies Group, Inc. 20110782 G New Mountain Partners III, L.P.; Dr. Romesh Wadhwani; New Mountain Partners III, L.P. 20110783 G KKR 2006 Fund (Overseas), Limited Partnership; Pfizer Inc.; KKR 2006 Fund (Overseas), Limited Partnership. 20110786 G Permira IV Continuing L.P.2; The Lightyear Fund, L.P.; Permira IV Continuing L.P.2.

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FOR FURTHER INFORMATION CONTACT: The Council consists of not more than ACTION: Notice. Sandra M. Peay, Contact Representative; 25 members. Council members are or Renee Chapman, Contact selected from prominent community SUMMARY: This notice announces the Representative, Federal Trade leaders with particular expertise in, or intention of the Agency for Healthcare Commission, Premerger Notification knowledge of, matters concerning HIV Research and Quality (AHRQ) to request Office, Bureau of Competition, Room H– and AIDS, public health, global health, that the Office of Management and 303, Washington, DC 20580, (202) 326– philanthropy, marketing or business, as Budget (OMB) approve the proposed ‘‘ 3100. well as other national leaders held in information collection project: Pre-test of an Assisted Living Consensus By direction of the Commission. high esteem from other sectors of society. Council members are appointed Instrument.’’ In accordance with the Donald S. Clark, by the Secretary or designee, in Paperwork Reduction Act, 44 U.S.C. Secretary. consultation with the White House 3501–3521, AHRQ invites the public to [FR Doc. 2011–11303 Filed 5–10–11; 8:45 am] Office on National AIDS Policy. The comment on this proposed information BILLING CODE 6750–01–M agenda for the upcoming meeting will collection. be posted on the Council’s Web site DATES: Comments on this notice must be http://www.pacha.gov . received by July 11, 2011. DEPARTMENT OF HEALTH AND Public attendance at the meeting is ADDRESSES: Written comments should HUMAN SERVICES limited to space available. Individuals be submitted to: Doris Lefkowitz, must provide a photo ID for entry into Reports Clearance Officer, AHRQ, by e- Meeting of the Presidential Advisory the building. Individuals who plan to mail at [email protected]. Council on HIV/AIDS attend and need special assistance, such Copies of the proposed collection as language interpretation or reasonable plans, data collection instruments, and AGENCY: Office of the Assistant accommodations, should notify the specific details on the estimated burden Secretary for Health, Office of the designated contact person. Pre- can be obtained from the AHRQ Reports Secretary, Department of Health and registration for public attendance is Clearance Officer. Human Services. advisable and can be accomplished by FOR FURTHER INFORMATION CONTACT: ACTION: Notice. contacting the PACHA Committee Doris Lefkowitz, AHRQ Reports Manager. Clearance Officer, (301) 427–1477, or by SUMMARY: As stipulated by the Federal Members of the public will have the e-mail at Advisory Committee Act, the U.S. opportunity to provide comments on [email protected]. Department of Health and Human during the public comment period(s) of SUPPLEMENTARY INFORMATION: Service (DHHS) is hereby giving notice the meeting. Pre-registration is required that the Presidential Advisory Council for public comment. Any individual Proposed Project on HIV/AIDS (PACHA) will hold a who wishes to participate in the public meeting. The meeting will be open to Pre-Test of an Assisted Living comment session must contact: Melvin Consensus Instrument the public. Joppy, Office of HIV/AIDS Policy, DATES: The meeting will be held [email protected], by close of Using a consensus-based process and Thursday, May 26, 2011 and Friday, business Monday, May 23, 2011. Public in partnership with the Center for May 27, 2011. The meeting will be held comment will be limited to three Excellence in Assisted Living (CEAL), from 10 a.m. to approximately 5 p.m. on minutes per speaker. Members of the AHRQ has developed a data collection May 26, 2011 and 9 a.m. to public who wish to have printed tool that will collect uniform approximately 3 p.m. on May 27, 2011. materials distributed to PACHA information about individual assisted living facilities (ALFs) in the United ADDRESSES: Department of Health and members for discussion at the meeting Human Services, Room 705A, Hubert H. are asked to provide, at a minimum, 2 States to increase the value of healthcare Humphrey Building, 200 Independence copies of the materials to the PACHA for consumers by helping them make Avenue, SW., Washington, DC 20201. Committee Manager no later than close informed choices when selecting an of business Tuesday, May 24, 2011. ALF. Included in the development FOR FURTHER INFORMATION CONTACT: Mr. process were a voluntary committee of Melvin Joppy, Committee Manager, Contact information for the PACHA Committee Manager is provided above. national representatives of Assisted Presidential Advisory Council on HIV/ Living Facilities, consumers, and AIDS, Department of Health and Human Dated: May 5, 2011. researchers. Services, 200 Independence Avenue, Christopher H. Bates, Assisted living (AL) is a relatively Room 443H, Hubert H. Humphrey Executive Director, Presidential Advisory on new long-term care option that currently Building, Washington, DC 20201; (202) HIV/AIDS. serves approximately one million older 690–5560. More detailed information [FR Doc. 2011–11542 Filed 5–10–11; 8:45 am] and dependent Americans. Unlike about PACHA can be obtained by BILLING CODE 4150–43–P skilled nursing facilities which are accessing the Council’s Web site at Federally regulated and relatively http://www.pacha.gov . uniform from state to state, ALFs vary SUPPLEMENTARY INFORMATION: PACHA DEPARTMENT OF HEALTH AND from state to state, as well as within was established by Executive Order HUMAN SERVICES each state, reflecting various core values 12963, dated June 14, 1995 as amended that embrace consumer choice and by Executive Order 13009, dated June Agency for Healthcare Research and provider diversity. 14, 1996. The Council was established Quality Most states mandate a set of basic to provide advice, information, and Agency Information Collection services that an ALF must offer, such as recommendations to the Secretary Activities; Proposed Collection; meals and housekeeping. The upper regarding programs and policies to Comment Request limits of allowable services are also promote effective prevention of HIV often prescribed. However, within the disease and AIDS. The functions of the AGENCY: Agency for Healthcare Research range of services required and allowed, Council are solely advisory in nature. and Quality, HHS. ALFs in most states are given some

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latitude as to who they choose to serve making about whether and when an of the Administrator or Executive and what services they choose to individual moves into and out of a Director of the ALF so the mailed pre- provide. Further, the choice of services particular ALF. Approximately ten test survey can be addressed directly to is not always confined by geography; percent of AL residents receive that person; and that is, given the widespread dispersion subsidies through State Medicaid (2) Pre-test of the Assisted Living of families, potential AL residents may Waiver or State Plan programs, and Provider Information Tool for Consumer be looking to choose among assisted fewer than three percent are covered by Education. The data collection will living properties in different states, long-term care insurance. Thus, a include information on several topics of thereby widening the choices available. substantial percentage of AL consumers interest to consumers including services While some ALFs are equipped to use savings and other assets, including available in ALFs and costs of those serve a wide range of resident needs, it proceeds from the sale of their homes, services, criteria for moving into and out is more common that an assisted living to pay for their stay in an ALF. In of an ALF, resident’s rights, house rules, property will address a particular choosing an ALF, consumers need to life safety features, staffing within the ‘‘market niche.’’ There are many ways in consider whether a particular facility is ALF, and the availability of dementia which ALFs offer diversity—in the able to accept Medicaid or other third care services within the ALF. The religious or cultural affiliations of its party payments, both now and in the purpose of the pre-test is to assess the target market; in the house rules that future, should their assets become utility of the data collection tool as well influence expectations about dress and depleted. as the feasibility for its implementation. behavior in the dining room; in the This research has the following goals: The data that will be collected admission and discharge criteria in (1) Refine the data collection tool through this effort will be used to make place; as well as in the range of services through pre-testing with a sample of final refinements to the Assisted Living provided. Major variation is found in ALFs; and Provider Information Tool for Consumer the extent to which a particular ALF is (2) Make the data collection tool Education and to make adjustments to able and willing to serve those with publically available through the AHRQ the recommended processes for dementia. While most ALFs admit and Web site. implementing a similar data collection retain residents with mild cognitive This study is being conducted by effort on a broader basis. impairment, those without a specialized AHRQ through its contractor, Abt Estimated Annual Respondent Burden dementia program may have difficulty Associates Inc., pursuant to AHRQ’s serving residents with common statutory authority to conduct and Exhibit 1 shows the estimated symptoms such as a lack of safety support research on healthcare and on annualized burden for the respondents’ awareness, wandering, sleep systems for the delivery of such care, time to participate in this project. The disturbances and agitation. including activities with respect to the telephone verification will be completed To some extent, admission and quality, effectiveness, efficiency, by 285 AL providers and will take discharge criteria are dictated by the appropriateness and value of healthcare approximately one minute to complete. laws and regulations of the state in services. 42 U.S.C. 299a(a)(1). The pre-test of the Assisted Living which a particular ALF operates. Provider Information Tool for Consumer Beyond this, ALFs have considerable Method of Collection Education will be completed by 191 latitude in assessing individuals whom To achieve the goals of this project the ALFs and will require approximately 25 they will admit and retain in their following data collection will be minutes to complete. The total annual facilities. undertaken: burden is estimated to be 85 hours. In addition to the assessment of (1) Telephone verification. The Exhibit 2 shows the estimated needed services in relation to the purpose of the telephone verification is annualized cost burden associated with services that are available, the ability to to ensure that the most current mailing the respondents’ time to participate in pay for AL services is a critical factor for address of each ALF is utilized for the this project. The total annualized cost both the consumer and ALF decision- survey pre-test, and to obtain the name burden is estimated to be $3,576.

EXHIBIT 1—ESTIMATED ANNUALIZED BURDEN HOURS

Number of Form name Number of responses per Hours per Total burden respondents respondent response hours

Telephone verification ...... 285 1 1/60 5 Pre-test ...... 191 1 25/60 80

Total ...... 476 na na 85

EXHIBIT 2—ESTIMATED ANNUALIZED COST BURDEN

Number of Total burden Average hourly Form name respondents hours wage rate* Total cost burden

Telephone verification ...... 285 5 $15.37 $77 Pre-Test ...... 191 80 43.74 3,499

Total ...... 476 85 na 3,576 * Based upon the mean of the average wages reflected in the National Compensation Survey (May 2009) U.S. Department of Labor, Bureau of Labor Statistics. Wage categories used: phone verification—office and administrative support workers; pre-test—medical and health services managers in the United States.

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Estimated Annual Costs to the Federal extends over four years, but this request Government is for a one year OMB clearance. Exhibit The total cost of this contract to the 3 shows a breakdown of the total cost government is $424,000. The project as well as the annualized cost.

EXHIBIT 3—ESTIMATED TOTAL AND ANNUALIZED COST

Cost component Total cost Annualized

Project Development ...... $125,000 $31,250 Data Collection Activities ...... 90,000 22,500 Data Processing and Analysis ...... 30,000 7,500 Reporting of results ...... 30,000 7,500 Project Management ...... 164,552 41,138

Total Costs ...... 439,552 109,888

Request for Comments opportunity for public comment on disabilities. The proposed information In accordance with the Paperwork proposed data collection projects, the collection activity will allow necessary Reduction Act, comments on AHRQ’s Centers for Disease Control and evaluation of the supplemental program information collection are requested Prevention (CDC) will publish periodic to determine if the program has with regard to any of the following: (a) summaries of proposed projects. To achieved its intended goals; to identify Whether the proposed collection of request more information on the efficient implementation strategies that information is necessary for the proper proposed projects or to obtain a copy of reach the greatest numbers of parents of performance of AHRQ healthcare the data collection plans and young children within defined research and healthcare information instruments, call 404–639–5960 and population groups; and determine the dissemination functions, including send comments to Daniel L. Holcomb, effectiveness of those strategies in whether the information will have CDC Reports Clearance Officer, 1600 changing parents’ awareness of the practical utility; (b) the accuracy of Clifton Road, MS–D74, Atlanta, GA campaign and behavior related to AHRQ’s estimate of burden (including 30333 or send an e-mail to monitoring early development. hours and costs) of the proposed [email protected]. This information collection activity collection(s) of information; (c) ways to Comments are invited on: (a) Whether will consist of two surveys of parents of enhance the quality, utility, and clarity the proposed collection of information young children in the demographic of the information to be collected; and is necessary for the proper performance groups and geographic areas targeted by (d) ways to minimize the burden of the of the functions of the agency, including this enhanced implementation of the collection of information upon the whether the information shall have ‘‘Learn the Signs Act Early’’ campaign; respondents, including the use of practical utility; (b) the accuracy of the one at baseline (before campaign automated collection techniques or agency’s estimate of the burden of the implementation) and one at follow-up other forms of information technology. proposed collection of information; (c) (near implementation end). The surveys Comments submitted in response to ways to enhance the quality, utility, and will capture information from the this notice will be summarized and clarity of the information to be program’s target audience to determine included in the Agency’s subsequent collected; and (d) ways to minimize the campaign reach and exposure among request for OMB approval of the burden of the collection of information this group, as well as identify change in proposed information collection. All on respondents, including through the knowledge, awareness, and behavior comments will become a matter of use of automated collection techniques related to the campaign and monitoring public record. or other forms of information early child development. The project Dated: April 22, 2011. technology. Written comments should aims to attain 250 completed parent Carolyn M. Clancy, be received within 60 days of this surveys from each of the 4 sites at Director. notice. baseline and again at follow-up (for a [FR Doc. 2011–11302 Filed 5–10–11; 8:45 am] Proposed Project total of 2,000 completed surveys). It is BILLING CODE 4160–90–M estimated that 2400 respondents will Evaluation of Enhanced have to be screened in order to recruit Implementation of the ‘‘Learn the Signs. 2000 total survey participants. Act Early.’’ Campaign in 4 Target DEPARTMENT OF HEALTH AND Participants will be recruited to HUMAN SERVICES Sites,—New—National Center on Birth Defects and Developmental Disabilities participate in one of two surveys that will be conducted in the following four Centers for Disease Control and (NCBDDD), Centers for Disease Control target areas: Washington: Yakima, Prevention and Prevention (CDC). Benton, Franklin, and Walla Walla [60Day–11–11EX] Background and Brief Description counties; Missouri: St. Louis City; Utah: ‘‘ ’’ Salt Lake County; and Alaska: Proposed Data Collections Submitted CDC’s Learn the Signs Act Early campaign is a health education Anchorage, Palmer, Wasilla, Homer, for Public Comment and Kenai. Recommendations campaign that aims to improve parent awareness of early child development This request is to obtain OMB In compliance with the requirement and improve early identification of clearance for two years. There are no of Section 3506(c)(2)(A) of the children with autism spectrum costs to the respondents other than their Paperwork Reduction Act of 1995 for disorders and other developmental time.

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ESTIMATED ANNUALIZED BURDEN HOURS

Average Number of Number of re- burden per Total burden Type of respondent Form name respondents sponses per response (in hours) respondent (in hours)

Parents ...... Screener ...... 2400 1 3/60 120 Parents ...... Baseline Survey ...... 1000 1 10/60 167 Parents ...... Follow-up Survey ...... 1000 1 10/60 167

Total ...... 454

Dated: May 5, 2011. and Interpretation—NEW—Office of physician specialty, professional Daniel L. Holcomb, Surveillance, Epidemiology, and memberships, practice size and practice Reports Clearance Officer, Centers for Disease Laboratory Services (OSELS), Centers setting), practice-related questions Control and Prevention. for Disease Control and Prevention including number and type of patients [FR Doc. 2011–11520 Filed 5–10–11; 8:45 am] (CDC). seen weekly. The majority of the questions request information about BILLING CODE 4163–18–P Background and Brief Description physician decision making processes The Quantitative Survey of Physician involved in test ordering and DEPARTMENT OF HEALTH AND Practices in Laboratory Test Ordering interpretation. HUMAN SERVICES and Interpretation is a national The effective use of laboratory testing systematic study investigating how the is an important component of the Centers for Disease Control and rapid evolution of laboratory medicine diagnostic process within physician Prevention is affecting primary care practice. This practices. The field of laboratory will be a new collection. The survey medicine is undergoing rapid change [30Day–11–11BZ] will be funded in full by the Office of with the continuing introduction of new Surveillance, Epidemiology, and tests, increased focus on evidence-based Agency Forms Undergoing Paperwork Laboratory Services (OSELS) of the medicine, the deployment of Electronic Reduction Act Review Centers for Disease Control and Health Records, and the wide The Centers for Disease Control and Prevention (CDC). availability to physicians of electronic Prevention (CDC) publishes a list of The survey follows focus groups of information resources, interactive information collection requests under fewer than ten participants with diagnostic tools, and computerized review by the Office of Management and primary care physicians that identified order entry systems. To date, no Budget (OMB) in compliance with the common concerns and problems with systematic study has been conducted to Paperwork Reduction Act (44 U.S.C. laboratory test ordering and test investigate how physicians are chapter 35). To request a copy of these interpretation. The survey will quantify incorporating these laboratory testing requests, call the CDC Reports Clearance the prevalence and impact of the issues innovations into their day-to-day Officer at (404) 639–5960 or send an e- identified within the focus groups. practices. This survey seeks to provide mail to [email protected]. Send written Understanding the relative importance insight into how physicians integrate comments to CDC Desk Officer, Office of of physician issues in the effective and laboratory medicine into their routines, Management and Budget, Washington, efficient use of laboratory medicine in and how they manage any challenges DC 20503 or by fax to (202) 395–5806. diagnosis will guide future efforts of the they encounter. Written comments should be received CDC to improve primary care practice The survey will be conducted on a within 30 days of this notice. and improve health outcomes of the national sample of primary care American public. physicians. There are no costs to Proposed Project The survey covers basic physician respondents except their time. The total Quantitative Survey of Physician demographic characteristics (year of estimated annualized burden hours are Practices in Laboratory Test Ordering birth, gender, years in practice, 373.

ESTIMATED ANNUALIZED BURDEN HOURS

Number of re- Avg. burden Type of respondents Form name Number of sponses per per response respondents respondent (in hrs)

Family Practice Physicians & Internal Medicine Generalists .. Laboratory Practices ...... 1600 1 14/60

Daniel Holcomb, Reports Clearance Officer, Centers for Disease Control and Prevention. [FR Doc. 2011–11528 Filed 5–10–11; 8:45 am] BILLING CODE 4163–18–P

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DEPARTMENT OF HEALTH AND DEPARTMENT OF HEALTH AND Atlanta, Georgia 30333, Telephone: HUMAN SERVICES HUMAN SERVICES (404) 498–2293. The Director, Management Analysis Centers for Disease Control and Centers for Disease Control and and Services Office, has been delegated Prevention Prevention the authority to sign Federal Register notices pertaining to announcements of Disease, Disability, and Injury Disease, Disability, and Injury meetings and other committee Prevention and Control Special Prevention and Control Special management activities, for both the Emphasis Panel (SEP): Meeting Emphasis Panel (SEP): Combining Centers for Disease Control and Subjective and Objective Methods for Prevention and the Agency for Toxic Studies at the Animal-Human Quantifying Contact Rates and Mixing Substances and Disease Registry. Pattern in School-Aged Children, Interface of Influenza and Other Dated: May 5, 2011. Zoonotic Diseases in Vietnam, Funding Funding Opportunity Announcement, CK11–006, Initial Review Elaine L. Baker, Opportunity Announcement (FOA) Director, Management Analysis and Services IP11–005, The Incidence and Etiology of Correction: The notice was published Office, Centers for Disease Control and Influenza-Associated Community- in the Federal Register on March 22, Prevention. Acquired Pneumonia in Hospitalized 2011, Volume 76, Number 55, Page [FR Doc. 2011–11521 Filed 5–10–11; 8:45 am] Persons Study; FOA IP11–011, 15984. The time, date, and place should BILLING CODE 4163–18–P Spectrum of Respiratory Pathogens in read as follows: Acute Respiratory Tract Infection Time And Date: 11 a.m.–2 p.m., May 3, Among Children and Adults in India; 2011 (Closed). DEPARTMENT OF HEALTH AND FOA IP11–012, Influenza Vaccine Place: Teleconference. HUMAN SERVICES Efficacy in Tropical and Developing Contact Person For More Information: Countries; FOA IP11–013, Influenza and Gregory Anderson, M.S., M.P.H., Scientific Centers for Disease Control and Prevention Other Respiratory Diseases in Southern Review Officer, CDC, 1600 Clifton Road, NE., Mailstop E60, Atlanta, Georgia 30333, Hemisphere; and FOA IP11–014, initial Telephone: (404) 498–2293. Advisory Council for the Elimination of review. The Director, Management Analysis and Tuberculosis Meeting (ACET) Correction: The notice was published Services Office, has been delegated the In accordance with section 10(a)(2) of in the Federal Register on March 11, authority to sign Federal Register notices the Federal Advisory Committee Act 2011, Volume 76, Number 48, Pages pertaining to announcements of meetings and other committee management activities, for (Pub. L. 92–463), the Centers for Disease 13413–13414. The place should read as both the Centers for Disease Control and Control and Prevention (CDC), follows: Prevention and the Agency for Toxic announces the following meeting of the Place: Holiday Inn Decatur Conference Substances and Disease Registry. aforementioned committee: Center, 130 Clairemont Avenue, Decatur, Dated: May 5, 2011. Times and Dates Georgia 30030, Telephone: (404) 371–0204. Elaine L. Baker, Director, Management Analysis and Services 11 a.m.–5 p.m., June 7, 2011. Contact Person For More Information: Office, Centers for Disease Control and 8:30 a.m.–2:30 p.m., June 8, 2011. Gregory Anderson, M.S., M.P.H., Prevention. Place: Corporate Square, Building 8, Scientific Review Officer, CDC, 1600 [FR Doc. 2011–11523 Filed 5–10–11; 8:45 am] 1st Floor Conference Room, Atlanta, Clifton Road, NE., Mailstop E60, BILLING CODE 4163–18–P Georgia 30333, telephone (404) 639– Atlanta, Georgia 30333, Telephone: 8317. (404) 498–2293. Status: Open to the public, limited The Director, Management Analysis DEPARTMENT OF HEALTH AND only by the space available. The meeting and Services Office, has been delegated HUMAN SERVICES room accommodates approximately 100 the authority to sign Federal Register people. Centers for Disease Control and Purpose: This council advises and notices pertaining to announcements of Prevention makes recommendations to the meetings and other committee Secretary of Health and Human management activities, for both the Disease, Disability, and Injury Services, the Assistant Secretary for Centers for Disease Control and Prevention and Control Special Health, and the Director, CDC, regarding Prevention and the Agency for Toxic Emphasis Panel (SEP): Virologic the elimination of tuberculosis. Substances and Disease Registry. Evaluation of the Modes of Influenza Specifically, the Council makes Dated: May 5, 2011. Virus Transmission Among Humans, recommendations regarding policies, Funding Opportunity Announcement, Elaine L. Baker, strategies, objectives, and priorities; IP11–001 addresses the development and Director, Management Analysis and Services Office, Centers for Disease Control and Correction: The notice was published application of new technologies; and Prevention. in the Federal Register on April 4, 2011, reviews the extent to which progress has been made toward eliminating [FR Doc. 2011–11522 Filed 5–10–11; 8:45 am] Volume 76, Number 64, Page 18555. The place should read as follows: tuberculosis. BILLING CODE 4163–18–P Matters to be Discussed: Agenda items Place: Holiday Inn Decatur Conference include issues pertaining to TB Plaza, 130 Clairemont Avenue, Decatur, Surveillance/Epidemiology/Outbreaks; Georgia 30030, Telephone: (404) 371–0204. Role of U.S. program in global TB Contact Person for More Information: control; Federal role in TB clinical and Gregory Anderson, M.S., M.P.H., diagnostic research; Role of CDC in Scientific Review Officer, CDC, 1600 development of evidence-based policies; Clifton Road, NE., Mailstop E60, Forecasting the U.S. TB Trends and

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Challenges; and other related Drug Administration, 1350 Piccard Dr., The IND information collection tuberculosis issues. Agenda items are PI50–400B, Rockville, MD 20850, 301– requirements provide the means by subject to change as priorities dictate. 796–3792, which FDA can do the following: (1) Contact Person for More Information: [email protected]. Monitor the safety of ongoing clinical Margie Scott-Cseh, Centers for Disease SUPPLEMENTARY INFORMATION: In investigations; (2) determine whether Control and Prevention, 1600 Clifton compliance with 44 U.S.C. 3507, FDA the clinical testing of a drug should be Road, NE., M/S E–07, Atlanta, Georgia has submitted the following proposed authorized; (3) ensure production of 30333, telephone: (404) 639–8317. collection of information to OMB for reliable data on the metabolism and The Director, Management Analysis review and clearance. pharmacological action of the drug in and Services Office, has been delegated humans; (4) obtain timely information the authority to sign Federal Register Investigational New Drug (IND) on adverse reactions to the drug; (5) Notices pertaining to announcements of Regulations—21 CFR Part 312—(OMB obtain information on side effects meetings and other committee Control Number 0910–0014)—Extension associated with increasing doses; (6) management activities, for both the FDA is requesting OMB approval for obtain information on the drug’s Centers for Disease Control and the reporting and recordkeeping effectiveness; (7) ensure the design of Prevention and the Agency for Toxic requirements contained in the FDA well-controlled, scientifically valid Substances and Disease Registry. regulations ‘‘Investigational New Drug studies; and (8) obtain other information Dated: May 5, 2011. Application’’ in part 312 (21 CFR part pertinent to determining whether Elaine L. Baker, 312). Part 312 implements provisions of clinical testing should be continued and Director, Management Analysis and Services section 505(i) of the Federal Food, Drug, information related to the protection of Office, Centers for Disease Control and and Cosmetic Act (the FD&C Act) (21 human subjects. Without the Prevention. U.S.C. 355(i)) to issue regulations under information provided by industry in [FR Doc. 2011–11526 Filed 5–10–11; 8:45 am] which the clinical investigation of the response to the IND regulations, FDA BILLING CODE 4163–18–P safety and effectiveness of unapproved cannot authorize or monitor the clinical new drugs and biological products can investigations which must be conducted be conducted. prior to authorizing the sale and general DEPARTMENT OF HEALTH AND FDA is charged with implementing use of new drugs. These reports enable HUMAN SERVICES statutory requirements that drug FDA to monitor a study’s progress, to products marketed in the United States assure subject safety, to assure that a Food and Drug Administration be shown to be safe and effective, study will be conducted ethically, and [Docket No. FDA–2011–N–0042] properly manufactured, and properly to increase the likelihood that the labeled for their intended uses. Section sponsor will conduct studies that will Agency Information Collection 505(a) of the FD&C Act provides that a be useful in determining whether the Activities; Submission for Office of new drug may not be introduced or drug should be marketed and available Management and Budget Review; delivered for introduction into interstate for use in medical practice. Comment Request; Investigational commerce in the United States unless There are two forms that are required New Drug Regulations FDA has previously approved a new under part 312: drug application (NDA). FDA approves Form FDA–1571—‘‘Investigational AGENCY: Food and Drug Administration, an NDA only if the sponsor of the New Drug Application’’—A person who HHS. application first demonstrates that the intends to conduct a clinical ACTION: Notice. drug is safe and effective for the investigation submits this form to FDA. SUMMARY: The Food and Drug conditions prescribed, recommended, or It includes the following information: Administration (FDA) is announcing suggested in the product’s labeling. (1) A cover sheet containing background that a proposed collection of Proof must consist, in part, of adequate information on the sponsor and information has been submitted to the and well-controlled studies, including investigator; (2) a table of contents; (3) Office of Management and Budget studies in humans, that are conducted an introductory statement and general (OMB) for review and clearance under by qualified experts. The IND investigational plan; (4) an investigator’s the Paperwork Reduction Act of 1995. regulations establish reporting brochure describing the drug substance; (5) a protocol for each planned study; DATES: Fax written comments on the requirements that include an initial (6) chemistry, manufacturing, and collection of information by June 10, application as well as amendments to control information for each 2011. that application, reports on significant revisions of clinical investigation plans, investigation; (7) pharmacology and ADDRESSES: To ensure that comments on and information on a drug’s safety or toxicology information for each the information collection are received, effectiveness. In addition, the sponsor is investigation; and (8) previous human OMB recommends that written required to give FDA an annual experience with the investigational comments be faxed to the Office of summary of the previous year’s clinical drug. Information and Regulatory Affairs, experience. Submissions are reviewed Form FDA–1572—‘‘Investigator OMB, Attn: FDA Desk Officer, FAX: by medical officers and other Agency Statement’’—Before permitting an 202–395–7285, or e-mailed to scientific reviewers assigned investigator to begin participation in an _ oira [email protected]. All responsibility for overseeing the specific investigation, the sponsor must obtain comments should be identified with the study. The IND regulations also contain and record this form. It includes OMB control number 0910–0014. Also recordkeeping requirements that pertain background information on the include the FDA docket number found to the responsibilities of sponsors and investigator and the investigation, and a in brackets in the heading of this investigators. The detail and complexity general outline of the planned document. of these requirements are dictated by the investigation and the study protocol. FOR FURTHER INFORMATION CONTACT: scientific procedures and human subject FDA is requesting OMB approval for Elizabeth Berbakos, Office of safeguards that must be followed in the the following reporting and Information Management, Food and clinical tests of INDs. recordkeeping requirements in part 312:

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Reporting Requirements 21 CFR 312.32(c)(1)—Written reports to 21 CFR 312.56(b), (c), and (d)—Sponsor 21 CFR 312.2(e)—Requests for FDA FDA and to investigators. monitoring of all clinical advice on the applicability of part 21 CFR 312.32(c)(2)—Telephone reports investigations, investigators, and 312 to a planned clinical to FDA for fatal or life-threatening drug safety; notification to FDA. investigation. experience. 21 CFR 312.58(a)—Sponsor’s 21 CFR 312.32(c)(3)—Format or 21 CFR 312.8—Charging for submission of records to FDA on frequency. investigational drugs under an IND. request. 21 CFR 312.32(d)—Follow up 21 CFR 312.10—Applications for waiver 21 CFR 312.64—Investigator reports to submissions. of requirements under part 312. As the sponsor. 21 CFR 312.33—Annual reports. indicated in § 312.10(a), estimates 21 CFR 312.64(a)—Progress reports. 21 CFR 312.33(a)—Individual study for this requirement are included 21 CFR 312.64(b)—Safety reports. information. under §§ 312.23 and 312.31. In 21 CFR 312.64(c)—Final reports. 21 CFR 312.33(b)—Summary 21 CFR 312.66—Investigator reports to addition, separate requests under information. § 312.10 are estimated in Table 1. Institutional Review Board. 21 CFR 312.33(b)(1)—Adverse Estimates for this requirement are 21 CFR 312.20(c)—Applications for experiences. investigations involving an included under § 312.53. 21 CFR 312.33(b)(2)—Safety report 21 CFR 312.70(a)—Investigator exception from informed consent summary. under § 50.24 (21 CFR 50.24). disqualification; opportunity to 21 CFR 312.33(b)(3)—List of fatalities respond to FDA. Estimates for this requirement are and causes of death. 21 CFR 312.83—Sponsor submission of included under § 312.23. 21 CFR 312.33(b)(4)—List of treatment protocol. Estimates for 21 CFR 312.23—INDs (content and discontinuing subjects. this requirement are included under format). 21 CFR 312.33(b)(5)—Drug action. § 312.320. 21 CFR 312.23(a)(1)—Cover sheet FDA– 21 CFR 312.33(b)(6)—Preclinical studies 1571. and findings. 21 CFR 312.85—Sponsors conducting 21 CFR 312.23(a)(2)—Table of Contents. 21 CFR 312.33(b)(7)—Significant phase 4 studies. Estimates for this 21 CFR 312.23(a)(3)—Investigational changes. requirement are included under plan for each planned study. 21 CFR 312.33(c)—Next year general § 312.23 in 0910–0014, and 21 CFR 312.23(a)(5)—Investigator’s investigational plan. §§ 314.50, 314.70, and 314.81 in brochure. 21 CFR 312.33(d)—Brochure revision. 0910–0001. 21 CFR 312.23(a)(6)—Protocols—Phases 21 CFR.312.33(e)—Phase I protocol 21 CFR 312.110(b)—Request to export 1, 2, and 3. modifications. an investigational drug. 21 CFR 312.23(a)(7)—Chemistry, 21 CFR.312.33(f)—Foreign marketing 21 CFR 312.120—Submissions related to manufacturing, and control developments. foreign clinical studies not information. 21 CFR 312.38(b) and (c)—Notification conducted under an IND. 21 CFR 312.23(a)(7)(iv)(a),(b),(c)—A of withdrawal of an IND. 21 CFR 312.130(d)—Request for description of the drug substance, a 21 CFR 312.42(e)—Sponsor requests disclosable information for list of all components, and any that a clinical hold be removed and investigations involving an placebo used. submits a complete response to the exception from informed consent 21 CFR 312.23(a)(7)(iv)(d)—Labeling: issues identified in the clinical hold under § 50.24. Copies of labels and labeling to be order. 21 CFR 312.310(b); 312.305(b)— provided each investigator. 21 CFR 312.44(c) and (d)—Opportunity Submissions related to expanded 21 CFR 312.23(a)(7)(iv)(e)— for sponsor response to FDA when access and treatment of an Environmental impact analysis IND is terminated. individual patient. regarding drug manufacturing and 21 CFR 312.45(a) and (b)—Sponsor 21 CFR 312.310(d)—Submissions use. request for, or response to, inactive related to emergency use of an 21 CFR 312.23(a)(8)—Pharmacological status determination of an IND. investigational new drug. and toxicology information. 21 CFR 312.47(b)—‘‘End-of-Phase 2’’ 21 CFR 312.315(c); 312.305(b)— 21 CFR 312.23(a)(9)—Previous human meetings and ‘‘Pre-NDA’’ meetings. Submissions related to expanded experience with the investigational 21 CFR 312.53(c)—Investigator access and treatment of an drug. information. intermediate size patient 21 CFR 312.23(a)(10)—Additional Investigator report (Form FDA–1572) population. information. and narrative; Investigator’s 21 CFR 312.320—Submissions related to 21 CFR 312.23(a)(11)—Relevant background information; Phase 1 treatment IND or treatment information. outline of planned investigation protocol. 21 CFR 312.23(f)—Identification of and Phase 2 outline of study Recordkeeping Requirements exception from informed consent. protocol. 21 CFR 312.30—Protocol amendments. 21 CFR 312.54(a) and (b)—Sponsor 21 CFR 312.52(a)—Transfer of 21 CFR 312.30(a)—New protocol. submissions concerning obligations to a contract research 21 CFR 312.30(b)—Change in protocol. investigations involving an organization. 21 CFR 312.30(c)—New investigator. exception from informed consent 21 CFR 312.57—Sponsor recordkeeping. 21 CFR 312.30(d)—Content and format. under § 50.24. 21 CFR 312.59—Sponsor recordkeeping 21CFR 312.30(e)—Frequency. 21 CFR 312.55(b)—Sponsor reports to of disposition of unused supply of 21 CFR 312.31—Information investigators on new observations, drugs. Estimates for this amendments. especially adverse reactions and requirement are included under 21CFR 312.31(b)—Content and format. safe use. Only ‘‘new observations’’ § 312.57. —Chemistry, toxicology, or technical are estimated under this section; 21 CFR 312.62(a)—Investigator information. investigator brochures are included recordkeeping of disposition of 21 CFR 312.32—Safety reports. under § 312.23. drugs.

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21 CFR 312.62(b)—Investigator 21 CFR 312.160(c)—Shipper records of received under part 312. The estimates recordkeeping of case histories of alternative disposition of unused for ‘‘Hours per Response’’ were made by individuals. drugs. CDER and CBER individuals familiar 21 CFR 312.120(d)—Recordkeeping In the tables below, the estimates for with the burden associated with these ‘‘ ’’ ‘‘ requirements for submissions No. of Respondents, Annual reports and from estimates received Frequency per Response,’’ and ‘‘Total from the pharmaceutical industry. related to foreign clinical studies Annual Responses’’ were obtained from In the Federal Register of January 27, not conducted under an IND. the Center for Drug Evaluation and 2011 (76 FR 4914), FDA published a 60- Estimates for this requirement are Research (CDER) and the Center for day notice requesting public comment included under § 312.57. Biologics Evaluation and Research on the proposed collection of 21 CFR 312.160(a)(3)—Records (CBER) reports and data management information. No comments were maintenance: shipment of drugs for systems for submissions received in received. investigational use in laboratory 2007 and from other sources familiar FDA estimates the burden of this research animals or in vitro tests. with the number of submissions collection of information as follows:

TABLE 1—ESTIMATED ANNUAL REPORTING BURDEN FOR HUMAN DRUGS 1

Number of Average 21 CFR Section Number of responses per Total annual burden per Total hours respondents respondent responses response (in hours) 2

312.2(e) ...... 455 1 .03 469 24 11,256 312.8 ...... 30 1 .13 34 48 1,632 312.10 ...... 4 1 4 10 40 312.23(a) through (f) ...... 2,496 1.26 3,145 1,600 5,032,000 312.30(a) through (e) ...... 2,030 8.91 18,087 284 5,136,708 312.31(b) ...... 153 2.97 454 100 45,400 312.32(c) and (d) ...... 985 23 .06 22,714 32 726,848 312.33(a) through (f) ...... 2,564 2.34 6,000 360 2,160,000 312.38(b) and (c) ...... 654 1.34 876 28 24,528 312.42(e) ...... 149 1.10 164 284 46,576 312.44(c) and (d) ...... 44 1 45 16 704 312.45(a) and (b) ...... 254 1 .43 363 12 4,356 312.47(b) ...... 281 1.8 506 160 80,960 312.53(c) ...... 21,194 1 21,194 80 1,695,520 312.54(a) and (b) ...... 0 0 0 48 0 312.55(b) ...... 985 2,306 2,271,410 48 109,027,680 312.56(b), (c), and (d) ...... 18 1 18 80 1,440 312.58(a) ...... 91 4 .10 373 8 2,984 312.64 ...... 31,791 1 31,791 24 762,984 312.70(a) ...... 4 1 4 40 160 312.110(b) ...... 23 18 .26 420 75 31,500 312.120 ...... 115 5 575 32 18,400 312.130(d) ...... 3 1 3 8 24 312.310(b) and 312.305(b) ...... 988 1 988 8 7,904 312.310(d) ...... 525 1 .23 646 16 10,336 312.315(c) and 312.305(b) ...... 68 1 68 120 8,160 312.320 ...... 9 1.11 10 300 3,000

Total ...... 124,841,100 1 There are no capital costs or operating and maintenance costs associated with this collection of information. 2 Burden estimates of less than 1 hour are expressed as a fraction of an hour in the format ‘‘[number of minutes per response]/60’’.

TABLE 2—ESTIMATED ANNUAL RECORDKEEPING BURDEN FOR HUMAN DRUGS 1

Number of Average 21 CFR Section Number of records per Total annual burden per Total hours recordkeepers recordkeeper records recordkeeping (in hours) 2

312.52(a) ...... 335 1.5 503 2 1,006 312.57 ...... 75 485.28 36,396 100 3,639,600 312.62(a) ...... 14,732 1 14,732 40 589,280 312.62(b) ...... 147,320 1 147,320 40 5,892,800 312.160(a)(3) ...... 547 1.4 766 30/60 383 312.160(c) ...... 547 1.4 766 30/60 383

Total ...... 10,123,452 1 There are no capital costs or operating and maintenance costs associated with this collection of information. 2 Burden estimates of less than 1 hour are expressed as a fraction of an hour in the format ‘‘[number of minutes per response]/60’’.

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TABLE 3—ESTIMATED ANNUAL REPORTING BURDEN FOR BIOLOGICS 1

Number of Average 21 CFR Section Number of responses per Total annual burden per Total hours respondents respondent responses response (in hours) 2

312.7(d) ...... 41 1.4 57 24 1,368 312.23(a) through (f) and 312.120(b), (c)(2), and (c)(3) ... 433 1.3 563 1,808 1,017,904 312.30(a) through (e) ...... 590 6 .8 4,012 284 1,139,408 312.31(b) ...... 263 29.3 7,706 100 770,600 312.32(c) and (d) and 312.56(c) ...... 294 13 .7 4,028 32 128,896 312.33(a) through (f) and 312.56(c) ...... 647 2 .3 1,488 360 535,680 312.35(a) and (b) ...... 1 1 1 300 300 312.36 ...... 6 1 6 16 96 312.38(b) and (c) ...... 117 1.3 152 28 4,256 312.42(e) ...... 74 1 .5 111 284 31,524 312.44(c) and (d) ...... 17 1 .1 18 16 304 312.45(a) and (b) ...... 60 1.8 108 12 1,296 312.47(b) ...... 43 1 .5 65 160 10,400 312.53(c) ...... 348 6 .6 2,297 80 183,760 312.54(a) and (b) ...... 1 1 1 48 48 312.55(b) ...... 138 2.5 345 48 16,560 312.56(b) and (d) ...... 14 1.6 22 80 1,760 312.58(a) ...... 8 1 8 8 64 312.64(a) through (d) ...... 6,003 3.5 21,010 24 504,240 312.70(a) ...... 6 1 6 40 240 312.110(b) ...... 21 1 21 75 1,575 312.130(d) ...... 1 1 1 8 8

Total ...... 4,350,287 1 There are no capital costs or operating and maintenance costs associated with this collection of information. 2 Burden estimates of less than 1 hour are expressed as a fraction of an hour in the format ‘‘[number of minutes per response]/60’’.

TABLE 4—ESTIMATED ANNUAL RECORDKEEPING BURDEN FOR BIOLOGICS 1

Number of Average 21 CFR Section Number of records per Total annual burden per Total hours recordkeepers recordkeeper records recordkeeping (in hours) 2

312.52(a) ...... 139 1.4 195 2 390 312.57(a) and (b) ...... 433 2 .6 1,126 100 112,600 312.62(a) ...... 5,570 1 5,570 40 222,800 312.62(b) ...... 5,570 10 55,700 40 2,228,000 312.160(a)(3) ...... 146 1.4 204 30/60 102 312.160(c) ...... 146 1.4 204 30/60 102

Total ...... 2,563,994 1 There are no capital costs or operating and maintenance costs associated with this collection of information. 2 Burden estimates of less than 1 hour are expressed as a fraction of an hour in the format ‘‘[number of minutes per response]/60’’.

Dated: May 6, 2011. DEPARTMENT OF HEALTH AND SUMMARY: The Food and Drug Leslie Kux, HUMAN SERVICES Administration (FDA) is announcing the Acting Assistant Commissioner for Policy. availability of the draft guidance Food and Drug Administration [FR Doc. 2011–11540 Filed 5–10–11; 8:45 am] entitled ‘‘Establishing the Performance BILLING CODE 4160–01–P Characteristics of In Vitro Diagnostic [Docket No. FDA–2011–D–0272] Devices for Chlamydia Trachomatis and/or Neisseria Gonorrhoeae: Draft Guidance for Industry and Food Screening and Diagnostic Testing.’’ This and Drug Administration Staff; draft guidance document provides Establishing the Performance industry and Agency staff with Characteristics of In Vitro Diagnostic recommendations for studies to Devices for Chlamydia Trachomatis establish the analytical and clinical and/or Neisseria Gonorrhoeae: Screening and Diagnostic Testing; performance of in vitro diagnostic Availability devices (IVDs) intended for C. trachomatis and/or N. gonorrhoeae AGENCY: Food and Drug Administration, screening and diagnostic testing using HHS. nucleic acid based assays. This draft guidance is not final nor is it in effect ACTION: Notice. at this time.

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DATES: Although you can comment on gonorrhoeae strains recommended for collections of information are subject to any guidance at any time (see 21 CFR analytical sensitivity studies and a list review by the Office of Management and 10.115(g)(5)), to ensure that the Agency of micro-organisms recommended for Budget (OMB) under the Paperwork considers your comment of this draft analytical specificity studies. This Reduction Act of 1995 (44 U.S.C. 3501– guidance before it begins work on the document also addresses 3520). The collections of information in final version of the guidance, submit recommendations for fulfilling labeling 21 CFR part 807, subpart E have been either electronic or written comments requirements applicable to all in vitro approved under OMB control number on the draft guidance by August 9, 2011. diagnostic devices intended to screen 0910–0120; the collections of ADDRESSES: Submit written requests for for, or aid in the diagnosis of, C. information in 21 CFR part 812 have single copies of the draft guidance trachomatis and/or N. gonorrhoeae been approved under OMB control document entitled ‘‘Establishing the directly from human specimens. number 0910–0078; the collections of Performance Characteristics of In Vitro This document is limited to studies information in 21 CFR parts 56.115 have Diagnostic Devices for Chlamydia intended to establish the performance been approved under OMB control Trachomatis and/or Neisseria characteristics of devices that detect number 0910–0130; and the collections Gonorrhoeae: Screening and Diagnostic chlamydial and/or gonococcal nucleic of information in 21 CFR part 801 and Testing’’ to the Division of Small acid. It does not address detection of 21 CFR 809.10 have been approved Manufacturers, International, and serological response from the host to under OMB control number 0910–0485. bacterial antigens, nor does it address Consumer Assistance, Center for V. Comments Devices and Radiological Health, Food establishing performance of non- and Drug Administration, 10903 New chlamydial or non-gonococcal Interested persons may submit to the Hampshire Ave., Bldg. 66, rm. 4613, components of multianalyte or Division of Dockets Management (see Silver Spring, MD 20993–0002. Send multiplex devices. ADDRESSES) either electronic or written one self-addressed adhesive label to II. Significance of Guidance comments regarding this document. It is assist that office in processing your only necessary to send one set of This draft guidance is being issued comments. It is no longer necessary to request, or fax your request to 301–847– consistent with FDA’s good guidance SUPPLEMENTARY send two copies of mailed comments. 8149. See the practices regulation (21 CFR 10.115). INFORMATION section for information on Identify comments with the docket The draft guidance, when finalized, will number found in brackets in the electronic access to the guidance. represent the Agency’s current thinking Submit electronic comments on the heading of this document. Received on establishing the performance draft guidance to http:// comments may be seen in the Division characteristics of in vitro diagnostic www.regulations.gov. Submit written of Dockets Management between 9 a.m. devices for C. trachomatis and/or N. comments to the Division of Dockets and 4 p.m., Monday through Friday. gonorrhoeae screening and diagnostic Management (HFA–305), Food and Drug testing. It does not create or confer any Dated: May 6, 2011. Administration, 5630 Fishers Lane, rm. rights for or on any person and does not Nancy K. Stade, 1061, Rockville, MD 20852. Identify operate to bind FDA or the public. An Deputy Director for Policy, Center for Devices comments with the docket number alternative approach may be used if and Radiological Health. found in brackets in the heading of this such approach satisfies the [FR Doc. 2011–11532 Filed 5–10–11; 8:45 am] document. requirements of the applicable statute BILLING CODE 4160–01–P FOR FURTHER INFORMATION CONTACT: and regulations. Kathleen Whitaker, Center for Devices and Radiological Health, Food and Drug III. Electronic Access DEPARTMENT OF HEALTH AND Administration, 10903 New Hampshire Persons interested in obtaining a copy HUMAN SERVICES Ave., Bldg. 66, rm. 5500, Silver Spring, of the draft guidance may do so by using MD 20993–0002, 301–796–6208. the Internet. A search capability for all Food and Drug Administration SUPPLEMENTARY INFORMATION: CDRH guidance documents is available [Docket No. FDA–2010–N–0621] at http://www.fda.gov/MedicalDevices/ I. Background DeviceRegulationandGuidance/ Proposal To Withdraw Approval for the FDA is issuing this draft guidance to GuidanceDocuments/default.htm. Breast Cancer Indication for provide industry and Agency staff with Guidance documents are also available Bevacizumab; Hearing recommendations for studies to at http://www.regulations.gov. To establish the analytical and clinical receive ‘‘Establishing the Performance AGENCY: Food and Drug Administration, performance of IVDs intended for C. Characteristics of In Vitro Diagnostic HHS. trachomatis and/or N. gonorrhoeae Devices for Chlamydia Trachomatis ACTION: Notice of hearing. screening and diagnostic testing using and/or Neisseria Gonorrhoeae: nucleic acid based assays. These devices Screening and Diagnostic Testing,’’ you SUMMARY: The Food and Drug are used to aid in the diagnosis of may either send an e-mail request to Administration (FDA) is granting a urogenital C. trachomatis and N. [email protected] to receive an hearing to Genentech, Inc. (Genentech), gonorrhoeae infection. They include electronic copy of the document or send on the Center for Drug Evaluation and devices that detect one specific a fax request to 301–847–8149 to receive Research’s (CDER’s) proposal to organism, as well as devices that may a hard copy. Please use the document withdraw approval of the breast cancer detect both organisms with or without number 1733 to identify the guidance indication for bevacizumab (Avastin). further differentiation. you are requesting. Genentech is the sponsor for Avastin. This draft guidance provides detailed Genentech and CDER are the parties to information on the types of studies FDA IV. Paperwork Reduction Act of 1995 the hearing. The issues to be discussed recommends to support class I and class This draft guidance refers to and resolved at the hearing relate II premarket submissions for these previously approved collections of directly to the statutory and regulatory devices. The draft guidance includes a information found in FDA regulations standard for FDA to withdraw list of C. trachomatis and N. and guidance documents. These accelerated approval of the metastatic

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breast cancer (MBC or breast cancer) anticipation of the hearing presentations with access to the Internet may obtain indication for Avastin. moving ahead of schedule, participants documents at http:// DATES: Date and Time: The hearing will are encouraged to arrive early to ensure www.regulations.gov. their designated order of presentation. be held on June 28 and 29, 2011, from I. Background 8 a.m. to 5 p.m. Participants who are not present when Section 506 of the Federal Food, Drug, ADDRESSES: The hearing will be held at called risk forfeiting their scheduled FDA’s White Oak Campus, 10903 New time. and Cosmetic Act (FD&C Act) (21 U.S.C. Hampshire Ave., Bldg 31, Rm. 1503 If you need special accommodations 356), which was added to the statute (Great Room), Silver Spring, MD 20993. due to a disability, please contact with the passage of the Food and Drug Talisha Williams at least 7 days in Modernization Act of 1997, provides for FOR FURTHER INFORMATION CONTACT: advance. the accelerated, or fast track, approval of Talisha Williams, Office of the Registration and Requests to Attend a drug product when FDA determines Ombudsman, Office of the the Hearing: The public hearing is free, that the ‘‘* * * product has an effect on Commissioner, Food and Drug but all persons wishing to attend the a clinical endpoint or on a surrogate Administration, 10903 New Hampshire hearing, who have not registered to endpoint that is reasonably likely to Ave., Silver Spring, MD 20993, 301– make an oral presentation, must register predict clinical benefit’’ (section 796–8530, e-mail: with FDA in advance of the hearing. By 506(b)(1)). Section 506 of the FDC&C [email protected]. May 20, 2011, FDA will post further Act also provides explicit authority for SUPPLEMENTARY INFORMATION: details regarding the registration process FDA to use expedited procedures to Registration and Requests to Make Oral for attendees to its Web site at http:// withdraw accelerated approval of a Presentations: On June 28, 2011, up to www.fda.gov. Beginning May 27, 2011, product under certain circumstances. 2 hours of the hearing have been you will be able to register to attend the FDA’s regulations regarding the reserved for oral presentations by hearing via FDA’s Web site at http:// accelerated approval of biological persons other than the parties. www.fda.gov. Space in the Great Room, products (§§ 601.40 through 601.46; part If you wish to make an oral where the hearing is to be held, will be 601, subpart E) (21 CFR 601.40 through presentation during the hearing, you limited to 300 persons from the general 601.46; 21 CFR part 601, subpart E)) set must register by submitting an public, and thus registration will be forth the procedures that FDA uses to electronic or written request by May 27, first-come, first-served. withdraw accelerated approval for a 2011, to Talisha Williams (see FOR Web cast: The hearing will also be biological product. Under § 601.43(b), FURTHER INFORMATION CONTACT). available to be viewed online via a Web FDA notifies the sponsor of the Depending on the number of requests, cast. Availability of the Web cast to the biological product of an opportunity for FDA may not be able to honor all such public will also be limited to a certain a hearing on a proposal to withdraw requests. You must provide your name, number of persons, and registration will approval of the product. FDA conducts title, business affiliation (if applicable), be required to access the Web cast. By such hearings in accordance with the address, telephone and fax numbers, e- May 20, 2011, FDA will post further procedures set forth in part 15 (21 CFR mail address, and (if applicable) type of details regarding the Web cast and the part 15), with some specific organization you represent (e.g., registration process for the Web cast to modifications, including the presence of industry, consumer organization). You the Agency’s Web site at http:// an advisory committee duly constituted also should submit a brief summary of www.fda.gov. Beginning May 27, 2011, under 21 CFR part 14, which provides the presentation, including the you will be able to register to access the advice and recommendations to the discussion topic(s) that will be Web cast via FDA’s Web site at http:// Agency (§ 601.43(e)). addressed and the approximate time www.fda.gov. On February 22, 2008, under section requested for your presentation. We Comments: Regardless of 506 of the FD&C Act and FDA’s encourage individuals and organizations participation in the public hearing, implementing regulations for with common interests to consolidate or interested persons may submit accelerated approval of biological coordinate their presentations to allow electronic or written comments on products, CDER approved supplemental adequate time for each request for CDER’s proposal to withdraw approval biological license application 125085/91 presentation. If there are many requests of the MBC indication. Submit (the sBLA), which was submitted by to present during the 2-hour period, the electronic comments to http:// Genentech. The sBLA sought approval amount of time that can be allotted to www.regulations.gov. Submit written of Avastin for use in combination with each presenter may be limited to comments to the Division of Dockets the chemotherapy drug paclitaxel for provide an opportunity to as many Management (see Registration and the treatment of patients who have not persons wishing to present as possible. Requests to Make Oral Presentations). received chemotherapy for metastatic Persons registered to make an oral Comments must be submitted by July HER2 negative breast cancer. Consistent presentation should check in with 14, 2011. It is only necessary to send with the regulations requiring Talisha Williams before the hearing. one set of comments. It is no longer postmarket studies for accelerated Participants should submit a copy of necessary to send two copies of mailed approval (see CFR 601.41 and 601.43), each presentation to Talisha Williams. comments. Identify comments with the CDER’s approval of the MBC indication We will file the hearing schedule, docket number found in brackets in the for Avastin was subject to the indicating the order of presentation and heading of this document. Submission requirement that the product be studied the time allotted to each person, with of comments prior to the meeting is further to verify and describe clinical the Division of Dockets Management strongly encouraged. benefit. The two specific ongoing (HFA–305), Food and Drug All documents filed or posted in this clinical trials identified to verify and Administration, 5630 Fishers Lane, Rm. matter are available for public review describe clinical benefit were: Trial 1061, Rockville, MD 20852 and it will under Docket No. FDA–2010–N–0621 in BO17708 (AVADO) (NCT 00333775) be posted on http:// the Division of Dockets Management and Trial AVF 3694g (RIBBON1) (NCT www.regulations.gov. We will mail, e- (see Registration and Requests to Make 00262067). On November 16, 2009, mail, or telephone the schedule to each Oral Presentations) between 9 a.m. and Genentech submitted the results of the participant before the hearing. In 4 p.m., Monday through Friday. Persons AVADO and RIBBON1 trials to CDER.

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On December 16, 2010, CDER issued be resolved. The issues for decision will information for Avastin ‘‘is a fair and a notice for opportunity for a hearing thus be stated in accordance with the accurate description of the safety profile (NOOH) on a proposal to withdraw statute and regulations. of Avastin,’’ and that ‘‘[t]he safety data approval of the MBC indication for The applicable regulation is § 601.43. observed in the E2100, AVADO, and Avastin. The NOOH stated CDER’s This regulation was finalized in 1992 RIBBON1 studies were consistent with conclusions that AVADO and RIBBON1 (57 FR 58942, December 11, 1992). In the safety profile of Avastin described in failed to verify clinical benefit with 1997, Congress enacted section 506 of its approved prescribing information’’ respect to the MBC indication for the FD&C Act, which sets out criteria for (Joint Statement, paragraphs 22 and 23). Avastin and that, because of that failure, expedited approval and withdrawal of In light of this agreement, the dispute the risk/benefit assessment that approval of ‘‘fast-track products.’’ It is with respect to this issue centers on the supported the initial approval of the FDA’s position that section 506(b) of the effectiveness information for the breast MBC indication had changed FD&C Act, while enacted after the cancer indication, and on the significantly such that Avastin no longer finalization of the regulation, essentially appropriate risk-benefit analysis to be met the safety and effectiveness codifies in the statute FDA’s accelerated made in light of that information as requirements for continued marketing approval regulations. Section 506(b)(3) compared to the agreed risk of the for that indication. On January 16, 2011, of the FD&C Act sets out four bases for product. Thus, FDA does not anticipate Genentech requested a hearing and expedited withdrawal of approval of a that the hearing will involve any submitted the data and information on product approved under the accelerated dispute about the safety information in which it intends to rely at the hearing. procedures. Section 601.43(a) sets out the clinical studies. By letter dated February 23, 2011, six bases. In this matter, there appears The safety profile of Avastin Karen Midthun (the Presiding Officer), to be agreement that two of the bases described in its approved prescribing advised the parties that FDA was will be at issue in this hearing. These information includes a black box granting the hearing request and that the two bases appear in both the regulations warning concerning gastrointestinal Commissioner of Food and Drugs (the and the statute. perforation, surgery and wound healing Commissioner) had appointed her as One basis for withdrawal of approval complications, and severe or fatal presiding officer. The letter stated that, of a product approved under the hemorrhage. Genentech does not state although not required by FDA’s accelerated procedures, set out in nearly that the use of this drug in the treatment regulations (see § 601.43(d)), the Agency identical language in § 601.43(a)(1) and of breast cancer is safe in the abstract. would be observing separation of section 506(b)(3)(B) of the FD&C Act, is Instead, it states that the drug should be functions for purposes of the hearing. that FDA may withdraw approval if, in found to be safe because its use provides The letter further communicated FDA’s the words of the regulation: ‘‘A benefits to patients that outweigh its conclusion that FDA’s regulations postmarketing clinical study fails to risks. Applying the standard in the require that the Agency’s Oncologic verify clinical benefit’’, or, in the words regulation and statute to the facts Drugs Advisory Committee (ODAC) of the statute, if: ‘‘[A] post-approval presented, therefore, the issue for serve as the advisory committee for the study of the fast track product fails to resolution will be: hearing and to provide advice and verify clinical benefit of the product.’’ Issue 2.A. Does the available evidence recommendations to the Commissioner In this case, the parties agree that on Avastin demonstrate that the drug under § 601.43(e)(1). Finally, the ‘‘During CDER’s review of [the sBLA], has not been shown to be effective for Presiding Officer directed Genentech Genentech proposed and CDER agreed the breast cancer indication for which it and CDER to submit a joint statement of that the AVADO and RIBBON1 trials was approved? undisputed facts and disputed issues. could serve as the required trial(s) to Issue 2.B. Does the available evidence On April 7, 2011, Genentech and verify and describe the clinical benefit’’ on Avastin demonstrate that the drug CDER submitted a ‘‘Joint Statement of (Joint Statement, paragraph 31). Thus, has not been shown to be safe for the Undisputed Facts and Select Issues in one ultimate issue in this hearing is: breast cancer indication for which it Dispute’’ (Joint Statement). On April 8, Issue 1. Do the AVADO and RIBBON1 was approved, in that Avastin has not 2011, Genentech and CDER submitted trials fail to verify the clinical benefit of been shown to present a clinical benefit separate statements of questions to be Avastin for the breast cancer indication that justifies the risks associated with presented at the hearing. for which it was approved? use of the product for this indication? If, after the hearing, the Commissioner A third issue is presented by the fact II. Hearing Issues and Process concludes that these studies fail to that both section 506(b)(3) of the FD&C FDA hereby grants Genentech’s verify the clinical benefit of Avastin for Act and § 601.43(a) do not by their request for a hearing under § 601.43 and that indication, FDA may withdraw the terms require the withdrawal of an part 15 on CDER’s proposal to withdraw approval. accelerated approval even if the bases approval of the MBC indication for CDER also seeks to base the for withdrawal they describe are Avastin. withdrawal of approval on an present. Instead, in each case, the alternative ground. This ground is set statute and regulation state that FDA A. Issues forth in the regulation and in the statute. ‘‘may’’ withdraw approval in those The issues to be decided at the Section 601.43(a)(6) states that FDA may circumstances. This standard reflects hearing relate directly to the statutory withdraw approval if: ‘‘Other evidence the fact that decisions on withdrawals of and regulatory standard for FDA to demonstrates that the biological product approval of products necessarily reflect withdraw accelerated approval of the is not shown to be safe or effective judgment on FDA’s part as to what MBC indication for Avastin. On April 7, under its conditions of use.’’ actions are appropriate to protect the 2011, in response to direction from the Section 506(b)(3)(C) of the FD&C Act public with respect to approved Presiding Officer to consult with each states that withdrawal is authorized if: products, and what uses of those other and submit an agreed statement of ‘‘[O]ther evidence demonstrates that the products should be stated on the labels the issues in dispute in this hearing, fast track product is not safe or effective of those products. counsel for Genentech and CDER under the conditions of use.’’ Genentech has stated that the ‘‘core reported that they were unable to reach In this case, the parties have agreed issue presented in this proceeding [is] agreement on how to frame the issues to that the FDA-approved prescribing whether FDA should maintain or

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withdraw the accelerated approval of decisions with respect to other products III. Transcripts Avastin for [the MBC indication], for the treatment of MBC or of other subject to Genentech’s conduct of a new products approved under the Please be advised that, as soon as a confirmatory study of Avastin with accelerated approval program. Issues transcript is available, it will be paclitaxel’’ (Letter from Michael Labson with respect to FDA action on other accessible at http:// to the Presiding Officer, April 8, 2011, products are not relevant to this www.regulations.gov. It may be viewed page 1). CDER has stated the issue, proceeding. Each decision to withdraw at the Division of Dockets Management ‘‘Whether CDER has appropriately or not to withdraw the approval of a (see Registration and Requests to Make exercised its authority by proposing to product must be made on its own Oral Presentation). A transcript will also withdraw approval of the MBC merits. If the decision with respect to be available in either hardcopy or on indication, rather than allowing the another product is in error, that would CD–ROM, after submission of a indication to remain on the label while not justify continuing that error with Freedom of Information request. Written the sponsor designs and conducts respect to the MBC indication for requests are to be sent to the Division additional studies intended to verify the Avastin. Moreover, as a practical matter, of Freedom of Information (HFI–35), drug’s clinical benefit’’ (CDER’s it would not be possible to evaluate the Office of Management Programs, Food Statement of Questions Presented, page different circumstances associated with and Drug Administration, 5600 Fishers 3). Ultimately, while stated differently, decisions with respect to other products Lane, Rm. 6–30, Rockville, MD 20857. the parties seem to agree that there is an in the context of this or any hearing. Dated: May 6, 2011. issue of the propriety of CDER’s FDA has consistently rejected attempts Leslie Kux, proposed withdrawal of this indication to bring evidence with respect to Acting Assistant Commissioner for Policy. now as opposed to the alternative of decisions on other products into [FR Doc. 2011–11539 Filed 5–6–11; 4:15 pm] continuing the approval of the breast hearings on approval or withdrawal of BILLING CODE 4160–01–P cancer indication while Genentech approval of products and will not performs new clinical studies of Avastin deviate from that position here. with paclitaxel to verify the clinical B. Process DEPARTMENT OF HEALTH AND benefit of the MBC indication. This HUMAN SERVICES statement of the issue raises the As further specified previously in this question of why, to confirm an document, the hearing will be held in National Institutes of Health indication for combination use with the Agency’s White Oak Conference paclitaxel, Genentech proposed, and Center on June 28 and 29, 2011. Laboratory Animal Welfare: Proposed CDER agreed, that Genentech could rely Although no statute or regulation Adoption and Implementation of the on studies of Avastin in combination requires that separation of functions be Eighth Edition of the Guide for the with chemotherapeutic agents other applied to this proceeding, the Agency Care and Use of Laboratory Animals than paclitaxel. It appears that the is observing separation of functions as a explanation is that these studies were matter of policy in this matter. As the AGENCY: National Institutes of Health, already ongoing at the time of the initial Center responsible for the proposed HHS. approval and both CDER and Genentech action, CDER, like Genentech, will be a ACTION: Notice of Additional Extension believed, at that time, that the results of party to the hearing and will be of Comment Period. these studies could provide evidence to responsible for presenting its position at verify the claim that Avastin, combined the hearing in accordance with § 601.43 SUMMARY: NIH is further extending the with paclitaxel, would have the effect and part 15. period for public comments on (1) NIH’s indicated in the approved labeling. In accordance with § 601.43(e)(2), no adoption of the eighth edition of the FDA is addressing the issue of person other than the Presiding Officer, Guide for the Care and Use of whether to maintain the accelerated the three designated representatives for Laboratory Animals (Guide) as a basis approval while additional studies are each party, and the members of the for evaluation of institutional programs conducted as the third issue for this advisory committee may question receiving or proposing to receive Public hearing as follows: witnesses present at the hearing. Health Service (PHS) support for Issue 3. If the Commissioner agrees Because this is a public hearing, it is activities involving animals; and (2) if with the grounds for withdrawal set out subject to our regulations concerning NIH decides to adopt the eighth edition in issue 1, issue 2.A, or issue 2.B, the policy and procedures for electronic of the Guide, NIH’s proposed should FDA nevertheless continue the media coverage of public agency implementation plan, which would approval of the breast cancer indication administrative proceedings (§§ 10.200 require that institutions complete at while the sponsor designs and conducts through 10.206 (21 CFR 10.200 through least one semiannual program and additional studies intended to verify the 10.206)). These procedures are primarily facility evaluation using the eighth drug’s clinical benefit? intended to expedite media access to edition of the Guide as the basis for While the parties would state the issues our public proceedings. Representatives evaluation by March 31, 2012. NIH will differently, the three issues stated in of the electronic media may be consider comments on (1) The adoption this notice will be those upon which the permitted, subject to certain limitations, of the Guide and (2) the implementation Commissioner expects to decide this to videotape, film, or otherwise record plan. The notice on the proposed matter. If Genentech prevails on issues our public administrative proceedings, adoption and implementation plan for 1, 2.A, and 2.B, the approval will be including the testimony of witnesses in the eighth edition of the Guide was continued. If CDER prevails on issue 1, the proceedings. Accordingly, the published in the Federal Register on 2.A, or 2.B, the question of withdrawal parties and nonparty participants to this February 24, 2011 (76 FR 10379). The will depend on issue 3. hearing, and all other interested comment period is extended by an In addition to the issues 1, 2.A, 2.B, persons, are directed to §§ 10.200 additional 30 days and thus will end on and 3, Genentech has proposed to raise through 10.206, for a more complete May 24, 2011. Additionally, character issues concerning the consistency of explanation of those regulations’ effect limits on the comment form fields have CDER’s position here with CDER’s on this hearing. been removed.

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DATES: Written comments on the The eighth edition of the Guide the disclosure of which would adoption and implementation of the contains substantive changes and constitute a clearly unwarranted eighth edition of the Guide must be additions from the previous edition. To invasion of personal privacy. received by NIH on or before May 24, gain insight from institutions on the Name of Committee: Board of Scientific 2011, in order to be considered. impact of changes to the Guide on their Counselors, NIA. ADDRESSES: Public comments may be animal care and use programs, NIH Date: June 14–15, 2011. entered at: http://grants.nih.gov/grants/ seeks comments on whether it should Closed: June 14, 2011, 8 a.m. to 8:30 a.m. olaw/2011guidecomments/add.htm. adopt the eighth edition of the Guide. Agenda: To review and evaluate personal qualifications and performance, and Character limits on the comment form NIH simultaneously proposes an competence of individual investigators. fields have been removed. If the implementation plan for the eighth edition of the Guide and seeks Place: National Institute on Aging, character limit previously in place Biomedical Research Center, 251 Bayview prevented you from submitting your comments on the proposed plan. The implementation plan proposed by Boulevard, 3rd Floor Conference Room, entire comment, please resubmit by the Baltimore, MD 21224. deadline in order to be considered. NIH would require institutions to complete at least one semiannual Open: June 14, 2011, 8:30 a.m. to 12 p.m. Comments will be made publicly Agenda: Committee discussion, individual program and facility evaluation, using available. Personally identifiable presentations, laboratory overview. information (except organizational the eighth edition of the Guide as the Place: National Institute on Aging, affiliations) will be removed prior to basis for evaluation, by March 31, 2012. Biomedical Research Center, 251 Bayview making comments publicly available. For such an evaluation to be considered Boulevard, 3rd Floor Conference Room, complete by NIH, it would need to Baltimore, MD 21224. FOR FURTHER INFORMATION CONTACT: include reasonable and specific plans Closed June 14, 2011, 12 p.m. to 1:15 p.m. Office of Laboratory Animal Welfare, and schedules for corrections of Agenda: To review and evaluate personal Office of Extramural Research, National deficiencies where appropriate. qualifications and performance, and Institutes of Health, RKL1, Suite 360, competence of individual investigators. 6705 Rockledge Drive, Bethesda, MD II. Electronic Access Place: National Institute on Aging, 20892–7982; telephone 301–496–7163. The eighth edition of the Guide is Biomedical Research Center, 251 Bayview Boulevard, 3rd Floor Conference Room, SUPPLEMENTARY INFORMATION: available on the NIH Office of Laboratory Animal Welfare Web site at Baltimore, MD 21224. I. Background http://olaw.nih.gov. Open: June 14, 2011, 1:15 p.m. to 3:15 p.m. Agenda: Committee discussion, individual The Guide, first published in 1963, is Dated: May 4, 2011. presentations, laboratory overview. a widely accepted primary reference on Francis S. Collins, Agenda: National Institute on Aging, animal care and use. Recommendations Director, National Institutes of Health. Biomedical Research Center, 251 Bayview in the Guide are based on published [FR Doc. 2011–11490 Filed 5–10–11; 8:45 am] Boulevard, 3rd Floor Conference Room, Baltimore, MD 21224. data, scientific principles, expert BILLING CODE 4140–01–P opinion, and experience with methods Closed: June 14, 2011, 3:15 p.m. to 3:30 and practices that are determined to be p.m. consistent with high quality, humane DEPARTMENT OF HEALTH AND Agenda: To review and evaluate personal qualifications and performance, and animal care and use. The eighth edition HUMAN SERVICES of the Guide was published in January competence of individual investigators. Place: National Institute on Aging, 2011 following a study by the Institute National Institutes of Health Biomedical Research Center, 251 Bayview for Laboratory Animal Research of the Boulevard, 3rd Floor Conference Room, National Academy of Sciences (NAS). National Institute on Aging; Notice of Baltimore, MD 21224. Meeting The NAS study process began in 2008 Open: June 14, 2011, 3:30 p.m. to 4:15 p.m. and followed the requirements of Pursuant to section 10(d) of the Agenda: Committee discussion, individual Section 15 of the Federal Advisory Federal Advisory Committee Act, as presentations, laboratory overview. Committee Act. The NAS study process amended (5 U.S.C. App.), notice is Place: National Institute on Aging, is described at the NAS Web site: hereby given of a meeting of the Board Biomedical Research Center, 251 Bayview http://www.nationalacademies.org/ Boulevard, 3rd Floor Conference Room, of Scientific Counselors, NIA. Baltimore, MD 21224. studyprocess/index.html. The meeting will be open to the Since 1985, the PHS Policy on Closed: June 14, 2011, 4:15 p.m. to 5:50 public as indicated below, with p.m. Humane Care and Use of Laboratory attendance limited to space available. Agenda: To review and evaluate personal Animals, authorized by Public Law 99– Individuals who plan to attend and qualifications and performance, and 158, 42 U.S.C. 289d, and incorporated need special assistance, such as sign competence of individual investigators. by reference at 42 CFR 52.8 and 42 CFR language interpretation or other Place: National Institute on Aging, 52a.8, has required that institutions reasonable accommodations, should Biomedical Research Center, 251 Bayview receiving PHS support for animal notify the Contact Person listed below Boulevard, 3rd Floor Conference Room, activities base their animal care and use in advance of the meeting. Baltimore, MD 21224. programs on the current edition of the The meeting will be closed to the Closed: June 15, 2011, 8 a.m. to 8:30 a.m. Guide and comply, as applicable, with public as indicated below in accordance Agenda: To review and evaluate personal the Animal Welfare Act and other with the provisions set forth in section qualifications and performance, and Federal statutes and regulations relating 552b(c)(6), Title 5 U.S.C., as amended competence of individual investigators. Place: National Institute on Aging, to animal activities. The PHS Policy is for the review, discussion, and Biomedical Research Center, 251 Bayview applicable to all PHS-conducted or evaluation of individual intramural Boulevard, 3rd Floor Conference Room, -supported activities (including programs and projects conducted by the Baltimore, MD 21224. research, research training, National Institute on Aging, including Open: June 15, 2011, 8:30 p.m. to 11:15 experimentation, biological testing, or consideration of personnel a.m. related purposes) involving live qualifications and performance, and the Agenda: Committee discussion, individual vertebrate animals. competence of individual investigators, presentations, laboratory overview.

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Place: National Institute on Aging, DEPARTMENT OF HEALTH AND postponed its originally scheduled Biomedical Research Center, 251 Bayview HUMAN SERVICES February 3, 2011, meeting due to Boulevard, 3rd Floor Conference Room, inclement weather. The new meeting Baltimore, MD 21224. National Institutes of Health date is June 21, 2011, in Texas City, Closed: June 15, 2011, 11:15 a.m. to 11:30 Texas, to discuss waterway a.m. National Center for Research improvements, aids to navigation, area Agenda: To review and evaluate personal Resources; Notice of Closed Meeting qualifications and performance, and projects impacting safety on the competence of individual investigators. Pursuant to section 10(d) of the Houston Ship Channel, and various Place: National Institute on Aging, Federal Advisory Committee Act, as other navigation safety matters in the Biomedical Research Center, 251 Bayview amended (5 U.S.C. App.), notice is Galveston Bay area. The meeting will be Boulevard, 3rd Floor Conference Room, hereby given of the following meeting. open to the public. Baltimore, MD 21224. The meeting will be closed to the DATES: The Committee will meet on Open: June 15, 2011, 11:30 a.m. to 12 p.m. public in accordance with the Tuesday, June 21, 2011, from 9 a.m. to Agenda: Committee discussion, individual provisions set forth in sections noon. Please note that meeting may presentations, laboratory overview. Place: National Institute on Aging, 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., close early if the Committee has Biomedical Research Center, 251 Bayview as amended. The grant applications and completed its business. Comments on Boulevard, 3rd Floor Conference Room, the discussions could disclose the issues to be considered by the Baltimore, MD 21224. confidential trade secrets or commercial committee should reach the online Closed: June 15, 2011, 12 p.m. to 1 p.m. property such as patentable material, docket or Docket Management Facility Agenda: To review and evaluate personal and personal information concerning by June 7, 2011. qualifications and performance, and individuals associated with the grant ADDRESSES: The meeting will be held at competence of individual investigators. applications, the disclosure of which Coast Guard Marine Safety Unit Place: National Institute on Aging, would constitute a clearly unwarranted Building in Texas City, 3101 FM 2004, Biomedical Research Center, 251 Bayview invasion of personal privacy. Boulevard, 3rd Floor Conference Room, Texas City, Texas 77591. For Baltimore, MD 21224. Name of Committee: National Center for information on facilities or services for Research Resources Special Emphasis Panel, individuals with disabilities or to Open: June 15, 2011, 1 p.m. to 2:45 p.m. COBRE 1, Part 2. request special assistance at the Agenda: Committee discussion, individual Date: June 22–23, 2011. presentations, laboratory overview. meeting, contact the person listed in the Time: 8 a.m. to 1 p.m. FOR FURTHER INFORMATION CONTACT Place: National Institute on Aging, Agenda: To review and evaluate grant Biomedical Research Center, 251 Bayview section below. applications. You may submit comments identified Boulevard, 3rd Floor Conference Room, Place: Hilton Washington/Rockville, 1750 Baltimore, MD 21224. Rockville Pike, Rockville, MD 20852. by docket number USCG–2010–1116 Closed: June 15, 2011, 2:45 p.m. to 3 p.m. Contact Person: Lisa A. Newman, SCD, using any one of the following methods: Agenda: To review and evaluate personal Scientific Review Officer, National Institutes (1) Federal eRulemaking Portal: qualifications and performance, and of Health, National Center for Research http://www.regulations.gov. Follow the competence of individual investigators. Resources, Office of Review, Room 1074, instructions for submitting comments. Place: National Institute on Aging, 6701 Democracy Blvd. MSC 4874, Bethesda, (2) Fax: 202–493–2251. Biomedical Research Center, 251 Bayview MD 20892. 301–435–0965. (3) Mail: Docket Management Facility Boulevard, 3rd Floor Conference Room, [email protected]. (M–30), U.S. Department of Baltimore, MD 21224. (Catalogue of Federal Domestic Assistance Transportation, West Building Ground Open: June 15, 2011, 3 p.m. to 3:45 p.m. Program Nos. 93.306, Comparative Medicine; Floor, Room W12–140, 1200 New Jersey Agenda: Committee discussion, individual 93.333, Clinical Research; 93.371, Biomedical Avenue, SE., Washington, DC 20590– presentations, laboratory overview. Technology; 93.389, Research Infrastructure, Place: National Institute on Aging, 93.306, 93.333; 93.702, ARRA Related 0001. Biomedical Research Center, 251 Bayview Construction Awards, National Institutes of (4) Hand delivery: Same as mail Boulevard, 3rd Floor Conference Room, Health, HHS) address above, between 9 a.m. and 5 Baltimore, MD 21224. p.m., Monday through Friday, except Dated: May 4, 2011. Closed: June 15, 2011, 3:45 p.m. to 5:20 Federal holidays. The telephone number p.m. Jennifer S. Spaeth, is 202–366–9329. To avoid duplication, Agenda: To review and evaluate personal Director, Office of Federal Advisory please use only one of these four qualifications and performance, and Committee Policy. methods. See the ‘‘Public Participation’’ competence of individual investigators. [FR Doc. 2011–11530 Filed 5–10–11; 8:45 am] portion of the SUPPLEMENTARY Place: National Institute on Aging, BILLING CODE 4140–01–P INFORMATION section below for Biomedical Research Center, 251 Bayview Boulevard, 3rd Floor Conference Room, instructions on submitting comments. Baltimore, MD 21224. FOR FURTHER INFORMATION CONTACT: If Contact Person: Michele K Evans, MD, DEPARTMENT OF HOMELAND you have any questions concerning the Acting Scientific Director, National Institute SECURITY meeting, contact Lieutenant Junior on Aging, 251 Bayview Boulevard, Suite 100, Grade Margaret Brown, Waterways Room 04C221, Baltimore, MD 21224, 410– Coast Guard Management Branch, Coast Guard, 558–8110, [email protected]. [USCG–2010–1116] telephone (713) 678–9001, e-mail (Catalogue of Federal Domestic Assistance [email protected]. If you have Program Nos. 93.866, Aging Research, Houston/Galveston Navigation Safety questions on viewing or submitting National Institutes of Health, HHS) Advisory Committee material to the docket, call Renee V. Dated: May 5, 2011. AGENCY: Coast Guard, DHS. Wright, Program Manager, Docket Jennifer S. Spaeth, Operations, telephone 202–366–9826. ACTION: Notice of Federal Advisory Director, Office of Federal Advisory Committee Meeting. SUPPLEMENTARY INFORMATION: Notice of Committee Policy. this meeting is given under the Federal [FR Doc. 2011–11529 Filed 5–10–11; 8:45 am] SUMMARY: The Houston/Galveston Advisory Committee Act (FACA), 5 BILLING CODE 4140–01–P Navigation Safety Advisory Committee U.S.C. App. (Pub. L. 93–463). The

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HOGANSAC is an advisory committee June 8, 2011 at the Homeport Web site: Dated: April 14, 2011. as provided for in section 18 of the http://homeport.uscg.mil/mycg/portal/ M.E. Woodring, Coast Guard Authorization Act of 1991, ep/programView.do?channelId18426& Captain, U.S. Coast Guard, Commander, (Pub. L. 102–241 as amended) and programId=13300&programPage= Sector Houston-Galveston. chartered under the provisions of the %2Fep%2Fprogram%2Feditorial.jsp& [FR Doc. 2011–11486 Filed 5–10–11; 8:45 am] FACA. HOGANSAC provides advice pageTypeId=13489&BV_SessionID=@@ BILLING CODE 9110–04–P and recommendations to the @@0584297917.1302013571@@@@&BV_ Commandant of the U.S. Coast Guard on EngineID=cccfadfdemifmekcfjgcfgfdf matters relating to safe transit of vessels fhdghm.0. The subcommittee is DEPARTMENT OF HOMELAND and products through Galveston Bay, reviewing safety issues at Bolivar Ferry SECURITY and to and from the Ports of Galveston, Landings and is requesting any real time Houston, Texas City, and Galveston Bay. videos and examples of unsafe wake in Federal Emergency Management Public Participation: To facilitate the area that users may have. The Agency public participation, we are inviting subcommittee continues to revise the [Internal Agency Docket No. FEMA–1974– public comment on the issues to be safe boating publications including the DR; Docket ID FEMA–2011–0001] considered by the committee as listed in Navigating the Houston Ship Channel the ‘‘Agenda’’ portion below. All brochure, a guide for commercial users Tennessee; Amendment No. 1 to submissions received must include the of the waterway; and the Sharing Our Notice of a Major Disaster Declaration words ‘‘Department of Homeland Bay Brochure, a guide for recreational AGENCY: Federal Emergency ’’ Security and the docket number for this users of the waterway. The Management Agency, DHS. action. Comments received will be subcommittee is conducting a study of ACTION: Notice. posted without alteration at http:// Galveston Anchorage Area and is www.regulations.gov, including any requesting that National Oceanic and SUMMARY: This notice amends the notice personal information provided. You Atmospheric Administration (NOAA) of a major disaster declaration for the may review a Privacy Act notice update Galveston-area nautical charts State of Tennessee (FEMA–1974–DR), regarding our public dockets in the with new survey information. The dated May 1, 2011, and related January 17, 2008, issue of the Federal subcommittee is also requesting that determinations. Register (73 FR 3316). NOAA utilize bottom contour DATES: Effective Date: May 4, 2011. Docket: For access to the docket to information for Anchorage A on FOR FURTHER INFORMATION CONTACT: read background documents or applicable charts and that hydrography Peggy Miller, Office of Response and comments received by the committee, information is added to applicable Recovery, Federal Emergency go to http://www.regulations.gov and charts for Anchorage A, B, and C in Management Agency, 500 C Street, SW., enter the docket number in the search Galveston Bay. The subcommittee Washington, DC 20472, (202) 646–3886. box. recently advised the Coast Guard Public Comment Period: A public regarding the costs and benefits of the SUPPLEMENTARY INFORMATION: The notice comment period will be held during the new U.S. Coast Guard Boarding of a major disaster declaration for the meeting on June 21 from 11 to 11:30 Procedures and has since closed the State of Tennessee is hereby amended to a.m. Speakers are requested to limit issue; include the following areas among those their comments to three minutes. Please (b) Area Maritime Security Committee areas determined to have been adversely note that the public comment period (AMSC) Liaison’s report: The AMSC affected by the event declared a major may end before the time indicated, representative will discuss the Annual disaster by the President in his following the last call for comments. Report from the Facility Security declaration of May 1, 2011. Contact the individual listed in the FOR Working Group, highlighting their new Bledsoe, Cocke, Johnson, McMinn, FURTHER INFORMATION CONTACT section to Web site and the progress they have Monroe, and Rhea Counties for Individual register as a speaker. made on various issues such as TWIC Assistance. (The following Catalog of Federal Domestic Agenda escorting and Mariner Access/Shore Leave. The representative will also Assistance Numbers (CFDA) are to be used The tentative agenda for the for reporting and drawing funds: 97.030, discuss lessons learned from the 2011 Community Disaster Loans; 97.031, Cora Committee is as follows: SECUREX, which took place on March (1) Opening Remarks by the Brown Fund; 97.032, Crisis Counseling; 24, 2011. The SECUREX is an exercise Designated Federal Officer (CAPT 97.033, Disaster Legal Services; 97.034, that focused on long-term recovery of Woodring) and Committee Chair (Mrs. Disaster Unemployment Assistance (DUA); the ship channel and the marine 97.046, Fire Management Assistance Grant; Tava Foret). transportation system following a 97.048, Disaster Housing Assistance to (2) Approval of September 23, 2010, Individuals and Households in Presidentially minutes. security incident. The AMSC representative will summarize the Declared Disaster Areas; 97.049, The HOGANSAC minutes will be Presidentially Declared Disaster Assistance— available at the following link as soon amount, type, finances, and timeline Disaster Housing Operations for Individuals as they are approved by the committee: associated with the Port Security Grants and Households; 97.050, Presidentially http://homeport.uscg.mil/mycg/portal/ Round 11 proposed projects. Declared Disaster Assistance to Individuals ep/channelView.do?channelId=-18426& (3) New Business. and Households—Other Needs; 97.036, Disaster Grants—Public Assistance channelPage=%2Fep%2Fchannel%2F (a) Review of 2011 Area Maritime _ Security Committees/Harbor Safety (Presidentially Declared Disasters); 97.039, default.jsp&pageTypeId=13489&BV Hazard Mitigation Grant.) SessionID=@@@@1196828626. Committees Conference in Houston, 1302537172@@@@&BV_EngineID= Texas; Dated: May 5, 2011. ccccadfdfemhkfhcfjgcfgfdffhdghk.0. (b) Brief presentation on Seafarer W. Craig Fugate, (3) Old Business. Access; Administrator, Federal Emergency (a) Waterways Safety and Utilization (5) Announcements. Management Agency. subcommittee report. Copies of the (a) Schedule Next Meetings; [FR Doc. 2011–11565 Filed 5–10–11; 8:45 am] report will be available to the public on (b) Solicitation for public comments. BILLING CODE 9111–23–P

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DEPARTMENT OF HOMELAND DEPARTMENT OF HOMELAND DEPARTMENT OF HOMELAND SECURITY SECURITY SECURITY

Federal Emergency Management Federal Emergency Management Federal Emergency Management Agency Agency Agency

[Internal Agency Docket No. FEMA–1971– [Internal Agency Docket No. FEMA–1966– [Internal Agency Docket No. FEMA–1971– DR; Docket ID FEMA–2011–0001] DR; Docket ID FEMA–2011–0001] DR; Docket ID FEMA–2011–0001]

Alabama; Amendment No. 9 to Notice Wisconsin; Amendment No. 1 to Notice Alabama; Amendment No. 8 to Notice of a Major Disaster Declaration of a Major Disaster Declaration of a Major Disaster Declaration

AGENCY: Federal Emergency AGENCY: Federal Emergency AGENCY: Federal Emergency Management Agency, DHS. Management Agency, DHS. Management Agency, DHS. ACTION: Notice. ACTION: Notice. ACTION: Notice.

DATES: Effective Date: May 4, 2011. DATES: Effective Date: May 3, 2011. DATES: Effective Date: May 4, 2011. FOR FURTHER INFORMATION CONTACT: FOR FURTHER INFORMATION CONTACT: FOR FURTHER INFORMATION CONTACT: Peggy Miller, Office of Response and Peggy Miller, Office of Response and Peggy Miller, Office of Response and Recovery, Federal Emergency Recovery, Federal Emergency Recovery, Federal Emergency Management Agency, 500 C Street, SW., Management Agency, 500 C Street, SW., Management Agency, 500 C Street, SW., Washington, DC 20472, (202) 646–3886. Washington, DC 20472, (202) 646–3886. Washington, DC 20472, (202) 646–3886. SUPPLEMENTARY INFORMATION: The notice SUPPLEMENTARY INFORMATION: The notice SUPPLEMENTARY INFORMATION: The notice of a major disaster declaration for the of a major disaster declaration for the of a major disaster declaration for the State of Alabama is hereby amended to State of Wisconsin is hereby amended to State of Alabama is hereby amended to include the following areas among those include the following area among those include the following area among those areas determined to have been adversely areas determined to have been adversely areas determined to have been adversely affected by the event declared a major affected by the event declared a major affected by the event declared a major disaster by the President in his disaster by the President in his disaster by the President in his declaration of April 28, 2011. declaration of April 5, 2011. declaration of April 28, 2011. Clarke and Perry Counties for Individual Green County for Public Assistance. Green Chambers County for Individual Assistance Assistance (already designated for debris County for emergency protective measures (already designated for debris removal and removal and emergency protective measures (Category B), including snow assistance, emergency protective measures [Categories A [Categories A and B], including direct under the Public Assistance program, for any and B], including direct Federal assistance, Federal assistance, under the Public continuous 48-hour period during or under the Public Assistance program). Assistance program). proximate to the incident period. The following Catalog of Federal Domestic The following Catalog of Federal Domestic (The following Catalog of Federal Domestic Assistance Numbers (CFDA) are to be used Assistance Numbers (CFDA) are to be used Assistance Numbers (CFDA) are to be used for reporting and drawing funds: 97.030, for reporting and drawing funds: 97.030, for reporting and drawing funds: 97.030, Community Disaster Loans; 97.031, Cora Community Disaster Loans; 97.031, Cora Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis Counseling; Brown Fund; 97.032, Crisis Counseling; Brown Fund; 97.032, Crisis Counseling; 97.033, Disaster Legal Services; 97.034, 97.033, Disaster Legal Services; 97.034, 97.033, Disaster Legal Services; 97.034, Disaster Unemployment Assistance (DUA); Disaster Unemployment Assistance (DUA); Disaster Unemployment Assistance (DUA); 97.046, Fire Management Assistance Grant; 97.046, Fire Management Assistance Grant; 97.046, Fire Management Assistance Grant; 97.048, Disaster Housing Assistance to 97.048, Disaster Housing Assistance to 97.048, Disaster Housing Assistance to Individuals and Households in Presidentially Individuals and Households in Presidentially Individuals and Households In Presidentially Declared Disaster Areas; 97.049, Declared Disaster Areas; 97.049, Declared Disaster Areas; 97.049, Presidentially Declared Disaster Assistance— Presidentially Declared Disaster Assistance— Presidentially Declared Disaster Assistance— Disaster Housing Operations for Individuals Disaster Housing Operations for Individuals Disaster Housing Operations for Individuals and Households; 97.050, Presidentially and Households; 97.050, Presidentially and Households; 97.050 Presidentially Declared Disaster Assistance to Individuals Declared Disaster Assistance to Individuals Declared Disaster Assistance to Individuals and Households—Other Needs; 97.036, and Households—Other Needs; 97.036, and Households—Other Needs; 97.036, Disaster Grants—Public Assistance Disaster Grants—Public Assistance Disaster Grants—Public Assistance (Presidentially Declared Disasters); 97.039, (Presidentially Declared Disasters); 97.039, (Presidentially Declared Disasters); 97.039, Hazard Mitigation Grant. Hazard Mitigation Grant.) Hazard Mitigation Grant. Dated: May 5, 2011. Dated: May 4, 2011. Dated: May 4, 2011. W. Craig Fugate, W. Craig Fugate, W. Craig Fugate, Administrator, Federal Emergency Administrator, Federal Emergency Administrator, Federal Emergency Management Agency. Management Agency. Management Agency. [FR Doc. 2011–11563 Filed 5–10–11; 8:45 am] [FR Doc. 2011–11517 Filed 5–10–11; 8:45 am] [FR Doc. 2011–11516 Filed 5–10–11; 8:45 am] BILLING CODE 9111–23–P BILLING CODE 9111–23–P BILLING CODE 9111–23–P

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DEPARTMENT OF HOMELAND DEPARTMENT OF HOMELAND DEPARTMENT OF HOMELAND SECURITY SECURITY SECURITY

Federal Emergency Management Federal Emergency Management Federal Emergency Management Agency Agency Agency

[Internal Agency Docket No. FEMA–1959– [Internal Agency Docket No. FEMA–1973– [Internal Agency Docket No. FEMA–1961– DR; Docket ID FEMA–2011–0001] DR; Docket ID FEMA–2011–0001] DR; Docket ID FEMA–2011–0001]

Massachusetts; Amendment No. 1 to Georgia; Amendment No. 4 to Notice of Missouri; Amendment No. 2 to Notice Notice of a Major Disaster Declaration a Major Disaster Declaration of a Major Disaster Declaration

AGENCY: Federal Emergency AGENCY: Federal Emergency AGENCY: Federal Emergency Management Agency, DHS. Management Agency, DHS. Management Agency, DHS. ACTION: Notice. ACTION: Notice. ACTION: Notice.

SUMMARY: This notice amends the notice SUMMARY: This notice amends the notice SUMMARY: This notice amends the notice of a major disaster declaration for the of a major disaster declaration for the of a major disaster declaration for the Commonwealth of Massachusetts State of Georgia (FEMA–1973–DR), State of Missouri (FEMA–1961–DR), (FEMA–1959–DR), dated March 7, 2011, dated April 29, 2011, and related dated March 23, 2011, and related and related determinations. determinations. determinations. DATES: Effective Date: May 3, 2011. DATES: Effective Date: May 3, 2011. DATES: Effective Date: May 3, 2011. FOR FURTHER INFORMATION CONTACT: FOR FURTHER INFORMATION CONTACT: FOR FURTHER INFORMATION CONTACT: Peggy Miller, Office of Response and Peggy Miller, Office of Response and Peggy Miller, Office of Response and Recovery, Federal Emergency Recovery, Federal Emergency Recovery, Federal Emergency Management Agency, 500 C Street, SW., Management Agency, 500 C Street, SW., Washington, DC 20472, (202) 646–3886. Management Agency, 500 C Street, SW., Washington, DC 20472, (202) 646–3886. Washington, DC 20472, (202) 646–3886. SUPPLEMENTARY INFORMATION: The notice SUPPLEMENTARY INFORMATION: The notice of a major disaster declaration for the SUPPLEMENTARY INFORMATION: The notice of a major disaster declaration for the Commonwealth of Massachusetts is of a major disaster declaration for the State of Missouri is hereby amended to hereby amended to include the State of Georgia is hereby amended to include the following areas among those following area among those areas include the following areas among those areas determined to have been adversely determined to have been adversely areas determined to have been adversely affected by the event declared a major affected by the event declared a major affected by the event declared a major disaster by the President in his disaster by the President in his disaster by the President in his declaration of March 23, 2011. declaration of March 7, 2011. declaration of April 29, 2011. Buchanan and Pike Counties for Public Hampden County for, debris removal and Cherokee, Habersham, Newton, Upson, and Assistance. emergency protective measures (Categories A White Counties for Individual Assistance. Buchanan and Pike Counties for emergency and B), including snow assistance under the (The following Catalog of Federal Domestic protective measures (Category B), including Public Assistance program for any snow assistance, under the Public Assistance continuous 48-hour period during or Assistance Numbers (CFDA) are to be used program, for any continuous 48-hour period proximate to the incident period. for reporting and drawing funds: 97.030, during or proximate to the incident period. (The following Catalog of Federal Domestic Community Disaster Loans; 97.031, Cora The following Catalog of Federal Domestic Assistance Numbers (CFDA) are to be used Brown Fund; 97.032, Crisis Counseling; Assistance Numbers (CFDA) are to be used for reporting and drawing funds: 97.030, 97.033, Disaster Legal Services; 97.034, for reporting and drawing funds: 97.030, Community Disaster Loans; 97.031, Cora Disaster Unemployment Assistance (DUA); Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis Counseling; 97.046, Fire Management Assistance Grant; 97.033, Disaster Legal Services; 97.034, 97.048, Disaster Housing Assistance to Brown Fund; 97.032, Crisis Counseling; Disaster Unemployment Assistance (DUA); Individuals and Households in Presidentially 97.033, Disaster Legal Services; 97.034, Disaster Unemployment Assistance (DUA); 97.046, Fire Management Assistance Grant; Declared Disaster Areas; 97.049, 97.046, Fire Management Assistance Grant; 97.048, Disaster Housing Assistance to Presidentially Declared Disaster Assistance— 97.048, Disaster Housing Assistance to Individuals and Households in Presidentially Disaster Housing Operations for Individuals Individuals and Households in Presidentially Declared Disaster Areas; 97.049, and Households; 97.050, Presidentially Presidentially Declared Disaster Assistance— Declared Disaster Areas; 97.049, Declared Disaster Assistance to Individuals Presidentially Declared Disaster Assistance— Disaster Housing Operations for Individuals and Households—Other Needs; 97.036, and Households; 97.050, Presidentially Disaster Housing Operations for Individuals Disaster Grants—Public Assistance Declared Disaster Assistance to Individuals and Households; 97.050 Presidentially (Presidentially Declared Disasters); 97.039, and Households—Other Needs; 97.036, Declared Disaster Assistance to Individuals Disaster Grants—Public Assistance Hazard Mitigation Grant.) and Households—Other Needs; 97.036, Disaster Grants—Public Assistance (Presidentially Declared Disasters); 97.039, W. Craig Fugate, Hazard Mitigation Grant.) (Presidentially Declared Disasters); 97.039, Administrator, Federal Emergency Hazard Mitigation Grant. Dated: May 4, 2011. Management Agency. W. Craig Fugate, [FR Doc. 2011–11512 Filed 5–10–11; 8:45 am] W. Craig Fugate, Administrator, Federal Emergency BILLING CODE 9111–23–P Administrator, Federal Emergency Management Agency. Management Agency. [FR Doc. 2011–11515 Filed 5–10–11; 8:45 am] [FR Doc. 2011–11510 Filed 5–10–11; 8:45 am] BILLING CODE 9111–23–P BILLING CODE 9111–23–P

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DEPARTMENT OF HOMELAND DEPARTMENT OF HOUSING AND necessary for the proper performance of SECURITY URBAN DEVELOPMENT the functions of the agency, including whether the information will have Federal Emergency Management [Docket No. FR–5487–N–14] practical utility; (2) evaluate the Agency accuracy of the agency’s estimate of the Notice of Proposed Information burden of the proposed collection of Collection for Public Comment; Indian information; (3) enhance the quality, [Internal Agency Docket No. FEMA–1971– Housing Block Grant (IHBG) Program utility, and clarity of the information to DR; Docket ID FEMA–2011–0001] Reporting be collected; and (4) minimize the Alabama; Amendment No. 7 to Notice AGENCY: Office of the Assistant burden of the collection of information of a Major Disaster Declaration Secretary for Public and Indian on those who are to respond, including Housing, HUD. through the use of appropriate AGENCY: Federal Emergency ACTION: Notice of proposed information automated collection techniques or Management Agency, DHS. collection. other forms of information technology, e.g., permitting electronic submission of ACTION: Notice. SUMMARY: The proposed information responses. collection requirement described below This Notice also lists the following SUMMARY: This notice amends the notice will be submitted to the Office of information: of a major disaster declaration for the Management and Budget (OMB) for Title of Proposal: Indian Housing State of Alabama (FEMA–1971–DR), review, as required by the Paperwork Block Grant Information Collection. dated April 28, 2011, and related Reduction Act. The Department is OMB Control Number: 2577–0218. Description of the need for the determinations. soliciting public comments on the information and proposed use: Indian subject proposal. DATES: Effective Date: May 3, 2011. Tribes, Alaska Natives, Native DATES: Comments Due Date: July 11, Hawaiians, or Tribally designated FOR FURTHER INFORMATION CONTACT: 2011. Peggy Miller, Office of Response and housing entities that receive Indian Recovery, Federal Emergency ADDRESSES: Interested persons are Housing Block Grant (IHBG) funds are Management Agency, 500 C Street, SW., invited to submit comments regarding required annually to submit HUD– 52737—the Indian Housing Plan/ Washington, DC 20472, (202) 646–3886. this proposal. Comments should refer to the proposal by name/or OMB Control Annual Performance Report (IHP/APR) SUPPLEMENTARY INFORMATION: The notice number and should be sent to: Colette that consists of two components: the of a major disaster declaration for the Pollard, Departmental Reports Indian Housing Plan (IHP) component State of Alabama is hereby amended to Management Officer, QDAM, and the Annual Performance Report include the following areas among those Department of Housing and Urban (APR) component areas determined to have been adversely Development, 451 7th Street, SW., The IHP is required by Section 102 of affected by the event declared a major Room 4160, Washington, DC 20410– the Native American Housing disaster by the President in his 5000; telephone 202–402–3400, (this is Assistance and Self-Determination Act declaration of April 28, 2011. not a toll-free number) or e-mail Ms. (NAHASDA) and describes the eligible IHBG-funded, affordable housing Lamar and Lauderdale Counties for Pollard at [email protected] for a activities the recipient plans to conduct Individual Assistance (already designated for copy of the proposed forms, or other for the benefit of low and moderate debris removal and emergency protective available information. Persons with income Tribal members and identifies measures [Categories A and B], including hearing or speech impairments may direct Federal assistance, under the Public access this number through TTY by the intended outcomes and outputs for Assistance program). calling the toll-free Federal Information the upcoming 12-month year. HUD Relay Service at (800) 877–8339. (Other conducts a limited review of the IHP to The following Catalog of Federal Domestic determine that the planned activities are Assistance Numbers (CFDA) are to be used than the HUD USER information line in compliance with NAHASDA for reporting and drawing funds: 97.030, and TTY numbers, telephone numbers requirements, as defined at 24 CFR Part Community Disaster Loans; 97.031, Cora are not toll-free.) 1000. Brown Fund; 97.032, Crisis Counseling; FOR FURTHER INFORMATION CONTACT: At the end of the 12-month period, 97.033, Disaster Legal Services; 97.034, Arlette Mussington, Office of Policy, the recipient submits the APR that is Disaster Unemployment Assistance (DUA); Programs and Legislative Initiatives, 97.046, Fire Management Assistance Grant; required by Section 404 of NAHASDA PIH, Department of Housing and Urban and describes (1) the use of grant funds 97.048, Disaster Housing Assistance to Development, 451 7th Street, SW., Individuals and Households In Presidentially during the prior 12-month period; (2) (L’Enfant Plaza, Room 2206), the actual outcomes and outputs Declared Disaster Areas; 97.049, Washington, DC 20410; telephone 202– Presidentially Declared Disaster Assistance— achieved; (3) program accomplishments; 402–4109, (this is not a toll-free and (4) jobs supported by IHBG-funded Disaster Housing Operations for Individuals number). and Households; 97.050, Presidentially activities. HUD uses the information in Declared Disaster Assistance to Individuals SUPPLEMENTARY INFORMATION: The the APR to review the recipient’s and Households—Other Needs; 97.036, Department will submit the proposed progress in implementing the IHP, Disaster Grants—Public Assistance information collection to OMB for verify whether the activities are eligible (Presidentially Declared Disasters); 97.039, review, as required by the Paperwork and to determine if the recipient has the Hazard Mitigation Grant.) Reduction Act of 1995 (44 U.S.C. capacity to continue implementing the chapter 35, as amended). This Notice is activities described in the IHP in a W. Craig Fugate, soliciting comments from members of timely manner. The information in the Administrator, Federal Emergency the public and affected agencies APR also will be used to provide Management Agency. concerning the proposed collection of Congress, stakeholders, and other [FR Doc. 2011–11507 Filed 5–10–11; 8:45 am] information to: (1) Evaluate whether the interested parties with information on BILLING CODE 9111–23–P proposed collection of information is how the IHBG funds are being used to

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meet affordable housing needs within and the total reporting burden is DATES: A written proposal and seven Native American communities. estimated at 54,578 hours. copies must be submitted on or before Recipients of Native American Status of the proposed information 5 p.m. (MST), on October 14, 2011. A Housing Block Grants (NAHBG) funds collection: Extension. proposal will be considered timely only under the American Recovery and Authority: Section 3506 of the Paperwork if it is received in the office of the Reinvestment Act of 2008 are required Reduction Act of 1995, 44 U.S.C. Chapter 35, Program Director by or before 5 p.m. on to submit annually the Annual as amended. the designated date. Interested entities Performance Report (HUD–52735–AS) are cautioned that delayed delivery to Dated: May 3, 2011. to describe (1) the use of NAHBG funds this office due to failures or during the prior 12-month period; (2) Merrie Nichols-Dixon, misunderstandings of the entity and/or the actual outcomes and outputs Deputy Director for Office of Policy, Programs, of mail, overnight, or courier services achieved; (3) program accomplishments; and Legislative Initiatives. will not excuse lateness and, and (4) jobs supported by NAHBG- [FR Doc. 2011–11518 Filed 5–10–11; 8:45 am] accordingly, are advised to provide funded activities. (Since NAHBG was BILLING CODE 4210–67–P sufficient time for delivery. Late authorized under the auspices of proposals will not be considered. NAHASDA, §§ 102 and 404 apply). ADDRESSES: Send written proposals and Participants in the IHBG program are seven copies to Mr. Reed R. Murray, DEPARTMENT OF THE INTERIOR responsible for notifying HUD of Program Director, Central Utah Project changes to the Formula Current Assisted Completion Act, Department of the Stock (FCAS) component of the IHBG Central Utah Project Completion Act; Interior, 302 East 1860 South, Provo, UT formula. HUD is notified of changes in Notice of Intent To Accept Proposals, 84606–7317. Requests for technical data the FCAS through a Formula Response Select a Potential Lessee, and Contract should also be sent to Mr. Murray. Any Form (HUD–4117), as defined at 24 CFR for Hydroelectric Power Development release of such data will be subject to 1000.302. A Tribe, TDHE, or HUD may at the Spanish Fork Flow Control applicable Homeland Security laws and challenge the data from the U.S. Structure policy. Decennial Census or provide an AGENCY: Office of the Assistant A copy of the proposal should also be alternative source of data by submitting Secretary—Water and Science, sent to Ms. LaVerne Kyriss, CRSP the Guidelines for Challenging U.S. Manager, Western Area Power Decennial Census Data Document Department of the Interior. Administration, 150 Social Hall (HUD–4119). Census challenges are due ACTION: Notice. Avenue, Suite 300, Salt Lake City, UT June 15 of each fiscal year, as defined 84111–1580. Information related to at 24 CFR 1000.336. This information SUMMARY: Current Federal policy Western’s purchasing and/or marketing collection is required of participants in encourages non-Federal development of the power may also be obtained from the IHBG program to demonstrate environmentally sustainable Ms. Kyriss at the address above, or by compliance with eligibility and other hydropower potential on Federal water calling (801) 524–6372. requirements of NAHASDA; provision resource projects. The Department of the Information related to the operation of correction or challenge Interior (Interior), in consultation with and maintenance of the Spanish Fork documentation of the formula the Department of Energy, Western Area Flow Control Structure may be obtained calculation; and provision of data for Power Administration (Western), will from Mr. Rich Tullis, Central Utah HUD’s annual report to Congress. The consider proposals for non-Federal Water Conservancy District, 355 West information gathered will be used to development of hydroelectric power at University Parkway, Orem, UT 84058– allocate funds under the IHBG program. the Spanish Fork Flow Control 7303; or by calling (801) 226–7122. The quality assurance of data reported Structures of the Central Utah Project is a very important issue in maintaining (CUP). Interior is considering such FOR FURTHER INFORMATION CONTACT: Mr. HUD’s databases used to monitor hydroelectric power development under Lynn Hansen, (801) 379–1238. participant’s proposed plans, a lease of power privilege. No Federal SUPPLEMENTARY INFORMATION: accomplishments, determine program funds will be available for such Background Information: The CUP, compliance, and to ensure fair and hydroelectric power development. Bonneville Unit, located in northern equitable allocations. In some cases, the Western would have the first Utah, was originally authorized for FCAS information addressing the opportunity to purchase and/or market construction, including hydroelectric conveyances and conversions of units the power that would be generated by power, by the Colorado River Storage has resulted in the recouping of funds. such development under a lease of Project (CRSP) Act of April 11, 1956 (ch. The information collected will allow power privilege. The CUP is a Federal 203, 70 Stat. 105) (CRSP Act). The HUD to accurately audit the program. Bureau of Reclamation (Reclamation) Spanish Fork Flow Control Structure Agency form numbers: HUD–52737, project under the administration of the was constructed under the Central Utah HUD–52735–AS, HUD–4117, HUD– Assistant Secretary for Water and Project Completion Act (CUPCA), 4119. Science. This notice presents comprised of Titles II–VI of the Act of Members of affected public: Native background information, proposal October 30, 1992 (106 Stat. 4600, Pub. American Tribes and Tribally content guidelines, and information L. 102–575). CUPCA also authorized the Designated Housing Entities, Alaska concerning selection of a non-Federal construction of other features of the Natives and Corporations, and Native entity to develop hydroelectric power at Bonneville Unit. Section 208 of CUPCA Hawaiians. the Spanish Fork Flow Control provides that power generation facilities Estimation of the total number of Structure, and power purchasing and/or associated with the CUP be developed hours needed to prepare the information marketing considerations. Interested and operated in accordance with the collection including number of entities are invited to submit a proposal CRSP Act, which explicitly embodies all respondents, frequency of response, and for hydroelectric power development at Reclamation law except as otherwise hours of response: The estimated the Spanish Fork Flow Control provided in the CRSP Act. Section 208 number of respondents is 579; the Structure site for consideration by also specifies that water diverted for frequency of response is once per year; Interior. power purposes shall only be incidental

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to the delivery of water for other lease of power privilege, including whole or in part by loans made pursuant authorized project purposes. The NEPA compliance and development of to the Rural Electrification Act of 1936, Central Utah Water Conservancy District the lease of power privilege, would be as amended. (District), under its contracts with the the expense of the lessee. In addition, B. Provide geographical locations and United States and under CUPCA has the lessee would be required to make describe principal structures and other certain responsibilities and obligations annual payments to the United States important features of the proposed for the CUP and specifically for the for the use of a Government facility. development including roads and Spanish Fork Flow Control Structure Depending on the economic capability transmission lines. Estimate and including operation, maintenance, of the proposed hydroelectric describe installed capacity and the replacement, and repayment. development, this amount will not be capacity of the power facilities under Interior, in consultation with Western, less than 3 mills per kilowatt-hour of dry, average, and wet hydrological is considering hydroelectric power generation. If conditions provide conditions. Also describe seasonal or development at the Spanish Fork Flow opportunity for substantial benefit to annual generation patterns. Include Control Structure through a lease of accrue to the lessee, then the United estimates of the amount of electrical power privilege. A lease of power States will benefit proportionally. Also, energy that would be produced from the privilege is an alternative to Federal under the lease of power privilege, facility for each month of average, dry, hydroelectric power development. A provisions will be included for inflation and wet water years. If capacity and lease of power privilege is a contractual of the annual payment with time. Such energy can be delivered to another right given to a non-Federal entity to use annual payments to the United States location, either by the proposing entity a Reclamation facility for electric power would be deposited as a credit to the or by potential wheeling agents, specify generation consistent with Reclamation Upper Colorado River Basin Fund. where capacity and energy can be project purposes. Leases of power Interested Parties: Interior will be delivered. Include concepts for power privilege have terms not to exceed 40 available to meet with interested entities sales and contractual arrangements, years. The general authority for lease of only upon written request to the involved parties and the proposed power privilege under Reclamation law Program Director at the above address. approach to wheeling if required. To includes, among others, Section 5 of the Interior reserves the right to schedule a determine the marketability of the Town Sites and Power Development Act single meeting and/or visit to address at generated hydropower, Western requires of 1906 (43 U.S.C. 522) and Section 9(c) once the questions of all entities that the following information: cost of of the Reclamation Project Act of 1939 have submitted questions or requested delivered generation in $/megawatt- (43 U.S.C. 485h(c)) (1939 Act). Interior site visits. Western will also be available hour, including any variations in cost will be the lead Federal agency for to meet with Interior and interested (on-peak, off-peak, seasonal), including ensuring compliance with the National entities to discuss Western’s potential escalation factors and any other charges; Environmental Policy Act (NEPA) of marketing of hydropower. delivery point and voltage of generation any lease of power privilege considered Proposal Content Guidelines: plus any arrangements the lessee has to in response to this notice. Leases of Interested parties should submit a wheel power to an alternate location(s); power privilege may be issued only proposal explaining in as precise detail the daily, weekly, monthly, and annual when Interior, upon completion of the as is practicable how the hydropower pattern of expected generation under NEPA process, determines that the potential at the site would be average, wet, and dry hydrological affected hydroelectric power sites are developed. Factors which a proposal conditions; ability of generation to environmentally acceptable. Any lease should consider and address include, provide ancillary services such as of power privilege at the Spanish Fork but are not limited to, the following: regulation, spinning reserves, and volt- Flow Control Structure must A. Provide all information relevant to ampere reactive support; and accommodate existing contractual the qualifications of the proposing information on the reliability of the commitments related to operation and entity to plan and implement such a generation, potential maintenance maintenance of such existing facilities. project, including, but not limited to, outage schedule, and duration. The potential lessee (i.e., successful information about preference status, C. Indicate title arrangements and the proposing entity) would be required to type of organization, length of time in ability for acquiring title to or the right coordinate with the District in the business, experience in funding, design to occupy and use lands necessary for operation and maintenance of any and construction of similar projects, the proposed development(s), including proposed hydropower developments industry rating(s) that indicate financial such additional lands as may be with existing project features. soundness and/or technical and required during construction. Western would have the first managerial capability, experience of key D. Discuss any studies necessary to opportunity to purchase and/or market management personnel, history of any adequately define impacts on the CUP the power that would be generated reorganizations or mergers with other and the environment of the under any lease of power privilege. companies, and any other information development. Describe any significant Under this process, Western would that demonstrates the interested entity’s environmental issues associated with either purchase and market the power as organizational, technical and financial the development and the proposing Salt Lake City Area—Integrated Projects ability to perform all aspects of the entity’s approach for gathering relevant (SLCA–IP) power or market the power work. Include a discussion of past data and resolving such issues to protect independently by first offering it to experience in operating and maintaining and enhance the quality of the preference entities and secondly to non- similar facilities and provide references environment. Explain any proposed use preference entities. Western would have as appropriate. The term ‘‘preference of the hydropower development for 60 days from the date of notification of entity,’’ as applied to a lease of power conservation and utilization of the selection of a potential lessee in which privilege, means an entity qualifying for available water resources in the public to decide whether to purchase and/or preference under Section 9(c) of the interest. market the power. Reclamation Project Act of 1939, as a E. Describe any contractual All costs incurred by the United municipality, public corporation or arrangements with the entity having States related to development and agency, or cooperative or other operation and maintenance operation and maintenance under a nonprofit organization financed in responsibility for the CUP feature(s) that

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are proposed for utilization in the hydropower facility and provide for entities as heretofore defined in hydropower development under long-term operation and maintenance, Proposal Content Guidelines, item A. consideration. Define how the and (4) best share the economic benefits Notice and Time Period to Enter Into hydropower development would of the hydropower development among Lease of Power Privilege: Interior will operate in harmony with the CUP and parties (including the United States) to notify, in writing, all entities submitting existing applicable contracts related to the lease of power privilege. A proposal proposals of Interior’s decision operation and maintenance of CUP will be deemed unacceptable if it is regarding selection of the potential feature(s) being considered for inconsistent with CUP purposes, as lessee(s). The selected potential lessee(s) modification. determined by Interior. Interior will give will have five years from the date of F. Identify plans for assuming liability preference to those entities that qualify such notification to enter into a lease(s) for damage to the operational and as preference entities (as defined under of power privilege for the site or sites structural integrity of the CUP caused by Proposal Content Guidelines, item A.), identified in the proposal. This period construction, operation, and/or provided that their proposal is at least may only be extended by the United maintenance of the hydropower as well-adapted to developing, States in writing. development. conserving, and utilizing the water and Dated: May 4, 2011. G. Identify the organizational natural resources as other submitted Reed R. Murray, structure planned for the long-term proposals and that the preference entity operation and maintenance of any Program Director, Department of the Interior. is well qualified. Through written [FR Doc. 2011–11525 Filed 5–10–11; 8:45 am] proposed hydropower development. notice, all preference entities would be BILLING CODE 4310–MN–P H. Provide a management plan to allowed 90 days to improve their accomplish such activities as planning, proposals, if necessary, to be made at NEPA compliance, lease of power least equal to a proposal(s) that may DEPARTMENT OF THE INTERIOR privilege development, design, have been submitted by a non- construction, facility testing, and start of preference entity. National Park Service hydropower production. Prepare Power Purchasing and/or Marketing schedules of these activities as is [NPS–PWR–PWRO–0215–6786; 8381–1001– Considerations: Western would have the applicable. Describe what studies are NZW] first opportunity to purchase and/or necessary to accomplish the hydroelectric power development and market the power that would be Water Resources Management Plan/ how the studies would be implemented. generated by the project under a lease(s) Environmental Impact Statement, I. Estimate development cost. This of power privilege. Western will consult Mojave National Preserve, San cost should include all investment costs with Interior on such power purchasing Bernardino County, CA and/or marketing considerations. such as the cost of studies to determine AGENCY: National Park Service, Interior. Western may market the power feasibility, NEPA compliance, design, ACTION: available from the project as part of its Notice of Intent to Prepare a construction, and financing as well as Water Resources Management Plan/ the amortized annual cost of the Salt Lake City Area Integrated Projects (SLCA/IP) or on a stand-alone basis, first Environmental Impact Statement for investment; also, the annual operation, Mojave National Preserve. maintenance, and replacement expense to preference entities qualified under for the hydropower development; lease criteria established by Western and SUMMARY: In accordance with payments to the United States; and second to non-preference entities, by § 102(2)(C) of the National expenses that may be associated with developing an individual marketing Environmental Policy Act of 1969, the CUP; and the anticipated return on plan for this power. This marketing plan Mojave National Preserve is initiating investment. If there are additional would be developed through a separate the conservation planning and transmission or wheeling expenses subsequent public process beginning environmental impact analysis process associated with the development of the with a notice in the Federal Register of needed to inform preparation of a Water hydropower development, these should Western’s intent to market the power. Resources Management Plan/ be included. Identify proposed methods The marketing plan would include all Environmental Impact Statement of financing the hydropower aspects of marketing the power, (WRMP/EIS). This plan is intended to development. An economic analysis including assignment of power to guide future management of ground and should be presented that compares the qualified preference and/or non- surface water sources within Mojave present worth of all benefits and costs preference entities, pricing, National Preserve. Through this process of the hydropower development. transmission, and delivery of power. the National Park Service (NPS) will Selection of the Potential Lessee: Western would recover the costs it identify and assess potential impacts of Interior, in consultation with Western, would incur in purchasing and/or a range of alternatives to management of will evaluate proposals received in marketing the power through the rates water resources. As part of the EIS response to this published notice. charged for the power. Firm power rates process, the NPS will evaluate different Interior may request additional would be established through a public approaches for water resources information from individual proposing process, initiated by a notice in the management to determine the potential entities and/or all proposing entities Federal Register, separate from the impacts on land use, water quality, after proposals are submitted, but prior marketing plan. geology, biological and cultural to making a selection of a potential In the event Western elects to not resources, human health and safety, lessee. purchase and/or market the power aesthetics, visitor experience, Interior will give more favorable generated by the hydropower Wilderness, and other stewardship consideration to proposals that (1) development or such a decision cannot considerations. utilize water and natural resources in an be made within 60 days of notification Mojave National Preserve (Preserve) is environmentally and economically of selection of a potential lessee, the a 1.6 million-acre unit of the National sound manner: (2) improve ecosystem lessee(s) would be responsible for Park System, established by Congress on function; (3) clearly demonstrate that marketing the power generated by the October 31, 1994, by the California the offeror is qualified to develop the project with priority given to preference Desert Protection Act. The Act protected

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a vast expanse of desert lands that by general principles that can be submit your comments online by represent a combination of Great Basin, applied to specific problems. visiting the project Web site http:// Sonoran, and Mojave desert ecosystems. Developing and clearly explaining how parkplanning.nps.gov/mojave_water. If The Act also specified hunting as a these principles should be applied is a you wish to submit written comments permitted activity within the Preserve. goal of the Draft WRMP/EIS. The (e.g., in a letter), you may send your By the time of establishment, many relationship between surface water comments via U.S. Postal Service (or artificial water sources had been availability and wildlife populations is other mail delivery service) or hand- developed within the Preserve to also multifaceted, and may be deliver them to the address provided support cattle grazing operations and complicated by the potential effects of above. Oral statements and written game populations. Human manipulation climate change. The Draft WRMP/EIS comments will also be accepted during of natural springs and seeps, with will provide the basis for preserving public meetings. Comments will not be intermittent maintenance, enhanced wildlife and preventing resource accepted by fax, e-mail, or in any other surface flow to provide additional water impairment. way than those specified above. for the same purposes. There also DATES: To facilitate sound planning and Comments in any format (hard copy or existed 133 small game wildlife water consideration of environmental electronic) submitted by an individual developments (also known as ‘‘guzzlers’’ resources, the NPS intends to gather or organization on behalf of another or ‘‘drinkers’’), and 6 big game guzzlers, information necessary for preparing the individual or organization also will not which intercept and store rainwater for Draft WRMP/EIS and to obtain be accepted. wildlife use. All of the big game suggestions from the public on issues Before including your address, phone guzzlers and many of the small game and concerns which should be number, e-mail address, or other water developments are in areas of the addressed. The NPS is seeking pertinent personal identifying information in your Preserve which are now designated environmental information regarding comment, you should be aware that Wilderness. scope of the analysis, and suggestions your entire comment—including your Since 1998, private donors have regarding preliminary alternatives personal identifying information—may purchased and retired approximately which should be considered. All be made publicly available at any time. 1,260,980 acres of grazing land in the comments must be postmarked or While you can ask us in your comment Preserve. As cattle have been removed, transmitted not later than July 11, 2011. to withhold your personal identifying watering troughs, windmills, and Full public participation by park information from public review, we pipelines were also removed or fell into stakeholders, concerned organizations cannot guarantee that we will be able to disrepair. This has led to calls by some and private citizens, as well as Federal, do so. hunting proponents to convert State, and local agencies, is invited so Decision Process: Following careful abandoned wells to game guzzlers. as to fully inform the process of analysis of all responses received Conversely, wildlife advocates have preparing the Draft WRMP/EIS. Four concerning the Draft WRMP/EIS, a final cited guzzler-related injuries to bighorn plan will be prepared and its sheep, protected desert tortoises, and public meetings will be hosted during the scoping period: June 27 (Henderson, availability similarly announced in the other wildlife species as a rationale for Federal Register. Thereafter, but not reducing the number of water NV), June 28 (Needles, CA), June 29 (San Bernardino, CA), and June 30 sooner than 30 days after release of the developments. Final WRMP/EIS, a Record of Decision Since 1994, the NPS has managed (Barstow, CA). Confirmed details on would be prepared. As a delegated EIS, water sources in the Preserve on a case- time and location will be announced in the official responsible for final by-case basis, while conducting the local press and on the park Web site approval of the Water Resources inventories and studies to develop the (http://www.nps.gov/moja); details may information needed for an ecosystem- also be obtained by contacting the Management Plan is the Regional scale management approach. The Preserve directly. These meetings will Director, Pacific West Region. Preserve’s general management plan provide current information and Subsequently the official responsible for (GMP) identified the need to develop a respond to questions and comments on implementation of the approved plan comprehensive ecosystem-scale Water issues and alternatives to assist NPS in would be the Superintendent, Mojave Resources Management Plan for springs, developing the Draft WRMP/EIS. National Preserve. seeps, water diversions, and artificial SUPPLEMENTARY INFORMATION: Dated: February 10, 2011. water sources to maintain healthy Periodically updated information will Patricia L. Neubacher, wildlife communities and groundwater be available on the project Web site at Acting Regional Director, Pacific West Region. flow conditions at safe yields—this http://parkplanning.nps.gov/ [FR Doc. 2011–11410 Filed 5–10–11; 8:45 am] mojave_water. You may request to be conservation planning effort seeks to BILLING CODE 4310–6E–P fulfill that objective. Desired future added to the project mailing list by condition goals will be developed mailing, e-mailing, or faxing your through public engagement with request to: Superintendent, Mojave DEPARTMENT OF THE INTERIOR hunting groups, environmental National Preserve, Attn: Mojave WRMP, organizations, park visitors, local, state 2701 Barstow Road, Barstow, California National Park Service and Federal agencies, and other 92311 (E-mail: MOJA_Superintendent@ interested parties, in keeping with nps.gov and Fax: (760) 252–6171). [NPS–WASO–NRNHL–0411– 7274; 2280– 665] existing laws, regulations, and NPS Please note in your request whether you management policies. wish to receive a printed or compact National Register of Historic Places; Surface water availability in the form disk version of the Draft WRMP/EIS, or Notification of Pending Nominations of springs and seeps is a function of just wish to receive notice that the and Related Actions groundwater flow and discharge. The document is available for review. relationship between groundwater, If you wish to comment during the Nominations for the following surface water, and wells is complex. scoping phase for the Draft WRMP/EIS, properties being considered for listing Preserve stewardship and resource you may use any one of several or related actions in the National management activities must be guided methods. To comment electronically, Register were received by the National

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Park Service before April 23, 2011. 759,737–743,745,748–758 E. 75th St., SUMMARY: In compliance with the Pursuant to section 60.13 of 36 CFR part Chicago, 11000318 Paperwork Reduction Act of 1995, the 60, written comments are being East 79th Street and South Cottage Grove Office of Surface Mining Reclamation accepted concerning the significance of Avenue Historic District, (Terra Cotta and Enforcement (OSM) is announcing Commercial Buildings in Chatham— the nominated properties under the Greater Grand Crossing MPS) 7850– its intention to request continued National Register criteria for evaluation. 58,7851–59,7901–11 S. Evans,714–26,734– approval for the collection of Comments may be forwarded by United 44,746–58,735–37,739–59,804–06,805–11 information which relates to a citizen’s States Postal Service, to the National E. 79th St., Chicago, 11000319 written request for a Federal inspection. Register of Historic Places, National O’Hanley Building, (Terra Cotta Commercial DATES: Comments on the proposed Park Service, 1849 C St., NW., MS 2280, Buildings in Chatham—Greater Grand information collection must be received Washington, DC 20240; by all other Crossing MPS) 7701–7705 S. Cottage Grove by July 11, 2011, to be assured of carriers, National Register of Historic Ave., Chicago, 11000321 consideration. Places, National Park Service, 1201 Eye MARYLAND ADDRESSES: Comments may be mailed to St., NW., 8th floor, Washington, DC Prince George’s County John Trelease, Office of Surface Mining 20005; or by fax, 202–371–6447. Written Reclamation and Enforcement, 1951 or faxed comments should be submitted Clagett House at Cool Spring Manor, 17500 Constitution Ave, NW., Room 202—SIB, May 26, 2011. Before including your Clagett Landing Rd., Upper Marlboro, 11000322 Washington, DC 20240. Comments may address, phone number, e-mail address, also be submitted electronically to or other personal identifying MINNESOTA [email protected]. information in your comment, you Hennepin County should be aware that your entire FOR FURTHER INFORMATION CONTACT: To Abbott Hospital, 110 E. 18th St., receive a copy of the information comment—including your personal Minneapolis, 11000323 identifying information—may be made collection request contact John Trelease publicly available at any time. While St. Louis County at (202) 208–2783 or by e-mail at you can ask us in your comment to Duluth Armory, 1301–1305 London Rd., [email protected]. withhold your personal identifying Duluth, 11000324 SUPPLEMENTARY INFORMATION: The Office YWCA of Duluth, (Duluth’s Central Business information from public review, we of Management and Budget (OMB) cannot guarantee that we will be able to District, MPS) 202 W. 2nd St., Duluth, 11000325 regulations at 5 CFR 1320, which do so. implement provisions of the Paperwork NEW YORK J. Paul Loether, Reduction Act of 1995 (Pub. L 104–13), Chief, National Register of Historic Places, Delaware County require that interested members of the National Historic Landmarks Program. Schoolhouse No. 5, 5942 Dunk Hill Rd., public and affected agencies have an Hamden, 11000326 opportunity to comment on information COLORADO collection and recordkeeping activities Onondaga County Mesa County [see 5 CFR 1320.8 (d)]. This notice Huntley Apartments, 407–409 Stolp Ave., identifies information collection that Calamity Camp, (Mining Industry in Syracuse, 11000327 Colorado, MPS) Address Restricted, OSM will be submitting to OMB for Gateway, 11000313 OREGON approval. This collection is contained in 30 CFR 842, Federal inspections and Lane County ILLINOIS monitoring. OSM has revised burden Cook County Springfield Motors Buick Dealership, 702 N. estimates, where appropriate, to reflect A St., Springfield, 11000328 current reporting levels or adjustments Building at 7600–7604 South Cottage Grove Williams, Lew, Chevrolet Dealership, 2020 Avenue, (Terra Cotta Commercial Franklin Blvd., Eugene, 11000329 based on reestimates of burden or Buildings in Chatham—Greater Grand respondents. OSM will request a 3-year A request for REMOVAL has been made for Crossing MPS) 7600–7604 S. Cottage Grove the following resource: term of approval for this information Ave., Chicago, 11000315 collection activity. Building at 8000–8008 South Cottage Grove INDIANA An agency may not conduct or Avenue, (Terra Cotta Commercial sponsor, and a person is not required to Vanderburgh County Buildings in Chatham—Greater Grand respond to, a collection of information Crossing MPS) 8000–8008 S. Cottage Grove Buckingham Apartments (Downtown unless it displays a currently valid OMB Ave., Chicago, 11000316 Evansville MRA) 314–316 SE. 3rd St., control number. The OMB control Building at 8030 South Cottage Grove Evansville, 82000082 number for 30 CFR 842 is 1029–0118. Avenue, (Terra Cotta Commercial [FR Doc. 2011–11504 Filed 5–10–11; 8:45 am] Buildings in Chatham—Greater Grand Comments are invited on: (1) The BILLING CODE 4312–51–P Crossing MPS) 8030 S. Cottage Grove Ave., need for the collection of information Chicago, 11000317 for the performance of the functions of Building at 932–944 East 79th Street, (Terra the agency; (2) the accuracy of the DEPARTMENT OF THE INTERIOR Cotta Commercial Buildings in Chatham— agency’s burden estimates; (3) ways to Greater Grand Crossing MPS) 932–944 E. Office of Surface Mining Reclamation enhance the quality, utility and clarity 79th St., Chicago, 11000314 and Enforcement of the information collection; and (4) Champlain Building, (Terra Cotta ways to minimize the information Commercial Buildings in Chatham— Notice of Proposed Information collection burden on respondents, such Greater Grand Crossing MPS) 635–637 E. as use of automated means of collection 79th St., Chicago, 11000320 Collection of the information. A summary of the East 75th Street and South Cottage Grove Avenue Historic District, (Terra Cotta AGENCY: Office of Surface Mining public comments will accompany Commercial Buildings in Chatham— Reclamation and Enforcement, Interior. OSM’s submission of the information collection request to OMB. Greater Grand Crossing MPS) 7439– ACTION: Notice and request for Before including your address, phone 41,7445–53,7455–59,7500–7504,7452–58 comments for 1029–0118. S. Cottage Grove Ave., 802–810,749– number, e-mail address, or other

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personal identifying information in your The purpose of this notice is to allow (4) Affected public who will be asked comment, you should be aware that for an additional 30 days for public or required to respond, as well as a brief your entire comment, including your comment until June 10, 2011. This abstract: The affected public includes personal identifying information, may process is conducted in accordance with the approximately 33 grantees of the be made publicly available at any time. 5 CFR 1320.10. Supervised Visitation Program who are While you can ask us in your comment Written comments and/or suggestions States, Indian Tribal governments, and to withhold your personal identifying regarding the items contained in this units of local government. The information from public review, we notice, especially the estimated public Supervised Visitation Program provides cannot guarantee that we will be able to burden and associated response time, an opportunity for communities to do so. should be sent to the Office of support the supervised visitation and This notice provides the public with Information and Regulatory Affairs, safe exchange of children, by and 60 days in which to comment on the Office of Management and Budget, Attn: between parents, in situations involving following information collection DOJ Desk Officer. The best way to domestic violence, child abuse, sexual activity: ensure your comments are received is to assault, or stalking. Title: 30 CFR 842—Federal e-mail them to (5) An estimate of the total number of inspections and monitoring. [email protected] or fax respondents and the amount of time OMB Control Number: 1029–0118. them to 202–395–7285. All comments estimated for an average respondent to Summary: For purposes of should reference the 8 digit OMB respond/reply: It is estimated that it will information collection, this part number for the collection or the title of take the approximately 33 respondents establishes the procedures for any the collection. If you have questions (Supervised Visitation Program person to notify the Office of Surface concerning the collection, please call grantees) approximately one hour to Mining in writing of any violation that Cathy Poston at 202–514–5430 or the complete a semi-annual progress report. may exist at a surface coal mining DOJ Desk Officer at 202–395–3176. The semi-annual progress report is operation. The information will be used Written comments and suggestions divided into sections that pertain to the to investigate potential violations of the from the public and affected agencies different types of activities in which Act or applicable State regulations. concerning the proposed collection of grantees may engage. A Supervised Bureau Form Number: None. information are encouraged. Your Visitation Program grantee will only be Frequency of Collection: Once. comments should address one or more required to complete the sections of the Description of Respondents: Citizens. form that pertain to its own specific Total Annual Responses: 47. of the following four points: Total Annual Burden Hours: 188 (1) Evaluate whether the proposed activities. (6) An estimate of the total public hours. collection of information is necessary Total Annual Non-Wage Burden: $0. for the proper performance of the burden (in hours) associated with the functions of the agency, including collection: The total annual hour burden Dated: May 4, 2011. whether the information will have to complete the data collection forms is Stephen M. Sheffield, practical utility; 66 hours, that is 33 grantees completing Acting Chief, Division of Regulatory Support. (2) Evaluate the accuracy of the a form twice a year with an estimated [FR Doc. 2011–11305 Filed 5–10–11; 8:45 am] agency’s estimate of the burden of the completion time for the form being one BILLING CODE 4310–05–M proposed collection of information, hour. including the validity of the If additional information is required methodology and assumptions used; contact: Lynn Murray, Deputy Clearance DEPARTMENT OF JUSTICE (3) Enhance the quality, utility, and Officer, United States Department of clarity of the information to be Justice, Justice Management Division, [OMB Number 1122–0009] collected; and Policy and Planning Staff, Two Constitution Square, 145 N Street, NE., Agency Information Collection (4) Minimize the burden of the Room 2E–808, Washington, DC 20530. Activities: Extension of a Currently collection of information on those who Approved Collection; Comments are to respond, including through the Dated: May 5, 2011. Requested: Semi-Annual Progress use of appropriate automated, Lynn Murray, Report for the Safe Havens: electronic, mechanical, or other Department Clearance Officer, PRA, United Supervised Visitation and Safe technological collection techniques or States Department of Justice. Exchange Grant Program other forms of information technology, [FR Doc. 2011–11505 Filed 5–10–11; 8:45 am] e.g., permitting electronic submission of BILLING CODE 4410–FX–P ACTION: 30-Day notice of information responses. collection under review. Overview of This Information DEPARTMENT OF JUSTICE The Department of Justice, Office on Collection Violence Against Women (OVW) will be (1) Type of Information Collection: [OMB Number 1122–0011] submitting the following information Extension of a currently approved Agency Information Collection collection request to the Office of collection. Management and Budget (OMB) for (2) Title of the Form/Collection: Semi- Activities: Extension of a Currently review and approval in accordance with Annual Progress Report for Grantees Approved Collection; Comments the Paperwork Reduction Act of 1995. from the Safe Havens: Supervised Requested: Semi-Annual Progress Report for Grantees From the Grants The proposed information collection is Visitation and Exchange Grant Program to State Sexual Assault and Domestic published to obtain comments from the (Supervised Visitation Program). public and affected agencies. This (3) Agency form number, if any, and Violence Coalitions Program proposed information collection was the applicable component of the ACTION: 30-Day notice of information previously published in the Federal Department of Justice sponsoring the collection under review. Register Volume 76, Number 40, page collection: Form Number: 1122–0009. 11278–11279, on March 1, 2011, U.S. Department of Justice, Office on The Department of Justice, Office on allowing for a 60-day comment period. Violence Against Women. Violence Against Women (OVW) will be

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submitting the following information Overview of This Information Dated: May 5, 2011. collection request to the Office of Collection Lynn Murray, Management and Budget (OMB) for Department Clearance Officer, PRA, United review and approval in accordance with (1) Type of Information Collection: States Department of Justice. Extension of a currently approved the Paperwork Reduction Act of 1995. [FR Doc. 2011–11508 Filed 5–10–11; 8:45 am] collection. The proposed information collection is BILLING CODE 4410–FX–P published to obtain comments from the (2) Title of the Form/Collection: Semi- public and affected agencies. This Annual Progress Report for Grantees proposed information collection was from the Grants to Support Tribal DEPARTMENT OF JUSTICE Domestic Violence and Sexual Assault previously published in the Federal [OMB Number 1122–0005] Register Volume 76, Number 40, page Coalitions Program (Tribal Coalitions.) 11279, on March 1, 2011, allowing for (3) Agency form number, if any, and Agency Information Collection a 60-day comment period. the applicable component of the Activities; Extension of a Currently The purpose of this notice is to allow Department of Justice sponsoring the Approved Collection; Comments for an additional 30 days for public collection: Form Number: 1122–0011. Requested: Semi-Annual Progress Report for the Grantees From the comment until June 10, 2011. This U.S. Department of Justice, Office on Violence Against Women. Grants To Reduce Violent Crimes process is conducted in accordance with Against Women on Campus Program 5 CFR 1320.10. (4) Affected public who will be asked or required to respond, as well as a brief Written comments and/or suggestions ACTION: 30-Day Notice of Information abstract: The affected public includes Collection Under Review. regarding the items contained in this the 14 grantees from the Tribal notice, especially the estimated public Coalitions Program. The Tribal The Department of Justice, Office on burden and associated response time, Coalitions Program grantees include Violence Against Women (OVW) will be should be sent to the Office of Indian Tribal governments that will submitting the following information Information and Regulatory Affairs, support the development and operation collection request to the Office of Office of Management and Budget, Attn: of new or existing nonprofit Tribal Management and Budget (OMB) for DOJ Desk Officer. The best way to domestic violence and sexual assault review and approval in accordance with ensure your comments are received is to coalitions in Indian country. These the Paperwork Reduction Act of 1995. e-mail them to grants provide funds to develop and _ The proposed information collection is oira [email protected] or fax operate nonprofit Tribal domestic published to obtain comments from the them to 202–395–7285. All comments violence and sexual assault coalitions in public and affected agencies. This should reference the 8 digit OMB Indian country to address the unique proposed information collection was number for the collection or the title of issues that confront Indian victims. The previously published in the Federal the collection. If you have questions Tribal Coalitions Program provides Register Volume 76, Number 40, pages concerning the collection, please call resources for organizing and supporting 11279–11280, on March 1, 2011, Cathy Poston at 202–514–5430 or the efforts to end violence against Indian allowing for a 60-day comment period. DOJ Desk Officer at 202–395–3176. women. The purpose of this notice is to allow Written comments and suggestions (5) An estimate of the total number of for an additional 30 days for public from the public and affected agencies respondents and the amount of time comment until June 10, 2011. This concerning the proposed collection of estimated for an average respondent to process is conducted in accordance with information are encouraged. Your respond/reply: It is estimated that it will 5 CFR 1320.10. comments should address one or more take the 14 respondents (grantees from Written comments and/or suggestions of the following four points: the Tribal Coalitions Program) regarding the items contained in this approximately one hour to complete a notice, especially the estimated public (1) Evaluate whether the proposed burden and associated response time, collection of information is necessary Semi-Annual Progress Report. The Semi-Annual Progress Report is divided should be sent to the Office of for the proper performance of the Information and Regulatory Affairs, functions of the agency, including into sections that pertain to the different types of activities that grantees may Office of Management and Budget, Attn: whether the information will have DOJ Desk Officer. The best way to practical utility; engage in with grant funds. Grantees must complete only those sections that ensure your comments are received is to (2) Evaluate the accuracy of the are relevant to their activities. e-mail them to agency’s estimate of the burden of the [email protected] or fax (6) An estimate of the total public proposed collection of information, them to 202–395–7285. All comments burden (in hours) associated with the including the validity of the should reference the 8 digit OMB collection: The total annual hour burden methodology and assumptions used; number for the collection or the title of to complete the data collection forms is (3) Enhance the quality, utility, and the collection. If you have questions 28 hours, that is 14 grantees completing concerning the collection, please call clarity of the information to be a form twice a year with an estimated collected; and Cathy Poston at 202–514–5430 or the completion time for the form being one DOJ Desk Officer at 202–395–3176. (4) Minimize the burden of the hour. Written comments and suggestions collection of information on those who If additional information is required from the public and affected agencies are to respond, including through the contact: Lynn Murray, Department concerning the proposed collection of use of appropriate automated, Clearance Officer, United States information are encouraged. Your electronic, mechanical, or other Department of Justice, Justice comments should address one or more technological collection techniques or Management Division, Policy and of the following four points: other forms of information technology, Planning Staff, Two Constitution (1) Evaluate whether the proposed e.g., permitting electronic submission of Square, 145 N Street, NE., Suite 2E–808, collection of information is necessary responses. Washington, DC 20530. for the proper performance of the

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functions of the agency, including will only be required to complete the DOJ Desk Officer. The best way to whether the information will have sections of the form that pertain to its ensure your comments are received is to practical utility; own specific activities. e-mail them to (2) Evaluate the accuracy of the (6) An estimate of the total public [email protected] or fax agency’s estimate of the burden of the burden (in hours) associated with the them to 202–395–7285. All comments proposed collection of information, collection: The total annual hour burden should reference the 8 digit OMB including the validity of the to complete the data collection forms is number for the collection or the title of methodology and assumptions used; 200 hours, that is 100 grantees the collection. If you have questions (3) Enhance the quality, utility, and completing a form twice a year with an concerning the collection, please call clarity of the information to be estimated completion time for the form Cathy Poston at 202–514–5430 or the collected; and being one hour. DOJ Desk Officer at 202–395–3176. (4) Minimize the burden of the If additional information is required Written comments and suggestions collection of information on those who contact: Lynn Murray, Department from the public and affected agencies are to respond, including through the Clearance Officer, United States concerning the proposed collection of use of appropriate automated, Department of Justice, Justice information are encouraged. Your electronic, mechanical, or other Management Division, Policy and comments should address one or more technological collection techniques or Planning Staff, Two Constitution of the following four points: other forms of information technology, Square, 145 N Street, NE., Room 2E–808 (1) Evaluate whether the proposed e.g., permitting electronic submission of NW., Washington, DC 20530. collection of information is necessary responses. for the proper performance of the Dated: May 5, 2011. functions of the agency, including Overview of This Information Lynn Murray, Collection whether the information will have Department Clearance Officer, PRA, United practical utility; (1) Type of Information Collection: States Department of Justice. (2) Evaluate the accuracy of the Extension of a currently approved [FR Doc. 2011–11509 Filed 5–10–11; 8:45 am] agency’s estimate of the burden of the collection. BILLING CODE 4410–FX–P proposed collection of information, (2) Title of the Form/Collection: Semi- including the validity of the Annual Progress Report for Grantees methodology and assumptions used; from the Grants To Reduce Violent DEPARTMENT OF JUSTICE (3) Enhance the quality, utility, and Crimes Against Women on Campus [OMB Number 1122–0010] clarity of the information to be Program (Campus Program). collected; and (3) Agency form number, if any, and Agency Information Collection (4) Minimize the burden of the the applicable component of the Activities: Extension of a Currently collection of information on those who Department of Justice sponsoring the Approved Collection; Comments are to respond, including through the collection: Form Number: 1122–0005. Requested: Semi-Annual Progress use of appropriate automated, U.S. Department of Justice, Office on Report for the Grants to State Sexual electronic, mechanical, or other Violence Against Women. Assault and Domestic Violence technological collection techniques or (4) Affected public who will be asked Coalitions Program other forms of information technology, or required to respond, as well as a brief e.g., permitting electronic submission of abstract: The affected public includes ACTION: 30-Day Notice of Information responses. the approximately 100 grantees Collection Under Review. (institutions of higher education) of the Overview of This Information Grants To Reduce Violent Crimes The Department of Justice, Office on Collection Against Women on Campus Program Violence Against Women (OVW) will be (1) Type of Information Collection: whose eligibility is determined by submitting the following information Extension of a currently approved statute. Campus Program grants may be collection request to the Office of collection. used to enhance victim services and Management and Budget (OMB) for (2) Title of the Form/Collection: Semi- develop programs to prevent violent review and approval in accordance with Annual Progress Report for Grantees crimes against women on campuses. the Paperwork Reduction Act of 1995. from the Grants to State Sexual Assault The Campus Program also enables The proposed information collection is and Domestic Violence Coalitions institutions of higher education to published to obtain comments from the Program (State Coalitions Program). develop and strengthen effective public and affected agencies. This (3) Agency form number, if any, and security and investigation strategies to proposed information collection was the applicable component of the combat violent crimes against women previously published in the Federal Department of Justice sponsoring the on campuses, including domestic Register Volume 76, Number 40, pages collection: Form Number: 1122–0010. violence, dating violence, sexual 11277–11278 on March 1, 2011, U.S. Department of Justice, Office on assault, and stalking. allowing for a 60-day comment period. Violence Against Women. (5) An estimate of the total number of The purpose of this notice is to allow (4) Affected public who will be asked respondents and the amount of time for an additional 30 days for public or required to respond, as well as a brief estimated for an average respondent to comment until June 10, 2011. This abstract: The affected public includes respond/reply: It is estimated that it will process is conducted in accordance with the 88 grantees from the State Coalitions take the approximately 100 respondents 5 CFR 1320.10. Program. The State Coalitions Program (Campus Program grantees) Written comments and/or suggestions provides Federal financial assistance to approximately one hour to complete a regarding the items contained in this state coalitions to support the semi-annual progress report. The semi- notice, especially the estimated public coordination of state victim services annual progress report is divided into burden and associated response time, activities, and collaboration and sections that pertain to the different should be sent to the Office of coordination with Federal, state, and types of activities in which grantees Information and Regulatory Affairs, local entities engaged in violence may engage. A Campus Program grantee Office of Management and Budget, Attn: against women activities.

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(5) An estimate of the total number of other sections of the force main that and Explosives (ATF), will be respondents and the amount of time have not been replaced in the past. In submitting the following information estimated for an average respondent to the event another rupture to the force collection request to the Office of respond/reply: It is estimated that it will main occurs, the agreement requires the Management and Budget (OMB) for take the approximately 88 respondents town to pay additional penalties and review and approval in accordance with (State Coalitions Program grantees) replace some or all of the older sections the Paperwork Reduction Act of 1995. approximately one hour to complete a of the force main—depending on the This notice requests comments from the semi-annual progress report. The semi- circumstances of the rupture. public and affected agencies concerning annual progress report is divided into The Department of Justice will receive the proposed information collection. sections that pertain to the different for a period of thirty (30) days from the Comments are encouraged and will be types of activities in which grantees date of this publication comments accepted for ‘‘sixty days’’ until July 11, may engage. A State Coalitions Program relating to the proposed Consent Decree. 2011. This process is conducted in grantee will only be required to Comments should be addressed to the accordance with 5 CFR 1320.10. complete the sections of the form that Assistant Attorney General, If you have comments on the pertain to its own specific activities. Environment and Natural Resources estimated public burden or associated (6) An estimate of the total public Division, and either e-mailed to response time, suggestions, or need a burden (in hours) associated with the [email protected] or copy of the proposed information collection: The total annual hour burden mailed to P.O. Box 7611, U.S. collection instrument with instructions to complete the data collection forms is Department of Justice, Washington, DC or additional information, please 176 hours, that is 88 grantees 20044–7611, and should refer to United contact Ann Marie Hannon, completing a form twice a year with an States v. Town of Greenwich, Civil [email protected], Policy and estimated completion time for the form Action No. 3:11–CV–00674–RNC, D.J. Human Capital Planning Branch, Room being one hour. Ref. 90–5–1–1–06717/1. 2.S–189, 99 New York Avenue, NE., If additional information is required During the public comment period, Washington, DC 20226. contact: Lynn Murray, Department the Consent Decree, may also be Written comments concerning this Clearance Officer, United States examined on the following Department information collection should be sent to of Justice Web site, to http:// Department of Justice, Justice the Office of Information and Regulatory www.usdoj.gov/enrd/ Management Division, Policy and Affairs, Office of Management and Consent_Decrees.html. A copy of the Planning Staff, Two Constitution Budget, Attn: DOJ Desk Officer. The best Consent Decree may also be obtained by Square, 145 N Street, NE., Room 2E– way to ensure your comments are mail from the Consent Decree Library, 808, Washington, DC 20530. received is to e-mail them to P.O. Box 7611, U.S. Department of Dated: May 5, 2011. [email protected] or fax Justice, Washington, DC 20044–7611 or Lynn Murray, them to 202–395–7285. All comments by faxing or e-mailing a request to Tonia should reference the 8 digit OMB Department Clearance Officer, PRA, United Fleetwood ([email protected]), States Department of Justice. number for the collection or the title of fax no. (202) 514–0097, phone [FR Doc. 2011–11503 Filed 5–10–11; 8:45 am] confirmation number (202) 514–1547. In the collection. If you have questions BILLING CODE 4410–FX–P requesting a copy from the Consent concerning the collection, please call Decree Library, please enclose a check Ann Marie Hannon 202–648–9010 or the DOJ Desk Officer at 202–395–3176. DEPARTMENT OF JUSTICE in the amount of $13.50 (25 cents per page reproduction costs of Consent Written comments and suggestions Decree and Appendices) payable to the from the public and affected agencies Notice of Lodging of Consent Decree concerning the proposed collection of Under the Clean Water Act U.S. Treasury or, if by e-mail or fax, forward a check in that amount to the information are encouraged. Your Notice is hereby given that on April Consent Decree Library at the stated comments should address one or more 27, 2011, a proposed Consent Decree in address. of the following four points: United States v. Town of Greenwich, —Evaluate whether the proposed Connecticut, Civil Action No. 3:11–CV– Ronald G. Gluck, collection of information is necessary 00674–RNC, was lodged with the Assistant Chief, Environmental Enforcement for the proper performance of the United States District Court for the Section, Environment and Natural Resources functions of the agency, including District of Connecticut. Division. whether the information will have In this action, the United States seeks, [FR Doc. 2011–11403 Filed 5–10–11; 8:45 am] practical utility; inter alia, injunctive relief in relation to BILLING CODE 4410–15–P —Evaluate the accuracy of the unauthorized discharges from the agency’s estimate of the burden of the Town’s wastewater collection system proposed collection of information, (‘‘Collection System’’), in violation of the DEPARTMENT OF JUSTICE including the validity of the Town’s National Pollutant Discharge Bureau of Alcohol, Tobacco, Firearms methodology and assumptions used; Elimination System Permit issued under and Explosives —Enhance the quality, utility, and the Clean Water Act, 33 U.S.C. 1251, et clarity of the information to be seq. The discharges resulted from [OMB Number 1140–0047] collected; and ruptures in the Old Greenwich Common —Minimize the burden of the Force Main, which is a critical Agency Information Collection collection of information on those who component of the Collection System. Activities: Proposed collection are to respond, including through the The Consent Decree requires the Town, comments requested Race and use of appropriate automated, among other things, to pay a $200,000 National Origin Identification electronic, mechanical, or other penalty and rehabilitate a section of the ACTION: 60-Day Notice. technological collection techniques or Old Greenwich Common Force Main. other forms of information technology, The Consent Decree further requires the The Department of Justice (DOJ), e.g., permitting electronic submission of town to evaluate the need to replace Bureau of Alcohol, Tobacco, Firearms responses.

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Summary of Information Collection Commission disclosing changes in its provisions limiting the recovery of (1) Type of Information Collection: membership, nature and objectives. The antitrust plaintiffs to actual damages Extension of a currently approved notifications were filed for the purpose under specified circumstances. collection. of extending the Act’s provisions Specifically, the NBAC has amended (2) Title of the Form/Collection: Race limiting the recovery of antitrust various aspects of its BQ–9000 standard and National Origin Identification. plaintiffs to actual damages under in several ways, including, but not (3) Agency form number, if any, and specified circumstances. Specifically, limited to, the following: The Producer the applicable component of the BP Offshore Response Company LLC, Standard now requires reporting of Department of Justice sponsoring the Houston, TX, has been added as a party significant process changes; adds more collection: Form Number: ATF F 2931.1. to this venture. The changes in its specific requirements for product Bureau of Alcohol, Tobacco, Firearms nature and objectives are: (1) In homogeneity and sampling; codifies and Explosives. furtherance of the venture’s previously- several previously informal policies; (4) Affected public who will be asked disclosed objectives, the previously- and implements a weighted ranking or required to respond, as well as a brief disclosed parties to MWCV have formed system. The Marketer Standard is abstract: Primary: Individuals or Marine Well Containment Company amended to answer questions about households. Other: None. LLC (‘‘MWCC LLC’’), a Delaware limited operating multiple facilities; adds an liability company located in Houston, oxidation stability reporting Need for Collection TX; and (2) in furtherance of the requirement; addresses a marketer The information collection is used to venture’s previously-disclosed functioning as a broker; creates maintain Race and National Origin data objectives, MWCC LLC and the parties exceptions for blends of 399 and higher; on all employees and new hires to meet to MWCV have entered into a System codifies several previously informal diversity/EEO goals and act as a Development Agreement. policies; implements a weighted ranking component of a tracking system to No other changes have been made in system; and adds a provision for ensure that personnel practices meet the either the membership or planned external laboratory verification. requirements of Federal laws. activity of the venture. The composition On August 27, 2004, NBAC filed its (5) An estimate of the total number of of members in this venture may change, original notification pursuant to Section respondents and the amount of time and MWCV intends to file additional 6(a) of the Act. The Department of estimated for an average respondent to written notifications disclosing all Justice published a notice in the Federal respond: It is estimated that 10,000 changes in membership. Register pursuant to Section 6(b) of the respondents will complete a 3 minute On August 18, 2010, MWCV filed its Act on October 4, 2004 (69 FR 59269). form. original notification pursuant to Section The last notification was filed with (6) An estimate of the total public 6(a) of the Act. The Department of the Department on May 15, 2009. A burden (in hours) associated with the Justice published a notice in the Federal notice was published in the Federal collection: There are an estimated 500 Register pursuant to Section 6(b) of the Register pursuant to Section 6(b) of the annual total burden hours associated Act on October 12, 2010 (75 FR 62570). Act on July 17, 2009 (74 FR 34788). The last notification was filed with with this collection. Patricia A. Brink, If additional information is required the Department on September 29, 2010. contact: Lynn Murray, Department A notice was published in the Federal Director of Civil Enforcement, Antitrust Division. Clearance Officer, Policy and Planning Register pursuant to Section 6(b) of the Staff, Justice Management Division, Act November 15, 2010 (75 FR 69705). [FR Doc. 2011–11454 Filed 5–10–11; 8:45 am] Department of Justice, Two Constitution BILLING CODE 4410–11–M Patricia A. Brink, Square, 145 N Street NE., Room 2E–808, Washington, DC 20530. Director of Civil Enforcement, Antitrust Division. DEPARTMENT OF JUSTICE Dated: May 5, 2011. [FR Doc. 2011–11455 Filed 5–10–11; 8:45 am] Antitrust Division Lynn Murray, BILLING CODE 4410–11–M Department Clearance Officer, PRA, U.S. Department of Justice. Notice Pursuant to the National DEPARTMENT OF JUSTICE Cooperative Research and Production [FR Doc. 2011–11502 Filed 5–10–11; 8:45 am] Act of 1993—American Society of BILLING CODE 4410–FY–P Antitrust Division Mechanical Engineers Notice is hereby given that, on April DEPARTMENT OF JUSTICE Notice Pursuant to the National Cooperative Research and Production 12, 2011, pursuant to Section 6(a) of the National Cooperative Research and Antitrust Division Act of 1993—National Biodiesel Accreditation Commission Production Act of 1993, 15 U.S.C. 4301 ‘‘ ’’ Notice Pursuant to the National et seq. ( the Act ), American Society Of ‘‘ ’’ Cooperative Research and Production Notice is hereby given that, on April Mechanical Engineers ( ASME ) has Act of 1993—Marine Well Containment 14, 2011, pursuant to Section 6(a) of the filed written notifications Venture National Cooperative Research and simultaneously with the Attorney Production Act of 1993, 15 U.S.C. 4301 General and the Federal Trade Notice is hereby given that, on March et seq. (‘‘the Act’’), National Biodiesel Commission disclosing additions or 04, 2011, pursuant to Section 6(a) of the Accreditation Commission (‘‘NBAC’’) changes to its standards development National Cooperative Research and has filed written notifications activities. The notifications were filed Production Act of 1993, 15 U.S.C. 4301 simultaneously with the Attorney for the purpose of extending the Act’s et seq. (‘‘the Act’’), Marine Well General and the Federal Trade provisions limiting the recovery of Containment Venture (‘‘MWCV’’) has Commission disclosing additions or antitrust plaintiffs to actual damages filed written notifications changes to its standards development under specified circumstances. simultaneously with the Attorney activities. The notifications were filed Specifically, since January 7, 2011, General and the Federal Trade for the purpose of extending the Act’s ASME has published one new standard

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and initiated three new standards Drug Enforcement Administration, 8701 (4) Affected public who will be asked activities within the general nature and Morrissette Drive, Springfield, VA or required to respond, as well as a brief scope of ASME’s standards 22152; (202) 307–7297. abstract: development activities, as specified in Written comments concerning this Primary: Business or other for-profit. its original notification. More details information collection should be sent to Other: Not-for-profit; Federal regarding these changes can be found at the Office of Information and Regulatory government; State, local, or Tribal http://www.asme.org. Affairs, Office of Management and government. On September 15, 2004, ASME filed Budget, Attn: DOJ Desk Officer. The best Abstract: 21 U.S.C. 827 requires that its original notification pursuant to way to ensure your comments are individual practitioners keep records of Section 6(a) of the Act. The Department received is to e-mail them to the dispensing and administration of of Justice published a notice in the [email protected] or fax controlled substances. This information Federal Register pursuant to Section them to (202) 395–7285. All comments is needed to maintain a closed system 6(b) of the Act on October 13, 2004 (69 should reference the eight-digit OMB of distribution. FR 60895). number for the collection or the title of (5) An estimate of the total number of The last notification was filed with the collection. If you have questions respondents and the amount of time the Department on January 10, 2011. A concerning the collection, please estimated for an average respondent to notice was published in the Federal contact Cathy A. Gallagher, Acting respond: DEA estimates that 81,397 Register pursuant to Section 6(b) of the Chief, Liaison and Policy Section, Office registrants respond to this information Act on February 4, 2011 (76 FR 6497). of Diversion Control, Drug Enforcement collection, with 81,397 responses Administration, 8701 Morrissette Drive, annually. DEA estimates that it takes 30 Patricia A. Brink, Springfield, VA 22152, (202) 307–7297, minutes per year for each practitioner to Director of Civil Enforcement, Antitrust or the DOJ Desk Officer at (202) 395– maintain the necessary records. Division. 3176. (6) An estimate of the total public [FR Doc. 2011–11452 Filed 5–10–11; 8:45 am] burden (in hours) associated with the Written comments and suggestions collection: DEA estimates that this BILLING CODE 4410–11–M from the public and affected agencies collection takes 40,699 annual burden concerning the proposed collection of hours. information are encouraged. Your DEPARTMENT OF JUSTICE If additional information is required comments should address one or more contact: Lynn Murray, Department of the following four points: Drug Enforcement Administration Clearance Officer, Policy and Planning • Evaluate whether the proposed [OMB Number 1117–0021] Staff, Justice Management Division, collection of information is necessary Department of Justice, Two Constitution for the proper performance of the Agency Information Collection Square, 145 N Street, NE., Suite 2E–808, functions of the agency, including Activities: Proposed Collection; Washington, DC 20530. whether the information will have Comments Requested: Dispensing practical utility; Dated: May 5, 2011. Records of Individual Practitioners • Evaluate the accuracy of the Lynn Murray, Department Clearance Officer, PRA, ACTION: 30-Day Notice of Information agencies estimate of the burden of the Collection under Review. proposed collection of information, U.S. Department of Justice. including the validity of the [FR Doc. 2011–11506 Filed 5–10–11; 8:45 am] The Department of Justice (DOJ), Drug methodology and assumptions used; BILLING CODE 4410–09–P Enforcement Administration (DEA) will • Enhance the quality, utility, and be submitting the following information clarity of the information to be collection request to the Office of collected; and DEPARTMENT OF JUSTICE • Management and Budget (OMB) for Minimize the burden of the Drug Enforcement Administration review and approval in accordance with collection of information on those who the Paperwork Reduction Act of 1995. are to respond, including through the [OMB Number 1117–0004] The proposed information collection is use of appropriate automated, published to obtain comments from the electronic, mechanical, or other Agency Information Collection public and affected agencies. This technological collection techniques or Activities; Proposed Collection; proposed information collection was other forms of information technology, Comments Requested; Application for previously published in the Federal e.g., permitting electronic submission of Permit To Export Controlled Register at 76 FR Number 44, pages responses. Substances/Export Controlled 12372–12373, March 7, 2011, allowing Substances for Reexport DEA Forms Overview of Information Collection for a 60 day comment period. 161 and 161r 1117–0021 The purpose of this notice is to allow ACTION: 30-Day Notice of Information (1) Type of Information Collection: for an additional 30 days for public Collection Under Review. comment until June 10, 2011. This Extension of a currently approved process is conducted in accordance with collection. The Department of Justice (DOJ), Drug 5 CFR 1320.10. (2) Title of the Form/Collection: Enforcement Administration (DEA) will If you have comments, especially on Dispensing records of individual be submitting the following information the estimated public burden or practitioners. collection request to the Office of associated response time, suggestions, (3) Agency form number, if any, and Management and Budget (OMB) for or need a copy of the proposed the applicable component of the review and approval in accordance with information collection instrument with Department sponsoring the collection: the Paperwork Reduction Act of 1995. instructions or additional information, Form number: N/A. The proposed information collection is please contact Cathy A. Gallagher, Component: Office of Diversion published to obtain comments from the Acting Chief, Liaison and Policy Control, Drug Enforcement public and affected agencies. This Section, Office of Diversion Control, Administration, Department of Justice. proposed information collection was

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previously published in the Federal Springfield, VA 22152 or the DOJ Desk Controlled Substances/Export Register at 76 FR 12371, March 7, 2011, Officer at (202) 395–3176. Controlled Substances for Reexport. allowing for a 60-day comment period. Written comments and suggestions (3) Agency form number, if any, and The purpose of this notice is to allow from the public and affected agencies the applicable component of the concerning the proposed collection of for an additional 30 days for public Department sponsoring the collection: information are encouraged. Your comment until June 10, 2011. This comments should address one or more Form number: DEA Forms 161 and process is conducted in accordance with of the following four points: 161r. 5 CFR 1320.10. • Evaluate whether the proposed Component: Office of Diversion If you have comments, especially on collection of information is necessary Control, Drug Enforcement the estimated public burden or for the proper performance of the Administration, Department of Justice. associated response time, suggestions, functions of the agency, including (4) Affected public who will be asked or need a copy of the proposed whether the information will have or required to respond, as well as a brief information collection instrument with practical utility; abstract: instructions or additional information, • Evaluate the accuracy of the please contact Cathy A. Gallagher, agencies estimate of the burden of the Primary: Business or other for-profit. Acting Chief, Liaison and Policy proposed collection of information, Other: None. Section, Office of Diversion Control, including the validity of the Abstract: Title 21 CFR 1312.21 and Drug Enforcement Administration, 8701 methodology and assumptions used; 1312.22 require persons who export • Morrissette Drive, Springfield, VA Enhance the quality, utility, and controlled substances in Schedules I 22152; (202) 307–7297. clarity of the information to be and II and who reexport controlled collected; and substances in Schedules I and II and Written comments concerning this • Minimize the burden of the information collection should be sent to narcotic controlled substances in collection of information on those who Schedules III and IV to obtain a permit the Office of Information and Regulatory are to respond, including through the Affairs, Office of Management and from DEA. Information is used to issue use of appropriate automated, export permits, exercise control over Budget, Attn: DOJ Desk Officer. The best electronic, mechanical, or other way to ensure your comments are exportation of controlled substances, technological collection techniques or and compile data for submission to the received is to e-mail them to other forms of information technology, [email protected] or fax United Nations to comply with treaty e.g., permitting electronic submission of requirements. them to (202) 395–7285. All comments responses. should reference the eight-digit OMB (5) An estimate of the total number of number for the collection or the title of Overview of Information Collection respondents and the amount of time the collection. If you have questions 1117–0004 estimated for an average respondent to concerning the collection, please (1) Type of Information Collection: respond: It is estimated that 69 contact Cathy A. Gallagher, Acting Extension of a currently approved respondents will respond with Form Chief, Liaison and Policy Section, Office collection. 161, and 12 respondents will respond of Diversion Control, Drug Enforcement (2) Title of the Form/Collection: with Form 161r, with submissions as Administration, 8701 Morrissette Drive, Application for Permit to Export follows:

Number of annual Average time Burden hours responses per response

DEA Form 161 (exportation only) ...... 5,577 30 minutes 2,788.5 (0.5 hours) DEA Form 161r (reexportation) ...... 196 45 minutes 147 (0.75 hours) Certification of exportation from United States to first country ...... 196 15 minutes 49 (0.25 hours) Certification of reexportation from first country to second country* ...... 235.2 15 minutes 58.8 (0.25 hours) Total ...... 3,043.3 * Assumes three separate reexports to second countries.

(6) An estimate of the total public Clearance Officer, Policy and Planning Dated: May 5, 2011. burden (in hours) associated with the Staff, Justice Management Division, Lynn Murray, collection: 3,043.3 annual burden hours. Department of Justice, Two Constitution Department Clearance Officer, PRA, U.S. If additional information is required Square, 145 N Street, NE., Room 2E– Department of Justice. contact: Lynn Murray, Department 808, Washington, DC 20530. [FR Doc. 2011–11501 Filed 5–10–11; 8:45 am] BILLING CODE 4410–09–P

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DEPARTMENT OF JUSTICE functions of the agency/component, determination to the Federal Firearms including whether the information will Licensee or in those cases in which a Federal Bureau of Investigation have practical utility; response has not been communicated, [OMB Number 1110–0035] (2) Evaluate the accuracy of the no later than the end of the operational agency’s/component’s estimate of the day in which the transaction was Agency Information Collection burden of the proposed collection of the initiated. For those responses that are Activities; Existing Collection, information, including the validity of not received, the NICS will assume the Comments Requested: Approval of an the methodology and assumptions used; transaction resulted in a ‘‘proceed.’’ Existing Collection; The National (3) Enhance the quality, utility, and (5) An estimate of the total number of Instant Criminal Background Check clarity of the information to be respondents and the amount of time System (NICS) Point of Contact (POC) collected; and State Final Determination Electronic (4) Minimize the burden of the estimated for an average respondent to Submission collection of information on those who respond: are to respond, including the use of There are 21 POC States who are ACTION: 30-Day notice of information appropriate automated, electronic, required to submit electronic collection under review. mechanical, or other technological notifications to the FBI CJIS Division’s collection techniques or other forms of The Department of Justice (DOJ), NICS Section and 18 ATF-qualified information technology, e.g., permitting Alternate Permit States who voluntarily Federal Bureau of Investigation (FBI), electronic submission of responses. Criminal Justice Information Services submit electronic notifications to the (CJIS) Division’s National Instant Overview of This Information FBI CJIS Division’s NICS Section. Both Criminal Background Check System (1) Type of information collection: POC States and ATF-qualified Permit (NICS) Section will be submitting the Approval of an Existing Collection. States conduct an average of 5,313,445 following information collection request (2) Title of the Forms: The National transactions per year. It is estimated that to the Office of Management and Budget Instant Criminal Background Check 26 percent would be affected by this (OMB) for review and approval in System (NICS) Point of Contact (POC) collection and would require electronic accordance with the Paperwork State Final Determination Electronic messages sent to the NICS. This Reduction Act of 1995. The proposed Submission. translates to 1,381,496 transactions, information collection is published to (3) Agency Form Number, if any, and which would be the total number of obtain comments from the public and the applicable component of the annual responses. The other 74 percent affected agencies. This proposed department sponsoring the collection: would not be reported in this collection. information collection was previously Form Number: 1110–0035. It is estimated it will require one minute published in the Federal Register Sponsor: Criminal Justice Information (60 seconds) for each POC State to Volume 76, Number 41, Pages 11513– Services (CJIS) Division of the Federal transmit the information per transaction 11514, on March 2, 2011, allowing for Bureau of Investigation (FBI), to the NICS. Thus, it is estimated that a 60-day comment period. Department of Justice (DOJ). collectively all respondents will spend The purpose of this notice is to allow (4) Affected public who will be asked 23,024 hours yearly submitting for an additional 30 days for public or required to respond, as well as a brief determinations to the NICS. If the comment until June 10, 2011. This abstract: number of transactions were distributed Primary: Full Point of Contact (POC) process is conducted in accordance with evenly among the POC States, then 590 States, Partial POC States, the Bureau of Title 5, Code of Federal Regulations hours would be the estimated time for Alcohol, Tobacco, Firearms and (CFR), 1320.10. each of the 39 states to respond. Record Written comments and/or suggestions Explosives (ATF)-qualified Alternate keeping time is part of the routine regarding the items contained in this Permit States. business process and is not part of this notice, especially the estimated public Brief Abstract: This collection is burden and associated response time, requested of Full Point of Contact (POC) calculation. should be sent to the Office of States, Partial POC States, and the (6) An estimate of the total public Information and Regulatory Affairs, Bureau of Alcohol, Tobacco, Firearms burden (in hours) associated with the Office of Management and Budget, Attn: and Explosives (ATF)-qualified collection: DOJ Desk Officer. The best way to Alternate Permit States. Per 28 Code of The average yearly hour burden for ensure your comments are received is to Federal Regulations, Section 25.6(h), submitting final determinations State POCs are required to transmit e-mail them to combined is: (5,313,445 total checks × _ electronic determination messages to oira [email protected] or fax 26 percent)/60 seconds = 23,024 hours. them to 202–395–7285. All comments the Federal Bureau of Investigation (FBI) should reference the 8 digit OMB Criminal Justice Information Services If additional information is required, number for the collection or the title of Division’s National Instant Criminal contact: Ms. Lynn Murray, Department the collection. If you have questions Background Check System (NICS) Clearance Officer, United States concerning the collection, please call Section of the status of a firearm Department of Justice, Policy and Sherry L. Kuneff at fax 304–625–7540 or background check in those instances in Planning Staff, Justice Management the DOJ Desk Officer at 202–395–3176. which a transaction is ‘‘open’’ Division, Two Constitution Square, 145 Written comments and suggestions (transactions unresolved before the end N Street, NE., Room 2E–808, from the public and affected agencies of the operational day on which the Washington, DC 20530. transaction was initiated); ‘‘denied’’ concerning the proposed collection of Dated: May 5, 2011. information are encouraged. Your transactions; transactions reported to comments should address one or more the NICS as open and subsequently Lynn Murray, of the following four points: changed to proceed; and overturned Department Clearance Officer, PRA, United (1) Evaluate whether the proposed denials. The POC States must States Department of Justice. collection of information is necessary communicate this response to the NICS [FR Doc. 2011–11495 Filed 5–10–11; 8:45 am] for the proper performance of the immediately upon communicating their BILLING CODE 4410–02–P

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DEPARTMENT OF JUSTICE U.S. Department of Justice, Office of following publication of this notice or Justice Programs, National Institute of by contacting Michel Smyth by Office of Justice Programs Justice (NIJ) will make available, to the telephone at 202–693–4129 (this is not [OJP (NIJ) Docket No. 1554] general public, the ‘‘Law Enforcement a toll-free number) or sending an e-mail Vehicular Digital Multimedia Evidence to [email protected]. 2011 National Institute of Justice Body Recording System Selection and Submit comments about this request Armor Workshop Application Guide.’’ to the Office of Information and The opportunity to provide comments Regulatory Affairs, Attn: OMB Desk AGENCY: National Institute of Justice, on these documents is open to industry Officer for the Department of Labor, DOJ. technical representatives, law Mine Safety and Health Administration ACTION: Notice of Meeting of the 2011 enforcement agencies and organizations, (MSHA), Office of Management and NIJ Body Armor Workshop. research, development and scientific Budget, Room 10235, Washington, DC communities, and all other stakeholders 20503, Telephone: 202–395–6929/Fax: SUMMARY: The National Institute of and interested parties. Those 202–395–6881 (these are not toll-free Justice invites manufacturers of individuals wishing to obtain and numbers), e-mail: ballistic-resistant body armor, ballistic provide comments on the draft [email protected]. laboratory testing facilities and other documents under consideration are FOR FURTHER INFORMATION CONTACT: interested parties to the 2011 NIJ Body directed to the following Web site: Contact Michel Smyth by telephone at Armor Workshop. This year’s workshop http://www.justnet.org. 202–693–4129 (this is not a toll-free will have topics of interest for DATES: The comment period will be number) or by e-mail at management and technical personnel open until June 27, 2011. [email protected]. from the manufacturing and laboratory FOR FURTHER INFORMATION CONTACT: communities. SUPPLEMENTARY INFORMATION: The Casandra Robinson, by telephone at The workshop will be held at the reporting and recordkeeping provisions 202–305–2596 [Note: this is not a toll- Baltimore Convention Center, located at in 30 CFR part 50, Notification, free telephone number], or by e-mail at One W. Pratt St., Baltimore, MD, on Investigation, Reports and Records of [email protected]. Thursday, June 2, 2011 from 8 a.m. to Accidents, Injuries and Illnesses, 4 p.m. For the time being, the number John H. Laub, Employment and Coal Production in of representatives is limited to three Director, National Institute of Justice. Mines, are essential elements in the MSHA’s Congressional mandate to from each company or organization. As [FR Doc. 2011–11569 Filed 5–10–11; 8:45 am] reduce work-related injuries and the workshop draws closer, space BILLING CODE 4410–18–P availability will be reassessed and a illnesses among the nation’s miners. notice will be posted if more space is Accident, injury, and illness data, when correlated with employment and available. DEPARTMENT OF LABOR Registration will close at 5 p.m. production data, provide information Eastern time on May 27, 2011. Please Office of the Secretary that allows the MSHA to improve its visit the Web site below to submit your safety and health enforcement programs, registration request: http:// Agency Information Collection focus its education and training efforts, www.justnet.org/Pages/ Activities; Submission for OMB and establish priorities for its technical 2011NIJBodyArmorWorkshop.aspx. Review; Comment Request; Mine assistance activities in mine safety and Accident, Injury & Illness Report and health. Maintaining a current database FOR FURTHER INFORMATION CONTACT: Quarterly Mine Employment and Coal allows the MSHA to identify and direct Debra Stoe, by telephone at 202–616– Production Report increased attention to those mines, 7036 [Note: this is not a toll-free industry segments, and geographical telephone number], or by e-mail at ACTION: Notice. areas where hazardous trends are [email protected]. developing. This could not be done SUMMARY: The Department of Labor John H. Laub, effectively using historical data. The (DOL) is submitting the revised Mine information collected under part 50 is Director, National Institute of Justice. Safety and Health Administration [FR Doc. 2011–11568 Filed 5–10–11; 8:45 am] the most comprehensive and reliable (MSHA) sponsored information occupational data available concerning BILLING CODE 4410–18–P collection request (ICR) titled, ‘‘Mine the mining industry. Accident, Injury & Illness Report and This submission has been Quarterly Mine Employment and Coal DEPARTMENT OF JUSTICE characterized as a revision, because the Production Report,’’ to the Office of MSHA has reformatted Forms MSHA– Office of Justice Programs Management and Budget (OMB) for 7000–1 and MSHA–7000–2 to collect review and approval for use in this data. These changes have not [OJP (NIJ) Docket No. 1553] accordance with the Paperwork affected the burden estimates. Reduction Act of 1995 (Pub. L. 104–13, This information collection is subject Law Enforcement Vehicular Digital 44 U.S.C. chapter 35). Multimedia Evidence Recording to the PRA. A Federal agency generally DATES: Submit comments on or before cannot conduct or sponsor a collection System Selection and Application June 10, 2011. Guide of information, and the public is ADDRESSES: A copy of this ICR, with generally not required to respond to an AGENCY: National Institute of Justice, applicable supporting documentation; information collection, unless it is DOJ. including a description of the likely approved by the OMB under the PRA ACTION: Notice and Request for respondents, proposed frequency of and displays a currently valid OMB Comments. response, and estimated total burden Control Number. In addition, may be obtained from the RegInfo.gov notwithstanding any other provisions of SUMMARY: In an effort to obtain Web site, http://www.reginfo.gov/ law, no person shall generally be subject comments from interested parties, the public/do/PRAMain, on the day to penalty for failing to comply with a

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collection of information if the Dated: May 4, 2011. The notice of proposed exemption collection of information does not Michel Smyth, was issued and the exemption is being display a valid OMB control number. Departmental Clearance Officer. granted solely by the Department See 5 CFR 1320.5(a) and 1320.6. The [FR Doc. 2011–11475 Filed 5–10–11; 8:45 am] because, effective December 31, 1978, DOL obtains OMB approval for this BILLING CODE 4510–43–P section 102 of Reorganization Plan No. information collection under OMB 4 of 1978, 5 U.S.C. App. 1 (1996), Control Number 1219–0007. The current transferred the authority of the Secretary OMB approval is scheduled to expire on of the Treasury to issue exemptions of May 31, 2011; however, it should be DEPARTMENT OF LABOR the type proposed to the Secretary of noted that information collections Labor. submitted to the OMB receive a month- Employee Benefits Security Statutory Findings to-month extension while they undergo Administration review. For additional information, see In accordance with section 408(a) of Exemptions From Certain Prohibited the Act and/or section 4975(c)(2) of the the related notice published in the Transaction Restrictions Federal Register on January 5, 2011 (76 Code and the procedures set forth in 29 FR 589). AGENCY: Employee Benefits Security CFR part 2570, subpart B (55 FR 32836, Interested parties are encouraged to Administration, Labor. 32847, August 10, 1990) and based upon the entire record, the Department makes send comments to the OMB, Office of ACTION: Grant of Individual Exemptions. Information and Regulatory Affairs at the following findings: the address shown in the ADDRESSES SUMMARY: This document contains (a) The exemption is administratively section within 30 days of publication of exemptions issued by the Department of feasible; this notice in the Federal Register. In Labor (the Department) from certain of (b) The exemption is in the interests order to help ensure appropriate the prohibited transaction restrictions of of the plan and its participants and consideration, comments should the Employee Retirement Income beneficiaries; and reference OMB Control Number 1219– Security Act of 1974 (ERISA or the Act) (c) The exemption is protective of the 0007. The OMB is particularly and/or the Internal Revenue Code of rights of the participants and interested in comments that: 1986 (the Code). This notice includes beneficiaries of the plan. • Evaluate whether the proposed the following: D–11528, 2011–06, Wachovia Corporation and Its Current collection of information is necessary Wachovia Corporation and Its Current and Future Affiliates or Successors for the proper performance of the and Future Affiliates or Successors (Collectively, Wachovia or the functions of the agency, including (collectively, Wachovia or the Applicant); Located in San Francisco, whether the information will have Applicant), D–11580, 2011–07, Robert California; [Prohibited Transaction practical utility; W. Baird and Co. Incorporated and its Exemption 2011–06; Exemption • Evaluate the accuracy of the Future Affiliates and Subsidiaries Application No. D–11528] (collectively, Baird); D–11621, 2011–08, agency’s estimate of the burden of the Exemption proposed collection of information, Security Benefit Mutual Holding including the validity of the Company (MHC) and Security Benefit Section I. Sales of Auction Rate methodology and assumptions used; Life Insurance Company (SBL, and Securities From Plans to Wachovia: • Enhance the quality, utility, and together with MHC the Applicants); and Unrelated to a Settlement Agreement clarity of the information to be D–11635, 2011–09, The Parvin Nahvi, The restrictions of section collected; and M.D. Inc. 401(k) Profit Sharing Trust 406(a)(1)(A) and (D) and section (the Plan). • Minimize the burden of the 406(b)(1) and (2) of the Act and the collection of information on those who SUPPLEMENTARY INFORMATION: A notice sanctions resulting from the application are to respond, including through the was published in the Federal Register of of section 4975 of the Code, by reason use of appropriate automated, the pendency before the Department of of section 4975(c)(1)(A), (D), and (E) of electronic, mechanical, or other a proposal to grant such exemption. The the Code, shall not apply, effective technological collection techniques or notice set forth a summary of facts and February 1, 2008, to the sale by a Plan other forms of information technology, representations contained in the (as defined in Section V(e)) of an e.g., permitting electronic submission of application for exemption and referred Auction Rate Security (as defined in responses. interested persons to the application for Section V(c)) to Wachovia, where such Agency: Mine Safety and Health a complete statement of the facts and sale (an Unrelated Sale) is unrelated to, Administration (MSHA). representations. The application has and not made in connection with, a been available for public inspection at Title of Collection: Mine Accident, Settlement Agreement (as defined in the Department in Washington, DC. The Injury & Illness Report and Quarterly Section V(f)), provided that the notice also invited interested persons to Mine Employment and Coal Production conditions set forth in Section II have submit comments on the requested Report. been met. exemption to the Department. In OMB Control Number: 1219–0007. addition the notice stated that any Section II. Conditions Applicable to Affected Public: Private Sector— interested person might submit a Transactions Described in Section I Businesses or other for-profits. written request that a public hearing be (a) The Plan acquired the Auction Total Estimated Number of held (where appropriate). The applicant Rate Security in connection with Respondents: 27,193. has represented that it has complied brokerage or advisory services provided Total Estimated Number of with the requirements of the notification by Wachovia to the Plan; Responses: 144,450. to interested persons. No requests for a (b) The last auction for the Auction Total Estimated Annual Burden hearing were received by the Rate Security was unsuccessful; Hours: 210,976. Department. Public comments were (c) Except in the case of a Plan Total Estimated Annual Costs Burden: received by the Department as described sponsored by Wachovia for its own $5,832. in the granted exemption. employees (a Wachovia Plan), the

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Unrelated Sale is made pursuant to a (h) Except in the case of a Wachovia (2) None of the persons described written offer by Wachovia (the Offer) Plan or a pooled fund maintained or above in paragraphs (l)(1)(B)–(C) shall containing all of the material terms of advised by Wachovia, neither Wachovia be authorized to examine trade secrets the Unrelated Sale, including, but not nor any affiliate exercises investment of Wachovia, or commercial or financial limited to: (1) The identity and par discretion or renders investment advice information which is privileged or value of the Auction Rate Security; (2) within the meaning of 29 CFR 2510.3– confidential; and the interest or dividend amounts that 21(c) with respect to the decision to (3) Should Wachovia refuse to are due and unpaid with respect to the accept the Offer or retain the Auction disclose information on the basis that Auction Rate Security; and (3) the most Rate Security; such information is exempt from recent rate information for the Auction (i) The Plan does not pay any disclosure, Wachovia shall, by the close Rate Security (if reliable information is commissions or transaction costs with of the thirtieth (30th) day following the available). Notwithstanding the respect to the Unrelated Sale; request, provide a written notice foregoing, in the case of a pooled fund (j) The Unrelated Sale is not part of an advising that person of the reasons for maintained or advised by Wachovia, arrangement, agreement or the refusal and that the Department may this condition shall be deemed met to understanding designed to benefit a request such information. the extent each Plan invested in the party in interest to the Plan; Section III. Sales of Auction Rate pooled fund (other than a Wachovia (k) Wachovia and its affiliates, as Securities From Plans to Wachovia: Plan) receives advance written notice applicable, maintain, or cause to be Related to a Settlement Agreement regarding the Unrelated Sale, where maintained, for a period of six (6) years such notice contains all of the material from the date of the Unrelated Sale, The restrictions of section terms of the Unrelated Sale, including, such records as are necessary to enable 406(a)(1)(A) and (D) and section but not limited to, the material terms the persons described below in 406(b)(1) and (2) of the Act and the described in the preceding sentence; paragraph (l)(1), to determine whether sanctions resulting from the application (d) The Unrelated Sale is for no the conditions of this exemption have of section 4975 of the Code, by reason consideration other than cash payment been met, except that: of section 4975(c)(1)(A), (D), and (E) of (1) No party in interest with respect against prompt delivery of the Auction the Code, shall not apply, effective to a Plan which engages in an Unrelated Rate Security; February 1, 2008, to the sale by a Plan Sale, other than Wachovia and its (e) The sales price for the Auction of an Auction Rate Security to affiliates, as applicable, shall be subject Rate Security is equal to the par value Wachovia, where such sale (a to a civil penalty under section 502(i) of of the Auction Rate Security, plus any the Act or the taxes imposed by section Settlement Sale) is related to, and made accrued but unpaid interest or 4975(a) and (b) of the Code, if such in connection with, a Settlement dividends; records are not maintained, or not Agreement, provided that the conditions (f) The Plan does not waive any rights available for examination, as required, set forth in Section IV have been met. or claims in connection with the below, by paragraph (l)(1); and Unrelated Sale; Section IV. Conditions Applicable to (2) A separate prohibited transaction Transactions Described in Section III (g) The decision to accept the Offer or shall not be considered to have occurred retain the Auction Rate Security is made solely because, due to circumstances (a) The terms and delivery of the Offer by a Plan fiduciary or Plan participant beyond the control of Wachovia or its are consistent with the requirements set or an individual retirement account (an affiliates, as applicable, such records are forth in the Settlement Agreement and IRA (as defined in Section V(e)) owner lost or destroyed prior to the end of the acceptance of the Offer does not who is independent (as defined in six-year period; constitute a waiver of any claim of the Section V(d)) of Wachovia. (l)(1) Except as provided below in tendering Plan; Notwithstanding the foregoing: (1) In paragraph (l)(2), and notwithstanding (b) The Offer or other documents the case of an IRA which is beneficially any provisions of subsections (a)(2) and available to the Plan specifically owned by an employee, officer, director (b) of section 504 of the Act, the records describe, among other things: or partner of Wachovia, the decision to referred to above in paragraph (k) are (1) The securities available for accept the Offer or retain the Auction unconditionally available at their purchase under the Offer; Rate Security may be made by such customary location for examination (2) The background of the Offer; employee, officer, director or partner; or during normal business hours by: (3) The methods and timing by which (2) in the case of a Wachovia Plan or a (A) Any duly authorized employee or Plans may accept the Offer; pooled fund maintained or advised by representative of the Department, the (4) The purchase dates, or the manner Wachovia, the decision to accept the Internal Revenue Service, or the U.S. of determining the purchase dates, for Offer may be made by Wachovia after Securities and Exchange Commission; Auction Rate Securities tendered Wachovia has determined that such (B) Any fiduciary of any Plan, pursuant to the Offer, if the Offer had purchase is in the best interest of the including any IRA owner, that engages any limitation on such dates; Wachovia Plan or pooled fund;1 in a Sale, or any duly authorized (5) The timing for acceptance by employee or representative of such Wachovia of tendered Auction Rate 1 The Department notes that the Act’s general fiduciary; or Securities, if there were any limitations standards of fiduciary conduct also would apply to (C) Any employer of participants and on such timing; the transactions described herein. In this regard, beneficiaries and any employee section 404 of the Act requires, among other things, (6) The timing of payment for Auction that a fiduciary discharge his duties respecting a organization whose members are Rate Securities accepted by Wachovia plan solely in the interest of the plan’s participants covered by a Plan that engages in the for payment, if payment was materially and beneficiaries and in a prudent manner. Unrelated Sale, or any authorized delayed beyond the acceptance of the Accordingly, a plan fiduciary must act prudently employee or representative of these with respect to, among other things, the decision to Offer; sell the Auction Rate Security to Wachovia for the entities; (7) The expiration date of the Offer; par value of the Auction Rate Security, plus unpaid and interest and dividends. The Department further fully understand the risks associated with this type emphasizes that it expects Plan fiduciaries, prior to of transaction following disclosure by Wachovia of (8) How to obtain additional entering into any of the proposed transactions, to all relevant information. information concerning the Offer;

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(c) The terms of the Settlement Sale effective October 9, 2009, to the cash auction with respect to the Securities, are consistent with the requirements set sale (the Sale) by a Plan (as defined in Baird will refund such excess amount forth in the Settlement Agreement; and Section II(d)) of an Auction Rate promptly to the Plan (after deducting all (d) All of the conditions in Section II Security (as defined in Section II(b)) to reasonable expenses incurred in have been met. Baird, provided that the following connection with the recovery); conditions are met: 2 (j) Neither Baird nor any affiliate Section V. Definitions (a) The Sale was a one-time exercises investment discretion or For purposes of this exemption: transaction made on a delivery versus renders investment advice (within the (a) The term ‘‘affiliate’’ means any payment basis in the amount described meaning of 29 CFR 2510.3–21(c)) with person directly or indirectly, through in paragraph (b); respect to the decision to accept the one or more intermediaries, controlling, (b) The Plan received an amount written Offer or retain the Security controlled by, or under common control equal to the par value of the Auction (unless the Sale involves an IRA whose with such other person; Rate Securities (the ARS or the owner is an employee, officer, director (b) The term ‘‘control’’ means the Securities) plus accrued but unpaid or partner of Baird); power to exercise a controlling income (interest or dividends, as (k) Baird and its affiliates, as influence over the management or applicable) as of the date of the Sale; applicable, maintain, or cause to be policies of a person other than an (c) The last auction for the Securities maintained, for a period of six (6) years individual; was unsuccessful; from the date of the Sale such records (c) The term ‘‘Auction Rate Security’’ (d) The Sale was made in connection as are necessary to enable the person or ‘‘ARS’’ means a security: (1) that is with a written offer (the Offer) by Baird described below in paragraph (l)(i), to either a debt instrument (generally with containing all of the material terms of determine whether the conditions of a long-term nominal maturity) or the Sale; this exemption have been met, except preferred stock; and (2) with an interest (e) The Plans did not bear any that— rate or dividend that is reset at specific commissions or transaction costs with (i) No party in interest with respect to intervals through a Dutch auction respect to the Sale; a Plan which engages in a Sale, other process; (f) The decision to accept the Offer or than Baird and its affiliates, shall be (d) A person is ‘‘independent’’ of retain the Auction Rate Security was subject to a civil penalty under section Wachovia if the person is: (1) not made by a Plan fiduciary or Plan 502(i) of the Act or the taxes imposed Wachovia or an affiliate; and (2) not a participant or an individual retirement by section 4975(a) and (b) of the Code, relative (as defined in section 3(15) of account (an IRA (as defined in Section if such records are not maintained, or the Act) of the party engaging in the II(d)) owner who is independent (as not available for examination, as transaction; defined in Section II(c)) of Baird. required, below, by paragraph (l)(i); (e) The term ‘‘Plan’’ means an Notwithstanding the foregoing, in the (ii) A separate prohibited transaction individual retirement account or similar case of an IRA which is beneficially shall not be considered to have occurred account described in section owned by an employee, officer, director solely because due to circumstances 4975(e)(1)(B) through (F) of the Code (an or partner of Baird, the decision to beyond the control of Baird, such IRA); an employee benefit plan as accept the Offer or retain the Auction records are lost or destroyed prior to the defined in section 3(3) of the Act; or an Rate Security may be made by such end of the six-year period. entity holding plan assets within the employee, officer, director or partner if (l)(i) Except as provided, below, in meaning of 29 CFR 2510.3–101, as all of the other conditions of this paragraph (l)(ii), and notwithstanding modified by section 3(42) of the Act; Section I have been met; any provisions of subsections (a)(2) and and (g) The Plan does not waive any rights (b) of section 504 of the Act, the records (f) The term ‘‘Settlement Agreement’’ or claims in connection with the Sale; referred to, above, in paragraph (k) are means a legal settlement involving (h) The Sale is not part of an unconditionally available at their Wachovia and a U.S. state or Federal arrangement, agreement or customary location for examination authority that provides for the purchase understanding designed to benefit a during normal business hours by— of an ARS by Wachovia from a Plan. party in interest with respect to the (A) Any duly authorized employee or Effective Date: This exemption is Plan; representative of the Department, the effective February 1, 2008. (i) If the exercise of any of Baird’s Internal Revenue Service, or the For Further Information Contact: Gary rights, claims or causes of action in Securities and Exchange Commission; Lefkowitz of the Department, telephone connection with its ownership of the (B) Any fiduciary of any Plan that (202) 693–8546. (This is not a toll-free Securities results in Baird recovering engages in the covered transactions, or number.) from the issuer of the Securities, or any any duly authorized employee or third party, an aggregate amount that is representative of such fiduciary; Robert W. Baird and Co. Incorporated (C) Any employer of participants and more than the sum of: and Its Current and Future Affiliates beneficiaries and any employee (1) The purchase price paid to the and Subsidiaries (Collectively, Baird); organization whose members are Plan for the Securities by Baird; and Located in Milwaukee, Wisconsin; covered by a Plan that engages in the (2) The income (interest or dividends, [Prohibited Transaction Exemption covered transactions, or any authorized as applicable) due on the Securities 2011–07; Exemption Application No. D– employee or representative of these from and after the date Baird purchased 11580] entities; or the Securities from the Plan, at the rate Exemption (D) Any IRA owner, participant or specified in the respective offering beneficiary of a Plan that engages in the Section I.—Transactions documents for the Securities or Sale, or duly authorized representative The restrictions of section 406(a) of determined pursuant to a successful of such IRA owner, Plan participant or the Act and the sanctions resulting from beneficiary; 2 For purposes of this exemption, references to (ii) None of the persons described, the application of section 4975 of the section 406 of ERISA refer as well to the Code, by reason of section 4975(c)(1)(A) corresponding provisions of section 4975 of the above, in paragraph (l)(i)(B)–(D) shall be through (D) of the Code, shall not apply, Code. authorized to examine trade secrets of

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Baird, or commercial or financial Security Benefit Mutual Holding cash, except that an Eligible Member information which is privileged or Company (MHC) and Security Benefit received or will receive Policy Credits, confidential; and Life Insurance Company (SBL, and and not cash, to the extent that— (iii) Should Baird refuse to disclose Together With MHC, the Applicants); (1) Consideration was allocable to the information on the basis that such Located in Topeka, Kansas; [Prohibited Eligible Member based on ownership of information is exempt from disclosure, Transaction Exemption 2011–08; a Tax-Qualified Contract; or Baird shall, by the close of the thirtieth Exemption Application No. D–11621] (2) SBL made an objective (30th) day following the request, Exemption determination that payment of Consideration in the form of cash would provide a written notice advising that Section I. Covered Transaction person of the reasons for the refusal and be disadvantageous to such Eligible Member in respect of applicable income that the Department may request such The restrictions of section 406(a) of or other taxation provisions. information. the Act and the sanctions resulting from the application of section 4975 of the (f) Any determination made by SBL Section II—Definitions Code, by reason of section 4975(c)(1)(A) under Paragraphs (e)(1) or (e)(2) above through (D) of the Code,3 shall not was based upon objective criteria that ‘‘ ’’ (a) The term affiliate of another apply, effective July 30, 2010, to the was applied consistently to similarly person means: Any person directly or receipt of cash or policy credits (Policy situated Eligible Members. indirectly, through one or more Credits), by or on behalf of a policy (g) Any act or determination intermediaries, controlling, controlled owner of SBL (Policyholder) that is an undertaken by an Eligible Member that by, or under common control with such Eligible Member, which is an employee was a Plan with respect to attending other person; benefit plan or retirement arrangement and/or submitting comments for the (b) The term ‘‘Auction Rate Security’’ that is subject to section 406 of the Act Commissioner’s public comment means a security: and/or section 4975 of the Code (a Plan), meeting and/or evidentiary hearing, attending MHC’s special meeting to (1) That is either a debt instrument other than a Plan maintained by MHC consider the D&D Plan, and/or voting on (generally with a long-term nominal and/or its affiliates, in exchange for the the D&D Plan, was made by one or more maturity) or preferred stock; and extinguishment of such Eligible Member’s membership interest in MHC, Plan fiduciaries that were independent (2) with an interest rate or dividend in accordance with the terms of a plan of SBL and its affiliates, and neither SBL that is reset at specific intervals through of demutualization and dissolution (the nor any of its affiliates provided a ‘‘Dutch Auction’’ process. D&D Plan), adopted by MHC and investment advice within the meaning (c) The term ‘‘Independent’’ means a implemented in accordance with Kansas of 29 CFR 2510.3–21(c) or exercised person who is not Baird or an affiliate Insurance Law. investment discretion with respect to (as defined in Section II(a)). This exemption is subject to the such act or determination. (h) All Eligible Members that were (d) The term ‘‘Plan’’ means an general conditions set forth below in Section II. Plans participated in the individual retirement account or similar demutualization of MHC (the account described in section Section II. General Conditions Demutualization) on the same basis as 4975(e)(1)(B) through (F) of the Code (an (a) The D&D Plan was implemented in all other Eligible Members that were not IRA); or an employee benefit plan as accordance with procedural and Plans. defined in section 3(3) of the Act. substantive safeguards that were (i) No Eligible Member paid any Effective Date: This exemption is imposed under the laws of the State of brokerage commissions or fees in effective October 9, 2009. Kansas and was subject to review, connection with the receipt of Policy For a more complete statement of the approval, and supervision by the Kansas Credits. facts and representations supporting the Commissioner of Insurance (the (j) All of SBL’s Policyholder Department’s decision to grant this Commissioner). obligations remained in force and were exemption, refer to the notice of (b) The Commissioner reviewed the not affected by the D&D Plan. proposed exemption published on terms that were provided to Eligible (k) The terms of the Demutualization January 19, 2011 at 76 FR 3165. Members as part of the Commissioner’s were at least as favorable to the Plans as review of the D&D Plan, and the the terms of an arm’s length transaction Notice to Interested Persons: Baird Commissioner approved the D&D Plan between unrelated parties. represents that it was unable to comply following a determination that such (l) Any Plan Eligible Member whose with the notice to interested persons D&D Plan was fair and equitable to all Consideration was placed in a trust, requirement within the time frame set Eligible Members. escrow account, or other similar forth in its application. However, Baird (c) Each Eligible Member had an arrangement (the Escrow Arrangement), has represented that it notified all opportunity to comment on the D&D pursuant to the D&D Plan, will receive interested persons, in the manner agreed Plan at the Commissioner’s public a distribution of such Consideration upon between Baird and the comment meeting or evidentiary hearing from the Escrow Arrangement, and will Department, by February 9, 2011. on the D&D Plan. not forfeit such Consideration. Interested persons were notified that (d) Each Eligible Member had an (m) SBL maintains or causes to be they had until March 14, 2011, to opportunity to vote to approve the D&D maintained, for a period of (6) six years, submit comments to the Department Plan after full written disclosure was the records necessary to enable the with respect to the proposed exemption. given to the Eligible Members by MHC. persons described in paragraph (n)(1) of No comments were received by the (e) Pursuant to the D&D Plan, an this section to determine whether the Department. Eligible Member generally received applicable conditions of this exemption For Further Information Contact: Mr. have been met. Such records are readily 3 Gary H. Lefkowitz of the Department, For purposes of this exemption, references to the provisions of Title I of the Act, unless otherwise available to assure accessibility by the telephone (202) 693–8546. (This is not specified, refer also to the corresponding provisions persons identified in paragraph (n)(1) of a toll-free number.) of the Code. this section.

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(n)(1) Notwithstanding any provisions (2) Any officer of, director of, or in order to retain the contract’s tax- of section 504(a)(2) and (b) of the Act, partner in such person. favored status. the records referred to in paragraph (m) (c) The ‘‘Adoption Date’’ refers to Section IV. Effective Date of this section are unconditionally March 2, 2010, the date that MHC’s available at their customary location for Board of Directors adopted the D&D This exemption is effective as of July examination during normal business Plan. 30, 2010. ‘‘ ’’ hours by— (d) The term Consideration means Written Comments (A) Any duly authorized employee or the cash or Policy Credits receivable by representative of the Department or the an Eligible Member in exchange for the The Department invited all interested Internal Revenue Service; extinguishment of such Eligible persons to submit written comments (B) Any fiduciary of an Eligible Member’s membership interest in MHC, with respect to the notice of proposed Member that is a Plan or any duly in accordance with the terms of the D&D exemption on or before March 4, 2011. authorized representative of such Plan. During the comment period, the fiduciary; (e) The ‘‘D&D Plan’’ means the plan of Department received 30 telephone inquiries, 1 e-mail inquiry, and 2 (C) Any contributing employer to any demutualization and dissolution written comments from Policyholders. Eligible Member that is a Plan or any adopted by MHC and implemented in Furthermore, the Department received a duly authorized employee accordance with Kansas Insurance Law, written comment from the Applicants, representative of such employer; and dated as of March 2, 2010. which supported the exemption and (D) Any participant or beneficiary of (f) The term ‘‘Eligible Member’’ means requested certain modifications and/or any Eligible Member that is a Plan, or a person, other than MHC or its clarifications regarding the Summary of any duly authorized representative of subsidiaries, who, as reflected in the Facts and Representations (the such participant or beneficiary. records of SBL or other relevant entities, Summary) in the notice of proposed (2) A prohibited transaction is not is the owner of one or more Eligible exemption. deemed to have occurred if, due to Policies on the Adoption Date. (g) The term ‘‘Eligible Policy’’ or Following is a discussion of the circumstances beyond the control of ‘‘Eligible Policies’’ means a policy that, aforementioned comments, including SBL, the records are lost or destroyed as reflected in the records of SBL or the responses made by the Applicants or prior to the end of the six-year period, other relevant entities, is in force on the the Department to address the issues and no party in interest other than SBL Adoption Date, unless the policy is raised therein. Any capitalized terms is subject to the civil penalty that may excluded pursuant to the D&D Plan. herein not otherwise defined have the be assessed under section 502(i) of the (h) The term ‘‘Policy Credit’’ means meanings ascribed to them in the Act or to the taxes imposed by sections consideration to be paid in the form of Summary. 4975(a) and (b) of the Code if the an increase in cash value, account records are not maintained or are not Policyholder Comments and Applicants’ value, dividend accumulations or available for examination as required by Responses benefit payment, as appropriate, paragraph (n)(1) of this section. depending upon the policy. The majority of Policyholder inquiries (3) None of the persons described in (i) The term ‘‘SBL’’ means Security and/or written comments concerned the paragraphs (B)–(D) of section (n)(1) are Benefit Life Insurance Company and commenters’ difficulties in authorized to examine the trade secrets any affiliate of SBL, as defined in understanding the notice of proposed of SBL or commercial or financial Section III(b). exemption or the effect of the proposed information which is privileged or (j) The term ‘‘Tax-Qualified Contract’’ exemption on such Policyholders’ confidential. means an Eligible Policy in one of the policies. The Department also received (4) Should SBL refuse to disclose following forms, that is held, other than written comments from two Eligible information on the basis that such through a trust, on the date that Members which generally concerned the information is exempt from disclosure, Consideration is distributed— benefit of the Covered Transaction to SBL shall, by the close of the thirtieth (1) An annuity contract that qualifies Policyholders and whether there were (30th) day following the request, for the treatment described in section adequate protections for Plan Eligible provide written notice advising that 403(b) of the Code; Members. person of the reason for the refusal and (2) An individual retirement annuity A. First Commenter that the Department may request such within the meaning of section 408(b) of information. the Code; The first commenter questioned the benefit of the proposed exemption to Section III. Definitions (3) An individual annuity contract or an individual life insurance policy Policyholders as compared to the For purposes of this exemption: issued directly to a Plan participant benefit to the Applicants. In response, (a) The term ‘‘MHC’’ means Security pursuant to a Plan qualified under the Applicants state that holders of Benefit Mutual Holding Company, and section 401(a) or section 403(a) of the Eligible Policies will benefit more from any affiliate of MHC, as defined below Code; the Department’s grant of the proposed in Section III(b). (4) A group annuity contract issued to exemption than from denial of it. The (b) An ‘‘affiliate’’ of a person an employer, designed to fund benefits Applicants explain that, if the proposed includes— under a Plan sponsored by the employer exemption is granted, the Policyholders (1) Any person directly or indirectly that qualifies under section 401(a) or that are Plan Eligible Members will through one or more intermediaries, section 403(a) of the Code; receive the Consideration allotted to controlling, controlled by, or under (5) An annuity contract issued in them and now held in the Escrow common control with such entity (for connection with a Plan established by a Arrangement in the form of cash or purposes of this paragraph, the term governmental entity that qualifies for Policy Credits. If, however, the ‘‘control’’ means the power to exercise a the treatment described in section 457 proposed exemption is denied, (1) the controlling influence over the of the Code; or Policyholders that are Plan Eligible management or policies of a person (6) Any other form of contract MHC Members will be unable to receive the other than an individual); and determines must receive Policy Credits Consideration allotted to them in the

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Escrow Arrangement; and (2) the strength rating for SBL upon expressly permitted pursuant to the Applicants will be unable to distribute announcement of the Transaction, again terms thereof. such Consideration to such Plans upon completion of the Interim In response to the second because of the risk of committing a Recapitalization, and yet again, as the commenter’s inquiry regarding the prohibited transaction. Instead, the Department noted in Footnote 4 of the ability to ensure future prudent Applicants state, the Consideration will Summary, immediately following the operational practices of management, be paid to, and will add to the capital closing of the Transaction. In contrast, the Applicants reiterate that SBL of, SBL.4 Furthermore, the Applicants the Applicants point out that, without remains subject to oversight and suggest that, although enhancing SBL’s the Transaction, MHC’s Board of regulation by the KID. Moreover, capital may have some benefit to the Directors could not, given the condition according to the Applicants, SBL’s new Policyholders, such capital ultimately of SBL, guarantee that the Kansas owners, whose representatives now belongs to the Applicants’ shareholders. Insurance Department (KID) would comprise a majority of the board of Thus, the Applicants state that payment refrain from taking regulatory action directors of Security Benefit Corporation of the Consideration to the that could adversely affect the (SBC), SBL’s parent, have a substantial Policyholders would be more beneficial Policyholders of SBL. investment in SBL, indirectly through to them. Furthermore, the Applicants SBC,7 and thus a significant financial emphasize that the Transaction was interest in SBL being well operated and B. Second Commenter monitored from its inception by the KID managed lest they lose on their The second commenter suggested that and, as part of the KID’s approval investment. the proposed exemption does not process for the D&D Plan, the Finally, in response to the second adequately protect the interests of Plan Commissioner determined that the D&D commenter’s inquiry regarding other Eligible Members. In this regard, the Plan was fair and equitable to Eligible courses of action available to protect second commenter inquired about (1) Members and Policyholders. The Policyholders and benefit the long term How Plan Eligible Members’ financial Applicants note that the survival of SBL, the Applicants suggest interests would be protected; (2) what Commissioner’s order approving the that, as the Transaction closed on July assurances exist that SBL’s policies Transaction found that the evidence 30, 2010, there are currently no would not be changed as a result of the established that the D&D Plan would not alternative courses of action available. exemption; (3) what prudent measures unjustly enrich any director, officer, However, the Applicants stress that would new management undertake to agent, or employee of SBL.5 The MHC’s Board of Directors, the ensure SBL’s future; and (4) what other Applicants also relate that Commissioner and an overwhelming courses of action are available to protect Policyholders, as Members of MHC, majority of Eligible Members supported Plan Eligible Members that would also likewise demonstrated their support for the D&D Plan. In addition, the benefit SBL’s long-term survival. the Transaction, noting that Applicants note that MHC’s Board of In response to the second approximately 90% of the Eligible Directors previously considered commenter’s inquiry about the Members voting at the May 26, 2010 possible alternatives and determined protection of Plan Eligible Members’ meeting voted in favor of the D&D Plan. that the Transaction was in the best financial interests, the Applicants state In response to the second interests of Policyholders. The that MHC’s Board of Directors believed commenter’s inquiry regarding Applicants state further that it is in the its approval of MHC’s (1) sale of SBC to guarantees that the Transaction would best interests of the Policyholders for Guggenheim and (2) concurrent not change the policies of SBL to the the exemption to be granted by the Demutualization and dissolution detriment of the Policyholders, the Department so that the Consideration (cumulatively, the Transaction) to be in Applicants note that the preamble of the can be distributed to the Plan Eligible the best interests of SBL’s Policyholders, D&D Plan, which was distributed to Members in accordance with the D&D as it expected the Transaction to Eligible Members with the MIB, Plan. provide SBL with a significantly provides that: ‘‘[t]he Transaction will The Applicants’ Comment improved financial condition that not, in any way, change premiums or The Applicants also delivered a would allow SBL to mitigate liquidity reduce policy benefits, values, and regulatory concerns and permit SBL written comment to the Department guarantees or other policy obligations of to operate with a stronger capital which was meant to clarify some of the SBL to its Policyholders.’’ Further, the position, better prospects, higher information provided in the Summary. Applicants note that the Commissioner financial strength ratings and thus The comment generally clarifies the determined that the evidence greater assurance it would fulfill its status of Consideration held in the established that the Investor had no obligations to its Policyholders. The Escrow Arrangement, the corporate plans to make any ‘‘material change in Applicants note that, as had been structure of SBL and SBC, the timing of [SBL’s] business or corporate structure anticipated, S&P improved its financial certain key events in the Transaction, or management that would be unfair developments in the allocation of and unreasonable to SBL’s 4 As stated in Representation 36 of the Summary, the Department views the mechanism in the D&D Policyholders and not in the public 7 The Applicants note that approximately $350 Plan whereby Consideration in the Escrow interest.’’ 6 The Applicants also stress million of the $400 million paid by the Investors Arrangement allotted to Plan Eligible Members is that SBL’s actions with respect to to acquire SBC was contributed by SBC as equity returned to SBL if no exemption is received by June Policyholders’ policies continue to be capital to SBL, and the Investors are limited by law 30, 2011 (the failsafe mechanism), as contrary to the in their ability to remove such capital from SBL. In protections afforded to plan assets and the parties subject to oversight and regulation by this regard, the Applicants explain that section 40– who are entitled to such assets under the Act. the KID and, as binding contractual 3306(f) of the Kansas Insurance Code prevents a Moreover, the Department believes that the failsafe agreements, such policies cannot be Kansas life insurer from paying a dividend to its mechanism is violative of Section II(h) of the unilaterally changed by SBL except as shareholders without the prior approval of the exemption, which provides that Plan Eligible Commissioner if the dividend is more than (A) 10% Members that participated in the Demutualization of its surplus as regards Policyholders as of be treated in the same manner as Eligible Members 5 See In re Security Benefit Mutual Holding December 31 immediately preceding; or (B) the net that were not Plans, and Section II(l) of the Company, Docket No. 4103–DM, paragraphs 91–92. gain from operations of such insurer, not including exemption, which prohibits the forfeiture of 6 See In re Security Benefit Mutual Holding realized capital gains for the 12-month period Consideration. Company, Docket No. 4103–DM, paragraph 77. ending December 31 immediately preceding.

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Consideration pursuant to the D&D inserted in its place. The Department allocation process that (1) all of the Plan, and the description of the failsafe takes note of the foregoing clarifications ERISA Contracts held by Eligible mechanism employed in the D&D Plan. and revisions to Representation 1 and Members were Tax-Qualified Contracts Footnote 3 of the Summary. and (2) the Consideration allocable to A. Distribution of Consideration Held in such ERISA Contracts would consist the Escrow Arrangement C. Timing of Key Events in the solely of Policy Credits.’’ The Transaction Section II(e) of the proposed Department concurs and takes note of exemption provides that pursuant to the In Representation 17 of the Summary, the Applicants’ clarification and update D&D Plan, an Eligible Member generally the Applicants suggest that the date on to the Summary. received cash, except that an Eligible which the MIB was mailed to Eligible Member received Policy Credits, and Members be changed to more accurately E. Description of the Failsafe not cash, to the extent that (1) reflect the timing of the mailing of the Mechanism in the D&D Plan Consideration was allocable to the MIB. Thus, the Applicants state that Representation 33 of the Summary Eligible Member based on ownership of ‘‘April 5, 2010’’ be inserted in place of characterizes the December 31, 2010 a Tax-Qualified Contract; or (2) SBL ‘‘March 31, 2010,’’ so that the first deadline for receipt of the IRS Rulings made an objective determination that sentence of Representation 17 now or the exemption as the ‘‘failsafe’’ payment of Consideration in the form of reads, ‘‘On or before April 5, 2010, at mechanism. The Applicants suggest a cash would be disadvantageous to such least 20 days in advance of the Public technical correction to Representation Eligible Member in respect of applicable Comment Meeting to be held by the 33 to clarify that the failsafe mechanism income or other taxation provisions. Commissioner, MHC provided each was not just the December 31, 2010 The Applicants explain that while Eligible Member with a copy of the deadline for receipt of the IRS Rulings Section II(e) of the proposed exemption Security Benefit Member Information and the exemption, subject to extension uses the past tense to describe the Booklet (MIB), describing in detail the by the Commissioner, but also the Eligible Members’ receipt of transactions described herein.’’ associated release of the amounts Consideration pursuant to the D&D Representation 30 of the Summary remaining in the Escrow Arrangement to Plan, a portion of available explains that the Escrow Arrangement the general account of SBL for the Consideration, payable in Policy was necessary to protect Plan Eligible benefit of all Policyholders. Thus, the Credits, continues to be held in the Members from adverse consequences in first sentence of Representation 33, as Escrow Arrangement, as described in the event that the exemption or IRS modified, would read as follows: Representations 29 though 36 of the Rulings were not received by the time According to the Applicants, the December Summary, and will not be distributed Consideration was payable to such 31, 2010 deadline for receipt of the IRS until the exemption is granted. Policyholders. The Applicants note that Rulings or the exemption, following which In response to the Applicants’ while delivery of Consideration to the amounts remaining in the Escrow comment, the Department has revised certain members was conditioned upon Arrangement would be released to the Section II(e) of the operative language the grant of the exemption, the general account of SBL in the absence of, as by including the phrase ‘‘or will receive’’ Transaction itself was not. Thus, the applicable, the IRS Rulings only, the after the word ‘‘received’’ and before the Applicants suggest that in the exemption only or both of the IRS Rulings and the exemption, constitutes a ‘‘failsafe’’ term ‘‘policy credits.’’ Section II(e) of the penultimate sentence of Representation mechanism, in that it is designed to protect exemption now reads, in relevant part, 30 of the Summary, the phrase ‘‘delivery Plans from potential adverse tax as follows: of Consideration to Eligible Members’’ consequences or disqualification in the event (e) Pursuant to the D&D Plan, an Eligible be replaced with the word that Consideration is paid to Eligible Member generally received cash, except that ‘‘Transaction,’’ to reflect that the Members holding Tax-Qualified Contracts or an Eligible Member received or will receive Transaction was not contingent upon ERISA Contracts without the requisite Policy Credits, and not cash, to the extent the receipt of the exemption or the IRS regulatory approvals. that * * * Rulings and proceeded to closing on The Applicants also suggest a In addition, the Department notes July 30, 2010. The Department takes technical correction to the penultimate corresponding revisions to note of the foregoing clarifications and sentence in Representation 33 which Representations 29–36 of the Summary. revisions to Representations 17 and 30 would clarify that the Applicants of the Summary. believed that there was a ‘‘possibility,’’ B. Corporate Structure of MHC and SBC not a ‘‘probability,’’ that only the In Representation 1 and Footnote 3 of D. Allocation of Consideration Pursuant exemption or the IRS Rulings would be the Summary, the Applicants suggest to the D&D Plan approved (but not the other). Thus, the certain technical corrections to clarify As described in the Summary, the sentence, as modified, would read, their corporate structure. In this regard, D&D Plan provides that Consideration ‘‘Furthermore, the Applicants claim that the Applicants suggest that the first was generally paid to Eligible Members there was a possibility that only the sentence in Representation 1 of the in cash; however, Consideration was exemption or the IRS Rulings would be Summary should be revised to read paid by the crediting of Policy Credits approved (but not the other), thereby ‘‘MHC, which is no longer in existence, to each Eligible Member whose Eligible creating a ‘‘catch-22’’ where was the Topeka, Kansas-based, former Policy was held in a Tax-Qualified Consideration could neither be paid to parent of Security Benefit Corporation Contract. The Applicants suggest a new Eligible Members nor kept in the Escrow (SBC), which in turn was the parent footnote to be added to Representation Arrangement indefinitely.’’ The corporation of Security Benefit Life 32, which clarifies that, as a result of the Department takes note of the Insurance Company (SBL).’’ allocation process, it was determined Applicants’ clarifications and concurs Furthermore, the Applicants state that that all of the Eligible Members holding with the foregoing revisions of ‘‘Security Distributors, Inc.’’ should be ERISA Contracts will receive Policy Representation 33. removed from the list of entities in Credits, because the ERISA Contracts Finally, the Department notes that, Footnote 3 because it is a subsidiary of are all also Tax-Qualified Contracts. due to a publication error, the reference SBL rather than SBC, and ‘‘Security Thus, the suggested footnote would to the date of issuance of the IRS Benefit Academy, Inc.’’ should be read, ‘‘SBL determined during the Rulings in Footnote 17 of the Summary

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erroneously refers to ‘‘Footnote 13,’’ and additional contributions or expenses duties respecting the plan solely in the that such reference should be repaid by the Plan relating to the holding interest of the participants and designated as ‘‘Footnote 14.’’ of the Property, less any income beneficiaries of the plan and in a After giving full consideration to the generated by the Property and paid to prudent fashion in accordance with entire record, including the written the Plan, less the Loan principal section 404(a)(1)(B) of the Act; nor does comments, the Department has decided assumed by the Applicants pursuant to it affect the requirement of section to grant the exemption, as described Section (b)(2), or 401(a) of the Code that the plan must above. The complete application file is (2) the Property’s appraised value of operate for the exclusive benefit of the made available for public inspection in $1,825,000, which represents the fair employees of the employer maintaining the Public Documents Room of the market value of the Property, less the the plan and their beneficiaries; Employee Benefits Security Loan principal assumed by the (2) This exemption is supplemental to Administration, Room N–1513, US Applicants pursuant to Section (b)(2); and not in derogation of, any other Department of Labor, 200 Constitution (d) The fair market value of the provisions of the Act and/or the Code, Avenue, NW., Washington, DC 20210. Property has been determined by a including statutory or administrative For a more complete statement of the qualified independent appraiser (the exemptions and transactional rules. facts and representations supporting the Appraiser) and is updated by such Furthermore, the fact that a transaction Department’s decision to grant this appraiser on the date the Sale is is subject to an administrative or exemption refer to the proposed consummated; statutory exemption is not dispositive of (e) The Sale is a one-time transaction exemption published in the Federal whether the transaction is in fact a for cash; Register on January 19, 2011 at 76 FR prohibited transaction; and 3167. (f) The Plan incurs no real estate fees, or commissions, in connection with the (3) The availability of this exemption FOR FURTHER INFORMATION CONTACT: Sale; and is subject to the express condition that Warren Blinder of the Department, (g) The Plan fiduciaries (1) Determine the material facts and representations telephone (202) 693–8553. (This is not whether it is in the interest of the Plan contained in the application accurately a toll-free number.) to proceed with the Sale, (2) review and describes all material terms of the The Parvin Nahvi, M.D., Inc. 401(k) approve the methodology used in the transaction which is the subject of the Profit Sharing Trust (the Plan); Located appraisal that is being relied upon, and exemption. in Templeton, CA; [Prohibited (3) ensure that such methodology is Signed at Washington, DC this 5th day of Transaction Exemption 2011–09; applied by the Appraiser in determining May, 2011. Exemption Application No. D–11635] the fair market value of the Property on Ivan Strasfeld, the date of the Sale. Exemption Director of Exemption Determinations, After giving full consideration to the Employee Benefits Security Administration, The restrictions of sections 406(a), entire record, the Department has U.S. Department of Labor. 406(b)(1) and (b)(2) of the Act and the decided to grant the exemption, as [FR Doc. 2011–11440 Filed 5–10–11; 8:45 am] sanctions resulting from the application described above. The complete BILLING CODE 4510–29–P of section 4975, by reason of section application file is made available for 4975(c)(1)(A) through (E) of the Code, public inspection in the Public shall not apply, in connection with the Documents Room of the Employee DEPARTMENT OF LABOR cash sale by the Plan (the Sale) of a Benefits Security Administration, Room parcel of improved real property (the N–1513, US Department of Labor, 200 Employment and Training Property), to Dr. Parvin Nahvi and Dr. Constitution Avenue, NW, Washington, Administration Javad Sani (the Applicants), the 100% DC 20210. owners of the Plan sponsor, Parvin For a more complete statement of the Proposed Information Collection Nahvi, M.D., Inc. (the Employer), and facts and representations supporting the Request (ICR) for the Impact parties in interest with respect to the Department’s decision to grant this Evaluation of the YouthBuild Program; Plan; provided that: exemption refer to the proposed Comment Request (a) All terms and conditions of the exemption published in the Federal AGENCY: Sale are at least as favorable to the Plan Register on February 17, 2011, at 76 FR Employment and Training as those that the Plan could obtain in an 9370. Administration (ETA), Labor. arm’s length transaction with an FOR FURTHER INFORMATION CONTACT: ACTION: Notice. unrelated party; Warren Blinder of the Department, (b) The Plan’s obligations with respect telephone (202) 693–8553. (This is not SUMMARY: The Department of Labor (the to the remaining principal balance of a a toll-free number.) Department or DOL), as part of its loan (the Loan) on the Property that is continuing effort to reduce paperwork secured by a first deed of trust (the Deed General Information and respondent burden, conducts a of Trust) with Santa Lucia Bank, an The attention of interested persons is preclearance consultation program to unrelated lender, are: directed to the following: provide the general public and other (1) satisfied in full out of the proceeds (1) The fact that a transaction is the Federal agencies with an opportunity to of the Sale, or subject of an exemption under section comment on proposed and/or (2) assumed in full by the Applicants, 408(a) of the Act and/or section continuing collections of information in who indemnify and hold the Plan 4975(c)(2) of the Code does not relieve accordance with the Paperwork harmless for any further payment on, or a fiduciary or other party in interest or Reduction Act of 1995 (PRA) [44 U.S.C. any claims arising in connection with, disqualified person from certain other 3506(c)(2)(A)]. This program helps to the Loan; provisions to which the exemption does ensure that required data can be (c) The Plan receives an amount in not apply and the general fiduciary provided in the desired format, cash, equal to the greater of: responsibility provisions of section 404 reporting burden (time and financial (1) the original purchase price paid by of the Act, which among other things resources) is minimized, collection the Plan for the Property, plus require a fiduciary to discharge his instruments are clearly understood, and

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the impact of collection requirements on development. The evaluation represents the study. Study participants will be respondents can be properly assessed. an important opportunity for DOL to randomly assigned to either the The Department notes that a Federal add to the growing body of knowledge treatment group, which will be eligible agency cannot conduct or sponsor a about the impacts of ‘‘second chance’’ for YouthBuild services, or to the collection of information unless it is programs for youth who have dropped control group which will not be eligible. approved by the Office of Management out of high school. Compared to peers Study participants will be followed for and Budget (OMB) under the PRA and who remain in school, high school four years after random assignment. displays a currently valid OMB control dropouts are more likely to be Data for the study will be collected number, and the public is not required disconnected from school and work, be from YouthBuild grantees and from to respond to a collection of information incarcerated, be unmarried, and have study participants through the following unless it displays a currently valid OMB children outside of marriage. methods: control number. Also, notwithstanding The evaluation of the YouthBuild Grantee Questionnaire and Survey any other provisions of law, no person program will address the following and Site Visits. A brief grantee shall be subject to penalty for failing to research questions: questionnaire and subsequent grantee comply with a collection of information Operation: How is YouthBuild survey will provide information about if the collection of information does not designed in each participating site? the grantee sites that run individual display a currently valid OMB control What are the key implementation YouthBuild programs. The number. See 5 CFR 1320.5(a) and practices that affect how the program questionnaire will be a mandatory 1320.6. operates? How does the local context component of grant awards for all DOL- A copy of the proposed ICR can be affect program implementation and the funded and CNCS-funded YouthBuild obtained by contacting the office listed services available to members of the programs funded in 2011, and will below in the addresses section of this control group? request general information about the notice or by accessing: http:// Participation: What are the staff and participants at each site. www.doleta.gov/OMBCN/ characteristics of youth who enroll in Information provided in this OMBControlNumber.cfm. the study? How are these characteristics questionnaire will be used to inform shaped by YouthBuild recruitment and selection of those grantees which will DATES: Written comments must be screening practices? participate in the participant random submitted to the office listed in the Impacts: What are YouthBuild’s assignment component of the addressee section below on or before impacts on educational attainment, evaluation. The grantee survey is also July 11, 2011. planning, and aspirations? What are mandatory and will be administered ADDRESSES: Send comments to Eileen YouthBuild’s impacts on employment, after programs are fully operational. It Pederson, U.S. Department of Labor, earnings, and job characteristics? What will request detailed information about Employment and Training are YouthBuild’s impacts on crime and the services each program offers, Administration, Office of Policy delinquency? What are the program’s including the frequency and location of Development and Research, 200 impacts on social-emotional particular services, as well as more in- Constitution Avenue, NW., Frances development, identity development, depth information about the staff and Perkins Bldg., Room N–5641, and self-regulation? participants. The information from the Washington, DC 20210, telephone Costs: How does the net cost per grantee survey will be used to support number (202) 693–3647 (this is not a participant compare with the impacts the implementation analysis and will toll-free number); e-mail address is the program generates? assess how outcomes may vary across [email protected] and fax The evaluation study started in June YouthBuild program models. As part of number is (202) 693–2766 (this is not a 2010 and is scheduled to continue until the implementation analysis, the toll-free number). July 2017. MDRC, the prime contractor, evaluation team will conduct site visits SUPPLEMENTARY INFORMATION: is working with Mathematica Policy to at least 60 sites. These visits will Research and Social Policy Research include classroom observations to assess I. Background Associates to design and implement the the quality of instruction, youth focus The Impact Evaluation of the evaluation. The study includes a groups, and semi-structured in-depth YouthBuild program is a seven-year baseline information collection, a Web- interviews with program staff and experimental design impact evaluation based questionnaire and a Web-based collect cost data to ascertain the cost of funded by DOL/ETA. This information survey of YouthBuild grantees, site- the program. collection covers the first year of the specific qualitative and cost data, and Baseline Data Forms Completed by project. YouthBuild is a youth and three mixed-mode (Web and computer- Sample Group Members. Prior to community development program that assisted telephone interviewing) surveys random assignment in the sites selected addresses several core issues facing low- of youth that will take place 12, 30, and for this component of the study, all income communities: available housing, 48 months after random assignment. eligible youth participants will and youth education, employment and The target population for the study is complete baseline data forms, which criminal behavior. The program out-of-school youth aged 16–24, who are will include an Informed Consent Form, primarily serves high school dropouts from low-income families; in foster care; a Baseline Information Form, and a and focuses on helping them attain a offenders; migrants; disabled; or are Contact Information Form. Taken high school diploma or general children of incarcerated parents. Of the together, these will provide participants educational development, or GED, and universe of YouthBuild programs, the with information about the study while teaching them construction skills geared study team will recruit 77 sites (60 DOL- collecting information for both future toward career placement. The funded sites and 17 sites that are not subgroup analysis and locating study evaluation will measure core program currently funded by DOL but do receive participants during future study follow- outcomes including educational funding from the Corporation for ups. attainment, postsecondary planning, National and Community Service Three Follow-up Surveys of Sample employment, earnings, delinquency and [CNCS], referred to hereafter as CNCS- Group Members. Members of both the involvement with the criminal justice funded programs) and will seek to treatment and control groups will system, and youth social and emotional enroll 3,465 eligible participants into complete follow-up surveys at 12, 30,

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and 48 months following random Cite/Reference/Form/etc: Workforce DEPARTMENT OF LABOR assignment. These surveys will request Investment Act Section 172. Employment and Training information about the services that 1. The Site Selection Questionnaire: participants have received through Administration Frequency: Once. YouthBuild and other community [TA–W–75,099] service providers, as well as information Total Responses: 117 sites (all 2011 about their educational attainment, DOL-funded YouthBuild grantees and West, A Thomson Reuters Business, postsecondary planning and all 17 of the CNCS-funded grantees Thomson Reuters Legal Division, engagement, employment, earnings, [excluding those which receive DOL Including On-Site Leased Workers delinquency and involvement with the funding]). From ADECCO, Albuquerque, NM; criminal justice system, and social and Notice of Affirmative Determination Average Time per Response: 10 emotional development. Regarding Application for minutes per staff for each response. At this time, clearance is requested for Reconsideration the site selection questionnaire and Estimated Total Burden Hours: 19.5 By application dated April 12, 2011, grantee survey and the study participant (117 responses × 10 minutes). a Trade Adjustment Assistance baseline data forms. A future request Total Burden Cost: $487.50 (19.5 Coordinator from the State of New will be submitted for the follow-up × hours $25/hour). Mexico requested administrative surveys, site visit protocols and cost 2. The study member enrollment reconsideration of the negative data collection forms. forms: determination regarding workers’ II. Desired Focus of Comments Frequency: Once. eligibility to apply for Trade Adjustment Assistance (TAA) applicable to workers Currently, DOL is soliciting comments Total Responses: 3,465 study and former workers of West, A Thomson concerning the above data collection for participants. Reuters Business, Thomson Reuters the Impact Evaluation of the YouthBuild Legal Division, Albuquerque, New program. Comments are requested to: Average Time per Response: 15 minutes per study participant. Mexico (subject firm). The * Evaluate whether the proposed determination was issued on March 4, collection of information is necessary Estimated Total Burden Hours: 866.25 × 2011. The Department’s Notice of for the proper performance of the (3,465 participants 15 minutes each). Determination was published in the functions of the agency, including Total Burden Cost: $6,280.31 (866.25 Federal Register on March 17, 2011 (76 whether the information will have hours × $7.25/hour). FR 14693). The workers are engaged in practical utility; 3. The Grantee Survey: activities related to the supply of legal, * Evaluate the accuracy of the business, and regulatory information agency’s estimate of the burden of the Frequency: Once. services. proposed collection of information, Total Responses: 117 sites (all 2011 The negative determination was based including the validity of the DOL-funded YouthBuild grantees and on the findings that the group eligibility methodology and assumptions used; all 17 of the CNCS-funded grantees requirements under Section 222(a) and * Enhance the quality, utility, and [excluding those which receive DOL (c) of the Act, 19 U.S.C. 2272(a) and (c), clarity of the information to be funding]). have not been satisfied because the collected; and Average Time per Response: 30 investigation revealed that only one * Minimize the burden of the worker has been totally or partially minutes per staff for each response. information collection on those who are separated from the subject firm. 29 CFR to respond, including the use of Estimated Total Burden Hours: 58.5 90.2 states that a significant number or appropriate automated, electronic, (117 responses × 30 minutes). proportion of the workers means at least mechanical, or other technological Total Burden Cost: $1,462.50 (58.5 three workers in a firm (or appropriate collection techniques or other forms of hours × $25/hour). subdivision thereof) with a workforce of information technology, e.g., permitting fewer than 50 workers, or five percent electronic submissions of responses. Note that, due to rounding, the total of the workers or 50 workers, whichever amounts may differ from the sum of the III. Current Actions is less, in a workforce of 50 or more components. workers. Finally, the group eligibility At this time, DOL is requesting Comments submitted in response to requirements under Section 222(f) of the clearance for the three study participant this request will be summarized and/or Act, 19 U.S.C. 2272(f), have not been enrollment forms—the informed included in the request for Office of satisfied because the workers’ firm has consent form, the baseline information Management and Budget approval; they not been identified in an affirmative form, and the contact information finding of injury by the International form—as well as the initial Site will also become a matter of public record. Trade Commission. Selection Questionnaire and subsequent In the request for reconsideration, the Grantee Survey. A future request for Signed at Washington, DC this 5th day of TAA Coordinator alleges a mistake in comment (and OMB clearance) will be May, 2011. fact with regards to the number and/or submitted for the site visit protocols, Jane Oates, proportion of workers separated, or cost data forms and follow-up surveys. Assistant Secretary for Employment and threatened with separation. Type of review: New information Training. The Department has carefully collection request. [FR Doc. 2011–11531 Filed 5–10–11; 8:45 am] reviewed the request for reconsideration Title of collection: Impact Evaluation and the existing record, and has BILLING CODE 4510–FN–P of the YouthBuild Program. determined that the Department will OMB Control Number: 1205–0NEW. conduct further investigation to Affected Public: Low-income, determine if the petitioning workers disadvantaged youth and DOL- and meet the eligibility requirements of the CNCS-funded YouthBuild programs. Trade Act of 1974, as amended.

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Conclusion The intent of the Department’s certification for workers of the subject After careful review of the certification is to include all workers firm. New findings show that worker application, I conclude that the claim is employed at CEVA Freight, LLC, Dell separations occurred during the relevant of sufficient weight to justify Logistics Division, Winston-Salem, time period at the Mack Avenue Engine reconsideration of the U.S. Department North Carolina who were adversely Plant #2, Detroit, Michigan location of of Labor’s prior decision. The affected as a supplier of freight Chrysler Group, LLC, Power Train application is, therefore, granted. management services. Division. Together, the Mack Avenue The amended notice applicable to Engine Plants #1 and #2 are part of an Signed at Washington, DC this 28th day of TA–W–72,900 is hereby issued as integrated production process for the April, 2011. follows: Jeep Commander and Jeep Grand Del Min Amy Chen, All workers of CEVA Freight, LLC, Dell Cherokee at the North Jefferson Certifying Officer, Office of Trade Adjustment Logistics Division, including on-site leased Assembly Plant and are also adversely Assistance. workers from Prologistix, including workers affected by the loss of business that was [FR Doc. 2011–11476 Filed 5–10–11; 8:45 am] whose unemployment insurance (UI) wages experienced at the North Jefferson BILLING CODE 4510–FN–P were paid through Spartan Staffing and/or Assembly plant affiliate of the subject Staffing Solutions, Winston-Salem, North Carolina, who became totally or partially firm. Accordingly, the Department is DEPARTMENT OF LABOR separated from employment on or after November 18, 2008, through March 19, 2012, amending the certification to include Employment and Training and all workers in the group threatened with workers of the Detroit, Michigan total or partial separation from employment Administration location of Mach Avenue Engine Plant on the date of certification through two years #2 of Chrysler Group, LLC, Power Train [TA–W–72,900] from the date of certification, are eligible to Division. apply for adjustment assistance under The intent of the Department’s CEVA Freight, LLC, Dell Logistics Chapter 2 of Title II of the Trade Act of 1974, as amended. certification is to include all workers of Division, Including On-Site Leased the subject firm who were adversely Workers From Prologistix, Including Signed at Washington, DC, this 29th day of affected by a shift of automotive engines Workers Whose Unemployment April, 2011. to Saltillo, Mexico. Insurance (UI) Wages Are Paid Del Min Amy Chen, The amended notice applicable to Through Spartan Staffing and/or Certifying Officer, Office of Trade Adjustment TA–W–75,023 is hereby issued as Staffing Solutions, Winston-Salem, Assistance. follows: North Carolina; Amended Certification [FR Doc. 2011–11477 Filed 5–10–11; 8:45 am] Regarding Eligibility To Apply for All workers of Chrysler Group, LLC, Power BILLING CODE 4510–FN–P Train Division, Mack Avenue Engine Plant Worker Adjustment Assistance #1 and #2, including on-site leased workers In accordance with Section 223 of the of Caravan Knight, Detroit, Michigan, who Trade Act of 1974, as amended (‘‘Act’’), DEPARTMENT OF LABOR became totally or partially separated from employment on or after December 5, 2010, 19 U.S.C. 2273, the Department of Labor Employment and Training through April 6, 2013, and all workers in the issued a Certification of Eligibility to Administration group threatened with total or partial Apply for Worker Adjustment separation from employment on date of Assistance on March 19, 2010, [TA–W–75,023] certification through two years from the date applicable to workers of CEVA Freight, of certification, are eligible to apply for LLC, Dell Logistics Division, including Chrysler Group, LLC, Power Train adjustment assistance under Chapter 2 of on-site leased workers from Prologistix, Division, Mack Avenue Engine Plants Title II of the Trade Act of 1974, as amended. Winston-Salem, North Carolina. The #1 And #2, Including On-Site Leased Workers from Caravan Knight, Detroit, Signed in Washington, DC, this 27th day of notice was published in the Federal April 2011. Register on April 23, 2010 (75 FR MI; Amended Certification Regarding Eligibility To Apply for Worker Del Min Amy Chen, 21357). The notice was amended on Adjustment Assistance Certifying Officer, Office of Trade Adjustment June 21, 2010 to include on-site leased Assistance. workers from Employment Staffing In accordance with Section 223 of the [FR Doc. 2011–11479 Filed 5–10–11; 8:45 am] Solutions. The amended notice was Trade Act of 1974, as amended (‘‘Act’’), BILLING CODE 4510–FN–P published in the Federal Register on 19 U.S.C. 2273, the Department of Labor July 1, 2010 (75 FR 38128–38129). issued a Certification of Eligibility to At the request of the State Agency, the Apply for Worker Adjustment DEPARTMENT OF LABOR Department reviewed the certification Assistance on April 6, 2011, applicable for workers of the subject firm. The to workers of Chrysler Group, LLC, Employment and Training workers supply freight management Power Train Division, Mack Avenue Administration services. Engine Plant #1, including on-site [TA–W–73,448] Information shows that leased leased workers of Caravan Knight, workers from Prologistix who were Detroit, Michigan. The workers are Blue Heron Paper Company, Including separated from employment at the engaged in the production of automotive Workers Whose Unemployment Winston-Salem, North Carolina location engines. The notice was published in Insurance (UI) Wages Are Paid of CEVA Freight, LLC had wages the Federal Register on April 22, 2011 Through Barrett Business Services, reported under a separate (76 FR 22731). The notice was amended Inc., Oregon City, OR; Amended unemployment insurance (UI) tax on April 12, 2011 to correct the impact Certification Regarding Eligibility To account under Spartan Staffing and/or date. The notice was published in the Apply for Worker Adjustment Staffing Solutions. Accordingly, the Federal Register on April 22, 2011 (76 Assistance Department is amending this FR 22729). certification to properly reflect this At the request of a company official, In accordance with Section 223 of the matter. the Department reviewed the Trade Act of 1974, as amended (‘‘Act’’),

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19 U.S.C. 2273, the Department of Labor DEPARTMENT OF LABOR Docket: To read or download issued a Certification of Eligibility to comments or other material in the Apply for Worker Adjustment Occupational Safety and Health docket, go to http://www.regulations.gov Assistance on May 27, 2010, applicable Administration or the OSHA Docket Office at the to workers of Blue Heron Paper [Docket No. OSHA–2011–0063] address above. All documents in the Company, Oregon City, Oregon. The docket (including this Federal Register notice was published in the Federal Slings; Extension of the Office of notice) are listed in the http:// Register on June 16, 2010 (75 FR 34174). Management and Budget’s (OMB) www.regulations.gov index; however, Approval of Information Collection some information (e.g., copyrighted At the request of the State agency, the (Paperwork) Requirements material) is not publicly available to Department reviewed the certification read or download through the Web site. AGENCY: for workers of the subject firm. The Occupational Safety and Health All submissions, including copyrighted workers are engaged in activities related Administration (OSHA), Labor. material, are available for inspection to the production of pulp and paper. ACTION: Request for public comments. and copying at the OSHA Docket Office. Information shows that Blue Heron SUMMARY: OSHA solicits public You may also contact Theda Kenney at Paper Company, through bankruptcy, comments concerning its proposal to the address below to obtain a copy of was assigned a trustee, Barrett Business extend OMB approval of the the ICR. Services, Inc., to provide payroll information collection requirements FOR FURTHER INFORMATION CONTACT: services while preparing for closure. contained in the Standard on Slings (29 Theda Kenney or Todd Owen, Some workers separated from CFR 1910.184). The collection of Directorate of Standards and Guidance, employment at the Oregon City, Oregon information (paperwork) provisions of OSHA, U.S. Department of Labor, Room location of the subject firm had their the Standard specify affixing N–3609, 200 Constitution Avenue, NW., wages reported under a separated identification tags or markings on slings, Washington, DC 20210; telephone (202) unemployment insurance (UI) tax developing and maintaining inspection 693–2222. records, and retaining proof testing account under the name Barrett SUPPLEMENTARY INFORMATION: Business Services, Inc. certificates. I. Background Accordingly, the Department is DATES: Comments must be submitted (postmarked, sent, or received) by July amending this certification to properly The Department of Labor, as part of its 11, 2011. reflect this matter. continuing effort to reduce paperwork ADDRESSES: Electronically: You may The intent of the Department’s and respondent (i.e., employer) burden, submit comments and attachments conducts a preclearance consultation certification is to include all workers of electronically at http:// the subject firm who were adversely program to provide the public with an www.regulations.gov, which is the opportunity to comment on proposed affected by increased imports of pulp Federal eRulemaking Portal. Follow the and paper. and continuing information collection instructions online for submitting requirements in accordance with the The amended notice applicable to comments. Paperwork Reduction Act of 1995 (44 Facsimile: If your comments, TA–W–73,448 is hereby issued as U.S.C. 3506(c)(2)(A)). This program including attachments, are not longer follows: ensures that information is in the than 10 pages, you may fax them to the desired format, reporting burden (time All workers of Blue Heron Paper Company, OSHA Docket Office at (202) 693–1648. including workers whose unemployment Mail, hand delivery, express mail, and costs) is minimal, collection insurance (UI) wages are paid through Barrett messenger, or courier service: When instruments are clearly understood, and Business Services, Inc., Oregon City, Oregon, using this method, you must submit a OSHA’s estimate of the information who became totally or partially separated copy of your comments and attachments collection burden is accurate. The from employment on or after February 1, to the OSHA Docket Office, Docket No. Occupational Safety and Health Act of 2009 through May 27, 2012, and all workers OSHA–2011–0063, U.S. Department of 1970 (the OSH Act) (29 U.S.C. 651 et in the group threatened with total or partial Labor, Occupational Safety and Health seq.) authorizes information collection separation from employment on the date of Administration, Room N–2625, 200 by employers as necessary or certification through two years from the date Constitution Avenue, NW., Washington, appropriate for enforcement of the OSH of certification, are eligible to apply for DC 20210. Deliveries (hand, express Act or for developing information adjustment assistance under Chapter 2 of mail, messenger, and courier service) regarding the causes and prevention of Title II of the Trade Act of 1974, as amended. are accepted during the Department of occupational injuries, illnesses, and Signed in Washington, DC this 27th day of Labor’s and Docket Office’s normal accidents (29 U.S.C. 657). The OSH Act April, 2011. business hours, 8:15 a.m. to 4:45 p.m., also requires that OSHA obtain such information with minimum burden Michael W. Jaffe, e.t. Instructions: All submissions must upon employers, especially those Certifying Officer, Office of Trade Adjustment operating small businesses, and to Assistance. include the Agency name and OSHA docket number (OSHA–2011–0063) for reduce to the maximum extent feasible [FR Doc. 2011–11478 Filed 5–10–11; 8:45 am] the Information Collection Request unnecessary duplication of efforts in BILLING CODE 4510–FN–P (ICR). All comments, including any obtaining information (29 U.S.C. 657). personal information you provide, are The Slings Standard (29 CFR placed in the public docket without 1910.184) specifies several collection of change, and may be made available information (paperwork) requirements, online at http://www.regulations.gov. depending on the type of sling. The For further information on submitting purpose of each of these requirements is comments see the ‘‘Public Participation’’ to prevent workers from using defective heading in the section of this notice or deteriorated slings, thereby reducing titled SUPPLEMENTARY INFORMATION. their risk of death or serious injury

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caused by sling failure during material proof test and make it available for Federal Government; State, Local, or handling. examination. Tribal Government. Paragraph (e) of the Standard covers The information on the identification Number of Respondents: 1,116,667. alloy steel chain slings. Paragraph (e)(1) tags, markings, and codings assist the Frequency of Response: On occasion. requires that alloy steel chain slings employer in determining whether the Average Time per Response: Varies have permanently affixed and durable sling can be used for the lifting task. The from 1 minute (.02 hour) to maintain a identification stating the size, grade, sling inspections enable early detection certificate to 30 minutes (.50 hour) for rated capacity, and reach of the sling. of faulty slings. The inspection and a manufacturing employee to acquire The information, supplied by the repair records provide employers with information from a manufacturer for a manufacturer, is typically marked on a information about when the last new tag, make a new tag, and affix it to metal tag and affixed to the sling. inspection was made and about the type a sling. Paragraph (e)(3)(i) requires the of the repairs made. This information Estimated Total Burden Hours: employer to make a thorough periodic provides some assurance about the 19,833. inspection of alloy steel chain slings in condition of the slings. These records Estimated Cost (Operation and use on a regular basis, but at least once also provide the most efficient means Maintenance): $0. a year. Paragraph (e)(3)(ii) requires the for an OSHA compliance officer to IV. Public Participation—Submission of employer to make and maintain a record determine that an employer is Comments on This Notice and Internet of the most recent month in which each complying with the Standard. Proof Access to Comments and Submissions alloy steel chain sling was thoroughly testing certificates give employers, inspected, and make this record You may submit comments in employees, and OSHA compliance response to this document as follows: available for examination. officers assurance that slings are safe to Paragraph (e)(4) requires the employer (1) Electronically at http:// use. The certificates also provide the www.regulations.gov, which is the to retain certificates of proof testing. compliance officers with an efficient Employers must ensure that before use, Federal eRulemaking Portal; (2) by means to assess employer compliance facsimile (fax); or (3) by hard copy. All each new, repaired, or reconditioned with the Standard. alloy steel chain sling, including all comments, attachments, and other welded components in the sling II. Special Issues for Comment material must identify the Agency name assembly, has been proof tested by the OSHA has a particular interest in and the OSHA docket number for the sling manufacturer or an equivalent comments on the following issues: ICR (Docket No. OSHA–2011–0063). entity. The certificates of proof testing • Whether the proposed information You may supplement electronic must be retained by the employer and collection requirements are necessary submissions by uploading document made available for examination. for the proper performance of the files electronically. If you wish to mail Paragraph (f) of the Standard covers Agency’s functions, including whether additional materials in reference to an wire rope slings. Paragraph (f)(4)(ii) the information is useful; electronic or facsimile submission, you requires that all welded end • The accuracy of OSHA’s estimate of must submit them to the OSHA Docket attachments of wire rope slings be proof the burden (time and costs) of the Office (see the section of this notice tested by the manufacturer at twice their information collection requirements, titled ADDRESSES). The additional rated capacity prior to initial use, and including the validity of the materials must clearly identify your that the employer retain a certificate of methodology and assumptions used; electronic comments by your name, the proof test and make it available for • The quality, utility, and clarity of date, and the docket number so the examination. the information collected; and Agency can attach them to your Paragraph (g) of the Standard covers • Ways to minimize the burden on comments. metal mesh slings. Paragraph (g)(1) employers who must comply; for Because of security procedures, the requires each metal mesh sling to have example, by using automated or other use of regular mail may cause a a durable marking permanently affixed technological information collection significant delay in the receipt of that states the rated capacity for vertical and transmission techniques. comments. For information about basket hitch and choker hitch loadings. security procedures concerning the Paragraph (g)(8)(ii) requires that once III. Proposed Actions delivery of materials by hand, express repaired, each metal mesh sling be OSHA is requesting that OMB extend delivery, messenger, or courier service, permanently marked or tagged, or a its approval of the information please contact the OSHA Docket Office written record maintained to indicate collection requirements contained in the at (202) 693–2350, (TTY (877) 889– the date and type of the repairs made, Standard on Slings (29 CFR 1910.184). 5627). and the person or organization that OSHA is proposing to increase the Comments and submissions are performed the repairs. Records of the existing burden hour estimate for the posted without change at http:// repairs shall be made available for collection of information requirements www.regulations.gov. Therefore, OSHA examination. specified by the Standard from 17,760 to cautions commenters about submitting Paragraph (i) of the Standard covers 19,833 hours, a total increase of 2,073 personal information such as social synthetic web slings. Paragraph (i)(1) hours. The increase occurred as a result security numbers and date of birth. requires that synthetic web slings be of an overall increase in the total Although all submissions are listed in marked or coded to show the rated number of slings. The Agency will the http://www.regulations.gov index, capacities for each type of hitch and the summarize the comments submitted in some information (e.g., copyrighted type of synthetic web material used in response to this notice and will include material) is not publicly available to the sling. this summary in the request to OMB. read or download through this Web site. Paragraph (i)(8)(i) prohibits the use of Type of Review: Extension of a All submissions, including copyrighted repaired synthetic web slings until they currently approved collection. material, are available for inspection have been proof tested by the Title: Slings (29 CFR 1910.184). and copying at the OSHA Docket Office. manufacturer or an equivalent entity. OMB Number: 1218–0223. Information on using the http:// Paragraph (i)(8)(ii) requires the Affected Public: Business or other for- www.regulations.gov Web site to submit employer to retain a certificate of the profits; Not-for-profit organizations; comments and access the docket is

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available at the Web site’s ‘‘User Tips’’ PORTIONS OPEN TO THE PUBLIC: The FOR FURTHER INFORMATION CONTACT: Ms. link. Contact the OSHA Docket Office meeting on Friday, May 20, 9 a.m.–5:30 Suzanne H. Plimpton, Reports Clearance for information about materials not p.m. will be open to the public. Officer, National Science Foundation, available through the Web site, and for PORTIONS CLOSED TO THE PUBLIC: The 4201 Wilson Boulevard, Suite 295, assistance in using the Internet to locate meeting on Thursday, May 19, 1 p.m.– Arlington, Virginia 22230; telephone docket submissions. 5:30 p.m. will be closed to the public. (703) 292–7556; or send e-mail to [email protected]. Individuals who use CONTACT PERSON FOR MORE INFORMATION: V. Authority and Signature a telecommunications device for the Anne Sommers, NCD, 1331 F Street, David Michaels, PhD, MPH, Assistant deaf (TDD) may call the Federal NW., Suite 850, Washington, DC 20004; Secretary of Labor for Occupational Information Relay Service (FIRS) at 1– 202–272–2004 (V), 202–272–2074 Safety and Health, directed the 800–877–8339, which is accessible 24 (TTY). preparation of this notice. The authority hours a day, 7 days a week, 365 days a for this notice is the Paperwork ACCOMMODATIONS: Those who plan to year (including Federal holidays). Reduction Act of 1995 (44 U.S.C. 3506 attend and require accommodations SUPPLEMENTARY INFORMATION: et seq.) and Secretary of Labor’s Order should notify NCD as soon as possible Title of Collection: Survey of Graduate No. 5–2010 (72 FR 55355). to allow time to make arrangements. Students and Postdoctorates in Science Signed at Washington, DC on May 5, 2011. Dated: May 9, 2011. and Engineering. OMB Approval Number: 3145–0062. David Michaels, Aaron Bishop, Executive Director. Expiration Date of Current Approval: Assistant Secretary of Labor for Occupational October 31, 2011. Safety and Health. [FR Doc. 2011–11677 Filed 5–9–11; 4:15 pm] Type of Request: Intent to seek [FR Doc. 2011–11457 Filed 5–10–11; 8:45 am] BILLING CODE 6820–MA–P approval to revise an information BILLING CODE 4510–26–P collection for three years.

NATIONAL SCIENCE FOUNDATION 1. Abstract The Survey of Graduate Students and NATIONAL COUNCIL ON DISABILITY Agency Information Collection Postdoctorates in Science and Activities: Proposed Collection; Sunshine Act Meetings Engineering (GSS) is sponsored by the Comment Request National Science Foundation and the National Institutes of Health. The GSS TIME AND DATES: The board meeting will AGENCY: National Science Foundation. be held on Thursday, May 19, 2011, 1 originated in 1966 and has been ACTION: Notice and request for p.m.–5:30 p.m., ET, and Friday, May 20, conducted annually since 1972. The comments. 2011, 9 a.m.–5:30 p.m., ET. GSS is a census of all departments in science, engineering and health fields PLACE: The board meeting will occur at SUMMARY: Under the Paperwork within academic institutions with post- the Access Board Conference Room, Reduction Act of 1995, Public Law 104– baccalaureate programs in the United 1331 F Street, NW., Suite 800, 13 (44 U.S.C. 3501 et seq.), and as part States. The total number of respondents Washington, DC. of its continuing effort to reduce surveyed in 2009, the last year for paperwork and respondent burden, the STATUS: Parts of this meeting will be which complete response rate data are National Science Foundation (NSF) is open to the public. The rest of the available, was 13,187 departments inviting the general public or other meeting will be closed to the public. (reporting units) located in 703 schools Federal agencies to comment on this MATTERS TO BE CONSIDERED: The agenda at 575 degree-granting institutions. The proposed continuing information for the board meeting includes a review GSS is the only national survey that collection. The NSF will publish of the agency’s budget and fiscal year collects information on the periodic summaries of the proposed obligations, strategic plan characteristics of graduate enrollment projects. implementation, a public comment for specific science, engineering and Comments: Comments are invited on: session, and other items, to be health disciplines at the department (a) Whether the proposed collection of determined. The meeting on Thursday level. It collects information on race/ information is necessary for the proper will be conducted in a closed session to ethnicity, citizenship, gender, sources of performance of the functions of the discuss internal personnel rules and support, mechanisms of support, and Foundation, including whether the practices, pursuant to paragraph (c)(2) of enrollment status for graduate students; information will have practical utility; the Sunshine Act, and in accordance information on postdoctorates by (b) the accuracy of the Foundation’s with a determination made by the NCD citizenship, gender, sources of support, estimate of the burden of the proposed Chairman. A public comment session doctorate type and origins. It also collection of information; (c) ways to will be held on Friday, May 20, from 1 collects information on other doctorate- enhance the quality, utility, and clarity p.m. until 1:30 p.m. Individuals holding non-faculty researchers. interested in making public comments of the information to be collected; and The National Science Foundation Act may do so in-person, by phone, or by (d) ways to minimize the burden of the of 1950, as subsequently amended, providing written comments by e-mail, collection of information on those who includes a statutory charge to ‘‘ *** fax, or mail. The toll-free call-in number are to respond, including through the provide a central clearinghouse for the is 1–888–972–9933, and the passcode is use of automated collection techniques collection, interpretation, and analysis ‘‘NCD Meeting.’’ Written comments on or other forms of information of data on scientific and engineering disability-related issues of concern or technology. resources, and to provide a source of interest may be mailed to NCD’s office DATES: Written comments on this notice information for policy formulation by at 1331 F Street, NW., Suite 850, must be received by July 11, 2011, to be other agencies of the Federal Washington, DC 20004; faxed to the assured consideration. Comments Government.’’ The GSS is designed to NCD office at (202) 272–2022; or may received after that date will be comply with these mandates by also be e-mailed to [email protected] at any considered to the extent practicable. providing information on the time. Send comments to address below. characteristics of academic graduate

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enrollment and postdoctoral estimate that the per unit burden will 15.1(a) and (c). All of the changes components in science, engineering and decrease slightly each year as the described herein are applicable to EDGA health fields. respondents become familiar with the Members. The text of the proposed rule The GSS (along with other academic question items in the survey, thus change is available on the Exchange’s sector surveys from both NSF and the estimate a burden of 2.7 hours per Internet Web site at http:// National Center of Education Statistics) reporting unit in 2011. We anticipate www.directedge.com. is one of the inputs into the that the number of units in 2011 cycle II. Self-Regulatory Organization’s WebCASPAR data system. Among other will include the units in 2010, plus Statement of the Purpose of, and uses, this NSF on-line database is used approximately 3% increase in units. In Statutory Basis for, the Proposed Rule by NSF to review changing enrollment addition, an estimated 500 new units Change levels to assess the effects of NSF will be added to the survey frame as a initiatives, to track student support result of expansion study in 2011. The In its filing with the Commission, the patterns and to analyze participation in estimated burden for each cycle of GSS self-regulatory organization included S&E fields by targeted groups for all is about 40,000 hours assuming the statements concerning the purpose of, disciplines or for selected disciplines same response rates as 2009 (99.3% for and basis for, the proposed rule change and for selected groups of institutions. the schools and the units). The total and discussed any comments it received The Foundation also uses the GSS estimated respondent burden of the GSS on the proposed rule change. The text information to prepare congressionally would be 120,000 hours over the 3-year of these statements may be examined at mandated reports such as Women, clearance period. the places specified in Item IV below. Minorities and Persons with Disabilities Dated: May 5, 2011. The self-regulatory organization has in Science and Engineering and Science Suzanne H. Plimpton, prepared summaries, set forth in and Engineering Indicators. A public sections A, B and C below, of the most Reports Clearance Officer, National Science use file is also made available on the significant aspects of such statements. world-wide Web. Foundation. Data are obtained primarily by Web [FR Doc. 2011–11474 Filed 5–10–11; 8:45 am] A. Self-Regulatory Organization’s survey (with paper worksheets made BILLING CODE 7555–01–P Statement of the Purpose of, and available upon request) and starts each Statutory Basis for, the Proposed Rule fall in mid-October. The data are Change solicited under the authority of the SECURITIES AND EXCHANGE 1. Purpose National Science Foundation Act of COMMISSION 1950, as amended. All information will The Exchange proposes to offer a [Release No. 34–64393; File No. SR–EDGA– reduced rate from $0.0023 per share to be used for statistical purposes only. 2011–14] Participation in the survey is voluntary. $0.0022 per share for Flag D executions Self-Regulatory Organizations; EDGA (as noted in proposed footnote 14 of the 2. Expected Respondents Exchange, Inc.; Notice of Filing and fee schedule) provided that the Member The GSS is census of all eligible Immediate Effectiveness of Proposed routes an average daily volume (‘‘ADV’’) academic institutions in the U.S. with Rule Change Relating to Amendments of more than 30,000,000 shares per day post-baccalaureate programs in science, to the EDGA Exchange, Inc. Fee to NYSE using the RDOT or RDOX engineering and health fields and their Schedule routing strategies, as defined in Rules related departments. The response rate 11.9(b)(3)(h) and (i). is calculated on the number of May 4, 2011. The H flag represents non-displayed departments that respond to the survey. Pursuant to Section 19(b)(1) of the executions. The Exchange proposes to Securities Exchange Act of 1934 (the append the reference to footnote 2 on 3. Estimate of Burden ‘‘Act’’),1 and Rule 19b–4 thereunder,2 Flag H so that a reduced rate (of $0.0010 The initial GSS data request is sent to notice is hereby given that on April 29, per share) would be offered provided the designated respondent (School 2011, the EDGA Exchange, Inc. (the that the Member adds greater than Coordinator) at each academic ‘‘Exchange’’ or the ‘‘EDGA’’) filed with 1,000,000 shares hidden on a daily basis institution in the fall. The School the Securities and Exchange (yielding Flag H), measured monthly or Coordinator may complete or delegate Commission (‘‘Commission’’) the posts greater than 8,000,000 shares on a all or part of the Part I listing of eligible proposed rule change as described in daily basis, measured monthly (yielding units (departments, programs, research Items I, II, and III below, which items Flags B,V, Y, 3 or 4). Members not centers and health care facilities) and have been prepared by the self- meeting either minimum will be Part II data. In all cases, the School regulatory organization. The charged $0.0030 per share. Coordinator is responsible for the Part I Commission is publishing this notice to For customer internalization (i.e., data collection. Usually, the School solicit comments on the proposed rule same MPID),4 currently there is no Coordinator delegates the Part II change from interested persons. charge nor rebate. This was because collection to unit respondents. The I. Self-Regulatory Organization’s when the Exchange launched in July amount of time it takes to provide the Statement of the Terms of Substance of 2010 the rebate for removing liquidity information on Part I and Part II varies the Proposed Rule Change ($0.0002 per share) was offset by the fee dramatically and depends to a large for adding liquidity ($0.0002 per share). degree on the extent to which the The Exchange proposes to amend its This situation yields Flag ‘‘E’’ on both school’s records are centrally stored and fees and rebates applicable to Members 3 sides of an execution. During the Pre- computerized. of the Exchange pursuant to EDGA Rule Opening and Post-Closing sessions, The 2010 GSS asked the unit respondents to provide an estimate of 1 15 U.S.C. 78s(b)(1). 4 This occurs when two orders presented to the the time spent in filling out the GSS. 2 17 CFR 240.19b–4. Exchange from the same Member (i.e., MPID) are 3 A Member is any registered broker or dealer, or presented separately and not in a paired manner, The average burden for completing the any person associated with a registered broker or but nonetheless inadvertently match with one GSS was 2.78 hours per reporting unit. dealer, that has been admitted to membership in the another. Members are advised to consult Rule 12.2 In keeping with prior experience, we Exchange. respecting fictitious trading.

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there are also no charges nor rebates, but share provided that the conditions of allocation of reasonable dues, fees, and this situation yields Flag ‘‘5’’ per side of the volume threshold are met. The other charges. The reduced rate of an execution (adding liquidity/removing Exchange believes that this discounted $0.0010 11 provided that a volume liquidity). The Exchange is now rate would incentivize Members to first threshold is satisfied is designed to proposing to charge $0.0001 per share route through EDGA to reach NYSE and incentivize Members to use non- per side of an execution (for adding would thereby increase liquidity on displayed orders to increase volume on liquidity and for removing liquidity) for EDGA. This type of rate is also similar EDGA. Flags E and 5 instead of the standard or to EDGA’s rate for removing liquidity Such increased volume increases tiered rebate/removal rates. Therefore, from LavaFlow (Flag M). The standard potential revenue to the Exchange, and Members would incur a total removal rate of $0.0029 per share is would allow the Exchange to spread its internalization cost of $0.0002 per share reduced to $0.0023 per share for orders administrative and infrastructure costs for both sides of an execution for routed to LavaFlow that achieve certain over a greater number of shares, leading customer internalization. volume thresholds, as EDGA Members to lower per share costs. These lower Currently, orders routed to EDGX are able to share in potential volume tier per share costs would allow the Mid-Point Match (‘‘MPM’’) using the savings realized by EDGA when routing Exchange to pass on the savings to IOCM routing strategy,5 as defined in to LavaFlow.9 This type of rate is also Members in the form of reduced fees. Rule 11.9(b)(3)(q),6 are assessed a fee of similar to other rates that EDGA charges, The increased liquidity also benefits all $0.0010 per share and yield flag ‘‘MT.’’ such as ‘‘one-under’’ pricing for routing investors by deepening EDGA’s The Exchange is proposing to increase to Nasdaq using the INET order type liquidity pool, supporting the quality of this fee to $0.0012 per share. and is consistent with the processing of price discovery, promoting market Finally, the Exchange is proposing to similar routing strategies by EDGA’s transparency and improving investor make a technical correction to the fee competitors.10 protection. Volume-based discounts schedule to replace the term ‘‘order The rate is also equitable in that it is such as the reduced execution fee type’’ with ‘‘routing strategy’’ throughout designed to incentivize Members to use proposed herein have been widely the fee schedule in order to conform to the RDOT or RDOX routing strategies to adopted in the cash equities markets language in Rule 11.9(b)(3). These increase volume on EDGA. Such and provide discounts that are amendments will appear in the text for increased volume increases potential reasonably related to the value to an Flags K, L, P, Q, T, Z, 2, 8, 9, BY, CL, revenue to the Exchange, and would exchange’s market quality associated MT, RT, RX, SW, and footnote 8. allow the Exchange to spread its with higher levels of market activity, EDGA Exchange proposes to administrative and infrastructure costs such as higher levels of liquidity implement these amendments to the over a greater number of shares, leading provision and introduction of higher Exchange fee schedule on May 1, 2011. to lower per share costs. These lower volumes of orders into the price and per share costs would allow the 2. Statutory Basis volume discovery processes. The Exchange to pass on the savings to Exchange believes that the proposed fee The Exchange believes that the Members in the form of reduced fees. is non-discriminatory in that it applies proposed rule change is consistent with The increased liquidity also benefits all uniformly to all Members. the objectives of Section 6 of the Act,7 investors by deepening EDGA’s The Exchange believes that the in general, and furthers the objectives of liquidity pool, supporting the quality of increased fee for customer Section 6(b)(4),8 in particular, as it is price discovery, promoting market internalization of $0.0001 per share per designed to provide for the equitable transparency and improving investor side of an execution for both Flags E allocation of reasonable dues, fees and protection. Volume-based discounts (regular trading session) and 5 (pre and other charges among its members and such as the reduced execution fee post market) represents an equitable other persons using its facilities. proposed here have been widely allocation of reasonable dues, fees, and The Exchange believes that the adopted in the cash equities markets other charges as it is designed to proposed reduced rate of $0.0022 per and provide discounts that are introduce a nominal and reasonable fee share for Flag D executions provided reasonably related to the value to an for members who inadvertently match that the Member routes an average daily exchange’s market quality associated with one another, thereby discouraging volume (‘‘ADV’’) of more than with higher levels of market activity, potential wash sales. The increased fee 30,000,000 shares per day to NYSE such as higher levels of liquidity also allows the Exchange to offset its using the RDOT or RDOX routing provision and introduction of higher administrative, clearing, and other strategies represents an equitable volumes of orders into the price and operating costs incurred in executing allocation of reasonable dues, fees, and volume discovery processes. The such trades. Finally, the fee is equitable other charges. When EDGA routes to Exchange believes that the proposed in that it is in line with the EDGA fee NYSE and removes liquidity, NYSE discounted rate is non-discriminatory in structure which currently has a maker/ charges EDGA $0.0023 per share. If a that it applies uniformly to all Members. taker spread of $0.0001 per share (the member uses EDGA to route to NYSE, The Exchange believes that the standard fee to add liquidity on EDGA EDGA provides a $0.0001 discount per proposed reduced rate for Flag H is $0.00025 per share, while the executions of $0.0010 per share, as standard rebate to remove liquidity is 5 EDGX Rule 11.5(c)(7) defines a MPM order as an described in footnote 2, is an equitable $0.00015 per share). EDGA also has a order with an instruction to execute it at the tiered rate for adding liquidity of midpoint of the NBBO. A MPM order may be a Day 9 See footnote 6 of the EDGA fee schedule. Order, Fill-or-Kill Order, or IOC Order. The $0.00005, which would make this 10 See footnote 7 of the EDGA fee schedule. See Exchange notes that members can send in a MPM ¥ also BATS BZX fee schedule: Discounted spread $0.0001 per share. As a result order directly to EDGX without routing through the Destination Specific Routing (‘‘One Under’’) to of the customer internalization charge, EDGA platform as an IOCM routing option. NYSE, NYSE ARCA and NASDAQ. See Securities 6 Members who internalized would be IOCM is a routing option under which an order Exchange Act Release No. 62858, 75 FR 55838 checks the System for available shares and then is (September 14, 2010) (SR–BATS–2010–023) charged $0.0001 per side of an sent to EDGX as an immediate or cancel (IOC) MPM (modifying the BATS fee schedule in order to order. amend the fees for its BATS + NYSE Arca 11 If a member fails to reach such volume 7 15 U.S.C. 78f. destination specific routing option to continue to thresholds, the Member will pay $0.0030 per share 8 15 U.S.C. 78f(b)(4). offer a ‘‘one under’’ pricing model). for Flag H executions.

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execution (total of $0.0002 per share) C. Self-Regulatory Organization’s amendments, all written statements instead of capturing the maker/taker Statement on Comments on the with respect to the proposed rule spread of ¥$0.0001 per share. Proposed Rule Change Received From change that are filed with the As mentioned above, when the Members, Participants or Others Commission, and all written Exchange launched in July 2010, this The Exchange has not solicited, and communications relating to the spread was zero (0). This increased fee does not intend to solicit, comments on proposed rule change between the per side of an execution ($0.0001 per this proposed rule change. The Commission and any person, other than side instead of free) thus brings the Exchange has not received any those that may be withheld from the public in accordance with the internalization fee in line with the unsolicited written comments from provisions of 5 U.S.C. 552, will be current maker/taker spreads.12 The members or other interested parties. available for Web site viewing and Exchange believes that the proposed fee III. Date of Effectiveness of the printing in the Commission’s Public is non-discriminatory in that it applies Proposed Rule Change and Timing for Reference Room, 100 F Street, NE., uniformly to all Members. Commission Action Washington, DC 20549, on official The Exchange believes that the The foregoing rule change has become business days between the hours of 10 proposed increased fee to $0.0012 per effective pursuant to Section 19(b)(3) of a.m. and 3 p.m. Copies of the filing also share for the ‘‘MT’’ flag for routing to the Act 13 and Rule 19b–4(f)(2) 14 will be available for inspection and EDGX MPM using the IOCM routing thereunder. At any time within 60 days copying at the principal office of the strategy represents an equitable of the filing of such proposed rule Exchange. All comments received will allocation of reasonable dues, fees, and change, the Commission summarily may be posted without change; the other charges as such increased fee temporarily suspend such rule change if Commission does not edit personal offsets the Exchange’s administrative it appears to the Commission that such identifying information from and other operational costs. The fee action is necessary or appropriate in the submissions. You should submit only increase represents a pass through by public interest, for the protection of information that you wish to make EDGA to its members of EDGX’s investors, or otherwise in furtherance of available publicly. All submissions increased fee (from $0.0010 to $0.0012 the purposes of the Act. should refer to File Number SR–EDGA– per share) for removing liquidity from 2011–14 and should be submitted on or IV. Solicitation of Comments EDGX MPM, effective May 1, 2011. The before June 1, 2011. $0.0012 per share is competitive and Interested persons are invited to For the Commission, by the Division of superior to comparable exchange submit written data, views, and Trading and Markets, pursuant to delegated standard removal rates of $0.0030 per arguments concerning the foregoing, authority.16 share (Nasdaq), $0.0030 per share including whether the proposed rule Elizabeth M. Murphy, (NYSE Arca), $0.0023 per share (NYSE), change is consistent with the Act. Secretary. and $0.0028 per share (BATS BZX). The Comments may be submitted by any of [FR Doc. 2011–11456 Filed 5–10–11; 8:45 am] the following methods: fee is also equitable as it is competitive BILLING CODE 8011–01–P with other fees assessed for routing Electronic Comments strategies that access low cost • Use the Commission’s Internet destinations, such as ROUZ, as defined SMALL BUSINESS ADMINISTRATION in Rule 11.9(b)(3)(c)(v) (yields Flag Z, comment form (http://www.sec.gov/ $0.0010 per share) and ROUD/ROUE, as rules/sro.shtml); or • Send an e-mail to rule- Small Business Size Standards: defined in Rules 11.9(b)(3)(b) and [email protected]. Please include File Waiver of the Nonmanufacturer Rule 11.9(b)(3)(c)(i) (Flag T, $0.0012 per Number SR–EDGA–2011–14 on the share). The Exchange believes that the AGENCY: U.S. Small Business subject line. proposed fee is non-discriminatory in Administration. that it applies uniformly to all Members. Paper Comments ACTION: Notice of Waiver to the Nonmanufacturer Rule for GEN II and • Send paper comments in triplicate The proposed rule change reflects a GEN III Image Intensifier Tubes. competitive pricing structure designed to Elizabeth M. Murphy, Secretary, to incent market participants to direct Securities and Exchange Commission, SUMMARY: The U. S. Small Business their order flow to the Exchange. The 100 F Street, NE., Washington, DC Administration (SBA) is granting a class Exchange believes that the proposed 20549–1090. waiver of the Nonmanufacturer Rule for rates are non-discriminatory in that they All submissions should refer to File GEN II and GEN III Image Intensifier apply uniformly to all Members. The Number SR–EDGA–2011–14. This file Tubes, Product Service Code (PSC) Exchange believes the fees and credits number should be included on the 5855, Night Vision Equipment under remain competitive with those charged subject line if e-mail is used. To help the North American Industry Classification by other venues and therefore continue Commission process and review your System (NAICS) code 333314 (Optical to be reasonable and equitably allocated comments more efficiently, please use Instrument and Lens Manufacturing). to Members. only one method. The Commission will The basis for the waiver is that no small post all comments on the Commission’s business manufacturers are supplying B. Self-Regulatory Organization’s Internet Web site (http://www.sec.gov/ this class of products to the Federal Statement on Burden on Competition rules/sro.shtml). Copies of the government. The effect of this waiver The proposed rule change does not submission,15 all subsequent will be to allow otherwise qualified impose any burden on competition that small businesses to supply the products is not necessary or appropriate in 13 15 U.S.C. 78s(b)(3)(A). of any manufacturer on a Federal 14 furtherance of the purposes of the Act. 17 CFR 19b–4(f)(2). contract set aside for small businesses, 15 The text of the proposed rule change is Service-Disabled Veteran-Owned available on Exchange’s Web site at http:// 12 The Exchange will continue to ensure that the www.directedge.com, on the Commission’s Web site (SDVO) small businesses, Participants internalization fee is no more favorable than each at http://www.sec.gov, at EDGA, and at the prevailing maker/taker spread. Commission’s Public Reference Room. 16 17 CFR 200.30–3(a)(12).

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in SBA’s 8(a) Business Development comments and sources of small business approval in accordance with the (BD) Program, or Women-Owned Small manufacturers of this class of products. Paperwork Reduction Act of 1995. Business (WOSB) concerns. In response to these notices, SBA • Title of Information Collection: DATES: This waiver is effective May 26, received comments from fourteen (14) Medical Examination for Immigrant or 2011. sources. One respondent, a large Refugee Applicant. • FOR FURTHER INFORMATION CONTACT: Ms. business, was identified as a OMB Control Number: 1405–0113. • Amy Garcia, Procurement Analyst, by manufacturer of GEN III image Type of Request: Revision of a telephone at (202) 205–6842; by Fax at intensifier tubes. Thirteen (13) Currently Approved Collection. • (202) 481–1630; or by e-mail at respondents were identified as small Originating Office: Bureau of [email protected]. business suppliers, distributors, or Consular Affairs, Office of Visa Services integrators of GEN II and/or GEN III (CA/VO). SUPPLEMENTARY INFORMATION: Section image intensifier tubes, night vision • Form Number: DS–2053, DS–2054, 8(a)(17) of the Small Business Act (Act), systems and/or related equipment. Of DS–3030, DS–3024, DS–3025, DS–3026. 15 U.S.C. 637(a)(17), and SBA’s these respondents, three (3) sources • Respondents: Immigrant visa and implementing regulations require that requested that additional related items refugee applicants. recipients of Federal supply contracts be considered for waiver: PVS–14, PVS– • Estimated Number of Respondents: set aside for small businesses, SDVO 17, and AVS–9 night vision systems. 630,000 per year. small businesses, Participants in the However, SBA has identified, through • Estimated Number of Responses: SBA’s 8(a) BD Program, or WOSBs, market research, and as a result of 630,000 per year. provide the product of a small business findings in this case, that one or more • Average Hours per Response: 1 manufacturer or processor, if the small business manufacturers or hour. recipient is other than the actual component assemblers exist for PVS–14, • Total Estimated Burden: 630,000 manufacturer or processor of the PVS–17, and AVS–9 night vision hours annually. product. This requirement is commonly • systems, and, as such, these items do Frequency: Once per application. referred to as the Nonmanufacturer • not qualify to be waived under the Obligation to Respond: Required to Rule. 13 CFR 121.406(b), 125.15(c), Nonmanufacturer Rule. 13 CFR Obtain Benefit. 127.505. Section 8(a)(17)(b)(iv) of the 121.406(b), 125.15(c), 127.505. One (1) DATES: Submit comments to the Office Act authorizes SBA to waive the respondent claimed to be a small of Management and Budget (OMB) for Nonmanufacturer Rule for any ‘‘class of business manufacturer of GEN II image up to 30 days from May 11, 2011. products’’ for which there are no small intensifier tubes. However, upon further ADDRESSES: Direct comments to the business manufacturers or processors investigation, the source does not Department of State Desk Officer in the available to participate in the Federal qualify as a manufacturer under 13 CFR Office of Information and Regulatory market. In order to be considered available to 121.406(b). Thus, no small business Affairs at the Office of Management and participate in the Federal market for a manufacturers of GEN II or GEN III Budget (OMB). You may submit image intensifier tubes that participate comments by the following methods: class of products, a small business • manufacturer must have submitted a in the Federal market were identified. E-mail: Consequently, SBA has determined _ proposal for a contract solicitation or oira [email protected]. You that there are no small business received a contract from the Federal must include the DS form number, manufacturers of these classes of Government within the last 24 months. information collection title, and OMB products, and is therefore granting the 13 CFR 121.1202(c). The SBA defines control number in the subject line of waiver of the Nonmanufacturer Rule for ‘‘class of products’’ based on the Office your message. GEN II and GEN III Image Intensifier • of Management and Budget’s NAICS. Fax: 202–395–5806. Attention: Desk The SBA received a request on August Tubes under PSC 5855, Night Vision Officer for Department of State. 13, 2010, to waive the Nonmanufacturer Equipment, NAICS code 333314 FOR FURTHER INFORMATION CONTACT: You Rule for GEN II and GEN III Image (Optical Instrument and Lens may obtain copies of the proposed Intensifier Tubes under Product Service Manufacturing). information collection and supporting Code (PSC) 5855, Night Vision Dated: April 29, 2011. documents from Stefanie Claus of the Equipment, Emitted and Reflected John W. Klein, Office of Visa Services, U.S. Department Radiation, under North American Director, Office of Government Contracting. of State, 2401 E. Street, NW. L–603, Industry Classification System (NAICS) [FR Doc. 2011–11142 Filed 5–10–11; 8:45 am] Washington, DC 20522, who may be code 333314 (Optical Instrument and BILLING CODE 8025–01–P reached at (202) 663–2910. Lens Manufacturing). SUPPLEMENTARY INFORMATION: We are On August 27, 2010, SBA published soliciting public comments to permit in the Federal Register a notice of intent DEPARTMENT OF STATE the Department to: to waive the Nonmanufacturer Rule for • Evaluate whether the proposed the above listed item. 75 FR 21427 [Public Notice: 7451] information collection is necessary to (2010). SBA explained in the notice that properly perform our functions. 30-Day Notice of Proposed Information it was soliciting comments and sources • Evaluate the accuracy of our Collection: Medical Examination Forms of small business manufacturers of this estimate of the burden of the proposed for Immigrant or Refugee Applicants class of products. In addition, SBA collection, including the validity of the conducted market research using the ACTION: Notice of request for public methodology and assumptions used. • Dynamic Small Business Search (DSBS) comment and submission to OMB of Enhance the quality, utility, and database and no small business proposed collection of information. clarity of the information to be manufacturers that participate in the collected. Federal market were identified. Lastly, SUMMARY: The Department of State has • Minimize the reporting burden on on September 16, 2010, SBA posted a submitted the following information those who are to respond. Sources Sought notice on http:// collection request to the Office of Abstract of proposed collection: INA www.fbo.gov that it was soliciting Management and Budget (OMB) for Section 221(d) requires that prior to the

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issuance of an immigrant visa the International Narcotics Control and Law DEPARTMENT OF STATE applicant undergo a physical and Enforcement heading in the [Public Notice: 7455] mental examination. The results of the Supplemental Appropriations Act, 2010 medical examination are used to (Pub. L. 111–212) (‘‘the Act’’), and the Determination and Certification Under determine the alien’s eligibility for such Department of State Delegation of Section 490(b)(1)(A) of the Foreign a visa under INA 212(a)(1). INA Section Authority Number 245–1, I hereby Assistance Act Relating to the Largest 412(b)(4)(B) requires that the United determine that, with respect to the $200 Exporting and Importing Countries of States Government ‘‘provide for the million INCLE funds made available for Certain Precursor Chemicals identification of refugees who have been implementation, management, security, determined to have medical conditions Pursuant to Section 490(b)(1)(A) of communications, and other expenses the Foreign Assistance Act of 1961, as affecting the public health and requiring related to the Iraqi police program, the ’’ amended, I hereby determine and certify treatment. Form DS–2053, Medical Government of Iraq supports and is Examination for Immigrant or Refugee that the top five exporting and cooperating with such program. Applicant (1991 Technical Instructions); importing countries and territories of Form DS–2054, Medical Examination This Determination shall be reported pseudoephedrine and ephedrine (Egypt, for Immigrant or Refugee Applicant to Congress and published in the Germany, India, Indonesia, Nigeria, (2007 Technical Instructions); Form DS– Federal Register. Thailand, Taiwan, Singapore, Switzerland, and the United Kingdom) 3024, Chest X-Ray and Classification Dated: December 28, 2010. Worksheet (1991 Technical have cooperated fully with the United James B. Steinberg, Instructions); Form DS–3030, Chest X- States, or have taken adequate steps on Ray and Classification Worksheet (2007 Deputy Secretary of State. their own, to achieve full compliance Technical Instructions); Form DS–3025, with the goals and objectives Editorial Note: This document was established by the United Nations Vaccination Documentation Worksheet; received in the Office of the Federal Register Convention Against Illicit Traffic in Form DS–3026, Medical History and on May 6, 2011. Narcotics Drugs and Psychotropic Physical Examination Worksheet, are [FR Doc. 2011–11549 Filed 5–10–11; 8:45 am] designed to record the results of the Substances. medical examination. The panel BILLING CODE 4710–17–P This Determination and Certification physician performs the medical shall be published in the Federal Register, and copies shall be provided examination of the applicant and DEPARTMENT OF STATE completes the forms. Medical exams to the Congress together with the may also be required occasionally for accompanying Memorandum of nonimmigrant visa applicants. [Public Notice: 7453] Justification. Methodology: The electronic medical Dated: March 11, 2011. Determination To Transfer Title of forms will be submitted electronically to Thomas R. Nides, Selected Aircraft to the Government of the Department. Doctors who submit the Deputy Secretary of State for Management medical information electronically will Mexico and Resources. no longer submit paper-based forms to [FR Doc. 2011–11548 Filed 5–10–11; 8:45 am] Pursuant to section 484(a)(2)(A) of the the Department. It is the intention of the BILLING CODE 4710–17–P Department to discontinue the paper Foreign Assistance Act of 1961, as versions as this electronic submission amended (‘‘the Act’’) and section 1– option is made available to all panel 100(a)(1) of Executive Order No. 12163 DEPARTMENT OF STATE (1979), as amended, I hereby determine physicians worldwide. [Public Notice: 7452] At posts that continue in the short that section 484(a)(1) of the Act (Which term to use the paper version of the requires that the United States retain Determination Pursuant to Section 451 medical forms, panel physicians will title to aircraft made available to foreign of the Foreign Assistance Act Relating keep copies of the form at their offices. countries primarily for narcotics-related to Assistance for Individuals To The completed forms are then submitted purposes) should not apply to three (3) Support Near East Regional in hard copy to the consular officer for Sikorsky UH–60M ‘‘Black Hawk’’ Democracy processing. helicopters, because it is in the United States’ national interest to transfer title. Pursuant to section 451 of the Foreign Dated: April 27, 2011. Assistance Act of 1961, as amended (the David T. Donahue, This Determination, supported by the ‘‘Act’’) (22 U.S.C. section 2261) and Deputy Assistant Secretary, Bureau of Memorandum of Justification, Section section 1–100 of Executive Order 12163, Consular Affairs, Department of State. 484 analysis, and the aircraft inventory, as amended, I hereby authorize, [FR Doc. 2011–11407 Filed 5–10–11; 8:45 am] shall be notified to the appropriate notwithstanding any other provision of BILLING CODE 4710–06–P congressional committees. law, the use of $5,000,000 in FY 2010 Dated: March 2, 2011. Economic Support Funds in order to provide assistance for individuals in Thomas R. Nides, DEPARTMENT OF STATE support of Near East Regional Deputy Secretary of State. [Public Notice: 7454] Democracy. [FR Doc. 2011–11550 Filed 5–10–11; 8:45 am] This Determination shall be reported Determination Under the Supplemental BILLING CODE 4710–17–P to the Congress promptly and published Appropriations Act, 2010 (Pub. L. 111– in the Federal Register. 212) Concerning the Government of Dated: April 19, 2011. Iraq’s Support for the Iraq Police Hillary Rodham Clinton, Program Secretary of State. Pursuant to the authority vested in the [FR Doc. 2011–11547 Filed 5–10–11; 8:45 am] Secretary of State under the BILLING CODE 4710–31–P

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DEPARTMENT OF STATE 399 (Omnibus Diplomatic Security and • Mail: Docket Management Facility; Antiterrorism Act of 1986), as amended; U.S. Department of Transportation, 1200 [Public Notice: 7445] Public Law 107–56 (USA PATRIOT New Jersey Avenue, SE., West Building, Advisory Committee for the Study of Act); and Executive Order 13356. The Room W12–140, Washington, DC Eastern Europe and the Independent purpose of the collection is to validate 20003–3302. States of the Former Soviet Union the identity of individuals who enter • Hand Delivery: Room W12–140 on (Title VIII) Department facilities. The data will be the plaza level of the West Building, entered into the Visitor Access Control 1200 New Jersey Avenue, SE., The Advisory Committee for the System (VACS–D) database. Please see Washington, DC, between 9 a.m. and 5 Study of Eastern Europe and the the Privacy Impact Assessment for p.m., Monday through Friday, except Independent States of the Former Soviet VACS–D at http://www.state.gov/ Federal holidays. Union (Title VIII) will convene on documents/organization/100305.pdf for • Federal eRulemaking Portal: Go to Thursday, June 2, 2011 at 10:30 a.m. additional information. http://www.regulations.gov. Follow the and last until approximately 12:30 p.m. Dated: April 25, 2011. online instructions for submitting The meeting location is Room 1205 of comments. the U.S. Department of State, Harry S Susan Nelson, Instructions: All submissions must Truman Building, 2201 C Street, NW., Executive Director, Advisory Committee for include the Agency name and docket Washington, DC. Study of Eastern Europe and Eurasia (the The Advisory Committee will Independent States of the Former Soviet number for this notice. Note that all recommend grant recipients for the FY Union). comments received will be posted 2011 competition of the Program for the [FR Doc. 2011–11244 Filed 5–10–11; 8:45 am] without change to http://dms.dot.gov Study of Eastern Europe and the BILLING CODE 4710–32–P including any personal information Independent States of the Former Soviet provided. Please see the Privacy Act Union in accordance with the Research heading for further information. Docket: For access to the docket to and Training for Eastern Europe and the DEPARTMENT OF TRANSPORTATION Independent States of the Former Soviet read background documents or Union Act of 1983, Public Law 98–164, Federal Motor Carrier Safety comments received, go to http:// as amended. The agenda will include Administration dms.dot.gov at any time or Room PL– opening statements by the Chair and W12–140 on the plaza level of the West members of the committee, and, within [Docket No. FMCSA–2011–0362] Building, 1200 New Jersey Avenue, SE., the committee, discussion, approval and Washington, DC, between 9 a.m. and 5 recommendation that the Department of Medical Review Board Public Meeting p.m., Monday through Friday, except Federal holidays. The DMS is available State negotiate grant agreements with AGENCY: Federal Motor Carrier Safety 24 hours each day, 365 days each year. certain ‘‘national organizations with an Administration (FMCSA), United States If you want acknowledgment that we interest and expertise in conducting Department of Transportation (DOT). research and training concerning the received your comments, please include countries of Eastern Europe and the ACTION: Notice of Medical Review Board a self-addressed, stamped envelope or Independent States of the Former Soviet (MRB) public meeting. postcard or print the acknowledgement page that appears after submitting Union,’’ based on the guidelines SUMMARY: The FMCSA announces that contained in the call for applications the Agency’s Medical Review Board will comments on-line. published in Grants.gov and hold a committee meeting on June 30, Privacy Act: Anyone may search the GrantSolutions.gov on February 3, 2011. 2011. The meeting will provide the electronic form of all comments Following committee deliberation, public an opportunity to observe and received into any of our dockets by the interested members of the public may participate in MRB deliberations about name of the individual submitting the make oral statements concerning the its recommendations for changes to the comment (or of the person signing the Title VIII program in general. Federal Motor Carrier Safety Regulation comment, if submitted on behalf of an This meeting will be open to the (FMCSR) medical standards, in association, business, labor union, etc.). public; however attendance will be accordance with the Federal Advisory You may review the U.S. Department of limited to the seating available. Entry Committee Act (FACA). Transportation’s complete Privacy Act into the Harry S Truman building is Statement in the Federal Register DATES: controlled and must be arranged in The MRB meeting will be held published on April 11, 2000 (65 FR advance of the meeting. Those planning from 10 a.m.–4 p.m. on June 30, 2011. 19477; Apr. 11, 2000). This information to attend should notify the Title VIII Please note the preliminary agenda for is also available at http://dms.dot.gov. Program Office at the U.S. Department this meeting in the SUPPLEMENTARY FOR FURTHER INFORMATION CONTACT: Ms. of State on (202) 736–4661 by Thursday, INFORMATION section of this notice for specific information. Elaine M. Papp, Division Chief, Medical May 26, providing the following Programs, 202–366–4001, FMCSA, ADDRESSES: The meeting will take place information: Full Name, Date of Birth, Department of Transportation, 1200 at the Hilton-Alexandria Old Town, Driver’s License Number and Issuing New Jersey Avenue, SE., Washington, 1767 King Street, Alexandria, VA 22314. State, Country of Citizenship, and any DC 20003–3302. Office hours are from You may submit comments identified requirements for special 8:30 a.m. to 5 p.m. Monday through by DOT Docket Management System accommodation. All attendees must use Friday, except Federal holidays. the 2201 C Street entrance and must (DMS) Docket Number FMCSA–2011– arrive no later than 10 a.m. to pass 0362 using any of the following INFORMATION ON SERVICES FOR through security before entering the methods: INDIVIDUALS WITH DISABILITIES: For building. Visitors who arrive without • Web Site: http://dmses.dot.gov/ information on facilities or services for prior notification and without photo submit. Follow the instructions for individuals with disabilities or to identification will not be admitted. submitting comments on the DOT request special assistance at the The identifying data from the public electronic docket site. meeting, contact Elaine M. Papp at 202– is requested pursuant to Public Law 99– • Fax: 1–202–493–2251. 366–4001.

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SUPPLEMENTARY INFORMATION: The is listed in the ADDRESSES section. Avenue, SE., Washington, DC, between preliminary agenda for the meeting During the MRB meeting (11:15–11:45 9 a.m. and 5 p.m., Monday through includes: a.m. and 2:30–4 p.m.), oral comments Friday, except Federal holidays. 10–10:15 a.m. Call to Order, may be limited depending on how many Privacy Act: Anyone may search the Introduction and Agenda Review persons wish to comment; and will be electronic form of all comments 10:15–1045 a.m. Updated Evidence accepted on a first come, first serve received into any of DOT’s dockets by Report Diabetes Mellitus basis as requestors register at the the name of the individual submitting 10:45–11:15 a.m. Preliminary Report meeting. The comments must directly the comment (or of the person signing on Cochlear Implants address relevant medical and scientific the comment, if submitted on behalf of 11:15–11:45 a.m. Public Comment issues on the MRB meeting agenda. For an association, business, labor union, or Period more information, please view the other entity). You may review DOT’s 11:45A–12:45 p.m. Break for Lunch following Web site: http:// Privacy Act Statement for the Federal 12:45–2 p.m. Update on 2007 www.fmcsa.dot.gov/mrb. Docket Management System (FDMS) published in the Federal Register on Evidence Report on Sleep Apnea; Issued on: May 5, 2011. Overview of 2007 Medical Expert January 17, 2008 (73 FR 3316), or you Larry W. Minor, may visit http://edocket.access.gpo.gov/ Panel Opinions on Sleep Apnea Associate Administrator of Policy. 2–2:30 p.m. Review on Previous MRB 2008/pdf/E8–785.pdf. [FR Doc. 2011–11576 Filed 5–10–11; 8:45 am] recommendations on Sleep Apnea BILLING CODE 4910–EX–P Background 2:30 –4 p.m. Public Comment Period On March 29, 2011, FMCSA Breaks will be announced on meeting published a notice of receipt of Federal day and may be adjusted according to DEPARTMENT OF TRANSPORTATION diabetes exemption applications from schedule changes, other meeting seventeen individuals and requested requirements. Federal Motor Carrier Safety comments from the public (76 FR Administration Background 17478). The public comment period [FMCSA Docket No. FMCSA–2011–0040] closed on April 28, 2011 and one The Secretary of the Department of comment was received. Transportation announced on November Qualification of Drivers; Exemption FMCSA has evaluated the eligibility 2, 2010, the five medical experts who Applications; Diabetes Mellitus of the seventeen applicants and serve on the MRB. Section 4116 of the determined that granting the AGENCY: Safe, Accountable, Flexible, Efficient Federal Motor Carrier Safety exemptions to these individuals would Transportation Equity Act: A Legacy for Administration (FMCSA), DOT. achieve a level of safety equivalent to, Users (SAFETEA–LU, Pub. L. 109–59) ACTION: Notice of final disposition. or greater than, the level that would be requires the Secretary of Transportation SUMMARY: FMCSA announces its achieved by complying with the current with the advice of the MRB to regulation 49 CFR 391.41(b)(3). ‘‘establish, review, and revise medical decision to exempt seventeen standards for operators of Commercial individuals from its rule prohibiting Diabetes Mellitus and Driving Motor Vehicles (CMVs) that will ensure persons with insulin-treated diabetes Experience of the Applicants that the physical condition of operators mellitus (ITDM) from operating The Agency established the current is adequate to enable them to operate commercial motor vehicles (CMVs) in standard for diabetes in 1970 because the vehicles safely.’’ FMCSA is planning interstate commerce. The exemptions several risk studies indicated that revisions to the physical qualification will enable these individuals to operate drivers with diabetes had a higher rate regulations of CMV drivers, and the CMVs in interstate commerce. of crash involvement than the general MRB will provide the necessary science- DATES: The exemptions are May 11, population. The diabetes rule provides based guidance to establish realistic and 2011. The exemptions expire on May that ‘‘A person is physically qualified to responsible medical standards. 13, 2013. drive a commercial motor vehicle if that The MRB operates in accordance with FOR FURTHER INFORMATION CONTACT: Dr. person has no established medical the Federal Advisory Committee Act Mary D. Gunnels, Director, Medical history or clinical diagnosis of diabetes (FACA) as announced in the Federal Programs, (202) 366–4001, mellitus currently requiring insulin for Register (70 FR 57642, October 3, 2005). [email protected], FMCSA, Room control’’ (49 CFR 391.41(b)(3)). The MRB is charged initially with the W64–224, Department of FMCSA established its diabetes review of all current FMCSA medical Transportation, 1200 New Jersey exemption program, based on the standards (49 CFR 391.41), as well as Avenue, SE., Washington, DC 20590– Agency’s July 2000 study entitled ‘‘A proposing new science-based standards 0001. Office hours are from 8:30 a.m. to Report to Congress on the Feasibility of and guidelines to ensure that drivers 5 p.m., Monday through Friday, except a Program to Qualify Individuals with operating CMVs in interstate commerce, Federal holidays. Insulin-Treated Diabetes Mellitus to as defined in CFR 390.5, are physically SUPPLEMENTARY INFORMATION: Operate in Interstate Commerce as capable of doing so. Directed by the Transportation Act for Electronic Access the 21st Century.’’ The report concluded Meeting Participation You may see all the comments online that a safe and practicable protocol to Attendance is open to the interested through the Federal Document allow some drivers with ITDM to public, including medical examiners, Management System (FDMS) at: http:// operate CMVs is feasible. motor carriers, drivers, and www.regulations.gov. The September 3, 2003 (68 FR 52441) representatives of medical and scientific Docket: For access to the docket to Federal Register notice in conjunction associations. Written comments for this read background documents or with the November 8, 2005 (70 FR MRB meeting will also be accepted comments, go to http:// 67777) Federal Register notice provides beginning on June 30, 2011 and www.regulations.gov and/or Room the current protocol for allowing such continuing until July 15, 2011, and W12–140 on the ground level of the drivers to operate CMVs in interstate should include the docket number that West Building, 1200 New Jersey commerce.

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These seventeen applicants have had monitoring checklist completed by the DEPARTMENT OF THE TREASURY ITDM over a range of 1 to 28 years. treating endocrinologist as well as an These applicants report no severe annual checklist with a comprehensive Office of the Secretary hypoglycemic reactions resulting in loss medical evaluation; (2) that each of consciousness or seizure, requiring individual reports within 2 business List of Countries Requiring the assistance of another person, or days of occurrence, all episodes of Cooperation With an International resulting in impaired cognitive function severe hypoglycemia, significant Boycott that occurred without warning complications, or inability to manage In accordance with section 999(a)(3) symptoms, in the past 12 months and no diabetes; also, any involvement in an of the Internal Revenue Code of 1986, recurrent (2 or more) severe accident or any other adverse event in the Department of the Treasury is hypoglycemic episodes in the past 5 a CMV or personal vehicle, whether or publishing a current list of countries years. In each case, an endocrinologist not it is related to an episode of which require or may require verified that the driver has hypoglycemia; (3) that each individual participation in, or cooperation with, an demonstrated a willingness to properly provide a copy of the ophthalmologist’s international boycott (within the monitor and manage his/her diabetes or optometrist’s report to the medical meaning of section 999(b)(3) of the mellitus, received education related to examiner at the time of the annual Internal Revenue Code of 1986). diabetes management, and is on a stable medical examination; and (4) that each On the basis of the best information insulin regimen. These drivers report no individual provide a copy of the annual currently available to the Department of other disqualifying conditions, medical certification to the employer for the Treasury, the following countries including diabetes-related retention in the driver’s qualification require or may require participation in, complications. Each meets the vision file, or keep a copy in his/her driver’s or cooperation with, an international standard at 49 CFR 391.41(b)(10). qualification file if he/she is self- boycott (within the meaning of section The qualifications and medical employed. The driver must also have a 999(b)(3) of the Internal Revenue Code condition of each applicant were stated copy of the certification when driving, of 1986). and discussed in detail in the March 29, for presentation to a duly authorized Kuwait, Lebanon, Libya, Qatar, Saudi 2011, Federal Register notice and they Federal, State, or local enforcement Arabia, Syria, United Arab will not be repeated in this notice. official. Emirates, Yemen, Republic of. Discussion of Comment Conclusion Iraq is not included in this list, but its FMCSA received one comment in this status with respect to future lists proceeding. The comment was Based upon its evaluation of the remains under review by the considered and discussed below. seventeen exemption applications, Department of the Treasury. The Pennsylvania Department of FMCSA exempts, Peter N. Amendola, Dated: May 2, 2011. Transportation stated that it had Edward D. Boyer, Steven V. Callison, Michael J. Caballero, reviewed the driving record for Edward Douglas A. Carroll, Bradley J. Frazier, International Tax Counsel, Tax Policy. Tamara S. Folsom, Gerald W. Fryar, D. Boyer and are in favor of granting [FR Doc. 2011–11307 Filed 5–10–11; 8:45 am] him a Federal diabetes exemption. Richard P. Inott, Ernest Martinelli, BILLING CODE 4810–25–M Jonathan C. Morgan, Benjamin D. Basis for Exemption Determination Phelps, Richard J. Rasch, Philip J. Under 49 U.S.C. 31136(e) and 31315, Regan, Paul E. Regelin, II, David R. DEPARTMENT OF THE TREASURY FMCSA may grant an exemption from Smith, Adam J. Stegenga and Donald D. the diabetes standard in 49 CFR Willard from the ITDM standard in 49 Office of Foreign Assets Control 391.41(b)(3) if the exemption is likely to CFR 391.41(b)(3), subject to the achieve an equivalent or greater level of conditions listed under ‘‘Conditions and Additional Identifying Information safety than would be achieved without Requirements’’ above. Associated With Persons Whose the exemption. The exemption allows Property and Interests in Property Are In accordance with 49 U.S.C. 31136(e) the applicants to operate CMVs in Blocked Pursuant to Executive Order and 31315 each exemption will be valid interstate commerce. 13572 of April 29, 2011, ‘‘Blocking for two years unless revoked earlier by To evaluate the effect of these Property of Certain Persons With FMCSA. The exemption will be revoked exemptions on safety, FMCSA Respect to Human Rights Abuses in if: (1) The person fails to comply with considered medical reports about the Syria’’ applicants’ ITDM and vision, and the terms and conditions of the reviewed the treating endocrinologists’ exemption; (2) the exemption has AGENCY: Office of Foreign Assets medical opinion related to the ability of resulted in a lower level of safety than Control, Treasury. the driver to safely operate a CMV while was maintained before it was granted; or ACTION: Notice. using insulin. (3) continuation of the exemption would Consequently, FMCSA finds that in not be consistent with the goals and SUMMARY: The Treasury Department’s each case exempting these applicants objectives of 49 U.S.C. 31136(e) and Office of Foreign Assets Control from the diabetes standard in 49 CFR 31315. If the exemption is still effective (‘‘OFAC’’) is publishing additional 391.41(b)(3) is likely to achieve a level at the end of the 2-year period, the identifying information associated with of safety equal to that existing without person may apply to FMCSA for a the three individuals and two entities the exemption. renewal under procedures in effect at listed in the Annex to Executive Order that time. 13572 of April 29, 2011, ‘‘Blocking Conditions and Requirements Property of Certain Persons with Issued on: May 5, 2011. The terms and conditions of the Respect to Human Rights Abuses in exemption will be provided to the Larry W. Minor, Syria,’’ whose property and interests in applicants in the exemption document Associate Administrator of Policy. property are therefore blocked. and they include the following: (1) That [FR Doc. 2011–11573 Filed 5–10–11; 8:45 am] FOR FURTHER INFORMATION CONTACT: each individual submit a quarterly BILLING CODE 4910–EX–P Assistant Director, Compliance

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Outreach & Implementation, Office of 3. NAJIB, Atif (a.k.a. NAJEEB, Atef; comments at the Public Reading Room, Foreign Assets Control, Department of a.k.a. NAJIB, Atef); POB Jablah, 1700 G Street, NW., Washington, DC the Treasury, 1500 Pennsylvania Syria; Brigadier General; Position: 20552 by appointment. To make an Avenue, NW. (Treasury Annex), Former head of the Syrian Political appointment, call (202) 906–5922, send Washington, DC 20220, Tel.: 202/622– Security Directorate for Dar’a an e-mail to [email protected], or 2490. Province (individual) [SYRIA.] send a facsimile transmission to (202) 906–7755. SUPPLEMENTARY INFORMATION: Entities FOR FURTHER INFORMATION CONTACT: For Electronic and Facsimile Availability 1. ISLAMIC REVOLUTIONARY GUARD further information or to obtain a copy This document and additional CORPS (IRGC)-QODS FORCE (a.k.a. of the submission to OMB, please information concerning OFAC are PASDARAN-E ENGHELAB-E contact Ira L. Mills at, available from OFAC’s Web site (http:// ISLAMI (PASDARAN); a.k.a. [email protected], or on (202) 906– www.treas.gov/ofac) or via facsimile SEPAH-E QODS (JERUSALEM 6531, or facsimile number (202) 906– through a 24-hour fax-on-demand FORCE)) [SDGT] [SYRIA] [IRGC.] 6518, Regulations and Legislation service, Tel.: 202/622–0077. 2. SYRIAN GENERAL INTELLIGENCE Division, Chief Counsel’s Office, Office DIRECTORATE (a.k.a. IDERAT AL- of Thrift Supervision, 1700 G Street, Background AMN AL-’AMM), Syria [SYRIA.] NW., Washington, DC 20552. On April 29, 2011, the President Dated: May 4, 2011. SUPPLEMENTARY INFORMATION: OTS may issued Executive Order 13572, Adam Szubin, not conduct or sponsor an information ‘‘Blocking Property of Certain Persons Director, Office of Foreign Assets Control. collection, and respondents are not with Respect to Human Rights Abuses [FR Doc. 2011–11556 Filed 5–10–11; 8:45 am] required to respond to an information in Syria,’’ (the ‘‘Order’’) pursuant to, BILLING CODE 4810–AL–P collection, unless the information inter alia, the International Emergency collection displays a currently valid Economic Powers Act (50 U.S.C. 1701– OMB control number. As part of the 06). In the Order, the President DEPARTMENT OF THE TREASURY approval process, we invite comments expanded the scope of the national on the following information collection. emergency declared in Executive Order Office of Thrift Supervision Title of Proposal: Request for Service 13338 of May 11, 2004. Corporation Activity. Section 1 of the Order blocks, with Request for Service Corporation OMB Number: 1550–0013. certain exceptions, all property and Activity Form Numbers: 1566 and 1562. interests in property that are in the Description: The information will be AGENCY: Office of Thrift Supervision United States, that come within the used by OTS to ensure that the United States, or that are or come within (OTS), Treasury. principles of safety and soundness are the possession or control of any United ACTION: Notice and request for comment. adhered to in the issuance of securities. States person, of persons listed in the SUMMARY: The proposed information It was determined that all supervisory Annex to the Order and of persons collection request (ICR) described below concerns would be satisfied if the determined by the Secretary of the has been submitted to the Office of information previously reported is Treasury, in consultation with the Management and Budget (OMB) for available for inspection by OTS Secretary of State, to satisfy certain review and approval, as required by the examiners. criteria set forth in the Order. Paperwork Reduction Act of 1995, 44 Type of Review: Extension of a The Annex to the Order lists three U.S.C. 3507. OTS is soliciting public currently approved collection. Affected Public: Business or other for- individuals and two entities whose comments on the proposal. property and interests in property are profit. DATES: Submit written comments on or blocked pursuant to the Order. OFAC is Estimated Number of Respondents: before June 10, 2011. A copy of this ICR, publishing additional identifying 19. with applicable supporting information associated with those Estimated Frequency of Response: On documentation, can be obtained from individuals and entities. As noted in the occasion. RegInfo.gov at http://www.reginfo.gov/ listings below, the property and Estimated Total Burden: 9.5 hours. public/do/PRAMain. interests in property of one of those Clearance Officer: Ira L. Mills, (202) entities also are blocked pursuant to ADDRESSES: Send comments, referring to 906–6531, Office of Thrift Supervision, other OFAC sanctions programs. the collection by title of the proposal or 1700 G Street, NW., Washington, DC The listings for those individuals and by OMB approval number, to OMB and 20552. entities on OFAC’s list of Specially OTS at these addresses: Office of Dated: May 4, 2011. Designated Nationals and Blocked Information and Regulatory Affairs, Ira L. Mills, Persons appear as follows: Attention: Desk Officer for OTS, U.S. Paperwork Clearance Officer, Office of Chief Office of Management and Budget, 725 Counsel, Office of Thrift Supervision. Individuals 17th Street, NW., Room 10235, [FR Doc. 2011–11492 Filed 5–10–11; 8:45 am] 1. AL-ASAD, Mahir (a.k.a. ASSAD, Washington, DC 20503, or by fax to BILLING CODE 6720–01–P Mahar; a.k.a. ASSAD, Maher); DOB (202) 393–6974; and Information 1968; Lieutenant Colonel; Position: Collection Comments, Chief Counsel’s Brigade Commander in the Syrian Office, Office of Thrift Supervision, DEPARTMENT OF THE TREASURY Army’s 4th Armored Division 1700 G Street, NW., Washington, DC (individual) [SYRIA.] 20552, by fax to (202) 906–6518, or by Office of Thrift Supervision 2. MAMLUK, Ali (a.k.a. MAMLUK, e-mail to ’Ali); DOB 1947; POB Amara, [email protected]. Notice and Request for Comment Damascus, Syria; Major General; OTS will post comments and the related AGENCY: Office of Thrift Supervision Position: Director, General index on the OTS Internet Site at (OTS), Treasury. Intelligence Directorate (individual) http://www.ots.treas.gov. In addition, ACTION: Notice and request for comment. [SYRIA.] interested persons may inspect

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SUMMARY: The proposed information to items and completeness in all 20420 or e-mail to collection request (ICR) described below material aspects. [email protected]. Please refer to has been submitted to the Office of Type of Review: Revisions to a ‘‘OMB Control No. 2900–0094’’ in any Management and Budget (OMB) for currently approved collection. correspondence. During the comment review and approval, as required by the Affected Public: Business or other for- period, comments may be viewed online Paperwork Reduction Act of 1995, 44 profit. through FDMS. U.S.C. 3507. OTS is soliciting public Estimated Number of Respondents: FOR FURTHER INFORMATION CONTACT: comments on the proposal. 131. Nancy J. Kessinger at (202) 461–9769 or DATES: Submit written comments on or Estimated Frequency of Response: On FAX (202) 275–5947. occasion. before June 10, 2011. A copy of this ICR, SUPPLEMENTARY INFORMATION: Under the with applicable supporting Estimated Total Burden: 153 hours. Clearance Officer: Ira L. Mills, (202) PRA of 1995 (Pub. L. 104–13; 44 U.S.C. documentation, can be obtained from 906–6531, Office of Thrift Supervision, 3501–3521), Federal agencies must RegInfo.gov at http://www.reginfo.gov/ 1700 G Street, NW., Washington, DC obtain approval from the Office of public/do/PRAMain. 20552. Management and Budget (OMB) for each ADDRESSES: Send comments, referring to collection of information they conduct the collection by title of the proposal or Dated: May 4, 2011. or sponsor. This request for comment is by OMB approval number, to OMB and Ira L. Mills, being made pursuant to Section OTS at these addresses: Office of Paperwork Clearance Officer, Office of Chief 3506(c)(2)(A) of the PRA. Information and Regulatory Affairs, Counsel, Office of Thrift Supervision. With respect to the following Attention: Desk Officer for OTS, U.S. [FR Doc. 2011–11493 Filed 5–10–11; 8:45 am] collection of information, VBA invites Office of Management and Budget, 725 BILLING CODE 6720–01–P comments on: (1) Whether the proposed 17th Street, NW., Room 10235, collection of information is necessary Washington DC 20503, or by fax to (202) for the proper performance of VBA’s 393–6974; and Information Collection DEPARTMENT OF VETERANS functions, including whether the Comments, Chief Counsel’s Office, AFFAIRS information will have practical utility; Office of Thrift Supervision, 1700 G [OMB Control No. 2900–0094] (2) the accuracy of VBA’s estimate of the Street, NW., Washington, DC 20552, by burden of the proposed collection of fax to (202) 906–6518, or by e-mail to Proposed Information Collection information; (3) ways to enhance the [email protected]. (Supplement to VA Forms 21–526, quality, utility, and clarity of the OTS will post comments and the related 21–534, and 21–535 (For Philippine information to be collected; and (4) index on the OTS Internet Site at Claims)); Comment Request ways to minimize the burden of the http://www.ots.treas.gov. In addition, collection of information on interested persons may inspect AGENCY: Veterans Benefits respondents, including through the use comments at the Public Reading Room, Administration, Department of Veterans of automated collection techniques or 1700 G Street, NW., Washington, DC Affairs. the use of other forms of information 20552 by appointment. To make an ACTION: Notice. technology. appointment, call (202) 906–5922, send Title: Supplement to VA Forms 21– SUMMARY: The Veterans Benefits an e-mail to [email protected], or 526, 21–534, and 21–535 (For Administration (VBA), Department of send a facsimile transmission to (202) Philippine Claims), VA Form 21–4169. Veterans Affairs (VA), is announcing an 906–7755. OMB Control Number: 2900–0094. opportunity for public comment on the FOR FURTHER INFORMATION CONTACT: For Type of Review: Extension of a proposed collection of certain further information or to obtain a copy currently approved collection. information by the agency. Under the of the submission to OMB, please Abstract: VA Form 21–4169 is used to Paperwork Reduction Act (PRA) of contact Ira L. Mills at, collect certain applicants’ service 1995, Federal agencies are required to [email protected], or on (202) 906– information, place of residence, proof of publish notice in the Federal Register 6531, or facsimile number (202) 906– service, and whether the applicant was concerning each proposed collection of 6518, Regulations and Legislation a member of pro-Japanese, pro-German, information, including each proposed Division, Chief Counsel’s Office, Office or anti-American Filipino organizations. extension of a currently approved of Thrift Supervision, 1700 G Street, VA uses the information collected to collection and allow 60 days for public NW., Washington, DC 20552. determine the applicant’s eligibility for comment in response to the notice. This SUPPLEMENTARY INFORMATION: benefits based on Commonwealth Army OTS may notice solicits comments on information of the Philippines or recognized not conduct or sponsor an information needed to determine whether a claimant guerrilla services. collection, and respondents are not served in the Commonwealth Army of Affected Public: Individuals or required to respond to an information the Philippines or in recognized households. collection, unless the information guerrilla organizations. collection displays a currently valid Estimated Annual Burden: 250 hours. DATES: OMB control number. As part of the Written comments and Estimated Average Burden per approval process, we invite comments recommendations on the proposed Respondent: 15 minutes. on the following information collection. collection of information should be Frequency of Response: One-time. Title of Proposal: Branch Offices. received on or before July 11, 2011. Estimated Number of Respondents: OMB Number: 1550–0006. ADDRESSES: Submit written comments 1,000. Form Numbers: 1450 and 1558. on the collection of information through Dated: May 5, 2011. Description: OTS analyzes each Federal Docket Management System branch application or notice to ensure (FDMS) at http://www.Regulations.gov By direction of the Secretary. that there are no supervisory objections or to Nancy J. Kessinger, Veterans Denise McLamb, and that it meets all regulatory Benefits Administration (20M33), Program Analyst, Enterprise Records Service. requirements. The application forms are Department of Veterans Affairs, 810 [FR Doc. 2011–11464 Filed 5–10–11; 8:45 am] also reviewed for adequacy of answers Vermont Avenue, NW., Washington, DC BILLING CODE 8320–01–P

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DEPARTMENT OF VETERANS burden of the proposed collection of By direction of the Secretary. AFFAIRS information; (3) ways to enhance the Denise McLamb, quality, utility, and clarity of the Program Analyst, Enterprise Records Service. [OMB Control No. 2900–0029] information to be collected; and (4) [FR Doc. 2011–11471 Filed 5–10–11; 8:45 am] Proposed Information Collection (Offer ways to minimize the burden of the BILLING CODE 8320–01–P To Purchase and Contract of Sale) collection of information on Activity: Comment Request respondents, including through the use of automated collection techniques or DEPARTMENT OF VETERANS AGENCY: Veterans Benefits the use of other forms of information AFFAIRS Administration, Department of Veterans technology. Affairs. Titles [OMB Control No. 2900–0052] ACTION: Notice. a. Offer to Purchase and Contract of Proposed Information Collection SUMMARY: The Veterans Benefits Sale, VA Form 26–6705. (Report of Medical Examination for Administration (VBA), Department of b. Credit Statement of Prospective Disability Evaluation); Comment Veterans Affairs (VA), is announcing an Purchaser, VA Form 26–6705b. Request opportunity for public comment on the c. Addendum to Offer to Purchase and AGENCY: Veterans Benefits proposed collection of certain Contract of Sale, VA Form 26–6705d. Administration, Department of Veterans information by the agency. Under the OMB Control Number: 2900–0029. Affairs. Paperwork Reduction Act (PRA) of Type of Review: Extension of a 1995, Federal agencies are required to currently approved collection. ACTION: Notice. publish notice in the Federal Register concerning each proposed collection of Abstracts SUMMARY: The Veterans Benefits Administration (VBA), Department of information, including each proposed a. VA Form 26–6705 is completed by Veterans Affairs (VA), is announcing an extension of a currently approved private sector sales broker to submit an opportunity for public comment on the collection, and allow 60 days for public offer to purchase VA-acquired property proposed collection of certain comment in response to the notice. This on behalf of a prospective buyer. VA information by the agency. Under the notice solicits comments on the Form 26–6705 becomes a contract of Paperwork Reduction Act (PRA) of information needed to acquire VA sale if VA accepts the offer to purchase. 1995, Federal agencies are required to property. It serves as a receipt for the prospective publish notice in the Federal Register DATES: Written comments and buyer for his/her earnest money deposit, concerning each proposed collection of recommendations on the proposed describes the terms of sale, and information, including each proposed collection of information should be eliminates the need for separate extension of a currently approved received on or before July 11, 2011. transmittal of a purchase offer. collection and allow 60 days for public ADDRESSES: Submit written comments b. VA Form 26–6705b is used as a comment in response to the notice. This on the collection of information through credit application to determine the notice solicits comments for information Federal Docket Management System prospective buyer creditworthiness in needed from claimants prior to (FDMS) at http://www.Regulations.gov instances when the prospective buyer undergoing a VA medical examination or to Nancy J. Kessinger, Veterans seeks VA vendee financing. In such for disability benefits. Benefits Administration (20M33), sales, the offer to purchase will not be DATES: Department of Veterans Affairs, 810 accepted until the buyer’s income and Written comments and Vermont Avenue, NW, Washington, DC credit history have been verified and a recommendations on the proposed 20420 or e-mail loan analysis has been completed. collection of information should be [email protected]. Please refer to c. VA Form 26–6705d is used in the received on or before July 11, 2011. ‘‘OMB Control No. 2900–0029’’ in any state of Virginia. The form requires the ADDRESSES: Submit written comments correspondence. During the comment buyer to be informed of the State’s law on the collection of information through period, comments may be viewed online at or prior to closing the transaction. Federal Docket Management System through the FDMS. Affected Public: Individuals or (FDMS) at http://www.Regulations.gov FOR FURTHER INFORMATION CONTACT: households. or to Nancy J. Kessinger, Veterans Benefits Administration (20M33), Nancy J. Kessinger at (202) 461–9769 or Estimated Annual Burden FAX (202) 275–5947. Department of Veterans Affairs, 810 Vermont Avenue, NW., Washington, DC SUPPLEMENTARY INFORMATION: Under the a. VA Form 26–6705—10,000 hours. 20420 or e-mail to PRA of 1995 (Pub. L. 104–13; 44 U.S.C. b. VA Form 26–6705b—7,333 hours. [email protected]. Please refer to 3501–21), Federal agencies must obtain c. VA Form 26–6705d—125 hours. ‘‘OMB Control No. 2900–0052’’ in any approval from the Office of Management Estimated Average Burden per correspondence. During the comment and Budget (OMB) for each collection of Respondent period, comments may be viewed online information they conduct or sponsor. through FDMS. This request for comment is being made a. VA Form 26–6705—20 minutes. pursuant to Section 3506(c)(2)(A) of the b. VA Form 26–6705b—20 minutes. FOR FURTHER INFORMATION CONTACT: PRA. c. VA Form 26–6705d—5 minutes. Nancy J. Kessinger at (202) 461–9769 or With respect to the following Frequency of Response: On occasion. FAX (202) 275–5947. collection of information, VBA invites Estimated Number of Total SUPPLEMENTARY INFORMATION: Under the comments on: (1) Whether the proposed Respondents PRA of 1995 (Pub. L. 104–13; 44 U.S.C. collection of information is necessary 3501–3521), Federal agencies must for the proper performance of VBA’s a. VA Form 26–6705—30,000. obtain approval from the Office of functions, including whether the b. VA Form 26–6705b—22,000. Management and Budget (OMB) for each information will have practical utility; c. VA Form 26–6705d—1,500. collection of information they conduct (2) the accuracy of VBA’s estimate of the Dated: May 5, 2011. or sponsor. This request for comment is

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being made pursuant to Section DEPARTMENT OF VETERANS (2) the accuracy of VBA’s estimate of the 3506(c)(2)(A) of the PRA. AFFAIRS burden of the proposed collection of information; (3) ways to enhance the With respect to the following [OMB Control No. 2900–0463] collection of information, VBA invites quality, utility, and clarity of the comments on: (1) Whether the proposed Proposed Information Collection information to be collected; and (4) ways to minimize the burden of the collection of information is necessary (Notice of Waiver of VA Compensation collection of information on for the proper performance of VBA’s or Pension To Receive Military Pay and respondents, including through the use functions, including whether the Allowances) Activity; Comment Request of automated collection techniques or information will have practical utility; the use of other forms of information (2) the accuracy of VBA’s estimate of the AGENCY: Veterans Benefits technology. burden of the proposed collection of Administration, Department of Veterans Title: Notice of Waiver of VA information; (3) ways to enhance the Affairs. Compensation or Pension to Receive quality, utility, and clarity of the ACTION: Notice. Military Pay and Allowances, VA Form information to be collected; and (4) 21–8951 and VA Form 21–8951–2. ways to minimize the burden of the SUMMARY: The Veterans Benefits OMB Control Number: 2900–0463. collection of information on Administration (VBA), Department of Type of Review: Extension of a respondents, including through the use Veterans Affairs (VA), is announcing an currently approved collection. of automated collection techniques or opportunity for public comment on the Abstract: Claimants who wish to the use of other forms of information proposed collection of certain waive VA disability benefits in order to technology. information by the agency. Under the receive active or inactive duty training Paperwork Reduction Act (PRA) of Title: Report of Medical Examination pay are required to complete VA Forms 1995, Federal agencies are required to 21–8951 and 21–8951–2. Active and for Disability Evaluation, VA Form 21– publish notice in the Federal Register inactive duty training pay cannot be 2545. concerning each proposed collection of paid concurrently with VA disability OMB Control Number: 2900–0052. information, including each proposed compensation or pension benefits. Type of Review: Extension of a extension of a currently approved Claimants who elect to keep training currently approved collection. collection, and allow 60 days for public pay must waive VA benefits for the comment in response to the notice. This number of days equal to the number of Abstract: VA Form 21–2545 is notice solicits comments for information days in which they received training completed by claimants prior to needed to waive disability benefits. pay. undergoing a VA examination for DATES: Written comments and Affected Public: Individuals or disability benefits. The examining recommendations on the proposed households. physician also completes the form to collection of information should be Estimated Annual Burden: 3,500 record the findings of such examination. received on or before July 11, 2011. hours. An examination is required where the ADDRESSES: Submit written comments Estimated Average Burden per reasonable probability of a valid claim on the collection of information through Respondent: 10 minutes. is indicated in any claims for disability Federal Docket Management System Frequency of Response: Annually. compensation or pension, including (FDMS) at http://www.Regulations.gov Estimated Number of Respondents: claims for benefits based on the need of or to Nancy J. Kessinger, Veterans 21,000. a veteran, surviving spouse, or parent Benefits Administration (20M33), Dated: May 5, 2011. for regular aid and attendance, and for Department of Veterans Affairs, 810 By direction of the Secretary. benefits based on a child’s’ incapacity of Vermont Avenue, NW., Washington, DC Denise McLamb, self-support. VA uses the data to 20420 or e-mail to Program Analyst, Enterprise Records Service. determine the level of disability. [email protected]. Please refer to ‘‘OMB Control No. 2900–0463’’ in any [FR Doc. 2011–11469 Filed 5–10–11; 8:45 am] Affected Public: Individuals or BILLING CODE 8320–01–P households. correspondence. During the comment period, comments may be viewed online Estimated Annual Burden: 45,000 through FDMS. hours. DEPARTMENT OF VETERANS FOR FURTHER INFORMATION CONTACT: AFFAIRS Estimated Average Burden per Nancy J. Kessinger at (202) 461–9769 or Respondent: 15 minutes. Fax (202) 275–5947. [OMB Control No. 2900–0047] Frequency of Response: On occasion. SUPPLEMENTARY INFORMATION: Under the Agency Information Collection PRA of 1995 (Pub. L 104–13; 44 U.S.C. Estimated Number of Respondents: (Financial Statement) Activity Under 3501–3521), Federal agencies must OMB Review 180,000. obtain approval from the Office of Dated: May 5, 2011. Management and Budget (OMB) for each AGENCY: Veterans Benefits By direction of the Secretary. collection of information they conduct Administration, Department of Veterans Denise McLamb, or sponsor. This request for comment is Affairs. being made pursuant to Section Program Analyst, Enterprise Records Service. ACTION: Notice. 3506(c)(2)(A) of the PRA. [FR Doc. 2011–11462 Filed 5–10–11; 8:45 am] With respect to the following SUMMARY: In compliance with the BILLING CODE 8320–01–P collection of information, VBA invites Paperwork Reduction Act (PRA) of 1995 comments on: (1) Whether the proposed (44 U.S.C. 3501–3521), this notice collection of information is necessary announces that the Veterans Benefits for the proper performance of VBA’s Administration (VBA), Department of functions, including whether the Veterans Affairs, will submit the information will have practical utility; collection of information abstracted

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below to the Office of Management and Frequency of Response: On Occasion. being made pursuant to Section Budget (OMB) for review and comment. Estimated Number of Respondents: 3506(c)(2)(A) of the PRA. The PRA submission describes the 6,000. With respect to the following nature of the information collection and Dated: May 5, 2011. collection of information, VBA invites its expected cost and burden; it includes comments on: (1) Whether the proposed the actual data collection instrument. By direction of the Secretary. Denise McLamb, collection of information is necessary DATES: Comments must be submitted on for the proper performance of VBA’s or before June 10, 2011. Program Analyst, Enterprise Records Service. [FR Doc. 2011–11467 Filed 5–10–11; 8:45 am] functions, including whether the ADDRESSES: Submit written comments information will have practical utility; BILLING CODE 8320–01–P on the collection of information through (2) the accuracy of VBA’s estimate of the http://www.Regulations.gov or to VA’s burden of the proposed collection of OMB Desk Officer, OMB Human DEPARTMENT OF VETERANS information; (3) ways to enhance the Resources and Housing Branch, New AFFAIRS quality, utility, and clarity of the Executive Office Building, Room 10235, information to be collected; and (4) Washington, DC 20503 (202) 395–7316. [OMB Control No. 2900–0711] ways to minimize the burden of the Please refer to ‘‘OMB Control No. 2900– 0047’’ in any correspondence. collection of information on Agency Information Collection Activity respondents, including through the use FOR FURTHER INFORMATION CONTACT: (VBA Loan Guaranty Service Lender of automated collection techniques or Denise McLamb, Enterprise Records Satisfaction Survey) Under OMB the use of other forms of information Service (005R1B), Department of Review Veterans Affairs, 810 Vermont Avenue, technology. NW., Washington, DC 20420, (202) 461– AGENCY: Veterans Benefits Title: Veterans Benefits 7485, Fax (202) 273–0443 or e-mail Administration, Department of Veterans Administration (VBA) Loan Guaranty [email protected]. Please refer to Affairs. Service Lender Satisfaction Survey. ‘‘OMB Control No. 2900–0047.’’ ACTION: Notice. OMB Control Number: 2900–0711. SUPPLEMENTARY INFORMATION: Type of Review: Revision of a Title: Financial Statement, VA Form SUMMARY: In compliance with the 26–6807. Paperwork Reduction Act (PRA) of 1995 currently approved collection. OMB Control Number: 2900–0047. (44 U.S.C. 3501–21), this notice Abstract: The survey will be used to Type of Review: Extension of a announces that the Veterans Benefits gather information from lenders about currently approved collection. Administration (VBA), Department of VA Loan Guaranty Program. The Abstract: The data collected on VA Veterans Affairs, will submit the information collected will allow the VA Form 26–6807 is used to determine collection of information abstracted to determine lenders’ satisfaction with release of liability and substitution of below to the Office of Management and the VA’s processes and to make Budget (OMB) for review and comment. entitlement cases. VA may release improvements to the program to better The PRA submission describes the original veteran obligors from personal serve the needs of eligible veterans. liability arising from the original nature of the information collection and guaranty of their home loan, or the its expected cost and burden and it An agency may not conduct or making of a direct loan, provided the includes the actual data collection sponsor, and a person is not required to purchasers/assumers meet the instrument. respond to a collection of information unless it displays a currently valid OMB creditworthiness requirements. The data DATES: Comments must be submitted on is also used to determine a borrower’s or before June 10, 2011. control number. The Federal Register Notice with a 60-day comment period financial condition in connection with ADDRESSES: Submit written comments soliciting comments on this collection efforts to reinstate a seriously defaulted on the collection of information through of information was published on guaranteed, insured, or portfolio loan, http://www.Regulations.gov; or to VA’s and to determine homeowners OMB Desk Officer, OMB Human February 15, 2011, at page 8846. eligibility for aid under the Resources and Housing Branch, New Affected Public: Business or other for- Homeowners Assistance Program, Executive Office Building, Room 10235, profit. which provides assistance by reducing Washington, DC 20503 (202) 395–7316. Estimated Annual Burden: 69 hours. losses incident to the disposal of homes Please refer to ‘‘OMB Control No. 2900– when military installations at which the 0711’’ in any correspondence. Estimated Average Burden per homeowners were employed or serving Respondent: 15 minutes. FOR FURTHER INFORMATION OR A COPY OF are ordered closed. Frequency of Response: On occasion. An agency may not conduct or THE SUBMISSION CONTACT: Denise sponsor, and a person is not required to McLamb, Enterprise Records Service Estimated Number of Respondents: respond to a collection of information (005R1B), Department of Veterans 786. Affairs, 810 Vermont Avenue, NW., unless it displays a currently valid OMB Dated: May 5, 2011. Washington, DC 20420, (202) 461–7485, control number. The Federal Register By direction of the Secretary. Notice with a 60-day comment period FAX (202) 461–0966 or e-mail: Denise McLamb, soliciting comments on this collection [email protected]. Please refer to of information was published on ‘‘OMB Control No. 2900–0711.’’ Program Analyst, Enterprise Records Service. February 15, 2011, at page 8848. SUPPLEMENTARY INFORMATION: Under the [FR Doc. 2011–11465 Filed 5–10–11; 8:45 am] Affected Public: Individuals or PRA of 1995 (Pub. L. 104–13; 44 U.S.C. BILLING CODE 8320–01–P households. 3501–3521), Federal agencies must Estimated Annual Burden: 4,500 obtain approval from the Office of hours. Management and Budget (OMB) for each Estimated Average Burden per collection of information they conduct Respondent: 45 minutes. or sponsor. This request for comment is

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DEPARTMENT OF VETERANS (2) the accuracy of VBA’s estimate of the notice solicits comments on information AFFAIRS burden of the proposed collection of needed to determine and verify information; (3) ways to enhance the entitlement to income-based benefits. [OMB Control No. 2900–0075] quality, utility, and clarity of the DATES: Written comments and Proposed Information Collection information to be collected; and (4) recommendations on the proposed (Statement in Support of Claim); ways to minimize the burden of the collection of information should be Comment Request collection of information on received on or before July 11, 2011. respondents, including through the use ADDRESSES: Submit written comments AGENCY: Veterans Benefits of automated collection techniques or on the collection of information through Administration, Department of Veterans the use of other forms of information Federal Docket Management System Affairs. technology. (FDMS) at http://www.Regulations.gov ACTION: Notice. Title: Statement in Support of Claim, or to Nancy J. Kessinger, Veterans VA Form 21–4138. Benefits Administration (20M33), SUMMARY: The Veterans Benefits OMB Control Number: 2900–0075. Department of Veterans Affairs, 810 Administration (VBA), Department of Type of Review: Extension of a Vermont Avenue, NW., Washington, DC Veterans Affairs (VA), is announcing an currently approved collection. opportunity for public comment on the Abstract: Statements submitted by or 20420 or e-mail to proposed collection of certain on behalf of a claimant must contain a [email protected]. Please refer to ‘‘ ’’ information by the agency. Under the certification by the respondent that the OMB Control No. 2900–0101 in any Paperwork Reduction Act (PRA) of information provided to VA is true and correspondence. During the comment 1995, Federal agencies are required to correct in support of various types of period, comments may be viewed online publish notice in the Federal Register benefit claims processed by VA. VA through FDMS. concerning each proposed collection of Form 21–4138 is to used collect the FOR FURTHER INFORMATION CONTACT: information, including each proposed statement in support of such claims. Nancy J. Kessinger at (202) 461–9769 or extension of a currently approved Affected Public: Individuals or FAX (202) 275–5947. collection and allow 60 days for public households. SUPPLEMENTARY INFORMATION: Under the comment in response to the notice. This Estimated Annual Burden: 188,000 PRA of 1995 (Pub. L. 104–13; 44 U.S.C. notice solicits comments on information hours. 3501–3521), Federal agencies must needed to ensure statements submitted Estimated Average Burden per obtain approval from the Office of by or on behalf of a claimant are true Respondent: 15 minutes. Management and Budget (OMB) for each and correct. Frequency of Response: On occasion. collection of information they conduct DATES: Written comments and Estimated Number of Respondents: or sponsor. This request for comment is recommendations on the proposed 752,000. being made pursuant to Section collection of information should be Dated: May 5, 2011. 3506(c)(2)(A) of the PRA. received on or before July 11, 2011. By direction of the Secretary. With respect to the following ADDRESSES: Submit written comments Denise McLamb, collection of information, VBA invites on the collection of information through comments on: (1) Whether the proposed Program Analyst, Enterprise Records Service. Federal Docket Management System collection of information is necessary (FDMS) at http://www.Regulations.gov [FR Doc. 2011–11463 Filed 5–10–11; 8:45 am] for the proper performance of VBA’s or to Nancy J. Kessinger, Veterans BILLING CODE 8320–01–P functions, including whether the Benefits Administration (20M33), information will have practical utility; Department of Veterans Affairs, 810 DEPARTMENT OF VETERANS (2) the accuracy of VBA’s estimate of the Vermont Avenue, NW., Washington, DC AFFAIRS burden of the proposed collection of 20420 or e-mail to information; (3) ways to enhance the [email protected]. Please refer to [OMB Control No. 2900–0101] quality, utility, and clarity of the ‘‘OMB Control No. 2900–0075’’ in any information to be collected; and (4) correspondence. During the comment Proposed Information Collection ways to minimize the burden of the period, comments may be viewed online (Eligibility Verification Reports); collection of information on through FDMS. Comment Request respondents, including through the use FOR FURTHER INFORMATION CONTACT: AGENCY: Veterans Benefits of automated collection techniques or Nancy J. Kessinger at (202) 461–9769 or Administration, Department of Veterans the use of other forms of information FAX (202) 275–5947. Affairs. technology. Titles: Eligibility Verification Reports SUPPLEMENTARY INFORMATION: Under the ACTION: Notice. PRA of 1995 (Pub. L. 104–13; 44 U.S.C. (EVR). 3501–3521), Federal agencies must SUMMARY: The Veterans Benefits a. Eligibility Verification Report obtain approval from the Office of Administration (VBA), Department of Instructions, VA Form 21–0510. Management and Budget (OMB) for each Veterans Affairs (VA), is announcing an b. Old Law and Section 306 Eligibility collection of information they conduct opportunity for public comment on the Verification Report (Surviving Spouse), or sponsor. This request for comment is proposed collection of certain VA Form 21–0512S–1. being made pursuant to Section information by the agency. Under the c. Old Law and Section 306 Eligibility 3506(c)(2)(A) of the PRA. Paperwork Reduction Act (PRA) of Verification Report (Veteran), VA Form With respect to the following 1995, Federal agencies are required to 21–0512V–1. collection of information, VBA invites publish notice in the Federal Register d. Old Law and Section 306 Eligibility comments on: (1) Whether the proposed concerning each proposed collection of Verification Report (Children Only), VA collection of information is necessary information, including each proposed Form 21–0513–1. for the proper performance of VBA’s extension of a currently approved e. DIC Parent’s Eligibility Verification functions, including whether the collection and allow 60 days for public Report, VA Forms 21–0514 and 21– information will have practical utility; comment in response to the notice. This 0514–1.

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f. Improved Pension Eligibility By direction of the Secretary. With respect to the following Verification Report (Veteran With No Denise McLamb, collection of information, VHA invites Children), VA Forms 21–0516 and 21– Program Analyst, Enterprise Records Service. comments on: (1) Whether the proposed 0516–1. [FR Doc. 2011–11461 Filed 5–10–11; 8:45 am] collection of information is necessary g. Improved Pension Eligibility BILLING CODE 8320–01–P for the proper performance of VHA’s Verification Report (Veteran With functions, including whether the Children), VA Forms 21–0517 and 21– information will have practical utility; 0517–1. DEPARTMENT OF VETERANS (2) the accuracy of VHA’s estimate of h. Improved Pension Eligibility AFFAIRS the burden of the proposed collection of Verification Report (Surviving Spouse information; (3) ways to enhance the With No Children), VA Forms 21–0518 [OMB Control No. 2900–New (VA Form 10– quality, utility, and clarity of the and 21–0518–1. 0513)] information to be collected; and (4) i. Improved Pension Eligibility Agency Information Collection Activity ways to minimize the burden of the Verification Report (Child or Children), (Veteran Suicide Prevention Online collection of information on VA Forms 21–0519C and 21–0519C–1. Quantitative Surveys) Under OMB respondents, including through the use j. Improved Pension Eligibility Review of automated collection techniques or Verification Report (Surviving Spouse the use of other forms of information With Children), VA Forms 21–0519S AGENCY: Veterans Health technology. and 21–0519S–1. Administration, Department of Veterans Titles OMB Control Number: 2900–0101. Affairs. Type of Review: Extension of a ACTION: Notice. a. Veterans Online Survey, VA Form currently approved collection. 10–0513. Abstract: VA uses Eligibility SUMMARY: In compliance with the b. Veterans Family Online Survey, VA Verification Reports (EVR) forms to Paperwork Reduction Act (PRA) of 1995 Form 10–0513a. verify a claimant’s continued (44 U.S.C. 3501–21), this notice entitlement to benefits. Claimants who announces that the Veterans Health c. Veterans Primary Care Provider applied for or receives Improved Administration (VHA), Department of Online Survey, VA Form 10–0513b. Pension or Parents’ Dependency and Veterans Affairs, will submit the OMB Control Number: 2900–New (VA Indemnity Compensation must collection of information abstracted Form 10–0513). promptly notify VA in writing of any below to the Office of Management and Type of Review: New collection. changes in entitlement factors. EVRs are Budget (OMB) for review and comment. Abstract: VA’s top priority is the required annually by beneficiaries The PRA submission describes the prevention of Veterans suicide. It is whose social security number (SSN) or nature of the information collection and imperative to reach these at-risk whose spouse’s SSN is not verified, or its expected cost and burden and it populations with proactive and trust- who has income other than Social includes the actual data collection worthy communications and focused Security. Recipients of Old Law and instrument. and effective outreach activities. As a Section 306 Pension are no longer DATES: Comments must be submitted on part of this outreach, VA will collect required to submit annual EVRs unless or before June 10, 2011. information from Veterans, primary care there is a change in their income. providers and families of veterans. Data Affected Public: Individuals or ADDRESSES: Submit written comments on the collection of information through collected on the surveys will be used to households. better understand Veterans and their Estimated Annual Burden: 113,075 http://www.Regulations.gov; or to VA’s OMB Desk Officer, OMB Human families’ awareness of VA’s suicide hours. The annual burden for VA Forms prevention and mental health support 21–0512S–1, 21–0512V–1, 21–0513–1, Resources and Housing Branch, New Executive Office Building, Room 10235, services. In addition, the surveys will 21–0514, 21–0514–1, 21–0516, 21– help gauge how Veterans view the need 0516–1, 21–0518, 21–0518–1, 21– Washington, DC 20503 (202) 395–7316. Please refer to ‘‘OMB Control No. 2900– for and willingness to accept help when 0519C, and 21–0519C–1 is 98,775 and in crises or contemplating suicide. 14,300 for VA Forms 21–0517, 21– New (VA Form 10–0513)’’ in any An agency may not conduct or 0517–1, 21–0519S, and 21–0519S–1. correspondence. sponsor, and a person is not required to Estimated Average Burden per FOR FURTHER INFORMATION OR A COPY OF respond to a collection of information Respondent: The estimated burden THE SUBMISSION CONTACT: Denise unless it displays a currently valid OMB respondent for VA Forms 21–0512S–1, McLamb, Enterprise Records Service control number. The Federal Register 21–0512V–1, 21–0513–1, 21–0514, 21– (005R1B), Department of Veterans Notice with a 60-day comment period 0514–1, 21–0516, 21–0516–1, 21–0518, Affairs, 810 Vermont Avenue, NW., soliciting comments on this collection 21–0518–1, 21–0519C, and 21–0519C–1 Washington, DC 20420, (202) 461–7485, of information was published on is 30 minutes and 40 minutes for VA FAX (202) 461–0966 or e-mail: February 18, 2011, at page 9637. Forms 21–0517, 21–0517–1, 21–0519S, [email protected]. Please refer to and 21–0519S–1. ‘‘OMB Control No. 2900–New (VA Form Affected Public: Individuals and Frequency of Response: Annually. 10–0513).’’ Households. Estimated Number of Respondents: SUPPLEMENTARY INFORMATION: Under the Estimated Annual Burden 219,000. The number of respondents for PRA of 1995 (Pub. L. 104–13; 44 U.S.C. VA Forms 21–0512S–1, 21–0512V–1, 3501–3521), Federal agencies must a. Veterans Online Survey, VA Form 21–0513–1, 21–0514, 21–0514–1, 21– obtain approval from the Office of 10–0513—300 hours. 0516, 21–0516–1, 21–0518, 21–0518–1, Management and Budget (OMB) for each b. Veterans Family Online Survey, VA 21–0519C, and 21–0519C–1 is 197,550 collection of information they conduct Form 10–0513a—300 hours. and 21,450 for VA Forms 21–0517, 21– or sponsor. This request for comment is c. Veterans Primary Care Provider 0517–1, 21–0519S, and 21–0519S–1. being made pursuant to Section Online Survey, VA Form 10–0513b— Dated: May 5, 2011. 3506(c)(2)(A) of the PRA. 300 hours.

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Estimated Average Burden per or to Cynthia Harvey Pryor, Veterans Frequency of Response: On occasion. Respondent Health Administration (193E1), Estimated Number of Respondents: 50. a. Veterans Online Survey, VA Form Department of Veterans Affairs, 810 10–0513—30 mins. Vermont Avenue, NW., Washington, DC Dated: May 5, 2011. b. Veterans Family Online Survey, VA 20420 or e-mail: cynthia.harvey- By direction of the Secretary. Form 10–0513a—30 mins. [email protected]. Please refer to ‘‘2900– Denise McLamb, c. Veterans Primary Care Provider 0661’’ in any correspondence. During Program Analyst, Enterprise Records Service. Online Survey, VA Form 10–0513b—30 the comment period, comments may be [FR Doc. 2011–11459 Filed 5–10–11; 8:45 am] viewed online through FDMS. mins. BILLING CODE 8320–01–P Frequency of Response: Annually. FOR FURTHER INFORMATION CONTACT: Cynthia Harvey-Pryor (202) 461–5870 or Estimated Number of Respondents FAX (202) 273–9387. DEPARTMENT OF VETERANS a. Veterans Online Survey, VA Form SUPPLEMENTARY INFORMATION: Under the AFFAIRS 10–0513—600. PRA of 1995 (Pub. L. 104–13; 44 U.S.C. [OMB Control No. 2900–0405] b. Veterans Family Online Survey, VA 3501–3521), Federal agencies must Form 10–0513a—600. obtain approval from the Office of Proposed Information Collection c. Veterans Primary Care Provider Management and Budget (OMB) for each (REPS Annual Eligibility Report) Online Survey, VA Form 10–0513b— collection of information they conduct Activity: Comment Request 600. or sponsor. This request for comment is AGENCY: Veterans Benefits being made pursuant to Section Dated: May 5, 2011. Administration, Department of Veterans 3506(c)(2)(A) of the PRA. By direction of the Secretary. Affairs. With respect to the following Denise McLamb, ACTION: Notice. Program Analyst, Enterprise Records Service. collection of information, VHA invites comments on: (1) Whether the proposed SUMMARY: The Veterans Benefits [FR Doc. 2011–11460 Filed 5–10–11; 8:45 am] collection of information is necessary BILLING CODE 8320–01–P Administration (VBA), Department of for the proper performance of VHA’s Veterans Affairs (VA), is announcing an functions, including whether the opportunity for public comment on the DEPARTMENT OF VETERANS information will have practical utility; proposed collection of certain AFFAIRS (2) the accuracy of VHA’s estimate of information by the agency. Under the the burden of the proposed collection of Paperwork Reduction Act (PRA) of [OMB Control No. 2900–0661] information; (3) ways to enhance the 1995, Federal agencies are required to quality, utility, and clarity of the publish notice in the Federal Register Proposed Information Collection information to be collected; and (4) concerning each proposed collection of (Forms for Grants to States for ways to minimize the burden of the information, including each proposed Construction and Acquisition of State collection of information on extension of a currently approved Home Facilities) Activity; Comment respondents, including through the use collection, and allow 60 days for public Request of automated collection techniques or comment in response to the notice. This AGENCY: Veterans Health the use of other forms of information notice solicits comments for information Administration, Department of Veterans technology. needed to confirm a claimant’s Affairs. Title: Forms for Grants to States for continued entitlement to Restored Construction and Acquisition of State ACTION: Notice. Entitlement Program for Survivors Home Facilities, VA Forms 10–0388–1, (REPS) benefits. SUMMARY: The Veterans Health 10–0388–2, 10–0388–3, 10–0388–4, 10– DATES: Written comments and Administration (VHA), Department of 0388–5, 10–0388–6, 10–0388–7, 10– recommendations on the proposed Veterans Affairs (VA), is announcing an 0388–8, 10–0388–9, 10–0388–10, 10– collection of information should be opportunity for public comment on the 0388–12, 10–0388–13. received on or before July 11, 2011. proposed collection of certain OMB Control Number: 2900–0661. Type of Review: Revision of a ADDRESSES: Submit written comments information by the agency. Under the on the collection of information through Paperwork Reduction Act (PRA) of currently approved collection. Abstract: State governments complete Federal Docket Management System 1995, Federal agencies are required to VA Forms 10–0388–1, 10–0388–2, 10– (FDMS) at http://www.Regulations.gov publish notice in the Federal Register 0388–3, 10–0388–4, 10–0388–5, 10– or to Nancy J. Kessinger, Veterans concerning each proposed collection of 0388–6, 10–0388–7, 10–0388–8, 10– Benefits Administration (20M33), information, including each proposed 0388–9, 10–0388–10, 10–0388–12, 10– Department of Veterans Affairs, 810 revision of a currently approved 0388–13, to apply for State Home Vermont Avenue, NW., Washington, DC collection, and allow 60 days for public Construction Grant Program and to 20420 or e-mail to comment in response to the notice. This certify compliance with VA [email protected]. Please refer to notice solicits comments for information requirements. VA uses this information, ‘‘OMB Control No. 2900–0405’’ in any needed to apply for a state home along with other documents submitted correspondence. During the comment construction grant. by States to determine the feasibility of period, comments may be viewed online DATES: Written comments and the projects for VA participation, to through FDMS. recommendations on the proposed determine eligibility for a grant award. FOR FURTHER INFORMATION CONTACT: collection of information should be Affected Public: State, Local or Tribal Nancy J. Kessinger at (202) 461–9769 or received on or before July 11, 2011. Government. FAX (202) 275–5947. ADDRESSES: Submit written comments Estimated Annual Burden: 1,200 SUPPLEMENTARY INFORMATION: Under the on the collection of information through hours. PRA of 1995 (Pub. L. 104–13; 44 U.S.C. the Federal Docket Management System Estimated Average Burden per 3501–3521), Federal agencies must (FDMS) at http://www.Regulations.gov; Respondent: 24 hours. obtain approval from the Office of

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Management and Budget (OMB) for each ACTION: Notice. Title: Employment Questionnaire, VA collection of information they conduct Forms 21–4140 and 21–4140–1. or sponsor. This request for comment is SUMMARY: The Veterans Benefits OMB Control Number: 2900–0079. being made pursuant to Section Administration (VBA), Department of Type of Review: Extension of a 3506(c)(2)(A) of the PRA. Veterans Affairs (VA), is announcing an currently approved collection. With respect to the following opportunity for public comment on the Abstract: Claimants who are under collection of information, VBA invites proposed collection of certain the age of 60 and receiving individual comments on: (1) Whether the proposed information by the agency. Under the unemployability compensation at 100 collection of information is necessary Paperwork Reduction Act (PRA) of percent rate are required to complete for the proper performance of VBA’s 1995, Federal agencies are required to VA Forms 21–4140 and 21–4140–1 functions, including whether the publish notice in the Federal Register certifying that they are still unable to information will have practical utility; concerning each proposed collection of secure or follow a substantially gainful (2) the accuracy of VBA’s estimate of the information, including each proposed occupation because of a service burden of the proposed collection of extension of currently approved connected-disability. VA will use the information; (3) ways to enhance the collection, and allow 60 days for public information collected to determine the quality, utility, and clarity of the comment in response to the notice. This claimant’s continued entitlement to information to be collected; and (4) notice solicits comments for information individual unemployability benefits. ways to minimize the burden of the needed to determine continued Affected Public: Individuals or collection of information on entitlement to benefits based on households. respondents, including through the use unemployment. Estimated Annual Burden: 10,833 of automated collection techniques or DATES: Written comments and hours. the use of other forms of information recommendations on the proposed Estimated Average Burden per technology. collection of information should be Respondent: 5 minutes. Title: REPS Annual Eligibility Report, received on or before July 11, 2011. Frequency of Response: Annually. (Under the Provisions of Section 156, ADDRESSES: Submit written comments Estimated Number of Respondents: Pub. L. 97–377), VA Form 21–8941. on the collection of information through 130,000. OMB Control Number: 2900–0405. Type of Review: Extension of a Federal Docket Management System Dated: May 5, 2011. currently approved collection. (FDMS) at http://www.Regulations.gov By direction of the Secretary. Abstract: VA Form 21–8941 is or to Nancy J. Kessinger, Veterans Denise McLamb, completed annually by claimants who Benefits Administration (20M33), Program Analyst, Enterprise Records Service. have earned income that is at or near the Department of Veterans Affairs, 810 [FR Doc. 2011–11466 Filed 5–10–11; 8:45 am] Vermont Avenue, NW., Washington, DC limit of earned income. The REPS BILLING CODE 8320–01–P program pays benefits to certain 20420 or e-mail to surviving spouses and children of [email protected]. Please refer to veterans who died in service prior to ‘‘OMB Control No. 2900–0079’’ in any DEPARTMENT OF VETERANS August 13, 1981 or who died as a result correspondence. During the comment AFFAIRS of a service-connected disability period, comments may be viewed online through FDMS. [OMB Control No. 2900–New (VA Form 10– incurred or aggravated prior to August 0511)] 13, 1981. VA uses the information FOR FURTHER INFORMATION CONTACT: collected to determine a claimant’s Nancy J. Kessinger at (202) 461–9769 or Agency Information Collection continued entitlement to REPS benefits. FAX (202) 275–5947. (Cooperative Studies Program (CSP): Affected Public: Individuals or SUPPLEMENTARY INFORMATION: Under the Site Survey and Meeting Evaluation) households. PRA of 1995 (Pub. L. 104–13; 44 U.S.C. Under OMB Review Estimated Annual Burden: 300 hours. 3501–3521), Federal agencies must Estimated Average Burden per obtain approval from the Office of AGENCY: Veterans Benefits Respondent: 15 minutes. Management and Budget (OMB) for each Administration, Department of Veterans Frequency of Response: Annually. collection of information they conduct Affairs. Estimated Number of Respondents: or sponsor. This request for comment is ACTION: Notice. 1,200. being made pursuant to Section SUMMARY: Dated: May 5, 2011. 3506(c)(2)(A) of the PRA. In compliance with the Paperwork Reduction Act (PRA) of 1995 By direction of the Secretary. With respect to the following (44 U.S.C. 3501–3521), this notice Denise McLamb, collection of information, VBA invites comments on: (1) Whether the proposed announces that the Veterans Benefits Program Analyst, Enterprise Records Service. Administration (VBA), Department of [FR Doc. 2011–11458 Filed 5–10–11; 8:45 am] collection of information is necessary for the proper performance of VBA’s Veterans Affairs, will submit the BILLING CODE 8320–01–P functions, including whether the collection of information abstracted information will have practical utility; below to the Office of Management and (2) the accuracy of VBA’s estimate of the Budget (OMB) for review and comment. DEPARTMENT OF VETERANS The PRA submission describes the AFFAIRS burden of the proposed collection of information; (3) ways to enhance the nature of the information collection and [OMB Control No. 2900–0079] quality, utility, and clarity of the its expected cost and burden; it includes the actual data collection instrument. Proposed Information Collection information to be collected; and (4) ways to minimize the burden of the DATES: Comments must be submitted on (Employment Questionnaire) Activity; or before June 10, 2011. Comment Request collection of information on respondents, including through the use ADDRESSES: Submit written comments AGENCY: Veterans Benefits of automated collection techniques or on the collection of information through Administration, Department of Veterans the use of other forms of information http://www.Regulations.gov or to VA’s Affairs. technology. OMB Desk Officer, OMB Human

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Resources and Housing Branch, New Dated: May 5, 2011. perform oversight of work delegated to Executive Office Building, Room 10235, By direction of the Secretary. lenders responsible for making Washington, DC 20503 (202) 395–7316. Denise McLamb, guaranteed VA backed loans. Please refer to ‘‘OMB Control No. 2900– Program Analyst, Enterprise Records Service. An agency may not conduct or New (VA Form 10–0511)’’ in any [FR Doc. 2011–11468 Filed 5–10–11; 8:45 am] sponsor, and a person is not required to respond to a collection of information correspondence. BILLING CODE 8320–01–P FOR FURTHER INFORMATION CONTACT: unless it displays a currently valid OMB Denise McLamb, Enterprise Records control number. The Federal Register Service (005R1B), Department of DEPARTMENT OF VETERANS Notice with a 60-day comment period Veterans Affairs, 810 Vermont Avenue, AFFAIRS soliciting comments on this collection of information was published on NW., Washington, DC 20420, (202) 461– [OMB Control No. 2900–0658] 7485, Fax (202) 461–0966 or e-mail February 15, 2011, at pages 8847–8848. Affected Public: Business or other for- [email protected]. Please refer to Agency Information Collection Activity ‘‘ profit. OMB Control No. 2900–New (VA Form (Lenders Staff Appraisal Reviewer Estimated Annual Burden: 83 hours. 10–0511).’’ (SAR) Application) Under OMB Review Estimated Average Burden per SUPPLEMENTARY INFORMATION: Respondent: 5 minutes. Titles: AGENCY: Veterans Benefits Administration, Department of Veterans Frequency of Response: On occasion. a. Cooperative Studies Program (CSP) Estimated Number of Respondents: Affairs. Site Survey, VA Form 10–0511. 1,000. ACTION: Notice. b. Cooperative Studies Program (CSP) Dated: May 5, 2011. Meeting Evaluation, VA Form 10– SUMMARY: In compliance with the By direction of the Secretary. 0511a. Paperwork Reduction Act (PRA) of 1995 Denise McLamb, OMB Control Number: OMB Control (44 U.S.C. 3501–21), this notice Program Analyst, Enterprise Records Service. No. 2900–New. announces that the Veterans Benefits [FR Doc. 2011–11470 Filed 5–10–11; 8:45 am] Type of Review: New Collection. Administration (VBA), Department of BILLING CODE 8320–01–P Abstracts: Veterans Affairs, has submitted the a. The data collected on VA Form 10– collection of information abstracted 0511 will be used to assist in below to the Office of Management and DEPARTMENT OF VETERANS evaluating the level of customer Budget (OMB) for review and comment. AFFAIRS service within the CSP Coordinating The PRA submission describes the Centers. nature of the information collection and Advisory Committee on Disability b. VA Form 10–0511a will be used to its expected cost and burden and Compensation; Notice of Meeting evaluate the effectiveness of the CSP includes the actual data collection The Department of Veterans Affairs in-person meetings and to identify instrument. ways to improve future meetings. (VA) gives notice under Public Law 92– An agency may not conduct or DATES: Comments must be submitted on 463 (Federal Advisory Committee Act) sponsor, and a person is not required to or before June 10, 2011. that the Advisory Committee on respond to a collection of information ADDRESSES: Submit written comments Disability Compensation will meet on unless it displays a currently valid OMB on the collection of information through Tuesday, June 21, 2011, at the Saint control number. The Federal Register http://www.Regulations.gov or to VA’s Regis Hotel, 923 16th Street, NW., Notice with a 60-day comment period OMB Desk Officer, OMB Human Washington, DC from 8:30 a.m. to 3 p.m. soliciting comments on this collection Resources and Housing Branch, New The meeting is open to the public. of information was published on Executive Office Building, Room 10235, The purpose of the Committee is to February 18, 2011, at pages 9637–9638. Washington, DC 20503, (202) 395–7316. advise the Secretary of Veterans Affairs Affected Public: Individuals or Please refer to ‘‘OMB Control No. 2900– on the maintenance and periodic households. 0658’’ in any correspondence. readjustment of the VA Schedule for Estimated Annual Burden: FOR FURTHER INFORMATION CONTACT: Rating Disabilities. The Committee is to a. Cooperative Studies Program (CSP) Denise McLamb, Enterprise Records assemble and review relevant Site Survey, VA Form 10–0511—83 Service (005R1B), Department of information relating to the nature and hours. Veterans Affairs, 810 Vermont Avenue, character of disabilities arising from b. Cooperative Studies Program (CSP) NW., Washington, DC 20420, (202) 461– service in the Armed Forces, provide an Meeting Evaluation, VA Form 10– 7485, FAX (202) 461–0966 or e-mail ongoing assessment of the effectiveness 0511a—83 hours. [email protected]. Please refer to of the rating schedule, and give advice Frequency of Response: Annually. ‘‘OMB Control No. 2900–0658.’’ on the most appropriate means of Estimated Average Burden per Title: Lenders Staff Appraisal responding to the needs of Veterans Respondent: Reviewer (SAR) Application, VA Form relating to disability compensation. a. Cooperative Studies Program (CSP) 26–0785. The Committee will receive briefings Site Survey, VA Form 10–0511—10 OMB Control Number: 2900–0658. on issues related to compensation for minutes. Type of Review: Extension of a Veterans with service-connected b. Cooperative Studies Program (CSP) currently approved collection. disabilities and other VA benefits Meeting Evaluation, VA Form 10– Abstract: VA Form 26–0785 is programs. Time will be allocated for 0511a–10 minutes. completed by lenders to nominate receiving public comments in the Estimated Annual Responses: employees for approval as approved afternoon. Public comments will be a. Cooperative Studies Program (CSP) Staff Appraisal Reviewer (SAR). Once limited to three minutes each. Site Survey, VA Form 10–0511– 500. approved, SARs will have the authority Individuals wishing to make oral b. Cooperative Studies Program (CSP) to review real estate appraisals and to statements before the Committee will be Meeting Evaluation, VA Form 10– issue notices of values on behalf of VA. accommodated on a first-come, first- 0511a—500. VA uses the information collected to served basis. Individuals who speak are

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invited to submit 1–2 page summaries of DEPARTMENT OF VETERANS Quality; an update on Academic their comments at the time of the AFFAIRS Affiliations; implementation of meeting for inclusion in the official Caregiver Legislation; and an update on meeting record. Special Medical Advisory Group; VHA’s budget outlook. Notice of Meeting The public may submit written No time will allocated for receiving statements for the Committee’s review The Department of Veterans Affairs oral presentations from the public. to Robert Watkins, Designated Federal (VA) gives notice under Public Law 92– However, members of the public may Officer, Department of Veterans Affairs, 463 (Federal Advisory Committee Act) submit written statements for review by Veterans Benefits Administration, that the Special Medical Advisory the Committee to Ms. Juanita Leslie, Compensation and Pension Service, Group will meet on May 26, 2011, in Department of Veterans Affairs, Office Regulation Staff (211D), 810 Vermont Room 830 at VA Central Office, 810 of Administrative Operations (10B2), Avenue, NW., Washington, DC 20420 or Vermont Avenue, NW., Washington, Veterans Health Administration, 810 e-mail at [email protected]. Any DC, from 8:30 a.m. to 3 p.m. The Vermont Avenue, NW., Washington, DC 20420, or e-mail at [email protected]. Any member of the public wishing to attend meeting is open to the public. member of the public wishing to attend the meeting or seeking additional The purpose of the Group is to advise the meeting or seeking additional information should contact Dr. Corina the Secretary of Veterans Affairs and the information should contact Ms. Leslie at Negrescu at (202) 461–9752. Under Secretary for Health on the care (202) 461–7019. Dated: May 5, 2011. and treatment of disabled Veterans, and other matters pertinent to the Dated: May 5, 2011. By Direction of the Secretary. Department’s Veterans Health By Direction of the Secretary. William F. Russo, Administration (VHA). William F. Russo, Director of Regulations Management, Office The agenda for the meeting will Director of Regulations Management, Office of the General Counsel. include discussions on VHA’s of the General Counsel. [FR Doc. 2011–11473 Filed 5–10–11; 8:45 am] transformational initiatives; VA [FR Doc. 2011–11472 Filed 5–10–11; 8:45 am] BILLING CODE P Benchmark/Aspire Data; a discussion on BILLING CODE P

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Part II

Federal Reserve System

12 CFR Part 226 Regulation Z; Truth in Lending; Proposed Rule

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FEDERAL RESERVE SYSTEM Include the docket number in the proposal is not limited to higher-priced subject line of the message. mortgage loans or loans secured by the 12 CFR Part 226 • Fax: (202) 452–3819 or (202) 452– consumer’s principal dwelling. The Act [Regulation Z; Docket No. R–1417] 3102. prohibits a creditor from making a • Mail: Address to Jennifer J. Johnson, mortgage loan unless the creditor makes RIN 7100–AD75 Secretary, Board of Governors of the a reasonable and good faith Federal Reserve System, 20th Street and determination, based on verified and Regulation Z; Truth in Lending Constitution Avenue, NW., Washington, documented information, that the AGENCY: Board of Governors of the DC 20551. consumer will have a reasonable ability Federal Reserve System. All public comments will be made to repay the loan, including any ACTION: Proposed rule; request for available on the Board’s Web site at mortgage-related obligations (such as public comment. http://www.federalreserve.gov/ property taxes). generalinfo/foia/ProposedRegs.cfm as Consistent with the Act, the proposal SUMMARY: The Board is publishing for submitted, unless modified for technical provides four options for complying public comment a proposed rule reasons. Accordingly, comments will with the ability-to-repay requirement. amending Regulation Z (Truth in not be edited to remove any identifying First, a creditor can meet the general Lending) to implement amendments to or contact information. Public ability-to-repay standard by originating the Truth in Lending Act (TILA) made comments may also be viewed a mortgage loan for which: by the Dodd-Frank Wall Street Reform electronically or in paper in Room MP– • The creditor considers and verifies and Consumer Protection Act (Dodd- 500 of the Board’s Martin Building (20th the following eight underwriting factors Frank Act or Act). Regulation Z and C Streets, NW.) between 9 a.m. and in determining repayment ability: (1) currently prohibits a creditor from 5 p.m. on weekdays. Current or reasonably expected income making a higher-priced mortgage loan FOR FURTHER INFORMATION CONTACT: or assets; (2) current employment status; without regard to the consumer’s ability Jamie Z. Goodson, Catherine Henderson, (3) the monthly payment on the to repay the loan. The proposal would or Priscilla Walton-Fein, Attorneys; Paul mortgage; (4) the monthly payment on implement statutory changes made by Mondor, Lorna Neill, Nikita M. Pastor, any simultaneous loan; (5) the monthly the Dodd-Frank Act that expand the or Maureen C. Yap, Senior Attorneys; or payment for mortgage-related scope of the ability-to-repay Brent Lattin, Counsel; Division of obligations; (6) current debt obligations; requirement to cover any consumer Consumer and Community Affairs, (7) the monthly debt-to-income ratio, or credit transaction secured by a dwelling Board of Governors of the Federal residual income; and (8) credit history; (excluding an open-end credit plan, Reserve System, Washington, DC 20551, and timeshare plan, reverse mortgage, or at (202) 452–2412 or (202) 452–3667. • The mortgage payment calculation temporary loan). In addition, the For users of Telecommunications is based on the fully indexed rate. proposal would establish standards for Device for the Deaf (TDD) only, contact Second, a creditor can refinance a complying with the ability-to-repay (202) 263–4869. ‘‘non-standard mortgage’’ into a requirement, including by making a SUPPLEMENTARY INFORMATION: ‘‘standard mortgage.’’ This is based on a ‘‘qualified mortgage.’’ The proposal also statutory provision that is meant to implements the Act’s limits on I. Summary of the Proposed Rule provide flexibility for streamlined prepayment penalties. Finally, the The Dodd-Frank Wall Street Reform refinancings, which are no- or low- proposal would require creditors to and Consumer Protection Act (Dodd- documentation transactions designed to retain evidence of compliance with this Frank Act or Act) amends the Truth in quickly refinance a consumer out of a rule for three years after a loan is Lending Act (TILA) to prohibit creditors risky mortgage into a more stable consummated. General rulemaking from making mortgage loans without product. Under this option, the creditor authority for TILA is scheduled to regard to the consumer’s repayment does not have to verify the consumer’s transfer to the Consumer Financial ability. Public Law 111–203 § 1411, 124 income or assets. The proposal defines Protection Bureau (CFPB) on July 21, Stat. 1376, 2142 (to be codified at 15 a ‘‘standard mortgage’’ as a mortgage 2011. Accordingly, this rulemaking will U.S.C. 1639c). The Act’s underwriting loan that, among other things, does not become a proposal of the CFPB and will requirements are substantially similar contain negative amortization, interest- not be finalized by the Board. but not identical to the ability-to-repay only payments, or balloon payments; DATES: Comments on this proposed rule requirements adopted by the Board for and has limited points and fees. must be received on or before July 22, higher-priced mortgage loans in July Third, a creditor can originate a 2011. All comment letters will be 2008 under the Home Ownership and ‘‘qualified mortgage,’’ which provides transferred to the Consumer Financial Equity Protection Act. 73 FR 44522, Jul. special protection from liability for Protection Bureau. 30, 2008 (‘‘2008 HOEPA Final Rule’’). creditors who make ‘‘qualified ADDRESSES: You may submit comments, General rulemaking authority for TILA mortgages.’’ It is unclear whether that identified by Docket No. R–1417 and is scheduled to transfer to the Consumer protection is intended to be a safe RIN No. 7100–AD75, by any of the Financial Protection Bureau (CFPB) in harbor or a rebuttable presumption of following methods: July 2011. Accordingly, this rulemaking compliance with the repayment ability • Agency Web Site: http:// will become a proposal of the CFPB and requirement. Therefore, the Board is www.federalreserve.gov. Follow the will not be finalized by the Board. proposing two alternative definitions of instructions for submitting comments at Consistent with the Act, the proposal a ‘‘qualified mortgage.’’ http://www.federalreserve.gov/ applies the ability-to-repay Alternative 1 operates as a legal safe generalinfo/foia/ProposedRegs.cfm. requirements to any consumer credit harbor and defines a ‘‘qualified • Federal eRulemaking Portal: http:// transaction secured by a dwelling, mortgage’’ as a mortgage for which: www.regulations.gov. Follow the except an open-end credit plan, (a) The loan does not contain negative instructions for submitting comments. timeshare plan, reverse mortgage, or amortization, interest-only payments, or • E-mail: temporary loan. Thus, unlike the balloon payments, or a loan term [email protected]. Board’s 2008 HOEPA Final Rule, the exceeding 30 years;

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(b) The total points and fees do not A. TILA and Regulation Z mortgage to a consumer based on the exceed 3% of the total loan amount; In 1968, Congress enacted TILA, 15 consumer’s collateral without regard to (c) The borrower’s income or assets U.S.C. 1601 et seq., based on findings the consumer’s repayment ability, are verified and documented; and that economic stability would be including the consumer’s current and (d) The underwriting of the mortgage enhanced and competition among expected income, current obligations, (1) is based on the maximum interest consumer credit providers would be and employment. TILA Section 129(h); rate in the first five years, (2) uses a strengthened by the informed use of 15 U.S.C. 1639(h). In addition to the payment schedule that fully amortizes credit resulting from consumers’ disclosures and limitations specified in the loan over the loan term, and awareness of the cost of credit. One of the statute, TILA Section 129, as added (3) takes into account any mortgage- the purposes of TILA is to promote the by HOEPA, expanded the Board’s related obligations. informed use of consumer credit by rulemaking authority. TILA Section Alternative 2 provides a rebuttable requiring disclosures about its costs and 129(l)(2)(A) authorizes the Board to presumption of compliance and defines terms. TILA requires additional a ‘‘qualified mortgage’’ as including the prohibit acts or practices the Board disclosures for loans secured by criteria listed under Alternative 1 as finds to be unfair and deceptive in consumers’ homes and permits well as the following additional connection with mortgage loans. 15 consumers to rescind certain underwriting requirements from the U.S.C. 1639(l)(2)(A). TILA Section transactions that involve their principal ability-to-repay standard: (1) The 129(l)(2)(B) authorizes the Board to dwelling. TILA directs the Board to consumer’s employment status, (2) the prohibit acts or practices in connection prescribe regulations to carry out the monthly payment for any simultaneous with the refinancing of mortgage loans purposes of the law, and specifically loan, (3) the consumer’s current debt that the board finds to be associated authorizes the Board, among other obligations, (4) the total debt-to-income with abusive lending practices, or that things, to issue regulations that contain ratio or residual income, and (5) the are otherwise not in the interest of the such additional requirements, consumer’s credit history. borrower. 15 U.S.C. 1639(l)(2)(B). Finally, a small creditor operating classifications, differentiations, or other provisions, or that provide for such In addition, HOEPA created three predominantly in rural or underserved special remedies for a violation of its areas can originate a balloon-payment adjustments and exceptions for all or any class of transactions, that in the provisions. First, a consumer who qualified mortgage. This standard is brings a timely action against a creditor evidently meant to accommodate Board’s judgment are necessary or proper to effectuate the purposes of for a violation of rules issued under community banks that originate balloon TILA Section 129 may be able to recover loans to hedge against interest rate risk. TILA, facilitate compliance with TILA, or prevent circumvention or evasion. 15 special statutory damages equal to the Under this option, a small creditor can sum of all finance charges and fees paid make a balloon-payment qualified U.S.C. 1604(a). TILA is implemented by the Board’s Regulation Z, 12 CFR part by the consumer (often referred to as mortgage if the loan term is five years ‘‘HOEPA damages’’), unless the creditor or more, and the payment calculation is 226. An Official Staff Commentary interprets the requirements of the demonstrates that the failure to comply based on the scheduled periodic is not material. TILA Section 130(a); 15 payments, excluding the balloon regulation and provides guidance to creditors in applying the rules to U.S.C. 1640(a). This recovery is in payment. addition to actual damages; statutory The proposal also implements the specific transactions. See 12 CFR part damages in an individual action or class Dodd-Frank Act’s limits on prepayment 226, Supp. I. action, up to a prescribed threshold; and penalties, lengthens the time creditors B. The Home Ownership and Equity court costs and attorney fees that would must retain records that evidence Protection Act (HOEPA) and HOEPA be available for violations of other TILA compliance with the ability-to-repay Rules provisions. Second, if a creditor assigns and prepayment penalty provisions, and In response to evidence of abusive prohibits evasion of the rule by a high-cost mortgage to another person, practices in the home-equity lending the consumer may be able to obtain structuring a closed-end extension of market, Congress amended TILA by credit as an open-end plan. The Dodd- from the assignee all of the foregoing enacting the Home Ownership and damages. TILA Section 131(d); 15 U.S.C. Frank Act contains other consumer Equity Protection Act (HOEPA) in 1994. protections for mortgages, which will be 1641(d). For all other loans, TILA Public Law 103–325, 108 Stat. 2160. Section 131(e), 15 U.S.C. 1641(e), limits implemented in subsequent HOEPA defines a class of ‘‘high-cost rulemakings. the liability of assignees for violations of mortgages,’’ which are generally closed- Regulation Z to disclosure violations II. Background end home-equity loans (excluding that are apparent on the face of the Over the years, concerns have been home-purchase loans) with annual disclosure statement required by TILA. raised about creditors originating percentage rates (APRs) or total points Finally, a consumer has a right to mortgage loans without regard to the and fees exceeding prescribed rescind a transaction for up to three 1 consumer’s ability to repay the loan. thresholds. HOEPA created special years after consummation when the Beginning in about 2006, these concerns substantive protections for high-cost mortgage contains a provision were heightened as mortgage mortgages, including prohibiting a prohibited by a rule adopted under the delinquencies and foreclosures rates creditor from engaging in a pattern or authority of TILA Section 129(l)(2). increased dramatically, caused in part practice of extending a high-cost TILA Section 125 and 129(j); 15 U.S.C. by the loosening of underwriting 1635 and 1639(j). Any consumer who 1 Mortgages covered by the HOEPA amendments has the right to rescind a transaction standards. See 73 FR 44524, Jul. 30, have been referred to as ‘‘HOEPA loans,’’ ‘‘Section 2008. Following is background 32 loans,’’ or ‘‘high-cost mortgages.’’ The Dodd- may rescind the transaction as against information, including a brief summary Frank Act now refers to these loans as ‘‘high-cost any assignee. TILA Section 131(c); 15 of the legislative and regulatory mortgages.’’ See the Dodd-Frank Act § 1431; TILA U.S.C. 1641(c). The right of rescission Section 103(aa). For simplicity and consistency, does not extend, however, to home responses to this issue, which this proposal will use the term ‘‘high-cost culminated in the enactment of the mortgages’’ to refer to mortgages covered by the purchase loans, construction loans, or Dodd-Frank Act on July 21, 2010. HOEPA amendments. certain refinancings with the same

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creditor. TILA Section 125(e); 15 U.S.C. advised lenders to (1) use the fully- loan’’ includes those loans that are 1635(e). indexed rate and fully-amortizing defined as ‘‘high-cost mortgages.’’ In 1995, the Board implemented the payment when qualifying borrowers for Among other things, the Board’s 2008 HOEPA amendments at § 226.31, loans with adjustable rates and HOEPA Final Rule revised the ability- 226.32, and 226.33 of Regulation Z. 60 potentially non-amortizing payments; to-repay requirements for high-cost FR 15463, March 24, 1995. In particular, (2) limit stated income and reduced mortgages, and extended these § 226.32(e)(1) implemented TILA documentation loans to cases where requirements to higher-priced mortgage Section 129(h) to prohibit a creditor mitigating factors clearly minimize the loans. Sections 226.34(a)(4), from extending a high-cost mortgage need for full documentation of income; 226.35(b)(1). Specifically, the rule: based on the consumer’s collateral if, and (3) provide that prepayment penalty • Prohibits a creditor from extending considering the consumer’s current and clauses expire a reasonable period a higher-priced mortgage loan based on expected income, current obligations, before reset, typically at least 60 days. the collateral and without regard to the and employment status, the consumer Statement on Subprime Mortgage consumer’s repayment ability. would be unable to make the scheduled Lending, 72 FR 37569, Jul. 10, 2007 • Prohibits a creditor from relying on payments. In 2001, the Board amended (‘‘2007 Subprime Mortgage Statement’’).2 income or assets to assess repayment these regulations to expand HOEPA’s The Conference of State Bank ability unless the creditor verifies such protections to more loans by revising Supervisors (‘‘CSBS’’) and the American amounts using third-party documents the APR threshold, and points and fees Association of Residential Mortgage that provide reasonably reliable definition. 66 FR 65604, Dec. 20, 2001. Regulators (‘‘AARMR’’) issued parallel evidence of the consumer’s income and In addition, the ability-to-repay statements for state supervisors to use assets. provisions in the regulation were with state-supervised entities, and many In addition, the Board’s 2008 Final Rule revised to provide for a presumption of states adopted the statements. provides certain restrictions on a violation of the rule if the creditor prepayment penalties for high-cost D. 2008 HOEPA Final Rule engages in a pattern or practice of mortgages and higher-priced mortgage making high-cost mortgages without In 2006 and 2007, the Board held a loans. Sections 226.32(d), 226.35(b)(2). verifying and documenting the series of national hearings on consumer consumers’ repayment ability. protection issues in the mortgage E. The Dodd-Frank Act C. 2006 and 2007 Interagency market. During those hearings, In 2007, Congress held hearings Supervisory Guidance consumer advocates and government focused on rising subprime foreclosure officials expressed a number of rates and the extent to which lending In December 2005, the Board and the concerns, and urged the Board to practices contributed to them. See 73 FR other Federal banking agencies prohibit or restrict certain underwriting 44528, Jul. 30, 2008. Consumer responded to concerns about the rapid practices, such as ‘‘stated income’’ or advocates testified that certain lending growth of nontraditional mortgages in ‘‘low documentation’’ loans, and certain terms or practices contributed to the the previous two years by proposing product features, such as prepayment foreclosures, including a failure to supervisory guidance. Nontraditional penalties. See 73 FR 44527, Jul. 30, consider the consumer’s ability to repay, mortgages are mortgages that allow the 2008. The Board was also urged to adopt low- or no-documentation loans, hybrid borrower to defer repayment of regulations under HOEPA, because, adjustable-rate mortgages, and principal and sometimes interest. The unlike the Interagency Supervisory prepayment penalties. Industry guidance advised institutions of the Guidance, the regulations would apply representatives, on the other hand, need to reduce ‘‘risk layering’’ practices to all creditors and would be testified that adopting substantive with respect to these products, such as restrictions on subprime loan terms failing to document income or lending enforceable by consumers through civil nearly the full appraised value of the actions. would risk reducing access to credit for home. The final guidance issued in In response to these hearings, in July some borrowers. In response to these September 2006 specifically advised of 2008, the Board adopted final rules hearings, the House of Representatives lenders that layering risks in pursuant to the Board’s authority in passed the Mortgage Reform and Anti- nontraditional mortgage loans to TILA Section 129(l)(2)(A). 73 FR 44522, Predatory Lending Act in 2007 and subprime borrowers may significantly Jul. 30, 2008 (‘‘2008 HOEPA Final 2009. H.R. 3915, 110th Cong. (2007); increase risks to borrowers as well as Rule’’). The Board’s 2008 HOEPA Final H.R. 1728, 111th Cong. (2009). Both institutions. Interagency Guidance on Rule defined a new class of ‘‘higher- bills would have amended TILA to Nontraditional Mortgage Product Risks, priced mortgage loans,’’ . Under the provide consumer protections for 71 FR 58609, Oct. 4, 2006 (‘‘2006 2008 HOEPA Final Rule, a higher-priced mortgages, including ability-to-repay Nontraditional Mortgage Guidance’’). mortgage loan is a consumer credit requirements, but neither bill was The Board and the other Federal transaction secured by the consumer’s passed by the Senate. banking agencies addressed concerns principal dwelling with an APR that Then, on July 21, 2010, the Dodd- about the subprime market in March exceeds the average prime offer rate Frank Act was signed into law. Public 2007 with proposed supervisory (APOR) for a comparable transaction, as Law 111–203, 124 Stat. 1376 (2010). guidance addressing the heightened of the date the interest rate is set, by 1.5 Title XIV of the Dodd-Frank Act risks to consumers and institutions of or more percentage points for loans contains the Mortgage Reform and Anti- 3 adjustable-rate mortgages with two- or secured by a first lien on the dwelling, Predatory Lending Act. Sections 1411, three-year ‘‘teaser’’ rates followed by or by 3.5 or more percentage points for 3 substantial increases in the rate and loans secured by a subordinate lien on Although S. Rpt. No. 111–176 generally contains the dwelling. Section 226.35(a)(1). The the legislative history for the Dodd-Frank Act, it payment. The guidance, finalized in does not contain the legislative history for the June of 2007, set out the standards definition of a ‘‘higher-priced mortgage Mortgage Reform and Anti-Predatory Lending Act. institutions should follow to ensure Therefore, the Board has relied on the legislative 2 The 2006 Nontraditional Mortgage Guidance history for the 2007 and 2009 House bills for borrowers in the subprime market and the 2007 Subprime Mortgage Statement will guidance in interpreting the statute. See H. Rpt. No. obtain loans they can afford to repay. hereinafter collectively be referred to as the 110–441 for H.R. 3915 (2007), and H. Rpt. No. 111– Among other steps, the guidance ‘‘Interagency Supervisory Guidance.’’ 194 for H.R. 1728 (2009).

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1412, and 1414 of the Dodd-Frank Act court costs and attorney fees that would loans that are not in the consumers’ create new TILA Section 129C, which, be available for violations of other TILA interest to increase the loan originator’s among other things, establishes new provisions. In addition, the statute of compensation. 75 FR 58509, Sept. 24, ability-to-repay requirements and new limitations for an action for a violation 2010 (‘‘2010 Loan Originator limits on prepayment penalties. Public of TILA Section 129C is three years from Compensation Rule’’). This rule became Law 111–203, § 1411, 1412, 1414, 124 the date of the occurrence of the effective April 6, 2011. Stat. 1376, 2142–53 (to be codified at 15 violation (as compared to one year for 2010 MDIA Interim Final Rule. In May U.S.C. 1639c). The Dodd-Frank Act other TILA violations). TILA Section 2009, the Board adopted final rules states that Congress created new TILA 130(e). Moreover, Section 1413 of the implementing the amendments to TILA Section 129C upon a finding that Dodd-Frank Act provides that a under the Mortgage Disclosure ‘‘economic stabilization would be consumer may assert a violation of TILA Improvement Act of 2008 (‘‘MDIA’’).4 enhanced by the protection, limitation, Section 129C(a) as a defense to Among other things, the MDIA and the and regulation of the terms of foreclosure by recoupment or set off. final rules require early, transaction- residential mortgage credit and the TILA Section 130(k). There is no time specific disclosures for mortgage loans practices related to such credit, while limit on the use of this defense. secured by a dwelling, and requires ensuring that responsible, affordable waiting periods between the time when F. Other Recent Board Actions mortgage credit remains available to disclosures are given and consumers.’’ Dodd-Frank Act Section In addition to the 2008 HOEPA Final consummation of the transaction. These 1402; TILA Section 129B(a)(1). The Rule, the Board has recently published rules became effective July 30, 2009, as Dodd-Frank Act further states that the several proposed or final rules for required by the statute. See 74 FR purpose of TILA Section 129C is to mortgages that are referenced in or 23289, May 19, 2009. The MDIA also ‘‘assure that consumers are offered and relevant to this proposal. requires disclosure of payment receive residential mortgage loans on 2009 Closed-End Mortgage Proposal. examples if the loan’s interest rate or terms that reasonably reflect their ability In August 2009, the Board issued two payments can change, along with a to repay the loans.’’ Dodd-Frank Act proposals to amend Regulation Z: One statement that there is no guarantee that Section 1402; TILA Section 129B(a)(2). for closed-end mortgages and one for the consumer will be able to refinance Specifically, TILA Section 129C: home equity lines of credit (‘‘HELOCs’’). the transaction in the future. Under the • Expands coverage of the ability-to- For closed-end mortgages, the August statute, these provisions of the MDIA repay requirements to any consumer 2009 proposal would revise the became effective on January 30, 2011. credit transaction secured by a dwelling, disclosure requirements to highlight On September 24, 2010, the Board except an open-end credit plan, potentially risky features, such as published an interim rule to implement timeshare plan, reverse mortgage, or adjustable rates and negative these requirements. See 75 FR 58470, temporary loan. amortization, and address other issues, Sept. 24, 2010. In particular, the rule • Prohibits a creditor from making a such as the timing of disclosures. See 74 provided definitions for a ‘‘balloon mortgage loan unless the creditor makes FR 43232, Aug. 26, 2009 (‘‘2009 Closed- payment,’’ ‘‘adjustable-rate mortgage,’’ a reasonable and good faith End Mortgage Proposal’’). For HELOCs, ‘‘step-rate mortgage,’’ ‘‘fixed-rate determination, based on verified and the August 2009 proposal would revise mortgage,’’ ‘‘interest-only loan,’’ documented information, that the the disclosure requirements and address ‘‘negative amortization loan,’’ and the consumer has a reasonable ability to other issues, such as account ‘‘fully indexed rate.’’ See § 226.18(s)(5) repay the loan according to its terms, terminations. 74 FR 43428, Aug. 26, and (s)(7). Subsequently, the Board and all applicable taxes, insurance, and 2009 (‘‘2009 HELOC Proposal’’). Public issued an interim rule to make certain assessments. comments for both proposals were due clarifying changes. See 75 FR 81836, • Provides a presumption of by December 24, 2009. Dec. 29, 2010. The term ‘‘2010 MDIA compliance with the ability-to-repay 2010 Mortgage Proposal. In Interim Final Rule’’ is used to refer to requirements if the mortgage loan is a September 2010, the Board issued a the September 2010 final rule as revised ‘‘qualified mortgage,’’ which does not proposal that would revise Regulation Z by the December 2010 final rule. contain certain risky features and limits with respect to rescission, refinancing, 2011 Escrow Proposal and Final Rule. points and fees on the loan. reverse mortgages, and the refund of In March 2011, the Board issued a • Prohibits prepayment penalties certain fees. See 75 FR 58539, Sept. 24, proposal to implement Sections 1461 unless the mortgage is a prime, fixed- 2010 (‘‘2010 Mortgage Proposal’’). Public and 1462 of the Dodd-Frank Act, which rate qualified mortgage, and the amount comments for this proposal were due by create new TILA Section 129D and of the prepayment penalty is limited. December 23, 2010. On February 1, provide certain escrow requirements for The Dodd-Frank Act creates special 2011, the Board issued a press release higher-priced mortgage loans. See 76 FR remedies for violations of TILA Section stating that it does not expect to finalize 11599, March 2, 2011 (‘‘2011 Escrow 129C. Section 1416 of the Dodd-Frank the 2009 Closed-End Mortgage Proposal, Proposal’’). In particular, the proposal Act provides that a consumer who 2009 HELOC Proposal, or the 2010 would revise the definition of a ‘‘higher- brings a timely action against a creditor Mortgage Proposal prior to the transfer priced mortgage loan,’’ and create an for a violation of TILA Section 129C(a) of authority for such rulemakings to the exemption from the escrow requirement (the ability-to-repay requirements) may Consumer Financial Protection Bureau for any loan extended by a creditor that be able to recover special statutory in July 2011. makes most of its first-lien higher-priced damages equal to the sum of all finance 2010 Loan Originator Compensation mortgage loans in counties designated charges and fees paid by the consumer Rule. In September 2010, the Board by the Board as ‘‘rural or underserved,’’ (often referred to as ‘‘HOEPA damages’’), adopted a final rule on loan originator has annual originations of 100 or fewer unless the creditor demonstrates that compensation to prohibit compensation the failure to comply is not material. to mortgage brokers and loan officers 4 The MDIA is contained in Sections 2501 TILA Section 130(a). This recovery is in (collectively, ‘‘loan originators’’) that is through 2503 of the Housing and Economic Recovery Act of 2008, Public Law 110–289, enacted addition to actual damages; statutory based on a loan’s interest rate or other on July 30, 2008. The MDIA was later amended by damages in an individual action or class terms. The final rule also prohibits loan the Emergency Economic Stabilization Act of 2008, action, up to a prescribed threshold; and originators from steering consumers to Public Law 110–343, enacted on October 3, 2008.

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first-lien mortgage loans, and does not creditors. Finally, the Board conducted IV. Discussion of the Proposed Rule escrow for any mortgage transaction it independent analyses regarding the A. Scope of Coverage services. effect of various underwriting In March 2011, the Board also issued procedures and loan features on loan Consistent with the Dodd-Frank Act, a final rule that implements a provision performance. the proposal applies to any dwelling- of the Dodd-Frank Act that increases the secured consumer credit transaction, APR threshold used to determine III. Legal Authority including vacation homes and home whether a mortgage lender is required to equity loans. The proposal does not establish an escrow account for property TILA Section 105(a) mandates that the apply to open-end credit plans, taxes and insurance for first-lien, Board prescribe regulations to carry out timeshare plans, reverse mortgages, or ‘‘jumbo’’ mortgage loans. See 76 FR the purposes of the Act. 15 U.S.C. temporary loans with terms of 12 11319, March 2, 2011 (‘‘2011 Jumbo 1604(a). In addition, TILA, as amended months or less. The Act essentially Loan Escrow Final Rule’’). Jumbo loans by the Dodd-Frank Act, specifically codifies the ability-to-repay are loans exceeding the conforming authorizes the Board to: requirements of the Board’s 2008 loan-size limit for purchase by Freddie • Issue regulations that contain such HOEPA Final Rule and expands the Mac, as specified by the legislation. additional requirements, classifications, scope to the covered transactions 2011 Risk Retention Proposal. On differentiations, or other provisions, or described above. March 31, 2011, the Board, the Office of that provide for such adjustments and B. Ability-to-Repay Requirements the Comptroller of the Currency, the exceptions for all or any class of Federal Deposit Insurance Corporation, transactions, that in the Board’s Consistent with the Dodd-Frank Act, the Securities and Exchange judgment are necessary or proper to the proposal provides that a creditor Commission, the U.S. Department of effectuate the purposes of TILA, may not make a covered mortgage loan Housing and Urban Development, and facilitate compliance with the Act, or unless the creditor makes a reasonable the Federal Housing Finance Agency and good faith determination, based on prevent circumvention or evasion. TILA (‘‘Agencies’’) issued a proposal to verified and documented information, Section 105(a); 15 U.S.C. 1604(a). implement Section 941 of the Dodd- that the consumer will have a Frank Act, which adds a new Section • By regulation, prohibit or condition reasonable ability to repay the loan, 15G to the Securities Exchange Act of terms, acts or practices relating to including any mortgage-related 1934. 15 U.S.C. 78o–11. As required by residential mortgage loans that the obligations (such as property taxes). the Act, the proposal generally requires Board finds to be abusive, unfair, TILA Section 129C; 15 U.S.C. 1639C. the sponsor of an asset-backed security deceptive, or predatory; necessary or The Act and the proposal provide four to retain not less than five percent of the proper to ensure that responsible, options for complying with the ability- credit risk of the assets collateralizing affordable mortgage credit remains to-repay requirement. Specifically, a the security. The Act and the proposal available to consumers in a manner creditor can: include a variety of exemptions, consistent with the purposes of the • Originate a covered transaction including an exemption for an asset- ability-to-repay requirements; necessary under the general ability-to-repay backed security that is collateralized or proper to effectuate the purposes of standard; • exclusively by ‘‘qualified residential the ability-to-repay requirements, to Refinance a ‘‘non-standard mortgages.’’ The Act requires the prevent circumvention or evasion mortgage’’ into a ‘‘standard mortgage’’; • Agencies to define the term ‘‘qualified thereof, or to facilitate compliance; or Originate a ‘‘qualified mortgage,’’ residential mortgage’’ taking into are not in the interest of the borrower. which provides a presumption of consideration underwriting and product TILA Section 129B(e); 15 U.S.C. compliance with the rule; or features that historical loan performance • 1639b(e). Originate a balloon-payment data indicate result in a lower risk of qualified mortgage, which provides a • default. The Act further provides that Prescribe regulations that revise, presumption of compliance with the the definition of a ‘‘qualified residential add to, or subtract from the criteria that rule. mortgage’’ can be ‘‘no broader than’’ the define a qualified mortgage upon a Each of these methods is discussed definition of a ‘‘qualified mortgage’’ finding that such regulations are below, with a description of: (1) Limits under TILA Section 129C(b)(2). The necessary or proper to ensure that on the loan features or term, (2) limits 2011 Risk Retention Proposal responsible, affordable mortgage credit on points and fees, (3) underwriting implements these provisions of the Act. remains available to consumers in a requirements, and (4) payment Public comments for this proposal are manner consistent with the purposes of calculations. due by June 10, 2011. the ability-to-repay requirements; or General Ability-to-Repay Standard necessary and appropriate to effectuate G. Development of This Proposal the purposes of the ability-to-repay Limits on loan features, term, and In developing this proposal, the Board requirements, to prevent circumvention points and fees. Under the general reviewed the laws, regulations, or evasion thereof, or to facilitate ability-to-repay standards, there are no proposals, and legislative history compliance. TILA Section limits on the loan’s features, term, or described above as well as state ability- 129C(b)(3)(B)(i); 15 U.S.C. points and fees, but the creditor must to-repay laws. The Board also 1639c(b)(3)(B)(i). follow certain underwriting conducted extensive outreach with requirements and payment calculations. consumer advocates, industry TILA, as amended by the Dodd-Frank Underwriting requirements. representatives, and Federal and state Act, states that it is the purpose of the Consistent with the Dodd-Frank Act, the regulators, and examined underwriting ability-to-repay requirements to assure proposal requires the creditor to rules and guidelines for the Federal that consumers are offered and receive consider and verify the following eight Housing Administration, the U.S. residential mortgage loans on terms that underwriting factors: Department of Veterans’ Affairs, Fannie reasonably reflect their ability to repay • Current or reasonably expected Mae, Freddie Mac, the Home Affordable the loans. TILA Section 129B(a)(2); 15 income or assets; Modification Program, and private U.S.C. 1639b(a)(2). • Current employment status;

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• The monthly payment on the Consistent with the Act, the proposal interest-only loan, and (3) a negative covered transaction; requires a creditor to underwrite a amortization loan. The Board believes • The monthly payment on any higher-priced loan with a balloon that this definition is consistent with simultaneous loan; payment by considering the consumer’s the legislative history, which indicates • The monthly payment for mortgage- ability to make the balloon payment that Congress was generally concerned related obligations; (without refinancing). As a practical with loans that provide for ‘‘payment • Current debt obligations; matter, this would mean that a creditor shock’’ through significantly higher • The monthly debt-to-income ratio, would not be able to make a higher- payments over the life of the loan. or residual income; and priced balloon loan unless the consumer The proposal defines the term • Credit history. had substantial documented assets or ‘‘standard mortgage’’ as a covered The proposal permits the creditor to income. transaction which, among other things, consider and verify these underwriting The Act permits a creditor to does not contain negative amortization, factors based on widely accepted underwrite a balloon loan that is not interest-only payments, or balloon underwriting standards. higher-priced in accordance with payments; and limits the points and The proposal is generally consistent regulations prescribed by the Board. The fees. with the Act except in one respect. The proposal requires creditors to Underwriting requirements. If the Act does not require the creditor to underwrite a balloon loan using the conditions described above are met, the consider simultaneous loans that are maximum payment scheduled during Act states that the creditor may give home equity lines of credit (‘‘HELOCs’’), the first five years after consummation. concerns about preventing a likely but the Board is using its adjustment This approach would not capture the default a ‘‘higher priority as an and exception authority and balloon payment for a balloon loan with acceptable underwriting practice.’’ The discretionary regulatory authority to a term of five years or more. The Board Board interprets this provision to include HELOCs within the definition believes five years is the appropriate provide an exception from the general of simultaneous loans. The Board time horizon in order to ensure ability-to-repay requirements for income believes that such inclusion would help consumers have a reasonable ability to and asset verification. The Board ensure the consumer’s ability to repay repay the loan, and to preserve credit believes that this approach is consistent the loan. Data and outreach indicated choice and availability. Moreover, the with the statute and would preserve that the origination of a simultaneous five year time horizon is consistent with access to streamlined refinancings. HELOC markedly increases the rate of other provisions in the Act and the Payment calculations. The proposal default. In addition, this approach is proposal, which require underwriting provides specific payment calculations consistent with the Board’s 2008 based on the first five years after for purposes of determining whether the HOEPA Final Rule. consummation (for qualified mortgages refinancing reduces the consumer’s Payment calculations. Under the and the refinancing of a non-standard monthly mortgage payment, and for general ability-to-repay standard, the mortgage) or which require a minimum determining whether the consumer has Dodd-Frank Act does not ban mortgage term of five years (for balloon-payment the ability to repay the standard features, but instead requires the qualified mortgages made by certain mortgage. The calculation for the non- creditor to underwrite the mortgage creditors). standard mortgage would reflect the highest payment that would occur as of payment according to certain Refinancing of a Non-Standard Mortgage assumptions and calculations. the date of the expiration of the period Specifically, consistent with the Act, the The Dodd-Frank Act provides an during which introductory-rate proposal requires creditors to calculate exception to the ability-to-repay payments, interest-only payments, or the mortgage payment using: (1) The standard’s underwriting requirements if: negatively amortizing payments are fully indexed rate; and (2) monthly, (1) The same creditor is refinancing a permitted. For a standard mortgage, the substantially equal payments that ‘‘hybrid mortgage’’ into a ‘‘standard calculation would be based on: (1) The amortize the loan amount over the loan mortgage,’’ (2) the consumer’s monthly maximum interest rate that may apply term. In addition, the Board is using its payment is reduced through the during the first five years after adjustment and exception authority and refinancing, and (3) the consumer has consummation, and (2) monthly, discretionary regulatory authority to not been delinquent on any payment on substantially equal payments that require the creditor to underwrite the the existing hybrid mortgage. This amortize the loan amount over the loan payment based on the introductory provision appears to be intended to term. interest rate if it is greater than the fully provide flexibility for streamlined Safe Harbor or Presumption of indexed rate. Some transactions use a refinancings, which are no- or low- Compliance for a Qualified Mortgage premium initial rate that is higher than documentation loans designed to quickly refinance a consumer in a risky Under the Board’s 2008 HOEPA Final the fully indexed rate. The Board Rule, a creditor may obtain a believes this approach would help mortgage into a more stable product. Streamlined refinancings have presumption of compliance with the ensure the consumer’s ability to repay repayment ability requirement if it the loan and prevent circumvention or substantially increased in recent years to accommodate consumers at risk of follows the required procedures, such as evasion. verifying the consumer’s income or The Act and proposal also provide default. assets, and additional optional special payment calculations for Definitions—loan features, term, and procedures, such as assessing the interest-only loans, negative points and fees. Although the Act uses consumer’s debt-to-income ratio. amortization loans, and balloon loans. the term ‘‘hybrid mortgage,’’ the However, the 2008 HOEPA Final Rule In particular, the requirements for proposal uses the term ‘‘non-standard makes clear that even if the creditor balloon loans depend on whether the mortgage,’’ defined as (1) an adjustable- follows the required and optional loan is ‘‘higher-priced’’ 5 or not. rate mortgage with an introductory fixed interest rate for a period of years, (2) an criteria, the creditor has only obtained 5 The Act provides separate underwriting a presumption of compliance with the requirements for balloon loans depending on percent for a first-lien loan or by 3.5 percent for a repayment ability requirement. The whether the loan’s APR exceeds the APOR by 1.5 subordinate-lien loan. consumer can still rebut or overcome

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that presumption by showing that, to know, (3) the consumer’s current creditor, and thus, little incentive to despite following the required and obligations, and (4) the consumer’s make a ‘‘qualified mortgage,’’ which optional procedures, the creditor credit history. Thus, if the ‘‘qualified limits loan fees and features. nonetheless disregarded the consumer’s mortgage’’ definition is deemed to be a Because of the statutory ambiguity ability to repay the loan. For example, safe harbor, the consumer could not and these competing concerns, the the consumer could present evidence allege the creditor violated the Board is proposing two alternative that although the creditor assessed the repayment ability requirement by failing definitions of a ‘‘qualified mortgage.’’ consumer’s debt-to-income ratio, that to consider and verify employment Alternative 1 defines a ‘‘qualified ratio was very high with little residual status, simultaneous loans, current mortgage’’ based on the criteria listed in income. This evidence may be sufficient obligations, or credit history. Under this the Act, and the definition operates as to overcome the presumption of approach, originating a ‘‘qualified a legal safe harbor and alternative to compliance and demonstrate that the mortgage’’ would be an alternative to complying with the general ability-to- creditor extended credit without regard complying with the general ability-to- repay standard. Alternative 1 does not to the consumer’s ability to repay the repay standard and would operate as a define a ‘‘qualified mortgage’’ to include loan. safe harbor. Thus, if a creditor satisfied a requirement to consider the The Dodd-Frank Act provides special the qualified mortgage criteria, the consumer’s debt-to-income ratio or protection from liability for creditors consumer could not assert that the residual income. Because of the who make ‘‘qualified mortgages,’’ but it creditor had violated the ability-to-repay discretion inherent in making these is unclear whether that protection is provisions. The consumer could only calculations, such a requirement would intended to be a safe harbor or a show that the creditor did not comply not provide certainty that the loan is a rebuttable presumption of compliance with one of the qualified mortgage safe qualified mortgage. with the repayment ability requirement. harbor criteria. Alternative 2 defines a ‘‘qualified The Act states that a creditor or assignee There are sound policy reasons for mortgage’’ to include the requirements ‘‘may presume’’ that a loan has met the interpreting a ‘‘qualified mortgage’’ as listed in the Act as well as the other repayment ability requirement if the providing either a safe harbor or a underwriting requirements that are in loan is a ‘‘qualified mortgage.’’ This presumption of compliance. Interpreting the general ability-to-repay standard might suggest that originating a a ‘‘qualified mortgage’’ as a safe harbor (i.e., employment status, simultaneous qualified mortgage only provides a would provide creditors with an loans, current debt obligations, debt-to- presumption of compliance, which the incentive to make qualified mortgages. income ratio, and credit history). The consumer can rebut by providing That is, in exchange for limiting loan definition provides a presumption of evidence that the creditor did not, in fees and features, the creditor’s compliance that could be rebutted by the consumer. fact, make a good faith and reasonable regulatory burden and exposure to Limits on points and fees. The Dodd- determination of the consumer’s ability liability would be reduced. Consumers Frank Act defines a ‘‘qualified mortgage’’ to repay the loan. may benefit by being provided with mortgage loans that do not have certain as a loan for which, among other things, However, the Act does not state that the total points and fees do not exceed ‘‘ risky features or high costs. However, a creditor that makes a qualified three percent of the total loan amount. ’’ the drawback to this approach is that a mortgage must comply with all of the In addition, the Act requires the Board underwriting criteria of the general creditor could not be challenged for failing to underwrite a loan based on the to prescribe rules adjusting this ability-to-repay standard. Specifically, consumer’s employment status, threshold for ‘‘smaller loans’’ and to the Act defines a ‘‘qualified mortgage’’ as simultaneous loans, current debt ‘‘consider the potential impact of such a covered transaction for which: obligations, or credit history, or for rules on rural areas and other areas • The loan does not contain negative generally not making a reasonable and where home values are lower.’’ If the amortization, interest-only payments, or good faith determination of the threshold were not adjusted for smaller balloon payments; consumer’s ability to repay the loan. loans, then creditors might not be able • The term does not exceed 30 years; • Interpreting a ‘‘qualified mortgage’’ as to recover their fixed costs for The points and fees generally do providing a rebuttable presumption of originating the loan. This could deter not exceed three percent of the total compliance would better ensure that some creditors from originating smaller loan amount; loans, thus reducing access to credit. • creditors consider a consumer’s ability The income or assets are considered to repay the loan. Creditors would have The Board is proposing two and verified; alternatives for implementing the limits • to make individualized determinations The total debt-to-income ratio or that the consumer had the ability to on points and fees for qualified residual income complies with any repay the loan based on all of the mortgages. Alternative A is based on guideline or regulation prescribed by underwriting factors listed in the certain tiers of loan amounts (e.g., a the Board; and general ability-to-repay standard. This points and fees threshold of 3.5 percent • The underwriting: (1) Is based on approach would require the creditor to of the total loan amount for a loan the maximum rate during the first five comply with all of the ability-to-repay amount greater than or equal to $60,000 years, (2) uses a payment schedule that standards, and preserve the consumer’s but less than $75,000). Alternative A is fully amortizes the loan over the loan ability to use these standards in a designed to be an easier calculation for term, and (3) takes into account all defense to foreclosure or other legal creditors, but may result in some mortgage-related obligations. action. In addition, a consumer could anomalies (e.g., a points and fees The definition of a ‘‘qualified mortgage’’ assert that, despite complying with the threshold of $2,250 for a $75,000 loan, does not require the creditor to consider criteria for a qualified mortgage and the but a points and fees threshold of $2,450 and verify the following underwriting ability-to-repay standard, the creditor for a $70,000 loan). Alternative B is requirements that are part of the general did not make a reasonable and good designed to remedy these anomalies by ability-to-repay standard: (1) The faith determination of the consumer’s providing a more precise sliding scale, consumer’s employment status, (2) the ability to repay the loan. However, the but may be cumbersome for some payment of any simultaneous loans of drawback of this approach is that it creditors. The proposal solicits which the creditor knows or has reason provides little legal certainty for the comment on these approaches.

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Definition of ‘‘points and fees.’’ balloon loans as a means of hedging and fees and underwriting requirements Generally, a qualified mortgage cannot against interest rate risk, and that the as a qualified mortgage. have points and fees that exceed three community banks typically hold these Payment calculations. Consistent with percent of the total loan amount. loans in portfolio. The Board believes the Dodd-Frank Act, the proposal Consistent with the Act, the proposal Congress enacted this exception to provides that a creditor may underwrite revises Regulation Z to define ‘‘points ensure access to credit in rural and a balloon-payment qualified mortgage and fees’’ to now include: (1) Certain underserved areas where consumers mortgage insurance premiums in excess may be able to obtain credit only from using all of the scheduled payments, of the amount payable under Federal such community banks offering these except the balloon payment. Housing Administration provisions; (2) balloon-payment loans. This exception Other Protections all compensation paid directly or is similar to the exemption from the indirectly by a consumer or creditor to escrow requirements provided in Limits on prepayment penalties. a loan originator; and (3) the another section of the Dodd-Frank Act. Consistent with the Dodd-Frank Act, the prepayment penalty on the covered The proposal provides an exception proposal provides that a covered transaction, or on the existing loan if it for a creditor that meets the following transaction may not include a is refinanced by the same creditor. The four criteria, with some alternatives: prepayment penalty unless the proposal also provides exceptions to the (1) Operates in predominantly rural or transaction: (1) Has an APR that cannot calculation of points and fees for: (1) underserved areas. The creditor, during increase after consummation (i.e., a the preceding calendar year, must have Any bona fide third party charge not fixed-rate or step-rate mortgage), (2) is a extended more than 50% of its total retained by the creditor, loan originator, qualified mortgage, and (3) is not a covered transactions that provide for or an affiliate of either, and (2) certain higher-priced mortgage loan. The bona fide discount points. balloon payments in one or more proposal further provides, consistent Underwriting requirements. As counties designated by the Board as discussed above, it is not clear whether ‘‘rural’’ or ‘‘underserved.’’ with the Act, that the prepayment the Act intends the definition of a (2) Total annual covered transactions. penalty may not exceed three percent of ‘‘qualified mortgage’’ to be a somewhat Under Alternative 1, the creditor, the outstanding loan balance during the narrowly-defined safe harbor or a more together with all affiliates, extended first year after consummation, two broadly-defined presumption of covered transactions of some dollar percent during the second year after compliance. For this reason, the Board amount or less during the preceding consummation, and one percent during is proposing two alternative definitions calendar year. Under Alternative 2, the the third year after consummation. with respect to the underwriting creditor, together with all affiliates, Prepayment penalties are not permitted requirements. Under Alternative 1, the extended some number of covered after the end of the third year after underwriting requirements for a transactions or fewer during the consummation. Finally, pursuant to the qualified mortgage are limited to preceding calendar year. The proposal Act, the proposal requires a creditor requiring a creditor to consider and solicits comment on an appropriate offering a consumer a loan with a verify the consumer’s current or dollar amount or number of prepayment penalty to also offer that reasonably expected income or assets. transactions. consumer a loan without a prepayment Under Alternative 2, the definition of a (3) Balloon loans in portfolio. Under penalty. qualified mortgage requires a creditor to Alternative 1, the creditor must not sell consider and verify all of the any balloon-payment loans on or after Expansion of record retention rules. underwriting factors required under the the effective date of the final rule. Under Currently, Regulation Z requires general ability-to-repay standard, Alternative 2, the creditor must not have creditors to retain evidence of namely: (1) The currently or reasonably sold any balloon-payment loans during compliance for two years after expected income, (2) the employment the preceding and current calendar year. disclosures must be made or action status, (3) the monthly payment on any (4) Asset size. The creditor must meet must be taken. The Dodd-Frank Act simultaneous loan, (4) the current debt an asset size threshold set annually by extends the statute of limitations for obligations, (5) the monthly debt-to- the Board, which for calendar year 2011 civil liability for a violation of the income ratio or residual income, and (6) would be $2 billion. prepayment penalty provisions or the credit history. Limits on loan features. The Dodd- ability-to-repay provisions (including Payment calculations. Consistent with Frank Act generally provides that a the qualified mortgage provisions) to the Dodd-Frank Act, the proposal balloon-payment qualified mortgage three years after the date of a violation. defines a qualified mortgage to require contains the same limits on loan The proposal revises Regulation Z to the creditor to calculate the mortgage features and the loan term as a qualified lengthen the record retention mortgage, except for allowing the payment using the periodic payment of requirement to three years after balloon payment. In addition, the Board principal and interest based on the consummation for consistency with the is using its adjustment and exception maximum interest rate that may apply Dodd-Frank Act. during the first five years after authority and discretionary regulatory consummation. authority to add a requirement that the Prohibition on evasion through open- loan term be five years or longer. The end credit. Currently, Regulation Z Balloon-Payment Qualified Mortgages Board believes that this requirement prohibits a creditor from structuring a Made by Certain Creditors would help ensure the consumer’s closed-end loan as an open-end plan to The Board is exercising the authority ability to repay the loan by providing evade the requirements for higher- provided under the Dodd-Frank Act to more time for the consumer to build priced mortgage loans. The Board is provide an exception to the definition of equity. using its adjustment and exception a ‘‘qualified mortgage’’ for a balloon- Points and fees and underwriting authority and discretionary regulatory payment loan made by a creditor that requirements. Consistent with the Dodd- authority to include a similar provision meets the criteria set forth in the Act. Frank Act, the proposal requires that a in this proposal in order to prevent Based on outreach, it appears that some balloon-payment qualified mortgage circumvention or evasion. community banks make short-term provide for the same limits on points

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V. Section-by-Section Analysis only enough information to reconstruct an alternative covered transaction the required disclosures or other without a prepayment penalty offered Section 226.25 Record Retention records. The Board proposes a new by another creditor that has a lower 25(a) General Rule comment 25(a)–6 that clarifies that if a interest rate or a lower total dollar Currently, § 226.25(a) requires that creditor must verify and document amount of origination points or fees and creditors retain evidence of compliance information used in underwriting a discount points. Proposed comment with Regulation Z for two years after transaction subject to proposed § 226.43, 25(a)–7 clarifies that, to evidence disclosures must be made or action the creditor should retain evidence compliance with proposed must be taken. Section 226.25(a) also sufficient to demonstrate compliance § 226.43(g)(4), the creditor should retain clarifies that administrative agencies with the documentation requirements of a record of (1) the alternative covered responsible for enforcing Regulation Z § 226.25(a). Proposed comment 25(a)–6 transaction without a prepayment may require creditors under their also clarifies that creditors need not penalty presented to the mortgage retain actual paper copies of the broker pursuant to proposed jurisdictions to retain records for a documentation used to underwrite a § 226.43(g)(4)(i), such as a rate sheet, longer period, if necessary to carry out transaction, but they should be able to and (2) the agreement with the mortgage their enforcement responsibilities under reproduce those records accurately, for broker required by proposed TILA Section 108. 15 U.S.C. 1607. example, by retaining a reproduction of § 226.34(g)(4)(ii). Under TILA Section 130(e), the statute a consumer’s Internal Revenue Service of limitations for civil liability for a Section 226.32 Requirements for Form W–2 rather than merely the violation of TILA is one year after the Certain Closed-End Home Mortgages income information on the form. The date a violation occurs. 15 U.S.C. 1640. Board also proposes to revise comment Introduction The proposal would implement the 25(a)–2 to remove obsolete references to requirement to consider a consumer’s The Board proposes to revise the particular documentation methods and repayment ability under TILA Section definition of ‘‘points and fees’’ in to reflect that in some cases creditors 129C(a), alternative requirements for § 226.32(b)(1) to incorporate must be able to reproduce (not merely ‘‘qualified mortgages’’ under TILA amendments to this definition under the reconstruct) records. Section 129C(b), and prepayment Dodd-Frank Act.6 Formerly, the Proposed comment 25(a)–7 provides definition of ‘‘points and fees’’ in both penalty requirements under TILA guidance regarding retention of records Section 129C(c) in proposed § 226.43, as TILA and Regulation Z applied only for evidencing compliance with the determining whether a home mortgage discussed in detail below. Section 1416 requirement to offer a consumer an of the Dodd-Frank Act extends the is a ‘‘high-cost mortgage’’ under TILA. alternative covered transaction without See TILA Section 103(aa)(4), 15 U.S.C. statute of limitations for civil liability a prepayment penalty, discussed below for a violation of TILA Section 129C, 1602(aa)(4); § 226.32. As discussed in the section-by-section analyses of earlier, however, the Dodd-Frank Act among other provisions, to three years proposed § 226.43(g)(3) through (5). after the date a violation occurs. amended TILA to create a new type of Proposed comment 25(a)–7 clarifies that mortgage—a ‘‘qualified mortgage’’—to Accordingly, the Board proposes to creditors must retain records that revise § 226.25(a) to require that which certain limits on the points and document compliance with that fees that may be charged apply.7 Under creditors retain records that evidence requirement if a transaction subject to compliance with proposed § 226.43 for the new TILA amendments, the term proposed § 226.43 is consummated with ‘‘points and fees’’ for qualified mortgages at least three years after consummation. a prepayment penalty, but need not Although creditors will take action has the same meaning as ‘‘points and retain such records if a covered fees’’ for high-cost mortgages. required under proposed § 226.43 transaction is consummated without a (underwriting covered transactions and The Board proposes amendments to prepayment penalty or a covered ‘‘ ’’ offering consumers the option of a the definition of points and fees to transaction is not consummated. See implement the limitation on points and covered transaction without a proposed § 226.43(g)(6). The Board prepayment penalty) before a fees for qualified mortgages. The Board believes the requirement to offer a is not currently proposing regulations to transaction is consummated, the Board transaction without a prepayment implement the Dodd-Frank Act’s believes calculating the record retention penalty under TILA Section 129C(c)(4) amendments to TILA’s high-cost period from the time of consummation is intended to ensure that consumers mortgage rules generally.8 For example, would facilitate compliance by can voluntarily choose an alternative the Board is not proposing at this time establishing a clear time period for covered transaction with a prepayment to implement revisions to the points and record retention. The proposal to extend penalty. The Board therefore believes it fees thresholds for high-cost mortgages the required period for retention of is unnecessary for creditors to document that exclude from the threshold evidence of compliance with § 226.43 compliance with the offer requirement would not affect the record retention when a consumer does not choose a 6 Public Law 111–203, 124 Stat. 1376, Title XIV, period for other requirements under transaction with a prepayment penalty, § 1431. Regulation Z. Increasing the period or if the covered transaction is not 7 Id. § 1412; TILA Section 129C(b)(2)(A)(vii), creditors must retain records evidencing consummated. (b)(2)(C)(i); 15 U.S.C. 1639c(b)(2)(A)(vii), (b)(2)(C)(i). compliance with § 226.43 from two to As discussed in detail below in the 8 Id. § 1431–1433. The Dodd-Frank Act defines a high-cost mortgage to include a mortgage for which three years would increase creditors’ section-by-section analysis of proposed ‘‘the total points and fees payable in connection compliance burden. The Board believes § 226.43(g)(4), if the creditor offers a with the transaction, other than bona fide third many creditors will retain such records covered transaction with a prepayment party charges not retained by the mortgage for at least three years, even in the penalty through a mortgage broker, the originator, creditor, or an affiliate of the creditor or mortgage originator, exceed—(I) in the case of a absence of a change to record retention creditor must present the mortgage transaction for $20,000 or more, 5 percent of the requirements, due to the extension of broker an alternative covered total transaction amount; or (II) in the case of a the statute of limitations for civil transaction without a prepayment transaction for less than $20,000, the lesser of 8 penalty. Also, the creditor must provide, percent of the total transaction amount or $1,000 (or liability. such other dollar amount as the Board shall Currently, comment 25(a)–2 clarifies by agreement, for the mortgage broker to prescribe by regulation.’’ Id. § 1431(a); TILA Section that in general creditors need retain present the consumer that transaction or 103(aa)(1)(A)(ii); 15 U.S.C. 1602(aa)(1)(A)(ii).

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calculation ‘‘bona fide third party that the allowable points and fees is a cost listed in § 226.32(b)(1)(iii) and charges not retained by the mortgage percentage of the amount of credit § 226.32(b)(1)(iv) that is both included originator, creditor, or an affiliate of the extended to the consumer, without as points and fees under § 226.32(b)(1) creditor or mortgage originator’’ and that taking into account the financed points and financed by the creditor. The Board permit creditors to exclude certain and fees themselves. Specifically, under requests comment on whether to ‘‘bona fide discount points.’’ 9 By current comment 32(a)(1)(ii)–1, the streamline the calculation to better contrast, identical provisions in the ‘‘total loan amount’’ is calculated by ensure that the ‘‘total loan amount’’ Dodd-Frank Act defining the points and ‘‘taking the amount financed, as includes all credit extended other than fees threshold for qualified mortgages determined according to § 226.18(b), financed points and fees. are proposed to be implemented in new and deducting any cost listed in Specifically, the Board solicits § 226.43(e)(3), discussed below.10 § 226.32(b)(1)(iii) and § 226.32(b)(1)(iv) comment on whether to revise the that is both included as points and fees calculation of ‘‘total loan amount’’ to be 32(a) Coverage under § 226.32(b)(1) and financed by the the following: ‘‘principal loan amount’’ 32(a)(1) Calculation of the ‘‘Total Loan creditor.’’ Section 226.32(b)(1)(iii) and (as defined in § 226.18(b) and Amount’’ (b)(1)(iv) pertain to ‘‘real estate-related accompanying commentary), minus charges that are points and fees under TILA Section 129C(b)(2)(A)(vii) fees’’ listed in § 226.4(c)(7) and § 226.32(b)(1) and are financed by the defines a ‘‘qualified mortgage’’ as a premiums or other charges for credit insurance or debt cancellation coverage, creditor. The purpose of using the mortgage for which, among other things, ‘‘principal loan amount’’ instead of the ‘‘the total points and fees [] payable in respectively. The Board proposes to revise this ‘‘amount financed’’ would be to connection with the loan do not exceed streamline the calculation to facilitate ’’ comment to cross-reference additional 3 percent of the total loan amount compliance and to ensure that no (emphasis added).11 Therefore, for financed points and fees described in proposed § 226.32(b)(1)(vi) as well. This charges other than financed points and purposes of implementing the qualified fees are excluded from the ‘‘total loan mortgage provisions, the Board proposes addition would require a creditor also to deduct from the amount financed any amount.’’ In general, the revised to retain existing comment 32(a)(1)(ii)– calculation would yield a larger ‘‘total 1 explaining the meaning of the term prepayment penalties that are ‘‘incurred by the consumer if the mortgage loan loan amount’’ to which the percentage ‘‘total loan amount,’’ with the minor points and fees thresholds would have revisions discussed below. refinances a previous loan made or currently held by the creditor to be applied than would the proposed First, the proposal revises the ‘‘total (and existing) ‘‘total loan amount’’ loan amount’’ calculation under current refinancing the loan or an affiliate of the creditor’’—to the extent that the calculation, because only financed comment 32(a)(1)(ii)–1 to account for points and fees and no other financed charges added to TILA’s definition of prepayment penalties are financed by the creditor into the new loan. See amounts would be excluded. Thus, points and fees by the Dodd-Frank Act creditors in some cases would be able to (proposed to be implemented under proposed § 226.32(b)(1)(vi), implementing TILA Section charge more points and fees on the same revisions to § 226.32(b)(1), discussed loan than under the proposed (and below). Under Regulation Z, the ‘‘total 103(aa)(4)(F). In this way, the three percent limit on points and fees for existing) rule. loan amount’’ is calculated to ensure To illustrate, under the proposed (and qualified mortgages will be based on the current) rule, the ‘‘total loan amount’’ for 9 amount of credit extended to the Public Law 111–203, 124 Stat. 1376, Title XIV, a loan with a ‘‘principal loan amount’’ of § 1431(a) and (d); TILA Section 103(aa)(1) and (dd); borrower without taking into account $100,000 and a $3,000 upfront mortgage 15 U.S.C. 1602(aa)(1) and (dd). the financed points and fees themselves. 10 Public Law 111–203, 124 Stat. 1376, Title XIV, The proposal also revises one of the insurance premium is $97,000. This is because the ‘‘amount financed,’’ from § 1412; TILA Section 129C(b)(2)(C); 15 U.S.C. commentary’s examples of the ‘‘total 1639c(b)(2)(C). Thus, if the rule on qualified which the ‘‘total loan amount’’ is loan amount’’ calculation. Specifically, mortgages is finalized prior to the rule on high-cost derived, excludes prepaid finance mortgages, the calculation of the points and fees the Board proposes to revise the charges. The $3,000 upfront mortgage threshold for each type of mortgage would be example of a $500 single premium for origination charge meets the definition different, but the baseline definition of ‘‘points and optional ‘‘credit life insurance’’ used in fees’’ would be the same. of a prepaid finance charge (see comment 32(b)(1)(i)–1.iv to be a $500 11 Similarly, prior to being revised by the Dodd- § 226.2(a)(23)) and thus would be single premium for optional ‘‘credit Frank Act, TILA Section 103(aa)(1)(B) defined a excluded from the ‘‘principal loan high-cost mortgage to include a mortgage for which unemployment insurance.’’ This change amount’’ to derive the ‘‘amount ‘‘the total points and fees payable by the consumer is proposed because, under the Dodd- at or before closing will exceed the greater of (i) financed.’’ The ‘‘total loan amount’’ is eight percent of the total loan amount; or (ii) $400’’ Frank Act, single-premium credit the ‘‘amount financed’’ ($97,000) minus (emphasis added). Regulation Z currently defines a insurance—including credit life any points and fees listed in high-cost mortgage to include a loan for which the insurance—is prohibited in covered § 226.32(b)(1)(iii) or (b)(1)(iv) that are total points and fees payable by the consumer at or transactions except for certain limited before closing exceed a certain percentage of the financed. In this example, there are no ‘‘total loan amount’’ or a dollar amount adjusted types of credit unemployment 12 charges under § 226.32(b)(1)(iii) or annually for inflation. See § 226.32(a)(1)(ii). insurance. See TILA Section 129C(d); (b)(1)(iv), so the ‘‘total loan amount’’ is Commentary to § 226.32(a)(1)(ii) explains the term 15 U.S.C. 1639c(d). $97,000. The allowable points and fees ‘‘total loan amount.’’ See comment 32(a)(1)(ii)–1. ‘‘ Alternative calculation of total loan under the qualified mortgage test in this Section 1431 of the Dodd-Frank Act now defines a amount’’ based on the ‘‘principal loan high-cost mortgage to include a mortgage for which example is three percent of $97,000 or ’’ ‘‘ the points and fees do not exceed a certain amount. As noted, currently the total $2,910. percentage of the ‘‘total transaction amount,’’ rather loan amount’’ is calculated by taking the If the ‘‘total loan amount’’ is derived than using the term ‘‘total loan amount.’’ TILA ‘‘amount financed’’ (as determined Section 103(aa)(1)(A)(ii). The Dodd-Frank Act does simply by subtracting from the not define the term ‘‘total transaction amount.’’ under § 226.18(b)) and deducting any ‘‘principal loan amount’’ all points and However, as discussed above, the Board is not at fees that are financed, however, a this time proposing to revise the definition of high- 12 Public Law 111–203, 124 Stat. 1376, Title XIV, cost mortgage in § 226.32 to implement Dodd-Frank § 1414. The Board is not at this time proposing to different result occurs. In the example Act amendments to TILA’s high-cost mortgage implement the restrictions on single-premium above, assume that the allowable provisions. credit insurance under the Dodd-Frank Act. upfront mortgage insurance premium

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for FHA loans is $2,000. Under disclosed under § 226.4(a) and 226.4(b)’’ 32(b)(1)(i)(B) Mortgage Insurance proposed § 226.32(b)(1)(i)(B) (discussed to read, ‘‘all items considered to be a Proposed § 226.32(b)(1)(i)(B) adds a in detail below), only the $1,000 finance charge under § 226.4(a) and new provision to the current definition difference between the $3,000 upfront 226.4(b)’’ in part because § 226.4 itself of ‘‘points and fees’’ regarding charges private mortgage insurance premium does not require disclosure of the for mortgage insurance and similar and the $2,000 amount that would be finance charge (see instead, for example, products. As stated above, under this allowable for an FHA loan must be § 226.18(d)). provision, points and fees would The Board also proposes to revise counted as points and fees. To include all items considered to be a ‘‘ ’’ comment 32(b)(1)(i)–1. Existing determine the total loan amount, the finance charge under § 226.4(a) and creditor would subtract $1,000 from the comment 32(b)(1)(i)–1 states that 226.4(b) except mortgage insurance ‘‘principal loan amount’’ ($100,000), § 226.32(b)(1)(i) includes in the total premiums or mortgage guarantee resulting in $99,000. The allowable ‘‘points and fees’’ items defined as charges or fees to the extent that the points and fees under the qualified finance charges under § 226.4(a) and premium or charge is— mortgage test in this example is three 226.4(b). The comment explains that • assessed in connection with any percent of $99,000 or $2,970. items excluded from the finance charge The Board requests comment on the under other provisions of § 226.4 are not Federal or state agency program; • not in excess of the amount payable proposed revisions to the comment included in the total ‘‘points and fees’’ under FHA mortgage insurance policies explaining how to calculate the ‘‘total under § 226.32(b)(1)(i), but may be loan amount,’’ including whether included in ‘‘points and fees’’ under (provided that the premium or charge is additional guidance is needed. § 226.32(b)(1)(ii) and 226.32(b)(1)(iii). required to be refundable on a pro-rated The Board proposes to revise this basis and the refund is automatically 32(b) Definitions comment to state that items excluded issued upon notification of the 32(b)(1) from the finance charge under other satisfaction of the underlying mortgage loan); or The proposed rule would revise provision of § 226.4 may be included in • ‘‘points and fee’’ under § 226.32(b)(1)(ii) payable after the loan closing. existing elements of Regulation Z’s This provision implements TILA definition of ‘‘points and fees’’ (see through 226.32(b)(1)(vi). This change is proposed to reflect the additional items Section 103(aa)(1)(C), which specifies proposed § 226.32(b)(1)(i)–(iv)) and add how ‘‘mortgage insurance’’ should be certain items not previously included in added to the definition of ‘‘points and fees’’ by the Dodd-Frank Act and to treated in the statutory definition of ‘‘points and fees’’ but now mandated by points and fees under TILA Section statute to be included (see proposed correct the previous omission of § 226.32(b)(1)(iv). 103(aa)(4). § 226.32(b)(1)(v) and (vi)). These Exclusion of government insurance changes are discussed in turn below. In addition, the Board proposes to incorporate into this comment an premiums and guaranty fees. The Board 32(b)(1)(i) Finance Charge example of how this rule operates. proposes to incorporate the new Current § 226.32(b)(1)(i) requires that Thus, the proposed comment notes that statutory exclusion from points and fees ‘‘ ‘‘points and fees’’ include ‘‘all items a fee imposed by the creditor for an of any premium provided by an agency required to be disclosed under § 226.4(a) appraisal performed by an employee of of the Federal Government or an agency and 226.4(b)’’—the provisions that the creditor meets the definition of of a State,’’ with revisions. TILA Section define the term ‘‘finance charge’’ ‘‘finance charge’’ under § 226.4(a) as 103(aa)(1)(C)(i). Specifically, the —‘‘except interest or the time-price ‘‘any charge payable directly or proposal excludes ‘‘any premium or differential.’’ Proposed § 226.32(b)(1)(i) indirectly by the consumer and imposed charge for any guaranty or insurance’’ would revise the current provision to directly or indirectly by the creditor as under a Federal or state government include in points and fees ‘‘all items an incident to or a condition of the program. See proposed considered to be a finance charge under extension of credit.’’ However, § 226.32(b)(1)(i)(B)(1). Proposed § 226.4(a) and 226.4(b), except— § 226.4(c)(7) expressly provides that comment 32(b)(1)(i)–2 explains that, • Interest or the time-price appraisal fees are not finance charges. under § 226.32(b)(1)(i)(B)(1) and (3), differential; and Therefore, under the general rule upfront mortgage insurance premiums • Any premium or charge for any regarding the finance charges that must or guaranty fees in connection with a guarantee or insurance protecting the be counted as points and fees, a fee Federal or state agency program are not creditor against the consumer’s default imposed by the creditor for an appraisal ‘‘points and fees,’’ even though they are or other credit loss to the extent that the performed by an employee of the finance charges under § 226.4(a) and (b). premium or charge is assessed— creditor would not be counted in points The comment provides the following Æ in connection with any Federal or and fees. Section 226.32(b)(1)(iii), example: If a consumer is required to state agency program; however, expressly includes in points pay a $2,000 mortgage insurance Æ not in excess of the amount payable and fees items listed in § 226.4(c)(7) premium before or at closing for a loan under policies in effect at the time of (including appraisal fees) if the creditor insured by the U.S. Federal Housing origination under Section 203(c)(2)(A) receives compensation in connection Administration, the $2,000 must be of the National Housing Act (12 U.S.C. with the charge. A creditor would treated as a finance charge but need not 1709(c)(2)(A)) (i.e., for Federal Housing receive compensation for an appraisal be counted in ‘‘points and fees.’’ Administration (FHA) loans), provided performed by its own employee. Thus, The Board interprets the statute to that the premium or charge is required the appraisal fee in this example must exclude from points and fees not only to be refundable on a pro-rated basis be included in the calculation of points upfront mortgage insurance premiums and the refund is automatically issued and fees. Comment 32(b)(1)(i)–1 is also under government programs but also upon notification of the satisfaction of proposed to be updated to include charges for mortgage guaranties under the underlying mortgage loan; or cross-references that correspond to government programs, which typically Æ payable after the loan closing. provisions added to the definition of are assessed upfront as well. The See proposed § 226.32(b)(1)(i)(A)-(C). ‘‘points and fees’’ by the Dodd-Frank Act proposed exclusion from points and fees The Board proposes to revise the (see proposed § 226.32(b)(1)(v) and of both mortgage insurance premiums existing phrase, ‘‘all items required to be (b)(1)(vi)). and guaranty fees under government

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programs is also supported by the effect at the time of origination under paid before or at closing, in cash or Board’s authority under TILA Section Section 203(c)(2)(A) of the National financed, and whether the insurance is 105(a) to make adjustments to facilitate Housing Act (12 U.S.C. 1709(c)(2)(A)) optional or required. This comment compliance with TILA and to effectuate (i.e., for Federal Housing further explains that these charges are the purposes of TILA. 15 U.S.C. 1604(a). Administration (FHA) loans). Upfront also included whether the amount The exclusion is further supported by private mortgage insurance charges may represents the entire premium or an the Board’s authority under TILA only be excluded from points and fees, initial payment. This proposed Section 129B(e) to condition terms, acts however, if the premium or charge is comment is consistent with existing or practices relating to residential required to be refundable on a pro-rated comment 32(b)(1)(iv)–1 regarding the mortgage loans that the Board finds basis and the refund is automatically treatment of credit insurance premiums. necessary or proper to effectuate the issued upon notification of the TILA’s new mortgage insurance purposes of TILA. 15 U.S.C. 1639b(e). satisfaction of the underlying mortgage provision could plausibly be interpreted The purposes of TILA include loan. Proposed § 226.32(b)(1)(i)(B)(3) to apply to the definition of points and ‘‘assur[ing] that consumers are offered excludes from points and fees any fees solely for purposes of high-cost and receive residential mortgage loan on premium or charge for any guarantee or mortgages and not for qualified terms that reasonably reflect their ability insurance protecting the creditor against mortgages. In this regard, the Board to repay the loans.’’ TILA Section the consumer’s default or other credit notes that the statutory provision 129B(a)(2); 15 U.S.C. 1629b(a)(2). loss to the extent that the premium or mandating a three percent cap on points Representatives of both the U.S. charge is payable after the loan closing. and fees for qualified mortgages Department of Veterans Affairs (VA) and Comment 32(b)(1)(i)–3 explains that, specifically cross-references TILA the U.S. Department of Agriculture under proposed § 226.32(b)(1)(i)(B)(2) Section 103(aa)(4) for the definition of (USDA) expressed concerns to Board and (3), upfront private mortgage ‘‘points and fees’’ applicable to qualified staff that the statute, which excludes insurance premiums are not ‘‘points and mortgages. The provision on mortgage only ‘‘premiums’’ under government fees,’’ even though they are finance insurance, however, does not appear in programs, could be read to mean that charges under § 226.4(a) and (b)—but TILA Section 103(aa)(4), but appears upfront charges for guaranties offered only to the extent that the premium rather as part of the general definition under loan programs of these agencies amount does not exceed the amount of a high-cost mortgage. See TILA and any state agencies must be counted payable under policies in effect at the Section 103(aa)(1). The Board also notes in ‘‘points and fees.’’ The Board time of origination under Section that certain provisions in the Dodd- understands that this interpretation of 203(c)(2)(A) of the National Housing Act Frank Act’s high-cost mortgage section the statute could disrupt these loan (12 U.S.C. 1709(c)(2)(A)). In addition, regarding points and fees are repeated in guaranty programs, jeopardizing an upfront private mortgage insurance the qualified mortgage section on points important home mortgage credit premiums are excluded from ‘‘points and fees. For example, both the high- resource for many consumers. and fees’’ only if they are required to be cost mortgage provisions and the According to VA representatives, for refunded on a pro rata basis and the qualified mortgage provisions expressly example, if VA ‘‘funding fees’’ for the VA refund is automatically issued upon exclude from points and fees ‘‘bona fide mortgage loan guaranty are included in notification of the satisfaction of the third party charges not retained by the points and fees, for example, VA loans underlying mortgage loan. This mortgage originator, creditor, or an might exceed high-cost mortgage comment provides the following affiliate of the creditor or mortgage ’’ thresholds and likely would exceed the example: Assume that a $3,000 upfront originator. TILA Sections points and fees cap for a qualified private mortgage insurance premium 103(aa)(1)(A)(ii) (for high-cost mortgage.13 In sum, the Board believes charged on a covered transaction is mortgages), 129C(b)(2)(C)(i) (for that the proposal is necessary to ensure required to be refunded on a pro rata qualified mortgages). The mortgage basis and automatically issued upon insurance provision, however, does not consumer’s access to credit through notification of the satisfaction of the separately appear in the qualified state and Federal government programs. The Board requests comment on the underlying mortgage loan. Assume also mortgage section. Nonetheless, the Board believes that proposal to exclude from ‘‘points and that the maximum upfront premium the better interpretation of the statute is fees’’ upfront premiums as well as allowable under the National Housing Act is $2,000. In this case, the creditor that the mortgage insurance provision in charges for any insurance or guaranty could exclude $2,000 from ‘‘points and TILA Section 103(aa)(1)(C) applies to under a Federal or state government fees’’ but would have to include in the meaning of points and fees for both program. high-cost mortgages and qualified Inclusion of upfront private mortgage points and fees the remaining $1,000, mortgages. The statute’s structure insurance. Proposed because this is the amount that exceeds the allowable premium under the reasonably supports this view: By its § 226.32(b)(1)(i)(B)(2) excludes from National Housing Act. However, if the plain language, the mortgage insurance points and fees any premium or charge $3,000 upfront private mortgage provision prescribes how points and for any guaranty or insurance protecting insurance premium were not required to fees should be computed ‘‘for purposes the creditor against the consumer’s be refunded on a pro rata basis and of paragraph (4)’’—namely, for purposes default or other credit loss to the extent automatically issued upon notification of TILA Section 103(aa)(4). The the premium or charge does not exceed of the satisfaction of the underlying mortgage insurance provision contains the amount payable under policies in mortgage loan, the entire $3,000 no caveat limiting its application solely premium must be included in ‘‘points to the points and fees calculation for 13 The statute authorizes certain agencies, including the VA and USDA, to prescribe rules and fees.’’ high-cost mortgages. The cross-reference defining the loans under their programs that are Proposed comment 32(b)(1)(i)–4 in the qualified mortgage provisions to qualified mortgages; until those rules take effect, explains that upfront private mortgage TILA Section 103(aa)(4) appropriately however, it appears that even loans under insurance premiums that do not qualify can be read to include provisions that government programs will be subject to the general ‘‘ ’’ ability-to-repay requirements and the criteria for for an exclusion from points and fees expressly prescribe how points and fees qualified mortgages. See TILA Section under § 226.32(b)(1)(i)(B)(2) must be should be calculated under TILA 129C(b)(3)(ii). included in ‘‘points and fees’’ whether Section 103(aa)(4), wherever located.

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Applying the mortgage insurance points and fees only for high-cost originator’’ under Section 1401 of the provision to the meaning of points and mortgages would mean that any Dodd-Frank Act.15 See TILA Section fees for both high-cost mortgages and premium amount for upfront private 103(cc)(2); 15 U.S.C. 1602(cc)(2). The qualified mortgages is also supported by mortgage insurance could be charged on term ‘‘loan originator’’ is used for the Board’s authority under TILA qualified mortgages; in most cases, none consistency with existing Regulation Z Section 105(a) to make adjustments to of that amount would be subject to the provisions under § 226.36. The Board facilitate compliance with TILA 15 cap on points and fees for qualified believes that the term ‘‘loan originator,’’ U.S.C. 1604(a). The exclusion is further mortgages because it would be excluded as defined in § 226.36(a)(1), is supported by the Board’s authority as a ‘‘bona fide third party fee’’ that is appropriately used in proposed under TILA Section 129B(e) to not retained by the creditor, loan § 226.32(b)(1)(ii) because the meaning of condition terms, acts or practices originator, or an affiliate of either. As a ‘‘loan originator’’ under § 226.36(a)(1) relating to residential mortgage loans result, consumers of qualified mortgages and the statutory definition of ‘‘mortgage that the Board finds necessary or proper could be vulnerable to paying excessive originator’’ are consistent in several key to effectuate the purposes of TILA. 15 upfront private mortgage insurance respects, discussed below. U.S.C. 1639b(e). The purposes of TILA costs. In the Board’s view, this outcome In addition, new § 226.32(b)(2) would include ‘‘assur[ing] that consumers are would undercut Congress’s clear intent account for the distinctions between the offered and receive residential mortgage to ensure that qualified mortgages are Dodd-Frank Act’s definition of loan on terms that reasonably reflect products with limited fees and more ‘‘mortgage originator’’ and the definition their ability to repay the loans.’’ TILA safe features. of ‘‘loan originator’’ under § 226.36(a)(1). Section 129B(a)(2); 15 U.S.C. Proposed § 226.32(b)(2) exempts from 1629b(a)(2). 32(b)(1)(ii) Loan Originator points and fees compensation paid to From a practical standpoint, the Compensation certain persons expressly excluded from Board is concerned about the increased The Board proposes revisions to the statutory definition of ‘‘mortgage risk of confusion and compliance error § 226.32(b)(ii) to reflect statutory originator.’’ See section-by-section if points and fees has two separate amendments under the Dodd-Frank Act. analysis of § 226.32(b)(2), below. Use of meanings in TILA—one for determining Current § 226.32(b)(ii) requires the term ‘‘loan originator’’ in proposed whether a loan is a high-cost mortgage inclusion in points and fees of ‘‘all § 226.32(b)(1)(ii). and another for determining whether a compensation paid to a mortgage Loan originator functions. The Dodd- loan is a qualified mortgage. The broker.’’ Proposed § 226.32(b)(ii) would Frank Act defines the term ‘‘mortgage proposal is intended to facilitate implement a new statutory provision originator’’ to mean ‘‘any person who, compliance by applying the mortgage that requires inclusion in points and for direct or indirect compensation or insurance provision to the meaning of fees of ‘‘all compensation paid directly gain, or in the expectation of direct or points and fees for both high-cost or indirectly by a consumer or creditor indirect compensation or gain—(i) takes mortgages and qualified mortgages. to a mortgage originator from any a residential mortgage loan application; In addition, the Board is concerned source, including a mortgage originator (ii) assists a consumer in obtaining or that market distortions could result due that is also the creditor in a table-funded applying to obtain a residential to different treatment of mortgage transaction.’’ See TILA Section mortgage loan; or (iii) offers or insurance in calculating points and fees 103(aa)(4)(B), 15 U.S.C. 1602(aa)(4)(B). negotiates terms of a residential ’’ for high-cost mortgages and qualified Consistent with the statute, the Board mortgage loan . * * * TILA Section ‘‘ ’’ mortgages. As noted, points and fees also proposes to exclude from points 103(cc)(2)(A). The statute further ‘‘ for both high-cost mortgages and and fees compensation paid to certain defines assists a consumer in obtaining qualified mortgages generally excludes persons. See proposed § 226.32(b)(2), or applying to obtain a residential ‘‘bona fide third party charges not mortgage loan’’ to mean, ‘‘among other discussed below. retained by the mortgage originator, things, advising on residential mortgage Proposed § 226.32(b)(1)(ii) mirrors the creditor, or an affiliate of the creditor or loan terms (including rates, fees, and statutory language, with two exceptions. mortgage originator.’’ TILA Sections other costs), preparing residential First, the statute requires inclusion of 103(aa)(1)(A)(ii), 129C(b)(2)(C)(i). Under mortgage loan packages, or collecting ‘‘compensation paid directly or this general provision standing alone, information on behalf of the consumer indirectly by a consumer or creditor to premiums for upfront private mortgage with regard to a residential mortgage a mortgage originator from any source. insurance would be excluded from loan.’’ ***’’ The proposed rule does not points and fees. However, as noted, the The definition of ‘‘loan originator’’ in include the phrase ‘‘from any source’’ statute’s specific provision on mortgage § 226.36 includes all of the activities because the provision expressly covers insurance (TILA Section 103(aa)(1)(C)) listed in the statute as part of the compensation paid ‘‘directly or requires that any portion of upfront definition of ‘‘mortgage originator,’’ with indirectly’’ to the loan originator, which premiums for private mortgage one exception. Unlike the statutory would have the same effect. The Board insurance that exceeds amounts definition of ‘‘mortgage originator,’’ requests comment on whether any allowable for upfront insurance however, Regulation Z’s definition of reason exists to include the phrase premiums in FHA mortgage loan ‘‘loan originator’’ does not include ‘‘any transactions be counted in points and ‘‘from any source’’ to describe loan originator compensation for purposes of fees. It further provides that upfront or other monetary gain, arranges, negotiates, or private mortgage insurance premiums implementing TILA Section otherwise obtains an extension of credit for another must be included in points and fees if 103(aa)(4)(B). person. The term ‘loan originator’ includes an employee of the creditor if the employee meets this they are not required to be refunded on Second, the proposal uses the term ‘‘loan originator’’ as defined in definition. The term ‘loan originator’ includes the a pro rata basis and the refund is not creditor only if the creditor does not provide the 14 automatically issued upon notification § 226.36(a)(1), not the term ‘‘mortgage funds for the transaction at consummation out of of the satisfaction of the underlying the creditor’s own resources, including drawing on 14 Section 226.36(a)(1) defines the term ‘‘loan a bona fide warehouse line of credit, or out of mortgage loan. originator’’ to mean, ‘‘with respect to a particular deposits held by the creditor.’’ Section 226.36(a)(1). Narrowly applying the mortgage transaction, a person who for compensation or other 15 Public Law 111–203, 124 Stat. 1376, Title XIV, insurance provision to the definition of monetary gain, or in expectation of compensation § 1401.

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person who represents to the public, for properties that they own. See TILA ‘‘points and fees’’ calculation for that through advertising or other means of Section 103(cc)(2)(E); 15 U.S.C. transaction whenever paid, whether at communicating or providing 1602(cc)(2)(E). Under the definition of or before closing or anytime after information (including the use of ‘‘loan originator’’ in § 226.36(a)(1), these closing, as long as that compensation business cards, stationery, brochures, persons would be ‘‘creditors’’—but they amount can be determined at the time signs, rate lists, or other promotional are not ‘‘creditors’’ that use table of closing. Thus, loan originator items), that such person can or will funding. As noted below, creditors that compensation for a covered transaction provide any of the activities’’ described use table funding are ‘‘loan originators’’ includes compensation that will be paid above. TILA Section 103(cc)(2)(B); 15 under § 226.36. However, all other as part of a periodic bonus, commission, U.S.C. 1602(cc)(2)(B). The Board does ‘‘creditors’’ are not ‘‘loan originators.’’ or gift if a portion of the dollar value of not believe that adding this element of See 75 FR 58509, 58510 (Sept. 24, 2010). the bonus, commission, or gift can be the definition of ‘‘mortgage originator’’ to Creditors in table-funded attributed to that transaction. Regulation Z’s definition of ‘‘loan transactions. Both the existing Proposed comment 32(b)(1)(ii)–2.i originator’’ is necessary at this time definition of ‘‘loan originator’’ in then provides three examples of because § 226.36 and the proposed § 226.36(a)(1) and the statutory compensation paid to a loan originator definition of ‘‘points and fees’’ are definition of ‘‘mortgage originator’’ that must be included in the points and concerned solely with loan originators exclude the creditor, except for the fees calculation. The first example that receive compensation for creditor in a table-funded transaction. assumes that, according to a creditor’s performing defined origination See TILA Section 103(cc)(2)(F); 15 compensation policies, the creditor functions. A person who solely U.S.C. 1602(cc)(2)(F); see also comment awards its loan officers a bonus every represents to the public that he is able 36(a)–1.i. Both also include employees year based on the number of loan to offer or negotiate mortgage terms for of a creditor, individual brokers and applications taken by the loan officer a consumer has not yet received mortgage brokerage firms, including that result in consummated transactions compensation for that function; thus, entities that close loans in their own during that year, and that each there is no compensation to account for names that are table funded by a third consummated transaction increases the in calculating ‘‘points and fees’’ for a party. bonus by $100. In this case, the $100 particular transaction. Secondary market transactions. bonus must be counted in the amount The Board solicits comment on the Finally, neither the definition of ‘‘loan of loan originator compensation that the proposal not to include in the definition originator’’ in § 226.36(a)(1) nor the creditor includes in ‘‘points and fees.’’ of ‘‘loan originator’’ a ‘‘person who statutory definition of ‘‘mortgage The second example assumes that, represents to the public, through originator’’ includes entities that earn according to a creditor’s compensation advertising or other means of compensation on the sale of loans by policies, the creditor awards its loan communicating or providing creditors to secondary market officers a bonus every year based on the information (including the use of purchasers—transactions to which dollar value of consummated business cards, stationery, brochures, consumers are not a direct party. See transactions originated by the loan signs, rate lists, or other promotional generally TILA Section 103(cc)(2); 15 officer during that year. Also assumed is items), that such person can or will U.S.C. 1602(cc)(2). that, for each transaction of up to provide’’ the services of a loan Comments 32(b)(1)(ii)–1, –2, and –3. $100,000, the creditor awards its loan originator. Proposed comments 32(b)(1)(ii)–1, –2, officers a bonus of $100; for each Administrative tasks. The Board also and –3 provide guidance on the types of transaction of more than $100,000 up to ‘‘ believes that the definition of loan loan originator compensation 16 $250,000, the creditor awards its loan ’’ originator in § 226.32(a)(1) is consistent included in ‘‘points and fees.’’ Existing officers $200; and for each transaction of with the Dodd-Frank Act’s definition of comment 32(b)(1)(ii)–1 would be more than $250,000, the creditor awards ‘‘mortgage originator’’ in that both its loan officers $300. In this case, for a revised to clarify that compensation exclude persons that perform solely mortgage transaction of $300,000, the paid by either a consumer or a creditor administrative or clerical tasks. $300 bonus is loan originator to a loan originator, as defined in Specifically, the statute excludes any compensation that must be included in § 226.32(a)(1), is included in ‘‘points and person who does not perform the tasks ‘‘points and fees.’’ fees.’’ No other substantive changes are in the paragraph above and ‘‘who The third example assumes that, intended. performs purely administrative or according to a creditor’s compensation New comment 32(b)(1)(ii)–2.i would clerical tasks on behalf of a person who policies, the creditor awards its loan clarify that, in determining ‘‘points and [performs those tasks].’’ TILA Section officers a bonus every year based on the fees,’’ loan originator compensation 103(cc)(2)(B); 15 U.S.C. 1602(cc)(2)(B). number of consummated transactions includes the dollar value of Similarly, Regulation Z’s current originated by the loan officer during that compensation paid to a loan originator definition of ‘‘loan originator’’ excludes year. Also assumed is that for the first for a covered transaction, such as a ‘‘managers, administrative staff, and 10 transactions originated by the loan bonus, commission, yield spread similar individuals who are employed officer in a given year, no bonus is by a creditor or loan originator but do premium, award of merchandise, awarded; for the next 10 transactions not arrange, negotiate, or otherwise services, trips, or similar prizes, or originated by the loan officer up to 20, obtain an extension of credit for a hourly pay for the actual number of a bonus of $100 per transaction is consumer, and whose compensation is hours worked on a particular awarded; and for each transaction not based on whether any particular transaction. The proposed comment originated after the first 20, a bonus of loan is originated.’’ Comment 36(a)(1)–4. would further clarify that compensation $200 per transaction is awarded. In this Seller financing. In addition, the paid to a loan originator for a covered case, for the first 10 transactions existing definition of ‘‘loan originator’’ transaction must be included in the originated by a loan officer during a in § 226.36(a)(1) is consistent with the given year, no amount of loan originator ‘‘ 16 Loan originator compensation would, of statutory definition of mortgage course, need to be consistent with the Interagency compensation need be included in originator’’ in that both exclude persons Guidance on Sound Incentive Compensation ‘‘points and fees.’’ For any mortgage and entities that provide seller financing Policies. 75 FR 36395, June 25, 2010. transaction made after the first 10, up to

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the 20th transaction, $100 must be mortgages is much lower than for the cancellation and suspension coverage. included in ‘‘points and fees.’’ For any high-cost mortgage threshold. Thus, The statute expressly states that these mortgage transaction made after the first creditors that use affiliated settlement premiums and charges are included in 20, $200 must be included in ‘‘points service providers such as title points and fees only if payable at or and fees.’’ companies are concerned that they will before closing. See TILA Section Proposed comment 32(b)(1)(ii)–2.ii have difficulty making loans that meet 103(aa)(1)(C) (for mortgage insurance) clarifies that, in determining ‘‘points and the qualified mortgage points and fees and TILA Section 103(aa)(4)(D) (for fees,’’ loan originator compensation threshold. credit insurance and debt cancellation excludes compensation that cannot be The Board is not proposing an and suspension coverage). The statute attributed to a transaction at the time of exemption for fees paid to creditor- does not so limit § 226.4(c)(7) charges, origination, including, for example: affiliated settlement services providers. possibly because these charges could • Compensation based on the The Board notes that Congress appears reasonably be viewed as charges that by performance of the loan originator’s to have rejected excluding from points definition are only payable at or before loans. 18 • and fees real estate-related fees where a closing. Compensation based on the overall creditor would receive indirect Nonetheless, regarding the mortgage quality of a loan originator’s loan files. • compensation as a result of obtaining loan transaction costs that are deemed The base salary of a loan originator distributions of profits from an affiliated points and fees, the Board requests who is also the employee of the creditor, entity based on the creditor’s ownership comment on whether any other types of not accounting for any bonuses, interest in compliance with RESPA.17 fees should be included in points and commissions, pay raises, or other The Board requests comment on the fees only if they are ‘‘payable at or before financial awards based solely on a proposal not to exclude from the points closing.’’ The Board is concerned that particular transaction or the number or and fees calculation for qualified some fees that occur after closing, such amount of covered transactions mortgages fees paid to creditor-affiliated as fees to modify a loan, might be originated by the loan originator. settlement services providers. The deemed to be points and fees. If so, Proposed comment 32(b)(1)(ii)–3 Board invites commenters favoring this calculating the points and fees to explains that loan originator exclusion to explain why excluding determine whether a transaction is a compensation includes amounts the these fees from the points and fees qualified mortgage may be difficult loan originator retains and is not calculation would be consistent with because the amount of future fees (e.g., dependent on the label or name of any the purposes of the statute. loan modification fees) cannot be fee imposed in connection with the Payable at or before closing. The known prior to closing. Creditors might transaction. For example, if a loan Dodd-Frank Act removed the phrase be exposed to excessive litigation risk if originator imposes a ‘‘processing fee’’ ‘‘payable at or before closing’’ from the consumers were able at any point and retains the fee, the fee is loan high-cost mortgage points and fees test during the life of a mortgage to argue originator compensation under in TILA Section 103(aa)(1)(B). See TILA that the points and fees for the loan paragraph 32(b)(1)(ii) whether the Section 103(aa)(1)(A)(ii). The phrase exceed the qualified mortgage limits due originator expends the fee to process the ‘‘payable at or before closing’’ is also not to fees imposed after loan closing. consumer’s application or uses it for in TILA’s provisions on the points and Creditors therefore might be other expenses, such as overhead. The fees cap for qualified mortgages. See discouraged from making qualified proposed comment is consistent with TILA Section 129C(b)(2)(A)(vii), mortgages, which would thwart comment 36(d)(1)–1.ii for loan (b)(2)(C). Thus, with a few exceptions, Congress’s goal of increasing incentives originator compensation. The Board requests comment on the any item listed in the ‘‘points and fees’’ for creditors to make more stable, proposal regarding the types of loan definition under § 226.32(b)(1) must be affordable loans. counted toward the limits on points and originator compensation that must be 32(b)(1)(iv) Credit Insurance and Debt fees for both high-cost mortgages and included in points and fees, including Cancellation or Suspension Coverage the appropriateness of specific examples qualified mortgages, even if it is payable The Board proposes to revise given in the commentary. after loan closing. The exceptions are mortgage insurance premiums and § 226.32(b)(1)(iv) to reflect statutory 32(b)(1)(iii) Real Estate-Related Fees charges for credit insurance and debt changes under the Dodd-Frank Act. See Consistent with the statute, the Board TILA Section 103(aa)(4)(D). Specifically, proposes no changes to existing 17 See Mortgage Reform and Anti-Predatory proposed § 226.32(b)(1)(iv) includes in Lending Act, H. Rep. 111–94, p. 121 (May 4, 2009). points and fees ‘‘[p]remiums or other § 226.32(b)(1)(iii), which includes in An earlier version of the Dodd-Frank Act would points and fees ‘‘all items listed in have amended the statutory provision implemented charges payable at or before closing of § 226.4(c)(7) (other than amounts held by § 226.32(b)(1)(iii) to read as follows (added the mortgage loan for any credit life, for future payment of taxes) unless the language italicized): credit disability, credit unemployment, charge is reasonable, the creditor * * * [P]oints and fees shall include— or credit property insurance, or any *** other life, accident, health, or loss-of- receives no direct or indirect (C) each of the charges listed in section 106(e) compensation in connection with the (except an escrow for future payment of taxes), 18 Section 226.4(c)(7) implements TILA Section unless— charge, and the charge is not paid to an 106(e), which states: ‘‘The following items, when affiliate of the creditor.’’ During (i) the charge is reasonable; charged in connection with any extension of credit outreach, creditor representatives raised (ii) the creditor receives no direct or indirect secured by an interest in real property, shall not be concerns about the inclusion in points compensation, except where applied to the charges included in the computation of the finance charge set forth in section 106(e)(1) where a creditor may with respect to that transaction: (1) Fees or and fees of real estate-related fees paid receive indirect compensation solely as a result of premiums for title examination, title insurance, or to an affiliate of the creditor, such as an obtaining distributions of profits from an affiliated similar purposes. (2) Fees for preparation of loan- affiliated title company. These fees have entity based on its ownership interest in compliance related documents. (3) Escrows for future payments historically been included in points and with section 8(c)(4) of the Real Estate Settlement of taxes and insurance. (4) Fees for notarizing deeds Procedures Act of 1974; and and other documents. (5) Appraisal fees, including fees for high-cost mortgages under both (iii) the charge is paid to a third party unaffiliated fees related to any pest infestation or flood hazard TILA and Regulation Z, but the points with the creditor. inspections conducted prior to closing. (6) Credit and fees threshold for qualified See id. reports’’ (emphasis added). 15 U.S.C. 1605(e).

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income insurance, or any payments include homeowners insurance, which, uses the phrase ‘‘an affiliate of the directly or indirectly for any debt unlike ‘‘credit property insurance,’’ current holder’’ to describe a third party cancellation or suspension agreement or typically covers not only the dwelling that refinances a loan subject to this contract.’’ Except for non-substantive but its contents, and designates the provision to be consistent with the changes in the ordering of the items consumer, not the creditor, as the statute, which, as noted, applies to listed, this provision mirrors the beneficiary. prepayment penalties incurred in statutory language. The Board requests comment on the connection with refinances by ‘‘the TILA’s new points and fees provision proposal to implement the statutory creditor * * * or an affiliate of the regarding charges for credit insurance provision that includes upfront creditor.’’ and debt cancellation and suspension premiums and charges for credit The proposed regulatory provision coverage adds certain types of credit insurance and debt cancellation and also cross-references proposed suspension coverage in the definition of insurance-related products to the § 226.43(b)(10) for the definition of ‘‘points and fees.’’ existing list of credit insurance products ‘‘prepayment penalty.’’ See section-by- for which payments at or before closing 32(b)(1)(v) Prepayment Penalties That section analysis of § 226.43(b)(10), must be considered points and fees in May be Charged on the Loan below. existing § 226.32(b)(1)(iv). Accordingly, proposed revisions to § 226.32(b)(1)(iv) Proposed § 226.32(b)(1)(v) includes in The Board requests comment on the add to the list of products the following points and fees ‘‘the maximum proposal to incorporate into the new items: Credit disability, credit prepayment penalty, as defined in definition of ‘‘points and fees’’ the unemployment, or credit property § 226.43(b)(10), that may be charged or prepayment penalty provisions of TILA insurance and debt suspension collected under the terms of the Section 103(aa)(4)(E) and (F) and solicits coverage. (Other life, accident, health, or mortgage loan.’’ This provision comment in particular on whether loss-of-income insurance, or any implements TILA Section 103(aa)(4)(E) additional guidance is needed to payments directly or indirectly for any and incorporates the statutory language, facilitate compliance with these debt cancellation or suspension with the exception of minor non- provisions. substantive changes, such as that the agreement or contract are included in ‘‘ proposed regulatory provision cross- 32(b)(2) Exclusion From Points and the existing provision.) In a separate Fees’’ of Compensation Paid to Certain provision, however, the Dodd-Frank Act references proposed § 226.43(b)(10) for ‘‘ ’’ Persons bans single-premium credit insurance the definition of prepayment penalty. and debt protection products of all the See section-by-section analysis of The Board proposes new types listed above, except for credit § 226.43(b)(10), below. § 226.32(b)(2) to reflect statutory unemployment insurance meeting 32(b)(1)(vi) Total Prepayment Penalties amendments under the Dodd-Frank Act. certain conditions. See TILA Section Incurred in a Refinance Current § 226.32(b)(2), defining ‘‘affiliate,’’ is proposed to be re- 129C(d); 15 U.S.C. 1639c(d). The Board Proposed § 226.32(b)(1)(vi) includes numbered as § 226.32(b)(3). Proposed notes that the practical result of these in points and fees ‘‘the total prepayment § 226.32(b)(2) is intended to exempt combined amendments is that only penalty, as defined in § 226.43(b)(10), from ‘‘points and fees’’ compensation single-premium credit unemployment incurred by the consumer if the paid to certain persons expressly insurance meeting certain conditions is mortgage loan is refinanced by the excluded from the meaning of ‘‘mortgage permitted; therefore only single- current holder of the existing mortgage originator’’ under the Dodd-Frank Act. premium credit unemployment loan, a servicer acting on behalf of the insurance will be included in points current holder, or an affiliate of either.’’ Employees of retailers of 19 and fees. This provision implements TILA manufactured homes. Specifically, The proposal revises current comment Section 103(aa)(4)(F), which includes in proposed § 226.32(b)(2)(i) excludes from 32(b)(1)(iv)–1 to clarify that upfront points and fees prepayment penalties ‘‘points and fees’’ compensation paid to charges for debt cancellation or incurred by a consumer ‘‘if the mortgage ‘‘an employee of a retailer of suspension agreements or contracts are loan refinances a previous loan made or manufactured homes who does not take expressly included in points and fees. currently held by the creditor a residential mortgage loan application, Another proposed revision clarifies that refinancing the loan or an affiliate of the offer or negotiate terms of a residential upfront credit insurance premiums and creditor.’’ See 15 U.S.C. 1602(aa)(4)(F). mortgage loan, or advise a consumer on debt cancellation or suspension charges The Board believes that this statutory loan terms (including rates, fees, and must be included in ‘‘points and fees’’ provision is intended in part to curtail other costs) but who, for compensation regardless of whether the insurance or the practice of ‘‘loan flipping,’’ which or other monetary gain, or in coverage is optional or voluntary. The involves a creditor refinancing an expectation of compensation or other proposal adds new comment existing loan for financial gain due to monetary gain, assists a consumer in 32(b)(1)(iv)–2 to clarify that ‘‘credit prepayment penalties and other fees obtaining or applying to obtain a property insurance’’ includes insurance that a consumer must pay to refinance residential mortgage loan.’’ This against loss of or damage to personal the loan—regardless of whether the proposed exemption is necessary to property, such as a houseboat or refinance is beneficial to the consumer. implement the revised definition of manufactured home. The comment The Board uses the phrases ‘‘current ‘‘points and fees’’ under TILA Section states that ‘‘credit property insurance’’ as holder of the existing mortgage loan’’ 103(aa)(4)(B) (quoted above), because used in § 226.32(b)(1)(iv) covers the and ‘‘servicer acting on behalf of the the statutory definition of ‘‘mortgage creditor’s security interest in the current holder’’ to describe the parties originator’’ excludes ‘‘an employee of a property. The comment explains that that refinance a loan subject to this retailer of manufactured homes’’ who, ‘‘credit property insurance’’ does not provision because, as a practical matter, for compensation or other monetary these are the entities that would gain, or in expectation of compensation 19 Public Law 111–203, 124 Stat. 1376, Title XIV, or other monetary gain, prepares § 1414. The Board is not at this time proposing to refinance the loan and directly or implement the restrictions on single-premium indirectly gain from associated residential mortgage loan packages or credit insurance under the Dodd-Frank Act. prepayment penalties. The Board also collects information on behalf of a

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consumer with regard to a residential analysis of § 226.32(b)(1)(ii) for a By contrast, the exclusion for mortgage loan.20 discussion of consistencies between the servicers under the statutory definition Real estate brokers. Proposed meaning of ‘‘loan originator’’ in of ‘‘mortgage originator’’ appears to be § 226.32(b)(2)(ii) excludes from ‘‘points § 226.36(a)(1) and ‘‘mortgage originator’’ broader than the definition of ‘‘loan and fees’’ compensation paid to ‘‘a in the Dodd-Frank Act. originator’’ under existing § 226.36(a)(1). person that only performs real estate The term ‘‘loan originator’’ in First, the exclusion expressly applies to brokerage activities and is licensed or § 226.36(a)(1) applies only to parties ‘‘a servicer or servicer employees, agents registered in accordance with applicable who arrange, negotiate, or obtain an and contractors.’’ Second, the exclusion state law, unless such person is extension of mortgage credit for a applies not only when these persons compensated by a creditor or loan consumer in return for compensation or offer or negotiate terms of residential originator, as defined in § 226.36(a)(1), other monetary gain. Thus, a ‘‘loan mortgage loan for purposes of modifying or by any agent of the creditor or loan originator’’ would not include a person a loan, but also for purposes of originator.’’ This proposed exemption is engaged only in real estate brokerage ‘‘replacing and subordinating principal necessary to implement the revised activities. See 75 FR 58509, 58510 (Sept. of existing mortgages where borrowers definition of ‘‘points and fees’’ under 24, 2010). However, the exemption for are behind in their payments, in default TILA Section 103(aa)(4)(B), because the real estate brokers from the meaning of or have a reasonable likelihood of being statutory definition of ‘‘mortgage ‘‘mortgage originator’’ is more precise in in default or falling behind.’’ TILA originator’’ contains a nearly identical the Dodd-Frank Act. First, for the Section 103(cc)(2)(G). exclusion.21 compensation of a real estate broker to The Board requests comment on the Proposed § 226.32(b)(2)(ii) uses the be exempt, the broker must be licensed proposed exemptions from the term ‘‘person’’ rather than the phrase or registered under state law. In definition of ‘‘points and fees’’ for ‘‘person or entity’’ used in the statute addition, the Dodd-Frank Act does not compensation paid to certain persons because ‘‘person’’ is defined in exclude real estate brokers from the not considered ‘‘mortgage originators’’ Regulation Z to mean ‘‘a natural person definition of ‘‘mortgage originator’’ if under the Dodd-Frank Act. or an organization, including a they are compensated by the ‘‘lender, 32(b)(3) Definition of ‘‘Affiliate’’ corporation, partnership, mortgage broker, or other mortgage proprietorship, association, cooperative, originator’’ or an agent of any of these Current § 226.32(b)(2) defining the estate, trust, or government unit.’’ parties. term ‘‘affiliate’’ is re-numbered as Section 226.2(a)(22). The proposed Servicers. Proposed § 226.32(b)(2)(ii) § 226.32(b)(3) to accommodate the new regulation uses the term ‘‘loan excludes from ‘‘points and fees’’ proposed § 226.32(b)(2) regarding originator’’ as defined in § 226.36(a)(1) compensation paid to ‘‘a servicer or compensation for the purposes of points rather than the terms ‘‘mortgage broker, servicer employees, agents and and fees. No substantive change is or other mortgage originator’’ because contractors, including but not limited to intended. the term ‘‘loan originator’’ under those who offer or negotiate terms of a Section 226.34 Prohibited Acts or § 226.36(a)(1) includes a mortgage covered transaction for purposes of Practices in Connection With Credit broker and is consistent with the renegotiating, modifying, replacing and Subject to § 226.32 statutory definition of ‘‘mortgage subordinating principal of existing 34(a) Prohibited Acts or Practices for originator’’ in respects relevant to this mortgages where borrowers are behind Loans Subject to § 226.32 provision. See section-by-section in their payments, in default or have a reasonable likelihood of being in default 34(a)(4) Repayment Ability 20 Specifically, the statute excludes from the or falling behind.’’ This proposed definition of ‘‘mortgage originator’’ ‘‘any person who Currently, Regulation Z prohibits is * * * (ii) an employee of a retailer of exemption is necessary to implement creditors making high-cost loans from manufactured homes who is not described in clause the revised definition of ‘‘points and extending credit without regard to a (i) [takes a residential mortgage loan application] or fees’’ under TILA Section 103(aa)(4)(B), consumer’s ability to repay. See (iii) [offers or negotiates terms of a residential because the statutory definition of mortgage loan] of subparagraph (A) and who does § 226.34(a)(4). As discussed in greater not advise a consumer on loan terms (including ‘‘mortgage originator’’ excludes this detail in the section-by-section analysis rates, fees, and other costs).’’ TILA Section compensation. TILA Section to § 226.43 below, the Dodd-Frank Act 103(cc)(2)(A)(i), (cc)(2)(A)(iii) and (cc)(2)(A)(C); 15 103(cc)(2)(G). now requires creditors to consider a U.S.C. 1602(cc)(2)(A) and (C). Thus, an employee of The term ‘‘loan originator’’ (as defined a retailer of manufactured homes is not considered consumer’s ability to repay prior to a ‘‘mortgage originator’’ even if that person ‘‘for in § 226.36(a)(1)), which is used in making any residential mortgage loan, direct or indirect compensation or gain, or in the proposed § 226.32(b)(1)(ii) to describe as defined in TILA Section 103(cc)(5). expectation of direct or indirect compensation or the persons whose compensation must Proposed § 226.43 would implement gain * * * assists a consumer in obtaining or be counted in points and fees, does not applying for a residential mortgage loan.’’ TILA this requirement and render Section 103(cc)(2)(A)(ii). The statute further defines apply to a loan servicer when the unnecessary § 226.34(a)(4). The Board ‘‘assists a consumer in obtaining or applying for a servicer modifies an existing loan on therefore proposes to remove residential mortgage loan’’ to mean ‘‘among other behalf of the current owner of the loan. § 226.34(a)(4) and its accompanying things, advising on residential mortgage loan terms See TILA Section 103(cc)(2)(G); 15 (including rates, fees, and other costs), preparing commentary. For ease of reading, the residential mortgage loan packages, or collecting U.S.C. 1602(cc)(2)(G). See also comment Board is not reprinting § 226.34(a)(4) information on behalf of the consumer with regard 36(a)–1.iii. However, a ‘‘loan originator’’ and its accompanying commentary in to a residential mortgage loan.’’ TILA Section under existing § 226.36(a)(1) includes a this proposed rule. 103(cc)(4). servicer who refinances a mortgage. See 21 The statutory definition of ‘‘mortgage comment 36(a)–1.iii. A ‘‘refinancing’’ Section 226.35 Prohibited Acts or originator’’ excludes ‘‘a person or entity that only Practices in Connection With Higher- performs real estate brokerage activities and is under § 226.36(a)(1) is defined as the licensed or registered in accordance with applicable satisfaction and replacement of an Priced Mortgage Loans State law, unless such person or entity is existing obligation subject to TILA by a Currently, § 226.35 prohibits certain compensated by a lender, a mortgage broker, or other mortgage originator or by any agent of such new obligation by the same consumer. acts or practices in connection with lender, mortgage broker, or other mortgage See § 226.20(a) and accompanying higher-priced mortgage loans. Section originator.’’ TILA Section 103(cc)(2)(D). commentary. 226.35(a) provides the coverage test for

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higher-priced mortgage loans. Section dwelling.’’ TILA Section 103(v) defines § 226.43 apply to consumer credit 226.35(b)(1) contains the ability to repay ‘‘dwelling’’ to mean a residential transactions secured by a dwelling, as requirement for higher-priced mortgage structure or mobile home which defined in § 226.2(a)(19), except for (1) loans. Section 226.35(b)(2) sets forth contains one- to four-family housing a home equity line of credit (HELOC) restrictions on prepayment penalties for units, or individual units of subject to § 226.5b, and (2) a mortgage higher-priced mortgage loans. Section condominiums or cooperatives. Thus, a transaction secured by a consumer’s 226.35(b)(3) contains escrow rules for ‘‘residential mortgage loan’’ is a interest in a timeshare plan, as defined higher-priced mortgage loans. Section dwelling-secured consumer credit in 11 U.S.C. 101(53(D)). The exemptions 226.35(b)(4) prohibits evasion of the transaction, which can include: (1) A under proposed § 226.43(a)(1) and (2) higher-priced mortgage loan protections home purchase, refinancing, or home implement the exclusions from the by structuring a transaction as open-end equity loan; (2) a loan secured by a first definition of ‘‘residential mortgage loan’’ credit. lien or a subordinate lien on a dwelling; under TILA Section 103(cc)(5). The proposed changes to Regulation Z (3) a loan secured by a dwelling that is Proposed § 226.43(a)(3) provides that in the 2011 Escrow Proposal and this a principal residence, second home, or the following transactions are exempt proposal would render all of current vacation home (other than a timeshare from coverage by proposed § 226.43(c) § 226.35 unnecessary. The 2011 Escrow residence); or (4) a loan secured by a through (f): (1) A reverse mortgage Proposal would adopt in proposed one-to-four unit residence, subject to § 226.33; and (2) a temporary § 226.45(a) the coverage test for higher- condominium, cooperative, mobile or ‘‘bridge loan’’ with a term of 12 priced mortgage loans in 226.35(a); home, or manufactured home. months or less, such as a loan to finance would revise and adopt in § 226.45(b) However, the term ‘‘residential the purchase of a new dwelling where the escrow requirements in mortgage loan’’ does not include an the consumer plans to sell a current § 226.35(b)(3); and would adopt in open-end credit plan or an extension of dwelling within 12 months or a loan to proposed § 226.45(d) the prohibition of credit relating to a timeshare plan, for finance the initial construction of a evasion of the higher-priced mortgage purposes of the Act’s repayment ability dwelling. loan protections by structuring a and prepayment penalty provisions As discussed in detail below, transaction as open-end credit, now in under TILA Section 129C, among other proposed § 226.43(c) and (d) implement § 226.35(b)(4). This proposal, as provisions. See TILA Section 103(cc)(5); repayment ability provisions and discussed below, would supersede in see also TILA Section 129C(i) special rules for refinancings of ‘‘non- § 226.43(a)–(f) the ability to repay (providing that timeshare transactions standard’’ mortgages into ‘‘standard’’ requirement in § 226.35(b)(1), and are not subject to TILA Section 129C). mortgages under TILA Section 129C(a). would supersede in § 226.43(g) the Further, the repayment ability TILA Section 129C(a)(8) specifically prepayment penalty rules in provisions of TILA Section 129C(a) do provides that reverse mortgages and § 226.34(b)(2). Accordingly, the Board not apply to reverse mortgages or temporary or ‘‘bridge’’ loans with a term proposes to remove and reserve § 226.35 temporary or ‘‘bridge’’ loans with a loan of 12 months or less are not subject to and its accompanying commentary. For term of 12 months or less, including a TILA Section 129C(a). The Board also ease of reading, the Board is not loan to purchase a new dwelling where proposes to apply this exception for reprinting § 226.35 and its the consumer plans to sell another purposes of alternative requirements for ‘‘ ’’ accompanying commentary in this dwelling within 12 months. See TILA qualified mortgages and balloon- Section 129C(a)(8). The repayment payment qualified mortgages pursuant proposed rule. ability provisions of TILA Section to TILA Section 129C(b). Although TILA Section 226.43 Minimum Standards 129C(a) also do not apply to consumer Section 129C(b) does not specifically for Transactions Secured by a Dwelling credit transactions secured by vacant exempt reverse mortgages or temporary TILA Sections 129C(a), (b), and (c) land and not by a dwelling. or ‘‘bridge’’ loans with a term of 12 The scope of the 2008 HOEPA Final establish, for residential mortgage loans: months or less from coverage by the Rule differs from the scope of TILA (1) A requirement to consider a alternative requirements for qualified Section 129C in three respects. First, as consumer’s repayment ability; (2) mortgages, the Board believes the discussed above, the 2008 HOEPA Final alternative requirements for ‘‘qualified alternative requirements for qualified Rule applies only to loans designated mortgages’’; and (3) limits on mortgages are relevant only if a ‘‘higher-priced mortgage loans’’ or ‘‘high- transaction is subject to the repayment prepayment penalties, respectively. The cost mortgages’’ based on their APR or ability requirements. Accordingly, Board proposes to implement TILA points and fees. Section 226.34(a)(4), proposed § 226.43(a)(3) provides that Section 129C(a) through (c) in new 226.35(b)(1). By contrast, TILA Sections reverse mortgages and temporary or § 226.43, as discussed in detail below. 129C(a) through (c) apply regardless of ‘‘bridge’’ loans with a term of 12 months 43(a) Scope the residential mortgage loan’s cost. or less are not subject to the alternative Background Second, the 2008 HOEPA Final Rule is requirements for qualified mortgages limited to loans secured by the and balloon-payment qualified Section 1411 of the Dodd-Frank Act consumer’s principal dwelling. Section mortgages, under proposed § 226.43(e) adds a new TILA Section 129C that 226.32(a)(1), 226.35(a)(1). Finally, the or (f). Such transactions nevertheless are requires creditors to determine a 2008 HOEPA Final Rule does not subject to the prepayment penalty consumer’s ability to repay a exempt transactions secured by a restrictions under proposed § 226.43(g), ‘‘residential mortgage loan.’’ Section consumer’s interest in a timeshare plan. discussed in detail below. 1401 of the Act adds a new TILA ‘‘Residential mortgage loan.’’ Proposed Section 103(cc) that defines ‘‘residential The Board’s Proposal § 226.43(a) clarifies that requirements mortgage loan’’ to mean, with some Proposed § 226.43(a) describes the under proposed § 226.43 apply to any exceptions, any consumer credit scope of the requirement to determine a consumer credit transaction secured by transaction secured by a mortgage, deed consumer’s ability to repay a residential a dwelling, as defined in § 226.2(a)(19), of trust, or other equivalent consensual mortgage loan. Proposed § 226.43(a)(1) with certain exceptions discussed security interest on ‘‘a dwelling or on and (2) provide that the repayment above. Proposed § 226.43(a) does not residential real property that includes a ability provisions under proposed use the term ‘‘residential mortgage loan,’’

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for two reasons. First, the usefulness of property that is not owner-occupied initial loan term may allow the defined term ‘‘residential mortgage (that is, in which the owner does not circumvention of those requirements. loan’’ is limited, because the coverage of expect to live for more than fourteen The Board solicits comment on whether provisions applicable to ‘‘residential days during the coming year) is deemed or not renewal loan terms should be mortgage loans’’ varies under different to be for business purposes. Proposed considered under proposed TILA provisions. For example, TILA comment 43(a)-1 clarifies that § 226.43 § 226.43(a)(3)(ii). In particular, the Section 103(cc) excludes transactions does not apply to an extension of credit Board requests comment on whether the secured by a consumer’s interest in a primarily for a business, commercial, or proposed exclusion should be limited to timeshare transaction from the agricultural purpose and cross- certain types of temporary or ‘‘bridge’’ definition of ‘‘residential mortgage loan’’ references the existing guidance on loans, such as loans to finance the for purposes of some, but not all, TILA determining the primary purpose of an initial construction of a dwelling, or provisions, and the Dodd-Frank Act extension of credit in commentary on should not apply for certain types of provides or authorizes other specific § 226.3. temporary or ‘‘bridge’’ loans, such as exemptions from coverage by Dwelling. TILA Section 129(cc) balloon-payment loans. requirements for ‘‘residential mortgage defines ‘‘residential mortgage loan’’ to Interaction with RESPA. TILA Section loans.’’ 22 Specifying which transactions mean a consumer credit transaction 129C applies to dwelling-secured are subject to and exempt from coverage secured by a mortgage or equivalent consumer credit transactions (other than by proposed § 226.43 in a scope consensual security interest ‘‘on a those specifically excluded from provision thus would facilitate dwelling or on residential real property coverage), even if they are not ‘‘federally compliance better than using the that includes a dwelling.’’ Under TILA related mortgage loans’’ subject to the defined term ‘‘residential mortgage and Regulation Z, the term ‘‘dwelling’’ Real Estate Settlement Procedures Act loan.’’ means a residential structure with one (RESPA). See 12 U.S.C. 2602(1); 24 CFR Second, the term ‘‘residential to four units, whether or not the 3500.2(b), 3500.5. Consistent with TILA mortgage loan’’ could be confused with structure is attached to real property, Section 129C, proposed § 226.43(a) the similar term ‘‘residential mortgage and includes a condominium or applies broadly to consumer credit transaction,’’ which means a transaction cooperative unit, mobile home, and transactions secured by a dwelling in which a mortgage or equivalent trailer, if used as a residence. See 15 (other than transactions excepted from consensual security interest is created or U.S.C. 1602(v); § 226.2(a)(19). To coverage under § 226.43(a)(1)-(3)). facilitate compliance by using retained against the consumer’s 43(b) Definitions dwelling to finance the acquisition or consistent terminology throughout initial construction of the dwelling. See Regulation Z, the proposal uses the term Section § 226.43(b) provides several 15 U.S.C. 1602(w). The term ‘‘residential ‘‘dwelling,’’ as defined in § 226.2(a)(19), definitions for purposes of mortgage transaction,’’ used in and not the phrase ‘‘residential real implementing the ability-to-repay, connection with rescission provisions property that includes a dwelling.’’ qualified mortgage, and prepayment under § 226.15 and 226.23, does not Proposed comment 43(a)-2 clarifies that, penalty provisions under § 226.43(b) encompass such transactions as for purposes of § 226.43, the term through (g), which implement TILA refinance transactions and home equity ‘‘dwelling’’ includes any real property to Sections 129C(a) through (c), as added loans. Using the similar term which the residential structure is by Sections 1411, 1412 and 1414 of the ‘‘residential mortgage loan,’’ which attached that also secures the covered Dodd-Frank Act. These proposed encompasses refinance transactions and transaction. defined terms are discussed in detail Renewable temporary or ‘‘bridge’’ home equity loans, could confuse below. loan. As discussed above, proposed creditors subject to proposed § 226.43. 43(b)(1) Covered Transaction Owner occupancy; consumer credit § 226.43(a)(3)(ii) provides that a ‘‘ ’’ transaction. If a transaction is a temporary or bridge loan with a term As discussed above in the section-by- dwelling-secured extension of consumer of 12 months or less, such as a loan to section analysis of the scope provisions credit, proposed § 226.43 applies finance the purchase of a new dwelling under proposed § 226.43(a), the Board where the consumer plans to sell a regardless of whether or not the proposes to apply § 226.43 to consumer current dwelling within 12 months and consumer occupies the dwelling (unless credit transactions secured by a a loan to finance the initial construction an exception from coverage applies dwelling, other than (1) a HELOC; (2) a of a dwelling, is excluded from coverage under proposed § 226.43(a)(1)-(3)). mortgage transaction secured by a by § 226.43(c) through (f). Proposed However, TILA and Regulation Z do not consumer’s interest in a timeshare plan; comment 43(a)-3 clarifies that, where a apply to credit extensions that are and (3) except for purposes of temporary or ‘‘bridge loan’’ is renewable, primarily for business purposes. 15 prepayment penalty requirements under the loan term does not include any U.S.C. 1603(l); § 226.3(a)(1). Current proposed § 226.43(g), a reverse mortgage additional period of time that could ‘‘ ’’ guidance in comment 3(a)-2 clarifies the or a temporary or bridge loan with a result from a renewal provision. loan term of 12 months or less. factors to be considered to determine Proposed comment 43(a)-3 also provides whether a credit extension is business Accordingly, proposed § 226.43(b)(1) an example where a construction loan ‘‘ ’’ or consumer credit. Further, comment defines covered transaction to mean a has an initial loan term of 12 months consumer credit transaction that is 3(a)-3 states that credit extended to but is renewable for another 12-month acquire, improve, or maintain rental secured by a dwelling, other than a loan term. In that example, the loan is transaction exempt from coverage under excluded from coverage by § 226.43(c) 22 See, e.g., TILA Section 129C(a)(8) (providing an proposed § 226.43(a), for purposes of exemption from repayment ability requirements for through (f), because the initial loan term proposed § 226.43. reverse mortgages and temporary or ‘‘bridge’’ loans is 12 months. with a term of 12 months or less); TILA Section The Board recognizes the risk that 43(b)(2) Fully Amortizing Payment 129D(d), (e) (authorizing an exemption from escrow determining coverage by ability-to-repay TILA Section 129C(a)(3) requires, in requirements for certain creditors operating predominantly in rural or underserved areas and requirements for a renewable temporary part, that the creditor determine the providing an exemption from escrow requirements or ‘‘bridge’’ loan with an initial loan term consumer’s ability to repay a loan ‘‘using for transactions secured by shares in a cooperative). of 12 months or less based only on the a payment schedule that fully amortizes

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the loan over the term of the loan.’’ TILA consumer from a non-standard mortgage a mortgage with an interest rate that Section 129C(a)(6)(D) provides that for to a standard mortgage. These proposed varies solely in accordance with an purposes of making the repayment provisions are discussed below. index, the annual percentage rate must ability determination required under The Board proposes § 226.43(b)(3) to be based on ‘‘the interest rate TILA Section 129C(a), the creditor must define the term ‘‘fully indexed rate’’ as determined by adding the index rate in calculate the payment on the mortgage ‘‘the interest rate calculated using the effect on the date of consummation of obligation assuming the loan is repaid index or formula at the time of the transaction to the maximum margin in ‘‘monthly amortizing payments for consummation and the maximum permitted at any time during the loan principal and interest over the entire margin that can apply at any time agreement.’’ Furthermore, although the term of the loan.’’ The Board proposes during the loan term.’’ This proposed Board is not aware of any loan products to use the term ‘‘fully amortizing definition is consistent with the used today that possess more than one payment’’ to refer to periodic amortizing statutory language of TILA Sections margin that may apply over the loan payments for principal and interest over 129C(a)(6)(D)(iii) and 129C(a)(7), but term, the Board proposes this the entire term of the loan, for revises certain statutory text to provide clarification to address the possibility simplicity. clarity.23 First, for consistency with that creditors may create products that Accordingly, consistent with statutory current Regulation Z and to facilitate permit different margins to take effect at language, and with minor modifications compliance, the Board proposes to different points throughout the loan for clarity, proposed § 226.43(b)(2) replace the phrases ‘‘at the time of the term. The Board solicits comment on would define ‘‘fully amortizing loan closing’’ in TILA Section this approach. payment’’ to mean a periodic payment of 129C(a)(6)(D)(iii) and ‘‘at the time the The proposed definition of ‘‘fully principal and interest that will fully loan is made’’ in TILA Section indexed rate’’ is also generally repay the loan amount (as defined in 129C(a)(7) with the phrase ‘‘at the time consistent with the definition of fully- proposed § 226.43(b)(5)) over the loan of consummation’’ for purposes of indexed rate, as used in the MDIA term (as defined in proposed identifying the fully indexed rate. The Interim Final Rule,24 and with the § 226.43(b)(6)). This term appears Board interprets these statutory phrases Federal banking agencies’ use of the primarily in proposed § 226.43(c)(5) and to have the same meaning as the phrase term ‘‘fully indexed rate’’ in the 2006 (d)(5), which provides, respectively, that ‘‘at the time of consummation.’’ See Nontraditional Mortgage Guidance and (1) the creditor determine the current § 226.2(a)(7), defining the term 2007 Subprime Mortgage Statement. consumer’s ability to repay the covered ‘‘consummation’’ for purposes of Proposed comment 43(b)(3)–1 notes transaction using the fully indexed rate Regulation Z requirements as ‘‘the time that in some adjustable-rate or introductory rate, whichever is that a consumer becomes contractually transactions, creditors may set an initial greater, and monthly, fully amortizing obligated on a credit transaction.’’ interest rate that is not determined by payments that are substantially equal; Second, the Board interprets the the index or formula used to make later and (2) the creditor can refinance the reference to the margin that will apply interest rate adjustments. This comment consumer from a non-standard to ‘‘after the expiration of any introductory would explain that, typically, this initial standard mortgage if, among other interest rates’’ as a reference to the rate charged to consumers is lower than things, the calculation of the payments maximum margin that can apply ‘‘at any the rate would be if it were calculated for the non-standard and standard time during the loan term,’’ for using the index or formula at mortgage are based on monthly, fully simplicity and consistency with TILA consummation (i.e., a ‘‘discounted rate’’); amortizing payments that are Section 103(a), discussed above. in some cases, this initial rate may be substantially equal. Referencing the entire loan term as the higher (i.e., a ‘‘premium rate’’). The relevant period of time during which comment would clarify that when 43(b)(3) Fully Indexed Rate the creditor must identify the maximum determining the fully indexed rate TILA Section 129C(a)(6)(D) requires margin that can occur under the loan where the initial interest rate is not that for purposes of making the makes the phrase ‘‘after the expiration of determined using the index or formula repayment ability determination any introductory interest rates’’ for subsequent interest rate adjustments, required under TILA Section 129C(a), unnecessary. the creditor must use the interest rate the creditor must calculate the monthly Third, the Board clarifies that the that would have applied had the payment on the mortgage obligation creditor should use the ‘‘maximum’’ creditor used such index or formula based on several assumptions, including margin that can apply when plus margin at the time of that the monthly payment be calculated determining the fully indexed rate. consummation. This comment would using the fully indexed rate at the time Accordingly, the creditor would be further clarify that this means, in of loan closing, without considering the required to take into account the largest determining the fully indexed rate, the introductory rate. See TILA Section margin that could apply under the terms creditor must not take into account any 129C(a)(6)(D)(iii). TILA Section of the legal obligation. The approach of discounted or premium rate. 129C(a)(7) defines the term ‘‘fully using the maximum margin that can Proposed comment 43(b)(3)–1 indexed rate’’ as ‘‘the index rate apply at any time during the loan term provides an illustration of this prevailing on a residential mortgage is consistent with the statutory language principle. This comment first assumes loan at the time the loan is made plus contained in TILA Section 103(aa), as an adjustable-rate transaction where the the margin that will apply after the amended by Section 1431 of the Dodd- initial interest rate is not based on an expiration of any introductory interest Frank Act, which defines a high-cost index or formula, and is set at 5% for rates.’’ The term ‘‘fully indexed rate’’ mortgage. This statutory provision the first five years. The loan agreement appears in proposed § 226.43(c)(5), provides that, for purposes of the provides that future interest rate which implements TILA Section definition of a ‘‘high-cost mortgage,’’ for 129C(a)(6)(iii) and provides the payment 24 See the 2010 MDIA Interim Final Rule, 75 FR calculation rules for covered 23 See current 12 CFR § 226.17(c)(1) and comment 58470, 58484, Sept. 24, 2010, which defines fully transactions. The term also appears in 17(c)(1)–10, and 12 CFR § 226.18(s)(7)(vi), which indexed rate as ‘‘the interest rate calculated using identify the index in effect at consummation as the the index value and margin’’; see also 75 FR 81836, § 226.43(d)(5), which provides special index value to be used in determining the fully Dec. 29, 2010 (revising the MDIA Interim Final rules for creditors that refinance a indexed rate. Rule.

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adjustments will be calculated based on subsequent rate adjustments on a Sections 129C(a)(6)(D)(iii) and (7). In the London Interbank Offered Rate different index, and whether further addition, the Board notes the proposed (LIBOR) plus a 3% margin. This guidance addressing how to calculate definition of fully indexed rate, and its comment explains that if the value of the fully indexed rate for such loan use in the proposed payment the LIBOR at consummation is 5%, the products is needed. calculation rules, is designed to assess interest rate that would have been Proposed comment 43(b)(3)–2 further whether the consumer has the ability to applied at consummation had the clarifies if the contract provides for a repay the loan according to its terms. creditor based the initial rate on this delay in the implementation of changes TILA Section 129B(a)(2); 15 U.S.C. index is 8% (5% plus 3% margin), and in an index value or formula, the 1639b(a)(2). This purpose differs from therefore, the fully indexed rate is 8%. creditor need not use that the index or the principal purpose of disclosure To facilitate compliance, this comment formula in effect at consummation, and requirements, which is to help ensure would direct creditors to commentary provides an illustrative example. This that consumers avoid the uninformed that addresses payment calculations proposed comment is consistent with use of credit. TILA Section 102(a); 15 based on the greater of the fully indexed current guidance in Regulation Z U.S.C. 1601(a). The Board believes rate or ‘‘premium rate’’ for purposes of regarding the use of the index value at disregarding the operation of adjustment the repayment ability determination the time of consummation where the caps in determining the payment for the under § 226.43(c). See § 226.43(c)(5)(i) contract provides for a delay. See covered transaction helps to ensure that and comment 43(c)(5)(i)–2. comments 17(c)(1)–10.i and the consumer can reasonably repay the This proposed comment differs from 18(s)(2)(iii)(C)–1, which addresses the loan once the interest rate adjusts. guidance in current comment 17(c)(1)– fully indexed rate for purposes of Furthermore, the guidance contained in 10.i, which provides that in cases where disclosure requirements. proposed comment 43(b)(3)–3 is the initial interest rate is not calculated Proposed comment 43(b)(3)–3 consistent with the Federal banking using the index or formula for later rate explains that the creditor must agencies’ use of the term fully indexed adjustments, the creditor should determine the fully indexed rate rate in the 2006 Nontraditional disclose a composite annual percentage without taking into account any Mortgage Guidance and 2007 Subprime rate that reflects both the initial rate and periodic interest rate adjustment cap Mortgage Statement. the fully indexed rate. The Board that may limit how quickly the fully Proposed comment 43(b)(3)–4 believes the different approach taken in indexed rate may be reached at any time clarifies that when determining the fully proposed comment 43(b)(3)–1 is during the loan term under the terms of indexed rate, a creditor may choose, in required by the statutory language the legal obligation. To illustrate, its sole discretion, to take into account which specifies that, for purposes of assume an adjustable-rate mortgage has the lifetime maximum interest rate determining the consumer’s repayment an initial fixed rate of 5% for the first provided under the terms of the legal ability, the fully indexed rate must be three years of the loan, after which the obligation. This comment would determined ‘‘without considering the rate will adjust annually to a specified explain, however, that where the introductory rate,’’ and is the rate ‘‘that index plus a margin of 3%. The loan creditor chooses to use the lifetime will apply after the expiration of any agreement provides for a 2% annual maximum interest rate, and the loan introductory interest rates.’’ See TILA interest rate adjustment cap, and a agreement provides a range for the Sections 129C(a)(6)(D)(iii) and (7). lifetime maximum interest rate of 10%. maximum interest rate, the creditor Furthermore, the Board believes this The index value in effect at must use the highest rate in that range approach is appropriate in the present consummation is 4.5%. The fully as the maximum interest rate. To indexed rate is 7.5% (4.5% plus 3%), case where the purpose of the statute is illustrate, assume an adjustable-rate regardless of the 2% annual interest rate to determine whether the consumer can mortgage has an initial fixed rate of 5% adjustment cap that would limit when repay the loan according to its terms, for the first three years of the loan, after the fully indexed rate would take effect including any potential increases in which the rate will adjust annually to a under the terms of the legal obligation. required payments. TILA Section specified index plus a margin of 3%. The Board notes that guidance The loan agreement provides for a 2% 129B(a)(2); 15 U.S.C 1639b(a)(2). contained in proposed comment The Board notes that the choice of annual interest rate adjustment cap, and 43(b)(3)–3 also differs from guidance which market index to use for later a lifetime maximum interest rate of 7%. contained in current comment 17(c)(1)– interest rate adjustments has become The index value in effect at 10.iii, which addresses disclosure of the more germane for both creditors and consummation is 4.5%; the fully annual percentage rate on the TILA. indexed rate is 7.5% (4.5% plus 3%). consumers due to recent market Comment 17(c)(1)–10.iii states that developments. For example, in recent The creditor can choose to use the when disclosing the annual percentage lifetime maximum interest rate of 7%, years consumers of adjustable-rate rate, creditors should give effect to mortgages that are tied to a LIBOR index instead of the fully indexed rate of periodic interest rate adjustment caps 7.5%, for purposes of this section. have paid more than they would have provided under the terms of the legal The Board notes that the statutory had their loans been tied to the U.S. 25 obligation (i.e., to take into account any construct of the payment calculation Treasury index. This divergence in caps that would prevent the initial rate rules, and the requirement to calculate index values is recent, and has not at the time of first adjustment from payments based on the fully indexed occurred historically. Given the changing to the fully-indexed rate). rate, apply to all loans that are subject increasing relevance of market indices, The Board believes the approach in to the ability-to-repay provisions, the Board solicits comment on whether proposed comment 43(b)(3)–3 is including loans that do not base the loan products currently exist that base consistent with, and required by, the interest rate on an index and therefore, the interest rate on a specific index at statutory language that states the fully do not have a fully indexed rate. consummation, but then base indexed rate must be determined Specifically, the statute states that ‘‘[f]or without considering any introductory purposes of making any determination 25 See Mark Schweitzer and Guhan Venkatu, Adjustable-Rate Mortgages and the LIBOR Surprise, rate and by using the margin that will under this subsection, a creditor shall at http://www.clevelandfed.org/research/ apply after expiration of any calculate the monthly payment amount commentary/2009/012109.cfm. introductory interest rates. See TILA for principal and interest on any

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residential mortgage loan by assuming’’ calculations, the Board is equally these rates.’’ See 2011 Escrow Proposal, several factors, including the fully concerned that by requiring creditors to 76 FR 11598, Mar. 2, 2011, which indexed rate, as defined in the statute use the maximum interest rate in a step- implements new TILA Section 129D for (emphasis added). See TILA Section rate mortgage, the monthly payments escrow requirements. As discussed in 129C(a)(6)(D). The statutory definition used to determine the consumer’s the Board’s 2011 Escrow Proposal, the of ‘‘residential mortgage loan’’ includes repayment ability will be overstated and proposed definition of ‘‘average prime loans with variable-rate features that are may inappropriately restrict credit offer rate’’ is identical to the definition not based on an index or formula, such availability. For these reasons, the Board of ‘‘average prime offer rate’’ in current as step-rate mortgages. See TILA Section is soliciting comment on this approach, § 226.35(a)(2), which the Board is 103(cc); see also proposed § 226.43(a), and whether the Board should exercise proposing to remove, and consistent addressing the proposal’s scope, and its authority under TILA Sections 105(a) with the provisions of the Dodd-Frank proposed § 226.43(b)(1), defining and 129B(e) to provide an exception for Act, which generally codify the ‘‘covered transaction.’’ However, because step-rate mortgages. For example, regulation’s current definition of step-rate mortgages do not have a fully should the Board require creditors to ‘‘average prime offer rate.’’ See TILA indexed rate, it is unclear what interest use the maximum interest rate that Sections 129C(b)(2)(B) and 129D(b)(3). rate the creditor must assume when occurs in the first 5 or 10 years, or some However, the proposed definition of calculating payment amounts for other appropriate time horizon? ‘‘higher-priced covered transaction’’ purposes of determining the consumer’s 43(b)(4) Higher-Priced Covered differs from the proposed definition of ability to repay the covered transaction. Transaction ‘‘higher-priced mortgage loan’’ included As discussed above, the Board in the Board’s 2011 Escrow Proposal in interprets the statutory requirement to Proposed § 226.43(b)(4) defines three respects: (1) To reflect statutory use the ‘‘margin that can apply at any ‘‘higher-priced covered transaction’’ to text, the proposed definition of ‘‘higher- time after the expiration of any mean a covered transaction with an priced covered transaction’’ would introductory interest rates’’ to mean that annual percentage rate that exceeds the provide that the annual percentage rate, the creditor must use the ‘‘maximum average prime offer rate for a rather than the ‘‘transaction coverage margin that can apply at any time comparable transaction as of the date rate,’’ is the loan pricing metric to be during the loan term’’ when determining the interest rate is set by 1.5 or more used to determine whether a transaction the fully indexed rate. Accordingly, percentage points for a first-lien covered is a higher-priced covered transaction; consistent with this approach, Board transaction, or by 3.5 or more (2) consistent with the scope of the percentage points for a subordinate-lien proposes to clarify in proposed ability-to-repay provisions, ‘‘higher- covered transaction. The proposed comment 43(b)(3)–5 that where the priced covered transaction’’ would cover definition of ‘‘higher-priced covered interest rate offered in the loan is not consumer credit transactions secured by transaction’’ replicates the statutory based on, and does not vary with, an a dwelling, and would not be limited to language used in TILA Section index or formula (i.e., there is no fully transactions secured by the consumer’s 129C(a)(6)(D)(ii)(I) and (II), which grants indexed rate), the creditor must use the principal dwelling; and (3) consistent the Board the authority to implement maximum interest rate that may apply at with the statutory authority, the special payment calculation rules for a any time during the loan term. Proposed applicable thresholds in ‘‘higher-priced balloon loan that ‘‘has an annual comment 43(b)(3)–5 provides covered transaction’’ would not reflect percentage rate that does not exceed the illustrative examples for a step-rate and the special, separate coverage threshold fixed-rate mortgage. This comment, for average prime offer rate for a of 2.5 percentage points above the example, would assume a step-rate comparable transaction’’ by certain rate average prime offer rate for ‘‘jumbo’’ mortgage with an interest rate fixed at spreads. These rules appear in proposed loans,26 as provided for by the Board’s 6.5% for the first two years of the loan, § 226.43(c)(5)(ii)(A), and are discussed 2011 Escrow Proposal and 2011 Jumbo 7% for the next three years, and 7.5% below. Loan Escrow Final Rule. See 76 FR thereafter for the remainder of loan The proposed definition of ‘‘higher- 11598, 11608–09, Mar. 2, 2011; 76 FR term. This comment would explain that, priced covered transaction’’ uses the 11319, Mar. 2, 2011.27 As a result of for purposes of determining the term ‘‘average prime offer rate.’’ To these differences, proposed commentary consumer’s repayment ability, the facilitate compliance and maintain to ‘‘average prime offer rate’’ that creditor must use 7.5%, which is the consistency, the term ‘‘average prime ‘‘ maximum rate that may apply during offer rate’’ has the same meaning as in clarifies the meaning of comparable ’’ ‘‘ ’’ the loan term. This comment would also the Board’s proposed § 226.45(a)(2)(ii). transaction and rate set for purposes provide an illustrative example for a Proposed § 226.45(a)(2)(ii) defines of higher-priced mortgage loans uses the fixed-rate mortgage. ‘‘average prime offer rate’’ for purposes of determining the applicability of 26 A ‘‘jumbo’’ loan includes a loan whose original The Board believes this approach is principal balance exceeds the current maximum appropriate because the purpose of escrow requirements to ‘‘higher-priced loan balance for loans eligible for sale to Freddie TILA Section 129C is to require mortgage loans’’ (as defined in proposed Mac as of the date the transaction’s rate is set. See creditors to assess whether the § 226.45(a)(1)), and states that the TILA Section 129D(b)(3)(B), as enacted by Section consumer can repay the loan according ‘‘average prime offer rate’’ means ‘‘an 1461 of the Dodd-Frank Act; see also Board’s March 2011 Jumbo Loan Escrow Final Rule, 76 FR 11319, to its terms, including any potential annual percentage rate that is derived 11324 (Mar. 2, 2011), which establishes the ‘‘jumbo’’ increases in required payments. TILA from average interest rate, points, and threshold in existing § 226.35(a)(1)(v). Section 129B(a)(2), 15 U.S.C. other loan pricing terms currently 27 The Board’s Jumbo Loan Escrow Final Rule 1639b(a)(2). Requiring creditors to use offered to consumers by a representative added new § 226.35(a)(1)(v) to provide a separate, higher rate threshold for determining when the the maximum interest rate helps to sample of creditors for mortgage Board’s escrow requirement applies to higher- ensure that consumers can repay the transactions that have low-risk pricing priced mortgage loans that are ‘‘jumbo loans.’’ The loan, without needing to refinance, for characteristics. The Board publishes Board incorporated the identical provision example. However, for the reasons average prime offer rates for a broad regarding the ‘‘jumbo’’ threshold in its 2011 Escrow Proposal for the reasons stated therein, and in discussed more fully below under range of types of transactions in a table anticipation of the Board proposing to remove proposed § 226.43(c)(5)(i), which updated at least weekly as well as the § 226.35 in its entirety, as discussed above. See discusses the general rule for payment methodology the Board uses to derive proposed § 226.45(a)(1).

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terms ‘‘transaction coverage rate,’’ and between the annual percentage rate and risk, regardless of loan size. As refers to the consumer’s principal the average prime offer rate to widen. discussed above, the scope of this dwelling. See proposed comments Although the purpose differs, the proposal extends to any dwelling- 45(a)(2)(ii)–2 and –3.28 Board similarly recognizes that the use secured transaction, not just principal To reduce the risk of confusion that of the term annual percentage rate in dwellings, and therefore second homes may occur by cross-referencing to ‘‘higher-priced covered transaction’’ (e.g., vacation homes) would be covered. proposed commentary in the Board’s means that the scope of balloon loans A non-‘‘jumbo’’ balloon loan for a 2011 Escrow Proposal that uses different that may exceed the applicable loan vacation home, for example, would be terminology, the Board proposes pricing thresholds will likely be greater. subject to the same rate threshold that commentary to proposed § 226.43(b)(4) The Board is concerned that using an would apply to a non-‘‘jumbo’’ loan to clarify the meaning of the terms over inclusive metric to compare to the secured by a principal dwelling. As a ‘‘average prime offer rate,’’ ‘‘comparable average prime offer rate may cover some result, balloon loans secured by non- transaction’’ and ‘‘rate set,’’ as those prime loans and unnecessarily limit principal dwellings would be more terms are used in the proposed credit access to these loan products, likely to exceed the applicable rate definition of ‘‘higher-priced covered contrary to statutory intent. For these threshold and be subject to the more transaction.’’ reasons and also for consistency, the stringent underwriting requirements Proposed comment 43(b)(4)–1 Board solicits comment on whether it discussed above. The Board is explains that the term ‘‘average prime should exercise its authority under concerned that this approach may Section TILA Sections 105(a) and offer rate’’ generally has the same inappropriately restrict credit access in 129B(e) to similarly replace ‘‘annual meaning as in proposed this market. Accordingly, the Board percentage rate’’ with ‘‘transaction § 226.45(a)(2)(ii), and would cross- solicits comment, and supporting data, coverage rate’’ as the loan pricing reference proposed comments on whether it should exercise its benchmark for higher-priced covered 45(a)(2)(ii)–1,–4, and –5, for further authority under TILA Sections 105(a) transactions. 15 U.S.C. 1604(a). and 129B(e) to incorporate a special, guidance on how to determine the In addition, the Board notes that average prime offer rate and for further separate coverage threshold in the ‘‘jumbo’’ loans typically carry a premium ‘‘ explanation of the Board table. Proposed proposed definition of higher-priced interest rate to reflect the increased covered transaction’’ for loans secured comment 43(b)(4)–2 states that the table credit risk of such loans.29 These loans by non-principal dwellings, and what of average prime offer rates published are more likely to exceed the average rate threshold would be appropriate for by the Board indicates how to identify prime offer rate coverage threshold and such loans. the comparable transaction for a higher- be considered higher-priced covered priced covered transaction, as defined. transactions under the thresholds 43(b)(5) Loan Amount Proposed comment 43(b)(4)–3 clarifies established by TILA Section TILA Section 129C(a)(6)(D) requires that a transaction’s annual percentage 129C(a)(6)(D)(ii). Accordingly, under that when the creditor makes the rate is compared to the average prime this proposal creditors would have to repayment ability determination under offer rate as of the date the transaction’s underwrite such loans using the TILA Section 129C(a), it must calculate interest rate is set (or ‘‘locked’’) before scheduled payments, including any the monthly payment on the mortgage consummation. This proposed comment balloon payment, regardless of the loan obligation based on several also explains that sometimes a creditor term. See proposed assumptions, including calculating the sets the interest rate initially and then § 226.43(c)(5)(ii)(A)(2), discussed below. monthly payment assuming that ‘‘the re-sets it at a different level before The Board is concerned that this loan proceeds are fully disbursed on the consummation, and clarify that in these approach may unnecessarily restrict date of consummation of the loan.’’ See cases, the creditor should use the last credit access and choice in the ‘‘jumbo’’ TILA Section 129C(a)(6)(D)(i). This date the interest rate is set before balloon loan market. Thus, the Board proposal replaces the phrase ‘‘loan consummation. also solicits comment on whether it proceeds are fully disbursed on the date As discussed above, the Board is should exercise its authority under of consummation of the loan’’ with the proposing to replace the term ‘‘annual TILA Sections 105(a) and 129B(e) to term ‘‘loan amount’’ for simplicity, and percentage rate’’ with the ‘‘transaction incorporate the special, separate also to provide clarity. coverage rate’’ for reasons stated in the coverage threshold of 2.5 percentage Proposed § 226.43(b)(5) defines ‘‘loan Board’s 2011 Escrow Proposal and 2010 points in the proposed definition of amount’’ to mean the principal amount Closed-End Proposal. See the Board’s ‘‘higher-priced covered transaction’’ to the consumer will borrow as reflected in 2011 Escrow Proposal at 76 FR 11598, permit more ‘‘jumbo’’ balloon loans that the promissory note or loan contract. 11609, Mar. 2, 2011 and the Board’s have ‘‘prime’’ loan pricing to benefit The Board believes that the loan 2010 Closed-End Mortgage Proposal at from the special payment calculation contract or promissory note would 75 FR 58539, 58660–61, Sept. 24, 2010. rule set forth under proposed accurately reflect all loan proceeds to be As discussed more fully in these § 226.43(c)(5)(ii)(A)(1) for balloon loans. disbursed under the loan agreement to proposals, the Board recognized that the 15 U.S.C. 1604(a). See 76 FR 11598, the consumer, including any proceeds use of the annual percentage rate as the 11608, Mar. 2 2011, which discusses the the consumer uses to cover costs of the coverage metric for the higher-priced proposed ‘‘jumbo’’ threshold in relation transaction. In addition, the term ‘‘loan mortgage loan protections posed a risk to the proposed escrow requirements. amount’’ is generally used by industry of over inclusive coverage; the The Board similarly recognizes that and consumers to refer to the amount protections were intended to be limited loans secured by non-principal the consumer borrows and is obligated to the subprime market. Specifically, the dwellings also generally carry a higher to repay under the loan agreement. The Board recognized that the term annual interest rate to reflect increased credit proposed term ‘‘loan amount’’ is percentage rate would include a broader consistent with the Board’s 2009 set of charges, causing the spread 29 See, e.g., Shane M. Sherland, ‘‘The Jumbo- Closed-End Mortgage Proposal, which Conforming Spread: A Semiparametric Approach,’’ proposed to define the term ‘‘loan Finance and Economics Discussion Series, 28 2011 Escrow Proposal, 76 FR 11598, 11626– Divisions of Research & Statistics and Monetary amount’’ for purposes of disclosure. See 11627, Mar. 2, 2011. Affairs, Federal Reserve Board (2008–01). 74 FR 43232, 43333, Aug. 26, 2009.

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The statute further requires that repay a loan. In addition, the term ‘‘loan of time it takes to repay the loan amount creditors assume that the loan amount is amount’’ appears in proposed in full. For example, a loan with an ‘‘fully disbursed on the date of § 226.43(d)(5)(i)(C)(2) which initial discounted rate that is fixed for consummation of the loan.’’ See TILA implements TILA Section 129C(a)(6)(E) the first two years, and that adjusts Section 129C(a)(6)(D)(i). The Board and provides the payment calculation periodically for the next 28 years has a recognizes that some loans do not for a non-standard mortgage with loan term of 30 years, which is the disburse the entire loan amount to the interest-only payments. The term ‘‘loan amortization period on which the consumer at consummation, but may, amount’’ also appears in proposed periodic amortizing payments are based. § 226.43(e)(2)(iv), which implements the for example, provide for multiple 43(b)(7) Maximum Loan Amount disbursements up to an amount stated requirement under TILA Sections in the loan agreement. See current 129C(b)(iv) and (v) that the creditor Proposed § 226.43(b)(7) defines § 226.17(c)(6), discussing multiple- underwrite the loan using a periodic ‘‘maximum loan amount’’ to mean the advance loans and comment 17(c)(6)–2 payment of principal and interest that loan amount plus any increase in and –3, discussing construction-to- will repay the loan to meet the principal balance that results from permanent financing loans. In these definition of a qualified mortgage. negative amortization (defined in current § 226.18(s)(7)(v)), based on the cases, the loan amount, as reflected in 43(b)(6) Loan Term the promissory note or loan contract, terms of the legal obligation assuming does not accurately reflect the amount TILA Section 129C(a)(3) requires that that: (1) The consumer makes only the disbursed at consummation. Thus, to a creditor determine a consumer’s minimum periodic payments for the reflect the statutory requirement that the repayment ability on a loan ‘‘using a maximum possible time, until the creditor assume the loan amount is fully payment schedule that fully amortizes consumer must begin making fully disbursed at consummation, the Board the loan over the term of the loan.’’ TILA amortizing payments; and (2) the would clarify that creditors must use the Section 129C(a)(6)(D)(ii) also requires maximum interest rate is reached at the entire loan amount as reflected in the that for purposes of making the earliest possible time. The term ‘‘ ’’ loan contract or promissory note, even repayment ability determination under maximum loan amount implements, where the loan amount is not fully TILA Section 129C(a), the creditor in part, TILA Section 129(a)(6)(C), disbursed at consummation. See calculate the monthly payment on the which states that when making the proposed comment 43(b)(5)–1. This mortgage obligation assuming that the payment calculation for loans with loan is repaid ‘‘over the entire term of ‘‘ comment would provide an illustrative negative amortization, a creditor shall the loan with no balloon payment.’’ In also take into consideration any balance example. The example assumes the addition, TILA Section 129C(b)(2)(A)(iv) increase that may accrue from any consumer enters into a loan agreement and (v) require that a creditor negative amortization provision.’’ where the consumer is obligated to underwrite the loan using ‘‘a payment Loans with negative amortization repay the creditor $200,000 over 15 schedule that fully amortizes the loan typically permit consumers to make years, but only $100,000 is disbursed at over the loan term’’ to meet the payments that cover only part of the consummation and the remaining definition of a qualified mortgage. The interest accrued each month, and none $100,000 will be disbursed during the Dodd-Frank Act does not define the of the principal. The unpaid but accrued year following consummation ($25,000 term ‘‘loan term.’’ interest is added to the principal each quarter). This comment would This proposal refers to the term of the balance, causing negative equity (i.e., explain that the creditor must use the loan as the ‘‘loan term,’’ as defined, for negative amortization). This accrued but loan amount of $200,000 even though simplicity. Proposed § 226.43(b)(6) unpaid interest can be significant if the the loan agreement provides that only provides that the ‘‘loan term’’ means the loan terms do not provide for any $100,000 will be disbursed to the period of time to repay the obligation in periodic interest rate adjustment caps, consumer at consummation. This full. This proposed definition is thereby permitting the accrual interest comment would state that generally, consistent with the proposed definition rate to quickly escalate to the lifetime creditors should rely on § 226.17(c)(6) of ‘‘loan term’’ for disclosure purposes in maximum interest rate. As a result of and associated commentary regarding the Board’s 2009 Closed-End Mortgage these loan features, consumers of loans treatment of multiple-advance and Proposal. See 74 FR 43232, 43333, Aug. with negative amortization are more construction loans that would be 26, 2009. This term primarily appears in likely to encounter payment shock once covered by this proposal (i.e., loans with proposed § 226.43(c)(5)(i), which fully amortizing payments are required. a term greater than 12 months). See implements TILA Section For these reasons, the Board believes it proposed § 226.43(a)(3) discussing 129(a)(6)(D)(ii) and requires creditors to is appropriate to interpret the phrase scope of coverage and term length. The determine a consumer’s ability to repay ‘‘any balance increase that may accrue’’ Board solicits comment on whether the loan based on fully amortizing as requiring the creditor to account for further guidance regarding treatment of payments. See proposed § 226.43(b)(2), the greatest potential increase in the loans that provide for multiple which defines ‘‘fully amortizing principal balance that could occur disbursements, such as construction-to- payments’’ as periodic payments that under in a loan with negative permanent loans that are treated as as a will fully repay the loan amount over amortization. See TILA Section single transaction, is needed. the loan term. ‘‘Loan term’’ also is used 129(a)(6)(C). The Board also believes The term ‘‘loan amount’’ appears in in proposed § 226.43(e)(2)(iv), which this interpretation is consistent with the proposed § 226.43(b)(2), which defines implements TILA Section 129C(b)(2)(iv) overall statutory construct that requires ‘‘fully amortizing payment,’’ and in and (v) and requires creditors to creditors to determine whether the proposed § 226.43(c)(5)(ii)(B), which underwrite the loan using the periodic consumer is able to manage payments implements the requirement under payment of principal and interest that that may be required at any time during TILA Section 129C(a)(6)(D)(i) that the will repay the loan over the loan term the loan term, especially where creditor assume that ‘‘the loan proceeds to meet the definition of a qualified payments can escalate significantly in are fully disbursed on the date of mortgage. amount. The proposed definition of consummation of the loan’’ when Proposed comment 43(b)(6)–1 ‘‘maximum loan amount’’ is also determining the consumer’s ability to clarifies that the loan term is the period consistent with the approach in the

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MDIA Interim Final Rule,30 which the creditor must assume the interest the due date of the 27th monthly addresses disclosure requirements for rate increases to the maximum lifetime payment and the loan is recast. The negative amortization loans, and the interest rate at the first adjustment. maximum loan amount as of the due 2006 Nontraditional Mortgage Proposed comment 43(b)(7)–3 date of the 27th monthly payment is Guidance, which provides guidance to provides examples illustrating the $229,243. See proposed comment creditors regarding underwriting application of the proposed definition of 43(b)(7)–3.i(B). negative amortization loans.31 ‘‘maximum loan amount’’ for a negative The term ‘‘maximum loan amount’’ is amortization loan that is an adjustable- 43(b)(8) Mortgage-Related Obligations used in proposed § 226.43(c)(5)(ii)(C), rate mortgage and for a fixed-rate, The Board proposes to use the term which implements the statutory graduated payment mortgage. For ‘‘mortgage-related obligations’’ to refer to requirements under new TILA Section example, proposed comment 43(b)(7)– ‘‘all applicable taxes, insurance 129C(a)(6)(C) and (D) regarding payment 3.i assumes an adjustable-rate mortgage (including mortgage guarantee calculations for negative amortization in the amount of $200,000 with a 30- insurance), and assessments’’ for loans. See proposed § 226.43(c)(5)(ii)(C), year loan term. The loan agreement purposes of TILA Sections 129C(a)(1) which discusses more fully the scope of provides that the consumer can make through (3) and (b)(2)(A)(iv) and (v). loans covered by the term ‘‘negative minimum monthly payments that cover TILA Sections 129C(a)(1) and (2) require amortization loan,’’ as defined in current only part of the interest accrued each that a creditor determine a consumer’s § 226.18(s)(7)(v). The term also appears month until the principal balance ability to repay the loan ‘‘according to in proposed § 226.43(d), which reaches 115% of its original balance [the loan’s] terms, and all applicable addresses the exception to the (i.e., a negative amortization cap of taxes, insurance (including mortgage repayment ability provision for the 115%) or for the first five years of the guarantee insurance), and assessments.’’ refinancing of a non-standard mortgage. loan (60 monthly payments), whichever TILA Section 129C(a)(3) further states Proposed comment 43(b)(7)–1 occurs first. The introductory interest that the creditor must consider the clarifies that in determining the rate at consummation is 1.5%. One consumer’s debt-to-income ratio after maximum loan amount, the creditor month after consummation, the interest allowing for ‘‘non-mortgage debt and must assume that the consumer makes rate adjusts and will adjust monthly mortgage-related obligations.’’ In the minimum periodic payment thereafter based on the specified index addition, TILA Sections permitted under the loan agreement for plus a margin of 3.5%. The maximum 129C(b)(2)(A)(iv) and (v) provide that to as long as possible, until the consumer lifetime interest rate is 10.5%; there are meet the qualified mortgage standard, must begin making fully amortizing no other periodic interest rate the creditor must underwrite the loan payments, and that the interest rate rises adjustment caps that limit how quickly ‘‘tak[ing] into account all applicable as quickly as possible after the maximum lifetime rate may be taxes, insurance, and assessments[.]’’ consummation under the terms of the reached. The minimum monthly The Dodd-Frank Act does not define the legal obligation. The proposed comment payment for the first year is based on term ‘‘mortgage-related obligations.’’ further clarifies that creditors must the initial interest rate of 1.5%. After However, these statutory requirements assume the consumer makes the that, the minimum monthly payment are substantially similar to current minimum periodic payment until any adjusts annually, but may increase by § 226.34(a)(4) of the Board’s 2008 negative amortization cap is reached or no more than 7.5% over the previous HOEPA Final Rule, which requires the until the period permitting minimum year’s payment. The minimum monthly creditor to consider mortgage-related periodic payments expires, whichever payment is $690 in the first year, $740 obligations when determining the occurs first. This comment would cross- in the second year, and $798 in the first consumer’s repayment ability on a loan. reference proposed § 226.43(b)(5) and part of the third year. See proposed Current § 226.34(a)(4)(i) defines § 226.18(s)(7)(v) for the meaning of the comment 43(b)(7)–3.i(A). ‘‘mortgage-related obligations’’ as terms ‘‘loan amount’’ and ‘‘negative This comment then states that to expected property taxes, premiums for amortization loan,’’ respectively. determine the maximum loan amount, mortgage-related insurance required by Proposed comment 43(b)(7)–2 creditors should assume that the interest the creditor as set forth in current provides further guidance to creditors rate increases to the maximum lifetime § 226.35(b)(3)(i), and similar expenses, regarding the assumed interest rate to interest rate of 10.5% at the first such as homeowners’ association dues use when determining the maximum adjustment (i.e., the second month) and and condominium or cooperative fees. loan amount. This comment would accrues at that rate until the loan is See comment 34(a)(4)(i)–1. explain that when calculating the recast. This proposed comment further Proposed § 226.43(b)(8) defines the maximum loan amount for an assumes the consumer makes the term ‘‘mortgage-related obligations’’ to adjustable-rate mortgage that is a minimum monthly payments as mean property taxes; mortgage-related negative amortization loan, the creditor scheduled, which are capped at 7.5% insurance premiums required by the must assume that the interest rate will from year-to-year. This comment would creditor as set forth in proposed increase as rapidly as possible after explain that as a result, the consumer’s § 226.45(b)(1); homeowner’s association, consummation, taking into account any minimum monthly payments are less condominium, and cooperative fees; periodic interest rate adjustment caps than the interest accrued each month, ground rent or leasehold payments; and provided in the loan agreement. This resulting in negative amortization (i.e., special assessments. Proposed comment would further explain that for the accrued but unpaid interest is added § 226.43(b)(8) is consistent with TILA an adjustable-rate mortgage with a to the principal balance). Sections 129C(a)(1)–(3) and lifetime maximum interest rate but no This comment concludes that on the 129C(b)(2)(A)(iv) and (v), with periodic interest rate adjustment cap, basis of these assumptions (that the modifications to the statutory language consumer makes the minimum monthly to provide greater clarity to creditors 30 See 12 CFR 226.18(s)(2)(ii) and comment payments for as long as possible and regarding what items are included in the 18(s)(2)(ii)–2, which discusses assumptions made that the maximum interest rate of 10.5% phrase ‘‘taxes, insurance (including for the interest rates in adjustable-rate mortgages that are negative amortization loans. is reached at the first rate adjustment mortgage guarantee insurance), and 31 See 2006 Nontraditional Mortgage Guidance at (i.e., the second month)), the negative assessments.’’ Based on outreach, the 58614, n.7. amortization cap of 115% is reached on Board believes greater specificity in

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defining the term ‘‘mortgage-related not require, such as earthquake TILA establishes certain disclosure obligations’’ would address concerns insurance or credit insurance, or fees for requirements for transactions for which that some creditors may have difficulty optional debt suspension and debt a penalty is imposed upon prepayment determining which items should be cancellation agreements. To facilitate but does not define the term included as mortgage-related obligations compliance, this comment would refer ‘‘prepayment penalty.’’ TILA Section when determining the total monthly to commentary associated with 128(a)(11) requires that the transaction- debt a consumer will owe in connection proposed § 226.43(c)(2)(v), which specific disclosures for closed-end with a loan. The proposed term would discusses the requirement to take into consumer credit transactions disclose a also track the current meaning of the account any mortgage-related ‘‘penalty’’ imposed upon prepayment in term mortgage-related obligations in obligations for purposes of the full of a closed-end transaction, without current § 226.34(a)(4)(i) and comment repayment ability determination using the term ‘‘prepayment penalty.’’ 15 34(a)(4)(i)–1, which the Board is required under proposed § 226.43(b)(2). U.S.C. 1638(a)(11).32 Current proposing to remove, with several The term ‘‘mortgage-related commentary on § 226.18(k)(1), which clarifications. obligations’’ appears in proposed implements TILA Section 128(a)(11), The Board proposes to define the term § 226.43(c)(2)(v), which implements clarifies that a ‘‘penalty’’ imposed upon ‘‘mortgage-related obligations’’ with new TILA Sections 129C(a)(1) through prepayment in full is a charge assessed three clarifications. First, consistent (3) and requires that the creditor solely because of the prepayment of an with current underwriting practices, the determine a consumer’s ability to repay obligation and includes, for example, proposed definition of ‘‘mortgage-related a covered transaction, taking into ‘‘interest’’ charges for any period after obligations’’ would include reference to account mortgage-related obligations. prepayment in full is made and a 33 ground rent or leasehold payments, The term also appears in proposed minimum finance charge. See which are payments made to the land § 226.43(e)(2)(iv), which implements comment 18(k)–1. The Board’s 2009 owner or leaseholder for use of the land. new TILA Section 129C(b)(2)(A)(iv) and Closed-End Mortgage Proposal clarifies Second, the proposed term would (v) and requires that the creditor that prepayment penalties include ‘‘ include reference to special underwrite a loan taking into account origination or other charges that a assessments.’’ Proposed comment mortgage-related obligations to meet the creditor waives unless the consumer 43(b)(8)–1 clarifies that special qualified mortgage definition. Proposed prepays, but do not include fees assessments include, for example, § 226.43(c) and (e) are discussed in imposed for preparing a payoff assessments that are imposed on the further detail below. statement, among other clarifications. consumer at or before consummation, See 74 FR 43232, 43413, Aug. 29, 2009. such as a one-time homeowners’ 43(b)(9) Points and Fees Also, the Board’s 2010 Mortgage association fee that will not be paid by Proposal clarifies that prepayment For ease of reference, proposed the consumer in full at or before penalties include ‘‘interest’’ charges after § 226.43(b)(9) states that the term consummation. Third, the term prepayment in full even if the charge ‘‘points and fees’’ has the same meaning ‘‘mortgage-related obligations’’ would results from the interest accrual as in § 226.32(b)(1). reference proposed § 226.45(b)(1) to amortization method used on the include mortgage-related insurance 43(b)(10) Prepayment Penalty transaction. See 75 FR 58539, 58756, premiums required by the creditor, such Sept. 24, 2010. as insurance against loss of or damage TILA Section 129C(c), as added by Proposed § 226.43(b)(10) defines to property, or against liability arising Section 1414 of the Dodd-Frank Act, ‘‘prepayment penalty’’ as a charge out of the ownership or use of the limits the transactions that may include imposed for paying all or part of a property, or insurance protecting the a ‘‘prepayment penalty,’’ the period covered transaction’s principal before creditor against the consumer’s default during which a prepayment penalty the date on which the principal is due. or other credit loss. Proposed may be imposed, and the maximum Also, proposed § 226.43(b)(10)(i) § 226.45(b)(1) parallels current amount of a prepayment penalty. TILA provides the following examples of § 226.35(b)(3)(i), which the Board is Section 129C(c) also requires creditors ‘‘prepayment penalties’’ for purposes of proposing to remove. See 76 FR 11598, to offer a consumer a covered § 226.43: (1) A charge determined by 11610, Mar. 2, 2011 for discussion of transaction without a prepayment treating the loan balance as outstanding proposed § 226.45(b)(1). The Board penalty if they offer the consumer a for a period of time after prepayment in solicits comment on how to address any covered transaction with a prepayment full and applying the interest rate to issues that may arise in connection with penalty. Qualified mortgages are subject such ‘‘balance,’’ even if the charge homeowners’ association transfer fees to additional limitations on prepayment results from the interest accrual and costs associated with loans for penalties, pursuant to points and fees amortization method used for other energy-efficient improvement. limitations under Section 1412 of the payments in the transaction; and (2) a Proposed comment 43(b)(8)–1 further Act. TILA Section 129C(b)(2)(A)(viii) fee, such as a loan closing cost, that is clarifies that mortgage-related limits the points and fees that may be obligations include expected property charged for a qualified mortgage to three 32 Also, TILA Section 128(a)(12) requires that the taxes and premiums for mortgage- percent of the total loan amount. TILA transaction-specific disclosures state that the Section 103(aa)(4)(E) and (F), as added consumer should refer to the appropriate contract related insurance required by the document for information regarding certain loan creditor as set forth in § 226.45(b)(1), by Section 1431(c) of the Dodd-Frank terms or features, including ‘‘prepayment * * * such as insurance against loss of or Act, define ‘‘points and fees’’ to include penalties.’’ 15 U.S.C. 1638(a)(12). In addition, TILA damage to property or against liability (1) the maximum prepayment fees and Section 129(c) limits the circumstances in which a high-cost mortgage may include a ‘‘prepayment arising out of the ownership or use of penalties that may be charged under the penalty.’’ 15 U.S.C. 1639(c). the property, and insurance protecting terms of the covered transaction; and (2) 33 Prepayment penalty disclosure requirements the creditor against the consumer’s all prepayment fees or penalties that are under § 226.18(k) apply to closed-end mortgage and default or other credit loss. This incurred by the consumer if the loan non-mortgage transactions. In the 2009 Closed-End comment would explain that the refinances a previous loan made or Mortgage Proposal, the Board proposed to establish a new § 226.38(a)(5) for disclosure of prepayment creditor need not include premiums for currently held by the same creditor or penalties specifically for closed-end mortgage mortgage-related insurance that it does an affiliate of the creditor. transactions.

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waived unless the consumer prepays the consumer prepays, pursuant to TILA as defined in § 226.18(s)(7)(v),36 the covered transaction. Proposed comment Section 129C(c) a covered transaction expiration of the period during which 43(b)(10)(A)–1 clarifies that ‘‘interest may not include such provisions unless negatively amortizing payments are accrual amortization’’ refers to the the transaction: (1) Has an APR that permitted under the terms of the legal method used to determine the amount cannot increase, (2) is a qualified obligation. of interest due for each period (for mortgage, and (3) is not a higher-priced Proposed comment 43(b)(11)–1 example, a month) in a transaction’s mortgage loan, as discussed in detail in explains that the date on which the term. The proposed comment also the section-by-section analysis of ‘‘recast’’ occurs is the due date of the last provides an example where a proposed § 226.43(g). Also, the amount monthly payment based on the prepayment penalty of $1,000 is of the ‘‘interest’’ charged after introductory fixed rate, the interest-only imposed because a full month’s interest prepayment, or the amount of fees payment, or the negatively amortizing of $3,000 is charged even though only waived unless the consumer prepays, payment, as applicable. Proposed $2,000 in interest was earned in the would be limited. Finally, the creditor comment 43(b)(11)–1 also provides an month during which the consumer would have to offer an alternative illustration of this rule for a loan in an prepaid. Proposed § 226.43(b)(10)(ii) covered transaction for which ‘‘interest’’ amount of $200,000 with a 30-year loan provides that a prepayment penalty will not be charged after prepayment or term, where the loan agreement does not include fees imposed for for which fees are waived even if the provides for a fixed interest rate and preparing and providing documents consumer prepays (although under the permits interest-only payments for the when a loan is paid in full, whether or Board’s proposal the alternative covered first five years of the loan (60 months). not the loan is prepaid, such as a loan transaction could have a different Under proposed § 226.43(b)(11), the payoff statement, a reconveyance interest rate). Thus, the Board solicits loan is ‘‘recast’’ on the due date of the document, or another document comment on whether or not it is 60th monthly payment. Thus, the term releasing the creditor’s security interest appropriate to include ‘‘interest’’ of the loan remaining as of the date the in the dwelling that secures the loan. charged for a period after prepayment, loan is recast is 25 years (300 months). Proposed § 226.43(b)(10) uses or fees waived unless the consumer The statute uses the term ‘‘reset’’ to language substantially similar to the prepays, in the definition of suggest the time at which the terms of language used in TILA Section 129C(c), ‘‘prepayment penalty’’ under proposed a mortgage loan are adjusted, resulting but proposed § 226.43(b)(10) refers to § 226.43(b)(10). Specifically, the Board in higher required payments. For charges for payment ‘‘before the date on requests comment on the possible example, TILA Section 129C(a)(6)(E)(ii) which the principal is due’’ rather than effects of including those charges on the states that a creditor that refinances a ‘‘after the loan is consummated,’’ for availability of particular types of loan may, under certain conditions, ‘‘ clarity. Proposed § 226.43(b)(10)(i) and covered transactions. consider if the extension of new credit (ii) are substantially similar to the would prevent a likely default should current guidance on prepayment 43(b)(11) Recast the original mortgage reset and give penalties in comment 18(k)–1 and in Proposed § 226.43(b)(11) defines the such concerns a higher priority as an proposed § 226.38(a)(5) under the term ‘‘recast,’’ which is used in two acceptable underwriting practice.’’ 15 Board’s 2009 Closed-End Mortgage paragraphs of proposed § 226.43: (1) U.S.C. 1639c(a)(6)(E)(ii). The legislative Proposal and 2010 Mortgage Proposal, Proposed § 226.43(c)(5)(ii) regarding history further indicates that, for discussed above. However, proposed certain required payment calculations adjustable-rate mortgages with low, § 226.43(b)(10) omits commentary that creditors must consider in fixed introductory rates, Congress ‘‘ ’’ providing: (1) Examples of prepayment determining a consumer’s ability to understood the term reset to mean the penalties include a minimum finance repay a covered transaction; and (2) time at which the low teaser rates converted to fully indexed rates, charge because such charges typically proposed § 226.43(d) regarding payment resulting in ‘‘significantly higher are imposed with open-end, rather than calculations required for refinancings monthly payments for homeowners.’’ 37 closed-end, transactions; and (2) that are exempt from the ability-to-repay Outreach participants indicated that examples of prepayment penalties do requirements in § 226.43(c). the term ‘‘recast’’ is typically used to not include loan guarantee fees because Specifically, § 226.43(b)(11) defines reference the time at which fully loan guarantee fees are not charges the term ‘‘recast’’ as follows: (1) For an amortizing payments are required for imposed for paying all or part of a loan’s adjustable-rate mortgage, as defined in principal before the date on which the interest-only and negative amortization § 226.18(s)(7)(i),34 the expiration of the principal is due. See comment 18(k)(1)– loans and that the term ‘‘reset’’ is more period during which payments based on 1. The term ‘‘prepayment penalty’’ frequently used to indicate the time at the introductory interest rate are appears in the ‘‘points and fees’’ which adjustable-rate mortgages with an permitted under the terms of the legal definition in proposed § 226.32(b)(1)(v) introductory fixed rate convert to a obligation; (2) for an interest-only loan, and (vi) and in the requirements for variable rate. For simplicity and clarity, as defined in § 226.18(s)(7)(iv),35 the prepayment penalties in § 226.43(g). however, the Board proposes to use the The Board recognizes that the effect of expiration of the period during which term ‘‘recast’’ to cover the conversion to including particular types of charges in interest-only payments are permitted less favorable terms and higher the proposed definition of a under the terms of the legal obligation; and (3) for a negative amortization loan, ‘‘prepayment penalty’’ is to apply the 36 ‘‘[T]he term ‘negative amortization’ means limitations on prepayment penalties payment of periodic payments that will result in an under TILA Section 129C(c) to those 34 ‘‘The term ‘adjustable-rate mortgage’ means a increase in the principal balance under the terms transaction secured by real property or a dwelling of the legal obligation; the term ‘negative types of charges, which in turn could for which the annual percentage rate may increase amortization loan’ means a loan that permits limit the availability of credit. In after consummation.’’ 12 CFR 226.18(s)(7)(i). payments resulting in negative amortization, other particular, if ‘‘prepayment penalty’’ is 35 ‘‘The term ‘interest-only’ means that, under the than a reverse mortgage subject to section 226.33.’’ defined to include a provision that terms of the legal obligation, one or more of the 12 CFR 226.18(s)(7)(v). ‘‘ ’’ periodic payments may be applied solely to accrued 37 See U.S. House of Reps., Comm. on Fin. requires the consumer to pay interest interest and not to loan principal; an ‘interest-only Services, Report on H.R. 1728, Mortgage Reform for a period after prepayment in full, or loan’ is a loan that permits interest-only payments.’’ and Anti-Predatory Lending Act, No. 111–94, 52 a provision that waives fees unless the 12 CFR 226.18(s)(7)(iv). (May 4, 2009).

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payments not only for interest-only include HELOCs as well as closed-end (i.e., refinancing). Including HELOCs in loans and negative amortization loans mortgages for purposes of TILA Section the proposed definition of but also for adjustable-rate mortgages. 129C(a)(2). The Board believes TILA ‘‘simultaneous loan’’ for purposes of The Board solicits comment on the Section 129C(a)(2) is meant to help TILA Section 129C(a)(2) is also proposed definition of ‘‘recast’’ for ensure that creditors account for the generally consistent with current purposes of proposed § 226.43(c) and increased risk of consumer delinquency comment 34(a)(4)–3, and the 2006 (d). or default on the covered transaction Nontraditional Mortgage Guidance 43(b)(12) Simultaneous Loan where more than one loan secured by regarding simultaneous second-lien the same dwelling is originated loans.38 The Board proposes to use the term concurrently, and therefore requires Second, data indicate that where a ‘‘simultaneous loan’’ to refer to loans creditors to consider the combined subordinate loan is originated that are subject to TILA Section payments on such loans. The Board concurrently with a first-lien loan to 129C(a)(2), which states that ‘‘if a believes this increased risk is present provide some or all of the downpayment creditor knows, or has reason to know, whether the other mortgage obligation is (i.e., ‘‘piggyback loan’’), the default rate that 1 or more residential mortgage a closed-end credit transaction or a on the first-lien loan increases loans secured by the same dwelling will HELOC. significantly, and in direct correlation to be made to the same consumer, the The Board proposes to broaden the increasing combined loan-to-value creditor shall make a reasonable and scope of TILA Section 129C(a)(2) to ratios.39 The data does not distinguish good faith determination, based on include HELOCs, and accordingly between ‘‘piggyback loans’’ that are verified and documented information, proposes to define the term closed-end or open-end credit that the consumer has a reasonable ‘‘simultaneous loan’’ to include HELOCs, transactions, or between purchase and ability to repay the combined payments using its authority under TILA Section non-purchase transactions. However, of all loans on the same dwelling 105(a). 15 U.S.C. 1604(a). TILA Section empirical evidence demonstrates that according to the terms of those loans 105(a), as amended by Section 1100A of approximately 60% of consumers who and all applicable taxes, insurance the Dodd-Frank Act, authorizes the open a HELOC concurrently with a first- (including mortgage guarantee Board to prescribe regulations to carry lien loan borrow against the line of insurance), and assessments.’’ TILA out the purposes of TILA and credit at the time of origination,40 Section 129C(a)(2) uses the term Regulation Z, to prevent circumvention suggesting that in many cases the ‘‘residential mortgage loan,’’ which is or evasion, or to facilitate compliance. HELOC may be used to provide some, defined in TILA Section 103(cc)(5) as 15 U.S.C. 1604(a). The inclusion of or all, of the downpayment on the first- excluding home equity lines of credit HELOCs is further supported by the lien loan. (HELOCs) for purposes of TILA Section Board’s authority under TILA Section The Board recognizes that consumers 129C. See proposed § 226.43(a), 129B(e) to condition terms, acts or have varied reasons for originating a discussing the scope of the ability-to- practices relating to residential mortgage HELOC concurrently with the first-lien repay provisions. Thus, TILA Section loans that the Board finds necessary or loan, for example, to reduce overall 129C(a)(2) does not require a creditor to proper to effectuate the purposes of closing costs or for the convenience of consider a simultaneous HELOC when TILA. 15 U.S.C. 1639b(e). One purpose having access to an available credit line determining a consumer’s repayment of the statute is set forth in TILA Section in the future. However, the Board ability on the covered transaction. 129B(a)(2), which states that ‘‘[i]t is the believes concerns relating to HELOCs By contrast, § 226.34(a)(4) of the purpose[] of * * * [S]ection 129C to originated concurrently for savings or Board’s 2008 HOEPA Final Rule assure that consumers are offered and convenience, and not to provide requires the creditor to consider the receive residential mortgage loans on payment towards the first-lien home consumer’s current obligations when terms that reasonably reflect their ability purchase loan, may be mitigated by the making its repayment ability to repay the loans.’’ 15 U.S.C. 1639b. For Board’s proposal to require that a determination. Current comment the reasons stated below, the Board creditor consider the periodic payment 34(a)(4)–3 clarifies the meaning of the believes requiring creditors to consider on the simultaneous loan based on the term ‘‘current obligations,’’ and provides simultaneous loans that are HELOCs for actual amount drawn from the credit that it includes other dwelling-secured purposes of TILA Section 129C(a)(2) line by the consumer. See proposed credit obligations undertaken prior to or would help to ensure that consumers § 226.43(c)(6)(ii), discussing payment at consummation of the transaction are offered, and receive, loans on terms calculation requirements for subject to § 226.34(a)(4) of which the that reasonably reflect their ability to simultaneous loans that are HELOCs. creditor has knowledge. This comment repay. Still, the Board recognizes that in the does not distinguish between closed- First, the Board is proposing in case of a non-purchase transaction (e.g., end and open-end credit transactions for § 226.43(c)(2)(vi) that the creditor must purposes of ‘‘other dwelling-secured consider current debt obligations in 38 See 2006 Nontraditional Mortgage Guidance, obligations.’’ Accordingly, under current determining a consumer’s ability to 71 FR 58609, 58614 (Oct.4, 2006). comment 34(a)(4)–3 the creditor must repay a covered transaction. Consistent 39 Kristopher Gerardi, Andreas Lehnert, Shane consider in the repayment ability with current § 226.34(a)(4), proposed Sherlund, and Paul S. Willen, ‘‘Making Sense of the Subprime Crisis,’’ Brookings Papers on Economic assessment a HELOC of which it has § 226.43(c)(2)(vi) would not distinguish Activity (Fall 2008), at 40, Table 3. knowledge if the HELOC will be between pre-existing closed-end and 40 The Board conducted independent analysis undertaken at or before consummation open-end mortgage obligations. The using data obtained from the FRBNY Consumer and will be secured by the same Board believes consistency requires that Credit Panel to determine the proportion of piggyback HELOCs taken out in the same month as dwelling that secures the transaction. it take the same approach when the first-lien loan that have a draw at the time of Proposed § 226.43(b)(12) would determining how to consider mortgage origination. Data used is extracted from credit define the term ‘‘simultaneous loan’’ to obligations that come into existence record data in years 2003 through 2010. See refer to other loans that are secured by concurrently with a first-lien loan as is Donghoon Less and Wilbert van der Klaauw, ‘‘An Introduction to the FRBNY Consumer Credit Panel,’’ the same dwelling and made to the same taken for pre-existing mortgage Staff Rept. No. 479 (Nov. 2010), at http:// consumer at or before consummation of obligations, whether the first-lien is a data.newyorkfed.org/research/staff_reports/ the covered transaction. The term would purchase or non-purchase transaction sr479.pdf, for further description of the database.

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a refinancing) a simultaneous loan that § 226.43(c)(2)(vi), which is discussed Immediately prior to consummation of is a HELOC is unlikely to be originated below. Last, the Board proposes to not the covered transaction, Consumer B and drawn upon to provide payment include the statutory language that ‘‘the opens a HELOC that is secured by the towards the first-lien loan, except creditor shall make a reasonable and same dwelling with the same creditor; perhaps towards closing costs. The good faith determination, based on Consumer A is not a signatory to the Board solicits comment on whether it verified and documented information, HELOC. For purposes of the definition should narrow the requirement to that the consumer has a reasonable of ‘‘simultaneous loan,’’ Consumer B is consider simultaneous loans that are ability to repay the combined payments the same consumer and the creditor HELOCs to apply only to purchase of all loans on the same dwelling must include the HELOC as a transactions. See discussion under according to the terms of those loans simultaneous loan. The Board believes proposed § 226.43(c)(6). and all applicable taxes, insurance this comment reflects statutory intent to Third, in developing this proposal (including mortgage guarantee include any loan that could impact the staff conducted outreach with a variety insurance), and assessments,’’ because consumer’s ability to repay the covered of participants that consistently these statutory requirements are transaction according to its terms (i.e., expressed the view that second-lien addressed in the repayment ability to require the creditor to consider the loans significantly impact a consumer’s provisions in proposed § 226.43(c)(2)(iv) combined payment obligations of the performance on the first-lien loan, and and (v), which are discussed more fully consumer(s) obligated to repay the that many second-lien loans are below. covered transaction). See TILA HELOCs. One industry participant Proposed comment 43(b)(12)–1 129C(a)(2). explained that the vast majority of clarifies that the definition of The term ‘‘simultaneous loan’’ appears ‘‘piggyback loans’’ it originated were ‘‘simultaneous loan’’ includes any loan in the following provisions: (1) HELOCs that were fully drawn at the that meets the definition, whether made Proposed § 226.43(c)(2)(iv), which time of origination and used to assist in by the same creditor or a third-party implements the requirement under the first-lien purchase transaction. creditor, and provides an illustrative TILA § 129C(a)(2) that a creditor Another outreach participant stated that example of this principle. This consider a consumer’s monthly payment HELOCs make up approximately 90% of proposed comment assumes a consumer obligation on a simultaneous loan that their simultaneous loan book-of- will enter into a legal obligation that is the creditor ‘‘knows or has reason to business. Industry outreach participants a covered transaction with Creditor A. know’’ will be made to the consumer; (2) generally indicated that it is a currently Immediately prior to consummation of proposed § 226.43(c)(6), which an accepted underwriting practice to the covered transaction with Creditor A, addresses the payment calculations for include HELOCs in the repayment the consumer opens a HELOC that is a simultaneous loan for purposes of ability assessment on the first-lien loan, secured by the same dwelling with proposed § 226.43(c)(2)(iv); and (3) and generally confirmed that the Creditor B. This proposed comment proposed Alternative 2— majority of simultaneous liens explains that for purposes of this § 226.43(e)(2)(v)(C), which requires the considered during the underwriting section, the loan extended by Creditor B creditor to consider a simultaneous loan process are HELOCs. Thus, for these is a simultaneous loan. To facilitate as a condition to meeting the definition reasons, the Board proposes to use its compliance, the comment would cross- of a qualified mortgage. authority under TILA Sections 105(a) reference to § 226.43(c)(2)(iv) and (c)(6) 43(b)(13) Third-Party Record and 129B(e) to broaden the scope of and associated commentary for further TILA Section 129C(a)(2), and discussion of the requirement to TILA Section 129C(a)(1) requires that accordingly proposes to define the term consider the consumer’s payment creditors determine a consumer’s ‘‘simultaneous loan’’ to include HELOCs. obligation on any simultaneous loan for repayment ability using ‘‘verified and Proposed § 226.43(b)(12) defines a purposes of determining the consumer’s documented information,’’and TILA ‘‘simultaneous loan’’ to mean another ability to repay the covered transaction Section 129C(a)(4) specifically requires covered transaction or home equity line subject to this section. verifying a consumer’s income or assets of credit subject to § 226.5b that will be Proposed comment 43(b)(12)–2 relied on to determine repayment ability secured by the same dwelling and made further clarifies the meaning of the term using a consumer’s tax return or ‘‘third- to the same consumer at or before ‘‘same consumer, and explains that for party documents’’ that provide consummation of the covered purposes of the definition of reasonably reliable evidence of the transaction. The proposed definition ‘‘simultaneous loan,’’ the term ‘‘same consumer’s income or assets, as generally tracks the meaning of ‘‘other consumer’’ includes any consumer, as discussed in detail below in the section- dwelling-secured obligations’’ under that term is defined in § 226.2(a)(11), by-section analysis of proposed current comment 34(a)(4)–3, as well as that enters into a loan that is a covered § 226.43(c)(3) and (4). The Board the statutory language of TILA Section transaction and also enters into another believes that in general creditors should 129C(a)(2) with the notable difference loan (e.g., second-lien covered rely on reasonably reliable records that the proposed term would include transaction or HELOC) secured by the prepared by a third party to verify HELOCs, as discussed above. The Board same dwelling. This comment further repayment ability under TILA Section proposes to replace the term ‘‘residential explains that where two or more 129C(a), consistent with verification mortgage loan’’ with the term ‘‘covered consumers enter into a legal obligation requirements under the Board’s 2008 transaction,’’ as defined in proposed that is a covered transaction, but only HOEPA Final Rule. See § 226.43(b)(1), for clarity. The Board one of them enters into another loan § 226.34(a)(4)(ii). However, the Board also proposes to add a reference to the secured by the same dwelling, the ‘‘same believes that in some cases a record phrase ‘‘at or before consummation of consumer’’ includes the person that has prepared by the creditor for a covered the covered transaction’’ to further entered into both legal obligations. This transaction can provide reasonably clarify that the definition does not proposed comment provides the reliable evidence of a consumer’s include pre-existing mortgage following illustrative example: Assume repayment ability, such as a creditor’s obligations. Pre-existing mortgage Consumer A and Consumer B will both records regarding a consumer’s savings obligations would be included as enter into a legal obligation that is a account held by the creditor or current debt obligations under proposed covered transaction with a creditor. employment records for a consumer

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employed by the creditor. Further, TILA 43(b)(13)(iii)–1 also provides the time of consummation, to repay the Section 129C(a)(4) allows creditors to example of a creditor’s records for an loan according to its terms, use a consumer-prepared tax return to account related to a consumer’s including any mortgage-related verify the consumer’s income or assets. outstanding obligations to the creditor, obligations; Proposed § 226.43(b)(13) therefore such as the creditor’s records for a first- • Must make the repayment ability would define the term ‘‘third-party lien mortgage to a consumer who determination by considering the records’’ to include certain records applies for a subordinate-lien home consumer’s: prepared by the consumer or creditor, equity loan. Æ Current or reasonably expected for consistency and simplicity in income or assets other than the 43(c) Repayment Ability implementing verification requirements value of the dwelling, or of any real under TILA Sections 129C(a)(1) and (4). TILA Section 129C(a)(1) provides that property to which the dwelling is Proposed § 226.43(b)(13) provides that no creditor may make a residential attached, that secures the loan; ‘‘third-party record’’ means: (1) A mortgage loan unless the creditor makes Æ Employment status, if the creditor document or other record prepared or a reasonable and good faith relies on income from the reviewed by a person other than the determination that, at the time the loan consumer’s employment in consumer, the creditor, any mortgage is consummated, the consumer has a determining repayment ability; broker, as defined in § 226.36(a)(2), or reasonable ability to repay the loan Æ Monthly payment on the covered any agent of the creditor or mortgage according to its terms and all applicable transaction; broker; (2) a copy of a tax return filed taxes, insurance, and assessments. TILA Æ Monthly payment on any with the Internal Revenue Service or a Section 129C(a)(2) provides that if a simultaneous loan that the creditor state taxing authority; (3) a record the creditor knows or has reason to know knows or has reason to know will creditor maintains for an account of the that one or more residential mortgage be made; consumer held by the creditor; or (4) if loans secured by the dwelling that Æ Monthly payment for mortgage- the consumer is an employee of the secures the covered transaction will be related obligations; creditor or the mortgage broker, a made to the same consumer, the creditor Æ Current debt obligations; document or other record regarding the must make a reasonable and good faith Æ Monthly debt-to-income ratio or consumer’s employment status or determination that the consumer has a residual income; and income. See proposed reasonable ability to repay the other Æ Credit history; and § 226.43(b)(13)(i)–(iv). loan(s) and all taxes, insurance, and • Must verify a consumer’s repayment Proposed comment 43(b)(13)–1 assessments applicable to the other ability using reasonably reliable clarifies that third party records include loan(s). TILA Section 129C(a)(3) third-party records. records transmitted or viewed provides that to determine the electronically, for example, a credit Proposed comment 43(c)–1 clarifies consumer’s repayment ability creditors that, to evaluate a consumer’s report prepared by a consumer reporting must consider: The consumer’s (1) agency and transmitted or viewed repayment ability, creditors may look to credit history; (2) current income and widely accepted governmental or non- electronically. Proposed comment reasonably expected income; (3) current 43(b)(13)–2 explains that a third-party governmental underwriting standards, obligations; (4) debt-to-income ratio or such as the Federal Housing record includes a form a creditor the residual income the consumer will provides to a third party for providing Administration’s Handbook on have after paying non-mortgage debt information, even if the creditor Mortgage Credit Analysis for Mortgage and mortgage-related obligations; (5) completes parts of the form unrelated to Insurance on One-to-Four Unit Mortgage employment status; and (6) financial the information sought. Proposed Loans. Proposed comment 43(c)–1 resources other than the consumer’s comment 43(b)(13)–2 provides an states, for example, that creditors may equity in the dwelling that secures example where the creditor gives the use such standards in determining: (1) repayment of the loan. Further, creditors consumer’s employer a form for Whether to classify particular inflows, must base their determination of the verifying the consumer’s employment obligations, or property as ‘‘income,’’ consumer’s repayment ability on status and income and clarifies that the ‘‘debt,’’ or ‘‘assets’’; (2) factors to consider verified and documented information. creditor may fill in the creditor’s name in evaluating the income of a self- and other portions of the form unrelated Finally, TILA Section 129C(a)(3) employed or seasonally-employed to the consumer’s employment status or provides that creditors must use a consumer; and (3) factors to consider in income. Proposed comment payment schedule that fully amortizes evaluating the credit history of a 43(b)(13)(i)–1 clarifies that a third-party the loan over the loan term in consumer who has obtained few or no record includes a document or other determining the consumer’s repayment extensions of traditional ‘‘credit,’’ as record prepared by the consumer, the ability. These TILA provisions are defined in § 226.2(a)(14). Proposed creditor, the mortgage broker, or an substantially similar to the repayment comment 43(c)–1 is consistent with, but agent of the creditor or mortgage broker, ability requirements under the Board’s broader than, current commentary on if the record is reviewed by a third 2008 HOEPA Final Rule. See determining a consumer’s debt-to- party. For example, a profit-and-loss § 226.34(a)(4), 226.35(b)(1). income ratio to meet the presumption of statement prepared by a self-employed Proposed § 226.43(c) would compliance with the repayment ability consumer and reviewed by a third-party implement TILA Section 129C(a)(1)–(3) requirement of the Board’s 2008 HOEPA accountant is a third-party record under and is substantially similar to those Final Rule. See § 226.34(a)(4)(iii)(C), § 226.43(b)(13)(i). Finally, proposed provisions. Specifically, proposed 226.35(b)(1). Currently, comment comment 43(b)(13)(iii)–1 clarifies that a § 226.43(c) provides that a creditor: 34(a)(4)(iii)(C)–1 states that creditors third-party record includes a record the • Must not make a covered transaction may look to widely accepted creditor maintains for an account of the unless the creditor makes a underwriting standards to determine consumer held by the creditor, and reasonable and good faith whether to classify particular inflows or provides the examples of checking determination at or before obligations as ‘‘income’’ or ‘‘debt.’’ accounts, savings accounts, and consummation that the consumer The Board’s proposed rule provides retirement accounts. Proposed comment will have a reasonable ability, at the flexibility in underwriting standards so

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that creditors may adapt their relevant to determining a creditor’s § 226.43(c)(2)(i) uses the term ‘‘assets’’ underwriting processes to a consumer’s compliance with the rule. However, rather than ‘‘financial resources,’’ to particular circumstances, such as to the proposed comment 43(c)(1)–1 states conform with terminology used in other needs of self-employed consumers and further that if such application or provisions under TILA Section 129C(a) consumers heavily dependent on records state there will be a change in and Regulation Z. See, e.g. TILA Section bonuses and commissions, consistent the consumer’s repayment ability after 129C(a)(4) (requiring that creditors with the Board’s 2008 HOEPA Final consummation (for example, if a consider a consumer’s assets in Rule. See 73 FR 44522, 44547, July 30, consumer’s application states that the determining repayment ability); 2008. For example, the proposed rule consumer plans to retire within twelve § 226.51(a) (requiring consideration of a does not prescribe: How many years of months without obtaining new consumer’s assets in determining a tax returns or other information a employment or transition from full-time consumer’s ability to repay a credit creditor must consider to determine the to part-time employment), the creditor extension under a credit card account). consumer’s repayment ability; which must consider that information. The Board believes the terms ‘‘financial income figure on tax returns creditors Proposed comment 43(c)(1)–1 is resources’’ and ‘‘assets’’ are synonymous must use; the elements of credit history substantially similar to current as used in TILA Section 129C(a), and to be considered, such as late payments comment 34(a)(4)–5 adopted by the the term ‘‘assets’’ is used throughout the or bankruptcies; the way in which to Board’s 2008 HOEPA Final Rule. proposal for consistency. verify credit history, such as by using a Proposed comment 43(c)(1)–2 clarifies Second, proposed § 226.43(c)(2)(i) tri-merge report or records of rental that proposed § 226.43(c)(1) does not provides that creditors may not look to require or permit the creditor to make payments; or a specific maximum debt- the value of the dwelling that secures inquiries prohibited by Regulation B, 12 to-income ratio or the compensating the covered transaction, instead of CFR part 202, consistent with current factors to allow a consumer to exceed providing that creditors may not look to comment 34(a)(4)–7 adopted by the such a ratio. The Board believes such the consumer’s equity in the dwelling. Board’s 2008 HOEPA Final Rule. flexibility is necessary because the rule The Board believes that TILA Section would cover such a wide variety of 43(c)(2) Basis for Determination 129C(a)(3) is intended to address the consumers and mortgage products. risk that creditors will consider the Removal of § 226.34(a)(4) and TILA Section 129C(a)(3) provides that amount that could be obtained through 226.35(b)(1). Repayment ability to determine a consumer’s repayment a foreclosure sale of the dwelling, which requirements under TILA Section ability, creditors must consider a 129C(a) apply to all dwelling-secured consumer’s credit history, current and may exceed the amount of the consumer credit transactions, other than reasonably expected income, current consumer’s equity in the dwelling. This HELOCs, reverse mortgages, temporary obligations, debt-to-income ratio or the approach is consistent with the Board’s or ‘‘bridge’’ loans with a loan term of 12 residual income the consumer will have 2008 HOEPA Final Rule, which months or less, and timeshare after paying non-mortgage debt and prohibits a creditor from extending transactions, as discussed in detail mortgage-related obligations, credit ‘‘based on the value of the above in the section-by-section analysis employment status, and ‘‘financial consumer’s collateral.’’ See of proposed § 226.43(a). Accordingly, resources’’ other than the consumer’s § 226.34(a)(4), 226.35(b)(1). The Board the Board proposes to implement TILA equity in the dwelling or real property proposes this adjustment pursuant to its Section 129C in a new § 226.43 and that secures repayment of the loan. authority under TILA Section 105(a), remove requirements to consider TILA Section 129C(a)(3) also provides which provides that the Board’s repayment ability for high-cost that creditors must determine regulations may contain such additional mortgages under § 226.34(a)(4) and for repayment ability using a repayment requirements, classifications, higher-priced mortgage loans under schedule that fully amortizes the loan differentiations, or other provisions, and § 226.35(b)(1), as discussed in detail over the loan term. Proposed may provide for such adjustments and above in the section-by-section analysis § 226.43(c)(2) would implement the exceptions for all or any class of of § 226.34 and 226.35. requirement to consider specific factors transactions as in the Board’s judgment in determining repayment ability. are necessary or proper to effectuate the 43(c)(1) General Requirement Proposed § 226.43(c)(2) is substantially purposes of TILA, prevent Proposed § 226.43(c)(1) would similar to TILA Section 129C(a)(3), circumvention or evasion thereof, or implement TILA Section 129C(a)(1) and except for some minor terminology facilitate compliance therewith. 15 provides that no creditor may make a changes, as discussed below. U.S.C. 1604(a). This approach is further covered transaction unless the creditor supported by the Board’s authority makes a reasonable and good faith 43(c)(2)(i) Income or Assets under TILA Section 129B(e) to determination at or before TILA Section 129C(a)(3) provides that condition terms, acts or practices consummation that the consumer will in making the repayment ability relating to residential mortgage loans have a reasonable ability, at the time of determination, creditors must consider, that the Board finds necessary or proper consummation, to repay the covered among other factors, a consumer’s to effectuate the purposes of TILA. 15 transaction according to its terms, current income, reasonably expected U.S.C. 1639b(e). One of the purposes of including any mortgage-related income, and ‘‘financial resources’’ other TILA is to ‘‘assure that consumers are obligations. Proposed comment than the consumer’s equity in the offered and receive residential mortgage 43(c)(1)–1 clarifies that a change in the dwelling or real property that secures loan on terms that reasonably reflect consumer’s circumstances after loan repayment. Furthermore, under their ability to repay the loans.’’ TILA consummation (for example, a TILA Section 129C(a)(9), creditors may Section 129B(a)(2); 15 U.S.C. significant reduction in income due to consider the seasonality or irregularity 1629b(a)(2). The Board believes a job loss or a significant obligation of a consumer’s income in determining providing that creditors may not arising from a major medical expense) repayment ability. consider the value of the dwelling is that is not reflected in the consumer’s Proposed § 226.43(c)(2)(i) generally proper to effectuate the purposes of application or the records used to mirrors TILA Section 129C(a)(3) but TILA Section 129C(a) that creditors determine repayment ability is not differs in two respects. First, proposed extend credit based on the consumer’s

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repayment ability rather than on the ability. See comments 34(a)(4)(ii)–1, –3. with current comment 34(a)(4)–6 dwelling’s foreclosure value. See TILA The Board believes that the requirement adopted by the Board’s 2008 HOEPA Section 129B(a)(2). to consider a consumer’s reasonably Final Rule but provides an example of Proposed comment 43(c)(2)(i)–1 expected income under TILA Section seasonal or irregular income that is not clarifies that creditors may base a 129C(a) should be interpreted consistent employment income. determination of repayment ability on with current § 226.34(a)(4), in light of 43(c)(2)(ii) Employment Status current or reasonably expected income the substantial similarity between the from employment or other sources, provisions. Accordingly, proposed TILA Section 129C(a)(3) requires that assets other than the dwelling that § 226.43(c)(2)(i) provides that creditors creditors consider a consumer’s secures the covered transaction, or both. must consider a consumer’s current employment status in determining the Proposed comment 43(c)(2)(i)–2 cross- income or reasonably expected income. consumer’s repayment ability, among references proposed comment 43(a)–2 to Proposed comment 43(c)(2)(i)–3 clarifies other requirements. Proposed clarify that the value of the dwelling that the creditor may rely on the § 226.43(c)(2)(ii) implements this includes the value of the real property consumer’s reasonably expected income requirement and clarifies that creditors to which the dwelling is attached, if the either in addition to or instead of need consider a consumer’s real property also secures the covered current income. employment status only if they rely on transaction. Proposed comment Proposed comment 43(c)(2)(i)–3 income from the consumer’s 43(c)(2)(i)–1 also provides examples of further clarifies that if creditors rely on employment in determining repayment types of income the creditor may expected income, the expectation that ability. Proposed comment 43(c)(2)(ii)–1 consider, including salary, wages, self- the income will be available for states, for example, that if a creditor employment income, military or reserve repayment must be reasonable and relies wholly on a consumer’s duty income, tips, commissions, and verified with third-party records that investment income to determine the retirement benefits; and examples of provide reasonably reliable evidence of consumer’s repayment ability, the assets the creditor may consider, the consumer’s expected income. creditor need not verify the consumer’s including funds in a savings or checking Proposed comment 43(c)(2)(i)–3 also employment status. Proposed comment account, amounts vested in a retirement gives examples of expected bonuses 43(c)(2)(ii)–1 clarifies that employment account, stocks, and bonds. The verified with documents demonstrating may be full-time, part-time, seasonal, proposed comment is substantially past bonuses, and expected salary from irregular, military, or self-employment. similar to comment 34(a)(4)–6 adopted a job verified with a written statement This comment is consistent with current by the Board’s 2008 HOEPA Final Rule, from an employer stating a specified comment 34(a)(4)–6 adopted by the but adds additional examples of income salary, consistent with current comment Board’s 2008 HOEPA Final Rule. and assets to facilitate compliance. 34(a)(4)(ii)–3 adopted by the Board’s Employment status of military Proposed comment 43(c)(2)(i)–2 clarifies 2008 HOEPA Final Rule. As the Board personnel. Creditors in general must that if a creditor bases its determination stated in connection with the 2008 verify information relied on to of repayment ability entirely or in part HOEPA Final Rule, in some cases a determine repayment ability using on a consumer’s income, the creditor covered transaction may have a likely reasonably reliable third-party records need consider only the income payment increase that would not be but may verify employment status orally necessary to support a determination affordable at the borrower’s income at as long as they prepare a record of the that the consumer can repay the covered the time of consummation. A creditor oral information, as discussed below in transaction. For example, if a consumer may be able to verify a reasonable the section-by-section analysis of earns income from a full-time job and a expectation of an increase in the proposed § 226.43(c)(3)(ii). Proposed part-time job and the creditor borrower’s income that will make the comment 43(c)(2)(ii)–2 clarifies that reasonably determines that the higher payment affordable to the creditors also may verify the consumer’s income from a full-time job borrower. See 73 FR 44522, 44544, July employment status of military personnel is sufficient to repay the covered 30, 2008. using the electronic database transaction, the creditor need not Seasonal or irregular income. TILA maintained by the Department of consider the consumer’s income from Section 129C(a)(9) provides that Defense (DoD) to facilitate identification the part-time job. Further, the creditor creditors may consider the seasonality of consumers covered by credit need verify only the income (and assets) or irregularity of a consumer’s income protections provided pursuant to 10 relied on to determine the consumer’s in determining repayment ability. U.S.C. 987, also known as the ‘‘Talent repayment ability, as discussed below in Accordingly, proposed comment Amendment.’’ 41 The Board solicits the section-by-section analysis of 43(c)(2)(i)–4 clarifies that a creditor comment on whether additional proposed § 226.43(c)(4). Proposed reasonably may determine that a flexibility in verifying the employment comment 43(c)(2)(i)–2 cross-references consumer can make periodic loan status of military personnel is necessary proposed comment 43(c)(4)–1, which is payments even if the consumer’s to facilitate compliance and whether substantially similar to current income, such as self-employment comment 43(c)(2)(ii)–2 also should state comment 34(a)(4)(ii)–1, adopted by the income, is seasonal or irregular. that creditors may verify the Board’s 2008 HOEPA Final Rule. Proposed comment 43(c)(2)(i)–4 states, employment status of a member of the Expected income. TILA Section for example, that if the creditor military using a Leave and Earnings 129C(a) provides that creditors must determines that the income a consumer Statement. Is a Leave and Earnings consider a consumer’s current and receives a few months each year from Statement as reliable a means of reasonably expected income to selling crops is sufficient to make determine repayment ability. This is monthly loan payments when divided 41 The Talent Amendment is contained in the consistent with current § 226.34(a)(4), equally across 12 months, the creditor John Warner National Defense Authorization Act. but commentary on § 226.34(a)(4) reasonably may determine that the See Public Law 109–364, 120 Stat. 2083, 2266, Oct. clarifies that creditors need consider a consumer can repay the loan, even 17, 2006; see also 72 FR 50580, 5088, Aug. 31, 2007 (discussing the DoD database in a final rule consumer’s reasonably expected income though the consumer may not receive implementing the Talent Amendment). Currently, only if the creditor relies on such income during certain months. the DoD database is available at https:// income in determining repayment Comment 43(c)(2)(i)–4 is consistent www.dmdc.osd.mil/appj/mla/.

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verifying the employment status of mortgage guarantee insurance), and credit that will be made to the same military personnel as using the assessments.’’ As discussed under consumer at consummation and secured electronic database maintained by the proposed § 226.43(b)(12), the Board is by the same dwelling, the creditor DoD? Is a Leave and Earnings Statement proposing to use its authority under knows or has reason to know of the equally reliable for determining TILA Sections 105(a) and 129B(e) to simultaneous loan and must consider employment status for a civilian broaden the scope of TILA Section the simultaneous loan. Alternatively, if employee of the military as for a service 129C(a)(2) to include HELOCs, and the creditor has information that member? define the term ‘‘simultaneous loan’’ suggests the downpayment source is the The Board solicits comment on this accordingly, for purposes of the consumer’s income or existing assets, approach, and on whether there are requirements under proposed the creditor would be under no further other specific employment situations for § 226.43(c)(2)(iv) and (c)(6). 15 U.S.C. obligation to determine whether a which additional guidance should be 1604(a). simultaneous loan will be extended at provided. Proposed comment 43(c)(2)(iv)–1 or before consummation of the covered clarifies that for purposes of the 43(c)(2)(iii) Monthly Payment on the transaction. repayment ability determination, a Covered Transaction Proposed comment 43(c)(2)(iv)–3 simultaneous loan includes any covered clarifies the scope of timing and the Proposed § 226.43(c)(2)(iii) would transaction or HELOC that will be made meaning of the phrase ‘‘at or before implement the requirements under to the same consumer at or before consummation’’ with respect to TILA Section 129C(a)(1) and (3), in part, consummation of the covered simultaneous loans that the creditor by requiring that the creditor consider transaction and secured by the same must consider for purposes of proposed the consumer’s monthly payment on the dwelling that secures the covered § 226.43(c)(2)(iv). This comment would covered transaction, calculated in transaction. This comment explains that accordance with proposed § 226.43(c)(5) explain that a simultaneous loan a HELOC that is a simultaneous loan includes a loan that comes into for purposes of determining the that the creditor knows or has reason to consumer’s repayment ability on a existence concurrently with the covered know about must be considered as a transaction subject to proposed covered transaction. See proposed mortgage obligation in determining a § 226.43(c)(5) for a discussion of the § 226.43(c). The comment would further consumer’s ability to repay the covered state that, in all cases, a simultaneous proposed payment calculation transaction, even though the HELOC is requirements. Proposed comment loan does not include a credit not a covered transaction subject to transaction that occurs after 43(c)(2)(iii)–1 would clarify that for § 226.43. To facilitate compliance, this consummation of the covered purposes of the repayment ability comment cross-references proposed transaction subject to proposed determination, the creditor must § 226.43(a), which discusses the scope § 226.43(c). consider the consumer’s monthly of the ability-to-repay provisions, payment on a covered transaction that is proposed § 226.43(b)(12) for the Proposed comment 43(c)(2)(iv)–4 calculated as required under proposed meaning of the term ‘‘simultaneous provides further guidance regarding § 226.43(c)(5), taking into account any loan,’’ and proposed comment verification of simultaneous loans. This mortgage-related obligations. This 43(b)(12)–2 for further explanation of comment would state that although a comment would also provide a cross- the term ‘‘same consumer.’’ credit report may be used to verify reference to proposed § 226.43(b)(8) for Proposed comment 43(c)(2)(iv)–2 current obligations, it will not reflect a the meaning of the term ‘‘mortgage- provides additional guidance regarding simultaneous loan that has not yet been related obligations.’’ the standard ‘‘knows or has reason to consummated or has just recently been ’’ consummated. This comment would 43(c)(2)(iv) Simultaneous Loans know for purposes of proposed § 226.43(c)(2)(iv) and explains that, for explain that if the creditor knows or has Proposed § 226.43(c)(2)(iv) requires example, where a covered transaction is reason to know that there will be a that the creditor consider the a home purchase loan, the creditor must simultaneous loan extended at or before consumer’s monthly payment obligation consider the consumer’s periodic consummation, the creditor may verify on any simultaneous loan that the payment obligation for any ‘‘piggyback’’ the simultaneous loan by obtaining creditor knows or has reason to know second-lien loan that the creditor knows third-party verification from the third- will be made to the consumer. Proposed or has reason to know will be used to party creditor of the simultaneous loan. § 226.43(c)(2)(iv) also requires that the finance part of the consumer’s down The comment would provide, as an consumer’s monthly payment obligation payment. This comment would provide example, that the creditor may obtain a on the simultaneous loan be calculated that the creditor complies with this copy of the promissory note or other in accordance with proposed requirement where, for example, the written verification from the third-party § 226.43(c)(6), which is discussed creditor follows policies and procedures creditor in accordance with widely below. Proposed § 226.43(c)(2)(iv) that show at or before consummation accepted governmental or non- implements TILA Section 129C(a)(2), that the same consumer has applied for governmental standards. To facilitate which provides that ‘‘if a creditor another credit transaction secured by compliance, the comment would cross- knows, or has reason to know, that 1 or the same dwelling. reference proposed comments 43(c)(3)– more residential mortgage loans secured This proposed comment would 1 and –2, which discuss verification by the same dwelling will be made to provide the following illustrative using third-party records. Based on the same consumer, the creditor shall example: Assume a creditor receives an outreach, the Board believes it is make a reasonable and good faith application for a home purchase loan feasible for creditors to obtain copies of determination, based on verified and where the requested loan amount is less promissory notes or other written documented information, that the than the home purchase price. The verification from third-party creditors, consumer has a reasonable ability to creditor’s policies and procedures but solicits comment on other examples repay the combined payments of all require the consumer to state the source the Board could provide to facilitate loans on the same dwelling according to of the downpayment. If the creditor creditors’ compliance with the proposed the terms of those loans and all determines the source of the verification requirement with respect to applicable taxes, insurance (including downpayment is another extension of simultaneous loans.

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The Board notes that proposed cooperative fees; ground rent or requirement, and whether additional § 226.43(c)(2)(iv) requires creditors to leasehold payments; and special guidance is necessary. consider a simultaneous loan when assessments. Proposed comment 43(c)(2)(v)–3 assessing the consumer’s ability to repay Proposed § 226.43(c)(2)(v) is generally explains that estimates of mortgage- a covered transaction, regardless of consistent with the requirement under related obligations should be based whether the simultaneous loan is made current § 226.34(a)(4) of the Board’s upon information that is known to the in connection with a purchase or non- 2008 HOEPA Final Rule that the creditor at the time the creditor purchase covered transaction (i.e., creditor include mortgage-related underwrites the mortgage obligation. refinancing). As discussed more fully obligations when determining the This comment would further explain below under proposed § 226.43(c)(6), consumer’s repayment ability on the that information is known if it is which addresses payment calculation loan, except that § 226.34(a)(4) does not ‘‘reasonably available’’ to the creditor at requirements for simultaneous loans, extend the verification requirement to the time of underwriting the loan, and the Board recognizes that in the case of mortgage-related obligations. In would cross-reference current comment a non-purchase transaction, a contrast, under proposed § 226.43(c)(3) 17(c)(2)(i)–1 for the meaning of simultaneous loan that is a HELOC is creditors would need to verify mortgage- ‘‘reasonably available.’’ The Board unlikely to be originated and drawn related obligations for purposes of the believes it is appropriate to permit upon to provide payment towards the repayment ability determination. See creditors to use estimates of mortgage- first-lien loan being refinanced, except proposed § 226.43(c)(3) and associated related obligations because actual perhaps towards closing costs. The commentary discussing the verification amounts may be unknown at the time of Board is soliciting comment on whether requirement generally. underwriting. For example, outreach it should narrow the requirement to Proposed comment 43(c)(2)(v)–1 participants confirmed that the current consider simultaneous loans that are states that the creditor must include in underwriting practice is to use estimates HELOCs to apply only to purchase its repayment ability assessment the of property taxes because actual transactions. See discussion under consumer’s mortgage-related property tax amounts are typically unknown until consummation. proposed § 226.43(c)(6) regarding obligations, such as the expected Proposed comment 43(c)(2)(v)–3 further payment calculations for simultaneous property taxes and premiums for clarifies that for purposes of proposed loans. mortgage-related insurance required by § 226.43(c), the creditor would not need the creditor as set forth in proposed 43(c)(2)(v) Mortgage-Related Obligations to project potential changes, such as by § 226.45(b)(1). This comment would Proposed § 226.43(c)(2)(v) implements estimating possible increases in taxes clarify, however, that creditors need not the requirement under TILA Sections and insurance. 129C(a)(1)–(3) that the creditor include mortgage-related insurance Proposed comment 43(c)(2)(v)–4 determine a consumer’s repayment premiums that the creditor does not states that creditors must make the ability taking into account the require, such as credit insurance or fees repayment ability determination consumer’s monthly payment for any for optional debt suspension and debt required under proposed § 226.43(c) mortgage-related obligations, based on cancellation agreements. This comment based on information verified from verified and documented information as would also explain that mortgage- reasonably reliable records. This required under proposed § 226.43(c)(3). related obligations must be included in comment would explain that guidance TILA Sections 129C(a)(1) and (2) require the creditor’s determination of regarding verification of mortgage- that the creditor determine a consumer’s repayment ability regardless of whether related obligations can be found in repayment ability on a covered the amounts are included in the proposed comments 43(c)(3)–1 and –2, transaction based on verified and monthly payment or whether there is an which discuss verification using third- documented information, ‘‘according to escrow account established. To facilitate party records. The Board solicits [the loans’s] terms, and all applicable compliance, this comment would cross- comment on any special concerns taxes, insurance (including mortgage reference proposed § 226.43(b)(8) for the regarding the requirement to document guarantee insurance), and assessments.’’ meaning of the term ‘‘mortgage-related certain mortgage-related obligations, TILA Section 129C(a)(3) further requires obligations.’’ such as for ground rent or leasehold that a consumer’s debt-to-income ratio As discussed more fully below under payments, or special assessments. The be considered as part of the repayment proposed § 226.43(c)(5), the Dodd-Frank Board also solicits comment on whether ability determination after allowing for Act provisions require creditors to it should provide, by way of example, ‘‘non-mortgage debt and mortgage- determine the consumer’s ability to that the HUD–1 or 1A, or a successor related obligations.’’ The Dodd-Frank repay based on monthly payments, form, can serve as verification of certain Act does not define the term ‘‘mortgage- taking into account mortgage-related mortgage-related obligations reflected related obligations.’’ As discussed in obligations. However, the Board therein (e.g., title insurance), where a proposed § 226.43(b)(8), the Board recognizes that creditors will need to legal obligation exists to complete the proposes to use the term ‘‘mortgage- convert mortgage-related obligations HUD–1 or 1A accurately. See 24 CFR related obligations’’ to refer to ‘‘all that are not monthly to pro rata monthly 3500.1 et seq. of Regulation X, which applicable taxes, insurance (including amounts to comply with this proposed implements the Real Estate Settlement mortgage guarantee insurance), and requirement. Thus, proposed comment Procedures Act (RESPA), 15 U.S.C. 2601 assessments.’’ Proposed § 226.43(b)(8) 43(c)(2)(v)–2 clarifies that, in et seq. ‘‘ considering mortgage-related obligations would define the term mortgage-related 43(c)(2)(vi) Current Debt Obligations obligations’’ to mean property taxes; that are not paid monthly, the creditor mortgage-related insurance premiums may look to widely accepted TILA Section 129C(a)(1) and (3) required by the creditor as set forth in governmental or non-governmental requires creditors to consider and verify proposed § 226.45(b)(1); 42 homeowner standards in determining the pro rata ‘‘current obligations’’ as part of the association, condominium, and monthly payment amount. The Board repayment ability determination. This solicits comment on operational new TILA provision is consistent with 42 See 2011 Escrow Proposal, 76 FR 11598, 11621, difficulties creditors may encounter the 2008 HOEPA Final Rule, which Mar. 2, 2011. when complying with this ‘‘monthly’’ prohibits creditors from extending

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credit without regard to a consumer’s current debt obligation that a consumer Finally, the Board solicits comment repayment ability, including a has not listed on the application, the on whether it should provide guidance consumer’s current obligations, and creditor must consider the obligation. on consideration and verification of requires creditors to verify the The credit report is deemed a current debt obligations for joint consumer’s current obligations. Sections reasonably reliable third-party record applicants. The Board also solicits 226.34(a)(4) and (a)(4)(ii)(C), under § 226.43(b)(3). Consistent with comment on whether the guidance 226.35(b)(1). In addition, current commentary to the 2008 HOEPA Final should differ for non-occupant joint comment 34(a)(4)(iii)(C)–1 provides that Rule, the proposed comment further applicants and occupant joint creditors may look to widely accepted provides that if a credit report does not applicants. governmental and non-governmental reflect a current debt obligation that a 43(c)(2)(vii) Debt-to-Income Ratio or underwriting standards in defining consumer has listed on the application, Residual Income ‘‘debt,’’ including, for example, those set the creditor must consider the forth in the Federal Housing obligation. However, the creditor need TILA Section 129C(a)(3) requires Administration’s (FHA) handbook on not verify the existence or amount of the creditors, as part of the repayment Mortgage Credit Analysis for Mortgage obligation through another source, as ability determination, to consider the Insurance on One- to Four-Unit discussed in the section-by-section debt-to-income ratio or the residual Mortgage Loans. Finally, current analysis for § 226.43(c)(3) below. If a income the consumer will have after comment 34(a)(4)(ii)(C)–1 provides that creditor nevertheless verifies an paying mortgage-related obligations and a credit report may be used to verify obligation, the creditor must consider current debt obligations. This new TILA current obligations. If, however, a credit the obligation based on the information provision is consistent with the Board’s report does not reflect an obligation that from the verified source. The Board 2008 HOEPA Final Rule, in which a a consumer has listed on an application, solicits comment on the feasibility of creditor is presumed to have complied then the creditor is responsible for requiring creditors independently to with the repayment ability requirement considering the obligation, but is not verify current debt obligations not if, among other things, the creditor required to verify the existence or reflected in the credit report that a ‘‘assesses the consumer’s repayment amount of the obligation through consumer has listed on the application. ability taking into account at least one another source. If a creditor nevertheless Such a requirement would be consistent of the following: The ratio of total debt verifies an obligation, the creditor must with TILA Section 129C(a)(1), which obligations to income, or the income the consider the obligation based on the requires the repayment ability consumer will have after paying debt information from the verified source. determination to be based on verified obligations.’’ Section 226.34(a)(4)(iii)(C), Proposed § 226.43(c)(2)(vi) information. On the other hand, 226.35(b)(1). In addition, comment implements TILA Section 129C(a)(1) requiring creditors to verify these 34(a)(4)(iii)(C)–1 provides that creditors and (3) and requires creditors to obligations may result in increased may look to widely accepted consider the consumer’s current debt compliance and litigation costs without governmental and non-governmental obligations as part of the repayment offsetting benefits. underwriting standards in defining ability determination. As discussed The Board solicits comment on three ‘‘income’’ and ‘‘debt,’’ including, for below, proposed § 226.43(c)(3) additional issues. First, the Board example, those set forth in the Federal implements TILA Section 129C(a)(1) by solicits comment on whether it should Housing Administration’s (FHA) requiring that a creditor verify a provide additional guidance on handbook on Mortgage Credit Analysis consumer’s repayment ability, which considering debt obligations that are for Mortgage Insurance on One- to Four- would include the consumer’s current almost paid off. For example, some Unit Mortgage Loans. debt obligations. underwriting standards limit the Proposed § 226.43(c)(2)(vii) Proposed comment 43(c)(2)(vi)–1 consideration of current debt obligations implements TILA Section 129C(a)(3) clarifies that creditors may look to to recurring obligations extending 10 and requires creditors, as part of the widely accepted governmental and non- months or more, and recurring repayment ability determination, to governmental underwriting standards in obligations extending less than 12 consider the consumer’s monthly debt- determining how to define ‘‘current debt months if they affect the consumer’s to-income ratio, or residual income. obligations’’ and how to verify such repayment ability in the months Proposed comment 43(c)(2)(vii)–1 cross- obligations. For example, a creditor immediately after consummation. references § 226.43(c)(7) regarding the would be required to consider student Requiring creditors to consider debts definitions and calculations for the loans, automobile loans, revolving debt, that are almost paid off would advance monthly debt-to-income ratio and alimony, child support, and existing safe and responsible lending, but may residual income. mortgages. To verify current debt unduly limit access to credit. Consistent with the 2008 HOEPA obligations as required by § 226.43(c)(3), Second, the Board solicits comment Final Rule, TILA Section 129C(a)(3) a creditor would be permitted, for on whether it should provide additional requires creditors to consider either the instance, look to credit reports, student guidance on considering debt consumer’s debt-to-income ratio or the loan statements, automobile loan obligations that are in forbearance or consumer’s residual income. As in the statements, credit card statements, deferral. For example, some 2008 HOEPA Final Rule, the proposal alimony or child support court orders, underwriting standards do not include provides creditors flexibility to and existing mortgage statements. This consideration of projected obligations determine whether using a debt-to- approach would parallel the 2008 deferred for at least 12 months, in income ratio or residual income HOEPA Final Rule’s model for particular student loans. Many increases a creditor’s ability to predict consideration and verification of income creditors, however, consider all repayment ability. If one of these and would preserve flexibility for projected obligations. Permitting metrics alone holds as much predictive creditors. The Board solicits comment creditors not to consider debt power as the two together, as may be on this approach, and on whether more obligations that are in forbearance or true of certain underwriting models at specific guidance should be provided. deferral may further limit access to certain times, then requiring creditors to Proposed comment 43(c)(2)(vi)–2 credit, but may also run counter to safe use both metrics could reduce access to states that if a credit report reflects a and responsible lending. credit without an offsetting increase in

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consumer protection. 73 FR 44550, July Proposed § 226.43(c)(3) would average incomes paid by the consumer’s 30, 2008. Outreach conducted by Board implement the general requirement to employer, for example, would not be staff also indicates that residual income verify a consumer’s repayment ability specific to the individual consumer and appears not to be as widely used or under TILA Section 129C(a)(1) and are not sufficient. Proposed comment tested as the debt-to-income ratio. requires that creditors verify a 43(c)(3)–2 explains that creditors may consumer’s repayment ability using obtain third-party records from a third- 43(c)(2)(viii) Credit History reasonably reliable third-party records, party service provider, as long as the TILA Section 129C(a)(1) and (3) with two exceptions. First, creditors records are reasonably reliable and requires creditors to consider and verify may orally verify a consumer’s specific to the individual consumer. credit history as part of the ability-to- employment status, if they prepare a Creditors also may obtain third-party repay determination. Creditors must record of the oral employment status records, for example, payroll statements, accordingly assess willingness to repay information. See proposed directly from the consumer. Proposed and not simply ability to repay. By § 226.43(c)(3)(i). The Board believes that comments 43(c)(3)–1 and –2 are contrast, the 2008 HOEPA Final Rule creditors in general should use consistent with current commentary and does not require consideration of credit reasonably reliable third-party records the supplementary information history. to verify information they rely on to discussing how creditors may obtain Proposed § 226.43(c)(2)(vii) determine repayment ability, to records relied on to determine implements TILA Section 129C(a)(3) document that independent information repayment ability under the Board’s and requires creditors to consider the supports their determination. Based on 2008 HOEPA Final Rule. See comments consumer’s credit history as part of the outreach to several creditors and 34(a)(4)(ii)(A)–1, –2, and –4; 73 FR repayment ability determination. As secondary market investors, however, 44522, 44547, July 30, 2008 (‘‘Creditors discussed below, proposed the Board believes that allowing may [* * *] rely on third party § 226.43(c)(3) implements TILA Section creditors to verify a consumer’s documentation the consumer provides 129C(a)(1) by requiring that a creditor employment status orally may increase directly to the creditor.’’) verify a consumer’s repayment ability, the efficiency of the process of verifying The Board solicits comment on which would include the consumer’s employment status without reducing the whether any documents or records credit history. reliability of the information obtained. prepared by the consumer and not Proposed comment 43(c)(2)(viii)–1 Over time, many creditors and reviewed by a third party appropriately clarifies that creditors may look to secondary market investors have come can be considered in determining widely accepted governmental and non- to allow oral verification of employment repayment ability, for example, because governmental underwriting standards to status as long as the consumer’s a particular record provides information define and verify ‘‘credit history.’’ For employment income is verified using not obtainable using third-party records. example, a creditor may consider factors third-party records. The Board is not In particular, the Board solicits such as the number and age of credit aware of a reduction in the reliability of comment on methods currently used to lines, payment history, and any employment status information as a ensure that documents prepared by self- judgments, collections, or bankruptcies. result of the shift from written to oral employed consumers (such as a year-to- To verify credit history as required by verification of employment status. Also, date profit and loss statement for the § 226.43(c)(3), a creditor may, for some employers may prefer to orally period after the period covered by the instance, look to credit reports from verify a consumer’s employment status, consumer’s latest income tax return, or credit bureaus, or other nontraditional for example, because of efficiency an operating income statement prepared credit references contained in third- considerations or concerns about by a consumer whose income includes party documents, such as rental appearing to commit to continuing to rental income) are reasonably reliable payment history or public utility employ the consumer. Proposed for use in determining repayment payments. The Board solicits comment § 226.43(c)(3)(ii) does not allow ability. on this approach. creditors to orally verify a consumer’s 43(c)(4) Verification of Income or Assets employment income, however. 43(c)(3) Verification Using Third-Party TILA Section 129C(a)(4) requires that Records The second exception to the requirement to verify repayment ability creditors verify amounts of income or TILA Section 129C(a)(1) requires that using third-party records applies in assets relied upon to determine creditors make a reasonable and good cases where a creditor relies on a repayment ability by reviewing the faith determination, based on ‘‘verified consumer’s credit report to verify a consumer’s Internal Revenue Service and documented information,’’ that a consumer’s current debt obligations, (IRS) Form W–2, tax returns, payroll consumer has a reasonable ability to and the consumer’s application states a statements, financial institution records, repay the covered transaction. The current debt obligation not shown in the or other third-party documents that Board’s 2008 HOEPA Final Rule consumer’s credit report. Under provide reasonably reliable evidence of requires that creditors verify the proposed § 226.43(c)(3)(ii), the creditor the consumer’s income or assets. TILA consumer’s income or assets relied on to need not independently verify such Section 129C(a)(4) provides further that, determine repayment ability and the current debt obligations. Proposed to safeguard against fraudulent consumer’s current obligations. See § 226.43(c)(3)(ii) is consistent with reporting, creditors must consider either § 226.34(a)(4)(ii)(A), (C). Thus, TILA current comment 34(a)(4)(ii)(C)–1 (1) IRS transcripts of tax returns or (2) Section 129C(a)(1) differs from the adopted by the Board’s 2008 HOEPA an alternative method that quickly and Board’s 2008 HOEPA Final Rule by Final Rule. effectively verifies third-party income requiring creditors to verify information Proposed comment 43(c)(3)–1 documentation, subject to rules relied on in considering each of the explains that records used to verify a prescribed by the Board. TILA Section specific factors required to be consumer’s repayment ability under 129C(a)(4) is substantially similar to considered under TILA Section proposed § 226.43(c)(1)(ii) must be § 226.34(a)(4)(ii)(A), adopted by the 129C(a)(3), which are discussed above specific to the individual consumer. Board’s 2008 HOEPA Final Rule. in the section-by-section analysis of Records regarding average incomes in However, TILA Section 129C(a)(4)(B) proposed § 226.43(c)(2). the consumer’s geographic location or provides for the alternative methods of

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third-party income documentation verification within a specific period of consumer’s salary to determine the (other than use of an IRS tax-return time. The Board also believes that consumer’s repayment ability. Proposed transcript) to be both ‘‘reasonably providing examples of reasonably comment 43(c)(4)–2 clarifies that, if reliable’’ and to ‘‘quickly and effectively’’ reliable records creditors may use to multiple consumers apply jointly for a verify a consumer’s income. The Board efficiently verify income or assets loan and each lists income or assets on proposes to adjust the requirement that facilitates compliance by providing the application, the creditor need verify such alternative method ‘‘quickly and clear guidance to creditors. In addition, only the income or assets the creditor effectively’’ verify a consumer’s income. providing examples of such records is relies on to determine repayment See TILA Section 129C(a)(4)(B). consistent with TILA Section ability. Proposed comment 43(c)(4)–3 Specifically, the Board proposes to 129C(a)(4)(B), which authorizes the clarifies that creditors may verify a implement TILA Section 129C(a)(4) Board to prescribe the types of records consumer’s income using an IRS tax- without using the phrase ‘‘quickly and that can be used to quickly and return transcript that summarizes the effectively’’ and instead to (1) require effectively verify a consumer’s income. information in the consumer’s filed tax the use of third-party records that are Proposed § 226.43(c)(4) implements return, another record that provides reasonably reliable; and (2) provide TILA Section 129C(a)(4) and provides reasonably reliable evidence of the examples of reasonably reliable records that a creditor must verify the amounts consumer’s income, or both. Proposed that creditors can use to efficiently of income or assets it relies on to comment 43(c)(4)–3 also clarifies that verify income, as well as assets. See determine a consumer’s ability to repay creditors may obtain a copy of an IRS proposed § 226.43(c)(4). a covered transaction using third-party tax-return transcript or filed tax return records that provide reasonably reliable The Board proposes this approach from a service provider or the consumer evidence of the consumer’s income or pursuant to the Board’s authority under and need not obtain the copy directly assets. The proposed rule and associated TILA Section 105(a) to prescribe from the IRS or other taxing authority, commentary provide the following regulations that contain such additional and cross-references guidance on examples of third-party records requirements, classifications, obtaining records in proposed comment creditors may use to verify the differentiations, or other provisions or 43(c)(3)–2. Proposed comments consumer’s income or assets, in 43(c)(4)–1, –2, and –3 are consistent provide for such adjustments and addition to or instead of tax-return with current commentary adopted by exceptions for all or any class of transcripts issued by the IRS: (1) Copies the Board’s 2008 HOEPA Final Rule. transactions as in the judgment of the of tax returns the consumer filed with See comments 34(a)(4)–7, Board are necessary or proper to the IRS or a state taxing authority; (2) 34(a)(4)(ii)(A)–1 and –2. Proposed effectuate the purposes of TILA, prevent IRS Form W–2s or similar IRS forms for comment 43(c)(4)(vi)–1 clarifies that an circumvention or evasion thereof, or to reporting wages or tax withholding; (3) example of a record from a Federal, facilitate compliance therewith. 15 payroll statements, including military state, or local government agency stating U.S.C. 1604(a). This approach is further Leave and Earnings Statements; (4) the consumer’s income from benefits or supported by the Board’s authority financial institution records; (5) records entitlements is a ‘‘proof of income letter’’ under TILA Section 129B(e) to from the consumer’s employer or a third (also known as a ‘‘budget letter,’’ condition terms, acts or practices party that obtained consumer-specific ‘‘benefits letter,’’ or ‘‘proof of award relating to residential mortgage loans income information from the letter’’) from the Social Security that the Board finds necessary or proper consumer’s employer; (6) records from a Administration. to effectuate the purposes of TILA. 15 government agency stating the The Board generally solicits comment U.S.C. 1639b(e). One of the purposes of consumer’s income from benefits or on this approach. In addition, the Board TILA Section 129C is to assure that entitlements, such as a ‘‘proof of specifically solicits comment on consumers are offered and receive income’’ letter issued by the Social whether, consistent with the Board’s covered transactions on terms that Security Administration; (7) check 2008 HOEPA Final Rule, the Board reasonably reflect their ability to repay cashing receipts; and (8) receipts from a should provide an affirmative defense the loan. See TILA Section 129B(a)(2). consumer’s use of funds transfer for a creditor that can show that the The Board believes that considering services. See proposed § 226.43(c)(4)(i)– amounts of the consumer’s income or reasonably reliable records is an (viii); proposed comment 43(c)(4)(vi)–1. assets relied upon in determining the effective means of verifying a Those examples are illustrative, not consumer’s repayment ability were not consumer’s income and helps ensure exhaustive, and creditors may materially greater than the amounts the that consumers are offered and receive determine that other records provide creditor could have verified using third- loans on terms that reasonably reflect reasonably reliable evidence of the party records at or before their repayment ability. The Board income relied upon in determining a consummation. See § 226.34(a)(4)(ii)(B). believes further that TILA Section consumer’s repayment ability. 129C(a)(4) is intended to safeguard Creditors need consider only the 43(c)(5) Payment Calculation against fraudulent reporting, rather than income or assets relied upon to Background to speed the process of verifying a determine the consumer’s repayment consumer’s income. Indeed, there is a ability, as discussed above in the Requirements of TILA Sections risk that requiring that creditors use section-by-section analysis of proposed 129C(a)(1), (3) and (6) quick methods to verify the consumer’s § 226.43(c)(2)(i). See proposed comment The Board proposes § 226.43(c)(5) to income would undermine the 43(c)(2)(i)–2. Accordingly, proposed implement the payment calculation effectiveness of the ability-to-repay comment 43(c)(4)–1 clarifies that requirements of TILA Section 129C(a), requirement by sacrificing speed for creditors need verify only the income or as enacted by Section 1411 of the Dodd- thoroughness. The Board believes that, assets relied upon to determine the Frank Act. TILA Section 129C(a) by contrast, requiring the use of consumer’s repayment ability. Proposed contains the general requirement that a reasonably reliable records effectuates comment 43(c)(4)–1 also provides an creditor determine the consumer’s the purposes of TILA Section 129C(a)(4) example where the creditor need not ‘‘ability to repay the loan, according to without suggesting that creditors must verify a consumer’s annual bonus its terms, and all applicable taxes, obtain records or complete income because the creditor relies on only the insurance (including mortgage

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guarantee insurance), and assessments,’’ variable-rate loans that defer repayment requirements in TILA Section based on several considerations, of any principal or interest, TILA 129C(a)(6)(D) addressing payment including ‘‘a payment schedule that Section 129C(a)(6)(A) states that for calculation requirements differ from fully amortizes the loan over the term of purposes of the repayment ability § 226.34(a)(4)(iii) in the following the loan.’’ TILA Sections 129C(a)(1) and determination a creditor must use ‘‘a manner: (1) The statute generally (3). The statutory requirement to fully amortizing repayment schedule.’’ premises repayment ability on monthly consider mortgage-related obligations, This provision generally reiterates the payment obligations calculated using as defined under proposed requirement provided under TILA the fully indexed rate, with no limit on § 226.43(b)(8), is discussed above in the Section 129C(a)(3) to use a payment the term of the loan that should be section-by-section analysis for proposed schedule that fully amortizes the loan. considered for such purpose; (2) the § 226.43(c)(2)(v). Second, for covered transactions that statute permits underwriting loans with TILA Sections 129C(a)(6)(A)–(D) also permit or require interest-only balloon payments to differ depending require creditors to make uniform payments, the statute requires that the on whether the loan’s annual percentage assumptions when calculating the creditor determine the consumers’ rate exceeds the applicable loan pricing payment obligation for purposes of repayment ability using ‘‘the payment metric, or meets or falls below the determining the consumer’s repayment amount required to amortize the loan by applicable loan pricing metric; and (3) ability for the covered transaction. its final maturity.’’ TILA Section the statute expressly addresses Specifically, TILA Section 129C(a)(6)(B). underwriting requirements for loans 129C(a)(6)(D)(i)–(iii) provides that when Third, for covered transactions with with interest-only payments or negative calculating the payment obligation that negative amortization, the statute amortization. will be used to determine whether the requires the creditor to also take into consumer can repay the covered account ‘‘any balance increase that may Interagency Supervisory Guidance transaction, the creditor must use a fully accrue from any negative amortization As discussed above in Part II.C, in amortizing payment schedule and provision’’ when making the repayment 2006 and 2007 the Board and other assume that— ability determination. TILA Section Federal banking agencies addressed (1) The loan proceeds are fully 129C(a)(6)(C). The statute does not concerns regarding the increased risk to disbursed on the date the loan is define the terms ‘‘variable-rate,’’ ‘‘fully creditors and consumers presented by consummated; amortizing,’’ ‘‘interest-only,’’ or ‘‘negative loans that permit consumers to defer (2) the loan is repaid in substantially amortization.’’ Proposed § 226.43(c)(5)(i) repayment of principal and sometimes equal, monthly amortizing payments for and (ii) implement these statutory interest, and by adjustable-rate principal and interest over the entire provisions, and are discussed in further mortgages in the subprime market. The term of the loan with no balloon detail below. Interagency Supervisory Guidance payment; and stated that creditors should determine a 2008 HOEPA Final Rule (3) the interest rate over the entire consumer’s repayment ability using a term of the loan is a fixed rate equal to TILA Section 129C(a), as enacted by payment amount based on the fully the fully-indexed rate at the time of the Section 1411 of the Dodd-Frank Act, indexed rate, assuming a fully loan closing, without considering the largely codifies many aspects of the amortizing schedule. In addition, the introductory rate. repayment ability rule under 2006 Nontraditional Mortgage Guidance The statute defines the term ‘‘fully- § 226.34(a)(4) of the Board’s 2008 addressed specific considerations for indexed rate’’ in TILA Section HOEPA Final Rule, which the Board is negative amortization and interest-only 129C(a)(7). proposing to remove, and extends such loans. State supervisors issued parallel TILA Section 129C(a)(6)(D)(ii)(I) and requirements to the entire mortgage statements to this guidance, which most (II), however, provides two exceptions market regardless of the loan’s interest states have adopted. TILA Sections to the second assumption regarding rate. Similar to § 226.34(a)(4), the 129C(a)(3) and (6) are generally ‘‘substantially equal, monthly payments statutory framework of TILA Section consistent with this longstanding over the entire term of the loan with no 129C(a) focuses on prescribing the Interagency Supervisory Guidance, and balloon payment’’ for loans that require requirements that govern the largely extend the guidance regarding ‘‘more rapid repayment (including underwriting process and extension of payment calculation assumptions to all balloon payment).’’ First, this statutory credit to consumers, rather than loan types covered under TILA Section provision authorizes the Board to dictating which credit terms may or may 129C(a), regardless of loan’s interest prescribe regulations for calculating the not be permissible. However, there are rate. payment obligation for loans that differences between TILA Section require more rapid repayment 129C(a) and the Board’s 2008 HOEPA The Board’s Proposal (including balloon payment), and which Final Rule with respect to payment The Board proposes § 226.43(c)(5) to have an annual percentage rate that does calculation requirements. implement the payment calculation not exceed a certain rate threshold. Current § 226.34(a)(4) does not requirements of TILA Sections TILA Section 129C(a)(6)(D)(ii)(I). address how a creditor must calculate 129C(a)(1), (3) and (6) for purposes of Second, for loans that ‘‘require more the payment obligation for a loan that the repayment ability determination rapid repayment (including balloon cannot meet the presumption of required under proposed § 226.43(c). payment),’’ and which exceed a certain compliance under § 226.34(a)(4)(iii)(B). Consistent with these statutory rate threshold, the statute requires that For example, § 226.34(a)(4) does not provisions, proposed § 226.43(c)(5) does the creditor use the loan contract’s specify how to calculate the periodic not prohibit the creditor from offering repayment schedule. TILA Section payment required for a negative certain credit terms or loan features, but 129C(a)(6)(D)(ii)(II). The statute does not amortization loan or balloon loan with rather focuses on the calculation process define the term ‘‘rapid repayment.’’ a term of less than seven years. In the creditor must use to determine The statute also provides three contrast, the Dodd-Frank Act lays out a whether the consumer can repay the additional clarifications to the specific framework for underwriting any loan according to its terms. Under the assumptions stated above for loans that loan subject to proposed § 226.43(c). In proposal, creditors generally would be contain certain features. First, for taking this approach, the statutory required to determine a consumer’s

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ability to repay a covered transaction term of the loan remaining as of the date over the loan term, using the fully using the fully indexed rate or the the loan is recast. For clarity, proposed indexed rate. introductory rate, whichever is greater, § 226.43(c)(5)(ii)(B) would use the terms Proposed comment 43(c)(5)(i)–1 to calculate monthly, fully amortizing ‘‘loan amount’’ and ‘‘recast,’’ which are would explain that the payment payments that are substantially equal, defined and discussed under proposed calculation method set forth in unless a special rule applies. See § 226.43(b)(5) and (11), respectively. § 226.43(c)(5)(i) applies to any covered proposed § 226.43(c)(5)(i). For clarity The term ‘‘interest-only loan’’ has the transaction that does not have a balloon and simplicity, proposed same meaning as in current payment, or that is not an interest-only § 226.43(c)(5)(i) would use the terms § 226.18(s)(7)(iv). loan or negative amortization loan, ‘‘fully amortizing payment’’ and ‘‘fully Negative amortization loans. whether it is a fixed-rate, adjustable-rate indexed rate,’’ as discussed above under Consistent with TILA Sections or step-rate mortgage. This comment proposed § 226.43(b)(2) and (3), 129C(a)(6)(C) and (D) of the Dodd-Frank would further explain that the payment respectively. Proposed comment Act, proposed § 226.43(c)(5)(ii)(C) calculation method set forth in 43(c)(5)(i)-1 would clarify that the provides special rules for negative § 226.43(c)(5)(ii) applies to any covered general rule would apply whether the amortization loans. Proposed transaction that is a loan with a balloon covered transaction is an adjustable-, § 226.43(c)(5)(ii)(C) requires that the payment, interest-only loan, or negative step-, or fixed-rate mortgage, as those creditor determine the consumer’s amortization loan. To facilitate terms are defined in § 226.18(s)(7)(i), ability to repay the negative compliance, this comment would list (ii), and (iii), respectively. amortization loan using (1) the fully the defined terms used in proposed Proposed § 226.43(c)(5)(ii)(A)–(C) indexed rate or the introductory rate, § 226.43(c)(5) and provide cross- create exceptions to the general rule and whichever is greater; and (2) references to their definitions. provide special rules for calculating the substantially equal, monthly payments The fully indexed rate or introductory payment obligation for balloon-payment of principal and interest that will repay rate, whichever is greater. Proposed loans, interest-only loans or negative the maximum loan amount over the § 226.43(c)(5)(i)(A) implements the amortization loans, as follows: term of the loan remaining as of the date requirement in TILA Section Balloon-payment loans. Consistent the loan is recast. Proposed comment 129C(a)(6)(D)(iii) to use the fully with TILA Section 129C(a)(6)(D)(ii)(I) 43(c)(5)(ii)(C)–1 clarifies that for indexed rate when calculating the and (II) of the Dodd-Frank Act, purposes of this proposed rule, the monthly, fully amortizing payment for proposed § 226.43(c)(5)(ii)(A) provides creditor must first determine the purposes of the repayment ability special rules for covered transactions maximum loan amount and the period determination. Proposed with a balloon payment that would of time that remains in the loan term § 226.43(c)(5)(i)(A) would also provide differ depending on the loan’s rate. after the loan is recast. For clarity, that when creditors calculate the Proposed § 226.43(c)(5)(ii)(A)(1) states proposed § 226.43(c)(5)(ii)(C) would use monthly, fully amortizing payment for that for covered transactions with a the terms ‘‘maximum loan amount’’ and adjustable-rate mortgages, they must use balloon payment that are not higher- ‘‘recast,’’ which are defined and the introductory interest rate if it is priced covered transactions, the creditor discussed under proposed § 226.43(b)(7) greater than the fully indexed rate (i.e., must determine a consumer’s ability to and (11), respectively. The term a premium rate). In some adjustable-rate repay the loan using the maximum ‘‘negative amortization loan’’ has the transactions, creditors may set an initial payment scheduled in the first five same meaning as in current interest rate that is not determined by years after consummation. Proposed § 226.18(s)(7)(v) and comment the index or formula used to make later § 226.43(c)(5)(ii)(A)(2) further states that 18(s)(7)(v)–1. interest rate adjustments. Typically, this for covered transactions with balloon Each of these proposed payment initial rate charged to consumers is payments that are higher priced covered calculation provisions is discussed in lower than the rate would be if it were transactions, the creditor must greater detail below. determined by using the index plus determine the consumer’s ability to margin, or formula (i.e., the fully 43(c)(5)(i) General rule repay according to the loan’s payment indexed rate). However, an initial rate schedule, including any balloon Proposed § 226.43(c)(5)(i) implements that is a premium rate is higher than the payment. For clarity, proposed the payment calculation requirements in rate based on the index or formula. See § 226.43(c)(5)(ii)(A) would use the term TILA Sections 129C(a)(3) and (6)(D)(i)– proposed comment 43(c)(5)(i)–2. Thus, ‘‘higher-priced covered transaction’’ to (iii), and states the general rule for requiring creditors to use only the fully refer to a loan that exceeds the calculating the payment obligation on a indexed rate would result in creditors applicable loan rate threshold, and is covered transaction for purposes of the underwriting loans that have a defined in proposed § 226.43(b)(4), ability-to-repay provisions. Consistent ‘‘premium’’ introductory rate at a rate discussed above. The term ‘‘balloon with the statute, proposed lower than the rate on which the payment’’ has the same meaning as in § 226.43(c)(5)(i) provides that unless an consumer’s initial payments would be current § 226.18(s)(5)(i). exception applies under proposed based. The Board believes requiring Interest-only loans. Consistent with § 226.43(c)(5)(ii), a creditor must make creditors to assess the consumer’s TILA Sections 129C(a)(6)(B) and (D) of the repayment ability determination ability to repay on the initial higher the Dodd-Frank Act, proposed required under proposed payments better effectuates the statutory § 226.43(c)(5)(ii)(B) provides special § 226.43(c)(2)(iii) by using the greater of intent and purpose. rules for interest-only loans. Proposed the fully indexed rate or any The Board proposes to require § 226.43(c)(5)(ii)(B) requires that the introductory interest rate, and monthly, creditors to underwrite the loan at the creditor determine the consumer’s fully amortizing payments that are premium rate if greater than the fully ability to repay the interest-only loan substantially equal. That is, under this indexed rate for purposes of the using (1) the fully indexed rate or the proposed general rule the creditor repayment ability determination using introductory rate, whichever is greater; would calculate the consumer’s its authority under TILA Section 105(a). and (2) substantially equal, monthly monthly payment amount based on the 15 U.S.C. 1604(a). TILA Section 105(a), payments of principal and interest that loan amount, and amortize that loan as amended by Section 1100A of the will repay the loan amount over the amount in substantially equal payments Dodd-Frank Act, authorizes the Board to

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prescribe regulations to carry out the calculation method a creditor must use determine the consumer’s repayment purposes of TILA and Regulation Z, to to determine the consumer’s repayment ability based on substantially equal, prevent circumvention or evasion, or to ability for a covered transaction. This monthly, fully amortizing payments as facilitate compliance. 15 U.S.C. 1604(a). comment explains, by way of example, required under proposed This approach is further supported by that the terms of the loan agreement § 226.43(c)(5)(i) for a fixed-rate, the Board’s authority under TILA may require that the consumer repay the adjustable-rate and step-rate mortgage. Section 129B(e) to condition terms, acts loan in quarterly or bi-weekly scheduled For example, proposed comment or practices relating to residential payments, but for purposes of the 43(c)(5)(i)–5.ii provides an illustration mortgage loans that the Board finds repayment ability determination, the of the payment calculation for an necessary or proper to effectuate the creditor must convert these scheduled adjustable-rate mortgage with a five-year purposes of TILA. 15 U.S.C. 1639b(e). payments to monthly payments in discounted rate. The example first The stated purpose of TILA Section accordance with § 226.43(c)(5)(i)(B). assumes a loan in an amount of 129C is to assure that consumers are This comment would also explain that $200,000 has a 30-year loan term. The offered and receive residential mortgage the loan agreement may not require the loan agreement provides for a loans on terms that reasonably reflect consumer to make fully amortizing discounted interest rate of 6% that is their ability to repay the loan. TILA payments, but for purposes of the fixed for an initial period of five years, Section 129B(b), 15 U.S.C. 1639b. For repayment ability determination the after which the interest rate will adjust the reasons discussed above, the Board creditor must convert any non- annually based on a specified index believes requiring creditors to amortizing payments to fully amortizing plus a margin of 3%, subject to a 2% underwrite the loan to the premium rate payments. annual periodic interest rate adjustment for purposes of the repayment ability Substantially equal. Proposed cap. The index value in effect at determination will help to ensure that comment 43(c)(5)(i)–4 provides consummation is 4.5%; the fully the consumers are offered, and receive, additional guidance to creditors for indexed rate is 7.5% (4.5% plus 3%). loans on terms that reasonably reflect determining whether monthly, fully See proposed comment 43(c)(5)(i)–5.ii. their ability to repay, and to prevent amortizing payments are ‘‘substantially This proposed comment explains that circumvention or evasion. equal.’’ See TILA Section even though the scheduled monthly Monthly, fully amortizing payments. 129C(a)(6)(D)(ii). This comment would payment required for the first five years For simplicity, proposed state that creditors should disregard is $1,199, for purposes of § 226.43(c)(5)(i) uses the term ‘‘fully minor variations due to payment- § 226.43(c)(2)(iii) the creditor must amortizing payment’’ to refer to the schedule irregularities and odd periods, determine the consumer’s ability to statutory requirements that a creditor such as a long or short first or last repay the loan based on a payment of use a payment schedule that repays the payment period. The comment would $1,398, which is the substantially equal, loan assuming that (1) the loan proceeds explain that monthly payments of monthly, fully amortizing payment that are fully disbursed on the date of principal and interest that repay the will repay $200,000 over 30 years using consummation of the loan; and (2) the loan amount over the loan term need the fully indexed rate of 7.5%. loan is repaid in amortizing payments not be equal, but that the monthly for principal and interest over the entire payments should be substantially the The Board recognizes that, although term of the loan. See TILA Sections same without significant variation in the consistent with the statute, the proposed 129C(a)(3) and (6)(D)(i)–(ii). As monthly combined payments of both framework would require creditors to discussed above, proposed principal and interest. Proposed underwrite certain loans, such as hybrid § 226.43(b)(2) defines ‘‘fully amortizing comment 43(c)(5)(i)–4 further explains ARMs with a discounted rate period of payment’’ to mean a periodic payment of that where, for example, no two five or more years (e.g., 5/1, 7/1, and principal and interest that will fully monthly payments vary from each other 10/1 ARMs) to a more stringent standard repay the loan amount over the loan by more than 1% (excluding odd as compared to the underwriting term. The terms ‘‘loan amount’’ and periods, such as a long or short first or standard set forth in proposed ‘‘loan term’’ are defined in proposed last payment period), such monthly § 226.43(e)(2)(v) for qualified mortgages. § 226.43(b)(5) and (b)(6), respectively, payments would be considered The Board believes this approach is and discussed above. substantially equal for purposes of this consistent with the statute’s intent to The statute also expressly requires proposal. The comment would further ensure consumers can reasonably repay that a creditor use ‘‘monthly amortizing provide that, in general, creditors their loan, and that in both cases payments’’ for purposes of the should determine whether the monthly, consumers’ interests are properly repayment ability determination. TILA fully amortizing payments are protected. See TILA Section 129B(a)(2), Section 129C(6)(D)(ii). The Board substantially equal based on guidance 15 U.S.C. 1639b(a)(2). To meet the recognizes that some loan agreements provided in § 226.17(c)(3) (discussing definition of a qualified mortgage, a loan require consumers to make periodic minor variations), and § 226.17(c)(4)(i)– cannot have certain risky terms or payments with less frequency, for (iii) (discussing payment-schedule features, such as provisions that permit example quarterly or semi-annually. irregularities and measuring odd deferral of principal or a term that Proposed § 226.43(c)(5)(i)(B) does not periods due to a long or short first exceeds 30 years; no similar restrictions dictate the frequency of payment under period) and associated commentary. The apply to loans subject to the ability-to- the terms of the loan agreement, but Board solicits comment on operational repay standard. See proposed does require creditors to convert the difficulties that arise by ensuring § 226.43(e)(2)(i) and (ii). As a result, the payment schedule to monthly payments payment amounts meet the risk of potential payment shock is to determine the consumer’s repayment ‘‘substantially equal’’ condition. The diminished significantly for qualified ability. Proposed comment 43(c)(5)(i)–3 Board also solicits comment on whether mortgages. For this reason, the Board clarifies that the general payment a 1% variance is an appropriate believes maintaining the more lenient calculation rules do not prescribe the tolerance threshold. statutory underwriting standard for terms or loan features that a creditor Examples of payment calculations. loans that satisfy the qualified mortgage may choose to offer or extend to a Proposed comment § 226.43(c)(5)(i)–5 criteria will help to ensure that consumer, but establishes the provides illustrative examples of how to responsible and affordable credit

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remains available to consumers. See payment is credited), when the fully does not have a balloon payment, and TILA 129B(a)(2), 15 U.S.C. 1639b(a)(2). indexed rate takes effect, the is not an interest-only or negative outstanding principal balance is amortization loan, can meet the Requests for Comment $180,832. Under this approach, the definition of a qualified mortgage if the Loan amount or outstanding principal creditor could underwrite the loan other underwriting criteria required are balance. As noted above, proposed based on the monthly payment of also met. As a result, step-rate mortgages § 226.43(c)(5)(i) is consistent with the principal and interest of $1,377 to repay that would need to comply with the statutory requirements regarding the outstanding principal balance of payment calculation rules under payment calculations for purposes of $180,832, instead of the monthly proposed § 226.43(c)(5) may be more the repayment ability determination. payment of $1,398 to repay the loan likely to be loans that contain a risky The Board believes the intent of these amount of $200,000. Such an approach feature. The Board solicits comment, statutory requirements is to prevent would seem to be consistent with the and supporting data for alternative creditors from assessing the consumer’s purpose of TILA Section 129B(a)(2), approaches, on whether it should repayment ability based on understated which is to ensure the consumer can exercise its authority under TILA payment obligations, especially when reasonably repay the loan according to Sections 105(a) and 129B(e) to provide risky features can be present on the its terms. 15 U.S.C. 1639b(a)(2). an exception for step-rate mortgages loan. However, the Board is concerned Step-rate mortgages. The Board also subject to the payment calculation rules that the statute, as implemented in notes that for purposes of the repayment in proposed § 226.43(c)(5). For example, proposed § 226.43(c)(5)(i), would ability determination, a step-rate should the Board require that creditors require creditors to determine, in some mortgage would be subject to the underwrite the step-rate mortgage using cases, a consumer’s repayment ability general payment calculation rule under the maximum rate in the first seven using overstated payment amounts proposed § 226.43(c)(5)(i), or the special years, ten years, or some other because the creditor must assume that rules under proposed § 226.43(c)(5)(ii), appropriate time horizon? Should the the consumer repays the loan amount in if it did not otherwise meet the Board similarly require that creditors substantially equal payments based on definition of a ‘‘qualified mortgage.’’ See underwrite an adjustable-rate mortgage the fully indexed rate, regardless of proposed comment 43(c)(5)(i)–1. As using the maximum interest rate in the when the fully indexed rate can take discussed in proposed § 226.43(b)(3), first seven years or some other effect under the terms of the loan. The which defines the term ‘‘fully indexed appropriate time horizon that reflects a Board is concerned that this approach rate’’ for purposes of the repayment significant introductory rate period? may restrict credit availability, even ability determination, the proposed where consumers are able to payment calculation requirements Safe harbor to facilitate compliance. demonstrate that they can repay the would require creditors to determine a The Board recognizes that under this payment obligation once the fully consumer’s ability to repay a step-rate proposal, creditors must comply with indexed rate takes effect. mortgage using the maximum rate that multiple assumptions when calculating For this reason, the Board solicits can occur at any time during the loan the particular payment for purposes of comment on whether it should exercise term. The Board notes that this the repayment ability determination. its authority under TILA Sections 105(a) approach is consistent with the For example, creditors would need to and 129B(e) to provide that the creditor requirement that the creditor give effect ensure that the monthly payment may calculate the monthly payment to the largest margin that can apply at amounts are ‘‘substantially equal.’’ using the fully indexed rate based on any time during the loan term when Creditors would also need to follow the outstanding principal balance as of determining the fully indexed rate. See different payment calculation rules the date the fully indexed rate takes TILA Section 129C(a)(6)(iii) and (7). depending on the type of loan being effect under the loan’s terms, instead of However, the Board notes that by underwritten (i.e., balloon-payment loan the loan amount at consummation. 15 requiring creditors to use the maximum vs. a negative amortization loan), as U.S.C. 1604(a). Under this approach, the rate in a step-rate mortgage, the monthly discussed below under proposed creditor would determine the payments used to determine the § 226.43(c)(5)(ii). The Board is consumer’s repayment ability using the consumer’s repayment ability will be concerned that the complexity attendant largest payment that could occur under higher than the consumer’s actual to the proposed payment calculation the loan’s terms based on the fully maximum payment. requirements may increase the potential indexed rate, rather than using monthly, The Board is concerned that this for unintentional errors to occur, fully amortizing payments that are approach could restrict credit making compliance difficult, especially substantially equal. For example, for availability. The Board recognizes that for small creditors that may be unable loans with a significant introductory this concern is also present for to invest in advanced technology or rate period of 7 years or longer, it may adjustable-rate mortgages, but notes that software needed to ensure payment be reasonable for the creditor to a step-rate product differs from an calculations are compliant. At the same underwrite the consumer by applying adjustable-rate mortgage in that future time, the Board notes that the intent of the fully indexed rate to the outstanding interest rate adjustments are known in the statutory framework and this principal balance at the end of the 7 advance and do not fluctuate over time proposal is to ensure consumers are year introductory period. To illustrate in accordance with a market index. The offered and receive loans on terms that this approach (all amounts are Board believes this feature of a step-rate they can reasonably repay. Thus, the rounded), assume an adjustable-rate product could mitigate the payment Board solicits comment on whether it mortgage in the amount of $200,000 shock risk to the consumer because the should exercise its authority under with a seven-year discounted rate of exact rate and payment increases would TILA Sections 105(a) and 129B(e) to 6.5%, after which the interest rate will be disclosed to the consumer in provide a safe harbor for creditors that adjust annually to the specified index advance, with no potential for the use the largest scheduled payment that plus a margin of 3%. The index value payment amounts to be greater can occur during the loan term to at consummation is 4.5%; the fully depending on market conditions. determine the consumer’s ability to indexed rate is 7.5%. At the end of the On the other hand, the Board repay to facilitate compliance with the seventh year (after the 84th monthly recognizes that a step-rate mortgage that requirements under proposed

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§ 226.43(c)(5)(i) and (ii). 15 U.S.C. types are also intended to be covered. Higher-priced covered transaction. 1604(a). The Board notes, however, that loans The Board is proposing with a balloon payment actually require § 226.43(c)(5)(i)(A)(1) and (2) to provide 43(c)(5)(ii) Special Rules: Balloon, less rapid payment of principal and special payment calculation rules for a Interest-Only, and Negative interest because the amortization period Amortization Loans covered transaction with a balloon used is much longer than the term, payment that would differ depending on Proposed § 226.43(c)(5)(ii) creates thereby causing the balloon payment of whether the loan is or is not a higher- exceptions to the general rule under principal and interest at maturity. Thus, priced covered transaction. For proposed § 226.43(c)(5)(i), and provides the reference to the phrase ‘‘including purposes of proposed special rules in proposed balloon payment’’ makes it unclear § 226.43(c)(5)(i)(A), the Board would § 226.43(c)(5)(ii)(A)–(C) for loans with a whether the scope of this provision is define ‘‘higher-priced covered balloon payment, interest-only loans, meant to cover loans that permit, for transaction’’ to mean a covered and negative amortization loans, example, consumers to make initial transaction with an annual percentage respectively, for purposes of the payments that are not fully amortizing, rate that exceeds the average prime offer repayment ability determination such as loans with negative rate for a comparable transaction as of required under proposed amortization, but that later require the date the interest rate is set by 1.5 or § 226.43(c)(2)(iii). In addition to TILA larger payments of principal and more percentage points for a first-lien Section 129C(a)(6)(D)(i)–(iii), proposed interest, or other loan types. covered transaction, or by 3.5 or more § 226.43(c)(5)(ii)(A)–(C) implement Outreach participants offered various percentage points for a subordinate-lien TILA Sections 129C(a)(6)(B) and (C), interpretations of the phrase ‘‘more covered transaction. See proposed and TILA Section 129C(a)(6)(D)(ii)(I)- rapid repayment (including balloon § 226.43(b)(4). (II). Each of these proposed special rules payment).’’ Participants suggested that As noted above under the proposed is discussed below. the loan types that could be covered by definition of higher-priced covered 43(c)(5)(i)(A) Balloon Loans the phrase ‘‘more repaid repayment’’ transaction, the Board recognizes that could range from graduated payment The statute provides an exception to ‘‘jumbo’’ loans typically carry a premium mortgages and negative amortization interest rate to reflect the increased the requirement that creditors determine loans (where initial payments do not a consumer’s repayment ability using credit risk and cost associated with cover principal and only some interest, lending larger loan amounts to substantially equal, monthly payments and therefore higher payments of consumers. Such loans are more likely for loans that require ‘‘more rapid principal and interest are required once to be considered ‘‘higher-priced covered repayment (including balloon the loan recasts to require fully transactions’’ and as a result, creditors payment).’’ See TILA Section amortizing payments), to niche-market would need to underwrite such loans 129C(a)(6)(D)(ii)(I) and (II). First, the balloon-payment loans (where a series using the loan’s payment schedule, statute authorizes the Board to prescribe of balloon payments are required including any balloon payment. See regulations for calculating the payment intermittently throughout the loan), to proposed § 226.43(c)(5)(i)(A)(2), obligation for loans that require more growth-equity mortgages (where the discussed below. The Board is rapid repayment (including balloon loan is paid in full earlier than the term concerned that this would restrict credit payment), and which have an annual used to calculate initial payments percentage rate that does not exceed the required under the payment schedule). availability for consumers in the average prime offer rate for a The Board does not believe it is ‘‘jumbo’’ balloon market. Accordingly, comparable transaction by 1.5 or more feasible for the phrase ‘‘more rapid the Board is soliciting comment on percentage points for a first-lien repayment’’ to cover all these loan types whether it should use its authority transaction, and by 3.5 or more given that each one has varying terms under TILA Sections 105(a) and 129B(e) percentage points for a subordinate-lien and features. Thus, the Board is to incorporate the special, separate transaction (i.e., a ‘‘prime’’ loan). See proposing to use its authority under coverage threshold of 2.5 percentage TILA Section 129C(a)(6)(D)(ii)(I). TILA Section 129C(a)(6)(D)(i)(I) only points for ‘‘jumbo loans’’ to permit more Second, for loans that ‘‘require more with respect to balloon loans. The Board jumbo loans to benefit from the special rapid repayment (including balloon solicits comment on the meaning of the payment calculation rule under payment),’’ and exceed the loan pricing phrase ‘‘more rapid repayment’’ and proposed § 226.43(c)(5)(ii)(A)(1), and threshold set forth (i.e., a ‘‘nonprime’’ what loan products should be covered also to be consistent with proposed loan), the statute requires that the by this phrase. For example, the Board § 226.45(a)(1), which implements rate creditor use the loan contract’s solicits comment on whether the phrase thresholds for the proposed escrow repayment schedule. See TILA Section ‘‘more rapid repayment’’ should include account requirement and certain 129C(a)(6)(D)(ii)(II). The Board any loan where the payments of appraisal-related requirements. See 76 interprets these statutory provisions as principal and interest are based on an FR 11598, Mar. 2, 2011; 75 FR 66554, authorizing the Board to prescribe amortization period that is shorter than Oct. 28, 2010. special payment calculation rules for the term of the loan during which The Board further notes under ‘‘prime’’ balloon loans, as discussed scheduled payments are permitted. For proposed § 226.43(b)(4) that premium more fully below. example, a loan may amortize the loan interest rates are typically required for Scope. The scope of loans covered by amount over a 30-year period to loans secured by non-principal the phrase ‘‘more rapid repayment determine monthly payment of interest dwellings, such as vacation homes, (including balloon payment)’’ in TILA during the first five years, but fully which are covered by this proposal. Section 129C(a)(6)(D)(ii) is unclear, and amortizing payments begin after five Accordingly, the Board also solicits the statute does not define the term years, and therefore are amortized over comment and supporting data on ‘‘rapid repayment.’’ The Board interprets a period of time that is shorter than the whether it should exercise its authority the use of the term ‘‘including,’’ which term of the loan (i.e., 25 years). The under TILA Sections 105(a) and 129B(e) qualifies the phrase ‘‘more rapid Board further solicits comment on the to incorporate a special, separate repayment,’’ as meaning that balloon specific terms and features of loans that coverage threshold to address loans loans are covered, but that other loan would result in ‘‘more rapid repayment.’’ secured by non-principal dwellings, and

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what rate threshold would be expensive than 30-year fixed-rate loans, threshold requirement, see proposed appropriate for such loans. but that may offer more stability than § 226.43(f)(1)(v)(D), but believes a Proposed comment 43(c)(5)(ii)(A)–1 some adjustable-rate loans. Five-year consistent approach to underwriting clarifies that for higher-priced covered balloon loans generally offer consumers balloon loans helps to prevent transactions with a balloon payment, a fixed rate for the entire term that is unintended consequences. For these the creditor must consider the lower than the prevailing rate for a 30- reasons, the Board believes this consumer’s ability to repay the loan year fixed. Consumers may choose this approach preserves credit availability based on the payment schedule under type of loan as short-term financing and choice of loan products that may the terms of the legal obligation, with the intent to refinance in the near offer more favorable terms to including any required balloon future into a fully amortizing, longer consumers, and also facilitates payment. This comment would explain term loan once the consumer’s personal compliance. that for loans with a balloon payment finances, market rate conditions, or In developing the proposed approach that are not higher-priced covered some other set of facts and for ‘‘prime’’ balloon loans, the Board transactions, the creditor should use the circumstances improves. The Board considered several different alternatives. maximum payment scheduled during believes that five years is a sufficient For example, the Board considered the first five years of the loan following period of time for consumers to improve requiring the creditor to determine consummation. To facilitate personal finances, for example, and that whether the consumer could refinance compliance, the comment would cross- there is an increased likelihood that a the loan before incurring the balloon reference to the definition of ‘‘balloon consumer may refinance, move or payment, using a fully amortizing payment’’ in current § 226.18(s)(5)(i). relocate during such time frame. In payment based on the then prevailing interest rate for a fixed-rate mortgage 43(c)(5)(ii)(A)(1) ‘‘Prime’’ Balloon Loans contrast, as discussed in proposed § 226.43(f)(1)(iv), balloon loans with with a 30-year term. The Board also Proposed § 226.43(c)(5)(ii)(A)(1) terms less than five years, but with considered requiring the creditor to use requires a creditor to determine a extended amortization periods, such as a fully amortizing payment based on a consumer’s ability to repay a loan with 30 or more years, may prevent rate that would be two times the a balloon payment using the maximum consumers from growing equity and contractual rate offered during the first payment scheduled during the first five therefore, likely present greater credit five years of the loan with the balloon years after consummation where the risk. payment. The Board believes both loan is not a higher-priced covered Second, the Board notes that using the approaches are speculative in nature, transaction (i.e., a ‘‘prime’’ loan). This first five years after consummation to and that neither can accurately predict proposed rule would apply to ‘‘prime’’ determine the consumer’s repayment the interest rate that would be available loans with a balloon payment that have ability on a ‘‘prime’’ balloon loan is to consumers at the time they may want a term of five or more years. consistent with other proposed to refinance. Moreover, the Board Legal authority. The Board proposes repayment ability provisions, and believes both approaches would likely this approach using its authority under therefore facilitates compliance. For overstate the consumer’s actual payment TILA Section 129C(a)(6)(D)(ii)(I), which example, proposed § 226.43(d)(5)(ii) and obligation for purposes of the repayment authorizes the Board to prescribe (e)(2)(iv) require the creditor to use the ability determination where, for regulations for ‘‘prime’’ balloon loans. In five-year period after consummation for example, the interest rate on a five-year addition, TILA Sections 105(a) and purposes of the determining whether an balloon loan is typically lower than the 129B(e) authorize the Board to prescribe exception applies to the repayment rate offered on a 30-year fixed. For these regulations that are consistent with the ability rules for certain refinancings, reasons, the Board did not believe these purposes of TILA. 15 U.S.C. 1604(a); 15 and when underwriting the loan to meet approaches were appropriate. U.S.C. 1639b(e). One of the purposes of the qualified mortgage standard, The Board notes that the proposed TILA is to ‘‘assure that consumers are respectively. The Board further notes five-year horizon for purposes of offered and receive residential mortgage that the five-year period under proposed determining the consumers repayment loan on terms that reasonably reflect § 226.43(e)(2)(iv) implements the ability for a ‘‘prime’’ balloon loan does their ability to repay the loans.’’ TILA statutory requirement that creditors not parallel the time horizon used for Section 129B(a)(2); 15 U.S.C. underwrite a loan, for purposes of the balloon loans under the Board’s anti- 1629b(a)(2). The Board believes qualified mortgage standard, based on steering provisions regarding loan proposing to require the creditor to use the maximum rate permitted during the originator compensation. See 75 FR the largest payment that can occur first five years after consummation, and 58509, Sept. 24, 2010. The Board’s anti- during the first five years after therefore, reflects the statutory intent steering rules prohibit a loan originator consummation to determine repayment that a five-year period is a reasonable from steering or directing a consumer to ability helps to ensure that consumers period of time to repay a loan. See TILA a loan to earn more compensation, are offered and receive loans on terms Section 129(b)(2)(A)(v). unless the transaction is in the that reasonably reflect their ability to Third, the Board also is proposing to consumer’s interest. See current repay the loan, and also facilitates require that balloon loans made by § 226.36(e). The Board provides a safe compliance. creditors in rural or underserved areas harbor for loan originators if certain First five years after consummation. have a minimum five-year term to be conditions are met, including offering For several reasons, the Board believes considered qualified mortgages. See certain loan options to the consumer. that five years is the appropriate time proposed § 226.43(f)(1), discussed One such loan option must be a loan horizon for purposes of determining the below. The Board believes it is with no risky features; a balloon consumer’s ability to repay a balloon appropriate for all types of creditors to payment that occurs in the first 7 years loan. First, the Board believes this use the same loan term when of the life of the loan is deemed a risky approach preserves credit choice for determining a consumer’s ability to feature for this purpose. The Board consumers interested in financing repay a balloon loan to create a more believes the different approaches are options that are based on interest rates level playing field. The Board warranted by the different purposes more consistent with shorter-term recognizes this concern may be served by the respective rules. Although maturities, and therefore typically less mitigated in part by the proposed asset the anti-steering provisions help to

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ensure consumers’ are offered certain loan is 3 years, and not the potential 6 Section 129B(a)(2), 15 U.S.C. loan options for which they likely years that could result if the consumer 1639b(a)(2), and TILA Section qualify, they are primarily intended to chooses to renew the loan. Accordingly, 129C(b)(2)(A)(v). Moreover, the Board prevent loan originators from offering the creditor must underwrite the loan believes it would be speculative to posit loan options with features that may not using the maximum payment scheduled the interest rate at the time of renewal benefit the consumer, or that the in the first five years after for purposes of the repayment ability consumer may not want or need, but consummation, which includes the determination. Third, the guidance which yield the loan originator greater balloon payment due at the end of the contained in comment 17(c)(1)–11 compensation. In contrast, the proposed 3-year loan term. This comment would regarding treatment of renewable repayment ability provisions are meant cross-reference proposed comment balloon loans is to help ensure to help ensure that the loan offered or 43(c)(5)(ii)(A).ii, which provides an consumers are aware of their loan terms chosen by the consumer has terms that example of how to determine the and avoid the uninformed use of credit, the consumer can reasonably repay. consumer’s repayment ability for a 3- which differs from the stated purpose of The Board solicits comment on year renewable balloon loan, and this proposed provision which is to help whether the five-year term is an comment 17(c)(1)–11 for a discussion of ensure that consumers receive loans on appropriate time horizon, with renewable balloon payment loans. terms that reasonably reflect their supporting data for any alternative The Board recognizes that proposed repayment ability. TILA Section 102(a), approaches. comment 43(c)(5)(ii)(A)(1)–3 does not 15 U.S.C. 1601(a)(2), and TILA Section Proposed comment take the same approach as guidance 129B(a)(2), 15 U.S.C. 1639b(a)(2). § 226.43(c)(5)(ii)(A)(1)–2 provides contained in comment 17(c)(1)–11 At the same time, the Board further guidance to creditors on regarding treatment of renewable recognizes that small creditors with determining whether a balloon payment balloon loans for disclosure purposes, or limited capital and reserves may use occurs in the first five years after with guidance contained in current these short-term balloon loans with consummation. This comment would comment 34(a)(4)(iv)–2 of the Board’s unconditional obligations to renew to clarify that in considering the 2008 HOEPA Final Rule. Current hedge their market rate risk. Not treating consumer’s repayment ability for a comment 17(c)(1)–11 states that renewable balloon loans in the same balloon loan that is not a higher-priced creditors may make the required TILA manner as comment 17(c)(1)–11 could covered transaction, the creditor must disclosures based on a period of time restrict credit access to ‘‘prime’’ balloon use the maximum payment scheduled that accounts for any unconditional loans. Accordingly, the Board solicits during the first five years, or first 60 obligation to renew (i.e., the payment comment on whether creditors should months, of the loan after the date of amortization period), assuming the be able to treat the loan term of a consummation. This comment would interest rate in effect at the time of ‘‘prime’’ balloon loan with an provide an illustrative example that consummation. Comment 34(a)(4)(iv)–2, unconditional obligation to renew as assumes a loan with a balloon payment which the Board is proposing to remove, extended by the renewal provision for due at the end of a five-year loan term provides that where the creditor is purposes of proposed is consummated on August 15, 2011. unconditionally obligated to renew the § 226.43(c)(5)(ii)(A), subject to certain The first monthly payment is due on balloon loan, the full term resulting conditions. Specifically, the Board October 1, 2011. The first five years after from such renewal is the relevant term solicits comment on how to ensure consummation occurs on August 15, for purposes of the exclusion of certain consumers can reasonably repay the 2016, with a balloon payment required balloon-payment loans from the ability- loan on its terms at the time of renewal. on the due date of the 60th monthly to-repay presumption of compliance. The Board further solicits comment on payment, which is September 1, 2016. Although the proposal differs from methods to address the risk of This comment would conclude that in current guidance in Regulation Z, the circumvention and potential payment this example, the creditor does not need Board believes this approach is shock risk to consumers where creditors to consider the balloon payment when appropriate for several reasons. First, are able to unilaterally increase the determining the consumer’s ability to the ability-to-repay provisions in the interest rate at the time of renewal. For repay this loan. Dodd-Frank Act do not address example, should the Board permit loan Proposed comment 43(c)(5)(ii)(A)(1)– extending the term of a balloon loan terms to be extended by renewal 3 addresses renewable balloon loans. with an unconditional obligation to provisions for purposes of proposed This comment recognizes balloon loans renew provision. Second, permitting § 226.43(c)(5)(ii)(A) when the creditor that are not higher-priced covered short-term ‘‘prime’’ balloon loans to underwrites the ‘‘prime’’ balloon loan transactions which provide an benefit from the special payment based on an average fully indexed rate unconditional obligation to renew a calculation rule when a creditor for a comparable transaction? balloon loan at the consumer’s option or includes an unconditional obligation to Proposed 226.43(c)(5)(ii)(A)(1)–4 obligation to renew subject to renew, but retains the right to increase would provide several illustrative conditions within the consumer’s the interest rate at the time of renewal, examples of how to determine the control. This comment would clarify would create a significant loophole in maximum payment scheduled during that for purposes of the repayment the balloon payment rules. Such an the first five years after consummation ability determination, the loan term approach could frustrate the objective to for loans with a balloon payment that does not include the period of time that ensure consumers obtain mortgages on are not higher-priced covered could result from a renewal provision. affordable terms for a reasonable period transactions. For example, this comment This comment would provide the of time because the interest rate could would illustrate the payment following illustration to provide further escalate within a short period of time, calculation rule for a balloon payment clarification: Assume a 3-year balloon increasing the potential risk of payment loan with a five-year loan term and loan that is not a higher-priced covered shock to the consumer. This is fixed interest rate. This comment would transaction contains an unconditional particularly the case where no limits assume that a loan provides for a fixed obligation to renew for another three exist on the interest rate that the interest rate of 6%, which is below the years at the consumer’s option. In this creditor can choose to offer to the APOR threshold for a comparable example, the loan term for the balloon consumer at the time of renewal. TILA transaction, and thus the loan is not a

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higher-priced covered transaction. The the creditor would be required to ability using ‘‘the payment amount comment would further assume that the determine that the consumer has a required to amortize the loan by its final loan amount is $200,000, and that the reasonable ability to repay the loan, maturity.’’ For clarity, this proposed rule loan has a five-year loan term but is including the balloon payment, from uses the term ‘‘recast,’’ which is defined amortized over 30 years. The loan is current or reasonably expected income for interest-only loans as the expiration consummated on March 15, 2011, and or assets other than the value of the of the period during which interest-only the monthly payment scheduled for the dwelling. As a result, the creditor would payments are permitted under the terms first five years following consummation not be able to consider the consumer’s of the legal obligation. See proposed is $1,199, with the first monthly ability to refinance the loan in order to § 226.43(b)(11). The statute does not payment due on May 1, 2011. The first pay, or avoid, the balloon payment. The define the term ‘‘interest-only.’’ For five years after consummation end on Board requests comment on this purposes of this proposal, the terms March 15, 2016. The balloon payment of approach. ‘‘interest-only loan’’ and ‘‘interest-only’’ $187,308 is required on the due date of Proposed comment have the same meaning as in the 60th monthly payment, which is § 226.43(c)(5)(ii)(A)(2)–5 provides an § 226.18(s)(7)(iv).43 April 1, 2016 (more than five years after illustrative example of how to Interest-only loans typically provide a consummation). See proposed comment determine the consumer’s repayment fixed introductory payment period, such 226.43(c)(5)(ii)(A)(1)–4.iii. This ability based on the loan contract’s as five or ten years, during which the comment explains that for purposes of payment schedule, including any consumer may make payments that pay § 226.43(c)(2)(iii), the creditor must balloon payment, for higher-priced only accrued interest, but no principal. determine the consumer’s ability to covered transactions with a balloon When the interest-only period expires, repay the loan based on the monthly payment. This comment would provide the payment amount required under the payment of $1,199, and need not an illustrative example for a balloon terms of the loan is the principal and consider the balloon payment of payment loan with a 10-year loan term; interest payment that will repay the $187,308 due on April 1, 2016. fixed interest rate. This comment would loan amount over the remainder of the assume that the loan is a higher-priced loan term. The Board interprets the ‘‘ ’’ 43(c)(5)(ii)(A)(2) Non-Prime Balloon covered transaction with a fixed interest statutory text in TILA Section Loans rate of 7%. This comment would also 129C(a)(6)(B) as requiring the creditor to Proposed § 226.43(c)(5)(ii)(A)(2) assume that the loan amount is determine the consumer’s ability to implements TILA Section $200,000 and the loan has a 10-year repay an interest-only loan using the 129C(a)(6)(D)(ii)(II) and provides that for loan term, but is amortized over 30 monthly principal and interest payment a higher-priced covered transaction, the years. This comment would state that amount needed to repay the loan creditor must determine the consumer’s the monthly payment scheduled for the amount once the interest-only payment ability to repay a loan with a balloon first ten years is $1,331, with a balloon period expires, rather than using, for payment using the scheduled payments payment of $172,956. This comment example, an understated monthly required under the terms of the loan, would explain that for purposes of principal and interest payment that including any balloon payment. TILA § 226.43(c)(2)(iii), the creditor must would amortize the loan over its entire Section 129C(a)(6)(D)(ii)(II) states that consider the consumer’s ability to repay term, similar to a 30-year fixed for loans that require more rapid the loan based on the payment schedule mortgage. The proposed rule would repayment (including balloon payment), that repays the loan amount, including apply to all interest-only loans, and which exceed the loan pricing the balloon payment of $172,956. regardless of the length of the interest- threshold set forth, the creditor must only period. The Board believes this 43(c)(5)(i)(B) Interest-Only Loans underwrite the loan using the ‘‘[loan] approach most accurately assesses the contract’s repayment schedule.’’ The For interest-only loans (i.e., loans that consumer’s ability to repay the loan Board interprets the statutory permit interest only payments for any once it begins to amortize; this is requirement that the creditor use ‘‘the part of the loan term), proposed consistent with the approach taken for loan contract’s payment schedule’’ to § 226.43(c)(5)(ii)(B) provides that the interest-only loans in the Interagency mean that the creditor must use all creditor must determine the consumer’s Supervisory Guidance. scheduled payments under the terms of ability to repay the interest-only loan Proposed comment 43(c)(5)(ii)(B)–1 the loan needed to fully amortize the using (1) the fully indexed rate or any would clarify that for loans that permit loan, consistent with the requirement introductory rate, whichever is greater; interest-only payments, the creditor under TILA Section 129C(a)(3). Payment and (2) substantially equal, monthly must use the fully indexed rate or of the balloon payment, either at payments of principal and interest that introductory rate, whichever is greater, maturity or during at any intermittent will repay the loan amount over the to calculate the substantially equal, period, is necessary to fully amortize the term of the loan remaining as of the date monthly payment of principal and loan. The proposed rule would apply to the loan is recast. The proposed interest that will repay the loan amount ‘‘non-prime’’ loans with a balloon payment calculation rule for interest- over the term of the loan remaining as payment regardless of the length of the only loans parallels the general rule of the date the loan is recast for term or any contract provision that proposed in § 226.43(c)(5)(i), except that purposes of the repayment ability provides for an unconditional guarantee proposed § 226.43(c)(5)(ii)(B)(2) requires determination. This comment would to renew. The Board is concerned that a creditor to determine the consumer’s also clarify that under proposed this approach could lessen credit choice ability to repay the loan amount over § 226.43(c)(5)(ii)(B), the relevant term of for non-prime borrowers, restrict credit the term that remains after the loan is the loan is the period of time that availability and negatively impact recast, rather than requiring the creditor remains after the loan is recast to competition for this credit market. to use fully amortizing payments, as Accordingly, the Board solicits defined under proposed § 226.43(b)(2). 43 See 12 CFR 226.18(s)(7)(iv), defining ‘‘interest comment, with supporting data, on the Proposed § 226.43(c)(5)(ii)(B)(2) only’’ to mean that under the terms of the legal obligation, one or more of the periodic payments impact of this approach for low-to- implements TILA Section 129C(a)(6)(B), may be applied solely to accrued interest and not moderate income borrowers. In which requires that the creditor to loan principal, and ‘‘interest-only loan’’ to mean addition, under proposed § 226.43(c)(2), determine the consumer’s repayment a loan that permits interest-only payments.

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require payments that will repay the requires the creditor to use the monthly principal and interest payment that will loan amount. This comment would also payment amount that repays the repay the loan amount, plus any balance explain that for a loan on which only maximum loan amount over the term of increase, over the remaining term of the interest and no principal has been paid, the loan that remains after the loan is loan. These loans are also often referred the loan amount will be the outstanding recast, rather than requiring the creditor to as ‘‘pay option’’ loans because they principal balance at the time of the to use fully amortizing payments, as offer multiple payment options to the recast. To facilitate compliance, this defined under proposed § 226.43(b)(2). consumer. Similarly, graduated comment would cross-reference to This proposed rule uses the terms payment mortgages that have negative proposed comments 43(b)(3)–1 through ‘‘maximum loan amount’’ and ‘‘recast,’’ amortization and fall within the –5, which provide further guidance on which are defined and discussed under definition of ‘‘negative amortization determining the fully indexed rate on proposed § 226.43(b)(7) and (b)(11), loans’’ provide for step payments that the transaction, and proposed comment respectively. Proposed may be less than the interest accrued for 43(c)(5)(i)–4, which provides further § 226.43(c)(5)(ii)(C)(2) implements the a fixed period of time. The unpaid guidance on the meaning of statutory requirement in TILA Section interest is added to the principal ‘‘substantially equal.’’ This comment 129C(a)(6)(C) that the creditor consider balance of the loan. When the would also provide cross-references to ‘‘any balance increase that may accrue introductory payment period expires, defined terms. from any negative amortization the payment amount required under the Proposed comment 43(c)(5)(ii)(B)–2 provision when making the repayment terms of the loan is the monthly would provide illustrative examples for ability determination.’’ The statute does principal and interest payment that will how to determine the consumer’s not define the term ‘‘negative repay the loan amount, plus any repayment ability based on substantially amortization.’’ principal balance increase, over the equal, monthly payments of principal Scope. The Board proposes that the remaining term of the loan. The Board and interest for interest-only loans. This term ‘‘negative amortization loan’’ have believes covering both types of loans in comment would provide the following the same meaning as set forth in current proposed § 226.43(c)(5)(ii)(C) is illustration of the payment calculation § 226.18(s)(7)(v) for purposes of the consistent with statutory intent to rule for a fixed-rate mortgage with repayment ability determination. The account for the negative equity that can interest-only payments for five years: A Board recently amended occur when a consumer makes loan in an amount of $200,000 has a 30- § 226.18(s)(7)(v) to clarify that the term payments that defer some or all year loan term. The loan agreement ‘‘negative amortization loan’’ covers a principal or interest for a period of time, provides for a fixed interest rate of 7%, loan, other than a reverse mortgage and to address the impact any potential and permits interest-only payments for subject to current § 226.33, that provides payment shock may have on the the first five years. The monthly for a minimum periodic payment that consumer’s ability to repay the loan. See payment of $1167 scheduled for the first covers only a portion of the accrued TILA Section 129C(a)(6)(C). five years would cover only the interest interest, resulting in negative In contrast, in a transaction that has due. The loan is recast on the due date amortization. As defined, the term a negative amortization feature, but of the 60th monthly payment, after ‘‘negative amortization loan’’ does not which does not provide for minimum which the scheduled monthly payments cover other loan types that may have a periodic payments that permit deferral increase to $1414, a monthly payment negative amortization feature, but which of some or all principal, the consumer that repays the loan amount of $200,000 do not permit the consumer multiple repays the loan with fully amortizing over the 25 years remaining as of the payment options, such as seasonal payments in accordance with the date the loan is recast (300 months). For income loans.44 Accordingly, proposed payment schedule and therefore, the purposes of § 226.43(c)(2)(iii), the § 226.43(c)(5)(ii)(C) covers only loan same potential for payment shock or creditor must determine the consumer’s products that permit or require negative equity does not exist. For ability to repay the loan based on a minimum periodic payments, such as example, certain loans are designed to payment of $1414, which is the pay option loans and graduated permit borrowers with seasonal income substantially equal, monthly, fully payment mortgages with negative to make periodic payments that repay amortizing payment that would repay amortization. the loan amount for part of the year, and $200,000 over the 25 years remaining as Negative amortization loans typically then to skip payments during certain of the date the loan is recast using the permit borrowers to defer principal and months. During those months when no fixed interest rate of 7%. interest repayment for a fixed period of payments are made, accrued interest time, such as five years, or until the 43(c)(5)(i)(C) Negative Amortization results in an increase in the principal principal balance increases to the Loans balance. However, when the monthly maximum amount allowed under the required payments resume, they are For negative amortization loans, terms of the loan (i.e., the negative fully amortizing payments that repay proposed § 226.43(c)(5)(ii)(C) provides amortization cap). When the the principal and interest accrued that a creditor must determine the introductory period permitting such during that year. See comment 18(s)(7)– consumer’s repayment ability using (1) minimum periodic payments expires or 1 discussing negative amortization the fully indexed rate or any the negative amortization cap is loans, and providing an example of a introductory interest rate, whichever is reached, whichever is earlier, the seasonal income loan that is not covered greater; and (2) substantially equal, payment amount required under the by the term. Loans not covered by the monthly payments of principal and terms of the loan is the monthly interest that will repay the maximum term ‘‘negative amortization loan,’’ but loan amount over the term of the loan 44 See the 2010 MDIA Interim Final Rule, 75 FR which may have a negative amortization remaining as of the date the loan is 58470, Sept. 24, 2010, revised by 75 FR 81836, feature, would be subject to the payment recast. This proposed payment 81840, Dec. 29, 2010, which defines the terms calculation requirements under the calculation rule for negative ‘‘negative amortization’’ and ‘‘negative amortization proposed general rule for purposes of loan.’’ The term ‘‘negative amortization’’ means amortization loans parallels the general payment of periodic payments that will result in an determining the consumer’s repayment rule in proposed § 226.43(c)(5)(i), except increase in the principal balance under the terms ability. See proposed § 226.43(c)(5)(i). that proposed § 226.43(c)(5)(ii)(C)(2) of the legal obligation. See § 226.18(s)(7)(v). Thus, seasonal income loans and

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graduated payment mortgages that do requires creditors to assume a ‘‘worst- introductory rate, whichever is greater, not fall within the definition of a case scenario,’’ but believes this to calculate the substantially equal, ‘‘negative amortization loan’’ would be approach is consistent with statutory monthly payment amount that will covered by the general payment intent to take into account the greatest repay the maximum loan amount over calculation rule in proposed potential increase in the principal the term of the loan that remains as of § 226.43(c)(5)(i). balance. the date the loan is recast. See proposed For purposes of determining the Moreover, the Board believes that § 226.43(c)(5)(ii)(C)(1) and (2). consumer’s ability to repay a negative where negative equity occurs in the Proposed comment 43(c)(5)(ii)(C)–1 amortization loan under proposed loan, it can be more difficult for the would clarify that creditors must follow § 226.43(c)(5)(ii)(C), creditors must consumer to refinance out of the loan this two-step approach when make a two-step payment calculation. because no principal has been reduced; determining the consumer’s repayment Step one: maximum loan amount. a dropping home value market can ability on a negative amortization loan, Proposed § 226.43(c)(5)(ii)(C) requires further aggravate this situation. In these and would also cross-reference to the that the creditor first determine the cases, the consumer is more likely to following defined terms: ‘‘maximum maximum loan amount and period of incur the increased payment obligation loan amount,’’ ‘‘negative amortization time that remains in the loan term after once the loan is recast. Accordingly, the loan,’’ ‘‘fully indexed rate,’’ and ‘‘recast.’’ the loan is recast before determining the Board believes it is appropriate to To facilitate compliance, this comment consumer’s repayment ability on the ensure that the consumer can make would also cross-reference to proposed loan. See proposed comment these increased payment amounts comment 43(c)(5)(i)–4 for further 43(c)(5)(ii)(C)–1; see also proposed assuming the maximum loan amount, guidance on the ‘‘substantially equal’’ § 226.43(b)(11), which defines the term consistent with the statute. The Board requirement. ‘‘recast’’ to mean the expiration of the also notes that calculating the maximum Proposed comment 43(c)(5)(ii)(C)–2 period during which negatively loan amount based on these would provide further guidance to amortizing payments are permitted assumptions is consistent with the creditors regarding the relevant term of under the terms of the legal obligation. approach in the 2010 MDIA Interim the loan that must be used for purposes Proposed comment 43(c)(5)(ii)(C)–2 Final Rule,45 which addresses of the repayment ability determination. would further clarify that recast for a disclosure requirements for negative This comment would explain that the negative amortization loan occurs after amortization loans, and also the 2006 relevant term of the loan is the period the maximum loan amount is reached Nontraditional Mortgage Guidance, of time that remains as of the date the (i.e., the negative amortization cap) or which provides guidance to creditors terms of the legal obligation recast. This the introductory minimum periodic regarding underwriting negative comment would further explain that the payment period expires. See proposed amortization loans.46 Both the 2010 creditor must determine substantially comment 43(c)(5)(ii)(C)–2. MDIA Interim Final Rule and the 2006 equal, monthly payments of principal As discussed above, proposed Nontraditional Mortgage Guidance and interest that will repay the § 226.43(b)(7) defines ‘‘maximum loan provide that the loan amount plus any maximum loan amount based on the amount’’ as the loan amount plus any balance increase should be taken into period of time that remains after any increase in principal balance that results account when disclosing terms or negative amortization cap is triggered or from negative amortization, as defined calculating the monthly principal and any period permitting minimum in § 226.18(s)(7)(v), based on the terms interest payment obligation, periodic payments expires, whichever of the legal obligation. Under the respectively. occurs first. proposal, creditors would make the As discussed above, comment Proposed comment 43(c)(5)(ii)(C)–3 would provide illustrative examples of following two assumptions when proposed 43(b)–1 would clarify that in determining the maximum loan amount: how to determine the consumer’s determining the maximum loan amount, (1) The consumer makes only the repayment ability based on substantially the creditor must assume that the minimum periodic payments for the equal, monthly payments of principal consumer makes the minimum periodic maximum possible time, until the and interest as required under proposed payment until any negative amortization consumer must begin making fully § 226.43(c)(5)(ii)(C) for a negative cap is reached or until the period amortizing payments; and (2) the amortization loan. For example, permitting minimum periodic payments maximum interest rate is reached at the proposed comment 43(c)(5)(ii)(C)–3.ii expires, whichever occurs first. earliest possible time. would illustrate the payment Comment 43(b)–2 would provide further As discussed above under the calculation rule for a graduated payment proposed definition of ‘‘maximum loan guidance to creditors regarding the mortgage with a fixed-interest rate that amount,’’ the Board interprets the assumed interest rate. Comment 43(b)– is a negative amortization loan. This statutory language in TILA Section 3 would provide examples illustrating comment would first assume a loan in 129C(a)(6)(C) as requiring creditors to how to calculate the maximum loan the amount of $200,000 has a 30-year fully account for any potential increase amount for negative amortization loans loan term. Second, the comment in the loan amount that may result for purposes of proposed assumes that the loan agreement under the loan’s terms where the § 226.43(c)(5)(ii)(C). provides for a fixed-interest rate of Step two: payment calculation. Once consumer makes only the minimum 7.5%, and requires the consumer to the creditor knows the maximum loan periodic payments required. The Board make minimum monthly payments amount and period of time that remains believes the intent of this statutory during the first year, with payments after the loan is recast, the proposed provision is to help ensure that the increasing 12.5% every year (the annual payment calculation rule for negative creditor consider the consumer’s payment cap) for four years. This amortization loans requires the creditor capacity to absorb the increased comment would state that the payment to use the fully indexed rate or payment amounts that would be needed schedule provides for payments of $943 to amortize the larger loan amount once in the first year, $1061 in the second 45 See 12 CFR 226.18(s)(2)(ii) and comment the loan is recast. The Board recognizes 18(s)(2)(ii)–2. year, $1194 in the third year, $1343 in that the approach taken towards 46 See 2006 Nontraditional Mortgage Guidance at the fourth year, and then requires $1511 calculating the maximum loan amount 58614, n.7. for the remaining term of the loan. This

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comment would then explain that made, calculated in accordance with HELOC is used as a ‘‘piggyback loan’’ to during the first three years of the loan, proposed § 226.43(c)(6). Furthermore, as help towards payment on a home the payments are less than the interest discussed under proposed purchase transaction or if the HELOC is accrued each month, resulting in § 226.43(b)(12), the Board is proposing opened for convenience to be drawn negative amortization. Assuming the to use its authority under TILA Sections down at a future time. The Board is minimum payments increase year-to- 105(a) and 129B(e) to broaden the scope concerned that requiring the creditor to year up to the 12.5% payment cap, the of TILA Section 129C(a)(2) to include underwrite a simultaneous HELOC consumer will begin making payments HELOCs, and define the term assuming a full draw on the credit line that cover at least all of the interest ‘‘simultaneous loan’’ accordingly, for may unduly restrict credit access, accrued at the end of the third year. purposes of the requirements under especially in connection with non- Thus, the loan is recast on the due date proposed § 226.43(c)(2)(iv) and (c)(6). 15 purchase transactions (i.e., of the 36th monthly payment. The U.S.C. 1604(a). refinancings), because it would require maximum loan amount on that date is Proposed § 226.43(c)(6) provides the creditors to assess the consumer’s $207,659, and the remaining loan term payment calculation for a simultaneous repayment ability using potentially is 27 years (324 months). See proposed loan that is a closed-end covered overstated payment amounts. Thus, the comment 43(c)(5)(ii)(C)–3.ii. transaction or a HELOC. Specifically, Board is proposing under This comment would conclude that proposed § 226.43(c)(6) requires that the § 226.43(c)(6)(ii) that the creditor for purposes of the repayment ability creditor consider the consumer’s calculate the payment for the determination required in payment on a simultaneous loan that is: simultaneous HELOC based on the § 226.43(c)(2)(iii), the creditor must (1) A covered transaction, by following amount of funds to be drawn by the determine the consumer’s ability- to proposed § 226.43(c)(5)(i)–(ii); or (2) a consumer at consummation of the repay the loan based on a monthly HELOC, by using the periodic payment covered transaction. As discussed in payment of $1497, which is the required under the terms of the plan further detail below under proposed substantially equal, monthly payment of using the amount of credit that will be comment 43(c)(6)–3, the Board solicits principal and interest that will repay the drawn at consummation of the covered comment on whether this approach is maximum loan amount of $207,659 over transaction. That is, with respect to appropriate. the remaining loan term of 27 years simultaneous loans that are covered Proposed comment 43(c)(6)–1 states using the fixed interest rate of 7.5%. transactions (i.e., closed-end loans that in determining the consumer’s The Board recognizes that the subject to proposed § 226.43(c)), repayment ability for a covered payment calculation requirements, proposed § 226.43(c)(6)(i) requires the transaction, the creditor must include which are consistent with statutory creditor to calculate the payment consideration of any simultaneous loan requirements, will sometimes require obligation consistent with the rules that which it knows or has reason to know the creditor to underwrite a graduated apply to covered transactions under will be made at or before consummation payment mortgage using a monthly proposed § 226.43(c)(5). Under those of the covered transaction. To facilitate payment that is lower than the largest proposed rules, the creditor must make compliance, the comment would cross- payment the consumer would be the repayment ability determination reference to proposed comment required to pay. For example, as using the greater of the fully indexed 43(c)(2)(iv)–2 for further discussion on illustrated in proposed comment rate or any introductory rate, to the standard ‘‘knows or has reason to 43(c)(5)(ii)(C)–3.ii, the creditor would calculate monthly, fully amortizing know,’’ and proposed § 226.43(b)(12) for underwrite the loan using a monthly payments that are substantially equal. the meaning of the term ‘‘simultaneous payment of $1497 for purposes of the Under proposed § 226.43(b)(2), a ‘‘fully loan.’’ repayment ability determination, even amortizing payment’’ is defined as a Proposed comment 43(c)(6)–2 though the consumer will need to begin periodic payment of principal and explains that for a simultaneous loan making monthly payments of $1511 interest that will repay the loan amount that is a covered transaction, as that beginning in the fifth year of the loan. over the loan term. Thus, in the case of term is defined in proposed This anomaly occurs because the a simultaneous loan that is a closed-end § 226.43(b)(1), the creditor must creditor must assume substantially credit transaction, the payment is based determine a consumer’s ability to repay equal payments over the term of the on the loan amount. Typically, in the monthly payment obligation for a loan remaining as of the date the loan closed-end transactions the consumer is simultaneous loan as set forth in is recast. As discussed above in relation committed to using the entire loan § 226.43(c)(5), taking into account any to step-rate mortgages, the Board solicits amount because there is full mortgage-related obligations. The comment on whether it should exercise disbursement of funds at comment would provide a cross- its authority under TILA Sections 105(a) consummation. See proposed comment reference to proposed § 226.43(b)(8) for and 129B(e) to require the creditor to 43(b)(5)–1, which discusses the the meaning of the term ‘‘mortgage- use the largest payment scheduled when definition of loan amount and clarifies related obligations.’’ determining the consumer’s ability to that the amount disbursed at Proposed comment 43(c)(6)–3 clarifies repay the loan. 15 U.S.C. 1604(a). consummation is not determinative for that for a simultaneous loan that is a purposes of the payment calculation HELOC, the creditor must consider the 43(c)(6) Payment Calculation for rules. See proposed § 226.43(c)(5) for periodic payment required under the Simultaneous Loans further discussion of the payment terms of the plan when assessing the As discussed above, proposed calculation requirements for covered consumer’s ability to repay the covered § 226.43(c)(2)(iv) implements TILA transactions. transaction secured by the same Section 129C(a)(2) and requires that By contrast, for a simultaneous loan dwelling as the simultaneous loan. This when determining the consumer’s that is a HELOC, the consumer is comment would explain that under repayment ability on a covered generally not committed to using the proposed § 226.43(c)(6)(ii), the creditor transaction, the creditor must consider entire credit line at consummation. The must determine the periodic payment the consumer’s monthly payment on amount of funds drawn on a required under the terms of the plan by any simultaneous loan that the creditor simultaneous HELOC may differ greatly considering the actual amount of credit knows or has reason to know will be depending, for example, on whether the to be drawn by the consumer at or

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before consummation of the covered simultaneous HELOCs. For example, covered transaction, as required to be transaction. This comment would should the Board require creditors to calculated by § 226.43(c)(2)(iii) and clarify that the amount to be drawn is assume a full draw (i.e., requested (c)(5); the monthly payment on any the amount requested by the consumer; amount to be used) of the credit line, a simultaneous loans, as required to be when the amount requested will be 50% draw, or some other amount calculated by § 226.43(c)(2)(iv) and disbursed, or actual receipt of funds, is instead of the actual amount to be (c)(6); the monthly payment amount of not determinative. This comment would drawn by the consumer? The Board also any mortgage-related obligations, as provide the following example: Where solicits comment on whether it would required to be considered by the creditor’s policies and procedures facilitate compliance to provide a safe § 226.43(c)(2)(v); and the monthly require the source of downpayment to harbor where creditors assume the full payment amount of any current debt be verified, and the creditor verifies that credit line is drawn at consummation. obligations, as required to be considered a simultaneous loan that is a HELOC In addition, as noted above, proposed by § 226.43(c)(2)(vi). Proposed will provide the source of § 226.43(c)(2)(iv) and (c)(6) do not § 226.43(c)(7)(i)(B) defines the term downpayment for the first-lien covered distinguish between purchase and non- ‘‘total monthly income’’ to mean the sum transaction, the creditor must consider purchase covered transactions when of the consumer’s current or reasonably the periodic payment on the HELOC by requiring creditors to consider a expected income, including any income assuming the amount to be drawn at periodic payment required on a from assets, as required to be considered consummation is the downpayment simultaneous loan that is a HELOC for by § 226.43(c)(2)(i) and (c)(4). amount. The Board recognizes that purposes of the repayment ability With respect to the calculations, determining the actual amount to be determination. The Board recognizes, proposed § 226.43(c)(7)(ii)(A) requires drawn by the consumer may depend on however, that concerns regarding the creditor to consider the consumer’s a number of variables, and may not be ‘‘piggyback loans’’ may not be as acute monthly debt-to-income ratio for readily determined prior to with non-purchase transactions (i.e., purposes of § 226.43(c)(2)(vii) using the consummation. As discussed more fully refinancings) where HELOCs generally ratio of the consumer’s total monthly below, the Board is soliciting comment are taken against established equity in debt obligations to total monthly on the appropriateness of this approach. the home, and are opened concurrently income. Proposed § 226.43(c)(7)(ii)(B) Proposed comment 43(c)(6)–3 would with the refinancing of the first-lien requires the creditor to consider the further clarify that, in general, the loan for convenience and savings in consumer’s remaining income after creditor should determine the periodic closing costs. In addition, the Board subtracting the consumer’s total payment based on guidance in staff notes that with respect to simultaneous monthly debt obligations from the total commentary to § 226.5b(d)(5), which HELOCs originated in connection with monthly income. discusses disclosure of payment terms a refinancing, proposed Proposed comment 43(c)(7)–1 states for HELOCs. § 226.43(c)(2)(iv) and (c)(6) could be that creditors must calculate the The Board recognizes that consumers circumvented, or its value diminished consumer’s total monthly debt may fully draw on available credit significantly, where consumers do not obligations and total monthly income in immediately after closing on the first- draw on the credit line until after the accordance with the requirements in lien loan, which could significantly covered transaction is consummated. proposed § 226.43(c)(7). The impact their repayment ability on both Moreover, the Board is concerned that commentary explains that creditors may the first-lien and second-lien mortgage the proposal could encourage creditors look to widely accepted governmental obligations. Although this risk is present and consumers to simply originate and non-governmental underwriting with respect to any credit line available HELOCs immediately subsequent to the standards to determine the appropriate to a consumer post-consummation, consummation of a covered transaction thresholds for the debt-to-income ratio unlike credit cards, HELOCs are secured that is a refinancing, resulting in lost or residual income. by a consumer’s dwelling. Inability to savings and convenience to consumers. Proposed comment 43(c)(7)–2 repay the first- or second-lien loan For these reasons, the Board solicits explains that if a creditor considers both could result in foreclosure and loss of comment, and supporting data, on the consumer’s debt-to-income ratio and the home. In addition, outreach revealed whether the Board should narrow the residual income, the creditor may base that creditors take varied approaches to requirement under proposed its repayment ability determination on determining the periodic payment they § 226.43(c)(2)(iv) and (c)(6) to require either the consumer’s debt-to-income consider when underwriting a creditors to consider simultaneous ratio or residual income, even if the simultaneous HELOC, with some HELOCs only in connection with ability-to-repay determination would participants indicating they assume a purchase transactions. differ with the basis used. Indeed, the full draw and calculate the periodic Board does not wish to create an 43(c)(7) Monthly Debt-to-Income Ratio payment based on the fully indexed incentive for creditors to consider and or Residual Income rate, and other participants indicating verify as few factors as possible in the that a 50% draw is assumed and only As discussed above, proposed repayment ability determination. the minimum periodic payment is § 226.43(c)(2)(vii) implements TILA Proposed comment 43(c)(7)–3 clarifies considered. Section 129C(a)(3) and requires that creditors may consider For these reasons, the Board solicits creditors, as part of the repayment compensating factors to mitigate a comment on the appropriateness of the ability determination, to consider the higher debt-to-income ratio or lower approach provided under proposed consumer’s monthly debt-to-income residual income. For example, creditors § 226.43(c)(6)(ii) and comment 43(c)(6)– ratio or residual income. Proposed may consider the consumer’s assets 3 regarding the payment calculation for § 226.43(c)(7) provides the definitions other than the dwelling securing the simultaneous HELOCs, with supporting and calculations for the monthly debt- covered transaction, or the consumer’s data for any alternative approaches. to-income ratio and residual income. residual income as compensating factors Specifically, the Board solicits comment With respect to the definitions, for a higher debt-to-income ratio. The on what amount of credit should be proposed § 226.43(c)(7)(i)(A) defines the proposed commentary permits creditors assumed as drawn by the consumer for term ‘‘total monthly debt obligations’’ to to look to widely accepted governmental purposes of the payment calculation for mean the sum of: The payment on the and non-governmental underwriting

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standards in determining whether and in determining whether a consumer has representatives of both industry and in what manner to include the the ability to repay a covered government-sponsored housing finance compensating factors. The Board solicits transaction. See proposed enterprises (GSEs); and examined comment on whether it should provide § 226.43(c)(2)(ii). It also applies a underwriting rules and guidelines for more guidance on what compensating different payment calculation the streamlined refinance programs of factors creditors may consider, and on requirement to creditors determining private creditors, GSEs and government how creditors may include whether a consumer has the ability to agencies, as well as for the Home compensating factors in the repayment repay these special types of refinanced Affordable Modification Program ability determination. loans. See proposed § 226.43(c)(2)(iii), (HAMP). For additional guidance, the Residual income. Except for one small and (c)(5). Proposed § 226.43(d) Board also considered the Dodd-Frank creditor and the U.S. Department of implements TILA Section 129C(a)(6)(E), Act provisions exempting streamlined Veterans’ Affairs (VA), the Board is not which was added to TILA under § 1411 refinancings under Federal government aware of any creditors that routinely use of the Dodd-Frank Act. 15 U.S.C. agency programs. See TILA Section residual income in underwriting, other 1639c(a)(6)(E). As previously noted, 129C(a)(5); 15 U.S.C. 1639c(a)(5). than as a compensating factor.47 The VA Section 1411 of the Dodd-Frank Act In the Board’s view, both the statutory underwrites its loans to veterans based amends TILA by adding new Section text and additional research support on a residual income table developed in 129C(a), which requires creditors to interpreting TILA Section 129C(a)(6)(E) 1997. The table shows the residual determine whether a consumer has a to mean that creditors of refinancings income required for the borrower based reasonable ability to repay a home meeting certain conditions should have on the loan amount, region of the mortgage loan before making the loan greater flexibility to comply with the country, and family size. The residual and sets the parameters for that general ability-to-repay provisions in income is calculated by deducting determination (detailed above in the TILA Section 129C(a) (proposed to be obligations, including Federal and state section-by-section analysis of implemented by § 226.43(c)). taxes, from effective income. The Board § 226.43(c)). 15 U.S.C. 1639c(a). TILA Accordingly, the proposal: (1) Clarifies solicits comment on whether Section 129C(a)(6)(E) applies special the conditions that must be met in home consideration of residual income should ability-to-repay provisions to mortgage refinancings to which greater account for loan amount, region of the transactions in which a ‘‘hybrid loan’’ is flexibility applies; and (2) provides an country, and family size. The Board also refinanced into a ‘‘standard loan’’ and exemption for creditors of these solicits comment on whether creditors the following additional conditions are refinancings from certain limited should be required to include Federal met: criteria required to be considered as part and state taxes in the consumer’s • The ‘‘creditor’’ for the hybrid loan of the general repayment ability obligations for purposes of calculating and the standard loan is the ‘‘same’’; determination under TILA Section residual income. • There is a ‘‘reduction’’ in the 129C(a) (see proposed § 226.43(c)). Automated underwriting systems. The consumer’s monthly payment from the Under the proposal, loans that can Board understands that creditors hybrid loan to the standard loan; and result in ‘‘payment shock’’ may be routinely rely on automated • The consumer ‘‘has not been refinanced without the creditor having underwriting systems. Many of those delinquent on any payment on the to verify the borrower’s income and systems are proprietary and thus lack existing hybrid mortgage.’’ assets with written documentation as transparency to the individual creditors prescribed in the general ability-to- 15 U.S.C. 1639c(a)(6)(E). using the systems. The Board solicits repay requirements (see the section-by- comment on providing a safe harbor for Specifically, ‘‘in considering any section analysis of § 226.43(c)(2)(ii) and creditors relying on automated application for a refinancing,’’ the (c)(4)), as long as a number of additional creditor may— underwriting systems that use monthly • conditions are met. In addition, the debt-to-income ratios, if the system Consider the consumer’s ‘‘good creditor is permitted to calculate the standing on the existing mortgage.’’ developer certifies that the system’s use • monthly payment used for determining of monthly debt-to-income ratios in Consider whether the extension of the consumer’s ability to repay the new determining repayment ability is new credit would prevent a likely loan based on assumptions that would empirically derived and statistically default should the original mortgage typically result in a lower monthly sound. The Board also solicits comment reset and may give this concern a payment than those required to be used on other methods to facilitate creditor ‘‘higher priority as an acceptable under the general ability-to-repay underwriting practice.’’ reliance on automated underwriting • requirements (see the section-by-section systems, while ensuring that creditors Offer rate discounts and other analysis of § 226.43(c)(2)(iii) and (c)(5)). can demonstrate compliance with the favorable terms to the consumer that As a result, when all of the special ‘‘ rule. would be available to new customers refinancing conditions are met, creditors with high credit ratings based on [the may be better able to qualify a consumer 43(d) Refinancing of Non-Standard creditor’s] underwriting practice.’’ for a new loan than under the general Mortgages TILA Section 129C(a)(6)(E)(i)–(iii); 15 ability-to-repay requirements. Introduction U.S.C. 1639c(a)(6)(E)(i)–(iii). A central provision of TILA Section Proposed § 226.43(d) exempts The Dodd-Frank Act does not define 129C(a)(6)(E) permits creditors to give creditors of refinancings under certain the terms ‘‘hybrid loan’’ or ‘‘standard prevention of a ‘‘likely default should limited circumstances from the loan.’’ The statute also does not the original mortgage reset a higher requirement to verify income and assets expressly state that a creditor is exempt priority as an acceptable underwriting from the statutory ability to repay practice.’’ TILA Section 129C(a)(6)(E)(ii); 47 See also, Michael E. Stone, What is Housing requirements in refinancings for which 15 U.S.C. 1639c(a)(6)(E)(ii). The Board Affordability? The Case for the Residual Income the above conditions are met. To believes that the structure of the statute Approach, 17 Housing Policy Debate 179 (Fannie determine the meaning of these supports interpreting this provision to Mae 2006) (advocating use of a residual income approach but acknowledging that it ‘‘is neither well provisions, the Board reviewed the mean that certain ability-to-repay known, particularly in this country, nor widely Dodd-Frank Act’s legislative history; criteria under TILA Section 129C(a) understood, let alone accepted’’). consulted with consumer advocates and should not apply to refinances that meet

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the requisite conditions. The special Regarding the statutory text, the Board focus of TILA’s new refinancing refinancing provisions of TILA Section notes that the refinancing provisions provisions is similar to the focus of 129C(a)(6)(E) are part of TILA Section under TILA Section 129C(a)(6)(E) HAMP, a government program 129C(a), entitled ‘‘Ability to Repay,’’ the include three central elements of typical specifically aimed at providing paragraph that specifically prescribes streamlined refinance programs.49 First, modifications for borrowers at risk of the requirements that creditors must the creditor for both the existing ‘‘imminent default,’’ or in default or meet to satisfy the obligation to mortgage and the new mortgage must be foreclosure.52 Underwriting criteria for a determine a consumer’s ability to repay the same (see the section-by-section HAMP modification are considerably a home mortgage. In the Board’s view, analysis of § 226.43(d)(1)(i) discussing more stringent than for a typical the term ‘‘underwriting practice’’ is the Board’s interpretation of ‘‘same streamlined refinance; for example, reasonably interpreted to refer to the creditor’’ to mean the current holder of income verification documentation is underwriting rules prescribed in earlier the loan or the servicer acting on behalf required, in addition to documented portions of TILA Section 129C(a)— of the current holder). 15 U.S.C. verification of expenses.53 Concerns namely, those concerning the general 1639C(a)(6)(E). Second, the borrower about the potential risks posed by loans ability to repay underwriting must have a positive payment history on to troubled borrowers may explain the requirements. the existing mortgage (see the section- robust underwriting standards for Overall, the Board interprets the by-section analysis of § 226.43(d)(1)(iv) HAMP modifications. special refinancing provisions of TILA and (d)(1)(v) for further discussion). On balance, the Board believes that Section 129C(a)(6)(E) as intended to Third, TILA’s special refinancing the statutory language is most allow for the greater flexibility in provisions require that the payment on appropriately interpreted to be modeled underwriting that is characteristic of so- the new mortgage be lower than the on the underwriting standards of typical called ‘‘streamlined refinances.’’ The payment on the existing mortgage—a streamlined refinance programs rather Board notes in particular that typical common objective of typical than the tighter standards of HAMP. The streamlined refinance programs do not streamlined refinance programs.50 plain language of the Dodd-Frank Act require documentation of income and indicates that Congress intended to Finally, as noted, TILA Section assets, although a verbal verification of facilitate opportunities to refinance 129C(a) includes a provision that employment may be required.48 The loans on which their payments could specifically addresses how the general Board’s interpretation is based both on become significantly higher and thus ability-to-repay requirements apply to the statutory text and on the Board’s unaffordable. Applying the strict streamlined refinances under programs research and outreach with concerned underwriting standards that are too of government agencies such as the parties. stringent could impede refinances that Regarding the Board’s research and Federal Housing Administration and Congress intended to encourage. In outreach, the Board understands that U.S. Department of Veterans’ Affairs. particular, the statutory language streamlined refinances have been an See TILA Section 129C(a)(5), 15 U.S.C. permitting creditors to give ‘‘likely important resource for consumers, 1639c(a)(5). In the Board’s view, the default’’ a ‘‘higher priority as an particularly in recent years, who faced most reasonable interpretation of the acceptable underwriting practice’’ impending payment shock, could not additional section on refinancings under indicates that flexibility in these special qualify for a typical refinance because of TILA Section 129C(a)(6)(E) is that it is refinances should be permitted. In property value declines, or both. To intended to cover the remaining market addition, underwriting standards that go address these problems, many lenders for streamlined refinances—namely, significantly beyond those used in as well as the GSEs and government those offered under programs of private existing streamlined refinance programs agencies developed lending programs to creditors and the GSEs. could create a risk that these programs allow borrowers of loans held by them One difference between the statute would be unable to meet the TILA to refinance despite high loan-to-value and typical streamlined refinance ability-to-repay requirements; thus, an ratios or other characteristics that might programs, however, is that the statute important refinancing resource for at- otherwise impede refinancing. targets consumers facing ‘‘likely default’’ risk borrowers would be compromised Representatives of creditors and GSEs in if the existing mortgage ‘‘reset[s].’’ The and the overall mortgage market particular informed the Board that their Board understands that, by contrast, potentially disrupted at a vulnerable streamlined refinance programs are a streamlined refinance programs are not time. significant proportion of their portfolios normally limited to borrowers at risk in At the same time, the Board and that they view their programs as this way. For example, they often assist recognizes that borrowers at risk of valuable to both consumers and loan consumers who are not facing potential default when higher payments are holders. Consumers are able to take default but who simply wish to take required might present greater credit advantage of lower rates to obtain a advantage of lower rates despite a drop risks to the institutions holding their more affordable loan (and lower in their home value or wish to switch loans when those loans are refinanced payments) and, in some cases, to avoid from a less stable variable-rate product without verifying the consumer’s default or even foreclosure. At the same to a fixed-rate product.51 However, the income and assets. For example, a time, loan holders strengthen their consumer may be paying $525 per portfolios by replacing potentially 49 During outreach, Fannie Mae provided data to month as an interest-only payment on unaffordable and unstable loans with the Board indicating that for 2010, Fannie Mae, an existing adjustable-rate loan. When Freddie Mac and Ginnie Mae refinancings totaled refinanced at a lower, fixed rate with affordable, stable products. $925 billion, while non-GSE refinancings totaled $73 billion. Of the combined GSE refinancings, fully amortizing payments, however, the 48 See id. at 4. See also, e.g., Freddie Mac Single- $288.6 billion were ‘‘streamlined refinances’’— Family Seller/Servicer Guide, Vol. 1, Ch. 24: approximately one-third of all GSE refinancings. Streamlined Refinance Mortgage,’’ Pub. No. 387, pp. Refinance Mortgages/24.4: Requirements for 50 See, e.g., Fannie Mae, ‘‘Home Affordable 1–2 (Aug. 2010). Freddie Mac-owned streamlined refinance Refinance Refi PlusTM Options,’’ p. 1 (Mar. 29, 52 See, e.g., Fannie Mae, ‘‘Home Affordable mortgages (Sept. 1, 2010). As of May 1, 2011, 2010). Modification Program,’’ p. 1, FM 0509 (2009). Freddie Mac will no longer purchase Freddie Mac- 51 See, e.g., Fannie Mae, ‘‘Home Affordable 53 See, Fannie Mae, ‘‘Making Home AffordableSM owned streamlined refinance mortgages. See Refinance Refi PlusTM Options,’’ p. 1 (Mar. 29, Program, Handbook for Servicers of Non-GSE Freddie Mac Bulletin 2011–2 (Jan. 18, 2011). 2010); Freddie Mac, ‘‘Freddie Mac-owned Mortgages,’’ Ch. II, § 5, pp. 59–62 (Dec. 2, 2010).

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payment may go up somewhat from the • The monthly payment for the the current holder of the existing ‘‘non- previous interest-only level—for standard mortgage is significantly lower standard mortgage’’ or the servicer example, to $650—because the new than the monthly payment for the non- acting on behalf of the current holder. payments now cover both principal and standard mortgage, as calculated under This provision implements the statutory interest. (For further discussion of how proposed § 226.43(d)(5). requirement that the existing loan must • this scenario is possible under the The creditor receives the be refinanced by ‘‘the creditor into a proposal, see the section-by-section consumer’s written application for the standard loan to be made by the same analysis of proposed § 226.43(d)(5).) The standard mortgage before the non- creditor.’’ TILA Section 129C(a)(6)(E); 15 new payment of $650 is likely to be standard mortgage is ‘‘recast’’ (defined in U.S.C. 1639c(a)(6)(E). The Board lower than the ‘‘reset’’ payment at the proposed § 226.43(b)(11)). believes that this statutory provision • The consumer has made no more fully-indexed rate on the existing requires the entity refinancing the loan than one payment more than 30 days mortgage; nonetheless, the creditor to have an existing relationship with the incurs some risk that the consumer may late on the non-standard mortgage during the 24 months immediately consumer. The existing relationship is not be able to afford the new payments. important because the creditor must be For this reason, to qualify for the preceding the creditor’s receipt of the able to easily access the consumer’s ability to repay exemptions under consumer’s written application for the payment history and potentially other proposed § 226.43(d), a consumer must standard mortgage. • meet some requirements that are more The consumer has made no information about the consumer in lieu stringent than those of typical payments more than 30 days late during of documenting the consumer’s income streamlined refinance programs. Under the six months immediately preceding and assets. In addition, the Board reads the proposal, for example, a consumer the creditor’s receipt of the consumer’s the statute to be intended in part to may have had only one delinquency of written application for the standard ensure the safety and soundness of more than 30 days in the 24 months mortgage. financial institutions by giving them immediately preceding the consumer’s As discussed further below, proposed greater flexibility to improve the quality application for a refinance. See § 226.43(d)(2)(iii) defines the term of their loan portfolios through proposed § 226.43(d)(1)(iv). By contrast, ‘‘refinancing’’ to have the same meaning streamlined refinances. streamlined refinance programs of as in § 226.20(a). The Board also believes that this Proposed comment 43(d)(1)–1 which the Board is aware tend to statutory provision is intended to ensure clarifies that the requirements for a consider the consumer’s payment that the creditor of the refinancing have history for only the last 12 months.54 As ‘‘written application,’’ a term that appears in § 226.43(d)(1)(iii), (d)(1)(iv) an interest in placing the consumer into another safeguard against risk, the Board new loan that is affordable and defines the type of loan into which a and (d)(1)(v), discussed in detail below, are found in comment 19(a)(1)(i)–3. beneficial. In the Board’s view, the consumer may refinance under TILA’s creditor of the new loan will in most new refinancing provisions to include Comment 19(a)(1)(i)–3 states that creditors may rely on the Real Estate cases retain an interest in the several characteristics designed to consumer’s well-being when the ensure that those loans are stable and Settlement Procedures Act (RESPA) and Regulation X (including any creditor is also the current holder of the affordable. These include a requirement loan or the servicer acting on the current that the interest rate be fixed for the first interpretations issued by HUD) in deciding whether a ‘‘written holder’s behalf. In cases where a five years after consummation (see application’’ has been received. This creditor holds a loan and will hold the proposed § 226.43(d)(2)(ii)(D)) and that comment further states that, in general, loan after it is refinanced, the creditor the points and fees be capped at three Regulation X defines ‘‘application’’ to has a direct interest in refinancing the percent of the total loan amount, subject mean the submission of a borrower’s consumer into a more stable and to a limited exemption for smaller loans financial information in anticipation of affordable product. In addition, the (see proposed § 226.43(d)(2)(ii)(B))). a credit decision relating to a Federally Board understands that the existing The Board’s Proposal related mortgage loan. See 24 CFR servicer often will be the entity 43(d)(1) Scope 3500.2(b). The comment clarifies that an conducting the refinance, particularly application is received when it reaches for refinances held by GSEs. By also Proposed § 226.43(d)(1) defines the the creditor in any of the ways permitting the creditor on the scope of the provisions regarding the applications are normally transmitted— refinanced loan to be the servicer acting refinancing of non-standard mortgages by mail, hand delivery, or through an on behalf of the holder of the existing under proposed § 226.43(d). intermediary agent or broker. The mortgage, the proposal is intended Specifically, this provision states that comment further clarifies that, if an clearly to cover instances where a loan § 226.43(d) applies to the refinancing of application reaches the creditor through that has been sold to a GSE is refinanced a ‘‘non-standard mortgage’’ (defined in an intermediary agent or broker, the by the existing servicer and continues to proposed § 226.43(d)(2)(i)) into a application is received when it reaches be held by the same GSE. ‘‘standard mortgage’’ (defined in the creditor, rather than when it reaches proposed § 226.43(d)(2)(ii)) when the the agent or broker. This comment also At the same time, the Board following conditions are met— recognizes that the creditor on the new • cross-references comment 19(b)–3 for The creditor of the standard guidance in determining whether or not mortgage may not necessarily retain an mortgage is the current holder of the the transaction involves an intermediary interest in the new loan if the creditor existing non-standard mortgage or the agent or broker. immediately sells the loan to a new servicer acting on behalf of the current holder. The Board requests comment on holder. 43(d)(1)(i) Creditor is the Current Holder whether the proposed rule could be or Servicer Acting on Behalf of Current structured differently to better ensure 54 See, e.g., Fannie Mae, ‘‘Home Affordable Holder that the creditor on a refinancing under Refinance Refi PlusTM Options,’’ p. 2 (Mar. 29, § 226.43(d) retains an interest in the 2010); Freddie Mac, ‘‘Freddie Mac-owned Proposed § 226.43(d)(1)(i) requires Streamlined Refinance Mortgage,’’ Pub. No. 387, p. that the creditor for the new mortgage performance of the new loan and 2 (Aug. 2010). (the ‘‘standard mortgage’’) also be either whether additional guidance is needed.

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43(d)(1)(ii) Monthly Payment for the whether a percentage or dollar amount § 226.43(d)(1)(v) (discussed below), Standard Mortgage is Materially Lower reduction would be more appropriate a § 226.43(d)(1)(iv) implements the Than the Monthly Payment for the Non- rule rather than a safe harbor. portion of TILA Section 129C(a)(6)(E) Standard Mortgage that requires that the borrower not have 43(d)(1)(iii) Creditor Receives the ‘‘ Proposed § 226.43(d)(1)(ii) requires Consumer’s Written Application for the been delinquent on any payment on the ’’ that the monthly payment on the new Standard Mortgage Before the Non- existing hybrid loan. 15 U.S.C. loan (the ‘‘standard mortgage’’) be Standard Mortgage is Recast 1639c(a)(6)(E). ‘‘materially lower’’ than the monthly The Board believes that the proposal Proposed § 226.43(d)(1)(iii) requires is consistent with the statutory payment for the existing loan (the ‘‘non- that the creditor for the refinancing standard mortgage’’). This provision prohibition on ‘‘any’’ delinquencies on receive the consumer’s written the existing non-standard (‘‘hybrid’’) implements the statutory requirement application for the refinancing before that there be ‘‘a reduction in monthly mortgage, in addition to being the existing non-standard mortgage is consistent with the consumer protection payment on the existing hybrid loan’’ in ‘‘recast.’’ As discussed in the section-by- order for the special provisions to apply purpose of TILA and industry practices section analysis of § 226.43(b)(11), the under many current streamlined to a refinancing. TILA Section Board defines the term ‘‘recast’’ to mean, 129C(a)(6)(E); 15 U.S.C. 1639c(a)(6)(E). refinance programs. Further, the for an adjustable-rate mortgage, the proposal is supported by the Board’s Proposed comment 43(d)(1)(ii)–1 expiration of the period during which provides that the exemptions afforded authority under TILA Sections 105(a) payments based on the introductory and 129B(e) to adjust provisions of TILA under § 226.43(d)(3) (discussed below) fixed rate are permitted; for an interest- apply to a refinancing only if the and condition practices ‘‘to assure that only loan, the expiration of the period consumers are offered and receive monthly payment for the new loan is during which the interest-only ‘‘materially lower’’ than the monthly residential mortgage loan on terms that payments are permitted; and, for a reasonably reflect their ability to repay payment for an existing non-standard negative amortization loan, the mortgage and clarifies that the payments the loans and that are understandable expiration of the period during which and not unfair, deceptive, or abusive.’’ that must be compared must be negatively amortizing payments are calculated based on the requirements 15 U.S.C. 1604(a); 15 U.S.C. 1639b(e); permitted. TILA Section 129B(a)(2), 15 U.S.C. under § 226.43(d)(5) (discussed below). The Board believes that proposed 1639b(a)(2). The proposal is designed to This comment also explains that § 226.43(d)(1)(iii) is necessary to further this purpose by facilitating whether the new loan payment is implement TILA Section transactions that help consumers ‘‘materially lower’’ than the non- 129C(a)(6)(E)(ii), which permits refinance out of unaffordable loans. standard mortgage payment depends on creditors of certain refinances to During outreach, the Board learned the facts and circumstances, but that, in ‘‘consider if the extension of new credit that a delinquency of more than 30 days all cases, a payment reduction of 10 would prevent a likely default should often can occur at the time of loan set- percent or greater would meet the the original mortgage reset.’’ 15 U.S.C. up due to errors in the set-up process ‘‘materially lower’’ standard. 1639c(a)(6)(E)(ii). This statutory outside of the consumer’s control. The For several reasons, the Board language implies that the special Board also noted, as discussed above, interprets the statutory requirement for refinancing provisions apply only where that all of the streamlined refinance a ‘‘reduction in monthly payment’’ to the original mortgage has not yet ‘‘reset.’’ programs reviewed by the Board permit mean that the new payment must be Congress’s concern appears to be at least one 30- or 31-day delinquency, ‘‘materially lower’’ than the payment prevention of default in the event of a although usually during the last 12 under the existing mortgage and that a ‘‘reset,’’ not loss mitigation on a months rather than the last 24 months 10 percent or greater reduction is a mortgage for which a default on the prior to application for a refinancing.55 reasonable safe harbor. First, if the ‘‘reset’’ payment has already occurred. required reduction could be merely de The Board recognizes that a consumer Thus the proposal is more stringent than minimis—such as a reduction of a few may not realize that a loan will be recast typical streamlined refinance programs, cents or dollars—the statutory purpose until the recast occurs and that, at that but does not prohibit all delinquencies. would not be met. In such cases, the point, the consumer could not refinance 24–Month Look-Back Period. The consumer would not obtain a the loan under the special streamlined Board proposes to require a look-back meaningful benefit that would prevent refinancing provisions of proposed period for payment history of 24 default—in other words, the reduction § 226.43(d). The Board requests months, rather than a 12-month period, would not be ‘‘material.’’ Second, based comment on whether to use its legal for several reasons. First, as noted on outreach, the Board understands that authority to make adjustments to TILA earlier, typical streamlined refinance a 10 percent reduction in the payment to permit streamlined refinancings even programs are often aimed at helping is a reasonable minimum reduction that after a loan is recast. borrowers with no risk of default. The can provide a meaningful benefit to the Board recognizes that borrowers at risk consumer. 43(d)(1)(iv) One Payment More Than 30 of default when higher payments are The Board requests comment on Days Late During the 24 Months required might present greater credit whether a requirement that the payment Immediately Preceding the Creditor’s risks to the institutions holding their on the standard mortgage must be Receipt of the Consumer’s Written loans, even if the institutions refinance ‘‘materially lower’’ than the payment on Application those loans. In the Board’s view, when the non-standard mortgage (as Proposed § 226.43(d)(1)(iv) requires income and assets are not required to be calculated under § 226.43(d)(5)(ii) and that, during the 24 months immediately verified, as proposed, the borrower’s (d)(5)(i), respectively) and whether a 10 preceding the creditor’s receipt of the payment history takes on greater percent reduction or some other consumer’s written application for the percentage or dollar amount would be a standard mortgage, the consumer has 55 See, e.g., Fannie Mae, ‘‘Home Affordable TM made no more than one payment on the Refinance Refi Plus Options,’’ p. 2 (Mar. 29, more appropriate safe harbor for 2010); Freddie Mac, ‘‘Freddie Mac-owned compliance with this requirement. The non-standard mortgage more than 30 Streamlined Refinance Mortgage,’’ Pub. No. 387, p. Board also requests comment on days late. Together with 2 (Aug. 2010).

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importance, especially in dealing with has a positive payment history based on of more than 30 days as proposed, 30 at-risk borrowers. whether the consumer has made any days or more, or some other time period. Second, the Board sees some merit in payments late by 30 days or more (or, 43(d)(1)(v) No Payments More Than 30 the views expressed during outreach by as in the proposal, more than 30 days).56 GSE and creditor representatives that Days Late During the Six Months Proposed comment 43(d)(1)(iv)–1 Immediately Preceding the Creditor’s borrowers with positive payment provides the following illustration of the histories tend to be less likely than other Receipt of the Consumer’s Written rule under § 226.43(d)(1)(iv): Assume a Application borrowers to sign up for a new loan for consumer applies for a refinancing on which they cannot afford the monthly May 1, 2011. Assume also that the Proposed § 226.43(d)(1)(v) requires payments. At the same time, the Board consumer made a non-standard that the consumer have made no acknowledges that a positive payment mortgage payment on August 15, 2009, payments on the non-standard mortgage history on payments at low levels due that was 45 days late, but made no other more than 30 days late during the six to temporarily favorable loan terms is no late payments on the non-standard months immediately preceding the guaranty that the consumer can afford mortgage between May 1, 2009, and creditor’s receipt of the consumer’s the payments on a new loan. The Board May 1, 2011. In this example, the written application for the standard solicits comment on the proposal to requirement under § 226.43(d)(1)(iv) is mortgage. This provision is intended to require that the consumer have only one met because the consumer made only complement proposed § 226.43(d)(1)(iv), delinquency during the 24 months prior one payment that was over 30 days late discussed above, in implementing the to applying for a refinancing, within the 24 months prior to applying portion of TILA Section 129C(a)(6)(E) particularly on whether a longer or for the refinancing (i.e., 20 and one-half that requires that the borrower not have shorter look-back period should be months prior to application). been ‘‘delinquent on any payment on the required. existing hybrid loan.’’ 15 U.S.C. Delinquency of 30 days or fewer Payment due date. Proposed comment 43(d)(1)(iv)–2 clarifies that whether a 1639C(a)(6)(E). The Board believes that, permitted. Under the proposal, late together with proposed payments of 30 days or fewer on the payment is more than 30 days late depends on the contractual due date not § 226.43(d)(1)(iv), this aspect of the existing, non-standard mortgage would proposal is a reasonable interpretation not disqualify a consumer from accounting for any grace period. The comment provides the following of the prohibition on ‘‘any’’ refinancing the non-standard mortgage delinquencies on the non-standard under the streamlined refinance example: The contractual due date for a non-standard mortgage payment is the mortgage and is supported by the provisions of proposed § 226.43(d). The Board’s authority under TILA Sections Board believes that allowing first day of every month, but no late fee will be charged as long as the payment 105(a) and 129B(e) to adjust provisions delinquencies of 30 or fewer days is of TILA and condition practices ‘‘to consistent with the statutory prohibition is received by the 16th day of the assure that consumers are offered and on ‘‘any’’ delinquency for several month. Here, the ‘‘payment due date’’ is receive residential mortgage loan on reasons. First, delinquencies of this the first day of the month rather than terms that reasonably reflect their ability length may occur for many reasons the 16th day of the month. Thus, a to repay the loans and that are outside of the consumer’s control, such payment due under the contract on understandable and not unfair, as mailing delays, miscommunication September 1st that is paid on October deceptive, or abusive.’’ 15 U.S.C. about where the payment should be 1st is made more than 30 days after the 1604(a); TILA Section 129B(a)(2), 15 sent, or payment crediting errors. payment due date. U.S.C. 1639b(a)(2). Second, many creditors incorporate a The Board believes that using the late fee ‘‘grace period’’ into their contractual due date for determining The Board believes that a six-month payment arrangements, which permits whether a payment has been made more ‘‘clean’’ payment record indicates a consumers to make their monthly than 30 days after the due date will reasonable level of financial stability on payments for a certain number of days facilitate compliance and enforcement the part of the consumer applying for a after the contractual due date without by providing clarity. Whereas late fee refinancing. This measure of financial incurring a late fee. Thus, many ‘‘grace periods’’ are often not stated in stability is especially important where consumers regularly make their writing, the contractual due date is income and assets are not required to be payments after the contractual due date unambiguous. In addition, using the verified. In addition, some outreach and may even set up automated contractual due date for determining participants indicated that a prohibition withdrawals for their payments to be whether a loan payment is made on on delinquencies of more than 30 days made after the contractual due date in time is consistent with standard home for the six months prior to application order to coincide with the consumer’s mortgage loan contracts.57 for the refinancing was generally pay periods. The Board does not believe The Board requests comment on consistent with common industry that the statute is reasonably interpreted whether the delinquencies that creditors practice and would not be unduly to prohibit consumers from obtaining are required to consider under disruptive to existing streamlined needed refinances due to payments that § 226.43(d)(1) should be late payments refinance programs with well- are late but within a late fee grace performing loans. period. 56 See, e.g., Freddie Mac Single-Family Seller/ Proposed comment 43(d)(1)(v)–1 In addition, as discussed above, the Servicer Guide, Vol. 1, Ch. 24: Refinance provides the following examples of the Board interprets TILA Section Mortgages/24.4: Requirements for Freddie Mac- proposed rule: Assume a consumer in a 129C(a)(6)(E) to be intended as a owned streamlined refinance mortgages (Sept. 1, non-standard mortgage applies for a 2010) (requiring that the consumer has been current mechanism for allowing existing on the existing mortgage ‘‘for the most recent 90 refinancing on May 1, 2011. If the streamlined refinance programs to days and has not been 30 days delinquent more consumer made a 45-day late payment continue should the entities offering than once in the most recent 21 months, or if the on March 15, 2011, the requirement them wish to maintain these programs. Mortgage being refinanced is seasoned for less than under § 226.43(d)(1)(v) is not met 12 months, since the Mortgage Note Date’’). The predominant streamlined refinance 57 See Fannie Mae/Freddie Mac Uniform because the consumer made a payment programs of which the Board is aware Instrument, Multistate Fixed Rate Note—Single more than 30 days late just one and one- uniformly measure whether a consumer Family, Form 3200, §§ 3, 6. half months prior to application.

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The comment further clarifies that if Proposed comment 43(d)(2)(i)(A)–1 arguably does not face ‘‘payment shock’’ the number of months between explains what it means that a ‘‘non- because the consumer has paid the fixed consummation of the non-standard standard mortgage’’ includes an rate for such a short period of time. mortgage and the consumer’s adjustable-rate mortgage with an Another concern is that allowing application for the standard mortgage is introductory fixed interest rate for one streamlined refinancings under this six or fewer, the consumer may not have or more years. This comment clarifies provision where the interest rate is fixed made any payment more than 30 days that, for example, a covered transaction for less than one year could result in late on the non-standard mortgage. The with a fixed introductory rate for the ‘‘loan flipping.’’ A creditor, for example, comment cross-references proposed first two, three or five years and then could make a covered transaction and comments 43(d)(1)–2 and 43(d)(1)(iv)–2 converts to a variable rate for the then only a few months later refinance for an explanation of ‘‘written remaining 28, 27 or 25 years, that loan under § 226.43(d) to take application’’ and how to determine the respectively, is a ‘‘non-standard advantage of the exemption from certain payment due date, respectively. mortgage.’’ By contrast, a covered ability-to-repay requirements while still transaction with an introductory rate for profiting from the refinancing fees. 43(d)(2) Definitions six months that then converts to a The Board recognizes that under this Proposed Section 226.43(d)(2) defines variable rate for the remaining 29 and 1⁄2 definition, a consumer could refinance the terms ‘‘non-standard mortgage’’ and years is not a ‘‘non-standard mortgage.’’ out of a relatively stable product, such ‘‘standard mortgage’’ in proposed The Board believes that the proposed as an adjustable-rate mortgage with a § 226.43(d). As noted earlier, the statute definition of a ‘‘non-standard mortgage’’ fixed interest rate for a period of 10 does not define the terms ‘‘hybrid loan’’ is consistent with congressional intent. years, which then adjusts to a variable and ‘‘standard loan’’ used in the special First, the legislative history of the Dodd- rate for the remaining loan term (a ‘‘10/ refinancing provisions of TILA Section Frank Act describes ‘‘hybrid’’ mortgages 1 ARM’’). Whether this is the type of 129C(a)(6)(E). Therefore, the Board as mortgages with a ‘‘blend’’ of fixed-rate product that the special refinancing proposes definitions that in its view are and adjustable-rate characteristics— provisions were meant to accommodate consistent with the policy objective generally loans with an initial fixed is unclear. The Board solicits comment underlying these special provisions: period and adjustment periods, such as on whether adjustable-rate mortgages Facilitating the refinancing of home ‘‘2/23s and 3/27s.’’ 61 The legislative with an initial fixed rate should be mortgages on which consumers risk a history also indicates that Congress was considered ‘‘non-standard mortgages’’ likely default due to impending concerned about borrowers being regardless of how long the initial fixed payment shock into more stable and trapped in mortgages likely to result in rate applies, or if the proposed initial affordable products. payments that would suddenly become fixed-rate period of at least one year 43(d)(2)(i) Non-Standard Mortgage significantly higher—often referred to as should otherwise be revised. ‘‘payment shock’’—because their home The proposed definition of ‘‘non- Proposed § 226.43(d)(2)(i) substitutes values had dropped, thereby ‘‘making standard mortgage’’ also does not the term ‘‘non-standard mortgage’’ for 62 refinancing difficult.’’ include balloon mortgages. As discussed the statutory term ‘‘hybrid loan’’ and The Board believes that Congress’s above, the Board understands defines this term to mean a covered overriding concern about consumers Congress’s intent to be to cover ‘‘hybrid’’ transaction on which the loan has a being at risk due to payment shock loans, meaning loans on which the fixed ‘‘teaser’’ rate for a period of one supports an interpretation of the term monthly payment will jump because year or longer after consummation, ‘‘hybrid loan’’ to encompass both loans new monthly payment terms take effect, which then adjusts to a variable rate that are ‘‘hybrid’’ in that they start with making the loan unaffordable for the plus a margin for the remaining term of a fixed interest rate and convert to a remaining loan term. Balloon mortgages the loan; or the minimum periodic variable rate, but also loans that are are not clearly ‘‘hybrid’’ in this sense. payments (whether required or optional) ‘‘hybrid’’ in that borrowers can make The monthly payments on a balloon are either interest-only or negatively payments that do not pay down mortgage do not necessarily increase or amortizing. Specifically, a ‘‘non- principal for a period of time that then change from the time of consummation; standard mortgage’’ is any ‘‘covered convert to higher payments covering all rather, the entire outstanding principal transaction’’ (defined in proposed or a portion of principal. By defining balance becomes due on a particular, § 226.43(b)(1)) that is: ‘‘non-standard mortgage’’ in this way, predetermined date. Consumers of • An adjustable-rate mortgage, as the proposal is intended to increase balloon mortgages typically expect that defined in § 226.18(s)(7)(i), with an refinancing options for a wide range of the entire loan balance will be due at introductory fixed interest rate for a at-risk consumers while remaining true once at a certain point in time and are period of one year or longer; 58 to the statutory language and legislative • An interest-only loan, as defined in generally aware well in advance that intent. they will need to repay the loan or § 226.18(s)(7)(iv); 59 or ‘‘ • The proposed definition of non- refinance. A negative amortization loan, as standard mortgage’’ does not include defined in § 226.18(s)(7)(v).60 However, the Board recognizes that adjustable-rate mortgages whose rate is consumers of balloon mortgages may be fixed for an initial period of less than 58 ‘‘The term ‘adjustable-rate mortgage’ means a at risk of being unable to pay the transaction secured by real property or a dwelling one year. In those instances, a consumer outstanding principal balance when due for which the annual percentage rate may increase and may need refinancing assistance. after consummation.’’ 12 CFR 226.18(s)(7)(i). of the legal obligation; the term ‘negative Thus the Board solicits comment on 59 ‘‘The term ‘interest-only’ means that, under the amortization loan’ means a loan that permits terms of the legal obligation, one or more of the payments resulting in negative amortization, other whether to use its legal authority to periodic payments may be applied solely to accrued than a reverse mortgage subject to section 226.33.’’ include balloon mortgages in the interest and not to loan principal; an ‘interest-only 12 CFR 226.18(s)(7)(v). definition of ‘‘non-standard mortgage’’ loan’ is a loan that permits interest-only payments.’’ 61 See U.S. House of Reps., Comm. on Fin. for purposes of the special refinancing 12 CFR 226.18(s)(7)(iv). Services, Report on H.R. 1728, Mortgage Reform 60 ‘‘[T]he term ‘negative amortization’ means and Anti-Predatory Lending Act, No. 111–94, 51 provisions of TILA Section payment of periodic payments that will result in an (May 4, 2009). 129C(a)(6)(E). The Board also requests increase in the principal balance under the terms 62 Id. at 51–52. comment generally on the

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appropriateness of the proposed sustainable mortgages. These provisions deferral of principal repayment in this definition of ‘‘non-standard mortgage.’’ are also consistent with the definition of manner and therefore generally may not a ‘‘qualified mortgage’’ under proposed be standard mortgages or qualified 43(d)(2)(ii) Standard Mortgage § 226.43(e)(2)(i). See section-by-section mortgages. Proposed § 226.43(d)(2)(ii) substitutes analysis of § 226.43(e)(2), below. Three percent cap on points and fees. the term ‘‘standard mortgage’’ for the Proposed comment 43(d)(2)(ii)(A)–1 Proposed § 226.43(d)(2)(ii)(B) prohibits statutory term ‘‘standard loan’’ and explains the meaning of ‘‘regular creditors from charging points and fees defines this term to mean a covered periodic payments’’ that do not result in on the mortgage transaction of more transaction (see proposed § 226.43(b)(1)) an increase of the principal balance than three percent of the total loan that has the following five (negative amortization) or allow the amount, with certain exceptions for characteristics, each of which will be consumer to defer repayment of small loans. Specifically, proposed discussed in more detail further below: principal (see proposed comment § 226.43(d)(2)(ii)(B) cross-references the • First, the regular periodic payments 43(e)(2)(i)–2, discussed below). The points and fees provisions under may not (1) cause the principal balance comment explains that the requirement proposed § 226.43(e)(3), thereby to increase; (2) allow the consumer to for ‘‘regular periodic payments’’ means applying the points and fees limitations defer repayment of principal; or (3) that the contractual terms of the for a ‘‘qualified mortgage’’ to a ‘‘standard result in a balloon payment. In other standard mortgage must obligate the mortgage.’’ The points and fees words, to qualify as a standard consumer to make payments of limitation for a ‘‘qualified mortgage’’ is mortgage, a covered transaction may not principal and interest on a monthly or discussed in detail in the section-by- provide for negative amortization other periodic basis that will repay the section analysis of proposed payments, payments of interest only or loan amount over the loan term. The § 226.43(e)(3), below. In sum, under of only a portion of the principal comment further explains that, with the proposed § 226.43(e)(3)(i), the total required to pay off the loan amount over exception of payments resulting from points and fees payable in connection the loan term, or a balloon payment. any interest rate changes after • with a loan may not exceed— Second, the total points and fees consummation in an adjustable-rate or payable in connection with the Alternative 1: step-rate mortgage, the periodic • For a loan amount of $75,000 or more, transaction may not exceed three payments must be substantially equal. 3 percent of the total loan amount; percent of the total loan amount, with This comment notes that meaning of • For a loan amount of greater than or exceptions for smaller loans specified in ‘‘substantially equal’’ is explained in equal to $60,000 but less than proposed § 226.43(e)(3), discussed in proposed comment 43(c)(5)(i)–3 $75,000, 3.5 percent of the total detail below. (discussed above in the section-by- • loan amount; Third, the loan term may not section analysis of proposed • For a loan amount of greater than or exceed 40 years. § 226.43(c)(5)). In addition, the equal to $40,000 but less than • Fourth, the interest rate must be comment clarifies that ‘‘regular periodic $60,000, 4 percent of the total loan fixed for the first five years after payments’’ do not include a single- amount; consummation. payment transaction and cross- • For a loan amount of greater than or • Fifth, the proceeds from the loan references similar commentary on the equal to $ 20,000 but less than may be used solely to pay—(1) the meaning of ‘‘regular periodic payments’’ $40,000, 4.5 percent of the total outstanding principal balance on the for the purposes of a ‘‘qualified loan amount; and non-standard mortgage; and (2) closing mortgage’’ (proposed comment • For a loan amount of less than or settlement charges required to be 43(e)(2)(i)–1). $20,000, 5 percent of the total loan disclosed under RESPA. In other words, Proposed comment 43(d)(2)(ii)(A)–1 amount. the refinance must be what is commonly also cross-references proposed comment referred to as a ‘‘no-cash-out’’ Alternative 2: 43(e)(2)(i)–2 to explain the prohibition • For a loan amount of $75,000 or more, refinancing, in which the consumer on payments that ‘‘allow the consumer 3 percent of the total loan amount; receives no funds from the loan to defer repayment of principal.’’ • For a loan amount of greater than or proceeds for discretionary spending. Proposed comment 43(e)(2)(i)-2 equal to $20,000 but less than In general, the criteria for a ‘‘standard describes the meaning of this phrase in $75,000, a percent of the total loan mortgage’’ is designed to be similar to the context of defining the term amount not to exceed the amount the criteria for a ‘‘qualified mortgage’’ ‘‘qualified mortgage’’ under proposed produced by the following under proposed § 226.43(e)(2), which § 226.43(e); however, the phrase has the formula— places certain limits on loan features same meaning in the definition of Æ Total loan amount ¥ $20,000 = $Z and fees. The Board believes that this ‘‘standard mortgage’’ under proposed Æ $Z × .0036 basis points = Y basis approach is appropriate to ensure that § 226.43(d). Specifically, the comment points standard mortgages provide product states that deferral of principal Æ 500 basis points ¥ Y basis points stability and affordability for repayment includes interest-only terms, = X basis points consumers. under which one or more of the periodic Æ X basis points × .01 = Allowable Limitations on regular periodic payments may be applied solely to points and fees as a percentage of the payments. Under proposed accrued interest and not to loan total loan amount. § 226.43(d)(2)(ii)(A), to qualify as a principal. Deferral of principal • For a loan amount of less than standard mortgage, a covered repayment also includes terms under $20,000, 5 percent of the total loan transaction must provide for regular which part of the periodic payment is amount. periodic payments that do not result in applied to loan principal but is For a detailed discussion of the negative amortization, deferral of insufficient to pay off the loan amount alternative points and fees thresholds principal repayment, or a balloon over the loan term, requiring an increase for qualified mortgages, see the section- payment. The Board believes that these in later periodic payments (or a balloon by-section analysis of proposed limitations promote the statutory payment) to make up the principal § 226.43(e)(3), below. purpose of facilitating refinances that shortfall of earlier payments. Graduated In the Board’s view, the proposed place at-risk consumers in more payment mortgages, for example, allow limitation on the points and fees that

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may be charged on a ‘‘standard allowing a loan term of 40 years on any rate for the first five years after mortgage’’ is important for at least three mortgage is detrimental to consumers consummation. In the example reasons. First, the limitation prevents and the market as a whole. Consumer provided, the adjustable-rate mortgage creditors from undermining the purpose advocates argued that 40-year loans are consummates on August 15, 2011, and of the provision—placing at-risk expensive and do not save consumers the first monthly payment is due on consumers into more affordable loans— sufficient money on the monthly October 1, 2011. The first five years after by charging excessive points and fees payment to offset this expense. Among consummation occurs on August 15, for the refinance. Second, the points and other information, consumer advocates 2016. The first interest rate adjustment fees cap helps ensure that consumers provided an example of a $300,000 loan occurs on the due date of the 60th attain a net benefit in refinancing their at an 8 percent fixed interest rate. The monthly payment, which is September non-standard mortgage. The higher a difference between the 20 and 30 year 1, 2016. As explained in the comment, consumer’s upfront costs to refinance a payment is $308.03 a month ($2,509.32 this loan meets the requirement that the home mortgage, the longer it will take reduced to $2,201.29). The difference rate be fixed for the first five years after for the consumer to recoup those costs between the 30- and 40-year loan is consummation because the interest rate through lower payments on the new $115.36 a month. Consumer advocates is fixed until September 1, 2016—more mortgage. By limiting the amount of question the advantages of a monthly than five years after consummation. points and fees that can be charged in payment reduction of $115.36 per This comment also cross-references a refinance covered by § 226.43(d), the month when the loan costs an proposed comment 43(e)(2)(iv)–3.iii for proposal reduces the amount of time it additional $208,783 over the 40 years guidance regarding step-rate mortgages. will take for the consumer to recoup his more than the 30-year loan. Step-rate mortgages may have a ‘‘fixed’’ transaction costs, thus increasing the A more appropriate comparison may interest rate for five years that is not the be the total interest paid for the two likelihood that the consumer will hold same rate for the entire five-year period. the loan long enough to in fact recoup types of loans during an equal, shorter those costs. Third, this provision is period rather than for the life of each The Board proposes a minimum five- consistent with the exemption from loan. A shorter period is relevant year fixed-rate period for standard income verification requirements for because most loans are prepaid well mortgages for several reasons. First, streamlined refinances under Federal before the stated end of the term. For requiring a fixed rate for five years is government programs. See TILA Section instance, during the first year, the total consistent with the statutory 129C(a)(5). The Board is not aware of interest paid on the 30-year loan would requirement for a qualified mortgage, any reason why points and fees should be $23,909, compared to $23,961 for the which requires the creditor to be capped for government streamlined 40-year loan. Over the first five years, underwrite the mortgage based on the refinances but not for private total interest paid on the 30-year loan maximum interest rate that may apply streamlined refinances. would be $117,287, compared to during the first five years after The Board requests comment on the $118,842 on the 40-year loan, which is consummation. See TILA Section proposal to apply the same limit on the a difference of $1,555 more for the 40- 129C(b)(2)(A)(v); see also proposed points and fees that may be charged for year loan. Over the first 10 years, total § 226.43(e)(2)(iv)(A). The Board a ‘‘qualified mortgage’’ under § 226.43(e) interest paid on the 30-year loan would understands that Congress intended to the points and fees that may be be $227,329, compared to $234,591 on both qualified mortgages and standard charged on a ‘‘standard mortgage’’ under the 40-year loan, which is a difference mortgages to be stable loan products, § 226.43(d). of $7,262 more for the 40-year loan. and therefore believes that the required Loan term of no more than 40 years. While recognizing that a 40-year five-year fixed-rate period for qualified Proposed § 226.43(d)(2)(ii)(C) provides mortgage is more expensive than a 30- mortgages is an appropriate benchmark that, to qualify as a standard mortgage year mortgage over the long term, the for standard mortgages as well. As a under proposed § 226.43(d), a covered Board is reluctant to foreclose options matter of policy, the Board believes that transaction may not have a loan term of for consumers for whom the lower the safeguard of a fixed rate for five more than 40 years. The Board believes payment of a 40-year loan might make years after consummation is necessary that allowing a loan term of up to 40 the difference between defaulting and to ensure that consumers refinance into years is consistent with the statutory not defaulting. The Board also notes that products that are stable for a substantial goal of promoting refinances for prevalent streamlined refinance period of time. In the Board’s view, a borrowers in potential crisis, as well as programs permit loan terms of up to 40 fixed payment for five years after with the statutory language that requires years and is concerned about disrupting consummation is a significant the monthly payment for the standard the current mortgage market at a improvement in the circumstances of a mortgage to be lower than the payment vulnerable time.63 The Board requests consumer who may have defaulted for the non-standard mortgage. The comment on the proposal to allow a absent the refinance. In effect, the proposal is intended to ensure that standard mortgage to have a loan term proposal permits so-called ‘‘5/1 ARMs,’’ creditors and consumers have sufficient of up to 40 years. where the interest rate is fixed for the options to refinance a 30-year loan, for Interest rate is fixed for the first five first five years, after which time the rate example, which is unaffordable for the years. Proposed § 226.43(d)(2)(ii)(D) becomes variable. In this regard, the consumer in the near term, into a loan requires that a standard mortgage have proposal is intended to be generally with lower, more affordable payments a fixed interest rate for the first five consistent with existing streamlined over a longer term. This flexibility may years (60 months) after consummation. refinance programs.64 The Board’s be especially important in higher cost Proposed comment 43(d)(2)(ii)(D)–1 understanding based on outreach is that areas where loan amounts on average illustrates this rule for an adjustable-rate 5/1 ARMs in existing streamlined exceed loan amounts in other areas. At mortgage with an initial fixed interest refinance programs have performed the same time, the Board recognizes that well. loans of longer terms cost more over 63 See, e.g., Fannie Mae, ‘‘Home Affordable Refinance—New Refinance Options for Existing time for the consumer. Fannie Mae Loans,’’ Announcement 09–04, p. 8 64 See, e.g., id. (permitting ‘‘[f]ully-amortizing During outreach, the Board heard (Mar. 4, 2009) (permitting ‘‘[f]ully-amortizing fixed- ARM loans with an initial fixed period of five years concerns from consumer advocates that rate mortgage loans with a term up to 40 years’’). or greater with a term up to 40 years’’).

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Consumer advocates have expressed cash to the consumer should be § 226.43(d)(5)(ii), discussed in more the view that a longer fixed-rate period permitted, either because this allowance detail in the section-by-section analysis for standard mortgages is necessary, would be operationally necessary to of that provision. preferably at least seven years, arguing cover transaction costs or for other For these exemptions to apply, all of that consumers may hold their loans reasons, such as to reimburse a the conditions in proposed longer than five years and be faced with consumer for closing costs that were § 226.43(d)(1)(i)–(v) described above payment shock sooner than they can over-estimated but financed. must be met. See proposed § 226.43(d)(3)(i). In addition, the afford. The Board requests comment on 43(d)(2)(iii) Refinancing the proposal to require that a standard creditor must consider whether the mortgage under proposed § 226.43(d) Proposed § 226.43(d)(2)(iii) defines standard mortgage will prevent a likely have an interest rate that is fixed for at the term ‘‘refinancing’’ to have the same default by the consumer on the non- least the first five years after meaning as in § 226.20(a). Section standard mortgage when the non- consummation, including on whether 226.20(a) defines the term ‘‘refinancing’’ standard mortgage is recast. See the rate should be required to be fixed generally to mean a transaction in proposed § 226.43(d)(3)(ii). This for a shorter or longer period and data which an existing obligation is ‘‘satisfied proposed provision implements TILA to support any alternative time period. and replaced by a new obligation Section 129C(a)(6)(E)(ii), which permits In addition, the Board requests undertaken by the same consumer.’’ a creditor to ‘‘consider if the extension comment on whether a balloon Official staff commentary explains that of new credit would prevent a likely mortgage of at least five years should be ‘‘[w]hether a refinancing has occurred is default should the original mortgage considered a ‘‘standard mortgage’’ under determined by reference to whether the reset and give such concerns a higher the streamlined refinancing provisions original obligation has been satisfied or priority as an acceptable underwriting of § 226.43(d). Arguably, a balloon extinguished and replaced by a new practice.’’ 15 U.S.C. 1639c(a)(6)(E)(ii). As mortgage with a fixed, monthly payment obligation, based on the parties’ contract clarified in proposed comment for five years would benefit a consumer and applicable law.’’ See comment 43(d)(3)(i)–1, the Board believes that who otherwise would have defaulted. 20(a)–1. However, the following, among this statutory provision requires a other transaction events, are not creditor consider whether: Also, a five-year balloon mortgage may • not be appreciably less risky for the considered ‘‘refinancings’’: (1) A renewal the consumer is likely to default on consumer than a ‘‘5/1 ARM,’’ which is of a payment obligation with no change the existing mortgage once new, higher permitted under the proposal, in the original terms; and (2) a reduction payments are required; and • the new mortgage will prevent the depending on the terms of the rate in the annual percentage rate with a consumer’s default. adjustment scheduled to occur in year corresponding change in the payment schedule. See § 226.20(a)(1) and (a)(2), Likely default. Proposed comment five. 43(d)(3)(i)–2 clarifies that, in Loan proceeds used for limited and comment 20(a)–2. In the Board’s 2010 Mortgage considering whether the consumer’s purposes. Proposed § 226.43(d)(2)(ii)(E) default on the non-standard mortgage is restricts the use of the proceeds of a Proposal, the Board proposed to revise the meaning of ‘‘refinancing’’ in § 226.20 ‘‘likely,’’ the creditor may look to widely standard mortgage to two purposes: accepted governmental and non- • To pay off the outstanding principal to include a broader range of transactions for which creditors would governmental standards for analyzing a balance on the non-standard mortgage; consumer’s likelihood of default. The and be required to give consumers new TILA 65 Board does not intend to constrain • To pay closing or settlement disclosures. The Board requests comment on whether the meaning of servicers and other relevant parties from charges required to be disclosed under using other methods to determine a the Real Estate Settlement Procedures ‘‘refinancing’’ in § 226.43(d) should be expanded to include a broader range of consumer’s likelihood of default, Act, 12 U.S.C. 2601 et seq., which including those tailored specifically to includes amounts required to be transactions, similar to those covered under the proposed revisions to that servicer. Outreach participants deposited in an escrow account at or informed the Board that servicers and before consummation. § 226.20, or otherwise should be defined differently or explained more fully than others use a variety of methods for Proposed comment 43(d)(2)(ii)(E)–1 proposed. determining a consumer’s likelihood of clarifies that if the proceeds of a covered default, some of which are based on the transaction are used for other purposes, 43(d)(3) Exemption From Certain particular servicer’s historical such as to pay off other liens or to Repayment Ability Requirements experience with the loans it has provide additional cash to the consumer Under specific conditions, proposed serviced. for discretionary spending, the § 226.43(d)(3) exempts a creditor in a The Board has also considered the transaction does not meet the definition refinancing from two of the meaning of ‘‘imminent default’’ in of a ‘‘standard mortgage.’’ requirements under proposed HAMP, which, as noted, is a This proposal is intended to ensure § 226.43(c) for determining a consumer’s government program designed to assist that the consumer does not incur ability to repay a home mortgage. First, consumers facing ‘‘imminent default’’ or additional home mortgage debt as part the creditor is not required to comply who are in default or foreclosure. The of a refinance designed to prevent the with the income and asset verification Board’s understanding, based on consumer from defaulting on an existing requirements of proposed research and discussions with outreach home mortgage. The Board believes that § 226.43(c)(2)(i) and (c)(4). Second, the participants, is that the requirements for permitting the consumer to lose creditor is not required to comply with determining what constitutes ‘‘imminent additional equity in his or her home the payment calculation requirements of default’’ were not precisely defined in under TILA’s special refinancing proposed § 226.43(c)(2)(iii) and (c)(5); the HAMP rules due to the legitimate provisions would undermine the the creditor may instead use payment differences in servicer assessments of a financial stability of the consumer, thus calculations prescribed in proposed consumer’s likelihood of default. In contravening the purposes of the statute. addition, a servicer may use more than The Board requests comment, however, 65 75 FR 58539, 58594–58604, 58697–58699, one method. For example, Freddie Mac on whether some de minimis amount of 58761–58764, Sept. 24, 2010. representatives informed the Board that

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its tool for calculating ‘‘imminent with a fixed rate for the first five years 1639c(b)(2)(A)(v). The Board believes default’’—the Imminent Default of payments (60 payments) followed by that the same standard is appropriately Indicator or IDI—is one factor among a variable rate, the creditor would not be applied to determining a consumer’s several that Freddie Mac Seller/ required to determine the consumer’s ability to repay a ‘‘standard mortgage’’ Servicers review in determining a ability to repay the loan based on a under § 226.43(d). The statute is consumer’s likelihood of default and payment that would result once the structured to encourage creditors to that these additional factors may vary variable rate applies. If the loan make both ‘‘qualified mortgages’’ and depending on the type of loan and other consummates on August 15, 2011, and ‘‘standard mortgages,’’ consistent with characteristics of a particular the first monthly payment is due on congressional findings on the transaction or borrower. October 1, 2011, five years after importance of ‘‘ensuring that The Board heard from consumer consummation occurs on August 15, responsible, affordable mortgage credit advocates that ‘‘imminent default,’’ as it 2016, and the first interest rate remains available to consumers.’’ TILA has been interpreted by some to date, adjustment occurs on the due date of the Section 129B(a)(1). In particular, the may be a standard that is too high for 60th monthly payment, which is statute affords creditors of both the refinancing provisions in TILA September 1, 2016. Thus, under qualified mortgages and standard Section 129C(a)(6)(E) and could prevent proposed § 226.43(d)(3)(ii), to calculate mortgages additional flexibility in many consumers from obtaining needed the payment required for the ability to complying with the general ability to streamlined refinances. The proposal repay rule under proposed repay underwriting requirements of therefore uses the exact statutory § 226.43(c)(2)(iii), the creditor should TILA Section 129C(a). See TILA Section wording—‘‘likely default’’—in use the payment based on the interest 129C(a)(6)(E) (for standard mortgages) implementing the provision permitting rate that is fixed for the first five years and 129C(b) (for qualified mortgages), a creditor to prioritize prevention of after consummation (from August 15, 15 U.S.C. 1639c(a)(6)(E), (b). default in underwriting a refinancing. 2011, until August 15, 2016) and is not Accordingly, the proposal requires that See TILA Section 129C(a)(6)(E)(ii); 15 required to account for the payment standard mortgages have most of the U.S.C. 1639c(a)(6)(E)(ii). In this way, the resulting after the first interest rate product features and restrictions proposal is intended to distinguish the adjustment on September 1, 2016. assigned by Congress to qualified required standard for a consumer’s The Board proposes this exemption mortgages to ensure product stability potential default under TILA’s new from the general ability to repay and affordability for consumers. refinancing provisions from any payment calculation requirements for Finally, the Board believes that this particular meaning that may have been three reasons. First, in the Board’s view, aspect of the proposal will facilitate ascribed to the term ‘‘imminent default’’ TILA Section 129C(a)(6)(E) is clearly compliance by allowing creditors to use in connection with HAMP. intended to encourage creditors to a single payment calculation for The Board solicits comment on the refinance loans on which consumers are determining whether: (1) The payment proposal to use the term ‘‘likely default’’ likely to default due to impending on the standard mortgage is ‘‘materially in implementing TILA Section ‘‘payment shock.’’ The proposal is lower’’ than the payment on the non- 129C(a)(6)(E)(ii) and on whether consistent with this policy objective standard mortgage; and (2) the additional guidance is needed on how because underwriting a refinance based consumer has a reasonable ability to to meet the requirement that a creditor on the payment due prior to the recast repay the standard mortgage. must reasonably and in good faith means that more consumers can qualify The Board requests comment on the determine that a standard mortgage will for loans to ensure sustained proposal to exempt creditors of prevent a likely default should the non- homeownership. Second, the safeguards refinances that meet the conditions standard mortgage be recast. built into the definition of a ‘‘standard under proposed § 226.43(d)(1) from the Payment calculation for repayment mortgage,’’ discussed under the section- income and asset verification ability determination. Proposed by-section analysis of proposed requirements and the payment comment 43(d)(3)(ii)–1 explains that, if § 226.43(d)(3)(ii), mitigate risks of not calculation requirements of the general the conditions in § 226.43(d)(1) are met accounting for the payment due after the ability-to-repay rules in proposed (discussed above), the creditor may recast in determining a consumer’s § 226.43(c). The Board solicits comment satisfy the payment calculation ability to repay. A standard mortgage, on whether an exemption from other requirements for determining a for example, may never have negative ability to repay requirements under consumer’s ability to repay the new loan amortization payments, interest-only proposed § 226.43(c), such as by applying the calculation prescribed payments, or a balloon payment. consideration of credit history under under § 226.43(d)(5)(ii), rather than the Third, the statute in general seeks to proposed § 226.43(c)(2)(viii), may also calculation prescribed under ensure that consumers obtain mortgages be appropriate. § 226.43(c)(2)(iii) and (c)(5). for which the payments are affordable Specifically, as discussed in more detail for a reasonable period of time. Based 43(d)(4) Offer of Rate Discounts and under proposed § 226.43(d)(5)(ii) below, on the definition of a ‘‘qualified Other Favorable Terms the creditor must calculate the standard mortgage,’’ the Board believes that Proposed § 226.43(d)(4) provides that mortgage payment based on the rate at Congress considered a reasonable a creditor making a loan under the consummation of the standard amount of time to be the first five years special refinancing provisions of mortgage. This is the rate that will apply after consummation of a loan. § 226.43(d) may offer to the consumer for the first five years after Specifically, as discussed in more detail the same or better rate discounts and consummation; to qualify as a ‘‘standard below in the section-by-section analysis other terms that the creditor offers to mortgage,’’ a mortgage must have an of proposed § 226.43(e)(2)(iv), an any new consumer, consistent with the interest rate that is fixed for at least the adjustable-rate mortgage is deemed to be creditor’s documented underwriting first five years after consummation of a qualified mortgage only if, among practices and to the extent not the loan (see proposed other factors, the underwriting is based prohibited by applicable state or Federal § 226.43(d)(2)(ii)(D), discussed below). on the maximum rate permitted under law. This provision implements TILA The comment explains that, as a result, the loan during the first five years. TILA Section 129C(a)(6)(E)(iii), which permits if the standard mortgage is a ‘‘5/1 ARM’’ Section 129C(b)(2)(A)(v), 15 U.S.C. creditors of refinancings under the

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special conditions of TILA Section refinanced into a standard mortgage. the consumer’s written application for 129C(a)(6)(E) to ‘‘offer rate discounts and TILA Section 129C(a)(6)(E), 15 U.S.C. the standard mortgage; other favorable terms’’ to the borrower 1639c(a)(6)(E). As noted above, the • The term of the loan remaining as ‘‘that would be available to new payment calculation for a standard of the date of the recast, assuming all customers with high credit ratings based mortgage required under proposed scheduled payments have been made up on such underwriting practice.’’ 15 § 226.43(d)(5)(ii) is also the payment to the recast date and the payment due U.S.C. 1639c(a)(6)(E)(iii). calculation that a creditor must use to on the recast date is made and credited The statutory provision is consistent calculate the monthly payment on the as of that date; and • with the congressional goal of standard loan in determining whether A remaining loan amount that is— Æ facilitating beneficial refinancings for the consumer is reasonably able to repay For an adjustable-rate mortgage borrowers facing potential payment the mortgage. See proposed under § 226.43(d)(2)(i)(A), the shock; the provision allows creditors to § 226.43(c)(2)(iii). outstanding principal balance as of the give their refinancing customers rate date the mortgage is recast, assuming all discounts and favorable terms they 43(d)(5)(i) Non-Standard Mortgage scheduled payments have been made up might offer to new customers with high Payment Calculation to the recast date and the payment due credit ratings. The Board recognizes that Proposed § 226.43(d)(5)(i) requires on the recast date is made and credited the meaning of ‘‘high credit ratings’’ may as of that date; that the monthly payment for a non- Æ vary by creditor and that the standard mortgage be based on For an interest-only loan under underwriting practices for these types of substantially equal, monthly, fully § 226.43(d)(2)(i)(B), the loan amount, assuming all scheduled payments have customers may vary also, including the amortizing payments of principal and been made up to the recast date and the terms that are offered. Thus the proposal interest that would result once the payment due on the recast date is made does not use the term ‘‘high credit mortgage is ‘‘recast,’’ as that term is ratings’’ but simply states that the rate and credited as of that date; defined in § 226.43(b)(11) and discussed Æ For a negative amortization loan discounts and terms offered to a in the section-by-section analysis of that consumer of a § 226.43(d) loan may be under § 226.43(d)(2)(i)(C), the maximum provision. The Board believes that loan amount. the same or better than those offered to comparing the payment on the standard any other consumer. Proposed comment 43(d)(5)(i)–1 mortgage to the payment amount on explains that, to determine whether the The proposal does require, however, which the consumer likely would have that a creditor have ‘‘documented monthly periodic payment for a defaulted (i.e., the payment resulting on standard mortgage is materially lower underwriting practices’’ to support the the existing non-standard mortgage once creditor’s offer of rate discounts and than the monthly periodic payment for the favorable terms cease and a higher the non-standard mortgage under loan terms. In this way, the proposal is payment results) promotes needed intended to promote transparency for § 226.43(d)(1)(ii), the creditor must refinances consistent with congressional consider the monthly payment for the examiners and consumers in intent. understanding the basis for any special non-standard mortgage that will result In the Board’s view, the payment that discounts or terms that the creditor after the loan is ‘‘recast,’’ as defined in offers to borrowers refinancing their the consumer is currently making on the § 226.43(b)(11), assuming substantially home mortgages under proposed existing non-standard mortgage may be equal payments of principal and interest § 226.43(d). In addition, the Board an inappropriately low payment to that amortize the remaining loan recognizes that state or Federal laws compare to the standard mortgage amount over the remaining term as of may regulate the rates and terms offered payment. The existing payments may be the date the mortgage is recast. This to consumers depending on various interest-only or negatively amortizing; comment notes that guidance regarding consumer characteristics or other these temporarily lower payment the meaning of ‘‘substantially equal’’ and factors. For this reason, the Board amounts would be difficult for creditors ‘‘recast’’ is provided comment ‘‘ ’’ proposes that the rates and terms offered to reduce with a refinanced loan that 43(c)(5)(i)–4 and § 226.43(b)(11), to consumers under § 226.43(d) not be has a comparable term length and respectively (discussed above). prohibited by other applicable state or principal amount. Indeed, the payment Proposed comment 43(d)(5)(i)–2 Federal law. on a new loan with a fixed-rate rate and explains that the term ‘‘fully indexed The Board requests comment on the fully-amortizing payment, as is required rate’’ used in § 226.43(d)(5)(i)(A) for proposed interpretation of TILA Section for the payment calculation of a calculating the payment for a non- 129C(a)(6)(E)(iii) and whether standard mortgage under proposed standard mortgage is generally defined additional guidance on the meaning of § 226.43(d)(5)(ii), for example, is likely in § 226.43(b)(3) and associated proposed § 226.43(d)(4) is needed. to be higher than the interest-only or commentary. The comment explains an negative amortization payment. As a important difference between the ‘‘fully 43(d)(5) Payment Calculations result, few refinancings would yield a indexed rate’’ as defined in Proposed § 226.43(d)(5) prescribes the lower monthly payment, so many § 226.43(b)(3), however, and the payment calculations that must be used consumers could not receive the meaning of ‘‘fully indexed rate’’ in to determine whether the consumer’s benefits of refinancing into a more § 226.43(d)(5)(i). Specifically, under monthly payment for a standard stable loan product. In addition, § 226.43(b)(3), the fully indexed rate is mortgage will be ‘‘materially lower’’ than streamlined refinances by GSEs and calculated at the time of consummation. the monthly payment for the non- private creditors might be severely Under § 226.43(d)(5)(i), the fully standard mortgage, as required under hampered, with potentially detrimental indexed rate is calculated within proposed § 226.43(d)(1)(ii), discussed effects on the market. reasonable period of time before or after above. Proposed § 226.43(d)(5) thus Thus the proposal requires a creditor the date on which the creditor receives complements proposed § 226.43(d)(1)(ii) to calculate the monthly payment for a the consumer’s written application for in implementing the statutory provision non-standard mortgage using— the standard mortgage. Comment that requires a ‘‘reduction’’ in the • The fully indexed rate as of a 43(d)(5)(i)–2 clarifies that 30 days monthly payment for the existing non- reasonable period of time before or after would generally be considered a standard (‘‘hybrid’’) mortgage when the date on which the creditor receives ‘‘reasonable period of time.’’

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Proposed comment 43(d)(5)(i)–3 will fully repay the outstanding than the non-standard mortgage clarifies that the term ‘‘written principal balance over the term of the monthly payment (see proposed application’’ is explained in comment loan remaining as of the date the loan § 226.43(d)(1)(ii)) is $1,383. This is the 19(a)(1)(i)–3. Comment 19(a)(1)(i)–3 is recast. Thus, the comment states, in substantially equal, monthly payment of states that creditors may rely on RESPA the example above, the creditor must principal and interest required to repay and Regulation X (including any assume a loan term of 28 years (336 the outstanding principal balance at the interpretations issued by HUD) in payments). See comment 43(d)(5)(i)– fully-indexed rate over the remaining deciding whether a ‘‘written 4.ii. Third, the payment must be based term. See comment 43(d)(5)(i)–5.v. application’’ has been received. In on the fully indexed rate, as defined in Payment calculation for an interest- general, Regulation X defines § 226.43(b)(3), as of the date of the only loan. Proposed comments ‘‘application’’ to mean the submission of written application for the standard 43(d)(5)(i)–6 and –7 explain the a borrower’s financial information in mortgage. See comment 43(d)(5)(i)–4.iii. payment calculation for an interest-only anticipation of a credit decision relating Proposed comment 43(d)(5)(i)–5 loan under proposed § 226.43(d)(5)(i). to a Federally related mortgage loan. See provides an illustration of the payment Proposed comment 43(d)(5)(i)–6 24 CFR 3500.2(b). As explained in calculation for an adjustable-rate clarifies that the monthly periodic comment 19(a)(1)(i)–3, an application is mortgage with an introductory fixed payment for an interest-only loan must received when it reaches the creditor in rate. The example first assumes a loan be calculated based on several any of the ways applications are in an amount of $200,000 has a 30-year assumptions. First, the payment must be normally transmitted—by mail, hand loan term. The loan agreement provides based on the loan amount, as defined in delivery, or through an intermediary for a discounted introductory interest § 226.43(b)(5) (for a loan on which only agent or broker. If an application rate of 5% that is fixed for an initial interest and no principal has been paid, reaches the creditor through an period of two years, after which the the ‘‘loan amount’’ will be the intermediary agent or broker, the interest rate will adjust annually based outstanding principal balance at the application is received when it reaches on a specified index plus a margin of 3 time of the recast), assuming all the creditor, rather than when it reaches percentage points. See comment scheduled payments are made under the the agent or broker. This comment also 43(d)(5)(i)–5.i. Second, the example terms of the legal obligation in effect cross-references comment 19(b)–3 for states that the non-standard mortgage is before the mortgage is recast. The guidance in determining whether the consummated on February 15, 2011, comment provides an example of a transaction involves an intermediary and the first monthly payment is due on mortgage with a 30-year loan term for agent or broker. April 1, 2011. The loan is recast on the which the first 24 months of payments Payment calculation for an due date of the 24th monthly payment, are interest-only. The comment then adjustable-rate mortgage with an which is March 1, 2013. See comment explains that, if the 24th payment is due introductory fixed rate. Proposed 43(d)(5)(i)–5.ii. Finally, the example on September 1, 2013, the creditor must comments 43(d)(5)(i)–4 and –5 explain assumes that on March 15, 2012, the calculate the outstanding principal the payment calculation for an creditor receives the consumer’s written balance as of September 1, 2013, adjustable-rate mortgage with an application for a refinancing after the assuming that all 24 payments under the introductory fixed rate under proposed consumer has made 12 monthly on-time interest-only payment terms have been § 226.43(d)(5)(i). Proposed comment payments and that, on this date, the made and credited. See comment 43(d)(5)(i)–4 clarifies that the monthly index value is 4.5%. See comment 43(d)(5)(i)–6.i. periodic payment for an adjustable-rate 43(d)(5)(i)–5.iii. Second, the payment calculation must mortgage with an introductory fixed Proposed comment 43(d)(5)(i)–5 then be based on substantially equal monthly interest rate for a period of one or more states that, to calculate the non-standard payments of principal and interest that years must be calculated based on mortgage payment that must be will fully repay the loan amount over several assumptions. First, the payment compared to the standard mortgage the term of the loan remaining as of the must be based on the outstanding payment under § 226.43(d)(1)(ii), the date the loan is recast. Thus, in the principal balance as of the date on creditor must use— example above, the creditor must which the mortgage is recast, assuming • The outstanding principal balance assume a loan term of 28 years (336 all scheduled payments have been made as of March 1, 2013, assuming all payments). See comment 43(d)(5)(i)– up to that date and the last payment due scheduled payments have been made up 6.ii. Third, the payment must be based under those terms is made and credited to March 1, 2013, and the last payment on the fully indexed rate, as defined in on that date. For example, assume an due under the fixed rate terms is made § 226.43(b)(3), as of the date of the adjustable-rate mortgage with a 30-year and credited on March 1, 2013. In this written application for the standard loan term. The loan agreement provides example, the outstanding principal mortgage. See comment 43(d)(5)(i)–6.iii. that the payments for the first 24 balance is $193,948. Proposed comment 43(d)(5)(i)–7 months are based on a fixed rate, after • The fully indexed rate of 7.5%, provides an illustration of the payment which the interest rate will adjust which is the index value of 4.5% as of calculation for an interest-only loan. annually based on a specified index and March 15, 2012 (the date on which the The example assumes a loan in an margin. The loan is recast on the due application for a refinancing is received) amount of $200,000 that has a 30-year date of the 24th payment. If the 24th plus the margin of 3%. loan term. The loan agreement provides payment is due on September 1, 2013, • The remaining loan term as of for a fixed interest rate of 7%, and the creditor must calculate the March 1, 2013, the date of the recast, permits interest-only payments for the outstanding principal balance as of which is 28 years (336 payments). first two years (the first 24 payments), September 1, 2013, assuming that all 24 See comment 43(d)(5)(i)–5.iv. after which time amortizing payments of payments under the fixed rate terms The comment concludes by stating principal and interest are required. See have been made and credited on time. that, based on the assumptions above, comment 43(d)(5)(i)–7.i. Second, the See comment 43(d)(5)(i)–4.i. the monthly payment for the non- example states that the non-standard Second, the payment calculation must standard mortgage for purposes of mortgage is consummated on February be based on substantially equal monthly determining whether the standard 15, 2011, and the first monthly payment payments of principal and interest that mortgage monthly payment is lower is due on April 1, 2011. The loan is

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recast on the due date of the 24th is recast on the due date of the 60th determining whether the standard monthly payment, which is March 1, monthly payment, the creditor must mortgage monthly payment is lower 2013. See comment 43(d)(5)(i)–7.ii. assume a loan term of 25 years (300 than the non-standard mortgage Finally, the example assumes that on payments). See comment 43(d)(5)(i)– monthly payment (see § 226.43(d)(1)(ii)) March 15, 2012, the creditor receives 8.ii. Third, the payment must be based is $1,717. This is the substantially the consumer’s written application for a on the fully-indexed rate as of the date equal, monthly payment of principal refinancing, after the consumer has of the written application for the and interest required to repay the made 12 monthly on-time payments. standard mortgage. See comment maximum loan amount at the fully- See comment 43(d)(5)(i)–7.iii. 43(d)(5)(i)–8.iii. indexed rate over the remaining term. Proposed comment 43(d)(5)(i)–7 then Proposed comment 43(d)(5)(i)–9 See comment 43(d)(5)(i)–9.v. states that, to calculate the non-standard provides an illustration of the payment The Board requests comment on the mortgage payment that must be calculation for a negative amortization proposed payment calculation for a non- compared to the standard mortgage loan. The example assumes loan in an standard mortgage and on the payment under § 226.43(d)(1)(ii), the amount of $200,000 that has a 30-year appropriateness and usefulness of the creditor must use— loan term. The loan agreement provides proposed payment calculation • The loan amount, which is the that the consumer can make minimum examples. outstanding principal balance as of monthly payments that cover only part 43(d)(5)(ii) Standard Mortgage Payment March 1, 2013, assuming all scheduled of the interest accrued each month until Calculation interest-only payments have been made the date on which the principal balance and credited up to that date. In this increases to the negative amortization Proposed § 226.43(d)(5)(ii) prescribes example, the loan amount is $200,000. cap of 115% of the loan amount, or for the required calculation for the monthly • An interest rate of 7%, which is the the first five years of monthly payments payment on a standard mortgage that interest rate in effect at the time of (60 payments), whichever occurs first. must be compared to the monthly consummation of this fixed-rate non- The loan is an adjustable-rate mortgage payment on a non-standard mortgage standard mortgage. that adjusts monthly according to a under proposed § 226.43(d)(1)(ii). The • The remaining loan term as of specified index plus a margin of 3.5%. same payment calculation must also be March 1, 2013, the date of the recast, See comment 43(d)(5)(i)–9.i. used by creditors of refinances under which is 28 years (336 payments). The example also states that the non- proposed § 226.43(d) in determining The comment concludes by stating standard mortgage is consummated on whether the consumer has a reasonable that, based on the assumptions above, February 15, 2011, and the first monthly ability to repay the standard mortgage, the monthly payment for the non- payment is due on April 1, 2011. as required under proposed standard mortgage for purposes of Further, the example assumes that, § 226.43(c)(2)(ii). determining whether the standard based on the calculation of the Specifically, the monthly payment for mortgage monthly payment is lower maximum loan amount required under a standard mortgage must be based on than the non-standard mortgage § 226.43(b)(7) and associated substantially equal, monthly, fully monthly payment (see § 226.43(d)(1)(ii)) commentary, the negative amortization amortizing payments using the is $1,359. This is the substantially cap of 115% is reached on July 1, 2013, maximum interest rate that may apply equal, monthly payment of principal the due date of the 28th monthly to the standard mortgage within the first and interest required to repay the loan payment (i.e., before the 60th payment five years after consummation. Proposed amount at the fully-indexed rate over is due). See comment 43(d)(5)(i)–9.ii. comment 43(d)(5)(ii)–1 clarifies that the the remaining term. See comment Finally, the example assumes that on meaning of ‘‘fully amortizing payment’’ 43(d)(5)(i)–7.v. March 15, 2012, the creditor receives is defined in § 226.43(b)(2), discussed Payment calculation for a negative the consumer’s written application for a above, and that guidance regarding the amortization loan. Proposed comments refinancing, after the consumer has meaning of ‘‘substantially equal’’ may be 43(d)(5)(i)–8 and –9 explain the made 12 monthly on-time payments. On found in proposed comment 43(c)(5)(i)– payment calculation for a negative this date, the index value is 4.5%. See 4, also discussed above. Proposed amortization loan under proposed comment 43(d)(5)(i)–9.iii. comment 43(d)(5)(ii)–1 also explains § 226.43(d)(5)(i)(C). Proposed comment Proposed comment 43(d)(5)(i)–9 then that, for a mortgage with a single, fixed 43(d)(5)(i)–8 clarifies that the monthly states that, to calculate the non-standard rate for the first five years, the periodic payment for a negative mortgage payment that must be maximum rate that will apply during amortization loan must be calculated compared to the standard mortgage the first five years after consummation based on several assumptions. First, the payment under § 226.43(d)(1)(ii), the will be the rate at consummation. For a calculation must be based on the creditor must use— step-rate mortgage, however, which is a maximum loan amount, as defined in • The maximum loan amount of type of fixed-rate mortgage, the rate that proposed § 226.43(b)(7); The comment $229,243 as of July 1, 2013. must be used is the highest rate that will further states that examples of how to • The fully indexed rate of 8%, which apply during the first five years after calculate the maximum loan amount are is the index value of 4.5% as of March consummation. For example, if the rate provided in proposed comment 15, 2012 (the date on which the creditor for the first two years is 4%, the rate for 43(b)(7)–3 (see the section-by-section receives the application for a the second two years is 5%, and the rate analysis of § 226.43(b)(7), above). See refinancing) plus the margin of 3.5%. for the next two years is 6%, the rate comment 43(d)(5)(i)–8.i. • The remaining loan term as of July that must be used is 6%. Second, the payment calculation must 1, 2013, the date of the recast, which is Proposed comment 43(d)(5)(ii)–2 be based on substantially equal monthly 27 years and 8 months (332 monthly provides an illustration of the payment payments of principal and interest that payments). calculation for a standard mortgage. The will fully repay the maximum loan See comment 43(d)(5)(i)–9.iv. example assumes a loan in an amount amount over the term of the loan The comment concludes by stating of $200,000 with a 30-year loan term. remaining as of the date the loan is that, based on the assumptions above, The loan agreement provides for a recast. For example, the comment states, the monthly payment for the non- discounted interest rate of 6% that is if the loan term is 30 years and the loan standard mortgage for purposes of fixed for an initial period of five years,

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after which time the interest rate will assignee of such loan subject to liability • The consumer’s current obligations; adjust annually based on a specified under this title, may presume that the and index plus a margin of 3%, subject to a loan has met the requirements of • The consumer’s credit history. 2% annual interest rate adjustment cap. subsection (a).’’ With respect to 2008 HOEPA Final Rule. Sections The comment states that, based on the underwriting requirements, TILA 226.34(a)(4) and 226.35(b)(1) prohibit a above assumptions, the creditor must Section 129C(b)(2) defines a ‘‘qualified creditor from extending credit that is a determine whether the standard mortgage’’ as any residential mortgage high-cost loan or higher-priced mortgage mortgage payment is materially lower loan— loan without regard to the consumer’s • than the non-standard mortgage For which the income and financial ability to repay. Specifically, for higher- payment based on a standard mortgage resources relied upon to qualify the priced mortgage loans and high-cost payment of $1,199. This is the obligors on the loan are verified and mortgages, the creditor must follow substantially equal, monthly payment of documented; • required procedures, such as verifying principal and interest required to repay For which the underwriting of the the consumer’s income or assets. $200,000 over 30 years at an interest residential mortgage loan is based on a Section 226.34(a)(4) and comments rate of 6%. fully amortizing payment schedule and 34(a)(4)–2 and –3. The 2008 HOEPA The Board requests comment on the the maximum interest rate during the Final Rule further provides a proposed payment calculation for a first 5 years, and takes into account all presumption of compliance with the standard mortgage. applicable taxes, insurance, and ability-to-repay requirements if the assessments; and 43(e) Qualified Mortgages • creditor follows additional optional That complies with any guidelines procedures regarding underwriting the Background or regulations established by the Board loan payment, assessing the debt-to- relating to ratios of total monthly debt The Dodd-Frank Act. TILA Section income ratio or residual income, and to monthly income or alternative 129C(a)(1) prohibits a creditor from limiting the features of the loan. Section measures of ability to pay regular making a residential mortgage loan 226.34(a)(4)(iii)–(iv) and comment expenses after payment of total monthly unless the creditor makes a reasonable 34(a)(4)(iii)–1. However, the 2008 debt, taking into account the income and good faith determination, based on HOEPA Final Rule makes clear that levels of the borrower and such other verified and documented information, even if the creditor follows the required factors as the Board may determine that the consumer has a reasonable and optional criteria, the creditor has relevant and consistent with the ability to repay the loan. TILA Section merely obtained a presumption of purposes of TILA Section 129C(a)(1)–(4) and (6)–(9) provides that compliance with the repayment ability 129C(b)(3)(B)(i). requirement. Comment 34(a)(4)(iii)–1. the ability-to-repay determination must In addition, the term ‘‘qualified The consumer can still rebut or be based on consideration of the mortgage’’ contains certain limits on the overcome that presumption by showing following underwriting factors: features, term, and costs of the loan. • that, despite following the required and The consumer’s current income, Specifically, TILA Section 129C(b) optional procedures, the creditor expected income the consumer is provides that a ‘‘qualified mortgage’’ is nonetheless disregarded the consumer’s reasonably ensured of receiving, and any residential mortgage loan— other financial resources other than the • For which the regular periodic ability to repay the loan. For example, consumer’s equity in the dwelling or payments may not result in an increase the consumer could present evidence real property that secures repayment of of the principal balance (negative that although the creditor assessed the the loan; amortization) or allow the consumer to creditor’s debt-to-income ratio, the debt- • The consumer’s employment status; to-income ratio was very high with little • defer repayment of principal (interest- The payment of the residential only payments); residual income. This evidence may be mortgage loan based on a fully • The terms of which do not result in sufficient to overcome the presumption amortizing payment schedule and the a balloon payment; of compliance and demonstrate that the fully-indexed rate; • For which the loan term does not creditor extended credit without regard • The payment of any simultaneous exceed 30 years; and to the consumer’s ability to repay the liens of which the creditor knows or has • For which the points and fees do loan. reason to know; not exceed 3 percent of the total loan Qualified Mortgages and the • The payment of all applicable taxes, amount. Presumption of Compliance insurance (including mortgage Accordingly, a qualified mortgage guarantee insurance), and assessments; cannot have an increase of the principal With regard to the ability-to-repay • The consumer’s current obligations; balance, interest-only payments, balloon requirement, the Dodd-Frank Act • The consumer’s debt-to-income payments, a term greater than 30 years, provides special protection from ratio or the residual income the or points and fees that exceed the liability for creditors who make consumer will have after paying threshold set forth in § 226.43(e)(4). ‘‘qualified mortgages.’’ However, it is mortgage related obligations and current However, while the term ‘‘qualified unclear whether that protection is debt obligations; and mortgage’’ limits the terms of loans in intended to be a safe harbor or a • The consumer’s credit history. ways that the general ability-to-repay presumption of compliance with the The ability-to-repay requirements do requirements do not, the term ‘‘qualified ability-to-repay requirement. An not contain any limits on the features, mortgage’’ omits certain underwriting analysis of the statutory construction term, or costs of the loan. factors. Specifically, the term ‘‘qualified and policy implications demonstrate TILA Section 129C(b) provides a mortgage’’ does not include the that there are sound reasons for presumption of compliance with the following underwriting factors that are adopting either interpretation. For this ability-to-repay requirements if the loan part of the ability-to-repay requirements: reason, the Board is proposing two is a ‘‘qualified mortgage.’’ Specifically, • The consumer’s employment status; alternative definitions of a ‘‘qualified TILA Section 129C(b)(1) provides that • The payment of any simultaneous mortgage’’: One that operates as a safe ‘‘[a]ny creditor with respect to any liens of which the creditor knows or has harbor and one that operates as a residential mortgage loan, and any reason to know; presumption of compliance.

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With respect to statutory construction, ability to repay the loan. Some of the practices require judgment about the on the one hand, the Dodd-Frank Act key elements in the statutory definition relative weight of various risk factors states that a creditor or assignee ‘‘may of a qualified mortgage, while designed (such as the tradeoff between a presume’’ that a loan has met the to ensure that qualified mortgages do consumer’s credit history and debt-to- repayment ability requirement if the not contain risky features, do not income ratio). These decisions are loan is a qualified mortgage. TILA directly address whether a qualified usually based on complex statistical Section 129C(b)(1). This suggests that mortgage is affordable for a particular default models or lender judgments, originating a qualified mortgage borrower. Although the qualified which will differ across originators and provides a presumption of compliance, mortgage limits on loan terms and costs over time. While the Board’s proposal which the consumer can rebut by may, in general, tend to make loans would allow creditors to look to widely providing evidence that the creditor did more affordable (in part because loan accepted underwriting standards in not, in fact, make a good faith and terms would be more transparent to reasonable determination of the consumers thus enabling consumers to complying with the general ability-to- consumer’s ability to repay the loan. more easily determine affordability for repay standard, those standards may On the other hand, the statutory themselves), the limits on loan terms leave room for the exercise of discretion structure suggests that the ‘‘qualified and costs would not ensure that a given and judgment by creditors and loan mortgage’’ is an alternative to the general consumer could necessarily afford a originators which could increase ability-to-repay standard and thus particular loan. Second, the ‘‘safe potential compliance and litigation risk, would operate as a safe harbor. First, harbor’’ approach would limit the thus weakening the incentive to make TILA Section 129C(b)(1) states that a consumer’s ability to challenge a qualified mortgages (even with a creditor or assignee may presume that a creditor’s determination of repayment presumption of compliance for qualified loan has ‘‘met the requirements of ability. That is, creditors could not be mortgages). As stated above, a violation subsection (a), if the loan is a qualified challenged for failing to underwrite the of the ability-to-repay requirement now mortgage.’’ TILA Section 129C(a) loan based on the consumer’s provides a consumer with a defense to contains the ability-to-repay employment status, simultaneous loans, foreclosure for an unlimited amount of requirement as well as all of the current debt obligations, or credit time. Dodd-Frank Act Section 1413; underwriting criteria for the general history, or for generally not making a TILA Section 130(k). ability-to-repay standard. Rather than reasonable and good faith determination stating that the presumption of of the consumer’s ability to repay the The Board’s Proposal compliance applies only to TILA loan. Section 129C(a)(1) for the ability-to- On the other hand, interpreting a Given the statutory ambiguity and repay requirement, it appears Congress ‘‘qualified mortgage’’ as providing a competing concerns described above, intended creditors who make qualified rebuttable presumption of compliance the Board proposes two alternative mortgages to be presumed to comply would better ensure that creditors definitions for a qualified mortgage. with both the ability-to-repay consider a consumer’s ability to repay Under Alternative 1, a qualified requirement and the underwriting the loan. Creditors would have to make mortgage would include only the criteria for the general ability-to-repay individualized determinations that the specific requirements listed in TILA standard. Second, TILA Section consumer has the ability to repay the Section 129C(b)(2), and would provide 129C(b)(2) does not define a ‘‘qualified loan based on all of the underwriting creditors with a safe harbor to establish mortgage’’ as requiring compliance with factors listed in the general ability-to- compliance with the general repayment all of the underwriting criteria of the repay standard. This approach would ability requirement in proposed general ability-to-repay standard. require the creditor to comply with all § 226.43(c)(1). That is, a consumer Therefore, unlike the approach found in of the ability-to-repay standards, and would have to show that a loan was not the 2008 HOEPA Final Rule, it appears preserve the consumer’s ability to use a qualified mortgage under § 226.43(e) that the criteria for a ‘‘qualified these standards in a defense to (e.g., that the loan permits negative ’’ mortgage would be an alternative to the foreclosure or other legal action. In amortization) in order to assert that the general ability-to-repay standard, rather addition, a consumer could assert that, loan violated the repayment ability than an addition to that standard. despite complying with the criteria for requirement under § 226.43(c). Under With respect to the policy a qualified mortgage and the ability-to- implications, there are sound reasons repay standard, the creditor did not Alternative 2, a qualified mortgage for interpreting a qualified mortgage as make a reasonable and good faith would include the specific requirements providing either a safe harbor or a determination of the consumer’s ability listed in the TILA Section 129C(b)(2), as presumption of compliance. On the one to repay the loan. well as additional requirements taken hand, interpreting a ‘‘qualified The drawback of treating a ‘‘qualified from the proposed general ability-to- mortgage’’ as a safe harbor would mortgage’’ as providing a presumption of repay standard in § 226.43(c)(2)–(7). provide creditors with an incentive to compliance is that it provides little legal Because Alternative 2 would require make qualified mortgages. That is, in certainty for the creditor, and thus little compliance with the general ability-to- exchange for limiting loan fees and incentive to make a ‘‘qualified repay standard, it would provide a features, the creditor’s regulatory mortgage,’’ which limits loan fees and presumption of compliance with the burden and exposure to liability would features. As stated above, the ability-to-repay requirement. However, be reduced. Consumers may benefit by underwriting requirements found in the as discussed more fully below, a being provided with mortgage loans that general repayment ability rule are based consumer would be able to rebut the do not have certain risky features or on individualized determinations that presumption of compliance (even if the high costs. will vary from consumer to consumer. loan was a qualified mortgage) by However, there are at least two As such, creditors or assignees may not demonstrating that the creditor did not drawbacks to the ‘‘safe harbor’’ be able to make bright-line judgments as adequately determine the consumer’s approach. First, the definition of a to whether or not a loan complies with ability to repay the loan. ‘‘qualified mortgage’’ is not necessarily these underwriting requirements. In consistent with ensuring the consumer’s many cases sound underwriting

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43(e)(1) In General creditors and assignees with the highest history, loan type, and loan-to-value 66 ALTERNATIVE 1 level of certainty about potential legal ratio are considered. Fourth, although and compliance risks and, consideration of the mortgage debt-to- Proposed § 226.43(e)(1) would concomitantly, the strongest incentive income ratio, the so-called ‘‘front-end implement TILA Section 129C(b)(1) and to make qualified mortgages. debt-to-income ratio,’’ might help ensure state that the creditor or assignee Accordingly, proposed comment that consumers receive loans on terms complies with § 226.43(c)(1) if the 43(e)(1)–1-Alternative 1 would clarify that reasonably reflect their ability to covered transaction is a qualified that a creditor assignee complies with repay the loans, Board outreach mortgage, as defined in § 226.43(e)(2). § 226.43(c)(1) if a covered transaction indicated that creditors often do not Proposed § 226.43(e)(2) would meets the conditions for a ‘‘qualified find that the ‘‘front-end debt-to-income implement TILA Section 129C(b)(2), mortgage’’ under § 226.43(e)(2) (or ratio’’ is a strong predictor of ability to and state that a ‘‘qualified mortgage’’ is § 226.43(f), if applicable). That is, a repay. a covered transaction— creditor or assignee need not Finally, the Board is concerned that • That provides for regular periodic demonstrate compliance with the benefit of including the debt-to- payments that do not— § 226.43(c)(2)–(7) if the terms of the loan income ratio or residual income in the Æ Result in an increase of the comply with § 226.43(e)(2)(i)–(ii) (or definition of ‘‘qualified mortgage’’ may principal balance (negative § 226.43(f), if applicable); the loan’s not outweigh the cost to certain amortization); points and fees do not exceed the limits consumers. In some cases, consumers Æ Allow the consumer to defer set forth in § 226.43(e)(2)(iii); and the may not meet widely accepted debt-to- repayment of principal (i.e., interest- creditor has complied with the income ratio standards, but may have only payments); or underwriting criteria described in other compensating factors, such as Æ Result in a balloon payment; § 226.43(e)(2)(iv)–(v) (or § 226.43(f), if • sufficient residual income or other For which the loan term does not applicable). The consumer may show resources, to be able to reasonably to exceed 30 years; the loan is not a qualified mortgage with • afford mortgage payments. A definition For which the total points and fees evidence that the terms, points and fees, of ‘‘qualified mortgage’’ that required payable in connection with the loan do or underwriting not comply with creditors to consider the consumer’s not exceed the threshold set forth in § 226.43(e)(2) (or § 226.43(f), if debt-to-income ratio or residual income § 226.43(e)(3); applicable). If a loan is not a qualified • could limit the availability of credit to For which the creditor underwrites mortgage (for example because the loan those consumers. While some creditors the loan using the following method: provides for negative amortization), may be willing to take on the potential Æ The creditor uses a periodic then the creditor or assignee must compliance costs associated with payment of principal and interest based demonstrate that loan complies with all considering compensating factors, other on the maximum interest rate that may of the requirements in § 226.43(c) (or creditors may choose not to extend apply during the first 5 years after § 226.43(d), if applicable). qualified mortgages to consumers who consummation; Debt-to-income ratio and residual do not meet the creditor’s specific Æ The periodic payments of principal income. While consideration of a thresholds. and interest would fully repay either the consumer’s debt-to-income ratio is loan amount over the loan term; or the required under the general ability-to- ALTERNATIVE 2 outstanding principal balance as of the repay standard, TILA Section Under Alternative 2, a qualified date the interest rate adjusts to the 129C(b)(2)(A)(vi) provides that qualified mortgage would include the maximum interest rate; mortgages must comply with any Æ requirements in proposed The creditor takes into account any guidelines or regulations established by § 226.43(e)(2)–Alternative 1, as well as mortgage-related obligations; and the Board for the consumer’s DTI ratio • additional ability-to-repay requirements. For which the creditor considers or residual income. For several reasons, Specifically, proposed § 226.43(e)(2)(v)– and verifies the consumer’s current or under Alternative 1 the Board is not Alternative 2 would require the creditor reasonably expected income or assets. proposing to require creditors to (by a cross-reference to the creditor’s Alternative 1 would construe the consider the consumer’s debt-to-income obligations in § 226.43(c)) to consider statutory text to provide creditors with ratio or residual income to make a the following under the ability-to-repay bright-line standards as an incentive to qualified mortgage. First, the debt-to- requirements: (1) The consumer’s make loans without certain risky income ratio and residual income are employment status, (2) any features and high costs. The statutory based on widely accepted standards, simultaneous loans, (3) the consumer’s ‘‘ ’’ definition of a qualified mortgage which, although flexible, do not provide current debt obligations, and (4) the includes only items which would allow certainty that a loan is a qualified consumer’s credit history. Proposed creditors and assignees to easily and mortgage. Congress seems to have § 226.43(e)(1)–Alternative 2 would efficiently verify whether or not a loan intended to provide incentives to implement TILA Section 129C(b)(1), ‘‘ ’’ is a qualified mortgage. By confining creditors to make qualified mortgages, and state that a creditor or assignee of the qualified mortgage definition to since they have less risky terms and a covered transaction is presumed to certain loan terms, features, and costs, features. Second, because the definition have complied with the repayment and by requiring only that the loan be of a qualified mortgage under ability requirement of § 226.43(c)(1) if underwritten based on certain Alternative 1 would not require the covered transaction is a qualified straightforward assumptions and using consideration of current debt obligations mortgage, as defined in § 226.43(e)(2). verified information about the or simultaneous loans, it would be consumer’s income or assets, creditors impossible for a creditor to calculate the 66 See Demyanyk Yuliya & Van Hemert, Otto and assignees can obtain a high degree debt-to-income ratio or residual income Understanding the Subprime Mortgage Crisis, The of certainty that a loan is a qualified without adding those requirements as Review of Financial Studies (2009); Berkovec, mortgage. Moreover, by clarifying that a well. Third, data show that the debt-to- James A., Canner, Glenn B., Gabriel, Stuart A., and Hannan, Timothy H., Race, Redlining, and qualified mortgage is a safe harbor for income ratio generally does not have Residential Mortgage Loan Performance. The compliance with the general repayment significant predictive power of loan Journal of Real Estate Finance and Economics ability rule, Alternative 1 would provide performance once the effects of credit (2004).

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As discussed further below, the Board Æ Allow the consumer to defer provided in § 226.43(f), discussed proposes these revisions to the repayment of principal (i.e., interest- below; or (3) result in a balloon definition of a ‘‘qualified mortgage’’ only payments); or payment, as defined in § 226.18(s)(5)(i), under its authority under TILA Section Æ Result in a balloon payment; except as provided in § 226.43(f), 129C(b)(3)B)(i). The Board believes this • For which the loan term does not discussed below. alternative definition would further the exceed 30 years; Proposed comment 43(e)(2)(i)–1 purpose of TILA Section 129C by • For which the total points and fees explains that, as a consequence of the requiring creditors to consider specific payable in connection with the loan do foregoing prerequisites, a qualified underwriting criteria to ensure a not exceed the threshold set forth in mortgage must require the consumer to consumer’s ability to repay a qualified § 226.43(e)(3); make payments of principal and mortgage. In addition, proposed • For which the creditor underwrites interest, on a monthly or other periodic § 226.43(e)(2)(v)–Alternative 2 the loan using the following method: basis, that will fully repay the loan implements TILA Section 129C(b)(2)(vi) Æ The creditor uses a periodic amount over the loan term. These by requiring creditors to consider the payment of principal and interest based periodic payments must be substantially consumer’s monthly debt-to-income on the maximum interest rate that may equal except for the effect that any ratio or residual income, as provided in apply during the first 5 years after interest rate change after consummation proposed § 226.43(c)(2)(vii). consummation; has on the payment amount in the case Proposed comment 43(e)(1)–1– Æ The periodic payments of principal of an adjustable-rate or step-rate Alternative 2 provides that a creditor or and interest would fully repay either the mortgage. The proposed comment also assignee is presumed to have complied loan amount over the loan term; or the notes that, because § 226.43(e)(2)(i) with the requirement of § 226.43(c)(1) if outstanding principal balance as of the requires that a qualified mortgage the terms of the loan comply with date the interest adjusts to the provide for regular, periodic payments, § 226.43(e)(2)(i)–(ii) (or § 226.43(f), if maximum interest rate; a single-payment transaction may not be applicable); the loan’s points and fees Æ The creditor takes into account any a qualified mortgage. This result would do not exceed the limit set forth in mortgage-related obligations; and prevent potential evasion, as a creditor § 226.43(e)(2)(iii); and the creditor has • For which the creditor considers otherwise could structure a transaction complied with the underwriting criteria and verifies the consumer’s current or with a single payment due at maturity described in § 226.43(e)(2)(iv)–(v) (or reasonably expected income or assets.67 (economically, a near equivalent to a § 226.43(f), if applicable). If the loan is balloon-payment loan) that technically not a qualified mortgage (for example, 43(e)(2)(i) Limits on Periodic Payments would not be a balloon payment as because the loan provides for negative TILA Section 129C(b)(2)(A)(i) states defined in § 226.18(s)(5)(i) because it is amortization), then the creditor or that the regular periodic payments of a not more than two times a regular assignee must demonstrate that the loan qualified mortgage may not result in an periodic payment. complies with all of the requirements of increase of the principal balance or Proposed comment 43(e)(2)(i)–2 § 226.43(c) (or § 226.43(d), if allow the consumer to defer repayment provides additional guidance on the applicable). However, even if the loan is of principal (except for certain balloon- requirement in proposed a qualified mortgage, the consumer may payment loans, discussed below in the § 226.43(e)(2)(i)(B) that a qualified rebut the presumption of compliance section-by-section analysis for mortgage may not allow the consumer to with evidence that the loan did not § 226.43(f)). TILA Section defer repayment of principal. The comply with § 226.43(c)(1). For 129C(b)(2)(A)(ii) states that the terms of comment clarifies that, in addition to example, evidence of a debt-to-income a qualified mortgage may not include a interest-only terms, deferred principal repayment also occurs if the payment is ratio with no compensating factors, such balloon payment (except for certain applied to both accrued interest and as adequate residual income, could be balloon-payment loans, discussed below principal but the consumer makes used to rebut the presumption. The in the section-by-section analysis for periodic payments that are less than the Board solicits comment on this § 226.43(f)). The statute defines ‘‘balloon amount that would be required under a approach. payment’’ as ‘‘a scheduled payment that payment schedule that has substantially The Board solicits comments on the is more than twice as large as the equal payments that fully repay the loan two proposed alternative definitions of average of earlier scheduled payments.’’ amount over the loan term. Graduated a qualified mortgage, or other alternative Proposed § 226.43(e)(2)(i) implements payment mortgages, for example, allow definitions. The Board specifically TILA Sections 129C(b)(2)(A)(i) and (ii). deferral of principal repayment in this solicits comment, including supporting First, the proposed provision requires data, on what criteria should be manner and therefore may not be that a qualified mortgage provide for qualified mortgages. included in the definition of a qualified regular periodic payments. Proposed mortgage to ensure that the definition As noted above, the statute defines comment 43(e)(2)(i)–1 clarifies that, for ‘‘balloon payment’’ as ‘‘a scheduled provides an incentive to creditors to this reason, a single-payment make qualified mortgages, while also payment that is more than twice as large transaction, where no payment of as the average of earlier scheduled ensuring that consumers have the ability principal or interest is required until to repay qualified mortgages. payments.’’ Proposed § 226.43(e)(2)(i)(C) maturity, may not be a qualified cross-references Regulation Z’s existing 43(e)(2) Qualified Mortgage Defined mortgage. Second, proposed definition of ‘‘balloon payment’’ in § 226.43(e)(2)(i) provides that the Proposed § 226.43(e)(2) implements § 226.18(s)(5)(i). That definition regular periodic payments may not TILA Section 129C(b)(2) and states that provides that a balloon payment is ‘‘a (1) result in an increase of the principal a ‘‘qualified mortgage’’ is a covered payment that is more than two times a balance; (2) allow the consumer to defer transaction— regular periodic payment.’’ This • That provides for regular periodic repayment of principal, except as definition is substantially similar to the payments that do not: statutory one, except that it uses as its Æ 67 As discussed below in this section-by-section Result in an increase of the analysis, in certain limited situations, a creditor benchmark any regular periodic principal balance (i.e., negative may comply with the requirements of § 226.43(f) payment rather than the average of amortization); instead of certain requirements § 226.43(e). earlier scheduled payments.

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The Board believes that, because a loan at the consumer’s option (or is that responsible, affordable mortgage qualified mortgage generally must obligated to renew subject to conditions credit remains available to consumers’’ provide for substantially equal, fully within the consumer’s control). The in ‘‘high-cost areas.’’ This belief is in amortizing payments of principal and Board also seeks comment on how such contrast with the Board’s proposal to interest, a payment that is greater than an exception should be structured to implement TILA Section 129C(a)(6)(E) twice any one of a loan’s regular ensure that the large-payment risk concerning refinancing of an existing periodic payments also generally will be ordinarily accompanying a balloon- hybrid loan into a standard loan, in greater than twice the average of its payment loan is fully eliminated by the proposed § 226.43(d). As discussed in earlier scheduled payments. Thus, the renewal terms. For example, the more detail above, proposed Board believes that the difference in exception might provide that the § 226.43(d)(2) provides an exemption wording between the statutory balloon-payment loan must be from certain repayment ability definition and the existing regulatory renewable on terms that either (1) do requirements when a creditor refinances definition, as a practical matter, does not include a balloon payment; or a non-standard mortgage into a standard not yield a significant difference in what (2) obligate the creditor unconditionally mortgage. Proposed § 226.43(d)(4)(ii)(C) constitutes a ‘‘balloon payment’’ in the (or subject to conditions within the permits a standard mortgage to have a qualified mortgage context. consumer’s control) to renew the loan loan term of up to 40 years. The Board Accordingly, in the interest of again upon expiration of each renewed believes that a 40-year loan term may be facilitating compliance by affording loan term, and the loan term resulting necessary to ensure affordable mortgage creditors a single definition within from such multiple renewals is at least credit remains available for a Regulation Z, the Board is proposing to equal to the amortization period of the refinancing that is being extended cross-reference § 226.18(s)(5)(i)’s loan. Finally, the Board recognizes that specifically to prevent a likely default, ‘‘ ’’ definition of balloon payment in such an exception could enable a as provided in proposed § 226.43(e)(2)(i)(C). The Board proposes creditor to circumvent the prohibition § 226.43(d)(2)(i)(B). this adjustment to the statutory on qualified mortgages providing for definition pursuant to its authority balloon payments by structuring a The Board solicits comment on under TILA Section 105(a) to make such balloon-payment loan as whether there are any ‘‘high-cost areas’’ adjustments for all or any class of unconditionally renewable but with in which loan terms in excess of 30 transactions as in the judgment of the new terms that effectively render the years are necessary to ensure that Board are necessary or proper to loan as renewed unaffordable for the responsible, affordable credit is facilitate compliance with TILA. 15 consumer, such as a substantially available and, if so, how they should be U.S.C. 1604(a). The class of transactions greater interest rate. The Board seeks identified for purposes of such an for which this adjustment is proposed is comment on how such an exception exception. The Board also seeks all covered transactions, i.e., closed-end might be structured to avoid the comment on whether any other consumer credit transactions that are potential for such circumvention. exceptions would be appropriate, secured by a dwelling. The Board consistent with the Board’s authority in 43(e)(2)(ii) Loan Term solicits comment on the appropriateness TILA Section 129C(b)(3)(B)(i). of this proposed adjustment to the TILA Section 129C(b)(2)(A)(viii) definition of ‘‘balloon payment.’’ This requires that a qualified mortgage must 43(e)(2)(iii) Points and Fees not provide for a loan term that exceeds approach is further supported by the TILA Section 129C(b)(2)(A)(vii) 30 years, ‘‘except as such term may be Board’s authority under TILA Section defines a ‘‘qualified mortgage’’ as a loan extended under paragraph (3), such as 129B(e) to condition terms, acts or for which, among other things, the total practices relating to residential mortgage in high-cost areas.’’ Under TILA Section 129C(b)(3)(B)(i), the Board is authorized points and fees payable in connection loans that the Board finds necessary or with the loan do not exceed three proper to facilitate compliance. 15 ‘‘to revise, add to, or subtract from the criteria that define a qualified mortgage percent of the total loan amount. TILA U.S.C. 1639b(e). Section 129C(b)(2)(D) requires the Board The Board recognizes that some upon a finding that such regulations are to prescribe rules adjusting this balloon-payment loans are renewable at necessary or proper to ensure that ‘‘ maturity. Such loans might responsible, affordable mortgage credit threshold to permit lenders that extend appropriately be eligible to be qualified remains available to consumers in a smaller loans to meet the requirements mortgages, provided the terms for manner consistent with the purposes of of the presumption of compliance.’’ The renewal eliminate the risk of the this section, necessary and appropriate statute further requires the Board, in consumer facing a large, unaffordable to effectuate the purposes of this section prescribing such rules, to ‘‘consider the payment obligation, which underlies the and section 129B, to prevent potential impact of such rules on rural rationale for generally excluding circumvention or evasion thereof, or to areas and other areas where home balloon-payment loans from the facilitate compliance with such values are lower.’’ Proposed definition of qualified mortgages. If the sections.’’ § 226.43(e)(2)(iii) implements these consumer is protected by the terms of Proposed § 226.43(e)(2)(ii) provisions by providing that a qualified the transaction from that risk, such a implements the 30-year maximum loan mortgage is a loan for which the total transaction might appropriately be term without any exception. Based on points and fees payable in connection treated as though it effectively is not a information available through outreach with the loan do not exceed the balloon-payment loan even if it is and data analysis, the Board believes amounts specified under § 226.43(e)(3). technically structured as one. that mortgage loans with terms greater As discussed in detail in the section-by- Accordingly, the Board solicits than 30 years are rare and, when made, section analysis for § 226.43(e)(3), the comment on whether it should include generally are for the convenience of Board proposes two alternatives for an exception providing that, customers who could qualify for a loan calculating the allowable points and notwithstanding § 226.43(e)(2)(i)(C), a with a 30-year term but prefer to spread fees for a qualified mortgage. Proposed qualified mortgage may provide for a out their payments further. Therefore, § 226.43(b)(9) defines ‘‘points and fees’’ balloon payment if the creditor is the Board believes such an exception to have the same meaning as in unconditionally obligated to renew the generally is not necessary ‘‘to ensure § 226.32(b)(1), addressed above.

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43(e)(2)(iv) Underwriting of the Loan adjustable-, or step-rate mortgage using to proposed § 226.43(b)(8) and TILA Sections 129C(b)(2)(A)(iv) and a periodic payment of principal and associated commentary to facilitate (v) provide as a condition to meeting the interest based on the maximum interest compliance. rate permitted during the first five years definition of a qualified mortgage, in 43(e)(2)(iv)(A) Maximum Interest Rate after consummation. The terms addition to other criteria, that the During First Five Years ‘‘ ’’ underwriting process for a fixed-rate or adjustable-rate mortgage, step-rate ’’ ‘‘ ’’ Proposed § 226.43(e)(2)(iv)(A) adjustable-rate loan be based on ‘‘a mortgage, and fixed-rate mortgage have the meaning as in current implements TILA Sections payment schedule that fully amortizes 129C(b)(2)(A)(iv) and (v), in part, and the loan over the loan term and takes § 226.18(s)(7)(i)–(iii), respectively. Specifically, proposed provides as a condition to meeting the into account all applicable taxes, § 226.43(e)(2)(iv) provides that meeting definition of a qualified mortgage that insurance, and assessments.’’ The statute the definition of a qualified mortgage is the creditor underwrite the loan using further states that for an adjustable-rate contingent, in part, on creditors the maximum interest rate that may loan, the underwriting must be based on underwriting the loan in the following apply during the first five years after ‘‘ the maximum rate permitted under the manner: consummation. The statute does not loan during the first 5 years.’’ See TILA (1) First, proposed § 226.43(e)(2)(iv) define the term ‘‘maximum rate.’’ In Section 129C(b)(2)(A)(v). The statute requires that the creditor take into addition, the statute does not clarify does not define the terms ‘‘fixed rate,’’ account any mortgage-related whether the phrase ‘‘the maximum rate adjustable rate,’’ or ‘‘loan term,’’ and obligations when underwriting the permitted under the loan during the first provides no additional set of consumer’s loan. 5 years’’ means the creditor should use assumptions regarding how to calculate (2) Second, proposed the maximum interest rate that occurs the payment obligation. § 226.43(e)(2)(iv)(A) requires creditors to during the first five years of the loan These statutory requirements differ use the maximum interest rate that may beginning with the first periodic from the payment calculation apply during the first five years after payment due under the loan, or during requirements set forth under consummation; the first five years after consummation § 226.34(a)(4)(iii) of the Board’s 2008 (3) Third, proposed of the loan. The distinction between HOEPA Final Rule. Section § 226.43(e)(2)(iv)(B) requires that the these two approaches is that the former 226.34(a)(4)(iii) states that a periodic payments of principal and would capture the rate reset for a 5⁄1 presumption of compliance exists where interest repay either the outstanding hybrid ARM that occurs on the due date the creditor underwrites the loan using principal balance over the remaining of the 60th monthly payment, and the the largest payment of principal and term of the loan as of the date the latter would not. interest scheduled in the first seven interest rate adjusts to the maximum Maximum interest rate. The Board years following consummation. The interest rate that can occur during the interprets the phrase ‘‘maximum rate existing presumption of compliance first five years after consummation, or permitted’’ as requiring creditors to under § 226.34(a)(4)(iii) is available for the loan amount over the loan term; and underwrite the loan based on the all loan types, except for loans with These three underwriting conditions maximum interest rate that could occur negative amortization or balloon loans under proposed § 226.43(e)(2)(iv) are under the terms of the loan during the with a term less than seven years. In discussed below. first five years after consummation, contrast, TILA Section 129C(b)(2)(A) assuming a rising index value. See TILA 43(e)(2)(iv) Mortgage-Related provides a five-year time horizon for Section 129C(b)(2)(A)(v). The plain Obligations purposes of underwriting the loan to the meaning of ‘‘maximum’’ is to the greatest maximum interest rate, and does not Proposed § 226.43(e)(2)(iv) possible degree or amount. For this extend the scope of qualified mortgages implements TILA Section reason, the Board believes it is to any loan that contains certain risky 129C(b)(2)(A)(iv) and (v), in part, and reasonable to interpret the phrase as features or a loan term exceeding provides that the creditor underwrite requiring the creditor to use the 30 years. For example, loans that permit the loan taking into account any maximum rate possible, assuming that deferral of principal or that have a term mortgage-related obligations. As the index value is increasing. See greater than 30 years would not meet discussed in proposed § 226.43(b)(8), proposed comment 43(e)(2)(iv)–1. This the definition of a qualified mortgage. the Board proposes to use the term interpretation is consistent with current See proposed § 226.43(e)(2)(i) and (ii). ‘‘mortgage-related obligations’’ to refer to guidance contained in Regulation Z In addition, loans with a balloon feature ‘‘all applicable taxes, insurance regarding disclosure of the maximum would not meet the definition of a (including mortgage guarantee interest rate. See MDIA Interim Rule, 75 qualified mortgage regardless of term insurance), and assessments.’’ Proposed FR 58471, Sept. 24, 2010. The Board length, unless made by a creditor that § 226.43(b)(8) would define the term further believes this interpretation is satisfies the conditions set forth under ‘‘mortgage-related obligations’’ to mean consistent with Congressional intent to the proposed exception. See proposed property taxes; mortgage-related encourage creditors to make loans to § 226.43(f)(1). insurance premiums required by the consumers that are less risky and that creditor as set forth in proposed afford the consumer a reasonable period The Board’s Proposal § 226.45(b)(1); homeowner association, of time to repay (i.e., 5 years) on less The Board proposes § 226.43(e)(2)(iv) condominium, and cooperative fees; risky terms. to implement the underwriting ground rent or leasehold payments; and First five years after consummation. requirements of TILA Sections special assessments. Unlike the For several reasons, the Board proposes 129C(b)(2)(A)(iv) and (v), as enacted by requirement under proposed to interpret the phrase ‘‘during the first Section 1412 of the Dodd-Frank Act, for § 226.43(c)(5)(v), however, creditors 5 years’’ as requiring creditors to purposes of determining whether a loan would not need to verify and document underwrite the loan based on the meets the definition of a qualified mortgage-related obligations for maximum interest rate that may apply mortgage. Under the proposal, creditors purposes of satisfying this underwriting during the first five years after would be required to underwrite the condition. Proposed comment consummation. TILA Section consumer for a loan that is a fixed-, 43(e)(2)(iv)–6 provides cross-references 129C(b)(2)(A)(v). First, a plain reading

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of the statutory language conveys that See 75 FR 81836, Dec. 29, 2010. The meaning of the term ‘‘fixed-rate the ‘‘first 5 years’’ is the first five years revision clarifies that the disclosure mortgage.’’ of the loan once it comes into existence requirements for 5/1 hybrid ARMs must Proposed comment 43(e)(2)(iv)–3 (i.e., once it is consummated). include the rate adjustment that occurs would provide further guidance to Interpreting the phrase to mean the first on the due date of the 60th monthly creditors regarding treatment of periodic five years beginning with the first payment, which typically occurs more interest rate adjustment caps. This periodic payment due under the loan than five years after consummation. The comment would explain that for an would require an expansive reading of disclosure requirements under the 2010 adjustable-rate mortgage, creditors the statutory text. MDIA Interim Final Rule, as revised, are should assume the interest rate Second, the Board believes the intent intended to help make consumers aware increases after consummation as rapidly of this underwriting condition is to of changes to their loan terms that may as possible, taking into account the ensure that the consumer can afford the occur if they choose to stay in the loan terms of the legal obligation. This loan’s payments for a reasonable beyond five years and therefore, helps to comment would further explain that amount of time. The Board believes that ensure consumers avoid the uninformed creditors should account for any Congress intended for a reasonable use of credit. periodic interest rate adjustment cap amount of time to be the first five years By contrast, consistent with statutory that may limit how quickly the interest after consummation, and therefore intent, proposed § 226.43(e)(2)(iv) seeks rate can increase under the terms of the interprets the statutory text ‘‘maximum to ensure that the loan’s payments are legal obligation. This comment would rate permitted during the first five affordable for a reasonable period of also state that where a range for the years’’ accordingly. time. For the reasons stated above, the maximum interest rate during the first Third, the Board believes this Board believes that Congress intended five years is provided, the highest rate approach is consistent with prior the first five years after consummation in that range is the maximum interest iterations of this statutory text and the to be a reasonable period of time to rate for purposes of this section. Finally, Board’s 2008 HOEPA Final Rule. As ensure that the consumer has the ability this comment would clarify that where noted above, the Dodd-Frank Act to repay the loan according to its terms. the terms of the legal obligation are not codifies many aspects of the repayment The Board also notes that the 2010 based on an index plus a margin, or ability requirements contained in MDIA Interim Final Rule and formula, the creditor must use the § 226.34(a)(4) of the Board’s 2008 226.43(e)(2)(iv) complement, rather than maximum interest rate that occurs HOEPA Final Rule. Previous versions of conflict, with each other. That is, during the first five years after this statutory text provided that consistent with Congressional intent, consummation. creditors underwrite the loan using the Proposed comment 43(e)(2)(iv)–3 proposed 226.43(e)(2)(iv) would ensure maximum interest rate during the first provides several illustrative examples of that a consumer could repay the loan for seven years; 68 this time horizon how to determine the maximum interest the first five years after consummation. parallels § 226.34(a)(4)(iii), which rate. For example, this comment would For those borrowers that want to stay in requires creditors to determine a illustrate how to determine the the mortgage longer than five years, the consumers repayment ability using the maximum interest rate in the first five disclosure required under the 2010 largest payment in first seven years years after consummation for an MDIA Interim Final Rule provides ‘‘following consummation.’’ adjustable-rate mortgage with a information about any potential increase Fourth, the Board believes that discounted rate for three years. The in payments so that the consumer can interpreting the phrase ‘‘during the first example first assumes an adjustable-rate decide whether those payments are five years’’ as including the rate mortgage that has an initial discounted affordable. adjustment at the end of the fifth year rate of 5% that is fixed for the first three would be of limited benefit to For these reasons, the Board believes years of the loan, after which the rate consumers because creditors could it is appropriate to interpret the will adjust annually based on a easily structure their product offerings statutory text as requiring that the specified index plus a margin of 3%. to avoid application of the rule. For creditor underwrite the loan using the This comment assumes the index value example, a creditor could move a rate maximum interest rate during the first in effect at consummation is 4.5%. This adjustment that typically occurs on the five years after consummation. The comment states that the loan agreement due date of the 60th monthly payment Board solicits comment on its provides for an annual interest rate to due date of the first month that falls interpretation of the phrase ‘‘first five adjustment cap of 2%, and a lifetime outside the specified time horizon, years’’ and the appropriateness of this maximum interest rate of 10%. The first making any proposal to extend the time approach. rate adjustment occurs on the due date period in order to include the rate Proposed comment 43(e)(2)(iv)–1 of the 36th monthly payment; the rate adjustment of diminished value. would provide additional guidance to can adjust to no more than 7% (5% Finally, the Board recognizes that the creditors on how to determine the initial discounted rate plus 2% annual proposed timing of the five-year period maximum interest rate during the first interest rate adjustment cap). The differs slightly from the approach used five years after consummation. This second rate adjustment occurs on the under the 2010 MDIA Interim Final comment would explain that creditors due date of the 48th monthly payment; Rule, but believes this is appropriate must use the maximum rate that could the rate can adjust to no more than 9% given the different purposes of the rules. apply at any time during the first five (7% rate plus 2% annual interest rate The Board recently amended the 2010 years after consummation, regardless of adjustment cap). The third rate MDIA Interim Final Rule to require that whether the maximum rate is reached at adjustment occurs on the due date of the creditors base their disclosures on the the first or subsequent adjustment 60th monthly payment, which occurs first five years after the first regular during such five year period. Proposed more than five years after periodic payment due date rather than comment 43(e)(2)(iv)(A)–2 would clarify consummation. This proposed comment the first five years after consummation. that for a fixed-rate mortgage, creditors explains that the maximum interest rate should use the interest rate in effect at during the first five years after 68 See, e.g., Mortgage Reform and Anti-Predatory consummation, and provide a cross- consummation is 9% (the rate on the Lending Act, H. Rep. 111–94, p. 39 (2009). reference to § 226.18(s)(7)(iii) for the due date of the 48th monthly payment).

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Proposed comment 43(e)(2)(iv)–4 do not define ‘‘loan term.’’ For Second, the comment would assume would further clarify the meaning of the consistency and to facilitate that the loan agreement provides for a phrase ‘‘first five years after compliance, the Board proposes to use discounted interest rate of 6% that is consummation.’’ This comment would the terms ‘‘loan amount’’ and ‘‘loan term’’ fixed for an initial period of five years, reiterate that under proposed in proposed § 226.43(b)(5) and (b)(6), after which the interest rate will adjust § 226.43(e)(2)(iv)(A), the creditor must respectively, for purposes of this annually based on a specified index underwrite the loan using the maximum underwriting condition. plus a margin of 3%, subject to a 2% interest rate that may apply during the However, the Board believes that a annual interest rate adjustment cap. first five years after consummation of loan that meets the definition of a The index value in effect at the loan, and would provide the qualified mortgage and which has the consummation is 4.5%. The loan following illustrative example: Assume benefit of other safeguards, such as consummates on March 15, 2011 and an adjustable-rate mortgage with an limits on loan features and fees, merits the first regular periodic payment is due initial fixed interest rate of 5% for the flexibility in the underwriting process. May 1, 2011. Under the terms of the first five years after consummation, after Accordingly, the Board proposes to loan agreement, the first rate adjustment which the interest rate will adjust permit creditors to underwrite the loan is on April 1, 2016 (the due date of the annually to the specified index plus a using periodic payments of principal 60th monthly payment), which occurs margin of 6%, subject to a 2% annual and interest that will repay either the more than five years after interest rate adjustment cap. The index outstanding principal balance as of the consummation of the loan. This value in effect at consummation is date the maximum interest rate takes proposed comment explains that the 5.5%. The loan consummates on effect under the terms of the loan, or the maximum interest rate under the terms September 15, 2011, and the first loan amount as of the date of of the loan during the first five years monthly payment is due on consummation. The Board believes after consummation is 6%. See November 1, 2011. The first five years permitting the former approach more proposed comment 43(e)(2)(iv)–7.iii. after consummation occurs on accurately reflects the largest payment This comment concludes that the September 15, 2016. The first rate amount that the borrower would need to creditor will meet the definition of a adjustment to no more than 7% (5% make under the terms of the loan during qualified mortgage if it underwrites the plus 2% annual interest rate adjustment the first five years after consummation, loan using the monthly payment of cap) occurs on the due date of the 60th where as the latter approach would principal and interest of $1,199 to repay monthly payment, which is October 1, actually overstate the payment amounts the loan amount of $200,000 over the 2016 and therefore, the rate adjustment required. This approach sets a minimum 30-year loan term using the maximum does not occur during the first five years standard for qualified mortgages, but interest rate during the first five years of after consummation. To meet the affords creditors to choose either 6%. definition of qualified mortgage under approach to facilitate compliance. The Board notes that in the case of an § 226.43(e)(2), the creditor must Proposed comment 43(e)(2)(iv)–5 adjustable-rate mortgage with a fixed underwrite the loan using a monthly would provide further clarification to interest rate for the first five years after payment of principal and interest based creditors regarding the loan amount to consummation, the creditor will use the on an interest rate of 5%, which is the be used for purposes of this second fixed initial rate as the maximum maximum interest rate during the first condition. This comment would explain interest rate to calculate the monthly five years after consummation. that for a creditor to meet the definition payment using that will repay the loan of a qualified mortgage under proposed amount, in accordance with 43(e)(2)(iv)(B) Amortizing Payments of § 226.43(e)(2), the creditor must requirements in proposed Principal and Interest determine the periodic payment of § 226.43(e)(2)(iv). Because the fixed Proposed § 226.43(e)(2)(iv)(B) principal and interest using the initial rate does not adjust during the implements TILA Section maximum interest rate permitted during first five years after consummation, the 129C(b)(2)(A)(iv) and (v), in part, and the first five years after consummation outstanding principal balance at the end provides as a condition to meeting the that repays either (1) the outstanding of the fifth year is equivalent to the definition of a qualified mortgage that principal balance as of the earliest date balance of the loan amount, assuming the creditor underwrite the loan using the maximum interest rate can take the first 60 monthly payments under the periodic payments of principal and effect under the terms of the legal loan are made as scheduled. Thus, there interest that will repay either (1) the obligation, over the remaining term of outstanding principal balance over the the loan, or (2) the loan amount, as that is no alternative calculation. remaining term of the loan as of the date term is defined in § 226.43(b)(5), over 43(e)(2)(v) the interest rate adjusts to the maximum the entire loan term, as that term is Income or Assets (ALTERNATIVE 1) or interest rate that occurs during the first defined in § 226.43(b)(6). This comment Underwriting Requirements five years after consummation; or (2) the would provide illustrative examples for (ALTERNATIVE 2) loan amount over the loan term. See both approaches. proposed § 226.43(e)(2)(iv)(B)(1) and (2). Proposed comment 43(e)(2)(iv)–7 As discussed above, it is not clear TILA Section 129C(b)(2)(A)(iv) and (v) provides illustrative examples of how to whether the Act intends the definition state that underwriting should be based determine the periodic payment of of a ‘‘qualified mortgage’’ to be a ‘‘on a payment schedule that fully principal and interest based on the somewhat narrowly-defined safe harbor amortizes the loan over the loan term.’’ maximum interest rate during the first or a more broadly-defined presumption The Board notes that unlike the five years after consummation under of compliance. Thus, the Board is payment calculation assumptions set proposed § 226.43(e)(2)(iv). For proposing two alternative requirements forth for purposes of the general ability- example, this comment would illustrate for the ‘‘qualified mortgage’’ definition. to-repay rule under TILA Section the payment calculation rule for an Under Alternative 1, the underwriting 129C(a)(6), the underwriting conditions adjustable-rate mortgage with discount requirements for a qualified mortgage for purposes of meeting the definition of for five years. This comment first would be limited to what is contained a qualified mortgage do not specify the assumes a loan in an amount of in the statutory definition, namely, loan amount that should be repaid, and $200,000 that has a 30-year loan term. considering and verifying the

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consumer’s current or reasonably verifying the consumer’s income or 43(e)(2)(v)(E) Debt-to-Income Ratio or expected income or assets. Under assets to satisfy the conditions under Residual Income Alternative 2, the qualified mortgage § 226.43(e)(2)(v) for a ‘‘qualified TILA Section 129C(b)(2)(vi) states that definition would require a creditor mortgage.’’ the term ‘‘qualified mortgage’’ includes consider and verify all of the ALTERNATIVE 2 any mortgage loan ‘‘that complies with underwriting criteria required under the any guidelines or regulations general ability-to-repay standard, 43(e)(2)(v)(A)–(F) Underwriting established by the Board relating to namely: (1) The consumer’s current or Requirements ratios of total monthly debt to monthly reasonably expected income, (2) the income or alternative measure of ability consumer’s employment status, (3) the Under Alternative 2, proposed to pay regular expenses after payment of monthly payment on any simultaneous § 226.43(e)(2)(v) would implement TILA total monthly debt, taking into account loans, (4) the consumer’s current debt Section 129C(b)(2)(A)(iii) and require the income levels of the borrower and obligations, (5) the consumer’s monthly that creditors consider and verify the such other factors as the Board may debt-to-income ratio or residual income, consumer’s current or reasonably determine relevant and consistent with and (6) the consumer’s credit history. expected income or assets to determine the consumer’s repayment ability, as the purposes described in paragraph ALTERNATIVE 1 required by proposed § 226.43(c)(2)(i) (3)(B)(i).’’ As stated above, under 43(e)(2)(v) Income or Assets and (c)(4). This proposed requirement, proposed § 226.43(e)(2)(v)—Alternative which under Alternative 2 is designated 1, creditors are not required to consider Under TILA Section § 226.43(e)(2)(v)(A), is discussed in the consumer’s debt-to-income ratio or 129C(b)(2)(A)(iii), a condition for a detail under Alternative 1 above. residual income to make a qualified ‘‘qualified mortgage’’ is that the income In addition, proposed mortgage. However, under proposed and financial resources relied upon to § 226.43(e)(2)(v)—Alternative 2, a qualify the obligors on the residential § 226.43(e)(2)(v)—Alternative 2 would require that creditors consider and ‘‘qualified mortgage’’ is a loan for which, mortgage loan are verified and among other things, the creditor documented. This requirement is verify the following additional underwriting requirements, which are considers the consumer’s monthly debt- consistent with the repayment ability to-income ratio or residual income, as requirement to consider and verify a also required under the general ability- to-repay standard: The consumer’s required by § 226.43(c)(2)(vii) and (c)(7). consumer’s income or assets using Without determining the consumer’s third-party records, under TILA Section employment status, the consumer’s monthly payment on any simultaneous debt-to-income ratio, a creditor could 129C(a)(1) and (3), as discussed above in originate a qualified mortgage without the section-by-section analysis of loans, the consumer’s current debt obligations, and the consumer’s credit any requirement to consider the effect of proposed § 226.43(c)(2)(i) and (c)(4). the new loan payment on the Proposed § 226.43(e)(2)(v) would history. Creditors could look to commentary on the general repayment consumer’s overall financial picture. implement TILA Section The consumer could have a very high 129C(b)(2)(A)(iii) and provides that for a ability provisions under proposed § 226.43(c)(2)(i), (ii), (iv), and (vi) total debt-to-income ratio under widely covered transaction to be a ‘‘qualified accepted underwriting standards, and mortgage,’’ the creditor must consider through (viii), and (c)(3), (c)(4), (c)(6), and (c)(7) for guidance regarding be predicted to default soon after the and verify the consumer’s current or first scheduled mortgage payment. reasonably expected income or assets to considering and verifying the consumer’s repayment ability to satisfy Accordingly, including the debt-to- determine the consumer’s repayment income ratio or residual income in the ability, as required by proposed the conditions under § 226.43(e)(2)(v) for a ‘‘qualified mortgage.’’ See proposed definition of ‘‘qualified mortgage’’ might § 226.43(c)(2)(i) and (c)(4). The Board ensure that the consumer has a believes creditors must consider and not comment 43(e)(2)(v)–1 (Alternative 2). The Board proposes these additions reasonable ability to repay the loan. merely verify a consumer’s income or The Board solicits comment on assets for a covered transaction to be a pursuant to its legal authority pursuant under TILA Section 129C(b)(3)(B)(i). whether consideration of the debt-to- ‘‘qualified mortgage,’’ because TILA income ratio or residual income should Section 129C(b)(2)(A)(iii) integrates a The Board believes that adding these requirements may be necessary to better be part of the criteria for a ‘‘qualified requirement to consider the consumer’s mortgage.’’ income or assets by referring to ensure that the consumers are offered Quantitative standards. The Board is qualifying a consumer for a covered and receive loans on terms that not proposing a quantitative standard transaction. Qualifying a consumer for a reasonably reflect their ability to repay for the debt-to-income ratio or residual covered transaction in general involves the loan. income in the qualified mortgage considering whether or not the The Board solicits comments on definition for several reasons. First, as consumer’s income or assets are adding each of these criteria to the explained in the Board’s 2008 HOEPA sufficient for the consumer to meet his definition of a ‘‘qualified mortgage.’’ Final Rule, the Board is concerned that payment obligations under the covered Specifically, the Board solicits comment setting a specific debt-to-income ratio or transaction. In addition, the proposal on whether, for each criterion, the residual income level could limit credit uses the term ‘‘assets’’ instead of inclusion of the criterion strikes the availability without providing adequate ‘‘financial resources’’ for consistency appropriate balance between ensuring off-setting benefits. 73 FR 44550, July with other provisions in Regulation Z, the consumer’s ability to repay the loan 30, 2008. For this proposal, the Board as discussed above in the section-by- and providing creditors with an analyzed data from the Applied section analysis of proposed incentive to make a qualified mortgage. Analytics division (formerly McDash § 226.43(c)(2)(i). Under the first In addition, the Board solicits comment Analytics) of Lender Processing Services alternative requirement, proposed on whether consideration of (LPS) for the years 2005–2008 69 and comment 43(e)(2)(v)–1 clarifies that simultaneous loans should be required for both purchase transactions and non- creditors may rely on commentary to 69 The LPS data include mortgage underwriting § 226.43(c)(2)(i), (c)(3) and (c)(4) for purchase transactions (i.e., and performance information. The LPS data do not guidance regarding considering and refinancings). include detailed information on borrower income

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data from the Survey of Consumer necessitate a re-calculation of the debt- • For a loan amount of greater than or Finances (the SCF) for the years 2005– to-income ratio. Furthermore, a equal to $60,000 but less than $75,000, 2007.70 Using the LPS data, the Board quantitative standard may also need to 3.5 percent of the total loan amount; found that about 23 percent of all provide tolerances for mistakes made in • For a loan amount of greater than or borrowers exceeded a debt-to-income calculating the debt-to-income ratio. equal to $40,000 but less than $60,000, ratio of 45 percent, the typical The rule would also need to address the 4 percent of the total loan amount; maximum permitted by creditors and use of automated underwriting systems • For a loan amount of greater than or the secondary market for loans that are in determining the debt-to-income ratio equal to $20,000 but less than $40,000, manually underwritten. The data show or residual income. 4.5 percent of the total loan amount; and that this rate was even higher for Finally, setting a quantitative • For a loan amount of less than borrowers living in low-income or high- standard for residual income could $20,000, 5 percent of the total loan cost areas. Using the SCF data, the prove particularly challenging. Except amount. Board found that about 44 percent of for one small creditor and the borrowers located in low-income areas Department of Veterans’ Affairs, the Alternative 2 and about 31 percent of borrowers Board is not aware of any creditors that • For a loan amount of $75,000 or located in high-cost areas exceeded the routinely use residual income in more, 3 percent of the total loan 45 percent limit.71 If the Board were to underwriting, other than as a amount; adopt a quantitative standard, the Board compensating factor.72 As noted in the • For a loan amount of greater than or seeks comment on what exceptions may supplementary information to the 2008 equal to $20,000 but less than $75,000, be necessary for low-income borrowers HOEPA Final Rule, the residual income a percent of the total loan amount not or borrowers living in high-cost areas, or guidelines of the Department of to exceed the percentage of the total for other cases. Veterans’ Affairs may be appropriate for loan amount yielded by the following Second, outreach conducted by the the limited segment of the mortgage formula— Board revealed a range of underwriting market this agency is authorized to Æ Total loan amount¥$20,000 = $Z guidelines for debt-to-income ratios serve, but they are not necessarily Æ $Z × .0036 basis points = Y basis based on product type, whether appropriate for the large segment of the points creditors used manual or automated mortgage market this regulation will Æ 500 basis points ¥Y basis points = underwriting, and special cover. 73 FR 44550, July 30, 2008. X basis points considerations for high- and low-income Moreover, the residual income Æ X basis points × .01 = Allowable borrowers. Setting a quantitative guidelines developed by the Department points and fees as a percentage of the standard would require the Board to of Veterans’ Affairs have not been total loan amount. address the operational issues related to updated since 1997. It is not clear that • For a loan amount of less than the calculation of the debt-to-income such guidelines would be appropriate or $20,000, 5 percent of the total loan ratio or residual income. For example, provide sufficient flexibility for amount. the Board would need clearly to define consumers outside the market served by For both alternatives, Proposed income and current debt obligations, as the Department of Veterans’ Affairs. well as compensating factors and the comment 43(e)(3)(i)–1 cross-references For these reasons, the Board is not comment 32(a)(1)(ii)–1 for an situations in which creditors may use proposing a quantitative standard for compensating factors, In addition, the explanation of how to calculate the the debt-to-income ratio or residual ‘‘total loan amount’’ under this debt-to-income ratio is often a floating income. The Board recognizes, however, metric, since the percentage changes as provision. Proposed comment that creditors, and ultimately 43(e)(3)(i)–2 also clarifies that a creditor new information about income or consumers, may benefit from a higher current debt obligations becomes must determine which category the loan degree of certainty surrounding the falls into based on the face amount of available. A quantitative standard qualified mortgage definition that a would require guidelines on the timing the note (the ‘‘loan amount’’), but must quantitative standard could provide. apply the allowable points and fees of the debt-to-income ratio calculation, Therefore, the Board solicits comment and what circumstances would percentage to the ‘‘total loan amount,’’ on whether and how it should prescribe which may be an amount that is a quantitative standard for the debt-to- and on other debts the borrower may have in different than the face amount of the addition to the mortgage. income ratio or residual income for the note. Specifically, the comment 70 The SCF is conducted every three years by the qualified mortgage definition. explains that a creditor must calculate Board, in cooperation with the U.S. Department of the allowable amount of points and fees Treasury, to provide detailed information on the 43(e)(3) Limits on Points and Fees for finances of U.S. families. The SCF collects Qualified Mortgages for a qualified mortgage as follows: • information on the balance sheet, pension, income, Proposed § 226.43(e)(3) sets forth two First, the creditor must determine and other demographic characteristics of U.S. ‘‘ ’’ alternative proposals establishing the the tier into which the loan falls based families. To ensure the representativeness of the on the loan amount. The loan amount is study, respondents are selected randomly using a points and fees that a creditor may scientific sampling methodology that allows a charge on a qualified mortgage: the principal amount the consumer will relatively small number of families to represent all borrow as reflected in the promissory types of families in the nation. Additional Alternative 1 note or loan contract. See § 226.43(b)(5). information on the SCF is available at http:// www.federalreserve.gov/pubs/oss/oss2/ • For a loan amount of $75,000 or For example, if the loan amount is method.html. more, 3 percent of the total loan $75,000, the loan falls into the tier for 71 See also Wardrip, Keith, An Annual Look at the amount; loans of $75,000 or more, to which a Housing Affordability Challenges of America’s three percent cap on points and fees Working Households (Center for Housing Policy 2011) (showing that just over 20 percent of working 72 See also Stone, Michael E., What is Housing applies. households, defined as households that report Affordability? The Case for the Residual Income • Second, the creditor must household members working at least 20 hours per Approach, 17 Housing Policy Debate 179 (Fannie determine the ‘‘total loan amount’’ based week, on average, with incomes no higher than 120 Mae 2006) (advocating use of a residual income on the calculation for the ‘‘total loan percent of the median income in their area, who approach but acknowledging that it ‘‘is neither well own a home spend more than half its income on known, particularly in this country, nor widely amount’’ under comment 32(a)(1)(ii)–1. housing costs). understood, let alone accepted’’). If the loan amount is $75,000, for

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example, the ‘‘total loan amount’’ may be included in the ‘‘points and fees’’ limiting the availability of credit to low- a different amount, such as $73,000. calculation, raising the percentage cap, income or rural borrowers if the points • Third, the creditor must apply the or a combination of both. Outreach and fees cap for qualified mortgages percentage cap on points and fees to the participants generally disfavored an were too low with respect to ‘‘smaller ‘‘total loan amount.’’ For example, for a approach that would require different loans.’’ If creditors could not meet the loan of $75,000 where the ‘‘total loan ways of calculating points and fees qualified mortgage points and fees cap, amount’’ is $73,000, the allowable depending on loan size. Industry these loans would not meet the points and fees is three percent of representatives in particular raised definition of a ‘‘qualified mortgage’’ and $73,000 or $2,190. concerns about compliance burden and creditors therefore would be less likely For a discussion of the Board’s proposed the increased risk of error resulting from to make these loans. revisions to the ‘‘total loan amount’’ a more complex rule. The Board Consumer advocates generally favored calculation, see the section-by-section believes that requiring separate ways of a narrower exception to the three analysis of § 226.32(a)(1)(ii), above. calculating points and fees is percent qualified mortgage points and unnecessary to effect the statutory fees threshold for ‘‘smaller loans,’’ Discussion mandate to ‘‘adjust the criteria’’ for the recommending a ‘‘smaller loan’’ size of The Board proposes the two qualified mortgage three percent points no higher than $50,000 and preferably alternative calculations for the qualified and fees threshold. The proposal lower. They questioned industry mortgage points and fees test to therefore simply would set higher concerns that the three percent implement TILA Section percentage caps on points and fees for threshold would limit the availability of 129C(b)(2)(A)(vii), which requires that loans of less than $75,000. credit for borrowers of comparatively the points and fees of a qualified Outreach participants had varying low loan amounts. Instead, they mortgage may not exceed three percent views on appropriate loan size emphasized the importance of ensuring of the total loan amount. 15 U.S.C. thresholds for an alternative points and that qualified mortgages are affordable 1639c(b)(2)(A)(vii). Proposed fees limitation applicable to ‘‘smaller because, depending on the Board’s § 226.43(e)(3) is also intended to loans.’’ Industry representatives shared a interpretation of the statute, these loans implement TILA Section 129C(b)(2)(D), concern that loans below a certain size potentially would not be subject to some which requires the Board to adjust this could not meet the three percent points or all of the specific repayment ability three percent points and fees limit for and fees cap because the minimum costs requirements in TILA Section 129C(a) ‘‘smaller loans’’ and also requires that, to originate any loan would exceed (see proposed § 226.43(c)). (For a ‘‘[i]n prescribing such rules, the Board three percent of loans of that size. While detailed discussion of the Board’s * * * consider the potential impact of recognizing that loan costs can be alternative proposals regarding which of such rules on rural areas and other areas covered in part by charging a higher the general repayment ability where home values are lower.’’ 15 U.S.C. interest rate, creditors were concerned requirements apply to creditors of 1639C(b)(2)(D). The statute does not that for smaller loans, the needed rate qualified mortgages, see the section-by- define, and the legislative history does increase might result in loan becoming section analysis of proposed § 226.43(e), not provide guidance on, the terms a high-cost mortgage; as a result, above.) In their view, the three percent ‘‘smaller loan’’ or the phrase ‘‘rural areas creditors would be reluctant to make points and fees cap is a centerpiece of and other areas where home values are these loans and credit availability ensuring affordability and should be lower.’’ would be compromised. Based on relaxed only in very limited Therefore, to gather information on calculations using loans in their own circumstances. how best to implement the statutory portfolios, some creditors indicated that The Board’s Proposal requirement that the Board ‘‘adjust’’ the the point at which minimum loan points and fees threshold for ‘‘smaller origination costs exceed three percent of Based on outreach and the Board’s loans,’’ Board staff consulted with the total loan amount is $50,000 to research, the Board is issuing two consumer advocates and numerous $75,000. At least one creditor indicated alternative proposals to implement the types of creditors, including that, in addition, for loans of $40,000 or points and fees limitation on qualified representatives of banks and credit less, the creditor would be unable to mortgages. The first consists of five unions in rural areas, as well as meet a four percent cap on points and ‘‘tiers’’ of loan sizes and corresponding manufactured home loan creditors. In fees. Others suggested $100,000 as the limits on points and fees. The second addition, Board staff also examined appropriate ‘‘smaller loan’’ threshold, consists of three ‘‘tiers,’’ with the middle recent data on loan size distributions for while still others recommended that the tier of allowable points and fees based home purchase loans and refinances by Board propose a ‘‘smaller loan’’ on a formula yielding a greater county and based on whether the loan threshold of greater than $100,000, such allowable percentage of the total loan was a conventional mortgage or a as at least $150,000. Community bank amount to be charged in points and fees mortgage secured by manufactured representatives in particular raised for each dollar increase in loan size. homes. The Board also considered that concerns that they would be unable to The Board proposes a ‘‘tiered’’ creditors can, to some extent, increase retain profitability without an approach, rather than a single ‘‘smaller the interest rate to offset limits on points adjustment to the points and fees cap for loan’’ threshold and a single alternate and fees. The Board recognizes that loan loans of less than $100,000. They argued points and fees cap for loans at or below pricing is typically a blend of points and that the sizes of loans originated by that amount, for several reasons. First, fees and interest rate and that limits on community banks and other institutions the Board understands that most points and fees tend to drive loan costs in less populated areas are ‘‘small’’ on creditors have a minimum cost for into the rate. average, leaving less opportunity for originating a mortgage loan of any size As an initial matter, the Board community banks than larger and that this cost may vary somewhat considered a few options for institutions to make up any losses on by creditor. If a single minimum implementing the statutory mandate to originations of small loans through origination cost is assumed, that cost ‘‘adjust[] the criteria’’ of the three originations of larger loans. will obviously comprise a different percent points and fees cap—namely, Industry representatives also percentage of a loan depending on its narrowing the charges required to be generally expressed concerns about size. Total points and fees of $2,500 will

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obviously be a smaller percentage of a • A $60,000 loan would fall into the proposing the alternative discussed loan of $100,000 (2.5%) than for a loan category for loans of $60,000 but less below. of $50,000 (5%), for example. A single than $75,000, to which a 3.5 percent Alternative 2. The Board proposes an threshold therefore may not be points and fees rate cap applies. alternative with three tiers that sufficiently flexible to allow loans of a Assuming that the ‘‘total loan amount’’ incorporates a formula designed to full range of sizes to be deemed for the loan is also $60,000, the dollar ensure that allowable points and fees as qualified mortgages. amount of allowable points and fees for a dollar amount will increase as the loan In addition, the Board believes that a this loan would be $2,100. amount increases, thus eliminating the rule allowing for incremental increases • A $40,000 loan would fall into the anomalies resulting from the proposed in the points and fees cap for several category for loans of $40,000 but less five-tier approach. Specifically, as ranges of loan sizes will help mitigate than $60,000, to which a four percent noted, for a loan amount of $75,000 or market distortions that might otherwise points and fees rate cap applies. more, allowable points and fees would result. For example, a rule setting a five Assuming that the ‘‘total loan amount’’ be 3 percent of the total loan amount. percent points and fees cap for all loans for the loan is also $40,000, the dollar For a loan amount of less than $20,000, less than $75,000 would create a amount of allowable points and fees for allowable points and fees would be 5 this loan would be $1,600. percent of the total loan amount. These significant disparity between the • amount of points and fees that could be A $20,000 loan would fall into the two categories correspond with the first charged on loans of substantially equal category for loans of $20,000 but less and last tiers of the five-tiered approach amounts. For a loan of $75,000, for than $40,000, to which a 4.5 percent discussed above. instance, a creditor could charge up to points and fees rate cap applies. For a loan amount of greater than or $2,250 (3% of $75,000). But for a loan Assuming that the ‘‘total loan amount’’ equal to $20,000 but less than $75,000, of $74,000, a creditor could charge as for the loan is also $40,000, the dollar however, the allowable points and fees much as $3,700 (5% of $74,000). As a amount of allowable points and fees for would be a percentage of the total loan result, loans slightly above the threshold this loan would be $900. amount not to exceed the amount • A $10,000 loan would fall into the at which a five percent cap applies—for yielded by the following formula— category for loans of less than $20,000, example, from $75,000 to $85,000— Æ Total loan amount¥$20,000 = $Z to which a five percent points and fees might be less likely to be made at all. Æ $Z × .0036 = Y basis points rate cap applies. Assuming that the Æ 500 basis points¥Y basis points = Finally, the Board is reluctant to ‘‘total loan amount’’ for the loan is also X basis points require a single threshold due to $10,000, the dollar amount of allowable Æ X basis points × .01 = Allowable limitations inherent in available data on points and fees for this loan would be points and fees as a percentage of the origination costs. Various resources that $500. track points and fees in loan Proposed alternative comment total loan amount. originations tend to use different 43(e)(3)(i)–3 provides the following In effect, for every dollar increase in the methods for calculating the points and illustration of how to calculate the total loan amount, the allowable points fees and to date do not include all items allowable points and fees for a $50,000 and fees would increase by .0036 basis that must be counted as points and fees loan with a $48,000 total loan amount: points. Proposed alternative comment under TILA as amended by the Dodd- A covered transaction with a loan 43(e)(3)(i)–3 provides the following Frank Act. See TILA Section 103(aa)(4); amount of $50,000 falls into the third illustration of how to apply this 15 U.S.C. 1602(aa)(4). See also section- points and fees tier, to which a points formula: Assume a loan amount of by-section analysis of § 226.32, above. and fees cap of 3.5 percent of the total $50,000 with a ‘‘total loan amount’’ of Alternative 1. The five-tiered loan amount applies. See $48,000. The amount of $20,000 must be approach proposed as Alternative 1 is § 226.43(e)(3)(i)(C). If a $48,000 total subtracted from $48,000 to yield the intended to facilitate compliance by loan amount is assumed, the allowable number of dollars to which the .0036 setting clear categories based on loan points and fees for this loan is 3.5 basis points multiple must be applied— size to which specific points and fees percent of $48,000 or $1,920. in this case, $28,000. $28,000 must be thresholds apply. The Board derived the One concern is that this approach multiplied by .0036 basis points—in loan size ranges for each category (with yields anomalous results in some this case resulting in 100.8 basis points. corresponding points and fees instances—namely, that a greater dollar This amount must be subtracted from thresholds of three percent, 3.5 percent, amount of points and fees would be the maximum allowable points and fees four percent, 4.5 percent, and five allowable on some loans than on other on any loan, which, under the proposed percent of the ‘‘total loan amount,’’ loans of a larger size. For example, the rule, is 500 basis points. (Five percent respectively) based on a calculation that allowable points and fees that could be of the total loan amount for loans of less would generally achieve a ‘‘sliding charged on a loan of $40,000 (also than $20,000 is the maximum allowable scale’’ points and fees cap from three to assuming in this example a ‘‘total loan points and fees on any loan. Five five percent for loans from $20,000 to amount’’ of $40,000) would be $1,600— percent expressed in basis points is $75,000. To make the proposal more four percent of the total loan amount. At 500.) Five hundred minus 100.8 equals straightforward, the Board chose the same time, the allowable points and 399.2 basis points: This is the allowable increments of .5% and rounded the loan fees that could be charged on a loan of points and fees in basis points. size ranges proposed for each category. $38,000 (also assuming in this example Translating basis points into a Thus, for example: a ‘‘total loan amount’’ of $38,000) would percentage of the total loan amount • An $80,000 loan would fall into the be $1,710—4.5 percent of the total loan requires multiplying 399.2 by .01— category for loans of $75,000 or more, to amount. The Board considered and resulting, in this case, in 3.99 percent. which a three percent points and fees could revise the first alternative to solve Allowable points and fees for this loan rate cap applies. Assuming that the the anomalies mathematically, but not as a dollar figure is therefore 3.99 ‘‘total loan amount’’ for the loan is also without adding significant complexity percent of $48,000 (i.e., the total loan $80,000, the dollar amount of allowable to the regulation, which in turn would amount), or $1,915.20. points and fees for this loan would be increase the risk of compliance errors. The Board recognizes that a formula $2,400. For these reasons, the Board is also is potentially more complex for

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creditors to comply with than the solely to high-cost mortgages. See TILA Second, Board outreach and research multiple tiers proposed under the first Section 129(k); 15 U.S.C. 1639(k). They indicate that $2,250—three percent of alternative. In particular, the Board also require that the consumer obtain $75,000—is within range of average requests comment on whether a formula ‘‘pre-loan counseling’’ not required for costs to originate a first-lien home would be difficult for smaller creditors other mortgages. See TILA Section mortgage. Thus $75,000 appears to be an to integrate into their lending 129(u); 15 U.S.C. 1639(u). appropriate benchmark for applying the operations. Three percent cap for loans of three percent limit, with a higher Three to five percent cap. The upper $75,000 or greater. The Board proposes percent limit applying to loans below end of the points and fees cap for a loan size of $75,000 as the point at that amount to afford creditors of these smaller loans is proposed to be five which the statutory three percent points loans a reasonable opportunity to percent for loans of less than $20,000. and fees cap begins to apply for several recoup their origination costs. The One reason for the maximum cap of five reasons. First, the Board believes that sliding scale approach to loans below percent for loans of less than $20,000 is Congress intended the exception to the $75,000 is intended in part to help to achieve general consistency with the qualified mortgage points and fees cap ensure that creditors of these loans Dodd-Frank Act amendments to the to affect more than a minimal—although would not have to add a significant points and fees thresholds for high-cost still limited—proportion of home- amount to the rate to recoup their mortgages.73 Specifically, TILA now secured loans. The 2008 Home Mortgage origination costs and thus cannot be defines a high-cost mortgage as one for Disclosure Act 75 (HMDA) data show classified as high-cost mortgages. In which the points and fees equal five that 8.4 percent of first-lien, home- addition, the Board seeks to limit percent of the total transaction amount purchase (site-built) mortgages had a compensating rate increases because it if the transaction is $20,000 or more loan amount of $74,000 or less.76 That recognizes that increasing the rate is not and, if the transaction is less than percentage significantly drops for loans necessarily in the consumer’s interest— $20,000, the lesser of eight percent of of $49,000 or less, to 2.8 percent, with for example, a loan with a higher rate the total transaction amount or $1,000. only .5 percent of all loans at $24,000 can be costly for a consumer who plans See TILA Section 103(aa)(1)(A)(ii)(I) and or less. The percentage of first-lien, to stay in the home (and loan) for a long (II); 15 U.S.C. 1602(aa)(1)(A)(ii)(I) and home-purchase (site-built) mortgages of time. Higher rates also can decrease (II). $100,000 or less is significantly higher credit access because some consumers The proposal seeks to ensure that if a than 8.4 percent, however—totaling 16 may not be able to make the resulting loan is a qualified mortgage, it would percent of the market. payments over time, but may have the not also be a high-cost mortgage based Similarly, in 2009, the percentage of cash to pay the costs upfront. on the points and fees, and therefore first-lien home-purchase (site-built) Third, the Board interprets Congress’s subject to the more stringent high-cost mortgages was 9.7 percent, with a express concern for ‘‘loans in areas mortgage rules of TILA Section 129 (as significant drop for loans of $50,000 or where home values are lower’’ to amended by the Dodd-Frank Act).74 For less to 3.3 percent of the total market encompass not only geographic areas example, five percent of a loan of and .3 percent for loans of $20,000 or but also ‘‘areas’’ of mortgage lending $19,999 is $999.95. Thus, for this loan less.77 Again, however, the percentage generally—in particular, property types to meet the points and fees test for of first-lien home-purchase (site-built) such as manufactured homes, which qualified mortgages, the maximum mortgages jumps substantially—from tend to be less expensive than site-built points and fees that could be charged 9.7 percent to 18.5 percent—for loans of homes. Regarding property types, the would be $999.95. If the maximum $100,000 or less. Parallel results Board focused on manufactured homes points and fees that could be charged on occurred for first-lien refinances and found that, in 2009, 74.8 percent of this loan under the qualified mortgage secured by site-built homes.78 all first-lien home-purchase loans test were $1,000, this loan would also be Thus, the Board believes that a loan secured by manufactured homes were a high-cost mortgage. size of less than $75,000 would capture $75,000 or less, while 61.8 percent of all As discussed earlier, the Board a material portion of the first-lien home- first-lien refinances secured by believes that the statute is designed to purchase (site-built) mortgage market manufactured homes were $75,000 or reduce the compliance burden on (close to 10 percent), but would not less. Thus the Board believes that the creditors when they make qualified undermine the statute by creating an proposal would appropriately address mortgages, in order to encourage exception that might be over-broad.79 Congress’s concern with the ‘‘lower’’ creditors to make loans with stable, home values typical of manufactured understandable loan features. Creating 75 12 U.S.C. 2801 et seq. homes. The Board considers 76 See The 2008 HMDA Data: The Mortgage manufactured homes to be an important points and fees thresholds for small Market during a Turbulent Year, Federal Reserve loans that might result in qualified Bulletin, vol. 95, p. A201 (April 2010). homeownership option for many mortgages also being high-cost 77 See HMDA data for 2009 is available at Federal consumers and intends through this mortgages would discourage creditors Financial Institutions Examination Council, http:// proposal to protect manufactured home from making qualified mortgages www.ffiec.gov.hmda/hmdaproducts.htm. loan consumers from excessive costs, 78 See The 2008 HMDA Data: The Mortgage while allowing more of these loans to be because the requirements and Market during a Turbulent Year, Federal Reserve limitations of high-cost loans are Bulletin, vol. 95, p. A201 (April 2010); Federal deemed qualified mortgages. generally more stringent than for other Financial Institutions Examination Council, http:// In general, the Board is reluctant to loans. High-cost mortgages, for example, www.ffiec.gov/hmda/hmdaproducts.htm propose an adjustment to the three are subject to a cap on the late fees that 79 The proposed loan size threshold would have percent qualified mortgage points and applied to the majority of second-lien home- fees cap based on geographic area alone. may be imposed and timing restrictions purchase and refinance loans secured by site-built regarding when the fee may be imposed, homes in 2008 and 2009. In 2008, 78.3 percent of Property values shift over time, and in but other mortgages are not subject to all second-lien home-purchase (site-built) some cases, properties in what today are these and several other rules applicable mortgages were $74,000 or less and 75.3 percent of all second-lien refinances (site-built) were $74,000 built) and 78.1 percent of all second-lien refinance or less. See The 2008 HMDA Data: The Mortgage (site-built) mortgages were in an amount of $75,000 73 Public Law 111–203, 124 Stat. 1376, Title XIV, Market during a Turbulent Year, Federal Reserve or less. See Federal Financial Institutions § 1431. Bulletin, vol. 95, p. A201 (April 2010). In 2009, 85.1 Examination Council, http://www.ffiec.gov/hmda/ 74 Id. § 1432, 1433. percent of all second-lien home-purchase (site- hmdaproducts.htm.

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remote, inexpensive areas may become retained by the creditor, loan originator, creditor against the consumer’s default more populated and costly over time. or an affiliate of either. or other credit loss to the extent that the The Board considered imposing an • Up to two bona fide discount points premium or charge exceeds the amount alternate points and fees threshold for paid by the consumer in connection payable under policies in effect at the defined geographic areas such as ‘‘non- with the covered transaction, but only if time of origination under Section MSA’’ areas. However, even within certain conditions are met (discussed 203(c)(2)(A) of the National Housing Act those areas, origination costs and loan below). (12 U.S.C. 1709(c)(2)(A)). These sizes may vary widely, so the Board • Up to one bona fide discount point premiums or charges must also be believes that an inadequate basis exists paid by the consumer in connection included if the premiums or charges are for such a proposal. with the covered transaction, but only if not required to be refundable on a pro- Nevertheless, regarding whether loan certain conditions are met (discussed rated basis, or the refund is not sizes are ‘‘lower’’ on average in some below). automatically issued upon notification geographic areas than others, the Board See proposed § 226.43(e)(3)(ii)(A)–(C). of the satisfaction of the underlying has conducted preliminary research on 43(e)(3)(ii)(A) Bona Fide Third Party mortgage loan. The comment clarifies loan size by county. HMDA data Charges that, under these circumstances, even if indicate that in 2009, for example, there the premiums and charges are not Proposed § 226.43(e)(3)(ii)(A) were eight counties in which loans retained by the creditor, loan originator, excludes from ‘‘points and fees’’ for under $75,000 comprised more than 90 or an affiliate of either, they must be qualified mortgages ‘‘any bona fide third percent of all first-lien mortgages made included in the ‘‘points and fees’’ party charge not retained by the in those counties, and 1,366 counties in calculation for qualified mortgages. The creditor, loan originator, or an affiliate which loans under $75,000 comprised comment also cross-references of either, unless the charge is required comments 32(b)(1)(i)–3 and –4 for more than 90 percent of all second-lien to be included in ‘points and fees’ under 80 further discussion of including upfront loans made in those counties. The § 226.32(b)(1)(i)(B).’’ This provision Board also noted that counties in which private mortgage insurance premiums in would implement TILA Section the points and fees calculation. at least 70 percent of second-lien 129C(b)(2)(C), which defines ‘‘points For a detailed discussion of the mortgages made were under $75,000 and fees’’ for qualified mortgages to have Board’s proposal to apply the Dodd- (2,616 counties) accounted for 91 the same meaning as ‘‘points and fees’’ Frank Act provisions on mortgage percent of the entire second-lien for high-cost mortgages (TILA Section insurance to the meaning of ‘‘points and mortgage market for loans of under 103(aa)(4)), but expressly excludes ’’ $75,000. These data suggest that the ‘‘bona fide third party charges not fees for qualified mortgages, see the proposal may affect access to credit retained by the mortgage originator, section-by-section analysis of proposed differently across the country. creditor, or an affiliate of the creditor or § 226.32(b)(1)(i) (implementing TILA The Board requests comment on the mortgage originator.’’ 15 U.S.C. Section 103(aa)(1)(C)). proposed alternative loan size ranges 1602(aa)(4), 1639c(b)(2)(C). With the 43(e)(3)(ii)(B) and 43(e)(3)(ii)(C) Bona and corresponding points and fees caps following example, proposed comment Fide Discount Points for qualified mortgages. The Board 43(e)(3)(ii)–1 clarifies the meaning of encourages commenters to provide ‘‘retained by’’ the loan originator, Proposed § 226.43(e)(3)(ii)(B) and specific data to support their creditor, or an affiliate of either: If a (e)(3)(ii)(C) permit a creditor to exclude recommendations. The Board also creditor charges a consumer $400 for an a limited number of discount points solicits comment on whether the appraisal conducted by a third party not from the calculation of points and fees proposal should index the loan size affiliated with the creditor, pays the under specific circumstances. These ranges for inflation and periodically third party appraiser $300 for the provisions are proposed to implement change them by regulation. In addition, appraisal, and retains $100, the creditor TILA Section 129C(b)(2)(C)(ii), (iii), and the Board requests comment on the may exclude $300 of this fee from (iv), and mirror the statutory language potential impact of the proposal on ‘‘points and fees’’ but must count the with minor clarifying revisions. 15 access to credit, particularly on how the $100 it retains in ‘‘points and fees.’’ U.S.C. 1639c(b)(2)(C)(ii), (iii), and (iv). impact may vary based on geographic Proposed § 226.43(e)(3)(ii)(A) would Exclusion of up to two bona fide area. also implement TILA Section discount points. Specifically, proposed 103(aa)(1)(C), which requires that § 226.43(e)(3)(ii)(B) permits a creditor to 43(e)(3)(ii) Exclusions From Points and premiums for private mortgage exclude from points and fees for a Fees for Qualified Mortgages insurance be included in ‘‘points and qualified mortgage up to two bona fide Proposed § 226.43(e)(3)(ii) excludes fees’’ as defined in TILA Section discount points paid by the consumer in three types of charges from the points 103(aa)(4) under certain circumstances. connection with the covered and fees calculation for qualified 15 U.S.C. 1602(aa)(1)(C). Applying transaction, provided that the following mortgages: general rules of statutory construction, conditions are met— • • Any bona fide third party charge the Board believes that the more specific The interest rate before the rate is not retained by the creditor, loan provision on private mortgage insurance discounted does not exceed the average originator, or an affiliate of either, supersedes the more general provision prime offer rate, as defined in subject to the limitations under permitting any bona fide third party § 226.45(a)(2)(ii),81 by more than one proposed § 226.32(b)(1)(i)(B), which charge not retained by the creditor, percent; and requires that premiums for private mortgage originator, or an affiliate of • The average prime offer rate used mortgage insurance be included in either to be excluded from ‘‘points and for purposes of paragraph points and fees under certain fees.’’ Thus, comment 43(e)(3)(ii)–2 43(e)(3)(ii)(B)(1) is the same average circumstances, even if they are not explains that § 226.32(b)(1)(i)(B) prime offer rate that applies to a requires creditors to include in ‘‘points comparable transaction as of the date ’’ 80 See Federal Financial Institutions Examination and fees premiums or charges payable Council, http://www.ffiec.gov/hmda/ at or before closing for any private 81 See 76 FR 11319, March 2, 2011 (2011 Jumbo hmdaproducts.htm. guaranty or insurance protecting the Loan Escrow Final Rule).

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the discounted interest rate for the the rate from which the discounted rate points and fees for qualified mortgages. covered transaction is set. was derived (7.00 percent) exceeded Points charged to meet GSE risk-based Proposed comment 43(e)(3)(ii)–3 APOR for a comparable transaction as of price adjustment requirements are provides the following example to the date the rate on the covered arguably no different than other points illustrate this rule: Assume a covered transaction was set (5.00 percent) by charged on loans sold to any secondary transaction that is a first-lien, purchase only two percent. market purchaser to compensate that money home mortgage with a fixed Comparable transaction. Both purchaser for added loan-level risks. interest rate and a 30-year term. Assume proposed exclusions for bona fide Congress clearly contemplated that also that the consumer locks in an discount points require the creditor to discount points generally should be interest rate of 6.00 percent on May 1, determine the APOR for a ‘‘comparable included in points and fees for qualified 2011, that was discounted from a rate of transaction.’’ Comment 43(e)(3)(ii)–5 mortgages; as discussed above, the 6.50 percent because the consumer paid clarifies that the APOR table published Dodd-Frank Act exempts from the two discount points. Finally, assume by the Board indicates how to identify qualified mortgage points and fees that the average prime offer rate (APOR) the comparable transaction.83 This calculation up to only two discount as of May 1, 2011 for first-lien, purchase comment also cross-references proposed points, and under limited money home mortgages with a fixed comment 45(a)(2)(ii)–2 contained in the circumstances. See TILA Section interest rate and a 30-year term is 5.50 2011 Escrow Proposal (see also existing 129C(b)(2)(C)(ii), (iii), and (iv), proposed percent. comment 35(a)(2)–2), which makes the to be implemented in new In this example, the creditor may same clarification in a different context. § 226.43(e)(3)(ii)(B) and (e)(3)(ii)(C). exclude two discount points from the Currently, the APOR table published by An exclusion for points charged by ‘‘points and fees’’ calculation because the Board indicates that one loan creditors in response to secondary the rate from which the discounted rate characteristic on which the APOR may market LLPAs also raises questions was derived exceeded APOR for a vary is whether the rate is fixed or about the appropriate treatment of comparable transaction as of the date adjustable. Another variable is the points charged by creditors to offset the rate on the covered transaction was length of the loan term. For a fixed-rate loan-level risks on mortgage loans that set by only one percent. mortgage, the relevant term is the length they hold in portfolio. Under normal Exclusion of up to one bona fide of the entire contractual obligation, such circumstances, these points are retained discount point. Proposed as 30 years. For an adjustable-rate by the creditor, so an argument that they § 226.43(e)(3)(ii)(C) permits a creditor to mortgage, the relevant term is the length should be excluded from points and fees exclude from points and fees for a of the initial fixed-rate period. The under the ‘‘bona fide third party charge’’ qualified mortgage up to one bona fide examples provided in proposed exclusion (see above) seems inapt. Yet discount point paid by the consumer in comments 43(e)(3)(ii)–3 and –4 are requiring that these points be included connection with the covered based on a fixed-rate mortgage with a in points and fees, when similar charges transaction, provided that the following 30-year term and accordingly refer to on loans sold into the secondary market conditions are met— the APOR for a fixed-rate mortgage with are excluded, may create undesirable • The interest rate before the discount a 30-year term. market imbalances between loans sold does not exceed the average prime offer Risk-based price adjustments. The to the secondary market and loans held rate, as defined in § 226.45(a)(2)(ii),82 by Board is aware that, in setting the in portfolio. more than two percent; purchase price for specific loans, Fannie Creditors may offset risks on their • The average prime offer rate used Mae and Freddie Mac make loan-level portfolio loans (or on loans sold into the for purposes of § 226.43(e)(3)(ii)(C)(1) is price adjustments (LLPAs) to secondary market) by charging a higher the same average prime offer rate that compensate offset added risks, such as rate rather than additional points and applies to a comparable transaction as of a high LTV or low credit score, among fees; however, the Board recognizes the the date the discounted interest rate for many other risk factors.84 Creditors limits of this approach to loan-level risk the covered transaction is set; and may, but are not required to, pass the mitigation due to concerns such as • Two bona fide discount points have resulting costs directly through to the exceeding high-cost mortgage rate not been excluded under consumer in the form of points. During thresholds. Nonetheless, in practice, an § 226.43(e)(3)(ii)(B) of this section. outreach, some creditors argued that exclusion from the qualified mortgage Proposed comment 43(e)(3)(ii)–4 these points should not be counted in points and fees calculation for all points provides the following example to points and fees for qualified mortgages charged to offset loan-level risks may illustrate this rule: Assume a covered under the exclusion for ‘‘bona fide third create compliance and enforcement transaction that is a first-lien, purchase party charges not retained by the loan difficulties. The Board questions money home mortgage with a fixed originator, creditor, or an affiliate of whether meaningful distinctions interest rate and a 30-year term. Assume either.’’ Proposed § 226.43(e)(3)(ii)(A); between points charged to offset loan- also that the consumer locks in an TILA Section 129C(b)(2)(C). level risks and other points and fees interest rate of 6.00 percent on May 1, The Board understands creditors’ charged on a loan can be made clearly 2011, that was discounted from a rate of concerns about exceeding the qualified and consistently. In addition, such an 7.00 percent because the consumer paid mortgage points and fees thresholds due exclusion could be overbroad and four discount points. Finally, assume to LLPAs required by the GSEs. At the inconsistent with Congress’s intent that that the average prime offer rate (APOR) same time, the Board questions whether points generally be counted toward the as of May 1, 2011 for first-lien, purchase an exemption for LLPAs is consistent points and fees threshold for qualified money home mortgages with a fixed with congressional intent in limiting mortgages. interest rate and a 30-year term is 5.00 The Board requests comment on percent. 83 Federal Financial Institutions Examination whether and on what basis the final rule In this example, the creditor may Council (FFIEC), ‘‘FFIEC Rate Spread Calculator,’’ should exclude from points and fees for exclude one discount point from the http://www.ffiec.gov/ratespread/newcalc.aspx. qualified mortgages points charged to 84 See e.g., Fannie Mae, ‘‘Loan-Level Price ‘‘points and fees’’ calculation because Adjustment (LLPA) Matrix and Adverse Market meet risk-based price adjustment Delivery Charge (AMDC) Information,’’ Selling requirements of secondary market 82 See id. Guide (Dec. 23, 2010). purchasers and points charged to offset

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loan-level risks on mortgages held in These factors may include, among the loan over a period of not more than portfolio. others: 30 years and takes into account all • The product type, such as whether applicable taxes, insurance, and 43(e)(3)(iii) Definition of Loan the loan is a fixed-rate or adjustable-rate assessments; and (4) the creditor meets Originator mortgage, or has a 30-year term or a 15- four prescribed qualifications. Those Proposed § 226.43(e)(3)(iii) defines year term. four qualifications are that the creditor the term ‘‘loan originator’’ in • How much the mortgage-backed (1) operates predominantly in rural or § 226.43(e)(3) to have the same meaning securities (MBS) market is willing to underserved areas; (2) together with all as in § 226.36(a)(1). For a discussion of pay for a loan at that interest rate and affiliates, has total annual residential the Board’s proposal to use the term the liquidity of an MBS with loans at mortgage loan originations that do not ‘‘loan originator’’ as defined in that rate. exceed a limit set by the Board; (3) • § 226.36(a)(1) rather than the statutory How much the secondary market is retains the balloon-payment loans in term ‘‘mortgage originator,’’ see the willing to pay for excess interest on the portfolio; and (4) meets any asset-size section-by-section analysis of proposed loan that is available for capitalization threshold and any other criteria the § 226.32(b)(1)(ii). outside of the MBS market. • Board may establish. The amount of the guaranty fee Based on outreach, certain 43(e)(3)(iv) Definition of Bona Fide required to be paid by the creditor to the Discount Point community banks appear to originate investor. balloon-payment loans to hedge against The proposal therefore is intended to Proposed § 226.43(e)(3)(iv) defines the interest rate risk, rather than making ‘‘ ’’ facilitate compliance by affording term bona fide discount point as used adjustable-rate mortgages. The Board ‘‘ flexibility, while still requiring, as in the exclusions of certain bona fide understands that the community banks ’’ ‘‘ ’’ mandated by the statute, that the discount points from points and fees hold these balloon-payment loans in amount of discount points paid by for qualified mortgages described above. portfolio virtually without exception consumers for a particular interest rate This provision is intended to implement because they are not eligible for sale in reduction be tied to the capital markets. TILA Section 129C(b)(2)(C)(iii), which the established secondary market. The ‘‘ The Board is concerned that a more defines the term bona fide discount Board believes Congress enacted the ’’ prescriptive interpretation would be point, as well as TILA Section exception in TILA Section 129C(b)(2)(E) operationally unworkable for most 129C(b)(2)(C)(iv), which limits the types to ensure access to credit in rural and creditors and would lead to excessive of discount points that may be excluded underserved areas where consumers ‘‘ ’’ legal and regulatory risk. In addition, from points and fees to those for may be able to obtain credit only from ‘‘ the Board recognizes that, due to the which the amount of the interest rate such community banks offering these variation in inputs described above, a reduction purchased is reasonably balloon-payment loans. Accordingly, more prescriptive rule likely would consistent with established industry proposed § 226.43(f) implements TILA require continual updating, creating norms and practices for secondary Section 129C(b)(2)(E) by providing an ’’ additional compliance burden and market transactions. 15 U.S.C. exception to the general provision that potential confusion. 1639c(b)(2)(C)(iii) and (iv). a qualified mortgage may not provide Thus, ‘‘bona fide discount point’’ is Concerns have been raised that small for a balloon payment. proposed to be defined as ‘‘any percent creditors such as community banks that Proposed § 226.43(f)(1) sets forth the of the loan amount’’ paid by the often hold loans in portfolio rather than four statutory conditions described consumer that reduces the interest rate sell them on the secondary market may above, as well as an additional or time-price differential applicable to have difficulty complying with this condition that the loan term be five the mortgage loan by an amount based requirement. The Board requests years or longer, which the Board is on a calculation that— comment on whether any exemptions proposing pursuant to its authority to • Is consistent with established from the requirement that the interest ‘‘revise, add to, or subtract from the industry practices for determining the rate reduction purchased by a ‘‘bona fide criteria that define a qualified mortgage’’ amount of reduction in the interest rate discount point’’ be tied to secondary under TILA Section 129C(b)(3)(B)(i). or time-price differential appropriate for market factors are appropriate. the amount of discount points paid by Proposed § 226.43(f)(2) provides 43(f) Balloon-Payment Qualified ‘‘ ’’ ‘‘ ’’ the consumer; and definitions of rural and underserved • Accounts for the amount of Mortgages Made by Certain Creditors for use in determining whether the compensation that the creditor can As discussed above, under this creditor satisfies the first qualification reasonably expect to receive from proposal, a qualified mortgage generally that it ‘‘operates predominantly in rural secondary market investors in return for may not provide for a balloon payment. or underserved areas.’’ These proposed the mortgage loan. TILA Section 129C(b)(2)(E), however, provisions are discussed in greater Consistent with the express statutory authorizes the Board to permit qualified detail below. language, the Board’s proposal requires mortgages with balloon payments, 43(f)(1) Exception that the creditor be able to show a provided the loans meet four relationship between the amount of conditions. Those conditions are that (1) 43(f)(1)(i) Criteria for a Qualified interest rate reduction purchased by a the loan meets all of the criteria for a Mortgage discount point to the value of the qualified mortgage, with certain Proposed § 226.43(f)(1)(i) implements transaction in the secondary market. exceptions discussed in the more TILA Section 129C(b)(2)(E)(i) by Based on outreach with representatives detailed section-by-section analysis, providing that a balloon-payment of creditors and government-sponsored below; (2) the creditor makes a qualified mortgage must meet all of the enterprises (GSEs) in particular, the determination that the consumer is able criteria for a qualified mortgage except Board understands that the value of a to make all scheduled payments, except those requiring that the loan (1) not rate reduction in a particular mortgage the balloon payment, out of income or provide for deferral of principal transaction on the secondary market is assets other than the collateral; (3) the repayment, (2) not provide for a balloon based on many complex factors, which loan is underwritten based on a payment, and (3) be underwritten based interact in a variety of complex ways. payment schedule that fully amortizes on a fully amortizing payment schedule

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that takes into account all mortgage- except the balloon payment, from the § 226.43(f)(1)(iii) requires that the related obligations and using the consumer’s current or reasonably scheduled payments on which the maximum interest rate that may apply expected income or assets other than the determination required by during the first five years after dwelling that secures the loan. Proposed § 226.43(f)(1)(ii) is based are calculated consummation. Proposed comment comment 43(f)(1)(ii)–1 provides the using an amortization period that does 43(f)(1)(i)–1 clarifies that a balloon- following example to illustrate the not exceed 30 years and include all payment qualified mortgage under this calculation of the monthly payment on mortgage-related obligations. The Board exception therefore must provide for which this determination must be believes that the underwriting regular periodic payments that do not based: Assume a loan in an amount of referenced in TILA Section result in an increase of the principal $200,000 that has a five-year loan term, 129C(b)(2)(E)(iii) corresponds to the balance as required by but is amortized over 30 years. The loan determination of the consumer’s § 226.43(e)(2)(i)(A), must have a loan agreement provides for a fixed interest repayment ability referenced in TILA term that does not exceed 30 years as rate of 6%. The loan consummates on Section 129C(b)(2)(E)(ii). required by § 226.43(e)(2)(ii), must have March 15, 2011, and the monthly Further, the Board believes that the total points and fees that do not exceed payment of principal and interest statutory reference to ‘‘a payment specified thresholds pursuant to scheduled for the first five years is schedule that fully amortizes the loan § 226.43(e)(2)(iii), and must satisfy the $1,199, with the first monthly payment over a period of not more than 30 years’’ consideration and verification due on May 1, 2011. The balloon refers to the amortization period used to requirements in § 226.43(e)(2)(v). payment of $187,308 is required on the determine the scheduled periodic Under this provision, in accordance due date of the 60th monthly payment, payments (other than the balloon with the statutory provisions, the which is April 1, 2016. The loan payment) under the legal obligation and exception would excuse balloon- remains a qualified mortgage if the not to the actual loan term of the payment qualified mortgages from the creditor underwrites the loan using the obligation, which often is considerably requirement in proposed scheduled principal and interest shorter for a balloon-payment loan. § 226.43(e)(2)(i)(B) that a qualified payment of $1,199 (plus all mortgage- Proposed comment 43(f)(1)(iii)–1 mortgage not allow the consumer to related obligations, pursuant to clarifies that balloon payments often defer repayment of principal. As noted § 226.43(f)(1)(iii)(B)). result when the periodic payment above, deferred principal repayment Proposed comment 43(f)(1)(ii)–2 would fully repay the loan amount only may occur if the payment is applied to provides additional clarification on how if made over some period that is longer both accrued interest and principal but a creditor may make the required than the loan term. The Board believes the consumer makes periodic payments determination that the consumer is able this type of transaction was the reason that are less than the amount that would to make all scheduled payments other for the statutory exception for certain be required under a payment schedule than the balloon payment. It states that balloon-payment loans. that has substantially equal payments a creditor must determine that the that fully repay the loan amount over consumer is able to make all scheduled 43(f)(1)(iv) Loan Term the loan term. The scheduled payments payments other than the balloon that fully repay a balloon-payment loan payment to satisfy § 226.43(f)(1)(ii), but As noted above, the Board is over the loan term include the balloon the creditor is not required to meet the proposing to add a condition for a payment itself and, therefore, are not repayment ability requirements of balloon-payment qualified mortgage that substantially equal. Thus, balloon- § 226.43(c)(2)–(7) because those is not established by TILA Section payment loans permit the consumer to requirements apply only to covered 129C(b)(2)(E). Proposed defer repayment of principal. The Board transactions that are not qualified § 226.43(f)(1)(iv) provides that a believes that Congress excused balloon- mortgages. Nevertheless, a creditor balloon-payment qualified mortgage payment qualified mortgages from the satisfies § 226.43(f)(1)(ii) if it complies must have a loan term of five years or restriction on principal repayment with the requirements of § 226.43(c)(2)– longer. The Board makes this proposal deferral for this reason. That rationale, (7). A creditor also may make the pursuant to TILA Section however, does not necessarily extend to determination that the consumer is able 129C(b)(3)(B)(i), which authorizes the loans that permit principal repayment to make the scheduled payments (other Board ‘‘to revise, add to, or subtract from deferral by providing for interest-only than the balloon payment) by other the criteria that define a qualified payments. The Board solicits comment means. For example, a creditor need not mortgage upon a finding that such on whether the exception should determine that the consumer is able to regulations are necessary or proper to provide that balloon-payment qualified make the scheduled payments based on ensure that responsible, affordable mortgages may permit only principal a payment amount that is calculated in mortgage credit remains available to repayment deferral resulting from the accordance with § 226.43(c)(5)(ii)(A) or consumers in a manner consistent with use of an amortization period that may choose to consider a debt-to- the purposes of this section, necessary exceeds the loan term, as balloon- income ratio that is not determined in and appropriate to effectuate the payment loans commonly do, but may accordance with § 226.43(c)(7). purposes of this section and Section not permit principal repayment deferral 129B, to prevent circumvention or 43(f)(1)(iii) Calculation of Scheduled resulting from interest-only payments. evasion thereof, or to facilitate Payments compliance with such sections.’’ The 43(f)(1)(ii) Underwriting Using TILA Section 129C(b)(2)(E)(iii) purpose of TILA Section 129C is to Scheduled Payments provides that a balloon-payment ensure that consumers are offered and Proposed § 226.43(f)(1)(ii) implements qualified mortgage must be receive loans on terms that they are TILA Section 129C(b)(2)(E)(ii) by underwritten based on a payment reasonably able to repay. TILA Section providing that, to make a balloon- schedule that fully amortizes the loan 129B(a)(2). The Board believes that a payment qualified mortgage, a creditor over a period of not more than 30 years minimum loan term for balloon- must determine that the consumer can and takes into account all applicable payment loans is necessary and make all of the scheduled payments taxes, insurance, and assessments. To appropriate both to effectuate the under the terms of the legal obligation, implement this provision, proposed purposes of TILA Section 129C and to

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prevent circumvention or evasion five years and thus ensuring that such predominantly in rural or underserved thereof. products truly support mortgage areas.’’ To implement this provision, The Board believes that the exception affordability, would effectuate the proposed § 226.43(f)(1)(v)(A) provides should be structured to prevent balloon- purposes of TILA Section 129C and that, during the preceding calendar year, payment loans with very short loan prevent circumvention or evasion a creditor must have made more than terms from being qualified mortgages thereof. The Board solicits comment on 50% of its total balloon-payment loans because such loans would present the appropriateness of this proposed in counties designated by the Board as certain risks to consumers. A consumer additional condition as well as on the ‘‘rural or underserved.’’ Proposed with a loan term of less than five years, proposed use of five years as the comment 43(f)(1)(v)–1.i states that the particularly where the amortization minimum loan term. Board publishes annually a list of period is especially long, would face a counties that qualify as ‘‘rural’’ or 43(f)(1)(v) Creditor Qualifications balloon payment soon after ‘‘underserved.’’ The Board’s annual consummation, in an amount virtually TILA Section 129C(b)(2)(E)(iv) determinations would be based on the equal to the original loan amount. The includes among the conditions for a criteria set forth in proposed consumer would establish little equity balloon-payment qualified mortgage that § 226.43(f)(2), discussed below. in the property under such terms, and the creditor (1) operates predominantly ‘‘Areas.’’ In determining what is a if the pattern is repeated the consumer in rural or underserved areas; (2) rural or underserved area, the Board is may never make any significant progress together with all affiliates, has total proposing to use counties as the toward owning the home annual residential mortgage loan relevant area. The Board believes that unencumbered. Thus, the greater the originations that do not exceed a limit the county level is the most appropriate difference between a balloon-payment set by the Board; (3) retains the balloon- area for this purpose, even though the loan’s amortization period and its loan payment loans in portfolio; and (4) sizes of counties can vary. In term, the more likely the consumer meets any asset-size threshold and any determining the relevant area for would face this problem. The Board’s other criteria as the Board may consumers who are shopping for proposal to require a minimum term establish. These four creditor mortgage loans, census tracts would be therefore complements the 30-year qualifications are similar to the too small, while states generally would maximum amortization period conditions for an exemption from the be too large. Because a single standard prescribed by TILA Section requirement that an escrow account be nationwide would facilitate compliance, 129C(b)(2)(E)(iii). established for certain mortgages set the Board is proposing to use counties In addition, the Board believes that forth in TILA Section 129D(c), as for all geographic areas. The Board seeks some consumers may obtain balloon- enacted by Section 1461 of the Dodd- comment on the appropriateness of this payment loans as a temporary solution Frank Act. The Board proposed to approach. when they cannot afford a longer-term, implement the escrow exemption in the ‘‘Operates predominantly.’’ As noted, fully amortizing loan. That is, because 2011 Escrow Proposal. The provisions the proposed rule requires a creditor to the interest rate is likely to be lower on of proposed § 226.43(f)(1)(v), which have made during the preceding a shorter-term obligation, a consumer implement TILA Section calendar year more than 50% of its total may use a balloon-payment loan for 129C(b)(2)(E)(iv), differ in some respects balloon-payment loans in ‘‘rural or more affordable financing currently, from the provisions of proposed underserved’’ counties. The Board intending to refinance into a longer- § 226.45(b)(2)(iii) in the 2011 Escrow believes that ‘‘predominantly’’ indicates term, fully amortizing loan once either Proposal because of differences in the a portion greater than half, hence the the consumer’s financial condition has rationales underlying the two proposed regulatory requirement of improved or current market rates have exceptions. more than 50%. The Board proposes to become more favorable, or both. The Proposed § 226.43(f)(1)(v) implements implement ‘‘operates’’ consistently with Board believes that the proposed five- TILA Section 129C(b)(2)(E)(iv) by the scope of the relevant qualified year minimum loan term would help providing that a balloon-payment loan mortgage provision. Thus, because the ensure that qualified mortgages with may be a qualified mortgage if the definition of qualified mortgage balloon payments provide consumers an creditor (1) makes most of its balloon- generally excludes balloon-payment adequate time window in which to payment loans in counties designated loans, see proposed § 226.43(e)(2)(i)(C), refinance into longer-term loans. Thus, by the Board as ‘‘rural or underserved,’’ only those loans would be counted the Board believes that the purpose of (2) together with all affiliates extended toward this element of the exception. ensuring that consumers are offered and only limited covered transactions, (3) The Board solicits comment on the receive affordable loan terms would be has not sold, assigned, or otherwise appropriateness of both of these served by requiring that balloon- transferred ownership of its balloon- proposed approaches to implementing payment qualified mortgages have a payment loans, and (4) has total assets the phrase, ‘‘operates predominantly.’’ minimum loan term of five years. that do not exceed a threshold Total Annual Residential Mortgage Loan The Board notes that the statute established and published annually by Originations requires underwriting for an adjustable- the Board, based on the year-to-year rate qualified mortgage to be based on change in the average of the Consumer Under TILA Section the maximum interest rate permitted Price Index for Urban Wage Earners and 129C(b)(2)(E)(iv)(II), to qualify for the during the first five years. TILA Section Clerical Workers. These qualifications exception, the creditor and all affiliates 129C(b)(2)(A)(v). Therefore, proposed are discussed in more detail in the together must have total annual § 226.43(f)(1)(iv) reflects the statutory following parts of this section-by- residential mortgage loan originations intent that five years is a reasonable section analysis. that do not exceed a limit set by the period to repay a loan. Board. The Board has identified two For the foregoing reasons, the Board ‘‘Operates Predominantly in Rural or primary issues presented in believes that proposed § 226.43(f)(1)(iv), Underserved Areas’’ implementing this provision: (1) in limiting the exception for balloon- Under TILA Section Whether total annual originations payment qualified mortgages to covered 129C(b)(2)(E)(iv)(I), to qualify for the should be measured by number of loans transactions with loan terms of at least exception, a creditor must ‘‘operate or by aggregate dollar volume; and (2)

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the appropriate threshold under either consumers in their markets with limited Asset-Size Threshold measure. access to responsible, affordable Under TILA Section The Board has only limited mortgage credit? The Board also 129C(b)(2)(E)(iv)(IV), to qualify for the information on which to base the requests that commenters share any data exception, a creditor must meet any foregoing determinations. Thrift on which their recommendations are asset-size threshold established by the Financial Reports provide limited data based. Board. Accordingly, proposed concerning thrifts’ balloon-payment § 226.43(f)(1)(v)(D) requires the creditor loan originations; other types of Retention of Balloon-Payment Loans in to have total assets as of December 31 depository institutions do not identify Portfolio of the preceding calendar year that do which of their mortgage originations are Under TILA Section not exceed an asset threshold balloon-payment loans. Moreover, the 129C(b)(2)(E)(iv)(III), to qualify for the established and published annually by balloon-payment loans reported by ‘‘ the Board. The threshold dollar amount thrifts include some unknown number exception, the creditor must retain[] the ’’ would be adjusted annually based on of commercial-purpose loans, which balloon loans in portfolio. Read as the year-to-year change in the average of would not be subject to Regulation Z. literally as possible, this requirement the Consumer Price Index for Urban Based on the limited thrift data would apply to all balloon-payment Wage Earners and Clerical Workers, not available from 2009, the Board estimates loans ever made by the creditor, even that a threshold of $100 million in those made prior to the enactment of the seasonally adjusted, for each 12-month annual aggregate loan amounts statute. The Board believes, however, period ending in November, with originated would make approximately that very few creditors, if any, would be rounding to the nearest million dollars. two-thirds of all thrifts eligible for the eligible for the exception under such a Comment 43(f)(1)(v)–1.iv would be exception (assuming they also meet the reading. Therefore, the Board is updated each December to publish the other qualifications), and those thrifts proposing two alternative versions of applicable threshold for the following are responsible for approximately 10% § 226.43(f)(1)(v)(C) to implement this calendar year. The comment would of all thrift-originated balloon-payment provision, both of which would require clarify that creditors that had total assets loans. Thus, at least among thrifts, the that the creditor not have sold, assigned, at or below the threshold on December vast majority of balloon-payment loans or otherwise transferred legal title to the 31 of the preceding year satisfy this are made by a minority of creditors with debt obligation for any balloon-payment criterion for purposes of the exception relatively large overall mortgage loan. The difference between the two during the current calendar year. origination volumes. It is not clear, alternatives lies entirely in the period This proposal would set the threshold however, that 10% is the correct during which any such transfer may not for calendar year 2011 at $2 billion. percentage of all balloon-payment loans occur. Thus, a creditor would satisfy this to be eligible for the exception. element of the test if it had total assets Alternative 1 would provide that the of $2 billion or less on December 31, In light of these uncertainties, the creditor must not sell any balloon- Board is not proposing a specific 2010. This number is based on the payment loan on or after the effective limited data available to the Board threshold. To implement TILA Section date of the final rule made pursuant to 129C(b)(2)(E)(iv)(II), the Board is through Thrift Financial Reports, noted this proposal. This approach would above, and information from proposing two alternative versions of implement the statute’s language § 226.43(f)(1)(v)(B). Alternative 1 would commercial banks’ Consolidated requiring that the creditor ‘‘retain[] the Reports of Condition and Income. require that, during the preceding balloon loans in portfolio.’’ The Board calendar year, the creditor together with Because of the limited information recognizes, however, that even this available on originations of balloon- all affiliates have extended covered approach may be unduly limited as a transactions with principal amounts payment loans, the Board cannot practical matter; once a creditor sold identify which creditors make more that in the aggregate total a to-be- even one balloon-payment loan after the determined dollar amount or less. than 50% of such loans in ‘‘rural’’ or effective date, it would become Alternative 2 would require that, during ‘‘underserved’’ counties. The Board can permanently ineligible for the the preceding calendar year, the creditor identify, however, the institutions that exception. By contrast, Alternative 2 together with all affiliates have likely conduct the majority of their would limit the period during which the extended a to-be-determined number of overall business in such locations by creditor must not have sold any balloon- covered transactions or fewer. The reference to their office locations and to payment loan to the preceding and Board is soliciting comment on both the origins of their deposits. The Board current calendar years. which alternative is more appropriate believes that the locations in which and the correct dollar amount or The Board solicits comment on the creditors have offices and from which number of loans, as applicable. For relative merits of Alternatives 1 and 2. they draw their deposits likely correlate example, should the threshold be 100 The Board also seeks comment on with the locations in which they extend loans per year, something greater, or whether, under either alternative, some balloon-payment loans. Of those something less? Alternatively, should de minimis number of transfers that may institutions that either have over 50% of the threshold be $100 million in be made without losing eligibility for their office locations in or derive over aggregate covered-transaction loan the exception, such as two per calendar 50% of their deposits from ‘‘rural’’ or amounts per year, something greater, or year, would be appropriate. Finally, the ‘‘underserved’’ counties (under the something less? The Board also requests Board seeks comment on whether there proposed definitions of those terms, that commenters explain their rationales are any other situations in which discussed below), none had total assets for any suggested thresholds. In creditors should be permitted to transfer as of the end of 2009 greater than $2 particular, how would a specific balloon-payment loans without billion. threshold correlate with the size and becoming ineligible for the exception, The Board believes that Congress’s scope of activity of creditors that, in the such as troubled institutions that need intent in authorizing the Board to absence of the exception, would be to raise capital by selling assets or establish an asset-size test is to ensure likely to cease offering balloon-payment institutions that enter into mergers or that only smaller institutions that serve loans and consequently leave acquisitions. areas with otherwise limited credit

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options may qualify for the exception. ‘‘rural or underserved’’ counties during a the proposed ‘‘rural’’ definition At the same time, the Board believes calendar year exceeded 50% of the represent the most remote rural areas, that the asset-size test should not creditor’s total balloon-payment loan where ready access to the resources of exclude creditors that otherwise originations in that calendar year, the larger, more urban communities and probably are the type of community creditor would satisfy mobility are most limited. Proposed bank for which the exception is § 226.43(f)(1)(v)(A) for purposes of the comment 43(f)(2)–1 states that the Board intended, i.e., those engaged primarily following calendar year. classifies a county as ‘‘rural’’ if it is in serving rural or underserved areas. Proposed § 226.43(f)(2) establishes categorized under ERS urban influence Accordingly, the Board is proposing to separate criteria for both ‘‘rural’’ and code 7, 10, 11, or 12. The Board seeks set the asset-size threshold at the ‘‘underserved,’’ thus a county could comment on all aspects of this approach highest level currently held by any of qualify for designation by the Board to designating ‘‘rural’’ counties, the institutions that appear to meet that under either definition. Under proposed including whether the definition should description. The annual adjustment to § 226.43(f)(2)(i), a county is designated be broader or narrower, as well as the threshold would ensure that as ‘‘rural’’ during a calendar year if it is whether the designation should be institutions growing at a pace consistent not in a metropolitan statistical area or based on information other than the ERS with inflation continue to be eligible for a micropolitan statistical area, as those urban influence codes. the exception. If an institution should terms are defined by the U.S. Office of ‘‘Underserved’’ grow substantially beyond the rate of Management and Budget, and either (1) inflation, however, it would effectively it is not adjacent to any metropolitan or In determining what areas should be ‘‘outgrow’’ the exception, consistent micropolitan area; or (2) it is adjacent to considered ‘‘underserved,’’ the Board with Congress’s intent to restrict the a metropolitan area with fewer than one has considered the minimum number of exception to relatively small creditors. million residents or adjacent to a creditors that must be engaged in The Board seeks comment on the micropolitan area, and it contains no significant mortgage operations in an appropriateness of the proposed $2 town with 2,500 or more residents. area for consumers to have meaningful billion asset-size threshold and of the Under proposed § 226.43(f)(2)(ii), a access to mortgage credit. The test for proposed annual adjustments thereto. county is designated as ‘‘underserved’’ ‘‘underserved’’ in proposed TILA Section 129C(b)(2)(E)(iv)(IV) during a calendar year if no more than § 226.43(f)(2)(ii), described above, is authorizes but does not require an asset- two creditors extend covered based on the Board’s judgment that, size test. The Board recognizes that the transactions five or more times in that where no more than two creditors are other qualifications that a creditor must county. significantly active (measured by satisfy, discussed above, likely would be These two definitions, discussed in extending mortgage credit at least five satisfied only by relatively small more detail below, parallel the times in a year), the unwillingness of creditors. Thus, there may be no need definitions of the same terms as they are one creditor to offer a balloon-payment for a separate asset-size test, and the used in proposed § 226.45(b)(2)(iv) as loan would be detrimental to consumers exception may be as readily set forth in the Board’s 2011 Escrow with otherwise limited credit options. implemented with lesser burden to Proposal. See proposed Thus, proposed § 226.43(f)(2)(ii) creditors by omitting such a test. § 226.45(b)(2)(iv), 76 FR 11598, 11621; designates a county as ‘‘underserved’’ Moreover, in the parallel provisions of March 2, 2011. Both sets of proposed during a calendar year if no more than the 2011 Escrow Proposal, the Board regulatory definitions are for purposes two creditors extend covered proposed no asset-size test on the belief of implementing identical statutory transactions five or more times in that that it would be unnecessary. provisions, thus the Board believes county. Proposed comment 43(f)(2)–1 Accordingly, the Board seeks comment consistent definitions are appropriate. states that the Board bases its on whether an asset-size test is See TILA Sections 129C(b)(2)(E)(iv)(I) determinations of whether counties are necessary to this exception. The Board and 129D(c)(1) (‘‘operates ‘‘underserved’’ for purposes of also seeks comment on what threshold predominantly in rural or underserved § 226.43(f)(1)(v)(A) by reference to data is appropriate, and why, if an asset-size areas’’). submitted by mortgage lenders under test is necessary. The Board requests the Home Mortgage Disclosure Act that commenters provide any data they ‘‘Rural’’ (HMDA). have underlying their recommendations The Board is proposing to limit the The Board believes the purpose of the on these questions. definition of ‘‘rural’’ areas to those areas exception is to permit creditors that rely most likely to have only limited sources on certain balloon-payment loan 43(f)(2) ‘‘Rural’’ and ‘‘Underserved’’ of mortgage credit because of their products to continue to offer credit to Defined remoteness from urban centers and their consumers, rather than leave the Proposed § 226.43(f)(2) sets out the resources. The test for ‘‘rural’’ in mortgage loan market, if such creditors’ criteria for a county to be designated by proposed § 226.43(f)(2)(i), described withdrawal would significantly limit the Board as ‘‘rural or underserved’’ for above, is based on the ‘‘urban influence consumers’ ability to obtain mortgage purposes of proposed codes’’ numbered 7, 10, 11, and 12, credit. In light of this rationale, the § 226.43(f)(1)(v)(A), discussed above. maintained by the Economic Research Board believes that ‘‘underserved’’ Under that section, a creditor’s balloon- Service (ERS) of the United States should be implemented in a way that payment loan originations in all Department of Agriculture. The ERS protects consumers from losing counties designated as ‘‘rural or devised the urban influence codes to meaningful access to mortgage credit. underserved’’ during a calendar year are reflect such factors as counties’ relative The Board is proposing to do so by measured as a percentage of the population sizes, degrees of designating as ‘‘underserved’’ only those creditor’s total balloon-payment loan ‘‘urbanization,’’ access to larger areas where the withdrawal of a creditor originations during that calendar year to communities, and commuting from the market could leave no determine whether the creditor may be patterns.85 The four codes captured in meaningful competition for consumers’ eligible for the exemption during the mortgage business. The Board seeks following calendar year. If the creditor’s 85 See http://www.ers.usda.gov/briefing/Rurality/ comment on the appropriateness of both balloon-payment loan originations in UrbanInf/. the proposed use of two or fewer

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existing competitors to delineate areas Board’s 2008 HOEPA Final Rule. See 15 proposed § 226.43(g)(1)(ii)(B). Among that are ‘‘underserved’’ and the proposed U.S.C. 1639(c), (l); § 226.35(b)(2). The other limitations, a qualified mortgage use of five or more covered transaction Board accordingly proposes to remove may not have a prepayment penalty if originations to identify competitors with the limitations on prepayment penalties the transaction provides for an increase a significant presence in a market. for higher-priced mortgage loans under in the principal balance. Reverse § 226.35(b)(2) and other requirements mortgages provide for interest and fees 43(g) Prepayment Penalties under § 226.35, as discussed in detail to be added to the principal balance and Proposed § 226.43(g) would above in the section-by-section analysis thus could not include a prepayment implement TILA Section 129C(c), which of proposed § 226.35. penalty. However, the Board has establishes certain limits on prepayment Limitations for high-cost mortgages. authority to define a category of penalties for covered transactions. Section 1432(a) of the Dodd-Frank Act ‘‘qualified’’ closed-end reverse mortgages Specifically, TILA Section 129C(c) prohibits prepayment penalties with that can include a prepayment penalty provides that: high-cost mortgages by removing TILA if certain other conditions are met, • Only a covered transaction that is a Section 129(c)(2), which had allowed pursuant to authority under TILA qualified mortgage may contain a prepayment penalties with high-cost Sections 129C(b)(2)(A)(ix) and prepayment penalty; mortgages in certain circumstances. 129C(b)(3)(B).88 Section • A qualified mortgage with a Currently, § 226.32(d)(7) implements 129C(b)(2)(A)(ix) authorizes the Board prepayment penalty may not have an TILA Section 129(c)(2). At this time, the to define a ‘‘qualified’’ reverse mortgage adjustable rate and may not have an Board does not propose to remove that ‘‘meets the standards for a qualified annual percentage rate that exceeds the § 226.32(d)(7) because the proposal in mortgage, as set by the Board in rules threshold for a higher-priced mortgage general does not propose to implement that are consistent with the purposes’’ of loan; the other revisions to the high-cost TILA Section 129C(b). Also, TILA • The prepayment penalty may not mortgage requirements under Section Section 129C(b)(3)(B) authorizes the exceed three percent of the outstanding 1431 of the Act. Nevertheless, under the Board to prescribe regulations that balance during the first year after proposal, a high-cost mortgage can revise, add to, or subtract from the consummation, two percent during the include a prepayment penalty only if criteria that define a qualified mortgage second year after consummation, and the high-cost mortgage meets the upon a finding that such regulations are one percent during the third year after conditions under both current (1) necessary or proper to ensure that consummation; § 226.32(d)(7) and proposed responsible, affordable mortgage credit • There can be no prepayment § 226.43(g)(1). The joint operation of remains available to consumers in a penalty after the end of the third year those two sets of conditions manner consistent with the purposes of after consummation; and significantly limits the circumstances in Section 129C(b), or (2) necessary and • A creditor may not offer a consumer which a high-cost mortgage may have a appropriate to effectuate the purposes of a loan with a prepayment penalty prepayment penalty.87 Sections 129B and 129C, to prevent without offering the consumer a loan Scope; reverse mortgages. Proposed circumvention or evasion thereof, or to that does not include a prepayment § 226.43(g) implements TILA Section facilitate compliance therewith. penalty.86 129C(c), which applies to a ‘‘residential The Board does not propose to The Board’s proposal to implement mortgage loan,’’ that is, to a consumer exclude ‘‘qualified’’ reverse mortgages TILA Section 129C(c) is discussed in credit transaction secured by a dwelling, from the coverage of the prepayment detail below. The Board at this time other than an open-end credit plan or a penalty requirements, for two reasons. does not propose to implement transaction secured by a consumer’s First, the Board does not believe that limitations on prepayment penalties the interest in a timeshare plan. See TILA such exclusion is necessary or proper to Dodd-Frank Act adds under other TILA Section 103(cc)(5). In contrast with the ensure that responsible, affordable provisions, also discussed below. exclusions for open-end credit plans mortgage credit remains available to Limitations for higher-priced and transactions secured by timeshares consumers. The overwhelming majority mortgage loans. Currently, from coverage by ability-to-repay of reverse mortgages to date have been § 226.35(b)(2) prohibits a prepayment requirements, neither the definition of insured by the Federal Housing ‘‘residential mortgage loan’’ nor the penalty for higher-priced mortgage Administration, which does not allow prepayment penalty provision excludes loans, unless certain conditions are met. reverse mortgages to contain reverse mortgages or temporary or 89 In particular, the prepayment penalty prepayment penalties. The Board ‘‘bridge’’ loans with a term of 12 months must not apply after the two-year period believes that most proprietary reverse or less, such as a loan to finance the following consummation, and the mortgages also do not contain purchase of a new dwelling where the amount of the periodic payment of prepayment penalties. Accordingly, the consumer plans to sell a current principal and interest or both must not Board believes that applying dwelling. See TILA Sections 103(cc)(5), prepayment penalty requirements under change during the four-year period 129C(a)(8), 129C(c). Accordingly, the TILA Section 129C(c) to closed-end following consummation. New TILA prepayment penalty requirements in reverse mortgages would have little or Section 129C(c), as added by Section proposed § 226.43(g) apply to such no effect on the availability of reverse 1414 of the Dodd-Frank Act, establishes transactions. See proposed limitations on prepayment penalties § 226.43(a)(3). 88 Open-end credit plans are excluded from the that apply to all covered transactions. A covered transaction may include a definition of ‘‘residential mortgage loan,’’ and thus Thus, TILA Section 129C(c) renders prepayment penalty only if the open-end reverse mortgages are not subject to the superfluous the limitations on transaction is a qualified mortgage. See prepayment penalty requirements under TILA prepayment penalties with higher- Section 129C(c). TILA Section 103(cc)(5). TILA Section 129C(c)(1)(A); see also 89 See Hui Shan, ‘‘Reversing the Trend: The priced mortgage loans adopted in the Recent Expansion of the Reverse Mortgage Market 87 In particular, the high-cost mortgage cannot be Finance and Economics Discussion Series,’’ Board 86 Also, TILA Section 129C(c)(2) requires weekly a higher-priced mortgage loan. See proposed of Governors of the Federal Reserve System, 2009– publication of the ‘‘average prime offer rate’’ used § 226.43(g)(1)(ii)(C). Also, the prepayment penalty 42 (2009), available at http:// to determine if a transaction is a ‘‘higher-priced must be permitted by applicable law. See www.federalreserve.gov/pubs/feds/2009/200942/ mortgage loan.’’ § 226.32(d)(7); proposed § 226.43(g)(1)(i). 200942pap.pdf.; 24 CFR 209(a).

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mortgages. Second, the Board believes for a comparable transaction, as of the loan may not include a prepayment that excluding ‘‘qualified’’ reverse date the rate is set, by a specified penalty if the periodic payment of mortgages from coverage of the number of percentage points. The principal or interest may change during prepayment penalty requirements is not applicable APR threshold depends on the first four years after consummation. necessary or appropriate to effectuate whether a first lien or subordinate lien See § 226.32(d)(7)(iv), 226.35(b)(2)(C). the purposes of TILA Section 129C, secures the transaction and whether or TILA Section 129C(c)(1)(B)(i) does not because the Board is unaware of a not the transaction’s original principal specify whether the term ‘‘adjustable reason why such exclusion would obligation exceeds the maximum rate’’ refers to the transaction’s interest ‘‘assure that consumers are offered and principal obligation for a loan eligible rate or annual percentage rate. Rules receive residential mortgage loans on for purchase by Freddie Mac, that is, under Regulation Z for closed-end terms that reasonably affect their ability whether or not the covered transaction transactions generally categorize to repay the loans and that are is a ‘‘jumbo’’ loan. Specifically, the APR transactions based on the possibility of understandable and not unfair, threshold is: (1) 1.5 percentage points APR changes rather than interest rate deceptive, or abusive.’’ See TILA Section above the average prime offer rate, for a changes.92 This distinction is relevant 129B(a)(2). first-lien, non-‘‘jumbo’’ loan; (2) 2.5 because covered transactions may have Only a qualified mortgage may have a percentage points above the average an APR that cannot increase after prepayment penalty, and reverse prime offer rate, for a first-lien ‘‘jumbo’’ consummation even though the interest mortgages typically do not satisfy the loan; and (3) 3.5 percentage points rate or payments may increase after qualified mortgage conditions. In above the average prime offer rate, for a consummation. For example, the APR particular, a qualified mortgage may not subordinate-lien loan. These thresholds for a ‘‘step-rate mortgage’’ without a provide for an increase in the also are used for purposes of escrow variable rate feature does not change transaction’s principal balance. See account requirements for ‘‘higher-priced after consummation, because the rates TILA Section 129C(b)(2)(A)(i). However, mortgage loans,’’ as discussed in the that will apply and the periods for a reverse mortgage provides for interest 2011 Escrow Proposal.91 Proposed which they will apply are known at and fees to be added to the loan balance, § 226.43(g)(1) would implement TILA consummation. Cf. § 226.18(s)(7)(ii) instead of providing for the consumer to Section 129C(c)(1) and provides that a (defining ‘‘step-rate mortgage’’ for make payments during the loan term. covered transaction may not include a purposes of transaction-specific interest Also, creditors do not consider a prepayment penalty unless the rate and payment disclosures). consumer’s repayment ability for a prepayment penalty is otherwise The Board proposes to interpret the reverse mortgage because the consumer permitted by law, and the transaction: prohibition on a prepayment penalty does not make payments. Thus, because (1) Has an APR that cannot increase with a covered transaction that has an the proposal does not establish special after consummation; (2) is a qualified ‘‘adjustable rate’’ in TILA Section conditions for reverse mortgages to be mortgage, as defined in proposed 129C(c)(1)(B)(i) to apply to covered qualified mortgages, closed-end reverse § 226.43(e) or (f); and (3) is not a higher- transactions for which the APR can mortgages likely may not have priced mortgage loan, as defined in increase after consummation, to prepayment penalties.90 See TILA proposed § 226.45(a). facilitate creditors’ compliance with the Section 129C(c)(1)(A). various rate-related requirements under 43(g)(1)(i) Permitted by Applicable Law The Board requests comment on Regulation Z. Accordingly, to whether special rules should be created Under proposed § 226.43(g)(1)(i), a implement TILA Section to permit certain reverse mortgages to prepayment penalty must be otherwise 129C(c)(1)(B)(i), proposed have prepayment penalties. In permitted by applicable law. The Board § 226.43(g)(1)(ii)(A) provides that a particular, the Board requests comment believes that TILA Section 129C(c) covered transaction cannot include a on how applying such conditions would limits, but does not specifically prepayment penalty unless the be consistent with the purposes of the authorize, including a prepayment transaction’s APR cannot increase after alternative requirements for qualified penalty with a covered transaction. That consummation. Thus, under the Board’s mortgages under TILA Section 129C(b). is, TILA Section 129C(c) does not proposal a fixed-rate mortgage or a step- The Board also requests comment and override other applicable laws, such as rate mortgage may have a prepayment any supporting data on the prepayment state laws, that may be more restrictive. penalty, but an adjustable-rate mortgage rates for reverse mortgages. Thus, a prepayment penalty would not may not have a prepayment penalty. See be permitted if otherwise prohibited by 43(g)(1) When Permitted § 226.18(s)(7)(i)–(iii) (defining ‘‘fixed- applicable law. This approach is rate mortgage,’’ ‘‘step-rate mortgage,’’ and TILA Section 129C(c)(1)(A) provides consistent with prepayment penalty ‘‘adjustable-rate mortgage’’). The Board that a covered transaction must not requirements for high-cost mortgages solicits comment on this approach. include a penalty for paying all or part and higher-priced mortgage loans. See of the principal balance after § 226.32(d)(7)(i), 226.35(b)(2)(i). 43(g)(1)(ii)(B) Qualified Mortgage consummation unless the transaction is 43(g)(1)(ii) Transaction Conditions Under TILA Section 129C(c)(1)(A), a a qualified mortgage as defined in TILA covered transaction may not include a Section 129C(b)(2). TILA Section 43(g)(1)(ii)(A) APR Cannot Increase prepayment penalty unless the 129C(c)(1)(B) provides that, for purposes After Consummation transaction is a qualified mortgage of TILA Section 129C(c), a qualified TILA Section 129C(c)(1)(B)(i) under TILA Section 129C(b)(2). mortgage does not include a covered provides that a covered transaction may Proposed § 226.43(g)(1)(ii)(B) would transaction that has an adjustable rate or not include a prepayment penalty if the implement TILA Section 129C(c)(1)(A) a covered transaction that has an APR transaction has an ‘‘adjustable rate.’’ The that exceeds the average prime offer rate statute differs from the Board’s 2008 92 See, e.g., § 226.18(f) (requiring disclosures HOEPA Final Rule, in which a high-cost regarding APR increases), 226.18(s)(7)(i)–(iii) 90 Open-end credit plans are excluded from the (categorizing disclosures for purposes of interest definition of ‘‘residential mortgage loan,’’ and thus mortgage or a higher-priced mortgage rate and payment disclosures), 226.36(e)(2)(i)–(ii) open-end reverse mortgages are not subject to the (categorizing transactions for purposes of the safe prepayment penalty requirements under TILA 91 76 FR 11598, 11608, Mar. 2, 2011 (discussing harbor for the anti-steering requirement under Section 129C(c). TILA Section 103(cc)(5). proposed new § 226.45(a)). § 226.36(e)(1)).

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and provides that a covered transaction The Board noted that the average prime penalty is imposed for either partial or must not include a prepayment penalty offer rate is based on Freddie Mac’s full prepayment. Thus, for example, if unless the transaction is a qualified Primary Mortgage Market Survey® of the the outstanding loan balance is mortgage under § 226.43(e) or (f). To be contract interest rates and points of $100,000 when the consumer prepays a qualified mortgage, a covered loans offered to consumers with low- $20,000 eleven months after transaction in general may not have a risk transaction terms and credit consummation, the maximum balloon payment. However, a covered profiles. APRs, however, are based on a prepayment penalty is $600 (three transaction with a balloon payment may broader set of charges, including some percent of $20,000), rather than $3,000 be a qualified mortgage if the creditor third-party charges such as mortgage (three percent of $100,000). The Board originates covered transactions insurance premiums. The Board also proposes this adjustment pursuant to primarily in ‘‘rural’’ or ‘‘underserved’’ recognized that, under the Board’s 2009 the Board’s authority under TILA areas, as discussed in detail above in the Closed-End Mortgage Proposal, the APR Section 105(a) to issue regulations with section-by-section analysis of would be based on a finance charge that such requirements, classifications, § 226.43(f). Thus, there are certain includes most third-party fees in differentiations, or other provisions, and situations in which a consumer could addition to points, origination fees, and that provide for such adjustments and face a prepayment penalty if she any other fees the creditor retains. Thus, exceptions for all or any class of attempts to refinance out of a balloon- the 2009 Closed-End Mortgage Proposal transactions, as in the judgment of the payment qualified mortgage before the would expand the existing difference Board are necessary and proper to balloon payment is due. The Board between fees included in the APR and effectuate the purposes of TILA, to solicits comment on whether it would fees included in the average prime offer prevent circumvention or evasion be appropriate to use legal authority rate. thereof, or to facilitate compliance under TILA Sections 105(a) and 129B(e) To address this concern, the Board therewith. 15 U.S.C. 1604(a). The Board to provide that a balloon-payment proposed in the 2010 Mortgage Proposal believes that calculating the maximum qualified mortgage may not have a to require creditors to compare the prepayment penalty based on the prepayment penalty in any case. transaction coverage rate, rather than amount of the outstanding loan balance the APR, to the average prime offer rate that is prepaid, rather than the entire 43(g)(1)(ii)(C) Threshold for a Higher- to determine whether a transaction is outstanding loan balance, would Priced Mortgage Loan covered by the protections for higher- effectuate the purposes of TILA Section Under TILA Section 129C(c)(1)(B), a priced mortgage loans. The Board also 129C(c) to facilitate partial (and full) covered transaction may not include a proposed to use the transaction coverage prepayment by limiting the amount of a prepayment penalty unless the rate for the definition of a higher-priced prepayment penalty. The Board believes transaction’s APR is below specified mortgage loan in the 2011 Escrow it would be inconsistent with thresholds. Accordingly, to implement Proposal.95 Similarly, under the present congressional intent, for example, for a TILA Section 129C(c)(1)(B), proposed proposal, creditors would determine consumer that makes several partial § 226.43(g)(1)(ii)(C) provides that a whether a transaction is a higher-priced prepayments to pay a percentage of the consummated covered transaction must mortgage loan based on the transaction outstanding loan balance each time. The not include a prepayment penalty coverage rate rather than the APR, for Board also believes that the proposed unless the transaction is not a higher- purposes of the prepayment penalty adjustment would facilitate compliance, priced mortgage loan, as defined in restriction. The Board solicits comment because determining the maximum proposed § 226.45(a) of the 2011 Escrow on this approach. prepayment penalty is simpler if the calculation is based on the amount of Proposal. 43(g)(2) Limits on Prepayment Penalties Under the Board’s 2010 Mortgage the outstanding balance prepaid in all Proposal, creditors would determine TILA Section 129C(c)(3) provides that cases, whether the consumer prepays in whether a transaction is a higher-priced a prepayment penalty may not be full or in part. mortgage loan by comparing the imposed more than three years after the Proposed comment 43(g)(2)–1 clarifies transaction’s ‘‘transaction coverage rate,’’ covered transaction is consummated that a covered transaction may include rather than APR, to the average prime and limits the maximum amount of the a prepayment penalty that may be offer rate, as discussed in detail in that prepayment penalty. Specifically, a imposed only during a shorter period or proposal.93 Under the 2010 Mortgage prepayment penalty is limited to (1) in a lower amount than provided in Proposal, the transaction coverage rate three percent of the outstanding proposed § 226.43(g)(2). Proposed is a transaction-specific rate that is used principal balance during the first year comment 43(g)(2)–1 provides the solely for coverage determinations and following consummation; (2) two example of a prepayment penalty that a would not be disclosed to consumers. percent during the second year creditor may impose for two years after The creditor would calculate the following consummation; and (3) one consummation that is limited to two transaction coverage rate based on percent during the third year following percent of the amount prepaid. Regulation Z’s rules for calculating the consummation. The Board recognizes that two other sections of TILA may limit the APR, except the creditor would make Proposed § 226.43(g)(2) would maximum amount of the prepayment the calculation using a modified value implement and is substantially similar penalty. First, TILA Section for the prepaid finance charge. In to TILA Section 129C(c)(3). However, 129C(b)(2)(A)(vii) indirectly limits the summary, the Board explained that under proposed § 226.43(g)(2) the maximum amount of a prepayment using the APR as the coverage metric for maximum penalty amount is penalty with a qualified mortgage, by requirements for higher-priced mortgage determined based on the amount of the limiting the maximum ‘‘points and fees’’ loans poses a risk of over-inclusive outstanding loan balance prepaid, rather for a qualified mortgage, which include coverage beyond the subprime market.94 than the entire outstanding loan balance, because the requirements prepayment penalties, to three percent of the total loan amount. See also 93 See 74 FR 58539, 58709–58710, Sept. 24, 2010 under TILA Section 129C(c) apply if a (proposing revisions to the definition of ‘‘higher- proposed § 226.43(e)(2)(iii), discussed priced mortgage loan’’ under § 226.35(a)). 95 See 75 FR 11598, 11620, Mar. 2, 2011 above. The definition of ‘‘points and 94 See 74 FR at 58660–58662. (proposing a new § 226.45(a)). fees’’ includes the maximum

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prepayment penalty that may be mortgages. The proposed additional a prepayment penalty, for two reasons. charged, as well as any prepayment conditions are intended to ensure that First, the Board believes TILA Section penalty incurred by the consumer if the the alternative covered transactions 129C(c)(4) is intended to ensure loan refinances a previous loan made or offered have substantially similar terms. consumers have a choice whether or not currently held by the same creditor or Also, proposed § 226.43(g)(3) requires to obtain a covered transaction with a an affiliate of the creditor. See TILA that the alternative covered transaction prepayment penalty, not to limit the Section 103(aa)(4)(E) and proposed be a transaction for which the consumer pricing of the alternative covered § 226.32(b)(1), discussed above. Thus, if likely qualifies. transaction without a prepayment a creditor wants to include the The Board proposes these additional penalty that the creditor must offer. maximum three percent prepayment requirements pursuant to the Board’s Second, the Board is concerned about penalty as a term of a qualified authority under TILA Section 105(a) to the likely consequences of restricting mortgage, it generally would have to prescribe regulations that contain such the pricing of the required alternative forego any other charges that are additional requirements, classifications, covered transaction without a included in the definition of points and differentiations, or other provisions, or prepayment penalty. If the alternative fees. provide for such adjustments or covered transaction must not be a Second, TILA Section exceptions for all or any class of higher-priced mortgage loan, the 103(aa)(1)(A)(iii) defines a ‘‘high-cost transactions, as in the judgment of the creditor may choose not to offer the mortgage’’ as any loan secured by the Board are necessary or proper to consumer a loan at all, or to offer the consumer’s principal dwelling in which effectuate the purposes of TILA, to consumer only a higher-priced mortgage the creditor may charge prepayment fees prevent circumvention or evasion loan. For example, assume that the or penalties more than 36 months after thereof, or to facilitate compliance higher-priced mortgage loan coverage the closing of the transaction, or in therewith. 15 U.S.C. 1604(a). The Board threshold for a 30-year, non-jumbo, which the fees or penalties exceed, in believes that requirements designed to fixed-rate covered transaction is 6.50 the aggregate, more than two percent of ensure that the alternative covered percent, and that the creditor charges the amount prepaid. In turn, a high-cost transaction with and without a 0.25 percentage points more in interest mortgage may not contain a prepayment prepayment penalty are substantially for a covered transaction without a penalty under TILA Section 129(c), as similar would effectuate the purposes of prepayment penalty. Assume further amended by Section 1432 of the Dodd- TILA Section 129C(c)(4), by enabling that the creditor would make such a Frank Act. At this time, the Board is not consumers to focus on a prepayment loan to a consumer in a covered proposing to implement these penalty’s risks and benefits without transaction either (1) with a prepayment limitations on prepayment penalties. having to consider or evaluate other penalty and with a transaction coverage The Board nevertheless solicits differences between the alternative rate of 6.45 percent (Transaction A); or comment on whether proposed covered transactions. For example, a (2) without a prepayment penalty and § 226.43(g)(2) should incorporate the consumer would compare a fixed-rate with a transaction coverage rate of 6.70 limitation of prepayment penalty mortgage with a prepayment penalty percent (Transaction B). However, if amounts to two percent of the amount with a fixed-rate mortgage without a offering Transaction A means the prepaid, as provided under TILA prepayment penalty, not with a step-rate creditor must offer the consumer an Section 103(aa)(1)(A)(iii), or some other mortgage without a prepayment penalty. alternative covered transaction without threshold to account for the limitation Also, the Board believes that requiring a prepayment penalty that is not a of points and fees, including the alternative covered transaction higher-priced mortgage loan, the prepayment penalties, for ‘‘qualified without a prepayment penalty be one creditor may choose not to offer the mortgages,’’ under TILA Section for which the consumer likely qualifies consumer a covered transaction at all. 129C(b)(2)(A)(vii) and proposed would effectuate the purposes of and Alternatively, the creditor might elect to § 226.43(e)(2)(iii). prevent circumvention of TILA Section offer the consumer only Transaction B, 129C(c)(4), by providing for consumers which is a higher-priced mortgage loan. 43(g)(3) Alternative Offer Required to be able to choose between options For the foregoing reasons, under Under TILA Section 129C(c)(4), if a that likely are available. Finally, proposed § 226.43(g)(3) if a creditor creditor offers a consumer a covered proposed comment 43(g)(3)–1 cross- offers a covered transaction with a transaction with a prepayment penalty, references comment 25(a)–7, discussed prepayment penalty, which may not be the creditor also must offer the above, for guidance on the requirements a higher-priced mortgage loan, the consumer a covered transaction without for retaining records as evidence of creditor may offer the consumer an a prepayment penalty. As discussed in compliance with § 226.43(g)(3). alternative covered transaction without detail below, proposed § 226.43(g)(3) Higher-priced mortgage loans. Under a prepayment penalty that is a higher- would implement TILA Section the proposal, a covered transaction priced mortgage loan. 129C(c)(4) and includes additional cannot have a prepayment penalty if the Timing of offer. Proposed conditions: The alternative covered transaction is a higher-priced mortgage § 226.43(g)(3) does not require that the transaction without a prepayment loan. However, the requirement to offer creditor offer an alternative covered penalty must (1) have an APR that an alternative covered transaction transaction without a prepayment cannot increase after consummation and without a prepayment penalty is not penalty at or by a particular time. This the same type of interest rate as the similarly restricted. Although the Board is consistent with § 226.36(e)(2) and (3), covered transaction with a prepayment believes the covered transaction with a which provide a safe harbor for the penalty (that is, both must be fixed-rate prepayment penalty and the alternative anti–steering requirement if a loan mortgages or both must be step-rate covered transaction without a originator presents certain loan options mortgages); (2) have the same loan term prepayment penalty must be to the consumer, but do not contain a as the covered transaction with a substantially similar, the Board also timing requirement. The Board prepayment penalty; (3) satisfy the believes a higher-priced mortgage loan recognizes that there may be costs and periodic payment conditions for without a prepayment penalty should be benefits to this approach. qualified mortgages; and (4) satisfy the a permissible alternative transaction for On the one hand, a timing points and fees conditions for qualified a non-higher-priced mortgage loan with requirement could ensure that

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consumers can consider an offer of an increase after consummation, to ensure that a consumer intends to buy single- alternative covered transaction without consumers are able to choose between premium credit unemployment a prepayment penalty before committing substantially similar alternative insurance, which would be included in to a transaction, for example, by transactions. See proposed the points and fees for the covered requiring that creditors present such an § 226.43(g)(1)(ii)(A). Proposed transactions. Proposed comment offer before the consumer pays a non– § 226.43(g)(3)(i) also requires that the 43(g)(3)(iv)-1 clarifies that the points refundable fee, other than a fee for covered transaction with a prepayment and fees condition is satisfied if the obtaining the consumer’s credit penalty and the alternative covered creditor reasonably believes, based on history.96 Alternatively, consumers transaction without a prepayment the information known to the creditor at might benefit from being offered an penalty have the same type of interest the time the offer is made, that the alternative covered transaction without rate. For purposes of proposed amount of points and fees to be charged a prepayment penalty later in the § 226.43(g)(3)(i), the term ‘‘type of for an alternative covered transaction lending process, after the creditor has interest rate’’ means whether the without a prepayment penalty will be underwritten the loan and determined covered transaction is a fixed–rate less than or equal to the amount of the terms on which it would originate mortgage, as defined in points and fees allowed for a qualified an alternative covered transaction to the § 226.18(s)(7)(iii), or a step–rate mortgage under § 226.43(e)(2)(iii). consumer. On the other hand, timing mortgage, as defined in 43(g)(3)(v) Likely Qualifies requirements might unduly limit § 226.18(s)(7)(ii).97 Proposed comment creditors’ flexibility to determine the 43(g)(3)(i)-1 clarifies that the covered Proposed § 226.43(g)(3)(v) provides terms on which they will offer a transaction with a prepayment penalty that the alternative covered transaction particular consumer an alternative and the alternative covered transaction without a prepayment penalty must be covered transaction without a without a prepayment penalty must a transaction for which the creditor has prepayment penalty. In addition, there either both be fixed-rate mortgages or a good faith belief that the consumer may be operational difficulties in both be step-rate mortgages. likely qualifies, as determined based on determining exactly when a creditor the information known to the creditor at offered the alternative covered 43(g)(3)(ii) Through (iv) Criteria for a the time the creditor offers the transaction (for example, when a Qualified Mortgage alternative covered transaction. consumer accesses options for covered As discussed above, proposed Proposed comment 43(g)(3)(v)-1 loans via the Internet) and how to cure § 226.43(g)(1)(ii)(A) provides that a provides an example where the creditor a violation if the creditor offers the covered transaction with a prepayment has a good faith belief the consumer can required alternative after the required penalty must be a qualified mortgage, as afford monthly payments of up to $800. time. defined under proposed § 226.43(e)(2) The proposed comment clarifies that, if The Board solicits comment on or (f). The Board also proposes to the creditor offers the consumer a fixed- whether it would be appropriate to require that an alternative covered rate mortgage with a prepayment require that creditors offer the transaction offered without a penalty for which monthly payments alternative covered transaction without prepayment penalty must meet three are $700 and an alternative covered a prepayment penalty during a specified conditions for qualified mortgages, so transaction without a prepayment time period, for example, before the that consumers may choose between penalty for which monthly payments are $900, the requirements of consumer pays a non–refundable fee or alternative covered transactions that are § 226.43(g)(3)(v) are not met. Proposed at least fifteen calendar days before substantially similar. Accordingly, comment 43(g)(3)(v)-1 also clarifies that, consummation. If a timing requirement proposed § 226.43(g)(3)(ii) through (iv) in making the determination the is included for purposes of proposed provide that an alternative covered consumer likely qualifies for the § 226.43(g)(3), the Board also solicits transaction without a prepayment alternative covered transaction, the comment on whether a timing penalty must: (1) Have the same loan creditor may rely on information requirement should be included under term as the covered transaction with a provided by the consumer, even if the the safe harbor for the anti–steering prepayment penalty; (2) satisfy the information subsequently is determined requirement under § 226.36(e)(2) and periodic payment conditions in to be inaccurate. Proposed (3), for consistency. § 226.43(e)(2)(i); and (3) satisfy the § 226.43(g)(3)(v) and proposed comment points and fees condition under 43(g)(3)(i) APR Cannot Increase After 43(g)(3)(v)-1 are substantially similar to § 226.43(e)(2)(iii), based on the Consummation § 226.36(e)(3)(ii), which provides a safe information known to the creditor at the harbor for the anti-steering requirements Under proposed § 226.43(g)(1)(i), a time the transaction is offered. Proposed if, among other things, a loan originator covered transaction with an APR that comment 43(g)(3)(iv)-1 provides presents the consumer with loan can increase after consummation may guidance for cases where a creditor options for which the consumer likely not have a prepayment penalty. offers a consumer an alternative covered qualifies. See also comment 36(e)(3)-4 Proposed § 226.43(g)(3)(i) provides that, transaction without a prepayment (providing guidance on information if a creditor offers a covered transaction penalty under proposed § 226.43(g)(3) used to determine whether or not a with a prepayment penalty, the creditor and knows only some of the points and consumer likely qualifies for a must offer an alternative covered fees that will be charged for the loan. transaction). transaction without a prepayment For example, a creditor may not know penalty and with an APR that cannot 43(g)(4) Offer Through a Mortgage 97 Under § 226.18(s)(7)(i)–(iii), a transaction Broker 96 Under the Board’s 2010 Mortgage Proposal, a secured by real property or a dwelling is (1) an non–refundable fee could be imposed no earlier ‘‘adjustable-rate mortgage’’ if the APR may increase The requirement to offer an than three business days after a consumer receives after consummation, (2) a ‘‘step-rate mortgage’’ if the alternative covered transaction without the early disclosures that creditors must provide interest rate will change after consummation, and a prepayment penalty applies to a soon after receiving the consumer’s application the rates that will apply and the periods for which ‘‘ ’’ (within three business days). See 75 FR 58539, they will apply are known at consummation, or (3) creditor. See TILA Section 129C(c)(4). 58696–58697, Sept. 24, 2010 (proposing a new a ‘‘fixed-rate mortgage,’’ if the transaction is not an TILA Section 103(f), in relevant part, § 226.19(a)(1)(iv)). adjustable-rate mortgage or a step-rate mortgage. defines ‘‘creditor’’ to mean a person who

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both (1) regularly extends consumer term ‘‘mortgage originator’’ is used, for § 226.36(e)(3)(i).99 Proposed credit which is payable by agreement in example, for purposes of the anti- § 226.43(g)(4) does not affect the more than four installments or for steering requirement added to TILA by conditions that a a loan originator must which the payment of a finance charge Section 1403 of the Dodd-Frank Act. See meet to take advantage of the safe harbor is or may be required, and (2) is the TILA Section 129B(c). for the anti-steering requirement, person to whom the debt arising from The Board also believes that requiring however. Thus, if loan originators the consumer credit transaction is choose to use the safe harbor, they must mortgage brokers to present to initially payable on the face of the present the consumer the loan option consumers a creditor’s alternative evidence of indebtedness (or, if there is with (1) the lowest interest rate overall, covered transaction without a no such evidence of indebtedness, by (2) the loan option with the lowest agreement). 15 U.S.C. 1602(f); prepayment penalty could confuse interest rate without certain risky § 226.2(a)(17). The Board proposes consumers if they are presented with features, including a prepayment special rules where a creditor offers a numerous other loan options. Presenting penalty, and (3) the loan option with the covered transaction with a prepayment a consumer more than four loan options lowest total origination points or fees penalty through a mortgage broker, as for each type of transaction in which the and discount points. See defined in § 226.36(a)(2), to account for consumer expresses an interest may not § 226.36(e)(3)(i). operational differences in offering a help the consumer to make a Proposed comment 43(g)(4)–1 clarifies covered transaction through the meaningful choice. When compared that the creditor may satisfy the wholesale channel versus through the with other loan options a mortgage requirement to present the mortgage retail channel.98 As discussed below in broker presents to a consumer, a broker such alternative covered the section-by-section analysis of creditor’s covered transaction without a transaction without a prepayment proposed § 226.43(g)(5), the Board prepayment penalty might not have the penalty by providing the mortgage proposes special rules for cases where a lowest interest rate (among transactions broker a rate sheet that states the terms creditor in a table-funded transaction either with or without risky features, of such an alternative covered also is a ‘‘loan originator,’’ as defined in such as a prepayment penalty) or the transaction without a prepayment § 226.36(a)(1), because those creditors lowest total dollar amount of origination penalty. Proposed comment 43(g)(4)–2 generally present to consumers loan points or fees and discount points, and clarifies that the creditor’s agreement options offered by multiple persons that thus might not be among the loan with the mortgage broker may provide provide table-funding. The Board does options most important for consumers for the mortgage broker to present both not propose special rules for cases to evaluate. Also, the Board is the creditor’s covered transaction and a where the loan originator is the concerned that creditors may have covered transaction offered by another creditor’s employee, because the Board operational difficulties in confirming creditor with a lower interest rate or a believes that in such cases the employee whether or not a mortgage broker has lower total dollar amount of origination likely can present alternative covered presented to the consumer the points or fees and discount points. transactions with and without a alternative covered transaction without Proposed comment 43(g)(4)–2 also prepayment penalty to the consumer a prepayment penalty. cross-references comment 36(e)(3)–3 for guidance in determining which step-rate without significant operational Accordingly, proposed § 226.43(g)(4) mortgage has a lower interest rate. difficulties. provides that, if a creditor offers a Proposed comment 43(g)(4)–3 clarifies The Board believes the requirement to covered transaction to a consumer that a creditor’s agreement with a offer an alternative covered transaction through a mortgage broker, as defined in without a prepayment penalty properly mortgage broker for purposes of § 226.36(a)(2), the creditor must present is applied to creditors and not to proposed § 226.43(g)(4) may be part of to the mortgage broker an alternative mortgage brokers, because creditors another agreement with the mortgage covered transaction without a ‘‘offer’’ covered transactions, even if broker, for example, a compensation prepayment penalty that meets the mortgage brokers present those offers to agreement. The proposed comment conditions under § 226.43(g)(3). consumers. Further, the Board believes clarifies that the creditor thus need not that if Congress had intended to apply Proposed § 226.43(g)(4) also provides enter into a separate agreement with the TILA Section 129C(c)(4) to mortgage that the creditor must establish, by mortgage broker with respect to each brokers, Congress explicitly would have agreement, that the mortgage broker covered transaction with a prepayment applied that provision to ‘‘mortgage must present the consumer an penalty. originators’’ in addition to creditors. alternative covered transaction without The Board solicits comment on the TILA Section 103(cc), as added by a prepayment penalty that meets the approach proposed under § 226.43(g)(4) Section 1401 of the Dodd-Frank Act, conditions under § 226.43(g)(3) offered for offering an alternative covered defines ‘‘mortgage originator’’ to mean by (1) the creditor, or (2) another transaction without a prepayment any person who, for direct or indirect creditor, if the transaction has a lower penalty through a mortgage broker. In compensation or gain, or in the interest rate or a lower total dollar particular, the Board solicits comment expectation of direct or indirect amount of origination points or fees and on whether additional guidance is compensation of gain, takes a residential discount points. By providing for the needed regarding offers of covered mortgage loan application, assists a presentation of a loan option with a transactions through mortgage brokers consumer in obtaining or applying to lower interest rate or a lower total dollar that use the safe harbor for the anti- obtain a residential mortgage loan, or amount of origination points or fees and offers or negotiates terms of a residential discount points than the loan option 99 Current § 226.36(e) provides that a loan offered by the creditor, proposed originator for a dwelling-secured consumer credit mortgage loan. 15 U.S.C. 1602(cc). The transaction must not direct or ‘‘steer’’ a consumer to § 226.43(g)(4) facilitates compliance consummate a transaction based on the fact that the 98 For ease of discussion, the terms ‘‘mortgage with proposed § 226.43(g)(3) and with originator will receive greater compensation from broker’’ and ‘‘loan originator’’ as used in this the safe harbor for the anti-steering the creditor in that transaction than in other discussion have the same meaning as under the requirement in connection with a single transactions the originator offered or could have Board’s requirements for loan originator offered the consumer, unless the consummated compensation. See § 226.36(a)(1), (2). covered transaction. See transaction is in the consumer’s interest.

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steering requirement, under § 226.36(a)(1), comment 36(a)–1.i, –1.ii. 43(h) Evasion; Open-End Credit § 226.36(e)(2) and (3). Proposed comment 43(g)(5)–2 cross- As discussed above, TILA Section references guidance in comment 43(g)(5) Creditor That Is a Loan 129C, which addresses the repayment 36(e)(3)–3 on determining which step- Originator ability requirements and qualified rate mortgage has a lower interest rate. mortgages, applies only to residential Proposed § 226.43(g)(5) addresses mortgage loans. TILA Section 103(cc)(5) cases where a creditor does not provide 43(g)(6) Applicability defines ‘‘residential mortgage loans’’ as the funds for a covered transaction out Proposed § 226.43(g)(6) provides that excluding open-end credit plans, such of its own resources but rather obtains proposed § 226.43(g) applies only if a as HELOCs. The Board recognizes that funds from another person and, transaction is consummated with a the exclusion of open-end credit plans immediately after consummation, prepayment penalty and is not violated assigns the note, loan contract, or other if (1) a covered transaction is could lead some creditors to attempt to evidence of the debt obligation to the consummated without a prepayment evade the requirements of TILA Section other person. Such creditors generally penalty or (2) the creditor and consumer 129C by structuring credit as open-end present to consumers loan options do not consummate a covered instead of closed-end. Sections offered by other persons and are loan transaction. Proposed § 226.43(g)(2) 226.34(b) and 226.35(b)(4) address this originators subject to the anti-steering limits the period during which a risk by prohibiting structuring a requirements under § 226.36(e). See prepayment penalty may be imposed transaction that does not meet the § 226.36(a)(1); comment 36(a)(1)–1. Like and the amount of any prepayment definition of ‘‘open-end credit’’ as a other loan originators, such creditors penalty. Those limitations apply only if HELOC to evade the repayment ability may use the safe harbor for the anti- a covered transaction with a and other requirements for high-cost steering requirements under prepayment penalty is consummated. mortgages and higher-priced mortgage § 226.36(e)(2) and (3). Proposed Proposed § 226.43(g)(3) requires loans. The Board proposes to extend § 226.43(g)(5) provides that, if the creditors that offer a consumer a this approach to new § 226.43, which creditor is a loan originator, as defined covered transaction with a prepayment would implement TILA Section 129C. in § 226.36(a)(1), and the creditor penalty offer the consumer an Proposed § 226.43(h) prohibits a presents a consumer a covered alternative covered transaction without creditor from structuring a transaction transaction with a prepayment penalty a prepayment penalty, and proposed that does not meet the definition of offered by a person to which the § 226.43(g)(4) and (5) establish open-end credit in § 226.2(a)(20) as a creditor would assign the covered requirements for creditors to comply HELOC to evade the requirements of transaction after consummation, the with proposed § 226.43(g)(3) if they (1) proposed § 226.43. Proposed comment creditor may present the consumer an offer covered transactions with a 43(h)–1 clarifies that where a loan is alternative covered transaction without prepayment penalty through a mortgage documented as open-end credit but the a prepayment penalty offered by (1) the broker or (2) are loan originators, features and terms or other assignee, or (2) another person, if the respectively. Where a consumer circumstances demonstrate that it does transaction offered by the other person consummates a covered transaction not meet the definition of open-end has a lower interest rate or a lower total without a prepayment penalty, it is credit, the loan is subject to the rules for dollar amount of origination points or unnecessary to require that the creditor closed-end credit, including § 226.43. fees and discount points. Thus, offer the consumer an alternative The Board proposes this provision using proposed § 226.43(g)(5) provides covered transaction without a its authority under TILA Sections 105(a) flexibility with respect to the prepayment penalty. Further, if the and 129B(e) to prevent circumvention or presentation of loan options, which creditor does not consummate a covered evasion. facilitates compliance with proposed transaction with the consumer, the issue As noted in the SUPPLEMENTARY § 226.43(g)(3) and with the safe harbor is irrelevant; the purpose of the INFORMATION to the Board’s 2008 HOEPA for the anti-steering requirement in requirement to offer an alternative Final Rule, the Board recognizes that connection with the same covered covered transaction without a consumers may prefer HELOCs to transaction. See § 226.36(e)(3)(i). Like prepayment penalty is for consumers closed-end home equity loans because proposed § 226.43(g)(4), however, not to have to accept a covered of the added flexibility HELOCs provide proposed § 226.43(g)(5) does not affect transaction with a prepayment penalty. them. See 73 FR 1697, Jan. 9, 2008. It the conditions that a creditor that is a Accordingly, proposed § 226.43(g) is not the Board’s intention to limit loan originator must meet to take applies only if the consumer consumers’ ability to choose between advantage of the safe harbor for the anti- consummates a covered transaction these two ways of structuring home steering requirement. Accordingly, if with a prepayment penalty. In equity credit. An overly broad anti- creditors that are loan originators particular, proposed comment 25(a)–7 evasion rule could potentially limit choose to use the safe harbor, they must clarifies that, if a creditor offers the consumer choices by casting doubt on present the consumer the loan option consumer a covered transaction with a the validity of legitimate open-end with (1) the lowest interest rate overall, prepayment penalty but a covered plans. The Board seeks comment on the (2) the loan option with the lowest transaction is consummated without a extent to which the proposed anti- interest rate without certain risky prepayment penalty or if the creditor evasion rule could have this features, including a prepayment and consumer do not consummate a consequence, and solicits suggestions penalty, and (3) the loan option with the covered transaction, the creditor need for a more narrowly tailored rule. For lowest total origination points or fees not maintain records that document example, the primary concern would and discount points. See compliance with the requirement that appear to be with HELOCs that are § 226.36(e)(3)(i). the creditor offer an alternative covered substituted for closed-end home Proposed comment 43(g)(5)–1 clarifies transaction without a prepayment purchase loans and refinancings, which that a loan originator includes any penalty under proposed § 226.43(g)(2) are usually first-lien loans, rather than creditor that satisfies the definition of through (5), as discussed above in the with HELOCs taken for home the term but makes use of ‘‘table- section-by-section analysis of proposed improvement or other consumer funding’’ by a third party. See § 226.25(a). purposes. The Board seeks comment on

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whether it should limit an anti-evasion and also directs the Board to prescribe in part III of the SUPPLEMENTARY rule to HELOCs secured by first liens regulations to carry out the purposes of INFORMATION. where the consumer draws down all or the statute. TILA is implemented by the C. Description of Small Entities to most of the entire line of credit Board’s Regulation Z. Which the Proposed Rule Would Apply immediately after the account is The proposed amendments to opened, and whether such a rule would Regulation Z implement certain The proposed regulations would be effective in preventing evasion. amendments to TILA as a result of the apply to all institutions and entities that Dodd-Frank Act. Sections 1411 and engage in originating or extending VI. Paperwork Reduction Act 1412 of the Dodd-Frank Act amend home-secured credit. The Board is not In accordance with the Paperwork TILA to prohibit a creditor from making aware of a reliable source for the total Reduction Act (PRA) of 1995 (44 U.S.C. any ‘‘residential mortgage loan’’ 101 number of small entities likely to be 3506; 5 CFR part 1320 Appendix A.1), unless the creditor makes a reasonable affected by the proposal, and the credit the Board reviewed the proposed rule and good faith determination that the provisions of TILA and Regulation Z under the authority delegated to the consumer has a reasonable ability to have broad applicability to individuals Board by the Office of Management and repay the loan. A creditor complies with and businesses that originate and extend Budget. The rule contains no collections this requirement by: (i) Making a even small numbers of home-secured of information under the PRA. See 44 residential mortgage loan that satisfies credit. See § 226.1(c)(1).102 All small U.S.C. 3502(3). Accordingly, there is no the ability-to-repay provisions, which entities that originate or extend closed- paperwork burden associated with the include certain underwriting criteria; end loans secured by a dwelling are rule. (ii) refinancing a ‘‘non-standard potentially subject to at least some VII. Initial Regulatory Flexibility mortgage’’ into a ‘‘standard mortgage’’; aspects of the proposed rule. Analysis (iii) making a ‘‘qualified mortgage,’’ The Board can, however, identify which is defined by prohibiting certain through data from Reports of Condition In accordance with Section 3(a) of the terms, limiting certain costs, and using and Income (‘‘Call Reports’’) Regulatory Flexibility Act (RFA), 5 certain underwriting criteria; or (iv) approximate numbers of small U.S.C. 601–612, the Board is publishing making a balloon-payment qualified depository institutions that would be an initial regulatory flexibility analysis mortgage. In addition, Section 1414 of subject to the proposed rule. Based on for the proposed amendments to the Dodd-Frank Act amends TILA to December 2010 Call Report data, Regulation Z. The RFA requires an add new restrictions on prepayment approximately 8,579 small institutions agency either to provide an initial penalties that may be imposed on would be subject to the proposed rule. regulatory flexibility analysis with a residential mortgage loans. Approximately 15,217 depository proposed rule or to certify that the institutions in the United States filed proposed rule will not have a significant B. Statement of Objectives and Legal Basis Call Report data, approximately 10,816 economic impact on a substantial of which had total domestic assets of number of small entities. Under The SUPPLEMENTARY INFORMATION $175 million or less and thus were regulations issued by the Small contains the statement of objectives and considered small entities for purposes of Business Administration (SBA), an legal basis for the proposed rule. In the RFA. Of 3,749 banks, 502 thrifts 103 ‘‘ ’’ entity is considered small if it has summary, the proposed amendments to and 6,565 credit unions that filed Call $175 million or less in assets for banks Regulation Z are designed to: (1) Add Report data and were considered small and other depository institutions, and new § 226.43(a)–(f) to require creditors entities, 3,621 banks, 477 thrifts, and $7 million or less in revenues for non- to determine a consumer’s repayment 4,481 credit unions, totaling 8,579 bank mortgage lenders and loan ability prior to making any residential 100 institutions, originated or extended servicers. mortgage loan; (2) provide a mortgage credit. Based on its analysis and for the presumption of compliance with the The Board cannot identify with reasons stated below, the Board believes repayment ability requirement or safe certainty the number of small non- that this proposed rule will have a harbor from the repayment ability depository institutions that would be significant economic impact on a requirement for qualified mortgages in subject to the proposed rule. Home substantial number of small entities. A new § 226.43(e); (3) add new § 226.43(g) Mortgage Disclosure Act (HMDA) 104 final regulatory flexibility analysis will regarding prepayment penalty be conducted after consideration of requirements for residential mortgage 102 Regulation Z generally applies to ‘‘each comments received during the public loans; and (4) provide record retention individual or business that offers or extends credit comment period. The Board requests requirements in § 226.25(a) that when four conditions are met: (i) The credit is public comment in the following areas. evidence compliance with proposed offered or extended to consumers; (ii) the offering § 226.43. or extension of credit is done regularly, (iii) the A. Reasons for the Proposed Rule credit is subject to a finance charge or is payable The legal basis for the proposed rule by a written agreement in more than four Congress enacted TILA based on is in Sections 105(a), 129B(e) and installments, and (iv) the credit is primarily for findings that economic stability would 129C(b)(3)(B)(i) of TILA. 15 U.S.C. personal, family, or household purposes.’’ Section be enhanced and competition among 1604(a), 1639b(e) and 1639c(b)(3)(B)(i). 226.1(c)(1). consumer credit providers would be 103 For purposes of this analysis, thrifts include A more detailed discussion of the savings banks, savings and loan entities, co- strengthened by the informed use of Board’s rulemaking authority is set forth operative banks, and industrial banks. credit resulting from consumers’ 104 The 8,022 lenders (both depository awareness of the cost of credit. As a 101 TILA Section 103(cc) generally defines institutions and mortgage companies) covered by result, TILA contains procedural and ‘‘residential mortgage loan’’ to mean any consumer HMDA in 2009 accounted for the majority of home credit transaction secured by a mortgage, deed of lending in the United States. Under HMDA, lenders substantive protections for consumers, trust, or other equivalent consensual security use a ‘‘loan/application register’’ (HMDA/LAR) to interest on ‘‘a dwelling or on residential real report information annually to their Federal 100 13 CFR 121.201; see also SBA, Table of Small property that includes a dwelling.’’ The term does supervisory agencies for each application and loan Business Size Standards Matched to North not include an open-end credit plan or an extension acted on during the calendar year. Only lenders that American Industry Classification System Codes, of credit relating to a timeshare plan, for purposes have offices (or, for non-depository institutions, available at http://www.sba.gov/sites/default/files/ of the repayment ability provisions. See TILA lenders that are deemed to have offices) in Size_Standards_Table.pdf. Section 103(cc)(5). Continued

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data indicate that 870 non-depository compliance or safe harbor for qualified regulate only high-cost or high-priced institutions filed HMDA reports in mortgages. mortgage loans under ability-to-repay 2009.105 Based on the small volume of Under the proposed rule, creditors laws. The proposed rule would not lending activity reported by these must retain evidence of compliance preempt such state laws except to the institutions, most are likely to be small. with proposed § 226.43 for three years extent they are inconsistent with the after the consummation of a covered proposal’s requirements. Id. D. Projected Reporting, Recordkeeping, transaction. Currently, § 226.25(a) The Board seeks comment regarding and Other Compliance Requirements requires that creditors retain evidence of any state or local statutes or regulations The compliance requirements of the compliance with Regulation Z for two that would duplicate, overlap, or proposed rule are described in part V of years after disclosures must be made or conflict with the proposed rule. the SUPPLEMENTARY INFORMATION. The an action must be taken, though G. Discussion of Significant Alternatives effect of the proposed revisions to § 226.25(a) also clarifies that Regulation Z on small entities is administrative agencies responsible for The steps the Board has taken to unknown. Some small entities would be enforcing Regulation Z may require minimize the economic impact and required, among other things, to modify creditors to retain records for a longer compliance burden on small entities, their underwriting practices to account period if necessary to carry out their including the factual, policy, and legal for the repayment ability analysis for enforcement responsibilities. While reasons for selecting the alternatives covered transactions in order to comply increasing the period creditors must adopted and why each one of the other with the revised rule. The precise costs retain certain records from two to three significant alternatives was not to small entities of modifying their years would increase creditors’ accepted, are described above in the underwriting practices are difficult to compliance burden, the precise costs to SUPPLEMENTARY INFORMATION. The Board predict. These costs will depend on a small entities is difficult to predict. has provided an exception to the general number of unknown factors, including, However, the Board believes many provision that a qualified mortgage may among other things, the current creditors will retain such records for at not provide for a balloon payment for practices used by such entities to collect least three years, in an abundance of loans that are originated by certain and analyze consumer income, asset, caution, which would minimize the small creditors and that meet specified and liability information, the overall burden increase. The criteria, as the Board understands that complexity of the terms of credit compliance burden is also mitigated by community banks originate balloon- products that they offer, and the range proposed comment 25(a)–6, which payment loans to hedge against interest of such product offerings. The proposed clarifies that creditors need not retain rate risk, rather than making adjustable- rule would provide small entities the actual paper copies of the rate mortgages, and that community option of offering only qualified documentation used to underwrite a banks hold these balloon-payment loans mortgages, which will enjoy either a transaction. Furthermore, the proposal in portfolio virtually without exception presumption of compliance with respect to extend the required retention period because they are not eligible for sale in to the repayment ability requirement or for evidence of compliance with the secondary market. The Board a safe harbor from the repayment ability proposed § 226.43 would not affect the believes that this exception will requirement, thus reducing litigation retention period for other requirements decrease the economic impact of the risks and costs for small entities. under Regulation Z. proposed rules on small entities. The Board believes that costs of the The proposed rule also requires The Board welcomes comments on proposed rule as a whole will have a creditors to determine a consumer’s any significant alternatives consistent significant economic effect on small repayment ability using a payment with the provisions of Sections 1411, entities, including small mortgage schedule based on monthly, fully- 1412, and 1414 of the Dodd-Frank Act creditors. The Board seeks information amortizing payments at the fully- that would minimize the impact of the and comment on any costs, compliance indexed rate or introductory rate, proposed regulations on small entities. requirements, or changes in operating whichever is greater. Under the procedures arising from the application List of Subjects in 12 CFR Part 226 proposed rule, special payment of the proposed rule to small businesses. calculation rules apply to loans with a Advertising, Consumer protection, balloon payment, interest-only loans, E. Identification of Duplicative, Federal Reserve System, Mortgages, and negative amortization loans. The Overlapping, or Conflicting Federal Reporting and recordkeeping proposed rule may therefore increase Rules Other Federal Rules requirements, Truth in Lending. compliance costs for small entities, The Board has not identified any Text of Proposed Revisions particularly for creditors that offer Federal rules that conflict with the Certain conventions have been used products that contain balloon payments, proposed revisions to Regulation Z. interest-only loans, and negative to highlight the proposed revisions. amortization loans. The precise costs to F. Identification of Duplicative, New language is shown inside bold small entities of updating their Overlapping, or Conflicting State Laws arrows, and language that would be processes and systems to account for State Equivalents to TILA deleted in shown inside bold brackets. these additional calculations are Many states regulate consumer credit Authority and Issuance difficult to predict, but these costs are through statutory disclosure schemes For the reasons set forth in the mitigated, in some circumstances, by similar to TILA. Under TILA Section preamble, the Board proposes to amend the proposed presumption of 111, the proposed rule would not Regulation Z, 12 CFR part 226, as preempt such state laws except to the follows: metropolitan areas are required to report under extent they are inconsistent with the HMDA. However, if a lender is required to report, proposal’s requirements. 15 U.S.C. 1610. PART 226—TRUTH IN LENDING it must report information on all of its home loan The Board is also aware that some applications and loans in all locations, including (REGULATION Z) non-metropolitan areas. states regulate mortgage loans under 105 The 2009 HMDA Data, available at http:// ability-to-repay laws that resemble the 1. The authority citation for part 226 www.ffiec.gov/hmda/default.htm. proposed rule, and that many states is revised to read as follows:

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Authority: 12 U.S.C. 3806; 15 U.S.C. 1604, (ii) All compensation paid øto (ii) A person that only performs real 1637(c)(5), and 1639(l); Sec. 2, Pub. L. 111– mortgage brokers¿ fldirectly or estate brokerage activities and is 24, 123 Stat. 1734; Pub. L. 111–203, 124 Stat. indirectly by a consumer or creditor to licensed or registered in accordance 1376. a loan originator, as defined in with applicable state law, unless such Subpart D—Miscellaneous § 226.36(a)(1), including a loan person is compensated by a creditor or originator that is also the creditor in a loan originator, as defined in 2. Section 226.25 is amended by table-funded transaction;fi § 226.36(a)(1), or by any agent of the revising paragraph (a) to read as follows: (iii) All items listed in § 226.4(c)(7) creditor or loan originator; or (other than amounts held for future (iii) A servicer or servicer employees, § 226.25 Record retention. payment of taxes) flpayable at or before agents and contractors, including but (a) General rule. A creditor shall closing of the mortgage loan,fi unless— not limited to those who offer or retain evidence of compliance with øthe charge is reasonable, the creditor negotiate terms of a covered transaction øthis regulation¿fl§ 226.43 of this receives no direct or indirect for purposes of renegotiating, regulation for 3 years after compensation in connection with the modifying, replacing and subordinating consummation of a transaction covered charge, and the charge is not paid to an principal of existing mortgages where by that section and shall retain evidence affiliate of the creditor; and¿ borrowers are behind in their payments, of compliance with all other sections of fl(A) The charge is reasonable; in default or have a reasonable this regulationfi (other than advertising (B) The creditor receives no direct or likelihood of being in default or falling requirements under §§ 226.16 and indirect compensation in connection behind. 226.24) for 2 years after the date with the charge; and (3)fiø(2)¿ Affiliate means any disclosures are required to be made or (C) The charge is not paid to an company that controls, is controlled by, action is required to be taken. The affiliate of the creditor; fi or is under common control with administrative agencies responsible for (iv) flPremiums or other charges another company, as set forth in the enforcing the regulation may require payable at or before closing of the Bank Holding Company Act of 1956 (12 creditors under their jurisdictions to mortgage loan for any credit life, credit U.S.C. 1841 et seq.). disability, credit unemployment, or retain records for a longer period if * * * * * necessary to carry out their enforcement credit property insurance, or any other 4. Section 226.34, is amended by responsibilities under section 108 of the life, accident, health, or loss-of-income removing paragraph (a)(4). act. insurance, or any payments directly or indirectly for any debt cancellation or § 226.34 Prohibited acts or practices in * * * * * suspension agreement or contract.fi connection with credit subject to § 226.32. ø Subpart E—Special Rules for Certain Premiums or other charges for credit (a) * * * Home Mortgage Transactions life, accident, health, or loss-of-income [(4) Repayment ability. Extend credit insurance, or debt-cancellation coverage subject to § 226.32 to a consumer based 3. Section 226.32 is amended by (whether or not the debt-cancellation on the value of the consumer’s collateral revising paragraph (b) to read as follows: coverage is insurance under applicable without regard to the consumer’s law) that provides for cancellation of all repayment ability as of consummation, § 226.32 Requirements for certain closed- end home mortgages. or part of the consumer’s liability in the including the consumer’s current and event of the loss of life, health, or reasonably expected income, * * * * * income or in the case of accident, employment, assets other than the (b) Definitions. For purposes of this written in connection with the credit collateral, current obligations, and subpart, the following definitions apply: transaction.¿ mortgage-related obligations. (1) For purposes of paragraph (a)(1)(ii) fl(v) The maximum prepayment (i) Mortgage-related obligations. For of this section, points and fees means: penalty, as defined in § 226.43(b)(10), purposes of this paragraph (a)(4), (i) All items flconsidered to be a that may be charged or collected under mortgage-related obligations are ø finance chargefi required to be the terms of the mortgage loan; and expected property taxes, premiums for ¿ disclosed under § 226.4(a) and (vi) The total prepayment penalty, as mortgage-related insurance required by ø 226.4(b), except fl—fi interest or the defined in § 226.43(b)(10), incurred by the creditor as set forth in ¿ time-price differential the consumer if the mortgage loan is § 226.35(b)(3)(i), and similar expenses. fl(A) Interest or the time-price refinanced by the current holder of the (ii) Verification of repayment ability. differential; existing mortgage loan, a servicer acting Under this paragraph (a)(4) a creditor (B) Any premium or other charge for on behalf of the current holder, or an must verify the consumer’s repayment any guaranty or insurance protecting the affiliate of either. ability as follows: creditor against the consumer’s default (2) For purposes of paragraph (b)(1)(ii) (A) A creditor must verify amounts of or other credit loss to the extent that the of this section, the term points and fees income or assets that it relies on to premium or charge is— does not include compensation paid determine repayment ability, including (1) Assessed in connection with any to— expected income or assets, by the Federal or state agency program; (i) An employee of a retailer of consumer’s Internal Revenue Service (2) Not in excess of the amount manufactured homes who does not take Form W–2, tax returns, payroll receipts, payable under policies in effect at the a residential mortgage loan application, financial institution records, or other time of origination under section offer or negotiate terms of a residential third-party documents that provide 203(c)(2)(A) of the National Housing Act mortgage loan, or advise a consumer on reasonably reliable evidence of the (12 U.S.C. 1709(c)(2)(A)), provided that loan terms (including rates, fees, and consumer’s income or assets. the premium or charge is required to be other costs) but who, for compensation (B) Notwithstanding paragraph refundable on a pro rata basis and the or other monetary gain, or in (a)(4)(ii)(A), a creditor has not violated refund is automatically issued upon expectation of compensation or other paragraph (a)(4)(ii) if the amounts of notification of the satisfaction of the monetary gain, assists a consumer in income and assets that the creditor underlying mortgage loan; or obtaining or applying to obtain a relied upon in determining repayment (3) Payable after the loan closing.fi residential mortgage loan; ability are not materially greater than

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the amounts of the consumer’s income (i) A reverse mortgage subject to the date on which the principal is due. or assets that the creditor could have § 226.33; or For purposes of this section— verified pursuant to paragraph (ii) A temporary or ‘‘bridge’’ loan with (i) The following are examples of (a)(4)(ii)(A) at the time the loan was a term of 12 months or less, such as a prepayment penalties: consummated. loan to finance the purchase of a new (A) A charge determined by treating (C) A creditor must verify the dwelling where the consumer plans to the loan balance as outstanding for a consumer’s current obligations. sell a current dwelling within 12 period of time after prepayment in full (iii) Presumption of compliance. A months or a loan to finance the initial and applying the interest rate to such creditor is presumed to have complied construction of a dwelling. ‘‘balance,’’ even if the charge results with this paragraph (a)(4) with respect (b) Definitions. For purposes of this from the interest accrual amortization to a transaction if the creditor: section: method used for other payments in the (A) Verifies the consumer’s repayment (1) Covered transaction means a transaction; and ability as provided in paragraph consumer credit transaction that is (B) A fee, such as a loan closing cost, (a)(4)(ii); secured by a dwelling, as defined in that is waived unless the consumer (B) Determines the consumer’s § 226.2(a)(19), other than a transaction prepays the covered transaction. repayment ability using the largest exempt from coverage under paragraph (ii) A prepayment penalty does not payment of principal and interest (a) of this section. include fees imposed for preparing and scheduled in the first seven years (2) Fully amortizing payment means a providing documents when a loan is following consummation and taking periodic payment of principal and paid in full, whether or not the loan is into account current obligations and interest that will fully repay the loan prepaid, such as a loan payoff mortgage-related obligations as defined amount over the loan term. statement, a reconveyance document, or in paragraph (a)(4)(i); and (3) Fully indexed rate means the another document releasing the (C) Assesses the consumer’s interest rate calculated using the index creditor’s security interest in the repayment ability taking into account at or formula at the time of consummation dwelling that secures the loan. least one of the following: The ratio of and the maximum margin that can (11) Recast means— (i) For an adjustable-rate mortgage, as total debt obligations to income, or the apply at any time during the loan term. defined in § 226.18(s)(7)(i), the income the consumer will have after (4) Higher-priced covered transaction expiration of the period during which paying debt obligations. means a covered transaction with an payments based on the introductory (iv) Exclusions from presumption of annual percentage rate that exceeds the fixed interest rate are permitted under compliance. Notwithstanding the average prime offer rate for a the terms of the legal obligation; previous paragraph, no presumption of comparable transaction as of the date compliance is available for a transaction (ii) For an interest-only loan, as the interest rate is set by 1.5 or more defined in § 226.18(s)(7)(iv), the for which: percentage points for a first-lien covered (A) The regular periodic payments for expiration of the period during which transaction, or by 3.5 or more interest-only payments are permitted the first seven years would cause the percentage points for a subordinate-lien principal balance to increase; or under the terms of the legal obligation; covered transaction. and (B) The term of the loan is less than (5) Loan amount means the principal seven years and the regular periodic (iii) For a negative amortization loan, amount the consumer will borrow as as defined in § 226.18(s)(7)(v), the payments when aggregated do not fully reflected in the promissory note or loan amortize the outstanding principal expiration of the period during which contract. negatively amortizing payments are balance. (6) Loan term means the period of (v) Exemption. This paragraph (a)(4) permitted under the terms of the legal time to repay the obligation in full. does not apply to temporary or ‘‘bridge’’ obligation. (7) Maximum loan amount means the loans with terms of twelve months or (12) Simultaneous loan means loan amount plus any increase in less, such as a loan to purchase a new another covered transaction or home principal balance that results from dwelling where the consumer plans to equity line of credit subject to § 226.5b negative amortization, as defined in sell a current dwelling within twelve that will be secured by the same § 226.18(s)(7)(v), based on the terms of months.¿ dwelling and made to the same the legal obligation assuming— * * * * * consumer at or before consummation of (i) The consumer makes only the the covered transaction. § 226.35 [Removed and reserved] minimum periodic payments for the (13) Third-party record means— maximum possible time, until the 5. Section 226.35 is removed and (i) A document or other record consumer must begin making fully reserved. prepared or reviewed by a person other amortizing payments; and 6. Add § 226.43 to read as follows: than the consumer, the creditor, or the (ii) The maximum interest rate is mortgage broker, as defined in ﬂ§ 226.43 Minimum standards for reached at the earliest possible time. § 226.36(a)(2), or an agent of the creditor transactions secured by a dwelling. (8) Mortgage-related obligations mean or mortgage broker; (a) Scope. This section applies to any property taxes; mortgage-related (ii) A copy of a tax return filed with consumer credit transaction that is insurance premiums required by the the Internal Revenue Service or a state secured by a dwelling, as defined in creditor as set forth in § 226.45(b)(1); taxing authority; § 226.2(a)(19), other than: homeowner’s association, (iii) A record the creditor maintains (1) A home equity line of credit condominium, and cooperative fees; for an account of the consumer held by subject to § 226.5b; ground rent or leasehold payments; and the creditor; or (2) A mortgage transaction secured by special assessments. (iv) If the consumer is an employee of a consumer’s interest in a timeshare (9) Points and fees has the same the creditor or the mortgage broker, a plan, as defined in 11 U.S.C. 101(53(D)); meaning as in § 226.32(b)(1). document or other record maintained by or (10) Prepayment penalty means a the creditor or mortgage broker (3) For purposes of paragraphs (c) charge imposed for paying all or part of regarding the consumer’s employment through (f) of this section— a covered transaction’s principal before status or employment income.

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(c) Repayment ability—(1) General assets. A creditor may verify the will repay the maximum loan amount requirement. A creditor shall not make consumer’s income using a tax-return over the term of the loan remaining as a loan in a covered transaction unless transcript issued by the Internal of the date the loan is recast. the creditor makes a reasonable and Revenue Service (IRS). Examples of (6) Payment calculation for good faith determination at or before other records the creditor may use to simultaneous loans. For purposes of consummation that the consumer will verify the consumer’s income or assets making the determination required have a reasonable ability, at the time of include: under paragraph (c)(2)(iv) of this consummation, to repay the loan (i) Copies of tax returns the consumer section, a creditor must consider a according to its terms, including any filed with the Internal Revenue Service consumer’s payment on a simultaneous mortgage-related obligations. or a state taxing authority; loan that is— (2) Basis for determination. Except as (ii) IRS Form W–2s or similar IRS (i) A covered transaction, by following provided otherwise in paragraphs (d), forms used for reporting wages or tax paragraphs (c)(5)(i)–(ii) of this section; (e), and (f) of this section, in making the withholding; or repayment ability determination (iii) Payroll statements, including (ii) A home equity line of credit required under paragraph (c)(1) of this military Leave and Earnings Statements; subject to § 226.5b, by using the section, a creditor must consider the (iv) Financial institution records; periodic payment required under the following: (v) Records from the consumer’s terms of the plan and the amount of (i) The consumer’s current or employer or a third-party that obtained credit drawn at consummation of the reasonably expected income or assets, information from the employer; covered transaction. other than the value of the dwelling that (vi) Records from a Federal, state, or (7) Monthly debt-to-income ratio or secures the loan; local government agency stating the residual income—(i) Definitions. For (ii) If the creditor relies on income consumer’s income from benefits or purposes of this paragraph, the from the consumer’s employment in entitlements; following definitions apply— determining repayment ability, the (vii) Receipts from the consumer’s use (A) Total monthly debt obligations. consumer’s current employment status; of check cashing services; and The term total monthly debt obligations (iii) The consumer’s monthly payment (viii) Receipts from the consumer’s means the sum of: the payment on the on the covered transaction, calculated in use of a funds transfer service. covered transaction, as required to be accordance with paragraph (c)(5) of this (5) Payment calculation—(i) General calculated by paragraphs (c)(2)(iii) and section; rule. Except as provided in paragraph (c)(5) of this section; simultaneous (iv) The consumer’s monthly payment (c)(5)(ii) of this section, a creditor must loans, as required by paragraphs on any simultaneous loan that the make the determination required under (c)(2)(iv) and (c)(6) of this section; creditor knows or has reason to know paragraph (c)(2)(iii) using— mortgage-related obligations, as required will be made, calculated in accordance (A) The fully indexed rate or any by paragraph (c)(2)(v) of this section; with paragraph (c)(6) of this section; introductory interest rate, whichever is and current debt obligations, as required (v) The consumer’s monthly payment greater; and by paragraph (c)(2)(vi) of this section. for mortgage-related obligations; (B) Monthly, fully amortizing (B) Total monthly income. The term (vi) The consumer’s current debt payments that are substantially equal. total monthly income means the sum of obligations; (ii) Special rules for loans with a the consumer’s current or reasonably (vii) The consumer’s monthly debt-to- balloon payment, interest-only loans, expected income, including any income income ratio, or residual income in and negative amortization loans. A from assets, as required paragraphs accordance with paragraph (c)(7) of this creditor must make the determination (c)(2)(i) and (c)(4) of this section. section; and required under paragraph (c)(2)(iii) for— (ii) Calculations. (A) Monthly debt-to- (viii) The consumer’s credit history. (A) A loan with a balloon payment, as income ratio. For purposes of (3) Verification using third-party defined in § 226.18(s)(5)(i), using— considering the consumer’s monthly records. A creditor must verify a (1) The maximum payment scheduled debt-to-income ratio under paragraph consumer’s repayment ability using during the first five years after (c)(2)(vii) of this section, the creditor reasonably reliable third-party records, consummation for a loan that is not a must consider the ratio of the except that— higher-priced covered transaction; or consumer’s total monthly debt (i) For purposes of paragraph (c)(2)(ii) (2) The maximum payment in the obligations to total monthly income. of this section, a creditor may verify a payment schedule, including any (B) Monthly residual income. For consumer’s employment status orally if balloon payment, for a higher-priced purposes of considering the consumer’s the creditor prepares a record of the covered transaction; monthly residual income under information obtained orally; and (B) An interest-only loan, as defined paragraph (c)(2)(vii) of this section, the (ii) For purposes of paragraph in § 226.18(s)(7)(iv), using— creditor must consider the consumer’s (c)(2)(vi) of this section, if a creditor (1) The fully indexed rate or any remaining income after subtracting the relies on a consumer’s credit report to introductory interest rate, whichever is consumer’s total monthly debt verify a consumer’s current debt greater; and obligations from the total monthly obligations and a consumer’s (2) Substantially equal, monthly income. application states a current debt payments of principal and interest that (d) Refinancing of non-standard obligation not shown in the consumer’s will repay the loan amount over the mortgages—(1) Scope. The provisions of credit report, the creditor need not term of the loan remaining as of the date this paragraph (d) apply to the independently verify such obligation. the loan is recast. refinancing of a non-standard mortgage (4) Verification of income or assets. A (C) A negative amortization loan, as into a standard mortgage when the creditor must verify the amounts of defined in § 226.18(s)(7), using— following conditions are met— income or assets it relies on to (1) The fully indexed rate or any (i) The creditor for the standard determine a consumer’s ability to repay introductory interest rate, whichever is mortgage is the current holder of the a covered transaction using third-party greater; and existing non-standard mortgage or the records that provide reasonably reliable (2) Substantially equal, monthly servicer acting on behalf of the current evidence of the consumer’s income or payments of principal and interest that holder.

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(ii) The monthly payment for the (3) Exemption from certain repayment loan amount, assuming all scheduled standard mortgage is materially lower ability requirements. (i) A creditor is not payments have been made up to the than the monthly payment for the non- required to comply with the income and recast date and the payment due on the standard mortgage, as calculated under asset verification requirements of recast date is made and credited as of paragraph (d)(5) of this section. paragraphs (c)(2)(i) and (c)(4) of this that date; (iii) The creditor receives the section or the payment calculation (3) For a negative amortization loan consumer’s written application for the requirements under paragraphs under paragraph (d)(2)(i)(C) of this standard mortgage before the non- (c)(2)(iii) and (c)(5) of this section if— section, the maximum loan amount. standard mortgage is recast. (A) The conditions in paragraph (d)(1) (ii) Standard mortgage. The monthly (iv) The consumer has made no more of this section are met; and payment for a standard mortgage must than one payment more than 30 days (B) The creditor has considered be based on substantially equal, late on the non-standard mortgage whether the standard mortgage will monthly, fully amortizing payments during the 24 months immediately prevent a likely default by the consumer based on the maximum interest rate that preceding the creditor’s receipt of the on the non-standard mortgage at the may apply during the first five years consumer’s written application for the time of its recast. after consummation. standard mortgage. (ii) If the conditions in paragraph (e) Qualified mortgages. (v) The consumer has made no (d)(3)(i) of this section are met, the payments more than 30 days late during creditor shall satisfy the requirements Alternative 1—Paragraph (e)(1) the six months immediately preceding under paragraphs (c)(2)(iii) and (c)(5) of (1) Safe harbor. A creditor or assignee the creditor’s receipt of the consumer’s this section for the standard mortgage by of a covered transaction complies with written application for the standard using the payment calculation the repayment ability requirement of mortgage. prescribed under paragraph (d)(5)(ii) of paragraph (c)(1) of this section if the (2) Definitions. For purposes of this this section. covered transaction is a qualified paragraph (d), the following definitions (4) Offer of rate discounts and other mortgage, as defined in paragraph (e)(2) apply: favorable terms. A creditor making a of this section. (i) Non-standard mortgage. The term covered transaction under this Alternative 2—Paragraph (e)(1) non-standard mortgage means a covered paragraph (d) may offer to the consumer transaction that is— the same or better rate discounts and (1) Presumption of compliance. A (A) An adjustable-rate mortgage, as terms that the creditor offers to new creditor or assignee of a covered defined in § 226.18(s)(7)(i), with an consumers, consistent with the transaction is presumed to have introductory fixed interest rate for a creditor’s documented underwriting complied with the repayment ability period of one year or longer; practices and to the extent not requirements of paragraph (c)(1) of this (B) An interest-only loan, as defined prohibited by applicable state or Federal section if the covered transaction is a in § 226.18(s)(7)(iv); or law. qualified mortgage, as defined in (C) A negative amortization loan, as (5) Payment calculations. For paragraph (e)(2) of this section. defined in § 226.18(s)(7)(v). purposes of determining whether the (2) Qualified mortgage defined. A (ii) Standard mortgage. The term consumer’s monthly payment for a qualified mortgage is a covered standard mortgage means a covered standard mortgage will be materially transaction— transaction— (i) That provides for regular periodic (A) That provides for regular periodic lower than the monthly payment for the payments that do not— payments that do not: non-standard mortgage, the following (A) Result in an increase of the (1) Cause the principal balance to provisions shall be used: principal balance; increase; (i) Non-standard mortgage. The (2) Allow the consumer to defer monthly payment for a non-standard (B) Allow the consumer to defer repayment of principal; or mortgage must be based on substantially repayment of principal, except as (3) Result in a balloon payment, as equal, monthly, fully amortizing provided in paragraph (f) of this section; defined in § 226.18(s)(5)(i); payments of principal and interest or (B) For which the total points and fees using— (C) Result in a balloon payment, as payable in connection with the (A) The fully indexed rate as of a defined in § 226.18(s)(5)(i), except as transaction do not exceed the amounts reasonable period of time before or after provided in paragraph (f) of this section; specified in paragraph (e)(3) of this the date on which the creditor receives (ii) For which the loan term does not section; the consumer’s written application for exceed 30 years; (C) For which the term does not the standard mortgage; (iii) For which the total points and exceed 40 years; (B) The term of the loan remaining as fees payable in connection with the loan (D) For which the interest rate is fixed of the date on which the recast occurs, do not exceed the amounts specified in for at least the first five years after assuming all scheduled payments have paragraph (e)(3) of this section; consummation; and been made up to the recast date and the (iv) For which the creditor (E) For which the proceeds from the payment due on the recast date is made underwrites the loan, taking into loan are used solely for the following and credited as of that date; and account any mortgage-related purposes— (C) A remaining loan amount that is— obligations, using— (1) To pay off the outstanding (1) For an adjustable-rate mortgage (A) The maximum interest rate that principal balance on the non-standard under paragraph (d)(2)(i)(A) of this may apply during the first five years mortgage; and section, the outstanding principal after consummation; and (2) To pay closing or settlement balance as of the date of the recast, (B) Periodic payments of principal charges required to be disclosed under assuming all scheduled payments have and interest that will repay either— the Real Estate Settlement Procedures been made up to the recast date and the (1) The outstanding principal balance Act, 12 U.S.C. 2601 et seq. payment due on the recast date is made over the remaining term of the loan as (iii) Refinancing. The term and credited as of that date; of the date the interest rate adjusts to the refinancing has the same meaning as in (2) For an interest-only loan under maximum interest rate set forth in § 226.20(a). paragraph (d)(2)(i)(B) of this section, the paragraph (e)(2)(iv)(A) of this section; or

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(2) The loan amount over the loan Alternative 2—Paragraph (e)(3)(i) (iii) The term loan originator has the term. (i) A covered transaction is not a same meaning as in § 226.36(a)(1). (iv) The term bona fide discount point Alternative 1—Paragraph (e)(2)(v) qualified mortgage unless the total points and fees payable in connection means any percent of the loan amount (v) For which the creditor considers with the loan do not exceed— of a covered transaction paid by the and verifies the consumer’s current or (A) For a loan amount of $75,000 or consumer that reduces the interest rate reasonably expected income or assets to more, three percent of the total loan or time-price differential applicable to determine the consumer’s repayment amount; the covered transaction based on a ability, as required by paragraphs (B) For a loan amount of greater than calculation that— (c)(2)(i), (c)(3), and (c)(4) of this section. or equal to $20,000 but less than (A) Is consistent with established Alternative 2—Paragraph (e)(2)(v) $75,000, a percentage of the total loan industry practices for determining the amount of reduction in the interest rate (v) For which the creditor considers amount resulting from the following formula— or time-price differential appropriate for and verifies, in accordance with ¥ the amount of discount points paid by paragraph (c)(3) of this section, the (1) Total loan amount $20,000 = $Z; the consumer; and following: × (B) Accounts for the amount of (A) The consumer’s current or (2) $Z .0036 = Y; (3) 500 ¥ Y = X; and compensation that the creditor can reasonably expected income or assets (4) X × .01 = Allowable points and reasonably expect to receive from other than the value of the dwelling that fees as a percentage of the total loan secondary market investors in return for secures the loan, in accordance with amount; and the mortgage loan. paragraphs (c)(2)(i) and (c)(4) of this (C) For a loan amount of less than (f) Balloon-payment qualified section; $20,000, five percent of the total loan mortgages made by certain creditors— (B) If the creditor relies on income amount. (1) Exception. Notwithstanding from the consumer’s employment in (ii) For purposes of calculating the paragraph (e)(2)(i)(C) of this section, a determining repayment ability, the total amount of points and fees that are qualified mortgage may provide for a consumer’s current employment status, payable in connection with a covered balloon payment, provided— in accordance with paragraph (c)(2)(ii) transaction under (e)(3)(i), the following (i) The loan satisfies all of the of this section; (C) The consumer’s monthly payment may be excluded: requirements for a qualified mortgage in (A) Any bona fide third party charge on any simultaneous loan that the paragraph (e)(2) of this section, other not retained by the creditor, loan creditor knows or has reason to know than paragraphs (e)(2)(i)(B), (e)(2)(i)(C), originator, or an affiliate of either, will be made, in accordance with and (e)(2)(iv) of this section; paragraphs (c)(2)(iv) and (c)(6) of this unless the charge is required to be (ii) The creditor determines that the ‘‘ ’’ section; included in points and fees under consumer can make all of the scheduled (D) The consumer’s current debt § 226.32(b)(1)(i)(B). payments under the terms of the legal obligations, in accordance with (B) Up to two bona fide discount obligation, except the balloon payment, paragraph (c)(2)(vi) of this section; points paid by the consumer in from the consumer’s current or (E) The consumer’s monthly debt-to- connection with the transaction, reasonably expected income or assets income ratio, or residual income, in provided that the following conditions other than the dwelling that secures the accordance with paragraphs (c)(2)(vii) are met— loan; and (c)(7) of this section; and (1) The interest rate before the (iii) The scheduled payments on (F) The consumer’s credit history, in discount does not exceed the average which the determination required by accordance with paragraph (c)(viii) of prime offer rate, as defined in paragraph (f)(1)(ii) of this section is this section. § 226.45(a)(2)(ii), by more than one based: (3) Limits on points and fees for percent; and (A) Are calculated using an qualified mortgages. (2) The average prime offer rate used amortization period that does not for purposes of paragraph (e)(3)(ii)(B)(1) exceed 30 years; and Alternative 1—Paragraph (e)(3)(i) of this section is the same average prime (B) Include all mortgage-related (i) A covered transaction is not a offer rate that applies to a comparable obligations; qualified mortgage unless the total transaction as of the date the discounted (iv) The loan term is five years or points and fees payable in connection interest rate for the transaction is set. longer; and with the loan do not exceed— (C) Up to one bona fide discount point (v) The creditor: (A) For a loan amount of $75,000 or paid by the consumer in connection (A) During the preceding calendar more, three percent of the total loan with the transaction, provided that the year, extended more than 50% of its amount; following conditions are met— total covered transactions that provide (B) For a loan amount of greater than (1) The interest rate before the for balloon payments in one or more or equal to $60,000 but less than discount does not exceed the average counties designated by the Board as $75,000, 3.5 percent of the total loan prime offer rate, as defined in ‘‘rural’’ or ‘‘underserved,’’ as defined in amount; § 226.45(a)(2)(ii), by more than two paragraph (f)(2) of this section; (C) For a loan amount of greater than percent; or equal to $40,000 but less than (2) The average prime offer rate used Alternative 1—Paragraph (f)(1)(v)(B) $60,000, four percent of the total loan for purposes of paragraph (e)(3)(ii)(C)(1) (B) During the preceding calendar amount; of this section is the same average prime year, together with all affiliates, (D) For a loan amount of greater than offer rate that applies to a comparable extended covered transactions with loan or equal to $20,000 but less than transaction as of the date the discounted amounts that in the aggregate total $___ $40,000, 4.5 percent of the total loan interest rate for the transaction is set; or less; amount; and and (E) For a loan amount of less than (3) Two bona fide discount points Alternative 2—Paragraph (f)(1)(v)(B) $20,000, five percent of the total loan have not been excluded under (B) During the preceding calendar amount. paragraph (e)(3)(ii)(B) of this section. year, together with all affiliates,

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extended ___ or fewer covered (ii) Must not exceed the following interest rate or a lower total dollar transactions; percentages of the amount of the amount of origination points or fees and outstanding loan balance prepaid: discount points. Alternative 1—Paragraph (f)(1)(v)(C) (A) Three percent, if incurred during (5) Creditor that is a loan originator. (C) On or after [effective date of final the first year following consummation; If the creditor is a loan originator, as rule], has not sold, assigned, or (B) Two percent, if incurred during defined in § 226.36(a)(1), and the otherwise transferred legal title to the the second year following creditor presents the consumer a debt obligation for any covered consummation; and covered transaction offered by a person transaction that provides for a balloon (C) One percent, if incurred during to which the creditor would assign the payment; and the third year following consummation. covered transaction after (3) Alternative offer required. Except Alternative 2—Paragraph (f)(1)(v)(C) consummation, the creditor must as provided otherwise in paragraph present the consumer an alternative (C) During the preceding and current (g)(4) or (g)(5) of this section, a creditor covered transaction without a calendar year, has not sold, assigned, or must not offer a consumer a covered prepayment penalty that satisfies the otherwise transferred legal title to the transaction with a prepayment penalty requirements of paragraph (g)(3) of this debt obligation for any covered unless the creditor also offers the section, offered by— transaction that provides for a balloon consumer an alternative covered (i) The assignee; or payment; and transaction without a prepayment (ii) Another person, if the transaction (D) As of the end of the preceding penalty and the alternative covered offered by the other person has a lower calendar year, had total assets that do transaction— interest rate or a lower total dollar not exceed the asset threshold (i) Has an annual percentage rate that amount of origination points or fees and established and published annually by cannot increase after consummation and discount points. the Board, based on the year-to-year has the same type of interest rate as the (6) Applicability. This paragraph (g) change in the average of the Consumer covered transaction with a prepayment applies only if a covered transaction is Price Index for Urban Wage Earners and penalty. For purposes of this paragraph consummated with a prepayment Clerical Workers, not seasonally (g), the term ‘‘type of interest rate’’ refers penalty and is not violated if: adjusted, for each 12-month period to whether a transaction: (i) A covered transaction is ending in November, with rounding to (A) Is a fixed-rate mortgage, as defined consummated without a prepayment the nearest million dollars. (See staff in § 226.18(s)(7)(iii); or penalty; or comment 43(f)(1)(v)–1.iv for the current (B) Is a step-rate mortgage, as defined (ii) The creditor and consumer do not threshold.) in § 226.18(s)(7)(ii). consummate a covered transaction. (2) ‘‘Rural’’ and ‘‘underserved’’ (ii) Has the same loan term as the loan (h) Evasion; open-end credit. In defined. For purposes of paragraph term for the covered transaction with a connection with credit secured by a (f)(1)(v)(A) of this section— prepayment penalty; consumer’s dwelling that does not meet (i) A county is ‘‘rural’’ during a (iii) Satisfies the periodic payment the definition of open-end credit in calendar year if it is not in a conditions under paragraph (e)(2)(i) of § 226.2(a)(20), a creditor shall not metropolitan statistical area or a this section; structure a home-secured loan as an micropolitan statistical area, as those (iv) Satisfies the points and fees open-end plan to evade the terms are defined by the U.S. Office of conditions under paragraph (e)(2)(iii) of requirements of this section.ﬁ Management and Budget, and: this section, based on the information 7. In Supplement I to Part 226: (A) It is not adjacent to any known to the creditor at the time the A. Under Section 226.25—Record metropolitan area or micropolitan area; transaction is offered; and Retention, 25(a) General rule, paragraph or (v) Is a transaction for which the 2 is revised and paragraphs 6 and 7 are (B) It is adjacent to a metropolitan creditor has a good faith belief that the added. area with fewer than one million consumer likely qualifies, based on the B. Under Section 226.32— residents or adjacent to a micropolitan information known to the creditor at the Requirements for Certain Closed-End area, and it contains no town with 2,500 time the creditor offers the covered Home Mortgages, or more residents. transaction without a prepayment (1) In subheading 32(a) Coverage, (ii) A county is ‘‘underserved’’ during penalty. Paragraph 32(a)(1)(ii), paragraph 1 is a calendar year if no more than two (4) Offer through a mortgage broker. If revised; creditors extend covered transactions the creditor offers a covered transaction (2) In subheading 32(b) Definitions, five or more times in the county. with a prepayment penalty to the Paragraph 32(b)(1)(i), paragraph 1 is (g) Prepayment penalties—(1) When consumer through a mortgage broker, as revised and paragraphs 2, 3, and 4 are permitted. A covered transaction must defined in § 226.36(a)(2), the creditor added; not include a prepayment penalty must— (i) Paragraph 32(b)(1)(ii), paragraph 1 unless: (i) Present the mortgage broker an is revised, paragraph 2. is redesignated (i) The prepayment penalty is alternative covered transaction without as Paragraph 32(b)(1)(iii), paragraph 1, otherwise permitted by law; and a prepayment penalty that satisfies the and revised, and new paragraphs 2 and (ii) The transaction— requirements of paragraph (g)(3) of this 3 are added to Paragraph 32(b)(1)(ii); (A) Has an annual percentage rate that section; and (ii) Paragraph 32(b)(1)(iv), paragraph cannot increase after consummation; (ii) Establish by agreement that the 1 is revised and paragraph 2 is added. (B) Is a qualified mortgage under mortgage broker must present the C. Under Section 226.34—Prohibited paragraph (e)(2) or (f) of this section; consumer an alternative covered Acts or Practices in Connection with and transaction without a prepayment Credit Subject to § 226.32, subheading (C) Is not a higher-priced mortgage penalty that satisfies the requirements of 34(a) Prohibited acts or practices for loan, as defined in § 226.45(a). paragraph (g)(3) of this section, offered loans subject to § 226.32, paragraph (2) Limits on prepayment penalties. A by— 34(a)(4) Repayment ability is removed prepayment penalty— (A) The creditor; or and reserved. (i) Must not apply after the three-year (B) Another creditor, if the transaction D. Section 226.35—Prohibited Acts or period following consummation; and offered by the other creditor has a lower Practices in Connection with Higher-

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Priced Mortgage Loans is removed and covered by § 226.43 has a prepayment because the $300 is not financed by the reserved. penalty, the creditor must maintain creditor, the fee is not part of the E. New entry Section 226.43— records that document that the creditor amount financed under § 226.18(b). In Minimum Standards for Transactions complied with requirements for offering this case, the amount financed is the Secured by a Dwelling is added. the consumer an alternative transaction same as the total loan amount: $9,600 The revisions, removals, and that does not include a prepayment ($10,000, less $400 in prepaid finance additions read as follows: penalty under § 226.43(g)(3), (4), or (5). charges). Supplement I to Part 226—Official Staff However, the creditor need not maintain iii. If the consumer finances a $300 Interpretations records that document compliance with fee for an appraisal conducted by those provisions if a transaction is someone other than the creditor or an * * * * * consummated without a prepayment affiliate, the $300 fee is not included penalty or if the creditor and consumer with other points and fees under Subpart D—Miscellaneous do not consummate a covered § 226.32(b)(1)(iii). flIn this case, the * * * * * transaction. See § 226.43(g)(6). If a amount financed is the same as the total creditor offers a transaction with a loan amount:fi $9,900 ($10,000 plus Section 226.25—Record Retention prepayment penalty to a consumer the $300 fee for an independently 25(a) General rule. through a mortgage broker, to evidence conducted appraisal that is financed by * * * * * compliance with § 226.43(g)(4) the the creditor, less the $400 paid in cash 2. Methods of retaining evidence. creditor should retain records of the and deducted as prepaid finance Adequate evidence of compliance does alternative covered transaction charges). not necessarily mean actual paper presented to the mortgage broker, such iv. If the consumer finances a $300 fee copies of disclosure statements or other as a rate sheet, and the agreement with for a creditor-conducted appraisal and a business records. The evidence may be the mortgage broker required by $500 single premium for optional credit retained [on microfilm, microfiche, or] § 226.43(g)(4)(ii).fi flunemploymentfi ølife¿ insurance, by any [other] method that reproduces * * * * * and pays $400 in points at closing, the records accurately (including computer amount financed under § 226.18(b) is programs). flUnless otherwise Subpart E—Special Rules for Certain $10,400 ($10,000, plus the $300 required,fi the creditor need retain only Home Mortgage Transactions appraisal fee that is paid to and financed by the creditor, plus the $500 enough information to reconstruct the * * * * * required disclosures or other records. insurance premium that is financed by Thus, for example, the creditor need not Section 226.32—Requirements for the creditor, less $400 in prepaid retain each open-end periodic Certain Closed-End Home Mortgages finance charges). The $300 appraisal fee statement, so long as the specific 32(a) Coverage. paid to the creditor is added to other points and fees under § 226.32(b)(1)(iii), information on each statement can be * * * * * retrieved. Paragraph 32(a)(1)(ii). and the $500 insurance premium is * * * * * 1. Total loan amount. For purposes of added under section 226.32(b)(1)(iv). fl6. Evidence of compliance with the ‘‘points and fees’’ test, the total loan The $300 and $500 costs are deducted § 226.43. Creditors must retain evidence amount is calculated by taking the from the amount financed ($10,400) to of compliance with § 226.43 for three amount financed, as determined derive a total loan amount of $9,600. years after the date of consummation of according to § 226.18(b), and deducting * * * * * a consumer credit transaction covered any cost listed in § 226.32(b)(1)(iii)fl,fi 32(b) Definitions. by that section. (See comment 25(a)–7 [and 226.32] (b)(1)(iv)fland (b)(1)(vi)fi Paragraph 32(b)(1)(i) for guidance on the retention of that is both included as points and fees 1. General. Section 226.32(b)(1)(i) evidence of compliance with the under § 226.32(b)(1) and financed by the includes in the total ‘‘points and fees’’ requirement to offer a consumer a loan creditor. Some examples follow, each items defined as finance charges under without a prepayment penalty under using a $10,000 amount borrowed, a § 226.4(a) and 226.4(b). Items excluded § 226.43(g)(3).) If a creditor must verify $300 appraisal fee, and $400 in points. from the finance charge under other and document information used in A $500 flsinglefi premium for provisions of § 226.4 are not excluded in underwriting a transaction subject to optional credit flunemploymentfi the total ‘‘points and fees’’ under § 226.43, the creditor should retain ølife¿ insurance is used in one example. § 226.32(b)(1)(i), but may be included in evidence sufficient to demonstrate i. If the consumer finances a $300 fee ‘‘points and fees’’ under § 226.32(b)(1)(ii) compliance with the documentation for a creditor-conducted appraisal and flthrough § 226.32(b)(1)(vi).fiøand requirements of the rule. Although pays $400 in points at closing, the § 226.32(b)(1)(iv)¿. Interest, including creditors need not retain actual paper amount financed under § 226.18(b) is per diem interest, is excluded from copies of the documentation used in $9,900 ($10,000 plus the $300 appraisal ‘‘points and fees under § 226.32(b)(1). underwriting a transaction subject to fee that is paid to and financed by the flTo illustrate: A fee imposed by the § 226.43, creditors should be able to creditor, less $400 in prepaid finance creditor for an appraisal performed by reproduce such records accurately. For charges). The $300 appraisal fee paid to an employee of the creditor meets the example, if the creditor uses a the creditor is added to other points and definition of ‘‘finance charge’’ under consumer’s Internal Revenue Service fees under § 226.32(b)(1)(iii). It is § 226.4(a) as ‘‘any charge payable (IRS) Form W–2 to verify the deducted from the amount financed directly or indirectly by the consumer consumer’s income, the creditor should ($9,900) to derive a total loan amount of and imposed directly or indirectly by be able to reproduce the IRS Form W– $9,600. the creditor as an incident to or a 2 itself, and not merely the income ii. If the consumer pays the $300 fee condition of the extension of credit.’’ information that was contained in the for the creditor-conducted appraisal in However, § 226.4(c)(7) expressly form. cash at closing, the $300 is included in provides that appraisal fees are not 7. Dwelling-secured transactions and the points and fees calculation because finance charges. Therefore, under the prepayment penalties. If a transaction it is paid to the creditor. However, general rule regarding the finance

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charges that must be counted as points refunded on a pro rata basis and during that year, and that each and fees, a fee imposed by the creditor automatically issued upon notification consummated transaction increases the for an appraisal performed by an of the satisfaction of the underlying bonus by $100. In this case, the $100 employee of the creditor would not be mortgage loan, the entire $3,000 bonus must be counted in the amount counted in points and fees. Section premium must be included in ‘‘points of loan originator compensation that the 226.32(b)(1)(iii), however, expressly re- and fees.’’ creditor includes in ‘‘points and fees.’’ includes in points and fees items listed 4. Method of paying private mortgage B. Assume that, according to a in § 226.4(c)(7) (including appraisal insurance premiums. Upfront private creditor’s compensation policies, the fees) if the creditor receives mortgage insurance premiums that do creditor awards its loan officers a year- compensation in connection with the not qualify for an exclusion from ‘‘points end bonus equal to a flat dollar amount charge. A creditor would receive and fees’’ under § 226.32(b)(1)(i)(B)(2) for each of the consummated compensation for an appraisal must be included in ‘‘points and fees’’ transactions originated by the loan performed by its own employee. Thus, for purposes of this section whether officer during that year. Assume also the appraisal fee in this example must paid before or at closing, in cash or that the per-transaction dollar amount is be included in the calculation of points financed, and whether the insurance is determined at the end of the year, based and fees. optional or required. Such charges are on the total dollar value of 2. Upfront Federal and state mortgage also included whether the amount consummated transactions originated by insurance premiums and guaranty fees. represents the entire premium or an the loan officer. If at the time a mortgage Under § 226.32(b)(1)(i)(B)(1) and (3), initial payment.fi transaction is consummated the loan upfront mortgage insurance premiums Paragraph 32(b)(1)(ii). officer has originated total volume that fl or guaranty fees in connection with a 1. [Mortgage broker fees] Loan qualifies the loan officer to receive a originator compensation—generalfi. In Federal or state agency program are not $300 bonus per transaction, the $300 determining ‘‘points and fees’’ for ‘‘points and fees,’’ even though they are bonus is loan originator compensation purposes of this section, compensation finance charges under § 226.4(a) and (b). that must be included in ‘‘points and paid by a consumer flor creditorfi to For example, if a consumer is required fees’’ for the transaction. a flloan originatorfi [mortgage broker to pay a $2,000 mortgage insurance C. Assume that, according to a premium before or at closing for a loan (directly or through the creditor for delivery to the broker)] is included in creditor’s compensation policies, the insured by the U.S. Federal Housing creditor awards its loan officers a bonus Administration, the $2,000 must be the calculation whether or not the amount is disclosed as a finance charge. every year based on the number of treated as a finance charge but need not consummated transactions originated by ‘‘ ’’ [Mortgage broker fees that are not paid be counted in points and fees. the loan officer during that year. 3. Upfront private mortgage insurance by the consumer are not included.] Assume also that for the first 10 premiums. i. Under flLoan originatorfi[Mortgage broker] transactions originated by the loan § 226.32(b)(1)(i)(B)(2) and (3), upfront fees already included in flpoints and private mortgage insurance premiums feesfi calculation as finance charges officer in a given year, no bonus is are not ‘‘points and fees,’’ even though under § 226.32(b)(1)(i) need not be awarded; for the next 10 transactions they are finance charges under counted again under § 226.32(b)(1)(ii). originated by the loan officer up to 20, § 226.4(a) and (b)—but only to the fl2. Loan originator compensation— a bonus of $100 per transaction is extent that the premium amount does examples. i. In determining ‘‘points and awarded; and for each transaction not exceed the amount payable under fees’’ under this section, loan originator originated after the first 20, a bonus of policies in effect at the time of compensation includes the dollar value $200 per transaction is awarded. In this origination under section 203(c)(2)(A) of of compensation paid to a loan case, for the first 10 transactions the National Housing Act (12 U.S.C. originator for a covered transaction, originated by a loan officer during a 1709(c)(2)(A)). such as a bonus, commission, yield given year, no amount of loan originator ii. In addition, to qualify for the spread premium, award of merchandise, compensation need be included in exclusion from points and fees, upfront services, trips, or similar prizes, or ‘‘points and fees.’’ For any mortgage private mortgage insurance premiums hourly pay for the actual number of transaction made after the first 10, up to must be required to be refunded on a hours worked on a particular the 20th transaction, $100 must be pro rata basis and the refund must be transaction. Compensation paid to a included in ‘‘points and fees.’’ For any automatically issued upon notification loan originator for a covered transaction mortgage transaction made after the first of the satisfaction of the underlying must be included in the ‘‘points and 20, $200 must be included in ‘‘points mortgage loan. fees’’ calculation for that loan whenever and fees.’’ iii. To illustrate: Assume that a $3,000 paid, whether before, at, or after closing, ii. In determining ‘‘points and fees’’ upfront private mortgage insurance as long as that compensation amount under this section, loan originator premium charged on a covered can be determined at the time of closing. compensation excludes compensation transaction is required to be refunded Thus, loan originator compensation for that cannot be attributed to a particular on a pro rata basis and automatically a covered transaction includes transaction at the time or origination, issued upon notification of the compensation that will be paid as part including, for example: satisfaction of the underlying mortgage of a periodic bonus, commission, or gift A. Compensation based on the long- loan. Assume also that the maximum if a portion of the dollar value of the term performance of the loan upfront premium allowable under the bonus, commission, or gift can be originator’s loans. National Housing Act is $2,000. In this attributed to that loan. The following B. Compensation based on the overall case, the creditor could exclude $2,000 examples illustrate the rule: quality of a loan originator’s loan files. from ‘‘points and fees’’ but would have A. Assume that, according to a C. The base salary of a loan originator to include the $1,000 that exceeds the creditor’s compensation policies, the who is also the employee of the creditor, allowable premium under the National creditor awards its loan officers a bonus not accounting for any bonuses, Housing Act. However, if the $3,000 every year based on the number of loan commissions, pay raises, or other upfront private mortgage insurance applications taken by the loan officer financial awards based solely on a premium were not required to be that result in consummated transactions particular transaction or the number or

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amount of covered transactions dwelling but its contents, and term does not include any additional originated by the loan originator. designates the consumer, not the period of time that could result from a 3. Name of fee. Loan originator creditor, as the beneficiary.fi renewal provision. For example, if a compensation includes amounts the * * * * * construction loan has an initial loan loan originator retains and is not term of 12 months but is renewable for dependent on the label or name of any Section 226.34—Prohibited Acts or another 12-month loan term, the loan is fee imposed in connection with the Practices in Connection with Credit excluded from coverage by § 226.43(c) transaction. For example, if a loan Subject to § 226.32 through (f), because the initial loan term originator imposes a ‘‘processing fee’’ 34(a) Prohibited acts or practices for is 12 months. and retains the fee, the fee is loan loans subject to § 226.32. 43(b) Definitions. originator compensation under * * * * * 43(b)(3) Fully indexed rate. § 226.32(b)(1)(ii) whether the originator 34(a)(4) Repayment ability. 1. Discounted and premium expends the fee to process the fløReserved.¿fi adjustable-rate transactions. In some consumer’s application or uses it for * * * * * adjustable-rate transactions, creditors other expenses, such as overhead. may set an initial interest rate that is not Paragraph 32(b)(1)(iii). Section 226.35 fløReserved.¿fi determined by the index or formula 1. Other charges.fi[2. Example.] used to make later interest rate Section 32(b)(1)(iii) defines ‘‘points and * * * * * adjustments. Typically, this initial rate fees’’ to include all items listed in flSection 226.43—Minimum Standards charged to consumers is lower than the § 226.4(c)(7), other than amounts held for Transactions Secured by a Dwelling for the future payment of taxes. An item rate would be if it were calculated using listed in § 226.4(c)(7) may be excluded 1. Record retention. See § 226.25(a) the index or formula at consummation ‘‘ ’’ from the ‘‘points and fees’’ calculation, and comments 25(a)–6 and –7 for (i.e., a discounted rate ). In some cases, however, if the charge is reasonablefl; guidance on the required retention of this initial rate may be higher (i.e., a fi[,] the creditor receives no direct or records as evidence of compliance with ‘‘premium rate’’). For purposes of indirect compensation from the § 226.43. determining the fully indexed rate chargefl;fi[,] and the charge is not paid 43(a) Scope. where the initial interest rate is not to an affiliate of the creditor. For 1. Consumer credit. In general, determined using the index or formula example, a reasonable fee paid by the § 226.43 applies to consumer credit for subsequent interest rate adjustments, consumer to an independent, third- transactions secured by a dwelling, but the creditor must use the interest rate party appraiser may be excluded from certain dwelling-secured consumer that would have applied had the the ‘‘points and fees’’ calculation credit transactions are exempt from creditor used such index or formula (assuming no compensation is paid to coverage under § 226.43(a)(1)–(3). (See plus margin at the time of the creditorfl or its affiliatefi). flBy § 226.2(a)(12) for the definition of consummation. That is, in determining contrast, afi[A] fee paid by the ‘‘consumer credit.’’) Section 226.43 does the fully indexed rate, the creditor must consumer for an appraisal performed by not apply to an extension of credit not take into account any discounted or the creditor must be included in the primarily for a business, commercial, or premium rate. To illustrate, assume an calculation, even though the fee may be agricultural purpose, even if it is adjustable-rate transaction where the excluded from the finance charge if it is secured by a dwelling. See § 226.3 and initial interest rate is not based on an bona fide and reasonable in amount. associated commentary for guidance in index or formula, and is set at 5% for determining the primary purpose of an the first five years. The loan agreement Paragraph 32(b)(1)(iv). extension of credit. provides that future interest rate 1. flCredit insurance and debt 2. Real property. ‘‘Dwelling’’ means a adjustments will be calculated based on cancellation or suspension coverage residential structure that contains one to the London Interbank Offered Rate fi[Premium amount]. In determining four units, whether or not the structure (LIBOR) plus a 3% margin. If the value ‘‘points and fees’’ for purposes of this is attached to real property. See of the LIBOR at consummation is 5%, section, premiums paid at or before § 226.2(a)(19). For purposes of § 226.43, the interest rate that would have been closing for credit insurance or flany the term ‘‘dwelling’’ includes any real applied at consummation had the debt cancellation or suspension property to which the residential creditor based the initial rate on this agreement or contractfi are included structure is attached that also secures index is 8% (5% plus 3% margin). For flin ‘‘points and fees’’ if they are paid the covered transaction. For example, purposes of this section, the fully at or before closing,fi whether they are for purposes of § 226.43(c)(2)(i), the indexed rate is 8%. For discussion of paid in cash or financed, fland whether value of the dwelling that secures the payment calculations based on the the insurance or coverage is optional or covered transaction includes the value greater of the fully indexed rate or required. Such charges are also of any real property to which the ‘‘premium rate’’ for purposes of the includedfi[and] whether the amount residential structure is attached that also repayment ability determination under represents the entire premium or secures the covered transaction. § 226.43(c), see § 226.43(c)(5)(i) and payment for the coverage or an initial 3. Renewable temporary or ‘‘bridge’’ comment 43(c)(5)(i)–2. payment. loan. Under § 226.43(a)(3)(ii), a 2. Index or formula at consummation. fl2. Credit property insurance. Credit temporary or ‘‘bridge’’ loan with a term The value of the index or formula in property insurance includes insurance of 12 months or less is excluded from effect at consummation need not be against loss of or damage to personal coverage by § 226.43(c) through (f). used if the contract provides for a delay property, such as a houseboat or Examples of such a loan are a loan to in the implementation of changes in an manufactured home. Credit property finance the purchase of a new dwelling index value or formula. For example, if insurance covers the creditor’s security where the consumer plans to sell a the contract specifies that rate changes interest in the property. Credit property current dwelling within 12 months and are based on the index value in effect 45 insurance does not include homeowners a loan to finance the initial construction days before the change date, the creditor insurance, which, unlike credit property of a dwelling. Where a temporary or may use any index value in effect insurance, typically covers not only the ‘‘bridge loan’’ is renewable, the loan during the 45 days before

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consummation in calculating the fully rate), the creditor must use the disbursed at consummation and the indexed rate. maximum interest rate that may apply at remaining $100,000 will be disbursed 3. Interest rate adjustment caps. If the any time during the loan term. To during the year following terms of the legal obligation contain a illustrate: consummation in a series of advances periodic interest rate adjustment cap i. Assume a step-rate mortgage with ($25,000 each quarter). For purposes of that would prevent the initial rate, at the an interest rate fixed at 6.5% for the first this section, the creditor must use the time of the first adjustment, from two years of the loan, 7% for the next loan amount of $200,000, even though changing to the rate determined using three years, and 7.5% thereafter for the the loan agreement provides that only the index or formula at consummation remainder of loan term. For purposes of $100,000 will be disbursed to the (i.e., the fully indexed rate), the creditor this section, the creditor must use 7.5%, consumer at consummation. Generally, must not give any effect to that rate cap which is the maximum rate that may creditors should rely on § 226.17(c)(6) when determining the fully indexed apply during the loan term. ‘‘Step-rate and associated commentary regarding rate. That is, a creditor must determine mortgage’’ is defined in § 226.18(s)(7)(ii). treatment of multiple-advance and the fully indexed rate without taking ii. Assume a fixed-rate mortgage with construction-to-permanent loans as into account any periodic interest rate an interest rate at consummation of 7% single or multiple transactions. adjustment cap that may limit how that is fixed for the 30-year loan term. 43(b)(6) Loan term. quickly the fully indexed rate may be For purposes of this section, the 1. General. The loan term is the reached at any time during the loan maximum interest rate that may apply period of time it takes to repay the loan term under the terms of the legal during the loan term is 7%, which is the amount in full. For example, a loan with obligation. To illustrate, assume an interest rate that is fixed at an initial discounted rate that is fixed adjustable-rate mortgage has an initial consummation. ‘‘Fixed-rate mortgage’’ is for the first two years, and that adjusts fixed rate of 5% for the first three years defined in § 226.18(s)(7)(iii). periodically for the next 28 years has a of the loan, after which the rate will 43(b)(4) Higher-priced covered loan term of 30 years, which is the adjust annually to a specified index plus transaction. amortization period on which the a margin of 3%. The loan agreement 1. Average prime offer rate. The periodic amortizing payments are based. provides for a 2% annual interest rate average prime offer rate generally has 43(b)(7) Maximum loan amount. adjustment cap, and a lifetime the same meaning as in 1. Calculation of maximum loan maximum interest rate of 10%. The § 226.45(a)(2)(ii). For further amount. For purposes of index value in effect at consummation explanation of the meaning of ‘‘average § 226.43(c)(2)(iii) and (c)(5)(ii)(C), a is 4.5%; the fully indexed rate is 7.5% prime offer rate,’’ and additional creditor must determine the maximum (4.5% plus 3%), regardless of the 2% guidance on determining the average loan amount for a negative amortization annual interest rate adjustment cap that prime offer rate, see comments loan by using the loan amount plus any would limit when the fully indexed rate 45(a)(2)(ii)–1 and –5. For further increase in principal balance that will would take effect under the terms of the explanation of the Board table, see result from negative amortization based legal obligation. comment 45(a)(2)(ii)–4. on the terms of the legal obligation. In 4. Lifetime maximum interest rate. A 2. Comparable transaction. A higher- determining the maximum loan amount, creditor may choose, in its sole priced covered transaction is a a creditor must assume that the discretion, to take into account the consumer credit transaction that is consumer makes the minimum periodic lifetime maximum interest rate provided secured by the consumer’s dwelling payment permitted under the loan under the terms of the legal obligation with an annual percentage rate that agreement for as long as possible, until when determining the fully indexed exceeds the average prime offer rate for the consumer must begin making fully rate. If the creditor chooses to use the a comparable transaction as of the date amortizing payments; and that the lifetime maximum interest rate and the the interest rate is set by the specified interest rate rises as quickly as possible loan agreement provides a range for the amount. The table of average prime offer after consummation under the terms of maximum interest rate, then the creditor rates published by the Board indicates the legal obligation. Thus, creditors must use the highest rate in that range how to identify a comparable must assume that the consumer makes as the maximum interest rate for transaction. See comment 45(a)(2)(ii)–2. the minimum periodic payment until purposes of this section. To illustrate, 3. Rate set. A transaction’s annual any negative amortization cap is assume an adjustable-rate mortgage has percentage rate is compared to the reached or until the period permitting an initial fixed rate of 5% for the first average prime offer rate as of the date minimum periodic payments expires, three years of the loan, after which the the transaction’s interest rate is set (or whichever occurs first. ‘‘Loan amount’’ rate will adjust annually to a specified ‘‘locked’’) before consummation. is defined in § 226.43(b)(5); ‘‘negative index plus a margin of 3%. The loan Sometimes a creditor sets the interest amortization loan’’ is defined in agreement provides for a 2% annual rate initially and then re-sets it at a § 226.18(s)(7)(v). interest rate adjustment cap, and a different level before consummation. 2. Assumed interest rate. In lifetime maximum interest rate of 7%. The creditor should use the last date the calculating the maximum loan amount The index value in effect at interest rate is set before consummation. for an adjustable-rate mortgage that is a consummation is 4.5%; the fully 43(b)(5) Loan amount. negative amortization loan, the creditor indexed rate is 7.5% (4.5% plus 3%). 1. Disbursement of the loan amount. must assume that the interest rate will For purposes of this section, the creditor The definition of ‘‘loan amount’’ requires increase as rapidly as possible after can choose to use the lifetime maximum the creditor to use the entire loan consummation, taking into account any interest rate of 7%, instead of the fully amount as reflected in the loan contract periodic interest rate adjustment caps indexed rate of 7.5%, for purposes of or promissory note, even though the provided in the loan agreement. For an this section. loan amount may not be fully disbursed adjustable-rate mortgage with a lifetime 5. Step-rate and fixed-rate mortgages. at consummation. For example, assume maximum interest rate but no periodic Where the interest rate offered under the the consumer enters into a loan interest rate adjustment cap, the creditor terms of the legal obligation is not based agreement where the consumer is must assume that the interest rate on, and does not vary with, an index or obligated to repay the creditor $200,000 increases to the maximum lifetime formula (i.e., there is no fully indexed over 15 years, but only $100,000 is interest rate at the first adjustment.

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3. Examples. The following are provides for a fixed interest rate of amortization’’ treats each payment as examples of how to determine the 7.5%, and requires the consumer to made on the scheduled, monthly due maximum loan amount for a negative make minimum monthly payments date even if it is actually paid early or amortization loan (all amounts are during the first year, with payments late (until the expiration of a grace rounded): increasing 12.5% every year for four period). Thus, under monthly interest i. Adjustable-rate mortgage with years. The payment schedule provides accrual amortization, if the amount of negative amortization. A. Assume an for payments of $943 in the first year, interest due on May 1 for the preceding adjustable-rate mortgage in the amount $1,061 in the second year, $1,194 in the month of April is $3000, the creditor of $200,000 with a 30-year loan term. third year, $1,343 in the fourth year, and will require payment of $3000 in The loan agreement provides that the $1,511 for the remaining term of the interest whether the payment is made consumer can make minimum monthly loan. During the first three years of the on April 20, on May 1, or on May 10. payments that cover only part of the loan, the payments are less than the In this example, if the interest charged interest accrued each month until the interest accrued each month, resulting for the month of April upon prepayment principal balance reaches 115% of its in negative amortization. Assuming that in full on April 20 is $3000, the charge original balance (i.e., a negative the consumer makes the minimum constitutes a prepayment penalty of amortization cap of 115%) or for the periodic payments for as long as $1000 because the amount of interest first five years of the loan (60 monthly possible, the maximum loan amount is actually earned through April 20 is only payments), whichever occurs first. The $207,659, which is reached at the end $2000. introductory interest rate at of the third year of the loan (on the due 43(b)(11) Recast. consummation is 1.5%. One month after date of the 36th monthly payment). See 1. Date of the recast. The term ‘‘recast’’ consummation, the interest rate adjusts comment 43(c)(5)(ii)(C)–3 providing means, for an adjustable-rate mortgage, and will adjust monthly thereafter based examples of how to determine the the expiration of the period during on the specified index plus a margin of consumer’s repayment ability for a which payments based on the 3.5%. The maximum lifetime interest negative amortization loan. introductory fixed rate are permitted; for rate is 10.5%; there are no other an interest-only loan, the expiration of periodic interest rate adjustment caps 43(b)(8) Mortgage-related obligations. the period during which the interest- that limit how quickly the maximum 1. General. Mortgage-related only payments are permitted; and, for a lifetime rate may be reached. The obligations include expected property negative amortization loan, the minimum monthly payment for the first taxes and premiums for mortgage- expiration of the period during which year is based on the initial interest rate related insurance required by the negatively amortizing payments are of 1.5%. After that, the minimum creditor as set forth in § 226.45(b)(1), permitted. For adjustable-rate monthly payment adjusts annually, but such as insurance against loss of or mortgages, interest-only loans, and may increase by no more than 7.5% damage to property or against liability negative amortization loans, the date on over the previous year’s payment. The arising out of the ownership or use of which the ‘‘recast’’ is considered to minimum monthly payment is $690 in the property, and insurance protecting occur is the due date of the last monthly the first year, $742 in the second year, the creditor against the consumer’s payment based on the introductory and $798 in the first part of the third default or other credit loss. A creditor fixed rate, the interest-only payment, or year. need not include premiums for the negatively amortizing payment, B. To determine the maximum loan mortgage-related insurance that it does respectively. To illustrate: A loan in an amount, assume that the initial interest not require, such as an earthquake amount of $200,000 has a 30-year loan rate increases to the maximum lifetime insurance or credit insurance, or fees for term. The loan agreement provides for a interest rate of 10.5% at the first optional debt suspension and debt fixed interest rate and permits interest- adjustment (i.e., the second month) and cancellation agreements. Mortgage- only payments for the first five years of accrues at that rate until the loan is related obligations also include special the loan (60 months). The loan is recast recast. Assume the consumer makes the assessments that are imposed on the on the due date of the 60th monthly minimum monthly payments as consumer at or before consummation, payment. Thus, the term of the loan scheduled, which are capped at 7.5% such as a one-time homeowners’ remaining as of the date the loan is from year-to-year. As a result, the association fee that will not be paid by recast is 25 years (300 months). consumer’s minimum monthly the consumer in full at or before 43(b)(12) Simultaneous loan. payments are less than the interest consummation. See commentary to 1. General. Section 226.43(b)(12) accrued each month, resulting in § 226.43(c)(2)(v), discussing the defines a simultaneous loan as another negative amortization (i.e., the accrued requirement to take into account any covered transaction or home equity line but unpaid interest is added to the mortgage-related obligations. of credit subject to § 226.5b (HELOC) principal balance). Thus, assuming that 43(b)(10) Prepayment penalty. that will be secured by the same the consumer makes the minimum Paragraph 43(b)(10)(i)(A). dwelling and made to the same monthly payments for as long as 1. Interest accrual amortization consumer at or before consummation of possible and that the maximum interest method. A prepayment penalty includes the covered transaction, whether it is rate of 10.5% is reached at the first rate charges determined by treating the loan made by the same creditor or a third- adjustment (i.e., the second month), the balance as outstanding for a period after party creditor. For example, assume a negative amortization cap of 115% is prepayment in full and applying the consumer will enter into a legal reached on the due date of the 27th interest rate to such balance, even if the obligation that is a covered transaction monthly payment and the loan is recast. charge results from the interest accrual with Creditor A. Immediately prior to The maximum loan amount as of the amortization method used on the consummation of the covered due date of the 27th monthly payment transaction. ‘‘Interest accrual transaction with Creditor A, the is $229,243. amortization’’ refers to the method by consumer opens a HELOC that is ii. Fixed-rate, graduated payment which the amount of interest due for secured by the same dwelling with mortgage with negative amortization. A each period (e.g., month), in a Creditor B. For purposes of this section, loan in the amount of $200,000 has a 30- transaction’s term is determined. For the loan extended by Creditor B is a year loan term. The loan agreement example, ‘‘monthly interest accrual simultaneous loan. See commentary to

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§ 226.43(c)(2)(iv) and (c)(6), discussing by a third-party accountant is a third- 2. Interaction with Regulation B. the requirement to consider the party record under § 226.43(b)(13)(i). Section 226.43(c)(1) does not require or consumer’s payment obligation on any Paragraph 43(b)(13)(iii). permit the creditor to make inquiries or simultaneous loan for purposes of 1. Creditor’s records. Section verifications that would be prohibited determining the consumer’s ability to 226.43(b)(13)(iii) provides that third- by Regulation B, 12 CFR part 202. repay the covered transaction subject to party record includes a record the Paragraph 43(c)(2)(i). this section. creditor maintains for an account of the 1. Income or assets generally. A 2. Same consumer. For purposes of consumer held by the creditor. creditor may base its determination of the definition of ‘‘simultaneous loan,’’ Examples of such accounts include repayment ability on current or the term ‘‘same consumer’’ includes any checking accounts, savings accounts, reasonably expected income from consumer, as that term is defined in and retirement accounts. Examples of employment or other sources, assets § 226.2(a)(11), that enters into a loan such accounts also include accounts other than the dwelling that secures the that is a covered transaction and also related to a consumer’s outstanding covered transaction, or both. The enters into another loan (e.g., second- obligations to a creditor. For example, a creditor may consider any type of lien covered transaction or HELOC) third-party record includes the current or reasonably expected income, secured by the same dwelling. Where creditor’s records for a first-lien including, for example, the following: two or more consumers enter into a mortgage to a consumer who applies for Salary; wages; self-employment income; legal obligation that is a covered a subordinate-lien home equity loan. military or reserve duty income; bonus transaction, but only one of them enters 43(c) Repayment ability. pay; tips; commissions; interest into another loan secured by the same 1. Widely accepted standards. To payments; dividends; retirement dwelling, the ‘‘same consumer’’ includes evaluate a consumer’s repayment ability benefits or entitlements; rental income; royalty payments; trust income; public the person that has entered into both under § 226.43(c), creditors may look to assistance payments; and alimony, child legal obligations. For example, assume widely accepted governmental or non- support, and separate maintenance Consumer A and Consumer B will both governmental underwriting standards, payments. The creditor may consider enter into a legal obligation that is a such as the Federal Housing any of the consumer’s assets, other than covered transaction with a creditor. Administration’s handbook on Mortgage the value of the dwelling that secures Immediately prior to consummation of Credit Analysis for Mortgage Insurance the covered transaction, including, for the covered transaction, Consumer B on One- to Four-Unit Mortgage Loans. example, the following: funds in a opens a HELOC that is secured by the For example, creditors may use such same dwelling with the same creditor; savings or checking account, amounts standards in determining: Consumer A is not a signatory to the vested in a retirement account, stocks, i. Whether to classify particular HELOC. For purposes of this definition, bonds, certificates of deposit, and inflows, obligations, or property as Consumer B is the same consumer and amounts available to the consumer from ‘‘income,’’ ‘‘debt,’’ or ‘‘assets’’; the creditor must include the HELOC as a trust fund. (For purposes of ii. Factors to consider in evaluating a simultaneous loan. § 226.43(c)(2)(i), the value of the 43(b)(13) Third-party record. the income of a self-employed or dwelling includes the value of the real 1. Electronic records. Third-party seasonally employed consumer; and property to which the real property is records include records transmitted iii. Factors to consider in evaluating attached, if the real property also electronically. For example, to verify a the credit history of a consumer who secures the covered transaction. See consumer’s credit history using third- has obtained few or no extensions of comment 43(a)–2.) party records as required by traditional ‘‘credit,’’ as defined in 2. Income or assets relied on. If a § 226.43(c)(2)(viii) and 226.43(c)(3), § 226.2(a)(14). creditor bases its determination of creditors may use a credit report 43(c)(1) General requirement. repayment ability entirely or in part on prepared by a consumer reporting 1. Repayment ability at a consumer’s income, the creditor need agency and transmitted or viewed consummation. Section 226.43(c)(1) consider only the income necessary to electronically. requires the creditor to determine that a support a determination that the 2. Forms. A record prepared by a third consumer will have a reasonable ability consumer can repay the covered party includes a form a creditor gives a at the time the loan is consummated to transaction. For example, if a third party for providing information, repay the loan. A change in the consumer’s loan application states that even if the creditor completes parts of consumer’s circumstances after the consumer earns an annual salary the form unrelated to the information consummation (for example, a from both a full-time job and a part-time sought. For example, if a creditor gives significant reduction in income due to job and the creditor reasonably a consumer’s employer a form for a job loss or a significant obligation determines that the consumer’s income verifying the consumer’s employment arising from a major medical expense) from the full-time job is sufficient to status and income, the creditor may fill that is not reflected in the consumer’s repay the loan, the creditor need not in the creditor’s name and other application or the records used to consider the consumer’s income from portions of the form unrelated to the determine repayment ability is not the part-time job. Further, a creditor consumer’s employment status or relevant to determining a creditor’s need verify only the income (and assets) income. compliance with the rule. However, if relied on to determine the consumer’s Paragraph 43(b)(13)(i). the application or records state there repayment ability. See comment 1. Reviewed record. Under will be a change in a consumer’s 43(c)(4)–1. § 226.43(b)(13)(i), a third-party record repayment ability after consummation 3. Expected income. If a creditor relies includes a document or other record (for example, if a consumer’s on expected income, either in addition prepared by the consumer, the creditor, application states that the consumer to or instead of current income, the the mortgage broker, or the creditor’s or plans to retire within 12 months expectation that the income will be mortgage broker’s agent, if the record is without obtaining new employment or available for repayment must be reviewed by a third party. For example, that the consumer will transition from reasonable and verified with third-party a profit-and-loss statement prepared by full-time to part-time employment), the records that provide reasonably reliable a self-employed consumer and reviewed creditor must consider that information. evidence of the consumer’s expected

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income. For example, if the creditor related obligations’’ is defined in determine whether a simultaneous loan relies on an expectation that a consumer § 226.43(b)(8). will be extended at or before will receive an annual bonus, the Paragraph 43(c)(2)(iv). consummation of the covered creditor may verify the basis for that 1. Home equity lines of credit. For transaction. expectation with records that show the purposes of § 226.43(c)(2)(iv), a 3. Scope of timing. For purposes of consumer’s past annual bonuses, and simultaneous loan includes any covered § 226.43(c)(2)(iv), a simultaneous loan the expected bonus must bear a transaction or home equity line of credit includes a loan that comes into reasonable relationship to the past subject to § 226.5b (HELOC) that will be existence concurrently with the covered bonuses. Similarly, if the creditor relies made to the same consumer at or before transaction subject to § 226.43(c). In all on a consumer’s expected salary from a consummation of the covered cases, a simultaneous loan does not job the consumer has accepted and will transaction and secured by the same include a credit transaction that occurs begin after receiving an educational dwelling that secures the covered after consummation of the covered degree, the creditor may verify that transaction. A HELOC that is a transaction that is subject to this expectation with a written statement simultaneous loan that the creditor section. from an employer indicating that the knows or has reason to know about 4. Verification of simultaneous loans. consumer will be employed upon must be considered as a mortgage Although a credit report may be used to graduation at a specified salary. obligation in determining a consumer’s verify current obligations, it will not 4. Seasonal or irregular income. A ability to repay the covered transaction reflect a simultaneous loan that has not creditor reasonably may determine that even though the HELOC is not a covered yet been consummated or has just a consumer can make periodic loan transaction subject to § 226.43. See recently been consummated. If the payments even if the consumer’s § 226.43(a) discussing the scope of this creditor knows or has reason to know income, such as self-employment section. ‘‘Simultaneous loan’’ is defined that there will be a simultaneous loan income, is seasonal or irregular. For in § 226.43(b)(12). For further extended at or before consummation, ‘‘ ’’ example, assume a consumer receives explanation of same consumer, see the creditor may verify the simultaneous income during a few months each year comment 43(b)(12)–2. loan by obtaining third-party 2. Knows or has reason to know. In from the sale of crops. If the creditor verification from the third-party creditor determining a consumer’s repayment determines that the consumer’s annual of the simultaneous loan. For example, ability for a covered transaction under the creditor may obtain a copy of the income divided equally across 12 § 226.43(c)(2), a creditor must consider promissory note or other written months is sufficient for the consumer to the consumer’s payment obligation on verification from the third-party creditor make monthly loan payments, the any simultaneous loan that the creditor in accordance with widely accepted creditor reasonably may determine that knows or has reason to know will be governmental or non-governmental the consumer can repay the loan, even made at or before consummation of the standards. For further guidance, see though the consumer may not receive covered transaction. For example, where comments 43(c)(3)–1 and –2 discussing income during certain months. a covered transaction is a home verification using third-party records. Paragraph 43(c)(2)(ii). purchase loan, the creditor must 43(c)(2)(v) Mortgage-related 1. Employment status and income. consider the consumer’s periodic obligations. Employment may be full-time, part- payment obligation for any ‘‘piggyback’’ 1. General. A creditor must include in time, seasonal, irregular, military, or second-lien loan that the creditor knows its repayment ability assessment the self-employment. Under or has reason to know will be used to consumer’s mortgage-related § 226.43(c)(2)(ii), a creditor need verify finance part of the consumer’s down obligations, such as the expected a consumer’s current employment status payment. The creditor complies with property taxes and premiums for only if the creditor relies on the this requirement where, for example, mortgage-related insurance required by consumer’s employment income in the creditor follows policies and the creditor as set forth in § 226.45(b)(1), determining the consumer’s repayment procedures that show at or before but need not include mortgage-related ability. For example, if a creditor relies consummation that the same consumer insurance premiums that the creditor wholly on a consumer’s investment has applied for another credit does not require, such as credit income to determine repayment ability, transaction secured by the same insurance or fees for operational debt the creditor need not verify or document dwelling. To illustrate, assume a suspension and debt cancellation employment status. See comment creditor receives an application for a agreements. Mortgage-related 43(c)(4)–2 for guidance on which home purchase loan where the obligations must be included in the income to consider where multiple requested loan amount is less than the creditor’s determination of repayment consumers apply jointly for a loan. home purchase price. The creditor’s ability regardless of whether the 2. Military personnel. Creditors may policies and procedures require the amounts are included in the monthly verify the employment status of military consumer to state the source of the payment or whether there is an escrow personnel using the electronic database downpayment. If the creditor account established. See § 226.43(b)(8) maintained by the Department of determines the source of the defining the term ‘‘mortgage-related Defense to facilitate identification of downpayment is another extension of obligations.’’ consumers covered by credit protections credit that will be made to the same 2. Pro rata amount. In considering provided pursuant to 10 U.S.C. 987. consumer at or before consummation mortgage-related obligations that are not Paragraph 43(c)(2)(iii). and secured by the same dwelling, the paid monthly, a creditor may look to 1. General. For purposes of the creditor knows or has reason to know of widely accepted governmental or non- repayment ability determination the simultaneous loan and must governmental standards in determining required under § 226.43(c)(2), a creditor consider the simultaneous loan. the pro rata monthly payment amount. must consider the consumer’s monthly Alternatively, if the creditor has 3. Estimates. Estimates of mortgage- payment on a covered transaction that is information that suggests the related obligations should be based calculated as required under downpayment source is the consumer’s upon information that is known to the § 226.43(c)(5), taking into account any income or existing assets, the creditor creditor at the time the creditor mortgage-related obligations. ‘‘Mortgage- would be under no further obligation to underwrites the mortgage obligation.

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Information is known if it is reasonably factors such as the number and age of from the consumer or from a service available to the creditor at the time of credit lines, payment history, and any provider and need not obtain the copy underwriting the loan. See comment judgments, collections, or bankruptcies. directly from the IRS or other taxing 17(c)(2)(i)–1 discussing the ‘‘reasonably To verify credit history as required by authority. See comment 43(c)(3)–2. available’’ standard. For purposes of this § 226.43(c)(3), a creditor may, for Paragraph 43(c)(4)(vi). section, the creditor need not project instance, look to credit reports from 1. Government benefits. In verifying a potential changes, such as by estimating credit bureaus, or nontraditional credit consumer’s income, creditors may use a possible increases in taxes and references contained in third-party written or electronic record from a insurance. documents, such as rental payment government agency of the amount of any 4. Verification of mortgage-related history or public utility payments. benefit payments or awards, such as a obligations. Creditors must make the 43(c)(3) Verification using third-party ‘‘proof of income letter’’ issued by the repayment ability determination records. Social Security Administration (also required under § 226.43(c) based on 1. Records specific to the individual known as a ‘‘budget letter,’’ ‘‘benefits information verified from reasonably consumer. Records used to verify a letter,’’ or ‘‘proof of award letter’’). reliable records. For guidance regarding consumer’s repayment ability must be 43(c)(5) Payment calculation. verification of mortgage-related specific to the individual consumer. 43(c)(5)(i) General rule. obligations see comments 43(c)(3)–1 and Records regarding average incomes in 1. General. For purposes of –2, which discuss verification using the consumer’s geographic location or § 226.43(c)(2)(iii), a creditor must third-party records. average incomes paid by the consumer’s determine the consumer’s ability to Paragraph 43(c)(2)(vi). employer, for example, would not be repay the covered transaction using the 1. Consideration and verification of specific to the individual consumer and payment calculation methods set forth current debt obligations. In determining are not sufficient. in § 226.43(c)(5). The payment how to define ‘‘current debt obligations’’ 2. Obtaining records. To determine calculation methods differ depending and how to verify such obligations, repayment ability, creditors may obtain on whether the covered transaction has creditors may look to widely accepted records from a third-party service a balloon payment, or is an interest-only governmental and non-governmental provider, such as a party the consumer’s or negative amortization loan. The underwriting standards. For example, a employer uses to respond to income payment calculation method set forth in creditor must consider student loans, verification requests, as long as the § 226.43(c)(5)(i) applies to any covered automobile loans, revolving debt, records are reasonably reliable and transaction that does not have a balloon alimony, child support, and existing specific to the individual consumer. payment, or that is not an interest-only mortgages. To verify the obligations as Creditors also may obtain third-party or negative amortization loan, whether required by § 226.43(c)(3), a creditor records directly from the consumer. For it is a fixed-rate, adjustable-rate or step- may, for instance, look to credit reports, example, creditors using payroll rate mortgage. The terms ‘‘fixed-rate student loan statements, automobile statements to verify the consumer’s mortgage,’’ ‘‘adjustable-rate mortgage,’’ loan statements, credit card statements, income (as allowed under ‘‘step-rate mortgage,’’ ‘‘interest-only loan’’ alimony or child support court orders, § 226.43(c)(4)(iii) may obtain the payroll and ‘‘negative amortization loan,’’ are and existing mortgage statements. statements from the consumer. defined in § 226.18(s)(7)(i), (ii), (iii), (iv) 2. Discrepancies between a credit 43(c)(4) Verification of income or and (v), respectively. For the meaning of report and an application. If a credit assets. the term ‘‘balloon payment,’’ see report reflects a current debt obligation 1. Income or assets relied on. A § 226.18(s)(5)(i). The payment that a consumer has not listed on the creditor need consider, and therefore calculation method set forth in application, the creditor must consider need verify, only the income or assets § 226.43(c)(5)(ii) applies to any covered the obligation. The credit report is the creditor relies on to evaluate the transaction that is a loan with a balloon deemed a reasonably reliable third-party consumer’s repayment ability. See payment, interest-only loan, or negative record under § 226.43(c)(3). If a credit comment 43(c)(2)(i)–2. For example, if a amortization loan. See commentary to report does not reflect a current debt consumer’s application states that the § 226.43(c)(5)(i) and (ii), which provides obligation that a consumer has listed on consumer earns a salary and is paid an examples for calculating the monthly the application, the creditor must annual bonus and the creditor relies on payment for purposes of the repayment consider the obligation. However, the only the consumer’s salary to evaluate ability determination required under creditor need not verify the existence or the consumer’s repayment ability, the § 226.43(c)(2)(iii). amount of the obligation through creditor need verify only the salary. 2. Greater of the fully indexed rate or another source. If a creditor nevertheless 2. Multiple applicants. If multiple introductory rate; premium adjustable- verifies an obligation, the creditor must consumers jointly apply for a loan and rate transactions. A creditor must consider the obligation based on the each lists income or assets on the determine a consumer’s repayment information from the verified source. application, the creditor need verify ability for the covered transaction using Paragraph 43(c)(2)(vii). only the income or assets the creditor substantially equal, monthly, fully 1. Monthly debt-to-income ratio and relies on in determining repayment amortizing payments that are based on residual income. See § 226.43(c)(7) ability. the greater of the fully indexed rate or regarding the definitions and 3. Tax-return transcript. Under any introductory interest rate. In some calculations for the monthly debt-to- § 226.43(c)(4), creditors may verify a adjustable-rate transactions, creditors income ratio and residual income. consumer’s income using an Internal may set an initial interest rate that is not Paragraph 43(c)(2)(viii). Revenue Service (IRS) tax-return determined by the index or formula 1. Consideration and verification of transcript, which summarizes the used to make later interest rate credit history. In determining how to information in a consumer’s filed tax adjustments. Typically, this initial rate define ‘‘credit history’’ and how to verify return, another record that provides charged to consumers is lower than the credit history, creditors may look to reasonably reliable evidence of the rate would be if it were determined by widely accepted governmental and non- consumer’s income, or both. Creditors using the the index plus margin, or governmental underwriting standards. may obtain a copy of a tax-return formula (i.e., fully indexed rate). For example, a creditor may consider transcript or a filed tax return directly However, an initial rate that is a

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premium rate is higher than the rate i. Fixed-rate mortgage. A loan in an with a balloon payment, the creditor based on the index or formula. In such amount of $200,000 has a 30-year loan must consider the consumer’s ability to cases, creditors must calculate the fully term and a fixed interest rate of 7%. For repay the loan based on the payment amortizing payment based on the initial purposes of § 226.43(c)(2)(iii), the schedule under the terms of the legal ‘‘premium’’ rate. ‘‘Fully indexed rate’’ is creditor must determine the consumer’s obligation, including any required defined in § 226.43(b)(3). ability to repay the loan based on a balloon payment. For loans with a 3. Monthly, fully amortizing payment of $1,331, which is the balloon payment that are not higher- payments. Section 226.43(c)(5)(i) does substantially equal, monthly, fully priced covered transactions, the creditor not prescribe the terms or loan features amortizing payment that will repay should use the maximum payment that a creditor may choose to offer or $200,000 over 30 years using the fixed scheduled during the first five years of extend to a consumer, but establishes interest rate of 7%. the loan following consummation. the calculation method a creditor must ii. Adjustable-rate mortgage with ‘‘Balloon payment’’ is defined in use to determine the consumer’s discount for five years. A loan in an § 226.18(s)(5)(i). repayment ability for a covered amount of $200,000 has a 30-year loan 2. First five years after consummation. transaction. For example, the terms of term. The loan agreement provides for a Under § 226.43(c)(5)(ii)(A)(1), the the loan agreement may require that the discounted interest rate of 6% that is creditor must determine a consumer’s consumer repay the loan in quarterly or fixed for an initial period of five years, ability to repay a loan with a balloon bi-weekly scheduled payments, but for after which the interest rate will adjust payment that is not a higher-priced purposes of the repayment ability annually based on a specified index covered transaction using the maximum determination, the creditor must convert plus a margin of 3%, subject to a 2% payment scheduled during the first five these scheduled payments to monthly annual periodic interest rate adjustment years (60 months) after consummation. payments in accordance with cap. The index value in effect at For example, assume a loan with a § 226.43(c)(5)(i)(B). Similarly, the loan consummation is 4.5%; the fully balloon payment due at the end of a agreement may not require the indexed rate is 7.5% (4.5% plus 3%). five-year loan term. The loan is consumer to make fully amortizing Even though the scheduled monthly consummated on August 15, 2011, and payments, but for purposes of the payment required for the first five years the first monthly payment is due on repayment ability determination the is $1,199, for purposes of October 1, 2011. The first five years after creditor must convert any non- § 226.43(c)(2)(iii) the creditor must consummation occurs on August 15, amortizing payments to fully amortizing determine the consumer’s ability to 2016. The balloon payment must be payments. repay the loan based on a payment of made on the due date of the 60th $1,398, which is the substantially equal, monthly payment, which is September 4. Substantially equal. In determining monthly, fully amortizing payment that 1, 2016. For purposes of determining the whether monthly, fully amortizing will repay $200,000 over 30 years using consumer’s ability to repay the loan payments are substantially equal, the fully indexed rate of 7.5%. under § 226.43(c)(2)(iii), the creditor creditors should disregard minor iii. Step-rate mortgage. A loan in an need not consider the balloon payment variations due to payment-schedule amount of $200,000 has a 30-year loan that is due on September 1, 2016. irregularities and odd periods, such as term. The loan agreement provides that 3. Renewable balloon loan; loan term. a long or short first or last payment the interest rate will be 6.5% for the first A balloon loan that is not a higher- period. That is, monthly payments of two years of the loan, 7% for the next priced covered transaction could principal and interest that repay the three years of the loan, and 7.5% provide that a creditor is loan amount over the loan term need thereafter. Accordingly, the scheduled unconditionally obligated to renew a not be equal, but the monthly payments payment amounts are $1,264 for the first balloon loan at the consumer’s option should be substantially the same two years, $1,328 for the next three (or is obligated to renew subject to without significant variation in the years, and $1,388 thereafter for the conditions within the consumer’s monthly combined payments of both remainder of the term. For purposes of control). See comment 17(c)(1)–11 principal and interest. For example, § 226.43(c)(2)(iii), the creditor must discussing renewable balloon loans. For where no two monthly payments vary determine the consumer’s ability to purposes of this section, the loan term from each other by more than 1% repay the loan based on a payment of does not include any the period of time (excluding odd periods, such as a long $1,398, which is the substantially equal, that could result from a renewal or short first or last payment period), monthly, fully amortizing payment that provision. To illustrate, assume a 3-year such monthly payments would be would repay $200,000 over 30 years balloon loan that is not a higher-priced considered substantially equal for using the fully indexed rate of 7.5%. covered transaction contains an purposes of this section. In general, 43(c)(5)(ii) Special rules for loans with unconditional obligation to renew for creditors should determine whether the a balloon payment, interest-only loans, another three years at the consumer’s monthly, fully amortizing payments are and negative amortization loans. option. In this example, the loan term substantially equal based on guidance Paragraph 43(c)(5)(ii)(A). for the balloon loan is 3 years, and not provided in § 226.17(c)(3) (discussing 1. General. For loans with a balloon the potential 6 years that could result if minor variations), and § 226.17(c)(4)(i)– payment, the rules differ depending on the consumer chooses to renew the loan. (iii) (discussing payment-schedule whether the loan is a higher-priced Accordingly, the creditor must irregularities and measuring odd covered transaction, as defined under underwrite the loan using the maximum periods due to a long or short first § 226.43(b)(4), or is not a higher-priced payment scheduled in the first five period) and associated commentary. covered transaction because the annual years after consummation, which 5. Examples. The following are percentage rate does not exceed the includes the balloon payment due at the examples of how to determine the applicable average prime offer rate end of the 3-year loan term. See consumer’s repayment ability based on (APOR) for a comparable transaction. comment 43(c)(5)(ii)(A).ii, which substantially equal, monthly, fully ‘‘Average prime offer rate’’ is defined in provides an example of how to amortizing payments as required under § 226.45(a)(2)(ii); ‘‘higher-priced covered determine the consumer’s repayment § 226.43(c)(5)(i) (all amounts are transaction’’ is defined in § 226.43(b)(4). ability for a 3-year renewable balloon rounded): For higher-priced covered transactions loan.

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4. Examples of loans with a balloon repay the loan based on the monthly would cover only the interest due. The payment that are not higher-priced payment of $1,199, and need not loan is recast on the due date of the 60th covered transactions. The following are consider the balloon payment of monthly payment, after which the examples of how to determine the $187,308 due on April 1, 2016. scheduled monthly payments increase maximum payment scheduled during 5. Example of a higher-priced covered to $1414, a monthly payment that the first five years after consummation transaction with a balloon payment. repays the loan amount of $200,000 over (all amounts are rounded): The following is an example of how to the 25 years remaining as of the date the i. Balloon payment loan with a three- determine the consumer’s repayment loan is recast (300 months). For year loan term; fixed interest rate. A ability based on the loan’s payment purposes of § 226.43(c)(2)(iii), the loan agreement provides for a fixed schedule, including any balloon creditor must determine the consumer’s interest rate of 6%, which is below the payment (all amounts are rounded): ability to repay the loan based on a APOR threshold for a comparable i. Balloon payment loan with a 10- payment of $1414, which is the transaction, thus the loan is not a year loan term; fixed interest rate. The substantially equal, monthly, fully higher-priced covered transaction. The loan is a higher-priced covered amortizing payment that would repay loan amount is $200,000, and the loan transaction with a fixed interest rate of $200,000 over the 25 years remaining as has a three-year loan term but is 7%. The loan amount is $200,000 and of the date the loan is recast using the amortized over 30 years. The monthly the loan has a 10-year loan term, but is fixed interest rate of 7%. payment scheduled for the first three amortized over 30 years. The monthly ii. Adjustable-rate mortgage with years following consummation is payment scheduled for the first ten discount for three years and interest- $1,199, with a balloon payment of years is $1,331, with a balloon payment only payments for five years. A loan in $193,367 due at the end of the third of $172,956. For purposes of an amount of $200,000 has a 30-year year. For purposes of § 226.43(c)(2)(iii), § 226.43(c)(2)(iii), the creditor must loan term, but provides for interest-only the creditor must determine the consider the consumer’s ability to repay payments for the first five years. The consumer’s ability to repay the loan the loan based on the payment schedule loan agreement provides for a based on the balloon payment of that fully repays the loan amount, discounted interest rate of 5% that is $193,367. including the balloon payment of fixed for an initial period of three years, ii. Renewable balloon payment loan $172,956. after which the interest rate will adjust with a three-year loan term. Assume the Paragraph 43(c)(5)(ii)(B). each year based on a specified index same facts above in 43(c)(5)(ii)(A).i, 1. General. For loans that permit plus a margin of 3%, subject to an except that the loan agreement also interest-only payments, the creditor annual interest rate adjustment cap of provides that the creditor is must use the fully indexed rate or 2%. The index value in effect at unconditionally obligated to renew the introductory rate, whichever is greater, consummation is 4.5%; the fully balloon payment mortgage at the to calculate the substantially equal, indexed rate is 7.5% (4.5% plus 3%). consumer’s option at the end of the monthly payment of principal and The monthly payments of $833 for the three-year term for another three years interest that will repay the loan amount first three years and $1250 for the (the creditor retains the option to over the term of the loan remaining as following two years would cover only increase the interest rate at the time of of the date the loan is recast. For the interest due. The loan is recast on renewal). In determining the maximum discussion regarding the fully indexed the due date of the 60th monthly payment scheduled during the first five rate and the meaning of ‘‘substantially payment, after which the scheduled years after consummation, the creditor equal,’’ see comments 43(b)(3)–1 monthly payments increase to $1478, a must use a loan term of three years. through –5 and 43(c)(5)(i)–4, monthly payment that will repay the Accordingly, for purposes of respectively. Under § 226.43(c)(5)(ii)(B), loan amount of $200,000 over the § 226.43(c)(2)(iii), the creditor must the relevant term of the loan is the remaining 25 years of the loan (300 determine the consumer’s ability to period of time that remains as of the months). For purposes of repay the loan based on the balloon date the loan is recast to require fully § 226.43(c)(2)(iii), the creditor must payment of $193,367. amortizing payments. For a loan on determine the consumer’s ability to iii. Balloon payment loan with a five- which only interest and no principal repay the loan based on a monthly year loan term; fixed interest rate. A has been paid, the loan amount will be payment of $1,478, which is the loan provides for a fixed interest rate of the outstanding principal balance at the substantially equal, monthly payment of 6%, which is below the APOR threshold time of the recast. ‘‘Loan amount’’ and principal and interest that would repay for a comparable transaction, and thus, ‘‘recast’’ are defined in § 226.43(b)(5) and $200,000 over the 25 years remaining as the loan is not a higher-priced covered (b)(11), respectively. ‘‘Interest-only’’ and of the date the loan is recast using the transaction. The loan amount is ‘‘Interest-only loan’’ are defined in fully indexed rate of 7.5%. $200,000, and the loan has a five-year § 226.18(s)(7)(iv). Paragraph 43(c)(5)(ii)(C). loan term but is amortized over 30 2. Examples. The following are 1. General. For purposes of years. The loan is consummated on examples of how to determine the determining the consumer’s ability to March 15, 2011, and the monthly consumer’s repayment ability based on repay a negative amortization loan, the payment scheduled for the first five substantially equal, monthly payments creditor must use substantially equal, years following consummation is of principal and interest under monthly payments of principal and $1,199, with the first monthly payment § 226.43(c)(5)(ii)(B) (all amounts are interest based on the fully indexed rate due on May 1, 2011. The first five years rounded): or the introductory rate, whichever is after consummation end on March 15, i. Fixed-rate mortgage with interest- greater, that will repay the maximum 2016. The balloon payment of $187,308 only payments for five years. A loan in loan amount over the term of the loan is required on the due date of the 60th an amount of $200,000 has a 30-year that remains as of the date the loan is monthly payment, which is April 1, loan term. The loan agreement provides recast. Accordingly, before determining 2016 (more than five years after for a fixed interest rate of 7%, and the substantially equal, monthly consummation). For purposes of permits interest-only payments for the payments the creditor must first § 226.43(c)(2)(iii), the creditor must first five years. The monthly payment of determine the maximum loan amount determine the consumer’s ability to $1167 scheduled for the first five years and the period of time that remains in

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the loan term after the loan is recast. year is based on the initial interest rate than the interest accrued each month, ‘‘Recast’’ is defined in § 226.43(b)(11). of 1.5%. After that, the minimum resulting in negative amortization. Second, the creditor must use the fully monthly payment adjusts annually, but Assuming the minimum payments indexed rate or introductory rate, may increase by no more than 7.5% increase year-to-year up to the 12.5% whichever is greater, to calculate the over the previous year’s payment. The payment cap, the consumer will begin substantially equal, monthly payment minimum monthly payment is $690 in making payments that cover at least all amount that will repay the maximum the first year, $742 in the second year, of the interest accrued at the end of the loan amount over the term of the loan and $798 in the first part of the third third year. Thus, the loan is recast on remaining as of the date the loan is year. the due date of the 36th monthly recast. For discussion regarding the B. To determine the maximum loan payment. The maximum loan amount fully indexed rate and the meaning of amount, assume that the interest rate on that date is $207,659, and the ‘‘substantially equal,’’ see comments increases to the maximum lifetime remaining loan term is 27 years (324 43(b)(3)–1 through –5 and 43(c)(5)(i)–4, interest rate of 10.5% at the first months). For purposes of respectively. For the meaning of the adjustment (i.e., the second month), and § 226.43(c)(2)(iii), the creditor must term ‘‘maximum loan amount’’ and a interest accrues at that rate until the determine the consumer’s ability to discussion of how to determine the loan is recast. Assume that the repay the loan based on a monthly maximum loan amount for purposes of consumer makes the minimum monthly payment of $1497, which is the § 226.43(c)(5)(ii)(C), see § 226.43(b)(7) payments scheduled, which are capped substantially equal, monthly payment of and associated commentary. ‘‘Negative at 7.5% from year-to-year, for the principal and interest that will repay the amortization loan’’ is defined in maximum possible time. Because the maximum loan amount of $207,659 over § 226.18(s)(7)(v). consumer’s minimum monthly the remaining loan term of 27 years 2. Term of loan. Under payments are less than the interest using the fixed interest rate of 7.5%. § 226.43(c)(5)(ii)(C), the relevant term of accrued each month, negative 43(c)(6) Payment calculation for the loan is the period of time that amortization occurs (i.e., the accrued simultaneous loans. remains as of the date the terms of the but unpaid interest is added to the 1. Scope. In determining the legal obligation recast. That is, the principal balance). Thus, assuming that consumer’s repayment ability for a creditor must determine substantially the consumer makes the minimum covered transaction under equal, monthly payments of principal monthly payments for as long as § 226.43(c)(2)(iii), creditors must and interest that will repay the possible and that the maximum interest include consideration of any maximum loan amount based on the rate of 10.5% is reached at the first rate simultaneous loan which it knows, or period of time that remains after any adjustment (i.e., the second month), the has reason to know, will be made at or negative amortization cap is triggered or negative amortization cap of 115% is before consummation of the covered any period permitting minimum reached on the due date of the 27th transaction. For a discussion of the periodic payments expires, whichever monthly payment and the loan is recast standard ‘‘knows or has reason to occurs first. as of that date. The maximum loan know,’’ see comment 43(c)(2)(iv)–2. For 3. Examples. The following are amount as of the due date of the 27th the meaning of the term ‘‘simultaneous examples of how to determine the monthly payment is $229,243, and the loan,’’ see § 226.43(b)(12). consumer’s repayment ability based on remaining term of the loan is 27 years 2. Payment calculation—covered substantially equal, monthly payments and nine months (333 months). transaction. For a simultaneous loan of principal and interest as required C. For purposes of § 226.43(c)(2)(iii), that is a covered transaction, as that under § 226.43(c)(5)(ii)(C) (all amounts the creditor must determine the term is defined under § 226.43(b)(12), a are rounded): consumer’s ability to repay the loan creditor must determine a consumer’s i. Adjustable-rate mortgage with based on a monthly payment of $1,716, ability to repay the monthly payment negative amortization. A. Assume an which is the substantially equal, obligation for a simultaneous loan as set adjustable-rate mortgage in the amount monthly payment of principal and forth in § 226.43(c)(5), taking into of $200,000 with a 30-year loan term. interest that will repay the maximum account any mortgage-related The loan agreement provides that the loan amount of $229,243 over the obligations. For the meaning of the term consumer can make minimum monthly remaining loan term of 333 months ‘‘mortgage-related obligations,’’ see payments that cover only part of the using the fully indexed rate of 8%. See § 226.43(b)(8). interest accrued each month until the comments 43(b)(7)–1 and –2 discussing 3. Payment calculation—home equity date on which the principal balance the calculation of the maximum loan line of credit. For a simultaneous loan reaches 115% of its original balance amount, and § 226.43(b)(11) for the that is a home equity line of credit (i.e., a negative amortization cap of meaning of the term ‘‘recast.’’ subject to § 226.5b, the creditor must 115%) or for the first five years of the ii. Fixed-rate, graduated payment consider the periodic payment required loan (60 monthly payments), whichever mortgage. A loan in the amount of under the terms of the plan when occurs first. The introductory interest $200,000 has a 30-year loan term. The assessing the consumer’s ability to repay rate at consummation is 1.5%. One loan agreement provides for a fixed- the covered transaction secured by the month after consummation, the interest interest rate of 7.5%, and requires the same dwelling as the simultaneous loan. rate adjusts and will adjust monthly consumer to make minimum monthly Under § 226.43(c)(6)(ii), a creditor must thereafter based on the specified index payments during the first year, with determine the periodic payment plus a margin of 3.5%. The index value payments increasing 12.5% every year required under the terms of the plan by in effect at consummation is 4.5%; the for four years (the annual payment cap). considering the actual amount of credit fully indexed rate is 8% (4.5% plus The payment schedule provides for to be drawn by the consumer at 3.5%). The maximum lifetime interest payments of $943 in the first year, consummation of the covered rate is 10.5%; there are no other $1061 in the second year, $1194 in the transaction. The amount to be drawn is periodic interest rate adjustment caps third year, $1343 in the fourth year, and the amount requested by the consumer; that limit how quickly the maximum then requires $1511 for the remaining when the amount requested will be lifetime rate may be reached. The term of the loan. During the first three disbursed, or actual receipt of funds, is minimum monthly payment for the first years of the loan, the payments are less not determinative. For example, where

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the creditor’s policies and procedures payments to be compared must be with a non-standard mortgage applies require the source of downpayment to calculated based on the requirements for a refinancing on May 1, 2011. If the be verified, and the creditor verifies that under § 226.43(d)(5). Whether the new consumer made a 45-day late payment a simultaneous loan that is a HELOC loan payment is ‘‘materially lower’’ than on March 15, 2011, the requirement will provide the source of the non-standard mortgage payment under § 226.43(d)(1)(v) is not met downpayment for the first-lien covered depends on the facts and circumstances. because the consumer made a payment transaction, the creditor must consider In all cases, a payment reduction of 10 more than 30 days late just one and one- the periodic payment on the HELOC by percent or more meets the ‘‘materially half months prior to application. If the assuming the amount drawn is the lower’’ standard. number of months between downpayment amount. In general, a Paragraph 43(d)(1)(iv). consummation of the non-standard creditor should determine the periodic 1. Late payment—24 months prior to mortgage and the consumer’s payment based on guidance in staff application. Under § 226.43(d)(1)(iv), application for the standard mortgage is commentary to § 226.5b(d)(5) the exemptions in § 226.43(d)(3) apply six or fewer, the consumer may not have (discussing payment terms). to a covered transaction only if, during made any payment more than 30 days 43(c)(7) Monthly debt-to-income ratio the 24 months immediately preceding late on the non-standard mortgage. or residual income. the creditor’s receipt of the consumer’s 43(d)(2) Definitions. 1. Monthly debt-to-income ratio and written application for a refinancing, the 43(d)(2)(i) Non-standard mortgage. monthly residual income. Under consumer has made no more than one Paragraph 43(d)(2)(i)(A). § 226.43(c)(2)(vii), the creditor must payment on the non-standard mortgage 1. Adjustable-rate mortgage with an consider the consumer’s monthly debt- more than 30 days late. (For an introductory fixed rate. Under to-income ratio, or the consumer’s explanation of ‘‘written application,’’ see § 226.43(d)(2)(i)(A), an adjustable-rate monthly residual income, in accordance comment 43(d)(1)–1.) For example, mortgage with an introductory fixed with the requirements in § 226.43(c)(7). assume a consumer applies for a interest rate for one year or longer is To determine the appropriate threshold refinancing on May 1, 2011. Assume considered a ‘‘non-standard mortgage.’’ for the monthly debt-to-income ratio or also that the consumer made a non- For example, a covered transaction that the monthly residual income, the standard mortgage payment on August has a fixed introductory rate for the first creditor may look to widely accepted 15, 2009, that was 45 days late. The two, three or five years and then governmental and non-governmental consumer made no other late payments converts to a variable rate for the underwriting standards. on the non-standard mortgage between remaining 28, 27 or 25 years, 2. Use of both debt-to-income ratio May 1, 2009, and May 1, 2011. In this respectively, is a ‘‘non-standard and monthly residual income. If a example, the requirement under mortgage.’’ A covered transaction with creditor considers both the consumer’s § 226.43(d)(1)(iv) is met because the an introductory rate for six months that monthly debt-to-income ratio and the consumer made only one payment that then converts to a variable rate for the residual income, the creditor may base was over 30 days late within the 24 remaining 29 and 1⁄2 years is not a ‘‘non- the ability-to-repay determination on months prior to applying for the standard mortgage.’’ either the consumer’s debt-to-income refinancing (i.e., 20 and one-half months 43(d)(2)(ii) Standard mortgage. ratio or residual income, even if the prior to application). Paragraph 43(d)(2)(ii)(A). ability-to-repay determination would 2. Payment due date. Whether a 1. Regular periodic payments. Under differ with the basis used. payment is more than 30 days late is § 226.43(d)(2)(ii)(A), a ‘‘standard 3. Compensating factors. The creditor measured in relation to the contractual mortgage’’ must provide for regular may consider compensating factors to due date not accounting for any grace periodic payments that do not result in mitigate a higher debt-to-income ratio or period. For example, if the contractual an increase of the principal balance lower residual income. For example, the due date for a non-standard mortgage (negative amortization), allow the creditor may consider the consumer’s payment is the first day of every month, consumer to defer repayment of assets other than the dwelling securing but no late fee will be charged as long principal (see comment 43(e)(2)(i)–2), or the covered transaction or the as the payment is received by the 16th result in a balloon payment. Thus, the consumer’s residual income as a of the month, the payment due date for terms of the legal obligation must compensating factor for a higher debt-to- purposes of § 226.43(d)(1)(iv) and require the consumer to make payments income ratio. In determining whether (d)(1)(v) is the first day of the month, of principal and interest on a monthly and in what manner to consider not the 16th day of the month. Thus, a or other periodic basis that will repay compensating factors, creditors may payment due under the contract on the loan amount over the loan term. look to widely accepted governmental September 1st that is paid on October Except for payments resulting from any and non-governmental underwriting 1st is made more than 30 days after the interest rate changes after standards. payment due date. consummation in an adjustable-rate or 43(d) Refinancing of non-standard Paragraph 43(d)(1)(v). step-rate mortgage, the periodic mortgages. 1. Late payment—six months prior to payments must be substantially equal. 43(d)(1) Scope. application. Under § 226.43(d)(1)(v), the For an explanation of the term 1. Written application. For an exemptions in § 226.43(d)(3) apply to a ‘‘substantially equal,’’ see comment explanation of the requirements for a covered transaction only if, during the 43(c)(5)(i)–4. In addition, a single- ‘‘written application’’ in six months immediately preceding the payment transaction is not a ‘‘standard § 226.43(d)(1)(iii), (d)(1)(iv) and creditor’s receipt of the consumer’s mortgage’’ because it does not require (d)(1)(v), see comment 19(a)(1)(i)–3. written application for a refinancing, the ‘‘regular periodic payments.’’ See also Paragraph 43(d)(1)(ii). consumer has made no payments on the comment 43(e)(2)(i)–1. 1. Materially lower. The exemptions non-standard mortgage more than 30 Paragraph 43(d)(2)(ii)(D). afforded under § 226.43(d)(3) apply to a days late. (For an explanation of 1. First five years after consummation. refinancing only if the monthly payment ‘‘written application’’ and how to A ‘‘standard mortgage’’ must have an for the new loan is ‘‘materially lower’’ determine the payment due date, see interest rate that is fixed for at least the than the monthly payment for an comments 43(d)(1)–1 and 43(d)(1)(iv)– first five years (60 months) after existing non-standard mortgage. The 2.) For example, assume a consumer consummation. For example, assume an

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adjustable-rate mortgage that applies the consummation occurs on August 15, the date on which the mortgage is same fixed interest rate to determine the 2016. The first interest rate adjustment recast, assuming all scheduled first 60 payments of principal and occurs on the due date of the 60th payments have been made up to that interest due. The loan consummates on monthly payment, which is September date and the last payment due under August 15, 2011, and the first monthly 1, 2016. Under § 226.43(d)(3)(ii), to those terms is made and credited on that payment is due on October 1, 2011. The calculate the payment required for the date. For example, assume an first five years after consummation ability-to-repay rule under adjustable-rate mortgage with a 30-year occurs on August 15, 2016. The first § 226.43(c)(2)(iii), the creditor should loan term. The loan agreement provides interest rate adjustment occurs on the use the payment based on the interest that the payments for the first 24 due date of the 60th monthly payment, rate that is fixed for the first five years months are based on a fixed rate, after which is September 1, 2016. This loan after consummation (from August 15, which the interest rate will adjust meets the criterion for a ‘‘standard 2011, until August 15, 2016), and is not annually based on a specified index and mortgage’’ under § 226.43(d)(2)(ii)(D) required to account for the payment margin. The loan is recast on the due because the interest rate is fixed until resulting after the first interest rate date of the 24th payment. If the 24th September 1, 2016, which is more than adjustment on September 1, 2016. payment is due on September 1, 2013, five years after consummation. For 43(d)(5) Payment calculations. the creditor must calculate the guidance regarding step-rate mortgages, 43(d)(5)(i) Non-standard mortgage. outstanding principal balance as of see comment 43(e)(2)(iv)–3.iii. 1. Payment calculation for a non- September 1, 2013, assuming that all 24 Paragraph 43(d)(2)(ii)(E). standard mortgage. In determining payments under the fixed rate terms 1. Permissible use of proceeds. To whether the monthly periodic payment have been made and credited timely. qualify as a ‘‘standard mortgage,’’ the for a standard mortgage is materially ii. Second, the payment calculation mortgage proceeds may be used for only lower than the monthly periodic must be based on substantially equal two purposes: paying off the non- payment for the non-standard mortgage monthly payments of principal and standard mortgage and paying for under § 226.43(d)(1)(ii), the creditor interest that will fully repay the closing costs, including paying escrow must consider the monthly payment for outstanding principal balance over the amounts required at or before closing. If the non-standard mortgage that will term of the loan remaining as of the date the proceeds of a covered transaction result after the loan is ‘‘recast,’’ assuming the loan is recast. Thus, in the example are used for other purposes, such as to substantially equal payments of above, the creditor must assume a loan pay off other liens or to provide principal and interest that amortize the term of 28 years (336 payments). additional cash to the consumer for remaining loan amount over the iii. Third, the payment must be based discretionary spending, the transaction remaining term as of the date the on the fully indexed rate, as defined in does not meet the definition of a mortgage is recast. For guidance § 226.43(b)(3), as of the date of the ‘‘standard mortgage.’’ regarding the meaning of ‘‘substantially written application for the standard 43(d)(3) Exemption from certain equal,’’ see comment 43(c)(5)(i)–4. For mortgage. repayment ability requirements. the meaning of ‘‘recast,’’ see 5. Example of payment calculation for Paragraph 43(d)(3)(i). § 226.43(b)(11) and associated an adjustable-rate mortgage with an 1. Two-part determination. To qualify commentary. introductory fixed rate. The following for the exemptions in § 226.43(d)(3), a 2. Fully indexed rate. The term ‘‘fully example illustrates the rule described in creditor must have considered, first, indexed rate’’ in § 226.43(d)(5)(i)(A) for comment 43(d)(5)(i)–4: whether the consumer is likely to calculating the payment for a non- i. A loan in an amount of $200,000 default on the existing mortgage once standard mortgage is generally defined has a 30-year loan term. The loan that loan is recast, and second, whether in § 226.43(b)(3) and associated agreement provides for a discounted the new mortgage will prevent the commentary. Under § 226.43(b)(3) the introductory interest rate of 5% that is consumer’s default. fully indexed rate is calculated at the fixed for an initial period of two years, 2. Likely default. In considering time of consummation. For purposes of after which the interest rate will adjust whether a consumer is likely to default § 226.43(d)(5)(i), however, the fully annually based on a specified index on the standard mortgage once it is indexed rate is calculated within a plus a margin of 3 percentage points. recast, a creditor may look to widely- reasonable period of time before or after ii. The non-standard mortgage accepted governmental and non- the date the creditor receives the consummates on February 15, 2011, and governmental standards for analyzing a consumer’s written application for the the first monthly payment is due on consumer’s likelihood of default. standard mortgage. Thirty days is April 1, 2011. The loan is recast on the Paragraph 43(d)(3)(ii). generally considered ‘‘a reasonable due date of the 24th monthly payment, 1. Payment calculation for repayment period of time.’’ which is March 1, 2013. ability requirements. If the conditions in 3. Written application. For an iii. On March 15, 2012, the creditor § 226.43(d)(3)(i) are met, the creditor explanation of the requirements for a receives the consumer’s written may meet the payment calculation ‘‘written application’’ in application for a refinancing after the requirements for determining a § 226.43(d)(5)(i), see comment consumer has made 12 monthly on-time consumer’s ability to repay the new loan 19(a)(1)(i)–3. payments. On this date, the index value by applying the calculation prescribed 4. Payment calculation for an is 4.5%. under § 226.43(d)(5)(ii), rather than the adjustable-rate mortgage with an iv. To calculate the non-standard calculations prescribed under introductory fixed rate. Under mortgage payment that must be § 226.43(c)(2)(iii) and (c)(5). For § 226.43(d)(5)(i), the monthly periodic compared to the standard mortgage example, assume that a ‘‘standard payment for an adjustable-rate mortgage payment under § 226.43(d)(1)(ii), the mortgage’’ is an adjustable-rate mortgage with an introductory fixed interest rate creditor must use— that has an initial fixed interest rate for for a period of one or more years must A. The outstanding principal balance the first five years after consummation. be calculated based on several as of March 1, 2013, assuming all The loan consummates on August 15, assumptions. scheduled payments have been made up 2011, and the first monthly payment is i. First, the payment must be based on to March 1, 2013, and the last payment due on October 1, 2011. Five years after the outstanding principal balance as of due under the fixed rate terms is made

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and credited on March 1, 2013. In this rate of 7%, and permits interest-only of the written application for the example, the outstanding principal payments for the first two years (the first standard mortgage. balance is $193,948. 24 payments), after which time 9. Example of payment calculation for B. The fully indexed rate of 7.5%, amortizing payments of principal and a negative amortization loan. The which is the index value of 4.5% as of interest are required. following example illustrates the rule March 15, 2012 (the date on which the ii. The non-standard mortgage described in comment 43(d)(5)(i)–8: application for a refinancing is received) consummates on February 15, 2011, and i. A loan in an amount of $200,000 plus the margin of 3%. the first monthly payment is due on has a 30-year loan term. The loan C. The remaining loan term as of April 1, 2011. The loan is recast on the agreement provides that the consumer March 1, 2013, the date of the recast, due date of the 24th monthly payment, can make minimum monthly payments which is 28 years (336 payments). which is March 1, 2013. that cover only part of the interest v. Based on these assumptions, the iii. On March 15, 2012, the creditor accrued each month until the date on monthly payment for the non-standard receives the consumer’s written which the principal balance increases to mortgage for purposes of determining application for a refinancing, after the the negative amortization cap of 115% whether the standard mortgage monthly consumer has made 12 monthly on-time of the loan amount, or for the first five payment is lower than the non-standard payments. years of monthly payments (60 mortgage monthly payment (see iv. To calculate the non-standard payments), whichever occurs first. The § 226.43(d)(1)(ii)) is $1,383. This is the mortgage payment that must be loan is an adjustable-rate mortgage that substantially equal, monthly payment of compared to the standard mortgage adjusts monthly according to a specified principal and interest required to repay payment under § 226.43(d)(1)(ii), the index plus a margin of 3.5%. the outstanding principal balance at the creditor must use— ii. The non-standard mortgage fully-indexed rate over the remaining A. The loan amount, which is the consummates on February 15, 2011, and term. outstanding principal balance as of the first monthly payment is due on 6. Payment calculation for an interest- March 1, 2013, assuming all scheduled April 1, 2011. Assume that, based on the only loan. Under § 226.43(d)(5)(i), the interest-only payments have been made calculation of the maximum loan monthly periodic payment for an and credited up to that date. In this amount required under § 226.43(b)(7) interest-only loan must be calculated example, the loan amount is $200,000. and associated commentary, the based on several assumptions. B. An interest rate of 7%, which is the negative amortization cap of 115% i. First, the payment must be based on interest rate in effect at the time of would be reached on July 1, 2013, the the loan amount, as defined in consummation of this fixed-rate non- due date of the 28th monthly payment. § 226.43(b)(5) (for a loan on which only standard mortgage. iii. On March 15, 2012, the creditor interest and no principal has been paid, C. The remaining loan term as of receives the consumer’s written the ‘‘loan amount’’ will be the March 1, 2013, the date of the recast, application for a refinancing, after the outstanding principal balance at the which is 28 years (336 payments). consumer has made 12 monthly on-time time of the recast), assuming all v. Based on these assumptions, the payments. On this date, the index value scheduled payments are made under the monthly payment for the non-standard is 4.5%. terms of the legal obligation in effect mortgage for purposes of determining iv. To calculate the non-standard before the mortgage is recast. For whether the standard mortgage monthly mortgage payment that must be example, assume that a mortgage has a payment is lower than the non-standard compared to the standard mortgage 30-year loan term, and provides that the mortgage monthly payment (see payment under § 226.43(d)(1)(ii), the first 24 months of payments are interest- § 226.43(d)(1)(ii)) is $1,359. This is the creditor must use— only. If the 24th payment is due on substantially equal, monthly payment of A. The maximum loan amount of September 1, 2013, the creditor must principal and interest required to repay $229,243 as of July 1, 2013. calculate the outstanding principal the loan amount at the fully-indexed B. The fully indexed rate of 8%, balance as of September 1, 2013, rate over the remaining term. which is the index value of 4.5% as of assuming that all 24 payments under the 8. Payment calculation for a negative March 15, 2012 (the date on which the interest-only payment terms have been amortization loan. Under creditor receives the application for a made and credited timely. § 226.43(d)(5)(i), the monthly periodic refinancing) plus the margin of 3.5%. ii. Second, the payment calculation payment for a negative amortization C. The remaining loan term as of July must be based on substantially equal loan must be calculated based on 1, 2013, the date of the recast, which is monthly payments of principal and several assumptions. 27 years and eight months (332 monthly interest that will fully repay the loan i. First, the calculation must be based payments). amount over the term of the loan on the maximum loan amount, as v. Based on these assumptions, the remaining as of the date the loan is defined in § 226.43(b)(7). For examples monthly payment for the non-standard recast. Thus, in the example above, the of how to calculate the maximum loan mortgage for purposes of determining creditor must assume a loan term of 28 amount, see comment 43(b)(7)–3. whether the standard mortgage monthly years (336 payments). ii. Second, the calculation must be payment is lower than the non-standard iii. Third, the payment must be based based on substantially equal monthly mortgage monthly payment (see on the fully indexed rate, as defined in payments of principal and interest that § 226.43(d)(1)(ii)) is $1,717. This is the § 226.43(b)(3), as of the date of the will fully repay the maximum loan substantially equal, monthly payment of written application for the standard amount over the term of the loan principal and interest required to repay mortgage. remaining as of the date the loan is the maximum loan amount at the fully- 7. Example of payment calculation for recast. For example, if the loan term is indexed rate over the remaining term. an interest-only loan. The following 30 years and the loan is recast on the 43(d)(5)(ii) Standard mortgage. example illustrates the rule described in due date of the 60th monthly payment, 1. Payment calculation for a standard comment 43(d)(5)(i)–6: the creditor must assume a loan term of mortgage. In determining whether the i. A loan in an amount of $200,000 25 years (300 payments). monthly periodic payment for a has a 30-year loan term. The loan iii. Third, the payment must be based standard mortgage is materially lower agreement provides for a fixed interest on the fully-indexed rate as of the date than the monthly periodic payment for

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a non-standard mortgage, the creditor § 226.43(f), if applicable). If a loan is not provide for regular periodic payments, a must consider the monthly payment for a qualified mortgage (for example single-payment transaction may not be a the standard mortgage that will result in because the loan provides for negative qualified mortgage. substantially equal, monthly, fully amortization), then the creditor or 2. Deferral of principal repayment. amortizing payments (as defined in assignee must demonstrate that the loan Under § 226.43(e)(2)(i)(B), a qualified § 226.43(b)(2)) using the rate as of complies with all of the requirements in mortgage’s regular periodic payments consummation. For guidance regarding § 226.43(c) (or, if applicable, may not allow the consumer to defer the meaning of ‘‘substantially equal’’ see § 226.43(d)). repayment of principal, except as comment 43(c)(5)(i)–4. For a mortgage Alternative 2—Paragraph 43(e)(1)–1 provided in § 226.43(f). A loan allows with a single, fixed rate for the first five 43(e)(1) Presumption of compliance. the deferral of principal repayment if years, the maximum rate that will apply 1. In general. Under § 226.43(c)(1), a one or more of the periodic payments during the first five years after creditor must make a reasonable and may be applied solely to accrued consummation will be the rate at good faith determination at or before interest and not to loan principal. consummation. For a step-rate mortgage, consummation that the consumer will Deferred principal repayment also occurs if the payment is applied to both however, which is a type of fixed-rate have a reasonable ability, at the time of accrued interest and principal but the mortgage, the rate that must be used is consummation, to repay the loan consumer is permitted to make periodic the highest rate that will apply during according to its terms, including any payments that are less than the amount the first five years after consummation. mortgage-related obligations. Under that would be required under a payment For example, if the rate for the first two § 226.43(e)(1), a creditor or assignee of schedule that has substantially equal years is 4%, the rate for the second two a covered transaction is presumed to payments that fully repay the loan years is 5%, and the rate for the next have complied with the repayment amount over the loan term. Graduated two years is 6%, the rate that must be ability requirement of § 226.43(c)(1) if used is 6%. payment mortgages, for example, allow the terms of the loan comply with 2. Example of payment calculation for deferral of principal repayment in this § 226.43(e)(2)(i)–(ii) (or, if applicable, a standard mortgage. The following manner and therefore may not be example illustrates the rule described in § 226.43(f)); the points and fees do not qualified mortgages. comment 43(d)(5)(ii)–1: A loan in an exceed the limit set forth in Paragraph 43(e)(2)(iv). amount of $200,000 has a 30-year loan § 226.43(e)(2)(iii), and the creditor has 1. Maximum interest rate during the term. The loan agreement provides for a complied with the underwriting criteria first five years after consummation. For discounted interest rate of 6% that is described in § 226.43(e)(2)(iv)–(v) (or, if a qualified mortgage, the creditor must fixed for an initial period of five years, applicable, § 226.43(f)). If a loan is not underwrite the loan using a periodic after which time the interest rate will a qualified mortgage (for example payment of principal and interest based adjust annually based on a specified because the loan provides for negative on the maximum interest rate that may index plus a margin of 3%, subject to a amortization), then the creditor or apply during the first five years after 2% annual interest rate adjustment cap. assignee must demonstrate that the loan consummation. Creditors must use the The creditor must determine whether complies with all of the requirements in maximum rate that could apply at any the standard mortgage monthly payment § 226.43(c) (or, if applicable, time during the first five years after is materially lower than the non- § 226.43(d)). However, even if the loan consummation, regardless of whether standard mortgage monthly payment is a qualified mortgage, the consumer the maximum rate is reached at the first (see § 226.43(d)(1)(ii)) based on a may rebut the presumption of or subsequent adjustment during the standard mortgage payment of $1,199. compliance with evidence that the loan five year period. This is the substantially equal, monthly did not comply with § 226.43(c)(1). For 2. Fixed-rate mortgage. For a fixed- payment of principal and interest example, evidence of a high debt-to- rate mortgage, creditors should use the required to repay $200,000 over 30 years income ratio with no compensating interest rate in effect at consummation. at an interest rate of 6%. factors, such as adequate residual ‘‘Fixed-rate mortgage’’ is defined in 43(e) Presumption of compliance for income, could be sufficient to rebut the § 226.18(s)(7)(iii). qualified mortgages. presumption. 3. Interest rate adjustment caps. For 43(e)(2) Qualified mortgage defined. an adjustable-rate mortgage, creditors Alternative 1—Paragraph 43(e)(1)–1 Paragraph 43(e)(2)(i). should assume the interest rate 43(e)(1) Safe harbor. 1. Regular periodic payments. Under increases after consummation as rapidly 1. In general. A creditor or assignee § 226.43(e)(2)(i), a qualified mortgage as possible, taking into account the that satisfies the requirements of must provide for regular periodic terms of the legal obligation. That is, § 226.43(e)(2) or § 226.43(f), as payments that may not result in an creditors should account for any applicable, is deemed to have complied increase of the principal balance periodic interest rate adjustment cap with § 226.43(c)(1). That is, a creditor or (negative amortization), deferral of that may limit how quickly the interest assignee need not demonstrate principal repayment, or a balloon rate can increase under the terms of the compliance with § 226.43(c)(2)–(7) if the payment. Thus, the terms of the legal legal obligation. Where a range for the terms of the loan comply with obligation must require the consumer to maximum interest rate during the first § 226.43(e)(2)(i)–(ii) (or, if applicable, make payments of principal and five years is provided, the highest rate § 226.43(f)); the loan’s points and fees interest, on a monthly or other periodic in that range is the maximum interest do not exceed the limits set forth in basis, that will fully repay the loan rate for purposes of this section. Where § 226.43(e)(2)(iii); and the creditor has amount over the loan term. The periodic the terms of the legal obligation are not complied with the underwriting criteria payments must be substantially equal based on an index plus margin or described in § 226.43(e)(2)(iv)–(v) (or, if except for the effect that any interest formula, the creditor must use the applicable, § 226.43(f)). The consumer rate change after consummation has on maximum interest rate that occurs may show the loan is not a qualified the payment in the case of an during the first five years after mortgage with evidence that the terms, adjustable-rate or step-rate mortgage. In consummation. To illustrate: points and fees, or underwriting did not addition, because § 226.43(e)(2)(i) i. Adjustable-rate mortgage with comply with § 226.43(e)(2)(i)–(v) (or requires that a qualified mortgage discount for three years. Assume an

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adjustable-rate mortgage has an initial monthly payment, which is October 1, obligations into account when discounted rate of 5% that is fixed for 2016, and therefore, the rate adjustment underwriting the loan. For the meaning the first three years of the loan, after does not occur during the first five years of the term ‘‘mortgage-related which the rate will adjust annually after consummation. To meet the obligations,’’ see § 226.43(b)(8) and based on a specified index plus a definition of qualified mortgage under associated commentary. margin of 3%. The index value in effect § 226.43(e)(2), the creditor must 7. Examples. The following are at consummation is 4.5%. The loan underwrite the loan using a monthly examples of how to determine the agreement provides for an annual payment of principal and interest based periodic payment of principal and interest rate adjustment cap of 2%, and on an interest rate of 5%, which is the interest based on the maximum interest a lifetime maximum interest rate of maximum interest rate during the first rate during the first five years after 10%. The first rate adjustment occurs on five years after consummation. consummation for purposes of meeting the due date of the 36th monthly 5. Loan amount. To meet the the definition of qualified mortgage payment; the rate can adjust to no more definition of qualified mortgage under under § 226.43(e) (all payment amounts than 7% (5% initial discounted rate § 226.43(e)(2), a creditor must determine are rounded): plus 2% annual interest rate adjustment the periodic payment of principal and i. Fixed-rate mortgage. A loan in an cap). The second rate adjustment occurs interest using the maximum interest rate amount of $200,000 has a 30-year loan on the due date of the 48th monthly permitted during the first five years after term and a fixed interest rate of 7%. The payment; the rate can adjust to no more consummation that repays either— maximum interest rate during the first than 9% (7% rate plus 2% annual i. The outstanding principal balance five years after consummation for a interest rate adjustment cap). The third as of the earliest date the maximum fixed-rate mortgage is the interest rate in rate adjustment occurs on the due date interest rate during the first five years effect at consummation, which is 7% of the 60th monthly payment, which after consummation can take effect under this example. The monthly fully occurs more than five years after under the terms of the legal obligation, amortizing payment scheduled over the consummation. The maximum interest over the remaining term of the loan. To 30 years is $1,331. The creditor will rate during the first five years after illustrate, assume a loan in an amount meet the definition of qualified consummation is 9% (the rate on the of $200,000 has a 30-year loan term. The mortgage if it underwrites the loan using due date of the 48th monthly payment). loan agreement provides for a the fully amortizing payment of $1,331. For further discussion of how to discounted interest rate of 5% that is ii. Adjustable-rate mortgage with determine whether a rate adjustment fixed for an initial period of three years, discount for three years. occurs during the first five years after after which the interest rate will adjust A. A loan in an amount of $200,000 consummation, see comment annually based on a specified index has a 30-year loan term. The loan 43(e)(2)(iv)-2. plus a margin of 3%, subject to a 2% agreement provides for a discounted ii. Adjustable-rate mortgage with annual interest rate adjustment cap and interest rate of 5% that is fixed for an discount for three years. Assume the a lifetime maximum interest rate of initial period of three years, after which same facts above except that the lifetime 10%. The index value in effect at the interest rate will adjust annually maximum interest rate is 8%, which is consummation equals 4.5%. Assuming based on a specified index plus a less than the maximum interest rate in the interest rate increases after margin of 3%, subject to a 2% annual the first five years of 9%. The maximum consummation as quickly as possible, interest rate adjustment cap. The index interest rate during the first five years the rate adjustment to the maximum value in effect at consummation is after consummation is 8%. interest rate of 9% occurs on the due 4.5%. The loan consummates on March iii. Step-rate mortgage. Assume a date of the 48th monthly payment. The 15, 2011, and the first regular periodic step-rate mortgage with an interest rate outstanding principal balance on the payment is due May 1, 2011. The loan fixed at 6.5% for the first two years, 7% loan at the end of the fourth year (after agreement provides that the first rate for the next three years, and then 7.5% the 48th monthly payment is credited) adjustment occurs on April 1, 2014 (the for remainder of the loan term. The is $188,218. The creditor will meet the due date of the 36th monthly payment); maximum interest rate during the first definition of qualified mortgage if it the second rate adjustment occurs on five years after consummation is 7%. underwrites the covered transaction April 1, 2015 (the due date of the 48th 4. First five years after consummation. using the monthly payment of principal monthly payment); and the third rate Under § 226.43(e)(2)(iv)(A), the creditor and interest of $1,564 to repay the adjustment occurs on April 1, 2016 (the must underwrite the loan using the outstanding principal balance of due date of the 60th monthly payment), maximum interest rate that may apply $188,218 over the remaining 26 years of which occurs more than five years after during the first five years after the loan term (312 months) using the consummation of the loan. Under this consummation. To illustrate, assume an maximum interest rate during the first example, the maximum interest rate adjustable-rate mortgage with an initial five years of 9%; or during the first five years after fixed interest rate of 5% for the first five ii. The loan amount, as that term is consummation is 9%, which applies years after consummation, after which defined in § 226.43(b)(5), over the entire beginning on April 1, 2015 (the due date the interest rate will adjust annually to loan term, as that term is defined in of the 48th monthly payment). The the specified index plus a margin of 6%, § 226.43(b)(6). Using the same example outstanding principal balance at the end subject to a 2% annual interest rate above, the creditor will meet the of the fourth year (after the 48th adjustment cap. The index value in definition of qualified mortgage if it payment is credited) is $188,218. effect at consummation is 5.5%. The underwrites the covered transaction B. The creditor will meet the loan consummates on September 15, using the monthly payment of principal definition of a qualified mortgage if it 2011, and the first monthly payment is and interest of $1,609 to repay the loan underwrites the loan using the monthly due on November 1, 2011. The first five amount of $200,000 over the 30-year payment of principal and interest of years after consummation occurs on loan term using the maximum interest $1,564 to repay the outstanding September 15, 2016. The first rate rate during the first five years of 9%. principal balance at the end of the adjustment to no more than 7% (5% 6. Mortgage-related obligations. fourth year of $188,218 over the plus 2% annual interest rate adjustment Section 226.43(e)(2)(iv) requires remaining 26 years of the loan term (312 cap) occurs on the due date of the 60th creditors to take mortgage-related months), using the maximum interest

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rate during the first five years after year loan term using the maximum Alternative 1—Comment 43(e)(3)(i)–3 consummation of 9%. Alternatively, the interest rate during the first five years of 3. Sample determination of allowable creditor will meet the definition of a 7%. points and fees for a $50,000 loan. A qualified mortgage if it underwrites the Alternative 1—Paragraph 43(e)(2)(v) covered transaction with a loan amount loan using the monthly payment of of $50,000 falls into the third points and principal and interest of $1,609 to repay Paragraph 43(e)(2)(v). fees tier, to which a points and fees cap the loan amount of $200,000 over the 1. Income or assets. Creditors may of 3.5 percent of the total loan amount 30-year loan term, using the maximum rely on commentary to § 226.43(c)(2)(i), applies. See § 226.43(e)(3)(i)(C). If a interest rate during the first five years (c)(3), and (c)(4) for guidance regarding $48,000 total loan amount is assumed, after consummation of 9%. considering and verifying the the allowable points and fees for this iii. Adjustable-rate mortgage with consumer’s income or assets to satisfy $50,000 loan is 3.5 percent of $48,000 discount for five years. the conditions under § 226.43(e)(2)(v) or $1,920. A. A loan in an amount of $200,000 for a ‘‘qualified mortgage.’’ has a 30-year loan term. The loan Alternative 2—Comment 43(e)(3)(i)–3 Alternative 2—Paragraph 43(e)(2)(v) agreement provides for a discounted 3. Sample determination of allowable Paragraph 43(e)(2)(v). interest rate of 6% that is fixed for an points and fees for a $50,000 loan. A initial period of five years, after which 1. Repayment ability. Creditors may covered transaction with a loan amount the interest rate will adjust annually rely on commentary to § 226.43(c)(2)(i), of $50,000 falls into the second points based on a specified index plus a (ii), (iv), and (vi) through (viii), (c)(3), and fees tier, requiring application of a margin of 3%, subject to a 2% annual (c)(4), (c)(6), and (c)(7) for guidance formula to derive the allowable points interest rate adjustment cap. The index regarding considering and verifying the and fees. See § 226.43(e)(3)(i)(B). If a value in effect at consummation is consumer’s repayment ability to satisfy $48,000 total loan amount is assumed, 4.5%. The loan consummates on March the conditions under § 226.43(e)(2)(v) the required formula must be applied as 15, 2011 and the first regular periodic for a ‘‘qualified mortgage.’’ follows: payment is due May 1, 2011. Under the 43(e)(3) Limits on points and fees for i. First, the amount of $20,000 must terms of the loan agreement, the first qualified mortgages. be subtracted from $48,000 to yield the rate adjustment is on April 1, 2016 (the Paragraph 43(e)(3)(i). number of dollars to which the .0036 due date of the 60th monthly payment), 1. Total loan amount. For an basis points multiple must be applied— which occurs more than five years after explanation of how to calculate the in this case, $28,000. consummation of the loan. Thus, the ‘‘total loan amount’’ under ii. Second, $28,000 must be maximum interest rate under the terms § 226.43(e)(3)(i), see comment multiplied by .0036—in this case of the loan during the first five years 32(a)(1)(ii)-1. resulting in 100.8. after consummation is 6%. 2. Calculation of allowable points and iii. Third, 100.8 must be subtracted B. The creditor will meet the fees. A creditor must determine which from 500. (The maximum allowable definition of a qualified mortgage if it category the loan falls into based on the points and fees on any loan is five underwrites the loan using the monthly face amount of the note (the ‘‘loan percent of the total loan amount for payment of principal and interest of amount’’), but must apply the allowable loans of less than $20,000. Five percent $1,199 to repay the loan amount of points and fees percentage to the ‘‘total expressed in basis points is 500). Five $200,000 over the 30-year loan term loan amount,’’ which may be different hundred minus 100.8 equals 399.2, using the maximum interest rate during which is the allowable points and fees the first five years of 6%. than the face amount of the note. A creditor must calculate the allowable in basis points. iv. Step-rate mortgage. A. A loan in an iv. Finally, the allowable points and amount of points and fees for a qualified amount of $200,000 has a 30-year loan fees in basis points must be translated mortgage as follows: term. The loan agreement provides that into the appropriate percentage of the the interest rate is 6.5% for the first two i. First, the creditor must determine ‘‘total loan amount,’’ which is achieved years of the loan, 7% for the next three the ‘‘tier’’ into which the loan falls based by multiplying 399.2 by .01. The result years, and then 7.5% for remainder of on the loan amount. The loan amount is is 3.99 percent. Accordingly, the the loan term. The maximum interest the principal amount the consumer will allowable points and fees for this rate during the first five years after borrow as reflected in the promissory $50,000 loan as a dollar figure is 3.99 consummation is 7%, which occurs on note or loan contract. See § 226.43(b)(5). percent of $48,000 or $1,915.20. the due date of the 24th monthly For example, if the loan amount is Paragraph 43(e)(3)(ii). payment. The outstanding principal $75,000, the loan falls into the tier for 1. Charges not retained by the balance at the end of the second year loans of $75,000 or more, to which a creditor, loan originator, or an affiliate (after the 24th payment is credited) is three percent cap on points and fees of either. In general, a creditor is not $195,379. applies. required to count in ‘‘points and fees’’ B. The creditor will meet the ii. Second, the creditor must for a qualified mortgage any bona fide definition of a qualified mortgage if it determine the ‘‘total loan amount’’ based third party charge not retained by the underwrites the loan using a monthly on the calculation for the ‘‘total loan creditor, loan originator, or an affiliate payment of principal and interest of amount’’ under comment 32(a)(1)(ii)–1. of either. For example, if a creditor $1,328 to repay the outstanding If the loan amount is $75,000, for charges a consumer $400 for an principal balance of $195,379 over the example, the ‘‘total loan amount’’ may be appraisal conducted by a third party not remaining 28 years of the loan term (336 a different amount, such as $73,000. affiliated with the creditor, pays the months), using the maximum interest iii. Third, the creditor must apply the third party appraiser $300 for the rate during the first five years of 7%. percentage cap on points and fees to the appraisal, and retains $100, the creditor Alternatively, the creditor will meet the ‘‘total loan amount.’’ For example, for a may exclude $300 of this fee but count definition of a qualified mortgage if it loan of $75,000 where the ‘‘total loan the $100 it retains in ‘‘points and fees’’ underwrites the loan using a monthly amount’’ is $73,000, the allowable for a qualified mortgage. payment of principal and interest of points and fees is three percent of 2. Private mortgage insurance. For $1,331 to repay $200,000 over the 30- $73,000 or $2,190. qualified mortgages, the exclusion for

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bona fide third party charges not 226.43(e)(3)(ii)(C) provides that, under a fixed interest rate of 6%. The loan retained by the creditor, loan originator, certain circumstances, up to one ‘‘bona consummates on March 15, 2011, and or an affiliate of either is limited by fide discount point,’’ as defined in the monthly payment of principal and § 226.32(b)(1)(i)(B) in the general § 226.43(e)(3)(iii), may be excluded from interest scheduled for the first five years definition of ‘‘points and fees.’’ Section the ‘‘points and fees’’ calculation for a is $1,199, with the first monthly 226.32(b)(1)(i)(B) requires inclusion in qualified mortgage. The following payment due on May 1, 2011. The ‘‘points and fees’’ of premiums or other example illustrates the rule: balloon payment of $187,308 is required charges payable at or before closing for i. Assume a covered transaction that on the due date of the 60th monthly any private guaranty or insurance is a first-lien, purchase money home payment, which is April 1, 2016. The protecting the creditor against the mortgage with a fixed interest rate and loan remains a qualified mortgage if the consumer’s default or other credit loss a 30-year term. Assume also that the creditor underwrites the loan using the to the extent that the premium or charge consumer locks in an interest rate of scheduled principal and interest exceeds the amount payable under 6.00 percent on May 1, 2011, that was payment of $1,199 (plus all mortgage- policies in effect at the time of discounted from a rate of 7.00 percent related obligations, pursuant to origination under section 203(c)(2)(A) of because the consumer paid four § 226.43(f)(1)(iii)(B)). the National Housing Act (12 U.S.C. discount points. Finally, assume that 2. Creditor’s determination. A creditor 1709(c)(2)(A)). These premiums or the average prime offer rate (APOR) as must determine that the consumer is charges must also be included if the of May 1, 2011, for home mortgages able to make all scheduled payments premiums or charges are not required to with a fixed interest rate and a 30-year other than the balloon payment to be refundable on a pro-rated basis, or term is 5.00 percent. satisfy § 226.43(f)(1)(ii), but the creditor the refund is not required to be ii. The creditor may exclude one is not required to meet the repayment automatically issued upon notification discount point from the ‘‘points and ability requirements of § 226.43(c)(2)–(7) of the satisfaction of the underlying fees’’ calculation because the rate from because those requirements apply only mortgage loan. Under these which the discounted rate was derived to covered transactions that are not circumstances, even if the premiums or (7.00 percent) exceeded APOR for a qualified mortgages. Nevertheless, a other charges are not retained by the comparable transaction as of the date creditor satisfies § 226.43(f)(1)(ii) if it creditor, loan originator, or an affiliate the rate on the covered transaction was complies with the requirements of of either, they must be included in the set (5.00 percent) by only two percent. § 226.43(c)(2)–(7). A creditor also may ‘‘points and fees’’ calculation for 5. Comparable transaction. The table make the determination that the qualified mortgages. See comments of average prime offer rates published consumer is able to make the scheduled 32(b)(1)(i)–3 and –4 for further by the Board indicates how to identify payments (other than the balloon discussion of including upfront private the comparable transaction. See payment) by other means. For example, mortgage insurance premiums in the comment 45(a)(2)(ii)-2. a creditor need not determine that the 43(f) Balloon-payment qualified points and fees calculation. consumer is able to make the scheduled 3. Exclusion of up to two bona fide mortgages made by certain creditors. payments based on a payment amount discount points. Section 43(f)(1) Exception. that is calculated in accordance with 226.43(e)(3)(ii)(B) provides that, under Paragraph 43(f)(1)(i). § 226.43(c)(5)(ii)(A) or may choose to certain circumstances, up to two ‘‘bona 1. Satisfaction of qualified mortgage consider a debt-to-income ratio that is fide discount points,’’ as defined in requirements. Under § 226.43(f)(1)(i), a not determined in accordance with § 226.43(e)(3)(iii), may be excluded from qualified mortgage that provides for a § 226.43(c)(7). the ‘‘points and fees’’ calculation for a balloon payment must satisfy all of the qualified mortgage. The following requirements for a qualified mortgage in Paragraph 43(f)(1)(iii). example illustrates the rule: § 226.43(e)(2), other than 1. Amortization period. Under i. Assume a covered transaction that § 226.43(e)(2)(i)(B), (e)(2)(i)(C), and § 226.43(f)(1)(ii), if a qualified mortgage is a first-lien, purchase money home (e)(2)(iv). Therefore, to satisfy this provides for a balloon payment, the mortgage with a fixed interest rate and condition, a covered transaction with creditor must determine that the a 30-year term. Assume also that the balloon payment terms must provide for consumer is able to make all scheduled consumer locks in an interest rate of regular periodic payments that do not payments under the legal obligation 6.00 percent on May 1, 2011, that was result in an increase of the principal other than the balloon payment. Under discounted from a rate of 6.50 percent balance, pursuant to § 226.43(e)(2)(i)(A); § 226.43(f)(1)(iii), those scheduled because the consumer paid two must have a loan term that does not payments must be determined using an discount points. Finally, assume that exceed 30 years, pursuant to amortization period that does not the average prime offer rate (APOR) as § 226.43(e)(2)(ii); must have total points exceed 30 years and must include all of May 1, 2011 for home mortgages with and fees that do not exceed specified mortgage-related obligations. Balloon a fixed interest rate and a 30-year term thresholds pursuant to payments often result when the periodic is 5.50 percent. § 226.43(e)(2)(iii); and must satisfy the payment would fully repay the loan ii. The creditor may exclude two consideration and verification amount only if made over some period discount points from the ‘‘points and requirements in § 226.43(e)(2)(v). that is longer than the loan term. For fees’’ calculation because the rate from Paragraph 43(f)(1)(ii). example, a loan term of 10 years with which the discounted rate was derived 1. Example. Under § 226.43(f)(1)(ii), if periodic payments based on an (6.50 percent) exceeded APOR for a a qualified mortgage provides for a amortization period of 20 years would comparable transaction as of the date balloon payment, the creditor must result in a balloon payment being due the rate on the covered transaction was determine that the consumer is able to at the end of the loan term. Whatever set (5.25 percent) by only one percent. make all scheduled payments under the the loan term, the amortization period For the meaning of ‘‘comparable legal obligation other than the balloon used to determine the scheduled transaction,’’ refer to comment payment. For example, assume a loan in periodic payments that the consumer 43(e)(3)(ii)–5. an amount of $200,000 that has a five- must pay under the terms of the legal 4. Exclusion of up to one bona fide year loan term, but is amortized over 30 obligation may not exceed 30 years. discount point. Section years. The loan agreement provides for Paragraph 43(f)(1)(v).

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1. Creditor qualifications. Under iv. As of the end of the preceding 1. Same type of interest rate. Under § 226.43(f)(1)(v), to make a qualified calendar year, the creditor had total § 226.43(g)(3)(i), if a creditor offers a mortgage that provides for a balloon assets that do not exceed the current consumer a covered transaction with a payment, the creditor must satisfy the asset threshold established by the prepayment penalty, the creditor must following four criteria: Board. For calendar year 2011, the asset offer the consumer an alternative i. During the preceding calendar year, threshold is $2,000,000,000. Creditors covered transaction without a the creditor extended over 50% of its that had total assets of $2,000,000,000 or prepayment penalty and with an annual total covered transactions with balloon less on December 31, 2010 satisfy this percentage rate that cannot increase payment terms in counties that are criterion for purposes of the exception after consummation. Further, the ‘‘rural’’ or ‘‘underserved,’’ as defined in during 2011. covered transaction with a prepayment § 226.43(f)(2). Pursuant to that section, 43(f)(2) ‘‘Rural’’ and ‘‘underserved’’ penalty and the alternative covered the Board determines annually which defined. transaction without a prepayment counties in the United States are rural 1. Requirements for ‘‘rural or penalty must both be fixed-rate or underserved and publishes on its underserved’’ status. A county is mortgages or both be step-rate public Web site a list of those counties considered ‘‘rural or underserved’’ for mortgages, as defined in to enable creditors to determine whether purposes of § 226.43(f)(1)(v)(A) if it § 226.18(s)(7)(iii) and (ii), respectively. they meet this criterion. Thus, for satisfies either of the two tests in Paragraph 43(g)(3)(iv). example, if a creditor originated 90 § 226.43(f)(2). The Board applies both 1. Points and fees. Whether or not an covered transactions with balloon tests to each county in the United States alternative covered transaction without payment terms during 2010, the creditor and, if a county satisfies either test, a prepayment penalty satisfies the meets this element of the exception in includes that county on the annual list points and fees conditions for a 2011 if at least 46 of those loans are of ‘‘rural or underserved’’ counties. The qualified mortgage is determined based secured by properties located in one or Board publishes on its public Web site on the information known to the more counties that are on the Board’s the applicable list for each calendar year creditor at the time the creditor offers list for 2010. by the end of that year. A creditor’s the consumer the transaction. At the time a creditor offers a consumer an originations of covered transactions Alternative 1—Paragraph 43(f)(1)(v)–1.ii alternative covered transaction without with balloon-payment terms in such a prepayment penalty under ii. During the preceding calendar year, counties during that year are considered § 226.43(g)(3), the creditor may know the creditor together with all affiliates in determining whether the creditor the amount of some, but not all, of the extended covered transactions with satisfies the condition in points and fees that will be charged for principal amounts that in the aggregate § 226.43(f)(1)(v)(A) and therefore will be ____ the transaction. For example, a creditor total $ or less. eligible for the exception during the may not know that a consumer intends following calendar year. The Board Alternative 2—Paragraph 43(f)(1)(v)–1.ii to buy single-premium credit determines whether each county is ii. During the preceding calendar year, unemployment insurance, which would ‘‘rural’’ by reference to the currently the creditor together with all affiliates be included in the points and fees for applicable Urban Influence Codes extended ___ or fewer covered the covered transaction. The points and (UICs), established by the United States transactions. fees condition under § 226.43(g)(3)(ii)(C) Department of Agriculture’s Economic is satisfied if a creditor reasonably Alternative 1—Paragraph 43(f)(1)(v)– Research Service (USDA–ERS). believes, based on information known to 1.iii Specifically, the Board classifies a the creditor at the time the offer is iii. On and after [effective date of final county as ‘‘rural’’ if the USDA–ERS made, that the amount of points and rule], the creditor has not sold, assigned, categorizes the county under UIC 7, 10, fees to be charged for an alternative or otherwise transferred legal title to the 11, or 12. The Board determines covered transaction without a debt obligation for any covered whether each county is ‘‘underserved’’ prepayment penalty will be less than or transaction with a balloon-payment by reference to data submitted by equal to the amount of points and fees term. mortgage lenders under the Home allowed for a qualified mortgage under Mortgage Disclosure Act (HMDA). § 226.43(e)(2)(iii). Alternative 2—Paragraph 43(f)(1)(v)– 43(g) Prepayment penalties. Paragraph 43(g)(3)(v). 1.iii 43(g)(2) Limits on prepayment 1. Transactions for which the iii. During the preceding or current penalties. consumer likely qualifies. Under calendar year, the creditor has not sold, 1. Maximum period and amount. § 226.43(g)(3)(v), the alternative covered assigned, or otherwise transferred legal Section 226.43(g)(2) establishes the transaction without a prepayment title to the debt obligation for any maximum period during which a penalty the creditor must offer under covered transaction with a balloon- prepayment penalty may be imposed § 226.43(g)(3) must be a transaction for payment term. Thus, for example, if a and the maximum amount of the which the creditor has a good faith creditor sells a covered transaction with prepayment penalty. A covered belief the consumer likely qualifies. For a balloon-payment term on April 1, transaction may include a prepayment example, assume the creditor has a good 2012, the creditor becomes ineligible for penalty that may be imposed during a faith belief the consumer can afford the exception for the remainder of 2012 shorter period or in a lower amount monthly payments of up to $800. If the (but not retroactively for January than provided under § 226.43(g)(2). For creditor offers the consumer a fixed-rate through March of 2012) and all of 2013. example, a covered transaction may mortgage with a prepayment penalty for If the creditor sells no covered include a prepayment penalty that may which monthly payments are $700 and transactions with balloon-payment be imposed for two years after an alternative covered transaction terms during 2013, it then may become consummation and equals two percent without a prepayment penalty for which eligible again for the exception of the amount prepaid in each of those monthly payments are $900, the beginning on January 1, 2014 and two years. requirements of § 226.43(g)(3)(v) are not remains eligible until and unless it sells 43(g)(3) Alternative offer required. met. The creditor’s belief that the such loans during 2014. Paragraph 43(g)(3)(i). consumer likely qualifies for the

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covered transaction without a with a lower interest rate or a lower 2. Lower interest rate. Under prepayment penalty should be based on total dollar amount of origination points § 226.43(g)(5), a creditor that is a loan the information known to the creditor at or fees and discount points. The originator must present an alternative the time the creditor offers the agreement may provide for the mortgage covered transaction without a transaction. In making this broker to present both the creditor’s prepayment penalty that satisfies the determination, the creditor may rely on covered transaction and a covered requirements of § 226.43(g)(3) offered by information provided by the consumer, transaction offered by another creditor either the assignee for the covered even if the information subsequently is with a lower interest rate or a lower transaction or another person, if that determined to be inaccurate. total dollar amount of origination points other person offers a transaction with a 43(g)(4) Offer through a mortgage or fees and discount points. See lower interest rate or a lower total dollar broker. comment 36(e)(3)–3 for guidance in amount of origination points or fees or 1. Rate sheet. Under § 226.43(g)(4), determining which step-rate mortgage where the creditor offers covered discount points. See comment 36(e)(3)– has a lower interest rate. 3 for guidance in determining which transactions with a prepayment penalty 3. Agreement. The creditor’s to consumers through a mortgage step-rate mortgage has a lower interest agreement with a mortgage broker for rate. broker, as defined in § 226.36(a)(2), the purposes of § 226.43(g)(4) may be part of creditor must present the mortgage another agreement with the mortgage 43(h) Evasion; open-end credit. broker an alternative covered broker, for example, a compensation 1. Subject to closed-end credit rules. transaction that satisfies the agreement. Thus, the creditor need not Where a loan is documented as open- requirements of § 226.43(g)(3). Creditors enter into a separate agreement with the end credit but the features and terms or may comply with this requirement by mortgage broker with respect to each other circumstances demonstrate that it providing a rate sheet to the mortgage covered transaction with a prepayment does not meet the definition of open- broker that states the terms of such an penalty. end credit, the loan is subject to the alternative covered transaction without rules for closed-end credit, including a prepayment penalty. 43(g)(5) Creditor that is a loan 2. Alternative to creditor’s offer. originator. § 226.43.ﬁ Section 226.43(g)(4)(ii) requires that the 1. Loan originator. The definition of * * * * * creditor provide, by agreement, for the ‘‘loan originator’’ in § 226.36(a)(1) By order of the Board of Governors of the mortgage broker to present the applies for purposes of § 226.43(g)(5). Federal Reserve System, April 18, 2011. consumer an alternative covered Thus, a loan originator includes any Jennifer J. Johnson, transaction without a prepayment creditor that satisfies the definition of penalty offered by either (1) the creditor, loan originator but makes use of ‘‘table- Secretary of the Board. or (2) another creditor, if the other funding’’ by a third party. See comment [FR Doc. 2011–9766 Filed 5–10–11; 8:45 am] creditor offers a covered transaction 36(a)–1.i, –1.ii. BILLING CODE 6210–01–P

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Part III

Department of Commerce

National Oceanic and Atmospheric Administration

50 CFR Part 660 Magnuson-Stevens Act Provisions; Fisheries Off West Coast States; Pacific Coast Groundfish Fishery; Biennial Specifications and Management Measures; Final Rule

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DEPARTMENT OF COMMERCE Federal eRulemaking Portal http:// under the PCGFMP. Specifications for www.regulations.gov. the overfished species and flatfish are National Oceanic and Atmospheric • Fax: 206–526–6736, Attn: Sarah also included in this final rule but are Administration Williams. adopted under the emergency authority • Mail: 7600 Sand Point Way NE., described in section 305 of the MSA. 50 CFR Part 660 Seattle, WA, 98115. The groundfish fishery regulations Instructions: All comments received include a collection of management [Docket No. 100804324–1265–02] are a part of the public record and will measures intended to keep the total RIN 0648–BA01 generally be posted to http:// catch of each groundfish species or www.regulations.gov without change. species complex within the harvest Magnuson-Stevens Act Provisions; All Personal Identifying Information (for specifications. The management Fisheries Off West Coast States; example, name, address, etc.) measures would be revised by this Pacific Coast Groundfish Fishery; voluntarily submitted by the commenter action for 2011 and 2012. Biennial Specifications and may be publicly accessible. Do not The Notice of Availability for the FEIS Management Measures submit Confidential Business for this action was published on March Information or otherwise sensitive or 11, 2011 (76 FR 13401). The final NMFS AGENCY: National Marine Fisheries protected information. NMFS will preferred alternative in the FEIS is a Service (NMFS), National Oceanic and accept anonymous comments (enter N/ modified version of the Council’s final Atmospheric Administration (NOAA), A in the required fields, if you wish to preferred alternative (FPA) which was Commerce. remain anonymous). You may submit described in the proposed rule for this ACTION: Final rule. attachments to electronic comments in action. The NMFS preferred alternative Microsoft Word, Excel, WordPerfect, or differs from the Council’s FPA and the SUMMARY: This final rule establishes the Adobe PDF file formats only. specifications discussed in the proposed 2011–2012 harvest specifications for rule on this action with respect to the FOR FURTHER INFORMATION CONTACT: most of the species in the groundfish specifications for yelloweye rockfish Sarah Williams, 7600 Sand Point Way fishery and management measures for and cowcod, and management measures NE., Seattle, WA, 98115. By phone at that fishery off the coasts of relative to the Cowcod Conservation 206–526–4646 or fax at 206–526–6736. Washington, Oregon, and California Area (CCA). These differences are Electronic Access: This final rule is consistent with the Magnuson-Stevens discussed in detail in the Provisions accessible via the Internet at the Office Fishery Conservation and Management Implemented Through Emergency Rule of the Federal Register’s Web site at Act (MSA) and the Pacific Coast and Changes from the Proposed Rule http://www.gpoaccess.gov/fr/ Groundfish Fishery Management Plan sections of this rule. index.html. Background information (PCGFMP). This rule also establishes, and documents are available at the Provisions Implemented Through under emergency authority in section Pacific Fishery Management Council’s Emergency Rule 305 of the Magnuson-Stevens Act Web site at http://www.pcouncil.org/. (MSA), harvest specifications for eight Section 305(c) of the MSA provides overfished species, and for flatfish. SUPPLEMENTARY INFORMATION: the Secretary of Commerce the authority Emergency authority is being invoked Background to promulgate emergency regulations to implement measures that were that are treated as an amendment to an included in Amendment 16–5 to the NMFS published a proposed rule to FMP for the period the regulations are PCGFMP, which NMFS disapproved in implement the 2011–2012 groundfish in effect. The one new and seven December 2010. These include a new harvest specifications and management revised rebuilding plans, revisions to rebuilding plan for petrale sole, revised measures on November 3, 2010 (75 FR flatfish proxies, ACLs for overfished rebuilding plans for the remaining seven 67810). The proposed rule comment species, and specifications for flatfish overfished species, and revised status period was extended through January 4, contained in this final rule are being determination criteria and 2011 (75 FR 75449, December 23, 2010) adopted under emergency authority precautionary harvest control rule for to provide additional opportunity for because these measures were part of, or flatfish. public comment given the delay in are based on, Amendment 16–5 to the implementation. NMFS received 35 PCGFMP, which NMFS disapproved. DATES: This rule is effective May 11, letters of comment, which are addressed This emergency action is necessary 2011. Comments must be received no later in the preamble of this final rule. because NMFS is under court order to later than June 10, 2011. See the preamble to the proposed rule establish new specifications for ADDRESSES: Copies of this rule, the for additional background information overfished species by April 29, 2011, Record of Decision (ROD) and on the fishery and on this final rule. before the Council can submit and Regulatory Impact Review (RIR)/Final The amount of each Pacific Coast NMFS can implement a revised Regulatory Flexibility Analysis (FRFA) groundfish species or species complex Amendment 16–5. are available from William Stelle, that is available for harvest in a specific NMFS disapproved Amendment 16–5 Regional Administrator, Northwest year is referred to as a harvest because at the time of NMFS’ approval Region, NMFS, 7600 Sand Point Way specification. The PCGFMP requires the decision, there was not an FEIS to NE., Seattle, WA 98115–0070. harvest specifications and management support the decision. Review of actions Electronic copies of this final rule are measures for groundfish to be set at least under the Magnuson-Stevens Act (16 also available at the NMFS Northwest biennially. This final rule, which U.S.C. 1854(a)) requires that before Region Web site: http:// implements the NMFS preferred approving an FMP or amendment, www.nwr.noaa.gov alternative described in the Final NMFS must review the FMP or You may submit comments, identified Environmental Impact Statement (FEIS), amendment for consistency with the by 0648–BA01, by any one of the would set 2011–2012 and beyond measures of the MSA itself as well as following methods: harvest specifications and management other applicable law. One of the primary • Electronic Submissions: Submit all measures for most of the groundfish tools that NMFS uses to accomplish this electronic public comments via the species or species complexes managed review is an adequate FEIS drafted

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consistent with the guidance contained year and the SPR harvest rate for Comments and Responses within NAO 216–6 (Environmental yelloweye rockfish are 2074 and 76.0 NMFS published a proposed rule on Review Procedures For Implementing percent. NMFS determined that the ACL November 2, 2010 (75 FR 67810) with the National Environmental Policy Act). in the Council’s and NMFS’ preferred a comment period that closed on NMFS completed the FEIS and made it alternative for darkblotched rockfish December 3, 2010. This comment period available for public review on March 11, meets the MSA standard and is was extended to January 4, 2011 to 2011. consistent with the court’s order. allow more time for public comments. As is described in the proposed rule Although the harvest level for NMFS received 35 comments on the preamble, on April 29, 2010, the district darkblotched is similar to the level proposed rule. The Department of the court for the Northern District of vacated by the court in 2010, the new Interior submitted a letter stating that California issued an order in NRDC v. rebuilding plan is based on a new stock they reviewed the proposed rule and Locke, Case 3:01–cv–00421–JLI, assessment, uses a more conservative had no comments. The Washington vacating the 2009–10 harvest levels for SPR harvest rate (64.9 percent rather Department of Fish and Wildlife yelloweye rockfish, cowcod, and than 62.1 percent), and rebuilds three (WDFW), the Oregon Department of darkblotched rockfish on the basis that years faster than the prior rebuilding the harvest levels did not meet the MSA Fish and Wildlife (ODFW) and the plan (2025 rather than 2028). California Department of Fish and Game mandate to rebuild those stocks in as The NMFS preferred alternative short a time as possible taking into (CDFG) all submitted letters in support would rebuild as quickly as possible of the Council’s final action and account factors including the needs of while avoiding serious adverse impacts fishing communities. The court upheld suggested corrections to the proposed to communities, and thus meets the the integrated or holistic approach used rule. 13 letters were submitted from MSA standard. Maintaining the 2010 to develop the harvest levels for all of fishing industry members in support of level of economic activity in the most the overfished species and to analyze the Council’s recommended changes to vulnerable communities could be their impacts on communities, which the depth restrictions in the CCA and expected to provide the consistency was first applied in Amendment 16–4. the slope rockfish retention changes. The Council, continuing the necessary for stability in the fishing One comment was submitted regarding integrated or holistic approach community infrastructure and be a request for a processing at sea developed in Amendment 16–4 and adequate to support the implementation exemption. NMFS also received a upheld by the district court, developed of the trawl rationalization program. At number of comments from the public suites of overfished species ACLs, with the same time the strategy would regarding the impacts from the ACLs for most of the non-overfished shorten the rebuilding duration for five overfished species specifications. The species held constant between the of the overfished species (bocaccio, Council submitted a letter stating that alternatives. The impacts of these suites cowcod, darkblotched rockfish, widow the Exempted Fishing Permit that was of ACLs are analyzed in the FEIS, rather rockfish and yelloweye rockfish); and issued in August of 2010 would actually than the impacts of individual species maintain the upward rebuilding be conducted in 2011. Oceana and the ACLs. The DEIS included three trajectories for the two overfished Natural Resource Defense Council alternative suites with lower, species (canary rockfish and Pacific (NRDC) submitted a joint letter intermediate and higher ACLs for the Ocean perch (POP)) where new stock regarding the proposed rule and FMP overfished species, as well as the assessments redefined the starting point Amendments 16–5 and 23. In their letter Council FPA that included the higher from which rebuilding began. Unlike they criticized NMFS for setting harvest ACLs for all of the overfished species the Council’s FPA, the NMFS preferred specifications that allegedly did not except for darkblotched rockfish, for alternative does not implement comply with the MSA mandate to which the Council adopted the proposed changes to the CCAs that rebuild overfished species in a period as intermediate ACL. would allow commercial fixed gear and short as possible. Additionally, they In response to public comment recreational fishing in areas shoreward criticized the implementation of regarding rebuilding plans for of 30 fathoms and would also allow Amendment 23 stating that the best overfished species and to ensure retention of shelf rockfish in depths available science was not used and that consistency with the court’s order in shallower than 30 fathoms. The impacts NMFS was not precautionary enough in NRDC v. Locke, Case 3:01–cv–00421– of the proposed changes on cowcod, setting harvest specifications for a JLI, NMFS included in the FEIS an particularly juveniles, are uncertain, number of species and species additional alternative (identified as and increased impacts on juveniles complexes. Ocean Conservancy Alternative 4, the NMFS preferred could potentially delay rebuilding. In submitted a letter raising similar issues alternative) that was not expressly addition, because the ACL for cowcod is as the joint Oceana-NRDC letter. considered in the DEIS. The NMFS so extremely low, any measures that Substantive comments received on the preferred alternative includes the same potentially increase cowcod mortality proposed rule are addressed in the ACLs as the Council’s FPA, except those require better information on potential following section: for yelloweye and cowcod. It does not biological and economic effects to include changes to the CCAs that were support such a change. In sum, NMFS Amendment 23 Implementation (P*, included in the Council’s FPA. For concluded that the NMFS preferred ABCs, ACLs, etc) and Stock Complexes cowcod and yelloweye, the NMFS alternative is more consistent with Comment 1: The ABC control rule preferred alternative implements ACLs direction provided by the court in makes Scientific and Statistical based on Spawning Potential Ratio NRDC v. Locke, Case 3:01–cv–00421– Committee’s (SSC) involvement (SPR) harvest rates that are associated JLI, and is more consistent with the functionally expendable because it with shorter rebuilding periods than MSA obligations to rebuild overfished contemplates presenting the Council those in the Council FPA. Specifically, species in the shortest timeframe with a range of potential scientific in the NMFS preferred alternative, the possible, taking into account the uncertainty reduction values, based on target rebuilding year and the SPR obligation to rebuild, the needs of the SSC recommended ‘‘sigma’’ values harvest rate for cowcod are 2068 and fishing communities, and the marine and a range of probabilities of 82.7 percent, and the target rebuilding environment. overfishing, from which the Council

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may choose. NMFS should adopt an best estimate of scientific uncertainty.’’ SSC reviews additional analyses in ABC control rule that allows the SSC to (Supplemental SSC Report, April 2010, future management cycles. These sigma recommend P* and sigma values along Agenda I.2.b). The Supplemental SSC values represent the SSC’s best estimate with a decision framework that allows Report 1 included in the March 2010 given the absence of a formal analysis of changes to the recommended ABCs to briefing book, which is the Councils assessment outcomes on which to be fully informed by analyses of record for each meeting and contains quantify scientific uncertainty as was resulting overfishing risks and reports from advisory bodies, state and done for category 1 stocks. The environmental consequences. Federal agencies and public comments, commenters specifically mention that Response: The ABC control rule states that the SSC viewed quantifying the Council and NMFS should have selected by the Council is based on the the uncertainty surrounding stock size used other methods for setting the sigma recommendation of the SSC, and is estimations as the highest priority, given values for category 2 and 3 species, such consistent with the MSA and the NS1 the large variability in stock as looking at the distributions of OFLs (74 FR 3178, January 16, 2009). The SSC assessments. The SSC did not for each stock, or the results of the PSA recommends the OFL and determines a recommend quantifying other sources of analysis. However, neither of these sigma value representing scientific uncertainty for the 2011–2012 methods was suggested by commenters uncertainty with respect to stock specifications cycle, but noted that it until very late in the development of the assessments. Once it has determined intends to consider other types of errors 2011–2012 specifications nor those values, it can provide the Council for future biennial cycles, specifically recommended by the SSC for this with the reductions from OFL that forecast uncertainty and uncertainty in specifications cycle. would occur based on the sigma value the optimal harvest rate. In short, the Comment 4: The P* values used in the in conjunction with a range of SSC’s recommended sigma values are proposed rule are too high, and allow probabilities of overfishing. This the best available scientific information for too great a risk of overfishing due to approach conforms with NMFS’s NS 1 at this time. In addition, with respect to an inaccurate estimate of the OFL, guidelines. In response to comments on longspine thornyhead and shortspine especially for overfished species. P* and the guidelines, NMFS explains that thornyhead, the ACLs for the area south resulting ABCs for category 2 and 3 determining the acceptable level of risk of 40°10′ N.lat are reduced below the stocks are not consistent with SSC of overfishing that results from scientific ABC to account for uncertainty recommendations. uncertainty is a policy issue for the associated with limited trawl surveys. Response: The NS1 guidelines Council to decide. The SSC must Comment 3: The proposed sigma provide the following standards for recommend an ABC to the Council after values for category 2 and 3 stocks lack setting the ABC: (1) The ABC may not the Council advises the SSC on the a technical basis and thus are arbitrary. exceed the OFL, and (2) the probability acceptable probability that a catch equal The Council should have used the PSA that overfishing will occur cannot to the ABC would result in overfishing analysis to generate an appropriate P*. exceed 50 percent and should be a (January 16, 2009, 74 FR 3178, Response Response: The SSC noted that lower value. The Council chose a P* to Comment 42 at 3192). The SSC’s role scientific uncertainty with respect to the value of .45, or a 45 percent probability is to determine both the level of biomass estimates for category 2 and 3 of overfishing, for data-rich species with scientific uncertainty that exists and to stocks cannot be precisely quantified data-rich assessments. For category 2 incorporate the Council’s policy due to the lack of available information and 3 species, with data-poor or no decision as to acceptable levels of about these stocks. The NS 1 guidelines assessments, the Council generally overfishing risk resulting from that recognize that precise quantification applied a P* value of .4, or a 40 percent uncertainty in developing an ABC. The assessments are not available for all probability of overfishing. The comment SSC’s recommendations regarding the stocks, such as the category 2 and 3 suggests that the 50 percent cap set by OFL and sigma limit the range of ABC stocks at issue here (See Response to the NS1 guidelines is inadequate, and reductions possible under the available Comment 36, 74 FR at 3190, January 16, that the MSA requires a lower range of P* values consistent with the 2009). With a P* approach for deciding probability of overfishing. NMFS best scientific information regarding the ABC for category 2 and 3 stocks, the considered this issue in developing the scientific uncertainty. SSC recommended setting the value of NS 1 guidelines and ultimately Comment 2: The proposed sigma sigma (s) for category 2 and 3 stocks to determined that while neither the MSA values for category 1 stocks represent 0.72 and 1.44 respectively (i.e., two and nor the relevant case law requires the underestimated and/or inaccurate four times the s for category 1 stocks). use of a specific probability, a quantification of scientific uncertainty; The difference between buffers 50 percent probability of success is a they do not account for uncertainty determined using sigma values of 0.72 lower bound. NMFS acknowledges that arising from sources other than and 1.44 corresponds fairly closely to some overfishing may occur even with estimates of biomass in stock the difference between the buffers ABCs that account for scientific assessments, and they do not accurately previously used for category 2 and 3 uncertainty, however, it does not account for uncertainty in estimates of stocks (25 percent versus 50 percent) believe that the MSA requires a biomass in stock assessments. when P* is in the range 0.3 ∼ 0.35. Also, complete elimination of any probability Response: While the proposed sigma the SSC noted that results from decision of overfishing, as reflected in the value for data-rich stocks (category 1) tables for some category 2 stocks guidelines (Response to Comment 63, 74 does not include quantification of all indicate values for sigma of FR at 3195–96, January 16, 2009). The known sources of scientific uncertainty, approximately .72 (PFMC I.2.b, Council’s choice of P* is consistent with it is the best scientific information Supplemental SSC Report, April 2010). the guidelines. available at this time and the SSC will The specific sigma values of 0.72 and The commenters specifically point to continue to refine this value in future 1.44 were recommended by the SSC and the ABCs for overfished species, and biennial cycles. The SSC acknowledged are considered to be the best available contend that these are not consistent that its recommended sigma value for scientific information; however, the with rebuilding plans. However, ACLs data-rich species does not account for values are not based on a formal for the overfished species are based on all sources of scientific uncertainty, but analysis of assessment outcomes and and consistent with the rebuilding recommended this value as ‘‘the current could change substantially when the plans, which are in turn based on the

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rebuilding analyses for these species. ABC to ACL address stock status, states if necessary. Applying a P* of .45 The process for developing the ACLs is management uncertainty, and other for the minor rockfish complex described in the preamble to the factors. For example, the ACLs for components reflects the fact that in proposed rule for this action (75 FR at longnose skate, starry flounder, the contrast to the Other Fish and Other 67827–29, January 16, 2009) and in the other fish complex and the other flatfish Flatfish complexes, the component FEIS. Thus, the ACLs for the overfished complex are all reduced below the ABC stocks in the minor rockfish complexes species are in most cases set far below to account for management uncertainty. are not all category 3 stocks. In addition, the ABCs derived following the ABC The ACL for sablefish is reduced below it reflects the fact that the complexes are control rule set forth in Amendment 23. the ABC according to the 40–10 harvest not ideally organized to account for For category 1 stocks, the scientific control rule, as this species is in the scientific uncertainty, and represents a uncertainty reduction from OFL that precautionary zone. The southern ACLs balance between the risk of overfishing results from a P* of .45 and a sigma of for longspine thornyhead and due to scientific uncertainty and the risk .36 is 4.4 percent. For healthy stocks, shortspine thornyhead are reduced in of unnecessarily limiting fisheries in this reduction is more risk-averse than order to account for uncertainty this biennium until a thorough analysis the approach of setting the OY equal to associated with trawl surveys in those of the rockfish complexes can be ABC that was used in previous biennial areas. These reductions are all described completed. cycles. For species in the precautionary in the FEIS and the proposed rule. Comment 5: ACLs should be reduced zone, application of the 40–10 or 25–5 The commenters specifically discuss from ABCs to account for management harvest control rules results in an what they see as potential negative uncertainty where there is not accurate additional reduction between ABC and impacts from the ABCs for lingcod, data regarding true catch amounts and ACL. sablefish and black rockfish. The FEIS no modeling of management The commenters also contend that the considered the risk of overfishing to all uncertainty. The ACL and ACT control P* values the Council adopted for species and no OFLs were projected to rules should identify all sources of category 2 and 3 stocks are inconsistent be exceeded under any of the management uncertainty. It is not clear with the SSC’s recommendation, which alternatives. For lingcod, the ACL how management uncertainty is the commenters characterize as (2330 mt in 2011) was set equal to the accounted for by the use of the ACTs for requiring P* values that would result in ABC, however the projected catches are yelloweye rockfish and POP. reductions from OFL of approximately only 685 mt leaving a substantial buffer. Response: The NS1 guidelines do not 25 percent and 50 percent. The Council Additionally, it is likely that the catches expressly contemplate a buffer between adopted a general policy of using a P* will come in under the ACL because of ABC and ACL as the primary means to of 0.4 for category 2 and 3 stocks. The the limited shelf opportunities given the address management uncertainty. An Council discussed P* values for Rockfish Conservation Area (RCA) ACT may be established to account for category 2 and 3 stocks of 0.35 and 0.32, configurations implemented through management uncertainty in controlling respectively. In its report the SSC noted this rule. For sablefish the estimated the catch at or below the ACL, but ACTs that these P* values, in combination catch of 5407 mt is well below the ACL are just one type of accountability with the sigma values described above, value of 6813 mt and the ABC of measure that can address management would have resulted in an 8418 mt. Finally, for black rockfish the uncertainty. NMFS specifically approximately 24 percent reduction estimated catch of 905 mt is well below considered a system such as that from OFL for category 2 stocks, and an the ACL of 1426 mt and the coastwide described by the commenter that would approximately 51 percent reduction ABC of 1589 mt to minimize the risk of require that ACL be set below the ABC from OFL for category 3 stocks, overfishing. to account for management uncertainty, approximating the 25 percent and 50 For the minor rockfish complexes, a but ultimately rejected it on the basis percent reductions from former ABC P* value of 0.45 was used in that it was Congressional intent that that the Council used prior to this combination with the SSC- ACL should be considered a true limit, specification cycle. However, the SSC recommended sigma values to not a target catch level (Response to did not make a recommendation determine the ABCs for the component Comment 8, 74 FR at 3183, January 16, regarding appropriate P* values but did stocks. Historically, the OY for minor 2009). Instead, the guidelines require endorse the Council’s final ABC values. rockfish north has been shared between that, to prevent ACLs from being In discussing the issue of the buffer Oregon and California with no formal exceeded, Councils must address the between OFL and ABC for category 2 catch sharing agreements because the management uncertainty in their and 3 stocks the Council noted that OY was generally high enough to fisheries using appropriate previously the buffer between former prevent concerns over the allocation of accountability measures, which could ABC and OY took into account many catch between the states. A struggle for possibly include setting an ACT. While sources of uncertainty, including fish could result from 2011–2012 ACLs the Council in fact set the ACL below scientific uncertainty, but that under NS that are significantly lower than the the ABC for a number of stocks 1 the buffer between OFL and ABC is 2010 OY for the minor nearshore (longnose skate, starry flounder, the now specific to scientific uncertainty. rockfish north subcomplex. (PFMC other fish complex, the other flatfish There was therefore concern regarding Supplemental Groundfish Management complex), consistent with the ‘‘double counting’’ of uncertainty that Team (GMT) Report, I.2.b April 2010). guidelines, the Council’s primary means might result from using status quo Applying a P* of 0.45 to determine the for addressing management uncertainty buffers to determine the ABC for ABC for this subcomplex results in an is through accountability measures. category 2 and 3 species. For this ABC lower than the 2010 OY, but higher Section 4.1 and tables 4–1 and 4–3 in reason, the Council concluded that it than the other alternatives considered the FEIS describe the actual impacts would be inappropriate to use these for determining the ABC. This option that are expected to the stocks in the reductions to quantify scientific constitutes an interim approach to fishery as a result of the management uncertainty in the reduction from the accounting for scientific uncertainty measures included in the integrated OFL to ABC. A review of the ACLs for given the current organization of the alternatives. For most of the non- category 2 and 3 stocks shows that for complexes and the time needed to work overfished stocks, expected catch levels a number of stocks, the reductions from out a sharing agreement between the are far below the ACLs set for these

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stocks. Thus, the proposed management and the projected catch means that an the case for 2011–2012 because the measures are expected to ensure that for ACT is not necessary for yelloweye. Council developed assessments for all the non-overfished stocks, actual catch Further, with the implementation of the species even if they were data-limited levels will not approach the ACLs. For Trawl Rationalization program NMFS assessment for data poor stocks. The the overfished stocks, the ACLs are will have better inseason monitoring issue is not the absence of an estimate based on the rebuilding plans. and will be able to track catches relative for safe levels of harvest, even if it is Management measures have been to set aside allocations and close data poor, it is that by grouping the specifically designed to keep the catch fisheries or take other appropriate action ACLs there is uncertainty that each of these stocks below their ACLs. if fisheries are projected to attain their individual species remains under its The NS 1 guidelines make clear that allocations. contributions to the group. Indicator the use of ACTs is optional, not Comment 6: The use of stock complex stocks do not address this issue. required. The proposed guidelines did ACLs must be consistent with new Additionally, the premise behind using require ACTs as reference points, but guidance outlined in the NS1 guidelines an indicator species is that it is the final action ‘‘retains the concept of to ensure that stocks are sufficiently representative of the group. Because the an ACT and an ACT control rule, but similar in geographic distribution, life current stock complexes are not does not require them to be included in history, and vulnerabilities to the organized such that the species within FMPs.’’ The guidelines note that where fishery such that the impact of each group are exposed to similar fisheries lack inseason management management actions on the stocks is fishing pressure, it is unclear how an controls to prevent ACLs from being similar. NMFS should either reorganize indicator species would be selected to exceeded, ‘‘AMs should utilize ACTs species complexes to include stocks represent the group. As previously that are set below ACLs so that catches with similar vulnerabilities to the stated, the analysis needed to support a do not exceed the ACL.’’ (74 FR at 3178, fishery, or designate indicator species reorganization of the current stock January 16, 2009). from among the most vulnerable species complexes or to define indicator stocks The Groundfish FMP provides for in each complex. In addition, species- could not be completed for this biennial inseason management to prevent catch specific ACLs should be set where cycle, but will be addressed at a later limit overages. The current system of possible. date. NMFS agrees that stock complexes inseason management in the groundfish Response: The Council recognized the should be organized so they include fishery has resulted in very few catch need for reorganization of the four similarly vulnerable species and that limit overages in the last four years. complexes described in the EIS to indictor stocks may be a useful tool to Catch limit overages have occurred for reflect the results of the vulnerability manage fisheries in a sustainable canary rockfish (2001–2007), Dover sole analysis conducted by the GMT. manner while preventing overfishing of (2006), POP (2007) and darkblotched However, it was determined that this the most vulnerable species. rockfish(2000, 2001, and 2007) (PFMC, work could not be completed in time for To aid in the management of stock Agenda item G.5.a, attachment 1, the 2011–2012 specifications and complexes, NMFS will be notifying the November 2009). management measures. The Council and states of Washington, Oregon and Projecting canary rockfish impacts has NMFS anticipate the development of California of the intent to propose been problematic, especially in the recommendations for reorganized stock revisions to the regulatory provisions at limited entry trawl sector. Under a complexes in time for the 2013–14 § 660.12 (8), § 660.130(d), § 660.230(c), rationalized fishery, there is individual specifications. and § 660.330(c) pertaining to the accountability and real time reporting As the commenters point out, the sorting and reporting of groundfish that is expected to substantially improve GMT analyzed the vulnerability of the catch. NMFS believes that refining the performance relative to the 2010 fishery stocks currently managed in complexes sorting requirements for the rockfish (i.e., ability to stay within the ACL). For and determined that the existing complexes is necessary for catch recreational fisheries, the Council complexes are comprised of stocks with accounting and management of the most recommended the use of HGs as an a range of vulnerabilities. It was vulnerable stocks within complexes. accountability measure to increase the recognized that the existing complexes Because this provision would require probability that total catch will stay were created prior to the revised NS 1 state and Federal reporting systems to within the ACL. POP and Dover sole are and are not organized in the best be modified including the data systems trawl dominant and management possible manner for taking into account that house these data, such a change performance is also expected to improve scientific uncertainty and the relevant cannot happen for the 2011 fishing under a rationalized fishery structure. management issues. For this reason, it season. However, the nature of POP catch in the has been noted by the GMT that the During the process of developing the whiting fishery could result in high reorganization of stock complexes is an 2011–2012 ACLs, the Council incidental catch events such as occurred issue they will work on for the 2013– considered removing several species in the Pacific whiting shoreside fishery 2014 biennial specifications and from the minor rockfish complexes, but in 2007. For development of the management measures cycle. The did not do so for this biennial cycle Council’s FPA in the EIS, the Council results of any analysis conducted could because changes necessary to manage recommended ACTs for POP and be presented to the Council for action. these species individually under the yelloweye rockfish for the FPA in order The analysis needed to support such trawl rationalization program could not to increase the likelihood that catches reconsideration could not be completed be completed in time for this cycle. will remain below the ACL. This final in time for the current cycle. Comment 7: The FPA lacks adequate rule implements an ACT for POP, but The commenters state that until the buffers for the data-poor stock not for yelloweye rockfish. This final complexes can be reorganized, indicator complexes. Specifically, the minor rule implements an ACL for yelloweye stocks should be designated to represent nearshore subcomplexes contain OFL/ that is 2.2 mt above the projected catch. the more vulnerable stocks in the ABC buffers of roughly 14 percent and The ACL value is based on the high end complexes. Typically indicator stocks no buffer between ABC and ACL, even estimates of projected set aside would be used for an assemblage of though these complexes contain highly amounts. Therefore, NMFS believes that similar species when most of the species vulnerable component species such as the 2.2 mt difference between the ACL do not have an assessment. This is not copper, China and quillback. The minor

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slope subcomplexes contain OFL/ABC AMs. In its December 27, 2010, letter to ACTs is premature. NMFS agrees that buffers of roughly 9 percent, and ABC/ the Council, NMFS identified this issue ecological factors are an important ACL buffers of between 12–25 percent, and suggested that it should be consideration in setting harvest levels even though these subcomplexes are addressed through the development and for groundfish species. The commenters composed of data-poor category 3 submission of an additional amendment reference two food web models for species and highly vulnerable rougheye to the FMP. possible use in considering ecological and shortraker. Comment 9: NMFS should identify factors. At this time these models have Response: It is unclear which kind of and incorporate a specific list of not been evaluated by the SSC or GMT ‘‘buffers’’ the commenters see as relevant ecological factors into the for use. NMFS suggests that the inadequate and therefore it is difficult to management of West Coast Groundfish commenters bring these models forward respond to this comment. The ABCs for and specify how such factors will be to the Council’s advisory bodies so that the species included in the complexes used in the determination of OY, ACLs, they can be evaluated. The groundfish were recommended by the SSC and or ACTs. stock assessment and review process, adopted by the Council as described Response: NMFS acknowledges that which includes procedures for assessing above in response to Comment 4. The ecological factors can be an important new models, is laid out in the Terms of Council specifically accounted for consideration in setting MSY and OY Reference for both the groundfish stock management uncertainty in the ACLs for levels. In the Response to Comment 24 assessment and review process and the the Other Fish and Other Flatfish by of the NS 1 guidelines NMFS states that SSC, which can be found at http:// adopting ACLs lower than the sum of ‘‘* * * ecological conditions not www.pcouncil.org/groundfish/stock- the ABCs for the individual components directly accounted for in the assessments/safe-documents/2011-safe- of these complexes. The ACLs for the specification of MSY can be among the document/. minor shelf and slope rockfish ecological factors considered when Even though the FMP does not subcomplexes are also significantly setting OY below MSY’’ (74 FR at 3187, contain a specific list of ecological lower than the ABCs for these January 16, 2009). The NS1 Guidelines factors that must be considered, the subcomplexes (shelf north—50 percent describe ACT as an accountability FEIS did consider ecological factors. lower, slope north—12 percent lower, measure that accounts for management Chapter 4 of the FEIS evaluated the shelf south—49 percent lower, slope uncertainty, and does not specifically impacts of the alternatives according to south—25 percent lower). In addition, incorporate ecological concerns. the impacts on fishing mortality, the projected catches of the complexes Under the FMP, as amended by rebuilding duration for the overfished and subcomplexes, with the exception Amendment 23, ecological factors can species, stock productivity relative to of the minor nearshore rockfish north be a consideration in setting the ACL rebuilding success, genetic diversity and subcomplex, are all significantly below below the ABC and in setting the OY prey availability. the ACLs. For the minor nearshore (FMP Section 2.2). The extent of our Overfished Species and Flatfish rockfish north subcomplex, as is knowledge on ecological factors with discussed in the FEIS, monitoring may respect to choosing between the Comment 10: The rebuilding plan for indicate a need for inseason integrated alternatives is considered in Darkblotched Rockfish is inconsistent management measures to prevent the FEIS but our ability to compare with the MSA. A TTARGET of 2025 would exceeding the ACL (FEIS at pg 352). In these factors with respect to the maintain the status quo catch limits that summary, given the reductions between alternatives is extremely limited. The were set in 2007–08 that were based on OFL and ABC, and ABC and ACL, and Council and NMFS have incorporated faulty information about darkblotched’s the fact that catches are expected to be ecosystem considerations into resiliency and would extend the 2009– lower than the ACL for most of the management of the groundfish fishery in 10 harvest specifications that were complexes and subcomplexes, a number of ways (e.g. closed areas that invalidated by NRDC v. Locke, Case overfishing on these complexes and protect particularly productive and/or 3:01-cv-00421–JLI. Review of recent subcomplexes is unlikely. sensitive areas, and consideration of catch levels as well as trends in the Comment 8: The Amendment must relevant ecological factors in stock economic health of the fishery reveal specify AMs that will be triggered when assessments). See Agenda Item J.1.c, that it is possible to meet the MSA’s ACLs are reached. Attachment 1, PFMC March 2011 conservation priorities by establishing Response: The NS1 guidelines (74 FR (Assessing Ecosystem Policy Principles faster rebuilding targets and lower 3178, January 16, 2009) state that FMPs and Bringing Ecosystem Science into harvest levels while accommodating the should include AMs, which ‘‘are the Pacific Fishery Management Council needs of the fishing community. NMFS management controls to prevent ACLs, Process). NMFS is actively engaged in should adopt a target rebuilding date for including sector-ACLs, from being developing ecosystem information about darkblotched that results in catch levels exceeded, and to correct or mitigate the California Current ecosystem, and no higher than 200 metric tons (mt) per overages of the ACL if they occur.’’ the Council is considering development year. The catch level for darkblotched NMFS believes that the Groundfish FMP of an Ecosystem Fishery Management was set at 200 mt in 2006 even though currently provides for robust inseason Plan and incorporating ecosystem economic data from both the management measures. Under current factors into the fishery management commercial trawl sector and the larger practices the Council is presented with process. See Agenda Item J.1, Ecosystem groundfish fishery indicate that inseason updates at each of its meetings. Fishery Management Plan (PFMC March revenues in 2006 continued to rebound Following an evaluation of the catch to 2011). from 2002 lows. Therefore, it is date and catch projections presented by While the ecological factors listed in reasonable to assume that the its advisory bodies, the Council makes the comments are relevant, at this time commercial trawl fishery and associated recommendations to NMFS on the specific elements listed have not fishing communities can accommodate regulation changes in order to keep been incorporated into the FMP and the current catch levels considerably closer catch within the catch limits. However, Council decisionmaking process. of 200 mt for darkblotched. NMFS notes that there is a lack of Therefore requiring that information to Response: NMFS disagrees with the clarity in the amendment with respect be reported in a stock assessment or in commenter. The harvest rate being to the connection between ACLs and the determination of OYs, ACLs and implemented by this rule is the most

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conservative harvest rate for groundfish fishery, the Council and ability to transfer catch privileges allows darkblotched rockfish since 2005. The NMFS follow an integrated or holistic the fleet to consolidate to fewer, but TTARGET adopted in this final rule does approach to rebuilding because it would more profitable vessels as the market not maintain the status quo catch limits not be appropriate to develop rebuilding directs quota in a manner that is more set based on faulty information in 2007– plans for each of the overfished species economically efficient. If the 08, and it does not extend the 2009–10 independent from the rebuilding plans darkblotched rockfish ACL is too low harvest specifications invalidated by for the others. The rebuilding (Alternative 1)—such that trawl fishers NRDC v. Locke. The TTARGET being groundfish species are correlated both perceive slope target fisheries to be risky adopted for darkblotched is 2025, which biologically and economically. Changes (high risk of exceeding the individual corresponds to an SPR of 64.9 percent to the OYs for any of the overfished quota pounds) and the fishers limit their and an ACL of 298 mt. The SPR harvest species affect the time to rebuild for that fishing participation for healthy target rate associated with the invalidated species and the ability of fishermen to species—or if fishers hold quota pounds darkblotched rockfish specifications harvest other species of groundfish. In of constraining overfished for sale to was 62.1 percent with a TTARGET equal addition, changes in OYs for groundfish other fishers who incur overages, they to 2028. The final rule implements a species have differing economic impacts would not be able to develop new TTARGET of 2025, which is only 9 years on West Coast fishing communities. methods or strategies to avoid catching longer than TF=0, and is three years Setting a rebuilding strategy for one overfished species. earlier than under the 2009–10 harvest species requires the rebuilding strategy The recruitment pattern for specifications. Similarly, the SPR for the other rebuilding species be darkblotched rockfish is similar to that harvest rate is more conservative than considered simultaneously. Utilizing of many rockfish species, with highly the harvest rate under the 2009–10 this approach, it is reasonable to assume variable recruitment from year to year harvest specifications. Although the that integrated Alternative 1, which adding to the variability in catch accounting between years. In addition, ACL this rule implements is comparable considered a TTARGET of 2022 and ACLs to the OY during the beginning of the of 222 mt in 2011 and 2012, would have the available ACL to the groundfish 2009–10 cycle, the rebuilding period is similar biological and socio-economic fishery is reduced by the projected catch shorter and the harvest rate is reduced impacts to the ACL of 200 mt suggested of darkblotched in incidental open based on the 2009 stock assessment by the commenter. NMFS does not agree access fisheries and non-groundfish update and the revised rebuilding that fishing communities can fisheries. As another commenter analyses, which are the best scientific accommodate an ACL closer to 200 mt pointed out, the incidental catch in non- information available at this time. In than the ACL in the final rule without groundfish fisheries such as pink 2005, steepness (productivity) was suffering severe adverse economic shrimp would be expected to increase as estimated at 1.0, and was set at 0.95. In impacts. Darkblotched rockfish is the darkblotched rockfish biomass 2007, a good deal more age data was currently taken in research fisheries, increases, further constraining the included in the assessment, largely as Tribal fisheries, limited entry trawl non- groundfish fishery unless the ACL conditional age-at length compositions, whiting fisheries, limited entry trawl allowed for such a rebuilding paradox.

and steepness was estimated (using the whiting fisheries, and limited entry NMFS believes that setting a TTARGET prior from Dorn’s meta-analysis) at 0.6. fixed-gear fisheries. Darkblotched that would result in a catch level no That value of steepness was then fixed rockfish are predominantly caught in higher than 200 mt has the potential to in the 2007 assessment and hence also bottom trawls operating on the outer result in short-term disastrous effects on already vulnerable communities. used in the 2009 update. The SPR continental shelf and slope north of 38° As the darkblotched rockfish biomass chosen following the 2005 rebuilding north latitude between 100 and 200 fm. increases, it will become increasingly analysis, and applied in the 2007–08 Reductions in the darkblotched rockfish more difficult to avoid as the stock harvest specifications (the 2007 SPR ACLs are highly limiting to the trawl rebuilds. Unlike the constant catch was 64.1 percent and the 2008 SPR was fisheries because darkblotched rockfish strategy suggested by the commenter, 60.7 percent), corresponded to a co-occur with the most economically which increasingly restricts the fishery TTARGET (median rebuilding year) of important species in the fishery such as as rebuilding occurs and requires ever 2011, which was much earlier than for slope rockfish, sablefish, Pacific increasing management restrictions to previous rebuilding analyses, due whiting, shortspine and longspine avoid exceeding the ACL, the constant largely to the high value of steepness thornyheads, and Dover sole. Under SPR strategy allows rebuilding to occur (and thus high productivity at low stock Alternative 1, trawl opportunities on the at an increasing rate without changing sizes) assumed in the 2005 assessment. slope would be limited as the seaward the TTARGET and without drastic swings Based on the 2007 rebuilding analysis, RCA boundaries were moved deeper. in management measures, which the darkblotched rockfish stock was The bottom trawl fisheries on the provides management stability to projected to recover 19 years later (2030) continental slope would be restricted fisheries and communities and than anticipated from the 2005 year round to a seaward RCA boundary contributes to economic stability. The rebuilding analysis. This then lead to of 250 fm. 2009 stock assessment indicates that the adoption by the Pacific Council of If the ACLs for overfished species are darkblotched rockfish was at 18.1 a new TTARGET equal to 2028 with an too low, it could undermine the success percent of its unfished biomass in 2006 SPR of 62.1 percent. Accordingly, as of the trawl rationalization program. as compared to 27.5 percent in 2009, mentioned above, the SPR of 64.9 Economic benefits to the IFQ fishery are showing an increasing trend. The percent being implemented by this rule expected to result from cost reductions recruitment pattern for darkblotched is the most conservative harvest rate for and increased access to target species rockfish is similar to that of many darkblotched rockfish since 2005. that arise from modifications in fishing rockfish species, with highly variable Moreover, the percent of unfished behavior (overfished species avoidance). recruitment from year to year. The most darkblotched rockfish biomass Individual accountability will put recent year of 2008 shows recruitment continues to increase toward rebuilding. pressure on operators to fish in areas closer to those seen in 2003–2005 after Due to the complexity and with lower encounter rates of very low recruitment in 2006 and 2007. interconnectivity of the Pacific constraining overfished species, and the Large year to year swings in recruitment

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affect the accuracy of catch projections. an SPR of 82.7 percent and an ACL of implemented by this rule is 10 years As discussed in the FEIS, catch models 3 mt. The TTARGET of 2068 implemented before the current TTARGET and 27 years used for the trawl fishery, a catch model by this rule is only 8 years longer than longer than TF=0. In contrast, the based on data from the fishery managed TF=0. In contrast, the proposed rule proposed rule included a yelloweye under a trip limit structure was used to included a cowcod rebuilding plan with rockfish rebuilding plan with a TTARGET project catch. Although it is the best a TTARGET of 2071, which corresponds to of 2084, which corresponds to an SPR available information, because the trawl an SPR of 79 percent and an ACL of 4 of 72.8 percent and an ACL of 20 mt. fishery is now being managed as a mt. The TTARGET of 2071 in the The TTARGET of 2084 in the proposed rationalized fishery with IFQs for the proposed rule was eleven years longer rule was 37 years longer than TF=0. As non-whiting fisheries, catch projections than TF=0. discussed below, NMFS determined that based on fishing distribution under a The commentor is incorrect in stating an ACL lower than 17 mt would have trip limit structure affect the utility of that the cowcod population may be in a disastrous short-term effect on fishing the catch model for making projections. decline. The cowcod stock shows a slow communities. In sum, the shorter rebuilding period but increasing trend in stock biomass. NMFS disagrees with the commenter and more conservative harvest rate Table ES–6 of the 2009 stock assessment regarding the rebuilding progress of adopted in this final rule rebuild presents a summary of recent trends in yelloweye rockfish. The 2009 stock darkblotched rockfish in a time period cowcod exploitation and stock levels assessment shows that yelloweye as short as possible, taking into account from the base case model. The rockfish stock has shown an increasing the statutory factors of the MSA. commenter is correct that the depletion trend in stock biomass during the Comment 11: The rebuilding plan for level projected by the 2009 stock rebuilding period, increasing from the Cowcod is inconsistent with the MSA. assessment is 4.5 percent, however, the estimated depletion level of 16.3 The estimated cowcod depletion rate in 2009 stock assessment, which is the best percent of the unfished biomass in 2002 2009 is 4.5 percent, slightly lower than available scientific information, revises to 20.3 percent in 2009. The median the 4.6 percent rate estimated in the the 2007 stock assessment results and year of recovery in the absence of 2007 assessment, indicating that the indicates that the 2007 biomass was at fishing (TF=0) was calculated by setting cowcod population is failing to rebuild 4 percent not 4.6 percent as the fishing mortality to zero in 2011, and is as projected, and may actually be in commenter indicated. Therefore, the equal to 2047. The value for TMIN, the decline. It is possible to rebuild cowcod best available scientific information median year for rebuilding to the target more quickly than the 2071 target available at this time indicates that level in the absence of fishing since the proposed by Amendment 16–5, and Cowcod depletion rate is improving and year of declaration (2000) is 2044 NMFS does not address why a target the cowcod population is rebuilding. (revised downward slightly from 2046 rebuilding year 11 years later than the Comment 12: The rebuilding plan for in the 2007 analysis). Because TMIN is shortest possible is ‘‘as short as possible’’ yelloweye is inconsistent with the MSA. only three years shorter than TF=0 in pursuant to the requirements of the NMFS’ conclusion that rebuilding 2011, it indicates that harvest rates MSA. Overall groundfish fishery progress on yelloweye has been during this eight-year period have been revenues have rebounded substantially ‘‘moderate’’ is too optimistic. The 2009 low enough to have had little effect on since 2002. The updated community rebuilding analysis indicates that the stocks rebuilding trajectory. vulnerability analysis did not rate any yelloweye rebuilding is three years Although TTARGETS corresponding to fishing communities off the Southern behind schedule under the status quo ACLs lower than 17 mt were U.S. west coast as vulnerable. Historic harvest rate. This is three years beyond considered, the impacts on the fisheries mortality data for cowcod (which are the target year of 2084, which was and communities were significantly admittedly subject to high levels of invalidated in NRDC v. Locke. There is greater. Small changes to yelloweye uncertainty) indicate that actual total a wide range of possible harvest limits rockfish ACLs can have catch has varied between as low as .32 in the 37 year time span between TF=0 disproportionately large effects on the mt in 2003, 2.18 mt in 2004, 1.27 mt in and the proposed target year of 2084 ability of fishers to harvest healthy 2005, and 1.18 mt in 2006. Therefore, it that would rebuild yelloweye more stocks of groundfish, both when is reasonable to assume that a catch quickly and still allow for bycatch. considered as part of the integrated level of 3 mt for cowcod, which is NMFS should adopt a target rebuilding approach, and when considered in projected to rebuild the species by 2068, date for yelloweye that results in catch isolation. For the recreational fisheries, would promote the conservation goals levels between 14–17 mt per year. a yelloweye ACL lower than 17 mt of the MSA and could be reasonably Response: NMFS fully considered all would result in northern California accommodated by affected fisheries and public comment and other relevant recreational seasons that are even fishing communities. NMFS should information, and has determined that shorter than the already extremely adopt a target rebuilding date for modifying the proposed rule to limited lengths (e.g., three months in the cowcod that results in catch levels no implement a shorter rebuilding period Mendocino Management Area). This higher than 3 mt per year. will not cause severe short-term would include a one and a half month Response: NMFS fully considered all economic consequences to season in the Mendocino Management public comment and other relevant communities. Therefore, a shorter Area if the ACL were at 14 mt. Imposing information, and has determined that rebuilding period for yelloweye rockfish further restrictions due to a lower ACL modifying the proposed rule to is more consistent with the would cause the greatest negative implement a shorter rebuilding period requirements of the MSA. The range of economic impacts to communities north will not cause severe short-term alternatives considered in the EIS for of Point Arena, particularly Fort Bragg economic consequences to yelloweye was reasonable as further and Shelter Cove. Under a 14 mt ACL communities. Therefore, a shorter explained in the response to comments the loss to California communities is rebuilding period for cowcod is more in the FEIS. This final rule implements equivalent to 170,000 fishing trips with consistent with the requirements of the a rebuilding plan for yelloweye rockfish an estimated revenue of 20 million MSA. This final rule implements a with a TTARGET of 2074, which dollars in expenditures associated with rebuilding plan for cowcod with a corresponds to an SPR of 76 percent and these trips (March 2011, Agenda Item TTARGET of 2068, which corresponds to an ACL of 17 mt. The TTARGET of 2074 H.2.c, CDFG Letter). Those dependent

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on the recreational fishery for their mt would add risk to communities that (TF=0 = 2024). NMFS believes that the incomes would be the most affected, were unjustified by the conservation rebuilding plan being adopted by this though the coastal community as a benefits associated with a lower ACL. action is consistent with the MSA. whole would suffer from the loss of Response: For a detailed description The latest assessment for canary expenditures by anglers. In the Oregon of the basis for the final ACL value of rockfish demonstrates that the stock has recreational fishery, an ACL (ACT) less 17 mt implemented in this rule refer to been rebuilding since 2000. The than 17 mt would require shallower the previous comment above. The commenter mischaracterizes the depth restrictions, decreased bag limits Council recommended a 20 mt ACL projected biomass depletion level from or full fishery closure, on the part of the with an ACT of 17 mt for yelloweye. the 2009 stock assessment, which is the state to prevent adjusted harvest The Council recommended using an best available scientific information, guidelines from being exceeded. This ACT to address the uncertainty in relative to biomass depletion levels from would likely cause severe economic accurately monitoring recreational the 2007 stock assessment. The impacts to coastal Oregon communities, fishery catch inseason, and increase the reduction from 2007 is largely due to a particularly Garibaldi and Gold Beach, likelihood that the total catch would be revised historical catch time series for which rely heavily on the recreational lower than the ACL. An ACL of 17 mt California. The new data resulted in the bottomfish and halibut fisheries. With is specified in this rule. NMFS chose entire rebuilding trajectory (2000 an ACL under 17 mt, the Washington not to specify an ACT for yelloweye. forward) being slightly lower than recreational management measures may This final rule implements an ACL for previously projected. The commenter need to be more restrictive. More yelloweye that is 2.2 mt above the indicated that canary rockfish restrictive management measures would projected catch. The ACL value is based rebuilding is six years behind schedule. negatively impact local communities on the high end estimates of projected The change in our understanding of the that are dependent on sport fishing. set aside amounts. Therefore NMFS rebuilding trajectory should not be Washington’s recreational yelloweye believes that the 2.2 mt difference interpreted as rebuilding having slowed, impacts are also tied very closely to the between the ACL and the projected as this is not the case. Throughout the halibut fishery. The affected catch means that an ACT is not rebuilding period, the stock has communities are mostly remote areas necessary for yelloweye. Further, with continued to progress towards that rely on the economic benefits the implementation of the Trawl rebuilding. The overall lowering of the created by recreational harvest Rationalization program NMFS will rebuilding trajectory throughout the opportunities. have better inseason monitoring and entire rebuilding period means that it In the commercial fisheries, will be able to track catches relative to would take more time to reach the yelloweye rockfish bycatch is also a set aside allocations and close fisheries B40% (biomass level of 40 percent, concern for fixed gear longline vessels or take other appropriate action if which is used as a proxy for BMSY) than targeting sablefish north of 40°10′. The fisheries are projected to attain their was understood in 2007. The new nearshore fishery in many communities allocations. By specifying an ACL of 17 assessment estimated the 2007 serves primarily specialty ‘‘live-fish’’ mt rather than an ACT, it is predicted depletion level for canary rockfish to markets. For example, the Brookings that rebuilding will occur in 2074, ten have been 21.7 percent (below the port group (southern Oregon) provides years earlier than under the Council’s estimate of 32.4 percent for 2007 from more live-fish landings than any other FPA. the 2007 assessment with 95 percent port group along the U.S. west coast. Comment 14: The rebuilding plan for confidence bounds of 24–41 percent) Because the fish buyers are different for canary rockfish is inconsistent with the and the 2009 depletion level to have this fishery than those for other MSA. The rebuilding plan for canary been 23.7 percent (95 percent commercial fisheries, severely rockfish is six years behind schedule, confidence bounds of 17–30 percent). restricting the fishery could influence according to the 2009 stock assessment. This action maintains the same SPR the primary live-fish buyers in some of The new assessment shows a biomass harvest rate that is in place under the these specialized ports to leave, which depletion percentage of 23.7 percent No Action Alternative. Maintaining the could put an end to live-fish deliveries instead of 32.4 percent seen just two same SPR harvest rate results in an ACL for these specialized fishing years before. In addition, the cumulative for 2011 that is lower than the than the communities. Many of the affected ports OY from 2000–2007 (years with reliable 2010 OY because applying the same lack the infrastructure to compensate for catch data since rebuilding began) was SPR harvest rate responds to changes in fish buyers leaving the area. The exceeded by 14 percent. Rather than our understanding of the status of the TTARGET of 2074 and ACL of 17 mt responding to new information that a stock. Because the rebuilding trajectory implemented by this rule are projected species is doing worse than expected by was modified, maintaining the current to rebuild yelloweye rockfish a full lowering catch rates, NMFS again has target year had to be modified despite decade sooner than the previous indicated that it is willing to extend the fact that the stock has continued to rebuilding time period, while avoiding target rebuilding dates in order to progress towards rebuilding. severe short-term adverse economic maintain status quo catch levels. As explained in the proposed rule and impacts to fishing communities. Therefore, maintenance of the status disclosed to the public in stock Comment 13: NMFS received 5 quo catch levels at the expense of a assessment documents, following the comments in support of the Council’s longer rebuilding period for canary is 1999 declaration that the canary final preferred yelloweye rockfish ACL inconsistent with the MSA’s mandate to rockfish stock was overfished the canary of 20 mt and ACT of 17 mt. The rebuild in a period as short as possible. OY was reduced by over 70 percent in comments in support were from the NMFS should adopt a target rebuilding 2000 (to 200 mt) and by the same Washington Department of Fish and date for canary rockfish that results in margin again from 2001 to 2003 (to 44 Wildlife (WDFW), Oregon Department catch levels no higher than 44 mt per mt). In retrospect, revised catch data of Fish and Wildlife (ODFW), California year. indicate that from 2003 to 2008, when Department of Fish and Game (CDFG) Response: NFMS disagrees with the the rebuilding OY was between 47 and and two comments from the public. commenter. The TARGET being 44 mt, the OY was exceeded 5 out of 6 These commenters also stated that implemented by this rule is within years, although catches were well below setting a yelloweye ACL lower than 17 3 years of the shortest time possible the ABC. These catch estimates were

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done in retrospect using data that were sectors negatively. The whiting sectors between 2005–2009, reaching a new not available during the season. Due to would likely have lower bycatch caps high of $22.8 million in 2009, which is the methods used to derive the total which could preclude them from almost 50% greater than average mortality estimates, the catches made in attaining their whiting allocations. In revenue in 1998 adjusted for inflation. retrospect were higher than estimates addition, the trawl IFQ fishery is After overall groundfish fishery made during the season. intended to provide long-term benefits revenues hit a low of $63.9 million in Canary rockfish are caught in all the to the fishery in the form of bycatch 2002 (concurrent with the disaster major fishery sectors, including: reduction and economic stability. Given declaration in the fishery), they Research fisheries, Washington, Oregon the full catch accounting proposed rebounded to significantly higher levels: and California recreational fisheries, under trawl IFQ program and that all After adjusting for inflation, average Tribal fisheries, limited entry non- catch, discarded and retained, will revenues for the groundfish fishery whiting trawl fisheries, limited entry count towards the individuals IFQ between 2005 and 2009 were slightly whiting trawl fisheries, limited entry shares, the risk of the fishery exceeding over $85 million. In 2008, revenues in fixed gear fisheries, open access the ACL is reduced compared to 2010 the fishery exceeded $113 million directed groundfish fisheries, open and prior years. In the short term, dollars. Per-vessel revenues have access directed fisheries with incidental fishers will need to learn how to avoid rebounded as well. Due in part to the groundfish catch (California halibut, canary rather than simply discarding reduction in the trawl fleet resulting pink shrimp and salmon troll). them at-sea. Economic benefits to the from the buyback program, per-vessel Due to the complexity and IFQ fishery are expected to result from revenues are roughly 40% higher than interconnectivity of the Pacific cost reductions and increased access to they were in 1998 after adjusted for groundfish fishery, the Council and target species that arise from inflation. NMFS follow an integrated or holistic modifications in fishing behavior approach to rebuilding because it would Response: NMFS does not believe that (overfished species avoidance). restricting harvests to maintain revenues not be appropriate to develop rebuilding Individual accountability will put plans for each of the overfished species at or below historically low levels takes pressure on operators to fish in areas into account the needs of fishing independent from the rebuilding plans with lower encounter rates of for the others. The rebuilding communities. Communities may still be constraining overfished species, and the ‘‘surviving’’ but they are not thriving, groundfish species are correlated both ability to transfer catch privileges allows biologically and economically. Changes and many fishing communities remain the fleet to consolidate to fewer, but vulnerable to short-term adverse to the OYs for any of the overfished more profitable, vessels as the market species affect the time to rebuild for that economic impacts associated with directs quota in a manner that is more rebuilding periods shorter than those species and the ability of fishermen to economically efficient. Lower ACLs for harvest other species of groundfish. In adopted by this rule. Small increases in canary rockfish could result in trawl addition, changes in OYs for groundfish revenues of some sectors will help fishers perceiving target fisheries for species have differing economic impacts prevent some of the more vulnerable healthy stocks to be risky (high risk of on West Coast fishing communities. communities from even further losses. exceeding the individual quota pounds) Setting a rebuilding strategy for one Except for the open access sectors, all and result in fishers limiting their species requires the rebuilding strategy other sectors show a decline under fishing participation for healthy target for the other rebuilding species be NMFS’ preferred alternative compared species; or if fishers hold quota pounds considered simultaneously. Utilizing to the No-Action Alternative: Non- of constraining overfished for sale to ¥ this approach, it is reasonable to assume whiting trawl ( 1.6%), limited entry other fishers who incur overages, they ¥ that a 44 mt catch level would have fixed gear ( 10.4%); and Tribal ¥ similar biological and socio-economic would not be able to develop new ( 1.9%—including Tribal shoreside impacts as considered under Alternative methods or strategies to avoid catching whiting). To provide different 1 in the FEIS. Alternative 1 considered overfished species. Reduced fishing perspectives, revenues are analyzed at a T of 2025, which is one year time may result in fishers being unable several levels. First, the total level TARGET to develop new methods or strategies to longer than TMIN and has an ACL of 49 groundfish of revenues, including those mt in 2011 and 51 mt in 2012. Under avoid overfished species. The long-term from non-whiting groundfish, shoreside Alternative 1, the canary rockfish ACL success of the trawl rationalization whiting, and at-sea whiting, are and associated apportionment to the program to maintain low incidental provided to give the perspective of the non-nearshore fisheries is so low that catch of overfished species in total fishery. Second, groundfish the sablefish allocations would have to conjunction with profitable harvest of revenues excluding estimates of at-sea be reduced by as much as 42 percent. healthy stocks is consistent with the whiting are analyzed to better focus the The California nearshore fishery would needs of communities specified in analysis on impacts to coastal also be severely constrained, requiring section 4.5.3.2 of the PCGFMP. communities, as most at-sea whiting statewide 20 fm (37 m) Shoreward RCA Comment 15: Economic indicators revenues are associated with large lines and large trip limit reductions or show improvements in the economic Seattle-based companies. Finally, total closures for some species would be health of the fishery, thus it should be shoreside non-whiting groundfish necessary. This is in contrast to status possible to meet the MSA’s conservation revenues are analyzed alone because the quo where the non-trawl RCAs are 20 priorities by establishing shorter shoreside non-whiting fishery is crucial fm (37 m) in most northern areas and 60 rebuilding periods and lower catch to communities for its ability to provide fm (110 m) south of 34°27′ north levels while accommodating the needs a year-round supply of fish and ‘‘keep latitude. All recreational fisheries would of fishing communities. Historic the lights on’’ so community processing experience reduced season lengths and revenue data indicate that average ex- facilities can take advantage of the restrictive depth restrictions. An ACL of vessel revenues in the groundfish hook- income provided from sporadic pulse 49 mt (Alternative 1) equates to a trawl and-line fishery have rebounded since fisheries such as whiting, salmon, crab, allocation of 13.3 mt—62 percent less hitting a low of just over $13 million in and shrimp (Note that San Francisco is then what is available in 2010. This will 2002. Annual ex-vessel revenues for the a ‘‘coastal community’’ that receives affect both the non-whiting and whiting fishery averaged nearly $18 million non-whiting groundfish).

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According to the Regulatory Impact endorsed permits on about 90 vessels. In increases in fuel costs. Fuel costs now Review Analysis, the total groundfish 2003, a trawl vessel buyback program account for approximately 30 to 40 fishery is projected to reach a level of was implemented, resulting in the percent of the vessels’ revenues. The $91 million compared to the No-Action retirement of 91 vessels and associated average 2005–2009 revenues were about Alternative of $82 million. All of this groundfish limited entry permits in $27 million, or 29 percent greater than increase is due to the increase in order to stabilize what had been 2004. The average 2005–2009 fuel price whiting harvests. Under the no-action declining per-vessel revenues and to was about $2.81 per gallon, 70% greater alternative, the whiting fishery reduce bycatch by the remaining than that of 2004. Therefore, it appears (shoreside and at-sea) account for $22 vessels. Industry is currently paying that the profitability of the 2009 fishery million in ex-vessel revenues. With the back the $36 million loan associated may not be that much improved over increase in the whiting OY from 193,000 with this program. In early 2011, that of 2004. In July of 2009, in Newport mt in 2010 to the 290,000 mt OY in implementation of a catch share Oregon fuel prices were about $2.20 a 2011, whiting revenues in 2011 are program under Amendment 20 to the gallon, in July of 2010, $2.50 a gallon projected to be $33 million. For the FMP began, changing management of and as of April 2011, about $3.75 per shoreside fisheries, including whiting, portions of the trawl fishery from 2- gallon. and coastal communities, shoreside ex- month cumulative trip limits to While NMFS preferred alternative vessel revenues are expected to increase individual fishing quota (IFQ) does result in projected shoreside by 2.6%. If whiting is excluded, 2011 management. In addition to improving revenue increases over status quo, these ex-vessel revenues flowing from the profitability of the fishery while are increases from historically low shoreside fisheries to coastal reducing capacity, the IFQ program is levels of revenue. Healthy communities communities are expected to decrease expected to reduce bycatch because of require profitable sectors. Profits by 3.3%. Most of this decrease is the increase in observer coverage to concern revenues and costs. NMFS and associated with projected decreases in 100%, and placement of catch monitors the Council have received public sablefish and petrale sole harvests. at landing locations (typically at comment that low levels of revenue Relative to the needs of communities, processing plants), and the use of since 1999 have resulted in numerous the commenter indicates that average electronic reporting will lead to better negative impacts to community (annual) ex-vessel revenues in the catch accounting and overall quota infrastructure. Many communities have groundfish hook-and-line fishery management of the fishery. Fishermen lost important infrastructure such as ice (includes limited entry fixed gear, open and processors are paying for these houses, fuel docks, and processing access fixed gear, and Tribal fixed gear observers and catch monitors (although facilities during the last decade. fisheries) have rebounded since hitting for the first three years these costs are Continued low levels of revenue will a low of just over $13 million in 2002. being partially subsidized by NMFS likely result in further losses of In 2011 and 2012 the sablefish ACL will based on available appropriations). The infrastructure. Although it is difficult to decline from the 2010 level of Council and NMFS are now developing predict, at some point the losses of approximately 7,700 mt to a cost-recovery program where up to 3 infrastructure and fishing opportunity approximately 6,800 mt. Therefore, the percent of the trawl revenues may be result in a ‘‘tipping point’’ in which a annual ex-vessel revenues in the assessed on the industry to partially community shifts from a fishing groundfish hook-and-line fishery are recover the costs of administering the community to a non-fishing community. projected to decline. Revenues from program. In addition, with decreased revenues, hook and line gear fishing are just one All of these capacity reduction fishermen are not making needed source of revenue to a community. The programs have yielded increased repairs or improvements to fishing gear, major source of groundfish revenues to average revenues per vessel. However, resulting in potential safety issues and communities are those from trawlers. even if average revenues per vessel or potentially reducing innovation in the Over the years, hook and line revenues total revenues have increased, total fleet to reduce bycatch or impacts to have been a growing source of revenue industry and sector profit levels are habitat. in light of declines in other groundfish likely to be declining especially in light Several other non-groundfish factors fisheries, including trawl fisheries. of increases in fuel prices. For the Trawl also affect fishing communities. From a During the 1998 to 2009 period, the Rationalization Program analysis, a fisheries perspective, for the period commercial revenue from trawl gear shorebased non-whiting model was from 2006 to 2010, except for 2007, the (includes commercial and Tribal, at sea constructed based on the 2004 fishery. Secretary of Commerce has determined and shoreside trawlers) has varied from In 2004, the shorebased non-whiting that a disaster under the MSA exists for a low of $46 million (2009) to a high of trawl fishery generated about $21 a major portion of the coastal salmon $91 million (2008). In 1998, total million in groundfish ex-vessel fishery. From a macro-economic groundfish revenues flowing to revenues. But according to cost perspective, in 2009 and 2010, communities from all gear types was estimates, this fishery was at best communities have been affected by the about $80 million, in 2002 $63 million, breaking even or perhaps suffering a overall downturn in the economy and and in 2009, $74 million. The hook and loss of up to $2 million. Since 2004, now in 2011 and beyond will be line share of total revenues has shorebased non-whiting trawl fisheries affected by the further consequences of increased from 18% in 1998, to 21% in have increased their revenues to about the economy. 2002, and 31% in 2009, the lowest year $30 million in 2009 and estimated $27 Comment 16: NMFS should reject for trawl revenues. million in 2010. The increase in changes to the reference points and 25– In light of conservation, management, shorebased revenues have come from 5 control rule for petrale sole and other and economic issues associated with increased landings of flatfish and assessed flatfish species, as the overcapacity, three capacity reduction sablefish and significant increases in proposed changes are not adequately programs have been instituted since sablefish ex-vessel prices. Sablefish now precautionary, fail to account for the 2000. In 2001, Amendment 14 to the accounts for almost 40 percent of the ecological services rendered by these FMP added a fixed gear permit stacking trawl fleet’s revenues. species, and are premature without a program which has resulted in the Increases in revenues must be comprehensive management strategy consolidation of currently 164 sablefish considered together with significant evaluation.

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Response: The specifications for both of these policy choices. The any other rebuilding paradigm that flatfish in the proposed rule and in this Council chose to set the MSST to 50 prioritizes the economic goal of long- final rule are based on a new proxy for percent of B25% (B12.5%), based on term cumulative yields over Fmsy (F30%) recommended by the SSC advice of the SSC that this was the conservation as a basis for its final and adopted by the Council. NMFS ‘‘lowest value recommended by the NS1 decision. believes that the new flatfish proxy is guidelines.’’ (PFMC G.2.b, Supplemental Comment 18: The rebuilding plan for based on the best available science and SSC Report, November 2009). The 25– petrale sole is inconsistent with the is consistent with the NS1 guidelines 5 harvest control rule is intended to be MSA. The 2011–2012 specifications and the MSA. Following the 2009 the flatfish corollary to the 40–10 allow for catch levels that exceed the scientific peer review of the petrale sole harvest control rule used for other 25–5 control rule and do not result in assessment by the Council’s stock groundfish species. The SSC’s the quickest rebuilding time for this assessment review panel (STAR panel), groundfish subcommittee suggested the species. the STAR panel prepared a report which 25–5 rule provided the same benefits as Response: NMFS disagrees with recommended that the SSC review the the 40–10 harvest control rule, but took commenters’ assertion that the estimates of FMSY produced by the into account the higher productivity of rebuilding plan for petrale sole is petrale sole assessment and investigate flatfish as compared to rockfish. (PFMC inconsistent with the MSA. All of the alternatives to the proxies of F40%. The E.4.b, Supplemental SSC Report 2, alternatives considered in the FEIS SSCs groundfish sub-committee further March 2010). rebuild the stock within 10 years, as considered the proxies produced by the The commenters suggest that these required by the MSA when the stock is petrale sole assessment and changes to the reference points and biologically capable of doing so. The recommended that a proxy for FMSY of precautionary reduction policy for rebuilding plan adopted in this final F30% be established for all west coast flatfish are not supported by sufficient rule is estimated to rebuild the stock by flatfish (PFMC E.2.c Supplemental SSC analysis of their environmental 2016, which is only 2 years longer than Report September 2009; Agenda Item consequences. They specifically identify the estimated minimum time to rebuild E.2.c Supplemental SSC PowerPoint, the services rendered by flatfish in the (which in this case is equal to TF=0). The September 2009). The full SSC endorsed California Current marine ecosystem. Council’s rebuilding strategy is to set the groundfish subcommittee’s Ecosystem impacts of the integrated the ACL equal to the ABC in 2011 and recommendation to establish a new alternatives are described in the FEIS in apply the 25–5 harvest control rule proxy of F30% for FMSY for flatfish section 4.1.5. However, available data starting in 2012. This rebuilding strategy (PFMC G.2.b Supplemental SSC Report, and models limit NMFS’ ability to results in a rebuilding time period that November 2009). This value was based assess the impacts of the alternatives in is as short as possible while taking into on a number of considerations, detail. The SSCs groundfish consideration the important role of including evaluation of information on subcommittee recognized the need for a petrale sole in the groundfish fishery flatfish productivity (steepness) for management strategy evaluation on and the relatively high productivity of assessed west coast flatfish, published harvest control rule proxies (PFMC the stock. meta-analyses of other flatfish stocks, E.2.c, Supplemental SSC report, Petrale sole is one of the primary and recommendations on appropriate September 2009) however, at this time target stocks in the non-whiting trawl proxies for FMSY and BMSY in the an evaluation has not yet been fishery and is predominantly caught by scientific literature. The SSC however conducted. that sector. No other sector currently did not endorse the use of a species- Comment 17: The rebuilding plans in targets petrale sole, although other specific estimate of FMSY for petrale the proposed rule implicitly adopt a sectors do incidentally catch petrale sole because of high variability in the Council-designed paradigm to set catch sole in relatively small amounts. For estimates between repeat assessments levels for overfished species that are this reason, the Council chose to rebuild for other stocks and the sensitivity of inconsistent with the mandates of the the petrale sole stock by constraining the estimates to assumptions concerning MSA to rebuild overfished species ‘‘as fishing opportunities for the non- stock structure. quickly as possible’’ and with the Ninth whiting trawl sector. Specifications in The SSC also recommended and the Circuit’s directive on how to do that this final rule rebuild the stock in as Council adopted a new Bmsy proxy for while ‘‘taking into account the needs of short a time as possible. flatfish—B25%. This recommendation fishing communities.’’ NMFS and the Comment 19: The harvest was developed through the same Council appear to have substituted this specifications for POP and widow process and with the same legal directive with a rebuilding rockfish appear inconsistent with the considerations described above (PFMC paradigm that continues to favor long- MSA mandate to rebuild overfished E.2.c Supplemental SSC Report term economic yields at the expense of species in as short of a time as possible. September 2009). The commenters point rebuilding as quickly as possible. The NMFS chose to maintain the status quo to SSC comments recommending a more white paper submitted to NMFS at the harvest rate and catch limits for POP comprehensive analysis of the control September 2010 Council meeting despite POP rebuilding being behind rule proxies. However, this long-term articulates a rebuilding policy that schedule according to the 2009 stock recommendation did not change the prioritizes the economic goal of long- assessment. In addition, although SSC’s ultimate recommendation that the term cumulative yield over widow rockfish appears close to being new proxies be used for the 2011–2012 conservation, a view that is inconsistent rebuilt, previous assessments predicted specifications cycle. The SSC’s with the MSA. the stock would be rebuilt by 2009, recommendations are the best available Response: The rebuilding plans indicating the stock is also behind science at this time. implemented by this final rule are schedule. Nonetheless, the proposed The SSC noted that the overfished designed to rebuild overfished or SPR harvest rate for widow rockfish is threshold, or MSST, and default depleted species as quickly as possible substantially increased. precautionary reduction policy, are while taking into account the statutory Response: NMFS disagrees with the policy decisions for the Council. factors of the MSA. Although NMFS commenters. The TTARGET for widow is However, the SSC suggested the options considered all relevant factors, NMFS 2010; the commenters incorrectly state that the Council ultimately chose for did not rely upon the white paper or that the species was to be rebuilt in

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2009. Because of the delay in final catch mandate to rebuild as quickly as include increased observation and impacts data, which will enable NMFS possible. monitoring as follows: One observer on to declare the stock not overfished, the Response: NMFS notes that the MSA every IFQ vessel and mothership change in widow rockfish to a healthy requires that overfished stocks be rebuilt catcher vessel; two observers on every stock can not officially occur until a as quickly as possible, taking into at-sea processing vessel 125 ft and over; later date. This ensures that NMFS uses account the status and biology of the one observer on at-sea processing the best available science in making its overfished stock, the needs of fishing vessels under 125 ft; catch monitors at final determination that a stock is no communities and the interaction of the all IFQ first receivers; full catch longer overfished. This final rule overfished stock of fish within the accounting of retained and discarded implements an ACL of 600 mt, which is marine ecosystem. NMFS believes that catch; and real-time catch reporting a modest increase from the No Action TMIN is the starting point, and that it is through observer reports and electronic OY of 509 but is unlikely to result in important to assess the impacts on fish tickets. Together these monitoring targeting of the stock. fishing communities of TMIN (or TF=0), measures are expected to result in For POP, the ACL alternatives and alternative levels above that amount significant improvements to the analyzed in the FEIS were based on the in order to determine the appropriate timeliness and accuracy of catch new stock assessment. Our current rebuilding time period. The FMP, as accounting in the trawl fisheries. understanding of POP stock status and amended by Amendment 16–4, is clear IFQs are expected to constrain the that the time to rebuild may be adjusted total catch mortality to a level within productivity shows that TF=0 is longer upward from TMIN (the minimum time the trawl allocations. Full catch than the current TTARGET. Therefore, all the ACL alternatives analyzed in the in which an overfished stock can accounting and real time reporting in FEIS contemplate a change in the rebuild to its target biomass) under the shoreside IFQ program is expected median time to rebuild that is greater certain circumstances, and as such, TMIN to reduce management uncertainty is the starting point for considering relative to inseason catch accounting in than the current TTARGET. Because the current harvest policy will not rebuild appropriate time periods for rebuilding. the trawl fishery. Under an IFQ program See FMP section 4.5.2. Procedures for there is a greater likelihood that the the species by TTARGET even in the absence of fishing, the rebuilding plan Calculating Rebuilding Parameters. trawl fishery will stay within the trawl is modified through this final rule. The TTARGET is established based on the allocations. Given the full catch SSC did recommend modifying the factors specified in MSA section accounting under trawl IFQ program and that all catch, discarded and rebuilding plan out of the necessity to 304(e)(4) with TMIN and TMAX serving as a starting point and reference point, retained counts towards the individuals’ extend the current T based on our TARGET respectively. The use of T as one IFQ shares, the risk of the fishery changed understanding of stock status MAX rebuilding reference point is consistent exceeding an ACL is further reduced and productivity. For the FPA, the with the NS1 Guidelines. However, the compared to 2010 and prior years. Council proposed changing T TARGET rebuilding plans implemented by the Management of the bottom trawl fishery from 2017 to 2020 while maintaining final rule are not ‘‘based on’’ T . under the IFQ program is expected to the F86.4 percent SPR harvest rate. MAX reduce bycatch. This is because the pace Although the same SPR harvest rate is Bycatch Accounting, CCAs, Processing of the fishery under IFQ is expected to being maintained for POP, the new at Sea, EFP and Other Comments slow such that fishers have time to use TTARGET of 2020 is only two years longer Comment 21: The PFMC requested innovative techniques to avoid non- than TF=0. In addition, maintaining the the yellowtail rockfish set aside for target species or reduce bycatch by same SPR harvest rate results in an ACL exempted fishing permit (EFP) activities increasing the utilization of non-target for 2011 that is lower than the former be 10 mt for 2011, rather than the species. 2010 OY because applying the same proposed 2 mt. This is because the EFP Bycatch accounting in the non-trawl SPR harvest rate responds to changes in was approved in 2010, but all of the fisheries has significantly improved our understanding of the status of the catch of yellowtail rockfish would occur since implementation of the West Coast stock. The Council also recommended in 2011. Groundfish Observer Program (WCGOP) specifying an ACT of 157 mt for POP in Response: NMFS has made the in 2003. Total catch is modeled using 2011 and 2012 under the FPA to further appropriate changes to the EFP set aside the best available WGCOP data (see reduce fishing-related mortality. This amounts and addresses this issue in the model descriptions in Appendix A of revised rebuilding time is based on the Changes from the proposed rule section the FEIS). Unlike the trawl fisheries best available science and rebuilds the of this rule. where every vessel in the fleet will be stock in as short a time as possible. This Comment 22: Bycatch accounting monitored in 2011 and 2012, vessels in rule implements an ACL and an ACT for methods are insufficient to meet the the non-trawl fisheries are sub-sampled POP. The ACT is discussed in detail in MSA mandate to prevent overfishing, meaning that observers collect data from Comment 5 above. and 2011–2012 specifications and a portion of the vessels in the various Comment 20: The leeway NMFS has management measures do not include non-trawl fisheries. The data collected to extend TTARGET beyond TMIN is new measures to make bycatch by observers, in combination with data limited to the amount of fish necessary accounting more timely and more from state landing receipts (fish tickets), to prevent severe short-term hardship to accurate. is used together to estimate bycatch. fishing communities. Therefore, any Response: The commenter does not Although the availability of data to TTARGET longer than TMIN must be specify additional management inform the understanding of discards in specifically demonstrated as necessary measures that might make bycatch the non-trawl fisheries has significantly to prevent this hardship. The rebuilding accounting methods more timely and improved since 2003; neither the plans continue to place undue reliance accurate, therefore it is difficult to WCGOP observer data on catch on TMAX. The Ninth Circuit decision in respond to this comment. In the trawl discarded at sea nor the landed catch NRDC v. NMFS makes it clear that fishery, new management measures data reported on fish ticket data rebuilding plans can no longer be based being implemented as part of the trawl submitted to the states are available in on TMAX but instead must be oriented catch shares program are expected to realtime. The WCGOP for the non-trawl around TMIN in order to comply with the improve bycatch accounting and fisheries is a developing program that is

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continually being refined. Even as a for young cowcod is especially critical is not appropriate to modify the developing program, NMFS believes when considering effective management regulations without an analysis that that the bycatch accounting methods strategies. There is little data currently specifically considers the effects of meet the MSA requirements. available to understand fishery allowing the expansion of processing at Comment 23: NMFS received 13 interactions and the distribution of sea. Further, regulations prohibiting letters from private citizens and fishing cowcod as the stock rebuilds. processing at sea were approved by the associations in support of provisions for While the CDFG analysis indicated Council during its development of the allowing fishing within the CCA out to that modifying the depth restriction in Trawl Rationalization program. NMFS 30 fm and allowing the retention of the CCA is not projected to result in suggests that the commenter consider shelf rockfish within the CCA. Many of increased catch of adult cowcod, submitting a request for consideration the comments indicated that the changes in the encounters of juvenile by the Council for the 2013–2014 analysis submitted by CDFG represented cowcod are unknown (recreational data biennial management cycle. the best available science and indicates does not currently report maturity Comment 26: There were several that when the CCAs were first status). The main conservation inaccuracies in the preamble of the established more area was closed than is considerations pertain to how the proposed rule noted by CDFG and necessary, as evidenced by the proposed changes to depth restrictions ODFW in their comment letters. They California commercial passenger fishing will change fishing effort distribution pertained to sector allocations in the vessels (CPFV or California recreational such that changes in effort would result preamble. charter) data showing one cowcod in increased encounters with cowcod Response: NMFS has corrected these caught in 20–30 fm in the last 10 years. (adult and juvenile) such that there is a errors for the final rule. CDFG also supported these changes in risk of exceeding the ACL, or rebuilding Comment 27: NMFS received letters its comment letter. being delayed (i.e., reproductive that did not contain statements that Response: Because cowcod are potential affected by disturbing or losing require a response but instead contained significantly depleted and the stock’s nursery habitat). The CDFG analysis information that provided NMFS with productivity is extremely low, an indicated that an increase in the depth more background information regarding extremely low incidental harvest rate is restriction from 20 fm to 30 fm or 40 fm the impacts of the alternatives necessary to achieve rebuilding may not result in a significant increase considered. progress. Tenets of the cowcod in bycatch of adult (greater than 45 cm) Response: NMFS considered all the rebuilding plan are to prohibit harvest cowcod in recreational fishery or relevant information and comments in all fisheries and to close the primary appreciably increase the risk of the ACL received during the comment period habitats where cowcod are known to being exceeded. However, NMFS and took that information into account occur. Closure of the CCAs in the believes that the uncertainty with the when making its final decision. southern California Bight in 2001 cowcod stock assessment and the Comment 28: NMFS should conduct effectively reduced harvest to very low general lack of information on fishery stock assessments and set stock-specific levels; a strategy anticipated to work interactions warrant precaution. catch limits for china, quillback and well for reducing adult cowcod Because limited data are available and rougheye rockfish, which appear to be mortality given their sedentary nature. given the potential disturbance and loss subject to overfishing according to Using the CCA closures to reduce of nursery areas that could have long- recent analyses. fishing pressure in significant portions lasting effects on rebuilding, NMFS Response: The selection of species for of known cowcod habitat addresses believes that new information on stock assessment purposes is conducted management uncertainty by reducing cowcod behavior and fishery interaction through the Council’s planning of the the likelihood that a management must be analyzed and considered in 2013–2014 Harvest Specifications. This mistake would compromise rebuilding, cooperation with the NMFS scientists process will begin at the September even under data-poor management and SSC prior to making changes in the 2011 Council meeting. Comments conditions. The FMP states that as new existing CCAs. In addition, NMFS regarding species that should have stock information become available on believes that the risks to the stock and assessments are most appropriately cowcod behavior and fisheries further management measures to submitted at that time. interactions with cowcod, the improve catch accounting relative to Comment 29: NMFS received one boundaries or related regulations changes in the CCAs must be comment from WDFW in support of concerning the current CCAs may considered. This final rule does not NMFS decision not to remove dusky change, and additional CCAs may be include changes to the No Action CCA and dwarf red rockfish from the FMP at established by regulation. Recent boundaries or retention allowances. this time. submersible surveys have provided Comment 24: NMFS received a Response: NMFS agrees with the some information on cowcod comment from a member of the public commenter and has disapproved the distribution and indicate that juvenile who participates in the limited entry portion of Amendment 23 that would cowcod occur over a wide range of trawl fishery requesting that the current have removed dusky and dwarf red habitat types, at depths between 28 and regulations prohibiting processing at sea rockfish from the FMP. 180 fathoms and typically avoid soft be changed to allow the commenter an sediment substrate, favoring hard exemption. This exemption was Changes From the Proposed Rule substrate such as cobble and boulder supported by ODFW in one of its The November 3, 2010 (75 FR 67850) fields or rock ridges (Love and comment letters on this action. proposed rule contained incorrect Yoklavich, 2008). However, Love and Response: NMFS understands the amendatory instructions for the Yaklovich (2008) also indicated that considerable expense of modifying a proposed changes to the harvest characterizing nursery habitat is fishing vessel to process at sea, specification tables. The biennial important when evaluating survival and however, this issue was not considered harvest specifications, including OFLs, recruitment strength of juvenile cowcod within the EIS for the 2011–2012 ACLs, HGs, allocations etc. are and the subsequent persistence of local management measures. Because published in 50 CFR part 660, subpart cowcod populations and that careful modification of the regulations could C in tables 1a through 2d. Instruction delineation of essential nursery habitats result in changes in fishing practices, it 14a contained amendatory instructions

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that described the proposed changes, appear in the codified regulations, by Clarifying text is also added to footnote incorrectly, as ‘‘Tables 1a through 1c, adding language that is consistent with ‘‘ii/’’ of Table 1a, subpart C and to subpart C, are proposed to be revised what was in the proposed rule to reflect footnote ‘‘ii/’’ of Table 2a, subpart C, to ***.’’ The instruction was incorrect the new ACL and ACT terminology. state that 2011 ACL and 2012 ACL are and incomplete. This final rule includes The proposed rule included a 499 mt both equivalent to the 2010 OY for the all eight of the harvest specification set-aside deduction from the proposed ‘‘other fish’’ complex, and that the tables, including: Table 1a, Table 1b, 2011 yellowtail rockfish ACL of 4,364 fishery HG is equal to the ACL. Table 1c, Table 1d, Table 2a, Table 2b, mt. This resulted in a proposed harvest Clarifying language is added in Table 2c and Table 2d to subpart C. The guideline of 3,865 mt for 2011. The footnotes ‘‘b/’’ through ‘‘e/’’ to Table 1b, tables that are revised in this final rule Council sent a letter to NMFS on subpart C, such that the descriptions of are unchanged from the tables that December 1, 2010 recommending that the allocations to the three sectors of the published in the proposed rule, unless NMFS increase the set-aside for EFP whiting fisheries are clearly articulated otherwise noted in the Changes from the catch from 2 mt to 10 mt to allow the and contain cross-references to Proposed Rule section. This final rule Oregon Recreational Fishing Alliance pertinent shorebased IFQ fishery also adds Table 1.e., to subpart C, as (RFA) to prosecute their EFP in 2011. regulations at § 660.140, subpart D. depicted in the proposed rule. The Oregon RFA will be fishing under Table 1d and Table 2d, subpart C, are In § 660.131 NMFS proposed to revise an EFP to catch underutilized yellowtail corrected to specify that there is a the term ‘‘end’’ and replace it with the rockfish while keeping bycatch of formal allocation of Pacific whiting to term ‘‘closed’’ as a housekeeping overfished species low. A 2 mt set aside the at-sea whiting fishery. References measure. The proposed rule contained a for EFPs in 2011 was initially are added to Table 1d and Table 2d, mistake in the amendatory language, recommended when the Oregon RFA subpart C, to the pertinent regulations in and listed the paragraphs to be revised project was anticipated to be concluded Table 1b, subpart C and Table 2b, as § 660.131(b)(4)(ii). The paragraph that before the start of 2011. However, subpart C, respectively. was intended to be amended is actually issuance of the EFP by NMFS later in This rule publishes boundaries for the § 660.131(b)(3)(ii). This final rule 2010 than was anticipated resulted in a non-trawl commercial fisheries as well corrects that mistake in the amendatory continuation in EFP activities into 2011. as cumulative limits for the limited language and makes the changes that Therefore, NMFS is increasing the set- entry fixed gear and opens access were proposed, but in the correct aside for yellowtail rockfish from 499 fisheries. Table 2 (North) and 2 (South), paragraph. mt to 507 mt to allow the Oregon RFA CDFG informed NMFS that there was EFP for yellowtail rockfish to be to subpart E and Table 3 (North) and 3 a mistake in a Council motion and the prosecuted in 2011. The slightly lower (South), to subpart F in this final rule new boundary line that approximates 2011 fishery harvest guideline of 3,857 are identical to those tables that the 40 fm depth contour inside the mt for yellowtail rockfish is shown in published in the proposed rule, except CCAs (around Santa Barbara Island, San Table 1.a and Table 1.b, to subpart C. for the trip limits for sablefish. Since the Nicolas Island, Tanner Bank, and Cortes This final rule also refines the fishery trip limits for sablefish that were Bank) should not have been harvest guidelines that are shown in published in the proposed rule were recommended to NMFS for Table 1a and Table 1b, subpart C, for developed, the most recent fishery implementation. CDFG requested that POP and petrale sole. The calculation information indicates that changes to the latitude and longitude coordinates and deductions from the ACL are sablefish trip limits are warranted. On that were part of the proposed changes unchanged, but the fishery harvest March 1, 2011, NMFS reduced sablefish at § 660.71 paragraphs (s) through (v) be guideline is modified to show one trip limits in the open access fishery removed from the final rule, as they decimal place. As a result, the fishery coastwide and increased or restructured were not intended to be used for harvest guideline in these tables for trip limits for sablefish in the limited management of groundfish fisheries that petrale sole is 910.6 mt instead of 911 entry fixed gear fishery coastwide, occur within the CCA. Therefore, NMFS mt, and the fishery harvest guideline for through the remainder of the year. This has removed the proposed additions at POP is 144.2 mt instead of 144 mt. action was consistent with the Council’s § 660.71 paragraphs (s) through (v), so Footnote ‘‘n/’’ to Table 1a, subpart C recommendations from its November that boundary lines approximating the was corrected so that the coastwide OFL 2010 meeting, and was based on the 40 fm depth contour around Santa of 1,802 mt for starry flounder was most recently available fishery Barbara Island, San Nicolas Island, correctly referenced to be for the year information. At its March 2011 meeting, Tanner Bank, and Cortes Bank will not 2011 and not for 2010. Changes to the Council considered the most recent be defined in regulations at this time. footnote ‘‘o/’’ to Table 1a, subpart C and fishery information and recommended a The November 3, 2010 proposed rule footnote ‘‘o/’’ to Table 2a, subpart C were reduction in the bi-monthly cumulative included changes for consistency with added to clarify that all species within limits for sablefish in the limited entry the new annual catch limit (ACL) the ‘‘other flatfish’’ complex are all fixed gear fishery in the area north of framework that was added to the category 3 stocks and that the 2011 ACL 36° N. latitude. The recommended PCGFMP under Amendment 23. In and 2012 ACL are both equivalent to the reduction was in response to an error in § 660.140, two paragraphs were 2010 OY for that species complex. the calculation of sablefish landings proposed to be revised to either replace Clarifying text is added to footnote discovered over the winter. The error or augment the term ‘‘OY’’ with the new ‘‘hh/’’ of Table 1a, subpart C to state that affected the landings estimates that the terminology that has been added to the the 2011 ACL is equivalent to the 2010 Council has been using for establishing PCGFMP and in other sections of the OY for longnose skate. Edits are also the cumulative limits in the limited groundfish regulations. The paragraphs made to footnote ‘‘ii/’’ of Table 1a, entry sablefish daily trip limit fishery. at § 660.140 were revised in a December subpart C and to footnote ‘‘ii/’’ of Table This resulted in cumulative limits in 15, 2010 final rule (75 FR 78344) that 2a, subpart C, to clarify that the ABC for this fishery that were too high, because implemented the final program the ‘‘other fish’’ complex is a 31 percent catch of sablefish was being components for the IFQ fishery. This reduction from the OFL (s=1.44/ underestimated. Therefore, NMFS is final rule modifies the revised P*=0.40) because all of the stocks in the reducing the bi-monthly cumulative paragraphs (a)(3) and (c)(1), as they complex are category 3 species. limits for sablefish in the limited entry

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fixed gear fishery in the area north of specifications and management emergency rule (75 FR 82296) 36° N. latitude. in this rule. measures, the tables that included the implemented an interim sablefish Tribal There are many instances throughout RCA boundaries and trip limits during allocation of 543 mt. That amount was 50 CFR part 660, subparts C through G 2010 would remain in place until calculated by taking 10 percent of the where the tables in the regulations at 50 superseded. So, on December 30, 2010 2011 ACL for the area North of 36° N. CFR part 660, subpart C that contain the Table 1b (North) and Table 1b (South) latitude. and then reducing that amount biennial harvest specifications are to subpart D from the proposed rule by 1.6 percent for estimated discard referred to as ‘‘tables 1a through 2d’’. were redesignated as Table 1 (North) mortality. The 1.6 percent was the Generally, Tables 1a through 1d, subpart and Table 1 (South) to subpart D and amount deducted for discard mortality C, would contain harvest specifications were implemented in an emergency in regulations for 2010, and therefore for the first year of the biennium. In this rule. NMFS implemented these tables that is what was used in the emergency case, those tables would contain the (Table 1b (North) and Table 1b (South) rule. This final rule implements the 2011 harvest specifications. Generally, to subpart D from the proposed rule) so Tribal allocations that were announced Table 2a through 2d, subpart C, would that fishing in the rationalized in the November 3, 2010 (75 FR 67850) contain the harvest specifications for the groundfish fishery could begin in proposed rule, and were calculated second year of the biennium and January 2011 under appropriate RCA using the proposed 1.5 percent beyond. In this case those tables would structures and with appropriate landing deduction for discard mortality. This contain the 2012 and beyond harvest allowances for non-IFQ species that are final rule also makes a grammatical specifications. Two of the harvest set forth in those tables. This final rule correction by adding the acronym ‘‘ACL’’ specification tables that published in supersedes the tables set forth in that in the description that was in the the proposed rule collapsed each year’s December 30, 2010 emergency rule with proposed rule. This grammatical harvest specifications into a single table. very similar tables, which will be in correction is needed so that the By doing this, it left no content for the effect for 2011 and beyond (see Table 1 allocation is correctly described as 10 2012 tables, at Table 2c and 2d, to (North) and Table 1 (South) to subpart percent of the Monterey through subpart C. This created an inconsistency D). Vancouver area ACL. with the cross-references that are This rule publishes Table 1 (North) The proposed changes to systemic throughout the groundfish and Table 1 (South) to subpart D, which § 660.140(c)(1) removed the term ‘‘OYs’’ regulations at 50 CFR part 660, subparts has identical trawl RCA boundaries and and replaced it with ‘‘ACLs or ACTs’’ C through G. To maintain the integrity landing allowances for non-IFQ species and made additional clarifying changes of the cross-references, and to maintain as Table 1b (North) and Table 1b (South) to surrounding text. The proposed the split of annual harvest specifications to subpart D that published in the clarifications to surrounding text were into two sets of tables (one set for the proposed rule. However, a grammatical confusing. Therefore, the final rule first year of the biennium, and one set correction is made to the introductory simply removes the term ‘‘OYs’’ and for the second year of the biennium, and text of each table to clarify that these replaces it with ‘‘ACLs or ACTs’’ with no beyond) this final rule removes the 2012 tables describe the RCA boundaries that further changes to the existing harvest specifications from Table 1c and apply to vessels that are using regulatory text at § 660.140(c)(1). Table 1d, subpart C, and re-publishes groundfish trawl gear. A further The December 30, 2010 emergency those 2012 harvest specifications, clarification is also made to both tables rule (75 FR 82296) implemented interim unchanged, in Tables 2c and 2d, subpart by adding language to the introductory changes to §§ 660.60 and 660.130 to C. text to cite regulations regarding gear remove obsolete language about trip As described in the preamble to the switching and which RCA applies to limits in the trawl fishery because that proposed rule, this final rule does not vessels operating under gear switching emergency rule removed trip limits for implement a single value for harvest provisions at § 660.140, subpart D. IFQ species. This final rule makes the specifications for Pacific whiting, but Technical corrections to the numbering removal of trip limits for IFQ species describes a range of harvest levels that of footnotes to these tables are also permanent, consistent with the were considered for 2011 and 2012. In made. proposed rule (see above regarding Tables 1a and 1b, and Tables 2a and 2b, Related to the redesignation of Table Table 1 (North) and Table 1 (South)). subpart C, the proposed rule announced 1 (North) and Table 1 (South) to subpart This final rule makes additional Pacific whiting harvest specifications as D, regulatory text at § 660.60(g) and regulatory changes to what was in the ‘‘TBA’’ or ‘‘to be announced’’. To clarify (h)(1) do not need to be revised as proposed rule, which are a natural that the range of harvest specifications proposed. This is because the current extension of the removal of trip limits is what are implemented in this final regulatory text correctly references in the proposed rule. This final rule rule, ‘‘TBA’’ has been removed from Table 1 (North) and Table 1 (South) to keeps the obsolete language out of the these tables and has been replaced with subpart D. This rule keeps those tables regulations at §§ 660.60 and 660.130, a reference to the range of harvest with their current designations, and consistent with the emergency rule. specifications. therefore the proposed changes to cross- NMFS acknowledges that some obsolete In the preamble of the proposed rule, references at § 660.60(g) and (h)(1) are language regarding trip limits, crossover NMFS described how two options for no longer necessary. provisions, and varying trip limits based the trawl RCA and trawl trip limits were The Tribal sablefish allocations for on the gear type that is used will remain proposed. One option was proposed in the area north of 36° N. latitude. that in regulations. NMFS intends to issue a the event that rationalization was were proposed for 2011 and 2012 were follow-up rulemaking that will remove delayed and the fishery was managed 552 mt and 535 mt per year, or revise outdated language. with trip limits (proposed Table 1a respectively (§ 660.50(f)(2)(ii)). These The December 30, 2010 emergency (North) and Table 1a (South) to subpart were calculated by taking 10 percent of rule (75 FR 82296) implemented interim D). The other option was proposed for the ACL, for 2011 and 2012, shorebased trawl allocations for the start the rationalized fishery (proposed Table respectively, for the area North of 36° N. of the 2011 trawl fishery at § 660.140. 1b (North) and Table 1b (South) to latitude. and then reducing that amount The interim allocations allowed quota subpart D). Due to the delay in final by 1.5 percent for estimated discard pounds for IFQ species to be available implementation of the biennial mortality. The December 30, 2010 at the start of the 2011 fishery, but

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before the final 2011 harvest contingent upon potential changes to conservation and management of the specifications were implemented. This the FMP with regard to status pacific coast groundfish fishery and that final rule adds new regulations, from determination criteria and harvest it is consistent with the Magnuson- what was in the proposed rule. The new control rules for flatfish. Therefore, the Stevens Fishery Conservation and regulations implement the allocation proposed 2012 harvest specifications for Management Act and other applicable structure that is articulated in § 660.55 flatfish are not implemented in this final laws. and are, therefore, a natural extension of rule. Assessed flatfish, OFLs, ABCs, As described in the preamble to the the trawl allocations that published in ACLs, ACTs and fishery HGs, in Table December 30, 2010 emergency rule and the proposed rule. This final rule 2a and Table 2b, subpart C, are equal to as discussed above in Background, there updates the initial shorebased trawl the 2011 values. was not adequate time, given the allocations that published in the NMFS is disapproving the Council- complexity of the rulemaking and emergency rule, with the final 2011 recommended changes to depth associated documentation and other shorebased trawl allocations. The final restrictions and groundfish retention work, to have this final rule effective by shorebased trawl allocations are regulations for vessels fishing within the January 1, 2011. Therefore, most of the increasing for the following species: CCAs. Therefore, this final rule does not 2010 specifications and management sablefish south of 36° N. latitude.; implement the proposed changes to measures remained in place for the splitnose rockfish south of 40°10′ N. recreational fishing restrictions that January-April cumulative limit periods, latitude.; Dover sole; english sole; modified the depth restrictions within except that an emergency rule made arrowtooth flounder; starry flounder; the CCAs or that allowed retention of interim changes to allow the start of the petrale sole; cowcod south of 40°10′ N. shelf rockfish within the fishing areas rationalized trawl fishery and routine latitude.; yelloweye rockfish; POP and that are open in the CCAs. Regulations adjustments to fishery management widow rockfish. Specifically, the at § 660.360(c)(3)(i)(A)(5) and (c)(3)(i)(B) measures, within the scope of the 2009– yelloweye rockfish shorebased trawl keep the depth restrictions and species 2010 regulations, were made. At the allocation is increasing from 0.3 mt to retention regulations within the CCAs time NMFS anticipated that this final 0.6 mt consistent with the Council’s for the California recreational fishery rule would implement the 2011–2012 recommendations associated with a 17 the same as those that were in place in biennial specifications and management mt harvest level, and the cowcod 2009 and 2010: Fishing for minor measures beginning on April 29, 2011. shorebased trawl allocation is increasing nearshore rockfish, cabezon, kelp NMFS is under court order to establish from 1.3 mt to 1.8 mt consistent with greenling, lingcod, California rebuilding plans by April 29, 2011 for the Council’s recommendations scorpionfish and ‘‘other flatfish’’ is the overfished species. The 2011–2012 regarding the trawl and non-trawl permitted within the CCAs, shoreward groundfish harvest specifications and allocations for cowcod south of 40°10′ of the 20 fm (37 m) depth contour when management measures are intended to N. latitude. the season for those species is open rebuild overfished stocks as quickly as This final rule publishes 2011 harvest south of 34°27′ N. latitude. Also, as part possible, taking into account the specifications for overfished groundfish of NMFS’ disapproval of changes to the appropriate factors. NMFS utilizes the species in Tables 1a, 1b, 1c and 1e that depth restrictions for vessels fishing most recently available fishery are identical to the proposed harvest within the CCAs, the latitude and information, scientific information, and specifications for all of the groundfish longitude points that were proposed to stock assessments, to implement species except cowcod and yelloweye define the 30 fm depth contour inside specifications and management rockfish. Therefore, the cowcod and the CCAs (around Santa Barbara Island, measures biennially. Generally these yelloweye rockfish ACLs in Table 1a to San Nicolas Island, Tanner Bank, and management measures are implemented subpart C are lower in this final rule Cortes Bank) are not included in this on January 1 of odd numbered years. than those from the proposed rule. final rule. Therefore, NMFS has The 2011–2012 specifications and Footnotes z/for cowcod and bb/for removed the proposed additions at management measures were developed yelloweye rockfish to Table 1a and have § 660.71, paragraphs (k) through (n), so using the most recently available also been modified for consistency with that boundary lines approximating the information and therefore reflect the the changes in Table 1a. Also, the 30 fm depth contour around Santa current status of the stock being cowcod fishery HG in Table 1b has been Barbara Island, San Nicolas Island, managed. modified for consistency with the Tanner Bank, and Cortes Bank will not NMFS finds good cause to waive the changes in Table 1a. be defined in regulations at this time. 30-day delay in effectiveness pursuant NMFS is implementing changes to the NMFS is disapproving the Council’s to 5 U.S.C. 553(d)(3), so that this final overfished species rebuilding plans. recommendation to remove dusky rule may become effective on May 11, However, final 2012 ACLs, ACTs, and rockfish (Sebastes ciliatus) and dwarf- 2011. Leaving the 2010 harvest fishery HGs in for the overfished species red rockfish (Sebastes rufianus) from specifications and management will be contingent upon potential the FMP as discussed above in the measures in place could cause harm to changes to the FMP with regard to the response to Comment 29. As a result of some stocks because those management rebuilding plans for the overfished this disapproval, this final rule does not measures are not based on the most species. Therefore, the proposed 2012 implement the proposed changes to the current scientific information, or they harvest specifications for overfished definition of ‘‘Groundfish’’ in paragraphs could cause drastic management species are not implemented in this (7), (7)(ii)(A) and (7)(ii)(B) to § 660.11, changes later in the year to prevent final rule. ACLs, ACTs and fishery HGs subpart C. exceeding some lower 2011 harvest for overfished species, in Table 2a and specifications once they are Table 2b, subpart C, are equal to the Classification implemented. For example, the cowcod 2011 values. The Administrator, Northwest Region, rockfish ACL is lower in 2011 than it NMFS is implementing changes to the NMFS, determined that FMP was in 2010 and is taken in commercial status determination criteria and harvest Amendment 23 and the 2011 groundfish and recreational fisheries north of Cape control rules for flatfish. However, final harvest specifications and management Mendocino, California. Therefore, if 2012 OFLs, ABCs, ACLs, ACTs and measures, which this final rule higher than anticipated catch of cowcod fishery HGs, for flatfish species will be implements, are necessary for the occurs, changes to management

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measures that could reduce incidental discussed in Chapter 4 of the FEIS, the and fixed, including whiting) are both catch of cowcod could be delayed following summary is based on the expected to decrease by about 2 percent. because of the higher harvest level that Council’s RIR/IRFA with the focus on A variety of time/area closures is in place. This could increase the risk the NMFS preferred alternative that will applicable to commercial vessels have of exceeding the lower 2011 ACL or be implemented by this action. In terms been implemented in recent years. The causing more severe closures later in the of expected harvests, ex-vessel values, most extensive of these are the RCAs, year for fisheries that take cowcod and recreational trips, there are no which have been in place since 2002 to incidentally. Also, for some species, differences between the Council’s FPA prohibit vessels from fishing in depths leaving 2010 harvest specifications in and the NMFS preferred alternative, where overfished groundfish species are place could unnecessarily delay fishing relative to the IRFA/FRFA. more abundant. Different RCA opportunities until later in the year, as configurations apply to the limited entry this final rule will increase the catch The overall economic impact of trawl sector and the limited entry fixed limits for several species for 2011. Thus, NMFS’ preferred alternative is that gear and open access sectors. In a delay in effectiveness could ultimately many sectors are expected to achieve addition, the depth ranges covered can cause economic harm to the fishing social and economic benefits similar to vary by latitudinal zone and time industry and associated fishing those under the current regulations, or period. The alternatives vary somewhat communities. These reasons constitute the No Action alternative. The in terms of the extent of RCAs. In good cause under authority contained in combined total ex-vessel revenues addition to the RCAs, two CCAs have 5 U.S.C. 553(d)(3), to establish an associated with the NMFS preferred been in place since 1999 in the effective date less than 30 days after alternative including at sea whiting is Southern California Bight to reduce date of publication. $90 million, compared with the No- bycatch of the overfished cowcod stock NMFS prepared a final environmental Action level of $82 million. On a and yelloweye conservation areas have impact statement for Amendments 16– coastwide basis, excluding at-sea been established off the Washington 5 and 23 and the 2011–2012 harvest whiting, commercial ex-vessel revenues Coast to reduce bycatch of the specifications and management for the non-Tribal and Tribal groundfish overfished yelloweye rockfish stock. measures. A notice of availability was sectors are estimated to be The NMFS preferred alternative for the published on March 11, 2011 (76 FR approximately $70 million per year limited entry non-whiting trawl fleet 13401). FMP amendment 23 was under NMFS’ preferred alternative generates slightly lower ex-vessel approved on December 23, 2010. NMFS compared with approximately $68 revenue on a coastwide basis when issued a ROD identifying the selected million under No Action, and the compared to revenues under the current alternative. A copy of the ROD is number of recreational bottom fish trips regulations or No Action alternative. available from NMFS (see ADDRESSES). is estimated to be 646 thousand under This is primarily driven by a decrease This final rule has been determined to NMFS’ preferred alternative compared in the abundance of sablefish and be not significant for purposes of with 609 thousand under No Action. petrale sole as opposed to changes in Executive Order 12866. However, there are differences in the status of constraining species. Area- A final regulatory flexibility analysis distribution of ex-vessel revenue and based management for the limited entry (FRFA) was prepared. The FRFA angler trips on a regional basis and on non-whiting trawl fleet under the NMFS incorporates the IRFA, a summary of the a sector-by-sector basis. These changes preferred alternative will be comparable significant issues raised by the public are driven by changes in the forecast to what was in place in 2009 and 2010— comments in response to the IRFA, and abundance for target species and the area north of Cape Alava, NMFS responses to those comments, overfished species. The major changes Washington and shoreward of the trawl and a summary of the analyses RCA will remain closed in order to completed to support the action. A copy to major commercial species target species are associated with Pacific protect overfished rockfish species. of the FRFA is available from NMFS Given the decreased amount of fishable whiting, Dover Sole, petrale sole and (see ADDRESSES) and a summary of the area in northern Washington since 2009, sablefish. Compared to the No-Action FRFA, per the requirements of 5 U.S.C. higher costs for fishery participants Alternative, Pacific whiting harvests are 604(a), follows: Amendment 23 and the from increases in fuel required to travel expected to increase by 50 percent and biennial harvest specifications and to and fish at those deeper depths management measures are intended to Dover sole by 25 percent while sablefish would remain. respond to court orders in NRDC v. harvests are expected to decrease by 10 The fixed gear sablefish sector will Locke and to implement a groundfish percent and petrale sole harvests by 23 generate lower revenue under NMFS’ management scheme for the 2011–2012 percent. With the exception of the preferred alternative than No Action groundfish fisheries. During the Pacific whiting and nearshore open because the sablefish ACL has comment period on the proposed rule, access sectors, all other non-Tribal decreased. However, the fixed gear fleet NMFS received 35 letters of comment, commercial fisheries sectors are will have somewhat more area available but none of the comments received expected to achieve lower levels of ex- than under No Action, because fishing addressed the IRFA, although one letter vessel revenues than under No Action. will be open at depths deeper than 100 directly or indirectly addressed the The limited entry fixed gear sector fm (183 m) north of 40°10′ north latitude economic effects of the rule, as shows the greatest projected decline whereas under No Action, depths discussed above in the response to (¥10 percent) in revenue as a result of between 100 fm (183 m) and 125 fm Comment 10, Comment 12 Comment 15 the sablefish ACL decrease. The Pacific (229 m) were only open on days when and Comment 17. The FRFA compares whiting fishery at-sea sector (including the Pacific halibut fishery was open. all the alternatives by discussing the Tribal) revenues are expected to Fixed gear fisheries south of 36° north impacts of each alternative on increase by 51 percent and the shoreside latitude will see sablefish harvest close commercial vessels, buyers and whiting trawl (excluding Tribal) to status quo levels. There are no processors, recreational charter vessels, revenues are expected to increase by 33 recommended changes to area seafood consumers, recreational anglers, percent. Ex-vessel revenues in both the management relative to status quo. non-consumptive users, non-users, and non-whiting trawl (excluding Tribal) Under NMFS’ preferred alternative, enforcement. Based on analyses and the Tribal shoreside fisheries (trawl the nearshore groundfish fishery is

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expected to have a moderate increase in species with IFQ. Since IFQ for business is one that has annual receipts ex-vessel revenues compared with No constraining, overfished species under $7 million. The FRFA estimates Action due to increased targeting represents a real cost in terms of money that implementation of NMFS preferred opportunities for black rockfish and/or fishing opportunity, it is alternative will affect about 2,600 small (between 42° north latitude and 40°10′ expected that fishers will take entities. These small entities are those north latitude) and cabezon south (south extraordinary steps to avoid that are directly regulated by this final of 42° north latitude). Fishing areas unnecessary catch of these species. At rule that is being promulgated to open to the nearshore fleets will be the same time there is uncertainty about support implementation of NMFS roughly the same as under No Action. how individuals will be able to manage preferred alternative. These entities are Fishing opportunity and economic the individual risk inherent in a system associated with those vessels that either impacts to the nearshore groundfish based on personal responsibility. This target groundfish or harvest groundfish sector are largely driven by the need to issue may present a considerable as bycatch. Consequently, these are the protect canary and especially yelloweye challenge, especially to small businesses vessels, other than catcher-processors, rockfish. that have access to only a single limited that participate in the limited entry Excluding whiting, the NMFS entry trawl permit. Exhausting all portion of the fishery, the open access preferred alternative is projected to readily available supplies of IFQ for a fishery, the charter boat fleet, and the provide the west coast economy with particularly constraining species, such Tribal fleets. Catcher/processors also slightly lower ex-vessel revenues than as yelloweye, may result in the business operate in the Alaska pollock fishery, was generated by the fishery under No being effectively shut down for the and all are associated with larger Action—a 3 percent decrease. However, remainder of the season. Partly for this companies such as Trident and effects on buyers and processors along reason it is expected that over time the American Seafoods. Therefore, it is the coast will vary depending on number of vessels and permits engaging assumed that all catcher/processors are location. In addition, NMFS’ preferred in the limited entry trawl fishery will ‘‘large’’ entities. Best estimates of the alternative attempts to take into account decline as fishers strive to consolidate limited entry groundfish fleet are taken the desire expressed by buyers and available IFQ onto a smaller number of from the NMFS Limited Entry Permits processors to have a year round vessels in order to reduce the costs of Office. As of June 2010, there are 399 groundfish fishery. Individual quota harvesting the quotas. A smaller number limited entry permits including 177 management for trawl fisheries should of active vessels will mean reductions in endorsed for trawl (172 trawl only, 4 help accommodate this preference; the number of crew hired and in trawl and longline, and 1 trawl and trap- however in practice in the absence of expenditures made in local ports for pot); 199 endorsed for longline (191 trip limits it is somewhat uncertain how materials, equipment, supplies and longline only, 4 longline and trap-pot, trawl landings will be distributed in vessel maintenance. As such, while and 4 trawl and longline); 32 endorsed time and space. wages and profits for those crew and for trap-pot (27 trap-pot only, 4 longline In terms of recreational angler effort, vessel owners that do remain in the and trap-pot, and 1 trawl and trap-pot). the number of angler trips under NMFS fishery should increase, the amount and Of the longline and trap-pot permits, preferred alternative is slightly higher distribution of ex-vessel revenues and 164 are sablefish endorsed. Of these compared to No Action, but somewhat community income will change in ways endorsements 130 are ‘‘stacked’’ (e.g. less than in 2009. However, an increase that are not yet foreseeable, but probably more than one permit registered to a in angler effort under NMFS preferred to the detriment of some businesses and single vessel) on 50 vessels. Ten of the alternative is occurring primarily in communities currently involved in the limited entry trawl endorsed permits are south and central California, while groundfish trawl fishery. Due to these used or owned by catcher/processor northern Washington shows a slight companies associated with the whiting increase and Oregon shows no change types of countervailing uncertainties, compared with No Action. It is expected impacts on trawl fisheries under the fishery. The remaining 389 entities are that under the proposed 2011–2012 2011–2012 management measures used assumed to be small businesses based management measures, Tribal in this analysis were estimated using a on a review of sector revenues and groundfish fisheries will generate less model designed to project overfished average revenues per entity. The open revenue and personal income than species bycatch levels under a status access or nearshore fleet, depending on under No Action due to a reduction in quo cumulative trip limit management the year and level of participation, is sablefish harvest. regime. Likewise, the model used to estimated to be about 1,300 to 1,600 The 2011–2012 period will be the first estimate community income impacts vessels. Again, these are assumed to be groundfish management cycle in which was calibrated based on recently ‘‘small entities.’’ The Tribal fleet the shoreside trawl sector fisheries estimated spending patterns for regional includes about 53 vessels, and the would be conducted under the vessels and processors. While providing charter boat fleet includes 525 vessels Amendment 20 trawl rationalization a useful starting point for comparing that are also assumed to be ‘‘small program, including issuance and gross-level effects under the entities.’’ tracking of individual fishing quotas alternatives, the true range of economic NMFS preferred alternative represents (IFQ) for most trawl-caught groundfish impacts achievable under the efforts to address the directions species. IFQ management is designed to rationalized, IFQ-managed fishery may provided by the Ninth Circuit Court of provide opportunities for fisherman and reflect a considerable departure from Appeals, which emphasizes the need to processors to maximize the value of these estimates. rebuild stocks in as short a time as their fishery by creating incentives to The FRFA analysis includes a possible, taking into account: (1) The make the optimum use of available discussion of small businesses. This status and biology of the stocks, (2) the target and bycatch species. Since all final rule will regulate businesses that needs of fishing communities, and (3) trawl trips will be observed, catch of harvest groundfish. According to the interactions of depleted stocks within constraining overfished species will be Small Business Administration, a small the marine ecosystem. By taking into monitored in real time, and individuals commercial harvesting business is one account the ‘‘needs of fishing will be held directly responsible for that has annual receipts under $4.0 communities’’ NMFS was also ‘‘covering’’ all catch of groundfish million and a small charter boat simultaneously taking into account the

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‘‘needs of small businesses’’ as fishing over the Council FPA by further (ESA) on August 10, 1990, November communities rely on small businesses as reducing the rebuilding times of cowcod 26, 1991, August 28, 1992, September a source of economic activity and and yelloweye by three years and ten 27, 1993, May 14, 1996, and December income. Therefore, it may be useful to years, respectively. Comparison of the 15, 1999 pertaining to the effects of the review whether the Council’s three- action alternatives with the No Action Pacific Coast groundfish FMP fisheries meeting process for selecting the FPA alternative allows an evaluation of the on Chinook salmon (Puget Sound, can be seen as means of trying to economic implications to groundfish Snake River spring/summer, Snake mitigate impacts of the proposed rule on sectors, ports, and fishing communities; River fall, upper Columbia River spring, small entities. The FEIS and RIR/IRFA and the interaction of depleted species lower Columbia River, upper Willamette include analysis of a range of within the marine ecosystem of River, Sacramento River winter, Central alternatives that were considered by the reducing ACLs for overfished species to Valley spring, California coastal), coho Council, including analysis of the rebuild stocks faster than they would salmon (Central California coastal, effects of setting allowable harvest under the rebuilding strategies that southern Oregon/northern California levels necessary to rebuild the seven NMFS adopted and has modified coastal), chum salmon (Hood Canal groundfish species that were previously consistent with new, scientific summer, Columbia River), sockeye declared overfished. An eighth species, information on the status and biology of salmon (Snake River, Ozette Lake), and petrale sole, was declared overfished in these stocks. steelhead (upper, middle and lower 2010 and the final action includes a new Alternative 2011–2012 groundfish Columbia River, Snake River Basin, rebuilding plan for this species along management measures are designed to upper Willamette River, central with the ACLs and management provide opportunities to harvest California coast, California Central measures consistent with the adopted healthy, target species within the Valley, south/central California, rebuilding plan. Associated rebuilding constraints of alternative ACLs for northern California, southern analyses for all eight species estimate overfished species. The integrated California). These biological opinions the time to rebuild under various levels alternatives allow estimation of target concluded that implementation of the of harvest. species catch under the suite of ACLs FMP for the Pacific Coast groundfish for overfished species both to fishery was not expected to jeopardize The Council initially considered a demonstrate if target species ACLs are the continued existence of any wider range of alternatives, but projected to be exceeded and to estimate endangered or threatened species under ultimately rejected from further analysis related socioeconomic impacts. the jurisdiction of NMFS, or result in alternatives allowing harvest levels The Council reviewed these analyses the destruction or adverse modification higher than what is generally consistent and read and heard testimony from of critical habitat. with current policies for rebuilding Council advisors, fishing industry NMFS reinitiated a formal section 7 overfished stocks and a ‘‘no fishing’’ representatives, representatives from consultation under the ESA in 2005 for scenario (F=0). Section 2.4 of the FEIS non-governmental organizations, and both the Pacific whiting midwater trawl describes six integrated alternatives the general public before deciding the fishery and the groundfish bottom trawl including No Action, the Council’s FPA, Council’s FPA in June 2010. The fishery. The December 19, 1999, the NMFS preferred alternative, and Council’s final preferred management Biological Opinion had defined an three other alternatives (including the measures are intended to stay within all 11,000 Chinook incidental take Council’s Preliminary Preferred the final recommended harvest levels threshold for the Pacific whiting fishery. Alternative, which is similar to the for groundfish species decided by the During the 2005 Pacific whiting season, Council’s FPA). NMFS finds that the Council at their April and June 2010 the 11,000 fish Chinook incidental take F=0 and Alternatives 1A, 1B, and 2, meetings. NMFS reviewed these threshold was exceeded, triggering while resulting in shorter rebuilding analyses, read and heard testimony from reinitiation. Also in 2005, new data times for most of the overfished species, Council advisors, fishing industry from the West Coast Groundfish lead to projected major decreases in representatives, representatives from Observer Program became available, commercial revenues and recreational non-governmental organizations, the allowing NMFS to complete an analysis activity. Allowing too many general public, and considered legal of salmon take in the bottom trawl communities to suffer commercial or obligations to comply with a court order fishery. recreational losses greater than 10 (NRDC v. Locke) before deciding NMFS’ NMFS prepared a Supplemental percent fails to take into account the preferred alternative in February 2011. Biological Opinion dated March 11, needs of fishing communities. The NMFS preferred management 2006, which addressed salmon take in Alternative 3, the Council FPA, and measures are intended to stay within all both the Pacific whiting midwater trawl NMFS preferred alternative all reduce the final recommended harvest levels and groundfish bottom trawl fisheries. the impacts to communities to less than for groundfish species that were part of In its 2006 Supplemental Biological 10 percent, but they differ in their the NMFS preferred alternative. Opinion, NMFS concluded that catch impacts on rebuilding times. Alternative There are no additional projected rates of salmon in the 2005 whiting 3 reduces rebuilding times from status reporting, record-keeping, and other fishery were consistent with quo for many of the overfished species, compliance requirements of this rule expectations considered during prior but does not reduce the rebuilding time not already envisioned within the scope consultations. Chinook bycatch has for yelloweye rockfish, and results in of current requirements. References to averaged about 7,300 fish over the last only minor reductions for cowcod and collections-of-information made in this 15 years and has only occasionally darkblotched and rockfish. The action are intended to properly cite exceeded the reinitiation trigger of Council’s FPA improves upon those collections in Federal regulations, 11,000 fish. Alternative 3 by reducing the rebuilding and not to alter their effect in any way. Since 1999, annual Chinook bycatch time for darkblotched rockfish by two No Federal rules have been identified has averaged about 8,450 fish. The years while maintaining Alternative 3’s that duplicate, overlap, or conflict with Chinook ESUs most likely affected by small positive increases in commercial this action. the whiting fishery have generally revenues and recreational activity. The NMFS issued Biological Opinions improved in status since the 1999 NMFS preferred alternative improves under the Endangered Species Act section 7 consultation. Although these

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species remain at risk, as indicated by Tribes, in writing, before the first of the discard mortality, research catches, and their ESA listing, NMFS concluded that two meetings at which the Council catches in exempted fishing permit the higher observed bycatch in 2005 considers groundfish management activities. Sector-specific annual catch does not require a reconsideration of its measures. The regulations at 50 CFR limits can be specified, especially in prior ‘‘no jeopardy’’ conclusion with 660.50(d)(2) further state ‘‘the Secretary cases where a sector has a formal, long- respect to the fishery. For the will develop Tribal allocations and term allocation of the harvestable groundfish bottom trawl fishery, NMFS regulations under this paragraph in surplus of a stock or stock complex. concluded that incidental take in the consultation with the affected Tribe(s) Annual Catch Target (ACT) is a groundfish fisheries is within the and, insofar as possible, with Tribal management target set below the annual overall limits articulated in the consensus.’’ The Tribal management catch limit and may be used as an Incidental Take Statement of the 1999 measures in this final rule have been accountability measure in cases where Biological Opinion. The groundfish developed following these procedures. there is great uncertainty in inseason bottom trawl limit from that opinion catch monitoring to ensure against was 9,000 fish annually. NMFS will List of Subjects in 50 CFR Part 660 exceeding an annual catch limit. Since continue to monitor and collect data to Fisheries, Fishing, and Indian the annual catch target is a target and analyze take levels. NMFS also Fisheries. not a limit it can be used in lieu of reaffirmed its prior determination that Dated: April 28, 2011. harvest guidelines or strategically to implementation of the Groundfish FMP Samuel D. Rauch III, accomplish other management is not likely to jeopardize the continued objectives. Sector-specific annual catch existence of any of the affected ESUs. Deputy Assistant Administrator for Regulatory Programs, National Marine targets can also be specified to Lower Columbia River coho (70 FR Fisheries Service. accomplish management objectives. 37160, June 28, 2005) were recently For the reasons set out in the * * * * * listed and Oregon Coastal coho (73 FR preamble, 50 CFR part 660 is amended Fishery harvest guideline means the 7816, February 11, 2008) were recently as follows: harvest guideline or quota after relisted as threatened under the ESA. subtracting from the ACL or ACT when The 1999 biological opinion concluded PART 660—FISHERIES OFF WEST specified, any allocation for the Pacific that the bycatch of salmonids in the COAST STATES Coast treaty Indian Tribes, projected Pacific whiting fishery were almost research catch, deductions for fishing entirely Chinook salmon, with little or ■ 1. The authority citation for part 660 mortality in non-groundfish fisheries, as no bycatch of coho, chum, sockeye, and continues to read as follows: necessary, and set-asides for EFPs. steelhead. Authority: 16 U.S.C. 1801 et seq., 16 * * * * * The Southern Distinct Population U.S.C. 773 et seq., and 16 U.S.C. 7001 et seq. Segment (DPS) of green sturgeon was Groundfish *** (9) ‘‘Other fish’’: Where regulations of listed as threatened under the ESA (71 Subpart C—West Coast Groundfish subparts C through G of this part refer FR 17757, April 7, 2006). The southern Fisheries to landings limits for ‘‘other fish,’’ those DPS of Pacific eulachon was listed as limits apply to all groundfish listed here threatened on March 18, 2010, under ■ 2. In § 660.11, the ESA (75 FR 13012). NMFS has ■ a. Add definitions of ‘‘Acceptable in paragraphs (1) through (8) of this reinitiated consultation on the fishery, Biological Catch’’, ‘‘Annual Catch Limit’’, definition except for the following: including impacts on green sturgeon, ‘‘Annual Catch Target’’, and ‘‘Overfishing Those groundfish species specifically eulachon, marine mammals, and turtles. limit’’ in alphabetical order. listed in Tables 1a and 2a of this subpart ■ ‘‘ with an OFL for that area (generally After reviewing the available b. Revise the definition of Fishery ° ′ information, NMFS has concluded that, harvest guideline’’. north and/or south of 40 10 N. lat.); consistent with Sections 7(a)(2) and 7(d) ■ c. In the definition for ‘‘Groundfish’’, spiny dogfish coastwide. ‘‘Other fish’’ of the ESA, the action would not revise paragraph (9). may include all sharks (except spiny jeopardize any listed species, would not ■ d. In the definition of ‘‘North-South dogfish), skates (except longnose skate), adversely modify any designated critical management area’’ redesignate ratfish, morids, grenadiers, and kelp habitat, and would not result in any paragraphs (2)(xvii) through (xxii) as greenling listed in this section, as well irreversible or irretrievable commitment (2)(xviii) through (xxiii). as cabezon in waters off Washington. of resources that would have the effect ■ e. In the definition of ‘‘North-South * * * * * of foreclosing the formulation or management area’’, add paragraph North-South management area *** (2)(xvii). (2) * * * implementation of any reasonable and ° ′ prudent alternative measures. (xvii) Cape Vizcaino, CA—39 44.00 Pursuant to Executive Order 13175, § 660.11 General definitions. N. lat. this final rule was developed after * * * * * * * * * * meaningful consultation and Acceptable Biological Catch (ABC) Overfishing limit (OFL) is the MSY collaboration with Tribal officials from means a harvest specification that is set harvest level or the annual abundance of the area covered by the FMP. Under the below the overfishing limit to account exploitable biomass of a stock or stock Magnuson-Stevens Act at 16 U.S.C. for scientific uncertainty in the estimate complex multiplied by the maximum 1852(b)(5), one of the voting members of of OFL, and other scientific uncertainty. fishing mortality threshold or proxy the Pacific Council must be a * * * * * thereof and is an estimate of the catch representative of an Indian Tribe with Annual Catch Limit (ACL) is a harvest level above which overfishing is Federally recognized fishing rights from specification set equal to or below the occurring. the area of the Council’s jurisdiction. In ABC threshold in consideration of * * * * * addition, regulations implementing the conservation objectives, socioeconomic ■ 3. In § 660.12 revise paragraph (a)(8) FMP establish a procedure by which the concerns, management uncertainty and to read as follows: Tribes with treaty fishing rights in the other factors. The ACL is a harvest limit area covered by the FMP request new that includes all sources of fishing- § 660.12 General groundfish prohibitions. allocations or regulations specific to the related mortality including landings, * * * * *

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(a) * * * to BMSY is 2027. The harvest control rule each year following the Council’s March (8) Fail to sort, prior to the first to be used to rebuild the canary rockfish meeting when the final specifications weighing after offloading, those stock is an annual SPR harvest rate of for Pacific whiting are announced. groundfish species or species groups for 88.7 percent. * * * * * which there is a trip limit, size limit, (c) Cowcod. The target year for (g) * * * scientific sorting designation, quota, rebuilding the cowcod stock south of (2) Thornyheads. The Tribes will harvest guideline, ACT, ACL or OY, if 40°10′ N. latitude to BMSY is 2068. The manage their fisheries to the following the vessel fished or landed in an area harvest control rule to be used to limits for shortspine and longspine during a time when such trip limit, size rebuild the cowcod stock is an annual thornyheads. The limits would be limit, scientific sorting designation, SPR harvest rate of 82.7 percent. accumulated across vessels into a quota, harvest guideline, ACT, ACL or (d) Darkblotched rockfish. The target cumulative fleetwide harvest target for OY applied; except as specified at year for rebuilding the darkblotched the year. The limits available to § 660.131, subpart C for vessels rockfish stock to BMSY is 2025. The individual fishermen will then be participating in the Pacific whiting at- harvest control rule to be used to adjusted inseason to stay within the sea sectors. rebuild the darkblotched rockfish stock overall harvest target as well as * * * * * is an annual SPR harvest rate of 64.9 estimated impacts to overfished species. ■ 4. In § 660.30, paragraphs (a)(2)(iv) percent. The annual following limits apply: and (a)(6) are revised to read as follows: (e) Pacific Ocean Perch (POP). The (i) Shortspine thornyhead cumulative target year for rebuilding the POP stock trip limits are 17,000-lb (7,711-kg) per 2 § 660.30 Compensation with fish for to BMSY is 2020. The harvest control rule months. collecting resource information—EFPs. to be used to rebuild the POP stock is (ii) Longspine thornyhead cumulative * * * * * an annual SPR harvest rate of 86.4 trip limits are 22,000-lb (9,979-kg) per 2 (a) * * * percent. months. (2) * * * (f) Petrale Sole. The target year for * * * * * (iv) The year in which the rebuilding the petrale sole stock to B compensation fish would be deducted MSY (7) Flatfish and other fish. Treaty is 2016. The harvest control rule is to set fishing vessels using bottom trawl gear from the ACL or ACT before the ACL equal to the ABC, which determining the fishery harvest are subject to the following limits: For corresponds to an annual SPR harvest Dover sole, English sole, other flatfish guideline or commercial harvest rate of 31 percent in 2011. guideline. 110,000 lbs (49,895 kg) per 2 months; (g) Widow rockfish. The target year for and for arrowtooth flounder 150,000 lbs * * * * * rebuilding the widow rockfish stock to (6) Accounting for the compensation (68,039 kg) per 2 months. The Dover BMSY is 2010. The harvest control rule sole and arrowtooth limits in place at catch. As part of the harvest is a constant catch of 600 mt, which specifications process, as described at the beginning of the season will be corresponds to an annual SPR harvest combined across periods and the fleet to § 660.60, subpart C, NMFS will advise rate of 91.7 percent in 2011. the Council of the amount of fish create a cumulative harvest target. The (h) Yelloweye rockfish. The target year limits available to individual vessels authorized to be retained under a for rebuilding the yelloweye rockfish compensation EFP, which then will be will then be adjusted inseason to stay stock to BMSY is 2074. The harvest within the overall harvest target as well deducted from the next harvest control rule to be used to rebuild the specifications (ACLs or ACTs) set by the as estimated impacts to overfished yelloweye rockfish stock is an annual species. For petrale sole, treaty fishing Council. Fish authorized in an EFP too SPR harvest rate of 76.0 percent. late in the year to be deducted from the vessels are restricted to a 50,000 lb following year’s ACLs or ACTs will be ■ 6. In § 660.50, paragraphs (f)(2)(i) and (22,680 kg) per 2 months limit for the accounted for in the next management (ii), (f)(4), (g)(2), and (g)(7) are revised to entire year. Trawl vessels are restricted cycle where it is practicable to do so. read as follows: to using small footrope trawl gear. * * * * * * * * * * § 660.50 Pacific Coast treaty Indian ■ ■ 5. Revise § 660.40 to read as follows: fisheries. 7. In § 660.55, paragraphs (a), (b) introductory text, (f)(1)(ii), and (k) are § 660.40 Overfished species rebuilding * * * * * revised to read as follows: plans. (f) * * * For each overfished groundfish stock (2) * * * § 660.55 Allocations. with an approved rebuilding plan, this (i) The sablefish allocation to Pacific * * * * * section contains the standards to be coast treaty Indian Tribes is 10 percent (a) General. An allocation is the used to establish annual or biennial of the sablefish ACL for the area north apportionment of a harvest privilege for ° ACLs, specifically the target date for of 36 N. lat. This allocation represents a specific purpose, to a particular rebuilding the stock to its MSY level the total amount available to the treaty person, group of persons, or fishery and the harvest control rule to be used Indian fisheries before deductions for sector. The opportunity to harvest to rebuild the stock. The harvest control discard mortality. Pacific Coast groundfish is allocated rule is expressed as a ‘‘Spawning (ii) The Tribal allocation is 552 mt in among participants in the fishery when Potential Ratio’’ or ‘‘SPR’’ harvest rate. 2011 and 535 in 2012 per year. This the ACLs for a given year are established (a) Bocaccio. The target year for allocation is, for each year, 10 percent in the biennial harvest specifications. rebuilding the bocaccio stock south of of the Monterey through Vancouver area For any stock that has been declared ° 40°10′ N. latitude to BMSY is 2022. The (North of 36 N. lat.) ACL. The Tribal overfished, any formal allocation may harvest control rule to be used to allocation is reduced by 1.5 percent for be temporarily revised for the duration rebuild the southern bocaccio stock is estimated discard mortality. of the rebuilding period. For certain an annual SPR harvest rate of 77.7 * * * * * species, primarily trawl-dominant percent. (4) Pacific whiting. The Tribal species, beginning with the 2011–2012 (b) Canary rockfish. The target year allocation for 2010 is 49,939 mt. The biennial specifications process, separate for rebuilding the canary rockfish stock Tribal allocations for will be announced allocations for the trawl and nontrawl

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fishery (which for this purpose includes in the non-groundfish fishery that is other purposes given in paragraphs limited entry fixed gear, directed open deducted from the ACL or ACT when (c)(1)(i)(A) and (B) of this section. access, and recreational fisheries) will specified. * * * * * be established biennially or annually * * * * * ■ 9. Section 660.65 is revised to read as using the standards and procedures follows: described in Chapter 6 of the PCGFMP. (k) Exempted fishing permit set- Chapter 6 of the PCGFMP provides the asides. Annual set-asides for EFPs § 660.65 Groundfish harvest allocation structure and percentages for described at § 660.60(f), will be specifications. species allocated between the trawl and deducted from the ACL or ACT when Harvest specifications include OFLs, nontrawl fisheries. Also, separate specified. Set-aside amounts will be ABCs, and the designation of OYs and allocations for the limited entry and adjusted through the biennial harvest ACLs. Management measures necessary open access fisheries may be established specifications and management to keep catch within the ACL include using the procedures described in measures process. ACTs, harvest guidelines (HGs), or Chapters 6 and 11 of the PCGFMP and * * * * * quotas for species that need individual this subpart. Allocation of sablefish ■ management, and the allocation of ° 8. In § 660.60 paragraph (c)(1)(i) north of 36 N. lat. is described in introductory text is revised to read as fishery HGs between the trawl and paragraph (h) of this section and in the follows: nontrawl segments of the fishery, and PCGFMP. Allocation of Pacific whiting the allocation of commercial HGs is described in paragraph (i) of this § 660.60 Specifications and management between the open access and limited section and in the PCGFMP. Allocation measures. entry segments of the fishery. These of black rockfish is described in * * * * * specifications include fish caught in paragraph (l) of this section. Allocation state ocean waters (0–3 nm offshore) as (c) * * * of Pacific halibut bycatch is described in well as fish caught in the EEZ (3–200 paragraph (m) of this section. (1) * * * nm offshore). Harvest specifications are Allocations not specified in the (i) Trip landing and frequency limits, provided in Tables 1a through 2d of this PCGFMP are established in regulation size limits, all gear. Trip landing and subpart. through the biennial harvest frequency limits have been designated ■ specifications and are listed in Tables 1 10. Section 660.71 is amended as as routine for the following species or follows: a through d and Tables 2 a through d of species groups: widow rockfish, canary ■ this subpart. a. Remove paragraph (e)(78), rockfish, yellowtail rockfish, Pacific ■ b. Redesignate paragraphs (e)(79) (b) Fishery harvest guidelines and ocean perch, yelloweye rockfish, black through (e)(333) as (e)(78) through reductions made prior to fishery rockfish, blue rockfish, splitnose (e)(332) respectively. allocations. Beginning with the 2011– rockfish, chilipepper rockfish, bocaccio, ■ c. Revise paragraphs (k)(149) and 2012 biennial specifications process and cowcod, minor nearshore rockfish or (150), redesignate paragraphs (k)(151) prior to the setting of fishery allocations, shallow and deeper minor nearshore through (212) as (k)(153) through (214), the ACL or ACT when specified is rockfish, shelf or minor shelf rockfish, add new paragraphs (k)(151) and (152) reduced by the Pacific Coast treaty and minor slope rockfish; DTS complex to read as follows: Indian Tribal harvest (allocations, set- which is composed of Dover sole, asides, and estimated harvest under sablefish, shortspine thornyheads, § 660.71 Latitude/longitude coordinates regulations at § 660.50); projected longspine thornyheads; petrale sole, rex defining the 10 fm (18 m) through 40 fm scientific research catch of all sole, arrowtooth flounder, Pacific (73 m) depth contours. groundfish species, estimates of fishing sanddabs, and the other flatfish * * * * * mortality in non-groundfish fisheries complex, which is composed of those (k) * * * and, as necessary, set-asides for EFPs. species plus any other flatfish species ***** The remaining amount after these listed at § 660.11, subpart C; Pacific (149) 36°18.40′ N. lat., 121°57.93′ W. deductions is the fishery harvest whiting; lingcod; Pacific cod; spiny long.; guideline or quota. (note: recreational dogfish; cabezon in Oregon and (150) 36°16.80′ N. lat., 121°59.97′ W. estimates are not deducted here). California and ‘‘other fish’’ as a complex long.; ° ′ ° ′ * * * * * consisting of all groundfish species (151) 36 15.00 N. lat., 121 55.95 W. (f) * * * listed at § 660.11, subpart C and not long.; ° ′ ° ′ (1) * * * otherwise listed as a distinct species or (152) 36 15.00 N. lat., 121 54.41 W. (ii) Catch accounting for the nontrawl species group. Specific to the IFQ long.; allocation. All groundfish caught by a fishery, sub-limits or aggregate limits * * * * * vessel not registered to a limited entry may be specified for the following ■ 11. Section 660.72 is amended as permit and not fishing in the non- species: longnose skate, big skate, follows: groundfish fishery will be counted California skate, California scorpionfish, ■ a. Remove and reserve paragraphs against the nontrawl allocation. All leopard shark, soupfin shark, finescale (f)(143) through (f)(144), and remove groundfish caught by a vessel registered codling, Pacific rattail (grenadier), paragraph (f)(198), to a limited entry permit when the ratfish, kelp greenling, shortbelly, and ■ b. Redesignate paragraphs (a)(122) fishery for a vessel’s limited entry cabezon in Washington. Size limits have through (a)(195) as (a)(127) through permit has closed or they are not been designated as routine for sablefish (a)(200), paragraphs (f)(145) through declared in to a limited entry fishery, and lingcod. Trip landing and frequency (f)(197) as (f)(146) through (f)(198), will be counted against the nontrawl limits and size limits for species with paragraphs (j)(16) through (j)(254) as allocation, unless they are declared in to those limits designated as routine may (j)(18) through (j)(256), and paragraphs a non-groundfish fishery. Catch by be imposed or adjusted on a biennial or (j)(4) through (j)(15) as (j)(5) through vessels fishing in the non-groundfish more frequent basis for the purpose of (j)(16), fishery, as defined at § 660.11, will be keeping landings within the harvest ■ c. Revise paragraphs (a)(121), newly accounted for in the estimated mortality levels announced by NMFS, and for the designated (a)(193), (b), (f)(140) through

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(f)(142), and newly designated (j)(183) (185) 36°14.53′ N. lat., 121°54.99′ W. (135) 43°57.49′ N. lat., 124°57.31′ W. through (j)(185), long.; long.; ■ d. Add paragraphs (a)(122) to (a)(126), * * * * * (136) 44°55.73′ N. lat., 124°55.41′ W. add and reserve paragraph (a)(145), and ■ long.; 12. Section 660.73 is amended as ° ′ ° ′ add paragraphs (j)(4), and (j)(17), to read follows: (137) 44 54.74 N. lat., 124 53.15 W. as follows: ■ a. Remove paragraphs (a)(118) through long.; § 660.72 Latitude/longitude coordinates (a)(120), (a)(156), (d)(134), (d)(180), * * * * * defining the 50 fm (91 m) through 75 fm (h)(157) and (h)(158), (183) 40°30.35′ N. lat., 124°37.52′ W. (137 m) depth contours. ■ b. Redesignate paragraphs (a)(3) long.; ° ′ ° ′ * * * * * through (a)(16) as (a)(4) through (a)(17), (184) 40 28.39 N. lat., 124 37.16 W. (a) * * * paragraphs (a)(17) through (a)(117) as long.; (121) 36°18.40′ N. lat., 121°58.97′ W. (a)(19) through (a)(119), paragraphs * * * * * long.; (a)(121) through (a)(155) as (a)(128) (h) * * * (122) 36°18.40′ N. lat., 122°00.35′ W. through (a)(162), paragraphs (a)(157) (157) 40°30.30′ N. lat., 124°37.63′ W. long.; through (a)(307) as (a)(165) through long.; (123) 36°16.02′ N. lat., 122°00.35′ W. (a)(315), paragraphs (d)(135) through * * * * * (d)(179) as (d)(138) through (d)(182), long.; ■ 13. Section 660.74 is amended as (124) 36°15.00′ N. lat., 121°58.53′ W. paragraphs (d)(181) through (d)(350) as (d)(185) through (d)(354), and follows: long.; ■ ° ′ ° ′ paragraphs (h)(159) through (h)(302) as a. Remove paragraphs (a)(159), (125) 36 15.00 N. lat., 121 56.53 W. (g)(136), long.; (h)(158) through (h)(301), ■ b. Redesignate paragraphs (a)(160) (126) 36°14.79′ N. lat., 121°54.41′ W. ■ c. Add paragraphs (a)(3), (a)(18), through (a)(284) as (a)(161) through long.; (a)(120) through (a)(127), (a)(163) and (a)(285), (g)(137) through (g)(256) as * * * * * (a)(164), (d)(134) through (d)(137), (d)(183), (d)(184), and (h)(157) to read as (g)(138) through (g)(257), (193) 32°55.35′ N. lat., 117°18.65′ W. ■ follows: c. Revise paragraphs (g)(133), (l)(84) long.; and (l)(85), * * * * * § 660.73 Latitude/longitude coordinates ■ d. Add paragraphs (a)(159) and (a) (b) The 50-fm (91-m) depth contour defining the 100 fm (183 m) through 150 fm (160), (g)(136) and (g)(137), to read as around the Swiftsure Bank and along (274 m) depth contours. follows: the U.S. border with Canada is defined * * * * * by straight lines connecting all of the (a) * * * § 660.74 Latitude/longitude coordinates following points in the order stated: (3) 48°10.00′ N. lat., 125°40.00′ W. defining the 180 fm (329 m) through 250 fm (457 m) depth contours. (1) 48°30.15′ N. lat., 124°56.12′ W. long.; * * * * * long.; * * * * * ° ′ ° ′ (a) * * * (2) 48 28.29 N. lat., 124 56.30 W. (18) 48°10.00′ N. lat., 125°17.81′ W. (159) 40°30.22′ N. lat., 124°37.80′ W. long.; long.; (3) 48°29.23′ N. lat., 124°53.63′ W. long.; * * * * * (160) 40°27.29′ N. lat., 124°37.10′ W. long.; (120) 44°02.34′ N. lat., 124°55.46′ W. (4) 48°30.31′ N. lat., 124°51.73′ W. long.; long.; long.; (121) 43°59.18′ N. lat., 124°56.94′ W. * * * * * and connecting back to 48°30.15′ N. (g) * * * ° ′ long.; ° ′ ° ′ lat., 124 56.12 W. long. (122) 43°56.74′ N. lat., 124°56.74′ W. (133) 40 30.16 N. lat., 124 37.91 W. * * * * * long.; long.; (f) * * * (123) 43°55.76′ N. lat., 124°55.76′ W. * * * * * ° ′ ° ′ (140) 36 16.80 N. lat., 122 01.76 W. long.; (136) 40°22.34′ N. lat., 124°31.22′ W. long.; (124) 43°55.41′ N. lat., 124°52.21′ W. long.; ° ′ ° ′ (141) 36 14.33 N. lat., 121 57.80 W. long.; (137) 40°14.40′ N. lat., 124°35.82′ W. long.; (125) 43°54.62′ N. lat., 124°48.23′ W. long.; ° ′ ° ′ (142) 36 14.67 N. lat., 121 54.41 W. long.; * * * * * long.; (126) 43°55.90′ N. lat., 124°41.11′ W. (l) * * * * * * * * long.; (84) 43°57.88′ N. lat., 124°58.25′ W. (j) * * * (127) 43°57.36′ N. lat., 124°38.68′ W. long.; (4) 48°10.00′ N. lat., 125°27.99′ W. long.; (85) 43°56.89′ N. lat., 124°57.33′ W. long.; * * * * * long.; * * * * * (163) 40°30.37′ N. lat., 124°37.30′ W. * * * * * (17) 48°10.00′ N. lat., 125°20.19′ W. long.; ■ 14. Tables to Part 660, Subpart C are long.; (164) 40°28.48′ N. lat., 124°36.95′ W. amended as follows: * * * * * long.; ■ a. Revise Tables 1a through 1d and 2a (183) 36°17.49′ N. lat., 122°03.08′ W. * * * * * through 2c, Subpart C, long.; (d) * * * ■ b. Add Table 1.e. and Table 2d, (184) 36°14.21′ N. lat., 121°57.80′ W. (134) 43°59.43′ N. lat., 124°57.22′ W. Subpart C, to read as follows: long.; long.; BILLING CODE 3510–22–P

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BILLING CODE 3510–22–C Tribes, projected research catch, deductions prepared in 2009. The lingcod north biomass a/ACLs and HGs are specified as total catch for fishing mortality in non-groundfish was estimated to be at 62 percent of its values. Fishery harvest guidelines (HGs) fisheries, as necessary, and set-asides for unfished biomass in 2009. The OFL of 2,438 means the harvest guideline or quota after EFPs. mt was calculated using an FMSY proxy of

subtracting from the ACL or ACT any b/Lingcod north (Oregon and Washington). F45%. The ABC of 2,330 mt was based on a allocation for the Pacific Coast treaty Indian A new lingcod stock assessment was 4 percent reduction from the OFL (s=0.36/

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P*=0.45) as it’s a category 1 species. Because based on a 4 percent reduction from the OFL the OFL (s=0.72/P*=0.40) as it’s a category

the stock is above B40% coastwide, the ACL (s=0.36/P*=0.45) as it’s a category 1 species. 2 species. Because the stock is above B25%, the

is set equal to the ABC. ACL is further Because the stock is above B40% coastwide, ACL is set equal to the ABC. A set-aside of reduced for the Tribal fishery (250 mt), the ACL is set equal to the ABC. No set- 2,078 mt is deducted from the ACL for the incidental open access fishery (16 mt) and asides were removed so the fishery HG is also Tribal fishery (2,041 mt), the incidental open research catch (5 mt), resulting in a fishery equal to the ACL at 50 mt. Cabezon in waters access fishery (30 mt), and research catch (7 HG of 2,059 mt. off Oregon were removed from the ‘‘other mt), resulting in a fishery HG of 13,096 mt. c/Lingcod south (California). A new fish’’ complex, while cabezon of Washington n/Starry Flounder. The stock was assessed lingcod stock assessment was prepared in will continue to be managed within the for the first time in 2005 and was estimated 2009. The lingcod south biomass was ‘‘other fish’’ complex. to be above 40 percent of its unfished estimated to be at 74 percent of its unfished i/Cabezon (California). A new cabezon biomass in 2005. For 2011, the coastwide biomass in 2009. The OFL of 2,523 mt was stock assessment was prepared in 2009. The OFL of 1,802 mt is based on the 2005

calculated using an FMSY proxy of F45%. The cabezon south biomass was estimated to be assessment with a FMSY proxy of F30%. The ABC of 2,102 mt was based on a 17 percent at 48 percent of its unfished biomass in 2009. ABC of 1,502 mt is a 17 percent reduction reduction from the OFL (s=0.72/P*=0.40) as The OFL of 187 mt was calculated using an from the OFL (s=0.72/P*=0.40) as it’s a

it’s a category 2 species. Because the stock is FMSY proxy of F45%. The ABC of 179 mt was category 2 species. Because the stock is above

above B40% coastwide, the ACL is set equal to based on a 4 percent reduction from the OFL B25%, the ACL could have been set equal to the ABC. An incidental open access set-aside (s=0.36/P*=0.45) as it’s a category 1 species. the ABC. As a precautionary measure, the

of 7 mt is deducted from the ACL, resulting Because the stock is above B40% coastwide, ACL of 1,352 mt is a 25 percent reduction in a fishery HG of 2,095 mt. the ACL is set equal to the ABC. No set- from the OFL, which is a 10 percent d/Pacific Cod. The 3,200 mt OFL is based asides were removed so the fishery HG is also reduction from the ABC. A set-aside of 7 mt on the maximum level of historic landings. equal to the ACL at 179 mt. is deducted from the ACL for the Tribal The ABC of 2,222 mt is a 31 percent j/Dover sole. A 2005 Dover sole assessment fishery (2 mt), the incidental open access reduction from the OFL (s=1.44/P*=0.40) as estimated the stock to be at 63 percent of its fishery (5 mt), resulting in a fishery HG of it’s a category 3 species. The 1,600 mt ACL unfished biomass in 2005. The OFL of 44,400 1,345 mt. is the OFL reduced by 50 percent as a mt is based on the results of the 2005 stock o/‘‘Other flatfish’’ are the unassessed

precautionary adjustment. A set-aside of 400 assessment with an FMSY proxy of F30%. The flatfish species that do not have individual mt is deducted from the ACL for the Tribal ABC of 42,436 mt is a 4 percent reduction OFLs/ABC/ACLs and include butter sole, fishery resulting in a fishery HG of 1,200 mt. from the OFL (s=0.36/P*=0.45) as it’s a curlfin sole, flathead sole, Pacific sand dab, e/Pacific whiting. A range of ACLs were category 1 species. Because the stock is above rex sole, rock sole, and sand sole. The other

considered in the EIS (96,968 mt-290,903 B25% coastwide, the ACL could be set equal flatfish OFL of 10,146 mt is based on the mt). A new stock assessment will be prepared to the ABC. However, the ACL of 25,000 mt summed contribution of the OFLs prior to the Council’s March 2011 meeting. is set at a level below the ABC and higher determined for the component stocks. The Final adoption of the Pacific whiting than the maximum historical landed catch. ABC of 7,044 mt is a 31 percent reduction specifications have been deferred until the A set-aside of 1,590 mt is deducted from the from the OFL (s=1.44/P*=0.40) as all species Council’s March 2011 meeting. ACL for the Tribal fishery (1,497 mt), the in this complex are category 3 species. The f/Sablefish north. A coastwide sablefish incidental open access fishery (55 mt) and ACL of 4,884 mt is equivalent to the 2010 stock assessment was prepared in 2007. The research catch (38 mt), resulting in a fishery OY, because there have been no significant coastwide sablefish biomass was estimated to HG of 23,410 mt. changes in the status or management of be at 38.3 percent of its unfished biomass in k/English sole. A stock assessment update stocks within the complex. A set-aside of 198 2007. The coastwide OFL of 8,808 mt was was prepared in 2007 based on the full mt is deducted from the ACL for the Tribal based on the 2007 stock assessment with a assessment in 2005. The stock was estimated fishery (60 mt), the incidental open access

FMSY proxy of F45%. The ABC of 8,418 mt is to be at 116 percent of its unfished biomass fishery (125 mt), and research catch (13 mt), a 4 percent reduction from the OFL (s=0.36/ in 2007. The OFL of 20,675 mt is based on resulting in a fishery HG of 4,686 mt. P*=0.45) as it’s a category 1 species. The 40– the results of the 2007 assessment update p/POP. A POP stock assessment update

10 harvest policy was applied to the ABC to with an FMSY proxy of F30%. The ABC of was prepared in 2009, based on the 2003 full derive the coastwide ACL and then the ACL 19,761 mt is a 4 percent reduction from the assessment, and the stock was estimated to was apportioned north and south of 36° N. OFL (s=0.36/P*=0.45) as it’s a category 1 be at 29 percent of its unfished biomass in

lat, using the average of annual swept area species. Because the stock is above B25%, the 2009. The OFL of 1,026 mt for the Vancouver biomass (2003–2008) from the NMFS NWFSC ACL was set equal to the ABC. A set-aside and Columbia areas is based on the 2009

trawl survey, between the northern and of 100 mt is deducted from the ACL for the stock assessment update with an F50% FMSY southern areas with 68 percent going to the Tribal fishery (91 mt), the incidental open proxy. The ABC of 981 mt is a 4 percent area north of 36° N. lat. and 32 percent going access fishery (4 mt) and research catch (5 reduction from the OFL (s=0.36/P*=0.45) as to the area south of 36° N. lat. The northern mt), resulting in a fishery HG of 19,661 mt. it’s a category 1 species. The ACL of 180 mt portion of the ACL is 5,515 mt and is reduced l/Petrale sole. A petrale sole stock is based on a rebuilding plan with a target by 552 mt for the Tribal allocation (10 assessment was prepared for 2009. In 2009 year to rebuild of 2020 and an SPR harvest percent of the ACL north of 36° N. lat.) The the petrale sole stock was estimated to be at rate of 86.4 percent. An ACT of 157 mt is 552 mt Tribal allocation is reduced by 1.5 12 percent of its unfished biomass coastwide, being established to address management percent to account for discard mortality. resulting in the stock being declared as uncertainty and increase the likelihood that Detailed sablefish allocations are shown in overfished. The OFL of 1,021 mt is based on total catch remains within the ACL. A set-

Table 1c. the 2009 assessment with a F30% FMSY proxy. aside of 12.8 mt is deducted from the ACT g/Sablefish South. That portion of the The ABC of 976 mt is a 4 percent reduction for the Tribal fishery (10.9 mt), EFP catch (0.1 coastwide ACL apportioned to the area south from the OFL (s=0.36/P*=0.45) as it’s a mt) and research catch (1.8 mt), resulting in of 36° N. lat. is 2,595 mt (32 percent). An category 1 species. The ACL is set equal to a fishery HG of 144.2 mt. additional 50 percent reduction was made for the ABC and corresponds to an SPR harvest q/Shortbelly rockfish. A non quantitative uncertainty resulting in an ACL of 1,298 mt. rate of 31 percent. A set-aside of 65.4 mt is assessment was conducted in 2007. The A set-aside of 34 mt is deducted from the deducted from the ACL for the Tribal fishery spawning stock biomass of shortbelly ACL for EFP catch (26 mt), the incidental (45.4 mt), the incidental open access fishery rockfish was estimated at 67 percent of its open access fishery (6 mt) and research catch (1 mt), EFP catch (2 mt) and research catch unfished biomass in 2005. The OFL of 6,950 (2 mt), resulting in a fishery HG of 1,264 mt. (17 mt), resulting in a fishery HG of 911 mt. mt was recommended for the stock in 2011 h/Cabezon (Oregon). A new cabezon stock m/Arrowtooth flounder. The stock was last with an ABC of 5,789 mt (s=0.72 with a P* assessment was prepared in 2009. The assessed in 2007 and was estimated to be at of 0.40). The 50 mt ACL is slightly higher cabezon biomass in Oregon was estimated to 79 percent of its unfished biomass in 2007. than recent landings, but much lower than be at 51 percent of its unfished biomass in The OFL of 18,211 mt is based on the 2007 previous OYs in recognition of the stock’s

2009. The OFL of 52 mt was calculated using assessment with a F30% FMSY proxy. The ABC importance as a forage species in the

an FMSY proxy of F45%. The ABC of 50 mt was of 15,174 mt is a 17 percent reduction from California Current ecosystem. A set-aside of

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1 mt for research catch results in a fishery HG harvest rate of 77.7 percent. A set-aside of for the biomass found in that area reduced by of 49 mt. 13.4 mt is deducted from the ACL for the an additional 25 percent as a precautionary r/Widow rockfish. The stock was assessed incidental open access fishery (0.7 mt), EFP adjustment. A set-aside of 44 mt is deducted in 2009 and was estimated to be at 39 percent catch (11 mt) and research catch (1.7 mt), from the ACL for the Tribal fishery (30 mt), of its unfished biomass in 2009. The OFL of resulting in a fishery HG of 249.6 mt. the incidental open access fishery (1 mt), and 5,097 mt is based on the 2009 stock v/Splitnose rockfish. A new coastwide research catch (13 mt) resulting in a fishery

assessment with an F50% FMSY proxy. The assessment was prepared in 2009 that HG of 2,075 mt. For that portion of the stock ABC of 4,872 mt is a 4 percent reduction estimated the stock to be at 66 percent of its south of 34°27′ N. lat. the ACL is 376 mt and from the OFL (s=0.36/P*=0.45) as it’s a unfished biomass in 2009. Splitnose in the is 21 percent of the coastwide ABC reduced category 1 species. A constant catch strategy north is managed under the minor slope by 50 percent as a precautionary adjustment. of 600 mt, which corresponds to an SPR rockfish complex and south of 40°10’ N. lat. A set-aside of 3 mt is deducted from the ACL harvest rate of 91.7 percent, will be used to with species-specific harvest specifications. for the incidental open access fishery (2 mt), rebuild the widow rockfish stock consistent South of 40°10 N. lat. the OFL of 1,529 mt and research catch (1 mt) resulting in a with the rebuilding plan and a TTARGET of is based on the 2009 assessment with an fishery HG of 373 mt. The sum of the

2010. A set-aside of 61 mt is deducted from FMSY proxy of F50%. The ABC of 1,461 mt is northern and southern area ACLs (2,495 mt) the ACL for the Tribal fishery (45 mt), the a 4 percent reduction from the OFL (s=0.36/ is a 16 percent reduction from the coastwide incidental open access fishery (3.3 mt), EFP P*=0.45) as it’s a category 1 species. Because ABC. catch (11 mt) and research catch (1.6 mt), the unfished biomass is estimated to be above z/Cowcod. A stock assessment update was resulting in a fishery HG of 539.1 mt. 40 percent of the unfished biomass, the ACL prepared in 2009 and the stock was estimated s/Canary rockfish. A canary rockfish stock is set equal to the ABC. A set-aside of 7 mt to be 5 percent (bounded between 4 and 21 assessment update, based on the full is deducted from the ACL for research catch, percent) of its unfished biomass in 2009. The assessment in 2007, was completed in 2009 resulting in a fishery HG of 1,454 mt. OFLs for the Monterey and Conception areas and the stock was estimated to be at 23.7 w/Yellowtail rockfish. A yellowtail were summed to derive the south of 40°10 N. percent of its unfished biomass coastwide in rockfish stock assessment was last prepared lat. OFL of 13 mt. The ABC for the area south 2009. The coastwide OFL of 614 mt is based in 2005 for the Vancouver, Columbia, and of 40°10′ N. lat. is 10 mt. The assessed on the new assessment with a FMSY proxy of Eureka areas. Yellowtail rockfish was portion of the stock in the Conception Area

F50%. The ABC of 586 mt is a 4 percent estimated to be at 55 percent of its unfished was considered category 2, with a reduction from the OFL (s=0.36/P*=0.45) as biomass in 2005. The OFL of 4,566 mt is Conception Area contribution to the ABC of it’s a category 1 species. The ACL of 102 mt based on the 2005 stock assessment with the 5 mt, which is a 17 percent reduction from

is based on a rebuilding plan with a target FMSY proxy of F50%. The ABC of 4,364 mt is the OFL (s=0.72/P*=0.35). The unassessed year to rebuild of 2027 and a SPR harvest rate a 4 percent reduction from the OFL (s=0.36/ portion of the stock in the Monterrey area of 88.7 percent. A set-aside of 20 mt is P*=0.45) as it’s a category 1 species. The ACL was considered a category 3 stock, with a deducted from the ACL for the Tribal fishery was set equal to the ABC, because the stock contribution to the ABC of 5 mt, which is a

(9.5 mt), the incidental open access fishery (2 is above B40%. A set-aside of 507 mt is 29 percent reduction from the OFL (s=1.44/ mt), EFP catch (1.3 mt) and research catch deducted from the ACL for the Tribal fishery P*=0.40). A single ACL of 3 mt is being set (7.2 mt) resulting in a fishery HG of 82 mt. (490 mt), the incidental open access fishery for both areas combined. The ACL of 3 mt is Recreational HGs are being specified as (3 mt), EFP catch (10 mt) and research catch based on a rebuilding plan with a target year follows: Washington recreational, 2.0; Oregon (4 mt), resulting in a fishery HG of 3,857 mt. to rebuild of 2068 and an SPR rate of 82.7 recreational 7.0 mt; and California x/Shortspine thornyhead. A coastwide percent. The amount anticipated to be taken recreational 14.5 mt. stock assessment was conducted in 2005 and during research activity is 0.1 mt and the t/Chilipepper rockfish. The coastwide the stock was estimated to be at 63 percent amount expected to be taken during EFP chilipepper stock was assessed in 2007 and of its unfished biomass in 2005. A coastwide activity is 0.2 mt, which results in a fishery estimated to be at 71 percent of its unfished OFL of 2,384 mt is based on the 2005 stock HG of 2.7 mt.

biomass coastwide in 2006. Given that assessment with a F50% FMSY proxy. The aa/Darkblotched rockfish. A stock chilipepper rockfish are predominantly a coastwide ABC of 2,279 mt is a 4 percent assessment update was prepared in 2009, southern species, the stock is managed with reduction from the OFL (s=0.36/P*=0.45) as based on the 2007 full assessment, and the stock-specific harvest specifications south of it’s a category 1 species. For the portion of stock was estimated to be at 27.5 percent of 40°10 N. lat. and within minor shelf rockfish the stock that is north of 34°27′ N. lat., the its unfished biomass in 2009. The OFL is north of 40°10 N. lat. South of 40°10 N. lat., ACL is 1,573 mt, 66 percent of the coastwide projected to be 508 mt and is based on the the OFL of 2,073 mt is based on the 2007 OFL. A set-aside of 45 mt is deducted from 2009 stock assessment with an FMSY proxy of

assessment with an FMSY proxy of F50%. The the ACL for the Tribal fishery (38 mt), the F50%. The ABC of 485 mt is a 4 percent ABC of 1,981 mt is a 4 percent reduction incidental open access fishery (2 mt), and reduction from the OFL (s=0.36/P*=0.45) as from the OFL (s=0.36/P*=0.45) as it’s a research catch (5 mt) resulting in a fishery it’s a category 1 species. The ACL of 298 mt category 1 species. Because the biomass is HG of 1,528 mt for the area north of 34°27′ is based on a rebuilding plan with a target estimated to be above 40 percent of the N. lat. For that portion of the stock south of year to rebuild of 2025 and an SPR harvest unfished biomass, the ACL was set equal to 34°27′ N. lat. the ACL is 405 mt which is 34 rate of 64.9 percent. A set-aside of 18.7 mt the ABC. The ACL is reduced by the percent of the coastwide OFL, reduced by 50 is deducted from the ACL for the Tribal incidental open access fishery (5 mt), and percent as a precautionary adjustment. A set- fishery (0.1 mt), the incidental open access research catch (9 mt), resulting in a fishery aside of 42 mt is deducted from the ACL for fishery (15 mt), EFP catch (1.5 mt) and HG of 1,966 mt. the incidental open access fishery (41 mt), research catch (2.1 mt), resulting in a fishery u/Bocaccio. A bocaccio stock assessment and research catch (1 mt) resulting in a HG of 279.3 mt. was prepared in 2009 from Cape Mendocino fishery HG of 363 mt for the area south of bb/Yelloweye rockfish. The stock was to Cape Blanco (43° N. lat.) Given that 34°27′ N. lat. The sum of the northern and assessed in 2009 and was estimated to be at bocaccio rockfish are predominantly a southern area ACLs (1,978 mt) is a 13 percent 20.3 percent of its unfished biomass in 2009. southern species, the stock is managed with reduction from the coastwide ABC. The 48 mt coastwide OFL was derived from stock-specific harvest specifications south of y/Longspine thornyhead. A coastwide the base model in the new stock assessment 40°10 N. lat. and within minor shelf rockfish stock assessment was conducted in 2005 and with an FMSY proxy of F50%. The ABC of 46 north of 40°10 N. lat. The bocaccio stock was the stock was estimated to be at 71 percent mt is a 4 percent reduction from the OFL estimated to be at 28 percent of its unfished of its unfished biomass in 2005. A coastwide (s=0.36/P*=0.45) as it’s a category 1 species. biomass in 2009. The OFL of 737 mt is based OFL of 3,577 mt is based on the 2005 stock The 17 mt ACL is based on a rebuilding plan on the 2009 stock assessment with an FMSY assessment with a F50% FMSY proxy. The ABC with a target year to rebuild of 2074 and an

proxy of F50%. The ABC of 704 mt is a 4 of 2,981 mt is a 17 percent reduction from SPR harvest rate of 76 percent. A set-aside of percent reduction from the OFL (s=0.36/ the OFL (s=0.72/P*=0.40) as it’s a category 5.9 mt is deducted from the ACT for the P*=0.45) as it’s a category 1 species. The 263 2 species. For the portion of the stock that Tribal fishery (2.3 mt), the incidental open mt ACL is based on a rebuilding plan with is north of 34°27′ N. lat., the ACL is 2,119 access fishery (0.2 mt), EFP catch (0.1 mt) a target year to rebuild of 2022 and a SPR mt, and is 79 percent of the coastwide OFL and research catch (3.3 mt) resulting in a

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fishery HG of 11.1 mt. Recreational HGs are lat., is subdivided with separate HGs being the ABCs for the contributing species in each being established as follows: Washington set for the area north of 42° N. lat. (580 mt/ sub-complex, is 3,723 mt (1,001 mt recreational, 2.6; Oregon recreational 2.4 mt; 58 percent) and for the area south of 42° N. nearshore, 1,885 mt shelf, and 836 mt slope). and California recreational 3.1 mt. lat. (420 mt/42 percent). The ACL of 2,341 mt for the complex is the cc/California Scorpionfish was assessed in ff/Minor rockfish north is comprised of sum of the sub-complex ACLs. The sub- 2005 and was estimated to be at 80 percent three minor rockfish sub-complexes: complex ACLs are the sum of the component of its unfished biomass in 2005. The OFL of nearshore, shelf, and slope rockfish. The OFL stock ACLs, which are less than or equal to 141 mt is based on the new assessment with of 3,767 mt is the sum of OFLs for nearshore the ABC contribution of each component a harvest rate proxy of F50%. The ABC of 135 (116 mt), shelf (2,188 mt) and slope (1,462 stock. There are no set-asides for the mt is a 4 percent reduction from the OFL mt) north sub-complexes. Each sub-complex nearshore sub-complex, thus the fishery HG (s=0.36/P*=0.45) as it’s a category 1 species. OFL is the sum of the OFLs of the component is equal to the ACL, which is 1,001 mt. The Because the stock is above B , the ACL is species within the complex. The ABCs for 40% set-aside for the shelf sub-complex is 13 mt set equal to the ABC. A set-aside of 2 mt is the minor rockfish complexes and sub- deducted from the ACL for the incidental complexes are based on a sigma value of 0.36 for the incidental open access fishery (9 mt), open access fishery, resulting in a fishery HG for category 1 stocks (splitnose and EFP catch (2 mt) and research catch (2 mt), of 133 mt. chilipepper rockfish), 0.72 for category 2 resulting in a shelf fishery HG of 701 mt. The dd/Black rockfish north (Washington). A stocks (greenstriped rockfish and blue set-aside for the slope sub-complex is 27 mt stock assessment was prepared for black rockfish in California) and 1.44 for category for the incidental open access fishery (17 mt), rockfish north of 45°56′ N. lat. (Cape Falcon, 3 stocks (all others) with a P* of 0.45. The EFP catch (2 mt) and research catch (8 mt), Oregon) in 2007. The biomass in the north resulting minor rockfish north ABC, which is resulting in a slope fishery HG of 599 mt. was estimated to be at 53 percent of its the summed contribution of the ABCs for the hh/Longnose skate. A stock assessment unfished biomass in 2007. The OFL from the contributing species in each sub-complex was prepared in 2007 and the stock was assessed area is based on the 2007 (nearshore, shelf, and slope) is 3,363 mt. The estimated to be at 66 percent of its unfished assessment with a harvest rate proxy of F50%. ACL of 2,227 mt for the complex is the sum biomass. The OFL of 3,128 mt is based on the The resulting OFL for the area north of 46°16’ of the sub-complex ACLs. The sub-complex 2007 stock assessment with an FMSY proxy of N. lat. (the Washington/Oregon Border) is ACLs are the sum of the component stock F45%. The ABC of 2,990 mt is a 4 percent 445 mt and is 97 percent of the OFL from the ACLs, which are less than or equal to the reduction from the OFL (s=0.36/P*=0.45) as assessed area. The ABC of 426 mt for the ABC contribution of each component stock. it’s a category 1 species. The ACL of 1,349 north of 46° 16’ N. Lat. is a 4 percent There are no set-asides for the nearshore sub- is equivalent to the 2010 OY and represents reduction from the OFL (s=0.36/P*=0.45) as complex, thus the fishery HG is equal to the a 50 percent increase in the average 2004– it’s a category 1 species. The ACL was set ACL, which is 99 mt. The set-aside for the 2006 mortality (landings and discard equal to the ABC, since the stock is above shelf sub-complex is 43 mt—Tribal fishery (9 mortality). The set-aside for longnose skate is B40%. A set-aside of 14 mt for the Tribal mt), the incidental open access fishery (26 129 mt for the Tribal fishery (56 mt), fishery results in a fishery HG of 412 mt. mt), EFP catch (4 mt) and research catch (4 incidental open access fishery (65 mt), and ee/Black rockfish south (Oregon and mt) resulting in a shelf fishery HG of 925 mt. research catch (8 mt), resulting in a fishery California). A 2007 stock assessment was The set-aside for the slope sub-complex is 68 ° HG of 1,220 mt. prepared for black rockfish south of 45 56’ N. mt—Tribal fishery (36 mt), the incidental ii/‘‘Other fish’’ contains all unassessed lat. (Cape Falcon, Oregon) to the southern open access fishery (19 mt), EFP catch (2 mt) groundfish FMP species that are neither limit of the stock’s distribution in Central and research catch (11 mt), resulting in a rockfish (family Scorpaenidae) nor flatfish. California in 2007. The biomass in this area slope fishery HG of 1,092 mt. These species include big skate, California was estimated to be at 70 percent of its gg/Minor rockfish south is comprised of skate, leopard shark, soupfin shark, spiny unfished biomass in 2007. The OFL from the three minor rockfish sub-complexes: dogfish, finescale codling, Pacific rattail, assessed area is based on the 2007 nearshore, shelf, and slope. The OFL of 4,302 ratfish, cabezon off Washington, and kelp assessment with a harvest rate proxy of F50%. mt is the sum of OFLs for nearshore (1,156 Three percent of the OFL from the stock mt), shelf (2,238 mt) and slope (907 mt) south greenling. The OFL of 11,150 mt is assessment prepared for black rockfish north sub-complexes. Each sub-complex OFL is the equivalent to the 2010 MSY harvest level of 45°56′ N. lat. is added to the OFL from the sum of the OFLs of the component species minus the 50 mt contribution made for assessed area south of 45° 56′ N. lat. The within the complex. The ABCs for the minor cabezon off Oregon, which is a newly resulting OFL for the area south of 46°16′ N. rockfish complexes and sub-complexes are assessed stock to be managed with stock- lat. is 1,217 mt. The ABC of 1,163 mt is a 4 based on a sigma value of 0.36 for category specific specifications. The ABC of 7,742 mt percent reduction from the OFL (s=0.36/ 1 stocks (gopher rockfish north of 34°27’ N. is a 31 percent reduction from the OFL P*=0.45) as it’s a category 1 species. The ACL lat., blackgill), 0.72 for category 2 stocks (blue (s=1.44/P*=0.40) as all of the stocks in the was set at 1,000 mt, which is a constant catch rockfish in the assessed area, greenstriped ‘‘other fish’’ complex are category 3 species. strategy designed to keep the stock biomass rockfish, and bank rockfish) and 1.44 for The ACL of 5,575 mt is equivalent to the above B40%. There are no set-asides thus the category 3 stocks (all others) with a P* of 2010 OY, minus half of the OFL contribution fishery HG is equal to the ACL. The black 0.45. The resulting minor rockfish south for Cabezon off of Oregon (25 mt). The rockfish ACL in the area south of 46°16′ N. ABC, which is the summed contribution of fishery HG is equal to the ACL.

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a/ Allocations decided through the biennial fisheries, as follows: 5.9 mt for the calculated here for the whiting portion of the specification process. shorebased IFQ fishery, 3.4 mt for the shorebased IFQ fishery contributes to the b/ 30 mt of the total trawl allocation for mothership fishery, and 4.8 mt for the total shorebased trawl allocation, which is POP is allocated to the whiting fisheries, as catcher/processor fishery. The tonnage found at 660.140 (d)(1)(ii)(D). follows: 12.6 mt for the shorebased IFQ calculated here for the whiting portion of the e/ 52 percent (255 mt) of the total trawl fishery, 7.2 mt for the mothership fishery, shorebased IFQ fishery contributes to the allocation for widow rockfish is allocated to and 10.2 mt for the catcher/processor fishery. total shorebased trawl allocation, which is the whiting fisheries, as follows: 107.1 mt for The tonnage calculated here for the whiting found at 660.140 (d)(1)(ii)(D). the shorebased IFQ fishery, 61.2 mt for the portion of the shorebased IFQ fishery d/ 25 mt of the total trawl allocation for mothership fishery, and 86.7 mt for the contributes to the total shorebased trawl darkblotched rockfish is allocated to the catcher/processor fishery. The tonnage allocation, which is found at 660.140 whiting fisheries, as follows: 10.5 mt for the calculated here for the whiting portion of the (d)(1)(ii)(D). shorebased IFQ fishery, 6.0 mt for the shorebased IFQ fishery contributes to the c/ 14.1 mt of the total trawl allocation of mothership fishery, and 8.5 mt for the total shorebased trawl allocation, which is canary rockfish is allocated to the whiting catcher/processor fishery. The tonnage found at 660.140 (d)(1)(ii)(D).

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BILLING CODE 3510–22–C TABLE 1d. TO PART 660, SUBPART TABLE 1d. TO PART 660, SUBPART C—AT-SEA WHITING FISHERY AN- C—AT-SEA WHITING FISHERY AN- TABLE 1d. TO PART 660, SUBPART NUAL SET-ASIDES 2011—Continued NUAL SET-ASIDES 2011—Continued C—AT-SEA WHITING FISHERY AN- NUAL SET-ASIDES 2011 Species of species complex Set-aside Set-aside (mt) Species of species complex (mt) Species of species complex Set-aside (mt) Longspine Thornyhead S. of NA Minor Nearshore RF S...... NA 34°27′. Minor Shelf RF N...... 35 Lingcod ...... 6 a DARKBLOTCHED ...... Allocation Minor Shelf RF S...... NA Pacific Cod ...... 5 Minor Slope RF N...... 55 California scorpionfish ...... NA Pacific Whiting ...... Allocation a Minor Slope RF S...... NA Cabezon (off CA only) ...... NA Sablefish N. of 36° ...... 50 Dover Sole ...... 5 Sablefish S. of 36° ...... NA English Sole ...... 5 Other Fish ...... 520 PACIFIC OCEAN PERCH ..... Allocation a Petrale Sole—coastwide ...... 5 Longnose Skate ...... 5 WIDOW ROCKFISH ...... Allocation a Arrowtooth Flounder ...... 10 Pacific Halibut ...... 10 b Chilipepper S. of 40°10′ ...... NA Starry Flounder ...... 5 ° ′ a See Table 1.b., to Subpart C, for the at- Splitnose S. of 40 10 ...... NA Other Flatfish ...... 20 sea whiting allocations for these species. ° ′ a Yellowtail N. of 40 10 ...... 300 CANARY ROCKFISH ...... Allocation b As stated in § 660.55(m), the Pacific hal- Shortspine Thornyhead N. of 20 BOCACCIO ...... NA ibut set-aside is 10 mt, to accommodate by- 34°27′. COWCOD ...... NA catch in the at-sea Pacific whiting fisheries Shortspine Thornyhead S. of NA YELLOWEYE ...... 0 and in the shorebased trawl sector south of 34°27′. Black Rockfish ...... NA 40°10′ N lat. (estimated to be approximately 5 Longspine Thornyhead N. of 5 Blue Rockfish (CA) ...... NA mt each). 34°27′. Minor Nearshore RF N...... NA BILLING CODE 3510–22–P

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BILLING CODE 3510–22–C fisheries, as necessary, and set-asides for F45%. The ABC of 2,151 mt was based on a a/ ACLs and HGs are specified as total EFPs. 4 percent reduction from the OFL (s=0.36/ catch values. Fishery harvest guideline (HG) b/ Lingcod north (Oregon and Washington). P*=0.45) as it’s a category 1 species. Because

means the harvest guideline or quota after A new lingcod stock assessment was the stock is above B40% coastwide, the ACL subtracting from the ACL of ACT any prepared in 2009. The lingcod north biomass is set equal to the ABC. ACL is further allocation for the Pacific Coast treaty Indian was estimated to be at 62 percent of its reduced for the Tribal fishery (250 mt), Tribes, projected research catch, deductions unfished biomass in 2009. The OFL of 2,251 incidental open access fishery (16 mt) and for fishing mortality in non-groundfish mt was calculated using an FMSY proxy of

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research catch (5 mt), resulting in a fishery asides were removed so the fishery HG is also r/ Widow rockfish. Final 2012 ACLs, ACTs HG of 1,880 mt. equal to the ACL at 48 mt. Cabezon in waters and fishery HGs for overfished species are c/ Lingcod south (California). A new off Oregon were removed from the ‘‘other contingent upon potential changes to lingcod stock assessment was prepared in fish’’ complex, while cabezon of Washington rebuilding plans. 2009. The lingcod south biomass was will continue to be managed within the s/ Canary rockfish. Final 2012 ACLs, ACTs estimated to be at 74 percent of its unfished ‘‘other fish’’ complex. and fishery HGs for overfished species are biomass in 2009. The OFL of 2,597 mt was i/ Cabezon (California)—A new cabezon contingent upon potential changes to

calculated using an FMSY proxy of F45%. The stock assessment was prepared in 2009. The rebuilding plans. ABC of 2,164 mt was based on a 17 percent cabezon south biomass was estimated to be t/ Chilipepper rockfish. The coastwide reduction from the OFL (s=0.72/P*=0.40) as at 48 percent of its unfished biomass in 2009. chilipepper stock was assessed in 2007 and it’s a category 2 species. Because the stock is The OFL of 176 mt was calculated using an estimated to be at 71 percent of its unfished

above B40% coastwide, the ACL is set equal to FMSY proxy of F45%. The ABC of 168 mt was biomass coastwide in 2006. Given that the ABC. An incidental open access set-aside based on a 4 percent reduction from the OFL chilipepper rockfish are predominantly a of 7 mt is deducted from the ACL, resulting (s=0.36/P*=0.45) as it’s a category 1 species. southern species, the stock is managed with in a fishery HG of 2,157 mt. Because the stock is above B40% coastwide, stock-specific harvest specifications south of d/ Pacific Cod. The 3,200 mt OFL is based the ACL is set equal to the ABC. No set- 40°10 N. lat. and within minor shelf rockfish on the maximum level of historic landings. asides were removed so the fishery HG is also north of 40°10 N. lat. South of 40°10 N. lat., The ABC of 2,222 mt is a 31 percent equal to the ACL at 168 mt. the OFL of 1,872 mt is based on the 2007 reduction from the OFL (s=1.44/P*=0.40) as j/ Dover sole. Final 2012 OFLs, ABCs, assessment with an FMSY proxy of F50≠. The it’s a category 3 species. The 1,600 mt ACL ACLs, ACTs and fishery HGs for assessed ABC of 1,789 mt is a 4 percent reduction is the OFL reduced by 50 percent as a flatfish species are contingent upon potential from the OFL (s=0.36/P*=0.45) as it’s a precautionary adjustment. A set-aside of 400 changes to the flatfish status determination category 1 species. Because the biomass is mt is deducted from the ACL for the Tribal criteria and harvest control rule. estimated to be above 40 percent the fishery, resulting in a fishery HG of 1,200 mt. k/ English sole. Final 2012 OFLs, ABCs, unfished biomass, the ACL was set equal to e/ Pacific whiting. A range of ACLs were ACLs, ACTs and fishery HGs for assessed the ABC. The ACL is reduced by the considered in the EIS (96,968 mt-290,903 flatfish species are contingent upon potential incidental open access fishery (5 mt), and mt). A new stock assessment will be prepared changes to the flatfish status determination research catch (9 mt), resulting in a fishery prior to the Council’s March 2012 meeting. criteria and harvest control rule. HG of 1,774 mt. Final adoption of the Pacific whiting l/ Petrale sole. Final 2012 petrale sole OFL, u/ Bocaccio. Final 2012 ACLs, ACTs and specifications have been deferred until the ABC, ACL, ACT and fishery HG are fishery HGs for overfished species are Council’s March 2012 meeting. contingent upon potential changes to the contingent upon potential changes to flatfish status determination criteria and f/ Sablefish north. A coastwide sablefish rebuilding plans. harvest control rule, and potential changes to stock assessment was prepared in 2007. The v/ Splitnose rockfish. A new coastwide rebuilding plans. coastwide sablefish biomass was estimated to assessment was prepared in 2009 that n/ Starry Flounder. Final 2012 OFLs, be at 38.3 percent of its unfished biomass in estimated the stock to be at 66 percent of its ABCs, ACLs, ACTs and fishery HGs, for 2007. The coastwide OFL of 8,623 mt was assessed flatfish species are contingent upon unfished biomass in 2009. Splitnose in the based on the 2007 stock assessment with a potential changes to the flatfish status north is managed under the minor slope FMSY proxy of F45%. The ABC of 8,242 mt is rockfish complex and in the south (south of determination criteria and harvest control ° ′ a 4 percent reduction from the OFL (s=0.36/ rule. 40 10 N. lat.), with species-specific harvest P*=0.45) as it’s a category 1 species. The 40– specifications. The 1,610 mt OFL south of o/ ‘‘Other flatfish’’ are the unassessed ° 10 harvest policy was applied to the ABC to flatfish species that do not have individual 40 10 N. lat. is based on the 2009 assessment derive the coastwide ACL and then the ACL with an FMSY proxy of F50≠. The ABC of 1,538 ° OFLs/ABC/ACLs and include butter sole, was apportioned north and south of 36 N. curlfin sole, flathead sole, Pacific sand dab, mt is a 4 percent reduction from the OFL lat, using the average of annual swept area rex sole, rock sole, and sand sole. The other (s=0.36/P*=0.45) as it’s a category 1 species. biomass (2003–2008) from the NMFS NWFSC flatfish OFL of 10,146 mt is based on the Because the unfished biomass is estimated to trawl survey, between the northern and summed contribution of the OFLs be above 40 percent of the unfished biomass, southern areas with 68 percent going to the determined for the component stocks. The the ACL is set equal to the ABC. A set-aside ° area north of 36 N. lat. and 32 percent going ABC of 7,044 mt is a 31 percent reduction of 7 mt is deducted from the ACL for research ° to the area south of 36 N. lat. The northern from the OFL (s=1.44/P*=0.40) as all species catch, resulting in a fishery HG of 1,531 mt. portion of the ACL is 5,347 mt and is reduced in this complex are category 3 species. The w/ Yellowtail rockfish. A yellowtail by 535 mt for the Tribal allocation (10 ACL of 4,884 mt is equivalent to the 2010 rockfish stock assessment was last prepared ° percent of the ACL north of 36 N. lat.) The OY, because there have been no significant in 2005 for the Vancouver, Columbia, Eureka 535 mt Tribal allocation is reduced by 1.5 changes in the status or management of areas. Yellowtail rockfish was estimated to be percent to account for discard mortality. stocks within the complex. A set-aside of 198 at 55 percent of its unfished biomass in 2005. Detailed sablefish allocations are shown in mt is deducted from the ACL for the Tribal The OFL of 4,573 mt is based on the 2005 Table 1c. fishery (60 mt), the incidental open access stock assessment with the FMSY proxy of F50≠. g/ Sablefish South. That portion of the fishery (125 mt), and research catch (13 mt), The ABC of 4,371 mt is a 4 percent reduction coastwide ACL (32 percent) apportioned to resulting in a fishery HG of 4,686 mt. from the OFL (s=0.36/P*=0.45) as it’s a the area south of 36° N. lat. is 2,516 mt. An p/ POP. Final 2012 ACLs, ACTs and category 1 species. The ACL was set equal to additional 50 percent reduction for fishery HGs for overfished species are the ABC, because the stock is above B40≠. A uncertainty was made, resulting in an ACL of contingent upon potential changes to set-aside of 499 mt is deducted from the ACL 1,258 mt. A set-aside of 34 mt is deducted rebuilding plans. for the Tribal fishery (490 mt), the incidental from the ACL for EFP catch (26 mt), the q/ Shortbelly rockfish. A non quantitative open access fishery (3 mt), EFP catch (2 mt) incidental open access fishery (6 mt) and assessment was conducted in 2007. The and research catch (4 mt), resulting in a research catch (2 mt), resulting in a fishery spawning stock biomass of shortbelly fishery HG of 3,872 mt. HG of 1,224 mt. rockfish was estimated at 67 percent of its x/ Shortspine thornyhead. A coastwide h/ Cabezon (Oregon). A new cabezon stock unfished biomass in 2005. The OFL of 6,950 stock assessment was conducted in 2005 and assessment was prepared in 2009. The mt was recommended for the stock in 2011 the stock was estimated to be at 63 percent cabezon biomass in Oregon was estimated to with an ABC of 5,789 mt (s=0.72 with a P* of its unfished biomass in 2005. A coastwide be at 51 percent of its unfished biomass in of 0.40). The 50 mt ACL is slightly higher OFL of 2,358 mt is based on the 2005 stock 2009. The OFL of 50 mt was calculated using than recent landings, but much lower than assessment with a F50≠ FMSY proxy. The

an FMSY proxy of F45%. The ABC of 48 mt was previous OYs in recognition of the stock’s coastwide ABC of 2,254 mt is a 4 percent based on a 4 percent reduction from the OFL importance as a forage species in the reduction from the OFL (s=0.36/P*=0.45) as (s=0.36/P*=0.45) as it’s a category 1 species. California Current ecosystem. A set-aside of it’s a category 1 species. For the portion of ° ′ Because the stock is above B40% coastwide, 1 mt for research catch, resulting in a fishery the stock that is north of 34 27 N. lat., the the ACL is set equal to the ABC. No set- HG of 49 mt. ACL is 1,556 mt, 66 percent of the coastwide

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OFL. A set-aside of 45 mt is deducted from unfished biomass in 2007. The OFL from the gg/ Minor rockfish south is comprised of the ACL for the Tribal fishery (38 mt), the assessed area is based on the 2007 three minor rockfish sub-complexes: incidental open access fishery (2 mt), and assessment with a harvest rate proxy of F50≠. Nearshore, shelf, and slope. The OFL of 4,291 research catch (5 mt), resulting in a fishery The resulting OFL for the area north of 46°16′ mt is the sum of OFLs for nearshore (1,145 HG of 1,511 mt for the area north of 34°27′ N. lat. (the Washington/Oregon border) is 435 mt), shelf (2,243 mt) and slope (903 mt) south N. lat. For that portion of the stock south of mt, which is 97 percent of the OFL from the sub-complexes. Each sub-complex OFL is the north of 34°27′ N. lat. the ACL is 401 mt assessed area. The ABC of 415 mt for the area sum of the OFLs of the component species ° ′ which is 34 percent of the coastwide OFL for north of 46 16 N. lat. is a 4 percent reduction within the complex. The ABCs for the minor the portion of the biomass found south of from the OFL (s=0.36/P*=0.45) as it’s a rockfish complexes and sub-complexes are ° ′ 34 27 N. lat reduced by 50 percent as a category 1 species. The ACL was set equal to based on a sigma value of 0.36 for category precautionary adjustment. A set-aside of 42 the ABC, since the stock is above B40≠. A set- 1 stocks (gopher rockfish north of Point aside of 14 mt for the Tribal fishery results mt is deducted from the ACL for the Conception, blackgill), 0.72 for category 2 in a fishery HG of 401 mt. incidental open access fishery (41 mt), and stocks (blue rockfish in the assessed area, ee/ Black rockfish south (Oregon and research catch (1 mt), resulting in a fishery greenstriped rockfish, and bank rockfish) and HG of 359 mt for the area south of 34°27′ N. California). A 2007 stock assessment was 1.44 for category 3 stocks (all others) with a lat. The sum of the northern and southern prepared for black rockfish south of 45°56′ N. P* of 0.45. The resulting minor rockfish area ACLs (1,957 mt) is a 13 percent lat. (Cape Falcon, Oregon) to the southern south ABC, which is the summed reduction from the coastwide ABC. limit of the stock’s distribution in Central y/ Longspine thornyhead. A coastwide California. The biomass in the south was contribution of the ABCs for the contributing stock assessment was conducted in 2005 and estimated to be at 70 percent of its unfished species in each sub-complex, is 3,712 mt. the stock was estimated to be at 71 percent biomass in 2007. The OFL from the assessed The ACL of 2,341 mt for the complex is the of its unfished biomass in 2005. A coastwide area is based on the 2007 assessment with a sum of the sub-complex ACLs. The sub- OFL of 3,483 mt is based on the 2005 stock harvest rate proxy of F50≠. Three percent of complex ACLs are the sum of the component the OFL from the stock assessment prepared stock ACLs, which are less than or equal to assessment with a F50≠ FMSY proxy. The ABC ° ′ of 2,902 mt is a 17 percent reduction from for black rockfish north of 45 56 N. lat. is the ABC contribution of each component the OFL (s=0.72/P*=0.40) as it’s a category added to the OFL from the assessed area stock. There are no set-asides for the south of 45°56′. The resulting OFL for the nearshore sub-complex, thus the fishery HG 2 species. For the portion of the stock that ° ′ is north of 34°27′ N. lat., the ACL is 2,064 area south of 46 16 N. lat. is 1,169 mt. The is equal to the ACL, which is 990 mt. The mt, and is 79 percent of the coastwide OFL ABC of 1,117 mt for the south is a 4 percent set-asides for the shelf sub-complex is 13 mt reduction from the OFL (s=0.36/P*=0.45) as for the biomass in that area. A set-aside of 44 for the incidental open access fishery (9 mt), it’s a category 1 species. The ACL was set at mt is deducted from the ACL for the Tribal EFP catch (2 mt) and research catch (2 mt), 1,000 mt, which is a constant catch strategy fishery (30 mt), the incidental open access resulting in a shelf fishery HG of 701 mt. The designed to keep the stock biomass above fishery (1 mt), and research catch (13 mt), set-asides for the slope sub-complex is 27 mt B40≠. The black rockfish ACL in the area for the incidental open access fishery (17 mt), resulting in a fishery HG of 2,020 mt. For that south of 46°16′ N. lat., is subdivided with ° ′ EFP catch (2 mt) and research catch (8 mt), portion of the stock south of 34 27 N. lat. the separate HGs being set for the area north of resulting in a slope fishery HG of 599 mt. ACL is 366 mt and is 21 percent of the 42° N. lat. (580 mt/58 percent) and for the hh/ Longnose skate. A stock assessment coastwide OFL reduced by 50 percent as a area south of 42° N. lat. (420 mt/42 percent). precautionary adjustment. A set-aside of 3 mt ff/ Minor rockfish north is comprised of update was prepared in 2007 and the stock is deducted from the ACL for the incidental three minor rockfish sub-complexes: was estimated to be at 66 percent of its open access fishery (2 mt), and research catch Nearshore, shelf, and slope. The OFL of 3,767 unfished biomass. The OFL of 3,128 mt is (1 mt), resulting in a fishery HG of 363 mt. mt is the sum of OFLs for nearshore (116 mt), based on the 2007 stock assessment with an The sum of the northern and southern area shelf (2,197 mt) and slope (1,507 mt) north FMSY proxy of F45≠. The ABC of 2,990 mt is ACLs (2,430 mt) is a 16 percent reduction sub-complexes. Each sub-complex OFL is the a 4 percent reduction from the OFL (s=0.36/ from the coastwide ABC. sum of the OFLs of the component species P*=0.45) as it’s a category 1 species. The ACL z/ Cowcod. Final 2012 ACLs, ACTs and within the complex. The ABCs for the minor of 1,349 is the 2010 OY and represents a 50 fishery HGs for overfished species are rockfish complexes and sub-complexes are percent increase in the average 2004–2006 contingent upon potential changes to based on a sigma value of 0.36 for category catch mortality (landings and discard rebuilding plans. 1 stocks (splitnose and chilipepper rockfish), mortality). The set-asides for longnose skate aa/ Darkblotched rockfish. Final 2012 0,72 for category 2 stocks (greenstriped is 129 mt for the Tribal fishery (56 mt), ACLs, ACTs and fishery HGs for overfished rockfish and blue rockfish in California) and incidental open access fishery (65 mt), and species are contingent upon potential 1.44 for category 3 stocks (all others) with a research catch (8 mt), resulting in a fishery changes to rebuilding plans. P* of 0.45. The resulting minor rockfish HG of 1,220 mt. bb/ Yelloweye rockfish. Final 2012 ACLs, north ABC, which is the summed ii/ ‘‘Other fish’’ contains all unassessed ACTs and fishery HGs for overfished species contribution of the ABCs for the contributing groundfish FMP species that are neither are contingent upon potential changes to species in each sub-complex (nearshore, rockfish (family Scorpaenidae) nor flatfish. rebuilding plans. shelf, and slope) is 3,414 mt. The ACL of These species include big skate, California cc/ California Scorpionfish south was 2,227 mt for the complex is the sum of the skate, leopard shark, soupfin shark, spiny assessed in 2005 and was estimated to be at sub-complex ACLs. The sub-complex ACLs dogfish, finescale codling, Pacific rattail, 80 percent of its unfished biomass in 2005. are the sum of the component stock ACLs, ratfish, cabezon off Washington, and kelp The OFL of 132 mt is based on the new which are less than or equal to the ABC greenling. The OFL of 11,150 mt is the 2010 assessment with a harvest rate proxy of F50≠. contribution of each component stock. There MSY harvest level minus the 50 mt The ABC of 126 mt is a 4 percent reduction are no set-asides for the nearshore sub- contribution made for cabezon off Oregon, from the OFL (s=0.36/P*=0.45) as it’s a complex, thus the fishery HG is equal to the which is a newly assessed stock to be category 1 species. Because the stock is above ACL, which is 99 mt. The set-aside for the managed with stock-specific specifications. B ≠, the ACL is set equal to the ABC. A set- 40 shelf sub-complex is 43 mt—Tribal fishery (9 The ABC of 7,742 mt is a 31 percent aside of 2 mt is deducted from the ACL for mt), the incidental open access fishery (26 reduction from the OFL (s=1.44/P*=0.40) as the incidental open access fishery, resulting mt), EFP catch (4 mt) and research catch (4 all of the stocks in the ‘‘other fish’’ complex in a fishery HG of 124 mt. mt), resulting in a shelf fishery HG of 925 mt. are category 3 species. The ACL of 5,575 mt dd/ Black rockfish north (Washington). A The set-aside for the slope sub-complex is 68 is equal to the 2010 OY, minus half of the stock assessment was prepared in 2007 for mt—Tribal fishery (36 mt), the incidental OFL contribution for Cabezon off of Oregon black rockfish north of 45°56′N. lat. (Cape open access fishery (19 mt), EFP catch (2) (25 mt). The fishery HG is equal to the ACL. Falcon, Oregon). The biomass in this area and research catch (11 mt), resulting in a was estimated to be at 53 percent of its slope fishery HG of 1,092 mt. BILLING CODE 3510–22–P

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a/ Allocations decided through the biennial fisheries, as follows: 5.9 mt for the calculated here for the whiting portion of the specification process. shorebased IFQ fishery, 3.4 mt for the shorebased IFQ fishery contributes to the b/ /30 mt of the total trawl allocation for mothership fishery, and 4.8 mt for the total shorebased trawl allocation, which is POP is allocated to the whiting fisheries, as catcher/processor fishery. The tonnage found at 660.140 (d)(1)(ii)(D). follows: 12.6 mt for the shorebased IFQ calculated here for the whiting portion of the e/ 52 percent (255 mt) of the total trawl fishery, 7.2 mt for the mothership fishery, shorebased IFQ fishery contributes to the allocation for widow rockfish is allocated to and 10.2 mt for the catcher/processor fishery. total shorebased trawl allocation, which is the whiting fisheries, as follows: 107.1 mt for The tonnage calculated here for the whiting found at 660.140 (d)(1)(ii)(D). the shorebased IFQ fishery, 61.2 mt for the portion of the shorebased IFQ fishery d/ 25 mt of the total trawl allocation for mothership fishery, and 86.7 mt for the contributes to the total shorebased trawl darkblotched rockfish is allocated to the catcher/processor fishery. The tonnage allocation, which is found at 660.140 whiting fisheries, as follows: 10.5 mt for the calculated here for the whiting portion of the (d)(1)(ii)(D). shorebased IFQ fishery, 6.0 mt for the shorebased IFQ fishery contributes to the c/ 14.1 mt of the total trawl allocation of mothership fishery, and 8.5 mt for the total shorebased trawl allocation, which is canary rockfish is allocated to the whiting catcher/processor fishery. The tonnage found at 660.140 (d)(1)(ii)(D).

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TABLE 2D. TO PART 660, SUBPART * * * * * (3) The Shorebased IFQ Program may C—AT-SEA WHITING FISHERY be restricted or closed as a result of Subpart D—West Coast Groundfish— ANNUAL SET-ASIDES, 2012 AND projected overages within the Limited Entry Trawl Fisheries. BEYOND Shorebased IFQ Program, the MS Coop Program, or the C/P Coop Program. As ■ 15. In § 660.130 paragraph (d) Set-aside introductory text is revised to read as determined necessary by the Regional Species or species complex (mt) follows: Administrator, area restrictions, season closures, or other measures will be used Lingcod ...... 6 § 660.130 Trawl fishery—management to prevent the trawl sector in aggregate Pacific Cod ...... 5 measures. Pacific Whiting ...... Allocation a or the individual trawl sectors Sablefish N. of 36° ...... 50 * * * * * (Shorebased IFQ, MS Coop, or C/P Sablefish S. of 36° ...... NA (d) Sorting. Under § 660.12 (a)(8), Coop) from exceeding an ACL, OY, ACT PACIFIC OCEAN PERCH ..... Allocation a subpart C, it is unlawful for any person or formal allocation specified in the WIDOW ROCKFISH ...... Allocation a to ‘‘fail to sort, prior to the first weighing PCGFMP or regulation at § 660.55, Chilipepper S. of 40°10′ ...... NA after offloading, those groundfish ° ′ subpart C, or §§ 660.140, 660.150, or Splitnose S. of 40 10 ...... NA species or species groups for which Yellowtail N. of 40°10′ ...... 300 660.160, subpart D. Shortspine Thornyhead N. of 20 there is a trip limit, size limit, scientific * * * * * ° ′ sorting designation, quota, harvest 34 27 . (c) * * * Shortspine Thornyhead S. of NA guideline, ACL or ACT or OY, if the 34°27′. vessel fished or landed in an area during (1) IFQ species. IFQ species are those Longspine Thornyhead N. of 5 a time when such trip limit, size limit, groundfish species and Pacific halibut 34°27′. scientific sorting designation, quota, in the exclusive economic zone or Longspine Thornyhead S. of NA harvest guideline, ACL or ACT or OY ° ′ adjacent state waters off Washington, 34 27 . applied.’’ The States of Washington, DARKBLOTCHED ...... Allocation a Oregon and California, under the Minor Slope RF N ...... 55 Oregon, and California may also require jurisdiction of the Pacific Fishery Minor Slope RF S ...... NA that vessels record their landings as Management Council, for which QS and Dover Sole ...... 5 sorted on their state landing receipt. IBQ will be issued. Groupings and area English Sole ...... 5 * * * * * subdivisions for IFQ species are those Petrale Sole—coastwide ...... 5 ■ 16. In § 660.131, paragraph (b)(3)(ii) is groupings and area subdivisions for Arrowtooth Flounder ...... 10 which ACLs or ACTs are specified in Starry Flounder ...... 5 revised to read as follows: the Tables 1a through 2d, subpart C, and Other Flatfish ...... 20 § 660.131 Pacific whiting fishery a those for which there is an area-specific CANARY ROCKFISH ...... Allocation management measures. BOCACCIO ...... NA precautionary harvest policy. The lists COWCOD ...... NA * * * * * of individual groundfish species YELLOWEYE ...... 0 (b) * * * included in the minor shelf complex Black Rockfish ...... NA (3) * * * north of 40°10′ N. lat., minor shelf Blue Rockfish (CA) ...... NA (ii) If, during a primary whiting ° ′ Minor Nearshore RF N ...... NA complex south of 40 10 N. lat., minor season, a whiting vessel harvests a slope complex north 40°10′ N. lat., Minor Nearshore RF S ...... NA groundfish species other than whiting minor slope complex south of 40°10′ N. Minor Shelf RF N ...... 35 for which there is a midwater trip limit, Minor Shelf RF S ...... NA lat., and in the other flatfish complex then that vessel may also harvest up to California scorpionfish ...... NA are specified under the definition of another footrope-specific limit for that Cabezon (off CA only) ...... NA ‘‘groundfish’’ at § 660.11. The following species during any cumulative limit Other Fish ...... 520 are the IFQ species: Longnose Skate ...... 5 period that overlaps the start or close of Pacific Halibut ...... 10 b the primary whiting season. * * * * * a/ See Table 2.b., to Subpart C, for the at- * * * * * (d) * * * sea whiting allocations for these species. ■ 17. In § 660.140, paragraphs (a)(3), (1) * * * b As stated in § 660.55(m), the Pacific hal- (c)(1), and (d)(1)(ii)(D), are revised as ibut set-aside is 10 mt, to accommodate by- (ii) * * * catch in the at-sea Pacific whiting fisheries follows: and in the shorebased trawl sector south of (D) For the 2011 trawl fishery, NMFS 40°10′ N lat. (estimated to be approximately 5 § 660.140 Shorebased IFQ program. will issue QP based on the following mt each). (a) * * * shorebased trawl allocations:

Shorebased IFQ Species Management area trawl allocation (mt)

Lingcod ...... 1,863.30 Pacific cod ...... 1,135.00 Pacific Whiting ...... 92,817.90 Sablefish ...... North of 36° N. lat...... 2,546.34 Sablefish ...... South of 36° N. lat...... 530.88 Dover sole ...... 22,234.50 English sole ...... 18,672.95 PETRALE SOLE ...... 871.00 Arrowtooth flounder ...... 12,431.20 Starry flounder ...... 667.50 Other flatfish ...... 4,197.40 PACIFIC OCEAN PERCH ...... North of 40°10′ N. lat...... 119.36 WIDOW ROCKFISH ...... 342.62

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Shorebased IFQ Species Management area trawl allocation (mt)

CANARY ROCKFISH ...... 25.90 Chilipepper rockfish ...... South of 40°10′ N. lat...... 1,475.25 BOCACCIO ROCKFISH ...... South of 40°10′ N. lat...... 60.00 Splitnose rockfish ...... South of 40°10′ N. lat...... 1,381.30 Yellowtail rockfish ...... North of 40°10′ N. lat...... 3,094.16 Shortspine thornyhead ...... North of 34°27′ N. lat...... 1,431.60 Shortspine thornyhead ...... South of 34°27′ N. lat...... 50.00 Longspine thornyhead ...... North of 34°27′ N. lat...... 1,966.25 COWCOD ...... South of 40°10′ N. lat...... 1.80 DARKBLOTCHED ROCKFISH ...... 250.84 YELLOWEYE ROCKFISH ...... 0.60 Minor shelf rockfish complex ...... North of 40°10′ N. lat...... 522.00 Minor shelf rockfish complex ...... South of 40°10′ N. lat...... 86.00 Minor slope rockfish complex ...... North of 40°10′ N. lat...... 829.52 Minor slope rockfish complex ...... South of 40°10′ N. lat...... 377.37

* * * * * Coop) from exceeding an ACL, ACT, or determined necessary by the Regional ■ 18. In § 660.150 paragraph (a)(5) is formal allocation specified in the Administrator, area restrictions, season revised to read as follows: PCGFMP or regulation at § 660.55, closures, or other measures will be used subpart C, or §§ 660.140, 660.150, or to prevent the trawl sectors in aggregate § 660.150 Mothership (MS) Coop program. 660.160, subpart D. or the individual trawl sector (a) * * * * * * * * (Shorebased IFQ, MS Coop, or C/P (5) The MS Coop Program may be ■ 19. In § 660.160 paragraph (a)(5) is Coop) from exceeding an ACL, ACT, or restricted or closed as a result of revised to read as follows: formal allocation specified in the projected overages within the MS Coop PCGFMP or regulation at § 660.55, Program, the C/P Coop Program, or the § 660.160 Catcher/processor (C/P) Coop subpart C, or §§ 660.140, 660.150, or Shorebased IFQ Program. As Program. 660.160, subpart D. determined necessary by the Regional (a) * * * * * * * * Administrator, area restrictions, season (5) The C/P Coop Program may be closures, or other measures will be used restricted or closed as a result of ■ 20. Table 1 (North), Table 1 (South) to to prevent the trawl sectors in aggregate projected overages within the MS Coop part 660, subpart D are revised to read or the individual trawl sector Program, the C/P Coop Program, or the as follows: (Shorebased IFQ, MS Coop, or C/P Shorebased IFQ Program. As BILLING CODE 3510–22–P

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BILLING CODE 3510–22–C species groups for which there is a trip (ii) North of 40°10′ N. lat.—POP, yellowtail rockfish, Cabezon (Oregon Subpart E—West Coast Groundfish— limit, size limit, scientific sorting and California); Limited Entry Fixed Gear Fisheries designation, quota, harvest guideline, ACL or ACT or OY, if the vessel fished * * * * * ■ 21. In § 660.230 paragraphs (c)(1), or landed in an area during a time when (d) * * * (c)(2)(ii), and (d)(5) through (9) are such trip limit, size limit, scientific (5) Point St. George YRCA. The revised to read as follows: sorting designation, quota, harvest latitude and longitude coordinates of guideline, ACL or ACT or OY applied.’’ the Point St. George YRCA boundaries § 660.230 Fixed gear fishery— The States of Washington, Oregon, and are specified at § 660.70, subpart C. management measures. California may also require that vessels Fishing with limited entry fixed gear is * * * * * record their landings as sorted on their prohibited within the Point St. George (c) * * * state landing receipts. YRCA, on dates when the closure is in (1) Under § 660.12(a)(8), subpart C, it effect. It is unlawful to take and retain, is unlawful for any person to ‘‘fail to (2) * * * possess, or land groundfish taken with sort, prior to the first weighing after limited entry fixed gear within the Point offloading, those groundfish species or St. George YRCA, on dates when the

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closure is in effect. The closure is not in transit through the Point Delgada endorsements are registered for use with effect at this time. This closure may be (North) YRCA, at any time, with or a single vessel, that vessel may land up imposed through inseason adjustment. without groundfish on board. to the total of all cumulative limits Limited entry fixed gear vessels may (9) Point Delgada (South) YRCA. The announced in this paragraph for the transit through the Point St. George latitude and longitude coordinates of tiers for those permits, except as limited YRCA, at any time, with or without the Point Delgada (South) YRCA by paragraph (b)(3)(ii) of this section. groundfish on board. boundaries are specified at § 660.70, Up to 3 permits may be registered for (6) South Reef YRCA. The latitude subpart C. Fishing with limited entry use with a single vessel during the and longitude coordinates of the South fixed gear is prohibited within the Point primary season; thus, a single vessel Reef YRCA boundaries are specified at Delgada (South) YRCA, on dates when may not take and retain, possess or land § 660.70, subpart C. Fishing with the closure is in effect. It is unlawful to more than 3 primary season sablefish limited entry fixed gear is prohibited take and retain, possess, or land cumulative limits in any one year. A within the South Reef YRCA, on dates groundfish taken with limited entry vessel registered for use with multiple when the closure is in effect. It is fixed gear within the Point Delgada limited entry permits is subject to per unlawful to take and retain, possess, or (South) YRCA, on dates when the vessel limits for species other than land groundfish taken with limited closure is in effect. The closure is not in sablefish, and to per vessel limits when entry fixed gear within the South Reef effect at this time. This closure may be participating in the daily trip limit YRCA, on dates when the closure is in imposed through inseason adjustment. fishery for sablefish under § 660.232, effect. The closure is not in effect at this Limited entry fixed gear vessels may subpart E. In 2011, the following annual time. This closure may be imposed transit through the Point Delgada limits are in effect: Tier 1 at 41,379 lb through inseason adjustment. Limited (South) YRCA, at any time, with or (18,769 kg), Tier 2 at 18,809 lb (8,532 entry fixed gear vessels may transit without groundfish on board. kg), and Tier 3 at 10,748 lb–(4,875 kg). through the South Reef YRCA, at any * * * * * For 2012 and beyond, the following time, with or without groundfish on annual limits are in effect: Tier 1 at board. ■ 22. In § 660.231, paragraphs (b)(1) and (b)(3)(i) are revised to read as follows: 40,113 lb (18,195 kg), Tier 2 at 18,233 (7) Reading Rock YRCA. The latitude lb (8,270 kg), and Tier 3 at 10,419 lb and longitude coordinates of the § 660.231 Limited entry fixed gear (4,726 kg). Reading Rock YRCA boundaries are sablefish primary fishery. specified at § 660.70, subpart C. Fishing * * * * * * * * * * with limited entry fixed gear is ■ 23. In § 660.232 paragraph (a)(2) is (b) * * * prohibited within the Reading Rock revised to read as follows: (1) Season dates. North of 36° N. lat., YRCA, on dates when the closure is in the sablefish primary season for the effect. It is unlawful to take and retain, § 660.232 Limited entry daily trip limit limited entry, fixed gear, sablefish- (DTL) fishery for sablefish. possess, or land groundfish taken with endorsed vessels begins at 12 noon local limited entry fixed gear within the (a) * * * time on April 1 and closes at 12 noon Reading Rock YRCA, on dates when the (2) Following the start of the primary closure is in effect. The closure is not in local time on October 31, or closes for an individual permit holder when that season, all landings made by a vessel effect at this time. This closure may be authorized by § 660.231(a) of this imposed through inseason adjustment. permit holder’s tier limit has been reached, whichever is earlier, unless subpart to fish in the primary season Limited entry fixed gear vessels may will count against the primary season transit through the Reading Rock YRCA, otherwise announced by the Regional Administrator through the routine cumulative limit(s) associated with the at any time, with or without groundfish permit(s) registered for use with that on board. management measures process described at § 660.60, subpart C. vessel. A vessel that is eligible to fish in (8) Point Delgada (North) YRCA. The the sablefish primary season may fish in latitude and longitude coordinates of * * * * * the DTL fishery for sablefish once that the Point Delgada (North) YRCA (3) * * * vessels’ primary season sablefish boundaries are specified at § 660.70, (i) A vessel participating in the limit(s) have been taken, or after the subpart C. Fishing with limited entry primary season will be constrained by close of the primary season, whichever fixed gear is prohibited within the Point the sablefish cumulative limit occurs earlier. Any subsequent sablefish Delgada (North) YRCA, on dates when associated with each of the permits landings by that vessel will be subject the closure is in effect. It is unlawful to registered for use with that vessel. to the restrictions and limits of the take and retain, possess, or land During the primary season, each vessel limited entry DTL fishery for sablefish groundfish taken with limited entry authorized to fish in that season under for the remainder of the fishing year. fixed gear within the Point Delgada paragraph (a) of this section may take, (North) YRCA, on dates when the retain, possess, and land sablefish, up to * * * * * closure is in effect. The closure is not in the cumulative limits for each of the ■ 24. Table 2 (North) and Table 2 effect at this time. This closure may be permits registered for use with that (South) to part 660, subpart E are imposed through inseason adjustment. vessel (i.e., stacked permits). If multiple revised to read as follows: Limited entry fixed gear vessels may limited entry permits with sablefish BILLING CODE 3510–22–P

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BILLING CODE 3510–22–C For open access vessels, the following Reef YRCA boundaries are specified at § 660.70, subpart C. Fishing with open Subpart F—West Coast Groundfish— species must be sorted: access gear is prohibited within the Open Access Fisheries * * * * * (2) North of 40°10′ N. lat.—POP, South Reef YRCA, on dates when the ■ 25. In § 660.330 paragraphs (c) yellowtail rockfish, Cabezon (Oregon closure is in effect. It is unlawful to take introductory text, (c)(2) and (d)(5) and California); and retain, possess, or land groundfish taken with open access gear within the through (9) are revised to read as * * * * * follows: South Reef YRCA, on dates when the (d) * * * closure is in effect. The closure is not in § 660.330 Open access fishery— (5) Point St. George YRCA. The effect at this time. This closure may be management measures. latitude and longitude coordinates of imposed through inseason adjustment. * * * * * the Point St. George YRCA boundaries Open access gear vessels may transit (c) Sorting. Under § 660.12(a)(8), are specified at § 660.70, subpart C. through the South Reef YRCA, at any subpart C, it is unlawful for any person Fishing with open access gear is time, with or without groundfish on to ‘‘fail to sort, prior to the first weighing prohibited within the Point St. George board. after offloading, those groundfish YRCA, on dates when the closure is in (7) Reading Rock YRCA. The latitude species or species groups for which effect. It is unlawful to take and retain, and longitude coordinates of the there is a trip limit, size limit, scientific possess, or land groundfish taken with Reading Rock YRCA boundaries are sorting designation, quota, harvest open access gear within the Point St. specified at § 660.70, subpart C. Fishing guideline, ACL or ACT or OY, if the George YRCA, on dates when the with open access gear is prohibited vessel fished or landed in an area during closure is in effect. The closure is not in within the Reading Rock YRCA, on a time when such trip limit, size limit, effect at this time. This closure may be dates when the closure is in effect. It is scientific sorting designation, quota, imposed through inseason adjustment. unlawful to take and retain, possess, or harvest guideline, ACL or ACT or OY Open access vessels may transit through land groundfish taken with open access applied.’’ The States of Washington, the Point St. George YRCA, at any time, gear within the Reading Rock YRCA, on Oregon, and California may also require with or without groundfish on board. dates when the closure is in effect. The that vessels record their landings as (6) South Reef YRCA. The latitude closure is not in effect at this time. This sorted on their state landing receipts. and longitude coordinates of the South closure may be imposed through

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inseason adjustment. Open access gear when the closure is in effect. The and retain, possess, or land groundfish vessels may transit through the Reading closure is not in effect at this time. This taken with open access gear within the Rock YRCA, at any time, with or closure may be imposed through Point Delgada (South) YRCA, on dates without groundfish on board. inseason adjustment. Open access gear when the closure is in effect. The (8) Point Delgada (North) YRCA. The vessels may transit through the Point closure is not in effect at this time. This latitude and longitude coordinates of Delgada (North) YRCA, at any time, closure may be imposed through the Point Delgada (North) YRCA with or without groundfish on board. inseason adjustment. Open access gear boundaries are specified at § 660.70, (9) Point Delgada (South) YRCA. The vessels may transit through the Point subpart C. Fishing with open access gear latitude and longitude coordinates of Delgada (South) YRCA, at any time, is prohibited within the Point Delgada the Point Delgada (South) YRCA with or without groundfish on board. (North) YRCA, on dates when the boundaries are specified at § 660.70, * * * * * closure is in effect. It is unlawful to take subpart C. Fishing with open access gear ■ 26. Table 3 (North) and Table 3 and retain, possess, or land groundfish is prohibited within the Point Delgada (South) to part 660, subpart F are taken with open access gear within the (South) YRCA, on dates when the revised to read as follows: Point Delgada (North) YRCA, on dates closure is in effect. It is unlawful to take BILLING CODE 3510–22–P

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BILLING CODE 3510–22–C ■ b. Redesignate paragraphs (c)(1)(iii) as (c)(3)(i)(A)(5), (c)(3)(i)(D) through (H), (c)(1)(iv), (c)(3)(i)(A)(6) as (c)(3)(i)(A)(5), (c)(3)(ii)(A)(5), Subpart G—West Coast Groundfish— (c)(3)(i)(D) through (J) as (c)(3)(i)(C) ■ d. Revise paragraphs (c)(1), Recreational Fisheries through (I), (c)(3)(ii)(A)(6) as (c)(1)(i)(D), (c)(1)(i)(D)(1) and (2), (c)(3)(ii)(A)(5), (c)(2)(iii), (c)(3)(i)(A)(1) through (4), ■ 27. In § 660.360, (c)(3)(i)(B), (c)(3)(ii)(A)(1) through (4), ■ c. Revise newly redesignated ■ a. Remove paragraphs (c)(3)(i)(C), (c)(3)(iii)(C), (c)(3)(iii)(D), paragraphs (c)(1)(iv)(A) and (B), (c)(3)(i)(A)(5), (c)(3)(ii)(A)(5), ■ d. Add paragraphs (c)(1)(i)(D)(3), (c)(1)(iii), to read as follows:

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§ 660.360 Recreational fishery— exceptions: Recreational fishing for (A) Marine fish. The bag limit is 10 management measures. rockfish is permitted within the RCA marine fish per day, which includes * * * * * from March 15 through June 15; rockfish, kelp greenling, cabezon and (c) * * * recreational fishing for sablefish and other groundfish species. The bag limit (1) Washington. For each person Pacific cod is permitted within the of marine fish excludes Pacific halibut, engaged in recreational fishing off the recreational RCA from May 1 through salmonids, tuna, perch species, coast of Washington, the groundfish bag June 15; and on days that the primary sturgeon, sanddabs, flatfish, lingcod, limit is 12 groundfish per day, including halibut fishery is open lingcod may be striped bass, hybrid bass, offshore rockfish, cabezon and lingcod. Within taken, retained and possessed within pelagic species and baitfish (herring, the groundfish bag limit, there are sub- the RCA. Days open to Pacific halibut smelt, anchovies and sardines). From limits for rockfish, lingcod, and cabezon recreational fishing off Washington are April 1 through September 30; no more outlined in paragraph (c)(1)(i)(D) of this announced on the NMFS hotline at than one fish may be cabezon. The section. The recreational groundfish (206) 526–6667 or (800) 662–9825. minimum size for cabezon retained in fishery is open year-round except for Retention of lingcod seaward of the the Oregon recreational fishery is 16 in lingcod, which has season dates boundary line approximating the 30 fm (41 cm) total length. The minimum size outlined in paragraph (c)(1)(iv) of this (55 m) depth contour south of 46°58’ N. for Kelp greenling retained in the section. In the Pacific halibut fisheries, lat. is prohibited on Fridays and Oregon recreational fishery is 10 in retention of groundfish is governed in Saturdays from July 1 through August (25 cm). part by annual management measures 31. For additional regulations regarding (B) Lingcod. There is a 3 fish limit per for Pacific halibut fisheries, which are the Washington recreational lingcod day for lingcod From January 1 through published in the Federal Register. The fishery, see paragraph (c)(1)(iv) of this December 31. The minimum size for following seasons, closed areas, subsection. Coordinates for the boundary lingcod retained in the Oregon limits and size limits apply: line approximating the 30 fm (55 m) recreational fishery is 22 in (56 cm) total length. * * * * * depth contour are listed in § 660.71. (C) Flatfish. There is a 25 fish limit (i)* * * (3) Between Leadbetter Point ° per day for all flatfish, excluding Pacific (D) Recreational rockfish conservation (46 38.17’ N. lat.) and the Washington/ halibut, but including all soles, area. Fishing for groundfish with Oregon border (Marine Area 1), when flounders and Pacific sanddabs, from recreational gear is prohibited within Pacific halibut are onboard the vessel, January 1 through December 31. the recreational RCA unless otherwise no groundfish may be taken and retained, possessed or landed, except (D) In the Pacific halibut fisheries. stated. It is unlawful to take and retain, Retention of groundfish is governed in possess, or land groundfish taken with sablefish and Pacific cod from May 1 through September 30. part by annual management measures recreational gear within the recreational for Pacific halibut fisheries, which are RCA unless otherwise stated. A vessel * * * * * published in the Federal Register. (iii) Cabezon. In areas of the EEZ fishing in the recreational RCA may not Between the Oregon border with seaward of Washington that are open to be in possession of any groundfish Washington and Cape Falcon, when recreational groundfish fishing, there is unless otherwise stated. [For example, if Pacific halibut are onboard the vessel, a 2 cabezon per day bag limit. a vessel participates in the recreational groundfish may not be taken and (iv) Lingcod. In areas of the EEZ salmon fishery within the RCA, the retained, possessed or landed, except seaward of Washington that are open to vessel cannot be in possession of sablefish and Pacific cod. Between Cape recreational groundfish fishing and groundfish while in the RCA. The vessel Falcon and Humbug Mountain, during when the recreational season for lingcod may, however, on the same trip fish for days open to the Oregon Central Coast is open, there is a bag limit of 2 lingcod and retain groundfish shoreward of the ‘‘all-depth’’ sport halibut fishery, when per day. The recreational fishing RCA on the return trip to port.] Pacific halibut are onboard the vessel, seasons and size limits for lingcod are (1) West of the Bonilla-Tatoosh line no groundfish may be taken and as follows: Between the U.S. border with Canada retained, possessed or landed, except (A) Between the U.S./Canada border and the Queets River (Washington state sablefish and Pacific cod. ‘‘All-depth’’ and 48°10’ N. lat. (Cape Alava) Marine Area 3 and 4), recreational season days are established in the (Washington Marine Area 4), fishing for groundfish is prohibited annual management measures for recreational fishing for lingcod is open, seaward of a boundary line Pacific halibut fisheries, which are for 2011, from April 16 through October approximating the 20 fm (37 m) depth published in the Federal Register and 15, and for 2012, from April 16 through contour from June 1 through September are announced on the NMFS halibut October 13. Lingcod may be no smaller 30, except on days when the Pacific hotline, 1–800–662–9825. halibut fishery is open in this area. Days than 24 inches (61 cm) total length. (E) Taking and retaining canary (B) Between 48°10’ N. lat. (Cape open to Pacific halibut recreational rockfish and yelloweye rockfish is Alava) and 46°16’ N. lat. (Washington/ fishing off Washington are announced prohibited at all times and in all areas. on the NMFS hotline at (206) 526–6667 Oregon border) (Washington Marine (3)* * * or (800) 662–9825. Coordinates for the Areas 1–3), recreational fishing for (i)* * * boundary line approximating the 20 fm lingcod is open for 2011, from March 19 (A)* * * (37 m) depth contour are listed in through October 15, and for 2012, from (1) Between 42° N. lat. (California/ § 660.71, subpart C. March 17 through October 13. Lingcod Oregon border) and 40° 10.00′ N. lat. (2) Between the Queets River may be no smaller than 22 inches (Northern Management Area), (47°31.70’ N. lat.) and Leadbetter Point (56 cm) total length. recreational fishing for all groundfish (46°38.17’ N. lat.) (Washington state * * * * * (except ‘‘other flatfish’’ as specified in Marine Area 2), recreational fishing for (2) * * * paragraph (c)(3)(iv) of this section) is groundfish is prohibited seaward of a (iii) Bag limits, size limits. For each prohibited seaward of the 20 fm (37 m) boundary line approximating the 30 fm person engaged in recreational fishing depth contour along the mainland coast (55 m) depth contour from March 15 off the coast of Oregon, the following and along islands and offshore through June 15 with the following bag limits apply: seamounts from May 14, 2011 through

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October 31, 2011 (shoreward of 20 fm is for all groundfish (except California subpart C, except that recreational open); and is closed entirely from scorpionfish as specified below in this fishing for ‘‘other flatfish’’ is permitted January 1 through May 13, 2011 and paragraph and in paragraph (v) of this around Cordell Banks as specified in from November 1 through December 31, section and ‘‘other flatfish’’ as specified paragraph (c)(3)(iv) of this section. 2011. Recreational fishing for in paragraph (c)(3)(iv) of this section) is [Note: California state regulations also groundfish is prohibited seaward of 20 prohibited seaward of a boundary line prohibit fishing for all greenlings of the fm (37 m) from May 12, 2012 through approximating the 60 fm (110 m) depth genus Hexagrammos, California October 31, 2012 (shoreward of 20 fm is contour from March 1 through sheephead and ocean whitefish.] open), and is closed entirely from December 31 along the mainland coast (D) Point St. George Yelloweye January 1 through May 11, 2012 and and along islands and offshore Rockfish Conservation Area (YRCA). from November 1, 2012 through seamounts, except in the CCAs where Recreational fishing for groundfish is December 31, 2012. fishing is prohibited seaward of the 20 prohibited within the Point St. George (2) Between 40°10′ N. lat. and fm (37 m) depth contour when the YRCA, as defined by latitude and 38°57.50′ N. lat. (Mendocino fishing season is open (see paragraph longitude coordinates at § 660.70, Management Area), recreational fishing (c)(3)(i)(B) of this section). Recreational subpart C, on dates when the closure is for all groundfish (except ‘‘other flatfish’’ fishing for all groundfish (except in effect. The closure is not in effect at as specified in paragraph (c)(3)(iv) of California scorpionfish and ‘‘other this time. This closure may be imposed this section) is prohibited seaward of flatfish’’) is closed entirely from January through inseason adjustment. the 20 fm (37 m) depth contour along 1 through February 28 (i.e., prohibited (E) South reef YRCA. Recreational the mainland coast and along islands seaward of the shoreline). Recreational fishing for groundfish is prohibited and offshore seamounts from May 14, fishing for California scorpionfish south within the South Reef YRCA, as defined 2011 through August 15, 2011 of 34°27′ N. lat. is prohibited seaward of by latitude and longitude coordinates at (shoreward of 20 fm is open), and is a boundary line approximating the 60 § 660.70, subpart C, on dates when the closed entirely from January 1, 2011 fm (110 m) depth contour from January closure is in effect. The closure is not in through May 13, 2011 and from August 1 through December 31, except in the effect at this time. This closure may be 16, 2011 through December 31, 2011; CCAs where fishing is prohibited imposed through inseason adjustment. Recreational fishing for groundfish is seaward of the boundary line (F) Reading Rock YRCA. Recreational prohibited seaward of 20 fm (37 m) and approximating the 30 fm (55 m) depth fishing for groundfish is prohibited from May 12, 2012 through August 15, contour when the fishing season is within the Reading Rock YRCA, as 2012 (shoreward of 20 fm is open); and open. Coordinates for the boundary line defined by latitude and longitude is closed entirely from January 1, 2012 approximating the 30 fm (55 m) and 60 coordinates at § 660.70, subpart C, on through May 11, 2012 and from August fm (110 m) depth contours are specified dates when the closure is in effect. The 16, 2012 through December 31, 2012. in §§ 660.71 and 660.72. closure is not in effect at this time. This (3) Between 38°57.50′ N. lat. and (B) Cowcod conservation areas. The closure may be imposed through 37°11′ N. lat. San Francisco latitude and longitude coordinates of inseason adjustment. Management Area), recreational fishing the Cowcod Conservation Areas (CCAs) (G) Point Delgada (North) YRCA. for all groundfish (except ‘‘other flatfish’’ boundaries are specified at § 660.70, Recreational fishing for groundfish is as specified in paragraph (c)(3)(iv) of subpart C. In general, recreational prohibited within the Point Delgada this section) is prohibited seaward of fishing for all groundfish is prohibited (North) YRCA, as defined by latitude the boundary line approximating the 30 within the CCAs, except that fishing for and longitude coordinates at § 660.70, fm (55 m) depth contour along the ‘‘other flatfish’’ is permitted within the subpart C, on dates when the closure is mainland coast and along islands and CCAs as specified in paragraph (c)(3)(iv) in effect. The closure is not in effect at offshore seamounts from June 1 through of this section. However, recreational this time. This closure may be imposed December 31; and is closed entirely fishing for the following species is through inseason adjustment. from January 1 through May 31. permitted shoreward of the 20 fm (37 m) (H) Point Delgada (South) YRCA. Closures around Cordell Banks (see depth contour when the season for those Recreational fishing for groundfish is paragraph (c)(3)(i)(C) of this section) species is open south of 34°27′ N. lat.: prohibited within the Point Delgada also apply in this area. Coordinates for Minor nearshore rockfish, cabezon, kelp (South) YRCA, as defined by latitude the boundary line approximating the 30 greenling, lingcod, California fm (55 m) depth contour are listed in scorpionfish, and ‘‘other flatfish’’ and longitude coordinates at § 660.70, § 660.71. (subject to gear requirements at subpart C, on dates when the closure is (4) Between 37°11′ N. lat. and 34°27′ paragraph (c)(3)(iv) of this section in effect. The closure is not in effect at N. lat. (Central Management Area), during January–February). [NOTE: this time. This closure may be imposed recreational fishing for all groundfish California state regulations also permit through inseason adjustment. (except ‘‘other flatfish’’ as specified in recreational fishing for California * * * * * paragraph (c)(3)(iv) of this section) is sheephead, ocean whitefish, and all (ii) * * * prohibited seaward of a boundary line greenlings of the genus Hexagrammos (A) * * * approximating the 40 fm (73 m) depth shoreward of the 20 fm (37 m) depth (1) Between 42° N. lat. (California/ contour along the mainland coast and contour in the CCAs when the season Oregon border) and 40°10′ N. lat. (North along islands and offshore seamounts for the RCG complex is open south of Management Area), recreational fishing from May 1 through December 31; and 34°27′ N. lat.] It is unlawful to take and for the RCG complex is open from May is closed entirely from January 1 retain, possess, or land groundfish 14, 2011 through October 31, 2011 (i.e. through April 30 (i.e. prohibited within the CCAs, except for species it’s closed from January 1 through May seaward of the shoreline). Coordinates authorized in this section. 13 and from November 1 through for the boundary line approximating the (C) Cordell banks. Recreational fishing December 31 in 2011) and from May 12, 40 fm (73 m) depth contour are for groundfish is prohibited in waters 2012 through October 31, 2012 (i.e. it’s specified in § 660.71. less than 100 fm (183 m) around Cordell closed from January 1 through May 11 (5) South of 34°27′ N. lat. (Southern Banks as defined by specific latitude and from November 1 through Management Area), recreational fishing and longitude coordinates at § 660.70, December 31 in 2012).

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(2) Between 40°10′ N. lat. and lingcod. The bag limit is 10 RCG through August 15, 2011 (i.e. it’s closed 38°57.50′ N. lat. (Mendocino Complex fish per day coastwide. from January 1 through May 13 and Management Area), recreational fishing Retention of canary rockfish, yelloweye August 16 through December 31 in for the RCG Complex is open from May rockfish, bronzespotted and cowcod is 2011) and from May 12, 2012 through 14, 2011 through August 15, 2011 (i.e. prohibited. Within the 10 RCG Complex August 15, 2012 (i.e. it’s closed from it’s closed from January 1 through May fish per day limit, no more than 2 may January 1 through May 11 and August 13 and August 16 through December 31 be bocaccio, no more than 2 may be 16 through December 31 in 2012). in 2011), and from May 12, 2012 greenling (kelp and/or other greenlings) (3) Between 38°57.50′ N. lat. and through August 15, 2012 (i.e. it’s closed and no more than 3 may be cabezon. 37°11′ N. lat. (San Francisco from January 1 through May 11 and Multi-day limits are authorized by a Management Area), recreational fishing August 16 through December 31 in valid permit issued by California and for lingcod is open from June 1 through 2012). (3) Between 38°57.50′ N. lat. and must not exceed the daily limit December 31 (i.e. it’s closed from 37°11′ N. lat. (San Francisco multiplied by the number of days in the January 1 through May 31). Management Area), recreational fishing fishing trip. (4) Between 37°11′ N. lat. and 34°27′ for the RCG complex is open from June * * * * * N. lat. (Central Management Area), 1 through December 31 (i.e. it’s closed (iii) * * * recreational fishing for lingcod is open from January 1 through May 31). from May 1 through December 31 (i.e. (4) Between 37°11′ N. lat. and 34°27′ (A) * * * ° it’s closed from January 1 through April N. lat. (Central Management Area), (1) Between 42 N. lat. (California/ ° ′ 30). recreational fishing for the RCG Oregon border) and 40 10.00 N. lat. ° ′ (Northern Management Area), (5) South of 34 27 N. lat. (Southern complex is open from May 1 through Management Area), recreational fishing December 31 (i.e. it’s closed from recreational fishing for lingcod is open from May 14, 2011 through October 31, for lingcod is open from March 1 January 1 through April 30). through December 31 (i.e. it’s closed (5) South of 34°27′ N. lat. (Southern 2011 (i.e. it’s closed from January 1 from January 1 through February 28). Management Area), recreational fishing through May 13 and from November 1 for the RCG Complex is open from through December 31 in 2011) and from * * * * * March 1 through December 31 (i.e. it’s May 12, 2012 through October 31, 2012 (C) Size limits. Lingcod may be no closed from January 1 through February (i.e. it’s closed from January 1 through smaller than 22 in (56 cm) total length. 28). May 11 and from November 1 through (D) Dressing/filleting. Lingcod filets (B) Bag limits, hook limits. In times December 31 in 2012). may be no smaller than 14 in (36 cm) and areas when the recreational season (2) Between 40°10′ N. lat. and in length. for the RCG Complex is open, there is 38°57.50′ N. lat. (Mendocino * * * * * a limit of 2 hooks and 1 line when Management Area), recreational fishing [FR Doc. 2011–10799 Filed 5–10–11; 8:45 am] fishing for the RCG complex and for lingcod is open from May 14, 2011 BILLING CODE 3510–22–P

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Part IV Department of the Treasury Office of the Comptroller of the Currency 12 CFR Part 45 Board of Governors of the Federal Reserve System 12 CFR Part 237 Federal Deposit Insurance Corporation 12 CFR Part 324 Farm Credit Administration 12 CFR Part 624 Federal Housing Finance Agency 12 CFR Part 1221

Margin and Capital Requirements for Covered Swap Entities; Proposed Rule

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DEPARTMENT OF THE TREASURY financial system arising from the use of provide such as name and address swaps and security-based swaps that are information, e-mail addresses, or phone Office of the Comptroller of the not cleared. numbers. Comments received, including Currency DATES: Comments should be received on attachments and other supporting or before June 24, 2011. materials, are part of the public record 12 CFR Part 45 ADDRESSES: Interested parties are and subject to public disclosure. Do not [Docket No. OCC–2011–0008] encouraged to submit written comments enclose any information in your jointly to all of the Agencies. comment or supporting materials that RIN 1557–AD43 Commenters are encouraged to use the you consider confidential or title ‘‘Margin and Capital Requirements inappropriate for public disclosure. BOARD OF GOVERNORS OF THE You may review comments and other FEDERAL RESERVE SYSTEM for Covered Swap Entities’’ to facilitate the organization and distribution of related materials that pertain to this proposed rulemaking by any of the 12 CFR Part 237 comments among the Agencies. Commenters are also encouraged to following methods: • [Docket No. R–1415] identify the number of the specific Viewing Comments Electronically: question for comment to which they are Go to http://www.regulations.gov. Select RIN 7100 AD74 responding. ‘‘Document Type’’ of ‘‘Public Office of the Comptroller of the Submissions,’’ and in the ‘‘Enter FEDERAL DEPOSIT INSURANCE Keyword or ID Box,’’ enter Docket ID CORPORATION Currency: Because paper mail in the Washington, DC area and at the OCC is ‘‘OCC–2011–0008,’’ and click ‘‘Search.’’ Comments will be listed under ‘‘View 12 CFR Part 324 subject to delay, commenters are encouraged to submit comments by the By Relevance’’ tab at the bottom of RIN 3064–AD79 Federal eRulemaking Portal or e-mail, if screen. If comments from more than one possible. Please use the title ‘‘Margin agency are listed, the ‘‘Agency’’ column FARM CREDIT ADMINISTRATION and Capital Requirements’’ to facilitate will indicate which comments were the organization and distribution of the received by the OCC. • 12 CFR Part 624 comments. You may submit comments Viewing Comments Personally: You RIN 3052–AC69 by any of the following methods: may personally inspect and photocopy • Federal eRulemaking Portal— comments at the OCC, 250 E Street, FEDERAL HOUSING FINANCE ‘‘Regulations.gov’’: Go to http:// SW., Washington, DC. For security AGENCY www.regulations.gov. Select ‘‘Document reasons, the OCC requires that visitors Type’’ of ‘‘Proposed Rules,’’ and in the make an appointment to inspect 12 CFR Part 1221 ‘‘Enter Keyword or ID Box,’’ enter Docket comments. You may do so by calling ID ‘‘OCC–2011–0008,’’ and click (202) 874–4700. Upon arrival, visitors RIN 2590–AA45 ‘‘Search.’’ On ‘‘View By Relevance’’ tab at will be required to present valid government-issued photo identification Margin and Capital Requirements for the bottom of screen, in the ‘‘Agency’’ and submit to security screening in Covered Swap Entities column, locate the Proposed Rule for the OCC, in the ‘‘Action’’ column, click order to inspect and photocopy AGENCY: Office of the Comptroller of the on ‘‘Submit a Comment’’ or ‘‘Open comments. Currency, Treasury (OCC); Board of Docket Folder’’ to submit or view public • Docket: You may also view or Governors of the Federal Reserve comments and to view supporting and request available background System (Board); Federal Deposit related materials for this rulemaking documents and project summaries using Insurance Corporation (FDIC); Farm action. the methods described above. • Credit Administration (FCA); and the Click on the ‘‘Help’’ tab on the Board of Governors of the Federal Federal Housing Finance Agency Regulations.gov home page to get Reserve System (FHFA). information on using Regulations.gov, You may submit comments, identified ACTION: Notice of proposed rulemaking. including instructions for submitting or viewing public comments, viewing by Docket No. R–1415 and RIN 7100 SUMMARY: The OCC, Board, FDIC, FCA, other supporting and related materials, AD74, by any of the following methods: • and FHFA (collectively, the Agencies) and viewing the docket after the close Agency Web Site: http:// are requesting comment on a proposal to of the comment period. www.federalreserve.gov. Follow the establish minimum margin and capital • E-mail: instructions for submitting comments at requirements for registered swap [email protected]. http://www.federalreserve.gov/ dealers, major swap participants, • Mail: Office of the Comptroller of generalinfo/foia/ProposedRegs.cfm. security-based swap dealers, and major the Currency, 250 E Street, SW., Mail • Federal eRulemaking Portal: http:// security-based swap participants for Stop 2–3, Washington, DC 20219. www.regulations.gov. Follow the which one of the Agencies is the • Fax: (202) 874–5274. instructions for submitting comments. prudential regulator. This proposed rule • Hand Delivery/Courier: 250 E • E-mail: implements sections 731 and 764 of the Street, SW., Mail Stop 2–3, Washington, [email protected]. Dodd-Frank Wall Street Reform and DC 20219. Include the docket number in the Consumer Protection Act, which require Instructions: You must include ‘‘OCC’’ subject line of the message. the Agencies to adopt rules jointly to as the agency name and ‘‘Docket ID • Fax: (202) 452–3819 or (202) 452– establish capital requirements and OCC–2011–0008’’ in your comment. In 3102. initial and variation margin general, OCC will enter all comments • Mail: Address to Jennifer J. Johnson, requirements for such entities on all received into the docket and publish Secretary, Board of Governors of the non-cleared swaps and non-cleared them on the Regulations.gov Web site Federal Reserve System, 20th Street and security-based swaps in order to offset without change, including any business Constitution Avenue, NW., Washington, the greater risk to such entities and the or personal information that you DC 20551.

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All public comments will be made Fourth Floor, 1700 G Street, NW., However, we will attempt to remove e- available on the Board’s Web site at Washington, DC 20552. mail addresses to help reduce Internet http://www.federalreserve.gov/ • Hand Delivery/Courier: The hand spam. delivery address is: Alfred M. Pollard, generalinfo/foia/ProposedRegs.cfm as FOR FURTHER INFORMATION CONTACT: submitted, unless modified for technical General Counsel, Attention: Comments/ OCC: Michael Sullivan, Market RAD RIN 2590–AA45, Federal Housing reasons. Accordingly, comments will (202) 874–3978, Kurt Wilhelm, Director, Finance Agency, Fourth Floor, 1700 G not be edited to remove any identifying Financial Markets Group (202) 874– Street, NW., Washington, DC 20552. A or contact information. Public 4479, Jamey Basham, Assistant Director, hand-delivered package should be comments may also be viewed Legislative and Regulatory Activities logged at the Guard Desk, First Floor, on electronically or in paper in Room MP– Division (202) 874–5090, or Ron 500 of the Board’s Martin Building (20th business days between 9 a.m. and 5 p.m. All comments received by the Shimabukuro, Senior Counsel, and C Streets, NW.) between 9 a.m. and Legislative and Regulatory Activities 5 p.m. on weekdays. deadline will be posted for public inspection without change, including Division (202) 874–5090, Office of the Federal Deposit Insurance Comptroller of the Currency, 250 E Corporation: You may submit any personal information you provide, such as your name and address, on the Street, SW., Washington, DC 20219. comments, identified by RIN number, Board: Sean D. Campbell, Deputy by any of the following methods: FHFA Web site at http://www.fhfa.gov. Copies of all comments timely received Associate Director, Division of Research • Agency Web Site: http:// and Statistics, (202) 452–3761, Michael www.fdic.gov/regulations/laws/federal/ will be available for public inspection and copying at the address above on Gibson, Senior Associate Director, propose.html. Follow instructions for Division of Research and Statistics, submitting comments on the Agency government-business days between the hours of 10 a.m. and 3 p.m. To make an (202) 452–2495, or Jeremy R. Newell, Web site. Senior Attorney, Legal Division, (202) • E-mail: [email protected]. appointment to inspect comments please call the Office of General Counsel 452–3239, Board of Governors of the Include the RIN number on the subject Federal Reserve System, 20th and C line of the message. at (202) 414–6924. Farm Credit Administration: We offer Streets, NW., Washington, DC 20551. • Mail: Robert E. Feldman, Executive a variety of methods for you to submit FDIC: Bobby R. Bean, Chief, Policy Secretary, Attention: Comments, Federal your comments. For accuracy and Section, (202) 898–6705, John Feid, Deposit Insurance Corporation, 550 17th efficiency reasons, commenters are Senior Capital Markets Specialist, (202) Street, NW., Washington, DC 20429. encouraged to submit comments by e- 898–8649, Division of Risk Management • Hand Delivery: Comments may be mail or through the FCA’s Web site. As Supervision, Thomas F. Hearn, Counsel, hand delivered to the guard station at facsimiles (fax) are difficult for us to (202) 898–6967, or Ryan K. Clougherty, the rear of the 550 17th Street Building process and achieve compliance with Senior Attorney, (202) 898–3843, Legal (located on F Street) on business days section 508 of the Rehabilitation Act, we Division, Federal Deposit Insurance between 7 a.m. and 5 p.m. are no longer accepting comments Corporation, 550 17th Street, NW., Instructions: All comments received submitted by fax. Regardless of the Washington, DC 20429. must include the agency name and RIN FHFA: Robert Collender, Principal method you use, please do not submit for this rulemaking and will be posted Policy Analyst, Office of Policy Analysis your comments multiple times via without change to http://www.fdic.gov/ and Research, (202) 343–1510, different methods. You may submit regulations/laws/federal/propose.html, [email protected], Peggy comments by any of the following including any personal information Balsawer, Assistant General Counsel, methods: provided. • E-mail: Send us an e-mail at reg- Office of General Counsel, (202) 343– Federal Housing Finance Agency: You [email protected]. 1529, [email protected]. or may submit your written comments on • FCA Web site: http://www.fca.gov. James Carley, Senior Associate Director, the proposed rulemaking, identified by Select ‘‘Public Commenters,’’ then Division of FHLBank Regulation, (202) regulatory information number (RIN) ‘‘Public Comments,’’ and follow the 408–2507, [email protected], 2590–AA45, by any of the following directions for ‘‘Submitting a Comment.’’ Federal Housing Finance Agency, methods: • Federal eRulemaking Portal: http:// Fourth Floor, 1700 G Street, NW., • E-mail: Comments to Alfred M. www.regulations.gov. Follow the Washington, DC 20552. The telephone Pollard, General Counsel, may be sent instructions for submitting comments. number for the Telecommunications by e-mail at [email protected]. • Mail: Gary K. Van Meter, Acting Device for the Hearing Impaired is (800) Please include ‘‘RIN 2590–AA45’’ in the Director, Office of Regulatory Policy, 877–8339. subject line of the message. Farm Credit Administration, 1501 Farm FCA: William G. Dunn, Acting • Federal eRulemaking Portal: http:// Credit Drive, McLean, VA 22102–5090. Associate Director, Finance and Capital www.regulations.gov. Follow the You may review copies of all Markets Team, Office of Regulatory instructions for submitting comments. If comments we receive at our office in Policy, Farm Credit Administration, you submit your comment to the McLean, Virginia or on our Web site at McLean, VA 22102–5090, (703) 883– Federal eRulemaking Portal, please also http://www.fca.gov. Once you are in the 4414, TTY (703) 883–4434, Joseph T. send it by e-mail to FHFA at Web site, select ‘‘Public Commenters,’’ Connor, Associate Director for Policy [email protected] to ensure then ‘‘Public Comments,’’ and follow the and Analysis, Office of Secondary timely receipt by the Agency. Please directions for ‘‘Reading Submitted Market Oversight, Farm Credit include ‘‘RIN 2590–AA45’’ in the subject Public Comments.’’ We will show your Administration, McLean, VA 22102– line of the message. comments as submitted, including any 5090, (703) 883–4280, TTY (703) 883– • U.S. Mail, United Parcel Service, supporting data provided, but for 4434, or Rebecca S. Orlich, Senior Federal Express, or Other Mail Service: technical reasons we may omit items Counsel, Office of General Counsel, The mailing address for comments is: such as logos and special characters. Farm Credit Administration, McLean, Alfred M. Pollard, General Counsel, Identifying information that you VA 22102–5090, (703) 883–4020, TTY Attention: Comments/RIN 2590–AA45, provide, such as phone numbers and (703) 883–4020. Federal Housing Finance Agency, addresses, will be publicly available. SUPPLEMENTARY INFORMATION:

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I. Background Dodd-Frank Act require the Agencies to (but no less than annually) regarding 7 The Dodd-Frank Wall Street Reform adopt rules jointly for swap entities these requirements. and Consumer Protection Act (the under their respective jurisdictions The capital and margin standards for Dodd-Frank Act) was enacted on July imposing (i) capital requirements and swap entities imposed under sections 21, 2010.1 Title VII of the Dodd-Frank (ii) initial and variation margin 731 and 764 of the Dodd-Frank Act are Act established a comprehensive new requirements on all non-cleared swaps intended to offset the greater risk to the regulatory framework for derivatives, and non-cleared security-based swaps.5 swap entity and the financial system which the Act generally characterizes as Swap entities that are prudentially arising from the use of swaps and ‘‘ ’’ regulated by the Agencies and therefore security-based swaps that are not swaps (which are defined in section 8 721 of the Dodd-Frank Act to include subject to the proposed rule are referred cleared. Sections 731 and 764 of the interest rate swaps, commodity-based to herein as ‘‘covered swap entities.’’ Dodd-Frank Act require that the capital swaps, and broad-based credit swaps) Sections 731 and 764 of the Dodd- and margin requirements imposed on and ‘‘security-based swaps’’ (which are Frank Act require the CFTC and SEC to swap entities must, to offset such risk, defined in section 761 of the Dodd- separately adopt rules imposing capital (i) help ensure the safety and soundness Frank Act to include single-name and and margin requirements for swap of the swap entity and (ii) be narrow-based credit swaps and equity- entities for which there is no prudential appropriate for the greater risk based swaps).2 regulator.6 The Dodd-Frank Act requires associated with the non-cleared swaps As part of this new regulatory the CFTC, SEC, and the Agencies to and non-cleared security-based swaps 9 framework, sections 731 and 764 of the establish and maintain, to the maximum held as a swap entity. In addition, Dodd-Frank Act add a new section 4s to extent practicable, capital and margin Sections 731 and 764 of the Dodd-Frank the Commodity Exchange Act and a new requirements that are comparable, and Act require the Agencies, in establishing section 15F to the Securities Exchange to consult with each other periodically capital rules for covered swap entities, Act of 1934, respectively, which require to take into account the risks associated the registration and regulation of swap International Banking Act of 1978, or a savings and with other types, classes or categories of dealers and major swap participants and loan holding company (on or after the transfer date swaps or security-based swaps engaged security-based swap dealers and major established under section 311 of the Dodd-Frank in, and the other activities conducted by Act), or a subsidiary of such a company or foreign that person that are not otherwise security-based swap participants bank (other than a subsidiary for which the OCC or (collectively, swap entities).3 For certain FDIC is the prudential regulator or that is required subject to regulation applicable to that types of swap entities that are to be registered with the CFTC or SEC as a swap person by virtue of the status of the prudentially regulated by one of the dealer or major swap participant or a security-based person as a swap dealer or a major swap swap dealer or major security-based swap 10 4 participant. Sections 731 and 764 Agencies, sections 731 and 764 of the participant, respectively). The OCC is the prudential regulator for any swap entity that is a become effective not less than 60 days 1 Dodd-Frank Wall Street Reform and Consumer national bank, a Federally chartered branch or after publication of the final rule or Protection Act, Public Law 111–203, 124 Stat. 1376 agency of a foreign bank, or a Federal savings regulation implementing these (2010). association. The FDIC is the prudential regulator for sections.11 2 See 7 U.S.C. 1a(47); 15 U.S.C. 78c(a)(68). Swaps any swap entity that is (i) a State-chartered bank The capital and margin requirements that is not a member of the Federal Reserve System and security-based swaps are sometimes referred to that must be established with respect to herein collectively as ‘‘derivatives.’’ or (ii) a State savings association. The FCA is the 3 See 7 U.S.C. 6s; 15 U.S.C. 78o–8. Section 731 prudential regulator for any swap entity that is an of the Dodd-Frank Act requires swap dealers and institution chartered under the Farm Credit Act of 7 See 7 U.S.C. 6s(e)(2)(A); 6s(e)(3)(D); 15 U.S.C. major swap participants to register with the 1971, as amended. FHFA is the prudential regulator 78o–8(e)(2)(A), 78o–8(e)(3)(D). Staff of the Agencies Commodity Futures Trading Commission (the for any swap entity that is a ‘‘regulated entity’’ under have consulted with staff of the CFTC and SEC in ‘‘CFTC’’), which is vested with primary the Federal Housing Enterprises Financial Safety developing the proposed rule. responsibility for the oversight of the swaps market and Soundness Act of 1992 (i.e., the Federal 8 See 7 U.S.C. 6s(e)(3)(A); 15 U.S.C. 78o– under title 7 of the Dodd Frank Act. Section 764 National Mortgage Association and its affiliates, the 8(e)(3)(A). of the Dodd-Frank Act requires security-based swap Federal Home Loan Mortgage Corporation and its 9 See 7 U.S.C. 6s(e)(3)(A); 15 U.S.C. 78o– dealers and major security-based swap participants affiliates, and the Federal Home Loan Banks). See 8(e)(3)(A). In addition, Section 1201 of Housing and to register with the Securities and Exchange 7 U.S.C. 1a(39). Economic Recovery Act of 2008 (Pub. L. 110–289, Commission (the ‘‘SEC’’), which is vested with 5 See 7 U.S.C. 6s(e)(2)(A); 15 U.S.C. 78o– 122 Stat. 2654) requires the Director of FHFA, when primary responsibility for the oversight of the 8(e)(2)(A). Section 6(s)(e)(1)(A) directs registered promulgating regulations relating to the Federal security-based swaps market under title 7 of the swap dealers and major swap participants for which Home Loan Banks, to consider the following Dodd-Frank Act. Section 713(d)(1) of the Dodd- there is a prudential regulator to comply with differences between the Federal Home Loan Banks Frank Act requires the CFTC and SEC to issue joint margin and capital rules issued by the prudential and the Federal National Mortgage Association rules further defining the terms swap dealer, major regulators, while section 6(s)(e)(1)(B) directs (Fannie Mae) and the Federal Home Loan Mortgage swap participant, security-based swap dealer, and registered swap dealers and major swap Corporation (Freddie Mac): cooperative ownership major security-based swap participant. The CFTC participants for which there is not a prudential structure; mission of providing liquidity to and SEC issued a joint notice of proposed regulator to comply with margin and capital rules members; affordable housing and community rulemaking with respect to these definitions in issued by the CFTC and SEC. Section 78o–8(e)(1) development mission; capital structure; and joint December, 2010. See 75 FR 80,174 (Dec. 21, 2010) generally parallels section 6s(e)(1), except that and several liability. See section 1201 Public Law (proposed rule). section 78o–8(e)(1)(A) refers to registered security- 110–289, 122 Stat. 2782–83 (amending 12 U.S.C. 4 Section 1a(39) of the Commodities Exchange Act based swap dealers and major security-based swap 4513). The Director of FHFA also may consider any defines the term ‘‘prudential regulator’’ for purposes participants for which ‘‘there is not a prudential other differences that are deemed appropriate. For of the capital and margin requirements applicable regulator.’’ The Agencies construe the ‘‘not’’ in purposes of this proposed rule, FHFA considered to swap dealers, major swap participants, security- section 78o–8(e)(1)(A) to have been included by the differences as they relate to the above factors. based swap dealers and major security-based swap mistake, in conflict with section 78o–8(e)(2)(A), and FHFA requests comments from the public about participants. The Board is the prudential regulator of no substantive meaning. Otherwise, registered whether differences related to these factors should for any swap entity that is (i) a State-chartered bank security-based swap dealers and major security- result in any revisions to the proposal. that is a member of the Federal Reserve System, (ii) based swap participants for which there is not a 10 See 7 U.S.C. 6s(e)(2)(C); 15 U.S.C. 78o– a State-chartered branch or agency of a foreign prudential regulator could be subject to multiple 8(e)(2)(C). In addition, the margin requirements bank, (iii) a foreign bank which does not operate an capital and margin rules, and institutions regulated imposed by the Agencies must permit the use of insured branch, (iv) an organization operating by the prudential regulators and registered as noncash collateral, as the Agencies determine to be under section 25A of the Federal Reserve Act (an security-based swap dealers and major security- consistent with (i) preserving the financial integrity Edge corporation) or having an agreement with the based swap participants might not be subject to any of the markets trading swaps and security-based Board under section 25 of the Federal Reserve Act capital and margin requirements under section 78o– swaps and (ii) preserving the stability of the U.S. (an Agreement corporation), and (v) a bank holding 8(e). financial system. See 7 U.S.C. 6s(e)(3)(C); 15 U.S.C. company, a foreign bank that is treated as a bank 6 See 7 U.S.C. 6s(e)(2)(B); 15 U.S.C. 78o– 78o–8(e)(3)(C). holding company under section 8(a) of the 8(e)(2)(B). 11 See Dodd Frank Act §§ 754, 774.

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non-cleared derivatives under sections ‘‘non-cleared’’ swap or security-based establishing both (i) the minimum 731 and 764 of the Dodd-Frank Act swap and will be subject to the capital amount of initial and variation margin complement changes made elsewhere in and margin requirements for such that it must collect from its the Act that require all sufficiently transactions established under sections counterparties and (ii) the frequency standardized swaps and security-based 731 and 764 of the Dodd-Frank Act. with which a covered swap entity must swaps be cleared through a derivatives The comprehensive derivatives- calculate and collect variation margin clearing organization or clearing related provisions of title VII of the from its counterparty. agency.12 This clearing mandate reflects Dodd-Frank Act, including sections 731 In implementing this risk-based the consensus of the G–20 leaders: ‘‘All and 764, are intended in general to approach, the proposed rule standardized over-the-counter reduce risk, increase transparency, distinguishes among four separate types derivatives contracts should be traded promote market integrity within the of derivatives counterparties: (i) on exchanges or electronic trading financial system, and, in particular, Counterparties that are themselves swap platforms, where appropriate, and address a number of weaknesses in the entities; (ii) counterparties that are high- cleared through central counterparties regulation and structure of the risk financial end users of derivatives; by end of 2012 at the latest.’’ 13 derivatives markets that were revealed (iii) counterparties that are low-risk In the derivatives clearing process, during the financial crisis experienced financial end users of derivatives; and central counterparties (CCPs) manage in 2008 and 2009. During the financial (iv) counterparties that are nonfinancial the credit risk through a range of crisis, the opacity of derivatives end users of derivatives.15 These controls and methods, including a transactions among dealer banks and categories reflect the Agencies’ margining regime that imposes both between dealer banks and their preliminary belief that distinctions can initial margin and variation margin counterparties created uncertainty about be made between types of derivatives requirements on parties to cleared whether market participants were counterparties that are useful in transactions.14 Thus, the mandatory significantly exposed to the risk of a distinguishing the risks posed by each clearing requirement established by the default by a swap counterparty. By type. Dodd-Frank Act for swaps and security- imposing a regulatory margin The proposed rule’s initial and based swaps will effectively require any requirement on non-cleared swaps, the variation margin requirements generally party to any transaction subject to the Dodd-Frank Act will reduce the apply only to the collection of minimum clearing mandate to post initial and uncertainty around the possible margin amounts by a covered swap variation margin to the CCP in exposures arising from non-cleared entity from its counterparties; they do connection with that transaction. swaps. not contain specific requirements as to However, if a particular swap or The recent financial crisis also the amount of initial or variation margin security-based swap is not cleared revealed that some participants in the that a covered swap entity must post to because it is not subject to the derivatives markets had used its counterparties.16 This approach, mandatory clearing requirement (or derivatives to take on excessive risks. By which emphasizes the collection rather because one of the parties to a particular imposing a minimum margin than the posting of margin, is based swap or security-based swap is eligible requirement on non-cleared derivatives, primarily on the Agencies’ preliminary for, and uses, an exemption from the sections 731 and 764 of the Dodd-Frank view that imposing requirements with mandatory clearing requirement), that Act will reduce the ability of firms to respect to the minimum amount of swap or security-based swap will be a take on excessive risks through swaps margin to be collected (but not posted) without sufficient financial resources to is a critical aspect of offsetting the 12 See 7 U.S.C. 2(h); 15 U.S.C. 78c–3. Certain make good on their contracts. Because greater risk to the covered swap entity types of counterparties (e.g., counterparties that are the Dodd-Frank Act requires that the and the financial system arising from not financial entities and are using swaps or the covered swap entity’s holdings of security-based swaps to hedge or mitigate margin requirements be based on the commercial risks) are exempt from this mandatory risks posed by the non-cleared swaps and security-based swaps that are clearing requirement and may elect not to clear a derivatives and derivatives not cleared and helps ensure the safety swap or security-based swap that would otherwise counterparties, firms that take and soundness of the covered swap be subject to the clearing requirement. significant risks through derivatives will entity. The proposed rule’s approach 13 G–20 Leaders, June 2010 Toronto Summit would also assure that swap entities Declaration, ¶ 25. The dealer community has also face more stringent margin requirements recognized the importance of clearing—beginning with respect to non-cleared derivatives, transacting with one another will in 2009, in an effort led by the Federal Reserve while firms that take lower risks will effectively be collecting and posting Bank of New York, the dealer community agreed to face less stringent margin requirements. margin with respect to those increase central clearing for certain credit transactions as a result of the margin derivatives and interest rate derivatives. See Press II. Overview of Proposed Rule Release, Federal Reserve Bank of New York, New collection requirements imposed on York Fed Welcomes Further Industry Commitments A. Margin Requirements each. on Over-the-Counter Derivatives press release (June With respect to initial margin, the 2, 2009), available at http://www.newyorkfed.org/ The Agencies have generally adopted proposed rule permits a covered swap newsevents/news/markets/2009/ma090602.html. a risk-based approach in proposing rules entity to select from two alternatives to 14 CCPs interpose themselves between to establish initial and variation margin calculate its initial margin requirements. counterparties to a derivative transaction, becoming requirements for covered swap entities, the buyer to the seller and the seller to the buyer A covered swap entity may calculate its and, in the process, taking on the credit risk that consistent with the statutory initial margin requirements using a each party poses to the other. For example, when requirement that these rules help ensure standardized ‘‘lookup’’ table that a derivatives contract between two parties that are the safety and soundness of the covered members of a CCP is executed and submitted for clearing, it is typically replaced by two new swap entity and be appropriate for the 15 See proposed rule §§ __.2(b), (g), (h), (i), (n), (r) contracts—separate contracts between the CCP and risk to the financial system associated and (y) for the various constituent definitions that each of the two original counterparties. At that with non-cleared swaps and non-cleared identify these four types of swap counterparties. point, the original counterparties are no longer security-based swaps held by covered 16 Section __.11 of the proposed rule adopted by counterparties to each other; instead, each faces the FHFA and FCA (but not the other Agencies) CCP as its counterparty, and the CCP assumes the swap entities. As a result, the proposed requires that their regulated entities collect initial counterparty credit risk of each of the original rule takes into account the relative risk and variation margin from swap entities, as counterparties. of a covered swap entity’s activities in described in section III.K of this notice.

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specifies the minimum initial margin covered swap entity from collecting based capital rules have been amended that must be collected, expressed as a margin in amounts greater than is and supplemented over time to take into percentage of the notional amount of the required under the proposed rule. account developments in the derivatives swap or security-based swap. These The proposed rule also specifies the market. These supplements include the percentages depend on the broad asset types of collateral that are eligible to be addition of the market risk amendment class of the swap or security-based collected to satisfy both the initial and to the first Basel Accord which requires swap.17 Alternatively, a covered swap variation margin requirements. Eligible banks and bank holding companies entity may calculate its minimum initial collateral is generally limited to (i) meeting certain thresholds to calculate margin requirements using an internal immediately available cash funds and their capital requirements for trading margin model that meets certain criteria (ii) certain high-quality, highly-liquid positions through models approved by and that has been approved by the U.S. government and agency obligations their primary Federal supervisor.28 In relevant prudential regulator.18 and, in the case of initial margin only, addition, certain large, complex banks A covered swap entity adopting the certain government-sponsored and bank holding companies are subject first alternative generally must collect at enterprise obligations, subject to to the banking agencies’ advanced risk- least the amount of initial margin specified minimum ‘‘haircuts’’ for based capital standards (advanced required under the standardized look-up purposes of determining their value for approaches rules), based on the table, regardless of the relative risk of its margin purposes.23 advanced approaches of the Basel II counterparty. A covered swap entity Separate from the proposed rule’s Accord.29 adopting the second alternative requirements with respect to the FHFA’s predecessor agencies used a generally must collect at least the collection of initial and variation similar methodology to frame the risk- amount of initial margin required under margin, the proposed rule also requires based capital rules applicable to those its initial margin model. Both a covered swap entity to ensure that its entities now regulated by FHFA. The alternatives permit a covered swap counterparty segregates the initial FCA’s risk-based capital regulations for entity to adopt a threshold amount margin that the covered swap entity Farm Credit System institutions, except below which it need not collect initial posts when engaging in swap or for the Federal Agricultural Mortgage margin from certain types of security-based swap transactions with Corporation (Farmer Mac), have been in counterparties.19 Under the proposed another swap entity.24 The Agencies place since 1988 and were updated in rule, the maximum threshold amount have proposed a requirement that 2005.30 The FCA’s risk-based capital permitted varies based on the relative segregation of initial margin be regulations for Farmer Mac have been in risk posed by the counterparty, as mandatory, not optional, for swap place since 2001 and were updated in determined by counterparty type. transactions by a covered swap entity 2006.31 With respect to variation margin, the with another swap entity in order to (i) The Basel Committee on Banking proposed rule generally requires a offset the greater risk to the covered Supervision has recently revised and covered swap entity to collect variation swap entity and the financial system enhanced its capital framework for margin periodically in an amount that is arising from the use of swaps and internationally active banks,32 and the at least equal to the increase in the value security-based swaps that are not banking agencies expect to propose of the swap to the covered swap cleared and (ii) protect the safety and these changes in the United States in the entity.20 As with initial margin, a soundness of the covered swap entity. near future through a separate notice of covered swap entity may adopt a proposed rulemaking. B. Capital Requirements threshold amount below which it need As described in section III.J below, the not collect variation margin from certain Sections 731 and 764 of the Dodd- proposed rule requires a covered swap types of lower-risk counterparties.21 Frank Act also require the Agencies to entity to comply with regulatory capital Consistent with the approach taken to issue, in addition to margin rules, joint initial margin, the maximum threshold rules on capital for covered swap capital framework in 1988, entitled International amount permitted for variation margin entities for which they are the Convergence of Capital Measurement and Capital prudential regulator.25 The Board, FDIC, Standards. varies based on the relative risk of the 28 61 FR 47358 (September 6, 1996). The banking counterparty, as determined by and OCC (collectively, the banking agencies’ market risk capital rules are at 12 CFR counterparty type. In addition, the agencies) have had risk-based capital part 3, Appendix B (OCC); 12 CFR part 208, frequency with which a covered swap rules in place for banks to address over- Appendix E and 12 CFR part 225, Appendix E the-counter derivatives since 1989 when (Board); and 12 CFR part 325, Appendix C (FDIC). entity must periodically recalculate and The rules apply to banks and bank holding collect variation margin under the the banking agencies implemented their companies with trading activity (on a worldwide proposed rule also varies based on the risk-based capital adequacy standards consolidated basis) that equals 10 percent or more relative risk of the counterparty, as (general banking risk-based capital of the institution’s total assets, or $1 billion or rules) 26 based on the first Basel more. determined by counterparty type, and 29 27 See BCBS, International Convergence of generally decreases as the relative risk Accord. The general banking risk- Capital Measurement and Capital Standards: A of the counterparty type decreases.22 Revised Framework (2006). The banking agencies The proposed rule’s margin 23 See proposed rule § __.6. implemented the advanced approaches of the Basel provisions establish only minimum 24 See proposed rule § __.7. The Agencies note II Accord in 2007. See 72 FR 69288 (December 7, that sections 724 and 763 of Dodd-Frank Act 2010). The advanced approaches rules are codified requirements with respect to initial require a swap entity to offer its swap and security- at 12 CFR part 3, Appendix C (OCC); 12 CFR part margin and variation that must be based swap counterparties the option of requiring 208, Appendix F and 12 CFR part 225, Appendix collected. Nothing in the proposed rule segregation of initial margin they post to the swap G (Board); and 12 CFR part 325, Appendix D is intended to prevent or discourage a entity. (FDIC). 25 7 U.S.C. 6s(e)(2); 15 U.S.C. 78o–8(e)(2). 30 See 53 FR 40.033 (Oct. 13, 1988); 70 FR 35.336 26 See 54 FR 4186 (January 27, 1989). The general (June 17, 2005); 12 CFR part 615 subpart H. 17 See proposed rule, Appendix A. banking risk-based capital rules are codified at 12 31 See 66 FR 19,048 (April 12, 2001); 71 FR 77,247 18 ______See proposed rule §§ .2(l), .3(a), .8. CFR part 3, Appendix A (OCC); 12 CFR parts 208 (Dec. 26, 2006); 12 CFR part 652. 19 __ __ See proposed rule §§ .2(m), .3(a)(2). and 225, Appendix A (Board); and 12 CFR part 325, 32 See BCBS, Basel III: A Global Regulatory 20 __ __ See proposed rule §§ .2(z), .4(a). Appendix A (FDIC). Framework for More Resilient Banks and Banking 21 See proposed rule §§ __.2(bb), __.4(a)(2). 27 The Basel Committee on Banking Supervision Systems (2010), available at http://www.bis.org/ 22 See proposed rule § __.4(b). (BCBS) developed the first international banking publ.bcbs189.htm.

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rules already made applicable to that swaps and security-based swaps under that swaps and security-based swap covered swap entity as part of its a qualifying master netting agreement transactions with these types of prudential regulatory regime. As with the counterparty on a portfolio counterparties should be excluded from discussed further below, given that basis in certain circumstances, if it is the scope of margin requirements these existing regulatory capital rules using an initial margin model to do so, imposed under sections 731 and 764 already specifically take into account and (ii) calculate variation margin because commercial firms engaged in and address the unique risks arising requirements under the proposed rule hedging activities pose a reduced risk to from derivatives transactions and on an aggregate, net basis under a their counterparties and the stability of activities, the Agencies are proposing to qualifying master netting agreement the U.S. financial system. In addition, rely on these existing rules, subject to with the counterparty. Applying the statements in the legislative history of the future notice of proposed new margin rules in such a way would, sections 731 and 764 suggest that rulemaking described above, as in some cases, have the effect of Congress did not intend, in enacting appropriate and sufficient to offset the applying the margin rules retroactively these sections, to impose margin greater risk to the covered swap entity to pre-effective-date swaps under the requirements on nonfinancial end users and the financial system arising from master agreement. Accordingly, in the engaged in hedging activities, even in the use of swaps and security-based case of initial margin, a covered swap cases where they entered into swaps or swaps that are not cleared and to protect entity using an initial margin model security-based swaps with swap the safety and soundness of the covered would be permitted, at its option, to entities.36 swap entity.33 calculate the initial margin In formulating the proposed rule, the requirements on a portfolio basis but Agencies have carefully considered III. Section-by-Section Summary of include only post-effective-date these concerns and statements. The Proposed Rule derivatives in the relevant portfolio.34 plain language of sections 731 and 764 A. Section __.1: Authority, Purpose and With respect to variation margin, the provides that the Agencies adopt rules Scope Agencies expect that the covered swap for covered swap entities imposing margin requirements on all non-cleared Section __.1 of the proposed rule entity will comply with the margin requirements with respect to all swaps swaps. Those sections do not, by their specifies the scope of swap and terms, exclude a swap with a security-based swap transactions to and security-based swaps governed by a master agreement, regardless of the date counterparty that is a commercial end which the margin requirements apply. It user. provides that the margin requirements on which they were entered into, consistent with current industry Importantly, those sections also apply to all non-cleared swaps and provide that the Agencies adopt margin security-based swaps into which a practice. The Agencies request comment on (i) what, if any, practical difficulties requirements that (i) help ensure the covered swap entity enters, regardless of safety and soundness of the covered might be raised by the proposed the type of transaction or the nature of swap entity and (ii) are appropriate for approach to application of the margin the counterparty. It also provides that the risk associated with the non-cleared requirements under master agreements the margin requirements apply only to swaps and non-cleared security-based governing both pre- and post-effective- swap and security-based swap swaps it holds as a swap entity. Thus, date swaps and security-based swaps transactions that are entered into on or the statute requires the Agencies to take and (ii) whether there are alternative after the date on which the proposed a risk-based approach to establishing approaches that might better address the rule becomes effective. margin requirements. issues raised by such master The proposed rule follows this 1. Treatment of Pre-Effective Date agreements. statutory framework and proposes a Derivatives 2. Treatment of Derivatives With risk-based approach to imposing margin The Agencies note that it is possible Commercial End User Counterparties requirements in which nonfinancial end that a covered swap entity may enter Following passage of the Dodd-Frank users are categorized as lower-risk into swap or security-based swap Act, various observers expressed counterparties than financial end users. transactions on or after the proposed concerns regarding whether sections In particular, the proposed rule permits rule’s effective date pursuant to the 731 and 764 of the Dodd-Frank Act covered swap entities to adopt, where same master netting agreement with a authorize or require the CFTC, SEC, and appropriate, initial and variation margin counterparty that governs existing Agencies to establish margin thresholds below which a covered swap swaps or security-based swaps entered requirements with respect to entity is not required to collect initial into prior to the effective date. As transactions between a covered swap and/or variation margin from discussed below, the proposed rules entity and a ‘‘commercial end user’’ (i.e., counterparties that are end users permit a covered swap entity to (i) a nonfinancial counterparty that engages because of the lesser risk posed by these calculate initial margin requirements for in derivatives activities to hedge types of counterparties to covered swap entities and financial stability with commercial risk),35 and have argued 33 For the duration of the conservatorships of respect to exposures below these Fannie Mae and Freddie Mac (together, the thresholds. The Agencies note that this Enterprises), FHFA has directed that their existing 34 See proposed rule § __.8(b). The covered swap regulatory capital requirements would not be entity would not be permitted to selectively threshold-based approach is consistent binding. However, FHFA continues to closely incorporate only certain pre-effective-date with current market practices with monitor the Enterprises’ activities. Such derivatives. respect to nonfinancial end users, in monitoring, coupled with the unique financial 35 Although the term ‘‘commercial end user’’ is not which derivatives dealers view the support available to the Enterprises from the United defined in the Dodd-Frank Act, it is generally States Treasury and the likelihood that FHFA will understood to mean a company that is eligible for promulgate new risk-based capital rules in due the exception to the mandatory clearing commercial risk, and (iii) has notified the CFTC or course to apply to the Enterprises (or their requirement for swaps and security-based swaps SEC how it generally meets its financial obligations successors) once the conservatorships have ended, under section 2(h)(7) of the Commodity Exchange with respect to non-cleared swaps or security-based lead to FHFA’s preliminary view that the reference Act and section 3C(g) of the Securities Exchange swaps, respectively. See 7 U.S.C. 2(h)(7) and 15 to existing capital rules is sufficient to address the Act, respectively. This exception is generally U.S.C. 78c–3(g). risks discussed in the text above as to the available to a person that (i) is not a financial entity, 36 See, e.g., 156 Cong. Rec. S5904 (daily ed. July Enterprises. (ii) is using the swap to hedge or mitigate 15, 2010) (statement of Sen. Lincoln).

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question of whether and to what extent variation margin to the derivatives infrastructure. In addition, the Agencies to require margin from their clearing organization or clearing agency, expect that covered swap entities that counterparties as a credit decision.37 and the exemption from the clearing wish to calculate initial margin using an Under the proposed rule, a covered requirement permits a nonfinancial end initial margin model will need sufficient swap entity would not be required to user taking advantage of the exemption time to develop such models and obtain collect initial or variation margin from to avoid posting margin to such central regulatory approval for their use. The a nonfinancial end user counterparty as CCPs. Although the Dodd-Frank Act Agencies request comment on the long as the covered swap entity’s does not contain an express exemption following implementation questions: exposures to the nonfinancial end user from the margin requirement of sections Question 3(a). What changes to were below the credit exposure limits 731 and 764 of the Dodd-Frank Act that internal risk management and other that the covered swap entity has is similar to the exemption for systems, trading documentation, established under appropriate credit commercial end users from the collateral arrangements, operational processes and standards. The Agencies mandatory clearing requirements of technology and infrastructure or other preliminarily believe that this approach sections 723 and 763 of the Dodd-Frank aspects of a covered swap entity’s is consistent with the statutory Act, the Agencies note that the proposed derivatives operations will likely need requirement that the margin rule’s approach to margin requirements to be made as part of the requirements be risk-based, and is for derivatives with nonfinancial end implementation of the proposed rule, appropriate in light of the minimal risks users could be viewed as lessening the and how much time will likely be that nonfinancial end users pose to the effectiveness of the clearing requirement required to make such changes? 3(b) Is safety and soundness of covered swap exemption for these nonfinancial end the proposed rule’s 180-day period entities and U.S. financial stability, users as concerns margin. sufficient? particularly in cases of relatively small In particular, the Agencies request Question 4(a). How much time will margin exposures. comment on the following questions: covered swap entities that wish to To the extent that a covered swap Question 1(a). Does the nonfinancial calculate initial margin using an initial entity has adopted an initial margin end user exemption from the mandatory margin model need to develop such threshold amount or a variation margin clearing requirement suggest or require models? 4(b) Is the proposed rule’s 180- threshold amount for a nonfinancial end that swaps and security-based swaps day period sufficient? involving a nonfinancial end user user counterparty but the cumulative B. Section __.2: Definitions required initial margin or variation should or must be exempt from initial __ margin, respectively, for transactions margin and variation margin Section .2 of the proposed rule with that end user exceeds the initial requirements for non-cleared swaps and provides definitions of the key terms margin threshold amount or variation security-based swaps? 1(b) If so, upon used in the proposed rule. In particular, __ margin threshold amount, respectively, what statutory basis would such an § .2 (i) defines the four types of swap the covered swap entity would be exemption rely? 1(c) Should that and security-based swap counterparties required to collect the excess amount. determination vary based on whether a that form the basis of the proposed The Agencies preliminarily believe that particular non-cleared swap or non- rule’s risk-based approach to margin this approach is appropriate for the cleared security-based swap is subject to requirements and (ii) provides other key greater risk posed by such the mandatory clearing regime or not operative terms that are needed to counterparties where margin exposures (i.e., whether the nonfinancial end user calculate the amount of initial and are relatively large. is actually using the clearing variation margin required under other The Agencies request comment on the exemption)? sections of the proposed rule. Question 2. Should counterparties appropriateness of the proposed rule’s 1. Counterparty Definitions approach to a covered swap entity’s that are small financial institutions transactions with nonfinancial end using derivatives to hedge their risks be The four types of counterparties users and whether there are alternative treated in the same manner as defined in the proposed rule are (in approaches that would better achieve nonfinancial end users for purposes of order of highest to lowest risk): (i) Swap the objective of sections 731 and 764 of the margin requirements? entities; (ii) high-risk financial end users; (iii) low-risk financial end users; the Dodd-Frank Act. In particular, the 3. Effective Date and (iv) nonfinancial end users. Agencies note that under other Section __.1 of the proposed rule provisions of the Dodd-Frank Act, provides that the proposed rule shall be a. ‘‘Swap entities’’ nonfinancial end users that engage in effective with respect to any swap or The proposed rule defines ‘‘swap derivatives to hedge their commercial security-based swap to which a covered entity’’ as any entity that is required to risks are exempt from the requirement swap entity becomes a party on or after register as a swap dealer, major swap that all designated swaps and security- the date that is 180 days following participant, security-based swap dealer based swaps be cleared by a derivatives publication of the final rule in the or major security-based swap clearing organization or clearing agency, Federal Register. The Agencies request participant.38 Non-cleared swaps respectively. A major consequence of comment regarding the appropriateness transactions with counterparties that are clearing a swap or security-based swap of this 180-day period. themselves swap entities pose risk to is a requirement that each party to the The Agencies expect that covered the financial system because swap transaction post initial margin and swap entities are likely to need to make entities are large players in swap and a number of changes to their current security-based swap markets and 37 In the case of a nonfinancial end user with a strong credit profile, under current market practices derivatives business operations in order therefore have the potential to generate a derivatives dealer would not require margin—in to achieve compliance with the systemic risk through their swap essence, it would extend unsecured credit to the proposed rules, including potential activities. Because of their end user with respect to the underlying exposure. changes to internal risk management interconnectedness and large presence For counterparties with a weak credit profile, a derivatives dealer would likely make a different and other systems, trading in the market, the failure of a single credit decision and require the counterparty to post documentation, collateral arrangements, margin. and operational technology and 38 See proposed rule § __.2(y).

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swap entity could cause severe stress covered swap entities for which it is the entity would generally be required to throughout the financial system.39 prudential regulator.41 reduce its counterparty exposure Accordingly, it is the preliminary view The proposed definition of a through more stringent margin of the Agencies that all non-cleared counterparty that is a financial end user collection requirements with respect to swap transactions with swap entities also includes any government of any non-cleared derivatives with financial should require margin. foreign country or any political end user counterparties having greater subdivision, agency, or instrumentality and riskier derivatives activities. b. ‘‘Financial end users’’ and thereof.42 The Agencies note that these Section __.2 of the proposed rule ‘‘nonfinancial end users’’ types of sovereign counterparties do not deems a financial end user counterparty fit easily into the proposed rule’s to be a low-risk financial end user only Non-cleared swap transactions with categories of financial and nonfinancial if it meets all of the following three end users (i.e., those counterparties that end users. In comparing the criteria: are not themselves swap entities) can characteristics of sovereign • Its swaps or security-based swaps also pose risks to covered swap entities. counterparties with those of financial fall below a specified ‘‘significant swaps Among end users, financial end users and nonfinancial end users, the exposure’’ threshold; are considered more risky than Agencies preliminarily believe that the • It predominantly uses swaps to nonfinancial end users because the financial condition of a sovereign will hedge or mitigate the risks of its profitability and viability of financial tend to be closely linked with the business activities, including balance end users is more tightly linked to the financial condition of its domestic sheet, interest rate, or other risk arising health of the financial system than banking system, through common from the business of the counterparty; nonfinancial end users. Because and effects of the business cycle on both • financial counterparties are more likely government finances and bank losses, as It is subject to capital requirements to default during a period of financial well as through the safety net that many established by a prudential regulator or 43 stress, they pose greater systemic risk sovereigns provide to banks. Such a state insurance regulator. and risk to the safety and soundness of tight link with the health of its domestic With respect to the first criterion, the the covered swap entity. Section __.2 of banking system, and by extension with definition of ‘‘significant swaps the proposed rule defines a financial the broader global financial system, exposure’’ under the proposed rule is end user as any counterparty, other than makes a sovereign counterparty similar very similar to the definition of a swap entity, that is: (i) A commodity to a financial end user both in the ‘‘substantial counterparty exposure’’ pool (as defined in section 1a(5) of the nature of the systemic risk and the risk proposed by the CFTC and SEC for Commodity Exchange Act (7 U.S.C. to the safety and soundness of the purposes of establishing what level of 1a(5))); (ii) a private fund (as defined in covered swap entity. As a result, the swap and security-based swap section 202(a) of the Investment Agencies propose to treat sovereign counterparty exposure would require a Advisors Act of 1940 (15 U.S.C. 80–b– counterparties as financial end users for person to register as a major swap 2(a))); (iii) an employee benefit plan (as purposes of the proposed rule’s margin participant or major security-based defined in paragraphs (3) and (32) of requirements. swap participant under the Commodity section 3 of the Employee Retirement The proposed rule defines a Exchange Act or the Securities Income and Security Act of 1974 (29 nonfinancial end user as any Exchange Act, respectively, except that the threshold amounts are established at U.S.C. 1002)); (iv) a person counterparty that is an end user but is half the level that would require predominantly engaged in activities that not a financial end user. registration as a major swap participant are in the business of banking, or in c. ‘‘High-risk financial end user’’ and or major security-based swap activities that are financial in nature, as ‘‘low-risk financial end user’’ participant.44 The proposed rule’s defined in section 4(k) of the Bank definition is thus intended to capture Holding Company of 1956 (12 U.S.C. A financial end user counterparty persons that, while not having 1843(k)); 40 (v) a person that would be a whose derivatives activities are derivatives positions rising to the level commodity pool or private fund if it relatively limited and pose little or no requiring margin requirements and were organized under the laws of the risk is classified as a low-risk financial end user; other end user counterparties comprehensive regulation as a major United States or any State thereof; and swap participant, nonetheless have (vi) any other person that one of the are classified as high-risk financial end users. The likelihood of a financial end substantial activity in the market and Agencies may designate with respect to user counterparty’s failure with respect are more likely to pose greater risk to to a covered swap entity during stressed covered swap entities with which they 39 This is consistent with the Dodd-Frank Act’s transact than persons with only minor requirement that the Agencies set margin and market conditions increases with, capital requirements appropriate for the risk to the among other things, the size and activity in the market. The Agencies financial system associated with non-cleared swaps riskiness of its derivatives activity, and request comment on whether this held as a swap dealer or major swap participant. 7 the potential impact to the covered definition of significant swaps exposure U.S.C. 6(e)(3)(A); 15 U.S.C. 78o–8(e)(3)(A). swap entity’s safety and soundness is appropriate, or whether an alternative 40 Although the proposed rule does not define a person predominantly engaged in activities that are increases with the size of its non-cleared threshold amount or definition would in the business of banking, or in activities that are swaps exposure to the end user be more consistent with the purposes of financial in nature, as defined in section 4(k) of the counterparty. Accordingly, the proposed sections 731 and 764 of the Dodd-Frank Bank Holding Company of 1956 (12 U.S.C. 1843(k)), rule is structured so that a covered swap Act. the Agencies note that the Board has recently issued The second criterion of the proposed a proposed rule for comment defining a similar term for purposes of Title I of the Dodd-Frank Act. 41 See proposed rule § __.2(h). This definition of definition of a low-risk financial end See 76 FR 7,731 (Feb. 11, 2011) (proposed rule). ‘‘financial end user’’ is based upon, and user references the purpose for which The Agencies request comment on whether they substantially similar to, the definition of a the financial end user enters into swaps should apply the same methodology as is adopted ‘‘financial entity’’ that is ineligible to use the end or security-based swaps. This criterion for purposes of Title I of the Dodd-Frank Act for user exemption from the mandatory clearing purposes of this clause of the proposed rule’s requirements of sections 723 and 763 of the Dodd- definition of a financial end user, or whether an Frank Act. See 7 U.S.C. 2(h)(7); 15 U.S.C. 78c–3(g). 43 See proposed rule § __.2(n). alternative methodology is appropriate. 42 See proposed rule § __.2(h)(6). 44 See 75 FR 80,174 (Dec. 10, 2010).

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generally mirrors the description of apply differently to such high-risk and section 764 requiring it to collect margin hedging-related swaps and security- low-risk nonfinancial end users? from its counterparties. Thus, both based swaps that are excluded for Question 7(a). Is the classification of parties to a non-cleared swap between purposes of determining whether a sovereign counterparties as financial two swap entities will have to collect person maintains a substantial position end users appropriate in light of the and post margin as required by the SEC, in swaps or security-based swaps and risks posed by these counterparties? 7(b) CFTC or their prudential regulator, as therefore meets the definition of a major If not, what other classification would applicable.47 swap participant or major security- be appropriate, and why? 1. Calculation Alternatives based swap participant under the Question 8(a). Should sovereign Commodity Exchange Act and counterparties receive their own distinct The proposed rule permits a covered Securities Exchange Act, respectively.45 counterparty classification that is swap entity to select from two This distinction reflects the fact that different from those classifications in alternatives for calculating its initial persons using derivatives the proposed rule? 8(b) If so, why? 8(c) margin requirements. In all cases, the predominantly to hedge or mitigate risks How should the permitted initial margin amount required under arising from their business, rather than uncollateralized exposures to a the proposed rule is a minimum to speculate for profit, are likely to pose sovereign counterparty differ from those requirement; covered swap entities are less risk to the covered swap entity (e.g., that are allowed for financial or not precluded from collecting additional because losses on a hedging-related nonfinancial end users? initial margin (whether by contract or swap will usually be accompanied by Question 9. Is it appropriate to subsequent agreement with the offsetting gains on the related position distinguish between financial and non- counterparty) when they believe it is that it hedges). financial counterparties for the purpose appropriate or preferable to do so. The third criterion of the proposed of this risk-based approach? Under the first alternative, a covered definition of low-risk financial end user Question 10. What other factors or swap entity may calculate its initial references whether the financial end tests should be used to determine the margin requirements using a user is subject to regulatory capital relative risk of an end user standardized ‘‘lookup’’ table that requirements. This criterion also counterparty? specifies the minimum initial margin generally mirrors the description of Question 11(a). Does the proposed that must be collected as a percentage of certain financial companies that are rule require greater clarity with respect the swap or security-based swap excluded from one prong of the to the treatment of U.S. Federal, state, or notional amount, which percentage definition of a major swap participant or municipal government counterparties? varies depending on the broad asset major security-based swap participant 11(b) If so, how should such class of the swap or security-based under the Commodity Exchange Act and counterparties be treated? swap.48 If the covered swap entity has Question 12. Should a counterparty the Securities Exchange Act, entered into more than one swap or that is a bank holding company or respectively.46 This distinction reflects security-based swap with a counterparty nonbank financial firm subject to the fact that financial end users that are (i.e., a portfolio of swaps), the aggregate enhanced prudential standards under subject to regulatory capital minimum initial margin required on Section 165 of the Dodd-Frank Act be requirements are likely to pose less risk those swaps and security-based swaps treated similarly to swap entity as counterparties (e.g., because the would be determined by summing the counterparties? requirements ensure that minimum minimum initial margin requirement for The Agencies also request comment amounts of capital will be available to each individual swap. on the other definitions included in the absorb any losses on their derivatives In many cases, however, the use of a proposed rule, including those transactions). standardized table may not accurately discussed in further detail below. The Agencies request comment on reflect the risk of a portfolio of swaps or whether the proposed rule’s C. Section __.3: Initial Margin security-based swaps, because the categorization of various types of Section __.3 of the proposed rules swaps or security-based swaps counterparties by risk, and the key specifies the manner in which a covered themselves vary in ways not reflected by definitions used to implement this risk- swap entity must calculate the initial the standardized table or because no based approach, are appropriate, or margin requirement applicable to its reduction in required initial margin to whether alternative approaches or swaps and security-based swaps. These reflect offsetting exposures, definitions would better reflect the initial margin requirements apply only diversification, and other hedging purposes of sections 731 and 764 of the to the amount of initial margin that a benefits is permitted, as discussed Dodd-Frank Act. covered swap entity is required to below. For this reason, the proposed Question 5. Do the definitions collect from its counterparties; they do rule includes a second alternative. adequately identify financial end user not address whether, or in what Under the second alternative, a counterparties that are high-risk and amounts, a covered swap entity must covered swap entity may calculate its low-risk? post initial margin to a derivatives minimum initial margin requirements Question 6(a). Should nonfinancial counterparty. Except as described below end users also be separated into high- __ 47 Separately, in the case of institutions regulated in the summary of § .6 of the proposed by FHFA and FCA, the effect of § __.11 of the risk and low-risk categories for purposes rule, the posting of initial margin by a of the margin requirements? 6(b) If so, proposed rule, when combined with the margin covered swap entity to a counterparty is requirements contained in other parts of the on what basis (e.g., in a manner similar generally left to the mutual agreement of proposed rule, would also be to effectively require to the classification of high-risk and both parties to a non-cleared swap or non-cleared the covered swap entity and its security-based swap between a swap entity and an low-risk financial end users)? 6(c) If so, counterparty. In the case where a how should the margin requirement institution regulated by FHFA or FCA to both covered swap entity enters into a swap collect and post initial margin. 48 See proposed rule §§ __.2(k)(1), __.3(a). 45 with a counterparty that itself is a swap See 7 U.S.C. 1a(33)(A)(i)(I); 15 U.S.C. entity, its counterparty is likely to be Although the Agencies intend to specify a 78c(a)(67)(a)(ii)(I). particular percentage in the final rule, the proposed 46 See 7 U.S.C. 1a(33)(A)(iii)(I); 15 U.S.C. subject to a regulatory margin rule provides a potential range of percentages for 78c(a)(67)(a)(ii)(III)(aa). requirement under section 731 or comment.

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using an internal margin model that portfolio containing (i) a one year pay Question 18. Should the Agencies meets certain criteria and has been fixed and receive floating interest rate consider some degree of offset across approved by the relevant prudential swap with a notional value of $10 risk categories? If so how should these regulator.49 Specifically, the covered million and (ii) a two year pay floating offsets be determined? swap entity must collect at least the and receive fixed interest rate swap with Question 19. Would adjusting the amount of initial margin that is required a notional value of $10 million, an gross notional amount of swap positions under its internal model calculations initial margin model would recognize in a particular risk category (e.g., (subject to any applicable initial margin that much of the risk of the one year commodity, credit, equity, or foreign threshold amount, as described below). swap is offset by the risk of the two year exchange/interest rate) by a net-to-gross The Agencies request comment on swap—changes in the level of interest ratio or a netting factor in a manner that whether the use of internal models or rates that increase the value of the one is similar to the method used for Appendix A is appropriate for the year swap will simultaneously decrease adjusting potential future exposure calculation of initial margin the value of the two year swap. Under requirements. In particular, the Appendix A, however, the gross calculations for purposes of the Federal Agencies request comment on the notional interest rate swap position banking agencies’ risk-based capital following questions: would be $20 million and the initial rules adequately capture offsetting Question 13. As an alternative to margin on the portfolio would be twice exposures, diversification, and other Appendix A, should the rule allow an the initial margin of either $10 million hedging benefits? alternative calculation method that swap even though the trades are, in fact, Question 20. Would adjustment of would link the margin on a non-cleared risk reducing. gross notional amounts with a net-to- swap or non-cleared security-based The Agencies are concerned that the gross ratio or a netting factor swap to the margin required by a use of gross notional amounts alone in systematically overestimate or derivatives clearing organization for a determining initial margin may not underestimate offsetting exposures, cleared swap or cleared security-based adequately recognize offsetting diversification, and other hedging swap whose terms and conditions exposures, diversification, and other benefits? closely resemble the terms and hedging benefits that are well Question 21. Are there additional conditions of the non-cleared swap or understood as in the above example. methods that could be used in non-cleared security-based swap? This lack of recognition might lead to conjunction with a standardized lookup Question 14. Would there be enough large disparities between a firm that similarity between cleared and non- uses a model to set initial margin and initial margin table that adequately cleared swaps or security-based swaps a firm that uses the standardized initial recognize offsetting exposures, to make this approach workable? margin requirements. These disparities diversification, and other hedging Question 15. With respect to either may give rise to significant competitive benefits? alternative for calculating initial margin inequities between firms that do and do Question 22(a). Are such methods requirements, should swap or security- not adopt an approved initial margin transparent and implementable? 22(b) based swap positions that pose no model. Can they be generalized across multiple counterparty risk to the covered swap The Agencies request comment on risk categories and swap types? entity, such as a sold call option with possible changes to the standardized As an alternative, the Agencies the full premium paid at inception of method of calculating initial margin the trade, be excluded from the initial request comment on whether Appendix requirements to better reflect the effect A should be revised to adopt a method margin calculation? of offsets and hedging when swaps and that more fully reflects the offsetting of The Agencies also request comment security-based swaps are conducted positions at default. For example, such on whether offsetting exposures, under a qualifying master netting a method might rely on a calculation of diversification, and other hedging agreement. In particular, the Agencies an adjusted gross notional amount that benefits of multiple derivatives seek comment on the following transactions can or should be more questions: would reduce the amount of initial accurately represented in Appendix A’s Question 16. Would calculating the margin required when a counterparty standardized table. The Agencies note standardized initial margin for a has many offsetting trades under a that although the use of an initial particular risk category by separately qualifying master netting agreement. To margin model will allow for significant calculating the initial margin required calculate the adjusted gross notional recognition of offsetting exposures, on the long positions and short amount for an asset class, one would diversification, and other hedging positions and then using only the higher first calculate the net notional to gross benefits of swap and security-based of these two amounts adequately notional ratio. This netting factor would swap positions that are conducted account for offsetting exposures, be the absolute value of the difference under a qualifying master netting diversification, and other hedging between the long notional contracts and agreement, Appendix A’s standardized benefits within a standardized initial the short notional contracts divided by table is based upon gross notional margin framework? the total gross notional amount of the amounts and recognizes no offsetting Question 17. Would the method contracts. This value would then be exposures, diversification, or other described above systematically used as a type of correlation factor hedging benefits. In particular, the gross overestimate or underestimate offsetting among the contracts. The adjusted gross notional amount may not accurately exposures, diversification, and other notional amount would then be reflect the size or riskiness of the actual hedging benefits? Is this method prone calculated as follows, where n is the position in many circumstances. For to manipulation or other gaming gross notional value of trades in an asset example, with respect to a swap concerns? class and ‘‘NF’’ is the netting factor:

49 See proposed rule §§ __.2(k)(2), __.3(a).

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The adjusted gross notional amount, threshold amount that a covered swap appropriately take into account and rather than the gross notional amount, entity may establish for a particular address the credit risk posed by the would then be used to calculate initial counterparty to the lower of (i) a range counterparty and the risks of such margin using Appendix A. of $15 to $45 million or (ii) a range of swaps and security-based swaps and (ii) When the netting factor is zero, initial 0.1 to 0.3 percent of the covered swap be reviewed, monitored, and approved margin would still be required to be entity’s tier 1 capital.53 Although the in accordance with the swap entity’s collected, and when the net to gross Agencies have proposed a range of credit processes. Threshold amounts ratio is one (all positions are one way) specific maximum initial margin that are established in accordance with the netting factor is also one so that the threshold amounts for a counterparty these standards are unlikely to generate adjusted gross notional is equal to the that is a low-risk financial end user, the meaningful risk to the safety and gross notional. This method would Agencies’ preliminary view is that the soundness of the covered swap entity allow offsetting transactions that reduce midpoint of each range would in each and do not pose systemic risk.54 In risk to reduce initial margin, but would case be an appropriate amount. With addition, in the case of counterparties not allow the offset to ever be perfect, respect to counterparties that are that are low-risk financial end users, so that initial margin would always be nonfinancial end users, the proposed which the Agencies preliminarily required to be collected. The adjusted rule does not place a specific limit on believe pose greater risk than gross notional method would be applied the maximum initial margin threshold nonfinancial end users, the proposed to the initial margin calculation by amount that a covered swap entity may rule imposes additional restrictions by using gross notional amounts within an establish. limiting the maximum initial margin asset class. The Agencies seek comment The proposed rule allows threshold amount that a covered swap on these methods, as well as alternative uncollateralized exposures below the entity may establish. methods for calculating initial margin initial margin threshold amount for The Agencies expect that covered requirements under Appendix A and certain counterparties because taking swap entities will establish initial potential ways in which Appendix A uncollateralized credit exposure to margin threshold amounts only when might better capture the offsetting counterparties is a long established they have meaningfully evaluated the exposures, diversification, and other business practice at the firms regulated creditworthiness of the counterparty hedging benefits. by the Agencies. When well managed, and have made a credit and risk taking on credit exposure does not management decision to expose 2. Initial Margin Thresholds automatically lead to unacceptable themselves to the unsecured credit of As part of the proposed rule’s initial levels of systemic risk. Credit exposure the counterparty pursuant to their margin requirements, a covered swap can arise from a number of activities generally applicable credit approval entity using either alternative is also that regulated firms are permitted to processes. The Agencies also expect that permitted to establish, for engage in with a counterparty—making covered swap entities will monitor counterparties that are low-risk a loan, opening a committed line of initial margin threshold amounts and financial end users or nonfinancial end credit, providing payments processing adjust them downward to reflect any users, a credit exposure limit below or transaction services, or engaging in deterioration in the credit quality of the which it need not collect initial swaps transactions. Although the counterparty or other increase in the margin.50 A covered swap entity is not proposal permits such credit exposure risks the counterparties’ swaps and permitted to establish an initial margin in certain circumstances, the proposed security-based swaps pose. Under the threshold amount for a counterparty rule seeks to ensure that initial margin proposed rule, even where an initial that is either (i) a covered swap entity is collected in amounts that are margin threshold amount is established, itself or (ii) a high-risk financial end appropriate to the risks posed by the covered swap entity must still user.51 counterparties that are low-risk calculate the initial margin amount for This credit exposure limit is defined financial end users or nonfinancial end the counterparty pursuant to § __.3 of in the proposed rule as the initial users. the proposed rule and, to the extent that margin threshold amount.52 The The proposed rule requires that any the initial margin amount exceeds the maximum initial margin threshold credit exposure limit that a covered initial margin threshold amount that has amount that a covered swap entity may swap entity establishes as an initial been established, collect initial margin establish varies based on the relative threshold amount for a counterparty (i) equal to the excess amount. risk of the counterparty, as determined For those counterparties that pose the by counterparty type (e.g., financial 53 Although the Agencies intend to specify greatest threat to systemic stability by particular amounts in the final rule, the proposed versus nonfinancial end user). With rule provides a potential range of numbers for virtue of their interconnectedness and respect to a counterparty that is a low- comment. Since tier 1 capital is not a concept that the size of their uncollateralized and risk financial end user, the proposed is applicable to covered swap entities for which potential outward exposures—namely, rule limits the maximum initial margin FHFA or the FCA is the prudential regulator, the other swap entities and high-risk thresholds as applied to such entities instead reference (i) in the case of covered swap entities for financial end users—the proposed rule 50 __ __ See proposed rule §§ .2(m), .3(a). A which FHFA is the prudential regulator, the term covered swap entity that has established an initial ‘‘total capital,’’ as separately defined within the 54 The Agencies also note that the categories of margin threshold amount for a counterparty need proposed regulatory text of FHFA’s proposed rule, counterparties for which the proposed rule permits only collect initial margin if the required amount and (ii) in the case of covered swap entities for a covered swap entity to establish an initial margin exceeds the initial margin threshold amount, and in which the FCA is the prudential regulator, the term threshold amount are roughly aligned with the such cases is only required to collect the excess ‘‘applicable core surplus or core capital (or Dodd-Frank Act exemption of non-financial end amount. successor high quality capital requirement),’’ as users from the Dodd-Frank Act mandatory clearing 51 See proposed rule § __.2(m)(1). separately defined within the proposed regulatory requirement. See 7 U.S.C. 2(h)(7); 15 U.S.C. 78c– 52 See proposed rule § __.2(m). text of the FCA’s proposed rule. 3(g).

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does not permit any exposure to remain cumulative amount is $100,000 or to any end user counterparty that is a uncollateralized; the threshold amount more.55 systemically significant financial is effectively zero. It is the preliminary institution under Title I of Dodd-Frank 4. Alternative Approach to Initial view of the Agencies that the potential Act, and (ii) requiring the covered swap Margin Requirements systemic risk from other swap entities entity to ensure that any such initial should lead to an amount of initial The Agencies also request comment margin posted is segregated at a third- margin being actually collected. Margin on several alternative approaches to party custodian. In particular, the should also be collected for all non- implementation of the initial margin Agencies request comment on the cleared swaps and non-cleared security- requirements. following questions: based swaps with high-risk financial First, the Agencies request comment Question 33. Would requiring a end users because, as previously on whether the proposed rule should be covered swap entity to post initial discussed, they are more likely to augmented by (i) imposing a separate, margin to systemically-significant end default during periods of financial stress additional requirement that a covered user counterparties reduce systemic risk and thus pose greater systemic risk and swap entity post initial margin to any (e.g., by reducing leverage in the risk to the safety and soundness of the counterparty that is an end user, financial system or reducing systemic covered swap entity. including both financial and vulnerability to the failure of a covered The Agencies request comment nonfinancial end users and (ii) requiring swap entity)? regarding whether it is appropriate to the covered swap entity to ensure that Question 34. Are there alternatives permit covered swap entities to any such initial margin posted is that address those risks more efficiently establish initial margin threshold segregated at a third-party custodian. In or with greater transparency? amounts for certain counterparties in particular, the Agencies request Question 35. Would requiring a the manner proposed. In particular, the comment on the following questions: covered swap entity to post initial Agencies request comment on the Question 28. Would requiring a margin to systemically-significant end following questions: covered swap entity to post initial user counterparties raise any concerns Question 23(a). Does the maximum margin to end user counterparties with respect to the safety and soundness initial margin threshold amount reduce systemic risk (e.g., by reducing of the covered swap entity, taking into proposed for counterparties that are leverage in the financial system or consideration the requirement that low-risk financial end users strike an reducing systemic vulnerability to the initial margin be segregated and held appropriate balance between traditional failure of a covered swap entity)? with a third party custodian? credit extension practices and the Question 29. Are there alternatives Question 36. Would requiring a potential for systemic risk or risk to the that address those risks more efficiently covered swap entity to post initial safety and soundness of a covered swap or with greater transparency? margin to systemically-significant end entity? 23(b) Should threshold amounts Question 30. Would requiring a user counterparties remove one or more for nonfinancial end users be subject to covered swap entity to post initial incentives for that covered swap entity a similar limit? 23(c) If so, at what margin to end user counterparties raise to choose, where possible, to structure maximum amount or amounts? 23(d) Do any concerns with respect to the safety a transaction so that it need not be the derivatives activities and exposures and soundness of the covered swap cleared through a CCP in order to avoid of nonfinancial end users have the entity, taking into consideration the pledging initial margin? potential to create systemic risk, either requirement that initial margin be Question 37. Would this approach be individually or in aggregate? segregated and held with a third party consistent with the statutory factors the Question 24. Is it appropriate for the custodian? Agencies are directed to take into threshold amounts to be capped at a Question 31. Would requiring a account under sections 731 and 764 of fixed dollar amount? covered swap entity to post initial the Dodd-Frank Act? Question 25. Should the rule also margin to end user counterparties Third, the Agencies request comment place a limit on the threshold amounts remove one or more incentives for that on whether the proposed rule should that a covered swap entity establishes covered swap entity to choose, where establish a distinct category of covered for all counterparties in the aggregate? possible, to structure a transaction so swap entities that, because of the Question 26(a). Is it appropriate for that it need not be cleared through a relatively small size of the derivatives the threshold amounts to be determined CCP in order to avoid pledging initial activities and the lesser risk they pose by reference to the tier 1 or other margin? to U.S. financial stability, would be measure of capital of a covered swap Question 32. Would this approach be subject to less stringent initial margin entity? 26(b) What other measures might consistent with the statutory factors the requirement. In particular, such an be used to determine appropriate Agencies are directed to take into approach would (i) permit such ‘‘low- threshold amounts? account under sections 731 and 764 of risk’’ covered swap entities to establish Question 27(a). Should the various the Dodd-Frank Act? larger initial or additional margin threshold amounts be subject to an Second, the Agencies request threshold amounts (e.g., for automatic adjustment for inflation on a comment on whether the proposed rule counterparties that are swap entities) periodic basis? 27(b) If so, what type of should be augmented by (i) imposing a and (ii) not require such ‘‘low-risk’’ adjustment would be appropriate? separate, additional requirement that a covered swap entities to comply with covered swap entity post initial margin the segregation requirements of § __.7 of 3. Minimum Transfer Amount the proposed rule. Such low-risk In addition, the proposed rule 55 See proposed rule § __.3(c). The minimum covered swap entities could be defined transfer amount only affects the timing of margin provides for a minimum transfer collection; it does not change the amount of margin by identifying a particular threshold amount for the collection of margin by that must be collected once the $100,000 threshold amount of derivatives activities below covered swap entities, under which a is crossed. For example, if the initial margin which one would be considered a low- covered swap entity need not collect requirement were to increase from $50,000 to risk covered swap entity. For example, $110,000, the covered swap entity would be initial margin from any individual required to collect the entire $110,000 (subject to under this approach, a low-risk covered counterparty otherwise required under application of any applicable initial margin swap entity might be defined as a the proposed rule until the required threshold amount). covered swap entity whose total

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positions in swaps and security-based entities and their counterparties would 2. Aggregate Calculation of Variation swaps are below the applicable remain free to negotiate the extent to Margin Requirements Under a thresholds established by the SEC and which a covered swap entity may be Qualifying Master Netting Agreement CFTC for determining whether a firm is required to post variation margin to a a major swap participant or major counterparty (other than a swap entity The proposed rule permits a covered security-based swap participant, that is itself subject to margin swap entity to calculate variation respectively. In particular, the Agencies requirements). margin requirements on an aggregate request comment on the following basis across all swap or security-based questions: The proposed rule generally requires swap transactions with a counterparty Question 38. Would establishing a a covered swap entity to collect that are executed under the same category of low-risk covered swap entity variation margin from its counterparties qualifying master netting agreement.60 57 and subjecting that category to less on a periodic basis. The amount of The proposed rule defines a qualifying stringent initial margin requirements variation margin that is required to be master netting agreement as a legally enhance or reduce systemic risk? periodically collected must be equal to enforceable agreement to offset positive Question 39. Would establishing a or greater than (i) the cumulative mark- and negative mark-to-market values of category of low-risk covered swap entity to-market change in value to the covered one or more swaps or security-based and subjecting that category to less swap entity of a swap or security-based swaps that meet a number of specific stringent initial margin requirements swap, as measured from the date it is raise any concerns with respect to the criteria designed to ensure that these entered into, less (ii) the value of all offset rights are fully enforceable, safety and soundness of such an entity? variation margin previously collected Question 40. If the Agencies adopted documented and monitored by the but not returned by the covered swap such an approach, how should a low- covered swap entity.61 The Agencies entity with respect to such swap or request comment regarding whether risk covered swap entity be defined? 58 Should the definition reference the security-based swap. permitting the aggregate calculation of thresholds established by the SEC and 1. Variation Margin Thresholds and variation margin requirements is CFTC for determining whether a firm is Minimum Transfer Amounts appropriate and, if so, whether the a major swap participant or major proposed rule’s definition of qualifying security-based swap participant, or Similar to the initial margin master netting agreement raises some variant of those thresholds? requirement under § __.3 of the practical or implementation difficulties Question 41. What less stringent proposed rule, § __.4 permits a covered or is inconsistent with current market initial margin requirements should swap entity to establish, for certain practices. apply to such low-risk covered swap counterparties that are end users, a entities? What, if any, segregation credit exposure limit that acts as a 3. Frequency of Variation Margin requirement should apply to such low- variation margin threshold below which Calculation and Collection risk covered swap entities? it need not collect variation margin.59 Question 42. Would such an approach The proposed rule also specifies the Although the variation margin threshold encourage covered swap entities to minimum frequency with which a is separate from, and may be applied separate their derivatives activities into covered swap entity must calculate and independently from, the initial margin multiple entities so as to avail collect initial margin. Consistent with themselves of the exemption? threshold with respect to qualifying the approach of the proposed rule Question 43. Would this approach be counterparties, the variation margin generally, the minimum frequency consistent with the statutory factors the threshold amount that a covered swap varies based on the systemic and safety Agencies are directed to take into entity may establish for counterparties and soundness risk of the counterparty account under sections 731 and 764 of that are low-risk financial end users is type. Covered swap entities must the Dodd-Frank Act? subject to the same specified maximum calculate and collect variation margin amount that governs initial margin D. Section __.4: Variation Margin from counterparties that are themselves threshold amounts for such swap entities or financial end users at Section __.4 of the proposed rules counterparties. As with initial margin least once per business day, and from specifies the manner in which a covered threshold amounts, a covered swap swap entity must calculate the variation counterparties that are nonfinancial end entity may not establish a variation users at least once per week. The margin requirement applicable to swaps margin threshold amount for and security-based swaps it enters into. Agencies request comment on whether counterparties that are swap entities or the proposed rule’s approach to the As with initial margin requirements, (i) high-risk financial end users. these variation margin requirements frequency with which the variation apply only to collection of variation In addition, the proposed rule’s margin requirements must be met is margin by covered swap entities from variation margin requirements contain consistent with current market their counterparties, and not to the provisions similar to those governing practices, and whether alternative posting of variation margin to their initial margin with respect to minimum approaches to imposing variation counterparties,56 and (ii) establish only transfer amounts. margin requirements would better a minimum amount of variation margin reflect the purposes of section 731 and that must be collected, leaving covered 57 See proposed rule § __.4(a). 764 of the Dodd-Frank Act. swap entities free to collect larger 58 The proposed rule defines this required amount as the ‘‘variation margin amount.’’ See amounts if they so choose. Consistent 60 __ proposed rule § __.2(bb). In the case of swap or See proposed rule § .4(d). with current practice, covered swap security-based swap that is out-of-the-money or in- 61 See proposed rule § __.2(t). The proposed rule’s the-money to a covered swap entity at the time it definition of qualifying master netting agreement 56 As described in section III.K of this notice, enters into the transaction, that amount is also generally mirrors the definition given to that term FHFA’s and the FCA’s proposed rules contain an included within the definition of variation margin in the Federal banking agencies’ risk-based capital additional provision that will have a different effect amount and subject to the variation margin rules applicable to derivatives positions held by with respect to entities regulated by FHFA and the requirements. insured depository institutions and bank holding FCA. 59 See proposed rule §§ __.2(bb), __.4(a). companies. See, e.g., 12 CFR part 225, App. G.I.2.

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4. Counterparty Refusal to Provide Question 45. Are there alternatives small size of the derivatives activities Required Variation Margin that address those risks more efficiently and the lesser risk they pose to U.S. or with greater regulatory transparency? Section __.4(e) of the proposed rule financial stability, would be subject to Question 46. Would requiring a addresses potential circumstances in less stringent variation margin covered swap entity to post variation which a counterparty may refuse to requirement. In particular, such an margin to end user counterparties raise ‘‘ ’’ provide required variation margin to a approach would permit such low- risk any concerns with respect to the safety covered swap entity. Specifically, it covered swap entities to establish larger and soundness of the covered swap provides that a covered swap entity variation margin threshold amounts. entity? Such low-risk covered swap entities shall not be deemed to have violated its Question 47. Would requiring a regulatory obligation to collect required could be defined as described in section covered swap entity to post variation III.C.4 of this notice. In particular, the variation margin from a counterparty if margin to end user counterparties the counterparty has refused or Agencies request comment on the remove one or more incentives for that following questions: otherwise failed to provide the required covered swap entity to choose, where variation margin to the covered swap possible, to structure a transaction so Question 54. Would establishing a entity and the covered swap entity has that it need not be cleared through a category of low-risk covered swap entity either (i) made the necessary efforts to CCP in order to avoid pledging variation and subjecting such an entity to less attempt to collect the required variation margin? stringent variation margin requirements margin, including the timely initiation Question 48. Would this approach be enhance or reduce systemic risk? and continued pursuit of formal dispute consistent with the statutory factors the Question 55. Would establishing a resolution mechanisms, or has Agencies are directed to take into category of low-risk covered swap entity otherwise demonstrated upon request to account under sections 731 and 764 of and subjecting such an entity to less the satisfaction of the relevant Agency the Dodd-Frank Act? stringent variation margin requirements that it has made appropriate efforts to Second, the Agencies request raise any concerns with respect to the collect the required variation margin, or comment on whether the proposed rule safety and soundness of such an entity? (ii) commenced termination of the swap should be augmented by imposing a Question 56. If the Agencies adopted or security-based based swap with the separate, additional requirement that a 62 such an approach, how should a low- counterparty. The Agencies note that, covered swap entity post variation risk covered swap entity be defined? in each such case, the covered swap margin to any end user counterparty What less stringent variation margin entity will have been required, under that is a systemically significant __ requirements should apply to such low § .5 of the proposed rule, to obtain the financial institution under Title I of risk covered swap entities? contractual right to collect such Dodd-Frank Act. In particular, the variation margin as is necessary to Agencies request comment on the Question 57. Would such an approach permit it to comply with the following questions: encourage covered swap entities to requirements of § __.4 of the proposed Question 49. Would requiring a separate their derivatives activities into rule and set out valuation dispute covered swap entity to post variation multiple entities so as to avail resolution procedures. margin to systemically-significant end themselves of the exemption? 5. Alternative Approach to Variation user counterparties reduce systemic risk Question 58. Would this approach be Margin Requirements (e.g., by reducing leverage in the consistent with the statutory factors the financial system or reducing systemic Agencies are directed to take into The Agencies also request comment vulnerability to the failure of a covered account under sections 731 and 764 of on several alternative approaches to swap entity)? the Dodd-Frank Act? implementation of the variation margin Question 50. Are there alternatives requirements. that address those risks more efficiently E. Section __.5: Documentation of First, the Agencies request comment or with greater regulatory transparency? Margin Matters on whether the proposed rule should be Question 51. Would requiring a augmented by imposing a separate, covered swap entity to post variation The proposed rule requires a covered additional requirement that a covered margin to systemically-significant end swap entity to execute trading swap entity post variation margin to any user counterparties raise any concerns documentation with each counterparty counterparty that is an end user, with respect to the safety and soundness that includes credit support including both financial and of the covered swap entity? arrangements that grant the covered nonfinancial end users. In particular, Question 52. Would requiring a swap entity the contractual right to the Agencies request comment on the covered swap entity to post variation collect initial margin and variation following questions: margin to systemically-significant end margin in such amounts, in such form, Question 44. Would requiring a user counterparties remove one or more and such circumstances as are required covered swap entity to post variation incentives for that covered swap entity by the initial margin and variation to choose, where possible, to structure margin requirements set forth in the margin to end user counterparties 63 reduce systemic risk (e.g., by reducing a transaction so that it need not be proposed rule. The trading leverage in the financial system or cleared through a CCP in order to avoid documentation must also specify (i) the reducing systemic vulnerability to the pledging variation margin? methods, procedures, rules, and inputs failure of a covered swap entity)? Question 53. Would this approach be for determining the value of each swap consistent with the statutory factors the or security-based swap for purposes of calculating variation margin 62 See proposed rule § __.4(e). The Agencies note Agencies are directed to take into that there is no similar reference to appropriate account under sections 731 and 764 of requirements and (ii) the procedures by efforts in the proposed rule initial margin the Dodd-Frank Act? which any disputes concerning the requirements; since initial margin is collected at the Third, the Agencies request comment valuation of swaps or security-based time a swap or security-based swap is entered into, swaps, or the valuation of assets a covered swap entity can and must collect any on whether the proposed rule should required initial margin as prerequisite to executing establish a distinct category of swap the transaction. entities that, because of the relatively 63 See proposed rule § __.5.

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collected or posted as initial margin or collateral that is an obligation of the Question 61. What criteria and factors variation margin, may be resolved.64 counterparty pledging such collateral.68 could be used to determine the set of The proposed rule does not allow for __ acceptable non-cash collateral? F. Section .6: Eligible Collateral the use of non-cash collateral, other Question 62. How could appropriate The proposed rule specifies the types than the limited types of highly-liquid, haircuts be determined for valuing these high-quality debt securities described assets for margin purposes? of collateral that are eligible to be above, to satisfy the margin Question 63(a). Should the types of collected to satisfy either the initial requirements. The appropriateness of eligible collateral listed be broadened to margin or variation margin using non-cash collateral to fulfill include foreign sovereign debt requirements. Under the proposed rule, margin requirements is complicated by securities? 63(b) If so, which foreign eligible collateral is limited to: (i) procyclical considerations. During a sovereign debt securities (e.g., those Immediately available cash funds period of financial stress, the value of accepted by a derivatives clearing (denominated in either U.S. dollars or in non-cash collateral pledged as margin organization as initial margin for a the currency in which payment may also come under stress just as cleared swap)? 63(c) If so, what haircut, obligations under the swap are required counterparties default and the non-cash if any, should apply? to be settled); (ii) any obligation which collateral is required to offset the cost of Question 64(a). Should fixed income is a direct obligation of, or fully replacing defaulted swap positions. In securities issued by a well-known guaranteed as to principal and interest addition, given the infinite variety of seasoned issuer that has a high credit by, the United States; (iii) with respect potential types of noncash collateral, it standing, are unsubordinated, to initial margin only, any senior debt is extremely difficult to establish historically display low volatility, are obligations of the Federal National accurate haircuts by regulation. Also, for traded in highly liquid markets, and Mortgage Association, the Federal Home nonfinancial end users, who are the have valuations that are readily Loan Mortgage Corporation, the Federal most likely type of counterparty to wish calculated be added to the list of eligible Home Loan Banks and Farmer Mac; and to post noncash collateral, the proposed collateral for initial margin? 64(b) If so, (iv) with respect to initial margin only, rules provide credit exposure how should the concept of a ‘‘high credit any obligation that is an ‘‘insured thresholds, under which a covered swap standing’’ be defined in a way that does obligation,’’ as that term is defined in 12 entity may determine the extent to not reference credit ratings? U.S.C. 2277a(3), of the Farm Credit which available noncash collateral G. Section __.7: Segregation of Collateral System banks.65 Other than appropriately reduces the covered swap immediately-available cash funds, all entity’s credit risk, consistent with its The proposed rule provides that each types of eligible collateral are subject to credit underwriting expertise. Similarly, covered swap entity must require each discounts or minimum ‘‘haircuts’’ for counterparties that wish to rely on other derivative’s counterparty that it faces purposes of determining their value for non-cash assets to meet margin that is a swap entity to segregate any margin purposes, which haircuts are requirements could pledge those assets funds or collateral that the covered identified in Appendix B of the with a bank or group of banks in a swap entity has posted as initial margin proposed rule.66 Because the value of separate arrangement, such as a secured for a non-cleared swap or non-cleared financing facility, and could draw cash security-based swap transaction at an noncash collateral may vary, the 69 proposed rule requires covered swap from that arrangement to meet margin independent, third-party custodian. entities to monitor the value of noncash requirements. This independent, third-party custodian must be prohibited by contract from (i) collateral previously collected to satisfy The Agencies request comment on rehypothecating or otherwise initial or variation margin requirements whether the proposed rule’s list of transferring any initial margin it holds and, to the extent the value of such eligible noncash collateral for initial for the covered swap entity and (ii) noncash collateral has decreased, to margin and variation margin is appropriate in scope. In particular, the reinvesting any initial margin held by collect additional collateral with a the custodian in any asset that would sufficient value to ensure that all Agencies request comment on the following questions: not qualify as eligible collateral for applicable initial and variation margin initial margin under the proposed requirements remain satisfied.67 The Question 59(a). Should the types of eligible collateral listed be broadened to rule.70 The custodian must also be proposed rule also prohibits a covered include other types of assets (e.g. located in a jurisdiction that applies the swap entity from collecting, as required securities backed by high-quality same insolvency regime to the custodian initial margin or variation margin, mortgages or issued with a third-party as would apply to the covered swap guarantee)? 59(b) If so, how might the entity.71 This segregation requirement 64 See id. systemic risk issue described above be applies only to initial margin, not 65 See proposed rule § _6(a). An obligation will be variation margin, and does not apply to considered to be fully guaranteed as to principal effectively mitigated? and interest by the United States if the guarantee Question 60(a). Should the types of transactions with a counterparty that is commits the full faith and credit of the United eligible collateral listed be broadened to an end user of any type.72 States for the repayment of principal and interest include immediately-available cash on the obligation. ‘‘Insured obligations’’ of Farm funds denominated in foreign currency, 69 See proposed rule § _7(a). Credit System banks are consolidated and System- 70 _ even where such currency is not the See proposed rule §§ 7(b), (c). wide obligations issued by Farm Credit System 71 See proposed rule § _7(d). banks. These obligations are insured by the Farm currency in which payment obligations 72 The proposed rule does not apply the Credit System Insurance Corporation out of funds under the swap are required to be segregation requirement to variation margin because in the Farm Credit Insurance Fund. Should the variation margin is generally used to offset the Farm Credit Insurance Fund ever be exhausted, settled? 60(b) If so, which currencies (e.g., those accepted by a derivatives current exposure arising from actual changes in the Farm Credit System banks are jointly and severally market value of the derivative position, rather than liable for payment on insured obligations. clearing organization as initial margin to secure potential exposure arising from future 66 _ See proposed rule § 6(b). With respect to these for a cleared swap)? 60(c) If so, what changes in the market value of the derivative haircuts, although the Agencies intend to specify haircut, if any, should apply to such position. Under section __.11 of FHFA’s and the particular haircut amounts in the final rule, the FCA’s proposed rules, entities regulated by FHFA proposed rule provides a potential range of haircuts foreign currency? and the FCA that are end users would have to for comment. require that any initial margin and variation margin 67 See proposed rule § _6(d). 68 See proposed rule § _6(c). they post to swap entities be segregated.

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The Agencies’ preliminary view is swaps. However, the segregation of liquidity and costs of swaps market that requiring covered swap entities to initial margin is likely to significantly participants be mitigated? ensure segregation of initial margin is reduce the availability of liquid assets to Question 67. Is segregation of initial necessary to (i) offset the greater risk to covered swap entities to meet payment margin and not variation margin the covered swap entity and the obligations, as liquid assets held or sufficient to achieve the purposes of financial system arising from the use of pledged as the initial margin would be sections 731 and 764 of the Dodd-Frank swaps and security-based swaps that are unavailable to the swap entity for other Act? If not, how might such purposes be not cleared and (ii) protect the safety purposes. The requirement to segregate achieved? and soundness of the covered swap initial margin could result in covered Question 68(a). Are the limitations entity. In developing this proposal, the swap entities having to seek alternative placed on rehypothecation and Agencies have taken into account the methods of funding. The loss in reinvestment under the proposed rule fact that the failure of a covered swap liquidity could be severe, and could appropriate or necessary? 68(b) What entity could pose significant systemic require covered swap entities to raise additional or alternative limitations may risks to the financial system and losses liquidity through other sources. be appropriate? 68(c) Should certain forms of rehypothecation (e.g., the borne by the financial system in such a The Agencies are concerned that not lending of securities pledged as failure could have significant requiring segregation at the outset may consequences. The consequences could collateral) or additional types of cause covered swap entities that incur a reinvestment be permitted? be magnified if the initial margin posted severe loss due to credit or market to the failing swap entity cannot be Question 69(a). Is the proposed rule’s events to face liquidity challenges requirement that the custodian must be quickly recovered by the nondefaulting because their counterparties may party during a period of financial stress located in a jurisdiction that applies the require segregation immediately after same insolvency regime to the custodian when the liquidity value of the funds is the loss, depleting the covered swap high. Moreover, swap entities typically as would apply to the covered swap entity’s liquid assets before it can raise have roughly offsetting exposures with entity necessary or appropriate? 69(b) additional funds through other means.74 one another. As a result, it is to be What additional or alternative Requiring swap entities to segregate at expected that the amount of initial requirements regarding the location of the outset addresses this concern at the margin required to be posted by two the custodian may be appropriate? time a swap entity suffers a loss, but swap entities will be similar. If swap __ depletes the liquid assets at the H. Section .8: Approved Initial Margin entities exchange similar amounts of inception of the swap transaction—a Models initial margin and these funds are time when the swap entity is more __ available for general use and Section .8 of the proposed rule likely to be able to raise additional rehypothecation by the swap entities, contains modeling standards that an then the net effect is as if little initial liquid funds. The Agencies request initial margin model must meet in order margin was exchanged. To the extent comment on whether the proposed for a covered swap entity to calculate that initial margin requirements are segregation requirement is appropriate, initial margin under such a model. intended to constrain risk-taking, a lack or whether an alternative approach Generally, the modeling standards are of segregation will weaken their effect.73 would better reflect the purposes of consistent with current regulatory rules Swap entities that engage in cleared sections 731 and 764 of the Dodd-Frank and best practices for such models in swap transactions will be required to Act. In particular, the Agencies request the context of risk-based capital rules post initial margin to the CCP. comment on the following questions: applicable to insured depository Consequently, the initial margin that is Question 65(a). Is it necessary to institutions and bank holding posted on cleared transactions will not require segregation of initial margin in companies, and are no less conservative be available for rehypothecation by order to address the systemic risk issues than those generally used by derivatives swap entities. Allowing for discussed above? 65(b) What clearing organizations and clearing rehypothecation of initial margin by alternatives to segregation would agencies.75 As a result, the Agencies swap entities would create an incentive effectively address these systemic risk preliminarily believe that these for swap entities to engage in non- issues? 65(c) As an alternative to modeling standards should ensure that cleared transactions even though other requiring segregation at the outset, a non-cleared swap does not pose a provisions of Dodd-Frank Act are should the Agencies impose rules that greater systemic risk than a cleared intended to promote central clearing of provide additional time for a swap swap. In particular, because non-cleared dealer to raise funds without requiring swaps are expected to be less liquid 73 For example, if dealer A and dealer B entered segregation? than cleared swaps, the proposed rule into a swap with each other under which each was specifies a minimum time horizon for Question 66(a). What are the potential required to collect $100 from the other in initial the initial margin model of 10 business operational, liquidity and credit costs of margin without segregation, each would collect days, compared with a typical $100 in initial margin from the other and no net requiring segregation of initial margin requirement of 3 to 5 business days used initial margin would be exchanged. In the case of by swap entities? 66(b) What would be a bankruptcy of dealer B, dealer A would be by derivatives CCPs.76 the expected liquidity impact and cost permitted to set off the $100 loss that may be The proposed rule permits a covered of the proposed segregation requirement incurred in replacing the swap against the $100 in swap entity to use an internal initial initial margin it ‘‘collected’’ from dealer B, but then on market participants? How can the margin model that reflects offsetting would face the potential loss of the $100 in initial impact of the proposed rule on the margin it provided to dealer B, for which it would exposures, diversification, and other only have a claim in bankruptcy. If instead the hedging benefits within four broad risk initial margin for such a swap had been segregated, 74 Although the agreements between the categories (commodity, credit, equity, dealer A would be permitted to set off the $100 loss counterparties might not allow for requests for that may be incurred in replacing the swap against segregation after a swap transaction has been the $100 in initial margin that dealer B pledged to confirmed, as a practical matter counterparties 75 This conservative approach also incorporates dealer A at a third-party custodian, and dealer A might refuse to enter into any additional the practices associated with model validation, could also recover the $100 in initial margin that transactions with a financially-stressed swaps entity independent review and other qualitative it pledged to dealer B at a third-party custodian, absent an accommodation to segregate some amount requirements associated with the use of internal with the result that dealer A would incur no loss of initial margin for the existing portfolio of swaps models for regulatory capital purposes. upon dealer B’s bankruptcy. between the two parties. 76 See proposed rule § __.8(d)(1).

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foreign exchange/interest rates) when response to a large increase in volatility require for similar transactions.80 This calculating initial margin for a during a period of financial stress. benchmarking requirement is intended particular counterparty if the relevant The Agencies request comment on to insure that any initial margin amount swaps or security-based swaps are whether the proposed requirement that produced by an initial margin model is executed under the same qualifying an initial margin model take into subject to a readily observable master netting agreement.77 The account financial stress is appropriate minimum. It will also have the effect of proposed rule does not permit an initial given the purpose the initial margin limiting the extent to which the use of margin model to reflect offsetting model is intended to serve. In initial margin models might exposures, diversification, or other particular, the Agencies request disadvantage the movement of certain hedging benefits across broad risk comment on the following questions: types of derivatives to CCPs by setting categories.78 It is the preliminary view Question 73. Can initial margin lower initial margin amounts for non- of the Agencies that the correlations of models be robustly calibrated to a stress cleared transactions than for similar exposures across broad risk categories period in a transparent and consistent cleared transactions. are not stable enough to be incorporated manner? The Agencies request comment on the into a regulatory margin requirement. Question 74. Are there any other proposed requirement for covered swap The Agencies request comment on systemic risk implications of requiring entities to benchmark any initial margin whether the standards for initial margin that initial margin be calibrated to a model to a model used by a derivatives models specified in the proposed rule period of financial stress rather than to clearing organization or clearing agency are sufficient to ensure the integrity of a recent or normal historical period? model for calculating initial margin, as initial margin calculations using such a Question 75. Is the proposed well as the following questions: model. In particular, the Agencies prudential standard for initial margin of Question 80. What are the operational request comment on the following a 99th percentile price move over a 10- costs associated with the benchmarking questions: day horizon, calibrated using historical exercise? Question 81. Can portfolio effects be Question 70(a). Should such models data incorporating a period of captured during the benchmarking be limited to models based on value-at- significant financial stress, appropriate? risk concepts, or are other models exercise? Question 76. Is a 10-day horizon Question 82. How would a banking appropriate to measure initial margin? sufficient to cover the likely liquidation 70(b) If so, how should those models organization fulfill the requirement in period on non-cleared swaps? the event that a derivatives clearing apply and be incorporated into the Question 76. Will the requirement to various aspects of the proposed rule? organization or clearing agency does not calibrate to a period of significant clear a similar derivative transaction? Question 71(a). Should offsetting financial stress reduce the potential exposures, diversification, and other procyclicality of the margin requirement I. Section __.9: Application of Margin hedging benefits be recognized more sufficiently? For example, would a Requirements to Certain Foreign broadly across substantially dissimilar minimum margin requirement as a Covered Swap Entities asset classes? 71(b) If so, what limits, if backstop to the modeled initial margin Section __.9 of the proposed rule any, would be placed on the recognition amounts be a prudent approach to addresses the manner in which the of offsetting exposures, diversification, addressing procyclicality concerns? proposed rule’s margin requirements and other hedging benefits, and how Question 77. Is ‘‘period of significant apply to certain foreign covered swap could these be measured, monitored and financial stress’’ a well-understood entities. In the absence of § __.9, the validated on an ongoing and consistent concept? How might it be clarified? proposed rule’s margin requirements basis across substantially dissimilar Question 78. What would be the would apply to all of a covered swap asset classes? benefits and costs of replacing the entity’s non-cleared swap and non- Question 72(a). Should the minimum requirement to calibrate the initial cleared security-based swap time horizon vary across swaps? 72(b) margin model using a period of transactions, without regard to whether For example, should it vary based on significant financial stress with a (i) the covered swap entity is organized the broad asset classes: commodity, requirement to calibrate the initial under U.S. or foreign law or (ii) the credit, equity, and foreign exchange/ margin model using a longer historical covered swap entity’s counterparty is interest rate? 72(c) If so, how should the data sample (such as 10 years), as an located inside or outside of the United horizons differ and what would be the alternative way to reduce the potential States. However, the potential basis for the different horizons? procyclicality of the margin application of the margin rules to 1. Stress Calibration requirement? foreign covered swap entities, or to In addition to a time horizon of 10 Question 79. Should market transactions by U.S. covered swap trading days, the proposed rule requires participants be able to comply with the entities with foreign counterparties, the initial margin model to be calibrated requirement to calibrate the initial raises several important questions. First, the potential application of the to a period of financial stress.79 margin requirement to a historical proposed rule to activities conducted by Calibration to a stress period ensures period of significant financial stress for a foreign covered swap entity wholly that the resulting initial margin newer products with little, if any, outside of the United States raises requirement is robust to a period of market history? If so, how? questions regarding the permissible financial stress during which swap 2. Benchmarking territorial scope of the proposed rule.81 entities and financial counterparties are The proposed rule requires that an more likely to default. Such calibration initial margin model used for 80 See proposed rule § __.8(d)(14). also reduces the systemic risk associated 81 calculating initial margin requirements Section 2(i) of the Commodity Exchange Act, as with any increase in margin be benchmarked periodically against amended by section 722 of the Dodd-Frank Act, requirements that might occur in provides that the provisions of the Commodity observable margin standards to ensure Exchange Act relating to swaps ‘‘shall not apply to activities outside of the United States unless those 77 See proposed rule § __.8(b). that the initial margin required is not less than what a derivatives clearing activities * * * have a direct and significant 78 Id. connection with activities in, or effect on, 79 See proposed rule § __.8(d)(11). organization or a clearing agency would commerce of the United States.’’

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Second, to the extent that the proposed counterparty that is a company treat that foreign subsidiary in the same margin requirements apply to organized under the laws of the United manner as a U.S. covered swap entity transactions involving foreign covered States or any State, a branch of a for purposes of the margin requirements swap entities or foreign counterparties, company organized under the laws of because the U.S. parent company’s such application could subject these the United States or any State, or a ownership of the subsidiary is likely to transactions to multiple, and potentially person resident in the United States.83 expose the U.S parent company, as a conflicting, margin requirements As a result, foreign swaps and security- result of legal, contractual or established by U.S. and foreign based swaps would generally only reputational factors, to the risks of the regulators. Third, the potentially include transactions where the foreign subsidiary’s derivatives different treatment of U.S. covered swap counterparty is not organized under activities. Transactions of a foreign entities and foreign covered swap U.S. law or otherwise located in the subsidiary of a U.S. company would entities raises questions of competitive United States, and no U.S. affiliate of also have direct and significant equality among the two types of firms. the counterparty has guaranteed the connection with activities in, and effect With respect to U.S. covered swap counterparty’s obligations under the on, commerce of the United States. entities, the Agencies propose to apply transaction.84 Similarly, neither a U.S. branch of a the margin requirements to U.S. covered The additional requirement that no foreign bank nor a U.S. subsidiary of a swap entities’ swap and security-based U.S. affiliate guarantee the foreign company would be a foreign swap transactions without regard to counterparty’s obligation is intended to covered swap entity under the proposed whether the counterparty is located exclude instances where such an rule. inside or outside the United States. This affiliate has, through a guarantee, The Agencies request comment on the approach acknowledges that the foreign effectively assumed ultimate proposed rule’s application to the U.S. swap and security-based swap responsibility for the performance of the and foreign swap and security-based transactions of a U.S. covered swap counterparty’s obligations under the swap activities of U.S. covered swap entity pose no lesser risk to the covered transaction. In particular, the Agencies entities and foreign swap entities, swap entity’s safety and soundness and are concerned that without such a respectively. In particular, the Agencies to financial stability based on the requirement, swaps and security-based request comment on the following location of the counterparty. The swaps with a U.S. counterparty could be questions: proposed rule applies that same structured, through the use of an Question 83. Does the proposed rule’s approach to covered swap entities that overseas affiliate, in a manner that treatment of the swap and security- are foreign subsidiaries and offices of would evade application of the based swap transactions of foreign U.S. firms. proposed margin requirements to U.S. covered swap entities appropriately With respect to foreign covered swap transactions. Transactions guaranteed limit application of the margin entities, the Agencies propose to by a U.S. affiliate would also have direct requirements in a manner consistent exclude certain qualifying foreign and significant connection with with the territorial scope of sections 731 derivative transactions of such entities activities in, and effect on, commerce of and 764 of the Dodd-Frank Act? from application of the proposed rule’s the United States. Question 84(a). Is the proposed rule’s margin requirements. Specifically, § __.9 The proposed rule defines a ‘‘foreign treatment of the foreign swap and of the proposed rule provides that the covered swap entity’’ as a covered swap security-based swap transactions of U.S. proposed rule’s margin requirements entity that: (i) Is not a company covered swap entities appropriate? 84(b) would not apply to any ‘‘foreign non- organized under the laws of the United Should such transactions be subject to cleared swap or foreign non-cleared States or any State; (ii) is not a branch the same exclusion that has been security-based swap’’ of a ‘‘foreign or office of a company organized under proposed for the foreign swap and covered swap entity,’’ as those terms are the laws of the United States or any security-based swap transactions of defined in § __.9 of the proposed rule.82 State; (iii) is not a U.S. branch, agency foreign covered swap entities? 84(c) If This proposed approach limits the or subsidiary of a foreign bank; and (iv) so, why? extra-territorial application of the is not controlled, directly or indirectly, Question 85(a). Should the proposed margin requirements while preserving, by a company that is organized under rule expand the definition of foreign to the extent possible, competitive the laws of the United States or any covered swap entity to include (i) the equality among U.S. and foreign firms in State.85 Accordingly, only a covered foreign subsidiaries of U.S. companies the United States. swap entity that is organized under or (ii) the foreign branches of U.S. For these purposes, the proposed rule foreign law and not controlled, directly insured depository institutions? 85(b) If defines a ‘‘foreign non-cleared swap or or indirectly, by a U.S. company would so, why? 85(c) How could the potential foreign non-cleared security-based be eligible for treatment as a foreign risks to the U.S. parent company or swap’’ as a non-cleared swap or non- covered swap entity for these purposes; insured depository institution related to cleared security-based swap with neither a foreign branch of a U.S. its subsidiary or branch’s activity be respect to which: (i) The counterparty to insured depository institution nor a limited or eliminated? 85(d) Is this the foreign covered swap entity is not a foreign subsidiary of a U.S. company operationally feasible? company organized under the laws of would be considered a foreign covered Question 86. What impact is the the United States or any State, not a swap entity under the proposed rule. In proposed rule’s treatment of the foreign branch or office of a company organized cases where a U.S. company has a swap and security-based swap under the laws of the United States or foreign subsidiary that is a covered transactions of U.S. covered swap any State, and not a person resident in swap entity, the proposed rule would entities likely to have on the structure, the United States; and (ii) performance management, and/or competitiveness of of the counterparty’s obligations to the 83 See proposed rule § __.9(b). U.S. covered swap entities? foreign covered swap entity under the 84 Under the proposed rule, swap and security- Question 87(a). Is the proposed rule’s swap or security-based swap has not based swaps with U.S. counterparties are subject to definition of a foreign swap or security- the proposed rule’s margin requirements regardless been guaranteed by an affiliate of the of whether the covered swap entity is U.S. or based swap transaction appropriate? foreign. 87(b) In particular, is the requirement 82 See proposed rule § __.9(a). 85 See proposed rule § __.9(c). that no U.S. affiliate guarantee the

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foreign counterparty’s obligations under • In the case of any ‘‘regulated entity’’ Agencies preliminarily believe that the swap or security-based swap under the Federal Housing Enterprises these capital rules sufficiently take into transaction appropriate? 87(c) Would an Financial Safety and Soundness Act of account and address the risks associated alternative definition more 1992 (i.e., Fannie Mae and its affiliates, with the derivatives positions that a appropriately differentiate between U.S. Freddie Mac and its affiliates, and the covered swap entity holds and the other and foreign counterparties for these Federal Home Loan Banks), the risk- activities conducted by a covered swap purposes? 87(d) If so, what should that based capital level or such other amount entity.88 definition be? applicable to the covered swap entity as The Agencies request comment Question 88(a). Is the proposed rule’s required by the Director of FHFA regarding whether application of these definition of a foreign covered swap pursuant to 12 U.S.C. 4611; capital regimes is appropriate. entity appropriate? 88(b) Would an • In the case of Farmer Mac, the Question 91. Is an alternative or alternative definition more capital adequacy regulations set forth in additional capital requirement appropriately differentiate between U.S. 12 CFR part 652; and appropriate for some or all of the and foreign counterparties for these • In the case of any Farm Credit covered swap entities subject to the purposes? 88(c) If so, what should that System institution (other than Farmer proposed rule? definition be? Mac), the capital regulations set forth in Question 92. Are there particular Question 89(a). Is the proposed rule’s 12 CFR part 615.86 issues or concerns raised in the context application of the margin requirements The Agencies have preliminarily of foreign banks or their U.S. branches to all U.S. swaps and security-based determined that compliance with these and agencies that would be better swaps of a covered swap entity, regulatory capital requirements is addressed through a different approach regardless of whether that covered swap sufficient to offset the greater risk to the to the capital requirement for such entity is U.S. or foreign, appropriate? swap entity and the financial system entities? 89(b) Should the proposed rule treat arising from the use of non-cleared K. Section __.11: Special Requirements such transactions differently? 89(c) If so, swaps, helps ensure the safety and for Transactions Between Swap Entities how? soundness of the covered swap entity, and Regulated Entities Question 90. What impact is the and is appropriate for the greater risk proposed rule’s treatment of the swap associated with the non-cleared swaps FHFA and FCA (but not the other and security-based swap transactions of and non-cleared security-based swaps Agencies) are proposing an additional provision, § __.11 of FHFA’s and FCA’s foreign covered swap entities likely to held as a covered swap entity. In proposed rules. Proposed § __.11 would have on the structure, management, particular, the Agencies note that the require that any entity that is regulated and/or competitiveness of foreign capital rules incorporated by reference by FHFA or FCA, but is not itself a covered swap entities? into the proposed rule already address, covered swap entity, collect initial in a risk-sensitive and comprehensive J. Section __.10: Capital margin and variation margin from its manner, the safety and soundness risks counterparty when entering into a non- The proposed rule generally requires posed by a covered swap entity’s cleared swap or non-cleared security- a covered swap entity to comply with derivatives positions.87 In addition, the regulatory capital rules already made based swap with a swap entity.89 Regulated entities subject to this applicable to that covered swap entity 86 See proposed rule § __.10. as part of its prudential regulatory 87 For example, under the banking agencies’ provision include the Federal Home regime, as follows: capital adequacy standards for banks and bank Loan Banks, Fannie Mae and its • In the case of insured depository holding companies based on the first Basel Accord, affiliates, Freddie Mac and its affiliates, interest-rate, exchange-rate, commodity, and equity- and all Farm Credit System institutions institutions, the capital adequacy linked derivative contracts that are not traded on an guidelines that are applicable to the exchange are subject to a capital charge based on including Farmer Mac (collectively, covered entity and have been adopted type of contract, remaining maturity, and the risk regulated entities, and each a regulated by the appropriate Federal banking category of the counterparty to the contract. See 12 entity). Regulated entities that are swap agency under section 38 of the Federal CFR part 3, Appendix A § 3(b)(7) (OCC); 12 CFR entities would be subject to §§ 1 through parts 208 and 225, Appendix A § III.E (Board); 12 9 of the proposed rule by virtue of being Deposit Insurance Act (12 U.S.C. CFR part 325, Appendix A § II.E (FDIC). As another 1831o); example, under the bank agencies’ advanced risk- covered swap entities. This section also • In the case of a bank holding based capital adequacy standards based on the does not apply to swaps entered into company or savings and loan holding advanced approaches of the Basel II Accord between regulated entities and end (‘‘advanced approaches’’), banks and bank holding company (on or after the transfer users. companies that use the advanced approaches __ established under Section 311 of the determine capital requirements for over-the-counter Proposed § .11 is consistent with Dodd-Frank Act), the capital adequacy derivatives based on a formula that takes into the risk-based approach to margin guidelines applicable to bank holding account collateral in mitigating counterparty credit risk. See 12 CFR part 3, Appendix C, part IV (OCC); revise the model to more specifically address companies under the Board’s Regulation 12 CFR part 208, Appendix F, part IV and 12 CFR derivatives transactions. Y (12 CFR part 225); part 225, Appendix G, part IV (Board); and 12 CFR 88 See footnote 33, supra, for a discussion of the • In the case of a foreign bank or the part 325, Appendix D, part IV (FDIC). The FCA’s basis for FHFA’s preliminary view that the U.S. branch or agency of a foreign bank, capital requirements for FCS institutions other than reference to existing statutory authority is sufficient the capital rules that are made Farmer Mac expressly address derivatives to address the risks discussed in the text above as transactions. See 12 CFR 615.5201 and 615.5212. to the Enterprises notwithstanding their current applicable to such covered entity The FCA’s capital requirements for Farmer Mac conservatorship status. pursuant to § 225.2(r)(3) of the Board’s indirectly address derivatives transactions in the 89 See FCA and FHFA proposed rule § __.11. FCA Regulation Y (12 CFR 225.2(r)(3); operational risk component of the statutorily and FHFA note that in sections III.C and III.D of this • In the case of an Edge corporation mandated risk-based capital stress test model. See notice of proposed rulemaking, the Agencies have 12 CFR part 652 Subpart B Appendix A. The FCA, requested comment on alternative approaches to or an Agreement corporation, the capital through the Office of Secondary Market Oversight, margin requirements, including whether covered adequacy guidelines that are made closely monitors and supervises all aspects of swap entities should be required to post margin to applicable to an Edge corporation Farmer Mac’s derivatives activities, and the FCA end users. In the event such an alternative approach engaged in banking pursuant to believes existing requirements and supervision are is adopted as part of a final rule, as to both initial sufficient to ensure safe and sound operations in and variation margin requirements, FCA and FHFA § 211.12(c)(2) of the Board’s Regulation this area. However, the FCA is considering note that this proposed § __.11 may not need to be K (12 CFR 211.12(c)(2); enhancements to the model and in the future may adopted as part of that final rule.

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proposed by the Agencies and parallels transaction. Any initial margin model is posted to a swap entity that the requirements that swap entities used to determine margin posted to a subsequently fails. collect initial and variation margin from regulated entity must meet all of the IV. Quantitative Impact of Margin their counterparties. Moreover, this requirements of § __.8 of the proposed Requirements approach recognizes that a default by a rule. FHFA and FCA preliminarily swap counterparty to a regulated entity believe that permitting a swap entity to The proposed rule would apply the could adversely affect the safe and use its own model to calculate the initial margin and variation margin sound operations of the regulated entity. amount of initial margin it would be requirements to non-cleared swaps and The requirement reflects current required to post to a regulated entity security-based swaps that are entered practice in that the regulated entities may introduce a conflict of interest to into by a covered swap entity after the generally obtain collateral to secure the transaction. That concern could be effective date, which is proposed to be their swaps exposure to swap dealer addressed by establishing a process 180 days after publication of a final rule counterparties, although current through which the regulated entity in the Federal Register. The proposed practice generally does not include could verify the reasonableness of the rule would not require an immediate or posting of initial margin by or to any counterparty’s model calculation. FHFA retroactive application of initial margin counterparty. and FCA each seeks comment on or variation margin for any derivative FHFA and FCA are proposing these whether it should allow its regulated transaction entered into prior to the provisions pursuant to each agency’s entities to use the counterparty’s model effective date of the final rule. role as safety and soundness regulator to calculate initial margin, and if so, Because the requirements would not for its respective regulated entities, and what provisions should be included to be applied retroactively, no new initial each agency’s authority to ensure that mitigate conflicts of interest. __ margin or variation margin requirements the regulated entities operate in a safe Section .11(a)(2) of the proposed would be imposed on derivatives and sound manner, including that they rule requires that a regulated entity transactions entered into prior to the maintain adequate capital and internal collect variation margin daily from the effective date until such time as those controls, that their activities foster swap entity in accordance with the __ transactions are rolled-over or renewed. liquid, efficient, competitive and requirements of § .4 of the proposed The only requirements that would apply resilient national finance markets for rule, which permits the amounts of to a pre-effective date covered derivative housing, agriculture, and rural markets, variation margin posted to be adjusted would be the initial margin and and that they carry out their public to account for qualifying master netting variation margin requirements to which policy missions through authorized agreements and applies a minimum the parties to the transaction had activities.90 transfer amount of $100,000. previously agreed to by contract. Section __.11(a)(1) of the proposed Section __.11(b) of the proposed rule rule requires a regulated entity to collect requires that any regulated entity The new requirements will have an initial margin when it enters into a swap entering into a non-cleared swap or a impact on the costs of engaging in new transaction with a swap entity. The non-cleared security-based swap with a swap transactions. In particular, the proposal provides that the amount of swap entity must execute trading proposed rule sets out requirements for initial margin the regulated entity must documentation with such counterparty initial and variation margin that collect shall be in accordance with in accordance with § __.5 of the represent a significant change from § __.3 of the proposed rule, which proposed rule. Section __.11(c) of the current industry practice in many permits the use of either an initial proposed rule provides that any circumstances. Assessing the margin model or the use of a collateral that a regulated entity is quantitative impact of the proposed standardized ‘‘look up’’ table specifying required to collect as initial or variation requirements is particularly difficult in the minimum initial margin that must margin must meet the eligible collateral light of the wide ranging and as yet be collected as a percentage of the requirements of § __.6 of the proposed undetermined changes that are notional amount of the transaction. The rule. That section applies the same occurring to the derivatives market as a minimum initial margin levels set out in eligibility requirements to the regulated result of regulatory reform. Specifically Appendix A apply only in the absence entities that are required of the swap there is significant uncertainty with of an initial margin model. FHFA and entities. respect to (i) which entities would be FCA, however, seek comment on Section __.11(d) of the proposed rule classified as swap entities; (ii) the extent whether a minimum initial margin provides that a regulated entity must to which existing derivatives would be requirement should apply as a backstop require that any initial margin it posts rolled-over or renewed; and (iii) the even to modeled initial margin amounts, to a counterparty be held by an extent to which derivatives currently as a prudent approach to address independent custodian. That provision traded on an over-the-counter basis will concerns about procyclicality and is consistent with the requirement in move to central clearing by a CCP. In competitive pressures to reduce margin § __.7 of the proposed rule that a addition, there are a number of specific requirements. If not, how should such covered swap entity require segregation and technical aspects of the proposed concerns be addressed? with an independent custodian of any rule, such as number and composition Section __.11(a)(1) of the proposed initial margin that it posts to another of counterparties that would be rule permits a regulated entity to use its swap entity. Section __.11(d) of the classified as high-risk financial end initial margin model to determine initial proposed rule applies this segregation users, low-risk financial end users, and margin and provides that if the requirement to variation margin as well nonfinancial end users, respectively, regulated entity does not have an initial as initial margin and thereby reflects that are difficult to assess without a margin model, it may engage a third current practice of at least some of the large amount of highly detailed data on party to calculate initial margin on its regulated entities. FHFA and FCA seek the size of derivative positions as well behalf, provided that the third party is comments on whether such a as the underlying rationale for itself independent of the swap entity requirement should be applied to maintaining those positions. These and that is the counterparty to the variation margin and if it is not applied, other complicating factors make it how the regulated entities would be difficult to make precise statements 90 See 12 U.S.C. 2154, 2248, 2252, 4513, 4526. protected in the event variation margin about the quantitative impact of the

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margin rule specified under the • Are the requirements in the may affect disclosure requirements and proposed rule. proposed regulation clearly stated? If burden estimates at the addresses listed Accordingly, the Agencies request not, how could the regulation be more in the ADDRESSES section of this commenters to provide their own clearly stated? Supplementary Information. A copy of detailed quantitative impact analyses. • Does the proposed regulation the comments may also be submitted to The Agencies encourage commenters to contain language or jargon that is not the OMB desk officer for the agencies: include the following elements in their clear? If so, which language requires By mail to U.S. Office of Management analyses categorized between swaps clarification? and Budget, 725 17th Street, NW., entities, high-risk financial end users, • Would a different format (grouping #10235, Washington, DC 20503 or by low-risk financial end users, and and order of sections, use of headings, facsimile (202–395–5806). nonfinancial end users: (i) Required paragraphing) make the regulation Title of Information Collection: initial margin if internal models were easier to understand? If so, what Margin and Capital Requirements for applied; (ii) required initial margin if changes to the format would make the Certain Swap Entities. the standardized chart in Appendix A regulation easier to understand? Frequency of Response: Event- were applied; (iii) required variation • What else could we do to make the generated and annual. margin; (iv) the expected costs of, or regulation easier to understand? Affected Public: The affected public of additional liquidity required by, the the FDIC, OCC, and Board is assigned VII. Administrative Law Matters initial margin and variation margin generally in accordance with the entities requirements; and (v) the potential A. Paperwork Reduction Act Analysis covered by the scope and authority benefits of the initial margin and section of their respective proposed Request for Comment on Proposed variation margin requirements to rule. The affected public of FHFA Information Collection covered swap entities, their generally would be those third parties counterparties, and financial stability. Certain provisions of the proposed not regulated by a prudential regulator The analyses should also (i) address rule contain ‘‘collection of information’’ that request prior written approval of an operational and other business related requirements within the meaning of the initial margin model for use by a costs associated with implementing the Paperwork Reduction Act of 1995 regulated entity. proposed rule and (ii) take into (‘‘PRA’’), 44 U.S.C. 3501–3521. In FDIC: Any FDIC-insured state- consideration and disclose the expected accordance with the requirements of the chartered bank that is not a member of effect of the likely clearing of certain PRA, the Agencies may not conduct or the Federal Reserve System or FDIC- derivative transactions through CCPs in sponsor, and the respondent is not insured state-chartered savings the future. required to respond to, an information association that is registered as a swap In order to better understand the collection unless it displays a currently dealer, major swap participant, security- effect that broader clearing requirements valid Office of Management and Budget based swap dealer, or major security- will have on the impact of the proposed (OMB) control number. The information based swap participant. rules, the Agencies also request collection requirements contained in OCC: Any national bank, Federal comment on the levels of covered this joint notice of proposed rulemaking savings association, or Federal branch or derivatives, including the roll-over or have been submitted by the FDIC, OCC, agency of a foreign bank that is renewal of prior derivatives that would and FHFA to OMB for approval under registered as a swap dealer, major swap become covered under the proposed section 3506 of the PRA and § 1320.11 participant, security-based swap dealer, rule, that can be expected over the of OMB’s implementing regulations (5 or major security-based swap following time horizons after the CFR part 1320). The Board reviewed the participant. effective date: (i) 1 year, (ii) 3 years, and proposed rule under the authority Board: Any state member bank (as (iii) 5 years. To maximize the usefulness delegated to the Board by OMB. defined in 12 CFR 208.2(g)), bank of such comments, the Agencies request Comments are invited on: holding company (as defined in 12 that commenters break down such (a) Whether the collections of U.S.C. 1842), savings and loan holding projections by covered derivatives that information are necessary for the proper company (as defined in 12 U.S.C. 1467a, are likely to be cleared and uncleared, performance of the agencies’ functions, (on or after the transfer established as well as by product class. including whether the information has under Section 311 of the Dodd-Frank practical utility; Act)12 U.S.C. 5411), foreign banking V. Request for Comments (b) The accuracy of the estimates of organization (as defined in 12 CFR The Agencies are interested in the burden of the information 211.21(o)), state branch or state agency receiving comments on all aspects of the collections, including the validity of the of a foreign bank (as defined in 12 proposed rule. methodology and assumptions used; U.S.C. 3101(b)(11) and (12)), or Edge or (c) Ways to enhance the quality, agreement corporation (as defined in 12 VI. Solicitation of Comments on Use of utility, and clarity of the information to CFR 211.1(c)(2) and (3)) that is Plain Language be collected; registered as a swap dealer, major swap Section 722 of the Gramm-Leach- (d) Ways to minimize the burden of participant, security-based swap dealer, Bliley Act, Public Law 106–102, section the information collections on or major security-based swap 722, 113 Stat. 1338, 1471 (Nov. 12, respondents, including through the use participant. 1999), requires the OCC, Board and of automated collection techniques or FHFA: With respect to any regulated FDIC to use plain language in all other forms of information technology; entity as defined in section 1303(20) of proposed and final rules published after and the Federal Housing Enterprises January 1, 2000. The OCC, Board and (e) Estimates of capital or start up Financial Safety and Soundness Act of FDIC invite your comments on how to costs and costs of operation, 1992 (12 U.S.C. 4502(20)), the proposed make this proposal easier to understand. maintenance, and purchase of services rule would not contain any collection of For example: to provide information. information pursuant to the PRA. • Have we organized the material to All comments will become a matter of However, the provisions in proposed suit your needs? If not, how could this public record. Commenters may submit § __.11(e) allowing a third party that is material be better organized? comments on aspects of this notice that not subject to regulation by a prudential

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regulator to request prior written requirements under an initial margin model meets specific requirements approval of an initial margin model for model on a portfolio basis. (§§ __.8(c)(1) and __.8(c)(2)); use by a regulated entity, would be a Section _.4 requires that on and after • A requirement that a covered swap collection of information under the the date on which a covered swap entity entity notify the relevant Agency in PRA. enters into a non-cleared swap or non- writing before extending use of the Abstract: The notice sets forth cleared security-based swap, the model to additional product types, proposed margin and capital covered swap entity shall collect making certain changes to the initial requirements with respect to non- variation margin from the counterparty margin model, or making material cleared swaps and non-cleared security- to such swap or security-based swap in changes to modeling assumptions based swaps for covered swap entities. specified amounts. Section __.4(e)(2)(i) (§ __.8(c)(3)); The information requirements in joint requires that, in cases where a • A variety of quantitative regulations proposed by the Agencies counterparty refuses to provide required requirements, including requirements are found in §§ __.2(t)(3), _.2(t)(4), variation margin, a covered swap entity that the covered swap entity validate _.4(e)(2)(i), __5, __.6(d)(2)(i), __.8(c)(1), demonstrated upon request to the and demonstrate the reasonableness of __.8(c)(2), __8(c)(3), __8(d)(3), __8(d)(8), satisfaction of the relevant Agency that its process for modeling and measuring __.8(d)(9), __.8(d)(10), __.8(d)(12), it has made appropriate efforts to collect hedging benefits, demonstrate to the __.8(e)(1), __.8(f)(2), __.8(f)(3), __.8(f)(4), the required variation margin unless it satisfaction of the relevant Agency that and __.8(g). Compliance with the has otherwise made the necessary the omission of any risk factor from the information collections found in efforts to attempt to collect the required calculation of its initial margin is sections __.2(t)(3) and _.2(t)(4) would be variation margin, including the timely appropriate, demonstrate to the mandatory for any covered swap entity initiation and continued pursuit of satisfaction of the relevant Agency that wishing to take a qualifying master formal dispute resolution mechanisms. any conversion of initial margin netting agreement into account for Section __.5 requires a covered swap calculated using a different holding purposes of calculating initial margin or entity to execute trading documentation period is appropriate, periodically variation margin. Compliance with the with each counterparty that (i) includes review and, as necessary, revise the data information collections found in credit support arrangements that grant used to calibrate the initial margin §§ __.4(e)(2)(i), __.5, and _.6(d)(2)(i) the covered swap entity the contractual model to ensure that the data would be mandatory for all covered right to collect initial margin and incorporate an appropriate period of swap entities. Compliance with the variation margin in such amounts, in significant financial stress (§§ __.8(d)(3), information collections found in such form, and such circumstances as __.8(d)(8), __.8(d)(9), __.8(d)10), §§ __.8(c)(1), __.8(c)(2), __.8(c)(3), are required by the initial margin and __.8(d)(12)); __.8(d)(3), __.8(d)(8), __.8(d)(9), variation margin requirements set forth • A requirement that a covered swap __.8(d)(10), __.8(d)(12), __.8(e)(1), in the proposed rule and (ii) meets other entity review its initial margin model __.8(f)(2), __.8(f)(3), __.8(f)(4), and specified criteria. annually (§ __.8(e)); __.8(g) would be mandatory for all Section __.6 establishes certain forms • A requirement that the covered covered swap entities wishing to use an of eligible collateral that a covered swap swap entity validate its initial margin initial margin model to calculate initial entity shall collect for initial margin and model initially and on an ongoing basis, margin requirements. variation margin required pursuant to describe to the relevant Agency any In addition, § __.11(e) of FHFA’s this part and requires a covered swap remedial actions being taken, and report proposed rule contains an information entity to monitor the market value of internal audit findings regarding the collection that would be for all third any eligible collateral it has collected to effectiveness of the initial margin model parties that are not subject to regulation satisfy initial margin or variation margin to the covered swap entity’s board of by a prudential regulator and that required by this part and, to the extent directors or a committee thereof request prior written approval of an that the market value of such collateral (§§ __.8(f)(2), __.8(f)(3), and __.8(f)(4)); initial margin model for use by an has declined, collect such additional and FHFA-regulated entity. eligible collateral as is necessary to • A requirement that the covered bring itself into compliance with the swap entity adequately document all Section-by-Section Analysis margin requirements of this part. material aspects of its initial margin Section _.2 defines terms used in the Section __.6(d)(2)(i) requires that, in model (§ __.8(g)). proposed rule, including the definition cases where a counterparty refuses to Section __.11(e) of FHFA’s proposed of ‘‘qualifying master netting agreement’’ provide required additional margin, a rule applies § __.8 of the proposed rule, contained in § __2(t). Sections __.2(t)(3) covered swap entity demonstrated upon the information collection of which is and __.2(t)(4) provide that, with respect request to the satisfaction of the relevant described above, to any third party that to a qualifying master netting Agency that it has made appropriate is not subject to regulation by a agreement, a covered swap entity must efforts to collect the required additional prudential regulator and requests prior (i) conduct sufficient legal review of the margin unless it has otherwise made the written approval of an initial margin agreement to conclude with a well- necessary efforts to attempt to collect model for use by an FHFA-regulated founded basis that the agreement meets the required additional margin, entity. specified criteria and (ii) establish and including the timely initiation and Estimated Paperwork Burden maintain procedures for monitoring continued pursuit of formal dispute relevant changes in law. The term resolution mechanisms. Estimated Burden Per Response: ‘‘qualifying master netting agreement’’ is Section __.8 establishes standards for § __.2—Definitions, § __.5— used elsewhere in the proposed rule to initial margin models. These standards Documentation of margin matters, and specify instances in which a covered include: § __.8(g)—Documentation: swap entity may (i) calculate variation • A requirement that the covered recordkeeping—5 hours. margin on an aggregate basis across swap entity receive prior approval from § __.4(e)(2)(i)—Variation margin and multiple swaps and security-based the relevant Agency based on § __.6(d)(2)(i)—Eligible collateral: swaps and (ii) calculate initial margin demonstration that the initial margin recordkeeping—4 hours.

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§ __.8(c) and (d)—Initial margin effect predominantly on two types of the impact of the margin requirements model: reporting—240 hours. small entities: (i) Financial institutions on end users from which swap entities § __.8(e)—Periodic review and § __.8 that are swap entities that are subject to may be required to collect initial margin (f)—Control, oversight and validation the proposed rule’s capital and margin and/or variation margin and have mechanisms: recordkeeping—40 hours. requirements; and (ii) counterparties solicited comment on any approaches § __.11(e)—Special requirements for that engage in derivatives transactions that would reduce the burden on all transactions between swap entities and with swap entities that are subject to the counterparties, including small entities. regulated entities: Initial margin models: proposed rule’s margin requirements. In addition, the Agencies have proposed recordkeeping—220 hours. With respect to financial institutions to reduce the effect of the proposed rule FDIC that are swap entities that are subject to on counterparties to covered swap the proposed rule’s margin requirement, entities, including small entities, Number of Respondents: 3. a financial institution generally is through the implementation of initial Total Estimated Annual Burden: 867 considered small if it has assets of $175 margin threshold amounts and variation hours. million or less.91 Based on 2010 Call margin threshold amounts. The OCC Report data, approximately 4,200 Agencies have also requested comment depository institutions had total Number of Respondents: 20. on a variety of alternative approaches to Total Estimated Annual Burden: domestic assets of $175 million or less. implementing margin requirements with 5,780 hours. Of this number, however, the Agencies respect to swaps and security-based do not expect that any is likely to be a swaps with counterparties that are end Board swap entity that is subject to the users. The Agencies welcome comment Number of Respondents: 30. proposed rule’s capital and margin on any significant alternatives that Total Estimated Annual Burden: requirements. With respect to would minimize the impact of the 8,670 hours. counterparties that engage in derivatives proposal on small entities. transactions with swap entities that are FCA: Pursuant to section 605(b) of the FHFA subject to the proposed rule’s margin Regulatory Flexibility Act, 5 U.S.C. 601 Number of Respondents: 2. requirements, the number of such et seq., FCA hereby certifies that the Total Estimated Annual Burden: 440 counterparties and the extent to which proposed rule will not have a significant hours. certain types of companies are likely to economic impact on a substantial FCA: The FCA collects information be counterparties are unknown. number of small entities. Each of the from Farm Credit System institutions, However, of the 4,200 depository banks in the Farm Credit System, which are Federal instrumentalities, in institutions described above, fewer than considered together with its affiliated the FCA’s capacity as their safety and 250 are party to non-cleared derivative associations, has assets and annual soundness regulator, and, therefore, contracts. income in excess of the amounts that OMB approval is not required for this 3. Compliance requirements. With would qualify them as small entities; collection. respect to the initial margin and nor does the Federal Agricultural variation margin requirements, the Mortgage Corporation meet the B. Initial Regulatory Flexibility Act Agencies’ proposed rule does not apply definition of ‘‘small entity.’’ Therefore, Analysis directly to counterparties that engage in System institutions are not ‘‘small In accordance with section 3(a) of the derivatives transactions with swap entities’’ as defined in the Regulatory Regulatory Flexibility Act, 5 U.S.C. 601 entities. However, because the proposed Flexibility Act. et seq. (RFA), the Agencies are rule requires a covered swap entity to FHFA: FHFA believes that the publishing an initial regulatory collect a minimum amount of margin proposed rule, if promulgated as a final flexibility analysis for the proposed (subject to a threshold in some cases) rule, would not have a significant rule. The RFA requires an agency to from all counterparties, including small economic impact on a substantial provide an initial regulatory flexibility entities, the margin requirements may number of small entities, since none of analysis with the proposed rule or to affect the amount of margin that FHFA’s regulated entities come within certify that the proposed rule will not counterparties that are small entities are the meaning of small entities as defined have a significant economic impact on required to post to dealer counterparties in the Regulatory Flexibility Act (see 5 a substantial number of small entities. when transacting in the derivatives U.S.C. 601(6)), and would not The Agencies welcome comment on all markets. Accordingly, the Agencies substantially affect any business that its aspects of the initial regulatory expect any economic impact on regulated entities might do with small flexibility analysis. A final regulatory counterparties that are small entities to entities. flexibility analysis will be conducted be negative to the extent that swap C. OCC Unfunded Mandates Reform Act after consideration of comments entities currently do not collect initial of 1995 Determination received during the public comment margin or variation margin from those period. counterparties but would be required to Section 202 of the Unfunded 1. Statement of the objectives of the do so under the proposed rule. Mandates Reform Act of 1995, Public proposal. As required by section 4s of 4. Other Federal rules. The Agencies Law 104–4 (Unfunded Mandates Act) the Commodity Exchange Act (7 U.S.C. believe that no Federal rules duplicate, requires that an agency prepare a 6(s)) and section 15F of the Securities overlap, or conflict with the proposed budgetary impact statement before Exchange Act (15 U.S.C. 78o–8), the rule. promulgating a rule that includes a Agencies are proposing new regulations 5. Significant alternatives to the Federal mandate that may result in to establish rules imposing (i) capital proposed rule. As discussed above, the expenditure by State, local, and tribal requirements and (ii) initial and Agencies have requested comment on governments, in the aggregate, or by the variation margin requirements on all private sector, of $100 million (adjusted non-cleared swaps into which the 91 U.S. Small Business Administration, Table of for inflation) or more in any one year. Small Business Size Standards Matched to North The current inflation-adjusted covered swap entities enter. American Industry Classification System Codes, 2. Small entities affected by the available at http://www.sba.gov/sites/default/files/ expenditure threshold is $126.4 million. proposal. This proposal may have an Size_Standards_Table.pdf. If a budgetary impact statement is

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required, section 205 of the UMRA also (g) End user means a counterparty (m) Initial margin threshold amount requires an agency to identify and that is not a swap entity. means a credit exposure limit that has consider a reasonable number of (h) Financial end user means any been established by a covered swap regulatory alternatives before counterparty that is an end user that entity with respect to its swaps and promulgating a rule. The OCC has is— security-based swaps with a determined this proposed rule is likely (1) A commodity pool as defined in counterparty, that appropriately takes to result in the expenditure by the section 1a(5) of the Commodity into account and addresses the credit private sector of $126.4 million or more. Exchange Act (7 U.S.C. 1a(5)); risk posed by the counterparty and the Therefore, the OCC has prepared a (2) A private fund as defined in risks of such swaps and security-based budgetary impact analysis and section 202(a) of the Investment swaps, and that has been reviewed, identified and considered alternative Advisors Act of 1940 (15 U.S.C. 80–b– monitored and approved in accordance approaches. The full text of the OCC’s 2(a)); with the covered swap entity’s credit analyses under the Unfunded Mandates (3) An employee benefit plan as processes, except that in no case shall Act is available at: http:// defined in paragraphs (3) and (32) of the threshold amount be greater than— www.regulations.gov, Docket ID OCC– section 3 of the Employee Retirement (1) Zero, if the counterparty is either 2011–0008. Income and Security Act of 1974 (29 a swap entity or a high-risk financial U.S.C. 1002); end user; or Text of the Proposed Common Rules (4) A person predominantly engaged (2) The lesser of [$15 to $45] million (All Agencies) in activities that are in the business of and [0.1 to 0.3] percent of the covered The text of the proposed common banking, or in activities that are swap entity’s [capital metric], if the rules appears below: financial in nature, as defined in section counterparty is a low-risk financial end 4(k) of the Bank Holding Company of user. PART [ ]—MARGIN AND CAPITAL 1956 (12 U.S.C. 1843(k)); (n) Low-risk financial end user means REQUIREMENTS FOR COVERED (5) A person that would be a financial a counterparty that is a financial end SWAP ENTITIES end user described in paragraph (h)(1) user and makes the following or (h)(2) of this section, if it were __ representations to a covered swap entity .1 Authority, purpose, and scope. organized under the laws of the United ll in connection with entering into a swap .2 Definitions. States or any State thereof; ll.3 Initial margin. or security-based swap with the covered ll.4 Variation margin. (6) A government of any foreign swap entity— ll.5 Documentation of margin matters. country or a political subdivision, (1) The counterparty does not have a ll.6 Eligible collateral. agency, or instrumentality thereof; or significant swaps exposure; ll.7 Segregation of collateral. (7) Any other person that [Agency] (2) The counterparty predominantly ll.8 Initial margin models. may designate. uses swaps or security-based swaps to ll.9 Application of margin requirements (i) High-risk financial end user means hedge or mitigate the risks of its to certain foreign covered swap entities. a counterparty that is a financial end business activities, including balance ll.10 Capital. user but is not a low-risk financial end sheet, interest rate, or other risk arising Appendix A to Part [ ]—Standardized user. from the business of the counterparty; Minimum Initial Margin Requirements for (j) Initial margin means eligible and Non-cleared Swaps and Non-cleared collateral that is pledged in connection (3) The counterparty is subject to Security-based Swaps with entering into a swap or security- capital requirements established by a Appendix B to Part [ ]—Margin Values for based swap by a party thereto to secure prudential regulator or state insurance Noncash Collateral the performance of its obligations to its regulator. counterparty under one or more swaps (o) Margin means initial margin and § ll.1 Authority, purpose, and scope. or security-based swaps. variation margin. [Reserved] (k) Initial margin collection amount (p) Non-cleared swap means a swap § ll.2 Definitions. means— that is not a cleared swap, as that term (1) In the case of a covered swap is defined in section 1a(7) of the (a) Clearing agency has the meaning entity that does not have an initial Commodity Exchange Act (7 U.S.C. specified in section 3(a)(23) of the margin model, the amount of initial 1a(7)). Securities Exchange Act of 1934 (15 margin with respect to a swap or (q) Non-cleared security-based swap U.S.C. 78c(a)(23)). security-based swap that is required means a security-based swap that is not, (b) Counterparty means, with respect under Appendix A of this part; and directly or indirectly, submitted to and to any swap or security-based swap to (2) In the case of a covered swap cleared by a clearing agency registered which a covered swap entity is a party, entity that does have an initial margin with the SEC. the counterparty to such swap or model, the amount of initial margin (r) Nonfinancial end user means any security-based swap, other than a with respect to a swap or security-based counterparty that is an end user but is counterparty that is a derivatives swap that is required under the initial not a financial end user. clearing organization or clearing agency. margin model. (s) Prudential regulator has the (c) [Reserved] (l) Initial margin model means an meaning specified in section 1a(39) of (d) Derivatives clearing organization internal risk management model that— the Commodity Exchange Act (7 U.S.C. has the meaning specified in section (1) Has been developed and designed 1a(39)). 1a(15) of the Commodity Exchange Act to identify an appropriate, risk-based (t) Qualifying master netting (7 U.S.C. 1a(15)). amount of initial margin that the agreement means an agreement (e) Eligible collateral means collateral covered swap entity must collect with governing one or more swaps or described in § ll.6. respect to one or more swaps or security-based swaps to which a (f) Effective date means [DATE THAT security-based swaps to which the covered swap entity is a party that IS 180 DAYS AFTER PUBLICATION OF covered swap entity is a party; and satisfies the following criteria— THE FINAL RULE IN THE FEDERAL (2) Has been approved by [Agency] (1) The agreement creates a single REGISTER]. pursuant to § ll.8 of this part. legal obligation for all individual

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transactions covered by the agreement (i) $1 billion in daily average swap or security-based swap after such upon an event of default, including aggregate uncollateralized outward date), less the value of all variation bankruptcy, insolvency, or similar exposure; or margin previously collected but not proceeding, of the counterparty; (ii) $2 billion in daily average returned by the covered swap entity (2) The agreement provides the aggregate uncollateralized outward (expressed as a positive amount) with covered swap entity the right to exposure plus daily average aggregate respect to such swap or security-based accelerate, terminate, and close-out on a potential outward exposure. swap. net basis all transactions under the (3) For purposes of this definition— (bb) Variation margin threshold agreement and to liquidate or set off (i) The terms daily average aggregate amount means a credit exposure limit collateral promptly upon an event of uncollateralized outward exposure and that has been established by a covered default, including upon an event of daily average aggregate potential swap entity with respect to its swaps bankruptcy, insolvency, or similar outward exposure, when used with and security-based swaps with a proceeding, of the counterparty, respect to swaps, each has the meaning counterparty, that appropriately takes provided that, in any such case, any specified for that term in [17 CFR into account and addresses the credit exercise of rights under the agreement 1.3(uuu)] for purposes of calculating risk posed by the counterparty and the will not be stayed or avoided under substantial counterparty exposure under risks of such swaps and security-based applicable law in the relevant that regulation. swaps, and that has been reviewed, jurisdictions; (ii) The terms daily average aggregate monitored and approved in accordance (3) The covered swap entity has uncollateralized outward exposure and with the covered swap entity’s credit conducted sufficient legal review to daily average aggregate potential processes, except that in no case shall conclude with a well-founded basis outward exposure, when used with the threshold amount be greater than— (and maintains sufficient written respect to security-based swaps, each (1) Zero, if the counterparty is a either documentation of that legal review) has the meaning specified for that term a swap entity or a high-risk financial that— in [15 CFR 240.3a67–5] for purposes of end user; or (i) The agreement meets the calculating substantial counterparty (2) The lesser of [$15 to 45] million requirements of paragraph (t)(2) of this exposure under that regulation. and [0.1 to 0.3]% of the covered swap definition; and (w) State insurance regulator means entity’s [capital metric], if the (ii) In the event of a legal challenge an insurance authority of a State that is counterparty is a low-risk financial end (including one resulting from default or engaged in the supervision of insurance user. from bankruptcy, insolvency, or similar companies under State insurance law. __ proceeding) the relevant court and (x) Swap has the meaning specified in § .3 Initial margin. administrative authorities would find section 1a(47) of the Commodity (a) General. A covered swap entity the agreement to be legal, valid, binding, Exchange Act (7 U.S.C. 1a(47)). shall collect initial margin with respect and enforceable under the law of the (y) Swap entity means a security- to any non-cleared swap or non-cleared relevant jurisdictions; based swap dealer as defined in section security-based swap from the (4) The covered swap entity 3(a)(71) of the Securities Exchange Act counterparty to such swap or security- establishes and maintains procedures to of 1934 (15 U.S.C. 78c(a)(71)), a major based swap in an amount that is no less monitor possible changes in relevant security-based swap participant as than the greater of— law and to ensure that the agreement defined in section 3(a)(67) of the (1) Zero; or continues to satisfy the requirements of Securities Exchange Act of 1934 (15 (2) The initial margin collection this definition; and U.S.C. 78c(a)(67)), a swap dealer as amount for such swap or security-based (5) The agreement does not contain a defined in section 1a(49) of the swap less the initial margin threshold provision that permits a non-defaulting Commodity Exchange Act (7 U.S.C. amount for the counterparty (not counterparty to make a lower payment 1a(49)), or a major swap participant as including any portion of the initial than it would make otherwise under the defined in section 1a(33) of the margin threshold amount being applied agreement, or no payment at all, to a Commodity Exchange Act (7 U.S.C. to other swaps or security-based swaps defaulter or the estate of a defaulter, 1a(33)). with the counterparty), as applicable. even if the defaulter or the estate of the (z) Variation margin means eligible (b) Timing. A covered swap entity defaulter is a net creditor under the collateral pledged or paid on an shall, with respect to any non-cleared agreement. intraday, daily or other periodic basis by swap or non-cleared security-based (u) Security-based swap has the one party to a swap or security-based swap to which it is a party, comply with meaning specified in section 3(a)(68) of swap to its counterparty to offset a the initial margin requirements the Securities Exchange Act of 1934 (15 change in the value of one or more described in paragraph (a) for a period U.S.C. 78c(a)(68)). swaps or security-based swaps between beginning on or before the date it enters (v) Significant swaps exposure the parties, as calculated in accordance into such swap or security-based swap means— with the contractual terms of such and ending on the date the non-cleared (1) Swap positions that equal or swaps or security-based swaps. swap or non-cleared security-based exceed any of the following (aa) Variation margin amount means swap is terminated or expires. thresholds— the cumulative mark-to-market change (c) Minimum Transfer Amount. (i) $2.5 billion in daily average in value to a covered swap entity of a Notwithstanding anything else in this aggregate uncollateralized outward swap or security-based swap, as section, a covered swap entity is not exposure; or measured from the date it is entered into required to collect initial margin (ii) $4 billion in daily average (or, in the case of swap or security-based pursuant to this section with respect to aggregate uncollateralized outward swap that has a current positive or a particular counterparty unless and exposure plus daily average aggregate negative value to a covered swap entity until the total amount of initial margin potential outward exposure; or on the date it is entered into, such that is required pursuant to this section (2) Security-based swap positions that positive or negative value plus any to be collected, but has not yet been equal or exceed any of the following cumulative mark-to-market change in collected, with respect to the thresholds— value to the covered swap entity of a counterparty is greater than $100,000.

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§ __.4 Variation margin. variation margin to the covered swap of this section, for purposes of satisfying (a) General. On and after the date on entity; and the initial margin or variation margin which a covered swap entity enters into (2) The covered swap entity has— requirements of this part shall be subject a non-cleared swap or non-cleared (i) Made the necessary efforts to to, and limited by, the discounts security-based swap, the covered swap attempt to collect the required variation described in Appendix B of this part. entity shall, to the extent the variation margin, including the timely initiation (c) A covered swap entity may not margin amount for such swap or and continued pursuit of formal dispute collect, as initial margin or variation security-based swap is positive, collect resolution mechanisms, or has margin required by this part, any variation margin from the counterparty otherwise demonstrated upon request to collateral that is an obligation of the to such swap or security-based swap in the satisfaction of [Agency] that it has counterparty pledging such collateral. an amount that is no less than the made appropriate efforts to collect the (d) A covered swap entity shall greater of— required variation margin; or monitor the market value of any eligible (1) Zero; or (ii) Commenced termination of the collateral it has collected to satisfy (2) The variation margin amount for swap or security-based swap with the initial margin or variation margin such swap or security-based swap less counterparty. required by this part and, to the extent that the market value of such collateral the variation margin threshold amount § __.5 Documentation of margin matters. has declined, shall collect such for the counterparty (not including any A covered swap entity shall execute portion of the variation margin additional eligible collateral as is trading documentation with each necessary to bring itself into compliance threshold amount being applied to other counterparty regarding credit support swaps or security-based swaps with the with the margin requirements of this arrangements that— part. A covered swap entity shall not be counterparty), as applicable. (a) Provides the covered swap entity deemed to have violated its obligation (b) Frequency. A covered swap entity with the contractual right to collect under this paragraph (d) to collect shall comply with the variation margin initial margin and variation margin in additional eligible collateral from a requirements described in paragraph (a) such amounts, in such form, and under counterparty if— of this section— such circumstances as are required by (1) No less than once per business day (1) The counterparty has refused or this part; and otherwise failed to provide the required with respect to a counterparty that is a (b) Specifies— swap entity or a financial end user; and (1) The methods, procedures, rules, additional eligible collateral to the (2) No less than once per week with and inputs for determining the value of covered swap entity; and (2) The covered swap entity— respect to a counterparty that is a each swap or security-based swap for (i) Has made the necessary efforts to nonfinancial end user. purposes of calculating variation margin attempt to collect the required (c) Minimum transfer amount. requirements; and additional eligible collateral, including Notwithstanding anything else in this (2) The procedures by which any the timely initiation and continued section, a covered swap entity is not disputes concerning the valuation of pursuit of formal dispute resolution required to collect variation margin swaps or security-based swaps, or the mechanisms, or has otherwise pursuant to this section unless and until valuation of assets collected or posted as demonstrated upon request to the the total amount of variation margin that initial margin or variation margin, may satisfaction of [Agency] that it has made is required pursuant to this section to be be resolved. appropriate efforts to collect the collected, but has not yet been collected, § __.6 Eligible collateral. required additional eligible collateral; or with respect to the counterparty is (ii) Has commenced termination of greater than $100,000. (a) A covered swap entity shall collect the swap or security-based swap with (d) Netting arrangements. To the initial margin and variation margin the counterparty. extent that one or more non-cleared required pursuant to this part solely in the form of one or more of the following (e) A covered swap entity may collect swaps or non-cleared security-based initial margin and variation margin that swaps are executed pursuant to a types of eligible collateral— (1) Immediately available cash funds is not required pursuant to this part in qualifying master netting agreement any form of collateral. between a covered swap entity and its that are denominated in— (i) U.S. dollars; or __ counterparty, a covered swap entity may (ii) The currency in which payment § .7 Segregation of collateral. calculate and comply with the variation obligations under the swap are required A covered swap entity that enters into margin requirements of this paragraph to be settled; a non-cleared swap or non-cleared on an aggregate basis with respect to all (2) Any obligation which is a direct security-based swap with a swap entity swaps and security-based swaps obligation of, or fully guaranteed as to and posts initial margin to the swap governed by such agreement, so long as principal and interest by, the United entity with respect to that swap or the covered swap entity complies with States; and security-based swap shall require that— these variation margin requirements (3) With respect to initial margin (a) All funds or other property the with respect to all swaps and security- only— covered swap entity provides as initial based swaps governed by such (i) Any senior debt obligation of the margin are held by a third-party agreement regardless of whether the Federal National Mortgage Association, custodian that is independent of the swaps and security-based swaps were the Federal Home Loan Mortgage covered swap entity and the entered into on or after the effective Corporation, the Federal Home Loan counterparty; date. Banks and the Federal Agricultural (b) The independent custodian is (e) A covered swap entity shall not be Mortgage Corporation; and prohibited by contract from deemed to have violated its obligation (ii) Any obligation that is an ‘‘insured rehypothecating or otherwise under paragraph (a) of this section to obligation,’’ as that term is defined in 12 transferring any initial margin held by collect variation margin from a U.S.C. 2277a(3), of a Farm Credit the custodian; counterparty if— System bank. (c) The independent custodian is (1) The counterparty has refused or (b) The value of any eligible collateral prohibited by contract from reinvesting otherwise failed to provide the required described in paragraphs (a)(2) or (a)(3) any initial margin held by the custodian

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in any asset that would not qualify as (i) Extending the use of an initial (3) The initial margin model may eligible collateral under § __.6 for margin model that [Agency] has calculate initial margin for a portfolio of purposes of satisfying the initial margin approved under this section to an swaps and/or security-based swaps and requirements of this part; and additional product type; reflect offsetting exposures, (d) The independent custodian is (ii) Making any change to any initial diversification, and other hedging located in a jurisdiction that applies the margin model approved by [Agency] benefits for swaps and security-based same insolvency regime to the under this section that would result in swaps that are governed by the same independent custodian as would apply a material change in the covered swap qualifying master netting agreement by to the covered swap entity. entity’s assessment of initial margin incorporating empirical correlations requirements; or within the following four broad risk § __.8 Initial margin models. (iii) Making any material change to categories, provided the covered swap (a) General adequacy of initial margin modeling assumptions used by the entity validates and demonstrates the model. Unless a covered swap entity’s initial margin model. reasonableness of its process for initial margin model conforms to the (4) [The Agency] may rescind its modeling and measuring hedging requirements of this section, the covered approval of the use of any initial margin benefits: Commodity, credit, equity, and swap entity shall calculate all initial model, in whole or in part, or may foreign exchange/interest rate. Offsetting margin collection amounts pursuant to impose additional conditions or exposures, diversification, and other Appendix A of this part. requirements if [Agency] determines hedging benefits under a qualifying (b) Applicability to swaps and that the initial margin model no longer master netting agreement may be security-based swaps. Any initial complies with this section. recognized by the initial margin model (d) Quantitative requirements. margin model that a covered swap within each broad risk category, but not entity wishes to use to calculate the (1) The covered entity’s initial margin model must calculate an amount of across broad risk categories. amount of initial margin required to be (4) If the initial margin model does collected for a single swap or security- initial margin that is equal to the potential future exposure of the swap, not explicitly reflect offsetting based swap transaction or a portfolio of exposures, diversification, and hedging swap and/or security-based swap security-based swap or portfolio of swaps and/or security-based swaps. benefits within a broad risk category, transactions with a given counterparty the covered swap entity must calculate pursuant to § __.3 must meet each Potential future exposure is an estimate of the one-tailed 99 percent confidence an amount of initial margin separately requirement of this section. An initial for each subset of swaps and security- margin model may be designed to interval for an increase in the value of the swap, security-based swap or based swaps for which offsetting calculate initial margin for a portfolio of exposures, diversification, and other swaps and/or security-based swaps only portfolio of swaps and/or security-based swaps due to an instantaneous price hedging benefits are explicitly if all such swaps and/or security-based recognized by the initial margin model. swaps are governed by the same shock that is equivalent to a movement in all material underlying risk factors, The sum of the initial margin amounts qualifying master netting agreement. To calculated for each subset of swaps and the extent that a qualifying master including prices, rates, and spreads, over a holding period equal to the security-based swaps within a broad netting agreement between a covered risk category will be used to determine swap entity and its counterparty shorter of ten business days or the maturity of the swap or security-based the aggregate initial margin due from the governs swaps or security-based swaps counterparty for the portfolio of swaps that were entered into before, on, and swap. If a covered swap entity elects to calculate initial margin using an initial and security-based swaps within the after the effective date, the covered broad risk category. swap entity may use its initial margin margin model on a portfolio of swaps (5) The sum of the initial margins model to calculate the amount of initial and/or security-based swaps under the calculated for each broad risk category margin required to be collected same qualifying master netting will be used to determine the aggregate pursuant to § __.3 either— agreement, the covered entity must (1) With respect to only those swaps calculate an amount of initial margin for initial margin due from the and/or security-based swaps that portfolio each time a new swap or counterparty. transactions entered into on and after security-based swap is added to that (6) The initial margin model may not the effective date; or portfolio and collect any incremental permit the calculation of any initial (2) With respect to all swaps and/or initial margin collection amount that is margin collection amount to be subject security-based swaps transactions required. to offset by, or otherwise take into governed by such qualifying master (2) The covered swap entity’s initial account, any initial margin that may be netting agreement, regardless of whether margin model must use risk factors owed or otherwise payable by the they were entered into before, on, or sufficient to measure all material price covered swap entity to the counterparty. after the effective date. risks inherent in the swap transactions (7) The initial margin model must (c) Requirements for initial margin for which initial margin is being include all material risks arising from model. calculated. The risk categories must the nonlinear price characteristics of (1) A covered swap entity must obtain include, but should not be limited to, options positions or positions with the prior written approval of [Agency] foreign exchange/interest rate risk, embedded optionality and the before using any initial margin model to credit risk, equity risk, and commodity sensitivity of the market value of the calculate the initial margin required in risk, as appropriate. For material positions to changes in the volatility of this part. exposures in the major currencies and the underlying rates, prices, or other (2) A covered swap entity must markets, modeling techniques must material risk factors. As an example, a demonstrate that the initial margin capture spread and basis risk and must covered swap entity with a large or model satisfies all of the requirements of incorporate a sufficient number of complex options portfolio must measure this section on an ongoing basis. segments of the yield curve to capture the volatility of options positions or (3) A covered swap entity must differences in volatility and imperfect positions with embedded optionality by promptly notify [Agency] in writing correlation of rates along the yield different maturities and/or strike prices, prior to: curve. where material.

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(8) The covered swap entity may not (e) Periodic review. A covered swap covered swap entity’s board of directors omit any risk factor from the calculation entity must periodically, but no less or a committee thereof. of its initial margin that the covered frequently than annually, review its (g) Documentation. The covered swap swap entity uses in its initial margin initial margin model in light of entity must adequately document all model unless it has previously developments in financial markets and material aspects of its initial margin demonstrated to the satisfaction of modeling technologies, and enhance the model, including management and [Agency] that such omission is initial margin model as appropriate to valuation of swap and/or security-based appropriate. ensure that the initial margin model swap transactions to which they apply, (9) The covered swap entity may not continues to meet the requirements for the control, oversight, and validation of incorporate any proxy or approximation approval in this section. the initial margin model, any review used to capture the risks of the covered (f) Control, oversight, and validation swap entity’s actual swap or security- mechanisms. processes and the results of such based swap transactions unless it has (1) The covered swap entity must processes. previously demonstrated to the have a risk control unit that reports § __.9 Application of margin requirements satisfaction of [Agency] that such proxy directly to senior management and is to certain foreign covered swap entities. or approximation is appropriate. independent from the business trading __ (10) The covered swap entity may units. (a) The requirements of §§ .3 __ calculate initial margin over the holding (2) The covered swap entity must through .8 shall not apply to any period directly or it may convert an validate its initial margin model foreign non-cleared swap or foreign initial margin calculated using a initially and on an ongoing basis. The non-cleared security-based swap of a different holding period. A covered covered swap entity’s validation process foreign covered swap entity. swap entity may not convert its initial must be independent of the (b) For purposes of this section, a margin calculation in such a manner development, implementation, and unless it has previously demonstrated to foreign non-cleared swap or foreign operation of the initial margin model, or the satisfaction of [Agency] that such non-cleared security-based swap is any the validation process must be subjected conversion is appropriate. non-cleared swap or non-cleared (11) All data used to calibrate the to an independent review of its security-based swap transaction with initial margin model must be based on adequacy and effectiveness. The respect to which— a historical observation period of at least validation process must include: (i) An evaluation of the conceptual (1) The counterparty to the foreign one year and must incorporate a period covered swap entity is— of significant financial stress soundness of (including developmental (i) Not an entity organized under the appropriate to the swap and/or security- evidence supporting) the initial margin laws of the United States or any State; based swap transactions to which the model; initial margin model is applied. (i) An ongoing monitoring process (ii) Not a branch or office of an entity (12) The covered swap entity must that includes verification of processes organized under the laws of the United review and, as necessary, revise the data and benchmarking by comparing the States or any State; and used to calibrate the initial margin covered swap entity’s initial margin model outputs (estimation of initial (iii) Not a person resident in the model at least monthly, and more United States; and frequently as market conditions warrant, margin) with relevant alternative to ensure that the data incorporate a internal and external data sources or (2) Performance of the counterparty’s period of significant financial stress estimation techniques; and obligations to the foreign covered swap appropriate to the swap and/or security- (ii) An outcomes analysis process that entity under the swap or security-based based swap transactions to which the includes backtesting of the initial swap has not been guaranteed by an initial margin model is applied. margin model. affiliate of the counterparty that is— (13) The level of sophistication of the (3) If the validation process reveals (i) An entity organized under the laws initial margin model must be any significant problems with the initial of the United States or any State; commensurate with the complexity of margin model, the covered swap entity (ii) A branch or office of an entity the swap and/or security-based swap must notify [Agency] of the problems, transactions to which they are applied. describe to [Agency] any remedial organized under the laws of the United In calculating an initial margin actions being taken, and adjust the States or any State; or collection amount, the initial margin initial margin model to insure an (iii) A person resident in the United model may make use of any of the appropriately conservative amount of States. generally accepted approaches for required initial margin is being (c) For purposes of this section, a calculated. modeling the risk of a single instrument foreign covered swap entity is any (4) The covered swap entity must or portfolio of instruments. covered swap entity that is— (14) The covered swap entity must have an internal audit function periodically benchmark the initial independent of business-line (1) Not a company organized under margin model against observable margin management that at least annually the laws of the United States or any standards to ensure that the initial assesses the effectiveness of the controls State; margin required is not less than what a supporting the covered swap entity’s (2) Not a branch or office of a derivatives clearing organization or a initial margin model measurement company organized under the laws of clearing agency would require for systems, including the activities of the the United States or any State; similar transactions. business trading units and independent (15) [The Agency] may require a risk control unit, compliance with (3) Not a U.S. branch, agency or covered swap entity using an initial policies and procedures, and calculation subsidiary of a foreign bank; and margin model to collect a greater of the covered swap entity’s initial (4) Not controlled, directly or amount of initial margin than that margin requirements under this part. At indirectly, by a company that is determined by the covered swap entity’s least annually, the internal audit organized under the laws of the United initial margin model. function must report its findings to the States or any State.

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§ __.10 Capital. STANDARDIZED MINIMUM INITIAL MAR- STANDARDIZED MINIMUM INITIAL MAR- [Reserved] GIN REQUIREMENTS FOR NON- GIN REQUIREMENTS FOR NON- CLEARED SWAPS AND NON-CLEARED CLEARED SWAPS AND NON-CLEARED Appendix A to Part [ ]—Standardized SECURITY-BASED SWAPS—Contin- SECURITY-BASED SWAPS—Contin- Minimum Initial Margin Requirements for Non-cleared Swaps and Non- ued ued cleared Security-based Swaps. Initial margin Initial margin requirement Asset Class requirement STANDARDIZED MINIMUM INITIAL MAR- Asset Class (% of notional (% of notional GIN REQUIREMENTS FOR NON- exposure) exposure) CLEARED SWAPS AND NON-CLEARED Credit: 2–5 year duration ...... [2–8] Interest Rate: 2–5 year dura- [1–3] SECURITY-BASED SWAPS Credit: 5+ year duration ...... [5–15] tion. Commodity ...... [10–20] Interest rate: 5+ year duration [2–6] Initial margin Equity ...... [10–20] Other ...... [10–20] requirement . Asset Class (% of notional Foreign Exchange/Currency [3–9] exposure) Interest Rate: 0–2 year dura- [0–2] tion. Appendix B to Part [ ]—Margin Values Credit: 0–2 year duration ...... [1–3] for Noncash Collateral.

MARGIN VALUES FOR NONCASH COLLATERAL

Margin value (% of market value) duration (years) 0–5 5–10 >10

U.S. Treasuries and Fully Guaranteed Agencies: Bills/Notes/Bonds/Inflation Indexed ...... [98–100] [95–99] [94–98] Zero Coupon, STRIPs ...... [97–99] [94–98] [90–94] Senior Debt Obligations of FHFA Regulated Entities and the Federal Agricultural Mortgage Corpora- tion, and Insured Obligations of Farm Credit System Banks: Bills/Notes/Bonds ...... [96–100] [94–98] [93–97] Zero Coupon ...... [95–99] [93–97] [89–93]

[END OF COMMON TEXT] Authority: 7 U.S.C. 6s(e), 12 U.S.C. 1 et cleared swaps and non-cleared security- seq., 93a, 161, 1818, 3907, 3090, and 15 based swaps. This regulation Adoption of the Common Rule Text U.S.C. 78o–10(e). implements section 4s of the 2. Part 45 is added as set forth at the The proposed adoption of the Commodity Exchange Act and section end of the Common Preamble. 15F of the Securities Exchange Act of common rules by the agencies, as 3. Part 45 is amended by: modified by agency-specific text, is set a. Removing ‘‘[Agency]’’ wherever it 1934 by defining terms used in the forth below: appears and adding in its place ‘‘the statute and related terms, establishing OCC’’; capital and margin requirements, and DEPARTMENT OF THE TREASURY b. Removing ‘‘[The Agency]’’ wherever explaining the statutes’ requirements. Office of the Comptroller of the it appears and adding in its place ‘‘The (c) Scope. This part establishes Currency OCC’’; and minimum capital and margin c. Removing ‘‘[capital metric]’’ requirements for each covered swap List of Subjects in 12 CFR Part 45 wherever it appears and adding in its entity subject to this part with respect to all non-cleared swaps and non- 12 CFR Chapter I place ‘‘Tier 1 capital’’. 4. Section 45.1 is added to read as cleared security-based swaps. This part Administrative practice and follows: applies to any non-cleared swap or non- cleared security-based swap entered procedure, Capital, Margin § 45.1 Authority, purpose, and scope. requirements, National banks, Reporting into by a covered swap entity on or after (a) Authority. This part is issued and recordkeeping requirements, Risk. [INSERT DATE THAT IS 180 DAYS under the authority of 7 U.S.C. 6s(e), 12 AFTER PUBLICATION OF THE FINAL Authority and Issuance U.S.C. 1 et seq., 93a, 161, 1818, 3907, RULE IN THE FEDERAL REGISTER]. 3090, and 15 U.S.C. 78o–10(e). Nothing in this part is intended to For the reasons stated in the Common (b) Purpose. Section 4s of the prevent a covered swap entity from Preamble, the Office of the Comptroller Commodity Exchange Act (7 U.S.C. 6s) collecting margin in amounts greater of the Currency proposes to amend and section 15F of the Securities than are required under this part. chapter I of Title 12, Code of Federal Exchange Act of 1934 (15 U.S.C. 78o–8) 5. Paragraph (c) of § 45.2 is added to Regulations as follows: require the OCC to establish capital and read as follows: margin requirements for any national PART 45—MARGIN AND CAPITAL bank, Federal savings association, or § 45.2 Definitions. REQUIREMENTS FOR COVERED Federal branch or agency of a foreign * * * * * SWAP ENTITIES banks that is registered as a swap dealer, (c) Covered swap entity means any major swap participant, security-based national bank, Federal savings 1. The authority citation for part 45 is swap dealer, or major security-based association, or Federal branch and added to read as follows: swap participant with respect to all non- agency of a foreign bank that is a swap

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entity, or any other entity that the OCC § 237.1 Authority, purpose, and scope. § 237.2 Definitions. determines. (a) Authority. This part (Regulation * * * * * * * * * * KK) is issued by the Board of Governors (c) Covered swap entity means any 6. Section 45.10 is added to read as of the Federal Reserve System (Board) state member bank (as defined in 12 follows: under section 4s(e) of the Commodity CFR 208.2(g)), bank holding company Exchange Act (7 U.S.C. 6s(e)) and (as defined in 12 U.S.C. 1842), savings § 45.10 Capital. section 15F(e) of the Securities and loan holding company (as defined A covered swap entity shall comply Exchange Act of 1934 (15 U.S.C. 78o– in 12 U.S.C. 1467a (on or after the with: 10(e)), as well as under the Federal transfer established under Section 311 (a) In the case of a covered swap Reserve Act, as amended (12 U.S.C. 221 of the Dodd-Frank Act) 12 U.S.C. 5411)), entity that is a national bank, the et seq.); section 8 of the Federal Deposit foreign banking organization (as defined minimum capital requirements in 12 Insurance Act, as amended (12 U.S.C. in 12 CFR 211.21(o)), any state branch CFR part 3; 1818); the Bank Holding Company Act or state agency of a foreign bank (as defined in 12 U.S.C. 3101(b)(11) and (b) In the case of a covered swap of 1956, as amended (12 U.S.C. 1841 et (12)), or Edge or agreement corporation entity that is a Federal savings seq.); and the International Banking Act (as defined in 12 CFR 211.1(c)(2) and association, the minimum capital of 1978, as amended (12 U.S.C. 3101 et (3)) that is a swap entity, or any other requirements in 12 CFR part 567; and seq.). entity that the Board determines. (c) In the case of a covered swap (b) Purpose. Section 4s of the * * * * * entity that is a Federal branch or agency Commodity Exchange Act (7 U.S.C. 6s) 12. Section 237.10 is added to read as of a foreign bank, the capital adequacy and section 15F of the Securities follows: guidelines that are applicable as Exchange Act of 1934 (15 U.S.C. 78o–8) generally provided under 12 CFR 28.14. require the Board to establish capital § 237.10 Capital. BOARD OF GOVERNORS OF THE and margin requirements for any state A covered swap entity shall comply FEDERAL RESERVE SYSTEM member bank (as defined in 12 CFR with: 208.2(g)), bank holding company (as (a) In the case of a covered swap List of Subjects in 12 CFR Part 237 defined in 12 U.S.C. 1842), savings and entity that is a state member bank (as 12 CFR Chapter II loan holding company (as defined in 12 defined in 12 CFR 208.2(g)), the capital U.S.C. 1467a (on or after the transfer adequacy guidelines that are applicable Administrative practice and established under Section 311 of the to the covered swap entity and have procedure, Banks and banking, Capital, Dodd-Frank Act) 12 U.S.C. 5411)), been adopted by the Board under Foreign banking, Holding companies, foreign banking organization (as defined section 38 of the Federal Deposit Margin requirements, Reporting and in 12 CFR 211.21(o)), state branch or Insurance Act (12 U.S.C. 1831o); recordkeeping requirements, Risk. state agency of a foreign bank (as (b) In the case of a covered swap defined in 12 U.S.C. 3101(b)(11) and entity that is a bank holding company Authority and Issuance (12)), or Edge or agreement corporation (as defined in 12 U.S.C. 1842) or a For the reasons set forth in the (as defined in 12 CFR 211.1(c)(2) and savings and loan holding company (as Supplementary Information, the Board (3)) that is registered as a swap dealer, defined in 12 U.S.C. 1467a), the capital of Governors of the Federal Reserve major swap participant, security-based adequacy guidelines applicable to bank System proposes to add the text of the swap dealer, or major security-based holding companies under the Board’s common rule as set forth at the end of swap participant with respect to all non- Regulation Y (12 CFR part 225); the Supplementary Information as part cleared swaps and non-cleared security- (c) In the case of a covered swap 237 to 12 CFR chapter II as follows: based swaps. This regulation entity that is foreign banking implements section 4s of the organization (as defined in 12 CFR PART 237—MARGIN AND CAPITAL Commodity Exchange Act and section 211.21(o)) or any state branch or state REQUIREMENTS FOR COVERED 15F of the Securities Exchange Act of agency of a foreign bank (as defined in SWAP ENTITIES (REGULATION KK) 1934 by defining terms used in the 12 U.S.C. 3101(b)(11) and (12)), the statute and related terms, establishing capital rules that are made applicable to 7. The authority citation for part 237 capital and margin requirements, and such covered swap entity pursuant to is added to read as follows: explaining the statutes’ requirements. § 225.2(r)(3) of the Board’s Regulation Y Authority: 7 U.S.C. 6s(e), 15 U.S.C. 78o– (c) Scope. This part establishes (12 CFR 225.2(r)(3)); and 10(e), 12 U.S.C. 221 et seq., 12 U.S.C. 1818, (d) In the case of a covered swap minimum capital and margin 12 U.S.C. 1841 et seq., and 12 U.S.C. 3103 entity that is an Edge or agreement requirements for each covered swap et seq. corporation (as defined in 12 CFR entity subject to this part with respect 211.1(c)(2) and (3)), the capital 8. Part 237 is added as set forth at the to all non-cleared swaps and non- adequacy guidelines that are made end of the Common Preamble. cleared security-based swaps. This part applicable to an Edge corporation 9. Part 237 is amended by: applies to any non-cleared swap or non- engaged in banking pursuant to a. Removing ‘‘[Agency]’’ wherever it cleared security-based swap entered § 211.12(c)(2) of the Board’s Regulation appears and adding in its place ‘‘the into by a covered swap entity on or after K (12 CFR 211.12(c)(2)). Board’’; [INSERT DATE THAT IS 180 DAYS b. Removing ‘‘[The Agency]’’ wherever AFTER PUBLICATION OF THE FINAL FEDERAL DEPOSIT INSURANCE it appears and adding in its place ‘‘The RULE IN THE FEDERAL REGISTER]. CORPORATION ’’ Nothing in this part is intended to Board ; and List of Subjects in 12 CFR Part 324 c. Removing ‘‘[capital metric]’’ prevent a covered swap entity from wherever it appears and adding in its collecting margin in amounts greater 12 CFR Chapter III place ‘‘tier 1 capital’’. than are required under this part. Banks, Reporting and recordkeeping 10. Section 237.1 is added to read as 11. Paragraph (c) of § 237.2 is added requirements, Holding companies, follows: to read as follows: Savings associations.

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Authority and Issuance entity subject to this part with respect a. Removing ‘‘[The Agency]’’ wherever For the reasons set forth in the to all non-cleared swaps and non- it appears and adding in its place ‘‘The Supplementary Information, the Federal cleared security-based swaps. This part FCA’’; and Deposit Insurance Corporation proposes applies to any non-cleared swap or non- c. Removing ‘‘[capital metric]’’ to add the text of the common rule as cleared security-based swap entered wherever it appears and adding in its set forth at the end of the into by a covered swap entity on or after place ‘‘core surplus or core capital, as Supplementary Information as part 324 [INSERT DATE THAT IS 180 DAYS applicable’’. to chapter III of Title 12, Code of Federal AFTER PUBLICATION OF THE FINAL 22. Section 624.1 is added to read as Regulations, modified as follows: RULE IN THE FEDERAL REGISTER]. follows: Nothing in this part is intended to § 624.1 Authority, purpose, and scope. PART 324—MARGIN AND CAPITAL prevent a covered swap entity from REQUIREMENTS FOR COVERED collecting margin in amounts greater (a) Authority. This part is issued by SWAP ENTITIES than are required under this part. the Farm Credit Administration (FCA) 17. Paragraph (c) of § 324.2 is added under section 4s(e) of the Commodity 13. The authority citation for part 324 to read as follows: Exchange Act (7 U.S.C. 6s(e)), section is added to read as follows: 15F(e) of the Securities Exchange Act of * * * * * 1934 (15 U.S.C. 78o–10(e)), and sections Authority: 7 U.S.C. 6s(e), 15 U.S.C. 78o– (c) Covered swap entity means any 10(e), and 12 U.S.C. 1818 and 12 U.S.C. 4.3, 5.9, 5.17, and 8.32 of the Farm FDIC-insured state-chartered bank that Credit Act (12 U.S.C. 2154, 12 U.S.C. 1819(a)(Tenth). is not a member of the Federal Reserve 14. Part 324 is added as set forth at 2243, 12 U.S.C. 2252, and 12 U.S.C. System or FDIC-insured state-chartered 2279bb–1). the end of the Common Preamble. savings association that is a swap entity, 15. Part 324 is amended by: (b) Purpose. Section 4s of the or any other entity that the FDIC Commodity Exchange Act (7 U.S.C. 6s) a. Removing ‘‘[Agency]’’ wherever it determines. appears and adding in its place ‘‘the and section 15F of the Securities * * * * * FDIC’’; Exchange Act of 1934 (15 U.S.C. 78o–8) b. Removing ‘‘[The Agency]’’ wherever 18. Section 324.10 is added to read as require the FCA to establish capital and it appears and adding in its place ‘‘The follows: margin requirements for any System FDIC’’; and § ll.10 Capital requirement. institution, including the Federal c. Removing ‘‘[capital metric]’’ Agricultural Mortgage Corporation, A covered swap entity shall comply wherever it appears and adding in its chartered under the Farm Credit Act of with the capital adequacy guidelines place ‘‘tier 1 capital’’. 1971, as amended (12 U.S.C. 2001 et 16. Section 324.1 is added to read as that are applicable to the covered swap seq.) that is registered as a swap dealer, follows: entity and have been adopted by the major swap participant, security-based FDIC under section 38 of the Federal swap dealer, or major security-based § ll.1 Authority, purpose, and scope. Deposit Insurance Act (12 U.S.C. swap participant with respect to all non- (a) Authority. This part is issued by 1831o). cleared swaps and non-cleared security- the Federal Deposit Insurance FARM CREDIT ADMINISTRATION based swaps. This regulation Corporation (FDIC) under section 4s(e) implements section 4s of the of the Commodity Exchange Act (7 List of Subjects in 12 CFR Part 624 Commodity Exchange Act and section U.S.C. 6s(e)), section 15F(e) of the Agriculture, Banks, Banking, Credit, 15F of the Securities Exchange Act of Securities Exchange Act of 1934 (15 Rural areas. 1934 by defining terms used in the U.S.C. 78o–10(e)), and section 8 of the statute and related terms, establishing Authority and Issuance Federal Deposit Insurance Act (12 capital and margin requirements, and U.S.C. 1818). For the reasons set forth in the explaining the statute’s requirements. (b) Purpose. Section 4s of the Supplementary Information, the Farm (c) Scope. This part establishes Commodity Exchange Act (7 U.S.C. 6s) Credit Administration proposes to add minimum capital and margin and section 15F of the Securities the text of the common rule as set forth requirements for each covered swap Exchange Act of 1934 (15 U.S.C. 78o–8) at the end of the Supplementary entity subject to this part with respect require the FDIC to establish capital and Information as part 624 to chapter VI of to all non-cleared swaps and non- margin requirements for any FDIC- Title 12, Code of Federal Regulations, cleared security-based swaps. This part insured state-chartered bank that is not modified as follows: applies to any non-cleared swap or non- a member of the Federal Reserve System cleared security-based swap entered or FDIC-insured state-chartered savings PART 624—MARGIN AND CAPITAL into by a covered swap entity on or after association that is registered as a swap REQUIREMENTS FOR COVERED [INSERT DATE THAT IS 180 DAYS dealer, major swap participant, security- SWAP ENTITIES AFTER PUBLICATION OF THE FINAL based swap dealer, or major security- RULE IN THE FEDERAL REGISTER]. based swap participant with respect to 19. The authority citation for part 624 is added to read as follows: Nothing in this part is intended to all non-cleared swaps and non-cleared prevent a covered swap entity from security-based swaps. This part Authority: 7 U.S.C. 6s(e), 15 U.S.C. 78o– collecting margin in amounts greater implements section 4s of the 10(e), and secs. 4.3, 5.9, 5.17, and 8.32 of the than are required under this part. Commodity Exchange Act and section Farm Credit Act (12 U.S.C. 2154, 12 U.S.C. 23. Paragraph (c) of § 624.2 is added 15F of the Securities Exchange Act of 2243, 12 U.S.C. 2252, and 12 U.S.C. 2279bb– 1). to read as follows: 1934 by defining terms used in the statutes and related terms, establishing 20. Part 624 is added as set forth at § 624.2 Definitions. capital and margin requirements, and the end of the Common Preamble. * * * * * explaining the statutes’ requirements. 21. Part 624 is amended by: (c) Covered swap entity means any (c) Scope. This part establishes a. Removing ‘‘[Agency]’’ wherever it institution chartered under the Farm minimum capital and margin appears and adding in its place ‘‘the Credit Act of 1971, as amended (12 requirements for each covered swap FCA’’; U.S.C. 2001 et seq.) that is a swap entity,

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or any other entity that the FCA System institution shall execute trading CHAPTER XII—FEDERAL HOUSING determines. documentation with such swap entity in FINANCE AGENCY * * * * * accordance with the requirements of SUBCHAPTER B—ENTITY REGULATIONS 24. Section 624.10 is added to read as § 624.5. follows: (c) Collateral. Any initial or variation PART 1221—MARGIN AND CAPITAL REQUIREMENTS FOR COVERED § 624.10 Capital requirement. margin that a System institution is required to collect from a swap entity SWAP ENTITIES A covered swap entity shall comply under paragraph (a) of this section shall with: 26. The authority citation for part meet the eligible collateral requirements (a) In the case of the Federal 1221 is added to read as follows: of § 624.6. Agricultural Mortgage Corporation, the Authority: 7 U.S.C. 6s(e), 15 U.S.C. 78o– capital adequacy regulations set forth in (d) Segregation. A System institution 10(e), 12 U.S.C. 4513 and 12 U.S.C. 4526(a). shall require that any funds or other 12 CFR part 652; and 27. Part 1221 is added as set forth at property that it posts to a swap entity as (b) In the case of any Farm Credit the end of the Common Preamble. initial or variation margin be held by a System institution other than the 28. Part 1221 is amended by: third-party custodian that is Federal Agricultural Mortgage a. Removing ‘‘[Agency]’’ wherever it independent of the swap entity and the Corporation, the capital regulations set appears and adding in its place ‘‘FHFA’’; forth in 12 CFR part 615. System institution, is located in a b. Removing ‘‘[The Agency]’’ wherever 25. Section 624.11 is added to read as jurisdiction that applies the same it appears and adding in its place follows: insolvency regime to the third-party ‘‘FHFA’’; and custodian as would apply to the System c. Removing ‘‘[capital metric]’’ § 624.11 Special requirements for institution, and is subject to the transactions between swap entities and wherever it appears and adding in its rehypothecation, reinvestment, and System institutions. place ‘‘total capital’’. other transfer restrictions of § 624.7 (a) Margin requirements. To the extent 29. Section 1221.1 is added to read as that a System institution, including the (e) Initial margin models. To the follows: Federal Agricultural Mortgage extent the initial margin collection § 1221.1 Authority, purpose, and scope. Corporation, that is not a covered swap amount that the System institution is entity enters into a non-cleared swap or required to collect from a swap entity (a) Authority. This part is issued by a non-cleared security-based swap with under paragraph (a)(1) of this section is the Federal Housing Finance Authority a swap entity, the System institution calculated by the System institution (FHFA) under section 4s(e) of the shall: using an initial margin model, such Commodity Exchange Act (7 U.S.C. (1) Collect initial margin from the model must meet all the requirements of 6s(e)), section 15F(e) of the Securities swap entity in an amount and at such § 624.8, provided that the appropriate Exchange Act of 1934 (15 U.S.C. 78o– times as would be in accordance with prudential regulator responsible for 10(e)), 12 U.S.C. 4513 and 12 U.S.C. the requirements of § 624.3, provided making or rescinding any approvals to 4526(a). that for purposes of this § 624.10 any the extent required or allowed under (b) Purpose. Section 4s of the reference to ‘‘initial margin model’’ in § 624.8 shall be: Commodity Exchange Act (7 U.S.C. 6s) the definition of ‘‘initial margin (1) In the case where the initial and section 15F of the Securities collection amount’’ shall mean: margin model is that of a third party Exchange Act of 1934 (15 U.S.C. 78o–8) (i) The System institution’s initial that is subject to regulation by a require FHFA to establish capital and margin model, if any, or prudential regulator, the prudential margin requirements for any regulated entity that is registered as a swap dealer, (ii)(A) If the System institution does regulator having such jurisdiction; or not have an initial margin model, an major swap participant, security-based initial margin model used by a third (2) In the case where the initial swap dealer, or major security-based party to calculate initial margin on margin model is that of either the swap participant with respect to all non- behalf of the System institution in System institution or a third party that cleared swaps and non-cleared security- accordance with § 624.3, provided that is not subject to regulation by a based swaps. This regulation the third party is itself independent of prudential regulator, the FCA. implements section 4s of the the swap entity that is the counterparty FEDERAL HOUSING FINANCE Commodity Exchange Act and section in the transaction at issue. AGENCY 15F of the Securities Exchange Act of (B) The amounts of initial margin 1934 by defining terms used in the collected under this paragraph (a) may List of Subjects in 12 CFR Part 1221 statute and related terms, establishing be adjusted for minimum transfer capital and margin requirements, and amounts as allowed under § 624.3(c). Government-sponsored enterprises, explaining the statute’s requirements. (2) Collect variation margin daily from Mortgages, Securities. (c) Scope. This part establishes the swap entity in an amount that Authority and Issuance minimum capital and margin would be in accordance with the requirements for each covered swap requirements in §§ 624.4(a) and For the reasons stated in the entity subject to this part with respect 624.4(e). The amounts of variation SUPPLEMENTARY INFORMATION, and under to all non-cleared swaps and non- margin collected under this paragraph the authority of 7 U.S.C. 6s(e), 15 U.S.C. cleared security-based swaps. This part may be adjusted as allowed for 78o–10(e), and 12 U.S.C. 4526, the applies to any non-cleared swap or non- minimum transfer amounts under Federal Housing Finance Agency cleared security-based swap entered § 624.4(c) and for qualifying master proposes to add the text of the common into by a covered swap entity on or after netting agreements under § 624.4(d). rule as set forth at the end of the [INSERT DATE THAT IS 180 DAYS (b) Documentation. To the extent that SUPPLEMENTARY INFORMATION as part AFTER PUBLICATION OF THE FINAL a System institution enters into a non- 1221 of subchapter B of chapter XII of RULE IN THE FEDERAL REGISTER]. cleared swap or a non-cleared security- title 12 of the Code of Federal Nothing in this part is intended to based swap with a swap entity, the Regulations, modified as follows: prevent a covered swap entity from

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collecting margin in amounts greater (1) Collect initial margin from the custodian as would apply to the than is required under this part. swap entity in an amount and at such regulated entity, and is subject to the 30. Section 1221.2 is amended as times as would be in accordance with rehypothecation, reinvestment, and follows: the requirements of § 1221.3, provided other transfer restrictions of § 1221.7. a. Add paragraph (c); that for purposes of this section any b. Redesignate paragraphs (z), (aa) and (e) Initial margin models. To the reference to ‘‘initial margin model’’ in extent the initial margin collection (bb) as paragraphs (bb), (cc), and (dd), the definition of ‘‘initial margin respectively; amount that the regulated entity is collection amount’’ shall mean: required to collect from a swap entity c. Redesignate paragraphs (u) through (i) The regulated entity’s initial (y) as (v) through (z); and under paragraph (a)(1) of this section is margin model, if any, or calculated by the regulated entity using d. Add new paragraphs (u) and (aa). (ii) (A) If the regulated entity does not an initial margin model, such model have an initial margin model, an initial § 1221.2 Definitions. must meet all the requirements of margin model used by a third party to * * * * * § 1221.8, provided that the appropriate calculate initial margin on behalf of the (c) Covered swap entity means any prudential regulator responsible for regulated entity in accordance with regulated entity that is a swap entity, or making or rescinding any approvals or § 1121.3, provided that the third party is any other entity that FHFA determines. taking other action to the extent itself independent of the swap entity required or allowed under § 1221.8 shall * * * * * that is the counterparty in the (u) Regulated entity means any be: transaction at issue. regulated entity as defined in section (B) The amounts of initial margin (1) In the case where the initial 1303(20) of the Federal Housing collected under this paragraph may be margin model is that of a third party Enterprises Financial Safety and adjusted for minimum transfer amounts that is subject to regulation by a Soundness Act of 1992 (12 U.S.C. as allowed under § 1221.3(c). prudential regulator, the prudential 4502(20)). (2) Collect variation margin daily from regulator having such jurisdiction; or * * * * * the swap entity in an amount that (aa) Total capital means: (2) In the case where the initial would be in accordance with the margin model is that of either the (1) In the case of any Federal Home requirements in § 1221.4(a) and Loan Bank, ‘‘total capital’’ as such term regulated entity or a third party that is § 1221.4(e). The amounts of variation not subject to regulation by a prudential is defined in 12 CFR 1229.1; and margin collected under this paragraph (2) In the case of the Federal National regulator, FHFA. may be adjusted as allowed for Mortgage Association, the Federal Home minimum transfer amounts under Dated: April 11, 2011. Loan Mortgage Corporation, or any of § 1221.4(c) and for qualifying master John Walsh, their respective affiliates, ‘‘total capital’’ netting agreements under § 1221.4(d). Acting Comptroller of the Currency. as such term is defined in 12 CFR (b) Documentation. To the extent that 1750.11. a regulated entity enters into a non- By order of the Board of Governors of the * * * * * cleared swap or a non-cleared security- Federal Reserve System, April 12, 2011. 31. Section 1221.10 is added to read based swap with a swap entity, the as follows: Jennifer J. Johnson, regulated entity shall execute trading Secretary of the Board. § 1221.10 Capital. documentation with such swap entity in accordance with the requirements of Dated at Washington, DC, this 12th of April A covered swap entity shall comply 2011. with the risk-based capital level or such § 1221.5. (c) Collateral. Any initial or variation By order of the Board of Directors. other amount applicable to the covered margin that a regulated entity is Federal Deposit Insurance Corporation. swap entity as required by the Director required to collect from a swap entity of FHFA pursuant to 12 U.S.C. 4611. Robert E. Feldman, 32. Section 1221.11 is added to read under paragraph (a) of this section shall Executive Secretary. as follows: meet the eligible collateral requirements Dated: April 11, 2011. of § 1221.6. Dale L. Aultman, § 1221.11 Special requirements for (d) Segregation. A regulated entity transactions between swap entities and shall require that any funds or other Secretary, Farm Credit Administration Board. regulated entities. property that it posts to a swap entity as Dated: April 11, 2011. (a) Margin requirements. To the extent initial or variation margin be held by a Edward J. DeMarco, that a regulated entity that is not a third-party custodian that is Acting Director, Federal Housing Finance covered swap entity enters into a non- independent of the swap entity and the Agency. cleared swap or a non-cleared security- regulated entity, is located in a [FR Doc. 2011–10432 Filed 5–10–11; 8:45 am] based swap with a swap entity, the jurisdiction that applies the same BILLING CODE 4810–33–P; 6210–01–P; 6714–01–P; regulated entity shall: insolvency regime to the third-party 6705–01–P; 8070–01–P

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Part V

The President

Proclamation 8670—National Women’s Health Week, 2011 Proclamation 8671—Mother’s Day, 2011

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Federal Register Presidential Documents Vol. 76, No. 91

Wednesday, May 11, 2011

Title 3— Proclamation 8670 of May 6, 2011

The President National Women’s Health Week, 2011

By the President of the United States of America

A Proclamation

Women are a foundation of our families, and their health affects the well- being of our communities and our country. They often make health care decisions for their families as well as themselves. However, American women have not always had access to the health care they need, or the freedom to make the best health choices for their loved ones. As a Nation, we must ensure our mothers, daughters, friends, and colleagues receive fair treatment and access to resources they need to live healthy, happy lives. During National Women’s Health Week, we reaffirm our commitment to making women’s health a priority. In the past, insurance companies have effectively considered being a woman a ‘‘pre-existing condition,’’ and the specific medical needs of women meant higher fees and less coverage. Before the Affordable Care Act became law last year, insurance companies could deny coverage to women due to previous events such as having had cancer or having been pregnant. In 2014, it will be illegal for insurance companies to discriminate against anyone with a pre-existing condition, or charge women higher premiums than they charge men. The Affordable Care Act gives women greater freedom and control over their health care. Thanks to this landmark legislation, women joining new health plans have the ability to choose their own doctor from any primary care provider, OB–GYN, or pediatrician in their health plan’s network without a referral. The new insurance exchanges created by this law ensure coverage of preventive care and basic health services, including maternity care, which is often not provided in health plans in the individual insurance market. National Women’s Health Week is also an opportunity for women of all ages, ethnicities, and economic circumstances to take simple, everyday steps to embrace healthier lifestyles. This week, we encourage women to schedule their annual checkups and talk to their health care provider about important health screenings, many of which will be free of charge because of the Affordable Care Act. All American women and their loved ones can visit www.WomensHealth.gov and www.GirlsHealth.gov for more information and resources on living longer and healthier lives. During National Women’s Health Week, I encourage women, and all Americans, to make their own health a priority and support each other in these efforts. NOW, THEREFORE, I, BARACK OBAMA, President of the United States of America, by virtue of the authority vested in me by the Constitution and the laws of the United States, do hereby proclaim May 8 through May 14, 2011, as National Women’s Health Week. I encourage all Americans to celebrate the progress we have made in protecting women’s health and to promote awareness, prevention, and educational activities that improve the health of all women.

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IN WITNESS WHEREOF, I have hereunto set my hand this sixth day of May, in the year of our Lord two thousand eleven, and of the Independence of the United States of America the two hundred and thirty-fifth.

[FR Doc. 2011–11748 Filed 5–10–11; 11:15 am] Billing code 3195–W1–P

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Proclamation 8671 of May 6, 2011

Mother’s Day, 2011

By the President of the United States of America

A Proclamation

As our society has changed, so have the challenges facing women raising families. Many American women are raising children at home while caring for an elderly parent, holding down two jobs, serving as the sole parent in a family, or defending our country overseas as a service member. Our Nation’s mothers not only look after our needs and teach us to be compas- sionate and responsible, but also manage households, build careers, and improve our neighborhoods and communities. While the roles and responsibilities of mothers have evolved, their guidance and care remains as strong and constant as ever. On Mother’s Day, we celebrate the extraordinary importance of mothers in our lives. The bond of love and dedication a mother shares with her children and family is without bounds or conditions. Whether an adoptive mom or grandmother, mother or partner, the women who raise us show us that no hurdle is too high, and no dream is beyond our reach. As sons and daughters, we show our gratitude for the women in our lives who care for us, shape our values, and set us on the path to a limitless future. Throughout our history, mothers have made remarkable sacrifices for the well-being of their loved ones. Nearly a century ago, Anna Jarvis, who had suffered the loss of her beloved mother, campaigned with many other Americans to make Mother’s Day a recognized holiday and pay respect to all women raising children. Today, we continue to celebrate the influence, love, and nurturing our mothers provide in our lives and in our national life. To support the parents who are raising tomorrow’s leaders, my Administra- tion is committed to doing all we can to create jobs and economic opportunities for families across America. We are striving to help mothers in the workplace by enforcing equal pay laws and addressing workplace flexibility as families balance the demands of work, child and elder care, and education. My budget strengthens the Child and Dependent Care Tax Credit to help families afford the cost of quality childcare. The tax-cut package we passed last December extended expansions of the Child Tax Credit and Earned Income Tax Credit, providing a tax cut for 15.7 million families with about 29.1 million children. The Affordable Care Act gives women more access to health care and better resources to protect the health of their families by requiring new insurance plans to cover wellness benefits for children, ending the exclusion of pre-existing conditions by insurance companies, and extending parents’ health coverage for young adults up to age 26. First Lady Michelle Obama’s ‘‘Let’s Move!’’ initiative is also providing mothers with helpful tools to support their children’s healthy growth. Mothers are the rocks of our families and a foundation in our communities. In gratitude for their generous love, patient counsel, and lifelong support, let us pay respect to the women who carry out the hard work of motherhood with skill and grace, and let us remember those mothers who, though no longer with us, inspire us still.

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The Congress, by a joint resolution approved May 8, 1914, (38 Stat. 770), has designated the second Sunday in May each year as ‘‘Mother’s Day’’ and requested the President to call for its appropriate observance. NOW, THEREFORE, I, BARACK OBAMA, President of the United States of America, do hereby proclaim May 8, 2011, as Mother’s Day. I urge all Americans to express their love, respect, and gratitude to mothers every- where, and I call upon all citizens to observe this day with appropriate programs, ceremonies, and activities. IN WITNESS WHEREOF, I have hereunto set my hand this sixth day of May, in the year of our Lord two thousand eleven, and of the Independence of the United States of America the two hundred and thirty-fifth.

[FR Doc. 2011–11749 Filed 5–10–11; 11:15 am] Billing code 3195–W1–P

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Reader Aids Federal Register Vol. 76, No. 91 Wednesday, May 11, 2011

CUSTOMER SERVICE AND INFORMATION CFR PARTS AFFECTED DURING MAY

Federal Register/Code of Federal Regulations At the end of each month the Office of the Federal Register General Information, indexes and other finding 202–741–6000 publishes separately a List of CFR Sections Affected (LSA), which aids lists parts and sections affected by documents published since Laws 741–6000 the revision date of each title. 441...... 26655 Presidential Documents 2 CFR 530...... 26655 Executive orders and proclamations 741–6000 Proposed Rules: 531...... 26655 The United States Government Manual 741–6000 Ch. VI...... 26651 532...... 26655 Other Services 3 CFR 533...... 26655 534...... 26655 Electronic and on-line services (voice) 741–6020 Proclamations: 537...... 26655 Privacy Act Compilation 741–6064 8658...... 24785 539...... 26655 Public Laws Update Service (numbers, dates, etc.) 741–6043 8659...... 25515 540...... 26655 TTY for the deaf-and-hard-of-hearing 741–6086 8660...... 25517 541...... 26655 8661...... 25519 544...... 26655 8662...... 25521 ELECTRONIC RESEARCH 548...... 26655 8663...... 25523 550...... 26655 World Wide Web 8664...... 25525 552...... 26655 Full text of the daily Federal Register, CFR and other publications 8665...... 25527 555...... 26655 is located at: www.fdsys.gov. 8666...... 25529 557...... 26655 8667...... 25531 559...... 26655 Federal Register information and research tools, including Public 8668...... 26925 Inspection List, indexes, and links to GPO Access are located at: 560...... 26655 8669...... 27217 561...... 26655 www.ofr.gov. 8670...... 27599 E-mail 8671...... 27601 10 CFR FEDREGTOC-L (Federal Register Table of Contents LISTSERV) is Executive Orders: 429...... 24762 an open e-mail service that provides subscribers with a digital 13571...... 24339 430...... 24762, 25211 form of the Federal Register Table of Contents. The digital form 13572...... 24787 600...... 26579 of the Federal Register Table of Contents includes HTML and Administrative Orders: 603...... 26579 PDF links to the full text of each document. Notices: 609...... 26579 Notice of April 29, 611...... 26579 To join or leave, go to http://listserv.access.gpo.gov and select 2011 ...... 24791 Online mailing list archives, FEDREGTOC-L, Join or leave the list Proposed Rules: 26...... 24831 (or change settings); then follow the instructions. 5 CFR 50...... 26223 PENS (Public Law Electronic Notification Service) is an e-mail Proposed Rules: 61...... 24831 service that notifies subscribers of recently enacted laws. 550...... 24406 430...... 26656 To subscribe, go to http://listserv.gsa.gov/archives/publaws-l.html 2640...... 24816 431...... 25622 and select Join or leave the list (or change settings); then follow 7 CFR 12 CFR the instructions. 28...... 25533 Proposed Rules: FEDREGTOC-L and PENS are mailing lists only. We cannot 205...... 26177, 26927 45...... 27564 respond to specific inquiries. 301...... 27219 226...... 27390 Reference questions. Send questions and comments about the 1150...... 26930 237...... 27564 Federal Register system to: [email protected] 4288...... 24343 324...... 27564 The Federal Register staff cannot interpret specific documents or Proposed Rules: 624...... 27564 regulations. 54...... 26222 1221...... 27564 62...... 26222 Reminders. Effective January 1, 2009, the Reminders, including 205...... 25612 13 CFR Rules Going Into Effect and Comments Due Next Week, no longer 271...... 24820, 25414 Proposed Rules: appear in the Reader Aids section of the Federal Register. This 272...... 24820, 25414 121...... 26948 information can be found online at http://www.regulations.gov. 273...... 25414 124...... 26948 CFR Checklist. Effective January 1, 2009, the CFR Checklist no 275...... 24820 125...... 26948 longer appears in the Federal Register. This information can be 301...... 26654 126...... 26948 found online at http://bookstore.gpo.gov/. 319...... 26654 127...... 26948 1206...... 26946 1208...... 25618 14 CFR FEDERAL REGISTER PAGES AND DATE, MAY 1210...... 25619 25...... 25229 39 ...... 24343, 24345, 24349, 24339–24786...... 2 9 CFR 24787–25210...... 3 24351, 24354, 24356, 24358, 93...... 24793 24360, 24793, 24796, 24798, 25211–25514...... 4 94...... 24793 25534, 25535, 27220, 27227, 25515–26176...... 5 95...... 24793 27232, 27237, 27239, 27240, 26177–26578...... 6 321...... 24714 27242, 27244, 27246 26579–26926...... 9 332...... 24714 71...... 25537 26927–27216...... 10 381...... 24714 97...... 25231, 25232 27217–27602...... 11 Proposed Rules: Proposed Rules: 300...... 26655 25 ...... 25648, 26949, 26957

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39 ...... 24407, 24832, 25259, 9...... 26660 26224, 26679, 27290 209...... 27274 25264, 26959, 26962, 27281, Ch. XI...... 26651 60...... 24976 211...... 25565 27282 63...... 24976 216...... 25566 29 CFR 71...... 24409, 26658 180...... 25281 223...... 25569 460...... 24836 1910...... 24576 272...... 26681 225...... 27274 1915...... 24576 721...... 26225, 27294 15 CFR 237...... 25565 252...... 25566, 25569 714...... 26583 30 CFR 42 CFR Proposed Rules: 412...... 26432 Proposed Rules: 17 CFR 70...... 25277 422...... 26490 4...... 24443 Proposed Rules: 71...... 25277 480...... 26490 8...... 24443 Ch. I ...... 25274 72...... 25277 482...... 25550 17...... 24443 229...... 25273 75...... 25277 485...... 25550 37...... 24443 240...... 25273, 26550 90...... 25277 Proposed Rules: 52...... 24443 242...... 26550 104...... 25277 412...... 25788 Ch. 6 ...... 26651 249...... 26550 1511...... 26232 31 CFR 413...... 25788, 26364 19 CFR 418...... 26806 1552...... 26235 Proposed Rules: 424...... 26364 1809...... 25656 210...... 24363 1069...... 24410 447...... 26342 1812...... 25657 20 CFR 33 CFR 455...... 26364 1828...... 25657 476...... 25788 3...... 26603 1852...... 25657 404...... 24802 482...... 25460 100...... 26603 405...... 24802 485...... 25460 117 ...... 24372, 26181, 26182, 416...... 24802 491...... 25460 49 CFR 26606, 27250 422...... 24802 494...... 25460 195...... 25576 165 ...... 24813, 25545, 25548, 21 CFR 383...... 26854 26183, 26603, 26607, 26931, 44 CFR 1...... 25531, 25542 27251, 27253 384...... 26854 73...... 25234 64...... 26938 385...... 26854 Proposed Rules: 65...... 26941, 26943 Proposed Rules: 100...... 27284 395...... 25588 1316...... 26660 165 ...... 24837, 24840, 24843, Proposed Rules: 451...... 24402 25278 67 ...... 26968, 26976, 26978, Proposed Rules: 22 CFR 167...... 27287, 27288 26980, 26981, 26982 172...... 27300 Proposed Rules: 177...... 27300 34 CFR 47 CFR Ch. I ...... 26651 Ch. II ...... 26682 0 ...... 24376, 24383, 26199 Proposed Rules: 385...... 26681 24 CFR 1 ...... 24376, 24383, 26620 Ch. VI...... 25650 386...... 26681 200...... 24363 20...... 26199 38 CFR 64...... 24393, 26641 390...... 26681 207...... 24363 395...... 26681 17...... 26148 Proposed Rules: 531...... 26996 25 CFR 71...... 26148 0...... 24434 533...... 26996 Proposed Rules: 1...... 24434, 26983 Ch. III ...... 26967 40 CFR 2...... 26983 9...... 26186 22...... 26983 50 CFR 26 CFR 52 ...... 24372, 25178, 26192, 24...... 26983 17...... 25590, 25593 1...... 26178 26609, 26615, 26933 27...... 26983 218...... 25480 31...... 26583 180 ...... 25236, 25240, 26194, 64...... 24437, 24442 301...... 24813 27256, 27261, 27268 73...... 24846 660...... 25246, 27508 679...... 24403, 24404 Proposed Rules: 272...... 26616 90...... 26983, 27296 31...... 26678 710...... 27271 95...... 26983 Proposed Rules: 721...... 26186 17 ...... 25150, 26086, 27184 28 CFR 1042...... 25246, 26620 48 CFR 226...... 25660 Proposed Rules: Proposed Rules: 19...... 26220 648...... 24444 8...... 26660 52 ...... 24421, 24846, 25652, Ch. 2 ...... 27274 679...... 25295

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pamphlet) form from the Courthouse’’. (Apr. 25, 2011; enacted public laws. To Superintendent of Documents, 125 Stat. 213) subscribe, go to http:// LIST OF PUBLIC LAWS U.S. Government Printing S.J. Res. 8/P.L. 112–12 listserv.gsa.gov/archives/ Office, Washington, DC 20402 Providing for the appointment publaws-l.html This is a continuing list of (phone, 202–512–1808). The public bills from the current of Stephen M. Case as a text will also be made citizen regent of the Board of session of Congress which available on the Internet from Note: This service is strictly Regents of the Smithsonian have become Federal laws. It GPO’s Federal Digital System for E-mail notification of new Institution. (Apr. 25, 2011; 125 may be used in conjunction (FDsys) at http://www.gpo.gov/ laws. The text of laws is not Stat. 214) with ‘‘P L U S’’ (Public Laws fdsys. Some laws may not yet available through this service. Last List April 19, 2011 Update Service) on 202–741– be available. PENS cannot respond to 6043. This list is also S. 307/P.L. 112–11 specific inquiries sent to this available online at http:// address. www.archives.gov/federal- To designate the Federal Public Laws Electronic register/laws. building and United States Notification Service courthouse located at 217 (PENS) The text of laws is not West King Street, Martinsburg, published in the Federal West Virginia, as the ‘‘W. Register but may be ordered Craig Broadwater Federal PENS is a free electronic mail in ‘‘slip law’’ (individual Building and United States notification service of newly

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