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2 III

Contents Federal Register Vol. 61, No. 233

Tuesday, December 3, 1996

Agricultural Research Service Environmental Protection Agency NOTICES RULES Patent licenses; non-exclusive, exclusive, or partially Air quality implementation plans; approval and exclusive: promulgation; various States: Fanning Corp., 64048 Maryland; correction, 64028–64029 Fanning Corporation of Chicago, 64048 New York; withdrawal, 64029 PROPOSED RULES Agriculture Department Air programs: See Agricultural Research Service Stratospheric ozone protection— See Forest Service Motor vehicle air conditioning; refigerant mixing See Natural Resources Conservation Service prevention, 64045 Air quality implementation plans; approval and promulgation; various States: Children and Families Administration Missouri, 64042–64044 NOTICES NOTICES Agency information collection activities: Clean Air Act: Submission for OMB review; comment request, 64097– Citizens suits; proposed settlements— 64098 Ober, Edward M. et al., 64082 Senior Executive Service: Meetings: Performance Review Board; membership, 64098 Environmental Policy and Technology National Advisory Council, 64082–64083 Commerce Department National Drinking Water Advisory Council, 64083 See Economic Development Administration Pesticide registration, cancellation, etc.: See International Trade Administration Flying Insect Killer, etc., 64083–64084 See National Institute of Standards and Technology See National Oceanic and Atmospheric Administration Federal Aviation Administration See Patent and Trademark Office RULES Air traffic operating and flight rules: Commodity Futures Trading Commission Security records falsification, 64242–64244 PROPOSED RULES NOTICES Air carrier certification and operations: Meetings; Sunshine Act, 64071 Single-engine aircraft; commercial passenger-carying operations under instrument flight rules, 64230– Copyright Office, Library of Congress 64240 PROPOSED RULES Copyright office and procedures: Federal Communications Commission Registration of claims— PROPOSED RULES ‘‘Best Edition’’ of published copyrighted works, 64042 Common carrier services: Digital television; technical standards, 64045–64046 Customs Service NOTICES PROPOSED RULES Agency information collection activities: Air commerce: Proposed collection; comment request, 64084–64085 User fee airports; list additions, 64041–64042 Submission for OMB review; comment request, 64085 NOTICES Ceramic floor and wall tile; crystallinity testing, 64192– Federal Deposit Insurance Corporation 64193 NOTICES Meetings: Defense Department Affordable Housing Advisory Board, 64085–64086 See Navy Department Meetings; Sunshine Act, 64086 Federal Energy Regulatory Commission Economic Development Administration PROPOSED RULES NOTICES Practice and procedure: Trade adjustment assistance eligibility determination Hydroelectric projects; relicensing procedures; petitions: rulemaking petition, 64031–64041 Hudson Standard Corp., et al., 64049–64050 NOTICES Electric rate and corporate regulation filings: Energy Department Edison Bataan Cogeneration Corp. et al., 64075–64077 See Federal Energy Regulatory Commission Meetings; Sunshine Act, 64077 See Western Area Power Administration Natural gas certificate filings: NOTICES Transcontinental Gas Pipe Line Corp. et al., 64077–64080 Radiological condition certification: Applications, hearings, determinations, etc.: Herring-Hall-Marvin safe site, OH, 64072–64073 ANR Pipeline Co., 64073 IV Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Contents

Central Vermont Public Service Corp., 64073–64074 Health Resources and Services Administration Teco Pipeline Co., 64074 NOTICES Tennessee Gas Pipeline Co., 64074 Agency information collection activities: Texas Eastern Transmission Corp., 64074 Proposed collection; comment request, 64137–64138 Tucson Electric Power Co., 64074–64075 United Illuminating Co., 64075 Housing and Urban Development Department Wisconsin Public Service Corp., 64075 NOTICES Agency information collection activities: Federal Housing Finance Board Proposed collection; comment request, 64141–64142 RULES Submission for OMB review; comment request, 64142– Federal home loan bank system: 64143 Federal home loan bank securities; book entry Grants and cooperative agreements; availability, etc.: regulations, 64021–64027 Community development block grant program— Small cities program and New York State small Federal Maritime Commission communities Section 108 loan guarantee program, NOTICES 64196–64218 Freight forwarder licenses: Elco Freight International, Inc. et al., 64086 Indian Health Service NOTICES Federal Railroad Administration Grants and cooperative agreements; availability, etc.: NOTICES Health profession educational loan repayment program, Alcohol/drug regulations: 64138–64139 Temporary post accident blood testing procedures, Interior Department 64189–64191 Direct Train Control operations; safety bulletin, 64091 See Fish and Wildlife Service See Land Management Bureau Federal Reserve System See National Park Service See Surface Mining Reclamation and Enforcement Office NOTICES Banks and bank holding companies: International Trade Administration Formations, acquisitions and mergers, 64086–64087 NOTICES Permissable nonbanking activities, 64087 Antidumping: Federal Reserve bank services: Cut-to-length carbon steel plate from— Private sector adjustment factor, etc., 64087–64097 China et al., 64051–64055 Meetings; Sunshine Act, 64097 Forged steel crankshafts from— United Kingdom, 64055–64058 Fish and Wildlife Service Gray portland cement and clinker from— NOTICES Mexico, 64058 Marine mammals permit applications, 64070 Steek wire rope from— Korea, 64058–64062 Food and Drug Administration Antidumping and countervailing duties: RULES Administrative review requests, 64050–64051 GRAS or prior-sanctioned ingredients: Countervailing duties: Ferrous lactate, 64027 Carbon steel products from— NOTICES Sweden, 64062–64066 Food for human consumption: Cut-to-length carbon steel plate from— Food Chemicals Codex; 4th Edition— Brazil, 64066–64067 Changes and new monographs, 64098–64099 Sweden, 64066 Human drugs: New drug applications— International Trade Commission Cyclospasmol; withdrawal, 64099–64136 NOTICES Reports; availability, etc.: Import investigations: Clinical hold for investigational new drug applications, Suits and suit-type jackets from— 64136–64137 Mexico, 64148–64150

Forest Service Labor Department NOTICES See Pension and Welfare Benefits Administration Meetings: Willamette Provincial Interagency Executive Committee Land Management Bureau Advisory Commmittee, 64048 NOTICES Meetings: Health and Human Services Department Resource advisory councils— See Children and Families Administration Utah, 64143 See Food and Drug Administration Realty actions; sales, leases, etc.: See Health Resources and Services Administration Oregon, 64143–64145 See Indian Health Service See Substance Abuse and Mental Health Services Library of Congress Administration See Copyright Office, Library of Congress Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Contents V

National Aeronautics and Space Administration Pension and Welfare Benefits Administration NOTICES NOTICES Meetings: Employee benefit plans; prohibited transaction exemptions: Life and Microgravity Sciences and Applications Wells Fargo Bank, N.A., et al., 64150–64173 Advisory Committee, 64173 Personnel Management Office National Credit Union Administration NOTICES NOTICES Meetings: Meetings; Sunshine Act, 64173 National Partnership Council, 64177 National Institute of Standards and Technology Public Health Service NOTICES See Food and Drug Administration National Fire Codes: See Health Resources and Services Administration Fire safety standards, 64067–64068 See Indian Health Service Technical committee reports, 64068–64069 See Substance Abuse and Mental Health Services National Oceanic and Atmospheric Administration Administration PROPOSED RULES Fishery conservation and management: Railroad Retirement Board Alaska; fisheries of Exclusive Economic Zone— NOTICES Scallop, 64047 Agency information collection activities: Northeastern United States fisheries— Proposed collection; comment request, 64177–64178 Atlantic mackerel, squid and butterfish, 64046–64047 NOTICES Research and Special Programs Administration Meetings: RULES Carribean Fishery Management Council, 64070 Pipeline safey: Permits: Rulemaking procedures, replication; Federal regulatory Marine mammals, 64070 reform Correction, 64030 National Park Service NOTICES Securities and Exchange Commission Environmental statements; availability, etc.: NOTICES Klondike Gold Rush National Historical Park, AK, 64145– Self regulatory organizations: 64146 Clearing agency registration applications— Petroglyph National Monument, NM, 64146–64147 Government Securities Clearing Corp., 64183–64184 Meetings: International Securities Clearing Corp., 64184–64185 Maine Acadian Culture Preservation Commission, 64147– Self-regulatory organizations; proposed rule changes: 64148 National Association of Securities Dealers, Inc., 64185– National Register of Historic Places: 64186 Pending nominations, 64148 Applications, hearings, determinations, etc.: Chubb Series Trust, et al., 64178–64183 Natural Resources Conservation Service Technitrol, Inc., 64183 NOTICES Environmental statements; availability, etc.: Small Business Administration Calcasieu Parish, LA; Perry Ridge Shoreline Protection, NOTICES 64049 Disaster loan areas: Navy Department Florida, 64187 Guam, 64187 NOTICES License surrenders: Environmental statements; notice of intent: SBI Capital Corp., 64187 U.S. Pacific Fleet, San Diego, CA, complex et al.; NIMITZ Applications, hearings, determinations, etc.: class nuclear-powered aircraft home port facilities MMG Ventures, L.P., 64186 development, 64071–64072 Stratford Equity Partners, L.P., 64186–64187 Nuclear Regulatory Commission Wasserstein Perella SBIC, L.P., 64187 NOTICES Meetings; Sunshine Act, 64175–64176 Substance Abuse and Mental Health Services Standard review plan for review of safety analysis reports Administration for nuclear power plants, 64176–64177 NOTICES Applications, hearings, determinations, etc.: Federal agency urine drug testing; certified laboratories Arkansas Nuclear One, Unit 2, 64173–64175 meeting minimum standards, 64140–64141 Houston Lighting & Power Co., 64175 Surface Mining Reclamation and Enforcement Office Patent and Trademark Office PROPOSED RULES RULES Abandoned mine land reclamation: Patent cases: Reclamation fund—fee collection and coal production Correspondence practice changes; signature and filing reporting— requirements; correction, 64027–64028 Coal moisture, 64220–64227 VI Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Contents

Surface Transportation Board Western Area Power Administration NOTICES NOTICES Railroad operation, acquisition, construction, etc.: Post-2000 resource pool allocation procedures; Pick Sloan Pioneer Railcorp., et al., 64191–64192 Missouri Basin program; Eastern Division; proposed power allocation procedures, etc., 64080–64082 Thrift Supervision Office RULES Corporate governance and policy statements: Separate Parts In This Issue Federal regulatory review, 64007–64021 Part II Transportation Department Department of Housing and Urban Development, 64196– See Federal Aviation Administration 64218 See Federal Railroad Administration See Research and Special Programs Administration Part III See Surface Transportation Board Department of Interior, Office of Surface Mining RULES Reclamation and Enforcement, 64220–64227 Organization, functions, and authority delegations: Maritime Administrator, 64029–64030 Part IV NOTICES Department of Transportation, Federal Aviation Agency information collection activities: Administration, 64230–64240 Submission for OMB review; comment request, 64187– 64188 Part V Aviation proceedings: Department of Transportation, Federal Aviation Certificates of public convenience and necessity and Administration, 64242–64244 foreign air carrier permits; weekly applications, 64188–64189 Aviation proceedings; Reader Aids Agreements filed; weekly receipts, 64189 Additional information, including a list of public laws, telephone numbers, reminders, and finding aids, appears in Treasury Department the Reader Aids section at the end of this issue. See Customs Service See Thrift Supervision Office Electronic Bulletin Board United States Information Agency Free Electronic Bulletin Board service for Public Law NOTICES numbers, Federal Register finding aids, and a list of Agency information collection activities: documents on public inspection is available on 202–275– Proposed collection; comment request, 64193–64194 1538 or 275–0920. Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Contents VII

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.

12 CFR 543...... 64007 544...... 64007 545...... 64007 552...... 64007 556...... 64007 575...... 64007 910...... 64021 912...... 64021 14 CFR 107...... 64242 108...... 64242 Proposed Rules: 135...... 64230 18 CFR Proposed Rules: 4...... 64031 375...... 64031 19 CFR Proposed Rules: 122...... 64041 21 CFR 73...... 64027 30 CFR Proposed Rules: 870...... 64220 37 CFR 1...... 64027 Proposed Rules: 202...... 64042 40 CFR 52 (2 documents) ...... 64028, 64029 Proposed Rules: 52...... 64042 70...... 64042 82...... 64045 47 CFR Proposed Rules: 1...... 64045 49 CFR 1...... 64029 106...... 64030 190...... 64030 50 CFR Proposed Rules: 648...... 64046 679...... 64047 64007

Rules and Regulations Federal Register Vol. 61, No. 233

Tuesday, December 3, 1996

This section of the FEDERAL REGISTER Lithotomos, Counsel (Banking and insurance 7 were also issued this contains regulatory documents having general Finance), Regulations and Legislation summer. The final rule regarding applicability and legal effect, most of which Division, (202) 906–6439, Chief conflicts of interest, corporate are keyed to and codified in the Code of Counsel’s Office, 1700 G Street NW., opportunity and hazard insurance was Federal Regulations, which is published under Washington, D.C. 20552. published in the Federal Register on 50 titles pursuant to 44 U.S.C. 1510. November 27, 1996. The final rule SUPPLEMENTARY INFORMATION: The Code of Federal Regulations is sold by regarding subsidiaries and equity the Superintendent of Documents. Prices of Table of Contents investments is imminent. new books are listed in the first FEDERAL I. Background On June 25, 1996, OTS also issued a REGISTER issue of each week. II. Summary of Comments and Description notice of proposed rulemaking to of the Final Rule A. General Discussion of the Comments streamline its charter and bylaw regulations (corporate governance).8 The DEPARTMENT OF THE TREASURY B. Section-by-Section Analysis III. Disposition of Corporate Governance proposal resulted from an intensive Office of Thrift Supervision Regulations review by OTS staff. OTS also sought IV. Administrative Procedure Act industry input regarding staff’s initial 12 CFR Parts 543, 544, 545, 552, 556, V. Paperwork Reduction Act of 1995 recommendations through an industry and 575 VI. Executive Order 12866 focus group meeting among VII. Regulatory Flexibility Act Analysis representatives of seven savings [No. 96±112] VIII. Unfunded Mandates Act of 1995 IX. Effective Date associations and an industry trade RIN 1550±AA87 association. I. Background Corporate Governance Today’s final rule is quite similar to In a comprehensive review of its the proposal. It reduces the number of AGENCY: Office of Thrift Supervision, regulations, beginning in the spring of charter and bylaw regulations and Treasury. 1995, pursuant to the Vice President’s policy statements from 33 to 21, a Reinvention Initiative and section 303 ACTION: Final rule. reduction of 36 percent. In addition, of CDRIA,1 OTS identified numerous deletion of the model bylaws from the SUMMARY: The Office of Thrift obsolete or redundant regulations that CFR will remove 10 pages of CFR text. Supervision (OTS or Office) is today could quickly be repealed. On December This information will be moved to the issuing a final rule amending its 27, 1995, OTS published a final rule in Application Processing Regulatory corporate governance regulations and the Federal Register repealing eight Handbook (Handbook) as guidance. The policy statements to update, reorganize percent of its regulations.2 As part of its Handbook is sent to all OTS regulated and substantially streamline them. review, OTS also identified several key institutions and is available to the This final rule follows a detailed areas in its regulations for a more public. The model bylaws will also be review of each pertinent regulation and intensive, systematic regulatory burden available through PUBLIFAX at (202) policy statement in the Code of Federal review. Certain areas—lending and 906–5660 and from fee service providers Regulations (CFR) to determine whether investment authority, corporate on CD Rom. it is necessary, imposes the least governance, subsidiaries and equity investments, and conflicts of interest, The general tenor of the changes being possible burden consistent with safety made today can be summarized in three and soundness, and is written in a clear corporate opportunity and hazard insurance—were chosen for intensive points. First, we are removing a number and straightforward manner. Today’s of duplicative or outdated corporate final rule is issued pursuant to the review because they are vital to the thrift industry, had not been developed governance regulations. By clearing out Regulatory Reinvention Initiative of the 3 the deadwood, OTS hopes to reduce Vice President’s National Performance on an interagency basis, and had not been substantially reviewed or amended compliance costs. Second, we are Review (Reinvention Initiative) and updating the regulations to reflect section 303 of the Riegle Community in recent years. Earlier this year, OTS proposed a modern trends toward greater flexibility Development and Regulatory comprehensive streamlining of its in corporate governance. Third, we are Improvement Act of 1994 (CDRIA) lending and investment regulations 4 adding clarifying language to various which requires OTS and the other and, subsequently, OTS published a regulations to respond to frequently Federal banking agencies to review, final lending and investment rule on recurring corporate governance streamline, and modify regulations and September 30, 1996.5 Proposals questions asked by institutions. Taken policies to improve efficiency, reduce regarding subsidiaries and equity together, these changes should unnecessary costs, and remove investments 6 and conflicts of interest, significantly reduce regulatory burden. inconsistent, outmoded, and duplicative corporate opportunity and hazard This final rule is the first major update requirements. of the corporate governance regulations EFFECTIVE DATE: January 1, 1997. 1 12 U.S.C. 4803(a)(1). in over a decade.9 FOR FURTHER INFORMATION CONTACT: 2 60 FR 66866 (December 27, 1995). David Permut, Counsel (Banking and 3 Interagency regulations are being reviewed 7 61 FR 30190 (June 14, 1996). through the Federal Financial Institutions 8 61 FR 32713 (June 25, 1996). Finance), Business Transactions Examination Counsel. 9 For an extensive discussion of the history of the Division, (202) 906–7505; or Mary Jo 4 61 FR 1162 (January 17, 1996). current and previous corporate governance Johnson, Project Manager, Supervision 5 61 FR 50951 (September 30, 1996). regulations, see the discussion in the proposal. 61 6 61 FR 29976 (June 13, 1996). Policy (202) 906–5739; or Valerie J. FR 32713, 32715 (June 25, 1996). 64008 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Rules and Regulations

II. Summary of Comments and Any institution which adopts the model these matters is more appropriately Description of the Final Rule bylaws will be deemed to comply with addressed in the bylaws, where related the regulations. issues are already addressed. Presenting A. General Discussion of the Comments The changes to the mutual charter are related requirements in a single place The public comment period on the as follows: should make the bylaws more user June 25 proposal closed on August 26, Section 1. Corporate Title. Section 1 friendly. 1996. Seven commenters responded. establishes the corporate title of the Section 9. Amendment of charter. Three savings associations, one savings Federal association. The words ‘‘hereby Section 9 describes the procedures for and loan holding company on behalf of chartered’’ are removed as unnecessary amending the association’s charter. its affiliated savings associations, one verbiage. References to §§ 544.2 or 544.3 are financial institutions trade group, one Section 2. Office. This section removed as unnecessary verbiage. law firm, and one private citizen designates the location of the Section 9 is also revised to reflect the submitted comments. The comments association’s home office. The section is fact that ‘‘preapproved’’ charter were generally favorable. Specific being revised to indicate that the street amendments (§ 544.2) will now be truly comments addressing various sections address of the home office need not be preapproved. Institutions are no longer are discussed, where appropriate, in the stated in the charter. It is sufficient to required to submit these amendments to section-by-section analysis below. indicate the city and state where the OTS for ‘‘preliminary’’ approval. (See home office is located. discussion of § 544.2 below.) B. Section-by-Section Analysis Section 6. Members. This section Finally, the signature blocks of the 1. Existing Corporate Governance identifies the association’s members and charter are modified to include a date to Sections describes their rights. OTS is clarify when a charter is effective. streamlining this section by moving the a. Part 544—Charter and Bylaws third and fourth sentences to the Section 544.2 Charter amendments Section 544.1 Federal Mutual Charter introductory paragraph of the Paragraphs (a) and (b) describe the regulation. These two sentences instruct filing requirements for amending This section contains the required institutions that wish to adopt the Federal mutual charters. OTS is charter for Federal mutual associations. charter, but are currently operating removing, from paragraphs (a)(2)(i) and In its proposed rulemaking, OTS under old charters conferring (ii), the requirement that institutions solicited comment on alternative membership rights on borrowers, to certify that amendments they propose proposals. One option was to move the grandfather the membership rights of are permissible under all applicable mutual charter (as well as the charter for their existing borrowers. laws. This certification is unnecessary stock associations and the model bylaws The sixth sentence of section 6, because the legality of a proposed for both) from the regulations to the dealing with proxies, is removed amendment is reviewed by OTS staff as Handbook. The other option was to because it also appears in the bylaws. part of the application process and its retain the charters (and model bylaws) The seventh and eighth sentences, deletion will reduce regulatory burden. in the regulations, but update them. dealing with quorums, is moved to the In addition, paragraph (b) is revised to Most commenters responded to this bylaws because matters regarding indicate that preapproved charter aspect of the proposal. Only one member meetings are more fully and amendments no longer require advance commenter generally supported moving appropriately addressed there. submissions to OTS. Instead, the charters and bylaws to the Section 7. Directors. This section preapproved amendments are now Handbook. Four commenters expressed provides that a Federal mutual deemed approved when adopted by the concern that moving the charters and association may have from 5 to 15 institution and must simply be filed model bylaws into the Handbook would directors. To further streamline the with OTS within 30 days after adoption. remove the opportunity for notice and charter, bracketed references to A new preapproved charter comment under the Administrative ‘‘trustees’’ are removed, and a single amendment is added to § 544.2 that Procedure Act (APA) when changes are sentence is added to the introductory authorizes Federal mutual associations made to these documents. One instructions indicating that institutions to amend their charters to raise the cap commenter stated that weakening the may substitute the term ‘‘trustee’’ for the on the maximum number of votes any APA requirements will jeopardize the term ‘‘director’’ where appropriate. member can cast up to 1,000. Mutual mutual charter and enhance the Similar changes are made throughout charters generally authorize depositors possibility of hostile activity against the charter (and the model bylaws) for to cast one vote for every $100 of mutuals by takeover interests. One mutual associations. deposits, subject to a cap that has commenter stated that if the OTS The third and fifth sentences historically tracked the limit on deposit believes that reasons of safety and (providing that directors shall be insurance. Thus, 1,000 votes is the soundness warrant maintaining members of the association and standard cap under the current mutual regulatory requirements over the forms addressing staggered terms for directors) charter (§ 544.1). However, many of charters and bylaws, then those are moved to the bylaw section dealing institutions operate under charters requirements should remain in the CFR. with directors. The fourth sentence adopted before the cap was raised to After considering these comments, OTS (regarding vacancies on the board) is 1,000. Making the 1,000 cap a has decided to retain the charters in the moved to the bylaw section on preapproved amendment enables CFR and to amend them, as proposed. resignations, removals and (newly institutions to update their cap without As for the model bylaws, however, OTS added) vacancies. The last sentence, in filing an application and paying an is moving them to the Handbook brackets, is also moved to the bylaw application fee. This is the most because the model bylaws are intended section on directors. This sentence frequently requested amendment for to serve only as guidance to institutions. authorizes state savings banks that Federal mutual associations. One Critical bylaw issues are addressed in convert to Federal mutual associations commenter suggested removing the cap the regulations described below. These to grandfather their existing provisions entirely, but the OTS has determined regulations, rather than the model for electing directors for a limited that the existing cap has worked well in bylaws, will serve as binding norms. period of time. OTS believes each of preventing unauthorized changes of Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Rules and Regulations 64009 control of mutual associations. For similar language that appears in verifying the identity of the member.12 example, if an institution had no cap on § 544.5(b)(16). Telephonic and electronic proxies votes, an investor with more than 10% Paragraph (b)(1) contains the annual enable institutions to gather proxies and of the deposits in the institution meeting requirements for Federal conduct corporate business more conceivably could exercise control over mutual associations. This paragraph is rapidly and have become an accepted the institution without regulatory amended to allow meetings not only at part of corporate democracy. In approval. OTS believes it is appropriate the main office, but also at any other addition, in response to frequent for the voting rights of mutuals to be convenient place the board of directors questions, OTS proposed to describe distributed broadly across the may designate, and to permit the voting procedures applicable to joint membership base. association to hold its annual meeting accounts and accounts held by OTS also is removing from § 544.2 an within 150 days of the end of the fiduciaries on behalf of others. These obsolete preapproved amendment association’s fiscal year. The current procedures will be included in the authorizing institutions to issue Mutual requirement is 120 days. Both changes model bylaws being moved to the Capital Certificates (MCCs). Institutions provide additional flexibility for Federal Handbook, rather than in the generally no longer issue MCCs.10 mutual associations. regulations. Moreover, the procedures Elimination of outdated matter such as Paragraph (b)(2) addresses special will be slightly modified, in response to this should make the regulations less meetings of members. It provides, inter a comment, to clarify that Individual confusing and easier to use. alia, that the holders of ten percent or Retirement Accounts and Keogh Paragraph 544.2(c) details the more of a mutual association’s voting accounts may be voted by an institution procedures an institution must follow capital may call a special meeting. if no other instructions are received. In when it wants OTS to reissue its charter Institutions frequently ask for addition, the procedures governing joint to reflect amendments to the charter. clarification of the meaning of ‘‘voting voting of shares will be modified to The wording of this section is capital,’’ since the term is no longer parallel the provisions of the stock conformed to the wording of the defined by the Home Owners’ Loan Act bylaws, also in response to a comment. corresponding stock charter section at (HOLA). As proposed, OTS is clarifying Current paragraph (b)(6), which § 552.4(d). No substantive change that voting capital means all FDIC- references § 545.131 regarding results. Paragraph (c) is also amended to insured deposits held by a savings communication with other members, remove the delegation of authority to association. In response to a comment, becomes (b)(7). In addition, the the Chief Counsel to execute reissued OTS has also added a phrase to indicate paragraph is amended to reflect the charters. This change was proposed as that voting capital will be determined as relocation of § 545.131 to Part 544, and part of a continuing effort to remove of the voting record date. to extend the privacy rights now delegations from the regulations. Paragraphs (b)(3) and (4), which guaranteed to depositors of Federal Delegated authority to execute reissued discuss notice requirements for stock institutions (§ 552.11(d)) to the charters will be preserved via an meetings of members and the fixing of depositors of Federal mutual internal OTS document. the record date for determining which institutions. The privacy rights of the Section 544.3 Adoption of a New members are entitled to vote, members of mutual institutions will not Federal Charter by a Federal Savings respectively, are amended to indicate prevent the internal use of member Association the circumstances under which information by those institutions. adjournment of a meeting of members This section details the procedures requires the issuance of new notices and Current paragraph (b)(7), regarding that a Federal mutual savings and loan the fixing of a new record date. These the number of directors, becomes (b)(8). association would use to amend its are frequently asked questions. In addition, the paragraph is amended to clarify that the bylaws must specify charter to read in the form of a Federal OTS also proposed a new paragraph the precise number of directors (rather mutual savings bank, or vice versa. This (b)(5), to be titled ‘‘Member Quorum.’’ 11 than a range). This number is chosen by section has become obsolete. Today, the This paragraph, which is being added as the institution within the range charters for both types of institution are proposed, contains certain quorum specified in the charter and may be identical, except for a possible provisions previously found in the changed by the institution from time to difference in corporate title. A simple charter (as discussed above), as well as time by amending its bylaws. One corporate title change can be used to clarification of what items of business commenter requested that the OTS redesignate an institution as a ‘‘savings may be considered at a meeting held allow a range of directors, as some state bank’’ or ‘‘savings and loan after adjournment. The agency believes codes allow. OTS has determined, association.’’ Thus, § 544.3 is repealed. that quorum issues are more however, that specificity is needed in Corresponding changes are made to appropriately addressed in the bylaws, the bylaws to determine quorum §§ 543.1(b) and 543.14. where other rules governing member requirements. Paragraph (b)(8) also meetings already appear. The new Section 544.5 Federal Mutual Savings contains three provisions being moved paragraph also clarifies, in response to Association Bylaws from section seven of the charter. One a comment, that the directors are elected This section describes the provision requires that directors be by a plurality of votes in an election of requirements for the bylaws of a Federal members of their association; a second directors. mutual association. A nonsubstantive provision, modified in response to a change is made to paragraph (a) to Current paragraph (b)(5), on voting by comment, allows, but does not require conform its language regarding proxy, is moved to (b)(6) and is that directors serve staggered terms; and procedures for bylaw amendments to amended to permit proxies to be given a third provision permits state savings telephonically or electronically as long banks that convert to Federal mutual as the holder uses a procedure for 10 An institution may still choose to issue MCCs, provided the institution makes any necessary 12 One example of a verification procedure is for amendments to its charter and bylaws (which are 11 All subsequent paragraphs will be renumbered the institution receiving the proxy by facsimile to no longer preapproved) and follows the procedures accordingly. However, only those paragraphs being compare the signature on the proxy to a signature specified at 12 CFR 563.74. substantively changed are discussed herein. that the institution has on file. 64010 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Rules and Regulations associations to grandfather their method preparedness.’’ Emergency preparedness necessary if all provisions in question of electing directors for a limited time. provisions will also no longer be part of meet the applicable criteria; instead an Current paragraph (b)(9), which the model bylaws. institution must submit notice of the addresses the duties of officers, Paragraphs (c)(1) and (c)(2) discuss provisions it has chosen to the OTS employees and agents and their the filing procedures for bylaw Regional Office within 30 days of indemnification, becomes (b)(10). In amendments. OTS proposed to remove adoption. All commenters who addition, a sentence on the removal of the requirement that applications for addressed this issue were in favor of the officers is added to answer a frequently bylaw amendments contain more flexible corporate governance asked question. The sentence states: certifications that the proposed structure. ‘‘Any officer may be removed by the amendments comport with all laws. As Paragraph (d), which addresses the board of directors with or without noted above in the discussion on charter effective date of all other bylaw cause, but such removal, other than for amendments, the certification amendments (i.e., amendments that are cause, shall be without prejudice to the requirement is unnecessary because the not preapproved or do not meet the contractual rights, if any, of the person legality of proposed amendments are standards just described), is amended to so removed.’’ reviewed by OTS staff as part of the comport with a similar provision for Current paragraph (b)(10), on the application process and its deletion will Federal stock associations. The change resignation or removal of directors, reduce regulatory burden. Accordingly, is intended to clarify the circumstances becomes (b)(11). A cross reference to the the certification requirement is dropped. under which an amendment may be definition of ‘‘cause,’’ which appears In addition, paragraph (c)(1) is revised rejected by OTS, by cross referencing elsewhere in the regulations, is added in to indicate that the model bylaws can the standards that appear in paragraph response to a frequently asked question now be found in the Handbook, which (c)(1). concerning the circumstances under is available from OTS. The current which shareholders can remove appendix to part 544, which contains Section 544.8 References to Old and directors for ‘‘cause.’’ Paragraph (b)(11) the model bylaws, is removed. New Charters; Rules Applicable to is also expanded to authorize boards of Subsection (c)(1)(ii) has been Trustees of Federal Mutual Savings directors to fill vacancies under the redesignated as (c)(1)(i)(B) and modified Banks flexible rules that now apply to stock to indicate OTS considers proposed associations. OTS proposed to remove this section, bylaw amendments regarding which indicates that trustees will be Current paragraph (b)(12), discussing indemnification, conflicts of interest, execution of instruments, is removed in treated as if they are directors for and limitations on director or officer purposes of the regulations. The same its entirety. OTS has determined that liability to raise significant issues of law this is not an item that it needs to point is made in the introductory or policy and, thus, require OTS review. instructions to the charter and model regulate. For guidance purposes, A new subparagraph is added to explain however, current provisions in the bylaws. It does not need to be repeated the application process for amendments here. Thus, the section is removed. model bylaws on the execution of raising issues of law or policy. instruments will remain. Paragraph (c)(1)(iii) is revised to Section 544.9 Obsolete Charter Current paragraph (b)(13), discussing indicate that the model bylaws, if Provision for Charter B Associations procedures for nominating directors, is adopted verbatim, are effective when This section provides that institutions expanded to clarify the scope of the adopted and must simply be filed with that still operate under the old Charter requirement that the names of nominees OTS within 30 days after adoption. This B are not bound by section 10 of that be posted at least 15 days before an change was proposed because OTS has charter. Section 10 of Charter B purports election, under certain circumstances. determined that over 90 percent of the to limit the authority of an institution to New language confirms that the bylaws applications filed in recent years invest in consumer loans and corporate requirement does not apply to a are for standard provisions that do not debt securities. As proposed § 544.9, nominee substituted as a result of death require agency review. or other incapacity of another nominee. A new paragraph (c)(3) is added to which affects very few institutions, is From time to time, institutions have allow mutuals to adopt additional moved from the regulations into the sought clarification on this issue. corporate governance procedures to the Handbook. The authority of Charter B Current paragraph (b)(15), discussing extent such procedures: (i) Are not associations to invest in consumer loans the corporate seal, is removed in its inconsistent with the HOLA, applicable and corporate debt securities is entirety. OTS has determined this is not Federal statutes and regulations, OTS governed by current Federal statutory an area it needs to regulate. Current policies, or safety and soundness; and limits, not section 10 of their charter. provisions in the model bylaws remain, (ii) do not touch upon certain key areas, Section 544.8 Communication for guidance purposes. such as OTS policies and regulations on Between Members of a Federal Mutual Current paragraph (b)(16), which sets indemnification, conflict of interest, Savings Association forth procedures for amending the limitation of director or officer liability, bylaws, becomes (b)(15) and is amended or other matters of safety and OTS proposed to move the rules to make it easier for a board that fails soundness. Subject to these governing communications between to meet its quorum requirement solely qualifications, this new provision members of Federal mutual due to vacancies on the board to amend allows Federal mutual associations to associations, which now appear in its bylaws. The new language specifies designate, en bloc or on a piecemeal § 545.131, to part 544. This is where that, in the absence of a quorum due basis, any of the corporate governance users of the regulations would most solely to vacancies, the affirmative vote procedures from the laws of the state likely look for guidance on such of a majority of the sitting board may where the main office of the institution in that area. It should also be noted that when amend the bylaws. is located.13 No preapproval is Current paragraph (b)(17), on adopting provisions from any of the alternative sources, a mutual may adopt only provisions of miscellaneous topics, becomes (b)(16) 13 We note, however, that silence in a particular and is amended to remove the reference state law specifically intended for mutual area in a state’s law may not, for these purposes, institutions and a stock institution may adopt only be construed as authorizing adoption of procedures to provisions regarding ‘‘emergency provisions intended for stock corporations. Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Rules and Regulations 64011 matters. Accordingly, current § 545.131 permit the issuance of ‘‘no par’’ stock. associations are no longer required to becomes new § 544.8. The decision whether stock should have certify that proposed amendments a stated par value is a matter of internal comport with all applicable laws. Appendix to Part 544 corporate governance that raises no Paragraph (b) sets forth a list of As indicated above, OTS proposed to supervisory or safety and soundness preapproved charter amendments. OTS eliminate the appendix to part 544, issues. has added descriptive titles to each of which contained the model bylaws. Second, the final sentence of the first the preapproved amendments. The titles These bylaws are moved to the paragraph is revised to reflect more correspond, when applicable, to the Handbook, with changes to be made to current accounting terminology. The titles of similar preapproved charter conform the model bylaws to the term ‘‘retained earnings’’ is substituted provisions for Federal mutual amendments to the bylaws regulations for ‘‘surplus,’’ and the phrase ‘‘common associations. Paragraph (b) is also described above. The revised Handbook stock or paid-in capital accounts’’ is revised to indicate that preapproved will be available from OTS in the near substituted for ‘‘stated capital.’’ charter amendments are effective when future, as well as through fee services on Third, the second paragraph is revised adopted and must simply be filed with CD ROM. The revised model bylaws are to clarify that a Federal stock OTS within 30 days after adoption. already available through PUBLIFAX at association may issue stock to officers, Paragraph (b)(3), which contains a (202) 906–5660. directors, and controlling persons in preapproved amendment for institutions b. Part 552—Incorporation, connection with its initial organization, that wish to change from a Federal stock Organization, and Conversion of Federal without a shareholder vote. savings and loan association charter to Stock Associations Fourth, the second sentence of the a Federal stock savings bank charter, is third paragraph is revised to clarify that removed for the same reasons described Section 552.2 Corporate Title a Federal stock charter may be amended above with regard to § 544.3.14 OTS proposed to remove this section, to eliminate cumulative voting. Current paragraph (b)(4), which which merely reminds institutions that Section 7. Directors. This section permits changes to the authorized § 543.1 regarding corporate titles for specifies that the number of directors of number of shares and the par or stated Federal associations applies to Federal a stock association shall be fixed in the value of such shares, becomes (b)(3). stock associations. Section 543.1, as bylaws and shall not be fewer than five Additional nonsubstantive changes have currently written, clearly governs nor more than fifteen. However, been made to clarify the language of this corporate titles for all Federal provision is made for the Director of provision. associations. Accordingly, § 552.2 is OTS to approve a larger or smaller board Current paragraph (b)(5), which removed. of directors. OTS has made a technical permits institutions to modify section 5 amendment to this section to specify of the charter so as to authorize the Section 552.2–5 Conversion from that approval of a larger or smaller issuance of preferred stock, becomes Federal Mutual to Federal Stock Charter board can be given either by the Director (b)(4) and includes the same changes to This section authorizes Federal ‘‘or his or her delegate.’’ section 5 of the charter as were mutual associations to convert to Section 8. Amendment of charter. discussed above for section 552.3. In Federal stock associations and provides Section 8 describes the procedure for addition, the reference to the Resolution for issuance of a stock charter upon amending an association’s charter. This Trust Corporation is deleted, because completion of the conversion. These section is revised to indicate that that agency no longer exists. matters are also covered, in greater preapproved charter amendments A new preapproved charter detail, by OTS conversion regulations. become effective once they have been amendment is added, as new paragraph OTS, therefore, proposed to, and does, approved by the association’s board of (b)(6), to authorize institutions to remove this section. directors and shareholders, without any prohibit cumulative voting for directors. need for ‘‘preliminary approval’’ or any Section 552.3 Charters for Federal The standard charter for Federal stock additional approval from OTS. (See Stock Associations associations provides for cumulative discussion below of § 552.4.) voting for directors. Federal associations This section contains the required In addition, OTS proposed to clarify frequently apply to amend their charters charter for Federal stock associations. the general rule that charter to prohibit cumulative voting, and OTS For the reasons stated above in the amendments require approval by only a routinely approves these applications. discussion of § 544.1, OTS has decided majority of the votes eligible to be cast Adding this provision to the list of not to move the charter into the at a shareholders’ meeting. Language is preapproved amendments will save Handbook. OTS will make the following added indicating that this general rule associations that wish to make this changes to the Federal stock charter, as does not apply in those instances where change the time and expense of filing an proposed: an association’s charter specifies that a application. Section 2. Office. This section supermajority vote is required. (See Paragraph (c) states OTS policy on designates the location of the discussion of § 552.4 below.) antitakeover provisions in charter association’s home office. The section is Finally, the signature blocks of the amendments. OTS proposed to expand being revised to indicate that the street charter are modified to include a date to this provision to state the two basic address of the home office need not be indicate when a charter is effective. standards OTS uses when reviewing stated in the charter. It is sufficient to Section 552.4 Charter Amendments proposed antitakeover amendments. indicate the city and state where the First, the proposed amendment must be Paragraphs (a) and (b) set forth the home office is located. consistent with applicable statutes, filing requirements for amendments to Section 5. Capital stock. Section 5 regulations and OTS policies. Second, Federal stock charters. In paragraph (a), describes the rules governing the capital such amendments must be adopted by OTS has made the same changes stock of a Federal stock association, a percentage of the shareholder vote at including the types of stock it may regarding certification requirements as issue, the consideration to be paid, and discussed above in connection with the 14 Subsequent paragraphs will be renumbered voting rights. Several changes have been corresponding provisions for mutual accordingly. However, only those paragraphs being made. First, the section is amended to associations (§ 544.2(a)). Thus, stock substantively changed are discussed below. 64012 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Rules and Regulations least equal to the highest percentage that basis, any of the corporate governance the paragraph is amended to waive its would be required to take any action procedures from: the laws of the state application to wholly-owned under the antitakeover provision. While where the main office of the institution institutions. several commenters objected to this is located; the laws of the state where Paragraph (e), regarding shareholder clarification, OTS notes that these are the institution’s holding company, if quorum requirements, is amended to not new standards; OTS already any, is located; Delaware General confirm that, whenever a quorum is employs them when reviewing Corporation Law; or the Model Business present, the affirmative vote of the antitakeover amendments. Stating these Corporation Act.16 No preapproval is majority of shares entitled to vote at standards in the regulations will enable necessary if all provisions in question shareholder meetings shall constitute an institutions to present applications that meet the applicable criteria; instead an act of the shareholders, absent a conform to OTS requirements, thereby institution must submit to the OTS supermajority voting requirement. The saving them time and expense. Regional Office the provisions it has amended paragraph also clarifies, in Accordingly, the proposed changes have chosen within 30 days of adoption. All response to a comment, that directors been made. commenters who addressed this issue are elected by a plurality of votes in an were generally in favor of the more election of directors. Section 552.5 Bylaws flexible corporate governance structure. Paragraph (f), which addresses This section presents the OTS proposed to add a new paragraph proxies, is amended in the same manner requirements for the bylaws of a Federal (d) confirming that the authority of a as the Federal mutual bylaws at stock association. A technical Federal stock association to engage in § 544.5(b)(6) to allow proxies to be amendment is made to paragraph (a) to any transaction is determined by the gathered electronically or confirm that shareholder votes to association’s charter and bylaws in telephonically. Subparagraph (f)(3), approve bylaw amendments must occur effect at the time of the transaction. which addresses cumulative voting, is ‘‘at a legal meeting’’ 15 of shareholders. Subsequent amendments do not removed, but remains in the model Paragraph (b) discusses the retroactively affect this determination. A bylaws as guidance for any association application and notice procedures similar regulatory provision is already that continues to use cumulative voting. applicable to bylaw amendments. This in effect for Federal mutual associations In addition, OTS is not adding paragraph is amended to remove the (§ 544.6). Accordingly, the paragraph is paragraph (f)(4) as proposed. Instead, requirement that associations certify added as proposed. the proposed language, which describes that bylaw amendments comport with voting procedures applicable to stock applicable law. Revisions are also made Section 552.6 Shareholders held by fiduciaries on behalf of others to indicate that the model bylaws, if This section contains certain and stock held jointly, will be included adopted verbatim, are approved when corporate governance requirements in the model bylaws in the Handbook, adopted and must simply be filed with regarding shareholder meetings. rather than in the regulations. The OTS within 30 days after adoption. Paragraph (a), which contains rules language will be modified as described Paragraph (b) also indicates that the regarding the time and place of in the corresponding section of the model bylaws will be in the revised shareholder meetings, is amended in Federal mutual bylaws. Handbook and made available by OTS. two respects. First, the requirement that A new paragraph (h) is added Subsection (b)(1)(iii) is also modified, in shareholder meetings be held in the confirming that, if an association’s the same way the corresponding mutual state of an association’s principal place bylaws so provide, shareholder action subsection is modified, to indicate to of business is removed. Instead, may be taken by unanimous written those contemplating bylaw changes, that associations may hold shareholder consent in lieu of a shareholder OTS considers amendments regarding meetings at any convenient place the meeting. At times, this may allow indemnification, conflicts of interest, board of directors designates. Second, associations to obtain shareholder and limitations on director or officer the time frame within which an approval more rapidly and with less liability to raise significant issues association must hold its annual expense. shareholders meeting is extended from requiring OTS review. A new Section 552.6–1 Board of Directors subparagraph is added to explain the 120 to 150 days of the end of the application process for such issues of association’s fiscal year. These are the This section addresses corporate law or policy. same changes made for Federal mutual governance matters involving directors. A new paragraph (b)(3) is added to associations (§ 544.5(b)(1)). Paragraph (a) is amended to provide that allow the adoption of additional Paragraph (b) states the notice directors need not be stockholders corporate governance procedures to the requirements for shareholder meetings. unless the bylaws so require. extent such procedures: (i) Are not This paragraph is amended to waive the Paragraph (b) sets forth the number inconsistent with the Home Owner’s shareholder notice requirements for and term of directors. This paragraph is Loan Act, applicable Federal statutes wholly-owned institutions. amended to clarify that the bylaws of a and regulations, OTS policies, or safety Paragraph (d)(1), which addresses Federal stock association must specify and soundness concerns; and (ii) do not access to shareholder lists, is revised to an exact number of positions on an touch upon certain key areas, such as clarify that shareholder lists are association’s board of directors, not OTS policies and regulations on available only to shareholders ‘‘of simply a range. The rationale for this indemnification, conflict of interest, record’’ and their agents. In addition, position is explained in the limitation of director or officer liability, corresponding section for Federal 16 We note, however, that silence in a particular mutual associations. The number is or other matters of safety and area in a state’s law or in the Model Business soundness. Subject to these Corporation Act may not, for these purposes, be selected by the institution within a qualifications, this new provision construed as authorizing adoption of procedures in range prescribed in the charter. OTS allows Federal stock associations to that area. It should also be noted that when also proposed to amend paragraph (b) to adopting provisions from any of the alternative exempt wholly-owned stock designate, en bloc or on a piecemeal sources, a stock institution may adopt only provisions state law intended for stock institutions associations from the requirement that 15 A ‘‘legal meeting’’ means a duly constituted and a mutual institution may adopt only provisions their directors be elected to staggered meeting of the institution. intended for a mutual corporation. terms. In response to a comment, OTS Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Rules and Regulations 64013 has decided to allow any association to required to notify their accountholders company may have from 5 to 15 elect not to have a staggered board. that all the rights they enjoyed as directors. In addition, OTS has made Paragraph (c), regarding regular accountholders, except voting and technical changes to conform the meetings of the board, is expanded to ownership of the institution, carry over wording of this section to the confirm that the board of directors has to the converting association. corresponding section of the charter for authority to determine the place, Accordingly, § 522.8 is removed as Federal mutual associations. frequency, time, and notice procedures proposed. Section 8. Amendment of charter. for its meetings. These matters need not Section 552.11 Books and Records Section 8 describes the procedures for be specified in the bylaws. amending the mutual holding Paragraph (e), which covers director This section describes a Federal stock company’s charter. These procedures vacancies, is amended to clarify that a association’s obligations with respect to are modified to indicate that director appointed to fill a vacancy may books and records. Paragraph (b) is preapproved charter amendments are serve ‘‘only’’ until the next election of amended to make clear that effective once approved by members of directors. This is not a substantive shareholders’ inspection rights extend the mutual holding company. Other change. The word ‘‘only’’ is being added only to nonconfidential portions of an amendments will continue to require for emphasis and clarity. institution’s books and records. advance OTS approval. Paragraph (f), concerning removal of Paragraph (a)(2) of § 575.9 provides directors, is retitled ‘‘Resignation or Appendix to Part 552 that mutual holding companies may removal of directors’’ to conform to the As indicated above, OTS has moved adopt the same preapproved charter title for the same provision for Federal the model bylaws for Federal stock amendments as are specified for mutual mutual associations. In addition, the associations, which currently appear in savings associations, subject to certain paragraph is amended to confirm, as is the appendix to Part 552, into the specified exclusions. Paragraph (a)(2) is already the case, that shareholders may Handbook. Changes will be made to updated to conform to the changes remove a director in the midst of his or conform the model bylaws to the proposed for the list of preapproved her term ‘‘only’’ for cause. A cross amendments to the bylaw regulations charter amendments for mutual reference to the existing regulatory described above. In addition, OTS associations. definition of ‘‘cause’’ is added to answer proposed to modify the model bylaws to a frequently asked question. indicate that procedures other than Paragraph (a)(4) specifies that Federal Paragraph (k), on age limitations for Robert’s Rules of Order may be used for mutual holding companies shall be directors, is revised to indicate that any shareholder meetings, as long as the subject to the same rules regarding age limitation provision must conform board of directors adopts alternative bylaws as apply to Federal mutual to applicable Federal law, rules, or written procedures. This change will associations, with certain exceptions. regulations. These rules would include also be made. As indicated above, a This paragraph is amended to indicate laws such as the Age Discrimination in revised Handbook will be available from that the model bylaws may be found in Employment Act and the Employee OTS. The revised model bylaws are a revised Handbook to be made Retirement Income Security Act already available through PUBLIFAX at available from OTS. (ERISA). (202) 906–5660. A technical amendment is made to paragraph (a)(5), which requires mutual Section 552.6–2 Officers c. Part 575—Mutual Holding Companies holding companies to make their charter This section addresses corporate Section 575.9 Charters and Bylaws for and bylaws available to members. The governance matters involving officers. Mutual Holding Companies and Their cross reference to § 545.131 is changed Paragraph (a) is amended to remove the Savings Association Subsidiaries to reflect the movement of this section requirement that the president always to Part 544. be a director and that either the This section describes the required president or the chair of the board of charter and bylaws for Federal mutual d. Miscellaneous Technical Changes directors always be the chief executive holding companies. Paragraph (a)(1) Section 543.1(b) Title Change officer. contains the prescribed charter. The Paragraph (c), on age limitations for following changes are made to the This section prescribes the rules for officers, is revised to indicate that any charter: corporate titles for Federal savings age limitation on service by officers Section 1. Corporate Title. Section 1 associations. This section is amended to must conform to applicable Federal law, contains the corporate title of the delete cross references to sections being rules, or regulations. Federal mutual holding company. The removed by this final rule. words ‘‘hereby chartered’’ are deleted as Section 543.14 Continuity of Existence Section 552.8 Savings Deposits unnecessary verbiage. This section contains instructions to Section 5. Members. This section This section, which confirms that the Federal stock associations regarding the identifies the mutual holding company’s corporate existence of converting types of savings deposits they may members and defines their rights. The associations continues, notwithstanding accept, preservation of those accounts sixth, seventh, and eighth sentences of the conversion, is amended to delete a when a former mutual association this section, addressing proxies and cross reference to a section being adopts a stock charter, rights of account quorums, are removed because these removed by this final rule. holders in the event of liquidation, and matters are now covered by the bylaw Section 556.1 Directors forms of certificates to use for accounts. requirements applicable to mutual OTS proposed to remove this section holding companies. As a result of this This policy statement, which from the regulations. The provisions of change, proxy and quorum issues are describes OTS policy on the number of this section are either self-evident or now addressed in a single place in the directors necessary for a quorum and addressed by other statutes and corporate documents of mutual holding the directors’ power to fill vacancies, is regulations and general contract law. companies. removed because both subjects are Under the conversion regulations, all Section 6. Directors. This section thoroughly covered by the bylaw converting mutual institutions are provides that a Federal mutual holding regulations. 64014 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Rules and Regulations

Section 556.17 Effect of Loan Original provision Comment Original provision Comment Participation on Status of Borrowing Members New § 544.5(b)(5) ...... Added new para- § 552.5(b)(1)(ii) ...... New paragraph graph on member added to explain This policy statement provides quorum and clari- application proc- guidance regarding various issues that fied. ess. arise when determining the identity of § 544.5(b) (5) through Redesignated (b) (6) § 552.5(b)(1)(iii) ...... Eliminated need for the borrowing members of a Federal (11). to (12). prior notice require- mutual savings association. For § 544.5(b)(6) ...... Amended to add pri- ment. example, this section indicates that sale vacy rights. § 552.5(b)(3) ...... New paragraph to of a whole loan by a savings association § 544.5(b)(7) ...... Amended for clarifica- provide alternative to a third party terminates the tion. corporate govern- ance procedures. borrower’s membership rights in the § 544.5(b)(9) ...... Amended. § 544.5(b)(10) ...... Amended to add § 552.5(d) ...... Added new para- association. As proposed, this policy graph for clarifica- statement is moved from the regulations guidance on vacan- cies. tion. into Handbook guidance. One § 544.5(b)(12) ...... Removed. § 552.6(a) ...... Amended for flexibil- commenter requested clarification on § 544.5(b)(13) ...... Amended to add ity; changed annual borrower membership if a loan is sold guidance on nomi- meeting date. when the servicing rights are retained nee substitution. § 552.6(b) ...... Amended share- by the selling association. Retention of § 544.5(b)(15) ...... Removed. holder meeting re- quirements. servicing rights, without more, will not § 544.5(b)(16) ...... Revised for clarifica- § 552.6(d) ...... Amended for clarifica- tion. cause the loan to be deemed to be tion. § 544.5(b)(17) ...... Amended to delete owned by the selling association. Thus, § 552.6(e) ...... Amended to add emergency pre- such borrowers would not have voting guidance on certain paredness. or ownership rights in the selling voting require- § 544.5(c) ...... Eliminated need for association. ments. management cer- § 552.6(f)(1) ...... Amended for flexibil- tification. III. Disposition of Corporate ity. Governance Regulations § 544.5(c)(1)(ii) ...... New paragraph § 552.6(f)(3) ...... Removed. added to explain The following chart gives an overview New § 552.6(h) ...... Added section on in- application proc- formal action. of the changes made to OTS’s corporate ess. governance regulations. § 552.6±1(a) ...... Amended for flexibil- § 544.5(c)(1)(iii) ...... Eliminated need for ity. prior notice require- § 552.6±1(b) ...... Removed necessity Original provision Comment ment. for staggered board § 544.5(c)(3) ...... New paragraph to of directors. Also § 543.1(b) ...... Amended to delete provide alternative amended to specify references. corporate govern- number of direc- § 543.14 ...... Amended to delete ance procedures. tors. references. § 544.5(d) ...... Reduced filing re- § 552.6±1(f) ...... Amended to clarify § 544.1 ...... Amended. quirement. where ``cause'' is § 544.1, Section 2 ..... Revised for clarifica- § 544.8 ...... Removed. defined. tion § 544.9 ...... Removed. § 552.6±1(k) ...... Amended to add § 544.1, Section 6 ..... Moved portion to Part 544 Appendix .... Conformed to pro- guidance. § 544.5 for clarifica- posed changes and § 552.6±2(a) ...... Amended to remove tion. moved to Hand- provision requiring § 544.1, Section 7 ..... Moved portion to book. president to be a § 544.5 for clarifica- § 545.131 ...... Moved to Part 544. director. tion. § 552.1 ...... Removed. § 552.8 ...... Removed. § 544.1, Section 9 ..... Removed need for § 552.2 ...... Removed. § 552.11(b) ...... Amended for clarifica- preliminary ap- § 552.2±5 ...... Removed. tion. proval. Part 552 Appendix .... Conformed to pro- § 544.2(a)(2) ...... Eliminated need for § 552.3 ...... Amended. posed changes and management cer- § 552.3, Section 2 ..... Revised for clarity. moved to Hand- tification. § 552.3, Section 8 ..... Removed need for book. § 544.2(b) ...... Eliminated need for preliminary ap- § 556.1 ...... Removed. prior notice require- proval. § 556.17 ...... Moved to Handbook. ment. § 552.4(a)(2) ...... Eliminated need for § 575.9 ...... Amended. § 544.2(b)(4) ...... Removed existing management cer- § 575.9 Section 8 ...... Removed need for paragraph and tification. preliminary ap- added new § 552.4(b) ...... Eliminated need for proval. preapproved prior notice require- § 575.9 (a)(2) and Amended. amendment raising ment. (a)(4). the cap to 1,000 § 552.4(b)(3) ...... Removed. votes. § 552.4(b) (4) through Redesignated (b) (3) § 544.2(c) ...... Removed delegation. (6). to (5). IV. Administrative Procedure Act § 544.3 ...... Removed. New § 552.4(b)(6) ...... Added new This final rule results from the notice preapproved § 544.5(a) ...... Revised for clarifica- of proposed rulemaking OTS published tion. amendment. § 544.5(b) (1) and (2) Amended for flexibil- § 552.4(c) ...... Amended for clarifica- on June 25, 1996. In addition to the ity; changed annual tion. regulatory language proposed in that meeting date. § 552.5(b) ...... Eliminated need for notice, OTS is today deleting several § 544.5(b) (3) and (4) Adjournment provi- management cer- bylaw regulations previously located in sions added. tification. Part 544 and Part 552, as described Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Rules and Regulations 64015 above. Pursuant to section 553(b) of the reduces regulatory burden and updates, requirements, Savings associations, Administrative Procedure Act, OTS reorganizes and substantially Securities. hereby finds that good cause exists not streamlines corporate governance Accordingly, the Office of Thrift to publish the deletions for public regulations and policy statements. OTS Supervision amends chapter V, title 12, notice and comment. The bylaw has determined that the final rule will Code of Federal Regulations, as set forth regulations deleted by this final rule are not result in expenditures by state, below. either unnecessary or are deleted as a local, or tribal governments or by the result of moving the model bylaws into private sector of $100 million or more. PART 543ÐINCORPORATION, the Handbook. Also, deleting these Accordingly, a budgetary impact ORGANIZATION, AND CONVERSION regulations reduces regulatory burden. statement is not required under section OF FEDERAL MUTUAL Thus, notice and opportunity to 202 of the Unfunded Mandates Act of ASSOCIATIONS comment are unnecessary. 1995. 1. The authority citation for part 543 V. Paperwork Reduction Act of 1995 IX. Effective Date continues to read as follows: The reporting requirements contained Two statutes affect the effective date Authority: 12 U.S.C. 1462, 1462a, 1463, in this final rule have been submitted to of OTS regulations. Section 302 of 1464, 1467a, 2901 et seq. and approved by the Office of CDRIA delays the effective date of § 543.1 [Amended] Management and Budget under OMB regulations promulgated by the Federal 2. Section 543.1 is amended in Control Nos. 1550–0017 and 1550–0018, banking agencies that impose additional paragraph (b) by removing the phrase in accordance with the Paperwork reporting, disclosure, or new ‘‘only pursuant to a charter change Reduction Act of 1995 (44 U.S.C. requirements to the first day of the first under § 544.3 or § 552.4 of this chapter’’. 3507(d)). Comments on the collection of calendar quarter following publication information should be sent to the Office of the final rule. CDRIA does not apply § 543.14 [Amended] of Management and Budget, Paperwork to this final rule because it imposes no 3. Section 543.14 is amended by Reduction Project (1550), Washington, new burden. It reduces regulatory removing the phrase ‘‘or under § 544.3 DC 20503, with copies to OTS, 1700 G burden in the corporate governance area of this chapter’’. Street, NW., Washington, DC 20552. and provides additional flexibility to Respondents are not required to both stock and mutual institutions. The PART 544ÐCHARTER AND BYLAWS respond to the foregoing collection of second statute, the Administrative 4. The authority citation for part 544 17 information unless it displays a Procedure Act (APA), generally continues to read as follows: currently valid OMB control number. requires a 30-day delay in effective date for final rules. The APA provides that Authority: 12 U.S.C. 1462, 1462a, 1463, VI. Executive Order 12866 an agency may waive this delay where 1464, 1467a, 2901 et seq. The Director of OTS has determined a regulation relieves regulatory 5. Section 544.1 is amended by that this final rule does not constitute a restrictions. Here, because this rule revising the introductory text, and ‘‘significant regulatory action’’ for the reduces regulatory burden, the OTS sections 1, 2, 6, 7 and 9 and the purposes of Executive Order 12866. believes there is good cause to waive the signature blocks at the end of the charter VII. Regulatory Flexibility Act Analysis normal 30-day delay of effective date. to read as follows: This will make the effective date of this § 544.1 Federal mutual charter. Pursuant to section 605(b) of the final rule the first day of the first Regulatory Flexibility Act, OTS certifies calendar quarter following publication A Federal mutual savings association that this final rule will not have a of the final rule. shall have a charter in the following significant economic impact on a form, which may include any of the substantial number of small entities. List of Subjects additional provisions set forth in § 544.2 The final rule does not impose 12 CFR Parts 543 and 544 of this Part, if such provisions are additional burdens or requirements specifically requested. A charter for a upon small entities and lowers several Reporting and recordkeeping Federal mutual savings bank shall paperwork and other burdens on all requirements, Savings associations. substitute the term ‘‘savings bank’’ for savings associations. 12 CFR Part 545 ‘‘association.’’ The term ‘‘trustee’’ may be substituted for the term ‘‘director.’’ VIII. Unfunded Mandates Act of 1995 Accounting, Consumer protection, Associations adopting this charter with Section 202 of the Unfunded Credit, Electronic Funds transfers, Investments, Reporting and existing borrower members must Mandates Reform Act of 1995, Public grandfather those borrower members Law 104–4 (Unfunded Mandates Act), recordkeeping requirements, Savings associations. who were members as of the date of requires that an agency prepare a issuance of the new charter by the budgetary impact statement before 12 CFR Part 552 Office. Such borrowers shall have one promulgating a rule that includes a Reporting and recordkeeping vote for the period of time such Federal mandate that may result in requirements, Savings associations, borrowings are in existence. expenditure by state, local, and tribal Securities. Federal Mutual Charter governments, in the aggregate, or by the private sector, of $100 million or more 12 CFR Part 556 Section 1. Corporate title. The full corporate title of the Federal savings in any one year. If a budgetary impact Savings associations. association is lll. statement is required, Section 205 of the 12 CFR Part 575 Section 2. Office. The home office shall be Unfunded Mandates Act also requires located in lll [city, state]. an agency to identify and consider a Administrative practice and * * * * * reasonable number of regulatory procedure, Capital, Holding companies, Section 6. Members. All holders of the alternatives before promulgating a rule. Reporting and recordkeeping association’s savings, demand, or other As discussed in this preamble and the authorized accounts are members of the preamble of the proposal, this final rule 17 5 U.S.C. 553(d). association. In the consideration of all 64016 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Rules and Regulations questions requiring action by the members of (b) * * * In addition, introductory text, revising newly the association, each holder of an account notwithstanding anything in paragraph designated paragraph (c)(1)(i)(B), and by shall be permitted to cast one vote for each (a) of this section to the contrary, the revising newly designated paragraph $100, or fraction thereof, of the withdrawal following charter amendments, (c)(1)(iii); and value of the member’s account. No member, however, shall cast more than 1000 votes. All including the adoption of the Federal l. Revising paragraph (c)(2), adding a accounts shall be nonassessable. mutual charter as set forth in § 544.1 of new paragraph (c)(3), and revising the Section 7. Directors. The association shall this part, shall be effective and deemed last sentence of paragraph (d). be under the direction of a board of directors. approved at the time of adoption, if The additions and revisions read as The authorized number of directors shall not adopted without change and filed with follows: be fewer than five nor more than fifteen OTS, within 30 days after adoption, persons, as fixed in the association’s bylaws, § 544.5 Federal mutual savings provided the association follows the association bylaws. except that the number of directors may be requirements of its charter in adopting decreased to a number less than five or (a) General. A Federal mutual savings such amendments: increased to a number greater than fifteen association shall operate under bylaws with the prior approval of the Director of the * * * * * that contain provisions that comply Office or his or her delegate. (4) Maximum number of votes. A with all requirements specified by the * * * * * Federal mutual savings association may lll OTS in this section and that are not Section 9. Amendment of charter. amend its charter by substituting otherwise inconsistent with the Adoption of any preapproved charter votes per member in section 6. [Fill in provisions of this section, the amendment shall be effective after such a number from 50 to 1000.] association’s charter, and all other preapproved amendment has been approved (c) Reissuance of charter. A Federal by the members at a legal meeting. Any other applicable laws, rules, and regulations mutual savings association that has provided that, a bylaw provision amendment, addition, change, or repeal of amended its charter may apply to have this charter must be approved by the Office inconsistent with the provisions of this prior to approval by the members at a legal its charter, including the amendments, section may be adopted with the meeting, and shall be effective upon filing reissued by the Office. Such request for approval of the OTS. Bylaws may be with the Office in accordance with regulatory reissuance should be filed in accordance adopted, amended or repealed by a procedures. with § 516.1(c) of this chapter and, majority of the votes cast by the lllllllllllllllll Attest: contain signatures required under members at a legal meeting or a majority Secretary of the Association § 544.1 of this part, together with such of the association’s board of directors. By: lllllllllllllllllll supporting documents as may be The bylaws for a Federal mutual savings President or Chief Executive Officer of needed to demonstrate that the bank shall substitute the term ‘‘savings the Association amendments were properly adopted. bank’’ for ‘‘association’’. The term lllllllllllllllll Attest: § 544.3 [Removed] ‘‘trustee’’ shall be substituted for the Secretary of the Office of Thrift 7. Section 544.3 is removed. term ‘‘director’’. Supervision (b) * * * lllllllllllllllllll 8. Section 544.5 is amended by: By: a. Revising paragraph (a); (1) * * * Such meeting shall be held, Director of the Office of Thrift b. Removing the words ‘‘[trustee]’’ as designated by its board of directors, Supervision and ‘‘[trustees]’’ wherever they appear at a location within the state that llllllllllllll Effective Date: in paragraph (b); constitutes the principal place of 6. Section 544.2 is amended by c. Revising the second sentence of business of the association, or at any revising paragraph (a)(2), the third paragraph (b)(1); other convenient place the board of sentence of the introductory text to d. Adding a separate new sentence at directors may designate, and at a date paragraph (b), paragraph (b)(4), and the end of each of paragraphs (b)(2), and time within 150 days after the end paragraph (c) to read as follows: (b)(3) and (b)(4); of the association’s fiscal year. * ** e. Removing paragraphs (b)(12) and (2) * * * For purposes of this section, § 544.2 Charter amendments. (b)(15); ‘‘voting capital’’ means FDIC-insured (a) * * * f. Redesignating paragraphs (b)(5) deposits as of the voting record date. (2) Form of filing—(i) Application through (b)(11) as paragraphs (b)(6) (3) * * * When any meeting is requirement. If the proposed charter through (b)(12), and paragraphs (b)(16) adjourned for 30 days or more, notice of amendment would: render more and (b)(17) as paragraphs (b)(15) and the adjournment and reconvening of the difficult or discourage a merger, proxy (b)(16), respectively; meeting shall be given as in the case of contest, the assumption of control by a g. Adding a new paragraph (b)(5); the original meeting. mutual account holder of the h. Revising newly designated (4) * * * The same determination association, or the removal of paragraphs (b)(6), (b)(7), (b)(8) and the shall apply to any adjourned meeting. incumbent management; or involve a second sentence of paragraph (b)(10)(i); (5) Member quorum. Any number of significant issue of law or policy; then, i. Adding a sentence at the end of members present and voting, the association shall file the proposed newly designated paragraph (b)(10)(ii); represented in person or by proxy, at a amendment and obtain the prior j. Revising newly designated regular or special meeting of the approval of the OTS. paragraph (b)(11), the last sentence of members shall constitute a quorum. A (ii) Notice requirement. If the paragraph (b)(13), and newly designated majority of all votes cast at any meeting proposed charter amendment does not paragraphs (b)(15), and (b)(16); of the members shall determine any involve a provision that would be k. Redesignating paragraphs (c)(1) question, unless otherwise required by covered by paragraph (a)(2)(i) of this introductory text, (c)(1)(i) through regulation. At any adjourned meeting, section and is permissible under all (c)(1)(iii), and (c)(1) concluding text as any business may be transacted that applicable laws, rules and regulations, paragraphs (c)(1)(i) introductory text, might have been transacted at the then the association shall submit the (c)(1)(i)(A) through (c)(1)(i)(C) and meeting as originally called. Members proposed amendment to the OTS, at (c)(1)(iii), respectively, adding a new present at a duly constituted meeting least 30 days prior to the effective date paragraph (c)(1)(ii), revising newly may continue to transact business until of the proposed charter amendment. designated paragraph (c)(1)(i) adjournment. Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Rules and Regulations 64017

(6) Voting by proxy. Procedures shall without cause, but such removal, other shall be submitted to the OTS if it be established for voting at any annual than for cause, shall be without would: or special meeting of the members by prejudice to the contractual rights, if * * * * * proxy pursuant to the rules and any, of the person so removed. (B) Involve a significant issue of law regulations of the Office, including the * * * * * or policy, including indemnification, placing of such proxies on file with the (11) Vacancies, resignation or removal conflicts of interest, and limitations on secretary of the association, for of directors. Members of the association director or officer liability; or verification, prior to the convening of shall elect directors by ballot: Provided, such meeting. Proxies may be given * * * * * that in the event of a vacancy on the telephonically or electronically as long (ii) Applications submitted under board, the board of directors may, by as the holder uses a procedure for paragraph (c)(1)(i) of this section shall their affirmative vote, fill such vacancy, verifying the identity of the member. All be subject to the applications processing even if the remaining directors proxies with a term greater than eleven procedures set forth at § 516.2 of this constitute less than a quorum. A months or solicited at the expense of the chapter. director elected to fill a vacancy shall be association must run to the board of (iii) For purposes of this paragraph elected to serve only until the next directors as a whole, or to a committee (c), bylaw provisions that adopt the election of directors by the members. appointed by a majority of such board. language of the model bylaws set forth (7) Communications between The bylaws shall set out the procedure in OTS’s Application Processing members. Provisions relating to for the resignation of a director, which Handbook, if adopted without change, communications between members shall be by written notice or by any and filed within 30 days after adoption, shall be consistent with § 544.8 of this other procedure established in the are effective upon adoption. part. No member, however, shall have bylaws. Directors may be removed only (2) Filing requirement. If the proposed the right to inspect or copy any portion for cause as defined in § 563.39 of this bylaw amendment does not involve a of any books or records of a Federal chapter, by a vote of the holders of a provision that would be covered by mutual savings association containing: majority of the shares then entitled to paragraph (c)(1) or (c)(3) of this section, (i) A list of depositors in or borrowers vote at an election of directors. then the association shall submit the from such association; * * * * * amendment to the OTS at least 30 days (ii) Their addresses; (13) * * * However, if such provision prior to the date the bylaw amendment (iii) Individual deposit or loan is made for prior submission of is to be adopted by the association. balances or records; or nominations by a member, then the (3) Corporate governance procedures. (iv) Any data from which such bylaws must provide for a nominating A Federal mutual association may elect information could be reasonably committee, which, except in the case of to follow the corporate governance constructed. a nominee substituted as a result of procedures of the laws of the state (8) Number of directors, membership. death or other incapacity, must submit where the main office of the institution The bylaws shall set forth a specific nominations to the secretary and have number of directors, not a range. The is located, provided that such such nominations similarly posted at number of directors shall be not fewer procedures may be elected only to the least 15 days prior to the date of the than five nor more than fifteen, unless extent not inconsistent with applicable a higher or lower number has been annual meeting. Federal statutes, regulations, and safety authorized by the Director of the Office * * * * * and soundness, and such procedures are or his or her designee. Each director of (15) Amendment. Bylaws may include not of the type described in paragraph the association shall be a member of the any provision for their amendment that (c)(1) of this section. If this election is association. Directors may be elected for would be consistent with applicable selected, a Federal mutual association periods of one to three years and until law, rules, and regulations and shall designate in its bylaws the their successors are elected and adequately addresses its subject and provision or provisions from the body of qualified, but if a staggered board is purpose. law selected for its corporate governance procedures, and shall file a chosen, provision shall be made for the (i) Amendments shall be effective: election of approximately one-third or copy of such bylaws, which are effective (A) After approval by a majority vote upon adoption, within 30 days after one-half of the board each year, as of the authorized board, or by a majority appropriate. State-chartered savings adoption. The submission shall of the vote cast by the members of the indicate, where not obvious, why the banks converting to Federal savings association at a legal meeting; and banks may include alternative bylaw provisions meet the requirements (B) After receipt of any applicable provisions for the election and term of stated in paragraph (c)(1) of this section. regulatory approval. office of directors so long as such (d) Effectiveness. * * * This provisions are authorized by the Office, (ii) When an association fails to meet automatic effective date does not apply and provide for compliance with the its quorum requirement, solely due to if, prior to the expiration of such 30-day standard provisions of this section no vacancies on the board, the bylaws may period, the OTS notifies the association later than six years after the conversion be amended by an affirmative vote of a that such amendment is rejected or that to a Federal savings association. majority of the sitting board. such amendment requires an application to be filed pursuant to * * * * * (16) Miscellaneous. The bylaws may (10) Officers, employees, and agents. also address the subject of age paragraph (c)(1) of this section. (i) * * * The officers of the association limitations for directors or officers as §§ 544.8±544.9 [Removed] shall consist of a president, one or more long as they are consistent with 9. Sections 544.8 and 544.9 are vice presidents, a secretary, and a applicable Federal law, rules or removed. treasurer or comptroller, each of whom regulations, and any other subjects necessary or appropriate for effective shall be elected annually by the board Appendix to Part 544 [Removed] of directors. * ** operation of the association. (ii) * * * Any officer may be removed (c) Form of filing—(1) Application 10. The Appendix to Part 544 is by the board of directors with or requirement. (i) Any bylaw amendment removed. 64018 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Rules and Regulations

PART 545ÐOPERATIONS under which they would be issued has been m. redesignating paragraph (b)(6) as approved by a majority of the total votes paragraph (b)(5) and revising it; 11. The authority citation for part 545 eligible to be cast at a legal meeting. n. adding a new paragraph (b)(6); continues to read as follows: ** * Each holder of shares of common o. adding a heading to paragraph stock shall be entitled to one vote for each Authority: 12 U.S.C. 1462a, 1463, 1464, share held by such holder, except as to the (b)(8); and 1828. cumulation of votes for the election of p. revising paragraph (c); The additions and revisions read as § 545.131 [Redesignated as § 544.8] directors, unless the charter provides that there shall be no such cumulative voting. follows: 12. Section 545.131 is redesignated as *** § 552.4 Charter amendments. § 544.8. * * * * * Section 7. Directors. The association shall (a) * * * PART 552ÐINCORPORATION, be under the direction of a board of directors. (2) Form of filing—(i) Application ORGANIZATION, AND CONVERSION The authorized number of directors, as stated requirement. If the proposed charter OF FEDERAL STOCK ASSOCIATIONS in the association’s bylaws, shall not be fewer amendment would render more difficult than five nor more than fifteen except when or discourage a merger, tender offer, or 13. The authority citation for part 552 a greater or lesser number is approved by the proxy contest, the assumption of control continues to read as follows: Director of the Office, or his or her delegate. by a holder of a block of the Authority: 12 U.S.C. 1462, 1462a, 1463, Section 8. Amendment of charter. Except association’s stock, the removal of 1464, 1467a. as provided in Section 5, no amendment, addition, alteration, change or repeal of this incumbent management, or involve a §§ 552.1±552.2 [Removed] charter shall be made, unless such is significant issue of law or policy, the association shall file the proposed 14. Sections 552.1 and 552.2 are proposed by the board of directors of the association, approved by the shareholders by amendment and shall obtain the prior removed. a majority of the votes eligible to be cast at approval of the OTS; and § 552.2±5 [Removed] a legal meeting, unless a higher vote is (ii) Notice requirement. If the otherwise required, and approved or 15. Section 552.2–5 is removed. proposed charter amendment does not preapproved by the Office. involve a provision that would be 16. Section 552.3 is amended in the Attest: lllllllllllllllll Federal Stock Charter by: Secretary of the Association covered by paragraph (a)(2)(i) of this a. revising Section 2; lllllllllllllllllll section and such amendment is By: permissible under all applicable laws, b. revising, in Section 5, the first and President or Chief Executive Officer of last sentences in the first paragraph, the the Association rules or regulations, then the association shall submit the proposed amendments second paragraph, and the second Attest: lllllllllllllllll sentence of the third paragraph; Secretary of the Office of Thrift to the OTS, at least 30 days prior to the c. revising Section 7; Supervision date the proposed charter amendment is to be mailed for consideration by the d. revising Section 8; By: lllllllllllllllllll e. revising the signature blocks at the Director of the Office of Thrift association’s shareholders. end of the charter. Supervision (b) * * * In addition, the following charter amendments, including the The revisions read as follows: Effective Date: llllllllllllll adoption of the Federal stock charter as § 552.3 Charters for Federal stock 17. Section 552.4 is amended by: set forth in § 552.3 of this part, shall be associations. a. removing at the end of paragraph approved at the time of adoption, if * * * * * (a)(1) the semicolon and the word adopted without change and filed with Federal Stock Charter ‘‘and’’, and by adding in lieu thereof a OTS within 30 days after adoption, period; provided the association follows the * * * * * b. revising paragraph (a)(2); Section 2. Office. The home office shall be requirements of its charter in adopting lll c. revising the last sentence of the such amendments: located in [city, state]. introductory text of paragraph (b); * * * * * (1) Title change. *** d. adding headings to paragraphs (2) Home office. *** Section 5. Capital stock. The total number (b)(1) and (b)(2); of shares of all classes of the capital stock (3) Number of shares of stock and par e. removing paragraph (b)(3); value. A Federal stock association may that the association has the authority to issue f. redesignating paragraph (b)(4) as lll amend Section 5 of its charter to change is , all of which shall be common stock paragraph (b)(3) and revising it; the number of authorized shares of of par [or if no par is specified then shares g. redesignating paragraph (b)(5) as shall have a stated] value of lll per stock, the number of shares within each paragraph (b)(4) and revising the share. * * * In the case of a stock class of stock, and the par or stated introductory text; dividend, that part of the retained earnings value of such shares. of the association that is transferred to h. revising the first and last sentences of the first paragraph in Section 5 of (4) Capital stock. A Federal stock common stock or paid-in capital accounts association may amend its charter by upon the issuance of shares as a stock newly designated paragraph (b)(4); dividend shall be deemed to be the i. revising the first sentence of the revising Section 5 to read as follows: consideration for their issuance. second paragraph in Section 5 of newly Section 5. The total number of shares of all Except for shares issued in the initial designated paragraph (b)(4); classes of capital stock that the association organization of the association or in j. revising the introductory text of the has the authority to issue is lll, of which connection with the conversion of the third paragraph in Section 5 of newly lll shall be common stock of par [or if no association from the mutual to stock form of par value is specified the stated] value of designated paragraph (b)(4); lll capitalization, no shares of capital stock k. amending newly designated per share and of which [list the (including shares issuable upon conversion, number of each class of preferred and the par exchange, or exercise of other securities) paragraph (b)(4) by revising paragraph or if no par value is specified the stated value shall be issued, directly or indirectly, to (ii) of the third paragraph in Section 5; per share of each such class]. * * * In the officers, directors, or controlling persons of l. amending newly designated case of a stock dividend, that part of the the association other than as part of a general paragraph (b)(4) by revising the last retained earnings of the association that is public offering or as qualifying shares to a sentence of paragraph A. of the fourth transferred to common stock or paid-in director, unless the issuance or the plan paragraph in Section 5; capital accounts upon the issuance of shares Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Rules and Regulations 64019 as a stock dividend shall be deemed to be the cumulate votes in an election of or involve a significant issue of law or consideration for their issuance. directors.’’ policy, including indemnification, Except for shares issued in the initial * * * * * conflicts of interest, and limitations on organization of the association or in director or officer liability. connection with the conversion of the (8) Anti-takeover provisions following association from the mutual to the stock form mutual to stock conversion. *** (ii) Applications submitted under of capitalization, no shares of capital stock (c) Anti-takeover provisions. The paragraph (b)(1)(i) of this section shall (including shares issuable upon conversion, Office may grant approval to a charter be subject to the applications processing exchange, or exercise of other securities) amendment not listed in paragraph (b) procedures set forth at § 516.2 of this shall be issued, directly or indirectly, to of this section regarding the acquisition chapter. officers, directors, or controlling persons of by any person or persons of its equity (iii) Bylaw provisions that adopt the the association other than as part of a general securities provided that the association language of the model bylaws set forth public offering or as qualifying shares to a in the OTS’s Application Processing director, unless their issuance or the plan shall file as part of its application for under which they would be issued has been approval an opinion, acceptable to the Handbook, if adopted without change, approved by a majority of the total votes OTS, of counsel independent from the and filed with OTS within 30 days after eligible to be cast at a legal meeting. * ** association that the proposed charter adoption, are effective upon adoption. Nothing contained in this section 5 (or in provision would be permitted to be (2) Filing requirement. If the proposed any supplementary sections hereto) shall adopted by a corporation chartered by bylaw amendment does not involve a entitle the holders of any class of a series of the state in which the principal office of provision that would be covered by capital stock to vote as a separate class or the association is located. Any such paragraph (b)(1) or (b)(3) of this section series or to more than one vote per share, and is permissible under all applicable except as to the cumulation of votes for the provision must be consistent with election of directors, unless the charter applicable statutes, regulations, and laws, rules, or regulations, then the otherwise provides that there shall be no OTS policies. Further, any such association shall submit the amendment such cumulative voting: Provided, That this provision that would have the effect of to the OTS at least 30 days prior to the restriction on voting separately by class or rendering more difficult a change in date the bylaw amendment is to be series shall not apply: control of the association and would adopted by the association. * * * * * require for any corporate action (other (3) Corporate governance procedures. (ii) To any provision that would require the than the removal of directors) the A Federal stock association may elect to holders of preferred stock, voting as a class affirmative vote of a larger percentage of follow the corporate governance or series, to approve the merger or shareholders than is required by this procedures of: The laws of the state consolidation of the association with another Part, shall not be effective unless where the main office of the association corporation or the sale, lease, or conveyance adopted by a percentage of shareholder is located; the laws of the state where (other than by mortgage or pledge) of the association’s holding company, if properties or business in exchange for vote at least equal to the highest securities of a corporation other than the percentage that would be required to any, is incorporated or chartered; association if the preferred stock is take any action under such provision. Delaware General Corporation law; or exchanged for securities of such other * * * * * The Model Business Corporation Act, corporation: Provided, That no provision may 18. Section 552.5 is amended by: provided that such procedures may be require such approval for transactions a. revising the second sentence of elected to the extent not inconsistent undertaken with the assistance or pursuant to paragraph (a); with applicable Federal statutes and the direction of the Office or the Federal regulations and safety and soundness, Deposit Insurance Corporation; b. redesignating paragraphs (b)(1) introductory text, (b)(1)(i), (b)(1)(ii), and and such procedures are not of the type * * * * * (b)(1) concluding text as paragraphs described in paragraph (b)(1) of this A. Common stock. * * * Each holder of section. If this election is selected, a shares of the common stock shall be entitled (b)(1)(i) introductory text, (b)(1)(i)(A), (b)(1)(i)(B), and (b)(1)(iii), respectively, Federal stock association shall designate to one vote for each share held by each in its bylaws the provision or provisions holder, except as to the cumulation of votes adding a new paragraph (b)(1)(ii), and for the election of directors, unless the by revising newly designated from the body or bodies of law selected charter otherwise provides that there shall be paragraphs (b)(1)(i) introductory text, for its corporate governance procedures, no such cumulative voting. (b)(1)(i)(B) and (b)(1)(iii); and shall file a copy of such bylaws, * * * * * c. revising paragraph (b)(2); which are effective upon adoption, (5) Limitations on subsequent d. adding a new paragraph (b)(3); and within 30 days after adoption. The issuances. A Federal stock association e. adding a new paragraph (d). submission shall indicate, where not may amend its charter to require The additions and revisions read as obvious, why the bylaw provisions meet shareholder approval of the issuance or follows: the requirements stated in paragraph reservation of common stock or (b)(1) of this section. § 552.5 Bylaws. securities convertible into common * * * * * stock under circumstances which would (a) * * * Bylaws may be adopted, (d) Effect of subsequent charter or require shareholder approval under the amended or repealed by either a bylaw change. Notwithstanding any rules of the New York or American majority of the votes cast by the subsequent change to its charter or Stock Exchange if the shares were then shareholders at a legal meeting or a bylaws, the authority of a Federal stock listed on the New York or American majority of the board of directors. * ** association to engage in any transaction Stock Exchange. (b) * * * (1) Application requirement. shall be determined only by the (6) Cumulative voting. A Federal stock (i) Any bylaw amendment shall be association’s charter or bylaws then in association may amend its charter by submitted to the OTS for approval if it effect, unless otherwise provided by substituting the following sentence for would: Federal law or regulation. the second sentence in the third * * * * * 19. Section 552.6 is amended by: paragraph of Section 5: ‘‘Each holder of (B) Be inconsistent with §§ 552.6, a. revising the first and last sentences shares of common stock shall be entitled 552.6–1, 552.6–2, and 552.6–3 of this in paragraph (a); to one vote for each share held by such part, with applicable laws, rules, b. adding a sentence at the end of holder and there shall be no right to regulations or the association’s charter paragraph (b); 64020 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Rules and Regulations

c. revising paragraph (d)(1); (f) Shareholder voting.—(1) * * * expressly for that purpose, any director d. adding a sentence at the end of Proxies may be given telephonically or may be removed only for cause, as paragraph (e); electronically as long as the holder uses defined in § 563.39 of this chapter, by a e. adding two sentences after the first a procedure for verifying the identity of vote of the holders of a majority of the sentence in paragraph (f)(1); the shareholder. A proxy may designate shares then entitled to vote at an f. removing paragraph (f)(3); and as holder a corporation, partnership or election of directors. Associations may g. adding paragraph (h). company as defined in Part 574 of this provide for procedures regarding The additions and revisions read as chapter, or other person. * ** resignations in the bylaws. follows: * * * * * * * * * * (h) Informal action by stockholders. If § 552.6 Shareholders. (k) Age limitation on directors. A the bylaws of the association so provide, Federal association may provide a (a) Shareholder meetings. An annual any action required to be taken at a bylaw on age limitation for directors. meeting of the shareholders of the meeting of the stockholders, or any Bylaws on age limitations must comply association for the election of directors other action that may be taken at a with all Federal laws, rules and and for the transaction of any other meeting of the stockholders, may be regulations. business of the association shall be held taken without a meeting if consent in annually within 150 days after the end writing has been given by all the 21. Section 552.6–2 is amended by of the association’s fiscal year. * ** stockholders entitled to vote with revising the first and fifth sentences of All annual and special meetings of respect to the subject matter. paragraph (a); by removing the third and shareholders shall be held at such place 20. Section 552.6–1 is amended by: fourth sentences of paragraph (a), and as the board of directors may determine a. adding a sentence at the end of revising paragraph (c) to read as follows: in the state in which the association has paragraph (a); its principal place of business, or at any b. revising paragraph (b); § 552.6±2 Officers. other convenient place the board of c. adding a sentence after the first (a) Positions. The officers of the directors may designate. sentence in paragraph (c); association shall be a president, one or (b) * * * Notwithstanding anything d. revising the second sentence of more vice presidents, a secretary, and a in this section, however, a Federal stock paragraph (e); treasurer or comptroller, each of whom association that is wholly owned shall e. revising the heading of paragraph shall be elected by the board of not be subject to the shareholder notice (f) and paragraph (f)(1); and directors. * * * The offices of the requirement. f. revising paragraph (k). The additions and revisions read as secretary and treasurer or comptroller * * * * * follows: may be held by the same person and the (d) Voting lists. (1) At least 20 days vice president may also be either the before each meeting of the shareholders, § 552.6±1 Board of directors. secretary or the treasurer or comptroller. the officer or agent having charge of the (a) * * * Directors need not be *** stock transfer books for the shares of the stockholders unless the bylaws so * * * * * association shall make a complete list of require. (c) Age limitation on officers. A the stockholders of record entitled to (b) Number and term. The bylaws Federal association may provide a vote at such meeting, or any shall set forth a specific number of bylaw on age limitation for officers. adjournments thereof, arranged in directors, not a range. The number of Bylaws on age limitations must comply alphabetical order, with the address and directors shall be not fewer than five nor with all Federal laws, rules, and the number of shares held by each. This more than fifteen, unless a higher or regulations. list of shareholders shall be kept on file lower number has been authorized by at the home office of the association and the Director of the Office or his or her § 552.8 [Removed] shall be subject to inspection by any delegate. Directors shall be elected for a shareholder of record or the term of one to three years and until their 22. Section 552.8 is removed. stockholder’s agent during the entire successors are elected and qualified. If § 552.11 [Amended] time of the meeting. The original stock a staggered board is chosen, the transfer book shall constitute prima directors shall be divided into two or 23. Section 552.11 is amended by facie evidence of the stockholders three classes as nearly equal in number adding the phrase ‘‘nonconfidential entitled to examine such list or transfer as possible and one class shall be portions of’’ in paragraph (b) between books or to vote at any meeting of elected by ballot annually. In the case of the words ‘‘times,’’ and ‘‘its’’ in the first stockholders. Notwithstanding anything a converting or newly chartered sentence. in this section, however, a Federal stock association where all directors shall be association that is wholly owned shall elected at the first election of directors, Appendix to Part 552 [Removed] not be subject to the voting list if a staggered board is chosen, the terms requirements. shall be staggered in length from one to 24. The Appendix to part 552 is * * * * * three years. removed. (e) * * * If a quorum is present, the (c) * * * The board of directors shall PART 556ÐSTATEMENTS OF POLICY affirmative vote of the majority of the determine the place, frequency, time shares represented at the meeting and and procedure for notice of such 25. The authority citation for part 556 entitled to vote on the subject matter meetings. continues to read as follows: shall be the act of the stockholders, * * * * * unless the vote of a greater number of (e) * * * A director elected to fill a Authority: 5 U.S.C. 552, 559; 12 U.S.C. stockholders voting together or voting vacancy shall be elected to serve only 1464, 1701j–3; 15 U.S.C. 1693–1693r. by classes is required by law or the until the next election of directors by §§ 556.1 and 556.17 [Removed] charter. Directors, however, are elected the shareholders. * * * by a plurality of the votes cast at an (f) Removal or resignation of directors. 26. Sections 556.1 and 556.17 are election of directors. (1) At a meeting of shareholders called removed. Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Rules and Regulations 64021

PART 575ÐMUTUAL HOLDING (2) Charter amendments. The rules action is being taken in conjunction COMPANIES and regulations set forth in § 544.2 of with similar amendments being made this chapter regarding charter by the Department of Treasury to its 27. The authority citation for part 575 amendments and reissuances of charters regulations governing Federal Reserve continues to read as follows: (including delegations and filing Bank book-entry procedures for Authority: 12 U.S.C. 1462, 1462a, 1463, instructions) shall be applicable to Treasury securities, and by the 1464, 1467a, 1828, 2901. mutual holding companies to the same regulators of other government 28. Section 575.9 is amended by: extent as if mutual holding companies sponsored enterprises for which the a. revising Section 1 of the Charter in were Federal mutual savings Federal Reserve Banks maintain book- paragraph (a)(1); associations, except that, with respect to entry securities. These amendments are b. removing, in Section 5 of the the pre-approved charter amendments intended to update the regulations to Charter in paragraph (a)(1), the sixth, set forth in § 544.2 of this chapter, eliminate the need to treat book-entry seventh, and eighth sentences in the last §§ 544.2(b)(1) and (b)(3) of this chapter securities as if they were certificated paragraph; shall not apply to mutual holding securities and to conform more closely c. revising Section 6 of the Charter in companies, and mutual holding to the manner in which book-entry paragraph (a)(1); companies changing their corporate title securities are treated under the laws of d. revising Section 8 of the Charter in pursuant to § 544.2(b)(2) of this chapter the majority of the states (as set forth in paragraph (a)(1); shall be required to comply with Article 8 of the Uniform Commercial e. revising the signature blocks at the § 575.9(a)(3) of this part as well as Code, as revised in 1994). end of the Charter in paragraph (a)(1); § 543.1(b) of this chapter. DATES: The interim final rule will f. revising paragraph (a)(2); * * * * * become effective on January 1, 1997. g. revising the last sentence of (4) * * * The model bylaws for The Finance Board will accept paragraph (a)(4); and Federal mutual savings associations set comments on the interim final rule in h. revising the last sentence of forth in the OTS Applications writing on or before February 3, 1997. paragraph (a)(5). Processing Handbook shall also serve as ADDRESSES: Mail comments to Elaine A. The revisions read as follows: the model bylaws for mutual holding Baker, Executive Secretary, Federal companies, except that the term Housing Finance Board, 1777 F Street, § 575.9 Charters and bylaws for mutual N.W., Washington, D.C. 20006. holding companies and their savings ‘‘association’’ each time it appears association subsidiaries. therein shall be replaced with the term FOR FURTHER INFORMATION CONTACT: Eric ‘‘Mutual Company’’; section 11(e) M. Raudenbush, Attorney-Advisor, (a) Charters and bylaws for mutual (extending leniency to borrowing Office of General Counsel, 202/408– holding companies—(1) Charters. * * * members) and section 11(f) (rejection of 2932, Federal Housing Finance Board, Charter applications for accounts or 1777 F Street, N.W., Washington, D.C. Section 1: Corporate title. The name of the membership) shall be removed and the 20006. mutual holding company is lll (the remaining paragraphs of section 11 SUPPLEMENTARY INFORMATION: ‘‘Mutual Company’’). redesignated accordingly. * * * * * (5) * * * Mutual holding companies I. Background Section 6. Directors. The Mutual Company shall also be subject to the provisions of Subsections (b) and (c) of section 11 shall be under the direction of a board of § 544.8 of this chapter. directors. The authorized number of directors of the Federal Home Loan Bank Act shall not be fewer than five nor more than * * * * * (Bank Act) authorize the issuance of fifteen, as fixed in the Mutual Company’s Dated: November 20, 1996. consolidated Federal Home Loan Bank bylaws, except that the number of directors By the Office of Thrift Supervision. (FHLBank) debentures or bonds may be decreased to a number less than five Nicolas P. Retsinas, (collectively, ‘‘FHLBank securities’’), or increased to a number greater than fifteen Director. which are the joint and several with the prior approval of the Director of the [FR Doc. 96–30262 Filed 12–2–96; 8:45 am] obligations of the FHLBanks, upon Office or his or her delegate. terms and conditions established by the BILLING CODE 6720±01±U * * * * * Federal Housing Finance Board Section 8. Amendment. Adoption of any (Finance Board). See 12 U.S.C. 1431(b), preapproved charter amendment shall be (c). The Finance Board has set forth the FEDERAL HOUSING FINANCE BOARD effective after such preapproved amendment terms and conditions regarding the has been approved by the members at a legal meeting. Any other amendment, addition, 12 CFR Parts 910 and 912 issuance of FHLBank securities in part 910 of its regulations. 12 CFR part 910. change, or repeal of this charter must be [No. 96±79] approved by the Office prior to approval by Although, under the Bank Act, the Finance Board is designated as the the members at a legal meeting and shall be Regulations Governing Book-Entry effective upon filing with the Office in ‘‘issuer’’ of FHLBank securities, it has Federal Home Loan Bank Securities accordance with regulatory procedures. delegated the issuance of FHLBank lllllllllllllllll Attest: AGENCY: Federal Housing Finance securities, along with such other Secretary of the Association Board. ministerial functions as the servicing of lllllllllllllllllll By: ACTION: Interim final rule with request the FHLBank securities, to the Office of President or Chief Executive Officer of for comments. Finance (OF) (a joint office of the the Association FHLBanks) pursuant to section 2B(b)(1) Attest: lllllllllllllllll SUMMARY: The Federal Housing Finance of the Bank Act, 12 U.S.C. 1422b(b)(1), Secretary of the Office of Thrift Board is adopting an interim final rule part 941 of the Finance Board’s Supervision amending its regulations governing regulations, 12 CFR part 941, and By: lllllllllllllllllll procedures for maintaining book-entry periodic resolutions of the Board of Director of the Office of Thrift (uncertificated) Federal Home Loan Directors of the Finance Board. Supervision Bank securities within the Federal Since 1977, the OF has issued Effective Date: llllllllllllll Reserve Banks’ system of accounts. This domestic FHLBank securities 64022 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Rules and Regulations exclusively in ‘‘book-entry’’ form; that part 912 contains no such ‘‘conversion’’ additional proposed rules, pending the is, as uncertificated securities recorded provisions. completion of a planned revision of as entries on the computerized system Corresponding law (including state Article 8 of the UCC, governing of accounts maintained by the Federal laws based on the Uniform Commercial investment securities, in order to Reserve Banks (Reserve Banks), acting Code (UCC)) at the time current part 912 coordinate the concepts contained in as fiscal agents of the FHLBanks. This was promulgated assumed that the new TRADES regulation with those arrangement between the FHLBanks and possession and delivery of physical set forth in the revised version of Article the Reserve Banks exists pursuant to a certificates were the key elements in the 8. 1973 agreement which, as permitted securities holding system. This led the The revised version of Article 8 of the under section 15 of the Bank Act, 12 Department of Treasury, the FHLBB, UCC (Revised Article 8) was ratified by U.S.C. 1435, authorizes the Reserve and other GSE regulators to premise the American Law Institute and the Banks to issue book-entry FHLBank their regulations upon the ‘‘bearer- National Conference of Commissioners securities; to maintain related book- definitive security fiction,’’ which on Uniform State Laws in 1994. entry accounts; to pay principal and deems each book-entry security to be Thereafter, the Department of Treasury, interest due on book-entry FHLBank the equivalent of a bearer-definitive in March 1996, published a fourth securities; and otherwise to service such security. Despite the usefulness of the proposed TRADES rule, see 61 FR 8420, FHLBank securities. bearer-definitive fiction, its that incorporates many of the concepts At the time this agreement was shortcomings have become increasingly regarding transactions and rights in consummated, the former Federal Home apparent over the past 25 years, as the book-entry securities that are set forth in Loan Bank Board (FHLBB)—the Finance rules based on this fiction have been Revised Article 8 and that defers to state Board’s predecessor as regulator of the found to leave many unanswered law modeled after Revised Article 8 in FHLBanks—promulgated regulations questions regarding transactions and many circumstances. A largely similar governing the rights and obligations of rights in book-entry securities. final rule was published in August the FHLBanks, the Reserve Banks, and In addition, the rules have proved 1996, see 61 FR 43626, the substantive other persons with respect to the inadequate to deal with the tiered provisions of which will take effect on issuance and servicing of book-entry system of accounts in which book-entry January 1, 1997. FHLBank securities and the operation of securities are held. Each interest in a In order to ensure uniformity in the the associated FHLBank book-entry book-entry security must be credited to treatment of book-entry government system. See 12 CFR 506a (1974); 38 FR the account of a Reserve Bank securities, the regulators of GSEs that 10969 (1973) (proposed rule); 38 FR ‘‘participant’’—that is, an entity having maintain book-entry securities at 26355 (1973) (final rule). These an account with a Reserve Bank. Reserve Banks also are promulgating regulations, and those of other Persons or entities, including securities new regulations to govern their government sponsored enterprises broker-dealers, who wish to acquire an respective book-entry systems. These (GSEs) having similar book-entry interest in book-entry securities, but regulations will parallel the new arrangements with Reserve Banks, are who do not have an account with a TRADES regulation, with modifications patterned after part 306 of the Reserve Bank, must do so through a appropriate to the particular GSE and regulations of the Department of Reserve Bank participant. Non- government securities to which such Treasury, 31 CFR part 306 (1996), which participant broker-dealers who deal in regulations will apply, and will most govern Reserve Bank book-entry book-entry securities through a likely become effective simultaneously procedures for Treasury securities. participant may, in turn, hold these with the new TRADES regulation. Responsibility for the FHLBB book- securities for other persons or entities As part of this effort, the Finance entry regulations was transferred to the who otherwise lack access to the Board is now adopting an interim final Finance Board by the Financial securities markets. Accordingly, a rule amending part 912 of its Institutions Reform, Recovery, and Reserve Bank most likely will have no regulations, governing book-entry Enforcement Act of 1989 (FIRREA), Pub. information regarding the beneficial FHLBank securities. Because new part L. 101–73, section 401(h), 103 Stat. 356 owners of interests in book-entry 912 is based upon the new TRADES (1989), and the regulations were securities, but, instead, will consider the regulation and because the Department redesignated as part 912 of the Finance participants in whose Reserve Bank of Treasury has published extensive Board’s regulations. accounts the book-entry securities are commentary in its proposed and final Like those underlying the analogous held to be the ‘‘owners’’ of the interests rules regarding the TRADES regulation, Department of Treasury regulations, the therein. the Finance Board has not set forth here legal concepts upon which part 912 is Since 1985, the Department of a comprehensive analysis of part 912. based have become outdated. At the Treasury has been working to develop a Instead, the Finance Board is including time that these regulations were new book-entry regulation that does not here concise summaries of each section developed, the United States rely on the bearer-definitive fiction and of new part 912, which address the government securities market was in a that effectively addresses the tiered manner in which the new provisions state of transition between one in which system of accounts in which book-entry will effect the FHLBank book-entry most securities existed in definitive securities are held. The Department of system specifically. Those wishing to form (that is, the traditional certificate) Treasury published proposed rules review a more complete explanation of to one in which securities are amending its regulations governing the the nuances of the book-entry regulation maintained almost exclusively within book-entry system for Treasury and the principles underlying it are computerized book-entry systems. This securities (called ‘‘Treasury/Reserve referred to the preambles of the is evidenced by the fact that current part Automated Debt Entry System’’ or proposed and final TRADES rules, as 912 and the parallel regulations ‘‘TRADES’’) in March 1986 (51 FR well as the official Department of contained provisions regarding the 8846), November 1986 (51 FR 43027) Treasury Commentary on the TRADES conversion of definitive securities into and April 1992 (57 FR 12244). After regulation, which will be published as book entry securities. Because, as publication of the latter proposed rule, Appendix B to 31 CFR part 357 (and mentioned, all definitive FHLBank the Department of Treasury decided to which was published as part of the final securities have reached maturity, new defer publication of a final rule, or TRADES rule at 61 FR 43631). Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Rules and Regulations 64023

Although new part 912 is intended to the security interest is from a person perfected automatically or by filing a provide a legal framework for all book- other than a participant. By implication, financing statement and providing that entry FHLBank securities, it is not a security interests in favor of a Reserve this issue is to be resolved by reference codification of all laws that could affect Bank that have been recorded on the to the law of the state in which the interests in book-entry FHLBank books of the Reserve Bank in accordance debtor is located. securities. In general, the regulation with § 912.4(c)(1) are governed by Section 912.3(d) is analogous to provides that (with some exceptions Federal law, as set forth in § 912.2(a). § 912.2(c), providing that if the regarding security interests) Federal law Thus, claims against the FHLBanks and application of the jurisdictional rule set will govern the rights and obligations of Reserve Banks made by participants, or forth in § 912.3(b) would result in the the FHLBanks and the Reserve Banks any other person claiming an interest in application of the law of a state that has arising from book-entry FHLBank a book-entry FHLBank security, other not adopted Revised Article 8, that securities and the book-entry system, than claims involving Reserve Bank state’s law will be read as if it had and that state law (to the extent that security interests that have not been adopted Revised Article 8. states have adopted Revised Article 8) recorded on the books of the Reserve Section 912.4(a) provides that a will govern all other rights and Bank, are governed solely and participant’s securities entitlement is obligations. The regulation also sets exclusively by Federal law. created when a Reserve Bank indicates forth the substantive Federal law that Section 912.2(c) provides that, if the by book-entry that a book-entry applies to the rights and obligations of application of the jurisdictional rule set FHLBank security has been credited to the FHLBanks and the Reserve Banks forth in the first sentence of § 912.2(b) the participant’s securities account. The arising from book-entry FHLBank would result in the application of the nature of the participant’s ‘‘securities securities and the book-entry system. law of a state that has not adopted entitlement’’—that is, the nature of its The most prominent aspect of the Revised Article 8, that state’s law will interest in a book-entry FHLBank substantive law set forth therein is that be read as if it had adopted Revised security—once it is created, must be neither the FHLBanks nor the Reserve Article 8. This limited rule of Federal determined by reference to Federal law Banks are liable to persons having or preemption is included in order to with respect to the participant’s rights claiming interests in book-entry ensure that matters involving book-entry against and obligations to its Reserve securities that are below the participant FHLBank securities will be treated Bank and the FHLBanks, as provided in level in the tiered system of ownership; similarly regardless of the state having § 912.2, or to applicable state law with that is, the FHLBanks and Reserve jurisdiction over the matter. As of respect to the participant’s rights against Banks need only recognize Reserve November 1, 1996, 29 states have and obligations to all other persons, as Bank participants as holders of interests adopted Revised Article 8 and others are provided in § 912.3. Section 912.4(b) in book-entry FHLBank securities. expected to follow. If and when all provides that a security interest in favor states adopt Revised Article 8, the of the United States government to II. Section-by-Section Analysis Finance Board expects that this secure deposits of public money has Section 912.1 contains definitions for provision, and the similar provision priority over the interests of any other use in part 912. Section 912.2(a) contained in § 912.3(d), will be person in a book-entry FHLBank provides that, with the exception of repealed. In the meantime, as provided security. certain security interests addressed in in § 912.9(b), the Finance Board will Section 912.4(c)(1) provides that, § 912.2(b) (discussed below), the rights defer to determinations of the where required by Federal law or and obligations of the FHLBanks and Department of Treasury regarding regulation or pursuant to a specific the Reserve Banks with respect to the whether particular states may be agreement with a Reserve Bank, a FHLBank book-entry system and the deemed to have adopted Revised Article security interest in book-entry FHLBank FHLBank securities maintained therein 8 for purposes of part 912. With regard securities in favor of a Reserve Bank or are governed solely and exclusively by to the TRADES regulation, the other person may be created and Federal law, which is defined to Department of Treasury intends to perfected by a Reserve Bank marking its include: part 912, book-entry FHLBank publish such determinations in the books to record the security interest. securities offering notices, and Reserve Federal Register, as necessary. See 61 However, neither the FHLBanks nor the Bank Operating Circulars. The FR 43633–34. Reserve Banks have any obligation to governing Federal law set forth in Section 912.3 is a choice of law rule agree to record a security interest in § 912.2 relates only to the matters set governing the substantive matters set book-entry FHLBank securities on the forth therein; other laws, such as tax, forth in § 912.3(a)—which are meant to books of a Reserve Bank, except as banking, and securities laws remain be coextensive with those matters required by Federal law or regulation. A applicable and could affect the holders covered by Revised Article 8 with security interest created and perfected of book-entry FHLBank securities. respect to a person’s interest in a book- as specified in § 912.4(c)(1) has priority Section 912.2(b) provides an entry FHLBank security, other than over all other interests in the book-entry exception to the rule of Federal interests connected with a person’s FHLBank security, except an interest of preemption set forth in § 912.2(a), relationship with the Reserve Banks or the United States government, as stating that security interests in book- the FHLBanks, which are governed by described in § 912.4(b). entry FHLBank securities in favor of a Federal law, as provided in § 912.2. Section 912.4(c)(2) provides that a Reserve Bank that have not been Section 912.3(b) adopts Revised Article security interest in a book-entry recorded on the books of the Reserve 8’s general choice of law rule, providing FHLBank security may be perfected by Bank, as described in § 912.4(c)(1), shall that the law applicable to the securities any method available under applicable be governed by: (i) the law of the state intermediary will govern matters state law, as determined under in which the head office of the Reserve involving an interest in a book-entry §§ 912.2(b) or 912.3, and that the Bank maintaining the participant’s FHLBank security held through that priority of such security interests shall account is located, if the security intermediary. Section 912.3(c) also be governed by such applicable law. If interest is from a participant; or (ii) the parallels Revised Article 8 by excepting a person perfects a security interest law of the state to be determined as from the general rule the determination pursuant to § 912.4(c)(2), obligations of specified in § 912.3 (discussed below), if of whether security interests are the FHLBanks and the Reserve Banks 64024 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Rules and Regulations with respect to that security interest are form, Transfer Message, or other written List of Subjects limited, absent a specific agreement instrument, or evidence submitted in 12 CFR Part 910 made by the FHLBanks or Reserve support thereof. Section 912.8 makes Banks pursuant to § 912.4(c)(1). In other clear where certain legal process should Federal home loan banks, words, although security interests in a be directed, although it makes clear that Government securities. book-entry FHLBank security perfected the regulations do not establish whether 12 CFR Part 912 under applicable state law may be valid, a Reserve Bank is required to honor any neither the FHLBanks nor a Reserve such order or notice. Federal home loan banks, Federal Bank have any obligation to recognize Section 912.9(a) references, for Reserve System, Government securities, any such interests, other than those of interpretive purposes, the Commentary electronic funds transfer. the participant in whose securities that the Department of Treasury has Accordingly, the Federal Housing account the interest is maintained; a appended to its TRADES regulation, so Finance Board hereby amends title 12, creditor’s recourse will be solely against as to provide a comprehensive chapter IX of the Code of Federal the debtor participant or other third background to the matters contained in Regulations, to read as follows: party. part 912 and to ensure that it is applied Section 912.5(a) sets forth the general in similar fashion to the TRADES PART 910ÐCONSOLIDATED BONDS rule that, with limited exceptions, the regulation. Section 912.9(b) defers to the AND DEBENTURES FHLBanks and the Reserve Banks will Department of Treasury determinations recognize the interest in a book-entry regarding whether particular states may 1. The authority citation for part 910 FHLBank security only of a participant be deemed to have adopted Revised is revised to read as follows: in whose securities account such Article 8 for purposes of part 912. Authority: 12 U.S.C. 1422b, 1431. interest is maintained. As noted above, Section 912.10 merely restates the 2. Section 910.3 is revised to read as book-entry FHLBank securities are held substance of section 15 of the Bank Act, follows: via a tiered system of ownership. The 12 U.S.C. 1435, which provides that records of a Reserve Bank reflect only FHLBank securities are not obligations § 910.3 Transactions in consolidated the ownership interests of participants. of the United States and are not bonds. Participants frequently will hold guaranteed by the United States. The general regulations of the interests in book-entry FHLBank III. Procedural Requirements Department of Treasury now or securities for the benefit of their hereafter in force governing transactions This interim final rule does not meet customers (which may include broker- in United States securities, except 31 the criteria for a ‘‘significant regulatory dealers and other securities CFR part 357, regarding book-entry intermediaries) who, in certain cases, in action’’ under Executive Order 12866. The Finance Board finds that the procedure, are hereby incorporated into turn will hold interests in FHLBank this part, so far as applicable and as securities for the benefit of their notice and comment procedure required by the Administrative Procedures Act is necessarily modified to relate to customers. Accordingly, neither the consolidated Federal Home Loan Bank FHLBanks nor a Reserve Bank would unnecessary, impracticable, and contrary to the public interest in this bonds, as the regulations of the Board know the identity or recognize a claim for similar transactions in consolidated of a participant’s customer if that instance. See 5 U.S.C. 553(b)(3)(B). The Treasury TRADES regulation on which Federal Home Loan Bank bonds. The customer were to present it to the book-entry procedure for consolidated FHLBanks or a Reserve Bank. Under the this rule is based has been published, in various forms, as a proposed rule four Federal Home Loan Bank bonds is regulation, persons at levels below the contained in part 912 of this subchapter. participant level must present their times and as a final rule once. In each 3. Part 912 is revised to read as claims to their securities intermediary; instance, the TRADES regulation was follows: neither the FHLBanks not the Reserve accompanied by extensive commentary Banks are liable for any such claims. addressing the background and PART 912ÐBOOK-ENTRY Section 912.5(b)(1) sets forth a provisions of the TRADES regulation. PROCEDURE FOR FEDERAL HOME corollary to the rule set forth in Accordingly, the Finance Board has LOAN BANK SECURITIES § 912.5(a), providing that the FHLBanks concluded that publication of new part discharge their payment responsibilities 912 for notice and comment is Sec. with respect to a book-entry FHLBank unnecessary given its similarity to the 912.1 Definitions. security when a Reserve Bank credits TRADES regulation and is impracticable 912.2 Law governing rights and obligations the funds account of a participant with given the compelling reasons for setting of Federal Home Loan Banks and Federal amounts due on that security, or makes the effective date of the regulation at Reserve Banks; rights of any Person payment in some other manner January 1, 1997, when the TRADES against Federal Home Loan Banks and Federal Reserve Banks. specified by the participant. Section regulation and those of the other GSEs 912.3 Law governing other interests. 912.5(b) establishes the mechanism for will most likely become effective. 912.4 Creation of Participant’s Security payment of book-entry FHLBank Nevertheless, because the Finance Entitlement; security interests. securities at maturity or upon Board believes public comments aid in 912.5 Obligations of the Federal Home Loan redemption. Contrary to the practice effective rulemaking, it will accept Banks; no Adverse Claims. with definitive securities, no act of written comments on the interim final 912.6 Authority of Federal Reserve Banks. presentment is required by the rule on or before February 3, 1997. 912.7 Liability of Federal Home Loan Banks participant. Because no notice of proposed and Federal Reserve Banks Section 912.6 authorizes the Reserve rulemaking is required, the provisions 912.8 Notice of attachment for Book-entry Banks, as fiscal agents of the FHLBanks, Federal Home Loan Bank Securities. of the Regulatory Flexibility Act, 5 912.9 Reference to certain Department of to operate the book-entry system for the U.S.C. 601, et seq., do not apply. Treasury commentary and FHLBanks. Section 912.7 provides that There are no collections of determinations. the FHLBanks and the Reserve Banks information contained in this interim 912.10 Obligations of United States with are not liable for actions taken in final rule. Therefore, the Paperwork respect to Federal Home Loan Bank reliance on a tender, transaction request Reduction Act does not apply. Securities. Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Rules and Regulations 64025

Authority: 12 U.S.C. 1422a, 1422b, 1431, Official Text. Copies of this publication of the Book-entry system, as it applies 1435. are available from the Executive Office to Federal Home Loan Bank Securities; § 912.1 Definitions. of the American Law Institute, 4025 are governed solely by regulations of the Chestnut Street, Philadelphia, PA Federal Housing Finance Board, For purposes of this part, unless the 19104, and the National Conference of including the regulations of this part context otherwise requires or indicates: Commissioners on Uniform State Laws, 912, the applicable offering notice, (a) Adverse Claim means a claim that 676 North St. Clair Street, Suite 1700, applicable procedures established by a claimant has a property interest in a Chicago, IL 60611. the Federal Home Loan Banks, and Book-entry Federal Home Loan Bank (l) Securities Intermediary means: Federal Reserve Bank Operating Security and that it is a violation of the (1) A Person that is registered as a Circulars. rights of the claimant for another Person ‘‘clearing agency’’ under the federal (b) A security interest in a Security to hold, transfer, or deal with the securities laws; a Federal Reserve Bank; Entitlement that is in favor of a Federal Security. any other person that provides clearance (b) Book-entry Federal Home Loan Reserve Bank from a Participant and or settlement services with respect to a Bank Security means a Federal Home that is not recorded on the books of a Book-entry Federal Home Loan Bank Loan Bank Security maintained in the Federal Reserve Bank pursuant to Security that would require it to register book-entry system of the Federal § 912.4(c)(1), is governed by the law (not as a clearing agency under the federal Reserve Banks. including the conflict-of-law rules) of securities laws but for an exclusion or (c) Entitlement Holder means a Person the jurisdiction where the head office of exemption from the registration to whose account an interest in a Book- the Federal Reserve Bank maintaining requirement, if its activities as a clearing entry Federal Home Loan Bank Security the Participant’s Securities Account is corporation, including promulgation of is credited on the records of a Securities located. A security interest in a Security rules, are subject to regulation by a Intermediary. Entitlement that is in favor of a Federal federal or state governmental authority; (d) Federal Home Loan Bank Security Reserve Bank from a Person that is not or means a consolidated bond, debenture, a Participant, and that is not recorded (2) A Person (other than an note, or other obligation of the Federal on the books of a Federal Reserve Bank individual, unless such individual is Home Loan Banks issued under pursuant to § 912.4(c)(1), is governed by registered as a broker or dealer under authority of section 11 of the Federal the law determined in the manner the federal securities laws) including a Home Loan Bank Act (12 U.S.C. 1431). specified in § 912.3. bank or broker, that in the ordinary (e) Federal Reserve Bank means the a (c) If the jurisdiction specified in the course of its business maintains Federal Reserve Bank or branch, acting first sentence of paragraph (b) of this securities accounts for others and is as fiscal agent of the Federal Home Loan section is a State that has not adopted acting in that capacity. Banks, unless otherwise indicated. Revised Article 8, then the law specified (m) Security Entitlement means the (f) Federal Reserve Bank Operating in the first sentence of paragraph (b) of rights and property interest of an Circular means the publication issued this section shall be the law of that State Entitlement Holder with respect to a by each Federal Reserve Bank that sets as though Revised Article 8 had been Book-entry Federal Home Loan Bank forth the terms and conditions under adopted by that State. Security. which the Federal Reserve Bank (n) State means any State of the § 912.3 Law governing other interests. maintains Book-entry Securities United States, the District of Columbia, accounts and transfers Book-entry (a) To the extent not inconsistent with Puerto Rico, the Virgin Islands, or any Securities. this part 912, the law (not including the other territory or possession of the (g) Funds account means a reserve conflict-of-law rules) of a Securities United States. and/or clearing account at a Federal Intermediary’s jurisdiction governs: (o) Transfer Message means an Reserve Bank to which debits or credits (1) The acquisition of a Security instruction of a Participant to a Federal are posted for transfers against payment, Entitlement from the Securities Reserve Bank to effect a transfer of a Book-entry Securities transaction fees, Intermediary; Book-entry Federal Home Loan Bank or principal and interest payments. (2) The rights and duties of the Security, as set forth in Federal Reserve (h) Participant means a Person that Securities Intermediary and Entitlement Bank Operating Circulars. maintains a Participant’s Securities Holder arising out of a Security Account with a Federal Reserve Bank. § 912.2 Law governing rights and Entitlement; (i) Participant’s Securities Account obligations of Federal Home Loan Banks (3) Whether the Securities means an account in the name of a and Federal Reserve Banks; rights of any Intermediary owes any duties to an Participant at a Federal Reserve Bank to Person against Federal Home Loan Banks adverse claimant to a Security which Book-entry Federal Home Loan and Federal Reserve Banks. Entitlement; Bank Securities held for a Participant (a) Except as provided in paragraph (4) Whether an Adverse Claim can be are or may be credited. (b) of this section, the rights and asserted against a Person who acquires (j) Person means and includes an obligations of the Federal Home Loan a Security Entitlement from the individual, corporation, company, Banks and the Federal Reserve Banks Securities Intermediary or a Person who governmental entity, association, firm, with respect to: A Book-entry Federal purchases a Security Entitlement or partnership, trust, estate, representative, Home Loan Bank Security or Security interest therein from an Entitlement and any other similar organization, but Entitlement and the operation of the Holder; and does not mean or include the United Book-entry system, as it applies to (5) Except as otherwise provided in States, a Federal Home Loan Bank, or a Federal Home Loan Bank securities; and paragraph (c) of this section, the Federal Reserve Bank. the rights of any Person, including a perfection, effect of perfection or non- (k) Revised Article 8 means Uniform Participant, against the Federal Home perfection, and priority of a security Commercial Code, Revised Article 8, Loan Banks and the Federal Reserve interest in a Security Entitlement. Investment Securities (with Conforming Banks with respect to: A Book-entry (b) The following rules determine a and Miscellaneous Amendments to Federal Home Loan Bank Security or ‘‘Securities Intermediary’s jurisdiction’’ Articles 1, 3, 4, 5, 9, and 10) 1994 Security Entitlement and the operation for purposes of this section: 64026 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Rules and Regulations

(1) If an agreement between the Bank Security has been credited to a interest are governed by that applicable Securities Intermediary and its Participant’s Securities Account. law. A security interest in favor of a Entitlement Holder specifies that it is (b) A security interest in a Security Federal Reserve Bank shall be treated as governed by the law of a particular Entitlement of a Participant in favor of a security interest in favor of a clearing jurisdiction, that jurisdiction is the the United States to secure deposits of corporation in all respects under that Securities Intermediary’s jurisdiction. public money, including, without law, including with respect to the effect (2) If an agreement between the limitation deposits to the Treasury tax of perfection and priority of the security Securities Intermediary and its and loan accounts, or other security interest. A Federal Reserve Bank Entitlement Holder does not specify the interest in favor of the United States that Operating Circular shall be treated as a governing law as provided in paragraph is required by Federal statute, rule adopted by a clearing corporation (b)(1) of this section, but expressly regulation, or agreement, and that is for such purposes. marked on the books of a Federal specifies that the securities account is § 912.5 Obligations of the Federal Home maintained at an office in a particular Reserve Bank is thereby effected and perfected, and has priority over any Loan Banks; No Adverse Claims. jurisdiction, that jurisdiction is the (a) Except in the case of a security Securities Intermediary’s jurisdiction. other interest in the Securities. Where a security interest in favor of the United interest in favor of the United States or (3) If an agreement between the a Federal Reserve Bank or otherwise as Securities Intermediary and its States in a Security Entitlement of a Participant is marked on the books of a provided in § 912.4(c)(1), for the Entitlement Holder does not specify a purposes of this part 912, the Federal jurisdiction as provided in paragraph Federal Reserve Bank, such Reserve Bank may rely, and is protected in Home Loan Banks and the Federal (b)(1) or (b)(2) of this section, the Reserve Banks shall treat the Participant Securities Intermediary’s jurisdiction is relying, exclusively on the order of an authorized representative of the United to whose Securities Account an interest the jurisdiction in which is located the States directing the transfer of the in a Book-entry Federal Home Loan office identified in an account statement Security. For purposes of this paragraph Bank Security has been credited as the as the office serving the Entitlement (b), an ‘‘authorized representative of the person exclusively entitled to issue a Holder’s account. United States’’ is the official designated Transfer Message, to receive interest and (4) If an agreement between the in the applicable regulations or other payments with respect thereof and Securities Intermediary and its agreement to which a Federal Reserve otherwise to exercise all the rights and Entitlement Holder does not specify a Bank is a party, governing the security powers with respect to the Security, jurisdiction as provided in paragraph interest. notwithstanding any information or (b)(1) or (b)(2) of this section and an (c)(1) The Federal Home Loan Banks notice to the contrary. Neither the account statement does not identify an and the Federal Reserve Banks have no Federal Reserve Banks nor the Federal office serving the Entitlement Holder’s obligation to agree to act on behalf of Home Loan Banks are liable to a Person account as provided in paragraph (b)(3) any Person or to recognize the interest asserting or having an Adverse Claim to of this section, the Securities of any transferee of a security interest or a Security Entitlement or to a Book- Intermediary’s jurisdiction is the other limited interest in a Security entry Federal Home Loan Bank Security jurisdiction in which is located the chief Entitlement in favor of any Person in a Participant’s Securities Account, executive office of the Securities except to the extent of any specific including any such claim arising as a Intermediary. requirement of Federal law or regulation result of the transfer or disposition of a (c) Notwithstanding the general rule or to the extent set forth in any specific Book-entry Federal Home Loan Bank in paragraph (a)(5) of this section, the agreement with the Federal Reserve Security by a Federal Reserve Bank law (but not the conflict-of-law rules) of Bank on whose books the interest of the pursuant to a Transfer Message that the the jurisdiction in which the Person Participant is recorded. To the extent Federal Reserve Bank reasonably creating a security interest is located required by such law or regulation or set believes to be genuine. governs whether and how the security forth in an agreement with a Federal (b) The obligation of the Federal interest may be perfected automatically Reserve Bank, or the Federal Reserve Home Loan Banks to make payments of or by filing a financing statement. Bank Operating Circular, a security interest and principal with respect to (d) If the jurisdiction specified in interest in a Security Entitlement that is Book-entry Federal Home Loan Bank paragraph (b) of this section is a State in favor of a Federal Reserve Bank or a Securities is discharged at the time that has not adopted Revised Article 8, Person may be created and perfected by payment in the appropriate amount is then the law for the matters specified in a Federal Reserve Bank marking its made as follows: paragraph (a) of this section shall be the books to record the security interest. (1) Interest on Book-entry Federal law of that State as though Revised Except as provided in paragraph (b) of Home Loan Bank Securities is either Article 8 had been adopted by that this section, a security interest in a credited by a Federal Reserve Bank to a State. For purposes of the application of Security Entitlement marked on the Funds Account maintained at the the matters specified in paragraph (a) of books of a Federal Reserve Bank shall Federal Reserve Bank or otherwise paid this section, the Federal Reserve Bank have priority over any other interest in as directed by the Participant. maintaining the Securities Account is a the Securities. (2) Book-entry Federal Home Loan clearing corporation, and the (2) In addition to the method Bank Securities are paid, either at Participant’s interest in a Federal Home provided in paragraph (c)(1) of this maturity or upon redemption, in Loan Bank Book-entry Security is a section, a security interest in a Security accordance with their terms by a Security Entitlement. Entitlement, including a security Federal Reserve Bank withdrawing the interest in favor of a Federal Reserve securities from the Participant’s § 912.4 Creation of Participant's Security Bank, may be perfected by any method Securities Account in which they are Entitlement; security interests. by which a security interest may be maintained and by either crediting the (a) A Participant’s Security perfected under applicable law as amount of the proceeds, including both Entitlement is created when a Federal described in § 912.2(b) or § 912.3. The principal and interest, where applicable, Reserve Bank indicates by book entry perfection, effect of perfection or non- to a Funds Account at the Federal that a Book-entry Federal Home Loan perfection, and priority of a security Reserve Bank or otherwise paying such Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Rules and Regulations 64027 principal and interest as directed by the process upon the secured party. These safe use of ferrous lactate for the Participant. No action by the Participant regulations do not purport to establish coloring of ripe olives. is required in connection with the whether a Federal Reserve Bank is DATES: Effective date confirmed: payment of a Book-entry Federal Home required to honor an order or other September 4, 1996. Loan Bank Security, unless otherwise notice of attachment in any particular FOR FURTHER INFORMATION CONTACT: expressly required. case or class of cases. Robert L. Martin, Center for Food Safety § 912.6 Authority of Federal Reserve § 912.9 Reference to certain Department of and Applied Nutrition (HFS–217), Food Banks. Treasury commentary and determinations. and Drug Administration, 200 C St. SW., (a) Each Federal Reserve Bank is (a) The Department of Treasury Washington, DC 20204–0001, 202–418– hereby authorized as fiscal agent of the TRADES Commentary (Appendix B to 3074. Federal Home Loan Banks to perform 31 CFR part 357) addressing the SUPPLEMENTARY INFORMATION: In the functions with respect to the issuance of Department of Treasury regulations Federal Register of August 2, 1996 (61 Book-entry Federal Home Loan Bank governing book-entry procedure for FR 40317), FDA amended 21 CFR part Securities, in accordance with the terms Treasury Securities is hereby 73 to add a new § 73.165 to provide for of the applicable offering notice and referenced, so far as applicable and as the use of ferrous lactate for the coloring with procedures established by the necessarily modified to relate to Book- of ripe olives. Federal Home Loan Banks; to service entry Federal Home Loan Bank FDA gave interested persons until and maintain Book-entry Federal Home Securities, as an interpretive aid to this September 3, 1996, to file objections or Loan Bank Securities in accounts part 912. requests for a hearing. The agency established for such purposes; to make (b) Determinations of the Department received no objections or requests for a payments of principal, interest and of Treasury regarding whether a State hearing on the final rule. Therefore, redemption premium (if any), as shall be considered to have adopted FDA finds that the effective date of the directed by the Federal Home Loan Revised Article 8 for purposes of 31 CFR final rule that published in the Federal Banks; to effect transfer of Book-entry part 357, as published in the Federal Register of August 2, 1996, should be Federal Home Loan Bank Securities Register or otherwise, shall also apply confirmed. between Participants’ Securities to this part 912. Accounts as directed by the List of Subjects in 21 CFR Part 73 Participants; and to perform such other § 912.10 Obligations of United States with Color additives, Cosmetics, Drugs, duties as fiscal agent as may be respect to Federal Home Loan Bank Medical devices. requested by the Federal Home Loan Securities. Therefore, under the Federal Food, Banks. Federal Home Loan Bank Securities Drug, and Cosmetic Act (secs. 201, 401, (b) Each Federal Reserve Bank may are not obligations of the United States 402, 403, 409, 501, 502, 505, 601, 602, issue Operating Circulars not and are not guaranteed by the United 701, 721 (21 U.S.C. 321, 341, 342, 343, inconsistent with this part 912, States. 348, 351, 352, 355, 361, 362, 371, 379e)) governing the details of its handling of By the Board of Directors of the Federal and under authority delegated to the Book-entry Federal Home Loan Bank Housing Finance Board. Commissioner of Food and Drugs and Securities, Security Entitlements, and Dated: November 7, 1996. redelegated to the Director, Center for the operation of the book-entry system Food Safety and Applied Nutrition, under this part 912. Bruce A. Morrison, Chairman. notice is given that no objections or § 912.7 Liability of Federal Home Loan [FR Doc. 96–30454 Filed 12–2–96; 8:45 am] requests for a hearing were filed in Banks and Federal Reserve Banks. response to the August 2, 1996, final BILLING CODE 6725±01±U The Federal Home Loan Banks and rule. Accordingly, the amendments the Federal Reserve Banks may rely on promulgated thereby became effective the information provided in a tender, September 4, 1996. DEPARTMENT OF HEALTH AND transaction request form, other Dated: November 21, 1996. HUMAN SERVICES transaction documentation, or Transfer Fred R. Shank, Message, and are not required to verify Food and Drug Administration Director, Center for Food Safety and Applied the information. The Federal Home Nutrition. Loan Banks and the Federal Reserve 21 CFR Part 73 [FR Doc. 96–30730 Filed 12–2–96; 8:45 am] Banks shall not be liable for any action BILLING CODE 4160±01±F taken in accordance with the [Docket No. 93G±0017] information set out in a tender, transaction request form, other Listing of Color Additives Exempt transaction documentation, or Transfer From Certification; Ferrous Lactate; DEPARTMENT OF COMMERCE Confirmation of Effective Date Message, or evidence submitted in Patent and Trademark Office support thereof. AGENCY: Food and Drug Administration, 37 CFR Part 1 § 912.8 Notice of attachment for Book- HHS. entry Federal Home Loan Bank Securities. ACTION: Final rule; confirmation of [Docket No. 961030301±6301±01] The interest of a debtor in a Security effective date. Entitlement may be reached by a RIN 0651±AA55 creditor only by legal process upon the SUMMARY: The Food and Drug Changes in Signature and Filing Securities Intermediary with whom the Administration (FDA) is confirming the Requirements for Correspondence debtor’s securities account is effective date of September 4, 1996, for Filed in the Patent and Trademark maintained, except where a Security the final rule that appeared in the Office Entitlement is maintained in the name Federal Register of August 2, 1996 (61 of a secured party, in which case the FR 40317), and amended the color AGENCY: Patent and Trademark Office, debtor’s interest may be reached by legal additive regulations to provide for the Commerce. 64028 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Rules and Regulations

ACTION: Correcting amendment. 1. The authority citation for 37 CFR ACTION: Direct final rule; correcting part 1 continues to read as follows: amendment. SUMMARY: This document contains a further correction to the final Authority: 35 U.S.C. 6, unless otherwise SUMMARY: This action corrects the regulations which were published noted. citation of a direct final rule, which was Friday, October 22, 1993 (58 FR 54494). 2. In § 1.741, paragraph (a) is revised published on Friday, September 27, The regulations related to the changes in to read as follows: 1996 (61 FR 50715). This action pertains signature and filing requirements for to the Maryland 1990 base year correspondence filed in the Patent and § 1.741 Filing date of application. emission inventory for ozone. Trademark Office. The correction re- (a) The filing date of an application EFFECTIVE DATE: December 3, 1996. for extension of a patent term is the date inserts part of a rule (37 CFR 1.741) that FOR FURTHER INFORMATION CONTACT: Rose was inadvertently deleted when the rule on which a complete application is Quinto, (215) 566–2182. was amended. received in the Patent and Trademark SUPPLEMENTARY INFORMATION: EFFECTIVE DATE: December 3, 1996. Office or filed pursuant to the FOR FURTHER INFORMATION CONTACT: ‘‘Certificate of Mailing or Transmission’’ Background Karin Tyson by telephone at (703) 305– procedures of 37 CFR 1.8 or ‘‘Express Mail’’ provisions of 37 CFR 1.10. A On October 31, 1995 (60 FR 55321) 9285; by mail marked to her attention EPA published a direct final rule and addressed to the Assistant complete application shall include: (1) An identification of the approved approving a State Implementation Plan Commissioner for Patents, Box (SIP) revision submitted by Maryland COMMENTS—PATENTS, Washington, product; (2) An identification of each Federal pertaining to the 1990 base year D.C. 20231; or by fax marked to her emission inventory for carbon monoxide attention at (703) 308–6916. statute under which regulatory review occurred; for the Baltimore Metropolitan SUPPLEMENTARY INFORMATION: (3) An identification of the patent for Statistical Area (40 CFR 52.1075(a)). On January 30, 1996 (61 FR 2931) which an extension is being sought; Background EPA published a direct final rule (4) An identification of each claim of The final regulation that is the subject approving a SIP revision submitted by the patent which claims the approved of this correction was revised to change Maryland pertaining to the 1990 base product or a method of using or ‘‘Certificate of Mailing’’ to ‘‘Certificate year emission inventory for carbon manufacturing the approved product; of Mailing or Transmission’’ in 37 CFR monoxide for the Washington (5) Sufficient information to enable 1.741(a) as published at 58 FR 54494 Metropolitan Statistical Area the Commissioner to determine under (October 22, 1993), corrected at 58 FR (§ 52.1075(b)). 64154 (December 6, 1993), and in the 35 U.S.C. 156 subsections (a) and (b) the On September 27, 1996 (61 FR 50715) Official Gazette of the Patent and eligibility of a patent for extension and EPA published a direct final rule Trademark Office at 1156 Off. Gaz. Pat. the rights that will be derived from the approving a SIP revision submitted by Office 61 (November 16, 1993), extension and information to enable the Maryland pertaining to the Maryland corrected at 1157 Off. Gaz. Pat. Office 87 Commissioner and the Secretary of 1990 base year emission inventory for (December 28, 1993). Health and Human Services or the ozone. Secretary of Agriculture to determine Need for Correction the length of the regulatory review Need for Correction As published, the final regulation period; and As published, the direct final rule inadvertently deleted the last sentence (6) A brief description of the activities contains errors which may prove to be of the first paragraph of paragraph (a) of undertaken by the marketing applicant misleading and are in need of Rule 741 and paragraphs (a)(1)–(a)(6). during the applicable regulatory review clarification. period with respect to the approved Paperwork Reduction Act Statement product and the significant dates Correction of Publication Notwithstanding any other provision applicable to such activities. Accordingly, the publication on of law, no person is required to respond * * * * * September 27, 1996 (61 FR 50717, FR to nor shall a person be subject to a Dated: November 26, 1996. Doc. 96–24524), Part 52, § 52.1075 is penalty for failure to comply with a Bruce A. Lehman, being amended by revising the section collection of information subject to the Assistant Secretary of Commerce and heading to ‘‘1990 Base Year Emission requirements of the Paperwork Commissioner of Patents and Trademarks. Inventory’’ and adding a third paragraph Reduction Act (PRA) unless that [FR Doc. 96–30751 Filed 12–2–96; 8:45 am] (c). collection of information displays a currently valid OMB control number. BILLING CODE 3510±16±P Administrative Requirements OMB has approved the collection of Under Executive Order 12866 (58 FR the information required by this rule 51735, October 4, 1993), this action is under OMB # 0651–0020. ENVIRONMENTAL PROTECTION not a ‘‘significant regulatory action’’ List of Subjects in 37 CFR Part 1 AGENCY and, is therefore not subject to review by the Office of Management and Budget. Administrative practice and 40 CFR Part 52 In addition, this action does not impose procedure, Freedom of Information, any enforceable duty or contain any Inventions and patents, Reporting and [MD033±7157; FRL±5650±8] unfunded mandate as described in the record keeping requirements. Approval and Promulgation of Air Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4), or require prior PART 1ÐRULES OF PRACTICE IN Quality Implementation Plans; consultation with State officials as PATENT CASES Maryland 1990 Base Year Emission Inventory; Correction specified by Executive Order 12875 (58 Accordingly, 37 CFR part 1 is FR 58093, October 28, 1993), or involve corrected by making the following AGENCY: Environmental Protection special consideration of environmental correcting amendment: Agency (EPA). justice related issues as required by Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Rules and Regulations 64029

Executive Order 12898 (59 FR 7629, 40 CFR Part 52 adverse comments were submitted to February 16, 1994). EPA within 30 days of publication of [Region II Docket No. 144, NY21±1±6732(c); Because this action is not subject to FRL±5657±8] the rule in the Federal Register (61 FR notice-and-comment requirements 51214). EPA received adverse under the Administrative Procedure Act Approval and Promulgation of comments. Therefore, EPA is or any other statute, it is not subject to Implementation Plans; New York; withdrawing the October 1, 1996 direct the provisions of the Regulatory Withdrawal of Direct Final Rule final approval of New York’s SIP Flexibility Act (5 U.S.C. 601 et seq.). Regarding Transportation Control revision. Comments received during the Under 5 U.S.C. 801(a)(1)(A) as added Measures 30 days after October 1, 1996 will be by the Small Business Regulatory addressed in a subsequent rulemaking Enforcement Fairness Act of 1996, EPA AGENCY: Environmental Protection action based on the proposed rule. As submitted a report containing this rule Agency (EPA). stated in the October 1, 1996 notice, this and other required information to the ACTION: Final rule. withdrawal action does not establish an U.S. Senate, the U.S. House of additional comment period. SUMMARY: On October 1, 1996, EPA Representatives and the Comptroller List of Subjects in 40 CFR Part 52 General of the General Accounting published approval of a State Office prior to publication of this rule in Implementation Plan (SIP) revision Environmental protection, Air today’s Federal Register. This rule is submitted by New York (61 FR 51214), pollution control, Hydrocarbons, not a ‘‘major rule’’ as defined by 5 which addressed the need for Intergovernmental relations, Nitrogen U.S.C. 804(2). transportation control measures (TCMs) Oxides, Ozone, Reporting and to offset growth in emissions from recordkeeping requirements, Volatile Dated: October 31, 1996. growth in vehicle miles traveled as organic compounds. Stanley L. Laskowski, required by the Clean Air Act. This Dated: November 20, 1996. Acting Regional Administrator, Region III. action was published without prior Herbert Barrack, List of Subjects in 40 CFR Part 52 proposal because EPA anticipated no adverse comments. Because EPA Acting Regional Administrator. Environmental protection, Air received adverse comments on this For the reasons set out in the pollution control, Carbon monoxide, action, EPA is withdrawing the approval preamble, 40 CFR Part 52 is amended as Hydrocarbons, Intergovernmental of New York’s request to revise its SIP follows: relations, Nitrogen dioxide, Ozone, for ozone, announced in the October 1, Reporting and recordkeeping 1996 direct final rule. EPA will now PART 52Ð[AMENDED] requirements. proceed with rulemaking based on a 1. The authority citation for part 52 Part 52, Chapter I, title 40 of the Code proposed rule pertaining to the same continues to read as follows: of Federal Regulations is amended as TCMs, which was published on the follows: same date (61 FR 51257). Authority: 42 U.S.C. 7401–7671q. EFFECTIVE DATE: This action is effective Subpart HHÐNew York PART 52Ð[AMENDED] December 3, 1996. 1. The authority citation for part 52 FOR FURTHER INFORMATION CONTACT: § 52.1683 [Amended] continues to read as follows: Linda Kareff, Environmental Protection 2. Section 52.1683 is amended by Agency, Region 2 Office, 290 Broadway, Authority: 42 U.S.C. 7401–7671q. removing paragraph (c). New York, New York 10007–1866, (212) [FR Doc. 96–30750 Filed 12–2–96; 8:45 am] Subpart VÐMaryland 637–3741 or BILLING CODE 6560±50±P [email protected]. 2. Section 52.1075 is amended by SUPPLEMENTARY INFORMATION: On revising the heading and adding October 1, 1996, EPA published direct DEPARTMENT OF TRANSPORTATION paragraph (c) to read as follows: final approval of a revision to New § 52.1075 1990 base year emission York’s SIP for ozone, submitted by New Office of the Secretary inventory. York on November 15, 1992 and 49 CFR Part 1 * * * * * supplemented on November 5, 1993 (61 FR 51215). The intended effect of this (c) EPA approves as a revision to the [OST Docket No. 1; Amdt. 1±279 ] action was to address the need for TCMs Maryland State Implementation Plan the to offset growth in emissions from 1990 base year emission inventories for Organization and Delegation of Powers growth in vehicle miles traveled as the Maryland ozone nonattainment and Duties Delegations of Authority to required by the Clean Air Act. EPA areas: Baltimore nonattainment areas, the Maritime Administrator published this direct final rulemaking Cecil County, and Kent and Queen without prior proposal because the AGENCY: Office of the Secretary, DOT. Anne’s Counties submitted by the Agency viewed it as a noncontroversial ACTION: Secretary of Maryland Department of Final Rule. revision and anticipated no adverse Environment on March 21, 1994. This comments. The direct final rule was SUMMARY: The Secretary of submittal consists of the 1990 base year published in the Federal Register with Transportation (Secretary) hereby point, area, non-road mobile, biogenic a provision for a 30 day comment delegates to the Maritime Administrator and on-road mobile source emission period. authority of the Secretary from the inventories for the following pollutants: A proposed rule pertaining to the Maritime Security Act of 1996, Public volatile organic compounds (VOC), same TCMs for New York was also Law 104–239. This amendment adds a carbon monoxide (CO), and oxides of published in the Federal Register on new paragraph 1.66(v) to reflect this nitrogen (NO ). X October 1, 1996 (61 FR 51257). EPA delegation of authority. [FR Doc. 96–30476 Filed 12–2–96; 8:45 am] announced that the direct final rule EFFECTIVE DATE: This rule becomes BILLING CODE 6560±50±P would be withdrawn in the event that effective December 6, 1996. 64030 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Rules and Regulations

FOR FURTHER INFORMATION CONTACT: In consideration of the foregoing, part Research and Special Programs Richard Weaver, Chief, Division of 1 of title 49, Code of Federal Administration Management and Organization, Regulations, is amended as follows: Maritime Administration, MAR–318, 49 CFR Parts 106 and 190 Room 7225, 400 Seventh Street, S.W., PART 1Ð[AMENDED] [Docket RSP±2; Admt. Nos. 106±12, 190± Washington, DC 20590, (202) 366–2811. 8] 1. The authority citation for part 1 SUPPLEMENTARY INFORMATION: Public Law 104–239, the Maritime Security Act continues to read as follows: RIN 2137±AC 94 of 1996, directs the Secretary of Authority: 49 U.S.C. 322; Pub. L. 101–552, Pipeline Safety Rulemaking Transportation (Secretary) to enter into 28 U.S.C. 2672, 31 U.S.C. 3711(a)(2). Procedures agreements with owners and operators 2. Section 1.66 is amended by adding of U.S.-flag commercial vessels for AGENCY: Research and Special Programs access to a fleet of modern commercial a new paragraph (v), to read as follows: Administration (RSPA), DOT. ships, along with the sophisticated § 1.66 Delegations to Maritime ACTION: Correction of amendment intermodal transportation system Administrator. number of final rule document. supporting it. The Act also extends to * * * * * seafarers certified by the Secretary the SUMMARY: This action corrects the same basic reemployment rights that (v) Carry out the responsibilities and amendment number of the Final Rule apply to reserve members of the U.S. exercise the authorities of the Secretary document published in the Federal Armed Forces in time of war or national of Transportation under the Maritime Register on Friday, September 27, 1996 emergency. This amendment to 49 CFR Security Act of 1996, Public Law 104– (61 FR 50908). In the document heading Part 1 delegates the Secretary’s 239; on page 50908, the amendment number authorities related to the above * * * * * ‘‘Amdt. 190–1’’ is changed to read responsibilities to the Maritime Issued at Washington, DC, this 22nd day of ‘‘Amdt. 190–8.’’ The Final Rule Administrator. November 1996. replicates in 49 CFR Part 190 its Since this amendment relates to rulemaking procedures presently found Federico Pen˜ a, departmental management, in 49 CFR Part 106. Secretary of Transportation. organization, procedure, and practice, EFFECTIVE DATE: October 1, 1996. [FR Doc. 96–30724 Filed 12–2–96; 8:45 am] notice and comment are unnecessary, FOR FURTHER INFORMATION CONTACT: Paul and the rule may become effective in BILLING CODE 4910±62±P Sanchez (202) 366–4400. fewer than 30 days after publication in the Federal Register. Issued in Washington, DC on November 26, 1996. List of Subjects in 49 CFR Part 1 Richard B. Felder, Authority delegations (Government Associate Administrator for Pipeline Safety. agencies), Organizations and functions [FR Doc. 96–30699 Filed 12–2–96; 8:45 am] (Government agencies). BILLING CODE 4910±60±P 64031

Proposed Rules Federal Register Vol. 61, No. 233

Tuesday, December 3, 1996

This section of the FEDERAL REGISTER Washington, DC 20426, (202) 208– Logon to the FedWorld system contains notices to the public of the proposed 0825. Type: /go FERC issuance of rules and regulations. The SUPPLEMENTARY INFORMATION: In purpose of these notices is to give interested addition to publishing the full text of I. Introduction persons an opportunity to participate in the this document in the Federal Register, rule making prior to the adoption of the final The Federal Energy Regulatory rules. the Commission provides all interested persons an opportunity to inspect or Commission (Commission) is proposing copy the contents of this document to revise its procedural regulations governing applications for licenses for DEPARTMENT OF ENERGY during normal business hours in Room 2A, 888 First Street, N.E., Washington, hydroelectric projects. The proposed Federal Energy Regulatory DC 20426. The last page of Appendix A regulations respond to a petition for Commission, DOE consists of a flow chart that is not being rulemaking filed by the National published in the Federal Register but is Hydropower Association (NHA) and are 18 CFR Parts 4 and 375 available from the Commission’s Public intended to offer an alternative administrative process whereby in [Docket No. RM95±16±000] Reference Room. The Commission Issuance Posting appropriate circumstances the pre-filing Regulations for the Relicensing of System (CIPS), an electronic bulletin consultation process and the Hydroelectric Projects; Notice of board service, provides access to the environmental review process can be Proposed Rulemaking texts of formal documents issued by the integrated. This alternative process is Commission. CIPS is available at no designed to be tailored to the facts and November 26, 1996. charge to the user and may be accessed circumstances of the particular AGENCY: Federal Energy Regulatory using a personal computer with a proceeding. The proposed regulations Commission, Doe. modem by dialing (202) 208–1397 if would not delete or replace any existing ACTION: Notice of proposed rulemaking. dialing locally or 1–800–856–3920 if regulations. dialing long distance. To access CIPS, II. Reporting Burden SUMMARY: The Federal Energy set your communications software to Regulatory Commission (Commission) is use 19200, 14400, 12000, 9600, 7200, The regulations proposed herein proposing to revise its procedural 4800, 2400 or 1200bps, full duplex, no would not impose any new information regulations governing applications for parity, 8 data bits, and 1 stop bit. The collection requirements. licenses for hydroelectric projects. The full text of this document will be proposed regulations respond to a available on CIPS indefinitely in ASCII III. Background petition for rulemaking filed by the and WordPerfect 5.1 format for one year. A. Order Nos. 513 and 533 Proceedings National Hydropower Association and The complete text on diskette in are intended to offer an alternative WordPerfect format may also be The Commission last made administrative process whereby in purchased from the Commission’s copy comprehensive revisions of its appropriate circumstances the pre-filing contractor, La Dorn Systems procedural regulations governing consultation process and the Corporation, also located in Room 2A, hydropower applications in two major environmental review process can be 888 First Street, N.E., Washington, DC rulemakings. In Order Nos. 513 and integrated. This alternative process is 20426. 513–A,1 the Commission revised its designed to be tailored to the facts and The Commission’s bulletin board regulations governing the relicensing of circumstances of the particular system also can be accessed through the hydropower projects to implement proceeding. The proposed regulations FedWorld system directly by modem or provisions added to the Federal Power would not delete or replace any existing through the Internet. To access the Act (FPA) 2 by the Electric Consumers regulations. FedWorld system by modem: Protection Act of 1986 (ECPA).3 The DATES: Comments on the Notice of Dial (703) 321–3339 and logon to the Commission adopted more detailed Proposed Rulemaking are due February FedWorld system. regulations for applicants for new 3, 1997 and March 3, 1997 for reply After logging on, type: /go FERC licenses to conduct pre-filing comments. Comments should be filed To access the FedWorld system consultation with resource agencies, to with the Office of the Secretary and through the Internet, a telnet application specify the information to be contained should refer to Docket No. RM95–16– must be used either as a stand-alone or in the applications, and to set forth 000. linked to a Web browser: procedures for processing and ADDRESSES: Federal Energy Regulatory Telnet to: fedworld.gov considering the applications. These Commission, 888 First Street, N.E., Select the option: [1] FedWorld regulations are principally contained in Washington, DC 20426. Logon to the FedWorld system 18 C.F.R. Part 16. In Order Nos. 533 and FOR FURTHER INFORMATION CONTACT: Type: /go FERC 1 Order No. 513 (1989), 54 FR 23756 (June 2, Edward Abrams, Office of Hydropower Or: 1989), FERC Stats & Regs., Regulations Preambles Licensing, 888 First Street, N.E., Point your Web Browser to: http:// 1986–1990 ¶ 30,854; Order No. 513–A (1989), 55 FR Washington, DC 20426, (202) 219– www.fedworld.gov 4 (January 2, 1990), FERC Stats & Regs., Regulations 2773. Scroll down the page to select FedWorld Preambles 1986–1990 ¶ 30,869. Merrill Hathaway, Office of the General Telnet Site 2 16 U.S.C. §§ 791a–825r. Counsel, 888 First Street, N.E., Select the option: [1] FedWorld 3 Pub. L. No. 99–495, 100 Stat. 1243 (Oct. 16, 1986). 64032 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules

533–A,4 the Commission adopted conditions, to permit the applicant or its that following this process requires a further revisions to its procedural contractor or consultant to prepare an number of waivers of the Commission’s regulations for all applications for Environmental Assessment (EA) or a regulations, in order to achieve the hydropower licenses, implemented contractor or consultant chosen by the purposes of the Act. The principal other provisions of ECPA, especially Commission and funded by the waivers required are: Section 10(j) of the FPA, and applicant to prepare an Environmental (1) the requirement for the applicant streamlined the hydropower licensing Impact Statement (EIS).8 The provision to file Exhibit E, containing process by making it more efficient, left untouched the Commission’s own environmental information 10—the draft fairer, and more understandable for all responsibilities under NEPA. NEPA document prepared by the participants. In the rule, the The Commission has implemented applicant or contractor or consultant, Commission codified and improved this provision of the Act by permitting together with additional information, many of its regulations governing pre- hydropower applicants to explore satisfies this requirement; filing consultation and hearing alternative licensing procedures. The (2) the provision allowing parties to practices, explaining how most Commission has received from potential request additional scientific studies hydropower proceedings are conducted hydropower applicants requests for after the application is tendered for by notice and comment rather than by guidance as to whether they could filing 11—the waiver procedures move trial-type hearings. This rulemaking submit an EA or an EIS as part of their this opportunity forward in time; established deadlines for participation license applications. Applicants have (3) the requirement for issuing a in hydropower proceedings, clarified a asked whether they could integrate the notice that the application is ready for number of Commission practices in the NEPA process with the Commission’s environmental analysis 12—integrating conduct of such proceedings,5 required pre-filing consultation process, obtain preparation of the draft NEPA document the Commission to resolve disputes greater involvement of Commission staff with the pre-filing consultation process concerning necessary scientific studies in this effort, and substitute such should ensure that the necessary in the pre-filing consultation process for actions and the resulting NEPA environmental data concerning the hydropower applicants, and provided document for the requirements for pre- application have already been greater opportunities for the public and filing consultation and filings set forth developed prior to filing; and Indian tribes to participate in the in the Commission’s regulations. (4) the requirement for the applicant proceedings. The Commission’s staff has responded to document the pre-filing process in In one important respect, however, to such requests on a case-by-case detail 13—this is replaced by periodic the Commission took no action in these basis.9 Staff advised potential applicants reports during the pre-filing process that rulemakings in response to comments that it could not participate unless are available to the public. made by some resource agencies and entities that might reasonably have an Before staff acts on a potential citizens’ groups. They believed that in interest in the contemplated applicant’s request for waiver of these the revised regulations the Commission hydropower application are invited to regulatory requirements, the applicant should have integrated the participate in the pre-filing process. must demonstrate that a cooperative environmental review process pursuant Such entities included all resource atmosphere exists regarding the to the National Environmental Policy agencies, Indian tribes, local participation of concerned entities in Act of 1969 (NEPA) 6 with the pre-filing governments, citizens groups, and the pre-filing process and that the consultation process required of members of the general public affected applicant has reached an agreement hydropower applicants. The by the proposed project. Staff advised with such entities on accepted Commission stated that this was not the procedures. Staff has advised the Commission’s historical practice, and 8 Section 2403 provides: participants on procedures that have that the results of the pre-filing (a) ENVIRONMENTAL IMPACT worked in similar circumstances to consultation process and the comments, STATEMENTS.—Where the Federal Energy produce good NEPA documents or that Regulatory Commission is required to prepare a show promise of working in this recommendations, conditions, and draft or final environmental impact statement . .. prescriptions of concerned parties were in connection with an application for a respect. Staff’s objective has been to a necessary predicate to a successful [hydropower] license . . ., the Commission may encourage the participants to focus NEPA review by the Commission of a permit, at the election of the applicant, a contractor, analysis on a preferred environmental consultant, or other person funded by the applicant alternative and, insofar as possible, hydropower application. and chosen by the Commission . . ., to prepare such statement for the Commission. . . . Nothing reach agreement on the issues raised by B. Implementation of Energy Policy Act herein shall affect the Commission’s responsibility the application.14 of 1992 to comply with the National Environmental Policy The applicant is also required to In section 2403 of the Energy Policy Act of 1969. develop a communications protocol, 7 (b) ENVIRONMENTAL ASSESSMENTS.—Where governing how the participants, Act of 1992, Congress authorized the an environmental assessment is required . . . in Commission, in preparing a NEPA connection with an application for a [hydropower] including Commission staff, may document in hydropower licensing license . . ., the Commission may permit an communicate with each other during proceedings, subject to certain applicant, or a contractor, consultant or other the pre-filing process. Oversight and person selected by the applicant, to prepare such technical committees may be formed. At environmental assessment. The Commission shall 4 Order No. 553 (1991), 56 FR 23108 (May 20, institute procedures, including pre-application least three public notices are required 1991), FERC Stats & Regs., Regulations Preambles consultations, to advise potential applicants of during this process, each of which 1991–1996 ¶ 30,921; Order No. 553–A (1991), 56 FR studies or other information foreseeably required by consists of notice placed in the Federal 61137 (December 2, 1991), FERC Stats. & Regs., the Commission. The Commission may allow the Regulations Preambles 1991–1996 ¶ 30,932. filing of such applicant-prepared environmental 10 5 These related to the requirements governing pre- assessment as part of the application. Nothing E.g.,18 CFR 4.51(f). filing consultation for applicants for amendment of herein shall affect the Commission’s responsibility 11 18 CFR 4.32(b)(7). licenses, when a water quality certification must be to comply with the National Environmental Policy 12 18 CFR 4.34(b). obtained, and how the Commission begins its Act of 1969. 13 E.g., 18 CFR 4.38. review of hydropower applications. 9 The Office of Hydropower Licensing has 14 The alternative process is designed to facilitate 6 42 U.S.C. §§ 4321–4307a. developed ‘‘Guidelines for the Applicant Prepared the negotiation of settlements in appropriate cases, 7 Pub. L. No. 102–486, 106 Stat. 2776, 2905–21. Environmental Assessment (APEA) Process.’’ See that could be submitted to the Commission with the Codified at 42 U.S.C. §§ 13201–13556 (Supp. 1993). Appendix A. application as an offer of settlement. Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules 64033

Register by the Commission, notice Projects.18 In its petition, NHA under § 385.214 of the Commission’s placed in local newspapers by the described its consultation with a large rules.20 The applicant’s Initial potential applicant, and notice mailed number of entities on how to improve Information Package would be directly to a mailing list of interested the Commission’s regulations in this ‘‘comprised primarily of baseline data entities.15 These notices are typically area. NHA expressed its views on from the exhibits in [existing] 18 CFR given: (1) at the beginning of the pre- problems it perceives in the existing § 4.51.’’ 21 These requirements were filing process, when the applicant process for relicensing hydroelectric spelled out in section 19 of NHA’s releases its initial information package, projects and proposed a comprehensive proposal, describing seven required which may include a schedule for the regulatory scheme for that purpose, ‘‘schedules’’ containing detailed first NEPA scoping meeting; 16 (2) when which would replace the existing information on the project, its operation the results of the applicant’s scientific regulations governing the preparation, and resource utilization, need for power studies are available, which may be filing, and hearing process for and alternative sources of power, costs combined with additional NEPA hydropower applications for new and financing, the environment, design scoping and study requests; and (3) licenses. drawings and other information when the preliminary draft As described by NHA, its proposal is showing the safety and adequacy of environmental document and related intended to integrate the application project structures, and a project map. application have been prepared. preparation process under the FPA with The environmental schedule would the environmental review process under Prior to the signing of the contain seven major elements, including NEPA, to provide an earlier start to the a description of the locale and reports communications protocol, staff has not NEPA process, to involve Commission communicated with any interested on water use and quality; fish, wildlife, staff prior to the filing of an application, and botanical resources; historic and entity other than on procedural matters. and to afford resource agencies and the Once the protocol is executed, pursuant archeological resources; recreational public greater opportunity to participate resources; socio-economic impacts; and to its provisions staff may enter into in the pre-filing process. The goal is to substantive discussions with any entity land management and aesthetics. This shorten and simplify relicensing information would describe not only the on the merits of the potential applicant’s proceedings, which NHA claimed take proposal, so long as the results of those existing project and its impacts but also too long to complete and impose mitigation and other measures proposed discussions are subsequently made unnecessary burdens on the available in the relevant public files. for the new license period. Unlike participants, by eliminating repetitious existing § 4.51 and similar regulations These consist of the Commission’s files steps in the pre-filing and post-filing for the project in question and a file (including § 16.8) now governing the stages. NHA also sought to promote preparation of license applications, no maintained by the potential applicant. settlements and to allow greater For the majority of the many consultation with resource agencies, communication among parties and applications for new license currently Indian tribes, or the public would be Commission staff by relaxing undergoing pre-filing consultation, the required in the preparation of these restrictions on ex parte applicants are using the process set proposals of the applicant. communications. NHA proposed a forth in the Commission’s rules. In 20 ‘‘collaborative option’’ by which Under NHA’s proposed rules, the proceedings where a potential applicant participants could agree to an Commission would conduct the NEPA is seeking a new or original license, the alternative process for preparing and process beginning immediately after the staff’s alternative pre-filing procedures evaluating a hydropower application for receipt of the Initial Information are being explored or are in use. In one Package. The rules specify deadlines for proceeding, use of the alternative new license. NHA proposed 49 pages of regulatory the Commission and all participants process has already resulted in an order text, which would substitute for defining ‘‘the latest point at which a issuing a license.17 In most of the sections in Parts 4 and 16 of the decision or action should be pending proceedings the applicant or its 22 Commission’s rules governing taken * * *’’ The Commission agent is preparing an EA; in some of the relicensing proceedings. NHA’s would be required to publish public cases a contractor funded by the proposed regulations specify 52 steps in notice of the Initial Information Package applicant is preparing an EIS. Some of such proceedings, through the filing of within 30 days of its filing and at the the proceedings involve multiple same time issue and serve on each projects on the same river basin. a final license application. The applicant would prepare and file with interested person a copy of ‘‘Scoping C. NHA Petition for Rulemaking the Commission a Notice of Intent Document I,’’ pursuant to NEPA. This document would include: (1) a On July 10, 1995, NHA filed a Petition Package, an Initial Information Package, for Rulemaking Regarding Regulations a study plan, and an application for new description of the scoping process, the for the Relicensing of Hydroelectric license. Under detailed guidelines, the project and its history; (2) a discussion Commission would give public notice of of the applicant’s proposal, reasonable 15 The mailing list is developed by the applicant each of these filings, review them to alternatives, and competing proposals; under the guidance of Commission staff. The list determine their adequacy, and either (3) a discussion of resource and will include federal and state resource agencies, accept or reject them.19 environmental issues (including Indian tribes, local governments, environmental Under NHA’s proposed regulations, a cumulative impacts, other relevant groups and others that may be affected by the proposed hydropower project. The mailing list may proceeding before the Commission projects and alternatives); (4) a schedule expand as a result of responses to the applicant’s would begin no later than the filing of for preparing the NEPA document; (5) initial pre-filing consultation meeting and public the Initial Information Package, when an outline for the final scoping notices, including local newspaper notice. interested persons could formally document; and (6) a mailing list of 16 Scoping is the formal process to solicit recipients with intervenors identified.23 comments to help determine the environmental intervene in the proceeding as parties issues and how they should be addressed in an EIS or EA. 18 NHA is an association that represents the 20 Id. at 5, section 8(c). 17 See Georgia Power Company, 74 FERC ¶ 62,146 hydropower industry. 21 Id. at 13. (1996) (Sinclair Project No. 1951). No requests for 19 See NHA Petition, Draft Regulations, at sections 22 Id. at 33, section 22(b) (emphasis in original). rehearing were filed. 6, 7, 18, 23, 24, 27, and 29. 23 Id. at 35, section 24. 64034 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules

Sixty days would be allowed for filing the results of each study completed at (3) how to integrate cumulative comments on Scoping Document I, and the conclusion of the first year’s study, impact analysis into an accelerated within 45 days the Commission would and the Commission would hold a NEPA process; be required to hold a site visit and meeting to discuss the report.31 Similar 24 (4) how to evaluate the public scoping meeting. Within 45 steps would be required in reference to appropriateness of the time deadlines days of the completion of the public a study plan for the second year, with proposed for comment and Commission comment period on Scoping Document further restrictions on the ability of action; and I, the Commission would be required to others to request additional studies, and issue Scoping Document II, reviewing deadlines for the Commission to resolve (5) how to develop transition all the issues identified and the any disputes presented to it. provisions regarding ongoing licensing comments provided.25 This document The final stage of NHA’s rulemaking proceedings. would identify all the data needs that proposal would require the applicant to D. Comments Received on NHA’s must be satisfied by studies to be prepare a ‘‘final license application’’ for conducted by the applicant. Persons filing with the Commission.32 This Petition would have 45 days to file comments on application would incorporate the On October 31, 1995, the Commission Scoping Document II, including Notice of Intent Package, the Initial issued a notice of NHA’s petition and Information Package, the scoping requests for additional or alternative invited comment on it.40 The documents and the study reports made studies. Not less than 14 days after Commission received 43 comments and issuance of Scoping Document II, the in the pre-filing process. This four reply comments. The commenters Commission would be required to issue information would be updated as are listed in Appendix B. public notice of a final public scoping necessary, and recommendations of meeting. agencies or citizens groups that were A number of licensees of hydropower Within 30 days after the final scoping rejected would be explained.33 This projects 41 and other industry meeting, the Commission would be filing would ‘‘constitute the complete associations 42 filed comments required to issue a final scoping application upon which the supportive of NHA’s petition. A number document, which would ‘‘identify all Commission will base its decision to of state agencies filed comments reasonable alternatives that need to be accept, reject, or accept with supporting NHA.43 A number of federal considered, identify cumulative effects modifications the final application agencies supported NHA’s petition,44 and significant issues that need to be submitted by the Applicant.’’ 34 but other federal agencies, while addressed in the environmental review NHA’s proposed rules would also approving of a Commission rulemaking process, document issues that were require the Commission to make more that would integrate the NEPA and pre- found not to be significant, and list all information about the relicensing filing consultation processes, objected to study and additional information process available on the Commission the short time frames and other aspects 26 Issuance Posting Systems (CIPS); 35 requirements * * *’’ At this point, of NHA’s proposed rules.45 applicants would have the right to elect provide that the Commission’s ex parte to prepare an EA or to have a contractor rule, § 385.2201, does not apply to the Many hydropower licensees filed prepare an EIS.27 proposed hydropower proceeding until comments critical of various aspects of Pursuant to a set of detailed after the filing of a final license NHA’s petition, supporting the goal of deadlines, NHA would allow a period of application; 36 and give an applicant the greater integration of the NEPA and pre- 150 days for the applicant to prepare a right to elect a collaborative option, by filing processes but asking for more study plan, comments on it to be filed, which the applicant and interested flexibility in the proposed rules in order and the Commission to resolve any parties may jointly design rules— to accommodate different disputes and review the plan.28 different from the detailed rules circumstances.46 Questions about the Agencies and citizens groups would proposed by NHA—to govern a appropriateness of the time frames have the burden of asking the hydropower proceeding.37 established in NHA’s proposal were Commission to resolve any dispute over NHA acknowledged that there are a raised,47 and the Commission was asked the adequacy of the applicant’s study number of relevant subject areas, where plan.29 If the agencies or groups failed it has not proposed regulations, that 40 The notice was published in the Federal to request such a resolution, they would require further analysis. These areas Register on November 8, 1995 (60 FR 56278). On waive any right to raise this issue include: 38 January 4, 1996, the Commission issued a notice subsequently in the relicensing (1) the impact of the relicensing extending the deadline for comments and reply proceeding. The Commission would process on small hydropower projects; comments to February 5 and March 4, 1996, respectively. have 60 days after the filing of the Final (2) the interaction of the Commission’s process with 41 E.g., Comments of Adirondack Hydro Study Plan for the first year’s study to Development Corp., Alabama Power Co., Idaho resolve any disputes presented to the administrative processes of other agencies, such as those conducted Power Co., Minnesota Power & Light Co., Montana Commission over the plan and to Power Co., Pacific Gas and Electric Co., and accept, reject, or modify the plan pursuant to the Endangered Species Southern California Edison Co. 39 accordingly.30 The applicant would be Act, and FPA sections 4(e) and 18; 42 E.g., Comments of American Public Power Association and Edison Electric Institute. required to submit a report summarizing 31 Id. at 45, section 35(g). 43 E.g., Comments of Idaho Public Utilities 32 Id. at 47–48, section 38. Commission and State of Washington, Department 24 Id. at 37, section 26. 33 As in the pre-filing process, NHA’s proposed of Ecology. 25 Id. at 37, section 27. regulations do not recognize any role for Indian 26 Id. at 39, section 31. tribes. 44 Comments of the U.S. Environmental 27 Id. at 39, section 32. 34 NHA Petition, Draft Regulations, at 47, section Protection Agency and the U.S. Department of 28 Id. at 40–47, sections 34–37. 38(b). Energy. 29 NHA’s proposed rules do not recognize any 35 Id. at 6, section 9(a). 45 Comments of U.S. Department of Agriculture right of Indian tribes to dispute the adequacy of the 36 Id. at 6, section 10. and U.S. Department of Commerce. applicant’s study plan. 37 Id. at 6–7, section 12. 46 Comments of Duke Power Co., Georgia Power 30 NHA Petition, Draft Regulations, at 43, section 38 NHA Petition at 12. Co., Nebraska Public Power District, and Niagara 34(e). 39 16 U.S.C. § 1531, et seq. Mohawk Power Co. 47 Comments of Public Utility District No. 2 of Grant County. Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules 64035 to codify the alternative procedures staff responsibility from the applicant to the current procedural regulations allow had used on a case-by-case basis.48 others. A number of federal agencies, this process to unfold, in HRC’s view Some licensees believed that NHA’s while supporting the goal of greater NHA’s proposal would replace them Initial Information Package was too integration of the pre-filing and NEPA with new regulations designed to curtail detailed, amounting to a draft license processes, made similar criticisms of this process and serve the interests of application.49 NHA’s petition and reminded the the license applicants.57 New England Power Company Commission of its trust responsibilities opposed adoption of NHA’s proposed for Indian tribes, which they asserted IV. Discussion rule, except in situations where the NHA ignored.53 A. NHA’s Petition parties agreed on such an approach as Citizens’ groups were very much The Commission recognizes that the an alternative. The company doubted opposed to adoption of the regulations present procedures for licensing that NHA’s proposal would help when NHA proposed.54 These commenters hydroelectric projects are complicated there was no such consensus, especially asked the Commission to continue its in light of the importance of other current practice of flexibly and can result in lengthy proceedings. related legal processes, such as those implementing the existing hydropower We agree with NHA that every effort involving fishway prescriptions under procedural regulations. should be made to lessen the burden of section 18 of the FPA and certifications Hydro Reform Coalition (HRC) stated such proceedings on the participants. under section 401 of the Clean Water that the Commission’s current To a considerable extent, however, we Act.50 New England Power did not procedural regulations for hydropower believe the burdens are an unavoidable believe that the Commission would applications were adopted for good product resulting from statutory have the resources to be as involved in reasons, to cure real problems in the mandates and the often conflicting the pre-filing process as NHA’s licensing process, have been working objectives of the large number of parties, proposed rule would require. The reasonably well and are not the chief including state and federal agencies company thought that NHA did not cause of any delays encountered in the with overlapping roles, Indian tribes, recognize the importance of the flexible, process.55 Rather, HRC asserted that and citizens’ groups, interested in the case-by-case procedures the applicants have brought such delays on licensing process. Nevertheless, we Commission’s staff had been using in themselves by not conducting adequate believe there continues to be room for recent years when there was a studies of a project’s resource impacts taking reasonable measures to improve consensus supporting this approach. and not filing required information with the efficiency of the process, while Some commenters characterized their applications. Other delays are remaining faithful to the statutory NHA’s petition as discouraging necessary to allow sufficient time to mandates and public interest the competing relicense applications, address such critical issues as Commission serves. Our hope is that the because the petition would seriously cumulative impacts. HRC stated: licensing process can be both expedited delay a potential competitor’s access to ‘‘NHA’s package of changes drastically in time and improved in results, while project information that section 15(b)(2) alters the equities of the relicensing treating all parties fairly. of the FPA requires the incumbent process in favor of a front-end loaded, We commend NHA and the other licensee to make available, and that the fast track, where licensees gain at the representatives of the hydropower potential competitor needs in order to expense of all other participants— industry who devoted substantial time decide whether to file an application.51 resource agencies, conservation groups, and effort in evaluating the A number of state agencies opposed competing applicants * * *.’’ 56 Commission’s hydropower licensing adoption of NHA’s proposed rule as HRC noted that a hydropower procedures. We appreciate NHA’s unnecessary.52 They objected to its licensing proceeding is a learning consultation with other participants in rigidity and to many of its features that process for most parties, who do not the licensing process and the in their view favored the applicant at have the information and knowledge of submission of a petition for rulemaking, the expense of other participants. They the applicant. It takes some time for and we welcome the comments of all considered NHA’s time deadlines on them to learn about and evaluate the those who responded. We believe that participants in the process unreasonable proposed project’s resource impacts so the comments show that everyone who and opposed the elimination of draft that they can usefully participate in the has studied and addressed this subject applications and the shifting of process and assist the Commission in shares common goals, making licensing considering reasonable alternatives and proceedings more efficient while 48 Comments of Power Authority of the State of in compiling an adequate record for a maintaining procedures that will protect New York. decision in the public interest. While the participatory rights of interested 49 Comments of Georgia Power Co. and Safe parties and compile an adequate record Harbor Water Power Corp. 50 33 U.S.C. § 1341(a)(1). 52 Comments of the U.S. Department of the for decision. 51 Comments of the Confederated Tribes of the Interior, Fish and Wildlife Service, and Bureau of A critical difference between the Warm Springs Reservation and the City of Santa Indian Affairs. avenues explored by the Commission Clara, California, Holyoke Gas & Electric Dept., and 54 Comments of the Adirondack Mountain Club, staff in light of the Energy Policy Act the Northern California Power Agency. the Defenders of Wildlife, and the Hydropower and by NHA is in their basic design. The Section 15(b)(2) of the FPA provides that, at the Reform Coalition, which includes American Rivers, time an existing licensee notifies the Commission American Whitewater Affiliation, Appalachian staff process was designed to whether it intends to file an application for a new Mountain Club, Conservation Law Foundation, supplement and not replace the existing license (which shall be at least 5 years before the Michigan Hydro Relicensing Coalition, Natural procedures in licensing proceedings and expiration of the existing license), the existing Heritage Institute, New England F.L.O.W., New can be flexibly applied on a case-by-case licensee must make publicly available such York Rivers United, River Alliance of Wisconsin, information about construction and operation of the Trout Unlimited, and Sierra Club Legal Defense basis, with the alternative procedures project as the Commission shall require. The Fund. tailored to the expressed needs and Commission’s regulations implementing this 55 HRC at 3–8. HRC pointed to many recent desires of the participants. This process provision (18 CFR 16.7) require extensive and relicense proceedings, primarily involving some places a lot of responsibility on the detailed information about the project. kind of cooperative approach, that were 52 E.g., State of Washington Department of Fish expeditiously conducted under the current participants to come together and reach and Wildlife and State of Wisconsin Department of regulations. Natural Resources. 56 HRC at 4. 57 HRC at 8. 64036 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules a consensus on how the environmental intervention of parties, and NHA itself resource agencies, Indian tribes, and the impacts of the applicant’s proposal also recognized that the proceeding may public, and those entities have a similar should be evaluated. If such a consensus be highly contentious. Under those attitude and commitment, the cannot be achieved, the standard circumstances, it would be unwise and Commission is willing to commit its procedures set forth in the may be unlawful for the Commission to staff to active involvement in the Commission’s regulations must be consider itself and its advisory staff as proceeding prior to the filing of an followed by the applicant. not subject to any ex parte restraint. application, to the extent our limited NHA has proposed enactment of We also share the concern of those resources permit. In such cases, the comprehensive generic procedures that who question how NHA’s proposal staff’s participation has been more as a would apply to all relicensing would afford potential competitors the resource and guide to the parties rather proceedings, regardless of whether such timely access to project information that than as a decisionmaker. a consensus exists and the prospect for section 15(b)(12) of the FPA calls for. Such an approach, tailored to the success. NHA’s proposal would require Nor has NHA justified the short time needs and requirements of the particular the Commission’s staff to be involved in frames it sets for responses and circumstances and facts presented, has developing every application for a new decisions during its proposed worked in many cases and in our view license and to render decisions on the hydropower process. The periods offers the best hope of achieving the details of the steps required in that allowed are much shorter than similar goal of expediting the licensing process development. The Commission does not time frames in the existing regulations, in a way that is fair to all parties and have the resources to carry out such an whose deadlines have been considered in the public interest. Such proceedings open-ended mandate. Furthermore, if, strict by various participants in the can front-load not only NEPA, but also as NHA proposed, Commission staff licensing process. Any successful the completion of other processes assumed the role of decisionmaker in process will necessarily require more related to hydropower licensing that are pre-filing consultation for all flexibility than may be contemplated in not in the Commission’s control, such as proceedings, concerned parties NHA’s proposal. state water quality certification for the (including the applicant) could be NHA’s proposed rules might also not project. discouraged from trying to form a result in a more efficient proceeding if In the following section, we describe consensus on how to study and resolve other state or federal agencies with the Commission’s proposed rule on this critical issues in a mutually satisfactory related statutory responsibilities, such alternative process. The proposed rule is manner. as Clean Water Act certification, do not intended to refine, clarify, and codify We share with the critics of NHA’s wish to participate in the accelerated the alternative procedures that the petition a concern that NHA’s proposed NEPA process that NHA would require Commission’s staff has evolved over the regulations would not improve in all cases. Lacking a consensus for an past few years on a case-by-case basis. hydropower licensing proceedings. In alternative approach to front-load the By articulating these procedures in the effect, NHA’s proposal would eliminate NEPA process would risk wasting a form of a notice of proposed the pre-filing consultation process. NHA large amount of resources by all rulemaking, we are providing a forum in would have an applicant for a new participants and might require the which all interested persons will have license develop a detailed package, NEPA process to be repeated, once the an opportunity to comment on them, in called the ‘‘Initial Information Package,’’ other agencies decided how they wished light of experience with the alternative that is for all intents and purposes a to proceed in reference to the procedures as well as with the existing draft license application. We think such applicant’s proposal. The Commission procedures. This rulemaking should proposals are best developed based on cannot by rule mandate a positive spirit provide an opportunity to consider how prior consultation with affected of mutual understanding and the alternative procedures have worked resource agencies, Indian tribes, and the cooperation among the applicant, to date, and how they might be refined public. Before doing such consultation resource agencies, Indian tribes, and the to improve the efficiency of the and conducting the studies that are public, or fully integrate related licensing process while preserving the required as part of the pre-filing process, processes that occur under separate rights of all of the participants in it. an applicant cannot know in detail what statutes.58 B. Proposed Rule mitigation and enhancement measures it We do, however, believe there is should propose. considerable merit in the part of NHA’s We propose to codify an alternative To require the Commission staff to proposal called a ‘‘collaborative process that affords case-by-case step in to direct every hydropower option.’’ This appears to be similar to flexibility and opportunity for relicensing proceeding prior to any pre- the alternative procedures that the continued innovation for all concerned. filing consultation would consume too Commission’s staff has been using on a We recognize that some of the much of the Commission’s limited case-by-case basis at the request of procedures that participants may agree resources without providing any license applicants, where there is a to use and that the Commission may assurance that the process would be consensus among the interested entities approve in individual cases might well improved. The Commission did not that such an approach would be fruitful. be similar to those that NHA has have the resources to undertake this role If an applicant is willing to devote itself proposed in generic form. The proposal in the past; we certainly do not have the to working on a cooperative basis with would leave intact the existing pre-filing resources to do so now, a time when all the entities interested in its proposed and hearing procedures for use in all federal agencies are being called upon to hydropower project, including affected proceedings where there is neither a tighten their budgets. consensus on suitable alternative NHA has described as critical its 58 NHA has also not explained its apparent procedures nor any reasonable prospect proposal to waive the ex parte rule prior omission of Indian tribes from its proposed rules. for their success in expediting the to the filing of what it calls the ‘‘final The Commission included the tribes in the pre- proceeding. license application’’ with the filing consultation process in recognition of their We see no reason to restrict the special interests and status. NHA claimed that it Commission. But its proposal would consulted with Indian tribes in developing its proposal to applicants for new licenses, have the Commission conducting a proposal, but NHA did not identify them or their but, consistent with Commission proceeding prior to that time, with the positions. practice and the Energy Policy Act, Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules 64037 would extend the ability to apply for consultation process. Public files of the pre-filing consultation process. In this option to all applicants for licenses, relevant documents would be appropriate cases, for example, the whether original, new or subsequent, maintained by the Commission and the Director could decide to actively assist and to amendments to existing licenses applicant. The Commission’s file would a potential applicant in the pre-filing where pre-filing consultation is required contain summary information while the consultation process, including the (pursuant to § 4.38(a)(4) of the applicant’s file would contain all preparation of a NEPA document. regulations).59 relevant information compiled during V. Environmental Analysis The Commission proposes to revise the process. § 4.34 of the regulations, governing the Under the alternative process, the Commission regulations describe the hydropower hearing process, to add a applicant could substitute a draft NEPA circumstances where preparation of an new subsection (i). Under this document for Exhibit E to its environmental assessment or an subsection, a potential applicant could application, and the applicant would environmental impact statement will be request that it be permitted to conduct not need to document all the details of required.60 The Commission has the pre-filing consultation and hearing the pre-filing consultation process. categorically excluded certain actions processes pursuant to an alternative Requests for scientific studies would be from this requirement as not having a procedure. Under this procedure, the due during the pre-filing process, and significant effect on the human pre-filing consultation process and the requests for additional studies could be environment.61 No environmental NEPA process would be integrated and made after filing of the application only consideration is necessary for the the applicant or its contractor or upon a showing that it was not possible promulgation of a rule that is clarifying, consultant would prepare a preliminary to request them during the pre-filing corrective, or procedural, or that does draft environmental assessment or a process. Preliminary fish and wildlife not substantially change the effect of contractor or consultant chosen by the recommendations, prescriptions, legislation or regulations being Commission and funded by the mandatory conditions, and comments amended.62 applicant would prepare a preliminary would be due during the pre-filing This proposed rule is procedural in draft environmental impact statement, period, to be finalized after the filing of nature. It proposes alternative to be filed with the application. the application. No notice that the procedures that participants to a In appropriate circumstances, the application is ready for environmental hydroelectric licensing proceeding may Commission could approve the request analysis would be given by the wish to use. Thus, no environmental and participate in the alternative Commission after filing of the assessment or environmental impact process, if the applicant demonstrated application. statement is necessary for the that it had reached out to interested The proposed rule would also reserve requirements proposed in the rule. entities and a consensus exists the Commission’s authority, upon VI. Regulatory Flexibility Certification supporting the use of alternative request and on a case-by-case basis, to procedures. The requester would also participate in the pre-filing consultation The Regulatory Flexibility Act of 1980 have to submit a communications process and assist in the integration of (RFA) 63 generally requires a protocol, supported by interested this process with the NEPA process description and analysis of final rules entities, that would describe how the where, e.g., the applicant, contractor or that will have significant economic applicant and other participants in the consultant funded by the applicant impact on a substantial number of small pre-filing consultation process, would not prepare an environmental entities. Pursuant to section 605(b) of including Commission staff, would assessment or environmental impact the RFA, the Commission hereby communicate concerning the merits of statement. In such cases, the certifies that the proposed regulations, if the applicant’s proposal. Commission could approve suitable promulgated, will not have a significant The alternative process would modifications to the procedures economic impact on a substantial integrate the NEPA process and the pre- otherwise applicable during the pre- number of small entities. filing consultation process. The filing and post-filing periods, similar to The procedures proposed herein are applicant, contractor or consultant those made for alternative procedures purely voluntary in nature, and are would be required to conduct an initial set forth in the proposed rule. designed to reduce burdens on small information meeting, to scope The Commission invites comment on entities (as well as large entities) rather environmental issues, to complete all aspects of its proposal, as described than to increase them. More scientific studies and release them, to above. The Commission particularly fundamentally, the alternative process conduct further scoping if appropriate, invites comment on what should we are proposing herein would be and to prepare the preliminary draft happen if the consensus for use of purely voluntary. The procedures environmental document for filing with alternative procedures disappears prior proposed herein would be a potential the Commission. The process would to the filing of an application. Should alternative to the procedures currently allow for public participation, and the Commission still allow alternative prescribed in our regulations, and public notice would be given of critical procedures to be followed in such a would not be adopted unless all of the stages (including the filing of the situation? If not, what procedures persons and entities interested in the request for alternative procedures) by should apply? proceeding affirmatively agreed to use the Commission in the Federal Register Would any transition provisions be them. Under this approach, each small and by the applicant in a local necessary for the proposed rule, so as entity would be able to evaluate for newspaper. not to upset applications currently being itself whether the alternative procedures Every quarter, the applicant would be prepared pursuant to staff-granted would be beneficial or burdensome, and required to report to the Commission on waivers? could decline to agree to their adoption the progress of the pre-filing The Commission also proposes to add a new § 375.314(u) to its regulations, to 60 Regulations Implementing National Environmental Policy Act, 52 FR 47897 (Dec. 17, 59 By revising § 4.34 of the regulations, which clarify and codify the authority of the governs the hearing process for all hydropower 1987), codified at 18 CFR Part 380. Director of the Office of Hydropower 61 applications, the proposal would apply to all 18 CFR 380.4(a)(2)(ii). licensing proceedings, including those subject to Licensing to approve the use of the 62 18 CFR 380.4. Part 16. alternative procedures and to assist in 63 5 U.S.C. §§ 601–612. 64038 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules if they appeared to be burdensome. 2. In § 4.34, the heading is revised and applicant’s request to use alternative Under these circumstances, the a new paragraph (i) is added to read as procedures. economic impact of the proposed rule follows: (6) If the Commission accepts the use would be either neutral or beneficial to of alternative procedures, the following the small entities affected by it. § 4.34 Hearings on applications; provisions will apply. consultation on terms and conditions; (i) To the extent feasible under the VII. Information Collection motions to intervene; alternative circumstances of the proceeding both procedures. Requirements the Commission and the applicant will * * * * * The Office of Management and give public notice at each of the stages (i) Alternative procedures. (1) An Budget’s (OMB) 64 regulations require described in paragraph (i)(4) of this applicant may submit to the that OMB approve certain information section. The applicant will also send Commission a request to approve the collection requirements imposed by notice of these stages to a mailing list use of alternative procedures for pre- agency rules. The regulations proposed approved by the Commission. filing consultation and the filing and in this Notice do not require the (ii) Every quarter, the applicant shall processing of an application for an collection or filing of any information, furnish the Commission with a report original, new or subsequent hydropower nor would they amend any existing summarizing the progress made in the license, or for the amendment of a information collection requirement. pre-filing consultation process and license that is otherwise subject to the referencing the applicant’s public file, VIII. Comment Procedure provisions of § 4.38. where additional information on that (2) The goal of such alternative The Commission invites interested process can be obtained. procedures shall be to: (iii) At a suitable location, the persons to submit written comments on (i) Integrate the pre-filing consultation applicant will maintain a public file of the matters proposed in this notice. An process with the environmental review all relevant documents, including original and 14 copies of the written process; scientific studies, correspondence, and comments must be filed with the (ii) Facilitate the greater participation minutes of meetings, compiled during Commission no later than February 3, of the public and Commission staff in the pre-filing consultation process. The 1997, for comments and March 3, 1997, the pre-filing consultation process; Commission will maintain a public file for reply comments. Comments should (iii) Allow for the preparation of an of the applicant’s initial proposal and be submitted to the Office of the environmental assessment by an information package, scoping Secretary, Federal Energy Regulatory applicant or its contractor or consultant documents, periodic reports on the pre- Commission, 888 First Street, N.E., or of an environmental impact statement filing consultation process, and the Washington, D.C. 20426, and should by a contractor or consultant chosen by preliminary draft environmental refer to Docket No. RM95–16–000. the Commission and funded by the document. Written comments will be placed in applicant; and (iv) An applicant authorized to use the public files of the Commission and (iv) Encourage the applicant and alternative procedures may substitute a will be available for inspection at the interested persons to narrow any areas preliminary draft environmental Commission’s Public Reference Room, of disagreement and promote settlement document and specified additional at 888 First Street, N.E., Washington, of the issues raised by the hydropower material instead of Exhibit E to its D.C. 20426, during regular business proposal. application and need not document the hours. (3) A potential hydropower applicant pre-filing consultation process. List of Subjects requesting the use of alternative (v) The procedures approved may procedures must: require all resource agencies, Indian 18 CFR Part 4 (i) Demonstrate that a reasonable tribes, citizens groups, and interested Electric power, Reporting and effort has been made to contact all persons to submit to the applicant recordkeeping requirements. resource agencies, Indian tribes, requests for scientific studies during the citizens’ groups and others affected by pre-filing consultation process, so long 18 CFR Part 375 the applicant’s proposal, and that a as additional requests may be made to Authority delegations (Government consensus exists that the use of the Commission for good cause after the agencies), Seals and insignia, Sunshine alternative procedures is appropriate filing of the application, explaining why Act. under the circumstances; and it was not possible to request the study (ii) Submit a communications during the pre-filing period. By direction of the Commission. protocol, supported by interested (vi) During the pre-filing process the Lois D. Cashell, entities, governing how the applicant Commission may require the filing of Secretary. and other participants in the pre-filing preliminary fish and wildlife In consideration of the foregoing, the consultation process, including the recommendations, prescriptions, Commission proposes to amend parts 4 Commission staff, may communicate mandatory conditions, and comments, and 375 of chapter I, title 18, Code of with each other regarding the merits of to be finalized after the filing of the Federal Regulations, as set forth below. the applicant’s proposal. application; no notice that the (4) As appropriate, the alternative application is ready for environmental PART 4ÐLICENSES, PERMITS, procedures shall include provision for analysis need be given by the EXEMPTIONS, AND DETERMINATION an initial information meeting, the Commission after the filing of an OF PROJECT COSTS scoping of environmental issues, the application pursuant to these analysis of completed scientific studies procedures. 1. The authority citation for part 4 and further scoping, and the preparation (7) The Commission may participate continues to read as follows: of a preliminary draft environmental in the pre-filing consultation process Authority: 16 U.S.C. 791a-825r, 2601– assessment or environmental impact and assist in the integration of this 2645; 42 U.S.C. 7101–7352. statement and related application. process and the environmental review (5) The Commission will give public process in appropriate cases where the 64 5 CFR 1320.13. notice inviting comment on the applicant, contractor or consultant Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules 64039 funded by the applicant is not preparing balances the interests of all stakeholders • Applicant writes to the Commission (cc: a preliminary draft environmental involved; and 3) expedite the licensing the mailing list) requesting that the assessment or environmental impact process. Commission agree to advise it in the APEA statement, but where staff assistance is Stage 1 Consultation process. • Commission responds to the applicant’s available and will expedite the Stage 1 Consultation sets the tone for the letter and specifies staff’s role in the process. proceeding. process and has two important features: Staff sends samples of communications participation in the activities ancillary to the protocol, if one hasn’t been proposed, as well PART 375ÐTHE COMMISSION licensing process and the beginning of NEPA as samples of other EAs, scoping documents, scoping, including a site visit. Part of the 3. The authority citation for part 375 etc. licensing process includes the applicant > continues to read as follows: inviting the federal, state, and local agencies, == Commission staff are selected to advise nongovernmental organizations (NGOs), and applicant Authority: 5 U.S.C. 551–557; 15 U.S.C. • 717–717w, 3301–3432; 16 U.S.C. 791–825r, other interested members of the public to Applicant requests a waiver of certain 2601–2645; 42 U.S.C. 7101–7352. participate in the process. Once the applicant regulations (such as a waiver allowing the has gathered a group to participate, the filing of the DEA in lieu of an exhibit E), as 4. In § 375.314, paragraph (u) is added applicant and participants should prepare a appropriate. to read as follows: communications protocol and a request for • The applicant, Commission staff, and waiver of specific three-stage consultation other participants develop a Communications § 375.314 Delegations to the Director of regulations. If a federal land managing protocol (merits and procedures discussions) the Office of Hydropower Licensing. agency is involved and desires cooperating and a timeline (milestones). Participants are * * * * * agency status in the Commission’s NEPA encouraged to sign the communications (u) Approve, on a case-specific basis, document, a Letter of Understanding (LOU) protocol. The applicant mails a copy of these the use of alternative procedures for the should be prepared by staff. documents to the mailing list. development of an application for an NEPA scoping and a site visit may begin • If applicable, the Commission or original, new or subsequent license or of in Stage 1. Basically, there are two options: applicant will executes a Letter of an application for a license amendment 1) the applicant can begin the NEPA scoping Understanding (LOU) with cooperating subject to the pre-filing consultation by combining the 1st Stage joint agency and federal managing agencies. public meeting [required in 18 C.F.R. • process, and assist in the pre-filing Applicant mails Initial Stage § 4.38(b)(3) and 16.8] with a NEPA scoping Consultation Document (ISCD). The ISCD consultation process. meeting; or 2) the applicant can hold the 1st must be comprehensive and contain adequate Note: The appendices will not appear in Stage meeting and postpone NEPA scoping information to provide a basis for the Code of Federal Regulations. until Stage 2. The Commission and the participants to comment and make Council on Environmental Quality (CEQ) recommendations concerning study plans, Appendix A—Guidelines for the prefer to scope the issues as early as possible. etc. Applicant Prepared Environmental There are advantages and disadvantages of Assessment (APEA) Process beginning NEPA scoping at the 1st Stage consultation meeting. The advantage is that BASED ON THE AMOUNT OF AVAILABLE (November 26, 1996—Office of Hydropower the applicant and participants can focus on PROJECT INFORMATION, THE Licensing Division of Project Review) identifying the issues up-front to develop COMMISSION STAFF WILL ADVISE THE Section 2403(b) of the Energy Policy Act of study plans for the project. This may help APPLICANT TO: (A) HOLD THE 1ST STAGE 1992 (Act) allows an applicant to file a draft eliminate the ‘‘cart before the horse’’ MEETING ONLY; OR (B) COMBINE THE 1ST environmental assessment (DEA), pursuant to syndrome where the applicant is requested to STAGE AND NEPA SCOPING MEETINGS. the National Environmental Policy Act of study everything to find out if it’s an issue. 1969 (NEPA),65 with its license application. Another advantage is that the applicant can (A) Applicant holds joint agency and The Act also requires the Federal Energy ask for input regarding project alternatives public meeting within 60 days of mailing the Regulatory Commission (Commission) to and ask the meeting participants to provide ISCD; conducts a site visit; Applicant institute procedures to advise applicants who information, such as existing studies, that requests that the agencies, NGOs provide choose this route. This document provides other agencies or NGOs might have. Most initial study needs. general advice consistent with the statutory APEA efforts have completed NEPA scoping > provisions. in Stage 1. == Comments from agencies/NGOs on the We’ve divided the process into three It may not be possible to combine NEPA ISCD are due 60 days after joint meeting. stages, consistent with the Commission’s scoping with the 1st Stage consultation Agencies, NGOs, and the public should three stage consultation regulations. In each meeting, because the participants may not be request initial studies. stage, we: 1) highlight the objective; and 2) able to identify the issues owing to a lack of • Applicant, agencies, or NGOs can, if discuss the major milestones and work data. needed, request dispute resolution on study products. The process, as outlined by the Consider combining the NEPA scoping and requests. bullet items and arrows, provides a 1st Stage joint meeting when: (B) Applicant prepares Scoping Document framework for applicants, consultants, 1) applicants ask to begin the APEA 1 (SD1) 67 and mails 30 days before joint Commission staff and other interested process at the beginning of Stage 1, and agency/public meeting. Applicant can attach entities to complete the process successfully. 2) project issues and potential impacts are Scoping Document I to the ISCD and mail The guidance herein is intended to be fairly well-known. This option is most together. flexibly administered, to suit the appropriate for relicenses or unlicensed > circumstances of specific cases. == Commission issues a notice of scoping. projects (UL’s). ==> Applicant holds NEPA scoping meetings Applicant Prepared EA (APEA) Process Here Are the Milestones and Work Products (public and agency); conducts site visit. > Commission Staff Goal: 1) front-load NEPA for Stage 1 Consultation == Comments from agencies/NGOs on the review and other licensing requirements (i.e., • Applicant decides to do APEA— ISCD and SDI are due 60 days after joint 401 water quality certification, section 106— preferably at the preliminary permit stage meeting. This includes requests for historic preservation consultation, section (original license) or at the notice of intent to initial studies. 7—endangered species consultation, etc.) by file stage (relicense) or earlier.66 • Applicant, agencies, or NGOs can, if providing oversight for an applicant who • Applicant generates a project mailing list needed, request dispute resolution on study prepares a DEA during the prefiling (federal, state, local agencies, NGOs, and any requests. consultation period; 2) facilitate a process other interested entities, such as property • Applicant issues Scoping Document II whereby the draft EA fully evaluates and owners along the river). (SDII).

65 National Environmental Policy Act of 1969, as 66 Applicant and interested stakeholders can 67 SDI can be very brief since the ISCD will amended. request to meet with staff to discuss the process. provide a great deal of information. 64040 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules

• Applicant should apply for the 401 WQC terms and conditions, prescriptions and • Commission staff modifies the DEA in so that the WQC agency can determine recommendations from the participants and light of responses to final agency and whether it requires any additional sends to all participants for review and participants’ recommendations. information to act on water quality comment.68 The PDEA should contain the ==> Staff completes comprehensive certification. results of any additional studies that were development analysis; writes Finding of Stage 2 Consultation completed in stage 2. Significant Impact or of No Significant Impact. Several activities occur during Stage 2: 1) ==>NOTE: The PDEA must include the • data collection and analysis [1–2 field applicant’s proposal and reasonable Commission issues staff DEA. seasons]; 2) scoping [if not completed in alternatives. ==> 30-day comment period on the DEA or Stage 1]; 3) final request for additional ==> Commission issues a notice of 45 days comment if section 10(j) issues studies pursuant to 18 C.F.R. Section 4.32 availability of the PDEA with a request apply. (b)(7); 4) development of the preliminary for preliminary terms and conditions, • Commission staff revises DEA in light of DEA and draft license application; 5) request prescriptions and recommendations. comments received and the results of section for agency/NGO/public preliminary • The applicant will incorporate 10(j) negotiations, if applicable. recommendations, terms and conditions; and • comments, preliminary terms and conditions Commission issues Final EA. 6) issuance of the draft license application • Commission requests Final 4(e) and recommendations from the participants and preliminary DEA for comment [as conditions, if applicable.69 required in 18 C.F.R. § 4.38(c)(4); § 16.8]. into the DEA and final license application. • License order issued.70 Note: The > Here Are the Milestones and Work Products == Comments from agencies, NGOs, and the Applicant-Prepared EA Process flow chart for Stage 2 public are due to the applicant 90 days that follows is not being published in the • from mailing the draft license Federal Register but is available from the Applicant will copy Commission and all application and PDEA. Commission’s Public Reference Room. participants on study plans (Commission • staff reviews, advises, comments). Hold a meeting, if needed, (not later than Note: The Applicant-Prepared EA Process • Applicant completes first field season of 60 days from the disagreeing parties’ letter) flow chart that follows is not being published studies. to discuss the applicant’s proposal, analyses, in the Federal Register but is available from etc., that were presented in the PDEA and the Commission’s Public Reference Room. IF NEPA SCOPING WASN’T DONE IN discuss any changes (such as settlement Appendix B—Commenters STAGE 1, PROCEED WITH (A); IF NEPA agreements, the preliminary conditions and SCOPING WAS DONE IN STAGE 1, recommendations) to be incorporated and U.S. Department of Agriculture, U.S. Forest Service FOLLOW (B). analyzed in the DEA and final license U.S. Department of Commerce, National application. • Marine Fisheries Service (A) Applicant provides study results to all Prepare final application and DEA. U.S. Department of Energy interested participants along with SD1. Stage 3 Consultation U.S. Department of the Interior, Bureau of Indian Affairs ==> In SD1, applicant issues a request for any At this stage, the Commission staff further study recommendations. U.S. Department of the Interior, U.S. Fish and conducts an independent analysis and makes Wildlife Service • Applicant holds a Scoping meeting and a recommended decision. U.S. Environmental Protection Agency site visit 30 days after mailing SDI. Here Are the Milestones for Stage 3 Environmental Council of States • Comments on scoping and additional Idaho Public Utility Commission study requests are due to the Applicant, with • Applicant files license application and Minnesota Department of Natural Resources a copy to the Commission staff, 60 days after DEA with Commission, and distributes it to Washington Department of Ecology SD1 is mailed; 30 days after the NEPA the mailing list. Washington Department of Fish and Wildlife scoping meeting. ==> Staff reviews the application and DEA Wisconsin Department of Natural Resources • If a dispute regarding an additional study for adequacy. Confederated Tribes of the Warm Springs request can not be resolved, an applicant, • Reservation of Oregon agency, or NGO may request dispute The Commission issues a notice of National Hydropower Association resolution. acceptance, provides opportunity for interested entities to request intervenor Edison Electric Institute (B) Since scoping meetings were held in American Public Power Association status, and requests final terms, conditions Stage 1, the Applicant mails study results to Western Urban Water Coalition all participants for 60-day review. [including final 401 WQC conditions] Northwest Hydroelectric Association ==> Applicant issues a request for any recommendations, and 4(e) conditions if Association of California Water Agencies further study recommendations 30 days applicable, from participants. Hydro Reform Coalition after study results have been mailed and ==> 60-day period to file a motion to Adirondack Mountain Club allows 60 days after issuance of that intervene with the Commission. Defenders of Wildlife letter for agencies, NGOs, public, to ==> 105-day comment period (60 days for Denver Water Department request additional studies, if needed. agency final recommendations; 45 days Nebraska Public Power District • If a dispute regarding an additional study for the applicant’s response to agency New York State Power Authority request can not be resolved, an applicant, final recommendations. Sacramento Municipal Power District agency, or NGO may request dispute ==> This 60-day recommendation period is Santa Clara County, Holyoke Gas & Electric resolution. also an opportunity for agencies, NGOs, Company, and California Water Agency and other interested entities to comment Alabama Power Company on the applicant’s license application Duke Power Company ALL APPLICANTS FOLLOW THE STEPS and DEA. Georgia Power Company OUTLINED BELOW • Idaho Power Company Commission staff receives final agency Minnesota Power & Light Company terms and conditions, prescriptions and • Second field season of studies, if needed. participants’ final recommendations. • Applicant begins preparing draft license 69 Some 4(e) agencies have a practice of providing application and preliminary DEA (PDEA). only preliminary terms and conditions before a 68 final NEPA document is issued. However, Staff will • Applicant requests preliminary terms To allow sufficient time for the applicant to evaluate and balance the participants’ work with cooperating agencies with the goal of and conditions from the stakeholders to recommendations and preliminary terms and expediting final 4(e) conditions so that they may be analyze in the PDEA. incorporated into the Final EA, rather than have • conditions, the applicant should mail the PDEA Applicant presents and analyzes its about 8 months prior to the deadline date for filing those conditions provided afterward. proposal for licensing/relicensing the project the final license application and DEA with the 70 Assumes 401 WQC has been received/waived in the PDEA along with any preliminary Commission. and no intervenors in opposition. Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules 64041

Montana Power Company Office of Field Operations, (202) 927– Paso-Laredo-Presidio Ports-area. In this Niagara Mohawk Power Company 5709. regard, it is pointed out that the private New England Power Services aircraft processing services Customs SUPPLEMENTARY INFORMATION: Pacific Gas & Electric Company provides at the Presidio, Del Rio, and Portland General Electric Company Background Safe Harbor Power Company Eagle Pass Airports will continue; Southern California Edison Company As part of Customs efforts to combat designating Midland International Washington Water Power Company drug-smuggling efforts, Customs air Airport is meant to provide an TAPOCO commerce regulations were amended in alternative airport to these other airports Adirondack Hydro Development Corporation 1975 to impose special reporting in order to relieve air traffic congestion Reply comments were filed by NHA, Hydro requirements and control procedures on at those locations. Reform Coalition, Georgia Power, and private aircraft arriving in the Although notice of this proposed Niagara Mohawk. Continental United States from certain designation is not required to be [FR Doc. 96–30715 Filed 12–2–96; 8:45 am] areas south of the United States. T.D. published in the Federal Register, comments are solicited from interested BILLING CODE 6717±01±P 75–201. Thus, since 1975, commanders of such aircraft have been required to parties concerning whether or not the furnish Customs with timely notice of Midland International Airport should be designated as an airport for the landing DEPARTMENT OF THE TREASURY their intended arrival, and certain private aircraft have been required to of private aircraft. Customs Service land at certain airports designated by Comments Customs for processing. In the last Before adopting this proposal as a 19 CFR Part 122 twenty years the list of designated final rule, consideration will be given to airports for private aircraft has changed any written comments timely submitted Addition of Midland International and the reporting requirements and to Customs. Comments submitted will Airport to List of Designated Landing control procedures—now contained in be available for public inspection in Locations for Private Aircraft Subpart C of Part 122 of the Customs accordance with the Freedom of Regulations (19 CFR Subpart C, Part AGENCY: Customs Service, Treasury. Information Act (5 U.S.C. 552), § 1.4 of 122)—have been amended, as necessary. the Treasury Department Regulations ACTION: Notice of proposed rulemaking. Specifically, § 122.23 (19 CFR 122.23) (31 CFR 1.4), and § 103.11(b) of the provides that subject aircraft arriving in SUMMARY: This document proposes to Customs Regulations (19 CFR 103.11(b), the Continental U.S. must furnish a amend the Customs Regulations by on regular business days between the notice of intended arrival to the adding the user-fee airport at Midland, hours of 9 a.m. and 4:30 p.m. at the designated airport located nearest the Texas (Midland International Airport) to Regulations Branch, Office of point of crossing. Section 122.24(b) the list of designated airports at which Regulations and Rulings, U.S. Customs provides that, unless exempt, such private aircraft arriving in the Service, 1099 14th St., NW, 4th floor, aircraft must land at the designated Continental U.S. via the U.S./Mexican Washington, DC. border, the Pacific Coast, the Gulf of airport for Customs processing and Mexico, or the Atlantic Coast from delineates the airports designated for Inapplicability of the Regulatory certain locations in the southern portion private aircraft reporting and processing Flexibility Act and Executive Order of the Western Hemisphere must land purposes. There are currently 30 12291 for Customs processing. This proposed designated airports listed at § 122.24(b). This proposed amendment seeks to amendment is made to improve the Community officials from Midland, expand the list of designated airports at effectiveness of Customs enforcement Texas, have written Customs requesting which private aircraft may land for efforts to combat the smuggling of drugs that the user-fee airport there (Midland Customs processing. Although this by air into the United States. This International Airport) be added to document is being issued with notice proposed amendment, if adopted, Customs list of airports designated for for public comment, because it relates to would also improve service to the private aircraft reporting and agency management and organization, it community, by relieving congestion at processing. The request is based both on is not subject to the notice and public Presidio-Lely International, Del Rio considerations of the strategic location procedure requirements of 5 U.S.C. 553. International, and Eagle Pass Municipal of the airport—between the Accordingly, this document is not Airports, which are also located in communities of El Paso and Laredo, subject to the provisions of the Texas. Texas—and because the airport has Regulatory Flexibility Act (5 U.S.C. 601 become a modern, well-equipped DATES: et seq.). Agency organization matters Comments must be received on airport that can accommodate corporate or before February 3, 1997. such as this document are exempt from aircraft. consideration under E.O. 12866. ADDRESSES: Written comments Customs has determined that the (preferably in triplicate) may be addition of Midland International Drafting Information addressed to U.S. Customs Service, Airport to the list of designated landing The principal author of this document Office of Regulations and Rulings, sites for private aircraft will improve the was Gregory R. Vilders, Regulations Regulations Branch, Franklin Court, effectiveness of Customs drug- Branch. 1301 Constitution Avenue, NW., enforcement programs relative to private Washington, D.C. 20229. Comments aircraft arrivals, as Midland is adjacent List of Subjects in 19 CFR Part 122 submitted may be inspected at the to the Southwest Border of the U.S. and Air carriers, Air transportation, Regulations Branch, Office of is on a regularly traveled flight path. Aircraft, Airports, Customs duties and Regulations and Rulings, located at Further, the designation would enhance inspection, Drug traffic control, Franklin Court, 1099 14th St., NW, Suite the efficiency of the Customs Service, as Organization and functions 4000, Washington, DC. the airport is close to the normal work (Government agencies), Reporting and FOR FURTHER INFORMATION CONTACT: Gay location for inspectional personnel recordkeeping requirements, Security Laxton, Passenger Operations Division, assigned to the Del Rio-Eagle Pass-El measures. 64042 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules

Proposed Amendment to the Counsel, Copyright GC/I&R, P.O. Box FOR FURTHER INFORMATION CONTACT: Regulations 70400, Southwest Station, Washington, Joshua Tapp at (913) 551–7606. D.C. 20024. Telephone (202) 707–8380, For the reasons stated above, it is SUPPLEMENTARY INFORMATION: proposed to amend part 122, Customs Telefax (202) 707–8366. I. Background and Purpose Regulations (19 CFR part 122), as set SUPPLEMENTARY INFORMATION: On forth below: November 15, 1996 (61 FR 58497), the Title V of the 1990 Clean Air Act Copyright Office published a Notice of Amendments (sections 501–507 of the PART 122ÐAIR COMMERCE Proposed Rulemaking to amend the Clean Air Act (‘‘the Act’’)), and REGULATIONS regulations regarding the deposit of the implementing regulations at 40 Code of ‘‘best edition’’ of published motion Federal Regulations (CFR) Part 70, 1. The authority citation for Part 122 pictures. The purpose of the proposed require that states develop and submit continues to read as follows: rule is to remove the ‘‘most widely operating permit programs to the EPA Authority: 5 U.S.C. 301; 19 U.S.C. 58b, 66, distributed gauge’’ as a selection faction by November 15, 1993, and that the EPA 1433, 1436, 1459, 1590, 1594, 1623, 1624, of the ‘‘best edition’’ and add new act to approve or disapprove each 1644; 49 U.S.C. App. 1509. videotape formats to the prioritized list program within one year after receiving § 122.24 [Amended] of material preferences based on current the submittal. The EPA’s program industry practices. 2. In § 122.24, paragraph (b) is review occurs pursuant to section 502 of Although the Office meant the the Act and the Part 70 regulations, amended by adding, in appropriate comment period to last at least six alphabetical order, ‘‘Midland, TX’’ in which together outline criteria for weeks, the Notice inadvertently set a approval or disapproval. Additionally, the column headed ‘‘Location’’ and, on deadline of December 6, 1996, for the same line, ‘‘Midland International section 502(g) of the Act and the Part 70 comments. Interested parties have asked regulations outline criteria for granting Airport.’’ in the column headed about an extension of the comment ‘‘Name’’. interim approval where a program period, and the Office has decided to substantially, but not fully, meets the Samuel H. Banks, extend the deadline to January 14, 1997. requirements of the Act and Part 70. The Acting Commissioner of Customs. Dated: November 26, 1996. EPA may grant interim approval to such Approved: November 8, 1996. Marilyn J. Kretsinger, a program for a period of up to two John P. Simpson, Acting General Counsel. years. Deputy Assistant Secretary of the Treasury. [FR Doc. 96–30590 Filed 12–2–96; 8:45 am] On January 13, 1995, the state of [FR Doc. 96–30722 Filed 12–2–96; 8:45 am] BILLING CODE 1410±30±P Missouri submitted an operating BILLING CODE 4820±02±P permits program to the EPA. Supplemental submissions were made ENVIRONMENTAL PROTECTION by the state on August 14, 1995; LIBRARY OF CONGRESS AGENCY September 19, 1995; and October 16, 1995. On April 11, 1996, Region VII Copyright Office 40 CFR Parts 52 and 70 determined that Missouri’s program contained the minimum elements 37 CFR Part 202 [MO 013±1013; FRL±5658±3] required for interim approval as [Docket No. 96±6] Approval and Promulgation of specified in 40 CFR 70.4(d). The Implementation Plans and State rationale for the EPA’s determination ``Best Edition'' of Published Operating Permit Programs; State of that interim approval is appropriate is Copyrighted Works for the Collections Missouri contained in the December 15, 1995, of the Library of Congress Federal Register document (60 FR AGENCY: Environmental Protection 64404) which proposed interim AGENCY: Copyright Office, Library of Agency (EPA). approval of the program. In that Congress. ACTION: Proposed full approval. document, the Region identified the ACTION: Proposed rule; Extension of revisions that were required in order for filing period. SUMMARY: The EPA is proposing to Region VII to be able to grant full approve State Implementation Plan approval. The state was required to SUMMARY: The Copyright Office is (SIP) revisions submitted by the state of adopt and submit these revisions to the extending the filing period for Missouri to update references and EPA within 12 months of the effective comments on proposed amendments to modify the Missouri intermediate date of the notice of final interim the regulations governing the deposit of operating permit program. The EPA is approval which published on April 11, the ‘‘best edition’’ of published motion also proposing to grant full approval of 1996. pictures. This extension will provide an operating permit program submitted The EPA is also proposing to approve interested parties with adequate time to by the state of Missouri for the purpose revisions submitted pursuant to section comment. of complying with Federal requirements 110 of the Act to update references in DATES: Filings should be received by for an approvable state program to issue rule 10 CSR 10–6.020, and to modify January 14, 1997. operating permits to all major stationary permit provisions in rule 10 CSR 10– ADDRESSES: By mail: Copyright GC/I&R, sources and to certain other sources. 6.065 with regard to the Missouri P.O. Box 70400, Southwest Station, DATES: Comments must be received on intermediate operating permit program. Washington, D.C. 20023. By hand: or before January 2, 1997. Specifically, the revisions to rule 10 Office of the General Counsel, U.S. ADDRESSES: Comments may be mailed to CSR 10–6.020 update a reference to the Copyright Office, James Madison Joshua A. Tapp, U.S. Environmental Standard Industrial Classification Memorial Building, Room 407, First and Protection Agency, Region VII, Air Manual and revise Table 2 entitled, Independence Avenue, S.E. Planning and Development Branch, 726 ‘‘List of Named Installations’’ so that it FOR FURTHER INFORMATION CONTACT: Minnesota Avenue, Kansas City, Kansas is consistent with applicable EPA Marilyn J. Kretsinger, Acting General 66101. regulations. Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules 64043

With regard to rule 10 CSR 10–6.065, Permits.’’ Paragraph (1)(D)2 was revised those terms of a variance that are Missouri submitted revisions that delete to clarify the meaning of ‘‘fugitive air consistent with applicable the following language from subsection pollutant’’ as it relates to Part 70 requirements. A Part 70 permit may also (3)(E): ‘‘However, for insignificant installations. Subsection (3)(D) was incorporate, via Part 70 permit issuance activities which are exempt because of revised to clarify Part 70 applicability or modification procedures, the size or production rate, a list of these with respect to emissions from exempt schedule of compliance set forth in a activities must be included in the installations and emission units. variance. However, the EPA reserves the application.’’ The requirement for Subpart (6)(C)1.C.(II)(b) was revised to right to pursue enforcement of listing insignificant activities relates to clarify the retention of records applicable requirements, the Title V program, and Missouri has requirements in permits, consistent with notwithstanding the existence of a retained this provision for its Title V 40 CFR 70.6(a)(3). Part (6)(C)1.G.(I) was compliance schedule in a permit to applications. Such a provision is not revised to clarify the general operate. This is consistent with relevant to the SIP-based Federally requirements for permit compliance and 70.5(c)(8)(iii)(C), which states that a approved operating permit programs as noncompliance, consistent with schedule of compliance ‘‘shall be defined by the EPA in a June 28, 1989, 70.6(a)(6). Subparagraph (6)(C)4.A. was supplemental to, and shall not sanction Federal Register document (54 FR revised to correct a citation error, and to noncompliance with, the applicable 27274). The SIP-based program is a clarify that the requirement for the EPA requirements on which it is based.’’ mechanism for restricting total and affected state review applies to The technical support document emissions at a source, and all emissions general permits, consistent with (TSD) for the interim approval describes (including those from insignificant 70.6(d)(1). Part (6)(C)7.B.(IV) was in detail the criteria for Federal activities) must be considered under revised to make the emergency approval of a Part 70 program and how Missouri’s rules in calculating potential provision notice consistent with the Missouri program meets these emissions at a source. However, such 70.6(g)(3). Paragraph (6)(C)8 was revised criteria. The TSD for the final interim activities are not required to be to clarify the meaning of the term approval also describes in detail the explicitly listed in the intermediate ‘‘emissions allowable under the revisions to these rules which are permit application. Therefore, the EPA permit.’’ Part (6)(E)5.B.(I), minor permit required for full approval of the is proposing approval of this modification criteria, was revised to be program. The reader should refer to this modification. consistent with 70.7(e)(2)(i)(A)(3). Part document which is located in the public The state of Missouri also revised (6)(E)5.B.(I) was also revised by the docket for further information. subsection (g) of the basic operating addition of subpart (b) which B. Proposed Full Part 70 Approval permit program which is contained in incorporates economic incentive The EPA is proposing to grant full section 4 of rule 10 CSR 10–6.065. This provisions consistent with approval to the operating permit program is not a Federally approved 70.7(e)(2)(i)(B). Subpart (6)(E)5.C.(I)(b) program submitted by the state of program. The EPA is, therefore, not was revised to correct the threshold for Missouri on August 6, 1996, with taking action on Missouri’s revision to group processing of minor permit supplemental information submitted on subsection 4(g) of rule 10 CSR 10–6.065. modifications so that it is consistent August 14, 1995; September 19, 1995; with 70.7(e)(2)(i)(B). Subpart II. Final 40 CFR Part 70 Action and and October 16, 1995. The state of (6)(E)5.D.(II)(a), significant permit Implications Missouri has demonstrated that its modification procedures, was revised so program meets the required elements for A. Missouri’s Submission and EPA- that it is consistent with 70.4(b)(2) and full approval as specified in 40 CFR Part Requested Modifications 70.5(c). And finally, minor citation 70. The December 15, 1995, Federal corrections were made to part 1. Regulations. This proposed Register document proposing interim (6)(B)3.I.(IV), subpart (6)(E)5.B.(II)(a), approval of the Missouri operating approval of the Missouri program part (6)(E)5.C.(V), and subparagraph permits program includes the following discussed two rules which are a part of (6)(E)6.C. regulations, solely as they relate to the the operating permit program that Missouri has the authority to issue a Missouri Part 70 operating permit require revisions in order for the variance from state requirements under program: 10 CSR 10–6.065, Operating program to qualify for full Part 70 section 643.110 of the state statutes. Permits; 10 CSR 10–6.110, Submission approval. These rules are 10 CSR 10– This provision was not included by the of Emission Data, Emission Fees and 6.020, ‘‘Definitions and Common state in its operating permit program Process Information; and 10 CSR 10– Reference Tables,’’ and 10 CSR 10– submittal, and the EPA regards this 6.020, Definitions and Common 6.065, ‘‘Operating Permits.’’ provision as wholly external to the Reference Tables. In order qualify for full approval, program submitted for approval under 2. Jurisdiction. The scope of the Part Missouri made the required program Part 70, and consequently is not taking 70 program on which the EPA is revisions in its August 6, 1996, action on this provision of state law. proposing action in this document submittal. Specifically, MDNR made the The EPA has no authority to approve applies to all Part 70 sources (as defined following revisions to rule 10 CSR 10– provisions of state law, such as the in the approved program), within the 6.020, ‘‘Definitions and Common variance provision referred to, which state of Missouri, except sources of air Reference Tables.’’ Paragraph (2)(I)7 was are inconsistent with the Act. The EPA pollution, if any, over which an Indian updated to reference the current does not recognize the ability of a Tribe has jurisdiction. See 59 FR 55813, Standard Industrial Classification permitting authority to grant relief from 55815–55818 (November 9, 1994). The Manual. And, subsection (3)(B), Table the duty to obtain or comply with a term ‘‘Indian Tribe’’ is defined under 2—List of Named Installations, was Federally enforceable Part 70 permit, the Act as ‘‘any Indian Tribe, Band, revised to make it consistent with the except where such relief is granted Nation, or other organized group or list in the definition of major source in through the procedures allowed by Part community, including any Alaska 40 CFR 70.2. 70. A Part 70 permit may be issued or Native village, which is federally MDNR made the following revisions revised (consistent with Part 70 recognized as eligible for the special to rule 10 CSR 10–6.065, ‘‘Operating permitting procedures) to incorporate programs and services provided by the 64044 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules

United States to Indians, because of The EPA granted approval to profit enterprises, and government their status as Indians.’’ See section Missouri’s preconstruction permitting entities with jurisdiction over 302(r) of the CAA; 59 FR 43956, 43962 program under the authority of Title V populations of less than 50,000. (August 25, 1994); 58 FR 54364 (October and Part 70 in an April 11, 1996, 21, 1993). Federal Register document (61 FR D. Unfunded Mandates 3. CAA section 112(l). Requirements 16063). This approval was granted Under section 202 of the Unfunded for approval, specified in 40 CFR solely for the purpose of implementing Mandates Reform Act of 1995 section 112(g) to the extent necessary 70.4(b), encompass section 112(l)(5) (‘‘Unfunded Mandates Act’’), signed during the transition period between requirements for approval of a program into law on March 22, 1995, the EPA for delegation of section 112 standards 112(g) promulgation and adoption of a must prepare a budgetary impact as promulgated by the EPA as they state rule implementing the EPA’s statement to accompany any proposed apply to Part 70 sources. Section section 112(g) regulations. Although 112(l)(5) requires that the state’s section 112(l) generally provides or final rule that includes a Federal program contain adequate authorities, authority for approval of state air mandate that may result in estimated adequate resources for implementation, programs to implement section 112(g), costs to state, local, or tribal and an expeditious compliance Title V and section 112(g) provide for governments in the aggregate; or to schedule, which are also requirements this limited approval because of the private sector, of $100 million or more. under Part 70. The EPA granted full direct linkage between the Under section 205, the EPA must select approval to the state’s program under implementation of section 112(g) and the most cost-effective and least section 112(l)(5) and 40 CFR 63.91 in an Title V. The scope of this approval was burdensome alternative that achieves April 11, 1996, Federal Register narrowly limited to section 112(g) and the objectives of the rule and is document (61 FR 16063). This approval does not confer or imply approval for consistent with statutory requirements. gives the state the authority to receive purposes of any other provision under Section 203 requires the EPA to delegation of section 112 standards for the Act (e.g., section 110). That approval establish a plan for informing and both Part 70 and non-Part 70 sources. will be without effect if the EPA decides advising any small governments that 4. CAA section 112(g). The EPA in the final section 112(g) rule that may be significantly or uniquely issued an interpretive document on sources are not subject to the impacted by the rule. requirements of the rule until state February 14, 1995 (60 FR 8333), which The EPA has determined that the regulations are adopted. The duration of outlines the EPA’s revised interpretation approval action proposed does not of 112(g) applicability. The document that approval is limited to 18 months include a Federal mandate that may postpones the effective date of 112(g) following promulgation by the EPA of result in estimated costs of $100 million until after the EPA has promulgated a the 112(g) rule to provide adequate time rule addressing that provision. The for the state to adopt regulations or more to either state, local, or tribal document sets forth in detail the consistent with the federal governments in the aggregate, or to the rationale for the revised interpretation. requirements. private sector. This Federal action approves preexisting requirements The section 112(g) interpretive notice III. Administrative Requirements explains that the EPA is still under state or local law, and imposes no considering whether the effective date A. Docket new Federal requirements. Accordingly, no additional costs to state, local, or of section 112(g) should be delayed Copies of the state submittal and other tribal governments, or to the private beyond the date of promulgation of the information relied upon for the Federal rule so as to allow states time proposed full approval are contained in sector, result from this action. to adopt rules implementing the Federal a docket maintained at the EPA List of Subjects rule, and that the EPA will provide for Regional Office. The docket is an any such additional delay in the final organized and complete file of all the 40 CFR Part 70 section 112(g) rulemaking. Unless and information submitted to, or otherwise Environmental protection, until the EPA provides for such an considered by, the EPA in the Administrative practice and procedure, additional postponement of section development of this proposed full Air pollution control, Intergovernmental 112(g), Missouri must have a Federally approval. The docket is available for enforceable mechanism for public inspection at the location listed relations, Operating permits, Reporting implementing section 112(g) during the under the ADDRESSES section of this and recordkeeping requirements. period between promulgation of the document. 40 CFR Part 52 Federal section 112(g) rule and adoption of implementing Federal regulations. B. Executive Order 12866 Environmental protection, Air The EPA is aware that Missouri lacks The Office of Management and Budget pollution control, Carbon monoxide, a program designed specifically to has exempted this regulatory action Hydrocarbons, Incorporation by implement section 112(g). However, from Executive Order 12866 review. reference, Intergovernmental relations, Missouri does have a program for C. Regulatory Flexibility Act Lead, Nitrogen dioxide, Ozone, review of new and modified hazardous Particulate matter, Reporting and air pollutant sources that can serve as an Under the Regulatory Flexibility Act, recordkeeping requirements, Sulfur adequate implementation vehicle during 5. U.S.C. 600 et seq., the EPA must oxides, Volatile organic compounds. the transition period, because it would prepare a regulatory flexibility analysis allow Missouri to select control assessing the impact of any proposed or Authority: 42 U.S.C. 7401–7671q. measures that would meet the final rule on small entities (5 U.S.C. 603 Dated: November 20, 1996. maximum achievable control and 604). Alternatively, the EPA may Dennis Grams, technology, as defined in section 112, certify that the rule will not have a Regional Administrator. and incorporate these measures into a significant impact on a substantial [FR Doc. 96–30742 Filed 12–2–96; 8:45 am] federally enforceable preconstruction number of small entities. Small entities permit. include small businesses, small not-for- BILLING CODE 6560±50±P Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules 64045

40 CFR Part 82 42, Central Docket Section, South Television (DTV). The agreement Conference Room 4, U.S. Environmental addresses issues raised in the Fifth [FRL±5657±9] Agency, 401 M Street, S.W., Further Notice of Proposed Rule Making Protection of Stratospheric Ozone Washington, D.C. 20460. Telephone: in this proceeding. Copies of this (202) 260–7548. The docket may be agreement are available for public AGENCY: Environmental Protection inspected between 8:00 a.m. and 5:30 inspection in the docket file in the Agency. p.m. weekdays. As provided in 40 CFR Commission’s Public Reference Room, ACTION: Notice of response to petition. part 2, a reasonable fee may be charged room 239, 1919 M Street, NW., for photocopying. Washington, DC, and on the SUMMARY: This action notifies the public FOR FURTHER INFORMATION CONTACT: Rey Commission’s internet site accessed at that the Agency received a petition Forte at (202) 233–9134 or fax (202) ‘‘www.fcc.gov.’’ Interested parties are pursuant to section 612(d) of the Clean 233–9577, U.S. EPA, Stratospheric invited to submit comments on this Air Act, under the Significant New Protection Division, 401 M Street S.W., proposal by Friday, December 6, 1996. Alternatives Policy (SNAP) Program, Mail Code 6205J, Washington, D.C. The Commission contemplates action and that EPA has responded to the 20460. on the issue by end of 1996. petition. The petition requested that SUPPLEMENTARY INFORMATION: Contact DATES: Comments are due on or before EPA take several specific actions. EPA the Stratospheric Protection Hotline at December 6, 1996. had already implemented certain 1–800–296–1996, Monday-Friday, FOR FURTHER INFORMATION CONTACT: requests prior to receipt of the petition, between the hours of 10:00 a.m. and Roger Holberg, (202) 418–2130, Gordon and will not take the other requested 4:00 p.m. (Eastern Standard Time) Godfrey (202) 418–2900, or Saul actions. SNAP implements section 612 weekdays. Shapiro (202) 418–2600. of the amended Clean Air Act of 1990, For more information on the Agency’s which requires EPA to evaluate process for administering the SNAP SUPPLEMENTARY INFORMATION: substitutes for ozone-depleting program or criteria for evaluation of [MM Docket No. 87±268] Substances (ODS) and to regulate the substitutes, refer to the SNAP final use of substitutes where other rulemaking published in the Federal The Commission Seeks Comment on alternatives exist that reduce overall risk Register on March 18, 1994 (59 FR Digital TV Standards Agreement to human health and the environment. 13044). Federal Register notices can be Technical Standards for Digital Through these evaluations, EPA ordered from the Government Printing Television generates lists of acceptable and Office Order Desk (202) 783–3238; the unacceptable substitutes for each of the citation is the date of publication. This On November 27, 1996, a number of major industrial use sectors. notice may also be obtained on the parties representing a diverse range of EPA has listed several refrigerants as World Wide Web at http:// interests submitted to the Commission acceptable substitutes for CFC–12 in www.epa.gov/docs/ozone/title6/snap/. the attached agreement on the issue of motor vehicle air conditioning (MVAC), technical standards for digital television provided they are used in accordance List of Subjects in 40 CFR Part 82 (DTV). The agreement addresses issues with several requirements. We have Environmental protection, raised in the Fifth Further Notice of worked with the MVAC industry to Administrative practice and procedure, Proposed Rule Making in MM Docket minimize the mixing of refrigerants and Air pollution control, Reporting and No. 87–268, 61 FR 26864 (May 29, to ensure that the recycled supply of recordkeeping requirements. 1996). Copies of the agreement are available for public inspection in the CFC–12 is protected from Dated: November 22, 1996. contamination. Contaminated docket file in the Commission’s Public Mary D. Nichols, refrigerant poses numerous technical Reference Room, room 239, 1919 M St. problems, and may damage both the Assistant Administrator for Air and NW., Washington, DC, and on the Radiation. vehicle’s air conditioner and equipment Commission’s internet site accessed at in shops that service such vehicles. [FR Doc. 96–30743 Filed 12–2–96; 8:45 am] ‘‘www.fcc.gov.’’ Interested parties are The Association of International BILLING CODE 6560±50±P invited to submit comments on this Automobile Manufacturers petitioned proposal by Friday, December 6, 1996. EPA to take additional steps to prevent This public notice elicits comment only the mixing of refrigerants. In general, FEDERAL COMMUNICATIONS on matters concerning the elements of AIAM believes that only HFC–134a COMMISSION the ATSC digital television standard. should be used as a retrofit refrigerant. The Commission does not contemplate 47 CFR PART 1 EPA has expressed the belief that HFC– any extension on the comment period, 134a is a good choice when a retrofit kit [MM Docket No. 87±268, FCC 96±465] and there will be no reply comment exists that is warranted by the filing period. The Commission manufacturer. However, some kits are Technical Standards for Digital contemplates action on the issue of quite expensive, and for many cars, they Television technical standards for DTV by the end of 1996. do not even exist. Therefore, EPA’s AGENCY: Federal Communications position has been that other alternatives Commission. Federal Communication Commission. have an important role to play. ACTION: Proposed rule. William F. Caton, Therefore, we will continue to review Acting Secretary. alternative refrigerants and impose SUMMARY: This Public Notice provides November 27, 1996. conditions on their use to eliminate the an opportunity for public comment on The Honorable Susan Ness, mixing of refrigerants. The petition is the appended agreement submitted to Commissioner, Federal Communications file number VI–D–197, and the response the Commission on November 27, 1996, Commission, 1919 M Street, N.W., Room is file number VI–C–18. by a number of parties representing a 832, Washington, D.C. 20554. ADDRESSES: Information relevant to this diverse range of interests concerning Dear Commissioner Ness: As we reported notice is contained in Air Docket A–91– technical standards for digital to you yesterday, broadcasters, computer 64046 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules industry representatives (‘‘CICATS’’), Broadcasters Caucus, DATES: Comments must be submitted by receiver manufacturers, and the Film Michael J. Sherlock (NBC), January 2, 1997. Coalition have engaged in lengthy and Chairman. ADDRESSES: Comments should be numerous discussions over the past four Consumer Electronics Manufacturers directed to Dr. Andrew A. Rosenberg, weeks concerning the proposed DTV Association, Regional Administrator, Northeast standard. The first three of these groups have Region, NMFS, 1 Blackburn Drive, reached the following agreement: Gary J. Shapiro, (1) The FCC should adopt no later than President. Gloucester, MA 01930. Please label the December 31, 1996, the voluntary ATSC DTV Computer Industry Coalition on Advanced envelope ‘‘Joint SMB Management.’’ Standard (A/53), except for the video format Television Service, FOR FURTHER INFORMATION CONTACT: constraints described in Table 3, including Paul E. Misener, Myles Raizin, Fishery Policy Analyst, the aspect ratios (‘‘the FCC standard’’). The Intel Corporation. 508–281–9104. ATSC DTV Standard, including the Table 3 cc: Chairman Reed E. Hundt SUPPLEMENTARY INFORMATION: video format constraints, remains unchanged. Commissioner James H. Quello (2) The FCC’s Report and Order adopting Commissioner Rachelle B. Chong Background the FCC standard should include language Honorable Larry Irving Soon after the passage of the original clarifying that data broadcasting is a Secretary, FCC (for filing in MM Docket No. Magnuson Fishery Conservation and permitted use under the standard. Data 87–268) Management Act in 1976, the Secretary, broadcasting is defined as the transmission of Attachment A pursuant to his authority under section any type of data other than real-time video Because there will be possibilities for 304(f), designated species-specific and audio programming. management responsibilities to the (3) The parties agree that the FCC standard future services that we cannot anticipate today, it is extremely important that the Fishery Management Councils provides for extensibility of services and that transport architecture provide open-ended (Councils). The MAFMC was given the this extensibility feature can be used as long extensibility of services. New elementary bit authority to manage the Atlantic as such services comply with the FCC streams could be handled at the transport standard. Video and audio services may be mackerel, Illex and Loligo squids, and layer without hardware modification by butterfish fisheries. In 1979, NMFS enhanced by providing augmentation data in assigning new packet IDs (‘‘PIDs’’) at the the manner described in ATSC ‘‘Guide to the transmitter and filtering out these new PIDs approved separate fishery management Use of the ATSC Digital Television in the bit stream at the receiver. Backward plans for the three species. In 1981, the Standard,’’ A/54, Section 8.1.1.3. See compatibility is assured when new bit three plans were merged into the Attachment A hereto. streams are introduced into the transport present FMP. (4) Subject to applicable legal restrictions, system as existing decoders will At its June 1996 meeting, the NEFMC if any, neither CICATS nor its member automatically ignore new PIDs. passed a motion to request the Secretary companies nor their representatives will [FR Doc. 96–30838 Filed 11–29–96; 10:54 to make the FMP a joint plan between directly or indirectly seek to oppose or am] the NEFMC and the MAFMC and to delay—before the FCC, by judicial review, BILLING CODE 6712±01±M designate the MAFMC as the lead legislatively or otherwise—final adoption of Council. While recognizing the need to the positions urged by broadcasters and conserve these resources, the NEFMC consumer electronics manufacturers in MM DEPARTMENT OF COMMERCE believes that there are access issues Docket No. 87–268 to the extent such concerning all of these fisheries that positions are not inconsistent with this letter. National Oceanic and Atmospheric only can be resolved fairly through joint Nor will they support efforts in Congress or Administration management. The NEFMC’s main elsewhere for auctioning of spectrum concern focused on a proposal for 50 CFR Part 648 allocated or to be allocated for digital resubmission to the Secretary of a television in MM Docket No. 87–268 or other [I.D. 111496C] management measure that would proceedings related to the launch of digital implement a permit moratorium on the television. After December 31, 1997, CICATS Fisheries of the Northeastern United fishery for Illex. Additionally, the and its member companies may address other States; Atlantic Mackerel, Squid, and NEFMC believes that there is enough spectrum issues, provided that they do not Butterfish Fisheries uncertainty about the stock structure of support efforts for the auctioning of spectrum Illex to warrant a closer look at how the MM Docket NO. 87–268 or other proceedings AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and resource should be managed in different related to the launch of digital television. The areas along the coast and how seasonal purpose of this understanding is to further Atmospheric Administration (NOAA), restrictions would substantially increase the common goal of expeditious launch of Commerce. the overall yield and economic value of digital television and is not intended to ACTION: Request for joint management; impose restrictions with respect to future request for public comments. the fishery. regulatory or legislative issues. In conjunction with this request for In addition, consistent with the target date SUMMARY: NMFS announces that the joint management, the NEFMC recognized in your letter to us, the parties Secretary of Commerce (Secretary) has requested NMFS to halt all rulemaking will no longer be bound by this agreement if been asked by the New England Fishery associated with the FMP. NMFS will not the FCC standard is not adopted by the FCC Management Council (NEFMC) to allow take such action, because it is by December 31, 1996. the Atlantic mackerel, squid, and inappropriate to interfere with the The parties agreed beforehand to maintain butterfish fisheries to be managed MAFMC’s statutory mandate to develop the confidentiality of the positions taken by jointly by the NEFMC and the Mid- fishery management plans and them in the discussions, if not agreed to as Atlantic Fishery Management Council amendments to manage the fisheries for part of a final resolution of the DTV standard (MAFMC). The MAFMC is currently which they are responsible. issue. All parties continue to be bound by responsible for the Fishery Management Furthermore, there is no legal that agreement. Plan for Atlantic Mackerel, Squid, and mechanism to bring rulemaking under Respectfully submitted, Butterfish (FMP). Public comments are the Magnuson-Stevens Fishery solicited concerning the request for joint Conservation and Management Act, as management. amended, (Magnuson-Stevens Act) to a Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules 64047 halt. The Magnuson-Stevens Act Management Plan for the Scallop amendment is available for public contains a statutory time period for the Fishery off Alaska for Secretarial review and comment. NMFS will review and implementation of a fishery review. Amendment 2 would establish a consider the public comments received management plan or amendment that is temporary moratorium on the entry of during the comment period in submitted to the Secretary by a Council. additional vessels into the scallop determining whether to approve the This can only be modified or halted by fishery off Alaska. Comments from the FMP or amendment. a legislative revision to the Magnuson- public are requested. Amendment 2 would establish a Stevens Act. DATES: Comments on Amendment 2 temporary vessel moratorium, which Public comments are requested on the must be received on or before February would remain in effect for 3 years from NEFMC’s request for joint designation of 3, 1997. the date of implementation or until this FMP. Comments will be reviewed repealed or replaced by a permanent ADDRESSES: Comments on Amendment and considered prior to the Secretary’s 2 should be submitted to Ronald J. Berg, limited access program. Scallop decision on this request. Chief, Fisheries Management Division, moratorium permits would be issued to Authority: 16 U.S.C. 1801 et seq. Alaska Region, NMFS, P.O. Box 21668, the person who was the most recent owner of a qualifying vessel at the time Dated: November 25, 1996. Juneau, AK 99802-1668, Attn: Lori Gravel, or delivered to the Federal of qualification. Vessels would qualify Gary C. Matlock, for inclusion in the moratorium if they Director, Office of Sustainable Fisheries, Building, 709 West 9th Street, Juneau, AK. made a legal landing of scallops during National Marine Fisheries Service. 1991, 1992, or 1993, or during any 4 Copies of Amendment 2 and the [FR Doc. 96–30687 Filed 12–2–96; 8:45 am] years between 1980 and 1990. The Environmental Assessment/ Regulatory BILLING CODE 3510±22±F purpose of Amendment 2 is to curtail Impact Review/Initial Regulatory increases in fishing capacity and to Flexibility Analysis prepared for the provide stability for industry while the amendment are available from the North 50 CFR Part 679 Council and NMFS develop a limited Pacific Fishery Management Council, access program for this fishery. [I.D. 111896B] 605 West Fourth Avenue, Anchorage, NMFS will consider the public RIN 0648±AF81 AK 99501-2252; telephone 907-271- 2809. comments received during the comment Fisheries of the Exclusive Economic period in determining whether to FOR FURTHER INFORMATION CONTACT: Kent approve the proposed amendment. A Zone Off Alaska; Scallop Fishery; Lind, 907-586-7228. Vessel Moratorium proposed rule to implement SUPPLEMENTARY INFORMATION: The Amendment 2 has been submitted for AGENCY: National Marine Fisheries Magnuson-Stevens Fishery Secretarial review and approval. NMFS Service (NMFS), National Oceanic and Conservation and Management Act expects to publish proposed regulations Atmospheric Administration (NOAA), (Magnuson-Stevens Act) requires that to implement Amendment 2 shortly for Commerce. each regional fishery management public review and comment. ACTION: Notice of availability of an council submit any fishery management Authority: 16 U.S.C. 1801 et seq. amendment to a fishery management plan (FMP) or plan amendment it Dated: November 26, 1996. plan; request for comments. prepares to NMFS for review and approval, disapproval, or partial Gary C. Matlock, SUMMARY: NMFS announces that the approval. The Magnuson-Stevens Act Director, Office of Sustainable Fisheries, North Pacific Fishery Management also requires that NMFS, upon receiving National Marine Fisheries Service. Council (Council) has submitted an FMP or amendment, immediately [FR Doc. 96–30688 Filed 12–2–96; 8:45 am] Amendment 2 to the Fishery publish a notice that the FMP or BILLING CODE 3510±22±F 64048

Notices Federal Register Vol. 61, No. 233

Tuesday, December 3, 1996

This section of the FEDERAL REGISTER establishes that the grant of the license would not be consistent with the contains documents other than rules or would not be consistent with the requirements of 35 U.S.C. 209 and 37 proposed rules that are applicable to the requirements of 35 U.S.C. 209 and 37 CFR 404.7. public. Notices of hearings and investigations, CFR 404.7. committee meetings, agency decisions and R.M. Parry, Jr., rulings, delegations of authority, filing of R.M. Parry, Jr., Assistant Administrator. petitions and applications and agency Assistant Administrator. [FR Doc. 96–30682 Filed 12–2–96; 8:45 am] statements of organization and functions are [FR Doc. 96–30681 Filed 12–2–96; 8:45 am] BILLING CODE 3410±03±M examples of documents appearing in this BILLING CODE 3410±03±M section. Forest Service Notice of Intent To Grant Exclusive DEPARTMENT OF AGRICULTURE License Willamette Provincial Interagency Agricultural Research Service AGENCY: Agricultural Research Service, Executive Committee (PIEC), Advisory USDA. Committee Notice of Availability for Licensing and ACTION: Notice of intent. Intent To Grant Exclusive License AGENCY: Forest Service, USDA. SUMMARY: Notice is hereby given that AGENCY: Agricultural Research Service, ACTION: Notice of meeting. the U.S. Department of Agriculture, USDA. Agricultural Research Service intends to ACTION: Notice of availability and intent. grant to The Fanning Corporation of SUMMARY: The Willamette PIEC Advisory Committee will meet on SUMMARY: Chicago, Illinois, an exclusive license Notice is hereby given that Thursday, December 12, 1996. The U.S. Patent Application Serial No. 08/ for U.S. Patent Application Serial No. meeting will be held at the USDI Salem 654,654, ‘‘Preparation of Secondary 08/534,810, filed September 27, 1995, BLM; 1717 Fabry Road SE; Salem, Ether Fatty Acids and Esters from their entitled ‘‘Method for the Development Hydroxy Acid Equivalents,’’ filed May of Delta Lactones and Hydroxy Acids Oregon 97306; phone (503) 375–5642. 29, 1996, is available for licensing and from Unsaturated Fatty Acids and their The meeting is scheduled to begin at that the U.S. Department of Agriculture, Glycerides.’’ Notice of Availability for 9:00 a.m. and conclude at Agricultural Research Service, intends U.S. Patent Application Serial No. 08/ approximately 12:00 NOON. Topics to grant an exclusive license to The 534,810 was published in the Federal tentatively scheduled on the agenda Fanning Corporation of Chicago, Register on July 18, 1996. include: (1) PAC Meeting Frequency; (2) Illinois. DATES: Comments must be received on Proposed topics for 1997 PAC Meetings, DATES: Comments must be received on or before February 3, 1997. (3) Public Forum; (4) Jobs in the Woods or before March 3, 1997. ADDRESSES: Send comments to: USDA, Program, FY 1997; (5) Watershed ADDRESSES: Send comments to: USDA, ARS, Office of the Director, National Analysis and Assessments in 1997; (6) ARS, Office of the Director, National Center for Agricultural Utilization Information sharing. Center for Agricultural Utilization Research, Room 2042, 1815 N. The meeting is open to the public and Research, Room 2042, 1815 N. University Street, Peoria, Illinois 61604. opportunity will be available to address University Street, Peoria, Illinois 61604. FOR FURTHER INFORMATION CONTACT: the Advisory Committee during the FOR FURTHER INFORMATION CONTACT: Andrew Watkins of the National Center public forum. Time allotted for Andrew Watkins of the National Center for Agricultural Utilization Research at individual presentations to the for Agricultural Utilization Research at the Peoria address given above; committee will be limited to 3–5 the Peoria address given above; telephone: 309–681–6545. minutes each. Written comments are telephone: 309–681–6545. SUPPLEMENTARY INFORMATION: The encouraged and can be submitted prior SUPPLEMENTARY INFORMATION: The Federal Government’s patent rights to to the meeting. Federal Government’s patent rights to this invention are assigned to the United this invention are assigned to the United States of America, as represented by the FOR FURTHER INFORMATION CONTACT: States of America, as represented by the Secretary of Agriculture. It is in the For more information regarding this Secretary of Agriculture. It is in the public interest to so license this meeting, contact Designated Federal public interest to so license this invention as The Fanning Corporation Official Neal Forrester; Willamette invention as The Fanning Corporation has submitted a complete and sufficient National Forest, 211 East Seventh has submitted a complete and sufficient application for a license. The Avenue; Eugene, Oregon 97401; (541) application for a license. The prospective exclusive license will be 465–6924. prospective exclusive license will be royalty-bearing and will comply with royalty-bearing and will comply with the terms and conditions of 35 U.S.C. Dated: November 26, 1996. the terms and conditions of 35 U.S.C. 209 and 37 CFR 404.7. The prospective Harold Legard, 209 and 37 CFR 404.7. The prospective exclusive license may be granted unless, Acting Forest Supervisor. exclusive license may be granted unless, within sixty days from the date of this [FR Doc. 96–30701 Filed 12–2–96; 8:45 am] within ninety days from the date of this published Notice, the Agricultural BILLING CODE 3410±11±M published Notice, the Agricultural Research Service receives written Research Service receives written evidence and argument which evidence and argument which establishes that the grant of the license Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64049

Natural Resources Conservation findings, Donald W. Gohmert, State taken until 30 days after the date of this Service Conservationist, has determined that the publication in the Federal Register. preparation and review of an Dated: November 7, 1996. Perry Ridge Shoreline Protection environmental impact statement are not Donald W. Gohmert, (PCS±26), Calcasieu Parish, LA needed for this project. State Conservationist. AGENCY: Natural Resources The purpose of the project is to ensure Conservation Service USDA. the stability of 1,203 acres of interior (This activity is listed in the Catalog of Federal Domestic Assistance under ACTION: marsh by providing bank protection of Notice of finding of no NO.10.904, Watershed Protection and Flood significant impact. the critical area located along the north GIWW bankline and preventing Prevention, and is subject to the provisions SUMMARY: Pursuant to Section 102(2)(c) additional breaching. The planned of Executive Order 12372, which requires of the National Environmental Policy works of improvement include the intergovernmental consultation with State and local officials.) Act of 1969; the Council on placement of 12,000 linear feet of rock Environmental Quality Regulations dike on critical areas within a 4.25 mile [FR Doc. 96–30664 Filed 12–2–96; 8:45 am] (40CFR Part 1500); and the Natural reach between Perry Ridge and the BILLING CODE 3410±16±M Resources Conservation Service Vinton Drainage Canal. Regulations (7CFR Part 650); the Natural The Notice of a Finding of No Resources Conservation Service, U.S. Significant Impact (FONSI) has been Department of Agriculture, gives notice forwarded to the Environmental DEPARTMENT OF COMMERCE that an environmental impact statement Protection Agency and to various is not being prepared for the Perry Ridge federal, state, and local agencies and Economic Development Shoreline Protection (PCS–26), interested parties. A limited number of Administration Calcasieu Parish, Louisiana. copies of the FONSI are available to fill Notice of Petitions by Producing Firms FOR FURTHER INFORMATION CONTACT: single copy requests at the above for Determination of Eligibility to Apply Donald W. Gohmert, State address. Basic data developed during for Trade Adjustment Assistance Conservationist, Natural Resources the environmental assessment are on Conservation Service, 3737 Government file and may be reviewed by contacting AGENCY: Economic Development Street, Alexandria, Louisiana, 71302, Bennett C. Landreneau, Assistant State Administration (EDA). telephone (318) 473–7751. Conservationist/Water Resources, SUPPLEMENTARY INFORMATION: The Natural Resources Conservation Service, ACTION: To give firms an opportunity to environmental assessment of this 3737 Government Street, Alexandria, comment. federally assisted action indicates that Louisiana, 71302, telephone (318) 473– the project will not cause significant 7756. Petitions have been accepted for filing local, regional, or national impacts on No administrative action on on the dates indicated from the firms the environment. As a result of these implementation of the proposal will be listed below.

LIST OF PETITION ACTION BY TRADE ADJUSTMENT ASSISTANCE FOR PERIOD 09/25/96±11/21/96

Date petition Firm name Address accepted Product

Hudson Standard Corporation ...... 90 South Street, Newark NJ 07114 ...... 09/27/96 Electric household appliancesÐtable ranges, waffle irons, broilers, toaster, and convection ovens. Agora Sales, Inc ...... 2101 28th Street North, St. Petersburg 09/30/96 Bags with textile outer surface of man FL 33713. made fibers. Shiloh Lure Company ...... 302 W. First Street, Montrose MO 10/01/96 Fishing lures. 64770. Adcom ...... 11 Elkins Road, East Brunswick NJ 10/01/96 Electric power amplifiers for home and 08816. consumer use. Rich-Mar Corporation ...... P.O. Box 879, Route 9, Inola OK 74036 10/01/96 Therapeutic ultrasonic appliances, mus- cle stimulators and gels. Warrior Enterprises, Inc ...... 5103 E Roadrunner, Mesa AZ 85205 .... 10/03/96 Remanufactured engine accessories for civil aircraft. Ver-Sa-Til Associates, Inc ...... 18400 West 77th Street, Chanhassen 10/03/96 Machined metal components of com- MN 55317. puter floppy disk drives, automobile and defense systems. The Kraissl Company, Inc ...... 299 Williams Avenue, Hackensack NJ 10/03/96 Heavy duty simplex and duplex strainers 07601. and filters for protecting equipment in pipeline service. Kozak Auto Dry Wash, Inc ...... 6 South Lyon Street, Batavia NY 14020 10/03/96 Cleaning cloths of heavy napped cotton chemically treated to clean automotive finishes and furniture. Molded Products, Inc ...... 11524 East 58th Street, Tulsa OK 10/15/96 Rack and pinion rubber boots, seals, 74146. brackets and diaphragms. Saco Brick Company ...... 102 Industrial Park Road, Saco MA 10/17/96 Foundation concrete blocks, paving 04072. stones and bricks, and masonry prod- ucts. J&C Ferrara Company, Inc ...... 104 Richards Avenue, North Attleboro 10/18/96 Precious metal jewelryÐplatinum, gold, MA 02761. and sterling silver charms, earrings, rings used with gems. 64050 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

LIST OF PETITION ACTION BY TRADE ADJUSTMENT ASSISTANCE FOR PERIOD 09/25/96±11/21/96ÐContinued

Date petition Firm name Address accepted Product

Atlas Plastic Products Corporation ...... 10550 72nd Street, N. #504, Largo FL 10/21/96 Injection molds for plastic parts and 33777. plastic resins. Leader Manufacturing Company, Inc ...... 3693 Forest Park Boulevard, St. Louis 10/21/96 Headwear. MO 63108. Purethane, Inc ...... One Purethane Place, West Branch IA 10/23/96 Urethane arm and wrist rests for fur- 52358. niture, appliance handles and ure- thane and vinyl automotive compo- nents. Chiles Power Supply Company dba 3131 W. Chestnut Expressway, Spring- 10/23/96 Underground/subfloor radiant, hydronic Heatway. field MO 65802. heating systems and supplies. Bassett Woodworks ...... 11905 Golden Gate Road, El Paso TX 10/23/96 Cabinets of wood for permanent installa- 79936. tion. United States Forgecraft Corporation ...... P.O. Box 387, Fort Smith AR 72902 ...... 10/25/96 Forged and electro-plated safety clasps, made of high quality metals. Manufacturing Group of America, Inc ...... 2841 Pierce Street, Dallas TX 75233 ..... 10/25/96 Wood cabinets. Land and Sky Manufacturing, Inc ...... 5410 N W 44th Street, Lincoln NE 10/29/96 Waterbed heaters, and vinyl waterbed 68524. mattresses. Cert-C, Inc. dba Flint River Manufacturing 1454 Williamson Road, Griffin GA 10/31/96 Sports caps of cotton, man-made mate- Company. 30223. rial and wool. Northern Laminate Sales, Inc ...... 11 Industrial Way, Atkinson NH 02116 .. 10/28/96 Copper clad laminated and punched boards. Bayer Clothing Group, Inc ...... RD #4, Box 91B, Clearfield PA 16830 ... 11/07/96 Men's tailored suits, sportcoats and slacks of wool/synthetic blend. OK Filter Company, Inc ...... 104 N. Cherokee, Catoosa OK 74015 ... 11/08/96 Air filters commercial and industrial. Andrews Knitting Mills, Inc ...... 3560 Huffman Road East, St. Paul MN 11/15/96 Custom knit garment trimÐcuffs, waist- 55110. bands, collars, etc. Spyrotech Corporation ...... 4930 Superior Street, Suite D, Lincoln 11/15/96 Gold shafts, industrial rolls, shafts and NE 68529. tubing for tent poles and bike frames, and pipes for oil drills. Marlow Industries, Inc ...... 10451 Vista Park Road, Dallas TX 11/12/96 Hybrid integrated circuits. 75238. German Machine, Inc ...... 245 Hollenbeck Street, Rochester NY 11/13/96 Cylindrical metal rollers, and pins used 14621. in office equipment and parts for film guides and blood analysers.

The petitions were submitted The Catalog of Federal Domestic Assistance Background pursuant to Section 251 of the Trade Act official program number and title of the of 1974 (19 U.S.C. 2341). Consequently, program under which these petitions are Each year during the anniversary submitted is 11.313, Trade Adjustment month of the publication of an the United States Department of Assistance. Commerce has initiated separate antidumping or countervailing duty Dated: November 25, 1996. order, finding, or suspension of investigations to determine whether Lewis R. Podolske, increased imports into the United States investigation, an interested party, as Director, Trade Adjustment Assistance defined in section 771(9) of the Tariff of articles like or directly competitive Division. with those produced by each firm Act of 1930, as amended, may request, [FR Doc. 96–30772 Filed 12–2–96; 8:45 am] in accordance with section 353.22 or contributed importantly to total or BILLING CODE 3510±24±M partial separation of the firm’s workers, 355.22 of the Department of Commerce’s or threat thereof, and to a decrease in (the Department) regulations (19 CFR sales or production of each petitioning International Trade Administration 353.22/355.22), that the Department firm. conduct an administrative review of that Antidumping or Countervailing Duty antidumping or countervailing duty Any party having a substantial Order, Finding, or Suspended order, finding, or suspended interest in the proceedings may request Investigation; Opportunity To Request investigation. a public hearing on the matter. A Administrative Review request for a hearing must be received Opportunity To Request a Review by the Trade Adjustment Assistance AGENCY: Import Administration, Not later than December 31, 1996, Division, Room 7023, Economic International Trade Administration, interested parties may request Development Administration, U.S. Department of Commerce. administrative review of the following Department of Commerce, Washington, ACTION: Notice of opportunity to request orders, findings, or suspended D.C. 20230, no later than the close of administrative review of antidumping or investigations, with anniversary dates in business of the tenth calendar day countervailing duty order, finding, or December for the following periods: following the publication of this notice. suspended investigation.

Antidumping Proceedings Period

BRAZIL: A±351±602 ...... Certain Carbon Steel Butt-Weld Pipe Fittings ...... 12/1/95±11/30±96 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64051

Antidumping Proceedings Period

BRAZIL: A±351±824 ...... Silcomanganese ...... 12/1/95±11/30/96 CANADA: A±122±047 ...... Elemental Sulphur ...... 12/1/95±11/30/96 GERMANY: A±428±062 ...... Animal Glue and Inedible Gelatin ...... 12/1/95±11/30/96 INDIA: A±533±808 ...... Stainless Steel Wire Rods ...... 12/1/95±11/30/96 JAPAN: A±588±809 ...... Business Telephone Systems ...... 12/1/95±11/30/96 JAPAN: A±588±405 ...... Cellular Mobile Telephones and Subassemblies ...... 12/1/95±11/30/96 JAPAN: A±588±811 ...... Drafting Machines and Parts Thereof ...... 12/1/95±11/30/96 JAPAN: A±588±046 ...... Polychloroprene Rubber ...... 12/1/95±11/30/96 JAPAN: A±588±068 ...... Steel Wire Strand ...... 12/1/95±11/30/96 MEXICO: A±201±504 ...... Cooking Ware ...... 12/1/95±11/30/96 NEW ZEALAND: A±614±502 ...... Low-Fuming Brazing Copper Rod & Wire ...... 12/1/95±11/30/96 SOUTH KOREA: A±580±501 ...... Photo Albums ...... 12/1/95±11/30/96 SOUTH KOREA: A±580±810 ...... Welded Stainless Steel Pipes ...... 12/1/95±11/30/96 SWEDEN: A±401±603 ...... Seamless Stainless Steel Hollow Products ...... 12/1/95±11/30/96 TAIWAN: A±583±806 ...... Business Telephone Systems ...... 12/1/95±11/30/96 TAIWAN: A±583±605 ...... Butt-Weld Pipe Fittings ...... 12/1/95±11/30/96 TAIWAN: A±583±508 ...... Porcelain-On-Steel Cooking Ware ...... 12/1/95±11/30/96 TAIWAN: A±583±815 ...... Welded Stainless Steel Pipes ...... 12/1/95±11/30/96 THE PEOPLE'S REPUBLIC OF CHINA: A±570±827 ...... Cased Pencils ...... 12/1/95±11/30/96 THE PEOPLE's REPUBLIC OF CHINA: A±570±506 ...... Porcelain-on-Steel Cooking Ware ...... 12/1/95±11/30/96 THE PEOPLE'S REPUBLIC OF CHINA: A±570±82 ...... Silicomanganese ...... 12/1/95±11/30/96

Countervailing Duty Proceedings Period

MEXICO: C±201±505 ...... Porcelain-On-Steel Cookware ...... 1/1/95±12/31/95

Suspension Agreements: None Import Administration, International Dated: November 27, 1996. In accordance with sections 353.22(a) Trade Administration, Room B–099, Joseph A. Spetrini, and 355.22(a) of the regulations, an U.S. Department of Commerce, 14th Deputy Assistant Secretary for Group III. interested party as defined by section Street & Constitution Avenue, N.W., [FR Doc. 96–30878 Filed 12–2–96; 8:45 am] 353.2(k) may request in writing that the Washington, D.C. 20230. The BILLING CODE 3510±DS±M Secretary conduct an administrative Department also asks parties to serve a review. The Department has changed its copy of their requests to the Office of requirements for requesting reviews for Antidumping/Countervailing [A±570±849, A±823±808, A±821±808, and A± countervailing duty orders and Enforcement, Attention: Shelia Forbes, 791±804] suspension agreements. Pursuant to 19 in room 3065 of the main Commerce Initiation of Antidumping Duty CFR 355.22(a), an interested party must Building. Further, in accordance with specify the individual producers or Investigations: Certain Cut-to-Length section 353.31(g) or 355.31(g) of the Carbon Steel Plate From the People's exporters covered by the order or regulations, a copy of each request must suspension agreements for which they Republic of China, Ukraine, the be served on every party on the Russian Federation, and the Republic are requesting a review (Interim Department’s service list. Regulations, 60 FR 25130, 25137 (May of South Africa 11, 1995)). Therefore, for antidumping The Department will publish in the Federal Register a notice of ‘‘Initiation AGENCY: Import Administration, and countervailing duty reviews, and International Trade Administration, suspension agreements, the interested of Administrative Review of Antidumping or Countervailing Duty Department of Commerce. party must specify for which individual EFFECTIVE DATE: December 3, 1996. producers or exporters covered by an Order, Finding, or Suspended FOR FURTHER INFORMATION CONTACT: antidumping finding, antidumping or Investigation,’’ for requests received by Robin Gray at (202) 482–0196 and countervailing duty order or suspension December 31, 1996. If the Department Elizabeth Patience at (202) 482–0195, agreement it is requesting a review, and does not receive, by December 31, 1996, Import Administration, International the requesting party must state why it a request for review of entries covered Trade Administration, U.S. Department desires the Secretary to review those by an order, finding, or suspended of Commerce, 14th Street and particular producers or exporters. If the investigation listed in this notice and for Constitution Avenue, NW., Washington, interested party intends for the the period identified above, the DC 20230. Secretary to review sales or Department will instruct the Customs merchandise by an exporter (or a Service to assess antidumping or Initiation of Investigation producer if that producer also exports countervailing duties on those entries at The Applicable Statute merchandise from other suppliers) a rate equal to the cash deposit of (or which were produced in more than one bond for) estimated antidumping or Unless otherwise indicated, all country of origin, and each country of countervailing duties required on those citations to the statute are references to origin is subject to a separate order, then entries at the time of entry, or the provisions effective January 1, 1995, the interested party must state withdrawal from warehouse, for the effective date of the amendments specifically, on an order-by-order basis, consumption and to continue to collect made to the Tariff Act of 1930 (‘‘the which exporter(s) the request is the cash deposit previously ordered. Act’’) by the Uruguay Round intended to cover. This notice is not required by statute, Agreements Act (‘‘URAA’’). In addition, Seven copies of the request should be but is published as a service to the unless otherwise indicated, all citations submitted to the Assistant Secretary for international trading community. to the Department’s regulations are to 64052 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices the current regulations, as amended by Commission for the 1992 carbon flat- metal, whether or not painted, the interim regulations published in the rolled steel investigations, that produce, varnished, or coated with plastics or Federal Register on May 11, 1995 (60 in general, carbon flat-rolled steel other nonmetallic substances; and FR 25130). products which, depending on the certain iron and non-alloy steel flat- producer, may or may not include plate. rolled products not in coils, of The Petitions Independent sources readily available to rectangular shape, hot-rolled, neither On November 5, 1996, the Department the Department indicate that the clad, plated, nor coated with metal, of Commerce (‘‘the Department’’) domestic producers originally identified whether or not painted, varnished, or received petitions filed in proper form in the petition are the only producers of coated with plastics or other from Geneva Steel Company (Geneva) carbon steel plate in the United States. nonmetallic substances, 4.75 mm or and Gulf States Steel, Inc. (Gulf States) See Metal Bulletin Books, Iron and Steel more in thickness and of a width which (‘‘petitioners’’), domestic producers of Works of the World (11th ed., 1994). exceeds 150 mm and measures at least certain cut-to-length carbon steel plate On November 18, 1996, counsel for twice the thickness. Included as subject (CTL plate). The Department received Ranger submitted additional arguments merchandise in this petition are flat- amended petitions on November 14 and on all four petitions contending that the rolled products of nonrectangular cross- 15, 1996. petitions do not have industry support. section where such cross-section is In accordance with section 732(b) of Ranger argues that petitioners failed to achieved subsequent to the rolling the Act, petitioners alleged that imports demonstrate on the face of the petitions process (i.e., products which have been of CTL plate from the People’s Republic that Geneva and Gulf States account for ‘‘worked after rolling’’)—for example, of China (China), Ukraine, the Russian more than 50 percent of total domestic products which have been bevelled or Federation (Russia), and the Republic of production. Ranger also contends that rounded at the edges. This merchandise South Africa (South Africa) are being, or the Department must determine through is currently classifiable in the are likely to be, sold in the United States polling that domestic producers Harmonized Tariff Schedule of the at less than fair value within the supporting the petitions account for United States (HTS) under item meaning of section 731 of the Act, and more than 50 percent of the production numbers 7208.40.3030, 7208.40.3060, that such imports are materially of CTL plate produced by that portion 7208.51.0030, 7208.51.0045, injuring, or threatening material injury of the industry expressing a view on the 7208.51.0060, 7208.52.0000, to a U.S. industry. petitions. 7208.53.0000, 7208.90.0000, The Department finds that petitioners On November 14, 1996, petitioners 7210.70.3000, 7210.90.9000, have standing to file the petitions submitted amended petitions for the 7211.13.0000, 7211.14.0030, because they are interested parties, as four countries with letters of support for 7211.14.0045, 7211.90.0000, defined under section 771(9)(C) of the the petitions from Bethlehem Steel 7212.40.1000, 7212.40.5000, Act. Corporation and U.S. Steel Group, a unit 7212.50.0000. Excluded from subject of USX Corporation. Letters of support Determination of Industry Support for merchandise within the scope of this were also submitted to the Department the Petitions petition is grade X–70 plate. Although by the United Steelworkers of America the HTS subheadings are provided for Section 732(c)(4)(A) of the Act on November 13, 1996. Based on the convenience and customs purposes, our requires the Department to determine, production data we collected from written description of the scope of this prior to the initiation of an domestic steel-producing companies, investigation is dispositive. investigation, that a minimum Geneva, Gulf States, Bethlehem and percentage of the domestic industry USX account for significantly more than South Africa supports an antidumping petition. A 50 percent of total production of the Export Price and Normal Value petition meets these minimum domestic like product. Because the requirements if the domestic producers amended petitions now establish The petitioners based export price on or workers who support the petition sufficient support of domestic producers the customs values derived from the account for: (1) At least 25 percent of within the meaning of 732(c)(4)(D), the IM–145 monthly import statistics for the total production of the domestic like Department is not required to poll or HTS subheading 7208.51.0060 and product; and (2) more than 50 percent rely on other information to determine 7208.52.0000, published by the U.S. of the production of the domestic like if there is support for the petition. The Department of Commerce, for the month product produced by that portion of the Department received no expressions of of July 1996. These customs values industry expressing support for, or opposition to the petitions from any correspond to the month the available opposition to, the petition. U.S. producers or workers. Accordingly, home market price lists were in effect. We received submissions from two the Department determines that the The customs values, which represent importers, Ranger Steel Supply petitions have been filed on behalf of the f.o.b. South Africa price of the Corporation (Ranger) and Klockner Steel the domestic industry in accordance subject CTL plate, were adjusted for Trade (Klockner), alleging that these with sections 732(c)(4)(A) and foreign inland freight, based on the petitions were not filed on behalf of the 732(c)(4)(D) of the Act. freight charges by one South African domestic carbon steel plate industry. producer. We find the customs values a Moreover, Klockner, in filing its notice Scope of the Investigation reasonable basis for export prices of appearance in the Chinese, Russian The scope of these investigations because (1) the HTS subheadings and Ukrainian proceedings, contended includes hot-rolled iron and non-alloy contain only CTL plate and no other that there are 38 domestic firms that steel universal mill plates (i.e., flat- products, and (2) the customs values may have produced plate in 1992. rolled products rolled on four faces or reported for IM–145 are based on the Therefore, the importer questions in a closed box pass, of a width transaction value of the merchandise. whether petitioners identified all exceeding 150 mm but not exceeding The petitioners based normal value on domestic plate producers in the 1250 mm and of a thickness of not less July 1996 prices between a South petitions. Klockner’s support for this than 4 mm, not in coils and without African producer and its customers assertion is based on a list of companies, patterns in relief), of rectangular shape, obtained from a market researcher. The prepared by the International Trade neither clad, plated nor coated with gross home market prices were adjusted Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64053 downward for discounts and value- surrogate market economy country in economically comparable. Based on the added tax. The petitioners converted the accordance with section 773(c) of the information provided by petitioners, we unit prices in South African rand to U.S. Act. believe that petitioners’ use of Indonesia dollars using the exchange rates that In the course of this investigation, all as a surrogate country is appropriate for were in effect on or about the time the parties will have the opportunity to purposes of initiation of this home market sales occurred. provide relevant information related to investigation. Based on comparisons of export price the issues of China’s NME status and the Petitioners were unable to obtain port to normal value, the estimated dumping granting of separate rates to individual unloading charges for Indonesia and, margins for certain CTL plate from exporters. See, e.g., Final Determination therefore, chose the lowest charge South Africa range from 6.66 percent to of Sales at Less Than Fair Value: Silicon applicable in Brazil based on a publicly- 33.87 percent. Carbide from the PRC, 59 FR 22585 available news article. Petitioners chose (May 2, 1994). Brazilian values because they were the China For their normal value calculation, only reasonably available figures for a Export Price petitioners based the factors of country with a per-capita GNP similar to production, as defined by section Petitioners based export price on two China’s. Petitioners were also unable to 773(c)(3) of the Act (raw materials, find data on factory overhead, selling, methods: 1) the import values declared labor, energy and capital cost), for CTL to the U.S. Customs Service; and 2) general & administrative (SG&A) plate on petitioners’ own usage inputs expenses, and profit from Indonesia. actual U.S. selling prices obtained by and amounts, adjusted for known Geneva. Petitioners used the HTS Therefore, petitioners used overhead, differences in production efficiencies on SG&A and profit percentages used by categories which contained only subject the basis of available information. merchandise, as follows: 7208.51.0060, the Department in a recent results of Petitioners asserted that no detailed review (Preliminary Results of Review: 7208.52.0000, 7208.40.3030, and information is available regarding the 7208.53.0000. Petitioners deducted Sebacic Acid from the People’s Republic quantities of inputs used by plate of China, 61 FR 46440 (September 3, foreign inland freight from the FAS producers in China. Thus, they have customs values in order to obtain ex- 1996)) where India was the surrogate assumed, for purposes of the petition, country in order to value these factors. factory prices. In order to calculate that producers in China use the same foreign inland freight, petitioners used Based on the information provided by inputs in the same quantities as petitioners, we believe that their use of Chilean rail rates. Petitioners explained petitioners, except where a variance that the only reasonably-available the noted Brazilian and Indian surrogate from petitioners’ cost model can be values are acceptable for purposes of public rates were from Chile and the justified on the basis of available United States. Because Chile’s GNP is initiation of this investigation. information. Petitioners argued that the Based on comparisons of export price closer to China’s, Chile’s transport rates use of their own factors is conservative to the factors of production, the were used in petitioners’ calculations. because the U.S. steel industry is more calculated dumping margins for CTL Based on the information presented by efficient and technologically-advanced plate from China ranged from 10.01– petitioners, we believe that their use of than the Chinese steel industry. 45.84 percent. Chilean rail rates is acceptable for Petitioners cited four different sources purposes of initiation of this to support this contention. Based on the Russia investigation. information provided by petitioners, we Export Price Normal Value believe that petitioners’ use of its own adjusted factors of production is Petitioners based export price on two Petitioners asserted that China is a appropriate for purposes of initiation of methods: (1) The import values declared non-market economy country (NME) to this investigation. See, Initiation of the to the U.S. Customs Service; and (2) the extent that sales or offers for sale of Antidumping Duty Investigations of actual U.S. selling prices known to such or similar merchandise in China or Melamine Institutional Dinner Products petitioners. In order to ensure a fair to third countries do not permit from Indonesia, Taiwan, and the comparison, petitioners used the HTS calculation of normal value under 19 People’s Republic of China, 61 FR 8039 categories which contained only subject C.F.R. 353.46, 353.49 or 353.53. (March 31, 1996). merchandise, as follows: 7208.51.0060, Petitioners, therefore, constructed a In accordance with section 773(c)(4) 7208.52.0000, 7208.40.3030, and normal value based on the factors of of the Act, petitioners then valued the 7208.53.0000. Petitioners deducted production methodology pursuant to 19 factors of production, where possible, foreign inland freight from the customs U.S.C. 1677b(c). In previous on reasonably available surrogate values in order to obtain ex-factory investigations, the Department has country data. Petitioners selected prices. In order to calculate foreign determined that China is an NME. See, Indonesia as the primary surrogate. inland freight, petitioners used U.S. e.g., Final Determination of Sales at Less Petitioners argued that Indonesia is an barge rates and Chilean rail rates than Fair Value: Bicycles From the acceptable surrogate country because its because they were the only appropriate People’s Republic of China, 61 FR 19026 level of economic development is public figures reasonably available to (April 30, 1996). In accordance with comparable to that of China and it is a the petitioners. Petitioners explained section 771(18)(C)(i) of the Act, the significant producer of comparable that they could only find barge rates for presumption of NME status remains in merchandise (in accordance with the United States that revealed the effect until revoked by the Department. 773(c)(4) of the Act). See, Final distances needed to permit calculation The presumption of NME status for Determination of Sales at Less-Than- of a rate in dollars-per-ton. Further, they China has not been revoked by the Fair-Value: Disposable Pocket Lighters could only find data on rail rates from Department and, therefore, remains in from the People’s Republic of China 60 Chile and the United States which effect for purposes of the initiation of FR 22359 (May 5, 1996). Petitioners would permit the calculation of rail this investigation. Accordingly, the stated that because the per-capita gross freight costs in such terms. They used normal value of the product was national product (GNP) of Indonesia and the Chilean rail rate because Chilean appropriately based on the producers’ China are relatively close, the two per-capita GNP is much closer to factors of production, valued in a countries may be considered Russia’s than is the United States’. 64054 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

Based on the information presented by than the Russian steel industry. Ukraine petitioners, we believe that their use of Petitioners cited three different sources Export Price U.S. barge and Chilean rail rates is to support this contention. Based on the acceptable for purposes of initiation of information provided by petitioners, we Petitioners based export price on two this investigation. believe that petitioners’ use of its own methods: (1) The import values declared adjusted factors of production is to the U.S. Customs Service; and (2) Normal Value actual U.S. selling prices known to appropriate for purposes of initiation of Petitioners asserted that Russia is a petitioners. In order to ensure a fair this investigation. non-market economy country (NME) to comparison, petitioners used the HTS the extent that sales or offers for sale of In accordance with section 773(c)(4) categories which contained only subject such or similar merchandise in Russia of the Act, petitioners valued these merchandise, as follows: 7208.51.0060, or to third countries do not permit factors, where possible, on reasonably 7208.52.0000, 7208.40.3030, and calculation of normal value under 19 available, published surrogate country 7208.53.0000. Petitioners deducted CFR 353.46, 353.49 or 353.53. data. Petitioners selected Turkey as their foreign inland freight from the customs Petitioners, therefore, constructed a primary surrogate. Petitioners stated values in order to obtain ex-factory normal value based on the factors of that the per-capita GNP of Turkey prices. In order to calculate foreign production methodology pursuant to 19 differs only slightly from Russia’s and, inland freight, petitioners used U.S. U.S.C. 1677b(c). In previous thus, maintain that Turkey is the most barge rates and Chilean rail rates investigations, the Department has suitable surrogate, amongst the potential because they were the only appropriate, determined that Russia is an NME. See, surrogates, because it is at a level of public figures reasonably available to e.g., Pure Magnesium and Alloy comparable economic development and the petitioners. Petitioners explained Magnesium from the Russian that they could only find barge rates for is also a significant producer of Federation, 60 FR 16440 (March 30, the United States that revealed the comparable merchandise (in accordance 1995). In accordance with section distances needed to permit calculation 771(18)(C)(i) of the Act, the with section 773(c)(4) of the Act). See, of a rate in dollars-per-ton. Further, they presumption of NME status remains in Final Determination of Sales at Less- could only find data on rail rates from effect until revoked by the Department. than-Fair-Value of Ferrovanadium and Chile and the United States which The presumption of NME status for Nitrided Vanadiam From the Russian would permit the calculation of rail Russia has not been revoked by the Federation, 60 FR 27957 (May 26, 1996). freight costs in such terms. They used Department and, therefore, remains in Based on the information provided by the Chilean rail rate because Chilean effect for purposes of the initiation of petitioners, we believe that petitioners’ per-capita GNP is much closer to this investigation. Accordingly, the use of Turkey as a surrogate country is Ukraine’s than is the United States’. normal value of the product is appropriate for purposes of initiation of Based on the information presented by appropriately based on factors of this investigation. petitioners, we believe that their use of production, valued in a surrogate Petitioners state that they were unable U.S. barge and Chilean rail rates is market economy country in accordance to find publicly-available information acceptable for purposes of initiation of with section 773(c) of the Act. this investigation. on port unloading charges in Turkey In the course of this investigation, all parties will have the opportunity to and, therefore, chose the lowest charge Normal Value provide relevant information related to applicable in Brazil as a surrogate value, Petitioners alleged that Ukraine is an the issues of Russia’s NME status and based on a published news article. NME to the extent that sales or offers for the granting of separate rates to Petitioners were also unable to find a sale of such or similar merchandise in individual exporters. See, e.g., Final published source for the number of Ukraine or to third countries does not Determination of Sales at Less Than man-hours used to produce a ton of any permit calculation of normal value Fair Value: Silicon Carbide from the steel product in Russia or Turkey, and, under 19 CFR 353.46, 353.49 or 353.53. PRC, 59 FR 22585 (May 2, 1994). therefore, used a labor-per-ton figure for Petitioners, therefore, constructed a For the normal value calculation, Mexico, based on a published news normal value based on the factors of petitioners based the factors of article, as the surrogate value. production methodology pursuant to 19 production, as defined by section Petitioners chose values from Brazil and U.S.C. 1677b(c). In previous 773(c)(3) of the Act (raw materials, Mexico, respectively, as surrogates investigations, the Department has labor, energy and capital cost), for CTL because the information was reasonably determined that Ukraine is an NME. plate on petitioners’ own usage inputs available and the per-capita GNPs of See, e.g., Final Determinations of Sales and amounts, adjusted for known these countries were most comparable at Less Than Fair Value: Ferrosilicon differences in production efficiencies on to Russia’s. Finally, petitioners valued from Kazakhstan and Ukraine; and the basis of available information. Russian consumption rates for fuel, Postponement of Final Determination; Petitioners asserted that no detailed energy, and raw materials at 20 percent Ferrosilicon from the Russian information is available regarding the above petitioners’ based on a publicly- Federation, 58 FR 13050 (March 9, quantities of inputs used by plate available news article. Based on the 1993). In accordance with section producers in Russia. Thus, they have information provided by petitioners, we 771(18)(C)(i) of the Act, the assumed, for purposes of the petition, presumption of NME status remains in believe that their use of the noted that producers in Russia use the same effect until revoked by the Department. surrogate values is acceptable for inputs in the same quantities as The presumption of NME status for purposes of initiation of this petitioners, except where a variance Ukraine has not been revoked by the from petitioners’ cost model can be investigation. Department and, therefore, remains in justified on the basis of available Based on comparisons of export price effect for purposes of the initiation of information. Petitioners argued that the to the factors of production, the this investigation. Accordingly, the use of their own factors is conservative calculated dumping margins for CTL normal value of the product is because the U.S. steel industry is more plate from Russia ranged from 139.97– appropriately based on the producers’ efficient and technologically-advanced 230.38 percent. factors of production valued in a Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64055 surrogate market economy country in Petitioners were unable to obtain port complained-of imports, allegedly sold at accordance with section 773(c) of the unloading charges for Peru and, less than fair value. In reaching this Act. therefore, chose the lowest charge determination, we have examined the In the course of this investigation, all applicable in Brazil based on a accuracy and adequacy of the evidence parties will have the opportunity to published news article. Petitioners were provided in the petitions based on provide relevant information related to also unable to find a published source information readily available to us, as the issues of Ukraine’s NME status and for the number of man-hours used to required by section 732(c)(1)(A)(i). the granting of separate rates to produce a ton of any steel product in Therefore, we are initiating individual exporters. See, e.g., Final Ukraine or Peru, and, therefore, used a antidumping duty investigations to Determination of Sales at Less Than labor-per-ton figure for Mexico based on determine whether imports of CTL plate Fair Value: Silicon Carbide from the a news article, as the surrogate value. from China, Ukraine, Russia and South PRC, 59 FR 22585 (May 2, 1994). Petitioners chose values from Brazil and Africa are being, or are likely to be, sold For the normal value calculation, Mexico, respectively, as surrogates in the United States at less than fair petitioners based the factors of because the information was reasonably value. Unless extended, we will make production, as defined by section available and the per-capita GNPs of our preliminary determination by April 773(c)(3) of the Act (raw materials, these countries were most comparable 14, 1997. labor, energy, and capital costs), for CTL to Ukraine’s. Based on the information plate on petitioners’ own usage provided by petitioners, we believe that Distribution of Copies of the Petitions amounts, adjusted for known their use of the noted Brazilian and In accordance with section differences in production efficiencies on Mexican surrogate values is acceptable 732(b)(3)(A) of the Act, copies of the the basis of available information. for purposes of initiation of this Petitioners asserted that no detailed public version of the petitions have investigation. been provided to the representatives of information is available regarding the Petitioners were also unable to find the governments of China, Ukraine, quantities of inputs used by plate values for natural gas rates, factory Russia and South Africa. We will producers in Ukraine. Thus, they have overhead, selling, general & attempt to provide copies of the public assumed, for purposes of the petition, administrative (SG&A) expenses, and versions of the petitions to the exporters that producers in Ukraine use the same profit from Peru. Therefore, petitioners named in the petitions. inputs in the same quantities as used surrogate natural gas rates from petitioners, except where a variance Indonesia and Turkish values for factory International Trade Commission (ITC) from petitioners’ cost model can be overhead, SG&A, and profit. Values Notification justified on the basis of available from Indonesia and Turkey were information. Petitioners argued that the selected on the basis that these We have notified the ITC of our use of their own data is conservative countries were closer to Ukraine in per- initiations, as required by section 732(d) because the U.S. steel industry is more capita GNP than were other countries of the Act. efficient and technologically-advanced from which values could be ascertained Preliminary Determination by the ITC than the Ukrainian steel industry. by petitioners. Based on the information Petitioners cited two different sources to provided by petitioners, we believe that The ITC will determine by December support this contention. Based on the their use of the noted Indonesian and 20, 1996, whether there is a reasonable information provided by petitioners, we Turkish surrogate values is acceptable indication that imports of CTL plate believe that petitioners’ use of its own for purposes of initiation of this from China, Ukraine, Russia and South adjusted factors of production is investigation. Africa are causing material injury, or appropriate for purposes of initiation of Based on comparisons of export price threatening to cause material injury, to this investigation. to the factors of production, the a U.S. industry. A negative ITC In accordance with section 773(c)(4) calculated dumping margins for CTL determination in any of these of the Act, petitioners valued these plate from Ukraine ranged from 201.61– investigations will result in the factors, where possible, on reasonably 274.82 percent. respective investigation being available, published surrogate country terminated; otherwise, these Fair Value Comparisons data. Petitioners selected Peru as their investigations will proceed according to primary surrogate. Petitioners argued Based on the data provided by statutory and regulatory time limits. that Peru is an acceptable surrogate petitioners, there is reason to believe country because its level of economic that imports of CTL plate from China, Dated: November 25, 1996. development is comparable to that of Ukraine, Russia and South Africa are Robert S. LaRussa Ukraine and it is a significant producer being, or are likely to be, sold at less Acting Assistant Secretary of Import of comparable merchandise (in than fair value. If it becomes necessary Administration accordance with 773(c)(4) of the Act). at a later date to consider these petitions [FR Doc. 96–30756 Filed 12–2–96; 8:45 am] See, Preliminary Determination of Sales as a source of facts available, under BILLING CODE 3510±DS±P at Less-than-Fair-Value and section 776 of the Act, we may further Postponement of Final Determination of review the calculations. Silicomanganese From Ukraine 59 FR [A±412±602] 31201 (June 17, 1996). Petitioners stated Initiation of Investigations that because the per-capita GNP of Peru We have examined the petitions on Certain Forged Steel Crankshafts From and Ukraine are relatively close, the two CTL plate from China, Ukraine, Russia the United Kingdom; Preliminary countries may be considered and South Africa and have found that Results of Antidumping Duty economically comparable. Based on the they meet the requirements of section Administrative Review and Intent to information provided by petitioners, we 732 of the Act, including the Revoke Order believe that petitioners’ use of Peru as requirements concerning allegations of a surrogate country is appropriate for material injury or threat of material AGENCY: Import Administration, purposes of initiation of this injury to the domestic producers of a International Trade Administration, investigation. domestic like product by reason of the Department of Commerce. 64056 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

ACTION: Notice of preliminary results of requested that we conduct an it sold the subject merchandise at less antidumping duty administrative review administrative review of BSF’s sales. We than NV. and intent to revoke order. published a notice of initiation of this In the two prior reviews of this order, antidumping duty administrative review we determined that BSF sold SUMMARY: The Department of Commerce on October 12, 1995 (60 FR 53164). The crankshafts from the United Kingdom at (the Department) is conducting an Department is conducting this not less than NV. The Department administrative review of the administrative review in accordance conducted a verification of BSF’s antidumping duty order on certain with section 751 of the Act. response for this review and forged steel crankshafts from the United Scope of Review preliminarily determines that BSF sold Kingdom in response to a request by crankshafts at not less than NV during respondent British Steel Forgings (BSF), Imports covered by this review are the review period. Based on BSF’s three a producer. This review covers certain forged steel crankshafts. The consecutive years of de minimis shipments of this merchandise to the term ‘‘crankshafts’’ as used in this margins, we have preliminarily United States during the period review includes forged carbon or alloy determined that it is not likely that BSF September 1, 1994 through August 31, steel crankshafts with a shipping weight will in the future sell subject 1995. Based upon BSF’s three between 40 and 750 pounds, whether merchandise at less than NV. Therefore, consecutive years of de minimis machined or unmachined. These we intend to revoke the order on margins, we intend to revoke the order products are currently classifiable under crankshafts from the United Kingdom, with respect to crankshafts from the item numbers 8483.10.10.10, based on our preliminary determination United Kingdom, based on our 8483.10.10.30, 8483.10.30.10, and that BSF is the only known producer of preliminary determination that BSF is 8483.10.30.50 of the Harmonized Tariff crankshafts, if these preliminary the only known producer of crankshafts. Schedule (HTS). Neither cast findings are affirmed in our final results. We have preliminarily determined crankshafts nor forged crankshafts with that sales have not been made below shipping weights of less than 40 pounds Foreign Like Product normal value (NV). or more than 750 pounds are subject to In determining similar merchandise Interested parties are invited to this review. The HTS item numbers are comparisons pursuant to section 771(16) comment on these preliminary results. provided for convenience and Customs of the Act, we considered the following Parties who submit arguments are purposes. The written description physical characteristics, which appear requested to submit with each argument remains dispositive of the scope of the in order of importance: (1) Twisted vs. (1) a statement of the issue and (2) a order. untwisted; (2) number of throws; (3) brief summary of the argument. This review covers one manufacturer/ forging method; (4) engine type; (5) EFFECTIVE DATE: December 3, 1996. exporter of crankshafts, and the period number of bearings; (6) number of FOR FURTHER INFORMATION CONTACT: September 1, 1994 through August 31, flanges; and (7) number of David Dirstine, Lyn Johnson, or Richard 1995. counterweights. We applied weight Rimlinger, Import Administration, Verification separately based on a range of plus or International Trade Administration, As provided in section 776(b) of the minus 20 percent of the weight of the U.S. Department of Commerce, 14th Act, we verified information provided U.S. model. If there were two or more Street and Constitution Avenue, N.W., by the respondent by using standard potential home market matches after Washington D.C. 20230; telephone (202) verification procedures, including on- applying each of the matching criteria, 482–4733. site inspection of the manufacturer’s including the 20 percent weight range, Applicable Statute facilities, the examination of relevant we chose the home market model that was closest in weight to the U.S. model. Unless otherwise indicated, all sales and financial records, and the selection of original documentation Our reasons for using the weight citations to the statute are references to criterion are contained in the Notice of the provisions effective January 1, 1995, containing relevant information. Our verification results are outlined in the Final Results of Antidumping Duty the effective date of the amendments Administrative Review: Certain Forged made to the Tariff Act of 1930 (the Act) public versions of the verification reports. Steel Crankshafts from the United by the Uruguay Round Agreements Act Kingdom, 60 FR 52150, 52151–152 (URAA). In addition, unless otherwise Intent To Revoke (October 5, 1995). indicated, all citations to the On September 29, 1995, BSF United States Price (USP) Department’s regulations are to the submitted a request, in accordance with current regulations, as amended by the 19 CFR 353.25(b), to revoke the order For sales made by BSF, we calculated interim regulations published in the covering crankshafts from the United an export price (EP), in accordance with Federal Register on May 11, 1995 (60 Kingdom with respect to BSF’s sales of section 772(a) of the Act, because the FR 25130). this merchandise. subject merchandise was sold to SUPPLEMENTARY INFORMATION: In accordance with 19 CFR unrelated purchasers in the United 353.25(a)(2)(iii), this request was States prior to importation into the Background accompanied by a certification from United States and the constructed On September 12, 1995, the BSF that it had not sold the relevant export price methodology was not Department published in the Federal class or kind of merchandise at less than indicated by other circumstances. Register a notice of ‘‘Opportunity to NV for a three-year period, including We calculated export price based on Request Administrative Review’’ (60 FR this review period, and would not do so delivered prices to unrelated 47349) of the antidumping duty order in the future. BSF also agreed to its purchasers. We made deductions for on certain forged steel crankshafts immediate reinstatement in the relevant foreign inland freight, ocean freight, (crankshafts) from the United Kingdom. antidumping order, as long as any firm marine insurance, U.S. duties, and In accordance with 19 CFR is subject to this order, if the brokerage and handling expenses in 353.22(a)(1)(1995), the petitioner, Krupp Department concludes under 19 CFR accordance with section 772(c)(2) of the Gerlach Company (KGC), and BSF 353.22(f) that, subsequent to revocation, Act. Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64057

Normal Value (NV) the same level of trade and channel of review, which will include the results of Pursuant to section 773(a)(1)(B) of the distribution. Therefore, BSF did not its analysis of issues raised in any such Act, we determined that the home request a level-of-trade adjustment. Our comments. The Department shall determine, and market (HM) is viable and an analysis and verification of BSF’s the Customs Service shall assess, appropriate basis for calculating NV. response confirmed that the selling antidumping duties on all appropriate On March 14, 1996, KGC submitted functions performed for EP and HM entries. Individual differences between an allegation that BSF sold subject sales are comparable. Therefore, in export price and NV may vary from the merchandise in its home market at less accordance with section 773(a)(7)(A) of percentage stated above. Upon than its cost of production (COP) during the Act, we compared sales at the same completion of this review, the the period of review. After analyzing the level of trade and did not make a level- Department will issue appraisement allegation, the Department determined of-trade adjustment to NV for these preliminary results. instructions directly to the Customs that reasonable grounds exist to believe For certain U.S. sales, we found no Service. or suspect that HM sales of the foreign comparable home market sales after If our intent to revoke is finalized, the like product were made below COP (see applying the model-matching revocation will apply to all entries of memo to Holly A. Kuga dated April 19, methodology, the contemporaneity test, the subject merchandise entered, or 1996). Accordingly, the Department and the difference-in-merchandise withdrawn from warehouse, for conducted a sales-below-COP (difmer) test. For these sales, we based consumption on or after September 1, investigation for this review period. NV on constructed value (CV), in 1995. The Department will then order In accordance with 19 CFR 353.51(c), accordance with section 773(a)(4) of the the suspension of liquidation ended for we calculated COP as the sum of Act. all such entries and will instruct the reported materials, labor, factory In accordance with section 773(e) of Customs Service to release any cash overhead, and general expenses, and the Act, we calculated CV based on the deposit or bonds. The Department will compared COP to HM prices, net of sum of BSF’s submitted cost of materials further instruct Customs to refund with price adjustments. and fabrication, selling, general and interest any cash deposits on post- As a result of our COP investigation, administrative (SG&A) expenses, and September 1, 1995 entries. In addition, we found that it was necessary to profit, and U.S. packing costs. In the Department will terminate the disregard certain HM sales pursuant to accordance with section 773(e)(2)(A) of review covering subject merchandise section 773(b)(1) of the Act. In the Act, we based SG&A and profit on from the United Kingdom sold during accordance with sections 773(b)(2) (B) the amounts incurred and realized by the period September 1, 1995, through and (C) of the Act, we found that 20 BSF in connection with the production August 31, 1996, which was initiated on percent or more of respondent’s sales of and sale of the foreign like product, in October 17, 1996 (61 FR 54154). a given product during the POR were at the ordinary course of trade, for If we do not revoke, the following prices less than COP and, therefore, that consumption in the foreign country. deposit rates will be effective upon below-cost sales were made within an We made COS adjustments, in publication of the final results of these extended period of time in substantial accordance with 19 CFR 353.56, by administrative reviews for all shipments quantities. We also determined, based deducting home market direct selling of crankshafts from the United Kingdom on a comparison of each below-cost expenses from CV and adding U.S. entered, or withdrawn from warehouse, price to the weighted-average COP for direct selling expenses to CV. These for consumption on or after the the period for that product, that below- adjustments were made for differences publication date, as provided for by cost sales were made at prices which in credit expenses, warranties, and section 751(a)(2)(c) of the Act: (1) The would not permit recovery of all costs warehousing. cash deposit rate for reviewed company within a reasonable period of time in will be the rate established in the final Preliminary Results of the Review accordance with section 773(b)(2)(D) of results of this review (except that no the Act. We preliminarily determine that the deposit will be required if the margin is Where HM sales were used for following dumping margin exists: zero or de minimis, i.e., less than 0.5 comparisons, we calculated NV based percent); (2) for previously reviewed or on packed, ex-factory or delivered Margin investigated companies not listed above, Manufacturer/ Time period (per- prices to customers in the United exporter cent) the cash deposit rate will continue to be Kingdom. We made deductions, where the company-specific rate published for appropriate, for rebates and for HM British Steel 09/01/94±8/31/95 ... 0.49 the most recent period; (3) if the movement charges. We also made Forgings. exporter is not a firm covered in this circumstances-of-sale (COS) review, a prior review or the original adjustments, where appropriate, for Parties to the proceeding may request less-than-fair-value investigation, but differences in credit expenses, warranty disclosure within 5 days of the date of the manufacturer is, the cash deposit expenses, customer-requested tooling publication of this notice. Any rate will be the rate established for the expenses, and post-sale warehousing interested party may request a hearing most recent period for the manufacturer expenses, in accordance with 19 CFR within 10 days of publication. Any of the merchandise; and (4) for all other 353.56(a). hearing, if requested, will be held 44 producers and/or exporters of this BSF did not claim HM packing days after the publication of this notice, merchandise, the cash deposit rate shall expenses since subject merchandise is or the first workday thereafter. be 6.55 percent, the adjusted ‘‘all loaded into reusable bins as part of the Interested parties may submit case briefs others’’ rate from the less-than-fair-value production process with no packing within 30 days of the date of publication investigation. material expenses incurred. In of this notice. Rebuttal briefs, which These deposit rates, when imposed, accordance with section 773(a)(6)(A) of must be limited to issues raised in the shall remain in effect until publication the Act, we then added U.S. packing case briefs, may be filed not later than of the final results of the next costs to all HM prices. 37 days after the date of publication. administrative review. BSF reported that its sales in the The Department will publish a notice of This notice also serves as a home and U.S. markets were made at final results of this administrative preliminary reminder to importers of 64058 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices their responsibility under 19 CFR SUPPLEMENTARY INFORMATION: expenses fail to qualify as a direct 353.26 to file a certificate regarding the Background deduction from foreign market value; (3) reimbursement of antidumping duties choose an appropriate methodology for prior to liquidation of the relevant On September 8, 1993, the establishing duty assessment and entries during this review period. Department published in the Federal estimated deposit rates; and (4) correct Failure to comply with this requirement Register the final results of its second certain clerical errors discovered during could result in the Secretary’s administrative review of the the first remand proceeding. See Cemex, presumption that reimbursement of antidumping duty order on gray S.A. v. United States, Slip Op. 96–132 antidumping duties occurred and the portland cement and clinker from (CIT August 13, 1996). The Department subsequent assessment of double Mexico (58 FR 47253 (September 8, filed its second redetermination with antidumping duties. 1993)). In those final results the the Court on September 27, 1996; the Department set forth its determination This administrative review, intent to Court, on October 24, 1996, affirmed the of the weighted-average margins for the revoke, and notice are in accordance Department’s remand results. See respondent Cemex for the period of with section 751(a)(1) of the Act (19 Cemex, S.A. v. United States, Slip Op. review, August 1, 1991 through July 31, U.S.C. 1675(a)(1)), 19 CFR 353.22, and 96–170 (CIT October 24, 1996). 1992, and announced its intent to 19 CFR 353.25. instruct the U.S. Customs Service to Suspension of Liquidation Dated: November 25, 1996. assess antidumping duties on all In its decision in Timken, the Federal Robert S. LaRussa, appropriate entries. Circuit held that, pursuant to 19 U.S.C. Acting Assistant Secretary for Import Cemex subsequently filed suit with 1516a(e), the Department must publish Administration. the Court challenging these final results. notice of a decision of the Court or [FR Doc. 96–30747 Filed 12–2–96; 8:45 am] Thereafter, the Court published an Federal Circuit which is ‘‘not in BILLING CODE 3510±DS±P Opinion dated April 24, 1995, in harmony’’ with the Department’s Cemex, S.A. v. United States, Ct. No. determination. Publication of this notice 93–10–00659, Slip Op. 95–72, fulfills this obligation. The Federal remanding the Department’s Circuit also held that in such a case, the [A±201±802] determination with instructions to: (1) Department must suspend liquidation Request and consider difference-in- Gray Portland Cement and Clinker until there is a ‘‘conclusive’’ decision in merchandise information to determine From Mexico; Notice of Court Decision the action. A ‘‘conclusive’’ decision the suitability of a price-to-price cannot be reached until the opportunity comparison of U.S. sales of Types II and AGENCY: Import Administration, to appeal expires or any appeal is V cement to home market sales of Type International Trade Administration, decided by the Federal Circuit. I cement; (2) consider an arm’s-length Department of Commerce. Therefore, the Department will continue test of transfer prices between a cement ACTION: Notice of court decision and to suspend liquidation pending distributor and a concrete manufacturer suspension of liquidation. in the United States, both related to expiration of the period to appeal or Cemex, for allocating profit to value pending a final decision of the Federal SUMMARY: On October 24, 1996, in the Circuit if Cemex is appealed. case of Cemex, S.A. v. United States, added during further processing in the Slip Op. 96–170, (Cemex), the United United States; (3) examine whether the Dated: November 25, 1996. States Court of International Trade (the Department articulated a new policy Joseph A. Spetrini, Court) affirmed the Department of regarding treatment of interest income Deputy Assistant Secretary, Enforcement Commerce’s (the Department’s) results ‘‘at a critical juncture,’’ thus warranting Group III. of redetermination pursuant to remand consideration of factual information [FR Doc. 96–30746 Filed 12–2–96; 8:45 am] of the final results of the second submitted by Cemex but rejected as BILLING CODE 3510±DS±P administrative review of the untimely new information; and (4) correct our margin calculation to antidumping duty order on gray [A±580±811] portland cement and clinker from include CEMEX’s sales of further- Mexico. The period covered by the manufactured merchandise. See Cemex, Steel Wire Rope From the Republic of second review is August 1, 1991 S.A. v. United States, Slip Op. 95–72 Korea; Preliminary Results of through July 31, 1992. Consistent with (CIT April 24, 1995). On February 1, Antidumping Duty Administrative the decision of the United States Court 1996, the Department filed its remand Review and Intent To Revoke of Appeals for the Federal Circuit results with the Court. Cemex and Antidumping Duty Order in Part (Federal Circuit) in Timken Co. v. defendant-intervenors, The Ad-Hoc United States, 893 F.2d 337 (Fed. Cir. Committee of AZ–NM–TX–FL AGENCY: Import Administration, 1990) (Timken), the Department will not Producers of Gray Portland Cement and International Trade Administration, order the liquidation of the subject the National Cement Company of Department of Commerce. merchandise entered or withdrawn from California, Inc., challenged certain ACTION: Notice of preliminary results of warehouse for consumption prior to a aspects of the Department’s remand antidumping duty administrative review ‘‘conclusive’’ decision in this case. results. and intent to revoke antidumping duty On August 13, 1996, the Court order in part. EFFECTIVE DATE: November 3, 1996. ordered a second remand so that the FOR FURTHER INFORMATION CONTACT: Department (1) could determine if the SUMMARY: In response to requests by the Robert James or John Kugelman, Office inclusion of non-subject merchandise in petitioner, the Committee of Domestic Eight, Enforcement Group III, Import Cemex’s calculation of its home market Steel Wire Rope & Specialty Cable Administration, International Trade freight expenses is distortive; (2) deny, Manufacturers, and by Manho Rope and Administration, U.S. Department of as either direct or indirect adjustments, Wire Ltd. (Manho) and Chun Kee Steel Commerce, 14th Street and Constitution Cemex’s claimed adjustments to foreign Wire Co. Ltd. (Chun Kee), respondent Avenue NW., Washington, DC 20230; market value for post-sale freight manufacturers/exporters of steel wire telephone: (202) 482–5222. expenses in those cases where the rope, the Department of Commerce (the Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64059

Department) is conducting an 28, 1996. On April 1, 1996, the Excluded from this review is stainless administrative review of the petitioner requested an administrative steel wire rope, i.e., ropes, cables and antidumping duty order on steel wire review of 12 manufacturers/exporters of cordage other than stranded wire, of rope from the Republic of Korea. The steel wire rope from Korea. Manho and stainless steel, not fitted with fittings or review covers 12 manufacturers/ Chun Kee, each on April 1, 1996, also made up into articles, which is exporters of the subject merchandise to requested that the Department conduct classifiable under HTS subheading the United States. The review period is an administrative review of their sales 7312.10.6000. Although HTS March 1, 1995, through February 28, of subject merchandise during the POR. subheadings are provided for 1996 (the POR). We published a notice of initiation of convenience and Customs purposes, our We have preliminarily determined administrative review on April 25, 1996 own written description of the scope of that sales have been made below normal (61 FR 18379). The Department is now this review is dispositive. value (NV). If these preliminary results conducting this review in accordance Export Price are adopted in our final results of with section 751 of the Act. administrative review, we will instruct For sales to the United States, the U.S. Customs to assess antidumping Unlocated Companies Department used EP as defined in duties equal to the difference between We were unable to obtain addresses section 772(a) of the Act, because the the export price (EP) and the normal for Hanboo Wire Rope and Seo Jin Wire subject merchandise was sold to value (NV). Also, if these preliminary Rope and thereafter received unaffiliated U.S. purchasers prior to the results are adopted in our final results confirmation from the U.S. embassy in date of importation and the use of of administrative review, we intend to Seoul, South Korea, that these constructed export price was not revoke the antidumping duty order with companies were closed. In accordance indicated by the facts of record. We calculated EP based on ex-factory, respect to Manho and Chun Kee based with our practice with respect to f.o.b., c.i.f., c&f, or delivered to Korean on three years of sales at not less than companies to which we cannot send a port prices to unrelated purchasers in, NV. See Intent to Revoke, infra. questionnaire, we are assigning to these or for exportation to, the United States. Interested parties are invited to companies the ‘‘All Others’’ rate from We adjusted these prices for billing comment on these preliminary results. the less-than-fair-value (LTFV) Parties who submit comments in this adjustments, where applicable. We investigation, which is 1.51 percent. See made adjustments, where applicable, for proceeding are requested to submit with Sweaters Wholly or in Chief Weight of each argument: (1) a statement of the domestic brokerage and handling, ocean Man-Made Fiber From Hong Kong; Final freight, marine insurance, terminal issue, and (2) a brief summary of the Results of Antidumping Duty argument. handling charges, stevedoring charges, Administrative Review, 59 FR 13926 wharfage expenses, bill of lading issuing EFFECTIVE DATE: December 3, 1996. (March 24, 1994). fees, export license fees, export FOR FURTHER INFORMATION CONTACT: Non-Shipper insurance, domestic inland freight, Thomas O. Barlow, Matthew containerization expenses and container Rosenbaum, or Kris Campbell, Import Myung Jin notified us that it did not taxes, container freight station charges, Administration, International Trade have shipments of subject merchandise and shoring charges in accordance with Administration, U.S. Department of during the POR, and we confirmed this section 772(c)(2)(A) of the Act. We also Commerce, 14th Street and Constitution with the United States Customs Service. added duty drawback, where applicable, Avenue, Washington, D.C. 20230; Verification for Manho and Chun Kee, pursuant to telephone: (202) 482–4733. section 772(c)(1)(B) of the Act. We did In accordance with section 782(i) of SUPPLEMENTARY INFORMATION: not make any duty drawback the Act, we verified information adjustments for Chung Woo Rope Co., The Applicable Statute provided by Chun Kee, Manho, Kumho Ltd., Inc. (Chung Woo), Kumho, or Unless otherwise indicated, all Wire Rope Mfg., Co., Ltd. (Kumho), and Ssang Yong Steel Wire Co., Ltd., citations to the Tariff Act of 1930, as Sungjin Company (Sung Jin), using because they were unable to amended (the Act), are references to the standard verification procedures, demonstrate a connection between provisions effective January 1, 1995, the including on-site inspection of the payment of import duties and receipt of effective date of the amendments made manufacturer’s facilities, the duty drawback on exports of steel wire to the Act by the Uruguay Rounds examination of relevant sales and rope, and because they did not Agreements Act (URAA). In addition, financial records, and selection of demonstrate that they had sufficient unless otherwise indicated, all citations original documentation containing imports of raw materials to account for to the Department’s regulations are to relevant information. Our verification the duty drawback received on exports the current regulations, as amended by results are outlined in the public of the manufactured product, consistent the interim regulation published in the versions of the verification reports. with our practice in the previous review Federal Register on May 11, 1995 (60 Scope of Review (see Steel Wire Rope From the Republic FR 25130). of Korea; Final Results of Antidumping The product covered by this review is Background Duty Administrative Review, 61 FR steel wire rope. Steel wire rope 55965, 55968 (October 30, 1996) (Steel On March 26, 1993, the Department encompasses ropes, cables, and cordage Wire Rope II Final)). published in the Federal Register (58 of iron or carbon steel, other than No other adjustments to EP were FR 16398) the antidumping duty order stranded wire, not fitted with fittings or claimed or allowed. on steel wire rope from the Republic of made up into articles, and not made up Korea. On March 4, 1996, the of brass-plated wire. Imports of these Normal Value Department published a notice of products are currently classifiable under Based on a comparison of the ‘‘Opportunity to Request an the following Harmonized Tariff aggregate quantity of home market and Administrative Review’’ (61 FR 8238) of Schedule (HTS) subheadings: U.S. sales, and absent any information this antidumping duty order for the 7312.10.9030, 7312.10.9060, and that a particular market situation in the period March 1, 1995, through February 7312.10.9090. exporting country does not permit a 64060 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices proper comparison, we determined that at prices less than the COP, we section 773(b) of the Act. We calculated the quantity of foreign like product each disregarded the below-cost sales CV, in accordance with section 773(e) of respondent sold in the exporting because we determined that the below- the Act, as the sum of the cost of country was sufficient to permit a cost sales were made within an manufacturing (COM) of the product proper comparison with the sales of the extended period of time in ‘‘substantial sold in the United States, home market subject merchandise to the United quantities’’ in accordance with sections SG&A expenses, home market profit, States, pursuant to section 773(a) of the 773(b)(2)(B) and (C) of the Act, and and U.S. packing expenses. The COM of Act, because each company had sales in based on comparisons of price to the product sold in the United States is its home market which were greater weighted-average COPs for the POR we the sum of direct material, direct labor, than five percent of the U.S. market. determined that the below-cost sales of and variable and fixed factory overhead Therefore, in accordance with section the product were at prices which would expenses. For home market SG&A 773(a)(1)(B)(i) of the Act, we based NV not permit recovery of all costs within expenses and profit, we used the actual on the prices at which the foreign like a reasonable period of time, in amounts incurred and realized by the products were first sold for accordance with section 773(b)(2)(D) of respondent in connection with the consumption in the exporting country. the Act. Based on this test, we production and sale of the foreign like We used sales to affiliated customers disregarded below cost sales with product in the ordinary course of trade, only where we determined such sales respect to Manho and Chun Kee. for consumption in the foreign country, were made at arm’s-length prices, i.e., at Pursuant to section 777A(d)(2) of the in accordance with section 773(e)(2)(A) prices comparable to prices at which the Act, we compared the EPs of individual of the Act, unless these actual data were firm sold identical merchandise to transactions to the monthly weighted- not available. If these actual data were unrelated customers. average price of sales of the foreign like not available, we used the actual Because we disregarded sales below product. We compared EP sales to sales amounts incurred and realized by the the cost of production (COP) in the last in the home market of identical or respondent in connection with the completed review for Manho and Chun similar merchandise. production and sale, for consumption in Kee, we had reasonable grounds to We based NV on the price at which the foreign country, of merchandise that believe or suspect that sales of the the foreign like product is first sold for is in the same general category of foreign product under consideration for consumption in the exporting country, products as the subject merchandise, in the determination of NV in this review in the usual commercial quantities, in accordance with section 773(e)(2)(B)(i) may have been made at prices below the the ordinary course of trade and at the of the Act. In accordance with section COP, as provided by section same level of trade as the EP, in 773(a)(8) of the Act, we made COS 773(b)(2)(A)(ii) of the Act. Therefore, accordance with section 773(a)(1)(B)(i) adjustments to CV by deducting home pursuant to section 773(b)(1) of the Act, of the Act. We made adjustments, where market direct selling expenses and we initiated COP investigations of sales appropriate, for rebates. We increased adding U.S. direct selling expenses. by Manho and Chun Kee in the home home market price by the amount of No other adjustments were claimed or market. U.S. packing costs in accordance with allowed. In accordance with section 773(b)(3) section 773(a)(6)(A) of the Act and of the Act, we calculated the COP based reduced it by the amount of home Use of Facts Otherwise Available on the sum of the costs of materials and market packing costs in accordance with We preliminarily determine, in fabrication employed in producing the section 773(a)(6)(B) of the Act. We accordance with section 776(a) of the foreign like product, plus selling, adjusted for movement expenses in Act, that the use of facts available is general and administrative expenses accordance with section 773(a)(6)(B)(ii) appropriate for Boo Kook Corp., Dong- (SG&A) and the cost of all expenses of the Act. We also made adjustments, Il Steel Mfg. Co., Ltd. and Yeon Sin incidental to placing the foreign like where applicable, for differences in the Metal because they did not respond to product in condition packed ready for physical characteristics of merchandise our antidumping questionnaire. We find shipment. We relied on the home in accordance with section that these firms have withheld market sales and COP information 773(a)(6)(C)(ii) of the Act. ‘‘information that has been requested by provided by Manho and Chun Kee in Pursuant to section 773(a)(6)(C)(iii) of the administering authority.’’ their questionnaire responses. the Act and 19 CFR 353.56, we made Furthermore, we determine that, After calculating COP, we tested circumstance-of-sale (COS) adjustments pursuant to section 776(b) of the Act, it whether home market sales of steel wire to NV. We deducted home market credit is appropriate to make an inference rope were made at prices below COP expenses, inspection fees, warranty and adverse to the interests of these within an extended period of time in servicing expenses and, where companies because they failed to substantial quantities, and whether such appropriate, added U.S. postage fees, cooperate by not responding to our prices permit recovery of all costs U.S. letter of credit fees, U.S. bank questionnaire. within a reasonable period of time. We charges, U.S. credit expenses, U.S. Where the Department must base the compared model-specific COPs to the inspection fees, U.S. warranty and entire dumping margin for a respondent reported home market prices less any servicing expenses, and U.S. product in an administrative review on facts applicable movement charges, rebates, liability insurance. Prices were reported otherwise available because that and direct selling expenses. net of value-added taxes (VAT) and, respondent failed to cooperate, section Pursuant to section 773(b)(2)(C), therefore, no adjustment for VAT was 776(b) of the Act authorizes the use of where less than 20 percent of necessary. an inference adverse to the interests of respondent’s sales of a given product In accordance with section 773(a)(4) that respondent in choosing the facts were at prices less than COP, we did not of the Act, we used CV as NV for those available. Section 776(b) of the Act also disregard any below-cost sales of that U.S. sales for which we could not authorizes the Department to use as product because we determined that the determine the NV based on home adverse facts available information below-cost sales were not made in market sales pursuant to section derived from the petition, the final ‘‘substantial quantities.’’ Where 20 773(a)(1) of the Act either because there determination, a previous percent or more of a respondent’s sales were no appropriate sales or because we administrative review, or other of a given product during the POR were disregarded below-cost sales pursuant to information placed on the record. Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64061

Section 776(c) of the Act provides that subject to the order, if the Department arguments. Rebuttal briefs, which must the Department shall, to the extent concludes under 19 CFR 353.22(f) that be limited to issues raised in the case practicable, corroborate that secondary Chun Kee and Manho, subsequent to briefs, may be filed not later than 37 information from independent sources revocation, sold merchandise at less days after the date of publication. The reasonably at its disposal. The than NV. Based on the preliminary Department will issue a notice of the Statement of Administrative Action results in this review and the two final results of this administrative (SAA) provides that ‘‘corroborate’’ preceding reviews (see Steel Wire Rope review, which will include the results of means simply that the Department will From the Republic of Korea; Final its analysis of issues raised in any such satisfy itself that the secondary Results of Antidumping Duty written comments or at the hearing, information to be used has probative Administrative Review, 60 FR 63499 within 120 days from the publication of value. (See H.R. Doc. 316, Vol. 1, 103d (December 11, 1995), and Steel Wire these preliminary results. Cong., 2d sess. 870 (1994).) Rope II Final), Chun Kee and Manho The Department shall determine, and To corroborate secondary information, have demonstrated three consecutive the Customs Service shall assess, the Department will, to the extent years of sales at not less than NV. antidumping duties on all appropriate practicable, examine the reliability and Given the results of the two preceding entries. The Department will issue relevance of the information to be used. reviews, if the final results of this appraisement instructions directly to However, unlike other types of review demonstrate that Chun Kee and the Customs Service. The final results of information, such as input costs or Manho sold the merchandise at not less this review shall be the basis for the selling expenses, there are no than NV, and if we determine that it is assessment of antidumping duties on independent sources for calculated not likely that Chun Kee and Manho entries of merchandise covered by the dumping margins. Thus, in an will sell the subject merchandise at less determination and for future deposits of administrative review, if the Department then NV in the future, we intend to estimated duties. For duty assessment chooses as total adverse facts available revoke the order with respect to purposes, we calculated an importer- a calculated dumping margin from a merchandise produced and exported by specific assessment rate by aggregating prior segment of the proceeding, it is not Chun Kee and Manho. the dumping margins calculated for all necessary to question the reliability of U.S. sales to each importer and dividing the margin for that time period. With Preliminary Results of Review this amount by the total quantity of respect to the relevance aspect of As a result of this review, we subject merchandise sold to each of the corroboration, however, the Department preliminarily determine that the respective importers. This specific rate will consider information reasonably at following margins exist for the period calculated for each importer will be its disposal as to whether there are March 1, 1995, through February 28, used for the assessment of antidumping circumstances that would render a 1996: duties on the relevant entries of subject margin not relevant. Where merchandise during the POR. circumstances indicate that the selected Furthermore, the following deposit Manufacturer/exporter Margin margin is not appropriate as adverse (percent) requirements will be effective upon facts available, the Department will completion of the final results of this disregard the margin and determine an Boo Kook Corporation ...... 1.51 administrative review for all shipments appropriate margin (see, e.g., Fresh Cut Chun Kee Steel & Wire Rope of steel wire rope from Korea entered, or Co., Ltd...... 0.01 Flowers from Mexico; Final Results of Chung Woo Rope Co., Ltd...... 0.24 withdrawn from warehouse, for Antidumping Duty Administrative Dong-Il Steel Manufacturing consumption on or after the publication Review, 61 FR 6812 (Feb. 22, 1996), Co., Ltd ...... 1.51 date of the final results of this where the Department disregarded the Hanboo Wire Rope, Inc...... 1.51 administrative review, as provided by highest margin as adverse best Kumho Wire Rope Mfg. Co., section 751(a)(1) of the Act: (1) the cash information available because the Ltd...... 0.01 deposit rate for the reviewed companies margin was based on another company’s Manho Rope & Wire, Ltd...... 0.00 will be the rates established in the final uncharacteristic business expense Myung Jin Co. 1 1.51. results of administrative review (except resulting in an unusually high margin). Seo Jin Rope ...... 1.51 that for companies whose weighted- In this case, we have used the highest Ssang Yong Steel Wire Co., average margins are less than 0.5 Ltd ...... 0.01 rate from any prior segment of the Sung Jin ...... 0.03 percent, i.e., are de minimis, no cash proceeding, 1.51 percent, as adverse Yeonsin Metal ...... 1.51 deposit will be required); (2) for facts available. This rate is the highest merchandise exported by manufacturers available rate and, to the best of our 1 No shipments subject to this review. Rate or exporters not covered in this review is from the last relevant segment of the pro- but covered in the original LTFV knowledge, there are no circumstances ceeding in which the firm had shipments/sales. that indicate that the selected margin is investigation or a previous review, the not appropriate as adverse facts Parties to the proceeding may request cash deposit will continue to be the available. disclosure within 5 days of the date of most recent rate published in the final publication of this notice. Any determination or final results for which Intent To Revoke interested party may request a hearing the manufacturer or exporter received Chun Kee and Manho requested, within 10 days of publication. Any an individual rate; (3) if the exporter is pursuant to 19 CFR 353.25(b), hearing, if requested, will be held 44 not a firm covered in this review, the revocation of the order with respect to days after the publication of this notice, previous review, or the original their sales of the merchandise in or the first workday thereafter. investigation, but the manufacturer is, question and submitted the certification Interested parties may submit case briefs the cash deposit rate will be the rate required by 19 CFR 353.25(b)(1). In within 30 days of the date of publication established for the most recent period addition, in accordance with 19 CFR of this notice. Parties who submit for the manufacturer of the 353.25(a)(2)(iii), Chun Kee and Manho argument in this proceeding are merchandise; and (4) if neither the have agreed in writing to their requested to submit with each exporter nor the manufacturer is a firm immediate reinstatement in the order, as argument: (1) a statement of the issues, covered in this or any previous reviews, long as any producer or reseller is and (2) a brief summary of the the cash deposit rate will be 1.51 64062 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices percent, the ‘‘all others’’ rate established telephone: Gayle Longest (202) 482– Department is conducting this in the LTFV investigation (58 FR 16398, 3338 or (202) 482–2786. administrative review in accordance March 26, 1993). with section 751(a) of the Act. SUPPLEMENTARY INFORMATION: This notice serves as a preliminary References to the Department’s reminder to importers of their Background Countervailing Duties; Notice of responsibility to file a certificate On October 4, 1985, the Department Proposed Rulemaking and Request for regarding the reimbursement of published in the Federal Register (50 Public Comments (54 FR 23366; May 31, antidumping duties prior to liquidation FR 48517) the countervailing duty order 1989) (1989 Proposed Regulations) are of the relevant entries during this on certain carbon steel products from provided solely for further explanation review period. Failure to comply with Sweden. On October 5, 1995, the of the Department’s countervailing duty this requirement could result in the Department published a notice of practice. Although the Department has Secretary’s presumption that ‘‘Opportunity to Request an withdrawn the particular rulemaking reimbursement of antidumping duties Administrative Review’’ (60 FR 52149) proceeding pursuant to which the 1989 occurred and the subsequent assessment of this countervailing duty order. We Proposed Regulations were issued, the of double antidumping duties. received timely requests for review, and subject matter of these regulations is being considered in connection with an This administrative review and notice we initiated the review, covering the ongoing rulemaking proceeding which, are in accordance with sections period January 1, 1994 through among other things, is intended to 751(a)(1) and 751(d) of the Act (19 December 31, 1994, on November 16, conform the Department’s regulations to U.S.C. 1675(a)(1)), 19 CFR 353.22, and 1995 (60 FR 57573). the URAA. See Advance Notice of 19 CFR 353.25. In accordance with section 355.22(a) Proposed Rulemaking for Public Dated: November 26, 1996. of the Department’s Interim Regulations, Comments, (60 FR 80; Jan. 3, 1995); this review covers only those producers Robert S. LaRussa, Antidumping Duties; Countervailing or exporters for which a review was Acting Assistant Secretary for Import Duties; Notice of Proposed Rulmaking specifically requested (see Antidumping Administration. and Request for Public Comments, (61 [FR Doc. 96–30755 Filed 12–2–96; 8:45 am] and Countervailing Duties: Interim FR 7308; February 27, 1996). BILLING CODE 3510±DS±P Regulations; Request for Comments, (60 FR 25130; May 11, 1995) (Interim Scope of the Review Regulations)). Accordingly, this review Imports covered by this review are [C±401±401] covers SSAB Svenskt Stal AB (SSAB), shipments of certain carbon steel the sole known producer/exporter of the products from Sweden. These products Certain Carbon Steel Products from subject merchandise during the period include cold-rolled carbon steel, flat- Sweden; Preliminary Results of of review (POR). This review also covers rolled products, whether or not Countervailing Duty Administrative 10 programs. corrugated, or crimped: whether or not Review On July 30, 1996, we extended the pickled, not cut, not pressed and not period for completion of the preliminary AGENCY: Import Administration, stamped to non-rectangular shape; not results pursuant to section 751(a)(3) of coated or pleated with metal and not International Trade Administration, the Tariff Act of 1930, as amended (see Department of Commerce. clad; over 12 inches in width and of any Certain Carbon Steel Products From thickness; whether or not in coils. ACTION: Notice of preliminary results of Sweden; Extension of Time Limit for During the review period, such countervailing duty administrative Countervailing Duty Administrative merchandise was classifiable under the review. Review (61 FR 39632). As explained in Harmonized Tariff Schedule (HTS) item the memoranda from the Assistant SUMMARY: The Department of Commerce numbers 7209.11.0000, 7209.12.0000, Secretary for Import Administration to (the Department) is conducting an 7209.13.0000, 7209.21.0000, the File, dated November 22, 1995, and administrative review of the 7209.22.0000, 7209.23.0000, January 11, 1996 (both on file in the countervailing duty order on certain 7209.24.5000, 7209.31.0000, public file of the Central Records Unit, carbon steel products from Sweden. For 7209.32.0000, 7209.33.0000, Room B–099 of the Department of information on the net subsidy for the 7209.34.0000, 7209.41.0000, Commerce), all deadlines were extended reviewed company, as well as for any 7209.43.0000, 7209.44.0000, to take into account the partial non-reviewed companies, please see the 7209.90.0000, 7211.30.5000, shutdowns of the Federal Government Preliminary Results of Review section of 7211.41.7000 and 7211.49.5000. The from November 15 through November this notice. If the final results remain written description remains dispositive. 21, 1995, and December 15, 1995, the same as these preliminary results of through January 6, 1996. Therefore, the Allocation Methodology administrative review, we will instruct deadline for these preliminary results is In the past, the Department has relied the U.S. Customs Service to assess no later than November 27, 1996, and upon information from the U.S. Internal countervailing duties as detailed in the the deadline for the final results of this Revenue Service on the industry- Preliminary Results of Review section of review is no later than 120 days from specific average useful life of assets in this notice. Interested parties are invited the date on which these preliminary determining the allocation period for to comment on these preliminary results are published in the Federal nonrecurring grant benefits. See General results. Register. Issues Appendix appended to Final EFFECTIVE DATE: December 3, 1996. Countervailing Duty Determination; FOR FURTHER INFORMATION CONTACT: Applicable Statute and Regulations Certain Steel Products from Austria (58 Gayle Longest or Lorenza Olivas, Office Unless otherwise indicated, all FR 37063, 37226; July 9, 1993). of CVD/AD Enforcement, Import citations to the statute are references to However, in British Steel plc. v. United Administration, International Trade the provisions of the Tariff Act of 1930, States, 879 F. Supp. 1254 (CIT 1995) Administration, U.S. Department of as amended by the Uruguay Round (British Steel), the U.S. Court of Commerce, 14th Street and Constitution Agreements Act (URAA) effective International Trade (the Court) ruled Avenue, N.W., Washington, D.C. 20230; January 1, 1995 (the Act). The against this allocation methodology. In Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64063 accordance with the Court’s remand in 1989. During the review period, benefit stream of the subsidies at the order, the Department calculated a SSAB was completely privatized. time of the sale of the shares. Next, we company-specific allocation period for In Final Affirmative Countervailing estimated the portion of the purchase nonrecurring subsidies based on the Duty Determinations: Certain Steel price which represents repayment of average useful life (AUL) of non- Products from Sweden (58 FR 37385; prior subsidies in accordance with the renewable physical assets. This remand July 9, 1993) (Final Determination), the methodology described in the determination was affirmed by the Court Department found that SSAB had ‘‘Privatization’’ section of the General on June 4, 1996. British Steel, 929 F. received countervailable subsidies prior Issues Appendix (58 FR 37217, 37259). Supp. 426, 439 (CIT 1996). to the sale of the productive units and This amount was then subtracted from The Department has decided to the two partial privatizations. Further, the amount of the NPV eligible for acquiesce to the Court’s decision and, as the Department found that a private repayment, and the result was divided such, we intend to determine the party purchasing all or part of a by the NPV to calculate the ratio allocation period for nonrecurring government-owned company can repay representing the amount of subsidies subsidies using company-specific AUL prior subsidies on behalf of the remaining with SSAB. data where reasonable and practicable. company as part or all of the sales price To calculate the benefit provided to Specifically, the Department has (see General Issues Appendix (58 FR SSAB in the POR, where appropriate, preliminarily determined that it is 37217, 37262; July 9, 1993)). Therefore, we multiplied the benefit calculated for reasonable and practicable to allocate all to the extent that a portion of the sales 1994, adjusted for sales of productive new nonrecurring subsidies (i.e., price paid for a privatized company can units, by the ratio representing the subsidies that have not yet been be reasonably attributed to prior amount of subsidies remaining with assigned an allocation period) based on subsidies, that portion of those SSAB after privatization. We then a company-specific AUL. However, if a subsidies will be extinguished. divided the results by the company’s subsidy has already been countervailed To calculate a rate for the subsidies total sales in 1994. based on an allocation period that were allocated to the spin-off, i.e., established in an earlier segment of the a productive unit that was sold, we first Analysis of Programs proceeding, it does not appear determined the amount of the subsidies I. Programs Conferring Subsidies reasonable or practicable to reallocate attributable to each productive unit by that subsidy over a different period of dividing the asset value of that Programs Previously Determined to time. In other words, since the productive unit by the total asset value Confer Subsidies countervailing duty rate in earlier of SSAB in the year of the spin-off. We (1) Equity Infusions segments of the proceeding was then applied this ratio to the net present calculated based on a certain allocation value (NPV), in the year of the spin-off, In 1981, the Government of Sweden period and resulting benefit stream, of the future benefit streams from all of (GOS) provided equity capital to SSAB redefining the allocation period in later SSAB’s prior subsidies allocable to the totaling 1,125 million Swedish kronor segments of the proceeding would entail POR. The future benefit streams at the (MSEK). Simultaneously, Granges, a taking the original grant amount and time of the sale of each productive unit private company and the only other creating an entirely new benefit stream reflect the Department’s allocation over shareholder at the time, contributed 375 for that grant. Such a practice may lead time of prior subsidies to SSAB in MSEK. To persuade Granges to to an increase or decrease in the amount accordance with the declining balance contribute this equity capital, the GOS countervailed and, thus, would result in methodology (see section 355.49 of the guaranteed a specified sum to be paid to the possibility of over-countervailing or Department’s 1989 Proposed Granges in 1991. Because of this under-countervailing the actual benefit. Regulations), and reflect also the effect arrangement, we determined that the The Department has preliminarily of prior spin-offs of SSAB productive 375 MSEK paid by Granges was an determined that a more reasonable and units. equity infusion provided indirectly by accurate approach is to continue using We next estimated the portion of the the GOS, through Granges, specifically the allocation period first assigned to purchase price which represents to SSAB. See Final Determination (58 the subsidy. We invite the parties to repayment of prior subsidies by FR 37385, 37387). comment on the selection of this determining the portion of SSAB’s net In the Final Determination and in the methodology and provide any other worth that was accounted for by final determination from a previous reasonable and practicable approaches subsidies. To do that, we divided the investigation of Swedish steel, Final for complying with the Court’s ruling. face value of the allocable subsidies Affirmative Countervailing Duty In the current review, there are no received by SSAB in each year from Determinations; Certain Carbon Steel new subsidies. All of the nonrecurring fiscal year 1979 through fiscal year 1993 Products from Sweden (50 FR 33377; grants under review were provided prior by SSAB’s net worth in the same year. August 19, 1985) (Final Certain Carbon to the POR; allocation periods for these We calculated a simple average of these Steel Products), we determined that grants were established during prior ratios, which was then multiplied by the SSAB was unequityworthy in 1981 segments of this proceeding. Therefore, purchase price of the productive unit. when it received the equity infusions, for purposes of these preliminary Thus, we determined the amount of the and that the two equity infusions are results, the Department is using the purchase price which represents therefore countervailable. There has original allocation period assigned to repayment of prior subsidies. This been no new information or evidence of each grant. amount was subtracted from the changed circumstances in this review to subsidies attributed to the productive warrant reconsideration of this Privatization and Sale of Assets to unit at the time of sale to arrive at the determination. Other Companies amount of subsidies allocated to the In accordance with the ‘‘Equity’’ SSAB is the only Swedish company productive unit being spun-off. section of the General Issues Appendix, that produces and exports the subject To calculate the subsidies remaining we treated the equity infusions as merchandise. SSAB has sold several with SSAB after privatization, we grants. To calculate the benefit from productive units and the company was performed the following calculations. these equity infusions for the POR, we partially privatized twice, in 1987 and We first calculated the NPV of the future used the grant methodology as 64064 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices described in the ‘‘Allocation previously established in the Final development loans and grants to Methodology’’ section above. Because Determination. Swedish industries for R&D purposes. the Department determined in the Final We reduced the benefit attributable to One type of R&D loan (industrial Determination that the infusions are the POR from the fixed-rate structural development loans) is mostly aimed at non-recurring subsidies, we have loan according to the methodology ‘‘new’’ industries such as the allocated the subsidies over 15 years, as outlined in the ‘‘Privatization’’ section biotechnical, electronic, and medical discussed in the ‘‘Allocation above. We then aggregated the benefits industries. Another type of R&D loan Methodology’’ section above. As the for the three loans (fixed interest rate (energy efficiency loans) is directed discount rate, we have used SSAB’s and variable interest rate) and divided towards big energy consumers. company-specific interest rate on fixed- the results by SSAB’s total sales for rate long-term loans (see 1994. On this basis, we preliminarily The loans accrue interest equal to the § 355.49(b)(2)(i) of the 1989 Proposed determine the net subsidy from the official ‘‘discount’’ rate plus a premium Regulations). three structural loans to be 0.27 percent of 3.75 percent. However, no interest or We reduced the benefit from these ad valorem. principal payments are due until the R&D project is completed. If, upon equity infusions attributable to the POR (3) Forgiven Reconstruction Loans according to the methodology outlined completion of a project, the company in the ‘‘Privatization’’ section above. We The GOS provided reconstruction wishes to use the research results for then divided the result by SSAB’s total loans to SSAB between 1979 and 1985 commercial purposes, the loan must be sales for 1994. On this basis, we to cover operating losses, investment in repaid. On the other hand, if the preliminarily determine the net subsidy certain plants and equipment, and for company decides not to utilize the for equity infusions to be 0.53 percent employment promotion purposes. The results and, therefore, does not claim ad valorem. loans were interest free for three years, proprietary treatment for the results, after which a fixed interest rate was (2) Structural Loans NUTEK will forgive the loan and the charged. According to the terms of the results of the research become publicly Under three separate pieces of loans, up to half of the outstanding available. legislation, SSAB received structural amount of the loan can be written off SSAB had several R&D loans loans for investment in plant and after the second calendar year following outstanding during the POR on which it equipment. The loans were disbursed in the disbursement. The remainder of the installments between 1978 and 1983. loan can be written off entirely at the did not make either principal or interest All three loans were outstanding during end of the ninth calendar year after payments. However, under our current the POR. disbursement. Pursuant to the terms of practice, we cannot determine whether According to the terms of the loans, the reconstruction loans, the GOS wrote SSAB has received a countervailable all three structural loans were interest- off large portions of principal and benefit until the research is completed free for three years from the date of accrued interest on these loans between and they will be able to submit disbursement. After that time, one loan 1980 and 1990. information demonstrating that the incurred interest at a fixed rate of five In the Final Determination and in research results are publicly available. It percent per annum while the other two Final Certain Carbon Steel Products, we is only upon completion that it will be loans incurred interest at a variable rate determined that forgiveness of these known (1) whether the loans are subject to change every five years. The loans is countervailable. There has been forgiven and (2) if the loans are not variable interest rate on these two loans no new information or evidence of forgiven, whether the accrued interest is is set at the rate of the long-term changed circumstances in this review to less than what would accrue if the loans government bonds plus a 0.25 percent warrant reconsideration of this are provided at commercial rates. See margin. After a five-year grace period, determination. Final Determination (58 FR 37385, the principal is repaid in 20 equal To calculate the benefit, we treated 37390). Therefore, we will continue to installments at the end of each calendar the written-off portions of the examine these R&D loans in future reconstruction loans as countervailable year. administrative reviews. In Final Determination and in Final grants received in the years the loans As explained above, NUTEK may Certain Carbon Steel Products, we were forgiven and calculated the benefit forgive R&D loans if the companies determined that these loans are using the grant methodology as receiving them disseminate publicly the countervailable because they were described in the ‘‘Allocation provided specifically to SSAB on terms Methodology’’ section above. We results of the research financed by the inconsistent with commercial reduced the benefits from these grants loans. The Department’s current considerations. There has been no new attributable to the POR according to the practice is to treat forgiven R&D loans as information or evidence of changed methodology outlined in the non-countervailable if the research circumstances in this review to warrant ‘‘Privatization’’ section above. We then results are publicly available. See Final reconsideration of this determination. divided the results by SSAB’s total sales Determination (58 FR 37385, 37390). To calculate the benefit from the for 1994. On this basis, we preliminarily During the POR, three such loans to fixed-rate structural loan, we employed determine the net subsidy from the SSAB were forgiven. Official the long-term loan methodology three forgiven reconstruction loans to be documentation from NUTEK, provided described in section 355.49(c)(1) of the 1.18 percent ad valorem. in the questionnaire response, indicates 1989 Proposed Regulations. To calculate II. Program Preliminarily Determined that the results of these research projects the benefits from the two variable-rate Not to Confer Subsidies for which these three loans were made loans, we used the variable-rate long- to SSAB were made publicly available. term loan methodology described in (1) Research & Development (R&D) On this basis, we preliminarily section 355.49(d)(1) of the 1989 Loans and Grants determine that these three forgiven R&D Proposed Regulations. As the discount The Swedish National Board for loans did not confer countervailable rate, we used SSAB’s company-specific Industrial and Technical Development benefits on the subject merchandise long-term interest rates, a benchmark (NUTEK) provides research and during the POR. Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64065

(2) Fund for Industry and New Business company with the amount of interest Preliminary Results of Review R&D that the company would have paid on In accordance with section SSAB reported in its questionnaire a similar loan provided at the benchmark rates, and we factored into 355.22(c)(4)(ii) of the Department’s response that SSAB Oxelosund, a Interim Regulations, we calculated an subsidiary, received a conditional the calculation the period of time in which the interest payment was in individual subsidy rate for each repayment R&D loan from the Fund for producer/exporter subject to this Industry and New Business (the Fund). arrears. We found that the amount paid administrative review. For the period The Fund provides project financing by the company was slightly lower than January 1, 1994 through December 31, to firms with a budget of at least two the amount that would have been paid million Swedish kroner (MSEK), and at the commercial benchmark rate. 1994, we preliminarily determine the start-up loans to new ‘‘limited’’ However, the subsidy rate that would be net subsidy for SSAB to be 1.98 percent companies. Projects are financed attributable to this loan is 0.00002 ad valorem. If the final results of this through (1) conditional repayment percent ad valorem. A rate this small review remain the same as these loans, (2) capital in return for royalty, would not change the overall subsidy preliminary results, the Department (3) project guarantees, and (4) credit rate for SSAB. Moreover, since the intends to instruct the U.S. Customs guarantees for developing new products, principal of the loan was entirely repaid Service (Customs) to assess processes and systems, and marketing. during the POR, the issue of the countervailing duties for SSAB at 1.98 The terms and conditions of the countervailability of the loan will not percent ad valorem. The Department financing depend on the type of arise in subsequent administrative also intends to instruct the Customs to financing provided. reviews. Since any benefit we would collect a cash deposit of 1.98 percent of In October 1992, the Fund approved calculate for the loan would not affect the f.o.b. invoice price on all shipments a 6–MSEK conditional repayment loan the overall subsidy rate during the POR of the subject merchandise from SSAB, for SSAB Oxelosund. Only 3 MSEK of and since there is no possibility of entered, or withdrawn from warehouse, the loan amount were disbursed. Under future benefits from this loan, we do not for consumption on or after the date of the terms of the loan, 50 percent of the consider it necessary to make a publication of the final results of this principal was to be paid at the end of determination on the specificity of this review. loan program and are not including it in 1994, with the remaining 50 percent to Because the URAA replaced the the calculation of these preliminary be paid at the end of 1995. The loan general rule in favor of a country-wide results. accrued interest from the date of rate with a general rule in favor of disbursement at a rate equal to the III. Programs Preliminarily Found to be individual rates for investigated and Central Bank’s ‘‘discount’’ rate, plus a 4 Not Used reviewed companies, the procedures for percent premium, paid quarterly, for the We also examined the following establishing countervailing duty rates, prior quarter. Because the base rate including those for non-reviewed changes quarterly, we have analyzed programs and preliminarily determine that SSAB did not apply for or receive companies, are now essentially the same this loan under our variable rate loan as those in antidumping cases, except as methodology. In Certain-Cut-to-Length benefits under them during the POR: A. Regional Development Grants provided for in section 777A(e)(2)(B) of Carbon Steel Plate from Sweden; the Act. The requested review will Preliminary Results of Countervailing B. Transportation Grants C. Location-of-industry Loans normally cover only those companies Duty Administrative Review (60 FR specifically named. Pursuant to 19 CFR 44017; August 24, 1995) (92/93 IV. Program Preliminarily Found to be 355.22(g), for all companies for which a Preliminary Results) and Certain-Cut-to- Terminated review was not requested, duties must Length Carbon Steel Plate from Sweden; Mining Exploration Grants be assessed at the cash deposit rate, and Final Results of Countervailing Duty cash deposits must continue to be Administrative Review (61 FR 5381; Between 1983 and 1985, SSAB collected, at the rate previously ordered. February 12, 1996) (92/93 Final received grants for exploration of new As such, the countervailing duty cash Results), the previous administrative mineral deposits in its Grangesberg deposit rate applicable to a company review of this order, we found that mines. In Final Determination, the can no longer change, except pursuant SSAB paid a higher interest rate for this Department found that these grants were to a request for a review of that loan than it would have paid at the countervailable, because they were company. See Federal-Mogul commercial benchmark rates. provided specifically to a group of Corporation and The Torrington Accordingly, we determined that the enterprises or industries (mining Company v. United States, 822 F.Supp. program did not confer a companies). The amounts received 782 (CIT 1993) and Floral Trade Council countervailable benefit on the subject under this program were less than 0.5 v. United States, 822 F.Supp. 766 (CIT merchandise during the POR. In this percent of the value of SSAB’s total 1993) (interpreting 19 CFR 353.22(e), review period, the entire outstanding sales for that year and were expensed in the antidumping regulation on principal and the accrued interest were the year of receipt in accordance with automatic assessment, which is the paid. the Allocation section of the General analogue to 19 CFR 355.22(g), the During the POR, SSAB made two Issues Appendix. interest payments on the loan. The first In June 1993, the mining exploration countervailing duty regulation on payment was in arrears and covered the grant program was terminated by the automatic assessment). Therefore, the last quarter of 1993; the second payment Government of Sweden under law SFS cash deposit rates for all companies was for interest accrued in 1994. 1993:693 which eliminated Na¨mnden except those covered by this review will Therefore, we selected benchmarks for fo¨r Statens Gruvegendom, the agency be unchanged by the results of this both 1993 and 1994, using the same that administered the program. No review. source for benchmarks established grants were given to SSAB under this We will instruct Customs to continue previously. See 92/93 Preliminary program after 1985 and there were no to collect cash deposits for non- Results and 92/93 Final Results. We residual benefits during the POR from reviewed companies at the most recent compared the interest paid by the grants previously bestowed. company-specific or country-wide rate 64066 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices applicable to the company. Accordingly, [C±401±804] are terminating this review of the the cash deposit rate that will be countervailing duty order on cut-to- applied to all non-reviewed companies Cut-to-Length Carbon Steel Plate From length carbon steel plate from Sweden. covered by this order is that established Sweden; Termination of Countervailing This notice is published in in the most recently completed Duty Administrative Review accordance with 19 CFR 355.22(a)(5). administrative proceeding. See Certain AGENCY: Import Administration, Dated: November 25, 1996. Carbon Steel Products From Sweden; International Trade Administration, Joseph A. Spetrini, Final Results of Countervailing Duty Department of Commerce. Deputy Assistant Secretary AD/CVD Administrative Review, 61 FR at 5378. ACTION: Notice of termination of Enforcement III. This rate shall apply to all non-reviewed countervailing duty administrative [FR Doc. 96–30752 Filed 12–2–96; 8:45 am] companies until a review of a company review. BILLING CODE 3510±DS±P assigned these rates is requested. In addition, for the period January 1, 1994 SUMMARY: On September 17, 1996 (61 through December 31, 1994, the FR 48885), in response to a request from [C±351±818] assessment rates applicable to all non- the petitioners, the Department of Cut-to-Length Carbon Steel Plate From reviewed companies covered by this Commerce (the Department) initiated an administrative review of the Brazil; Termination of Countervailing order are the cash deposit rates in effect Duty Administrative Review at the time of entry. countervailing duty order on cut-to- length carbon steel plate from Sweden. AGENCY: Import Administration, Public Comment In accordance with 19 CFR 355.22(a)(5) International Trade Administration, (Interim Regulations, 60 FR 25137; May Parties to the proceeding may request Department of Commerce. 11, 1995), the Department is now ACTION: Notice of termination of disclosure of the calculation terminating this review because methodology and interested parties may countervailing duty administrative petitioners have withdrawn their review. request a hearing not later than 10 days request for review. after the date of publication of this EFFECTIVE DATE: December 3, 1996. SUMMARY: On September 15, 1995 (60 notice. Interested parties may submit FOR FURTHER INFORMATION CONTACT: FR 47930), in response to a request from written arguments in case briefs on Gayle Longest or Lorenza Olivas, Office Usinas Siderurgicas de Minas Gerais, these preliminary results within 30 days S.A. (USIMINAS), the Department of of the date of publication. Rebuttal of CVD/AD Enforcement VI, Import Administration, International Trade Commerce (the Department) initiated an briefs, limited to arguments raised in Administration, U.S. Department of administrative review of the case briefs, may be submitted seven Commerce, 14th Street and Constitution countervailing duty order on cut-to- days after the time limit for filing the Avenue, NW., Washington, DC 20230; length carbon steel plate from Brazil. In case brief. Parties who submit written telephone: (202) 482–2786. accordance with 19 CFR 355.22(a)(5) arguments in this proceeding are (Interim Regulations, 60 FR 25137; May requested to submit with the argument SUPPLEMENTARY INFORMATION: 11, 1995), the Department is now (1) a statement of the issue and (2) a Background terminating this review because brief summary of the argument. Any USIMINAS has withdrawn its request hearing, if requested, will be held seven On August 30, 1996, the Department received a request for an administrative for review. days after the scheduled date for EFFECTIVE DATE: December 3, 1996. submission of rebuttal briefs. Copies of review of this countervailing duty order FOR FURTHER INFORMATION CONTACT: case briefs and rebuttal briefs must be from the petitioners, U.S. producers of the subject merchandise, for the period Stephanie Moore or Cameron Cardozo, served on interested parties in Office of CVD/AD Enforcement VI, accordance with 19 CFR 355.38(e). January 1, 1995, through December 31, 1995. No other interested party Import Administration, International Representatives of parties to the requested a review of the countervailing Trade Administration, U.S. Department proceeding may request disclosure of duty order. On September 17, 1996, the of Commerce, 14th Street and proprietary information under Department published in the Federal Constitution Avenue, NW., Washington, administrative protective order no later Register (61 FR 48885) a notice of DC 20230; telephone: (202) 482–2786. than 10 days after the representative’s ‘‘Initiation of Countervailing Duty SUPPLEMENTARY INFORMATION: client or employer becomes a party to Administrative Review’’ initiating the the proceeding, but in no event later administrative review of SSAB Svenskt Background than the date the case briefs, under Stal AB for that period. On November On August 29, 1996, the Department § 355.38(c), are due. The Department 19, 1996, the petitioners withdrew their received a request for an administrative will publish the final results of this request for review. review of this countervailing duty order administrative review, including the Section 355.22(a)(5) of the from USIMINAS, a Brazilian exporter of results of its analysis of issues raised in Department’s interim regulations the subject merchandise, for the period any case or rebuttal brief or at a hearing. stipulates that the Secretary may permit January 1, 1995, through December 31, This administrative review and notice a party that requests a review to 1995. No other interested party are in accordance with section 751(a)(1) withdraw the request not later than 90 requested a review of the countervailing of the Act (19 U.S.C. 1675(a)(1) and 19 days after the date of publication of the duty order. On September 15, 1995, the C.F.R. § 355.22(c)(5)). notice of initiation of the requested Department published in the Federal review. In this case, the petitioners have Register (60 FR 47930) a notice of Dated: November 25, 1996. withdrawn their request for review ‘‘Initiation of Countervailing Duty Robert S. LaRussa, within the 90-day period. No other Administrative Review’’ initiating the Acting Assistant Secretary for Import interested party requested a review and administrative review of USIMINAS for Administration. we have received no other submissions that period. On November 18, 1996, [FR Doc. 96–30754 Filed 12–2–96; 8:45 am] regarding the petitioners’ withdrawal of USIMINAS withdrew its request for BILLING CODE 3510±DS±P their request for review. Therefore, we review. Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64067

Section 355.22(a)(5) of the SUMMARY: The National Fire Protection approves the incorporation by reference Department’s regulations stipulates that Association (NFPA) proposes to revise of these standards under 5 U.S.C. 552(a) the Secretary may permit a party that some of its fire safety standards and and 1 CFR Part 51. requests a review to withdraw the requests proposals from the public to Request for Proposals request not later than 90 days after the amend existing NFPA fire safety date of publication of the notice of standards. The purpose of this request is Interested persons may submit initiation of the requested review. In to increase public participation in the amendments, supported by written data, this case, USIMINAS has withdrawn its system used by NFPA to develop its views, or arguments to Arthur E. Cote, request for review within the 90-day standards. P.E., Secretary, Standards Council, period. No other interested party The publication of this notice on NFPA, 1 Batterymarch Park, P.O. Box requested a review and we have behalf of NFPA is being undertaken as 9101, Quincy, Massachusetts 02269– received no other submissions regarding a public service; NIST does not 9101. Proposals should be submitted on USIMINAS’s withdrawal of its request necessarily endorse, approve, or forms available from the NFPA for review. Therefore, we a terminating recommend any of the standards Standards Administration Office. referenced in the notice. this review of the countervailing duty Each person must include his or her DATES: order on cut-to-length carbon steel plate Interested persons may submit name and address, identify the proposals on or before the dates listed from Brazil. document and give reasons for the with the standards. This notice is published in proposal. Proposals received before or accordance with 19 CFR 355.22(a)(5). ADDRESSES: Arthur E. Cote, P.E., by 5:00 PM local time on the closing Secretary, Standards Council, NFPA, 1 Dated: November 25, 1996. date indicated will be acted on by the Batterymarch Park, P.O. Box 9101, Committee. The NFPA will consider any Joseph A. Spetrini, Quincy, Massachusetts 02269–9101. Deputy Assistant Secretary for AD/CVD proposal that it receives on or before the FOR FURTHER INFORMATION CONTACT: date listed with the standard. Enforcement III. Arthur E Cote, P.E., Secretary, Standards [FR Doc. 96–30753 Filed 12–2–96; 8:45 am] Council, at above address, (617) 770– At a later date, each NFPA Technical BILLING CODE 3510±DS±M 3000. Committee will issue a report which will include a copy of written proposals SUPPLEMENTARY INFORMATION: that have been received and an account National Institute of Standards and Background of their disposition of by the NFPA Technology Committee as the Report on Proposals. The National Fire Protection Each person who has submitted a National Fire Codes: Request for Association (NFPA) develops fire safety written proposal will receive a copy of Proposals for Revision of Standards standards which are known collectively the report. as the National Fire Codes. Federal AGENCY: National Institute of Standards agencies frequently use these standards Authority: 15 U.S.G. 272. and Technology, Commerce. as the basis for developing Federal Dated: November 26, 1996. regulations concerning fire safety. Often, Samuel Kramer, ACTION: Notice of request for proposals. the Office of the Federal Register Associate Director.

Closing NFPA No. Proposal title date

NFPA 13±1996 ...... Installation of Sprinkler Systems ...... 1/02/98 NFPA 13D±1996 ... Installation of Sprinkler Systems in One- and Two-Family Dwellings and Manufactured Homes ...... 1/02/98 NFPA 22±1996 ...... Water Tanks for Private Fire Protection ...... 1/17/97 NFPA 30±1996 ...... Flammable and Combustible Liquids Code ...... 8/1/97 NFPA 30A±1996 .... Automotive and Marine Service Station Code ...... 8/1/97 NFPA 33±1995 ...... Spray Application Using Flammable or Combustible Materials ...... 8/1/97 NFPA 34±1995 ...... Dipping and Coating Processes Using Flammable or Combustible Liquids ...... 8/1/97 NFPA 35±1995 ...... Manufacture of Organic Coatings ...... 12/31/96 NFPA 43D±1994 ... Pesticides ...... 1/17/97 NFPA 45±1996 ...... Fire Protection for Laboratories Using Chemicals ...... 1/02/98 NFPA 52±1995 ...... Compressed Natural Gas (CNG) Vehicular Fuel Systems ...... 1/17/97 NFPA 54±1996 ...... National Fuel Gas Code ...... 1/02/98 NFPA 59A±1996 .... Liquefied Natural Gas (LNG) ...... 1/02/98 NFPA 61±1995 ...... Fires and Dust Explosions in Agricultural and Food Products Facilities ...... 1/02/98 NFPA 65±1993 ...... Processing and Finishing of Aluminum ...... 1/17/97 NFPA 70B±1994 .... Electrical Equipment Maintenance ...... 1/17/97 NFPA 72±1996 ...... National Fire Alarm Code ...... 1/02/98 NFPA 75±1995 ...... Electronic Computer/Data Processing Equipment ...... 7/18/97 NFPA 80±1995 ...... Fire Doors and Fire Windows ...... 1/17/97 NFPA 82±1994 ...... Incinerators and Waste and Linen Handling Systems and Equipment ...... 1/17/97 NFPA 86±1995 ...... Ovens and Furnaces ...... 1/02/98 NFPA 86C±1995 ... Industrial Furnaces Using a Special Processing Atmosphere ...... 1/02/98 NFPA 86D±1995 ... Industrial Furnaces Using Vacuum as an Atmosphere ...... 1/02/98 NFPA 88A±1995 .... Parking Structures ...... 1/17/97 NFPA 91±1995 ...... Exhaust Systems for Air Conveying of Materials ...... 7/18/97 NFPA 92B±1995 .... Smoke Management Systems in Malls, Atria, and Large Areas ...... 1/17/97 NFPA 99±1996 ...... Health Care Facilities ...... 6/1/97 NFPA 99B±1996 .... Hypobaric Facilities ...... 6/1/97 NFPA 101B±P * ..... Means of Egress Code ...... 1/17/97 NFPA 102±1995 .... Granstands, Folding and Telescopic Seating, Tents, and Membrane Structures ...... 4/4/97 NFPA 105±1993 .... Smoke-Control Door Assemblies ...... 1/17/97 64068 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

Closing NFPA No. Proposal title date

NFPA 110±1996 .... Emergency and Standby Power Systems ...... 7/18/97 NFPA 111±1996 .... Stored Electrical Energy Emergency and Standby Power Systems ...... 7/18/97 NFPA 220±1995 .... Types of Building Construction ...... 1/02/98 NFPA 231±1995 .... General Storage ...... 1/17/97 NFPA 231C±1995 Rack Storage of Materials ...... 1/17/97 NFPA 231D±1994 Storage of Rubber Tires ...... 1/17/97 NFPA 260±1994 .... Cigarette Ignition Resistance of Components of Upholstered Furniture ...... 1/17/97 NFPA 261±1994 .... Mock-Up Upholstered Furniture Material Assemblies to Ignition by Smoldering Cigarettes ...... 1/17/97 NFPA 262±1994 .... Fire and Smoke Characteristics of Wires and Cables ...... 1/17/97 NFPA 263±1994 .... Heat and Visible Smoke Release Rates for Materials and Products ...... 1/17/97 NFPA 264±1995 .... Heat and Visible Smoke Release Rates for Materials and Products Using an Oxygen Consumption Calo- 1/17/97 rimeter. NFPA 264A±1994 .. Heat Release Rates for Upholstered Furniture Components or Composites and Mattresses Using an Oxy- 1/17/97 gen Consumption Calorimeter. NFPA 285±P* ...... Evaluation of Flammability Characteristics of Exterior Non-Load Bearing Wall Assemblies Containing Com- 1/17/97 bustible Components Using the Intermediate Scale Multi-Story Test Apparatus. NFPA 295±1991 .... Wildfire Control ...... 1/17/97 NFPA 297±1995 .... Principles and Practices for Communications Systems ...... 1/17/97 NFPA 302±1994 .... Pleasure and Commercial Motor Craft ...... 1/17/97 NFPA 326±1993 .... Underground Storage Tanks ...... 1/02/98 NFPA 327±1993 .... Cleaning or Safeguarding Small Tanks and Containers Without Entry ...... 1/02/98 NFPA 328±1992 .... Flammable and Combustible Liquids and Gases in Manholes, Sewers, and Similar Underground Structures 1/02/98 NFPA 329±1992 .... Underground Releases of Flammable and Combustible Liquids ...... 1/02/98 NFPA 403±1993 .... Aircraft Rescue and Fire Fighting Services at Airports ...... 1/17/97 NFPA 412±1993 .... Aircraft Rescue and Fire Fighting Foam Equipment ...... 1/17/97 NFPA 430±1995 .... Liquid and Solid Oxidizers ...... 1/17/97 NFPA 480±1993 .... Magnesium Solids and Powders ...... 1/17/97 NFPA 481±1995 .... Titanium ...... 1/17/97 NFPA 490±1993 .... Ammonium Nitrate ...... 1/17/97 NFPA 496±1993 .... Purged and Pressurized Enclosures for Electrical Equipment ...... 1/17/97 NFPA 501C±1996 Recreational Vehicles ...... 7/18/97 NFPA 501D±1996 Recreational Vehicle Parks and Campgrounds ...... 7/18/97 NFPA 502±1996 .... Limited Access Highways, Tunnels, Bridges, Elevated Roadways, and Air Right Structures ...... 1/17/97 NFPA 505±1996 .... Powered Industrial Trucks Including Type Designations, Areas of Use, Conversions, Maintenance, and Op- 1/17/97 eration. NFPA 512±1994 .... Truck Fire Protection ...... 1/17/97 NFPA 513±1994 .... Motor Freight Terminals ...... 1/17/97 NFPA 550±1995 .... Fire Safety Concepts Tree ...... 1/17/97 NFPA 651±1993 .... Aluminum Powder ...... 1/17/97 NFPA 655±1993 .... Sulfur Fires and Explosions ...... 1/17/97 NFPA 664±1993 .... Wood Processing and Woodworking Facilities ...... 1/17/97 NFPA 701±1996 .... Fire Tests for Flame-Resistant Textiles and Films ...... 4/1/97 NFPA 906±1993 .... Fire Incident Field Notes ...... 1/17/97 NFPA 1002±1993 .. Fire Department Vehicle Dirver/Operator Professional Qualifications ...... 1/17/97 NFPA 1031±1993 .. Professional Qualifications for Fire Inspector ...... 1/17/97 NFPA 1033±1993 .. Professional Qualifications for Fire Investigator ...... 1/17/97 NFPA 1035±1993 .. Professional Qualifications for Public Fire and Life Safety Educator ...... 1/17/97 NFPA 1124±1995 .. Manufacture, Transportation, and Storage of Fireworks ...... 1/17/97 NFPA 1127±1995 .. High Power Rocketry ...... 1/17/97 NFPA 1221±1994 .. Public Fire Service Communication Systems ...... 1/17/97 NFPA 1231±1993 .. Water Supplies for Suburban and Rural Fire Fighting ...... 1/17/97 NFPA 1420±1993 .. Pre-Incident Planning for Warehouse Occupancies ...... 1/17/97 NFPA 1452±1993 .. Training Fire Service Personnel to Make Dwelling Fire Safety Surveys ...... 1/31/97 NFPA 1470±1994 .. Search and Rescue Training for Structural Collapse Incidents ...... 7/18/97 NFPA 1963±1993 .. Fire Hose Connections ...... 1/17/97 NFPA 1975±1994 .. Station/Work Uniforms for Fire Fighters ...... 6/27/97 NFPA 1991±1994 .. Vapor-Protective Suits for Hazardous Chemical Emergencies ...... 6/27/97 NFPA 1992±1994 .. Liquid Splash-Protective Suits for Hazardous Chemical Emergencies ...... 6/27/97 NFPA 1993±1994 .. Support Function Protective Clothing for Hazardous Chemical Operations ...... 6/27/97 NFPA 8502±1995 .. Furnace Explosions/Implosions in Multiple Burner Boilers ...... 7/18/97 NFPA 8506±1995 .. Heat Recovery Steam Generator Systems ...... 1/17/97 * Proposed NEW drafts are available from the NFPA Standards Administration Department, 1 Batterymarch Park, Ouincy, MA 02269.

[FR Doc. 96–30708 Filed 12–2–96; 8:45 am] National Fire Codes: Request for SUMMARY: The National Fire Protection BILLING CODE 3510±13±M Comments on NFPA Technical Association (NFPA) revises existing Committee Reports standards and adopts new standards twice a year. At its Fall Meeting in AGENCY: National Institute of Standards November or its Annual Meeting in and Technology, Commerce. May, the NFPA acts on ACTION: Notice of request for comments. recommendations made by its technical Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64069 committees. The purpose of this notice SUPPLEMENTARY INFORMATION: use only in Windows or Macintosh is to request comments on the technical Background environments). It will also be available reports which will be presented at in the traditional print version. NFPA’s 1997 Fall Meeting. Standards developed by the technical Commenters may use the forms The publication of this notice by the committees of the National Fire provided for comments in the Reports National Institute of Standards and Protection Association (NFPA) have on Proposals. Each person submitting a Technology (NIST) on behalf of NFPA is been used by various Federal Agencies comment should include his or her being undertaken as a public service; as the basis for Federal regulations name and address, identify the notice, NIST does not necessarily endorse, concerning fire safety. The NFPA and give reasons for any approve, or recommend any of the standards are known collectively as the recommendations. Comments received standards referenced in the notice. National Fire Codes. Often, the Office of on or before April 11, 1997, for the 1997 the Federal Register approves the DATES: Twenty-eight reports are Fall Meeting Report on Proposals, will published in the 1997 Fall Meeting incorporation by reference of these be considered by the NFPA before final Report on Proposals and will be standards under 5 U.S.C. 552(a) and 1 action is taken on the proposals. available on January 31, 1997. CFR Part 51. Copies of all written comments Comments received on or before April Revisions of existing standards and received and the disposition of those 11, 1997 will be considered by the adoption of new standards are reported comments by the NFPA committees will respective NFPA Committees before by the technical committees at the be published as the 1997 Fall Meeting final action is taken on the proposals. NFPA’s Fall Meeting in November or at Report on Comments by September 26, the Annual Meeting in May each year. 1997, prior to the Fall Meeting. ADDRESSES: The 1997 Fall Meeting The NFPA invites public comment on A copy of the Report on Comments Report on Proposals is available from its Report on Proposals. NFPA, Publications Department, 11 will be sent automatically to each Tracy Drive, Avon, MA 02322. Request for Comments commenter. Action on the reports of the Technical Committees (adoption or Comments on the reports should be Interested persons may participate in submitted to Arthur E. Cote, P.E., rejection) will be taken at the Fall the revisions of these technical reports Meeting, November 17–19, 1997, in Secretary, Standards Council, NFPA, 1 by submitting written data, views, or Batterymarch Park, P.O. Box 9101, Kansas City, Missouri, by NFPA arguments to Arthur E. Cote, P.E., members. Quincy, Massachusetts 02269–9101. Secretary, Standards Council, NFPA, 1 FOR FURTHER INFORMATION CONTACT: Batterymarch Park, P.O. Box 9101, Authority: 15 U.S.C. 272. Arthur E. Cote, P.E., Secretary, Quincy, Massachusetts 02269–9101. Dated: November 26, 1996. Standards Council, at above address, The 1997 Fall Report on Proposals will Samuel Kramer, (617) 770–3000. be available on CD–ROM (suitable for Associate Director.

1997 FALL MEETING: REPORT ON PROPOSALS [P = Partial revision; W = Withdrawal; R = Reconfirmation; N = New; C = Complete Revision]

Doc. No. Title Action

NFPA 10±1994 ...... Standard for Portable Fire Extinguishers ...... P NFPA 10R±1992 .... Recommended Practice for Portable Fire Extinguishing Equipment in Family Dwellings and Living Units ...... W NFPA 12±1993 ...... Standard on Carbon Dioxide Extinguishing Systems ...... P NFPA 17±1994 ...... Standard for Dry Chemical Extinguishing Systems ...... P NFPA 17A±1994 .... Standard for Wet Chemical Extinguishing Systems ...... P NFPA 25±1995 ...... Standard for the Inspection, Testing, and Maintenance of Water-Based Fire Protection Systems ...... P NFPA 37±1994 ...... Standard for the Installation and Use of Stationary Combustion Engines and Gas Turbines ...... P NFPA 55±1993 ...... Standard for the Storage, Use, and Handling of Compressed and Liquefied Gases in Portable Cylinders ...... P NFPA 58±1995 ...... Standard for the Storage and Handling of Liquefied Petroleum Gases ...... P NFPA 59±1995 ...... Standard for the Storage and Handling of Liquefied Petroleum Gases at Utility Gas Plants ...... P NFPA 68±1994 ...... Guide for Venting of Deflagrations ...... P NFPA 101A±1995 .. Guide on Alternative Approaches to Life Safety ...... P NFPA 160±P * ...... Standard for the Use of Flame Special Effects Before a Proximate Audience ...... N NFPA 256±1993 .... Standard Methods of Fire Tests of Roof Coverings ...... P NFPA 259±1993 .... Standard Test Method for Potential Heat of Building Materials ...... C NFPA 266±1994 .... Standard Method of Test for Fire Characteristics of Upholstered Furniture Exposed to Flaming Ignition Source ..... P NFPA 267±1994 .... Standard Method of Test for Fire Characteristics of Mattresses and Bedding Assemblies Exposed to Flaming Ig- P nition Source. NFPA 301±P* ...... Code for Safety to Life From Fire on Merchant Vessels ...... N NFPA 650±1990 .... Standard for Pneumatic Conveying Systems for Handling Combustible Materials ...... C NFPA 720±P* ...... Recommended Practice for the Installation of Household Carbon Monoxide (CO) Warning Equipment ...... N NFPA 801±1995 .... Standard for Facilities Handling Radioactive Materials ...... C NFPA 802±1993 .... Recommended Practice for Fire Protection for Nuclear Research and Production Reactors ...... W NFPA 803±1993 .... Standard for Fire Protection for Light Water Nuclear Power Plants ...... P NFPA 921±1995 .... Guide for Fire and Explosion Investigations ...... P NFPA 1201±1994 .. Standard for Developing Fire Protection Services for the Public (will be renumbered NFPA 1200) ...... C NFPA 1962±1993 .. Standard for the Care, Use and Service Testing of Fire Hose, Including Couplings and Nozzles ...... P NFPA 1964±1993 .. Standard for Spray Nozzles (Shutoff and Tip) ...... C NFPA 8505±1992 .. Recommended Practice for Stoker Operation ...... P * Proposed NEW drafts are available from the NFPA Standards Administration Department, 1 Batterymarch Park, Quincy, MA 02269. [FR Doc. 96–30709 Filed 12–2–96; 8:45 am] BILLING CODE 3510±13±M 64070 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

National Oceanic and Atmospheric Dated: November 25, 1996. importing, and exporting of endangered Administration George H. Darcy, fish and wildlife (50 CFR 222.23), and Acting Director, Office of Sustainable the Fur Seal Act of 1966, as amended [I.D. 112596A] Fisheries, National Marine Fisheries Service. (16 U.S.C. 1151 et seq.). [FR Doc. 96–30760 Filed 12–2–96; 8:45 am] The applicant proposes to obtain Caribbean Fishery Management samples from all species of cetacea Council; Public Meeting BILLING CODE 3510±22±F (whales, porpoises and dolphins), AGENCY: National Marine Fisheries pinnipedia (seals and walrus), sirenia Service (NMFS), National Oceanic and DEPARTMENT OF THE INTERIOR (manatees and dugongs), and marine Atmospheric Administration (NOAA), and sea otters. Samples will be Commerce. Fish and Wildlife Service collected, imported, exported and re- ACTION: Notice of public meeting. [I.D. 111496B] imported from salvaged individuals that were: Directly taken in fisheries for such SUMMARY: The Caribbean Fishery Marine Mammals; Scientific Research animals in countries and situations Management Council (Council) and its Permit (P772#70) where such taking is legal; killed Administrative Committee will hold incidental to fishing or other operations; meetings. AGENCY: National Marine Fisheries found dead at sea or beached; found Service (NMFS), National Oceanic and DATES: The meetings will be held on dead of natural causes; and/or collected Atmospheric Administration (NOAA), December 11–12, 1996. from captive animals. Commerce. ADDRESSES: All meetings will be held at Documentation is available at the ACTION: Receipt of application. the Ponce Hilton Hotel, Ponce, Puerto following locations: Rico. SUMMARY: Notice is hereby given that Permits Division, Office of Protected Council Address: Caribbean Fishery the Southwest Fisheries Science Center, Resources, NMFS, 1315 East-West Management Council, 268 Mun˜ oz NMFS, P.O. Box 271, La Jolla, CA Highway, Room 13130, Silver Spring, Rivera Avenue, Suite 1108, San Juan, PR 92038–0271, has applied in due form for MD 20910 (301/713–2289); 00918–2577. a permit to take all species of cetacea, Regional Administrator, Southwest FOR FURTHER INFORMATION CONTACT: pinnipedia, sirenia and marine and sea Region, NMFS, 501 West Ocean Caribbean Fishery Management Council; otters for purposes of scientific research. Boulevard, Suite 4200, Long Beach, CA telephone: (787) 766–5926. DATES: Written comments must be 90802–4213 (310/980–4001); Regional Administrator, Northwest SUPPLEMENTARY INFORMATION: The received on or before January 2, 1997. Region, NMFS, 7600 Sand Point Way Council will hold its 90th regular public ADDRESSES: The application and related NE, Bin C15700, Seattle Washington meeting to discuss the Third documents are available for review 98115–0070 (206/526–6150); Amendment to the Reef Fish Fishery upon written request or by appointment. Management Plan, and the Queen See SUPPLEMENTARY INFORMATION for Regional Administrator, Northeast Conch Survey, among other topics. addresses. Region, NMFS, One Blackburn Drive, The Council will convene on Written data or views, or requests for Gloucester, MA 01930–2298 (508/281– December 11, 1996, from 9:00 a.m. to a public hearing on this request, should 9250); 5:00 p.m., and December 12, 1996, from be submitted to the Director, Office of Regional Administrator, Southeast 9:00 a.m. to noon, approximately. Protected Resources, NMFS, 1315 East- Region, NMFS, 9721 Executive Center The Administrative Committee will West Highway, Room 13130, Silver Drive North, St. Petersburg, FL 33702– meet on December 10, 1996, from 2:00 Spring, MD 20910. Those individuals 2432 (813/570–5301); p.m. to 5:00 p.m., to discuss requesting a hearing should set forth the Regional Administrator, Alaska administrative matters regarding specific reasons why a hearing on this Region, P.O. Box 21668, Juneau, AK Council operation. particular request would be appropriate. 99802–1668 (907/586–7221); and The meetings are open to the public, Concurrent with the publication of U.S. Fish and Wildlife Service, 4401 and will be conducted in English. this notice in the Federal Register, N. Fairfax Drive, Room 432, Arlington, Fishers and other interested persons are NMFS is forwarding copies of this VA 22203 (1–800–358–2104). application to the Marine Mammal invited to attend and participate with Dated: November 14, 1996. oral or written statements regarding Commission and its Committee of Scientific Advisors. Ann D. Terbush, agenda issues. Chief, Permits and Documentation Division, SUPPLEMENTARY INFORMATION: The Special Accommodations Office of Protected Resources, National subject permit is requested under the Marine Fisheries Service. These meetings are physically authority of the Marine Mammal accessible to people with disabilities. Protection Act of 1972, as amended (16 Dated: November 14, 1996. For more information or requests for U.S.C. 1361 et seq.), the Regulations Margaret Tieger, sign language interpretation and/or Governing the Taking and Importing of Chief, Branch of Permits, Office of other auxiliary aids please contact Mr. Marine Mammals (50 CFR part 216), the Management Authority, Fish and Wildlife Miguel A. Rolo´n, Executive Director, Endangered Species Act of 1973, as ervice. (see ADDRESSES) at least 5 days prior to amended (ESA; 16 U.S.C. 1531 et seq.), [FR Doc. 96–30761 Filed 12–2–96; 8:45 am] the meeting date. the regulations governing the taking, BILLING CODE 3510±22±F Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64071

COMMODITY FUTURES TRADING CONTACT PERSON FOR MORE INFORMATION: PLACE: 1155 21st St., N.W., Washington, COMMISSION Jean A. Webb, 202–418–5100. D.C. 9th Fl. Conference Room. Jean A. Webb, STATUS: Closed. Sunshine Act Meeting Secretary of the Commission. MATTERS TO BE CONSIDERED: Surveillance TIME AND DATE: 10:00 a.m., Thursday, [FR Doc. 96–30845 Filed 11–29–96; 10:15 Matters. December 19, 1996. am] CONTACT PERSON FOR MORE INFORMATION: PLACE: 1155 21st St., N.W., Washington, BILLING CODE 6351±01±M Jean A. Webb, 202–418–5100. D.C., 9th Fl. Conference Room. Jean A. Webb, STATUS: Closed. Sunshine Act Meeting Secretary of the Commission. MATTERS TO BE CONSIDERED: [FR Doc. 96–30849 Filed 11–29–96;10:15 am] Enforcement Matters. TIME AND DATE: 11:00 a.m., Friday, BILLING CODE 6351±01±M CONTACT PERSON FOR MORE INFORMATION: December 27, 1996. Jean A. Webb, 202–418–5100. PLACE: 1155 21st St., N.W., Washington, Jean A. Webb, D.C., 9th Fl. Conference Room. DEPARTMENT OF DEFENSE Secretary of the Commission. STATUS: Closed. Department of Navy, DoD [FR Doc. 96–30842 MATTERS TO BE CONSIDERED: Surveillance Filed 11–29–96; 10:15 am] Matters. Notice of Intent to Prepare an BILLING CODE 6351±01±M CONTACT PERSON FOR MORE INFORMATION: Environmental Impact Statement and Jean A. Webb, 202–418–5100. to Open Scoping for Developing Home Sunshine Act Meeting Jean A. Webb, Port Facilities for Three NIMITZ Class Secretary of the Commission. Nuclear-Powered Aircraft Carriers in TIME AND DATE: 2:00 p.m., Monday, [FR Doc. 96–30846 Filed 11–29–96; 10:15 Support of the United States Pacific December 16, 1996. am] Fleet PLACE: 1155 21st St., N.W., Washington, BILLING CODE 6351±01±M SUMMARY: Pursuant to Section 102(2)(c) D.C. 9th Fl. Conference Room. of the National Environmental Policy STATUS: Closed Sunshine Act Meeting Act (NEPA) of 1969, as implemented by MATTERS TO BE CONSIDERED: the Council on Environmental Quality Adjudicatory Matters. TIME AND DATE: 11:00 a.m., Friday, Regulations (40 CFR Parts 1500–1508), CONTACT PERSON FOR MORE INFORMATION: December 20, 1996. the Department of the Navy announces Jean A. Webb, 202–418–5100. PLACE: 1155 21st St., NW., Washington, its intent to prepare an Environmental Jean A. Webb, D.C., 9th Fl. Conference Room. Impact Statement (EIS) and to open Secretary of the Commission. STATUS: Closed. scoping to evaluate the environmental [FR Doc. 96–30843 Filed 11–29–96; 10:15 effects associated with developing and MATTERS TO BE CONSIDERED: Surveillance am] operating home port facilities for three Matters. BILLING CODE 6351±01±M nuclear-powered aircraft carriers (CVNs) CONTACT PERSON FOR MORE INFORMATION: in support of the U.S. Pacific Fleet. Jean A. Webb, 202–418–5100. The scope of the proposed action is Sunshine Act Meeting Jean A. Webb, to: (1) determine the appropriate home Secretary of the Commission. port for two CVNs that will replace two TIME AND DATE: 2:00 p.m., Tuesday, conventionally-powered aircraft carriers December 10, 1996. [FR Doc. 96–30847 Filed 11–29–96; 10:15 am] (CVs) that are currently homeported at PLACE: 1155 21st St., N.W., Washington, BILLING CODE 6351±01±M Naval Air Station (NAS) North Island in D.C. Lobby Level Hearing Room located the Naval Complex San Diego, CA, and at Room 1000. (2) reevaluate the current location of one STATUS: Open. Sunshine Act Meeting CVN homeport at Naval Station MATTERS TO BE CONSIDERED: Proposed (NAVSTA) Everett in order to increase TIME AND DATE: 11:00 a.m., Friday, amendment to Regulation 1.41; Update efficiency of support infrastructure, December 13, 1996. on Commission activities. maintenance, and repair capabilities, to CONTACT PERSON FOR MORE INFORMATION: PLACE: 1155 21st St., N.W., Washington, reduce costs, and to enhance crew Jean A. Webb, 202–418–5100. D.C. 9th Fl. Conference Room. quality of life. Decisions for facilities Jean A. Webb, STATUS: Closed. development need to be made as soon Secretary of the Commission. MATTERS TO BE CONSIDERED: Surveillance as possible to accommodate planned [FR Doc. 96–30844 Filed 11–29–96; 10:15 Matters. arrival schedules of the CVNs to the am] CONTACT PERSON FOR MORE INFORMATION: Pacific Fleet (one as early as 2001) and BILLING CODE 6351±01±M Jean A. Webb, 202–418–5100. to gain infrastructure benefits prior to Jean A. Webb, upcoming ship maintenance periods (commencing in 1999). These schedules Secretary of the Commission. Sunshine Act Meeting are now sufficiently clarified to allow [FR Doc. 96–30848 Filed 11–29–96; 10:15 Navy to proceed with the proposed am] TIME AND DATE: 2:00 p.m., Monday, actions at this time. December 9, 1996. BILLING CODE 6351±01±M There are three major U.S. areas of PLACE: 1155 21st St., N.W., Washington, Navy concentration in the Pacific: San D.C. 9th Fl. Conference Room. Sunshine Act Meeting Diego, CA complex; Puget Sound, WA STATUS: Closed. complex; and Pearl Harbor, HI complex. MATTERS TO BE CONSIDERED: TIME AND DATE: 11:00 a.m., Friday, Naval Air Station (NAS) North Island in Adjudicatory Matters. December 6, 1996. the San Diego Naval Complex and Puget 64072 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

Sound Naval Shipyard (PSNS) these proposed actions. Public meetings Engineer District (MED) and the Atomic Bremerton and NAVSTA Everett in the to receive oral comments from the Energy Commission (AEC). Radiological Pacific Northwest are currently public will be held in the four primary surveys show that the property now designated as CVN home ports. All three areas of consideration (San Diego, CA; meets applicable requirements for use locations will be considered as Bremerton, WA; Everett, WA; and without radiological restrictions, and alternative locations for the proposed Honolulu, HI) in January and February the docket related to cleanup activities actions. Although not currently 1997. These meetings will be is now available. designated as a CVN home port, Pearl announced in the Federal Register and ADDRESSES: The docket is available Harbor is capable of accommodating in local area newspapers. Navy from: deep-draft ships and will also be representatives will be available at the Public Reading Room, Room 1E–190, evaluated as a potential home port. scoping meetings to receive comments Forrestal Building, U.S. Department of The 1993 Defense Base Closure and from the public regarding issues of Energy, 1000 Independence Avenue, Realignment Commission concern. A brief presentation describing S.W., Washington, D.C. 20585 recommended, and the President and the proposed actions and the NEPA Congress directed the closure of NAS process will precede a request for public Public Document Room, Oak Ridge Alameda, CA (scheduled for 1997), and comments. It is important that federal, Operations Office, U.S. Department of the relocation of two CVNs to fleet state, and local agencies, as well as Energy, 200 Administration Road, concentrations in San Diego, CA, and in interested organizations and Oak Ridge, Tennessee 37831 the Pacific Northwest. Consequently, individuals, take this opportunity to Lane Public Library, 300 N. Third the Department of the Navy established identify environmental concerns that Street, Hamilton, Ohio 45011 homeporting capabilities for one they feel should be addressed during the FOR FURTHER INFORMATION CONTACT: nuclear-powered aircraft carrier at NAS preparation of the EIS. Agencies and the William E. Murphie, Acting Director, North Island in the San Diego Naval public are invited and encouraged to Office of Eastern Area Programs, Office Complex, CA (scheduled for completion provide written comments in addition of Environmental Restoration (EM–42), in 1998), and one nuclear-powered to, or in lieu of, oral comments at the U.S. Department of Energy, aircraft carrier at PSNS Bremerton, WA public meetings. To be most helpful, Germantown, Maryland 20874, (301) (which has now been implemented). scoping comments should clearly 903–2328 Fax: (301) 903–2385. The proposed actions do not involve a describe specific issues or topics that SUPPLEMENTARY INFORMATION: The reexamination of homeporting actions the commenter believes the EIS should Department of Energy (DOE), Office of directed by the 1993 Defense Base address. Written comments or questions Eastern Area Programs, the Formerly Closure and Realignment process. regarding the scoping process and/or the Utilized Sites Remedial Action Program As the proposed actions could result EIS should be postmarked no later than (FUSRAP) Team, has conducted in the aggregation of CVNs at PSNS 28 February 1997 and sent to the remedial at the Herring-Hall-Marvin Bremerton, consideration will be given following address. Safe Company site in Hamilton, Ohio, as to relocation of non-nuclear powered FOR FURTHER INFORMATION CONTACT: part of FUSRAP. The objective of the deep-draft Navy support ships currently Mr. Daniel Muslin (Code 03PL), program is to identify and remediate or homeported at PSNS Bremerton. Southwest Division, Naval Facilities otherwise control sites where residual The EIS will analyze the potential Engineering Command, 1220 Pacific radioactive contamination remains from environmental effects of the proposed Highway, San Diego, CA 92132–5190; activities carried out under contract to actions at the alternative locations telephone (619) 532–3403. the Manhattan Engineer District/Atomic discussed above, including any Dated: November 27, 1996. Energy Commission (MED/AEC) during associated facilities development and D.E. Koenig, the early years of the nation’s atomic dredging, and other reasonable energy program or from commercial alternatives identified during the public LCDR, JAGC, USN, Federal Register Liaison Officer. operations causing conditions that scoping process. Environmental issues Congress has authorized DOE to [FR Doc. 96–30721 Filed 12–2–96; 8:45 am] to be addressed in the EIS include: remedy. In June 1994, the site was geology, topography, and soils; BILLING CODE 3810±FF±M designated for cleanup under FUSRAP. dredging, hydrology, and water quality; The Herring-Hall-Marvin Safe pollution prevention; biology and Company, intermittently from the 1940s natural resources; noise; air quality; DEPARTMENT OF ENERGY to the early 1950s, machined natural land use; historic and archeological (not depleted or enriched) uranium resources; socioeconomics schools, and Certification of the Radiological Condition of the Herring-Hall-Marvin metal slugs from rolled stock under housing, transportation/circulation/ subcontract to prime MED contractors parking; public facilities and recreation; Safe Company Site in Hamilton, Ohio, 1995 Dupont and the University of Chicago. safety and environmental health; Records indicate that two work orders aesthetics; utilities; and environmental AGENCY: Office of Environmental were performed at the site in 1943 in justice. Issue analysis will include an Management, Department of Energy support of the MED and one in 1951 for evaluation of the direct, indirect, short- (DOE). the AEC. The uranium machining was term, and cumulative impacts ACTION: Notice of Certification. relatively small scale and appears to associated with the proposed actions. have been conducted during brief No decision to implement the proposed SUMMARY: DOE has completed remedial periods. The available records indicate actions will be made until the NEPA actions to decontaminate the Herring- that MED/AEC work performed at the process is complete. Hall-Marvin Safe Company site in site was discontinued by August 1951. ADDRESSES: The Department of the Navy Hamilton, Ohio. Formerly, the property The structure is a large, roughly will initiate a scoping process for the was found to contain quantities of rectangular building (approximately purpose of determining the scope of residual radioactive material resulting 300,000 ft2), constructed mostly of issues to be addressed and for from activities conducted by contractors concrete. The interior is primarily an identifying significant issues relative to for DOE’s predecessors, the Manhattan open design with few walls and a Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64073 support structure of columns and beams 1E–190 of the Forrestal Building, 1000 Fourth Revised Sheet Nos. 5 through 7 with cross braces. High bays are offset Independence Avenue, S.W., Sixteenth Revised Sheet No. 8 by rows of windows at the ceiling. Early Washington, D.C. 20585. Copies of the Eighteenth Revised Sheet No. 9 site documents used for the original certification docket will also be Fourth Revised Sheet Nos. 10 through 12 Fourth Revised Sheet Nos. 14 and 15 radiological survey noted that uranium available in the DOE Public Document Eighteenth Revised Sheet No. 16 was machined on lathes in the large Room, U.S. Department of Energy, Oak Sixth Revised Sheet No. 17A machine room on the first floor of this Ridge Operations Office, Oak Ridge, Twenty-first Revised Sheet No. 18 section of the building. A portion of the Tennessee, 37831, and in the Lane Third Revised Sheet No. 23 first floor is currently occupied by Public Library, 300 N. Third Street, Second Revised Sheet No. 33A Union Paper Company. The remainder Hamilton, Ohio, 45011. Third Revised Sheet No. 40 of the building is unoccupied and is DOE, through the Oak Ridge Second Revised Sheet No. 89 used for storage. Operations Office, Former Sites Second Revised Sheet No. 145 On August 29 and 30, 1988, and April Restoration Division, has issued the Second Revised Sheet No. 175 24, 1989, radiological surveys were following statement: Third Revised Sheet No. 180 conducted at the request of DOE and Fourth Revised Sheet No. 181 Statement of Certification: Herring- Second Revised Sheet No. 186 with the consent of the property owner. Third Revised Sheet No. 192 The results of the radiological surveys Hall-Marvin Safe Company Site in revealed no radionuclide concentrations Hamilton, Ohio Original Volume No. 2 in excess of the applicable DOE criteria DOE, Oak Ridge Operations Office, Title Page for air and soil on the first floor, and no Former Sites Restoration Division, has ANR states that this filing is being beta or gamma radiation above reviewed and analyzed the radiological made to implement the remaining background could be detected. data obtained following remedial action changes to its tariffs to conform with the Consequently, the site was eliminated at the Herring-Hall-Marvin Safe revisions made to Part 154 of the from consideration under FUSRAP. Company Site in Hamilton, Ohio. Based Commission’s regulations pursuant to Later interviews with individuals on analysis of all data collected, Order No. 582 and 582–A (‘‘Orders’’). formerly associated with the site including post-remedial action surveys, The Orders directed pipelines to revealed that uranium machining DOE certifies that any residual complete the revisions to their tariffs to operations for MED also occurred in the contamination on the site falls within reflect the changes by no later than southeastern corner of the building in a current guidelines for use without December 31, 1996. section with three floors, accessed by a radiological restrictions. This Any person desiring to be heard or to stairwell and an elevator. Uranium was certification of compliance provides protest this filing should file a motion machined on the third floor in a room assurance that reasonably foreseeable to intervene or protest with the Federal with concrete columns. Radiological future use of the site will result in no Energy Regulatory Commission, 888 surveys performed in 1988 and 1989 did radiological exposure above current First Street, N.E., Washington, D.C. not include that area of the building radiological guidelines established to 20426, in accordance with Sections because it has not been previously protect members of the general public as 385.214 and 385.211 of the identified as an area where uranium well as occupants of the site. Commission’s Rules and Regulations. operations had taken place. A third Property owned by William All such motions or protest must be radiological survey, conducted by Oak Burchfield, 1550 Grand Boulevard, filed in accordance with Section Ridge National Laboratory in 1993, Hamilton, Ohio 45011. 154.210 of the Commission’s identified uranium in portions of the Issued in Washington, D.C., on November Regulations. Protests will be considered floor and walls of the 9,000-square-foot 25, 1996. by the Commission in determining the third floor area. Also, it was determined James M. Owendoff, from historical records that MED and/or appropriate action to be taken, but will its agents exercised significant control Deputy Assistant Secretary for Environmental not serve to make protestants parties to Restoration. over the fabrication process and that the proceeding. Any person wishing to MED had an on-site representative [FR Doc. 96–30707 Filed 12–2–96; 8:45 am] become a party must file a motion to during some operations. In June 1993, BILLING CODE 6450±01±P intervene. Copies of this filing are on the property was designated for file with the Commission and are remedial action by FUSRAP. Remedial available for public inspection in the Federal Energy Regulatory action was conducted at the site from Public Inspection Room. Commission December 1994 to March 1995. Linwood A. Watson, Jr., Post-remedial action surveys have [Docket No. RP97±94±000] Acting Secretary. demonstrated and DOE has certified that [FR Doc. 96–30678 Filed 12–2–96; 8:45 am] the subject property is in compliance ANR Pipeline Co.; Notice of Proposed BILLING CODE 6717±01±M with DOE radiological decontamination Changes in FERC Gas Tariff criteria and standards. The standards November 26, 1996. are established to protect members of [Docket No. OA97±12±000] Take notice that on November 22, the general public and occupants of the 1996, ANR Pipeline Company (ANR) Central Vermont Public Service properties and to ensure that future use tendered for filing as part of its FERC Corporation; Notice of Filing of the properties will result in no Gas Tariff, Second Revised Volume No. radiological exposure above applicable November 26, 1996. 1 and Original Volume No. 2, the health-based guidelines. Accordingly, Take notice that on October 16, 1996, following tariff sheets, proposed to this property is released from FUSRAP. Central Vermont Public Service become effective December 1, 1996: The certification docket will be Corporation tendered for filing an available for review between 9:00 a.m. Second Revised Volume No. 1 amendment to its October 11, 1996 and 4:00 p.m., Monday through Friday Original Sheet No. 2A through 2J filing in the above-reference docket. (except Federal holidays) in the DOE First Revised Sheet No. 4 Any person desiring to be heard or to Public Reading Room located in Room Original Sheet Nos. 4A through 4J protest said filing should file a motion 64074 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices to intervene or protest with the Federal available for public inspection in the replace it with a statement indicating Energy Regulatory Commission, 888 public reference room. that the index is available on Texas First Street, NE., Washington, DC 20426, Linwood A. Watson, Jr., Eastern’s Electronic Bulletin Board in accordance with Rules 211 and 214 Acting Secretary. (EBB), and (2) update the title pages to of the Commission’s Rules of Practice [FR Doc. 96–30673 Filed 12–2–96; 8:45 am] reflect the correct person to whom and Procedure (18 CFR 385.211 and 18 BILLING CODE 6717±01±M communications regarding the tariff CFR 385.214). All such motions or should be sent. Texas Eastern states that protests should be filed on or before it is in compliance with the electronic December 6, 1996. Protests will be [Docket Nos. RP93±151±000, RP94±39, filing requirements of Section considered by the Commission in RP94±127, RP94±197, RP94±309, RP94±425, 284.106(c) of the Commission’s determining the appropriate action to be RP95±89, RP95±216, RP95±368, RP95±451, Regulations, regarding the posting of the RP96±85, RP96±195, RP96±297, RP97±7, taken, but will not serve to make RP93±148, RP95±62, RP96±73, RP94±222, current Index of Firm Customers on its protestants parties to the proceeding. RP94±202, and RP95±112] EBB in a downloadable format each Any person wishing to become a party calendar quarter and submitting the must file a motion to intervene. Copies Tennessee Gas Pipeline Company, electronic file to the Commission. of this filing are on file with the Notice of Customer Conference Accordingly, pursuant to Section Commission and are available for public 154.111(a) of the Commission’s inspection. November 26, 1996. Regulations, Texas Eastern is not Linwood A. Watson, Jr., Take notice that an informal customer required to provide an index of conference will be convened in this Acting Secretary. customers in its tariff. proceeding on Wednesday, December 4, [FR Doc. 96–30671 Filed 12–2–96; 8:45 am] Texas Eastern states that copies of the 1996, at 10:00 a.m., at the offices of the filing were served on firm customers of BILLING CODE 6717±01±M Federal Energy Regulatory Commission, Texas Eastern and interested state 888 First Street, N.E., Washington, DC, commissions. [Docket No. PR97±2±000] 20426, for the purpose of discussing the Any person desiring to be heard or to draft settlement of the above-referenced protest this filing should file a motion Teco Pipeline Company; Notice of dockets. to intervene or protest with the Federal Compliance of Petition for Rate Any party, as defined by 18 CFR Energy Regulatory Commission, 888 Approval 385.102(c), or any participant, as First Street, N.E., Washington, DC defined in 18 CFR 385.102(b), is invited 20426, in accordance with Sections November 26, 1996. to attend. Persons wishing to become a Take notice that on October 29, 1996, 385.214 and 385.211 of the party must move to intervene and Commission’s Rules and Regulations. Teco Pipeline Company (TECO) filed receive intervenor status pursuant to the with the Federal Energy Regulatory All such motions or protests must be Commission’s regulations (18 CFR filed in accordance with Section Commission a Petition for Rate 385.214). Approval Filed in Compliance With 154.210 of the Commission’s For additional information, contact Regulations. Protests will be considered Commission Order, requesting that the Donald Williams at (202) 208–0743 or Commission approve as fair and by the Commission in determining the Dennis H. Melvin at (202) 208–0042. appropriate action to be taken, but will equitable under 18 CFR 284.123(b)(2) its Lois D. Cashell, proposed rates for transportation service not serve to make protestants parties to Secretary. rendered pursuant to Section 311 of the the proceeding. Any person wishing to NGPA. [FR Doc. 96–30674 Filed 12–2–96; 8:45 am] become a party must file a motion to TECO seeks approval to charge cost- BILLING CODE 6717±01±M intervene. Copies of this filing are on justified rates, not to exceed 40 cents file with the Commission and are available for public inspection in the ($0.40) per MMBtu and 18 cents ($0.18) [Docket No. GT97±12±000] per MMBtu, for firm and interruptible Public Reference Room. NGPA § 311(a)(2) transportation Texas Eastern Transmission Linwood A. Watson, Jr., services, respectively, plus Corporation; Notice of Proposed Acting Secretary. reimbursement for all applicable third Changes in FERC Gas Tariff [FR Doc. 96–30668 Filed 12–2–96; 8:45 am] party transportation and/or gathering BILLING CODE 6717±01±M charges plus actual fuel. November 26, 1996. Any person desiring to be heard or to Take notice that on November 22, make a protest in this filing should file 1996, Texas Eastern Transmission [Docket No. OA96±140±000] Corporation (Texas Eastern) tendered for a motion to intervene or protest with the Tucson Electric Power Company; Federal Energy Regulatory Commission, filing as part of its FERC Gas Tariff, Sixth Revised Volume No. 1 and Notice of Informal Settlement 888 First Street N.E., Washington, D.C. Conference 20426, in accordance with Sections Original Volume No. 2, the following 385.214 and 385.211 of the tariff sheets to become effective November 26, 1996. Commission’s Rules of Practice and December 23, 1996: Take notice that an informal Procedures. All motions to intervene or Sixth Revised Volume No. 1 settlement conference will be convened protest should be filed by December 11, Title Page in this proceeding on Friday, December 1996. Protests will be considered by the Third Revised Sheet No. 1000 6, 1996, at 10:00 a.m., at the offices of Commission in determining the Third Revised Sheet Nos. 1001–1011 the Federal Energy Regulatory appropriate action to be taken, but will Commission, 888 First Street, N.E., Original Volume No. 2 not serve to make protestants parties to Washington, DC, for the purpose of the proceeding. Any person wishing to Title Page exploring the possible settlement of the become a party must file a motion to Texas Eastern states that the purpose above-referenced docket. intervene. Copies of this filing are on of this filing is to (1) delete the Index Any party, as defined by 18 CFR file with the Commission and are of Firm Customers from its tariff and 385.102(c), or any participant as defined Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64075 in 18 CFR 385.102(b), is invited to [Docket No. OA97±17±000] 2. Carolina Power & Light Company attend. Persons wishing to become a [Docket No. ER96–2941–000] party must move to intervene and Wisconsin Public Service Corporation; receive intervenor status pursuant to the Notice of Filing Take notice that on November 8, 1996, Carolina Power & Light Company Commission’s regulations (18 CFR November 26, 1996. 385.214). tendered for filing an amendment in the Take notice that on October 16, 1996, above-referenced docket. For additional information, please Wisconsin Public Service Corporation Comment date: December 6, 1996, in contact Betsy R. Carr (202) 208–1240 or (WPSC) tendered an informational filing accordance with Standard Paragraph E Stan Berman (202) 208–1159. applicable to its service agreement with at the end of this notice. Linwood A. Watson, Jr., the Oconto Electric Cooperative. Acting Secretary. Any person desiring to be heard or to 3. Commonwealth Edison Company [FR Doc. 96–30669 Filed 12–2–96; 8:45 am] protest said filing should file a motion [Docket No. ER97–470–000] to intervene or protest with the Federal BILLING CODE 6717±01±M Energy Regulatory Commission, 888 Take notice that on November 14, First Street, NE., Washington, DC 20426, 1996, Commonwealth Edison Company in accordance with Rules 211 and 214 (ComEd) submitted Amendment No. 3, [Docket No. OA96±171±000] of the Commission’s Rules of Practice dated September 1, 1996 to the Electric and Procedure (18 CFR 385.211 and 18 Coordination Agreement (ECA), dated The United Illuminating Company; CFR 385.214). All such motions or December 31, 1988, between Notice of Filing protests should be filed on or before Commonwealth Edison Company (ComEd) and the Village of Winnetka, November 26, 1996. December 6, 1996. Protests will be considered by the Commission in Illinois (Village). Amendment No. 3 Take notice that on November 4, determining the appropriate action to be establishes a new point of 1996, The United Illuminating Company taken, but will not serve to make interconnection. The Village has agreed (UI), tendered for filing proposed protestants parties to the proceeding. that effective September 1, 1996, the changes in its FERC Electric Tariff, Any person wishing to become a party original point of interconnection, now Original Volume No. 4 (Tariff), which it must file a motion to intervene. Copies designated the Northbrook filed on July 9, 1996 in Docket No. of this filing are on file with the Interconnection, will serve only as a OA96–171–000. In these changes, UI Commission and are available for public non-firm source of supply on a capacity proposes revisions to Schedules 1 and 3 inspection. available basis. Amendment No. 3 also revises Service Schedule E, Local of the Tariff. Linwood A. Watson, Jr., Facilities. The Commission has UI requests an effective date of July 9, Acting Secretary. previously designated the ECA as 1996 and has therefore requested that [FR Doc. 96–30672 Filed 12–2–96; 8:45 am] ComEd’s Rate Schedule FERC No. 37. the Commission waive its 60-day prior BILLING CODE 6717±01±M ComEd requests an effective date of notice requirement. Copies of the filing September 1, 1996, and accordingly were served upon all persons listed on seeks waiver of the Commission’s the official service compiled by the [Docket No. EG97±18±000, et al.] requirements. Copies of this filing were Secretary in Docket No. OA96–171–000, served upon the Village and the Illinois and upon Robert J. Murphy, Executive Edison Bataan Cogeneration Commerce Commission. Secretary, Connecticut Department of Corporation, et al.; Electric Rate and Comment date: December 9, 1996, in Public Utility Control, and McCallum Corporate Regulation Filings accordance with Standard Paragraph E Enterprises I Limited Partnership. November 25, 1996. at the end of this notice. Any person desiring to be heard or to Take notice that the following filings protest said filing should file a motion 4. Pennsylvania Power & Light have been made with the Commission. to intervene or protest with the Federal Company Energy Regulatory Commission, 888 1. Edison Bataan Cogeneration [Docket No. ER97–471–000] First Street, N.E., Washington, D.C. Corporation Take notice that on November 14, 20426, in accordance with Rules 211 [Docket No. EG97–18–000] 1996, Pennsylvania Power & Light and 214 of the Commission’s Rules of Company (PP&L), filed a Service Practice and Procedure (18 CFR 385.211 On November 12, 1996, Edison Bataan Cogeneration Corporation (‘‘Edison Agreement, dated October 30, 1996, and 18 CFR 385.214). All such motions with Atlantic Electric (Atlantic) for non- or protests should be filed on or before Bataan’’) filed with the Federal Energy Regulatory Commission firm point-to-point transmission service December 6, 1996. Protests will be under PP&L’s Open Access considered by the Commission in (‘‘Commission’’) an application for determination of exempt wholesale Transmission Tariff. The Service determining the appropriate action to be generator status pursuant to Part 365 of Agreement adds Atlantic as an eligible taken, but will not serve to make the Commission’s regulations. customer under the Tariff. protestants parties to the proceeding. PP&L requests an effective date of Any person wishing to become a party Edison Bataan is the owner and operator of a 58 MW eligible facility August 2, 1996, for the Service must file a motion to intervene. Copies Agreement. of this filing are on file with the located in Bataan on the island of PP&L states that copies of this filing Commission and are available for public Luzon, Republic of the Philippines. have been supplied to Atlantic and to inspection. Comment date: December 13, 1996, in accordance with Standard Paragraph E the Pennsylvania Public Utility Linwood A. Watson, Jr., at the end of this notice. The Commission. Acting Secretary. Commission will limit its consideration Comment date: December 9, 1996, in [FR Doc. 96–30670 Filed 12–2–96; 8:45 am] of comments to those that concern the accordance with Standard Paragraph E BILLING CODE 6717±01±M adequacy or accuracy of the application. at the end of this notice. 64076 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

5. Pennsylvania Power & Light Under the Transmission Service company agrees to provide services to Company Agreement, Northern Indiana Public PacifiCorp Marketing, Inc. under [Docket No. ER97–472–000] Service Company will provide Point-to- Northern Indiana Public Service Point Transmission Service to Entergy Company’s Power Sales Tariff, which Take notice that on November 14, Power Marketing Corporation pursuant was accepting for filing by the 1996, Pennsylvania Power & Light to the Transmission Service Tariff filed Commission and made effective by Company (PP&L), tendered for filing a by Northern Indiana Public Service Order dated August 17, 1995 in Docket Capacity and Energy Sales Agreement, Company in Docket No. ER96–1426–000 No. ER95–1222–000. Northern Indiana dated as of April 6, 1995, as and allowed to become effective by the Public Service Company and PacifiCorp supplemented between PP&L and Jersey Commission. Northern Indiana Public Power Marketing, Inc. request a waiver Central Power & Light Company Service Company, 75 FERC ¶ 61,213 of the Commission’s sixty-day notice (JCP&L), in compliance with § 35.12 of (1996). Northern Indiana Public Service requirement to permit an effective date the Regulations of the Federal Energy Company has requested that the Service of November 15, 1996. Regulatory Commission (FERC or the Agreement be allowed to become Copies of this filing have been sent to Commission), 18 CFR 35.12. effective as of November 15, 1996. the Indiana Utility Regulatory PP&L requests an effective date of Copies of this filing have been sent to Commission and the Indiana Office of June 1, 1997, for the Agreement. the Indiana Utility Regulatory Utility Consumer Counselor. PP&L states that copies of this filing Commission and the Indiana Office of Comment date: December 9, 1996, in have been supplied to JCP&L as well as Utility Consumer Counselor. accordance with Standard Paragraph E to the Pennsylvania Public Utility Comment date: December 9, 1996, in at the end of this notice. Commission and the New Jersey Board accordance with Standard Paragraph E 10. Northern Indiana Public Service of Public Utilities. at the end of this notice. Comment date: December 9, 1996, in Company accordance with Standard Paragraph E 8. Northern Indiana Public Service [Docket No. ER97–477–000] Company at the end of this notice. Take notice that on November 14, 6. Northern Indiana Public Service [Docket No. ER97–475–000] 1996, Northern Indiana Public Service Company Take notice that on November 14, Company, tendered for filing an 1996, Northern Indiana Public Service executed Service Agreement between [Docket No. ER97–473–000] Company, tendered for filing an Northern Indiana Public Service Take notice that on November 14, executed Service Agreement between Company and CNG Power Services 1996, Northern Indiana Public Service Northern Indiana Public Service Corporation. Company, tendered for filing an Company and Industrial Energy Under the Service Agreement, executed Standard Transmission Applications, Inc. Northern Indiana Public Service Service Agreement between Northern Under the Service Agreement, Company agrees to provide services to Indiana Public Service Company and Northern Indiana Public Service CNG Power Services Corporation under Carolina Power & Light Company. Company agrees to provide services to Northern Indiana Public Service Under the Transmission Service Industrial Energy Applications, Inc. Company’s Power Sales Tariff, which Agreement, Northern Indiana Public under Northern Indiana Public Service was accepting for filing by the Service Company will provide Point-to- Company’s Power Sales Tariff, which Commission and made effective by Point Transmission Service to Carolina was accepting for filing by the Order dated August 17, 1995 in Docket Power & Light Company pursuant to the Commission and made effective by No. ER95–1222–000. Northern Indiana Transmission Service Tariff filed by Order dated August 17, 1995 in Docket Public Service Company and CNG Northern Indiana Public Service No. ER95–1222–000. Northern Indiana Power Services Corporation request a Company in Docket No. ER96–1426–000 Public Service Company and Industrial waiver of the Commission’s sixty-day and allowed to become effective by the Energy Applications, Inc. request a notice requirement to permit an Commission. Northern Indiana Public waiver of the Commission’s sixty-day effective date of November 15, 1996. Service Company, 75 FERC ¶ 61,213 notice requirement to permit an Copies of this filing have been sent to (1996). Northern Indiana Public Service effective date of November 15, 1996. the Indiana Utility Regulatory Company has requested that the Service Copies of this filing have been sent to Commission and the Indiana Office of Agreement be allowed to become the Indiana Utility Regulatory Utility Consumer Counselor. effective as of November 15, 1996. Commission and the Indiana Office of Comment date: December 9, 1996, in Copies of this filing have been sent to Utility Consumer Counselor. accordance with Standard Paragraph E the Indiana Utility Regulatory Comment date: December 9, 1996, in at the end of this notice. Commission and the Indiana Office of accordance with Standard Paragraph E 11. Northern Indiana Public Service Utility Consumer Counselor. at the end of this notice. Company Comment date: December 9, 1996, in 9. Northern Indiana Public Service accordance with Standard Paragraph E [Docket No. ER97–478–000] Company at the end of this notice. Take notice that on November 14, [Docket No. ER97–476–000] 7. Northern Indiana Public Service 1996, Northern Indiana Public Service Take notice that on November 14, Company, tendered for filing an [Docket No. ER97–474–000] 1996, Northern Indiana Public Service executed Service Agreement between Take notice that on November 14, Company, tendered for filing an Northern Indiana Public Service 1996, Northern Indiana Public Service executed Service Agreement between Company and JPower, Inc. Company, tendered for filing an Northern Indiana Public Service Under the Service Agreement, executed Standard Transmission Company and PacifiCorp Power Northern Indiana Public Service Service Agreement between Northern Marketing, Inc. Company agrees to provide services to Indiana Public Service Company and Under the Service Agreement, JPower, Inc. under Northern Indiana Entergy Power Marketing Corporation. Northern Indiana Public Service Public Service Company’s Power Sales Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64077

Tariff, which was accepting for filing by Public Service Company and Williams Sunshine Act Meeting the Commission and made effective by Energy Services Company request a Order dated August 17, 1995 in Docket waiver of the Commission’s sixty-day FEDERAL REGISTER CITATION OF PREVIOUS ANNOUNCEMENT: No. ER95–1222–000. Northern Indiana notice requirement to permit an November 22, 1996 61 FR 59433. Public Service Company and JPower, effective date of November 15, 1996. PREVIOUSLY ANNOUNCED TIME AND DATE OF Inc. request a waiver of the Copies of this filing have been sent to Commission’s sixty-day notice MEETING: November 26, 1996 10:00 a.m. the Indiana Utility Regulatory requirement to permit an effective date CHANGE IN THE MEETING: The following Commission and the Indiana Office of of November 15, 1996. Docket Numbers and companies have Utility Consumer Counselor. Copies of this filing have been sent to been added to the Agenda scheduled for the Indiana Utility Regulatory Comment date: December 9, 1996, in the November 26, 1996 meeting. Commission and the Indiana Office of accordance with Standard Paragraph E Item No.—Docket No. and Company Utility Consumer Counselor. at the end of this notice. CAE–10—OA97–23–000, Edison Sault Comment date: December 9, 1996, in Electric Company 14. UtiliCorp United Inc. accordance with Standard Paragraph E CAG–9—RP95–197–000, Transcontinental at the end of this notice. [Docket No. ES97–11–000] Gas Pipe Line Corporation Lois D. Cashell, 12. Northern Indiana Public Service Take notice that on November 19, Secretary. Company 1996, UtiliCorp United Inc. (UtiliCorp) [FR Doc. 96–30825 Filed 11–25–96; 4:20 pm] [Docket No. ER97–479–000] filed an application, under § 204 of the Federal Power Act, seeking BILLING CODE 6717±01±M Take notice that on November 14, authorization to implement shareholder 1996, Northern Indiana Public Service Rights Plan. Under such Plan, the Board [Docket No. CP97±92±000, et al.] Company, tendered for filing an of Directors of UtiliCorp has authorized executed Service Agreement between Transcontinental Gas Pipe Line Northern Indiana Public Service and declared a dividend of one Right for each share of Common Stock, of Corporation, et al.; Natural Gas Company and VTEC Energy. Certificate Filings Under the Service Agreement, UtiliCorp outstanding at close of Northern Indiana Public Service business on December 31, 1996. Each November 22, 1996. Company agrees to provide services to Right will initially represent the right to Take notice that the following filings VTEC Energy under Northern Indiana purchase one one-thousandth (1/1000) have been made with the Commission: Public Service Company’s Power Sales of a share of Series A Participating Cumulative Preference Stock, no par 1. Transcontinental Gas Pipe Line Tariff, which was accepted for filing by Corporation the Commission and made effective by value, of UtiliCorp. Order dated August 17, 1995 in Docket UtiliCorp also requests an exemption [Docket No. CP97–92–000] No. ER95–1222–000. Northern Indiana from the Commission’s competitive Take notice that on November 12, Public Service Company and VTEC bidding and negotiated placement 1996, Transcontinental Gas Pipe Line Energy request a waiver of the requirements. Corporation (Transco), P. O. Box 1396, Commission’s sixty-day notice Houston, Texas 77251, filed in Docket requirement to permit an effective date Comment date: December 18, 1996, in No. CP97–92–000 an application of November 15, 1996. accordance with Standard Paragraph E pursuant to Section 7(c) of the Natural Copies of this filing have been sent to at the end of this notice. Gas Act for a certificate of public the Indiana Utility Regulatory Standard Paragraph convenience and necessity authorizing Commission and the Indiana Office of an extension and expansion of Transco’s Utility Consumer Counselor. E. Any person desiring to be heard or Mobile Bay Lateral including (i) Comment date: December 9, 1996, in to protest said filing should file a authorization to construct and operate accordance with Standard Paragraph E motion to intervene or protest with the approximately 76.8 miles of 30-inch at the end of this notice. Federal Energy Regulatory Commission, diameter pipeline extending from a 888 First Street, N.E., Washington, D.C. proposed new platform in Main Pass 13. Northern Indiana Public Service Area, Block 260 to its existing Company 20426, in accordance with Rules 211 and 214 of the Commission’s Rules of Compressor Station No. 82 in Mobile [Docket No. ER97–480–000] Practice and Procedure (18 CFR 385.211 County, Alabama; approximately 17.5 Take notice that on November 14, and 18 CFR 385.214). All such motions miles of 36-inch diameter onshore 1996, Northern Indiana Public Service or protests should be filed on or before pipeline loop located immediately Company, tendered for filing an the comment date. Protests will be downstream of Station No. 82 in executed Service Agreement between considered by the Commission in southern Mobile County, Alabama; a Northern Indiana Public Service determining the appropriate action to be new 30,000 horsepower compressor Company and Williams Energy Services taken, but will not serve to make Station No. 83 located in northern Company. protestants parties to the proceeding. Mobile County, Alabama; and a 26,000 Under the Service Agreement, Any person wishing to become a party horsepower compression addition at Northern Indiana Public Service must file a motion to intervene. Copies Transco’s existing Station No. 82; all of Company agrees to provide services to of this filing are on file with the which facilities will provide a total of Williams Energy Services Company Commission and are available for public the dekatherm equivalent of 600 MMcf per day of additional service offshore 1 under Northern Indiana Public Service inspection. Company’s Power Sales Tariff, which was accepting for filing by the Lois D. Cashell, 1 In referring to the ‘‘offshore extension’’ of its Secretary. Mobile Bay Lateral, Transco states that Commission and made effective by approximately 73.0 miles of the extension will be Order dated August 17, 1995 in Docket [FR Doc. 96–30666 Filed 12–2–96; 8:45 am] located offshore and approximately 4.0 miles will No. ER95–1222–000. Northern Indiana BILLING CODE 6717±01±P Continued 64078 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices and 500 MMcf per day of additional 1, 1998. Transco estimates that the presumption of rolled-in rate treatment service onshore 2, to become available in proposed facilities will cost, in the on the pricing of new pipeline late 1998; (ii) approval of Transco’s aggregate, $171.5 million. construction. Transco also states that initial rates for such service to be According to Transco, the project will the facilities constructed as part of the Transco’s then-current Rate schedule FT create firm transportation capacity of project will produce significant system- rate for Zone 4A, and (iii) approval of the dekatherm equivalent of 600 MMcf wide operational and financial benefits rolled-in rate treatment for costs per day from Main Pass Block 260 to and will be operated on an integrated associated with the Mobile Bay Lateral Transco’s Station No. 82 and 500 MMcf basis with its existing facilities. Extension and Expansion Project, to be per day from Station No. 82 to Station To meet the proposed in-service date made effective in Transco’s first NGA No. 85, where Transco’s Mobile Bay for the project, Transco requests that the Section 4 rate proceeding following the Lateral interconnects with its mainline Commission issue a preliminary in-service date of the project, all as more in Choctaw County, Alabama. Transco determination approving all aspects of fully set forth in the application which states that it will make the capacity the proposal other than environmental is on file with the Commission and open under the project available to all matters by July 1, 1997, with a final to public inspection. shippers by means of an ‘‘open season’’ determination and all appropriate In order to create the firm planned to be held commencing certificate authorizations by February 1, transportation capacity under the November 15, 1996. It is stated that the 1998. project, Transco states that it will open season will extend until December The Commission staff cannot construct and operate the following 16, 1996. Concurrent with the open schedule a completion date for the facilities: season, Transco states that it intends to environmental analysis of this project, solicit interest in the relinquishment of because Transco has not begun certain Offshore Facilities firm capacity currently held by shippers critical processes. Transco has not yet • Approximately 76.8 miles of 30- on the Mobile Bay Lateral, in order to filed applications with the Minerals inch diameter pipeline commencing at a assure that the project facilities are Management Service (MMS) or the U.S. proposed offshore platform in Main Pass properly sized. Transco states that it Army Corps of Engineers (COE), nor has Area, Block 260 to be constructed by a will notify the Commission of the it requested a determination of producer, to Transco’s Station No. 82 in commitments received from customers consistency with the Coastal Zone Mobile County, Alabama. as soon as practicable after the end of Management Plan (Alabama Department the open season period, and Transco of Environmental Management Onshore Facilities will seek to enter into firm (ADEM)). The staff wants to coordinate • Approximately 17.5 miles of 36- transportation precedent agreements its environmental analysis with the inch diameter pipeline loop located which reflect a minimum 15 year term. MMS, ADEM, and the COE. immediately downstream of Station No. Transco states that it expects to file Other missing material that will delay 82 in Mobile County, Alabama, from these executed precedent agreements the completion of the environmental Mobile Bay Lateral MP 105.19 to MP within thirty days of the end of the open analysis include surveys for threatened 122.68; season period. Transco states that the or endangered species and consultation • A new 30,000 horsepower firm transportation service to be with the U.S. Fish and Wildlife Service compressor Station No. 83 located in rendered through this new capacity will and completion of surveys for cultural Mobile County, Alabama at Mobile Bay be performed under its Rate Schedule resources and consultation with the Lateral MP 71.57; and FT and Part 284(G) of the Commission’s State Historic Preservation Office. These • A 26,000 horsepower compression regulations. Transco states that it will resources are of particular interest addition at Transco’s existing Station charge the project shippers the then- because they were of concern with No. 82 in Mobile County, Alabama. current Zone 4A rate under Rate respect to the construction of the Schedule FT in effect when the facilities original Mobile Bay Lateral. Third Party/Non-Jurisdictional are placed in service, plus any Concerns over erosion and Facilities applicable surcharges. sedimentation plans must also be • A third party will construct, own Transco avers that the project resolved as part of our environmental and operate a 600 MMcf per day shippers will have primary firm analysis. separation plant, including a slug transportation rights to all delivery Comment date: December 13, 1996, in catcher, immediately upstream of points located in Transco’s Rate Zone accordance with Standard Paragraph F Compressor Station No. 82. The plant 4A, enabling them to access various at the end of this notice. will be designed to remove liquids from market points on the interstate pipeline 2. Colorado Interstate Gas Company the pipeline and deliver pipeline quality grid, including markets at the pooling [Docket No. CP97–94–000] natural gas to the suction side of points located at Transco’s Station No. Compressor Station No. 82. The plant is 85 and the existing upstream and Take notice that on November 12, estimated to require thirty acres of land downstream interconnections with 1996, Colorado Interstate Gas Company and is planned to be located other pipelines on Transco’s system. (CIG), P.O. Box 1087, Colorado Springs, immediately to the west and adjacent to Transco requests that the Commission Colorado 80944, filed in Docket No. Compressor Station No. 82. grant rolled-in rate treatment for the CP97–94–000 a request pursuant to Transco states that the proposed in- costs associated with the project in Sections 157.205 and 157.216 of the service date for the project is December Transco’s first Section 4 rate proceeding Commission’s Regulations under the to become effective after the in-service Natural Gas Act (18 CFR 157.205, be located onshore upstream of and connecting date of this project. Transco states that 157.216) for authorization to lease to with Station No. 82, which is the existing terminus the presumption to roll-in the project Vessels Hydrocarbons, Inc. (Vessels) of the Mobile Bay Lateral. costs applies because the rate impact on almost 2.22 miles of 8-inch diameter 2 Transco states that it is sizing its onshore its existing customers under each firm pipe located in Adams County, expansion facilities smaller than its offshore facilities based on informal indications that it will rate schedule is less than five percent, Colorado, under CIG’s blanket certificate receive 100 MMcf of capacity turnback on the which is the level set forth in the issued in Docket No. CP83–21–000 Mobile Bay Lateral. Commission’s Statement of Policy for a pursuant to Section 7 of the Natural Gas Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64079

Act, all as more fully set forth in the CP80–14–000 (Columbia Gas 5. ANR Pipeline Company request that is on file with the Transmission Corporation, 11 FERC [Docket No. CP97–103–000] Commission and open to public Paragraph 61,047 (1980); order Take notice that on November 18, inspection. amending certificate, 11 FERC 1996, ANR Pipeline Company (ANR), CIG states it has been advised by Paragraph 61,214 (1980)), an increase in 500 Renaissance Center, Detroit, Vessels that Vessels plans to consolidate actual over estimated local production Michigan 48243–1902, filed in Docket its processing activities by closing its in the area prompted Columbia to No. CP97–103–000 a request pursuant to Third Creek plant and constructing a retract its abandonment authorization. Sections 157.205 and 157.211 of the line to move raw gas from the tailgate Columbia states that in a letter dated of the Third Creek plant to its Commission’s Regulations under the January 21, 1982 to the Commission, Natural Gas Act (18 CFR 157.205, Wattenberg plant which is almost 18.5 Columbia advised that the horizontal miles away. CIG also states the 157.211) for authorization to operate an units would be retained in service. It is existing interconnection constructed abandonment by lease to Vessels of stated that since that time, the decline CIG’s Third Creek Lateral will prevent under the authorization of Section 311 in location production along with other of the Natural Gas Policy Act of 1978 the construction of almost 2.22 miles of facility upgrades in the York Production pipe and avoid the associated and to construct and operate additional field rendered the horizontal units facilities for the delivery of natural gas environmental disruption. Vessels has inactive by 1989. Columbia now advised CIG that Shippers using the to Alcan Ingot, a division of Alcan requests approval to proceed with the Aluminum Corporation (Alcan) in Wattenberg plant will have access to abandonment granted by the CIG’s transmission after processing. Webster County, Kentucky, under Commission in 1980. Columbia states ANR’s blanket certificate issued in CIG further states that the subject that the horizontal units are no longer facilities were certificated and operated Docket No. CP82–480–000, pursuant to needed and have become obsolete and Section 7 of the Natural Gas Act, all as pursuant to the certificate of public their abandonment will not result in any convenience and necessity issued in more fully set forth in the request that termination of service. Therefore, is on file with the Commission and open Docket No. CP79–284. Columbia submits that the proposed Comment date: January 6, 1997, in to public inspection. abandonment is required by the present accordance with Standard Paragraph G ANR proposes to operate the existing and future public convenience and at the end of this notice. facilities, which consist of a 4-inch tap necessity. and associated piping, valves and 3. Columbia Gas Transmission Columbia states that the cost of fittings, and to construct and operate Corporation retiring the seven horizontal compressor electronic measurement equipment in [Docket No. CP97–95–000] units is approximately $264,000, with order to provide a transportation service an estimated net debit to accumulated Take notice that on November 13, for Alcan pursuant to a firm 1996, Columbia Gas Transmission provision for depreciation of $835,305. transportation rate schedule. It is stated Corporation (Columbia), 1700 Comment date: December 13, 1996, in that the existing facilities were installed MacCorkle Avenue, SE., Charleston, accordance with Standard Paragraph F in 1984 to deliver gas to Alcan on behalf West Virginia 25314–1599, filed in at the end of this notice. of Orbit Gas Company (Orbit). It is Docket No. CP97–95–000, pursuant to 4. National Fuel Gas Supply explained that Orbit deactivated its Section 7(b) of the Natural Gas Act Corporation interconnection with Alcan and that (NGA), as amended, and Section 157.7 Alcan purchased the facilities [Docket No. CP97–101–000] and 157.18 of the Commission’s downstream of ANR from Orbit. Regulations thereunder, an abbreviated Take notice that on November 18, It is stated that the facilities would be application requesting permission and 1996, National Fuel Gas Supply designed to deliver up to 417 Mcf of approval to abandon certain natural gas Corporation (National), 10 Lafayette natural gas per hour. ANR estimates the compression facilities, all as more fully Square, Buffalo, New York 14203, filed cost of the facilities at $23,100, for set forth in the application on file with in Docket No. CP97–101–000 a request which ANR would be fully reimbursed. the Commission. pursuant to Sections 157.205 and It is explained that Alcan has informed Columbia requests NGA Section 7(b) 157.211 of the Commission’s ANR that it proposes to use capacity authorization for the abandonment of Regulations under the Natural Gas Act release transportation on ANR’s system. seven 500 horsepower horizontal type (18 CFR 157.205, 157.211) for It is stated that the proposal would have engine compressor units, located within authorization to construct and operate a no adverse impact on ANR’s peak day the York Compressor Station, located in residential sales tap under National’s deliveries or on annual entitlements of Medina County, Ohio. blanket certificate issued in Docket No. ANR’s existing customers. It is further Columbia states that in addition to the CP83–4–000 pursuant to Section 7 of stated that ANR has sufficient gas abandonment of the compressor units the Natural Gas Act, all as more fully set supply to make the deliveries and that for which Columbia is seeking forth in the request that is on file with the deliveries can be made without authorization, Columbia would also the Commission and open to public detriment or disadvantage to ANR’s remove any associated equipment, inspection. existing customers. appurtenances and buildings associated Specifically, National proposes to Comment date: January 6, 1997, in with these units. construct and operate a sales tap for accordance with Standard Paragraph G Columbia further states that the York delivery of approximately 150 Mcf at the end of this notice. Compressor Station has been in service annually of gas to National Fuel Gas 6. Texas Gas Transmission Corporation since 1914 to compress local field Distribution Corporation (Distribution) production gas and relay transmission at an estimated cost of $1,500, for which [Docket No. CP97–106–000] volumes into Columbia’s Line L. National would be reimbursed by Take notice that on November 19, Columbia states that although Distribution. 1996, Texas Gas Transmission authorization to abandon the horizontal Comment date: January 6, 1997, in Corporation (Texas Gas), 3800 Frederica units, originally installed between 1914 accordance with Standard Paragraph G Street, Owensboro, Kentucky 42301, and 1928, was received in Docket No. at the end of this notice. filed in Docket No. CP97–106–000 a 64080 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices request pursuant to Sections 157.205 in accordance with the Commission’s proposed allocations for new Native and 157.211 of the Commission’s Rules. American customers associated with the Regulations under the Natural Gas Act Take further notice that, pursuant to Post-2000 Resource Pool—Pick-Sloan (18 CFR 157.205, 157.211) for the authority contained in and subject to Missouri Basin Program, Eastern authorization to construct and operate a jurisdiction conferred upon the Federal Division (P–SMBP–ED). Western delivery point for Clarksdale Public Energy Regulatory Commission by received numerous comments regarding Utilities (Clarksdale), in Coahoma Sections 7 and 15 of the Natural Gas Act the proposed allocation published County, Mississippi, under Texas Gas’s and the Commission’s Rules of Practice August 30, 1996, in 61 FR 45957 blanket certificate issued in Docket No. and Procedure, a hearing will be held (Method One) and is prepared to use an CP82–407–000 pursuant to Section 7 of without further notice before the alternative method (Method Two). the Natural Gas Act, all as more fully set Commission or its designee on this Western is, therefore, soliciting forth in the request that is on file with filing if no motion to intervene is filed comments only on the use of Method the Commission and open to public within the time required herein, if the One or Method Two and will base final inspection. Commission on its own review of the allocations on those comments. Texas Gas proposes to install, operate, matter finds that a grant of the DATES: Written comments must be sent maintain and own a dual, four-inch certificate is required by the public to the Upper Great Plains Regional meter station with electronic flow convenience and necessity. If a motion Manager by certified or return receipt measurement equipment and remote for leave to intervene is timely filed, or requested U.S. mail and received by flow control equipment and related if the Commission on its own motion close of business on January 6, 1997. facilities on a site to be provided by believes that a formal hearing is Western will hold a public meeting on Clarksdale. Texas Gas states that the required, further notice of such hearing the allocation method alternatives on proposed delivery point will be known will be duly given. December 17, 1996, in Rapid City, South as the Clarksdale P.U.C. Meter Station. Under the procedure herein provided Dakota at the following location: Texas Gas states that Clarksdale is for, unless otherwise advised, it will be Rushmore Plaza Holiday Inn, 505 North requesting up to 16,800 MMBtu per day unnecessary for the applicant to appear 5th Street, Rapid City, South Dakota. of interruptible natural gas or be represented at the hearing. Information forum—9 a.m. (not to transportation service for use at its G. Any person or the Commission’s exceed 2 hours) Clarksdale facility for electric staff may, within 45 days after the Comment forum—immediately generation. issuance of the instant notice by the following the information forum Texas Gas states that Clarksdale’s Commission, file pursuant to Rule 214 ADDRESSES: All comments regarding the natural gas requirements are presently of the Commission’s Procedural Rules methodology used to calculate the supplied by Mississippi Valley Gas (18 CFR 385.214) a motion to intervene proposed allocations for new Native Company, a local distribution customer or notice of intervention and pursuant American customers from the Post-2000 of Texas Gas, and that Clarksdale has to Section 157.205 of the Regulations Resource Pool should be directed to the requested that Texas Gas construct a under the Natural Gas Act (18 CFR following address: Mr. Gerald C. new delivery point in Coahoma County, 157.205) a protest to the request. If no Wegner, Regional Manager, Upper Great Mississippi to enable Clarksdale to protest is filed within the time allowed Plains Customer Service Region, receive natural gas transportation therefore, the proposed activity shall be Western Area Power Administration, service directly from Texas Gas. deemed to be authorized effective the P.O. Box 35800, Billings, MT 59107– Texas Gas states that Clarksdale will day after the time allowed for filing a 5800. All documentation developed or reimburse Texas Gas in full for the cost protest. If a protest is filed and not retained by Western for the purpose of of the facilities to be installed by Texas withdrawn within 30 days after the time developing the Proposed Allocation of Gas, which cost is estimated to be allowed for filing a protest, the instant the Post-2000 Resource Pool will be $139,670. request shall be treated as an Comment date: January 6, 1997, in available for inspection and copying at application for authorization pursuant the Upper Great Plains Customer accordance with Standard Paragraph G to Section 7 of the Natural Gas Act. at the end of this notice. Service Regional Office, 2900 Fourth Lois D. Cashell, Avenue North, Billings, Montana. Standard Paragraphs Secretary. FOR FURTHER INFORMATION CONTACT: Mr. F. Any person desiring to be heard or [FR Doc. 96–30667 Filed 12–2–96; 8:45 am] Robert J. Harris, Power Marketing make any protest with reference to said BILLING CODE 6717±01±P Manager, Upper Great Plains Customer filing should on or before the comment Service Region, Western Area Power date file with the Federal Energy Administration, P.O. Box 35800, Regulatory Commission, 888 First Western Area Power Administration Billings, MT 59107–5800, (406) 247– Street, N.E., Washington, D.C. 20426, a 7394. motion to intervene or a protest in Proposed Allocation of the Post-2000 SUPPLEMENTARY INFORMATION: Western, a accordance with the requirements of the Resource PoolÐPick-Sloan Missouri Federal power marketing agency of the Commission’s Rules of Practice and Basin Program, Eastern Division Department of Energy, published on Procedure (18 CFR 385.211 and AGENCY: Western Area Power August 30, 1996, in the Federal Register 385.214) and the Regulations under the Administration, DOE. (61 FR 45957), a notice of Proposed Natural Gas Act (18 CFR 157.10). All ACTION: Notice of clarification, response Allocation of its Post-2000 Resource protests filed with the Commission will to comments and request for additional Pool to fulfill the requirements of be considered by it in determining the comments. Subpart C—Power Marketing Initiative appropriate action to be taken but will of the Energy Planning and Management not serve to make the protestants parties SUMMARY: The purpose of this notice is Program Final Rule, 10 CFR 905. On to the proceeding. Any person wishing to clarify and respond to comments October 8, 1996, Western published a to become a party to a proceeding or to Western Area Power Administration notice to extend the time written participate as a party in any hearing (Western) received regarding the comments could be submitted until therein must file a motion to intervene ‘‘levelized’’ method of calculating the October 21, 1996. The Post-2000 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64081

Resource Pool Proposed Allocation of Register on August 7, 1996, at 61 FR comment. Method One, the alternative Power is Western’s implementation of 41142. Method Two, and a brief summary Subpart C—Power Marketing Initiative As a result of comments received follow: of the Energy Planning and Management during the comment period regarding Method One: The proposed Program Final Rule. Western published the ‘‘levelized’’ method (Method One) of allocations of power under Method One the final Post-2000 Resource Pool calculation used in determining the for new Native American customers and Allocation Procedures in the Federal proposed allocation, Western is the data these allocations were based proposing an alternative method for upon are as follows:

Average current west- Proposed post-2000 Estimated ern service power allocation New Native American customers demand (kilowatts) Summer Winter Summer Winter (percent) (percent) (kilowatts) (kilowatts)

Blackfeet Nation ...... 18,600 34 29 5,454 5,184 Cheyenne River Sioux ...... 13,500 33 29 4,094 3,762 Chippewa Cree-Rocky Boy ...... 5,000 55 44 416 643 Crow Creek ...... 4,100 50 47 546 405 Crow ...... 12,500 55 44 1,040 1,609 Devils Lake Sioux ...... 7,700 22 14 3,182 3,301 Flandreau Santee Sioux ...... 2,355 55 56 196 20 Fort Belknap Indian Community ...... 6,200 28 22 2,190 2,162 Fort Peck Tribes ...... 15,300 34 31 4,486 3,958 Lower Brule Sioux ...... 3,100 33 29 940 864 Lower Sioux ...... 3,750 0 0 2,375 2,133 Northern Cheyenne ...... 9,400 36 37 2,568 1,868 Oglala Sioux-Pine Ridge ...... 29,600 28 24 10,456 9,729 Omaha Tribe of Nebraska ...... 5,100 15 14 2,464 2,186 Ponca Tribe of Nebraska ...... 2,100 8 6 1,162 1,068 Rosebud Sioux ...... 21,300 49 43 3,051 2,954 Santee Sioux Tribe of Nebraska ...... 1,100 10 8 587 538 Sisseton-Wahpeton Sioux ...... 7,500 40 38 1,749 1,415 Standing Rock Sioux ...... 12,900 30 29 4,299 3,595 Three Affiliated Tribes ...... 8,000 30 25 2,666 2,550 Turtle Mountain Chippewa ...... 18,000 35 18 5,098 6,996 Upper Sioux ...... 1,250 42 39 267 223 White Earth Indian Reservation ...... 3,500 6 7 2,006 1,745 Winnebago Tribe of Nebraska ...... 3,100 10 8 1,653 1,515 Yankton Sioux ...... 5,300 25 24 2,031 1,742

The proposed allocations for new Federal hydropower benefits, the benefit of Federal hydropower. The Native American customers were average current percentage of Western proposed allocations to new Native calculated based upon the estimated service that each of the tribes receives American customers set forth in the demand figures set forth in the table through their current power supplier(s) table above are based on the P–SMBP– above. Inconsistent demand estimates was utilized and is as shown in the table ED marketable resource available at this were adjusted by Western. above. For the Blackfeet Nation, time. If the P–SMBP–ED marketable Western calculated the proposed Western used the weighted average of resource is adjusted in the future, the power allocations in the table above in the current percentage of Western proposed allocations will be adjusted such a manner as to levelize total service for the remaining tribes. The accordingly. Federal hydropower benefits to each of Blackfeet Nation is served by Glacier the Native American tribes. This results Electric Cooperative, which is a total Method Two: The proposed in a total Federal hydropower benefit of requirements customer of Bonneville allocations of power under Method Two 63.323 percent in the summer season Power Administration; therefore, the for new Native American customers and and 56.869 percent in the winter season Blackfeet Nation does not receive the data these allocations were based to each of the tribes. To levelize the total Western service, but does receive the upon are as follows:

Proposed post-2000 Estimated Percent of power allocation New Native American customers demand total estimated (kilowatts) demand Summer Winter (percent) (kilowatts) (kilowatts)

Blackfeet Nation ...... 18,600 8.4448 5,487 5,250 Cheyenne River Sioux ...... 13,500 6.1293 3,983 3,810 Chippewa Cree-Rocky Boy ...... 5,000 2.2701 1,475 1,411 Crow Creek ...... 4,100 1.8615 1,209 1,157 Crow ...... 12,500 5.6752 3,688 3,528 Devils Lake Sioux ...... 7,700 3.4959 2,272 2,173 Flandreau Santee Sioux ...... 2,355 1.0692 695 665 Fort Belknap Indian Community ...... 6,200 2.8149 1,829 1,750 Fort Peck Tribes ...... 15,300 6.9465 4,514 4,318 64082 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

Proposed post-2000 Estimated Percent of power allocation New Native American customers demand total estimated (kilowatts) demand Summer Winter (percent) (kilowatts) (kilowatts)

Lower Brule Sioux ...... 3,100 1.4075 914 875 Lower Sioux ...... 3,750 1.7026 1,106 1,058 Northern Cheyenne ...... 9,400 4.2678 2,773 2,653 Oglala Sioux-Pine Ridge ...... 29,600 13.4390 8,732 8,355 Omaha Tribe of Nebraska ...... 5,100 2.3155 1,505 1,439 Ponca Tribe of Nebraska ...... 2,100 0.9534 619 593 Rosebud Sioux ...... 21,300 9.6706 6,284 6,012 Santee Sioux Tribe of Nebraska ...... 1,100 0.4994 324 311 Sisseton-Wahpeton Sioux ...... 7,500 3.4051 2,213 2,117 Standing Rock Sioux ...... 12,900 5.8568 3,806 3,641 Three Affiliated Tribes ...... 8,000 3.6322 2,360 2,258 Turtle Mountain Chippewa ...... 18,000 8.1723 5,310 5,080 Upper Sioux ...... 1,250 0.5675 369 353 White Earth Indian Reservation ...... 3,500 1.5891 1,032 988 Winnebago Tribe of Nebraska ...... 3,100 1.4075 914 875 Yankton Sioux ...... 5,300 2.4063 1,564 1,496

Under Method Two, the proposed hereby given of a proposed settlement [FRL±5657±6] allocations for new Native American agreement concerning litigation customers were calculated based upon instituted against the Environmental National Advisory Council for Environmental Policy and Technology the same estimated demand figures as in Protection Agency (‘‘EPA’’) by Edward Information Impacts Committee; Public Method One above. The proposed M. Ober, et al., through his counsel Meeting allocations were derived by dividing the Davis S. Baron of the Arizona Center for Native American tribes’ share of the Law in the Public Interest. The lawsuit AGENCY: Environmental Protection resource pool among the tribes in the concerns EPA’s alleged failure to Agency (EPA). same proportion as each tribe’s percent perform a nondiscretionary duty with ACTION: Notice of public meeting. of total estimated demand. respect to promulgating a federal The proposed allocations to new implementation plan (‘‘FIP’’) controlling Native American customers set forth in SUMMARY: Under the Federal Advisory particulate matter (‘‘PM–10’’) emissions the table above are based on the P– Committee Act, Public Law 92463, EPA in the Phoenix, Arizona Planning Area. SMBP–ED marketable resource available gives notice of a two-day meeting, of the at this time. If the P–SMBP–ED For a period of thirty (30) days National Advisory Council for marketable resource is adjusted in the following the date of publication of this Environmental Policy and Technology future, the proposed allocations will be notice, the Agency will receive written (NACEPT) Information Impacts adjusted accordingly. comments relating to the settlement Committee (IIC). NACEPT provides After all public comments have been agreement. EPA or the Department of advice and recommendations to the thoroughly considered, Western will Justice may withhold or withdraw Administrator of EPA on a broad range prepare and publish the Final Post-2000 consent to the proposed settlement of environmental policy issues. The IIC has been asked to review information Resource Pool Allocation in the Federal agreement if the comments disclose requirements, and provide Register. facts or circumstances that indicate that recommendations on how to effectively such consent is inappropriate, Issued at Golden, Colorado, November 21, position information resources to 1996. improper, inadequate, or inconsistent support new, comprehensive and long- J.M. Shafer, with the requirements of the Act. term Agency initiatives. This meeting is Administrator. Copies of the settlement agreement being held to provide the IIC with [FR Doc. 96–30706 Filed 12–2–96; 8:45 am] are available from Phyllis Cochran, Air perspectives unique to EPA’s program BILLING CODE 6450±01±P and Radiation Division (2344), Office of office and media-specific information General Counsel, U.S. Environmental and regulatory requirements. Protection Agency, 401 M Street, SW., DATES: The two-day public meeting will ENVIRONMENTAL PROTECTION Washington, DC 20460, (202) 260–7606. be held on Tuesday, January 21, 1997 AGENCY Written comments should be sent to from 9:00 am to 5:00 pm and [FRL±5658±1] Michael A. Prosper at the above address Wednesday, January 22, 1997 from 9:00 and must be submitted on or before am to 3:00 pm. The meeting will be held Proposed Settlement Agreement; PM± January 2, 1997. at the Channel Inn Hotel, 650 Water 10 SIP for the State of Arizona Dated: November 25, 1996. Street, SW Washington, DC 20024. AGENCY: Environmental Protection Scott C. Fulton, ADDRESSES: Materials, or written Agency (EPA). General Counsel. comments, may be transmitted to the Committee through Joe Sierra, ACTION: Notice of proposed settlement [FR Doc. 96–30740 Filed 12–2–96; 8:45 am] agreement. Designated Federal Official, NACEPT/ BILLING CODE 6560±50±M IIC, U.S. EPA, Office of Cooperative SUMMARY: In accordance with section Environmental Management (1601F), 113(g) of the Clean Air Act (‘‘Act’’), as 401 M Street, SW, Washington, DC amended, 42 U.S.C. 7413(g), notice is 20460. Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64083

FOR FURTHER INFORMATION CONTACT: one-half hour for this purpose. Oral receipt of request for amendment by Joseph Sierra, Designated Federal statements will be limited to five registrants to delete uses in certain Official for the Information Impacts minutes, and it is preferred that only pesticide registrations. Committee at 202–260–5839. one person present the statement. Any DATES: Unless a request is withdrawn, Dated: November 20, 1996. outside parties interested in presenting the Agency will approve these use Joseph A. Sierra, an oral statement should petition the deletions and the deletions will become Designated Federal Official. Council by telephone at (202) 260–2285 effective on June 2, 1997. before December 18, 1996. [FR Doc. 96–30739 Filed 12–2–96; 8:45 am] Any person who wishes to file a FOR FURTHER INFORMATION CONTACT: By BILLING CODE 6560±50±M written statement can do so before or mail: James A. Hollins, Office of after a Council meeting. Written Pesticide Programs (7502C), [FRL±5658±2] statements received prior to the meeting Environmental Protection Agency, 401 will be distributed to all members of the M St., SW, Washington, DC 20460. National Drinking Water Advisory Council before any final discussion or Office location for commercial courier Council; Notice of Open Meetings vote is completed. Any statements delivery and telephone number: Room received after the meeting will become 216, Crystal Mall No. 2, 1921 Jefferson Under Section 10(a)(2) of Public Law Davis Highway, Arlington, VA, (703) 92–423, ‘‘The Federal Advisory part of the permanent meeting file and will be forwarded to the Council 305–5761; e-mail: Committee Act,’’ notice is hereby given [email protected]. that a meeting of the National Drinking members for their information. Members of the public that would like Water Advisory Council established SUPPLEMENTARY INFORMATION: to attend the meeting, present an oral under the Safe Drinking Water Act, as statement, or submit a written I. Introduction amended (42 U.S.C. S300f et seq.), will statement, should contact Ms. Charlene be held on December 19, 1996, from Section 6(f)(1) of FIFRA, provides that Shaw, Designated Federal Officer, 3:00 p.m. until 6:00 p.m., in Room 1026 a registrant of a pesticide product may National Drinking Water Advisory East Tower, U.S. Environmental at any time request that any of its Council, U.S. EPA, Office of Ground Protection Agency (EPA) Headquarters, pesticide registrations be amended to Water and Drinking Water (4601), 401 M 401 M Street SW, Washington, D.C. delete one or more uses. The Act further Street SW, Washington, D.C. 20460. The 20460. Council members will be provides that, before acting on the telephone number is Area Code (202) participating by Conference Call. The request, EPA must publish a notice of 260–2285 or E-Mail meeting is open to the public, but due receipt of any such request in the [email protected]. to past experience, seating will be Federal Register. Thereafter, the limited. Dated: November 26, 1996. Administrator may approve such a The purpose of this meeting is to Barbara Elkus, request. provide the Council with the mini- Acting Director, Office of Ground Water and II. Intent to Delete Uses workplans for the new working groups Drinking Water. that will be set up to advise them on [FR Doc. 96–30738 Filed 12–2–96; 8:45 am] This notice announces receipt by the consumer confidence reports, operator BILLING CODE 6560±50±P Agency of applications from registrants certification, small systems capacity to delete uses in the 10 pesticide building, the Drinking Water State registrations listed in the following Revolving Fund, drinking water [OPP±340104; FRL 5572±3] Table 1. These registrations are listed by registration number, product names, contaminant identification, source water Notice of Receipt of Requests for active ingredients and the specific uses protection, and possibly rule Amendments to Delete Uses in Certain deleted. Users of these products who development for microbial Pesticide Registrations contaminants and disinfectants/ desire continued use on crops or sites disinfection by-products. This meeting AGENCY: Environmental Protection being deleted should contact the will also serve as a planning session for Agency (EPA). applicable registrant before June 2, 1997 future Council meetings and scheduling ACTION: Notice. to discuss withdrawal of the of participation of its members on the applications for amendment. This 180- working groups. SUMMARY: In accordance with section day period will also permit interested The meeting is open to the public. 6(f)(1) of the Federal Insecticide, members of the public to intercede with The Council encourages the hearing of Fungicide and Rodenticide Act (FIFRA), registrants prior to the Agency approval outside statements and will allocate as amended, EPA is issuing a notice of of the deletion.

TABLE 1. Ð REGISTRATIONS WITH REQUESTS FOR AMENDMENTS TO DELETE USES IN CERTAIN PESTICIDE REGISTRATIONS

EPA Reg No. Product Name Active Ingredient Delete From Label

000334±00364 Flying Insect Killer d-trans-Allethrin; 2-Methyl-4-oxo-3- (2- Aircraft uses cyclopenten-1-Yl d-trans-2,2 dimethyl; (Butylcarbityl)(6-pro pylpipernoyl) ether 88% & related compounds) 000432±00041 Brittle Extract of Cube Root Rotenone Domestic pet uses 000432±00046 Rotenone Crystalline Rotenone; Cube Resins other than Rotenone Domestic pet uses 000432±00525 Powdered Cube Root Rotenone Domestic pet uses 002217±00383 Sevin Dust 5% Asparagus uses 002217±00572 Gordon's Sevin Dust 5% Carbaryl Asparagus & poultry uses 002393±00375 Hopkins Poultry and Garden Dust Carbaryl Pet uses 64084 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

TABLE 1. Ð REGISTRATIONS WITH REQUESTS FOR AMENDMENTS TO DELETE USES IN CERTAIN PESTICIDE REGISTRATIONSÐContinued

EPA Reg No. Product Name Active Ingredient Delete From Label

006458±00001 Cube Powder Cube Resins other than Rotenone; Rotenone Domestic pet uses 006458±00005 Cube Extract Cube Resins other than Rotenone; Rotenone Domestic pet uses 064405±00002 Redzone Bait Boric Acid Beetles

The following Table 2, includes the names and addresses of record for all registrants of the products in Table 1, in sequence by EPA company number.

TABLE 2. Ð REGISTRANTS REQUESTING AMENDMENTS TO DELETE USES IN CERTAIN PESTICIDE REGISTRATIONS

Com- pany No. Company Name and Address

000334 Tech-Line Products, P.O. Box 24095, Milwaukee, WI 53224. 000432 AgrEvo Environmental Health, 95 Chestnut Ridge Road, Montvale, NJ 07645. 002217 PBI/Gordon Corp., 1217 W. 12th Street, P.O. Box 4090, Kansas City, MO 64101. 002393 Platte Chemical Company, P.O. Box 667, 419 18th Street, Greeley, CO 80632. 006458 AgrEvo Environmental Health, 95 Chestnut Ridge Road, Montvale, NJ 07645. 064405 RegWest Company, P.O. Box 2220, Greeley, CO 80632.

III. Existing Stocks Provisions Public Law 104–13. An agency may not Communications Commission, Room The Agency has authorized registrants conduct or sponsor a collection of 234, 1919 M St., N.W., Washington, DC to sell or distribute product under the information unless it displays a 20554 or via internet to previously approved labeling for a currently valid control number. No [email protected]. person shall be subject to any penalty period of 18 months after approval of FOR FURTHER INFORMATION CONTACT: For for failing to comply with a collection the revision, unless other restrictions additional information or copies of the of information subject to the Paperwork have been imposed, as in special review information collections contact Dorothy Reduction Act (PRA) that does not actions. Conway at 202–418–0217 or via internet display a valid control number. at [email protected]. List of Subjects Comments are requested concerning (a) whether the proposed collection of SUPPLEMENTARY INFORMATION: Environmental protection, Pesticides information is necessary for the proper and pests, Product registrations. performance of the functions of the OMB Number: 3060–0157. Dated: November 18, 1996. Commission, including whether the Title: Section 73.99 Presunrise Service information shall have practical utility; Authorization (PSRA) and Postsunset Linda A. Travers, (b) the accuracy of the Commissions Service Authorization (PSSA). Acting Director, Program Management and burden estimates; (c) ways to enhance Support Division, Office of Pesticide Form Number: None. Programs. the quality, utility, and clarity of the Type of Review: Extension. information collected and (d) ways to [FR Doc. 96–30744 Filed 12–2–96; 8:45 am] minimize the burden of the collection of Affected Public: Business or other for- BILLING CODE 6560±50±F information on the respondents, profit. including the use of automated Number of Respondents: 200. collection techniques or other forms of Estimated time per response: 0.5 FEDERAL COMMUNICATIONS information technology. hours (0.25 hours respondent/0.25 COMMISSION The FCC is reviewing the following hours attorney). information collection requirements for Total annual burden: 50. Notice of Public Information possible 3-year extension under Needs and Uses: Section 73.99(e) Collections Being Reviewed by FCC delegated authority 5 CFR part 1320, requires the licensee of an AM broadcast for Extension Under Delegated authority delegated to the Commission station intending to operate with a Authority 5 CFR Part 1320 Authority, by the Office of Management and presunrise or postsunset service Comments Requested Budget (OMB). authorization to submit by letter the November 25, 1996. DATES: Written comments should be licensee’s name, call letters, location, SUMMARY: The Federal Communications submitted on or before February 3, 1997. the intended service, and a description Commission, as part of its continuing If you anticipate that you will be of the method whereby any necessary effort to reduce paperwork burden submitting comments, but find it power reduction will be achieved. Upon invites the general public and other difficult to do so within the period of submission of this information, Federal agencies to take this time allowed by this notice, you should operation may begin without further opportunity to comment on the advise the contact listed below as soon authority. The letter is used by FCC staff following proposed and/or continuing as possible. to maintain complete technical information collections, as required by ADDRESSES: Direct all comments to information about the station to ensure the Paperwork Reduction Act of 1995, Dorothy Conway, Federal that the licensee is in full compliance Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64085 with the Commission’s rules and will (b) the accuracy of the Commissions the budern on the public and not cause interference to other stations. burden estimates; (c) ways to enhance Commission staff. OMB Number: 3060–0474. the quality, utility, and clarity of the Federal Communications Commission Title: Section 74.1263 Time of information collected and (d) ways to William F. Caton, minimize the burden of the collection of Operation. Acting Secretary. Form Number: None. information on the respondents, [FR Doc. 96–30704 Filed 12–2–96; 8:45 am] Type of Review: Extension. including the use of automated Affected Public: Business or other for- collection techniques or other forms of BILLING CODE 6712±01±P profit. information technology. Number of Respondents: 75. DATES: Written comments should be Estimated time per response: 0.5 submitted on or before January 2, 1997. FEDERAL DEPOSIT INSURANCE hours. If you anticipate that you will be CORPORATION Total annual burden: 38. submitting comments, but find it Needs and Uses: Section 74.1263(c) Affordable Housing Advisory Board difficult to do so within the period of Meeting requires licensees of FM translator or time allowed by this notice, you should booster stations to notify the advise the contact listed below as soon AGENCY: Federal Deposit Insurance Commission of its intent to discontinue as possible. Corporation (FDIC). operations for 30 or more consecutive ADDRESSES: Direct all comments to ACTION: Notice of meeting. days. In addition, licensees must notify Dorothy Conway, Federal SUMMARY: the Commission within 48 hours of the Communications, Room 234, 1919 M In accordance with the station’s return to operation. Section St., N.W., Washington, DC 20554 or via Federal Advisory Committee Act, 5 74.1263(d) requires FM translator or internet to [email protected] and U.S.C. App., announcement is hereby booster station licensees to notify the Timothy Fain, OMB Desk Officer, 10236 published of the Affordable Housing Commission of its intent to permanently NEOB 725 17th Street, N.W., Advisory Board (AHAB) meeting. The discontinue operations and to forward Washington, DC 20503 or meeting is open to the public. the station license to the FCC for [email protected]. DATES: The Federal Deposit Insurance cancellation. The data is used by FCC Corporation, Affordable Housing FOR FURTHER INFORMATION CONTACT: For staff to keep records up-to-date. These Advisory Board will hold its fourth additional information or copies of the notifications inform FCC staff that quarter meeting on Tuesday, December information collections contact Dorothy frequencies are not being used for a 17, 1996 in New York, New York, from Conway at 202–418–0217 or via internet specified amount of time and that 9:00 a.m. to 12 Noon. at [email protected]. frequencies have become available for ADDRESSES: The meeting will be held at other users. SUPPLEMENTARY INFORMATION: the following location: New York Hilton Federal Communications Commission OMB Approval Number: New & Towers, 1335 Avenue of the William F. Caton, Collection. Americas, Beckman Parlor, Second Acting Secretary. Title: Children’s Television Floor, New York, New York 10019. [FR Doc. 96–30703 Filed 12–2–96; 8:45 am] Programming Report. FOR FURTHER INFORMATION CONTACT: Danita M.C. Walker, Committee BILLING CODE 6712±01±P Form No.: 398. Type of Review: New Collection. Management Officer, Federal Deposit Respondents: Businesses or other for- Insurance Corporation, 801 17th Street, Notice of Public Information profit. NW, Room 736, Washington, D.C. Collections Submitted to OMB for Number of Respondents: 1,200 20429, (202) 416–4086. Review and Approval Commercial TV Licensees. SUPPLEMENTARY INFORMATION: The Board Estimated Time Per Response: 3.5–4.5 consists of the Secretary of Housing and November 25, 1996. hour. Urban Development (HUD) or delegate; SUMMARY: The Federal Communications, Total Annual Burden: 18,000 hours. the Chairperson of the Board of as part of its continuing effort to reduce Needs and Uses: On 8/8/96, the Directors of the FDIC, or delegate; the paperwork burden invites the general Commission adopted a Report and Chairperson of the Oversight Board, or public and other Federal agencies to Order in MM Docket No. 93–48 Policies delegate; four persons appointed by the take this opportunity to comment on the and Rules Concerning Children’s General Deputy Assistant Secretary of following proposed and/or continuing Television Programming. As a result of HUD who represent the interests of information collections, as required by this Report and Order, the Commission individuals and organizations involved the Paperwork Reduction Act of 1995, has developed a new FCC Form 398 in using the affordable housing Public Law 104–13. An agency may not ‘‘Children’s Television Programming programs, and two former members of conduct or sponsor a collection of Report’’. The FCC Form 398 will request the Resolution Trust Corporations information unless it displays a information to identify children’s Regional Advisory Boards. The AHAB’s currently valid control number. No educational and informational programs original charter was issued March 9, person shall be subject to any penalty aired to meet their obligations under the 1994, and recharter was issued on for failing to comply with a collection Children’s Television Act of 1990 February 26, 1996. of information subject to the Paperwork (CTA). The form will also request Reduction Act (PRA) that does not information on children’s educational Agendas display a valid control number. and informational programs that An agenda will be available at the Comments are requested concerning (a) stations plan to air in the next calendar meeting. At the general session, the whether the proposed collection of quarter. This standardized form will Board will (1) Report on FDIC information is necessary for the proper facilitate consistency of reporting among downsizing and the affect on the performance of the functions of the licensees, assist in efforts by the public Affordable Housing Program, (2) Discuss Commission, including whether the and the Commission to monitor the status report on Monitoring & information shall have practical utility; compliance with the CTA, and lessen Compliance and (3) Report on Board 64086 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices options, meeting schedule and Work 550—17th Street, N.W., Washington, FEDERAL RESERVE SYSTEM Program for 1997. The AHAB will D.C. Formations of, Acquisitions by, and develop recommendations at the Dated: November 26, 1996. conclusion of the Board meeting. The Mergers of Bank Holding Companies Federal Deposit Insurance Corporation AHAB’s chairperson or its Delegated Federal Officer may authorize a member Valerie J. Best, The companies listed in this notice or members of the public to address the Assistant Executive Secretary. have applied to the Board for approval, AHAB during the public forum portion [FR Doc. 96–30907 Filed 11–29–96; 2:30 pm] pursuant to the Bank Holding Company of the session. BILLING CODE 6714±01±M Act of 1956 (12 U.S.C. 1841 et seq.) (BHC Act), Regulation Y (12 CFR Part Statements 225), and all other applicable statutes Interested persons may submit, in and regulations to become a bank writing, data, information or views on FEDERAL MARITIME COMMISSION holding company and/or to acquire the the issues pending before the Affordable assets or the ownership of, control of, or Housing Advisory Board prior to or at Ocean Freight Forwarder License the power to vote shares of a bank or the general session of the meeting. Revocations bank holding company and all of the Seating for the public is available on a banks and nonbanking companies first-come first-served basis. The Federal Maritime Commission owned by the bank holding company, including the companies listed below. Dated: November 26, 1996. hereby gives notice that the following freight forwarder licenses have been Danita M.C. Walker, The applications listed below, as well revoked pursuant to section 19 of the as other related filings required by the Committee Management Officer, Federal Shipping Act of 1984 (46 U.S.C. app. Deposit Insurance Corporation. Board, are available for immediate 1718) and the regulations of the inspection at the Federal Reserve Bank [FR Doc. 96–30656 Filed 12–2–96; 8:45 am] Commission pertaining to the licensing indicated. Once the application has BILLING CODE 6714±01±M of ocean freight forwarders, effective on been accepted for processing, it will also the corresponding revocation dates be available for inspection at the offices shown below: Notice of Agency Sunshine Act of the Board of Governors. Interested Meeting License number: 978 persons may express their views in Name: Elco Freight International, Inc. writing on the standards enumerated in Pursuant to the provisions of the Address: 420 West Merrick Road, Valley the BHC Act (12 U.S.C. 1842(c)). If the ‘‘Government in the Sunshine Act’’ (5 Stream, NY 11580 proposal also involves the acquisition of U.S.C. 552b), notice is hereby given that Date revoked: October 23, 1996 a nonbanking company, the review also at 11:13 a.m. on Tuesday, November 26, Reason: Failed to maintain a valid surety includes whether the acquisition of the 1996, the Board of Directors of the bond. nonbanking company complies with the Federal Deposit Insurance Corporation License number: 2138 standards in section 4 of the BHC Act, met in closed session to consider the Name: Greystone International, Inc. d/b/a including whether the acquisition of the following matters: American Exporters Forwarding nonbanking company can ‘‘reasonably International Matters relating to the Corporation’s be expected to produce benefits to the corporate and supervisory activities Address: 840 Hinckley Road, Suite 143, public, such as greater convenience, Matters relating to an administrative Burlingame, CA 94010 increased competition, or gains in enforcement proceeding. Date revoked: November 1, 1996 efficiency, that outweigh possible Reason: Failed to maintain a valid surety In calling the meeting, the Board adverse effects, such as undue bond. concentration of resources, decreased or determined, on motion of Vice License number: 2149 Chairman Andrew C. Hove, Jr, seconded unfair competition, conflicts of Name: International Consolidators and interests, or unsound banking practices’’ by Director Joseph H. Neely Freight Forwarders, Inc. (Appointive), concurred in by Director (12 U.S.C. 1843). Any request for Address: 16284 S.W. 74th Street, Miami, FL a hearing must be accompanied by a Nicolas P. Retsinas (Director, Office of 33193 Thrift Supervision), Ms. Judith Walter, Date revoked: October 17, 1996 statement of the reasons a written acting in the place and stead of Director Reason: Failed to maintain a valid surety presentation would not suffice in lieu of Eugene A. Ludwig (Comptroller of the bond. a hearing, identifying specifically any questions of fact that are in dispute, Currency), and Chairman Ricki Helfer, License number: 3331 that Corporation business required its Name: Ransar International, Inc. summarizing the evidence that would consideration of the matters on less than Address: 6 Colonial Drive, Smithtown, NY be presented at a hearing, and indicating seven days’ notice to the public; that no 11787 how the party commenting would be earlier notice of the meeting was Date revoked: November 7, 1996 aggrieved by approval of the proposal. practicable; that the public interest did Reason: Surrendered license voluntarily. Unless otherwise noted, nonbanking not require consideration of the matters License number: 515 activities will be conducted throughout in a meeting open to public observation; Name: Silvey Shipping Co., Inc. the United States. and that the matters could be Address: Building 75, Suite 200, North Unless otherwise noted, comments considered in a closed meeting by Hanger Road, Jamaica, NY 11430 regarding each of these applications authority of subsections (c)(2), (c)(4), Date revoked: October 25, 1996 must be received at the Reserve Bank (c)(6), (c)(8), (c)(9)(A)(ii), (c)(9)(B), and Reason: Failed to maintain a valid surety indicated or the offices of the Board of (c)(10) of the ‘‘Government in the bond. Governors not later than December 17, Sunshine Act’’ (5 U.S.C. 552b(c)(2), Bryant L. VanBrakle, 1996. (c)(4), (c)(6), (c)(8), (c)(9)(A)(ii), (c)(9)(B), Director, Bureau of Tariffs, Certification and A. Federal Reserve Bank of Kansas and (c)(10)). Licensing. City (John E. Yorke, Senior Vice The meeting was held in the Board [FR Doc. 96–30686 Filed 12–2–96; 8:45 am] President) 925 Grand Avenue, Kansas Room of the FDIC Building located at BILLING CODE 6730±01±M City, Missouri 64198: Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64087

1. Berthoud Bancorp Employee Stock received at the Reserve Bank indicated Systems; for questions regarding the fee Ownership Plan, Berthoud, Colorado to or the offices of the Board of Governors schedules: Julius Weyman, Financial acquire at least 50 percent of the voting not later than December 17, 1996. Services Analyst, Check Payments, shares of Berthoud Bancorp, Inc., A. Federal Reserve Bank of New (202/452- 5223), Scott Knudson, Senior Berthoud, Colorado, and thereby York (Christopher J. McCurdy, Senior Financial Services Analyst, ACH indirectly acquire Berthoud National Vice President) 33 Liberty Street, New Payments, (202/452–3959), Darrell Mak, Bank, Berthoud, Colorado. York, New York 10045: Financial Services Analyst, Funds Board of Governors of the Federal Reserve 1. Bayerische Vereinsbank AG, Transfer and Book-Entry Securities System, November 26, 1996. Munich, Germany; to engage de novo Services, (202/452–3223), Anne Paulin, Jennifer J. Johnson, through its subsidiary, VB Risk Senior Information Technology Analyst Deputy Secretary of the Board. Management Products, Inc., New York, (electronic connections), (202/452– 2560), Michael Bermudez, Financial [FR Doc. 96–30696 Filed 12-2-96; 8:45 am] New York in intermediating in the international swap markets by acting as Services Analyst, Noncash Collection BILLING CODE 6210-01-F an originator and principal in interest Service, (202/452–2216), or Kate rate swap and currency swap Connor, Senior Financial Services Notice of Proposals To Engage in transactions; in acting as an originator Analyst, Special Cash Services, (202/ Permissible Nonbanking Activities or and principal with respect to certain 452–3917), Division of Reserve Bank To Acquire Companies That Are interest rate and currency risk- Operations and Payment Systems. For Engaged in Permissible Nonbanking management products such as caps, users of Telecommunications Device for Activities floors and collars, as well as options on the Deaf (TDD) only, please contact swaps, caps, floors and collars (‘‘swap Dorothea Thompson (202/452–3544). The companies listed in this notice derivative products’’); in acting as a Copies of the 1997 fee schedules for have given notice under section 4 of the broker or agent with respect to the the check, automated clearing house Bank Holding Company Act (12 U.S.C. foregoing transactions or instruments; (ACH), funds transfer and net 1843) (BHC Act) and Regulation and in acting as an advisor to settlement, book-entry securities, Y, (12 CFR Part 225) to engage de novo, institutional customers regarding noncash collection, and special cash or to acquire or control voting securities financial strategies involving interest services, as well as electronic or assets of a company that engages rate and currency swaps and swap connections to Reserve Banks, are either directly or through a subsidiary or derivative products; Swiss Bank available from the Reserve Banks. other company, in a nonbanking activity Corporation, 81 Fed. Res. Bull. 185 SUPPLEMENTARY INFORMATION: that is listed in § 225.25 of Regulation (1995); The Long-Term Credit Bank of Y (12 CFR 225.25) or that the Board has Japan, 79 Fed. Res. Bull. 345 (1993); I. Private Sector Adjustment Factor determined by Order to be closely The Sumitomo Bank, Limited, 75 Fed. A. Overview related to banking and permissible for Res. Bull. 582 (1989). bank holding companies. Unless The Board has approved a 1997 PSAF otherwise noted, these activities will be Board of Governors of the Federal Reserve for Federal Reserve priced services of conducted throughout the United States. System, November 26, 1996. $101.5 million. This amount represents Each notice is available for inspection Jennifer J. Johnson, an increase of $15.7 million or 18.3 at the Federal Reserve Bank indicated. Deputy Secretary of the Board. percent from the PSAF of $85.8 million Once the notice has been accepted for [FR Doc. 96–30695 Filed 12-2-96; 8:45 am] targeted for 1996. processing, it will also be available for BILLING CODE 6210-01-F As required by the Monetary Control inspection at the offices of the Board of Act (12 U.S.C. 248a), the Federal Reserve’s fee schedule for priced Governors. Interested persons may [Docket No. R±0941] express their views in writing on the services includes ‘‘taxes that would question whether the proposal complies Federal Reserve Bank Services; Notice have been paid and the return on capital with the standards of section 4 of the that would have been provided had the AGENCY: Board of Governors of the BHC Act, including whether services been furnished by a private Federal Reserve System. consummation of the proposal can business firm.’’ These imputed costs are ‘‘reasonably be expected to produce ACTION: Notice. based on data developed in part from a benefits to the public, such as greater model comprised of the nation’s 50 SUMMARY: The Board has approved a convenience, increased competition, or private sector adjustment factor (PSAF) largest (in asset size) bank holding gains in efficiency, that outweigh for 1997 of $101.5 million, as well as the companies (BHCs). possible adverse effects, such as undue The methodology first entails fee schedules for Federal Reserve priced concentration of resources, decreased or determining the value of Federal services and electronic connections. unfair competition, conflicts of Reserve assets that will be used in These actions were taken in accordance interests, or unsound banking practices’’ producing priced services during the with the requirements of the Monetary (12 U.S.C. 1843). Any request for a coming year. Short-term assets are Control Act of 1980, which requires hearing on this question must be assumed to be financed by short-term that, over the long run, fees for Federal accompanied by a statement of the liabilities; long-term assets are assumed Reserve priced services be established reasons a written presentation would to be financed by a combination of long- on the basis of all direct and indirect not suffice in lieu of a hearing, term debt and equity derived from the costs, including the PSAF. identifying specifically any questions of BHC model. fact that are in dispute, summarizing the DATES: The PSAF and the fee schedules Imputed capital costs are determined evidence that would be presented at a become effective on January 2, 1997. by applying related interest rates and hearing, and indicating how the party FOR FURTHER INFORMATION CONTACT: For rates of return on equity (ROE) derived commenting would be aggrieved by questions regarding the private sector from the bank holding company model. approval of the proposal. adjustment factor: Elizabeth Tacik, The rates drawn from the BHC model Unless otherwise noted, comments Accountant, (202/452–2303), Division of are based on consolidated financial data regarding the applications must be Reserve Bank Operations and Payment for the 50 largest BHCs in each of the 64088 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices last five years. Because short-term debt, II. Priced Services recovery, and targeted ROE.3 by definition, matures within one year, Approximately $26.8 million in A. Overview only data for the most recent year are automation consolidation special used for computing the short-term debt Over the period 1986 through 1995, project costs will be recovered in 1996, rate. the Reserve Banks recovered 100.1 leaving $30.8 million in accumulated The PSAF comprises capital costs, percent of their total costs of providing costs to be financed and recovered in imputed taxes, expenses of the Board of priced services, including special future years.4 Governors related to priced services, project costs that were budgeted for The variation from the Reserve Banks’ and an imputed FDIC insurance recovery and targeted after-tax profit, original budget is attributable to two assessment on clearing balances held i.e., ROE.1 2 Because the revenue from factors. First, volumes have been higher with the Federal Reserve to settle the Reserve Banks’ priced services than expected in the funds transfer, transactions. recovers imputed costs that are not book-entry securities transfer, and actually incurred, the Federal Reserve’s noncash collection services, resulting in B. Asset Base provision of priced services has higher net revenue. Second, costs have The estimated value of Federal consistently had a positive effect on the been lower than budgeted in the funds Reserve assets to be used in providing level of earnings transferred by the transfer and automated clearing house priced services in 1997 is reflected in Federal Reserve to the Treasury. Over (ACH) services, largely due to efficiency Table A–1. Table A–2 shows that the the past 10 years, priced services gains from automation consolidation.5 assets assumed to be financed through revenue has exceeded operating costs by In 1997, the Reserve Banks project to debt and equity are projected to total more than $872 million. This net recover 100.5 percent of total expenses, $623.5 million. As shown in Table A– revenue contributes to the amount including special project costs and 3, this represents a net decrease of $13.8 transferred to the Treasury. Table 1 targeted ROE. The proposed 1997 fees million or 2.2 percent from 1996. This summarizes the cost and revenue for priced services will yield a projected decrease results from lower priced asset performance for priced services since net income of $49.8 million for the year, base levels at the Federal Reserve 1986. compared with a targeted ROE of $45.8 Automation Services (FRAS), slightly During 1994 and 1995, the Reserve million. Approximately $27.7 million of offset by an increase in the Reserve Banks did not fully recover their automation consolidation special Banks’ priced asset base due to building targeted ROE due primarily to declining project expenses will be recovered, projects in three districts and increased check volumes resulting from the new leaving an accumulated balance of long-term prepayments. same-day settlement rule. In response to special project costs of $22.0 million to declining volumes, the Reserve Banks be recovered in future years. The C. Cost of Capital, Taxes, and Other Reserve Banks have indicated that the Imputed Costs adjusted the resources devoted to the check service and increased prices most significant risk associated with the Table A–3 shows the financing and selectively. In 1996, the Reserve Banks proposed fee schedules is the tax rates as well as the other required estimate that priced services revenue uncertainty of 1997 volume estimates PSAF recoveries proposed for 1997 and will yield an after-tax net income of given the current competitive compares the 1997 rates with the rates $55.6 million, compared with a targeted environment and the effects of interstate used for developing the PSAF for 1996. return on equity of $36.6 million. The branch banking. Overall, prices across all services are The pre-tax return on equity rate 1996 recovery rate is estimated to be projected to decline by approximately increased from 14.2 percent in 1996 to 102.4 percent of the costs of providing 19.1 percent for 1997. The increase is a priced services, including imputed 3 Through August 1996, the Reserve Banks result of stronger 1995 BHC financial expenses, automation consolidation performance included in the 1997 BHC recovered 103.2 percent of total priced services special project costs budgeted for expenses, including automation consolidation model, which replaces the 1990 BHC special project costs and targeted ROE. financial performance in the 1996 BHC 4 1 The Monetary Control Act requires that, over the Under an existing Board policy, the Reserve Banks may defer and finance development costs if model. long run, the Federal Reserve set fees for priced the development costs would have a material effect The decrease in the FDIC insurance services to recover all direct and indirect costs of on unit costs, provided that a conservative time providing the services plus imputed costs, such as assessment from $2.2 million in 1996 to period is set for full cost recovery and a financing taxes that would have been paid and the return on $2.0 million in 1997, as shown in Table factor is applied to the deferred portion of capital that would have been earned had the development costs. The 1996 and 1997 financing A–3, is attributable to the impact of the services been provided by a private business firm. new lower rate for deposit insurance. rates are 12.0 and 15.1 percent, respectively, which The targeted ROE is the budgeted after-tax profit are the weighted-average imputed costs of the The FDIC rate for adequately capitalized that the Federal Reserve would have earned, as Federal Reserve’s long-term debt and equity. This institutions of $0.04 on every $100 in required by law, had it been a private business firm. methodology is similar to the approach a private The targeted ROE is derived from the BHC model clearing balances was reduced to $0.03 firm would use in financing such costs. Starting in based on consolidated financial data for each of the 1992, the Reserve Banks deferred and financed in January 1996. last five years. special project costs for automation consolidation 2 Certain offsets to costs and certain costs are that were associated with employee retention and D. Capital Adequacy treated differently in the pro forma income severance and excess mainframe computer capacity. As shown on Table A–4, the amount statement for Federal Reserve priced services that Each priced service is expected to recover fully its of capital imputed for the proposed is published in the Board’s Annual Report than they portion of these deferred expenses and accumulated are for purposes of setting fees. For example, offsets finance charges within five years after that service 1997 PSAF totals 32.6 percent of risk- to costs associated with the transition to and has completed its transition to the consolidated weighted assets and 4.1 percent of total retroactive application of the Financial Accounting automation environment. Most services have been assets. While the capital to risk- Standards Board’s Statement of Financial able to recover these expenses more quickly than weighted asset ratio is well in excess of Accounting Standards No. 87 (SFAS 87), pension the five-year deadline. accounting, and SFAS 106, other post-retirement 5 The Reserve Banks have substantially completed the 8 percent capital guideline for employee benefits accounting, have not been the transfer of mainframe computer operations to adequately capitalized state member considered in setting fees for priced services. Under the System’s consolidated data centers, managed by banks and BHCs, the Federal Reserve is the procedures used to prepare the pro forma the Federal Reserve Automation Services (FRAS) treated as an adequately capitalized income statement, the Reserve Banks recovered and also have completed significant milestones in 100.7 percent of the expenses incurred in providing the centralization of certain key software bank for FDIC assessment purposes priced services, including targeted ROE, from 1986 applications, such as ACH, Fedwire funds transfers, based on its capital to total asset ratio. through 1995. and the Integrated Accounting System. Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64089

3.4 percent in 1997, reflecting increases reductions for ACH, Fedwire funds entry securities transfer and noncash in paper-based check product prices and transfers, and selected electronic check collection services.6 selected electronic access fees, price products, and stable prices for the book-

TABLE 1. 7ÐPRO FORMA COST AND REVENUE PERFORMANCE a [$ millions]

1 2 3 4 5 6 7 8 Revenue b Operating Special Total ex- Net income Target Recovery Special costs & im- project pense ROE ROE e rate after project Year puted ex- costs recov- [2+3] [1±4] target ROE costs de- penses c ered d (percent) ferred & fi- [1/(4+6)] nanced f

1986 ...... 627.7 571.6 0.0 571.6 56.1 27.3 104.8 0.0 1987 ...... 649.7 598.2 0.0 598.2 51.5 29.3 103.5 0.0 1988 ...... 667.7 641.1 3.2 644.3 23.4 32.7 98.6 0.0 1989 ...... 718.6 692.1 4.6 696.7 21.9 32.9 98.5 0.0 1990 ...... 746.5 698.1 2.8 700.9 45.6 33.6 101.6 0.0 1991 ...... 750.2 710.0 1.6 711.6 38.6 32.5 100.8 0.0 1992 ...... 760.8 731.0 11.2 742.2 18.6 26.0 99.0 1.6 1993 ...... 774.5 722.4 27.1 749.5 25.0 24.9 100.0 12.5 1994 ...... 767.2 748.3 8.8 757.1 10.1 34.6 96.9 33.9 1995 ...... 765.2 724.0 19.8 743.8 21.4 31.5 98.7 36.3 1996 (Est) ...... 810.4 728.0 26.8 754.8 55.6 36.6 102.4 30.8 1997 (Bud) ...... 813.9 736.4 27.7 764.1 49.8 45.8 100.5 22.0 a The revenues and expenses for 1986 through 1993 include the definitive securities safekeeping service, which was discontinued in 1993. The table includes revised revenue and expense data for 1992 and 1993. b Beginning in 1987, net income on clearing balances is included in revenue. c Imputed expenses include interest on debt, taxes, FDIC insurance premiums, and the cost of float. Credits for prepaid pension costs under SFAS 87 and the charges for post-retirement benefits in accordance with SFAS 106 are included beginning in 1993. d Special project costs include research and development expenses for evaluating a different computer processing platform for electronic pay- ments from 1988 through 1990, check image project costs from 1988 through 1993, and automation consolidation costs from 1992 through 1997. e Targeted ROE is based on the ROE included in the private sector adjustment factor and has been adjusted for taxes, which are included in column 2. Targeted ROE has not been adjusted to reflect automation consolidation special project costs deferred and financed. f Totals are cumulative and include financing costs.

B. Check—Table 2 presents the actual 1997 cost recovery performance for the 1995, estimated 1996, and projected check service.

TABLE 2.ÐCHECK PRO FORMA COST AND REVENUE PERFORMANCE ($ millions)

7 8 2 3 4 5 Recovery Special 1 Operating Special Total ex- Net income 6 rate after project Year Revenue costs and project pense (ROE) Target ROE target ROE costs de- imputed ex- costs recov- [2+3] [1±4] (percent) ferred and penses ered [1/(4+6)] financed

1995 ...... 574.0 558.9 5.3 564.2 9.8 24.0 97.6 12.4 1996 (Est) ...... 605.1 569.7 6.5 576.2 28.9 28.0 100.1 10.4 1997 (Bud) ...... 616.7 572.9 7.5 580.4 36.3 35.3 100.2 7.4

1. 1995 Performance the same-day settlement regulation in will recover 100.1 percent of their costs The check service recovered 97.6 1994. Return item volume increased 3.8 for the full year, compared with the percent of total expenses in 1995, percent in 1995 compared to 1994 targeted 1996 recovery rate of 100.0 including targeted ROE. The volume of levels. percent. Check collection volumes appear to be stabilizing compared to the checks collected decreased 5.3 percent 2. 1996 Performance from 1994 levels, as volume losses relatively significant volume losses in associated with bank consolidations and Through August 1996, the check 1994 and 1995. The Reserve Banks now the implementation of the same-day service recovered 101.2 percent of total project that the volume of checks settlement regulation continued. In expenses, including automation collected during 1996 will decline by 1995, however, volume losses were less consolidation special projects costs 0.4 percent from 1995 levels, reflecting substantial than the double-digit losses budgeted for recovery and targeted ROE. a 1.6 percent increase in processed that accompanied the introduction of The Reserve Banks estimate that they volume and a 9.1 percent decrease in

6 This estimate is based on a chained Fisher Ideal index may overstate the price effects of paper-based services that are mostly electronic, such as ACH, price index. This index was not adjusted for quality services. Generally, processing costs (and hence funds transfer, and check payor bank services. changes in Federal Reserve priced services. Because prices) have risen in services that are paper-based, 7 Calculations on this table and subsequent pro the index was not adjusted for quality and due to such as check collection, but have declined in those forma cost and revenue tables may be affected by data deficiencies in certain electronic services, the rounding. 64090 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices fine sort volume. Return item volume is Reserve Bank of New York closed its contribute to efficiencies in paying estimated to increase by 2.9 percent. Regional Check Processing Center in banks’ operations by reducing rejects Jericho, New York, and consolidated and minimizing adjustments. 3. 1997 Issues those operations at its East Rutherford The Reserve Banks also are expanding The total number of interbank checks (New Jersey) Operations Center. In their image-enhanced check products, will likely continue to decline as banks addition, the New York Bank is which have the potential to increase the merge when interstate branch banking centralizing the processing of use of electronic check presentment and becomes effective nationwide in June adjustments at its Utica, New York, to reduce the risks associated with it. At 1997 and as banks continue to Regional Check Processing Center. In present, 19 Reserve Bank offices offer consolidate their payment processing addition, on October 27, the System’s image-enhanced products; in 1997, 34 operations. In addition, other service Interdistrict Transportation Service Reserve Bank offices plan to offer these providers in the interbank check (ITS) moved one of its five airport hubs products. processing market are expected to from Teterboro, New Jersey, to compete aggressively for check Total check service operating costs Philadelphia, Pennsylvania. This move plus imputed expenses are projected to collection and returned check volume. allows for improvements in deposit The Reserve Banks project modest increase by $3.2 million, or 0.6 percent deadlines and funds availability for volume increases in 1997 despite the above estimated 1996 expenses. many depositors. challenges posed by this environment. 4. 1997 Fees Total forward check collection volume The Reserve Banks will continue to is expected to increase by 0.7 percent in promote electronic check products that The Reserve Banks are continuing the 1997, reflecting a projected increase of are designed to increase operating steps taken over the last several years to 1.9 percent in processed volume and a efficiency and improve the speed of the set check fees to reflect more accurately decrease of 5.5 percent in fine sort check collection system. For example, the fixed and variable costs associated volume. Returned check volume is Reserve Banks are expanding the range with providing check services. The 1997 expected to increase 0.4 percent. of deposit products that use electronic fees and product offerings are intended The Reserve Banks continue to take cash letters (ECL). The expanded use of to encourage the use of electronics and steps to improve the efficiency of their these deposit products is expected to to improve the efficiency of the check check processing operations. For improve the efficiency of the Reserve collection mechanism. Table 3 example, on October 15, the Federal Banks’ operations and may ultimately summarizes key check service fees.

TABLE 3.ÐSELECTED CHECK FEES

Products 1996 price ranges 1997 price ranges

Items: (per item) (per item) Forward processed: City ...... $0.003 to 0.080 ...... $0.003 to 0.080. RCPC ...... $0.003 to 0.079 ...... $0.004 to 0.090. Fine sort: City ...... $0.003 to 0.012 ...... $0.003 to 0.012. RCPC ...... $0.002 to 0.017 ...... $0.003 to 0.017. Qualified return items: City ...... $0.100 to 1.110 ...... $0.160 to 1.110. RCPC ...... $0.120 to 1.560 ...... $0.017 to 1.560. Raw return items: City ...... $0.580 to 4.000 ...... $0.580 to 4.000. RCPC ...... $0.900 to 4.000 ...... $0.650 to 4.000. Cash letters: (per cash letter) (per cash letter) Forward processed ...... $1.500 to 9.000 ...... $1.500 to 9.000. Forward fine-sort package ...... $2.500 to 11.000 ...... $2.500 to 13.000. Return items: raw and qualified ...... $1.500 to 8.000 ...... $1.500 to 7.000. Payor bank services: Min Per item ...... Min Per item MICR information ...... $5±$30 $0.001±0.0050 ...... $5±$30 $0.001±0.0050. Electronic presentment ...... $3±$14 $0.001±0.0045 ...... $3±$14 $0.001±0.0045. Truncation ...... $3±$25 $0.010±0.0170 ...... $3±$25 $0.010±0.0170.

Overall, 1997 fees for forward the fees assessed for deposits made with For the first time since 1993, the collection products will increase by a matching ECL file will result in per- Reserve Banks will change some ITS about 1.8 percent on a volume-weighted item charges that are $0.002 less than fees. For 1997, ITS fees will increase basis, compared with January 1996 the same deposit received without an about 11 percent on a volume-weighted prices. For returned check products, the accompanying ECL file. This price basis. The price changes are designed to increase is 2.6 percent. The most differential reflects the potential reflect more accurately the cost of significant increases are in fine sort fees, efficiencies from processing checks in servicing certain low-volume and which are increasing by 7.8 percent. conjunction with ECL data. Payor bank remote routes. Fees for 12 percent of the Fees for electronic check services will services revenue is expected to increase routes, representing 47 percent of the decline or remain stable. These fees by 13.9 percent, primarily due to more check volume carried on ITS, will include per-item fees for the Reserve widespread acceptance of electronic remain unchanged. The Reserve Banks Banks’ electronic check presentment are investigating, for possible check presentment and image-enhanced and payor bank information products as implementation during 1997, alternative check products. well as for ECL products. On average, fee structures for the ITS. Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64091

The Reserve Banks project that the The Reserve Banks continue to take the proposed 1997 check service fees, check service will recover 100.2 percent steps to control costs, and their volume including ITS fees, and the deposit of total costs in 1997, including targeted projections for 1997 are relatively deadlines. ROE and $7.5 million in automation conservative. It is difficult, however, to consolidation special project costs. project the effect of interstate branch C. Automated Clearing House (ACH) Approximately $7.4 million in banking on the Reserve Banks’ check Table 4 presents the actual 1995, accumulated automation consolidation service. The Board believes that steps estimated 1996, and projected 1997 cost special project costs will be deferred could be taken during 1997 to reduce recovery performance for the and financed for recovery in future operating costs if volume projections commercial ACH service. years. were not realized. The Board approved

TABLE 4.ÐACH PRO FORMA COST AND REVENUE PERFORMANCE [$ millions]

7 8 2 3 4 5 Recovery special 1 Operating Special Total ex- Net income 6 rate after project Year Revenue costs & im- project pense (ROE) Target ROE target ROE costs de- puted ex- costs recov- [2+3] [1±4] (percent) ferred & fi- penses ered [1/(4+6)] nanced

1995 ...... 75.6 66.6 4.0 70.6 5.0 3.1 102.6 21.3 1996 (Est) ...... 79.8 63.6 9.2 72.8 7.0 3.6 104.5 16.7 1997 (Bud) ...... 75.4 59.9 11.1 71.0 4.3 4.0 100.5 10.8

1. 1995 Performance $0.012 interregional fee; reducing the most federal government payments be presort deposit fee by 10 percent to 0.9 made electronically by January 1999 Revenues from the ACH service cent from 1.0 cent; and eliminating the may indirectly increase commercial recovered 102.6 percent of total interregional and presort deposit ACH volume.8 expenses, including automation deadlines, as well as one local deposit consolidation special project costs and deadline. The reduction in fees is 4. 1997 Fees targeted ROE, during 1995. The expected to result in substantial savings The new Fed ACH processing overrecovery was due primarily to to the banking industry, and the changes environment is expected to enable the higher-than-expected growth in in the deadlines will provide originators Federal Reserve to realize significant commercial ACH volume. Commercial of ACH transactions an additional one operating efficiencies. The Board has volume increased 17.8 percent, to one and one-half hours of processing approved several fee reductions compared to a projected growth rate of time. effective January 1997. These changes 12.9 percent. As a result, total ACH Through August, commercial ACH support the System’s strategic direction revenue was 6.7 percent above target. volume has increased 16.1 percent over of moving from a paper-based to an 2. 1996 Performance the 1995 level. For the full year, the electronic payments system and Reserve Banks expect commercial recognize the technological and Through August 1996, the ACH volume to increase 15.2 percent, operational changes implemented service recovered 104.6 percent of total compared to the 17.5 percent increase during the past year. expenses, including automation originally projected. The revised consolidation special project costs projection reflects the effect of TABLE 5 budgeted for recovery and targeted ROE. consolidation in the banking industry The Reserve Banks estimate that they and some increased use of private-sector Pro- will recover 104.5 percent of their costs Current processors. Fee category fee posed for the full year, compared with the 1997 fee targeted 1996 recovery rate of 100.0 3. 1997 Issues percent. This overrecovery is 1997 will be the first full year that all Premium surcharge ...... $0.01 $0.005 Addenda fee ...... 0.004 0.003 attributable primarily to lower-than- Reserve Banks operate in the Fed ACH Discrete/commingled 10.00 Elimi- expected data processing costs resulting environment. The projected reduction file fee. nate. from the efficiencies realized with the in ACH operating costs reflects the new Fed ACH application software. The expected cost savings that should be As Table 5 indicates, the Reserve conversion to Fed ACH began in late realized from centralized processing. Banks will reduce the premium 1995 and was completed in August Beginning in January 1997, several new surcharge by 50 percent on items 1996. features will be made available to deposited after 8:00 p.m. Eastern Time. On October 1, the Reserve Banks depository institutions, including Reducing the premium cycle surcharge implemented a number of changes to additional file delivery options and recognizes the improvements made in their ACH fees and products, which automated trace and research request the Federal Reserve’s processing of ACH were approved under delegated capabilities. The projected volume transactions that reduce operational and authority by the Director of the Board’s growth rate of 18.5 percent is very Division of Reserve Bank Operations aggressive in light of 1996 volume 8 The Debt Collection Improvement Act of 1996 and Payment Systems. The changes estimates. The Reserve Banks believe, mandates the use of electronic funds transfers for included combining the interregional however, that Federal Reserve and federal government payments to recipients who become eligible after July 26, 1996. The Act also and intraregional fee into one basic fee industry marketing efforts will spur mandates that all federal government payments, of $0.01 per item, representing a 16.7 commercial ACH volume growth. with limited exceptions, be made electronically percent reduction from the former Moreover, the recent requirement that after January 1, 1999. 64092 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices float risk. The Reserve Banks will number, is being eliminated because of The Reserve Banks project that the continue to review originating the new delivery features that are ACH service will recover 100.5 percent institutions’ deposit patterns to available in Fed ACH. of its 1997 costs, including $11.1 determine whether the current premium In addition to the above changes, the million in automation consolidation deposit deadline can be extended. In Reserve Banks plan to propose a new fee special project costs and targeted ROE. addition, the Reserve Banks will reduce schedule during 1997 that fully reflects Approximately $10.8 million in the fee for addenda records by $0.001, the efficiencies of the Fed ACH automation consolidation special or 25 percent. The reduction in the processing environment. project costs will continue to be To determine the nature and extent of addenda record fee is intended to the expected efficiencies, the Reserve deferred and financed for recovery in promote the use of electronic payments Banks are studying their processing future years. for financial electronic data interchange costs in the new environment. It is D. Funds Transfer and Net Settlement applications. Finally, the Reserve Banks anticipated that, under delegated will eliminate the monthly discrete/ authority, the Director of the Board’s Table 6 presents the actual 1995, commingled file receipt fee. The Division of Reserve Bank Operations estimated 1996, and projected 1997 cost discrete/commingled file fee, which is and Payment Systems will be requested recovery performance for the funds charged to receiving points that receive to approve a new ACH fee schedule by transfer and net settlement service. multiple files segregated by routing mid-1997.

TABLE 6.ÐFUNDS TRANSFER AND NET SETTLEMENT PRO FORMA COST AND REVENUE PERFORMANCE [$ millions]

2 3 7 8 Operating Special 4 5 Recovery Special Year 1 costs & project Total Net Income 6 rate after project Revenue imputed costs expense (ROE) Target ROE target ROE costs [2+3] [1¥4] (percent) deferred expenses recovered [1/(4+6)] & financed

1995 ...... 90.6 74.1 9.7 83.8 6.8 3.4 103.8 0.0 1996 (Est) ...... 97.3 69.6 9.3 78.8 18.5 3.8 117.7 0.3 1997 (Bud) ...... 95.2 80.2 7.4 87.6 7.6 5.1 102.7 0.0

1. 1995 Performance budget, due to higher-than-expected on- effective in 1997.9 Partially offsetting For 1995, the funds transfer and net line funds transfer volume. Basic this increase is a projected decline in settlement service recovered 103.8 origination volume growth is estimated data processing costs due to the percent of total expenses, including to be 8.3 percent in 1996 compared to conversion of the New York Reserve automation consolidation special original budget projections of 2.1 Bank’s funds transfer application to the project costs and targeted ROE. Basic percent. The higher volume has been consolidated FRAS environment in funds transfer origination volume attributed to sharply increased mutual spring 1997. fund activity, aggressive marketing of increased 5.6 percent over the 1994 4. 1997 Fees level, resulting in higher revenues. cash management services by depository institutions to their customers, and, to a Despite projected increased costs in 2. 1996 Performance lesser extent, increased mortgage 1997, the benefits of automation Through August 1996, the funds activity and securities-related settlement consolidation combined with strong transfer and net settlement service payments (the latter due to the market’s volume growth will enable the Reserve recovered 117.9 percent of total move to a T+3 settlement cycle and Banks to reduce the basic funds transfer expenses, including automation same-day funds settlement on securities fee by 10 percent from $0.50 to $0.45. consolidation special project costs trades). All other funds transfer and net budgeted for recovery and targeted ROE. 3. 1997 Issues settlement fees will remain unchanged. For full-year 1996, the Reserve Banks The Reserve Banks project that revenues estimate that the funds transfer service The Reserve Banks expect funds will recover 102.7 percent of total funds will recover 117.7 percent of total transfer origination volume to increase transfer expenses, including targeted expenses, compared to a targeted 5.3 percent over 1996 estimated levels. ROE and all allocated automation recovery rate of 106.0 percent. This This projected growth rate is lower than consolidation special project costs. difference is attributable to both lower- the 1996 estimated growth rate but than-anticipated costs and higher-than- slightly above the ten-year historical E. Book-Entry Securities 10 average annual growth rate of 5.0 anticipated revenue. The Reserve Banks Table 7 presents the actual 1995, percent. Uncertainties in achieving the estimate that operating costs will be estimated 1996, and projected 1997 cost lower than the original budget estimates projected volume growth include the due to lower-than-budgeted allocations effects of increased bank mergers and consolidations as interstate branch 9 The Reserve Banks have modified their of local and national data methodology for allocating FRAS data processing communications costs. In addition, the banking takes effect in 1997 and the and data communications (DP/DC) costs to provide Reserve Banks are beginning to realize level of mutual fund and cash more incentives for the efficient use of DP/DC the efficiencies from processing funds management activity in 1997. resources, and for allocating certain joint overhead transfers in a centralized software Operating costs also are anticipated to costs to recognize that these costs are not closely related to particular services. These cost accounting environment. increase in 1997 due primarily to two changes are consistent with general industry Total revenue is estimated to be $6.4 changes to the Reserve Banks’ cost practices. million (or 7.1 percent) over the original accounting methodology that become 10 Includes Purchase and Sale Activity. Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64093 recovery performance for the book-entry securities service.11

TABLE 7.ÐBOOK-ENTRY SECURITIES PRO FORMA COST AND REVENUE PERFORMANCE [$ millions]

7 8 2 3 Recovery Special 1 Operating Special 4 5 6 rate after project Year Revenue costs & im- project Total ex- Net income Target ROE target ROE costs de- puted ex- costs recov- pense (ROE) (percent) ferred & fi- penses ered [1/(4+6)] nanced

1995 ...... 15.9 14.6 0.9 15.5 0.4 0.7 97.8 2.4 1996 (Est) ...... 16.9 14.3 1.7 16.0 0.9 0.8 100.7 3.2 1997 (Bud) ...... 16.7 14.4 1.5 15.8 0.9 0.9 100.1 3.8

1. 1995 Performance 3. 1997 Issues services and allocate the cost and The book-entry securities service The Reserve Banks expect book-entry revenue associated with electronic recovered 97.8 percent of total expenses securities transfer origination volume to access to the various priced services. in 1995, including automation decline 1.3 percent in 1997 from the The Reserve Banks will retain the consolidation special project costs 1996 estimated level. Participants Trust current monthly fees for electronic budgeted for recovery and targeted ROE. Company (PTC) expects to expand its access for all connection types in 1997 Origination volume declined 0.3 percent mortgage-backed securities business by without modification but increase the from the 1994 level, compared to a mid-1997 to include Fedwire-eligible fees for installation and training. budgeted increase of 3.1 percent. Total securities issued by the Federal Home Currently, the Reserve Banks assess costs were over budget due to higher- Loan Mortgage Corporation and the an installation and training fee of $300 than-expected data communication Federal National Mortgage Association. for new Fedline customers and a $300 costs as a result of increased circuit In addition, Reserve Banks may face fee for the installation of new computer- expenses and lower-than-expected potential volume reductions resulting interface connections. These fees have savings from reductions in local data from bank mergers and consolidations not changed since 1986. The current processing operations. as interstate branch banking takes effect fees assessed for customer training and in 1997. The Board believes that there installation do not reflect fully the costs 2. 1996 Performance is some risk in achieving the volume of these activities, particularly for Through August 1996, the book-entry levels projected by the Reserve Banks computer-interface customers. securities service recovered 100.6 because of uncertainties regarding the In 1997, the Reserve Banks will percent of total expenses, including extent to which Reserve Banks’ charge separate fees for installation and automation consolidation special mortgage-backed securities transfer training activities. Compared to the project costs and targeted ROE. For the volume will move to PTC’s new service. current combined installation and full-year 1996, the Reserve Banks training fee of $300, the Reserve Banks estimate that revenues will recover 4. 1997 Fees will assess a fee of $150 for the training 100.7 percent of total costs compared to The Reserve Banks will maintain 1997 of new Fedline customers and a fee of a budgeted recovery rate of 100.0 book-entry securities fees at the 1996 $300 for Fedline installations; the $150 percent. Total revenue is expected to be level. The Reserve Banks project that the fee for retraining is unchanged. In $1.1 million higher than budget due book-entry securities service will addition, the Reserve Banks will primarily to higher-than-anticipated recover 100.1 percent of costs, including increase the one-time computer- growth in on-line origination volume. targeted ROE and $1.5 million in interface installation fee from $300 to Volume in 1996 is estimated to grow 9.7 automation consolidation special $800. percent, compared to a budgeted decline project costs. G. Noncash Collection of 0.4 percent. This unexpected growth partially reflects the one-time movement F. Electronic Connections Table 8 presents the actual 1995, of securities associated with mergers The Reserve Banks charge fees for the estimated 1996, and projected 1997 cost and higher-than-expected mortgage- electronic connections used by recovery performance for the noncash backed securities activity. depository institutions to access priced collection service.

11 The Reserve Banks provide securities transfer institutions. The priced component of this service, Treasury securities, the Reserve Banks act as fiscal services for securities issued by the U.S. Treasury, reflected in this memorandum, consists of the agents and the Treasury Department assesses fees federal government agencies, government revenues, expenses, and volumes associated with for those transfer services. sponsored enterprises, and certain international the transfer of all non-Treasury securities. For 64094 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

TABLE 8.ÐNONCASH COLLECTION PRO FORMA COST AND REVENUE PERFORMANCE [$ millions]

7 8 2 3 4 5 Recovery Special 1 Operating Special Total ex- Net income 6 rate after project Year Revenue costs & im- project pense (ROE) Target ROE target ROE costs de- puted ex- costs recov- [2+3] [1±4] (percent) ferred & fi- penses ered [1/(4+6)] nanced

1995 ...... 4.0 4.5 0.0 4.5 (0.5) 0.2 84.7 0.3 1996 (Est) ...... 5.6 5.2 0.0 5.2 0.4 0.2 103.0 0.3 1997 (Bud) ...... 4.5 3.8 0.3 4.1 0.3 0.2 102.8 0.0

1. 1995 Performance percent. Noncash collection volume is the Reserve Banks project a 19.6 percent expected to continue its long-term volume decline from the 1996 estimated The noncash collection service contraction.12 The Reserve Banks volume. recovered 84.7 percent of total expenses, estimate that 1996 volume will be less 4. 1997 Fees including targeted ROE, in 1995. than 24 percent of the peak volume Volume increased 23.2 percent processed in 1985. Due to this declining compared to an original budgeted The current fees will be retained in demand, most national providers have 1997. At these fee levels, the Reserve growth rate of 16.6 percent. The cost withdrawn from providing noncash recovery shortfall was attributed to Banks project a cost recovery of 102.8 collection services. As a result, the percent for 1997. transition costs associated with Reserve Banks estimate that volume will consolidation of the Federal Reserve’s increase 31.8 percent in 1996, compared H. Special Cash Services noncash collection service at two to the budgeted increase of 22.5 percent. Priced special cash services represent processing sites—the Cleveland Reserve The combined effect of higher than a very small portion (approximately 2 Bank and the Jacksonville Branch of the budgeted volume, fee increases, and percent) of overall cash services Federal Reserve Bank of Atlanta. cost containment efforts account for the provided by the Reserve Banks to better-than-anticipated cost recovery. 2. 1996 Performance depository institutions. Special cash Through August 1996, the noncash 3. 1997 Issues services include cash transportation, collection service recovered 103.3 The Depository Trust Company (DTC) coin wrapping, nonstandard packaging percent of total expenses, including has recently entered the noncash of currency orders and deposits, and targeted ROE. For the year, Reserve collection business. The Reserve Banks nonstandard frequency of access to cash Banks now estimate that the noncash believe that DTC’s entrance into this services. collection service will recover 103.0 service will not materially affect the Table 9 presents the actual 1995, percent of total expenses, including Reserve Banks’ 1997 noncash volume, estimated 1996, and projected 1997 cost targeted ROE, compared with the since DTC’s noncash collection service recovery performance for special cash targeted full-year recovery rate of 100.0 is limited to its participants. For 1997, services.

TABLE 9.ÐCASH PRO FORMA COST AND REVENUE PERFORMANCE [$ millions]

7 8 2 3 4 5 Recovery Special 1 Operating Special Total ex- Net income 6 rate after project Year Revenue costs & im- project pense (ROE) Target ROE target ROE costs de- puted ex- costs recov- [2+3] [1±4] (percent) ferred & fi- penses ered [1/(4+6)] nanced

1995 ...... 5.2 5.2 0.0 5.2 0.0 0.1 97.7 0.0 1996 (Est) ...... 5.7 5.7 0.0 5.7 0.0 0.2 96.9 0.0 1997 (Bud) ...... 5.5 5.2 0.0 5.2 0.4 0.3 102.1 0.0

1. 1995 Performance total expenses, including targeted ROE. In March 1996, the Director of the The special cash services recovered For full-year 1996, the Reserve Banks Board’s Division of Reserve Bank 97.7 percent of total expenses, including estimate that special cash services will Operations and Payment Systems, under targeted ROE, in 1995. recover 96.9 percent of total expenses, delegated authority from the Board, compared to a targeted recovery rate of approved a proposal from the Federal 2. 1996 Performance 102.2 percent. Costs were higher than Reserve Bank of San Francisco to charge Through August 1996, the special budgeted and priced volumes were fees for access to cash services beyond cash services recovered 98.1 percent of lower than budgeted in certain offices. the basic service level.13 Estimated

12 The Tax Equity and Fiscal Responsibility Act securities were ‘‘immobilized’’ in depositories, such becomes effective on May 1, 1998. The policy of 1982 (TEFRA) imposed a tax disadvantage to the as DTC, further reducing the demand for noncash provides for a base level of free currency access to holding of bearer securities, which has resulted in collection services. all depository institutions, but restricts the number the virtual elimination of new issues. Following the 13 In April 1996, the Board approved a new cash of offices served and the frequency of access. enactment of TEFRA, many bearer municipal access policy for the Federal Reserve Banks that Depository institutions that meet minimum volume Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64095 revenues are lower than budgeted for participants are subject to the The Board believes that the 1996 because of lower-than-anticipated competitive impact analysis described recommended price and service level volume levels in the San Francisco in the March 1990 policy statement changes will not have a direct and District. ‘‘The Federal Reserve in the Payments material adverse effect on the ability of other service providers to compete with 3. 1997 Fees System.’’ In this analysis, the Board assesses whether the proposed change the Reserve Banks in providing similar For 1997, the Reserve Banks project would have a direct and material services. The 1997 fees proposed by the that special cash services will recover adverse effect on the ability of other Reserve Banks result in a projected 102.1 percent of costs, including service providers to compete effectively return on equity that meets the targeted targeted ROE. Several Reserve Banks with the Federal Reserve in providing return on equity, based on the 50 bank will increase fees for wrapped coin. similar services due to differing legal holding company model. Over the long powers or constraints or due to a term, the Reserve Banks have recovered III. Competitive Impact Analysis their total costs of providing priced dominant market position of the Federal services, including imputed costs and All operational and legal changes Reserve deriving from such legal targeted return on equity. Other service considered by the Board that have a differences. substantial effect on payment system providers have pricing flexibility that is equal to, or greater than, that used by the Reserve Banks.

TABLE A±1ÐCOMPARISON OF PRO FORMA BALANCE SHEETS FOR FEDERAL RESERVE PRICED SERVICES [Millions of dollarsÐaverage for year]

1997 1996

Short-term assets: Imputed reserve requirement on clearing balances ...... $545.7 409.6 Investment in marketable securities ...... 4,911.3 3,686.7 Receivables 1 ...... 64.3 64.4 Materials and supplies 1 ...... 11.6 8.6 Suspense & Difference 1 ...... 0.0 0.0 Prepaid expenses 1 ...... 14.6 13.9 Items in process of collection ...... 2,548.2 2,413.2

Total short-term assets ...... 8,095.7 6,596.4

Long-term assets: Premises 1 2 ...... 348.0 346.4 Furniture and equipment 1 ...... 167.0 189.4 Leasehold improvements and long-term prepayments 1 ...... 18.0 14.6 Capital leases ...... 0.7 2.3

Total long-term assets ...... 533.7 552.7

Total assets ...... 8,629.4 7,149.1

Short-term liabilities: Clearing balances and balances arising from early credit of uncollected items ...... 5,457.0 4,096.3 Deferred credit items ...... 2,548.2 2,413.2 Short-term debt 3 ...... 90.5 86.8

Total short-term liabilities ...... 8,095.7 6,596.3

Long-term liabilities: Obligations under capital leases ...... 0.7 2.3 Long-term debt 3 ...... 180.5 182.7

Total long-term liabilities ...... 181.2 185.0

Total liabilities ...... 8,276.9 6,781.3

Equity 3 ...... 352.5 367.8

Total liabilities and equity ...... 8,629.4 7,149.1 1 Financed through PSAF; other assets are self-financing. 2 Includes allocations of Board of Governors' assets to priced services of $0.5 million for 1997 and $0.5 million for 1996. 3 Imputed figures represent the source of financing for certain priced services assets. Note: Details may not add to totals due to rounding. thresholds will be able to obtain more frequent free access. Additional access, beyond the free level, will be priced. 1 The Dockets Management Branch used the letter ‘‘G’’ to refer to the Government exhibits by the participants. 64096 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

Table A–2—Derivation of the 1997 PSAF [Millions of dollars]

A. Assets to be Financed: 1 Short-term ...... $90.5 Long-term 2 ...... 533.0

Total ...... $623.5

B. Weighted Average Cost: 1. Capital Structure: 3 Short-term Debt ...... 14.5% Long-term Debt ...... 28.9% Equity ...... 56.5% 2. Financing Rates/Costs: 3 Short-term Debt ...... 5.2% Long-term Debt ...... 7.1% Pre-tax Equity 4 ...... 19.1% 3. Elements of Capital Costs: Short-term Debt ...... $90.5×5.2%=$4.7 Long-term Debt ...... 180.5×7.1%=12.8 Equity ...... 352.5×19.1%=67.5

Total ...... 85.0

C. Other Required PSAF Recoveries: Sales Taxes ...... $11.6 Federal Deposit Insurance Assessment ...... 2.0 Board of Governors Expenses ...... 2.9

Total ...... $16.5

D. Total PSAF Recoveries ...... $101.5 As a percent of capital ...... 16.3% As a percent of expenses 5 ...... 16.6% 1 Priced service asset base is based on the direct determination of assets method. 2 Consists of total long-term assets, including the priced portion of FRAS assets, less self financing capital leases. 3 All short-term assets are assumed to be financed by short-term debt. Of the total long-term assets, 33 percent are assumed to be financed by long-term debt and 67 percent by equity. 4 The pre-tax rate of return on equity is based on the average after-tax rate of return on equity, adjusted by the effective tax rate to yield the pre-tax rate of return on equity for each bank holding company for each year. These data are then averaged over five years to yield the pre-tax return on equity for use in the PSAF. 5 Systemwide 1997 budgeted priced service expenses less shipping are $613.1 million. TABLE A±3.ÐCOMPARISON BETWEEN TABLE A±3.ÐCOMPARISON BETWEEN TABLE A±3.ÐCOMPARISON BETWEEN 1997 AND 1996 PSAF COMPONENTS 1997 AND 1996 PSAF COMPO- 1997 AND 1996 PSAF COMPO- NENTSÐContinued NENTSÐContinued 1997 1996 1997 1996 1997 1996 A. Assets to be Fi- nanced (millions of Weighted Aver- Federal Deposit dollars): age Long-term Insurance As- Short-term ...... $90.5 $86.9 Cost of Capital 15.1% 12.0% sessment ...... 2.0 2.2 Long-term ...... 533.0 550.4 C. Tax Rate ...... 32.1% 29.9% Board of Gov- ernors Ex- Total ...... $623.5 $637.3 D. Capital Structure: Short-term Debt 14.5% 13.6% penses ...... 2.9 2.8 Long-term Debt .. 29.0% 28.7% F. Total PSAF: B. Cost of Capital: Required Recov- Equity ...... 56.5% 57.7% Short-term Debt ery ...... $101.5 $85.8 Rate ...... 5.2% 3.9% E. Other Required As Percent of Long-term Debt PSAF Recoveries Capital ...... 16.3% 13.5% Rate ...... 7.1% 7.6% (millions of dollars): As Percent of Ex- Pre-tax Return Sales Taxes ...... $11.6 $11.3 penses ...... 16.6% 14.1% on Equity ...... 19.1% 14.2%

TABLE A±4.ÐCOMPUTATION OF CAPITAL ADEQUACY FOR FEDERAL RESERVE PRICED SERVICES [Millions of dollars]

Weighted Assets Risk weight assets

Imputed reserve requirement on clearing balances ...... $545.7 0.0 $0.0 Investment in marketable securities ...... 4,911.3 0.0 0.0 Receivables ...... 64.3 0.2 12.9 Materials and supplies ...... 11.6 1.0 11.6 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64097

TABLE A±4.ÐCOMPUTATION OF CAPITAL ADEQUACY FOR FEDERAL RESERVE PRICED SERVICESÐContinued [Millions of dollars]

Weighted Assets Risk weight assets

Suspense & Difference ...... 0.0 0.2 0.0 Prepaid expenses ...... 14.6 1.0 14.6 Items in process of collection ...... 2,548.2 0.2 509.6 Premises ...... 348.0 1.0 348.0 Furniture and equipment ...... 167.0 1.0 167.0 Leases & long-term prepayments ...... 18.7 1.0 18.7

Total ...... $8,629.5 ...... 1,082.4

Imputed Equity for 1996 ...... $352.5 ...... Capital to Risk-Weighted Assets (percent) ...... 32.6 ...... Capital to Total Assets (percent) ...... 4.1 ......

By order of the Board of Governors of the CONTACT PERSON FOR MORE INFORMATION: Development Block Grant Reporting Federal Reserve System. Mr. Joseph R. Coyne, Assistant to the Requirements. Dated: November 26, 1996. Board; (202) 452–3204. You may call OMB No.: 0980–0140. William W. Wiles, (202) 452–3207, beginning at Secretary of the Board. approximately 5 p.m. two business days Description: Under section 471(a)(16) [FR Doc. 96–30705 Filed 12–2–96; 8:45 am] before this meeting, for a recorded of title IV–E of the Social Security Act, in order for a State to be eligible for BILLING CODE 6210±01±P announcement of bank and bank holding company applications payments they must have an approved scheduled for the meeting. State plan which provides for the BOARD OF GOVERNORS OF THE Dated: November 29, 1996. development of a case plan (as defined in section 475(1)) for each child FEDERAL RESERVE SYSTEM Jennifer J. Johnson, receiving foster care maintenance Deputy Secretary of the Board. Sunshine Act Meeting payments and provides a case review [FR Doc. 96–30934 Filed 11–29–96; 4:03 pm] system which meets the requirements in TIME AND DATE: 11:00 a.m., Monday, BILLING CODE 6210±01±P section 475(5)(B). Through these December 9, 1996. requirements the State also complies PLACE: Marriner S. Eccles Federal with title IV–B, section 422(b)(9) (as of Reserve Board Building, C Street DEPARTMENT OF HEALTH AND 4/1/96) which assures certain protection entrance between 20th and 21st Streets, HUMAN SERVICES for children in foster care. N.W., Washington, D.C. 20551. Respondents: State governments. STATUS: Closed. Administration for Children and Families MATTERS TO BE CONSIDERED: 1. Personnel actions (appointments, Submission for OMB Review; promotions, assignments, reassignments, and Comment Request salary actions) involving individual Federal Reserve System employees. Title: Case Plan, Sections 422, 2. Any items carried forward from a 471(a)(16), 475(1) and 475(5)(A) of the previously announced meeting. Social Security Act Child Care and

ANNUAL BURDEN ESTIMATES

Number of Average Total Instrument Number of responses per burden hours burden respondents respondent per response hours

Case plan ...... 445,000 1 4 1,780,000

Estimated Total Annual Burden 20447, Attn: ACF Reports Clearance publication. Written comments and Hours: 1,780,000. Officer. recommendations for the proposed information collection should be sent Additional Information OMB Comment directly to the following: Office of Copies of the proposed collection may OMB is required to make a decision Management and Budget, Paperwork be obtained by writing to The concerning the collection of information Reduction Project, 725 17th Street, Administration for Children and between 30 and 60 days after N.W., Washington, D.C. 20503, Attn: Families, Office of Information Services, publication of this document in the Ms. Wendy Taylor. Division of Information Resource Federal Register. Therefore, a comment Management Services, 370 L’Enfant is best assured of having its full effect Promenade, S.W., Washington, D.C. if OMB receives it within 30 days of 64098 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

Dated: November 25, 1996. to provide funds to states for the expanded programs with the child Bob Sargis, development of family preservation and welfare system and other existing Acting Reports Clearance Officer. family support programs and services. providers. Both qualitative and [FR Doc. 96–30657 Filed 12–2–96; 8:45 am] Subpart 2, Section 435 of OBRA 93 quantitative analyses will be completed BILLING CODE 4184±01±M requires the Secretary of HHS to to highlight the process states employ to evaluate the effectiveness of programs implement the legislation, coordinate carried out under the legislation. This with other funding sources, develop Submission for OMB Review; data collection is being conducted to new programs, and improve service Comment Request help meet this requirement and to delivery systems. The analysis of this implement reauthorization of the information will be used to provide Title: Family Preservation and Family legislation in 1999. feedback to ACF necessary to determine Support (FP/FS) Service Data collection will ask local child the need for future policy guidance and Implementation Study—Community welfare agencies and other community refine the nature and scope of technical Level Data Collection. service providers and agencies involved assistance. The information will also OMB No.: New request. in planning and implementation of title provide direct feedback to states and Description: The Omnibus Budget IV–B subpart 2 to provide information communities concerning successful Reconciliation Act of 1993 (OBRA 93) on the programs and services funded, implementation strategies. established title IV–B, subpart 2 of the populations targeted, reform efforts Respondents: State, Local or Tribal Social Security Act (42 U.S.C. 62–628) initiated, and the coordination of new or Govt., and Not-for-profit institutions.

ANNUAL BURDEN ESTIMATES

Number of Average Number of responses burden Total bur- Instrument respondents per re- hours per den hours spondent response

Child Welfare ...... 20 1 1.5 30 Family Preservation ...... 20 1 1.0 20 Family Support ...... 60 1 1.5 90 FP/FS Coordinator ...... 20 1 1.5 30 Oversight Committee/Board Member ...... 60 1 1.0 60 Estimated Total Annual Burden Hours: 230.

Additional Information Senior Executive Service; Performance Food and Drug Administration Review Board Members Copies of the proposed collection may [Docket No. 96N±0326] be obtained by writing to The Title 5, U.S. Code, Section 4314(c)(4) New Monographs and Revisions of Administration for Children and of the Civil Service Reform Act of 1978, Certain Food Chemicals Codex Families, Office of Information Services, Public Law 95–454, requires that the Division of Information Resource Monographs; Opportunity for Public appointment of Performance Review Comment Management Services, 370 L’Enfant Board members be published in the Promenade, S.W., Washington, D.C. Federal Register. AGENCY: Food and Drug Administration, 20447, Attn: ACF Reports Clearance HHS. Officer. The following persons will serve on the Performance Review Board or Panels ACTION: Notice. OMB Comment which oversee the evaluation of performance appraisals of Senior SUMMARY: The Food and Drug OMB is required to make a decision Executive Service members of the Administration (FDA) is announcing an concerning the collection of information Administration for Children and opportunity for public comment on between 30 and 60 days after pending changes to certain Food Families: publication of this document in the Chemicals Codex monographs in the Federal Register. Therefore, a comment Diann Dawson fourth edition and on specifications for is best assured of having its full effect Robert C. Harris proposed new monographs. if OMB receives it within 30 days of Specifications consisting of new publication. Written comments and Laurence J. Love monographs for certain substances used recommendations for the proposed Madeline Mocko as food ingredients and additions, information collection should be sent Carol W. Williams revisions, and corrections to current directly to the following: Office of monographs are being prepared by the Dated: November 25, 1996. Management and Budget, Paperwork National Academy of Sciences/Institute Reduction Project, 725 17th Street, Olivia A. Golden, of Medicine (NAS/IOM) Committee on N.W., Washington, D.C. 20503, Attn: Acting Assistant Secretary for Children and Food Chemicals Codex (the committee). Ms. Wendy Taylor. Families. This material will be presented in the [FR Doc. 96–30658 Filed 12–2–96; 8:45 am] next publication of the Food Chemicals Dated: November 27, 1996. BILLING CODE 4184±01±M Codex (the first supplement to the Bob Sargis, fourth edition), scheduled for Acting Reports Clearance Officer. publication in late summer 1997. [FR Doc. 96–30774 Filed 12–2–96; 8:45 am] DATES: Written comments by February BILLING CODE 4184±01±M 18, 1997. (The committee advises that comments received after this date may not be considered for the first Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64099 supplement to the fourth edition. FDA now gives notice that the Konjac Flour (revise identification test Comments received too late for committee is soliciting comments and B) consideration for the first supplement information on additional proposed new Magnesium Phosphate, Dibasic will be considered for later monographs and proposed changes to (decrease loss on ignition limits) supplements.) certain current monographs. These new Niacin (revise identification tests) ADDRESSES: Submit written comments monographs and changes will be Niacinamide (revise identification tests, and supporting data and documentation published in the first supplement to the assay) to the NAS/IOM Committee on Food fourth edition of the Food Chemicals Pectins (revise identification tests) Chemicals Codex, National Academy of Codex, which is scheduled for Potassium Phosphate, Dibasic (decrease Sciences, 2101 Constitution Ave. NW., publication in late summer, 1997. lead limit) Washington, DC 20418. Copies of the Copies of the proposed new Potassium Phosphate, Monobasic new monographs and proposed monographs and revisions to current (decrease lead limit) revisions to current monographs may be monographs may be obtained upon Sodium Acid Pyrophosphate (revise obtained upon written request from written request from NAS at the address assay limit) NAS (address above) or from the listed above or through the internet at Sodium Carboxymethylcellulose Dockets Management Branch (HFA– http://www2.nas.edu/codex. (change primary name to Cellulose Gel) 305), Food and Drug Administration, FDA emphasizes, however, that it will Sodium Tripolyphosphate (reduce lead 12420 Parklawn Dr., rm. 1–23, not consider adopting and incorporating limit) Rockville, MD 20857. Requests for any of the committee’s new monographs Spice Oleoresins (add oleoresin copies should specify the monographs or monograph revisions into FDA rosemary) desired by name. New and revised regulations without ample opportunity Whey monographs may also be obtained for public comment. If FDA decides to Interested persons may, on or before through the Internet at http:// propose the adoption of new February 18, 1997, submit to NAS www2.nas.edu/codex. monographs and changes that have written comments regarding the received final approval of the monographs listed in this notice. Timely FOR FURTHER INFORMATION CONTACT: committee, it will announce its submission will ensure that comments Fatima N. Johnson, Committee on intention and provide an opportunity are considered for the first supplement Food Chemicals Codex, Food and for public comment in the Federal to the Fourth Edition of the Food Nutrition Board, National Academy Register. Chemicals Codex. Comments received of Sciences, 2101 Constitution Ave. The committee invites comments and after this date may not be considered for NW., Washington, DC 20418, 202– suggestions by all interested parties on the first supplement, but will be 334–2580; or specifications to be included in the considered for subsequent supplements. Paul M. Kuznesof, Center for Food proposed new monographs (12) and Those wishing to make comments are Safety and Applied Nutrition (HFS– revisions of current monographs (22) encouraged to submit supporting data 247), Food and Drug that follow: and documentation with their Administration, 200 C St. SW., I. Proposed New Monographs comments. Two copies of any comments Washington, DC 20204, 202–418– regarding the monographs listed in this 3009. Beta-Cyclodextrin notice are to be submitted to NAS Calcium Lignosulfonate SUPPLEMENTARY INFORMATION: By (address above). Comments and Dimethyl Dicarbonate supporting data or documentation are to contract with NAS/IOM, FDA supports Glyceryl Palmitostearate the preparation of the Food Chemicals 4-Hexylresorcinol be identified with the docket number Codex, a compendium of specification Sodium Lignosulfonate found in brackets in the heading of this monographs for substances used as food Sucrose Fatty Acid Esters document and each submission should ingredients. Before any specifications Sugar Beet Fiber include the statement that it is in are included in a Food Chemicals Codex Reduced Lactose Whey response to this Federal Register notice. publication, public announcement is Reduced Minerals Whey NAS will forward a copy of each made in the Federal Register. All Whey Protein Concentrate comment to the Dockets Management interested parties are invited to Autolyzed Yeast Branch (address above). Received comment and to make suggestions for II. Current Monographs to Which the comments may be seen in the Dockets consideration. Suggestions should be Committee Proposes to Make Revisions Management Branch between 9 a.m. and accompanied by supporting data or 4 p.m., Monday through Friday. Aspartame (delete transmittance test) other documentation to facilitate and Dated: November 14, 1996. expedite review by the committee. Calcium Phosphate, Dibasic (decrease lead limit) Fred R. Shank, In the Federal Register of May 31, Calcium Phosphate, Monobasic Director, Center for Food Safety and Applied 1995 (60 FR 28413) , FDA last (decrease lead limit) Nutrition. announced that the committee was Calcium Phosphate, Tribasic (decrease [FR Doc. 96–30727 Filed 12–2–96; 8:45 am] considering an additional monograph lead limit) BILLING CODE 4160±01±F and a number of monograph revisions Calcium Silicate (revise fluoride test) for inclusion in the fourth edition of the Carbon Dioxide (combine nitric oxide Food Chemicals Codex. The fourth and nitrogen dioxide limits, and revise [Docket No. 84N±0168] edition of the Food Chemicals Codex test) Cyclospasmol; Final Decision on was released by the National Academy Dextrin (add sulfur dioxide test) Proposed Withdrawal of Approval of Press (NAP) in March 1996. It is now Dioctyl Sodium Sulfosuccinate (revise New Drug Application available for sale from NAP (1–800– identification test) 624–6242; 202–334–3313; FAX 202– Enzyme-Modified Fats (modify enzyme- AGENCY: Food and Drug Administration, 334–2451; Internet http://www.nap.edu) modified milkfat monograph) HHS. 2101 Constitution Ave. NW., Lockbox L-Glutamic Acid (revise identification ACTION: Notice. 285, Washington, DC 20055. test B) 64100 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

SUMMARY: The Food and Drug being given for the reader’s Hynson, Westcott and Dunning, 412 Administration (FDA) is announcing convenience: U.S. 609, 617 (1973), citing 21 U.S.C. that the Commissioner of Food and I. The Commissioner’s Final Decision 355(e)(3).) Drugs (the Commissioner) is issuing his The Commissioner announced in a Final Decision on the proposal to A. Background notice published in the Federal Register B. The Legal Standard of July 20, 1971 (36 FR 13347), that he withdraw approval of the new drug C. The Intermittent Claudication Indication application (NDA) for the human drug had evaluated a report received from the  1. The MDS–96 (Reich) Study product Cyclospasmol (cyclandelate) a. Objective of the Study National Academy of Sciences/National (NDA 11–544). This drug is labeled for b. Test for Presence of Disease Research Council (NAS/NRC) Drug use in two indications: specifically, as a c. Foot Pedal Ergometer as an Evaluative Efficacy Study Group pertaining to treatment for intermittent claudication Measure certain peripheral vasodilators for oral caused by arteriosclerosis obliterans and d. The Winsor Study use, including Cyclospasmol Capsules as a treatment for cognitive dysfunction e. Adequacy of the MDS–96 (Reich) Study and Tablets. Under the NAS/NRC in patients suffering from senile 2. The Five-Center Study report, the Commissioner classified a. Reanalysis of the Five-Center Study Cyclospasmol as possibly effective for dementia of the multiinfarct or b. Inclusion/Exclusion Decisions Alzheimer’s type. The Commissioner c. Calculation of Treadmill Distances its labeled indications, except for those  has determined that Cyclospasmol has d. Variability Among Centers claims specifically found in the notice not been shown to be effective for such e. Adequacy of the Five-Center Study to lack substantial evidence of uses, and the Commissioner hereby D. The Senile Dementia Disease Indication effectiveness. withdraws approval for this drug. The 1. The Rao Study In a notice published in the Federal Commissioner’s Decision sustains the a. Admissibility of the Reanalysis Register of December 14, 1972 (37 FR Initial Decision of the Administrative b. Labeling and Patient Selection 26623), the FDA announced that it c. Concomitant Diseases and Conditions would permit Cyclospasmol capsules Law Judge (ALJ), who found that d. Concomitant Medications Cyclospasmol had not been shown by and tablets, as well as other peripheral e. Case Report Forms vasodilators, to remain on the market sufficient evidence of adequate and f. Blinding and Bias well-controlled studies to be effective g. Adequacy of the Rao Study beyond the time limits prescribed for for its intended uses. 2. The Yesavage Study implementation of the DESI program. In a subsequent notice published in the EFFECTIVE DATE: January 2, 1997. a. Selection of Patients for the Study b. Distribution of Patients with Strokes Federal Register of July 11, 1973 (38 FR ADDRESSES: The transcript of the c. Baseline Comparability 18477), FDA required that by September hearing, evidence submitted, and all d. Concomitant Medications 10, 1973, persons interested in other documents cited in this decision e. Small Sample Size conducting clinical studies to determine may be seen in the Dockets Management f. Clinical Significance the effectiveness of peripheral Branch (HFA–305), Food and Drug g. Multiple Tests vasodilators to submit protocols and h. Adequacy of the Yesavage Study Administration, 12420 Parklawn Drive, provide the agency with notice of the rm. 1–23, Rockville, MD 20857, from 9 II. Conclusion and Order date when such studies were expected a.m. to 4 p.m., Monday through Friday. I. The Commissioner’s Final Decision to begin. FOR FURTHER INFORMATION CONTACT: On June 20, 1978, the manufacturer of Nancy E. Pirt, Office of Health Affairs A. Background Cyclospasmol, Ives Laboratories, a (HFY–1), Food and Drug Cyclospasmol is a drug consisting of wholly owned subsidiary of American Administration, 5600 Fishers Lane, 200 milligrams (mg) of cyclandelate. (G– Home Products (hereinafter referred to Rockville, MD 20857, 301–443–1382. 33.2 at 7.) 1 The NDA for Cyclospasmol as ‘‘AHP’’), submitted to FDA’s Bureau SUPPLEMENTARY INFORMATION: The (NDA 11–544) was approved at a time of Drugs (currently the Center for Drug purpose of this proceeding has been to when the Federal Food, Drug, and Evaluation and Research (hereinafter determine whether FDA should Cosmetic Act (21 U.S.C. 301 et. seq.) referred to as ‘‘the Center’’), a status withdraw approval of the NDA for the report of five completed studies for  (the act) required only proof of safety. In human drug product Cyclospasmol 1962, the act was amended by the Drug peripheral vascular disease and five (cyclandelate). This drug is being Amendments Act of 1962 (Pub. L. 87– completed studies for cerebral vascular offered for use in two indications, 781) to provide that drugs could no disease studies. These studies were specifically: (1) As a treatment for longer be approved unless both safety reviewed by the Center and found not intermittent claudication caused by and efficacy had been proved. to provide substantial evidence of arteriosclerosis obliterans (AHP The act, as amended, also required adequate and well-controlled studies Exceptions at 14; AHP Post-Hearing indicating the effectiveness of FDA to evaluate drugs approved before  Brief at (1), and (2) as a treatment for 1962 to determine whether such drugs Cyclospasmol for its labeled cognitive dysfunction in patients were effective and to withdraw approval indications. In two subsequent notices suffering from senile dementia of the for any NDA where ‘‘substantial published in the Federal Register of multiinfarct or Alzheimer’s type. (AHP evidence’’ of the drug’s effectiveness May 25, 1979 (44 FR 30436; 44 FR Exceptions at 111; AHP Post-Hearing 30443), FDA proposed to withdraw was lacking. (Section 505(e)(3) of the act  Brief at 1.) (21 U.S.C. 355(e)(3)).) FDA’s review of approval for Cyclospasmol ’s NDA and Under § 12.130 (21 CFR 12.130), the these pre-1962 drugs for effectiveness is offered an opportunity for a hearing on Commissioner makes the following known as the Drug Efficacy Study the proposed withdrawal. Ives decision adjudicating the significant Implementation (DESI) program. The act Laboratories (hereinafter referred to as issues raised by the parties following placed the burden of coming forward ‘‘AHP’’) was also given until May 26, the administrative hearing. The effect of with evidence of effectiveness on the 1980, to complete any studies which this decision is that this drug may no manufacturer of the drug. (Weinberger v. were still in progress. longer be marketed in the United States. On June 25, 1979, AHP filed a request Because the Commissioner’s 1 The Dockets Management Branch used the letter for a hearing, and this request was discussion of the issues is necessarily ‘‘G’’ to refer to the Government exhibits by the granted by the Commissioner on detailed, an outline of this discussion is participants. October 18, 1984 (49 FR 40972). Under Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64101

21 CFR 12.45, both the Center and AHP and the reasons or basis therefor, on all AHP further argues that the ALJ erred filed notices of participation. A the material issues of fact, law, or in concluding that at least two adequate prehearing conference was held on discretion presented on the record and well-controlled studies are January 15, 1985. Following the ** *.’’ (AHP Exceptions at 3, quoting necessary to establish efficacy. (AHP submission of written testimony and 5 U.S.C. 557(c).) AHP also cites FDA Exceptions at 2 n.1; I.D. at 8.) As with documentary evidence, a hearing was regulations requiring that initial AHP’s previous objection, this issue, held before ALJ Daniel J. Davidson decisions contain findings of fact based too, has been settled in previous beginning on June 18, 1985, and ending upon relevant, material and reliable Commissioner’s decisions. In the on June 27, 1985. evidence in the record and also contain Commissioner’s Decision on Oral Subsequently, on September 25, 1986, ‘‘(a) discussion of the reasons for the Proteolytic Enzymes (OPE), it was held Judge Davidson issued his decision, in findings and conclusions, including a that, except in certain limited cases, a which he found that the efficacy of discussion of the significant contentions minimum of two adequate and well- Cyclospasmol had not been proved by made by any participant’’ with controlled studies are required. substantial evidence of adequate and ‘‘(c)itations to the record supporting the (Commissioner’s Decision on OPE, slip well-controlled clinical trials, and findings and conclusions * * *.’’ (AHP op. at 23, FDA Docket No. 75N–0139 concluded that the approval of NDA 11– Exceptions at 3, quoting 21 CFR (FDA May 30, 1985), aff’d sub nom. on 544 should be withdrawn. Both AHP 12.120(b).) other grounds Warner-Lambert Co. v. and the Center filed exceptions to AHP argues that the ALJ did not state Heckler, 787 F.2d 147 (3d Cir. 1986).) various points in Judge Davidson’s how he arrived at his findings of fact. This requirement arises from the decision and appealed to the (AHP Exceptions at 8.) Ignoring the bulk statutory language of the act at 21 U.S.C. Commissioner, under 21 CFR 12.125. of the ALJ’s decision, AHP refers to the 355(d), which mandates the submission concluding section of the ALJ’s B. The Legal Standard of a plural number of adequate and decision, which is appropriately well-controlled investigations. I am issuing this Final Decision under entitled ‘‘Conclusions,’’ to argue that the (Commissioner’s Decision on OPE, slip § 12.130. In taking this action, I have all ALJ simply announced his findings in op. at 23; Commissioner’s Decision on the powers I would have had in making one sentence decrees. (AHP Exceptions Deprol (58 FR 50929 at 50936, the Initial Decision. (§ 12.130(a); see at 9, citing the ALJ’s Initial Decision September 29, 1993).) also Commissioner’s Decision on (I.D.) at 23.) FDA has permitted exceptions to the Polychlorinated Biphenyls (49 FR 21514 An identical issue was addressed in requirement for at least two adequate at 21519, May 22, 1984).) Further, under the Commissioner’s Decision on and well-controlled studies in limited § 5.10 (21 CFR 5.10(a)(1)), I have been Lutrexin, wherein the Commissioner circumstances, including: (1) When the delegated the authority by the Secretary stated: disease is very rare and it is extremely of the Department of Health and Human (The manufacturer) implies that the difficult to obtain enough subjects for Services ‘‘to determine, after giving full findings and order are deficient because the two studies, (2) when the disease consideration to all of the evidence that numbered findings of fact at the end of the process is expensive to study has been submitted, including expert narrative do not contain the evidentiary experimentally, (3) when the study opinions, if the (evidence) meet(s) the details that (the manufacturer) feels would conducted is very large and regulatory criteria and show(s) justify the judge’s ruling. Those details, multicentered, and (4) when the disease effectiveness.’’ (Warner-Lambert Co. v. however, are fully set out in the judge’s is rapidly fatal and there is no Heckler, 787 F.2d 147, 154 (3d Cir. narrative explanation. Stating, discussing, alternative therapy. (Commissioner’s and resolving factual issues in narrative form 1986).) Decision on OPE, slip op. at 24; In the present case, I have fully rather than in numbered paragraphs is a commonly used format that has been Commissioner’s Decision on Deprol, 58 reviewed the complete administrative specifically recognized as fulfilling the FR 50929 at 50936.) AHP does not argue record, including: (1) The transcript of Administrative Procedure Act requirement of that any of these exceptions apply to the the hearing that was held before the ALJ a ‘‘statement of * * * findings and present case, nor do I find these from June 18, to June 27, 1985; (2) the conclusions * * * on all the material issues exceptions to be applicable. Therefore, I written testimony and documentary of fact, law, or discretion. 5 U.S.C. 557(c). find no merit in AHP’s objections to the evidence submitted by AHP and the Gilbertville Trucking Co. v. United States, ALJ’s ruling that at least two adequate Center before, during, and after the 196 F. Supp. 351 (D. Mass. 1961); State Corporation Comm. v. United States, 184 F. and well-controlled studies are Hearing; (3) the exceptions which AHP Supp. 691 (D. Kan. 1959). ‘‘An agency which necessary to demonstrate the efficacy of  and the Center filed to the ALJ’s issues opinions in narrative and expository Cyclospasmol . Decision; and (4) all briefs filed by AHP form may continue to do so without making Finally, AHP argues that many and the Center pursuant to this matter. separate findings of fact and conclusions of sections of the ALJ’s Decision My Decision is based upon a full review law.’’ Attorney General’s Memorandum on paraphrase, or contain recitations of, of the facts and arguments that appear the Administrative Procedure Act 86 (1947). portions of the post-hearing briefs filed in the record, and my independent So too may an Administrative Law Judge. by the Center and AHP. AHP states that, conclusions are based upon that review. (Commissioner’s Decision on Lutrexin, as a result, ‘‘(t)he substantive statements AHP first argues that the ALJ’s 41 FR 14406 at 14410, April 5, 1976.) made by the ALJ raise questions as to decision did not meet the minimum I have reviewed the ALJ’s decision in the ALJ’s understanding of the issues.’’ standard required by the Administrative the present matter, and I find that it (AHP Exceptions at 12.) AHP has not Procedure Act and by FDA regulations comports with the previously cited cited, however, any authority which pertaining to initial decisions following requirements of the Administrative indicates that it is impermissible for an formal adjudicatory proceedings. (AHP Procedure Act and FDA regulations. As ALJ to paraphrase or recite in his Exceptions at 3, citing 5 U.S.C. 557(c) in the Commissioner’s decision decision statements from the post- and 21 CFR 12.120(b).) In support of its regarding Lutrexin, I find that the ALJ hearing briefs. After reviewing the ALJ’s argument, AHP cites the Administrative fully set out the reasons for his decision Decision, I find that the ALJ fully set out Procedure Act for the requirement that in the narrative explanation section of the reasons for the conclusions he all initial decisions shall include a the Initial Decision. Therefore, I find no reached. Additionally, I find that AHP’s statement of ‘‘findings and conclusions, merit in AHP’s argument. claim that ‘‘(t)he ALJ’s Decision fails to 64102 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices meet the requirements of the APA or of Coffman, G–58 at 2 (Dr. Coffman all 39 patients completed the study, FDA’s regulations’’ (id.) because the ALJ testified that relief should come within only 32 were found to be suitable for paraphrased or reproduced language 5 to 10 minutes).) If relief takes longer inclusion in the statistical analysis. (G– which was submitted in the post- to come, then the problem is not likely 9.1 at 252.) Seven patients were hearing briefs is without merit. to be intermittent claudication. (Reich, excluded from analysis for failure to Moreover, I have fully reviewed the Tr. Vol. V at 17.) take the required dose during a 2-week administrative record, and, as discussed AHP submitted two studies—the interval. (G–9.1 at 252.) The results of above, have reached independent MDS–96 (Reich) study and the five- the analysis reported a statistically conclusions from the evidence center study—in support of the significant difference in favor of presented to the agency and to the ALJ. indication for intermittent claudication. Cyclospasmol on the mean number of For the following reasons, I find that Each of these studies will be discussed foot pounds of work that could be there is a lack of substantial evidence in turn. performed on the foot pedal ergometer. that Cyclospasmol will have the effect it 1. The MDS–96 (Reich) Study (Reich, A–110 at 10.) purports or is represented to have under The ALJ concluded that the Reich the conditions of use prescribed, The MDS–96 study, also referred to as study was not an adequate and well- recommended, or suggested in its the Reich study, was conducted by Dr. controlled investigation because: (1) The labeling, and I therefore affirm the Theobald Reich as a 12-week, crossover protocol failed to clearly identify the Initial Decision of the ALJ. study of 39 patients with arterial condition to be studied, (2) patient insufficiency. The stated purpose of the selection was marred by the lack of an C. The Intermittent Claudication study was ‘‘(t)o determine the effect of objective test to determine the presence Indication  cyclandelate (Cyclospasmol ), in of the disease, and (3) reliance on the The labeling for Cyclospasmol comparison with a placebo, on the foot pedal ergometer to measure patient previously described its first indication clinical course and certain vasomotor improvement in walking ability was not as being for an ‘‘adjunctive therapy in reflexes in patients with peripheral shown to be proper. (I.D. at 23.) intermittent claudication; vascular disease.’’ (G–25.2 at 163.) Each a. Objective of the study. The arteriosclerosis obliterans; patient was in the study for 12 weeks, ‘‘objective’’ section of the Reich study thrombophlebitis (to control associated assigned to either 6 weeks on the test protocol read in its entirety, ‘‘To vasospasm and muscular ischemia); drug followed by 6 weeks on the determine the effect of cyclandelate, in nocturnal leg cramps; (and) Raynaud’s placebo, or vice versa. (G–9.1 at 2.) comparison with a placebo, on the phenomenon.’’ (G–33.2 at 7; see also A– Patients included in the study were to clinical course and certain vasomotor 89 at 2–4; G–57 at 2–4.) However, AHP have a diagnosis of peripheral vascular reflexes by objective measurement in has modified this proposed indication disease, including one or more of the patients with peripheral vascular to limit it to treatment of intermittent following symptoms: Intermittent disease.’’ (G–25.2 at 163.) The ALJ, after claudication caused by arteriosclerosis claudication, rest pain, cold extremities, reviewing the arguments by both AHP obliterans. (See AHP Post-Hearing Brief or peripheral cyanosis. (G–25.2 at 163.) and the Center (see I.D. at 12), ruled, at 1; AHP Exceptions at 14.) The evaluation of the subjects ‘‘Because the objective of the Reich Peripheral vascular disease is a included skin temperature, skin color, study was to determine the effect of the generic name given to diseases that pulse, distance walked prior to drug on certain vasomotor reflexes, it affect the arteries, veins, and lymphatics claudication, and severity of pain at failed to clearly identify and isolate the in the arms and legs. (Coffman, G–58 at rest. (G–25.2 at 164.) Additionally, skin condition to be studied.’’ (I.D. at 55.) 1; Vyden, G–59 at 3.) The most common temperature of the toes and foot, AHP raises several issues regarding this peripheral vascular disease is reactive hyperemia time, blanching time ruling. arteriosclerosis obliterans, in which a on elevation, and rubor time on First, AHP argues that the ALJ erred buildup of cholesterol and fatty acids dependence was also to be measured. in restricting himself to a reading of the accumulates in the lining of the arteries (G–25.2 at 164.) The protocol further section of the protocol entitled of the legs. This condition results in a stated that vasomotor reflexes of the leg ‘‘Objective’’ when the ALJ determined narrowing of the lumens of these and calf blood flow were to be measured the study’s objective. (AHP Exceptions vessels, with consequent decreased at the beginning of the study and at 2- at 25.) AHP argues that under FDA blood flow to the muscles. (Coffman, G– week intervals during the study by regulations, AHP was not required to 58 at 2; Vyden, G–59 at 3.) means of venous occlusion have a separate section in its protocol The first indication for which plethysmography with a mercury-in- for the objective, and that it was Cyclospasmol is labeled is as a treatment rubber strain gauge. (G–25.2 at 164.) acceptable if the objective of a study for intermittent claudication caused by Blood flow was to be measured at rest could be ascertained from a reading of arteriosclerosis obliterans. (AHP in the recumbent position, and after the complete study protocol. (AHP Exceptions at 14; AHP Post-Hearing exercise on a foot pedal ergometer. (G– Exceptions at 26.) AHP also questions Brief at 1.) Arteriosclerosis obliterans 25.2 at 164.) what the ALJ meant by finding that the can cause intermittent claudication, Exercise on a foot pedal ergometer Reich protocol ‘‘failed to clearly identify which is pain, cramps, fatigue, or was performed by a patient in a supine the condition to be studied.’’ (AHP weakness in the legs during exercise. position, with the patient using his or Exceptions at 28, quoting I.D. at 23.) (Coffman, G–58 at 1–2.) A patient with her foot to repeatedly raise a weight AHP further asks how the ALJ intermittent claudication experiences attached to the foot ergometer pedal. concluded that the sole objective of the exercise-induced pain in the calf or (Reich, A–112 at 29; Denton, A–121 at Reich study was to determine the effect thigh muscles caused by a lack of 3–4.) Exercise on the foot pedal of the drug on ‘‘certain vasomotor oxygen in the blood being supplied to ergometer was to be continued until reflexes.’’ (AHP Exceptions at 28, the leg muscles after walking a certain claudication or, if pain did not appear, quoting I.D. at 55.) distance. (Reich, Tr. Vol. V at 17; was to be discontinued after 500 plantar The Center counters by arguing that Vyden, G–59 at 3.) Typically, pain is flexions of the foot. (G–25.2 at 164.) the vagueness of the objective for the relieved within 1 to 3 minutes after Thirty-nine patients were entered into Reich study lies in the absence of a clear resting. (Reich, Tr. Vol. V at 17; see also the study. (Reich, A–112 at 13.) While statement in the protocol identifying Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64103 intermittent claudication as the focus of statement of objectives is required by F.2d 772, 779–81 (D.C. Cir. 1974).) Also, the study. (Center Response to AHP the regulations. (§ 314.126(b)(1).) Not the ALJ is not required to accept the Exceptions at 7–11.) The Center points finding the objective to be clear in the opinion of expert witnesses, as such to the fact that intermittent claudication protocol, I therefore find no error in the testimony is only as strong as the was only one of a number of symptoms ALJ’s decision on this point. studies on which it is based. (Warner- in the patient selection criteria, and that Next, AHP argues that the ALJ failed Lambert Co. v. Heckler, 787 F.2d 147, patients were not required to have to read the ‘‘Objective’’ section of the 154 (3d Cir. 1986); Commissioner’s intermittent claudication in order to protocol correctly. (AHP Exceptions at Decision on OPE, slip op. at 22, citing enter the study. (Center Response to 27.) AHP argues that in the ALJ’s Upjohn Co. v. Finch, 422 F.2d 944 (6th AHP Exceptions at 8.) In sum, the opinion, the ALJ incorrectly quoted Cir. 1970); Commissioner’s Decision on Center is arguing that although AHP is from the ‘‘Objective’’ section of the Deprol, 58 FR 50929 at 50930.) For these now submitting the Reich study as proof MDS–96 protocol. reasons, I find no error in the ALJ’s of Cyclospasmol’s efficacy in treating As previously discussed, the ALJ decision on this matter. intermittent claudication, the Reich wrote in his opinion that he had found AHP also argues that the objective of study’s protocol was vague in that the objective of the Reich study was the MDS–96 protocol is identifying this as the objective of the ‘‘to determine the effect of cyclandelate indistinguishable from another protocol study. I find the Center’s arguments to on certain vasom(otor) reflexes in which AHP identifies as an ‘‘FDA/ have merit. patients with peripheral vascular Industry protocol.’’ (AHP Exceptions at For a study to be considered adequate disease as compared to those patients on 32–33.) AHP, citing exhibit G–6, argues and well-controlled, FDA regulations placebo.’’ (I.D. at 12–13.) The verbatim that document is a protocol drafted by require the study to contain ‘‘a clear statement of objective in the protocol the pharmaceutical industry in statement of the objectives of the read, ‘‘To determine the effect of conjunction with FDA, and that the investigation.’’ (§ 314.126(b)(1) (21 CFR cyclandelate, in comparison with a protocol used in the MDS–96 study is 314.126(b)(1)); see also Commissioner’s placebo, on the clinical course and comparable. (AHP Exceptions at 32–33.) Decision on Cothyrobal (42 FR 28602 at certain vasomotor reflexes by objective The Center argues that AHP is 28613, June 3, 1977).) The reason for measurement in patients with incorrectly characterizing this document requiring a clear statement of objective peripheral vascular disease.’’ (G–25.2 at as an ‘‘FDA/Industry protocol,’’ and the was aptly summarized by Dr. Marvin 163.) In the ALJ’s ruling, the ALJ left out Center further argues that the document Schneiderman, a statistician and one of the phrases ‘‘on the clinical course’’ and is actually a protocol from another the witnesses for the Center, who ‘‘by objective measurement,’’ which study, the MDS–176 study, performed testified, ‘‘Having a vague objective AHP argues contributed to the ALJ’s by Dr. Reich as part of the multicenter means that you have a free hand to assertedly erroneous conclusion Five-center study, the second study examine any kind of data and decide regarding the objective. I find AHP’s submitted by AHP in support of the after the fact what data are important to argument to be without merit. With or intermittent claudication indication for report in relation to this kind of without the phrases in question, the Cyclospasmol. (Center Response to objective.’’ (Schneiderman, G–65 at 5.) identification of the study’s objective AHP Exceptions at 15.) I find that the Turning first to that section of the fails because the purpose of the study is Center is correct in its argument. protocol entitled ‘‘Objective,’’ I note that not clear from a reading of the protocol. I therefore conclude that the ALJ was the Reich study set out its focus in AHP also takes exception to the ALJ’s correct in finding that the MDS–96 general terms as being on ‘‘the clinical decision on the grounds that the ALJ did study did not clearly state its objectives. course and certain vasomotor reflexes not expressly state how much weight he b. Test for presence of the disease. ** * in patients with peripheral gave to the testimony of AHP’s The ALJ ruled that patient selection in vascular disease.’’ (G–25.2 at 163.) In witnesses who testified in support of the the MDS–96 study was marred because another section of the protocol, entitled objective contained in AHP’s protocol. the study lacked an objective test to ‘‘Number and Kind of Subjects,’’ the (AHP Exceptions at 28.) AHP offers no determine the presence of intermittent protocol stated that it was anticipated legal authority as a basis for asserting claudication. (I.D. at 23, 55.) AHP argues that the underlying diagnosis for the that the ALJ must expressly assign a that the ALJ did not express his views patients would be ‘‘atherosclerosis of weight to the testimony of witnesses, as to what he concluded were the the arterial vessels of the extremities.’’ and I find this argument to be without shortcomings of evaluating patients for (G–25.2 at 163.) As described in this merit. The ALJ is not required to make intermittent claudication on the basis of section, patients admitted to the study findings on all the evidence when the a personal history and a physical were required to have ‘‘one or more of findings he has made support his examination, the latter which included the following symptoms: intermittent decision. (See Immigration and the palpation of pulses. (AHP claudication, rest pain, cold extremities, Naturalization Serv. v. Bagamasbad, Exceptions at 38.) In a related argument, or peripheral cyanosis.’’ (G–25.2 at 163.) 429 U.S. 24, 25 (1976); Deep South AHP charges that the ALJ did not give While AHP is correct in stating that Broadcasting Co. v. FCC, 278 F.2d 264, his rationale for concluding that some FDA regulations do not require a section 266 (D.C. Cir. 1960); Community & type of objective instrumentation should entitled ‘‘objective’’ in the protocol, Johnson Corp. v. United States, 156 F. have been used to make the diagnosis of nevertheless, I am not persuaded by Supp. 440, 443 (D.N.J. 1957).) If the ALJ intermittent claudication. (AHP AHP’s argument because I find the identified at least one conclusive Exceptions at 40.) I disagree with AHP’s objective of the Reich study to be vague deficiency in each of the studies characterization of the ALJ’s opinion. even after having read the entire proffered, the ALJ’s decision must be It must be noted that the Reich study’s protocol. As is evident from reading the upheld. (American Cyanamid Co. v. protocol did not require the patients to entire protocol, intermittent FDA, 606 F.2d 1307, 1314 & n.53 (D.C. have intermittent claudication as a claudication was not a necessary Cir. 1979); SmithKline Corp. v. FDA, 587 condition of entering the study. Rather, requirement for inclusion in the study. F.2d 1107, 1120–21 (D.C. Cir. 1978); under the protocol, patients included in I find that the protocol does not clearly Masti-Kure Products, Inc. v. Califano, the Reich study were to have a diagnosis identify intermittent claudication as the 587 F.2d 1099, 1104 (D.C. Cir. 1978); of peripheral vascular disease, with one intended object of the study. A clear Cooper Laboratories, Inc. v. FDA, 501 or more of the following symptoms: 64104 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

Intermittent claudication, rest pain, cold diagnosis of intermittent claudication. by the technique named oscillometry to extremities, or peripheral cyanosis. (G– For example, as previously discussed, insure that, in fact, they did have narrowing 25.2 at 163.) Intermittent claudication although several patients complained of of the arteries in the legs. The feeling of was mentioned only as one symptom rest pain, these patients were included. pulses is not an adequate substitute because among a number of symptoms of it is misleading. One must actually examine Dr. Reich testified that these patients by oscillometry the status of the arteries in peripheral vascular disease which ‘‘may have pains at night, and this is the thighs and legs to see whether in fact patients entering the study could have. certainly rest pain of sorts but it is not there is arterial disease in the person or not. I further note that while ischemic neuritic rest pain.’’ (Reich, Tr. ‘‘claudication’’ was marked on most Vol. V at 58.) However, there is nothing (Vyden, G–59 at 6–7.) AHP argues that Dr. Vyden’s patient forms as a symptom reported by in the patient records which reveals testimony should not be credited the patient, intermittent claudication how this diagnosis was made. The because oscillometry, the type of was not listed in the physician’s patient records do not elaborate on the instrument which was identified by Dr. diagnosis for most patients. In fact, only type of rest pain which the patients Vyden as an objective measure of one patient had intermittent experienced, and so this aspect of the intermittent claudication, is an claudication marked as a diagnosis. (G– study cannot be reviewed. 29.1 at 16.) Most other patients had a Regarding the necessity in a clinical outmoded technique. AHP’s arguments diagnosis of arteriosclerosis obliterans. study for documentation supporting a do not change my ruling. However, even assuming for the diagnosis, Dr. Lipicky, a witness for the Firstly, AHP’s argument fails to moment that intermittent claudication Center, testified: address the main point of Dr. Vyden’s was the physician’s diagnosis, my testimony, i.e., that a common cause of review of the patients’ forms The protocol did not specify the diagnostic full leg pain is degenerative joint aspects of the disease. Ordinarily, if one is nevertheless reveals a number of disease of the lumbar spine and sciatic doing a specific hypothesis testing protocol, nerve radiation. This is a possible instances where it is not at all clear that the diagnostic criteria would be explicitly the patient in fact had intermittent laid out. * * * * Such specificity was lacking confounding factor to the Reich study. claudication. For example, rest pain is from the protocol under question. From an Secondly, Dr. Reichle, a witness for an indication that the patient has a overall point of view, the inclusion of AHP who criticized oscillometry as condition other than intermittent patients was entirely dependent upon the outmoded, conceded that he, too, had claudication. (See Reich, Tr. Vol. V at clinical judgment and the clinical opinion of used oscillometry as recently as 1 year 17, 58 (speaking generally about the investigator. No documentation of the before the Reich study was conducted. intermittent claudication).) Dr. validity of that opinion was made available. (Tr. Vol. II at 14.) While oscillometry Scheiner, an AHP witness, testified that This is not acceptable. may have been eclipsed by newer patients with rest pain were excluded (Lipicky, G–61 at 6 (emphasis added).) technology, such as the Doppler, I note from the study (Scheiner, Tr. Vol. V at I find that the reliability of the that this does not diminish Dr. Vyden’s 14), but this does not appear to be the diagnosis of intermittent claudication main point, i.e., that an objective test case. A review of the records reveals for the patients in the Reich study was was needed to confirm a suspected that at least four patients had ‘‘rest properly called into question, and that diagnosis of intermittent claudication. pain’’ checked as a symptom on their the ALJ was correct when he ruled that FDA regulations require adequate case records (G–29.1 at 21, 34, 46, 82), ‘‘(t)he method of patient selection failed assurance that patients have the disease and a fifth patient had a question mark to limit entry into the study to patients or condition being studied. entered into the box for rest pain on the with intermittent claudication. This (§ 314.126(b)(3).) As was ruled in the case record. (G–29.1 at 65.) A sixth could easily have been rectified with the Commissioner’s Decision regarding the patient had night cramps in calves listed use of an objective test to determine the drug Cothyrobal, ‘‘Clearly, a study as a symptom (G–29.1 at 5), which is presence of the condition under ** * must be conducted in patients also distinct from intermittent review.’’ (I.D. at 55.) who have one of the labeled indications claudication. Additionally, further tests were if that study is to be used a proof of Additionally, another patient was needed to confirm the diagnosis of effectiveness for those indications.’’ diagnosed as having Raynaud’s intermittent claudication because there (Commissioner’s Decision on syndrome, and not intermittent are other conditions which may present Cothyrobal, 42 FR 28602 at 28610.) claudication. (G–29.1 at 21.) Also, two as intermittent claudication arising from Therefore, I find no error in the ALJ’s patients accepted into the study, Patient arteriosclerosis obliterans, but in ruling on this basis. Nos. 39 and 62, had ulceration marked actuality be another disease or AHP next argues that the ALJ did not as a symptom (G–29.1 at 42; G–29.1 at condition. Regarding this point, Dr. John consider Dr. Reich’s testimony in which 75), which in itself can be a cause of Vyden, a witness for the Center, he stated that he had tested the MDS– pain and which was a basis for testified: 96 study patients with a Doppler exclusion under the protocol. (G–25.2 at Over half of the patients that I have seen instrument even though that was not 163.) While one of these two patients in my professional career, which amounts to required by the protocol. (AHP with ulcerations, Patient No. 39, was thousands of patients sent to me for Exceptions at 39–40; Reich, Tr. Vol. V excluded at the completion of the study investigation of intermittent claudication, do at 61–62.) On this point, Dr. Reich for failure to follow the medication not in fact have intermittent claudication. testified: regimen, I note that the existence of this The commonest cause of full leg pain is, in patient’s leg ulcerations was not fact, degenerative joint disease of the Every patient had a Doppler study in the discussed. (G–29.1 at 4.) The other (lumbar) spine and sciatic nerve radiation. MDS- 96 study, every single one of them. patient with reported leg ulcerations, (Vyden, G–59 at 7 (emphasis added).) ** * As a matter of fact, you know, in the Specifically with regard to the Reich ’70s when this was being done, in the early Patient No. 62, remained in the study. ’70s, the Doppler was just being introduced The problem with the patient study, Dr. Vyden testified: for this sort of a measurement. I was using histories for the Reich study is that A major problem with this study is that the Doppler for at least ten years earlier than these histories are not well documented. there is no evidence that these people really that. In the ’70s they were coming out with The patient histories do not provide suffered from intermittent claudication. By commercial instruments. Now, blood sufficient information to support the this I mean that they should have been tested pressure—you know, measuring ankle blood Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64105 pressure was just being introduced in clinical available for the ALJ’s review, and I find In considering this issue, I have medicine and, as I say, the cheap Doppler that his use of it was proper. reviewed the ALJ’s decision, and I find instruments—the low cost Doppler Based on my review of the evidence, that the ALJ adequately summarized the instruments were being made available and I find that the ALJ’s conclusion is evidence on both sides of the issue I was doing this just out of curiosity to see how my numbers would stack up with other supported by the evidence. The ALJ’s before making his ruling. (I.D. at 18–20.) people’s. You know, there was no big clinical conclusion that the MDS–96 study This evidence included the testimony of mass of data to evaluate the significance of should have included an objective test Drs. Vyden and Lipicky, witnesses for it but I have Doppler measurements on all of for the presence of intermittent the Center, who both testified that the my patients, probably going back about 16— claudication was correct. Therefore, I foot pedal ergometer was not shown to (Question from the Center’s Attorney): Did find no error in the ALJ’s ruling. be an accurate predictor of walking you report the Doppler measurements? c. Foot pedal ergometer as an distance. (Vyden, G–59 at 9; Lipicky, Tr. (Answer from Dr. Reich): No, the protocol evaluative measure. The ALJ Vol. IV at 60–66.) Specifically, Dr. didn’t call for it—not the protocol but the Vyden testified: report sheet didn’t have a thing but I have determined that the evidence was it in my own records. insufficient to show that the foot pedal A foot ergometer, in my judgment, is not ergometer was a useful measure of a satisfactory testing device (as compared to (Reich, Tr. Vol. V at 61–62 (emphasis Cyclospasmol’s efficacy in treating a treadmill) on whether a drug is effective in added).) intermittent claudication. (I.D. at 18–21, treating intermittent claudication. Now the As is clear from Dr. Reich’s testimony, 56.) AHP takes several exceptions to the reason for this is that, let us say we have a no written reports were submitted to the ALJ’s ruling on this matter. (AHP patient who is 150 pounds. That patient has Center to show what values were Exceptions at 48–53.) (AHP also to walk and support 150 pounds of weight obtained with the Doppler and what when walking. It is a total bodily exercise. disputes the ALJ’s findings with regard Now, when they are using the ergometer they criteria were used to determine whether to the Winsor study, which was a study are, in fact, not measuring the leg muscle the patients had intermittent submitted by AHP to show the when it is supporting the entire body weight. claudication. FDA regulations require correlation between the foot pedal Therefore, the amount of work being done on that the report of a study ‘‘provide ergometer measurements and treadmill the ergometer does not reflect whether a sufficient details of study design, measurements. I will discuss the Winsor patient can walk further since most of their conduct, and analysis to allow critical study separately in section I.C.1.d. of body is not being used in this exercise. evaluation and a determination of this document.) (Vyden, G–59 at 9.) whether the characteristics of an First, to reiterate the specifications of Similarly, when Dr. Lipicky was adequate and well-controlled study are the Reich protocol regarding the foot asked to comment on the use of the foot present.’’ (§ 314.126(a).) I find that the pedal ergometer, the protocol provided pedal ergometer as a measure of mere fact that Dr. Reich obtained some that blood flow was to be measured both efficacy, he testified that while the foot Doppler measurements for patients in with the patient at rest in a recumbent pedal ergometer was a measure of the the study to be of no moment if those position, and after the patient exercised ability of the muscles to perform certain measurements were never recorded in on a foot pedal ergometer. (G–25.2 at work, the foot pedal ergometer the study results, nor submitted to the 164.) Exercise on a foot pedal ergometer measurement was different from Center for review, nor were in evidence was performed by the patient in a walking in that the patient using the before the ALJ for his consideration. For supine position, with the patient using foot pedal ergometer was not required to this reason, I find no error in the ALJ’s his or her foot to repeatedly raise a support the body’s weight while decision on this matter. weight attached to a foot pedal. (Reich, exercising. (Lipicky, G–61 at 9.) AHP further argues that the ALJ erred A–112 at 29; see also Denton, A–121 at Witnesses for AHP expressed the view when he considered Dr. Travis V. 3–4.) Exercise on the foot pedal that the foot pedal ergometer was a valid Winsor’s testimony regarding a ergometer was to be continued until indication of efficacy for Cyclospas- previous, similar study that Dr. Winsor claudication or, if pain did not appear, mol . (Reichle, A–110 at 4–5; 2 Winsor, conducted in 1972. (AHP Exceptions at was to be discontinued after 500 plantar A–111 at 5; Reich, A–112 at 30- 31; 41–43.) Specifically, Dr. Winsor testified flexions of the foot. (G–25.2 at 164.) The Porter, A–109 at 7–8; Scheiner, A–122 at that in 1972 he conducted a study protocol further stated that vasomotor 2–3; Denton, A–121 at 3–4.) However, I which required, in addition to the reflexes of the leg and calf blood flow note that none of the AHP witnesses can clinical estimation of the patient’s were to be measured at the beginning of be said to have refuted the basic point condition at baseline, an objective the study and at 2-week intervals during of the testimony of the Center’s evaluation of the pulse volume by the study by means of venous occlusion witnesses, that being that work on a foot segmental plethysmogram obtained at plethysmography with a mercury-in- pedal ergometer is different from one wrist and both ankles. (Winsor, Tr. rubber strain gauge. (G–25.2 at 164.) walking because walking entails more of Vol. III at 105.) A segmental In AHP’s first objection on this point, the cardiovascular system, in addition plethysmogram was not performed in AHP questions ‘‘what the ALJ’s basis’’ to the joints and skeletal system, and the MDS–96 study. The ALJ found that was for ruling that the foot pedal requires a person to carry the weight of the implication was that the MDS–96 ergometer used in the Reich study was his or her body while exercising. I note study protocol was deficient in not not an accurate predictor of walking that the testimony given by AHP’s requiring some form of objective ability. (AHP Exceptions at 48.) The witnesses is consistent with the evaluation. (I.D. at 15.) AHP challenges basis for the ALJ’s decision is set forth testimony of the Center’s witnesses on this conclusion. in the Initial Decision. More important, this point. For example, Dr. Winsor, an I find no error in the ALJ’s reliance on however, is the question of whether the AHP witness, testified as follows: this evidence as one of the factors in his evidence was sufficient to support Ergometry and treadmill testing are decision. Dr. Winsor’s testimony AHP’s claim that the foot pedal different in some respects. Exercising on a regarding this matter was in evidence ergometer was an accurate predictor of 2 The Dockets Management Branch used the letter (Winsor, Tr. Vol. III at 105), as was a walking ability, and it appears that this ‘‘A’’ to refer to the exhibits of Ives Laboratories, a copy of the protocol for that study. (G– is the issue which AHP is arguing and wholly owned subsidiary of American Home 25.2 at 176–180.) This evidence was which I will address. Products. 64106 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices treadmill increases the cardiac output and accurate measure of walking ability, was established, and that a correlation this increased cardiac output helps the insufficient to show that the foot pedal between the foot pedal ergometer and circulation of blood in the leg. Exercising on ergometer was a useful measure of walking ability needed to be an ergometer, however, does not have a Cyclospasmol’s efficacy in treating demonstrated. significant cardiac aspect to it. The ergometer intermittent claudication, absent other AHP also takes exception to the ALJ’s measures the ability of a set of muscles to perform work with a near constant cardiac sufficient evidence demonstrating such decision on the grounds that the ALJ did participation, but exercising on a treadmill a correlation. (Again I note that the not expressly state how much weight he involves both cardiac and peripheral Winsor study, which was offered by gave to the testimony of the Center’s circulation. AHP for the purposes of correlating the witnesses who testified against the foot foot pedal ergometer with walking on a pedal ergometer as an evaluative (Winsor, A–111 at 5.) treadmill, will be discussed in a measure. (AHP Exceptions at 51.) AHP Similar testimony was given by Dr. subsequent section of this decision. (See offers no legal authority as a basis for Porter, another AHP witness, who section I.C.1.d. of this document.)) asserting that the ALJ must expressly expanded on the differences between AHP further argues that the ALJ did assign a weight to the testimony of the foot pedal ergometer and the not consider the views of three AHP witnesses, and I find this argument to be treadmill as follows: witnesses who testified regarding the without merit. As I stated in a previous The correlation (between the ergometer foot pedal ergometer, Drs. Reichle, paragraph, the ALJ is not required to and the treadmill) will not be one-to-one for Scheiner, and Denton, and that the ALJ make findings on all the evidence when two reasons. First, the patient’s ability to mischaracterized the views of three the findings which have been made perform work on a treadmill will vary other AHP witnesses, Drs. Porter, support the decision. (See Immigration somewhat from day to day depending on a Winsor, and Reich. (AHP Exceptions at and Naturalization Serv. v. variety of physical and emotional factors, such as whether the patient got a good night’s 49.) Bagamasbad, 429 U.S. at 25; Deep sleep and whether he is angry or depressed. Regarding the testimony of Drs. South Broadcasting Co. v. FCC, 278 F.2d Second, the ergometer focuses on the Reichle, Scheiner, and Denton, I note at 266; Community & Johnson Corp. v. capacity of two muscles, the gastrocnemius that the ALJ is not required to make United States, 156 F. Supp. at 443.) and the soleus muscles, to perform work. findings on all the evidence when the AHP further avers that the ALJ While the treadmill involves principally the findings which the ALJ has made mischaracterized the Center’s position use of the gastrocnemius and soleus muscles, support the ALJ’s decision. (See on the use of the foot pedal ergometer it also involves the use of other muscles in Immigration and Naturalization Serv. v. when the ALJ wrote, ‘‘However, the the body and of the patient’s cardiovascular Bagamasbad, 429 U.S. at 25; Deep Center believes that the ergometer system. These other muscles and the South Broadcasting Co. v. FCC, 278 F.2d measurement is not an accurate cardiovascular system may affect a patient’s conclusion as to when he feels forced to stop at 266; Community & Johnson Corp. v. predictor of walking distance since walking on a treadmill. United States, 156 F. Supp. at 443.) walking is a ‘total bodily exercise.’ ’’ Also, as has been established in prior (I.D. at 18–19, citation omitted.) I find (Porter, A–110 at 8.) cases, the ALJ is not required to accept this objection to be without merit, since I find that the difference between the the opinion of expert witnesses. the ALJ correctly quoted the testimony testimony of the Center’s witnesses and (Warner-Lambert Co. v. Heckler, 787 of Dr. Vyden, the Center’s witness. of AHP’s witnesses lies in their F.2d at 154; Commissioner’s Decision (Vyden, G–59 at 9.) disparate views as to whether the limits on OPE, slip op. at 22; Commissioner’s For the above reasons, I conclude that of the focus of the foot pedal ergometer Decision on Deprol, 58 FR 50929 at the ALJ did not err in his consideration was a positive factor because it isolated 50930.) Such testimony is only as strong of the testimony of AHP’s experts the work of certain muscles, or whether as the studies upon which it is based. regarding the foot pedal ergometer. the foot pedal ergometer exercise was so (Commissioner’s Decision on OPE, slip d. The Winsor study. The Winsor dissimilar from the actual outcome of op. at 22, citing Upjohn Co. v. Finch, study was an additional study interest, i.e, walking ability, that the foot 422 F.2d 944 (6th Cir. 1970).) performed by AHP for the purpose of pedal ergometer could not be said to be Regarding the testimony of Drs. correlating measurements taken on a a useful measure of a patient’s walking Porter, Winsor, and Reich, AHP argues foot pedal ergometer with ability. that the ALJ mischaracterized their measurements taken on a treadmill. The ALJ, after reviewing the evidence testimony by failing to make it clear that (Winsor, A–111 at 4–6; A–124 at 31–44.) presented by both parties, ruled: these witnesses testified that they had The Winsor study did not have a written (T)he suitability of the ergometer as a used ergometry extensively and had protocol. The subsequent report on the measurement of walking ability is called into testified without qualification that they study indicated that 13 patients were question since a treadmill is more commonly believed the foot pedal ergometer was a tested on both a foot pedal ergometer used in studies where the relevant function reliable predicator of walking ability. and on a treadmill. (A–124 at 31; AHP to be tested is walking. Thus if the ergometer (AHP Exceptions at 50.) I have reviewed Post-Hearing Brief at 21.) It was reported is to be used as a measurement of walking the testimony of these witnesses, and I that the two tests were carried out 30 ability, some basis is needed to correlate do not find that their testimony changes minutes apart. The report stated that these factors. my ruling regarding the foot pedal patients were randomized with respect (I.D. at 20.) ergometer used in the Reich study. As to the order of the two tests. (Winsor, A– I find the ALJ’s ruling to be sound. As I stated previously, the testimony of 111 at 7; A–124 at 31.) stated previously in this section, the AHP’s witnesses is consistent with the Of the 13 patients in the Winsor evidence indicates that exercise on a testimony of the Center’s witnesses, in study, 4 patients were brought back for foot pedal ergometer is different in which the latter testified that the foot a second day of tests. One patient, many respects from walking. Therefore, pedal ergometer exercise was different Patient No. 2, was reported to have had I find that the evidence offered by AHP, in several key respects from the exercise the concomitant condition of arthritis in in which witnesses described their of walking. Therefore, I find that the ALJ the knee, and it was further reported personal experiences with ergometers was correct in ruling that the suitability that at the patient’s first test, arthritis and expressed their own estimations of the foot pedal ergometer as a affected this patient’s performance. For that a foot pedal ergometer was an measurement of walking ability was not this reason, Dr. Winsor decided that Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64107

Patient No. 2’s first test results would studies and, by the same reasoning, subjects for a study should provide not be used in the statistical analysis. supportive studies such as the Winsor adequate assurance that the subjects (A–124 at 31.) Instead, this patient’s study, must be adequately designed so have the disease or condition being second day test results on both the that scientists can draw reasonable studied. (§ 314.126(b)(3).) I do not find ergometer and the treadmill were used conclusions from them. the undocumented, prestudy experience in the statistical analysis. (A–124 at 31.) (Commissioner’s Decision on of Dr. Winsor with the study patients to The other three patients who were Cothyrobal, 42 FR 28602 at 28614.) For be sufficient evidence of the patients’ tested twice—Patient Nos. 8, 9, and 12— this reason, all of the factors that are conditions. were reported to have had peripheral relevant to a determination as to AHP next challenges the ALJ’s vascular disease in both legs. For this whether an efficacy study is adequate opinion on the grounds that the ALJ did reason, Dr. Winsor decided to retest and well-controlled are also relevant in not state what he understood to be Dr. these three patients on a second day on determining whether other supportive Lipicky’s central criticism of the Winsor both the ergometer and the treadmill, studies are adequate for their purposes. study. (AHP Exceptions at 66–67.) AHP using the other leg on the ergometer. (Commissioner’s Decision on Deprol, 58 further questions whether the ALJ (A–124 at 31.) In the subsequent FR 50929 at 50942 n.5.) understood the Winsor study, the focus statistical analysis, results for these One of the most basic requirements of this argument being whether the ALJ three patients were analyzed in three for a study is a written protocol. The should have given any weight to Dr. ways. Initially, the first day test results regulations provide that ‘‘the protocol Lipicky’s testimony in which Dr. of these patients were used in the for the study * * * should describe the Lipicky questioned aspects of the analysis. (A–124 at 32.) Next, the results study design precisely * * *.’’ Winsor study. (AHP Exceptions at 70– were reanalyzed twice more, once using (§ 314.126 (b)(2).) As is noted in the 72.) these patients’ lowest reported regulations, this characteristic, along Dr. Lipicky testified at some length ergometer test results, and then using with the other characteristics set forth in regarding the Winsor study. One of the these patients’ highest reported this section of the regulations, has been aspects of Dr. Lipicky’s testimony which ergometer test results. (A–124 at 32.) As developed over a period of years and is AHP is challenging is Dr. Lipicky’s for the treadmill results, it appears that recognized by the scientific community review of certain graphs drawn by Dr. the treadmill readings taken on the same as an essential of an adequate and well- Wang, an AHP witness, based on the day as the corresponding ergometer controlled clinical trial. (§ 314.126(a).) data points from the Winsor study. results were used. (A–124 at 32; 36.) The written protocol should have (AHP Exceptions at 71; AHP Post- The post-study report stated that there included a summary of the proposed or Hearing Brief at 22–24.) As part of its was a ‘‘significant correlation’’ between actual methods of analysis and a post-study report, AHP submitted the treadmill distance and ergometer description of the method of selection of several graphs plotting the results of the foot-pounds. (A–124 at 32.) The ALJ, subjects. (§ 314.126 (b)(1) to (b)(7).) The Winsor study. (A–124 at 38–44.) Of describing the Winsor study as hastily necessity for a written protocol is clear. particular focus in the present issue are organized and conducted, ruled that the It is a key factor in preventing bias, two graphs plotting treadmill feet versus study was not adequate to prove that the whether intentional or unintentional, ergometer foot-pounds.3 (A–124 at 42– foot pedal ergometer was a useful from influencing a study’s outcome. The 43.) These graphs are of interest because measure of the efficacy of problems created by the absence of a the post-study report stated that there Cyclospasmol for intermittent written protocol can be seen in the was ‘‘significant correlation between claudication. (I.D. at 56.) AHP disputes Winsor study. For example, Dr. Winsor treadmill distance and ergometer ft-lb.’’ the ALJ’s conclusions. (AHP Exceptions retested one of the patients after noting (A–124 at 32.) at 53–72.) an ‘‘abnormality’’ in the patient’s first As described in the post-study report, As one of its objections, AHP asks test results, an abnormality said to be ‘‘Regression of the work performed whether the ALJ gave any weight to the attributed to the subject’s arthritis. Dr. (was) carried out using linear regression Center’s contention that the Winsor Winsor also tested three patients in a with or without forcing through the study should be disregarded because it different manner from the rest, by origin (i.e. assume that if the ergometer was not carried out under a written testing each leg separately on the foot work is zero, the treadmill work should protocol. (AHP Exceptions at 58–59; see pedal ergometer. (I.D. at 19.) These also be zero).’’ (A–124 at 32.) In other Center Post-Hearing Brief at 28.) While types of variations in testing among words, a straight-line graph was plotted the ALJ did not expressly make a ruling patients raise serious questions of bias, which most closely fit the data points, on this point (see I.D. at 19), I find that and the questions of bias are only and another straight-line graph was the fact that the Winsor study lacked a exacerbated by the absence of a written plotted forcing the graph through the written protocol is a matter properly protocol describing the testing protocol. origin of the graph. Regarding the considered in evaluating and weighing Also, because of the absence of a former of these two graphs, Dr. Lipicky the Winsor study. written protocol, the basis for patient had testified that the graph ‘‘says that The Winsor study was not a study to selection was not set forth in advance of when a patient cannot pump an prove efficacy, and therefore, strictly the Winsor study. While the post-study ergometer that patient can walk 200 ft, speaking, was not bound to comply with report stated that all patients in the which clearly is a nonsensical result. It all of the requirements for an adequate Winsor study had intermittent defies common sense that that would be and well-controlled study, such as claudication, the report failed to the case.’’ (Lipicky, Tr. Vol. IV at 64.) blinding. In this respect, the Winsor describe the basis for this diagnosis. Regarding the graph forced through the study is comparable to a safety study, AHP argues that it was not necessary to origin, Dr. Lipicky testified, ‘‘most of the which similarly does not necessarily have a written protocol describing the data points, (especially) the early ones, have to satisfy every requirement of an selection criteria since Dr. Winsor was are well above that line and a couple of adequate and well-controlled clinical familiar with all of the patients’ trial. (Commissioner’s Decision on conditions because he had been the 3 The other graphs plotted ergometer foot-pounds Cothyrobal, 42 FR 28602 at 28614; patients’ doctor for quite some time. versus treadmill foot-pounds. (A–124 at 38–41.) There was also a scatter diagram plotting treadmill Commissioner’s Decision on Deprol, 58 (AHP Exceptions at 65.) The regulations foot-pounds/minute versus ergometer foot-pounds/ FR 50929 at 50942.) Nonetheless, safety state that the method of selecting minute. (A–124 at 14.) 64108 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices data points later on lie well below that testimony that his graphs represented which requires the ALJ to explicitly line—to my eye, not a very good fit at ‘‘an alternate way of looking at the same assign a weight to the evidence which all.’’ (Lipicky, Tr. Vol. IV at 64.) data and that there’s no way from that the ALJ considers. As I previously Using the same data points, Dr. data to choose between those two stated, the ALJ is not required to make Lipicky drew and offered several other interpretations.’’ (Lipicky, Tr. Vol. IV at findings on all the evidence when the possible graphs. (G–67 at 2–4.) Dr. 65; see I.D. at 20.) As Dr. Lipicky noted, findings which have been made by the Lipicky cited one of his graphs in while there may be some relationship ALJ support the decision. (See particular as fitting the data points best between the foot pedal ergometer and Immigration and Naturalization Serv. v. of all. In this graph, the line began at the treadmill, the crux of the matter at Bagamasbad, 429 U.S. at 25; Deep slope, the slope then decreased and at issue lies in defining the relationship South Broadcasting Co. v. FCC, 278 F.2d one point flattened out for the later data between the two. (Lipicky, Tr. Vol. IV at at 266; Community & Johnson Corp. v. points. (G–67 at 2–3.) 65, 124.) United States, 156 F. Supp. at 443.) AHP criticizes Dr. Lipicky’s testimony Dr. Lipicky offered testimony AHP further questions the ALJ’s on several grounds. First, AHP argues indicating that the graphs submitted by conclusions that the suitability of the that Dr. Lipicky is essentially testifying AHP either did not fit the data results foot pedal ergometer as a measure of that the Winsor study was deficient or suggested a result that did not make walking ability was called into question because it did not yield a mathematical sense. The graphs submitted by Dr. because the treadmill is more commonly formula that described the relationship Lipicky reflected a better fit with the used, and that if the foot pedal between the foot pedal ergometer data. Why the Winsor study’s data came ergometer was to be used, some basis measure and the treadmill measure. out as they did was not an issue which was needed to correlate these two (AHP Post-Hearing Brief at 22.) AHP Dr. Lipicky was required to explain. measures. (AHP Exceptions at 68–69.) I argues that Dr. Lipicky’s testimony on While Dr. Lipicky, as a witness for the addressed this issue in section I.C.1.c. of this point is faulty because he did not Center, suggested several possible other this document, wherein I ruled that it disclose why such a mathematical graphs, the Center does not have the was necessary to correlate the measures formula would be useful. I disagree with burden of proof. AHP has the burden of taken on the treadmill with measures AHP’s position. proving the nature of the relationship, if taken on the foot pedal ergometer Dr. Lipicky testified that the issue any, between the results on the because the evidence indicated that the raised by the results of the Winsor study treadmill and the results on the foot foot pedal ergometer exercise was was what is ‘‘the explicit relationship pedal ergometer. The correlation different in several key respects from between the two variables. Given a between the two measures needed to be the exercise of walking on a treadmill. specific ergometer value, whatever its defined, and the burden of proof lay In my judgment, the ALJ was correct units, what can one predict would be with AHP as proponent for approval of in concluding that AHP did not prove the walking distance on (the) treadmill the efficacy of Cyclospasmol. that the foot pedal ergometer was useful in the absence of having measured it?’’ (Weinberger v. Hynson, Westcott & in demonstrating Cyclospasmol’s (Lipicky, Tr. Vol. IV at 124.) In Dunning, 412 U.S. 609, 617 (1973), efficacy in treating intermittent considering this evidence, it must be citing 21 U.S.C. 355(e)(3).) Therefore, I claudication. I find sufficient kept in mind that the Winsor study was find no merit in AHP’s argument. justification to support the ALJ’s undertaken to supplement the MDS–96 AHP also contends that the ALJ rejection of the Winsor study. study, since the results of the MDS–96 devoted only two sentences of his e. Adequacy of the MDS–96 (Reich) study were expressed in terms of foot opinion to the Winsor study. (AHP study. In sum, I find that the Reich pedal ergometer units, despite the fact Exceptions at 71.) As I previously study was not adequate and well- that other evidence indicated that the discussed, the ALJ gave adequate controlled. In making this treadmill is more commonly used. For reasons why he did not credit the determination, I have considered the this reason, I find that Dr. Lipicky was Winsor study. Also, the ALJ devoted aggregate effect of the protocol correct in noting that it was necessary several pages of his opinion to a review violations. As I previously discussed: (1) for the Winsor study to demonstrate the of the Winsor study. (I.D. at 19–21, 23, The objective of the study was vague value of the foot pedal ergometer to 56.) I find that the evidence supports a and the protocol was not clear in predict walking distance on a treadmill. finding that the ALJ did understand the identifying intermittent claudication as AHP further argues that Dr. Lipicky’s Winsor study, and I affirm his decision the focus; (2) the reliability of the testimony should not be credited with respect to it. diagnosis of intermittent claudication because the graphs which he submitted, AHP further argues that the ALJ did was properly called into question and in particular the graph described in the not indicate how much weight he gave an objective test for intermittent above discussion as flattening-out, to the following arguments of the claudication should have been included reflects only Dr. Lipicky’s hypothesis. Center: (1) That the Winsor study in the study; and (3) the evidence did (AHP Post-Hearing Brief at 22–23.) AHP should be disregarded because it was not establish that the foot pedal argues that Dr. Lipicky’s testimony fails not carried out pursuant to a written ergometer was a suitable measure of because Dr. Lipicky offered no protocol, (2) that the Winsor study walking ability. physiological or other explanation to should be disregarded because Dr. Regarding the Winsor study, I find explain why his graph of the data points Winsor undertook the study after he had that the ALJ properly concluded that shows that a person might be able to agreed to be a witness for AHP, (3) that AHP did not prove that the foot pedal increase his or her performance on the Dr. Winsor retested 4 of the patients, ergometer was useful in demonstrating foot pedal ergometer without and (4) that although it was reported Cyclospasmol’s efficacy in treating correspondingly increasing his or her that the patients in the study had intermittent claudication. As detailed performance on the treadmill. (AHP intermittent claudication, there was no above: (1) The Winsor study did not Post-Hearing Brief at 22–24.) objective evidence that the 13 patients have a written protocol; (2) not all I find that Dr. Lipicky’s testimony in the Winsor study had intermittent patients in the study were tested in the indicates that the data may be claudication. (AHP Exceptions at 58–66; same manner; (3) the basis for patient interpreted in more than one way. see Center Post-Hearing Brief at 27–30.) selection was not set forth in advance of Indeed, Dr. Lipicky stated in his There is no rule in law or regulations the study; and (4) the study did not Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64109 demonstrate the value of the foot pedal and well-controlled, in part because the on the left side with B, these being switched ergometer in predicting walking reanalysis of the initial 12 weeks of the for the remaining half of patients. A distance on the treadmill. five-center study was performed only crossover analysis could be invalid if after the failure to find a positive drug treatment on one side influenced the 2. The Five-Center Study response on the other side. effect in the initial analysis. (I.D. at 26, The five-center study was, as its name 30–31.) AHP has challenged the ALJ’s (A–127 at 11.) indicates, a multicenter study findings on the following matters: (1) AHP further cites the testimony of Dr. conducted at five sites. The study’s The weight to be accorded the Lipicky, a witness for the Center, who stated objective was to ‘‘evaluate the reanalysis of data, (2) the inclusion and testified that crossover studies are often efficacy of Cyclospasmol versus exclusion of patients, (3) the calculation analyzed as parallel studies for the first placebo, as an adjunct to generally of treadmill distances, and (4) the half of the data, and that he himself had accepted therapy, for the amelioration of inconsistency of results among the five probably spoken in favor of such symptoms (including intermittent centers in the reanalysis. I address analyses. (AHP Exceptions at 81, citing claudication) in the lower extremities of AHP’s exceptions below. Lipicky, Tr. Vol. IV at 92.) It is to be patients with chronic occlusive arterial a. Reanalysis of the five-center study. noted, however, that Dr. Lipicky disease (atherosclerosis) who have no AHP takes exception to the ALJ’s clarified his position in this regard by manifestations of severe (advanced) conclusion that no weight should be adding that, while such reanalyses are a disease * * *.’’ (G–6 at 3.) Severe given to the reanalysis of the data from ‘‘common practice,’’ in his opinion it disease was defined in the protocol as: the five-center study. (AHP Exceptions was very often not an appropriate exercise. (Lipicky, Tr. Vol. IV at 94.) On severe (advanced) chronic occlusive at 78–88, citing I.D. at 30, 56.) As arterial disease as manifested by major previously discussed, the five-center this point, Dr. Lipicky testified: trophic changes (e.g., atrophic shiny skin, study was conducted using a crossover Well, I guess if one is talking about major nail changes and/or muscle atrophy), design. After statistical analysis of the appropriateness, I think that reanalyses are ischemic rest pain, ulceration and/or study failed to demonstrate a not appropriate very often—commonly done gangrene, marked pallor or rubor with the statistically significant difference but not appropriate very often; sometimes extremity in the horizontal position. Also between drug and placebo (I.D. at 26; G– useful if, indeed, there are particular things those in whom prior arteriography has 9.1 at 86), the data were reanalyzed as that one is trying to get to and if there is an demonstrated combined aortoiliac and analysis that one can think of doing that, femoropopliteal disease; or popliteal disease if the study had been conducted with a indeed, was not thought of ahead of time and involving the trifurcation; or distal arterial parallel design. (A–108 at 1–11.) To do where the major intent of the trial is not (tibial) disease or arteriolar disease such as this, the data from the second half of the singularly or singly dependent upon that may be associated with diabetes mellitus. study—the final 12 weeks—were analysis. (G–6 at 5–6.) dropped. (Lipicky, Tr. Vol. IV at 68.) (Lipicky, Tr. Vol. IV at 94.) The five-center study employed a Also, the decisions on inclusions and Other testimony on this issue was crossover design. (G–9.1 at 85.) Initially, exclusions of all patients were offered by Dr. Schneiderman, a a 6 to 8 week, single-blinded placebo reexamined. (Issues pertaining to the statistician and witness for the Center, washout period was used. (G–9.1 at 85.) reexamination of exclusions will be who gave the following testimony: discussed in section I.C.2.b. of this Patients were then randomly assigned to And, thus, in a cross-over experiment if a one of two groups in a double-blinded document.) AHP’s reasons for electing to perform this type of reanalysis were phase or a sequence effect can be shown— manner. Group I received a placebo for a carry-over effect—then it would be 12 weeks and then Cyclospasmol for not communicated to the Center, either inappropriate, I think, to continue the 12 weeks, with no intervening washout orally or in writing. (Lipicky, Tr. Vol. IV analysis as if there were no carry-over effect period. Group II underwent the reverse at 68.) In the reanalysis, a statistically because that’s one of the conditions, significant improvement was reported essentially, from which you create a cross- sequence, also with no intervening  washout period. (G–9.1 at 85.) One in the Cyclospasmol -treated group over over design. The original analysis of these data did not show such a * * * carry-over hundred and sixteen patients were the placebo group. (A–108 at 3.) In support of its decision to reanalyze effect and, therefore, quite obviously it was enrolled in the study, with 91 appropriate to have designed the experiment completing it. (G–9.1 at 85.) Of those the first 12 weeks of the data as a parallel study, AHP cites to the as it was designed and to continue to analyze who completed the study, 65 patients it as the indication had been for the analysis. testimony of Dr. Nathan Mantel, a were adjudged to be ‘‘acceptable,’’ for I see no justification really for discarding the analysis, i.e., capable of being evaluated. witness for AHP who was critical of cross-over design, which people who knew (G–9.1 at 85.) crossover protocols in general. (Mantel, the biology had designed, and, thus, Statistical analysis of the pooled data A–127 at 10–12.) In relevant part, Dr. discarding half the data. from the five centers indicated no Mantel testified: (Schneiderman, Tr. Vol. VII at 5–6 statistically significant difference When AHP turned to me for advice with (emphasis added).) between Cyclospasmol and placebo. respect to the proper analysis of the five- In addressing AHP’s argument, I first (G–9.1 at 86, 93, 142–46; AHP center study, I voiced my own long-standing note that it is a requirement of an criticism of use of a crossover design, albeit adequate and well-controlled study that Exceptions at 80.) The pooled data were this is a design greatly emphasized in then reanalyzed using only the first half standard statistical texts. Biological and there be an analysis of the results of the of the study (the initial 12 weeks) and medical realities just do not correspond to study adequate to assess the effects of the inclusion/exclusion decisions for the simple mathematical model underlying the drug. (§ 314.126(b)(7).) Additionally, each patient were reconsidered. (A–108 use of the crossover. When a patient receives because faulty analysis can introduce at 1–11.) Using one-tailed tests of treatment A, followed in due course by bias, adequate measures must be taken significance, the reanalysis indicated a treatment B, the final response observed is to minimize bias on the part of the statistically significant, drug-over- not a response to treatment B. Rather, it is a analysts of the data. (§ 314.126(b)(5).) response to the sequence of treatments used, placebo effect. (A–108 at 1–11; AHP including all lapses of time. Another Also, the study’s protocol should Exceptions at 81.) crossover design example, one not even describe the study design precisely, The ALJ ruled that the five-center involving any initial values, is where half the including information on the duration study could not be considered adequate patients get treated on the right side with A, of treatment periods, whether 64110 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices treatments are parallel, sequential, or on a crossover basis. (AHP Exceptions at its reanalysis. (AHP Exceptions at 86– crossover, and whether the sample size 82–83, citing I.D. at 25.) The ALJ did not 87.) There is no basis in law for AHP’s is predetermined or based upon some make such a broad pronouncement. The argument. The burden of proving safety interim analysis. (§ 314.126(b)(2).) One ALJ rejected AHP’s reanalysis because and efficacy lies with the applicant. of the most important reasons for AHP did not provide a ‘‘good reason’’ as (Hynson, 412 U.S. at 617; 21 U.S.C. requiring protocol decisions to be made to why AHP analyzed only the first half 355(e); 21 CFR 12.87(e).) The Center, in advance of the clinical investigation of the data collected. (I.D. at 30.) therefore, was not obligated to perform is to avoid bias. AHP also argues that the ALJ ignored its own crossover analysis, particularly As AHP acknowledged in its Post- evidence indicating that the 1985 using the results as they were calculated Hearing Brief, FDA regulations provide reanalysis was precisely the type of in the reanalysis in this case. that a sponsor may use an analytical analysis that the Center itself would Notwithstanding my ruling on this method that is not set out in the have required to establish efficacy. issue, I nevertheless note that the Center protocol, but the sponsor should inform (AHP Exceptions at 84.) By this did perform an analysis using the FDA as to how it selected that analytical argument, AHP is apparently referring original crossover data; in this analysis, method. (AHP Post-Hearing Brief at 39; to the testimony of Dr. Lipicky, a Center the Center followed the protocol for the § 314.126(b)(1).) AHP did not inform the witness, who testified that crossover five-center study by using maximum, Center of the reasons for switching from studies are often analyzed as parallel rather than average, treadmill analyzing the entire data as a crossover studies, and that he himself had measurements. (G–71 at 1–4; Lipicky, study to instead analyzing the first half probably spoken in favor of such a Tr. Vol. V at 74–79.) However, this of the study as a parallel study. procedure. (Lipicky, Tr. Vol. IV at 92.) exhibit was stricken on motion of AHP. (Lipicky, Tr. Vol. IV at 68.) The However, as I noted above, Dr. Lipicky (Tr. Vol. V at 6.) Additionally, I note testimony of Dr. Mantel fails as an explained his position by adding that that, as Dr. Lipicky testified, in order for explanation because Dr. Mantel’s reason while such reanalyses are commonly the Center to perform an independent for objecting to crossover studies— done in clinical studies, they are very reanalysis, the Center would have to specifically, the failure of patients to often not appropriate. I find AHP’s have access to the raw data, i.e., the case return to baseline at the time of interpretation of Dr. Lipicky’s testimony report forms, and these were not crossover (Mantel, A–127 at 10–12)— as a requirement for analysis of all submitted to FDA. (Lipicky, G–61 at 19.) was not identified as a problem with the crossover studies as if these were AHP further contends that the ALJ five-center study. (See Schneiderman, parallel studies to be incorrect. erroneously concluded that AHP had Tr. Vol. VII at 5–6.) Moreover, AHP’s Moreover, I note that another witness given no reason for submitting a parallel reliance upon Dr. Mantel’s broad for the Center, Dr. Schneiderman, was study. (AHP Exceptions at 87.) AHP is indictment of all crossover studies is clearly critical of AHP’s reanalysis of misstating the ALJ’s decision. The ALJ difficult to accept, in view of the fact this crossover study as a parallel study. held that AHP did not provide a that the second study submitted by AHP (Schneiderman, Tr. Vol. VII at 5–6.) In sufficient reason for its submission of a in support of the indication of any event, regardless of any statements parallel analysis for a crossover study. intermittent claudication for by Dr. Lipicky, or any other witnesses (I.D. at 30.) I uphold the ALJ’s Cyclospasmol, the MDS–96 study, was for either party, the Commissioner is not conclusion. a crossover study and was analyzed as required to accept the testimony of AHP argues that the ALJ failed to such by AHP. (See section I.C.1. of this expert witnesses but is to make his or consider the views of AHP’s expert document.) her own decision regarding efficacy. witnesses regarding peripheral vascular The reanalysis of the five-center study (Warner-Lambert Co. v. Heckler, 787 disease. (AHP Exceptions at 87–88.) was more than a mere mathematical F.2d at 154; Commissioner’s Decision AHP avers that its witnesses testified check. It was a reconsideration of the on OPE, slip op. at 22; Commissioner’s that the reanalysis of the five-center protocol after the clinical trial had been Decision on Deprol, 58 FR 50929 at study demonstrated a treatment effect. completed. While circumstances can 50930.) (AHP Exceptions at 88, citing: Porter, arise that justify analyzing only the first AHP additionally argues that the ALJ A–109 at 22–25; Reichle, A–110 at 18– half of a crossover study as a parallel erred in his understanding of Dr. 20; Winsor at A–111 at 15–16; Reich, A– study, such as when a sequence effect Schneiderman’s testimony. (AHP 112 at 49–51.) As is apparent from the occurs, a decision to throw out half of Exceptions at 84.) AHP alleges that Dr. ALJ’s Initial Decision, the ALJ did the data cannot be made arbitrarily if a Schneiderman did not indicate that the consider AHP’s evidence, but the ALJ study is to be considered adequate and parallel analysis was inappropriate, and was not persuaded by it. well-controlled. Where, as in the five- that the ALJ erred in using Dr. In any case, as I stated previously (see center study, a ‘‘reanalysis’’ means that: Schneiderman’s testimony as part of his section I.C.1.c. of this document), the (1) Initially no statistically significant rationale for rejecting the reanalysis. I Commissioner is not bound by the difference between the drug and the have reviewed Dr. Schneiderman’s conclusions of expert witnesses. placebo was found, (2) the inclusion testimony, and I find that the ALJ was (Warner-Lambert Co. v. Heckler, 787 and exclusion decisions for each patient correct in his interpretation. Dr. F.2d at 154; Commissioner’s Decision were reconsidered, (3) the second half of Schneiderman’s testimony could not be on OPE, slip op. at 22; Commissioner’s the crossover trial was dropped, and (4) more clear on this point, ‘‘I see no Decision on Deprol, 58 FR 50929 at the first half of the crossover data was justification really for discarding the 50930.) Expert opinion testimony is reviewed as if the trial had been a cross-over design, which people who only as strong as the studies on which parallel trial, then certainly the sponsor knew the biology had designed, and, it is based. (Commissioner’s Decision on should expect that an explanation for thus, discarding half the data.’’ OPE, slip op. at 22, citing Upjohn v. these changes would be in order. (Schneiderman, Tr. Vol. VII at 5–6.) Finch, 422 F.2d 944, 955 (1970).) AHP further challenges the ALJ’s AHP further argues that the ALJ Having reviewed all of the evidence, decision on the grounds that the ALJ should have required the Center to I am in agreement with the ALJ’s purportedly took the position that he support its criticism of the reanalysis by conclusion that AHP did not provide a would not consider a parallel analysis of preparing its own crossover analysis sufficient reason showing that it was any study that is designed to gather data using the values submitted by AHP in proper to analyze only the first 12 weeks Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64111 of this 24 week study. In a study such persuasive. The ALJ devoted several resulted in a total of 20 patients (almost 25% as the five-center study, where major pages of his decision to a discussion of of the patients analyzed) to be declared now changes to the protocol were made but the reanalysis. (See I.D. at 26–31, 56.) In analyzable whereas previously being the decision to make those changes was relevant part, the ALJ noted: (1) That the declared non-analyzable. arrived at only after the data had been five-center study was originally (Lipicky, G–61 at 18.) analyzed without showing a statistically designed, conducted, and analyzed with AHP argues that Dr. Lipicky’s significant drug effect, it is not possible a crossover design, (2) that when the testimony was refuted in AHP’s Post- in the subsequent reanalysis to original analysis failed to find a Hearing Brief, wherein AHP had argued ‘‘distinguish the effect of a drug from statistically significant drug effect, AHP that ‘‘(a)n examination of the difference other influences, such as spontaneous sought to rely upon the results from between the initial analysis and the change in the course of the disease, only one of the five centers, (3) that reanalysis show that AHP’s inclusion/ placebo effect, or biased observation.’’ AHP subsequently chose instead to exclusion decisions in the reanalysis (§ 314.126(a)) For the above reasons, I reanalyze the first 12 weeks of the study contradict(ed) Dr. Lipicky’s therefore hold that AHP’s reanalysis of as if it had been a parallel study, (4) that manipulation theory with respect to the five-center study can not be relied in the reanalysis, the inclusion and four of the centers; only the Reich center upon as substantial evidence of efficacy exclusion decisions for every patient was consistent with Dr. Lipicky’s theory from an adequate and well-controlled were reconsidered and 23 changes were ** *.’’ (AHP Post-Hearing Brief at 42 clinical trial. made in patient selection, and (5) (emphasis in original).) The ALJ’s b. Inclusion/exclusion decisions. As calculation of the treadmill baseline finding regarding this aspect of the part of AHP’s reanalysis of the five- data was not done in strict accordance reanalysis, with which AHP takes issue, center study, Dr. Clarence Denton and with the protocol, i.e., average values reads as follows: Dr. Stuart L. Scheiner reviewed the case were used instead of the highest value. In addition, AHP claims the Center’s reports for all of the 92 patients who (I.D. at 56.) As I ruled at the outset of allegation is incorrect with respect to four of completed the first 12 weeks of the five- this Final Decision, I find that the ALJ’s the centers since patients were added, not center study and reconsidered the Initial Decision comports with the subtracted to the Raines center and excluded inclusion/exclusion decisions from the Batson-Hollier and Abbott centers requirements of the Administrative with no changes to the String center. Only pertaining to each patient. (AHP Procedure Act and FDA regulations, and Exceptions at 89; A–108 at 2.) In their the Reich center showed a positive drug that the ALJ fully set out the reasons for effect and had four patients added to it. reanalysis, Drs. Denton and Scheiner his decision in the narrative explanation (I.D. at 26–27.) were said to have been blinded to such section of his decision. (See section I.B. factors as whether a particular patient AHP now argues that in its Post- of this document.) Therefore, I find no Hearing Brief, it had refuted Dr. had been included in the initial merit in AHP’s argument. analysis, whether a patient had been on Lipicky’s assertions in their entirety, AHP also challenges the ALJ’s and that the ALJ was in error in finding drug or placebo, and as to a patient’s statement that the reanalysis should be outcome at the conclusion of the five- that AHP had argued that the Center’s given a ‘‘higher degree of scrutiny’’ than allegation was incorrect with respect to center study. (AHP Exceptions at 89; the initial analysis. (AHP Exceptions at AHP Post-Hearing Brief at 42; Denton, four of the five centers. (AHP 92–93.) As the ALJ stated in his opinion, Exceptions at 93.) I find this argument Tr. Vol. VII at 10–11, 47.) However, it ‘‘(A) higher degree of scrutiny is is not clear that Drs. Denton and to be clearly without merit. As the warranted here not because the previously quoted excerpt from AHP’s Scheiner were also blinded regarding reanalysis was termed as such but the center to which a patient had been Post-Hearing Brief plainly shows, AHP because the reanalysis was undertaken did say that it found that Dr. Lipicky’s assigned during the trial. in response to the initial lack of a A total of 23 changes in the selection testimony was correct with regard to the statistically significant difference of patients for analysis were made Reich center, just as the ALJ had ruled. between the drug and placebo.’’ (I.D. at between the original analysis and the (AHP Post-Hearing Brief at 42.) I find no 26.) The ALJ’s statement was reanalysis. These changes included 11 indication that the ALJ misunderstood appropriate, and I find no error in it. AHP’s response to Dr. Lipicky’s new inclusions and 11 new exclusions AHP further argues that the ALJ testimony, and, therefore, I find no of patients, and one reclassification of a misunderstood AHP’s response to Dr. patient who originally had been listed merit in AHP’s argument. Lipicky’s ‘‘accusations of as a placebo patient but upon discovery AHP also argues that the ALJ was in manipulation.’’ (AHP Exceptions at 93.) of a coding error was reclassified as a error in stating that the Reich Center The portion of Dr. Lipicky’s testimony Cyclospasmol patient. (I.D. at 27; A– was the only one of the five centers to to which AHP refers reads as follows 108 at 11.) The ALJ determined that show a ‘‘positive drug effect.’’ (AHP regarding the reanalysis: these decisions were made post hoc and Exceptions at 94.) In this statement, the ruled that this was another factor for The first analysis showed that different ALJ was referring to the initial analysis which the reliability of the reanalysis investigators had different results. If I had to of the five-center study, in which only can be called into question. (I.D. at 56.) search for a means of turning a negative trial the Reich Center showed a statistically positive, I would retrospectively search for AHP disputes the ALJ’s conclusions. reasons to exclude patients studied by significant drug effect. (See I.D. at 26– (AHP Exceptions at 88–98.) investigators who did not produce results 27; G–9.1 at 85.) The ALJ also noted that The first objection raised by AHP on favoring drug over placebo and include when the reanalysis was performed, this point is to ask ‘‘why’’ the ALJ patients studied by investigators who did four patients were added to the Reich questioned the reliability of the 1985 favor drug over placebo. Remarkably, the Center. (I.D. at 27.) The ALJ’s statements five-center study. (AHP Exceptions at reanalysis, in addition to restricting attention were correct, and I find no error in 1 90–91.) This is a very broad and not to only ⁄2 of the entire time of the study, them. well-defined issue, but it appears that excluded 7 patients from the Batson study, 3 AHP further challenges the ALJ’s patients from the Raines study (both Batson its gist is the argument that the ALJ did and Raines having not favored drug over decision by asking what the ALJ’s not adequately explain the basis for his placebo) and included 4 patients from the rationale was for ruling that two ruling on this issue. (AHP Exceptions at Reich study (Reich having favored drug over patients who had been included in the 91.) I do not find this argument to be placebo). Yet other inclusions and exclusions initial analysis—Patient Nos. 15 and 16 64112 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices from the Batson-Hollier center—were results. (Commissioner’s Decision on entered into the five-center study was improperly excluded from the OPE, slip op. at 238–39; Commissioner’s enrolled in a 6 to 8 week, pretreatment reanalysis. (AHP Exceptions at 94–98, Decision on Deprol, 58 FR 50929 at washout period during which all citing I.D. at 28.) This issue refers to the 50939 and 50940.) In the present case, patients were given a placebo. (G–6 at setting of a baseline treadmill the issue of bias has been raised all the 9.) As provided under the protocol, a set measurement for patients under a more strongly because the exclusions of two treadmill tests were to be section of the protocol that has been also involved a change in the protocol performed each time a treadmill reading termed the ‘‘salvage’’ provision. (AHP and subsequent reanalysis after the was required by the study. (G–6 at 10.) Exceptions at 95.) (Other issues related initial analysis failed to find statistical To establish the baseline value for a to the salvage provision are discussed significance. I find AHP’s exclusion of patient on the treadmill, the maximum below in section I.C.2.c. of this these patients effectively to be a change value recorded on the last visit of the document.) in the entry criteria made after the data pretreatment period was to be used as Basically, the salvage provision was a were collected, analyzed, and failed to the baseline. (G–6 at 10, 21.) The contingency that required a fairly stable show statistically significant results. protocol also stipulated that if the treadmill measurement for the baseline The ALJ was right to question it. maximum values recorded on the last for a patient’s entry into the study. Each Therefore, I uphold the ALJ’s rejection two consecutive pretreatment visits patient entered into the five-center of the inclusion/exclusion decision differed from one another by more than study was enrolled in a 6 to 8 week, regarding these two patients in the 20 percent of the larger of these two pretreatment washout period during reanalysis. values, then, under a section of the which all patients were given a placebo. AHP further argues that the ALJ protocol referred to as the ‘‘salvage (G–6 at 9.) A set of two treadmill tests misunderstood AHP’s evidence provision’’ (AHP Exceptions at 95), up were performed each time a treadmill regarding the exclusion of Patient Nos. to two additional sets of treadmill tests reading was required by the study. (G– 15 and 16 from the Batson-Hollier at weekly intervals could be made. (G– 6 at 10.) To establish a patient’s baseline center. (AHP Exceptions at 98.) On this 6 at 10–11.) Only the last two value on the treadmill, the maximum point, AHP takes issue with the consecutive sets of tests would be value recorded on the last visit of the following statement by the ALJ: ‘‘This considered for qualification of the pretreatment period was to be used as (exclusion of patients who would have patient into the study. If agreement the baseline. (G–6 at 10, 21.) The qualified for entry in the study by within 20 percent failed to be found protocol also provided that if the means of the ‘salvage provision’), after four visits, the patient was to be maximum values recorded on the last according to AHP, explains why the dropped from the study. (G–6 at 11.) two consecutive, pretreatment visits patient population at the Batson-Hollier The protocol contained a comparable differed from one another by more than Center was different than that of the requirement for the measurement of 20 percent of the value of the larger of other centers.’’ (I.D. at 28; see AHP treadmill values throughout the study, these two readings, then up to two Exceptions at 98.) I have reviewed the in that ‘‘(t)he test resulting in the longer additional sets of treadmill tests at record, and I find that the ALJ’s opinion claudication time (was to) be used for weekly intervals could be made. (G–6 at accurately summarizes the statements calculating the maximum distance 10–11.) Only the last two consecutive made by AHP in its Post-Hearing Brief, walked.’’ (G–6 at 21 (emphasis in set of tests would be considered for particularly this language from that original).) qualification of the patient into the brief: ‘‘The patient population studied at The report of the initial analysis for study. If agreement within 20 percent the one center (the Batson center) was, the five center study stated that ‘‘the failed to be found after four visits, the as a consequence (of the salvage baseline measurement used was the patient was to be dropped from the provision), different from the patient maximum of the two values from the study. (G–6 at 11.) population studied in the other four last visit’’ of the pretreatment period. In the initial analysis, Patient Nos. 15 centers.’’ (AHP Post-Hearing Brief at 52.) (G–9.1 at 90.) However, it is not clear and 16 from the Batson-Hollier center Therefore, I find no merit in AHP’s that, in fact, the maximum values were were said to have entered the study argument. used for all five of the centers, for in a under the salvage provision, i.e., these I am in agreement with the ALJ’s separate report on the MDS–176 (Reich) patients required additional determination that the inclusion/ center it was stated that the baseline pretreatment visits and treadmill tests to exclusion decisions called the reliability measurement was ‘‘the average of the establish an acceptable baseline. (AHP of the reanalysis into question. An last two visits of the single blind pre- Exceptions at 95.) While these patients adequate and well-controlled study medication placebo phase’’ (G–9.1 at were included in the initial analysis, must ensure that adequate measures are 180 (emphasis added)), rather than the these patients were excluded from the taken to minimize bias on the part of the maximum value as provided in the reanalysis. (AHP Exceptions at 95.) analysts. (§ 314.126(b)(5)) Exclusion protocol. Moreover, in the reanalysis, Regarding this change in inclusion/ decisions made after randomization may AHP calculated the baseline values for exclusion decisions, the ALJ wrote, affect the initial randomization and the each patient by averaging the two ‘‘AHP cannot exclude these patients assignment of subjects in such a way as treadmill measurements from the after the initial analysis failed to to bias the results. (Commissioner’s pretreatment results rather than by demonstrate a positive drug effect. Decision on OPE, slip op. at 238–39; using the maximum value, as per the There is no reason why AHP could not Commissioner’s Decision on Deprol, 58 protocol. (Lipicky, Tr. Vol. IV at 70; see have identified this problem area FR 50929 at 50939–40.) Under the facts also A–108 at 2–11; AHP Exceptions at sooner.’’ (I.D. at 28.) in the present case, it is not possible in 100.) I am in agreement with the ALJ’s the reanalysis to distinguish the effect of In his Initial Decision, the ALJ found, ruling on the exclusion of these two a drug from other influences, such as ‘‘AHP also did not calculate all the patients. As I said before, inclusion/ biased observation. (See § 314.126(a).) treadmill data in strict accordance with exclusion decisions made after Therefore, for the reasons previously the instruction of the protocol.’’ (I.D. at randomization may affect the initial discussed I reject AHP’s exceptions. 56.) AHP takes exceptions to the ALJ’s randomization and assignment of c. Calculation of treadmill distances. findings on this point. (AHP Exceptions subjects in such a way as to bias the As previously indicated, each patient at 98.) AHP first avers that no witness Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64113 for the Center criticized the 1985 five- is a misstatement of the ALJ’s opinion. (Schneiderman, Tr. Vol. VII at 8.) On center study analysis on the basis of the The ALJ rejected the reanalysis because this point, Dr. Schneiderman testified: manner in which the baseline treadmill AHP ‘‘provided no good reason’’ for Oh, I think there’s a substantial difference values for patients were calculated, and analyzing only the first half of the data among the institutions that tested the that the issue was raised for the first from this study. (I.D. at 30) Therefore, I patients. One institution shows substantial time by the Center in its brief. (AHP find AHP’s argument to have no merit. improvements in the average among the Exceptions at 101.) However, my review d. Variability among centers. AHP patients, much of that improvement being of the hearing transcript reveals that Dr. next objects to the ALJ’s ruling that the contributed by one patient who was in one Lipicky, a witness for the Center, results of the various centers within the of the inclusions—included once and five-center study are so inconsistent as excluded once—thereby, the selection testified, ‘‘(E)ven though the protocol criteria become of considerable importance clearly stated that the analysis was to be to make any finding of a significant drug in that one institution. effect questionable. (AHP Exceptions at based upon the longest walking distance In the four other institutions, two of 105, citing I.D. at 31.) In its arguments, measured at any of the visits, AHP them show some minor effects for the AHP raises the broad questions of when chose to use mean values of the two drug, slightly better than placebo; two of it is appropriate to ‘‘break open’’ a treadmill walking times that were them show some minor effects for multicenter study and review the results measured at each visit.’’ (Lipicky, Tr. placebo, slightly better than the drug. So of individual centers, and what it is that Vol. IV at 70.) The calculation of it seems to me there was a substantial the ALJ should examine in such a treadmill values was identified as a difference among the institutions. protocol violation by the Center at the review. (AHP Exceptions at 107–08.) hearing, and so AHP’s assertions to the By statutory mandate, FDA is charged (Schneiderman, Tr. Vol. VII at 8.) contrary are simply incorrect. with reviewing all DESI drugs for Additionally, another Center witness, AHP next argues that the Center, in efficacy and to withdraw approval for Dr. Lipicky, testified that results of the preparing its own analysis of the data, any NDA where ‘‘substantial evidence’’ various investigators differed to an computed baseline and final treadmill of the drug’s effectiveness is lacking (21 extent that made the pooled data measurement by averaging the U.S.C. 355(e)(3)). Among the difficult to accept as accurate. (Lipicky, measurements from the study. (AHP considerations to be weighed in the G–61 at 19.) Dr. Lipicky reported that Exceptions at 102–03.) In support of its FDA’s review are the validity of the two of the five centers found the argument, AHP cites to the testimony of methodology used in a particular study, placebo to be numerically superior to  Dr. Lipicky, a witness for the Center, and the determination of whether Cyclospasmol , and that it was the who relied upon an exhibit identified as substantial evidence of efficacy has been Reich Center which found the largest G–70 in his testimony on this point. proved. (Warner-Lambert, 787 F.2d at numerical difference between drug and (See Lipicky, Tr. Vol. IV at 74–82, 97– 153.) placebo. Dr. Lipicky further testified, 104.) To this end, a thorough review of the ‘‘Within the study, replication is poor The record indicates that the Center studies submitted by a manufacturer to and this remains a major problem. In performed at least eight different the FDA as proof of a drug’s efficacy is fact at one point in time AHP used this analyses in its review of the five-center always appropriate. All aspects of the argument to argue the results of the study, with exhibit G–70 being one of data are proper subjects for review. multicenter study could not be pooled.’’ the Center’s analyses. (Lipicky, Tr. Vol. When the study is a multicenter trial, (Lipicky, G–61 at 19.) IV at 75.) Dr. Lipicky testified that in the methodology and data from each e. Adequacy of the five-center study. Exhibit G–70, the Center looked at the participating center may be evaluated In sum, I find that the five-center study data in the same way as did AHP in its and reviewed. I therefore find that the was not adequate and well-controlled. reanalysis. (Lipicky, Tr. Vol. IV at 76.) ALJ did not err when he ‘‘broke open’’ In making this determination, I have Baseline walking distances were the multicenter trial and reviewed the considered the aggregate effect of the computed by averaging a given patient’s outcome at each of the centers. protocol violations. As I previously test measurements at the third and AHP next argues that the ALJ ignored discussed: (1) AHP’s reanalysis of the fourth visits. (Lipicky, Tr. Vol. IV at 98.) the pooled results of the five-center five-center study cannot be relied upon However, I note that Exhibit G–70 was study. (AHP Exceptions at 107.) I find as substantial evidence of efficacy from stricken from evidence by the ALJ on that the ALJ did weigh the pooled data an adequate and well-controlled clinical motion of AHP. (Tr. Vol. V at 6.) but that he concluded that the data trial; (2) reconsideration of the Therefore, I find any issues pertaining to failed to meet the requirements of an inclusion/exclusion decisions called Dr. Lipicky’s testimony regarding this adequate and well-controlled study. into question the reliability of the evidence to be moot. (See generally Commissioner’s Decision reanalysis; (3) calculation of treadmill AHP also asks if the ALJ considered on Phenformin Hydrochloride (44 FR distances were not performed according whether the study results would have 20967 at 20970, April 6, 1979) to the protocol; and (4) the evidence been any different if maximum values (Commissioner ruled that ALJ did not indicated that results of the various had been used rather than average disregard specified evidence but instead centers differed to an extent that made values. (AHP Exceptions at 103.) The was found to have considered the the pooled data difficult to accept as ALJ is not required to perform such overall evidence.)) accurate. calculations. More importantly, the fact AHP next challenges the ALJ’s finding D. The Senile Dementia Disease is that AHP’s calculation of the that ‘‘the results of the five-center study Indication treadmill values using average values are so inconsistent as to make a The labeling for Cyclospasmol was yet one more protocol violation in significant drug effect questionable.’’ originally identified ‘‘selected cases of a study with other protocol violations. (AHP Exceptions at 105, quoting I.D. at ischemic cerebral-vascular disease,’’ as AHP raises the additional argument 31.) I find that the ALJ’s ruling is being one of Cyclospasmol’s that the ALJ rejected the five-center supported by the evidence. Regarding indications. (G–33.2 at 7; see also A–89 study solely on the basis of AHP’s use the reanalysis, Dr. Schneiderman, a at 4–6; G–57 at 4–7.) However, AHP has of average treadmill values instead of witness for the Center, testified that modified this proposed labeled the maximum values required by the there were substantial differences indication to that of treatment for protocol. (AHP Exceptions at 103.) This among the five centers in the study. cognitive dysfunction in patients 64114 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices suffering from senile dementia of the Evaluation (NOSIE). (G–14.2 at 242–43.) that statistical significance was not multiinfarct or Alzheimer’s type. (See Also, a global evaluation of each shown for Cyclospasmol. (G–3.1 at 98.) AHP Post-Hearing Brief at 1; AHP patient’s clinical improvement was As for the physicians’ global Exceptions at 111.) made at final visit. (G–14.2 at 243–44.) evaluations, Dr. Rao reported a Senile dementia is a clinical term With the SCAG measurement, a statistically significant difference in used to describe a series of conditions physician rated each patient based on a favor of Cyclospasmol. (G–3.1 at 98, in which elderly individuals have list of 19 items, or symptoms, associated 99.) memory loss and cognitive impairment. with dementia. (G–3.1 at 97.) These The ALJ ruled that the Rao study (Thal, G–63 at 3.) There are various items included attributes such as cannot be considered an adequate and etiologies which can result in the ‘‘confusion,’’ ‘‘bothersomeness,’’ well-controlled study because he found clinical syndrome of senile dementia. ‘‘appetite,’’ and ‘‘anxiety.’’ (G–3.1 at 98.) that the study was conducted ‘‘so poorly (Thal, G–63 at 3.) Multiinfarcts and Each Item in the SCAG was rated on a that the results cannot be relied on with Alzheimer’s disease are two such scale from 1 to 7, with 1 indicating that any degree of certainty.’’ (I.D. at 42.) etiologies. Other diseases and the symptom was ‘‘not present,’’ and 7 Both AHP and the Center raise conditions which can cause dementia indicating that the symptom was objections pertaining to rulings made by include psychiatric problems ‘‘severe.’’ (G–3.1 at 97; see, e.g., G–14.2 the ALJ regarding the Rao study. masquerading as dementia, metabolic at 6–8.) a. Admissibility of the reanalysis. AHP argues that the ALJ erred in disorders, such as hyperthyroidism or Eighteen of the SCAG items were then refusing to admit AHP’s reanalysis of Vitamin B–12 deficiency, diseases of the grouped into five factors for patient the Rao study into evidence. (AHP central nervous system, and systemic rating. (G–3.1 at 97; see also G–11.1 at Exceptions at 117–21; I.D. at 9.) In illnesses that affect the function of the 69–71 (Dr. Yesavage discussing SCAG in denying the admission of the reanalysis central nervous system, such as diseases the Yesavage study).) The five factors for into evidence, the ALJ ruled that the of the heart, lungs, liver, kidneys, the SCAG included: (1) Cognitive reanalysis was not timely filed as endocrine and hematologic organ dysfunction, (2) interpersonal required under FDA regulations. (I.D. at systems. (Thal, G–63 at 3; Leber, G–64 relationships, (3) affect, (4) apathy, and 9; ALJ Order of 5/29/85, Exhibit Vol. 89; at 5.) (5) somatic dysfunction. The 19th item, Cognitive dysfunction is a symptom § 12.85 (21 CFR 12.85.)) The ALJ further a physician’s overall assessment of the ruled that AHP failed to demonstrate, as of senile dementia. (Zung, Tr. Vol. III at patient, was rated separately and was 43.) Cognitive dysfunction can include was required per the regulations, that not grouped into a factor. (G–3.1 at 97; AHP could not have submitted the a lack of mental alertness, confusion, see also G–11.1 at 70 n.7 (Dr. Yesavage inattentiveness, memory problems, and reanalysis sooner, and that the value of discussing SCAG in the Yesavage the reanalysis to the evidentiary record disorientation. (Goodman, A–123 at 4; study).) Klerman, A–118 at 6.) Emotional or would justify potential delay resulting The NOSIE rated the frequency of 30 motivational disturbances are also from the document’s late submission. specific behaviors, employing a scale sometimes associated with cognitive (I.D. at 9; see § 12.85(c).) from ‘‘1’’ for ‘‘never,’’ to ‘‘5’’ for dysfunction. (Klerman, A–118 at 7.) The circumstances preceding the ‘‘always.’’ (See, e.g., G–14.2 at 10.) AHP submitted two studies in support submission of the reanalysis are not in Among the rated behaviors were such of the dementia indication—the Rao dispute. Following the publication in items as ‘‘is sloppy,’’ ‘‘sleeps, unless study and the Yesavage study. Each the Federal Register on May 25, 1979, directed into activity,’’ and ‘‘has trouble study will be reviewed in turn. of a Notice of an Opportunity for a remembering.’’ (See, e.g., G–14.2 at 10.) Hearing regarding Cyclospasmol (44 1. The Rao Study For the final, global evaluation, the FR 30443), AHP made a request for a The Rao study was a placebo- patient’s physician rated the patient’s hearing and submitted in support of controlled, parallel group study overall clinical condition during the Cyclospasmol’s efficacy a four page conducted from December 1975 through study as being either ‘‘worsened,’’ article published by Dr. Dodda B. Rao June 1976 at Oak Forest Hospital, ‘‘unchanged,’’ ‘‘minimal improvement,’’ discussing this study. (Center Illinois, by Drs. Dodda B. Rao, Emile L. ‘‘moderate improvement,’’ or ‘‘marked Exceptions at 34.) Subsequently, FDA Georgiev, P.D. Paul, and A.B. Guzman. improvement.’’ (See, e.g., 14.2 at 25.) asked AHP for the Rao study’s case (I.D. at 32.) The stated objective of the Regarding the SCAG ratings, Dr. Rao report forms, but AHP advised FDA that study was ‘‘to evaluate the efficacy of reported a statistically significant only 3 of the 58 forms could be located. Cyclospasmol in alleviating symptoms change from baseline in favor of (Center’s Narrative, G–57 at 5.) In July  of senescence commonly associated Cyclospasmol on four of the five SCAG of 1984, representatives of FDA visited with cerebral vascular insufficiency.’’ Factors, but not on the separate SCAG Oak Forest Hospital and were able to (G–28.8 at 314.) Item 19. (G–3.1 at 97–98.) locate and review the hospital records Patients in the drug group were given As for the NOSIE results, the Rao for 56 of the 58 subjects in the Rao 1,600 mg of Cyclospasmol per day for study grouped the 30 items on the study. (Center Exceptions at 35, citing 12 weeks, while patients in the control NOSIE into 5 factors, identified as: (1) Center’s Allegations of Fact Nos. 58–62; group received a placebo. (G–28.8 at Social competence, (2) social interest, Center’s Narrative, G–57 at 5.) 314.) Seventy patients were enrolled in (3) personal neatness, (4) irritability, In October of 1984, the Center filed its the study. However, nine patients and (5) retardation. (G–3.1 at 98.) The Narrative Statement in which the Center dropped out and three patients were specific grouping into factors was not criticized the Rao study for failing to later excluded from the statistical discussed in the report on the Rao exclude certain patients who had been analysis, leaving 58 patients whose study. (See G–3.1 at 96–99.) However, it given concomitant medications during results were included in the final was reported that for three of the five the study and for other violations of the analysis. (I.D. at 32.) NOSIE factors, the test and control arms protocol’s exclusionary requirements. Patients in the Rao study were rated were not comparable at baseline. (G–3.1 (Center Exceptions at 35; see Center’s by using the Sandoz Clinical at 98.) For the remaining two NOSIE Narrative, G–57 at 1–8.) On December Assessment—Geriatric (SCAG), and the factors, which were found to have been 17, 1984, AHP filed with the Nurses Observation Scale—Inpatient comparable at baseline, it was reported administrative record copies of AHP’s Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64115 documentary data and other information resulted in a statistically significant not find that AHP has made the relied upon, as required under FDA result. (AHP Exceptions at 121.) I find necessary strong showing that such an regulations. (§ 12.85.) The reanalysis of that these arguments merely beg the abuse of discretion occurred on the part the Rao study was not included with question and do not address the fact that of the ALJ. Therefore, I find that the ALJ AHP’s prehearing submission. AHP made no attempt to offer a motion did not err in granting the Center’s On May 6, 1985, a reanalysis of the with explanation to the ALJ to motion to strike the reanalysis. Rao study was submitted as an supplement AHP’s submissions for the b. Labeling and patient selection. AHP attachment to the deposition testimony Rao study, as stipulated in the next argues that the ALJ erred in of Mr. Danny Chaing. (A–125, regulations. (§§ 12.85(c) and concluding that the Rao study was not Attachment E.) In this reanalysis, AHP 12.94(c)(1)(iii).) (By contrast, I note that adequate and well-controlled because excluded 14 patients from the analysis AHP made such a motion, which was the claimed indications for because of concomitant medication granted by the ALJ, to supplement its Cyclospasmol went beyond those of violations or concomitant diseases and submissions in connection with the the patient group which was originally conditions. (AHP Exceptions at 118.) five-center study. (See I.D. at 8–9.)) said to have been studied. (AHP The results of the reanalysis, using 44 The reanalysis submitted by AHP Exceptions at 121; I.D. at 34, 42, 56.) patients of the 58 patients originally entailed a reconsideration of the The ALJ had noted that while AHP was analyzed, were reported as showing exclusionary decisions made regarding now seeking to label Cyclospasmol for statistical significance in favor of the study subjects and a recalculation of indications in patients with dementia  Cyclospasmol . (AHP Exceptions at statistical significance. As was ruled in resulting from both Alzheimer’s disease 119.) the Commissioner’s Decision on the and from multiinfarcts, Dr. Rao, in his The Center moved to strike the drug Cothyrobal, ‘‘(I)t is not the function published account of the study, stated reanalysis on the grounds that it was a of a hearing to consider new evidence, that he had excluded patients with ‘‘a late submission and that there was no i.e., evidence that was not available to history of Alzheimer’s disease.’’ (I.D. at justification for its delayed filing. the agency at the time it initially denied 56; G–3.1 at 97.) (Center Motion to Strike 5/13/85, the NDA.’’ (Commissioner’s Decision on As stated in the protocol, the objective Exhibit Vol. 88 at p. 12–13.) The Center Cothyrobal, 42 FR 28602 at 28616, June of the Rao study was ‘‘to evaluate the argued that the reanalysis should have 3, 1977), aff’d Edison Pharmaceutical efficacy of Cyclospasmol in alleviating been submitted to the FDA in either the Co. v. FDA, 600 F.2d 831 (1979); see symptoms of senescence commonly  NDA for Cyclospasmol or in the also Warner-Lambert, 787 F.2d at 162 associated with cerebral vascular prehearing submissions required under (ALJ has ‘‘the power to make reasonable, insufficiency.’’ (G–28.8 at 314.) The FDA regulations. (§ 12.85.) nonarbitrary decision regarding the protocol also required, among other FDA regulations require that within admission or exclusion of evidence for things, that patients ‘‘whose symptoms 60 days of the publication of the notice procedural reasons.’’).) of senescence occurred prior to age of hearing, each participant in the Similar decisions pertaining to fifty’’ be excluded. (G–28.8 at 314.) hearing shall submit to the docket all administrative hearings before other Dr. Rao, in his subsequently data and information relied upon. Federal agencies have been affirmed by published article, indicated that the (§ 12.85(b).) The regulations further the courts. For example, in Michigan focus of the study was the treatment of provide that such submissions may be Consolidated Gas Co. v. Federal Energy cerebrovascular insufficiency. (G–3.1 at supplemented later in the proceeding, Regulatory Comm’n, 883 F.2d 117, 124– 96.) Dr. Rao noted ‘‘that in the past with the approval of the presiding 25 (D.C. Cir. 1989), the circuit court vasodilators have too often been officer, upon a showing that the material ruled, ‘‘When a party is on reasonable prescribed indiscriminately, without contained in the supplement ‘‘was not notice as to the dates and times for proper selection of patients.’’ (G–3.1 at reasonably known or available when the hearings and for filings in an 97.) Dr. Rao then went on to describe submission was made or that the administrative proceeding, we are hard the patient population for his study as relevance of the material contained in pressed to hold that the administering follows: the supplement could not reasonably agency acted arbitrarily or capriciously have been foreseen.’’ (§ 12.85(c).) in denying admission of materials Sixty geriatric patients (men and women If written evidence is not submitted as untimely filed.’’ (See also Irving Bank aged 65 or older) were selected initially for required under the regulations, the ALJ the study. We excluded those with a history Corp. v. Board of Governors of Fed. of Alzheimer’s disease; stroke; psychiatric may exclude the evidence as Reserve System, 845 F.2d 1035, 1039 n.5 illness; traumatic, neoplastic or infective inadmissible. (§ 12.94 (21 CFR (1988) (Board of Governors of Federal brain damage; and other relevant disorders. 12.94(c)(1)(iii)).) Under the regulations, Reserve System had discretion over We attempted to identify patients with the ALJ in the present case excluded the extent to which it was required to clearly evident symptoms of senility, but Rao reanalysis, inasmuch as the consider late-submitted evidence); excluded those who were so severely submission was neither timely filed, nor Pittsburgh & Lake Erie R.R. Co. v. debilitated as to make the possibility of was a motion to supplement AHP’s Interstate Commerce Comm’n, 796 F.2d significant improvement unlikely. submissions made offering an 1534, 1544–45 (D.C. Cir. 1986) (Carrier (G–3.1 at 97.) explanation for the lateness of the challenging cancellation of several joint Notwithstanding Dr. Rao’s article submission. rates was not entitled to admission of reporting that he had excluded patients In support of its submission, AHP certain rebuttal evidence which the with Alzheimer’s disease, AHP argues argues that the reanalysis was ‘‘highly carrier submitted at a stage in the that Dr. Rao’s exclusions did not relevant,’’ and that the reanalysis was administrative proceedings when the prevent the study population from the appropriate response to the Center’s opposing party would not have had an including patients with dementia due to criticisms of the Rao study. (AHP opportunity to respond.)) Alzheimer’s disease. (AHP Exceptions at Exceptions at 120.) AHP also argues that In challenging an evidentiary ruling 123.) AHP argues that the definition of the ALJ’s ruling prevented AHP from such as this, the objecting party has the Alzheimer’s disease has changed since demonstrating that even if certain burden to make a ‘‘strong showing’’ that the time of Dr. Rao’s article. AHP argues patients were excluded from the the ALJ abused his or her discretion. that in the mid-1970’s, when Dr. Rao statistical analysis, the Rao study still (Warner-Lambert, 787 F.2d at 162.) I do conducted this study and published his 64116 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices article, Alzheimer’s disease was defined The third witness cited by AHP is Dr. patients in the study exhibited as dementia in a relatively young Leon J. Thal, a witness for the Center. dementia, and (2) the patients were in patient population, i.e., patients under I have reviewed Dr. Thal’s testimony, the typical age group for patients having age 65. Dr. Rao, when he purported to however, and I do not find it to support Alzheimer’s or multiinfarct. be excluding Alzheimer’s patients from the point being advanced by AHP. I find that evidence about dementia in his study, excluded only dementia When Dr. Thal was asked whether it general in the geriatric population, such patients under age 65. This definition was likely that the patient population as that evidence offered by Drs. for Alzheimer’s disease is today chosen under the Rao protocol, i.e., Goodman and Klerman, does not outmoded. (AHP Exceptions at 122; patients having ‘‘symptoms of provide adequate assurance that the Zung, Tr. Vol. III at 15–16.) AHP argues senescence commonly associated with subjects of the Rao study had that today the definition of Alzheimer’s cerebral vascular insufficiency,’’ would Alzheimer’s disease. As Dr. Thal, the disease includes patients over the age of today be the same as a population third witness cited by AHP, testified, 65, which would include patients in the consisting of Alzheimer’s patients and dementia can be caused by various age group represented in the Rao study. multiinfarcts dementia patients, Dr. conditions or diseases. (Thal, Tr. Vol. VI Citing the change in the definition of Thal responded in the negative. at 38.) Included among these other Alzheimer’s disease, AHP also argues Contrary to the position which AHP is diseases or conditions are that despite Dr. Rao’s claim of excluding arguing, Dr. Thal testified, ‘‘No, that’s hypothyroidism, vitamin B12 deficiency, Alzheimer’s disease patients from the not correct because, in addition to hydrocephalus, psychiatric problems study, Dr. Rao could not possibly have multi-infarct dementia and Alzheimer’s (pseudodementia), chronic alcoholism, excluded patients with Alzheimer’s disease, there are many other causes of Parkinson’s disease, severe diabetes, disease because the only way to dementia. The patients in the Rao study neurological disease, infection in the differentiate conclusively between were not systematically examined for central nervous system, and brain multiinfarct dementia and Alzheimer’s other causes of dementia.’’ (Thal, Tr. tumors. (Zung, Tr. Vol. III at 17–18; 23– disease is by an autopsy. (AHP Vol. VI at 38.) Dr. Thal went on to add 24, 32, 50; Goodman, Tr. Vol. V at 82– Exceptions at 123, citing Denton, Tr. that even if Alzheimer’s disease patients 83; Goodman, A–123 at 23.) Despite this Vol. VII at 14; Yesavage, Tr. Vol. IV at and multiinfarct patients were counted fact, the evidence does not show that 27; Yesavage, A–115 at 7.) AHP argues as one group, still it was likely that the patients in the Rao study were that the patient population represented approximately 20 percent of the patients examined for other causes of dementia. in the Rao study was the same as would included in the Rao study had other (Thal, Tr. Vol. VI at 38.) currently be identified as suffering from causes of dementia. (Thal, Tr. Vol. VI at AHP argues that it did perform a either multiinfarct dementia or 38.) physical examination to screen for other Alzheimer’s disease. (AHP Exceptions at FDA regulations require that ‘‘(t)he neurological causes of dementia. (AHP 123.) AHP concludes by arguing that Dr. method of selection of subjects provides Post- Hearing Brief at 88; see Goodman, Rao’s exclusions did not prevent the adequate assurance that they have the A–123 at 21–23; Goodman, Tr. Vol. V at Rao study population from including disease or condition being studied 82–83; Zung, A–117 at 30.) This patients with both multiinfarct * * *.’’ (§ 314.126(b)(3).) Towards this examination was said to consist of an dementia and dementia due to end, the Commissioner’s Decision on evaluation of each patient’s gait, muscle Alzheimer’s disease, notwithstanding Mysteclin, relying upon this section of strength, balance, deep-tendon reflexes, Dr. Rao’s contrary intention. (AHP the regulations, stated: level of consciousness, attention and Exceptions at 123.) AHP cites to the understanding, cooperation and It is essential, therefore, that the most intelligence, and visual, auditory and testimony of three witnesses in support accurate diagnostic techniques available be of its position. (AHP Exceptions at 123.) other special senses. (Goodman, A–123 used in order to provide as much assurance at 21.) However, none of the results of The first of the witnesses cited by as possible that the results are credible. See AHP is Dr. Lowell I. Goodman, a Lutrexin; Withdrawal of Approval of New these tests were in evidence, nor were witness for AHP, who testified generally Drug Application, 41 Fed. Reg. 14406, 14419 the results available for review by the about the population suffering from (1976). Because patients often are treated on Center. In the absence of evidence of the dementia. Dr. Goodman stated, ‘‘Almost the basis of preliminary diagnoses that results of such tests, AHP’s argument certainly subsequent epidemiological suggest, without confirmation, a disease’s that it did perform certain diagnostic studies and further research into this etiology, the diagnostic criteria used by tests is not persuasive and has no physicians when treating patients are not population have revealed that probative value. (Commissioner’s always applicable in the context of a drug Decision on Cothyrobal, 42 FR 28602 at approximately two-thirds of such investigation. patients, diagnosed as having senile 28608 (Where a particular condition can dementia, were of the Alzheimer type (Commissioner’s Decision on Mysteclin, be caused by many factors, evidence and approximately a third were either slip op. at 36–37, FDA Docket No. 82N– must be provided regarding diagnostic multiinfarct dementia or a mixture of 0153 (FDA February 8, 1988) (some criteria and the confirmatory laboratory the two.’’ (Goodman, Tr. Vol. V at 82.) citations omitted), opinion denying tests.)) AHP also cited to the testimony of Dr. review sub nom. E.R. Squibb & Sons, AHP further argues that, because most Gerald L. Klerman, also an AHP Inc., v. Bowen, 870 F.2d 678 (D.C. Cir. of the patients entered into the study witness, who testified: 1989) (hereinafter cited as had been under the close supervision of Commissioner’s Decision on the study’s physicians for years and Our current thinking is that cerebral Mysteclin).) were familiar to the physicians before arteriosclerosis plays relatively little role in most cases of senile dementia and that they Leaving aside the question of Dr. the study began, further diagnostic are either of the Alzheimer’s type or what is Rao’s intent, I turn instead to the testing was not necessary to screen for called multi-infarct dementia. The Rao and evidence that Alzheimer’s and/or other causes of dementia. (AHP Post- the Yesavage study by current standards multiinfarct patients were included in Hearing Brief at 88; see Klerman. A–118 would be primarily cases with Alzheimer’s the Rao study, and that patients with at 28–29; Goodman, A–123 at 21–23; disorder and some with a mixture of previous other causes of dementia were excluded. Goodman, Tr. Vol. V at 82–83; Zung, A– strokes. The evidence argued by AHP basically 117 at 30.) I am not persuaded by this (Klerman, Tr. Vol. III at 69.) consists of the facts that: (1) The argument. By statutory mandate, a Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64117 drug’s efficacy must be proved by patient history by ruling out other particular disease may be difficult to substantial evidence from adequate and causes of dementia. On this point, Dr. diagnose. (42 FR 28602 at 28608.) well-controlled clinical trials. (21 U.S.C. William Zung, a witness for AHP, While AHP argues that difficulties in 355(d).) It is established that the burden testified that in order to make a making a diagnosis are what prevented of proving the adequacy of a study is on differential diagnosis, one must the Rao study from distinguishing the proponent for the drug. (Hynson, consider the history of the patient. Dr. Alzheimer’s patients from others, the 412 U.S. at 617, citing 21 U.S.C. Zung testified that with Alzheimer’s fact remains that the Rao study was 355(e)(3).) Under agency regulations, the disease, ‘‘the signs and symptoms are neither looking for nor attempting to method of selecting subjects for a study progressive. They are of a slow onset.’’ identify Alzheimer’s patients as that must provide adequate assurance that (Zung, Tr. Vol. III at 14.) However, for disease is currently defined, i.e., the subjects have the disease or multiinfarct dementia, Dr. Zung including patients with an onset of condition being studied. (§ 314.126(3).) testified, ‘‘the symptomatology would dementia over the age of 50. Rather, the In the Rao study, I do not find the come on fairly rapidly * * *.’’ (Zung, Rao study primarily used an age cut off undocumented, prestudy experience of Tr. Vol. III at 14.) Dr. Zung further to identify Alzheimer’s patients under the physicians with the study patients testified: the old definition. To retrospectively to be acceptable as substantial evidence identify Alzheimer’s patients under the (Y)ou can tell a differential diagnosis of the patients’ conditions. between senile dementia of the Alzheimer current definition for Alzheimer’s As for the change in the definition of type and the multi-infarct because patients disease would require adequate Alzheimer’s disease, I find this equally who have multi-infarct dementia have focal information in the patient records unpersuasive as a basis for supporting signs. That is to say, specifically where that which could be used to support the an indication for Alzheimer’s disease. part of the brain has been affected by lack of diagnoses. This information is not As I previously stated, general the oxygen and by death of the cells, say, if available in the Rao study records. observations about the geriatric, senile it’s in the motor part of the brain, then that As was stated in the Commissioner’s population at large do not provide patient would have a decrease in their motor Decision on Lutrexin, ‘‘(T)he law is adequate assurance that the subjects of function. clear that the applicant must provide the Rao study had Alzheimer’s disease. (Zung, Tr. Vol. III at 15.) substantial evidence of a drug’s Moreover, as AHP concedes, I find that for an adequate and well- effectiveness under its labeled Alzheimer’s disease and multiinfarct controlled study, merely selecting an conditions of use, not those under dementia are distinct diseases with elderly population which has dementia which an investigator chooses to test it.’’ different etiologies. AHP argues that is not sufficient to assure that the study (41 FR 14406 at 14419). Therefore, for etiology does not matter because AHP will demonstrate the effectiveness of a all of the aforementioned reasons, I find does not have to prove the mechanism drug for patients with Alzheimer’s that the Rao study was not adequate and of action for Cyclospasmol. While it is disease. While the ‘‘gold standard’’ for well-controlled in that it failed to show true that the regulations do not require diagnosing Alzheimer’s disease lies in that Cyclospasmol was tested in proof of mechanism of action, this is autopsies, nonetheless, there was Alzheimer’s patients. beside the point now at issue. The issue evidence indicating that antemortem c. Concomitant diseases and is diagnosis of the disease, not diagnosis can be made by the process of conditions. AHP further argues that the mechanism of action for the drug. In an eliminating other possible causes of ALJ erred in ruling that the Rao study adequate and well-controlled study, it is dementia. Identification of dementia was not adequate and well-controlled not acceptable to group persons having caused by other conditions must be because the ALJ found that patients similar symptoms but distinct diseases made and patients with other causes for with strokes, histories of alcoholism, together into one study without their dementia excluded from the study. severe diabetes, and Parkinson’s disease identifying which patient has which Alternatively, if patients with other were admitted to the study, although disease (as was done in the Rao study). causes of dementia, such as multiinfarct these patients were to have been If this practice were permitted, it would dementia, are to be included, then all excluded under the protocol. (AHP be impossible to assess a drug’s patients’ diagnoses should be Exceptions 125–26, citing I.D. at 42, 56.) effectiveness on a particular disease. (Cf. identified.4 In all, the Center identified 18 patients Commissioner’s Decision on Lutrexin, As was ruled in the Commissioner’s with concomitant diseases or 41 FR 14406 at 14422 (In a study of Decision on Lutrexin, ‘‘The evidence conditions, including 3 patients with premature labor, results were incapable made clear that although existing multiple conditions, whom they claim of scientific interpretation because diagnostic techniques do not permit should have been excluded. (Center patients with different conditions were certainty in the matter, they do allow Exceptions at 5–6; Center Post-Hearing evaluated together without physicians to make a valid judgment Brief at 53–62, & Attachment A.) distinguishing between the conditions.); ** *. That the judgment will AHP concedes that protocol violations see also Commissioner’s Decision on sometimes prove to be incorrect does occurred, but argues that inclusion of Cothyrobal, 42 FR 28602 at 28608 not mean that diagnosis * * * is most of these patients resulted in mere (Where a particular condition can be impossible, only that it is inherently technical violations of the protocol and caused by many factors, evidence must uncertain.’’ (41 FR 14406 at 14414.) did not confound the results of the be provided regarding diagnostic criteria Similarly, in the Commissioner’s study. (AHP Exceptions at 126–28.) and the confirmatory laboratory tests.)) Decision on Cothyrobal, it was ruled AHP further states that the Rao protocol Difficulty in diagnosis is not a that where a disease or condition can be was overly rigid, and that it was a justification for a less than adequate and caused by many factors, a study must question of medical judgment and well-controlled study. (Commissioner’s give the patients’ diagnoses and must expertise as to whether these protocol Decision on Cothyrobal, 42 FR 28602 at also provide sufficient information to violations affected the study results. 28608.) While Alzheimer’s disease may substantiate the diagnoses, (AHP Post-Hearing Brief at 90, 93.) not be positively diagnosed until an notwithstanding the fact that a The stated objective of the Rao study autopsy is performed, evidence was ‘‘to evaluate the efficacy of  indicated that it was possible to make a 4 I note that this was done in the Yesavage study. Cyclospasmol ’’ in alleviating differential diagnosis on the basis of (See Yesavage, Tr. Vol. IV at 27.) symptoms of senescence commonly 64118 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices associated with cerebral vascular Clarence Denton, a witness for AHP, suffering from alcoholism. (Mohs, G–62 insufficiency.’’ (G–28.8 at 314.) Towards who testified as follows: at 9; Thal G–63 at 6; Leber, G–64 at 10– this end, the protocol provided for the Generally, there is no need to exclude 12; Denton, A–121 at 28–29, 42, 77, 79, exclusion of patients with dementia patients on the basis of a stroke which 84, 85; Denton, Tr. Vol. VII at 22–24; A– caused by other conditions. In relevant occurred more than two to three years prior 126 at 17–20, 22–25.) part, the protocol’s exclusionary criteria to the onset of the study. Strokes which AHP makes an argument only against read as follows: occurred shortly before the onset of the study the exclusion of Patient No. 16. (AHP should be excluded, however, because the Post-Hearing Brief at 93; AHP Patients exhibiting any one of the natural recovery process which occurs soon following will be excluded from the study: Exceptions at 129.) AHP cites to the after a stroke is suffered could make it appear testimony of Dr. Denton, who testified 1. Those with a history of CVA (cerebral that a drug (or placebo) was having a vascular accident, i.e., stroke (See A–121 at favorable action. Ordinarily, normal recovery that Patient No. 16 had consumed no 1 28)). from a stroke would occur within six months alcohol for 3 ⁄2 years before the start of 2. Those who, upon physical examination, to one year of the occurrence of the stroke. the study, and that the initial demonstrate neurological evidence of a past From a practical standpoint, therefore, it is psychiatric consultation diagnosed both CVA. perfectly reasonable to include patients cerebral arteriosclerosis and chronic * * * * * whose strokes occurred many years prior to alcoholism. (Denton, A–121 at 28–29.) 8. Those with severe diabetes mellitus the onset of the study, as long as dementia Because of the diagnosis of cerebral which requires insuli(n) therapy, or with is still present. arteriosclerosis, Dr. Denton suggested evidence of glycosuria on urinalysis or who (Denton, A–121 at 26.) that it is unlikely that alcoholism is the exhibit complication of diabetes. It is beyond cavil that patients having primary cause of the dementia in Patient * * * * * a history of strokes were to be excluded No. 16. (Id. at 29.) 10. Those with any other severe disease: under the protocol. Inclusion of these Although in the practice of medicine e.g. significant hematologic disorders; history patients was a clear protocol violation. it is expected that a physician may be of malignant disease within one (1) year; The question now is what effect do called upon to treat patients with recent (4 months) major surgical procedure; these protocol violations have on the concomitant illnesses, in clinical drug pulmonary embolism within one (1) year; validity of the study. trials it is necessary to exclude patients severe chronic infection; severe renal, I begin my review of these protocol hepatic or neurological disorder, except the with any concomitant conditions that one being studied herein * * *. violations by noting that some protocol may confound the results of the study. violations may be inadvertent or Aside from the fact that Dr. Denton * * * * * unavoidable on the part of those 12. Those whose symptoms of senescence offers no facts to support his position occurred prior to age fifty (50). conducting the study, such as occurs regarding Patient No. 16, I conclude 13. Those with a history of alcohol or other with the failure of a study subject to that, at the very least, alcoholism was a drug abuse, except that patients with a follow the study’s drug regimen. confounding factor with this patient. It history of alcoholism prior to age 45, with no However, other protocol violations may is clear that Patient No. 16 should have recurrence after that age, may be entered if reflect a lack of attention to the been excluded, as should the other four the investigator feels that the patient’s requirements of the protocol by those patients (Nos. 22, 32, 54, and 63) who alcoholism did not contribute to his present conducting the study. (Commissioner’s also had alcoholism. symptoms. Decision on Benylin, 44 FR 51512 at iii. Severe diabetes. The Center next 14. Those with a history of major 51531 (The inclusion of subjects who argues that three subjects—Patient Nos. psychiatric illness. did not meet the entrance criteria of the 23, 29, and 32—had severe diabetes, a (G–28.8 at 315–16.) study ‘‘suggests inattention to detail’’ basis for exclusion under the protocol. Relying upon the protocol, the Center and can ‘‘be considered in deciding (Mohs, G–62 at 9; Thal, G–63 at 6; identifies numerous patients whom it whether the study was adequate and Leber, G–64 at 13; Denton, A–121 at 32, contends were admitted in violation of well-controlled.’’).) Failure to follow 80; A–126 at 21.) the exclusion provisions. I will address inclusion/exclusion criteria, such as AHP takes issue with only the each type of alleged violation in turn. occurred in the Rao study, can be an exclusion of Patient No. 32. (AHP Post- i. Strokes. The Center first specifies indication of such inattention to the Hearing Brief at 92; AHP Exceptions at seven patients, identified as Numbers 3, details of a study’s protocol. 130.) AHP argues that it was not 12, 15, 21, 31, 45 and 64, as having Even violations which by themselves necessary to exclude Patient No. 32 histories of strokes and therefore subject may not warrant rejection of a study can because this patient’s diabetes was not to exclusion. (Mohs, G–62 at 8–9; Thal, be considered in the aggregate in severe enough to be insulin dependent. G–63 at 6; Leber, G–64 at 10–15; Leber, determining whether a study is (AHP Exceptions at 130; Denton, A–121 G–64, Attachment B at 2; Denton, A–121 adequate and well-controlled. at 32.) I find AHP’s arguments with at 25, 27–28, 74, 76, 77, 79, 83, 85; (Commissioner’s Decision on Benylin, regard to this patient to be moot, since Denton Tr. Vol. VII at 16–17; G–14.6 at 44 FR 51512 at 51531.) Evidence of any AHP has already conceded that Patient 351.) protocol violation, even if inadvertent or No. 32 should be excluded for AHP concedes that Patient Nos. 12 unavoidable, is relevant to the issue of alcoholism. (See section I.D.1.c.(2). of and 64 should be excluded (AHP Post- whether the study is adequate and well- this document.) Hearing Brief at 91; Denton, A–121 at controlled. Therefore, I rule that iv. Severe diseases, Parkinson’s 28), but argues against excluding the inclusion of the seven stroke patients, disease, psychiatric illness, and other other five patients, on the grounds that both the two patients whom AHP diseases. The Center argues that three the protocol was overly rigid because it concedes should be excluded and the other patients—Nos. 20, 31 and 59—had excluded patients whose strokes five whom AHP disputes, properly can severe, chronic infections, which was a occurred 2 to 3 years prior to the start be considered as protocol violations and basis for exclusion under the protocol. of the Rao study. (AHP Post-Hearing weighed in the review of the Rao study. (Center Post-Hearing Brief at 56–57; see Brief at 93.) ii. Alcoholism. The Center further G–28.8 at 315–16.) The Center first In support of its position that these argues that five subjects—Patient Nos. argues that Patient No. 20 should have stroke patients need not be excluded, 16, 22, 32, 54, and 63—should have been excluded because this patient had AHP cites to the testimony of Dr. been excluded because they were active pulmonary tuberculosis. (Center Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64119

Exceptions at 7–8, citing Mohs, G–62 at Exceptions at 130; Denton, A–121 at 29, OPE, the citation for the comparable 9; Leber, G–64 at 11–12.) Regarding 35, 84–85.) regulation was 21 CFR Patient No. 20, Dr. Leber, a Center The Center also argues that Patient 314.111(a)(5)(ii)(a)(2)(iii)).) The witness, testified that ‘‘(a)dequate No. 9 should have been excluded objective of this requirement is to limit, treatment of his condition rather than because this patient had a major before the study has begun, the treatment with Cyclospasmol may psychiatric illness, i.e., hysterical extraneous factors which could be easily have accounted for the patient’s personality. (Leber, G–64 at Attachment responsible for a difference between 3.0 improvement on Item 19 of the B, p.2.) AHP similarly concedes that this groups. (Commissioner’s Decision on SCAG.’’ (Leber, G–64 at 15.) patient should have been excluded, and OPE, slip op. at 47–48.) If the AHP argues that the diagnosis of I also accept this concession. (Denton, assignment of patients is biased, this severe pulmonary tuberculosis was A–121 at 33, 75.) can skew the study’s results. incorrect for Patient No. 20, and cites to The Center next argues that Patient The second relevant principle, also the testimony of Dr. Denton, an AHP No. 32 had grand mal epilepsy and incorporated into agency regulations, is witness, who undertook a post-study should have been excluded for this a requirement that ‘‘(t)he study uses a review of records for the Rao study. reason. (G–14.7 at 9; A–126 at 21; design that permits a valid comparison (AHP Reply to Center Exceptions at B– Denton, Tr. Vol. VII at 20–21.) I need with a control to provide a quantitative 6, citing Denton, Tr. Vol. VII at 28–33; not reach the merits of this argument assessment of drug effect.’’ AHP Post-Hearing Brief at 91.) In his because AHP has already conceded that (§ 314.126(b)(2) (The comparable testimony, Dr. Denton agreed that the Patient No. 32 should be excluded for numbered section of the regulations at patient records showed that Patient No. alcoholism. (See section I.D.1.c.(2). of the time of the Commissioner’s Decision 20 was treated with anti-tuberculous this document.) on OPE was § 314.111(a)(5)(ii)(a)(4)).) d. Concomitant Medications. AHP drugs (see G–14.6 at 77), and further The use of concomitant medication can further argues that the ALJ erred in agreed that the records reflect that this make it impossible to state with ruling that the widespread patient was diagnosed during the study accuracy whether the results of a study administration of concomitant as having pulmonary tuberculosis with were due to the test drug under study medications precluded any meaningful chronic brain syndrome (see G–14.6 at or were due to the use of concomitant analysis of the effects of Cyclospasmol 53, 55), but nevertheless disputes the medication. (Commissioner’s Decision in the Rao study. (AHP Exceptions at diagnosis. Dr. Denton based his on OPE, slip op. at 48–50.) 132, citing I.D. at 37, 42, 56.) In support Thirdly, the Commissioner’s Decision challenge to the diagnosis on the of its argument, AHP cites to a previous on OPE ruled that concomitant absence in the patient records of the Commissioner’s Decision pertaining to medication use must be sufficiently actual X-ray report and the absence of the human drug, Oral Proteolytic documented so that a scientific the sputum examination. (Denton, Tr. Enzymes (OPE), in which it was ruled evaluation of the use of concomitant Vol. VII at 30.) that a study may be used to demonstrate medication can be done. I am not persuaded by Dr. Denton’s efficacy ‘‘if the identity, quantity, (Commissioner’s Decision on OPE, slip testimony on this point. I find that there strength, frequency, and length of op. at 50–53.) If a study lacks sufficient is sufficient evidence in Patient No. 20’s administration of the concomitant documentation of concomitant records to support a conclusion that this medication is known and if the medication use, the study cannot be patient did have severe pulmonary confounding effect of the concomitant considered as part of the basis for tuberculosis. There are several notations medication has been analyzed so that approval of effectiveness claims. (Id.) in this patients’ records which state that the effect of the test drug can be This requirement is expressed in the this patient had pulmonary determined.’’ (Commissioner’s Decision regulatory requirement that the report of tuberculosis. (See, e.g., G–14.6 at 53, on OPE, slip op. at 52–53 (footnote a study ‘‘provide sufficient details of 55.) Under the protocol, this patient omitted).) AHP argues that under the study design, conduct, and analysis to appropriately should have been OPE decision, the ALJ failed to analyze allow critical evaluation and a excluded. sufficiently whether the concomitant determination of whether the The Center also argues that Patient medications had any effect on the study characteristics of an adequate and well- Nos. 31 and 59 should have been results. controlled study are present.’’ excluded because these patients had In the Commissioner’s OPE decision, (§ 314.126(a) (The comparable severe, chronic infections. (Center Post- it was noted that ‘‘(t)he uncontrolled use numbered section of the regulations at Hearing Brief at Attachment A, citing of concomitant medication violates the time of the Commissioner’s Decision Thal, G–63 at 6.) However, the Center several of the most basic scientific on OPE was 21 CFR 314.200(d)(2)).) does not identify the types of chronic principles governing clinical Regarding the review of concomitant infections which these two patients investigations.’’ (Commissioner’s medication, I note that the were said to have had. I reviewed the Decision on OPE, slip op. at 47.) Three Commissioner’s Decision on OPE extant patient records, but these records such scientific principles, all of which further states that the use of were not always legible and I was have been incorporated into FDA concomitant medication must be unable to determine what type of regulations, were cited by the considered as ‘‘a fatal flaw’’ in the infections these patients had. Therefore, Commissioner’s Decision on OPE. absence of detailed records which in absence of more specific evidence, I The first of these principles, as would permit evaluation of the effect of rule that Patient Nos. 31 and 59 should articulated in the regulations, requires the concomitant medication on the not be excluded. that ‘‘(t)he method of assigning patients results of the study. (Commissioner’s The Center further argues that two to treatment and control groups Decision on OPE, slip op. at 52.) The subjects, Patient Nos. 56 and 63, had minimizes bias and is intended to burden is on the proponent of the drug Parkinson’s disease. (Thal, G–63 at 6–7; assure comparability of the groups with to supply detailed records Leber, G–64 at 14.) AHP concedes that respect to pertinent variables such as demonstrating the effects of the both of these patients should be ** * use of drugs or therapy other than concomitant medication on the results excluded, and I accept AHP’s the test drug.’’ (§ 314.126(b)(4) (At the of the study. (Commissioner’s Decision concession on this matter. (AHP time of the Commissioner’s Decision on on OPE, slip op. at 134, 144, 203–04.) 64120 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

As for the Rao study, I have reviewed concomitant medications used by these These observations will be made at the the ALJ’s decision, and I find that the patients made the Rao study results initial evaluation and at weeks 4, 8, 12.’’ ALJ considered each instance of unreliable. (Center Post-Hearing Brief at (G- 14.2 at 241.) The dates of these concomitant medication use. (See I.D. at 65.) evaluations are important to a review of A–1 to A–5.) Contrary to AHP’s claim, I note, however, that of these 21 concomitant medication use because the the ALJ did not base his decision solely patients, AHP has already conceded that protocol also provided that ‘‘no major upon the number of patients who were 9 patients (Patient Nos. 9, 22, 23, 29, 32, tranquilizer should be administered given concomitant medication. As was 36, 43, 56, 68) should be excluded for within the four (4) days immediately observed in the Commissioner’s OPE violations of the inclusion/exclusion proceeding (sic) any evaluation.’’ (G– decision, ‘‘the use of more than one criteria. (See section I.D.1.c. of this 14.2 at 243.) concomitant medication increases the document.) Additionally, Dr. Denton, a In reviewing the patient records, I difficulty of the evaluation of the (study witness for AHP, conceded that Patient noted that, despite the requirements of drug’s) effect.’’ (Commissioner’s No. 36 should be excluded because this the protocol, in a number of patient Decision on OPE, slip op. at 56 (footnote patient was taking the concomitant records the dates on which the patient omitted).) While the number of patients medication, Seconal, a psychoactive received the study drug and the dates of given concomitant medication was one drug, and Haldol, a major tranquilizer, the patient evaluations are not factor which properly was considered at the time of final evaluation. (Denton, consistent with the specifications of the by the ALJ (Commissioner’s Decision on A–121 at 81–82.) Remaining after these protocol. For example, in the physician OPE, slip op. at 57), a review of the nine conceded exclusions are 12 order sheets and in the medication ALJ’s complete decision reveals that the patients who received 7 different drugs, records for Patient No. 1, evidence ALJ also considered the identity, including Patient No. 1 (Valium, indicates that this patient began to quantity, strength, frequency, and length Compazine), Patient No. 2 (Mellaril), receive the study drug on December 17, of administration of the various Patient No. 6 (Valium), Patient No. 10 1975, and continued to receive this drug concomitant medications. (See I.D. at (Valium), Patient No. 14 (Valium), until March 19, 1976. (G–14.5 at 13–16, A–1 to A–5.) The ALJ took the cited Patient No. 17 (Valium, Mellaril), 21, 23, 25, 27.) However, other portion of the Commissioner’s Decision Patient No. 24 (Aldomet), Patient No. 28 documents in evidence indicate that on OPE into consideration when the ALJ (Hydergine), Patient No. 42 (Seconal), this patient was initially evaluated on ruled that the concomitant medications Patient No. 45 (Mellaril, Peritrate), January 14, 1976, 1 month after the ‘‘were so numerous and so pervasive in Patient No. 51 (Mellaril), and Patient patient began to receive the study drug. the Rao study as to preclude any No. 57 (Compazine). I will address the (G–14.5 at 10.) Additional documents in meaningful analysis of the test drug.’’ issues concerning these remaining, evidence also point to a delayed (I.D. at 37.) contested exclusions. evaluation occurring in January. For AHP also made arguments regarding However, before I address the specific example, one document lists a date of the individual patients’ concomitant records for each patient, I will make February 25, 1976, and states, ‘‘Mental drug use. (AHP Post-Hearing Brief at some general observations regarding all Status: Second evaluation during the 96–99.) The Center, based upon a the patient records in evidence from the fourth week.’’ (G–14.5 at 9.) Another review of the hospital records, Rao study. First, it must be noted that document lists the date of May 11, 1976, identified 16 different concomitant the contents and status of the patient as the date of the third evaluation. (G– medications used by 21 patients in the records in evidence is not consistent 14.5 at 8.) Rao study,5 including Patient No. 1 from patient to patient. Most records It is difficult to fathom why the initial (Valium, Compazine), Patient No. 2 appear to contain only excerpts from the evaluation would have occurred a (Mellaril), Patient No. 6 (Valium), original records. Some records include month after the study had begun, but Patient No. 9 (Haldol, Benadryl), Patient numerous pages from the physician the dates in the records of a number of No. 10 (Valium), Patient No. 14 order sheets, medication records, other patients clearly support this (Valium), Patient No. 17 (Valium, nursing care record sheets, and patient conclusion. (See also Patient No. 6, G– Mellaril), Patient No. 22 (Mellaril), progress notes. (See, e.g., Patient No. 24, 14.5 at 153, 154; Patient No. 17, G–14.6 Patient No. 23 (Seconal), Patient No. 24 G–14.6 at 175–209.) Other patient at 14, 18.) I further noted that this 1 (Aldomet), Patient No. 28 (Hydergine), records contain only a single page. (See, month difference in dates is not found Patient No. 29 (Mellaril, Insulin, e.g., Patient No. 18, G–14.6 at 30.) Then consistently in all patient records. (See, Doxepin), Patient No. 32 (Phenobarbital, again, other records contain a few pages e.g., Patient No. 57, G–14.8 at 132, 135 Dilantin), Patient No. 36 (Haldol, of various sections from the original (initial evaluation and start of study Seconal, Meprobamate), Patient No. 42 patient records. (See, e.g., Patient No. 2, drug occurred on same date.)) Of course, (Seconal), Patient No. 43 (Seconal, G–14.5 at 51–62.) an initial evaluation that occurred 1 Peritrate), Patient No. 45 (Mellaril, In addition to the difficulty presented month after the start of the study drug Peritrate), Patient No. 51 (Mellaril), by the inconsistent content of the would be a protocol violation and Patient No. 56 (Valium, Sinemet), patient records, another problem is would not be the proper procedures for Patient No. 57 (Compazine), and Patient legibility of records. In some instances, an adequate and well-controlled study. No. 68 (Thorazine). The Center argued although records are in evidence, An initial evaluation of the patient that the confounding effect of the portions of those records are printed so should be taken before the patient has faintly as to be illegible. (See, e.g, been randomized in the study. 5 The Center also argues that Patient No. 2 in the Patient No. 1, G–14.5 at 32, 34, 39, 41; I also noted that while most patient Rao study should be excluded because this patient Patient No. 42, G–14. 7 at 245–264; records in evidence contained a page had been given Elavil, which was a violation of the from a psychological evaluation which protocol. The Center further argues that Patient No. Patient No. 45, G–14.7 at 320.) 24 had received Serax, and Patient No. 34 had Another problem I have found with was captioned at the top ‘‘Final received Phenergan in violation of the protocol. the records in evidence is the difficulty Evaluation,’’ I found that the date of this However, my review of the records reveals that it in identifying the dates on which the evaluation in many instances appeared was Patient Nos. 2, 24, and 34 in the Yesavage patient was evaluated during the study. to be from the middle of the study, often study, not the Rao study, who had taken these drugs. Accordingly, these issues will be addressed The protocol provided that ‘‘(e)ach closer to week 8 than to the actual time in the discussion of the Yesavage study. patient will be observed four (4) times. of final evaluation at week 12. (See, e.g., Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64121

Patient No. 25, G–14.6 at 210–213; because this patient received both margins next to this Valium entry which Patient No. 26, G–14.6 at 234–237.) Valium and Compazine during the read, ‘‘Start 12/31,’’ ‘‘Valium 10 mg. ‘IM’ However, not all patient records follow course of the study. (Center Post- daily,’’ ‘‘q 8°,’’ and ‘‘Stop 3/19,’’ or it this pattern. In some cases, the date on Hearing Brief at 64 and Attachment B; may be ‘‘Stop 5/19,’’ the writing is not the ‘‘Final Evaluation’’ document does G–14.5 at 20–28; Thal, G–63 at 7.) clear. (G–14.5 at 154.) However, my appear to have occurred 12 weeks after Valium, a benzodiazepine, is a interpretation of this entry is that this the patient started on the study drug. psychoactive drug, given to reduce particular chart was begun on December (See, e.g., Patient No. 45, G–14.7 at 310, anxiety; this drug can cause drowsiness, 31, and the arrow across the chart was 312.) Therefore, I did not find the date and affect attention and alertness. intended to delete the earlier days in the on the document entitled ‘‘Final (Leber, G–64 at 14; Zung, Tr. Vol. III at month of December, and was not meant Evaluation’’ to be a reliable means of 38; Denton, Tr. Vol. VII at 25–26.) to reflect dosages on those earlier dates. establishing the dates of the patients’ Compazine, also a psychoactive drug, Therefore, I find that the ALJ was in final evaluations in many instances. may impair mental and physical error in his interpretation of this Also, I have found several records in abilities. (Denton, Tr. Vol. VII at 39.) particular chart. which the physician order sheets or The frequency of administration of Notwithstanding my ruling with medication records indicate that the Valium given to Patient No. 1 is regard to the previously mentioned patient had been receiving the test drug particularly troubling. According to the chart, I find that other records in for a month before the recorded date of testimony of Dr. Denton, this patient evidence do support a finding that the patient’s initial evaluation. (See, was given 23 doses of Valium during the Patient No. 6 was receiving regular e.g., Patient No. 1, G–14.5 at 10, 13; study. (Denton, A–121 at 72; see also G– doses of Valium at later dates Patient No. 3, G–14.5 at 68, 73; Patient 14.5 at 20–28; I.D. at A–1.) Specifically, throughout the study. Aside from the No. 26, G–14.6 at 235, 239.) this patient received Valium 11 times aforementioned chart entries, there are Nevertheless, despite these flaws I between December 18 to December 23, several other chart entries which state have given the patient records full 1975, 5 times between January 24 to that 10 mg of Valium was to be given consideration. These records were January 31, 1976, 8 times between intramuscularly every 8 hours, closely scrutinized for pertinent dates February 14 to February 22, 1976, and commencing on December 31, 1975, and and schedules of relevant medication 4 times between March 2 to March 5, running through March 9, 1976. (G–14.5 use. However, AHP, as sponsor of these 1976. (Denton, A–121 at 72; I.D. at A– at 154, 155, 156, 157.) During this same studies, bears the responsibility of 2; G–14.5 at 13–49.) In addition, at least time, Patient No. 6 was receiving the providing adequate records for review. 5 doses of Valium were given during the study drug. (G–14.5 at 154, 155, 156, For this reason, any failure of the prestudy washout period. (I.D. at A–2; 157.) The extent of Valium records to document concomitant G–14.5 at 13–28.) Moreover, the time of administration was a clear violation of medication use can be weighed against administration of the Valium is not the protocol’s general prohibition on the finding the Rao study adequate. always clearly indicated in the record. use of psychoactive drugs except for (Commissioner’s Decision on OPE, slip This is a clear violation of the protocol, bedtime doses of Noludar or chloral op. at 50–53.) With this as background, which provided that no psychoactive hydrate. (G–28.8 at 318.) Therefore, I I turn now to the specifics of each use drugs, except for a bedtime dose of affirm the ALJ’s ruling in excluding of concomitant medication now at issue. Noludar or chloral hydrate, were Patient No. 6. As for Patient No. 17, the physician The Rao protocol’s requirements permitted. (G–28.8 at 318.) Accordingly, order sheet states that Patient No. 17 regarding concomitant medications I am in agreement with the ALJ in was to receive chloral hydrate PRN (pro were as follows: finding that this is no mere technical violation of the protocol, and that re nata, as occasion arises) during the No vasodilating agents, psychoactive Patient No. 1 should be excluded. study (G–14.6 at 19, 21), and evidence drugs, narcotics, reserpine derivatives or The Center also argues that Patient indicates that the patient received this steroids other than estrogen will be permitted No. 6 should be excluded for receiving drug on several occasions. (Mohs, G–62 during the study, except for an h.s. (hora Valium during the study. (Center Post- at 9–10.) I note, however, that chloral somni, i.e., at bedtime) hypnotic, which may be either Noludar or chloral hydrate, or an Hearing Brief at 64 & Attachment B.) hydrate at bedtime was permitted under occasional dose of a major tranquilizer The ALJ ruled that this patient should the protocol, and I do not find this to (phenothiazines, haloperidol, etc.) deemed have been excluded because medication be a basis for excluding this patient. (G– necessary for the patient’s welfare. However, records appeared to indicate that this 28.8 at 318.) any patient who receives more than sixteen patient had received Valium throughout The Center also argues that Patient (16) doses of a major tranquilizer during the the course of the study. (I.D. at A–1.) No. 17 received both Valium and entire course of the study, or more than three The ALJ cited to the fact that the copy Mellaril on several occasions, and that (3) doses in any one week, will be dropped of the medication records in evidence this is a basis for excluding this patient. from the study. Also, no major tranquilizer shows a line drawn across all dates in (Center Post-Hearing Brief at should be administered during the four (4) the chart entry for Valium. (I.D. at A–1, Attachment B; Mohs, G–62 at 9–10.) As days immediately proceeding (sic) any evaluation. Other routine drugs (e.g. digitalis, citing G–14.5 at 154.) AHP challenges previously discussed, Valium is a diuretics, oral hypoglycemics, non-narcotic the ALJ’s interpretation of the psychoactive drug. The use of analgesics, antibiotics, etc.) required by the medication records, arguing that the psychoactive drugs was generally patient may be administered, but every effort referenced markings on Patient No. 6’s prohibited except for bedtime doses of should be made to maintain a consistent chart do not support a finding that the Noludar or chloral hydrate. (G–28.8 at dosage schedule. Patients who have been patient was given Valium on those days. 318.) Mellaril, on the other hand, would receiving agents not permitted during the (AHP Post-Hearing Brief at 97.) fall under the category of a major study should have them discontinued 21 I have reviewed the cited portion of tranquilizer under the protocol, of days prior to entry. the medication records for Patient No. 6, which occasional doses were permitted (G–28.8 at 318.) and I find that the medication chart in if necessary for the patient’s welfare. Regarding the use of concomitant question does show an arrow drawn (G–28.8 at 318.) medication, the Center first argues that across all dates in the chart. (G–14.5 at I have reviewed the extant charts for Patient No. 1 should be excluded 154.) There are also notations in the Patient No. 17, and I have found that the 64122 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices physician order sheets contain a patient should be excluded. might have experienced may have notation, dated December 18, 1975, to (Commissioner’s Decision on OPE, slip passed. As for the withdrawal of run through February 18, 1976, which op. at 50–53.) Aldomet during the study, I do not find reads, ‘‘Valium 10 mg I.M. Regarding Patient No. 24, Dr. Paul the evidence of any negative effects on (intramuscularly) PRN.’’ (G–14.6 at 17.) Leber, a witness for the Center, testified the patient to be sufficient to exclude Another entry in the physician order that there were several interruptions in this patient. Therefore, I uphold the sheets, dated February 18, 1976, treatment with Cyclospasmol between ALJ’s decision to include Patient No. 24 directed that the Valium order be the dates of February 18, and February in the Rao study. (I.D. at A–2.) continued through April 19, 1976. (G– 22, 1976, during the study. (Leber, G–64 The Center next argues that Patient 14.6 at 20.) Entries on the nursing care at 12.) I have reviewed the physician’s No. 28 should be excluded for receiving records, which are illegible in sections, order sheet for this patient, and I have Hydergine during the study. (Center indicate that Patient No. 17 received 10 found that the records do show that Post- Hearing Brief at 64 & Attachment mg of Valium intramuscularly on at Cyclospasmol was discontinued on B.) Evidence indicates that this patient least five occasions. (G–14.6 at 23–25.) February 18, but was started again on received Hydergine three times a day The record indicates administration of February 22, 1976. (G–14.6 at 182, 183.) during the first week of the study. Valium on December 16 and 21, 1975, I note Patient No. 24’s records indicate (Denton, A–121 at 80; Thal, G–63 at 7; and on January 1, January 9, and that this patient’s initial evaluation was G–14.6 at 261–62.) Regarding the effect January 14, 1976. It also appears from on January 26, 1976, and the patient’s of this drug, Dr. Denton testified, the record that this patient began final evaluation was on May 7, 1976. ‘‘Hydergine is an agent which helps to receiving the study drug on December (G–14.6 at 175, 177.) In view of the relieve some of the cognitive aspects of 19, 1975. (G–14.6 at 18.) brevity of the interruption, and the fact dementia through an unknown The physician order sheets further that it did not occur close to the time mechanism of action.’’ (Denton, A–121 show that on December 18, 1975, orders of either the initial or the final at 39; see also Zung, Tr. Vol. III at 64.) were given for Patient No. 17 to receive evaluation, I do not find this a basis to However, Dr. Denton suggested that 25 mg of Mellaril, an antipsychotic exclude Patient No. 24. Patient No. 28 did not have to be drug, ‘‘t.i.d.’’ (ter in die, three times a Dr. Leber also testified that Patient excluded because Hydergine was day), beginning during the final 2 days No. 24 received Aldomet, an administered during the first week of of the washout period. (G–14.6 at 17; see antihypertensive medication which can the study in December 1975, and this also Leber, G–64 at 11; Mohs, G–62 at affect mood and cognition. (Leber, G–64 should not have affected the final 9–10.) However, another chart entry, at 13.) Dr. Leber testified that ‘‘the evaluation made in March 1976. dated December 19, 1975, ordered the protocol (was) unclear as to whether (Denton, A–121 at 40.) Mellaril discontinued. (G–14.6 at 18.) such patients could or could not have I have reviewed the records in The nursing care records do not record been admitted, but discontinuation of evidence for Patient No. 28, and I found the administration of Mellaril. this medication (Aldomet) might affect that the physician order sheets indicate With regard to the dates of evaluation a patient’s mental status.’’ (Leber, G–64 that this patient was receiving of Patient No. 17, I note that there are at 13.) Hydergine for at least two months prior significant inconsistencies in this In considering the administration of to the start of the Rao study. (G–14.6 at patient’s records. While the physician’s Aldomet to Patient No. 24, I note that 261, 262, 265.) To the extent that order sheets indicate that Patient No. 17 the protocol provided that ‘‘routine Hydergine is effective, then Patient No. was started on the study drug on drugs (e.g., digitalis, diuretics, oral 28’s baseline might have been higher December 19, 1975 (G–14.6 at 18), hypoglycemics, non-narcotic analgesics, than it would have been otherwise. The another document in the record antibiotics, etc.) required by the patient withdrawal of Hydergine could have indicates that this patient’s initial may be administered, but every effort caused a worsening in the patient’s evaluation occurred on January 19, 1976 should be made to maintain a consistent condition over the course of the 12- (G–14.6 at 14), 1 month after the patient dosage schedule.’’ (G–14.2 at 243.) I week study. I therefore find that the had been on the study drug. This would place Aldomet in the category of possible confounding effect of January date for the initial evaluation is routine drugs for the purposes of the Hydergine must be considered, and that consistent with another record entry, Rao study. As for the schedule of for this reason, Patient No. 28 should be which lists the date for the ‘‘(s)econd administration of Aldomet to Patient excluded. evaluation during the fourth week’’ as No. 24, the physician’s order sheets Regarding Patient No. 42, Dr. Denton being on February 25, 1976. (G–14.6 at indicate that this patient was receiving testified that this patient received 13.) But in apparent contradiction to the 250 mg of Aldomet four times a day Seconal at bedtime during the final January date, yet another record item, from November 14, 1975 (G–14.6 at week of the study, from March 27 to this one found in the patient progress 186), until February 16, 1976. (G–14.6 at April 2, 1976. (Denton, A–121 at 82.) As notes, dated January 23, 1976, states that 184.) As I previously noted, this Dr. Denton acknowledged, Seconal is a the patient ‘‘is on vasodilator drug patient’s initial evaluation was on psychoactive medication, and, as such, Cyclospasmol for another month.’’ (G– January 26, 1976, and the final its use was generally prohibited under 14.6 at 15.) This would place this evaluation was on May 7, 1976. (G–14.6 the protocol. (Denton, A–121 at 81 patient’s initial evaluation at sometime at 175, 177.) Thus, this patient was (discussing Patient No. 36); G–28.8 at in November 1975, and final evaluation receiving Aldomet throughout the 318.) Nevertheless, Dr. Denton takes the in February 1976. washout period and continuing through position that this is not a reason to These inconsistencies, along with the several weeks of the study. exclude Patient No. 42, notwithstanding illegibilities and obvious Having considered Patient No. 24’s the fact that the medication was given incompleteness of the record (there are use of Aldomet, I find that this is not a at the time of final evaluation. (Denton, large gaps of at least two months basis to exclude this patient. At the time A–121 at 82.) duration between dates in the patient of initial evaluation, this patient was First, I note that this patient’s use of progress records), make the records of well-established on the regimen of Seconal does not appear to be Patient No. 17 inadequate for proper Aldomet, which could mean that any documented in the patient records in review. Therefore, I find that this initial drowsiness which the patient evidence; however, I also note that Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64123 many of this patient’s records are not complete records can be considered a use is based on Dr. Denton’s testimony legible. (G–14.7 at 219–264.) The ‘‘fatal flaw’’ for the adequacy of a study that this patient received Compazine question of documentation was not (Commissioner’s Decision on OPE, slip twice during the study. Because this raised by the Center; rather, the Center’s op. at 52–53), nevertheless, because the was the focus of the Center’s argument, arguments are based on the violation of issue is the washout period, in this I will address my ruling to the Center’s the concomitant medication restrictions instance I will accept Dr. Denton’s argument, rather than considering the in the protocol. testimony regarding the administration standing order for Compazine reflected Because the averred level of use of of Mellaril. Specifically, I will accept in the patient’s records. On this basis, I Seconal was that of a bedtime hypnotic, that Mellaril was discontinued 10 days do not find that Patient No. 57 needed I find that, while Patient No. 42’s prior to the commencement of the Rao to be excluded. concomitant medication use violated study. I find that this is probably Notwithstanding my ruling regarding the protocol’s general prohibition on sufficient for the purposes of including Patient No. 57’s receiving Compazine, I psychoactive drugs except for bedtime this patient in the study, although the nevertheless note that AHP’s failure to doses of Noludar or chloral hydrate (G– protocol required a 21-day washout provide documentation of the 28.8 at 318), this level of use is not period. (See G–14.2 at 243.) administration of Compazine can be cause for excluding Patient No. 42. Notwithstanding my finding regarding considered as a flaw in the Rao study. Nevertheless, I note that AHP’s failure the inclusion of Patient No. 45 despite (Commissioner’s Decision on OPE, slip to provide documentation for the this patient’s use of Mellaril, I note both op. at 52–53.) While Dr. Denton testified administration of Seconal can be the violation of the protocol’s 21-day that Compazine was only administered considered as a flaw in the Rao study washout period, and the incompleteness twice, the physician’s order sheets for and can be weighed in evaluating the of the records regarding Patient No. 45’s this patient suggest that this drug might adequacy of this study. (Commissioner’s use of Mellaril can be considered in have been administered more Decision on OPE, slip op. at slip op. at evaluating the adequacy of the Rao frequently. Because of the absence of 52–53.) Additionally, the fact of this study. adequate records, this patient’s protocol violation can also be As for the administration of Peritrate concomitant medication use can not be considered in evaluating this study. to Patient No. 45, I note that the fully reviewed, and this fact can be Regarding Patient No. 45, evidence administration of this vasodilating agent considered in weighing the adequacy of indicated that this patient received 20 was a violation of specific prohibitions this study. mg of Peritrate, a vasodilator, twice a of the protocol against the use of The Center also argues that several day during the study, from March 23 to vasodilating agents other than patients were in violation of the March 31, 1976. (G–14.7 at 314; Denton, Cyclospasmol. (G–28.8 at 318.) protocol’s 21-day, prestudy washout A–121 at 39, 82–83; Mohs, G–62 at 11.) However, because Peritrate was not requirement. (Center Post-Hearing Brief Patient No. 45’s records do not indicate administered near the time of either the at Attachment B.) It is alleged that a the date of initial evaluation, but, from initial evaluation, on January 5, or the number of patients received major an entry on the physician’s order sheet, final evaluation, on April 8, I will tranquilizers during the washout period. it appears that this patient had been accept Dr. Denton’s estimation that this However, before I review the records of receiving the study drug since January level of Peritrate was not a basis to each of the patients which the Center 5, 1976. (G–14.7 at 312.) Another entry exclude this patient, although I do not cites, I note that administration of in this patient’s progress notes states accept his characterization of the use of occasional doses of a major tranquilizer that, as of March 7, 1976, this patient this drug as ‘‘irrelevant.’’ Therefore, I during the study were permitted by the had been on Cyclospasmol for 2 find that this patient could be included protocol. (G–28.8 at 318). Because months, which would be consistent in the analysis of the Rao study. occasional doses were permitted during with an initial date of January 5, 1976. Nevertheless, this is a clear protocol the study, by extension, I find that (G–14.7 at 318.) Final evaluation of this violation, and the possible confounding occasional administration of a major patient apparently was on April 8, 1976. effect of Peritrate should be weighed in tranquilizer might be said to have been (G–14.7 at 310.) Evidence also indicates reviewing the adequacy of the Rao permitted during the prestudy washout that Patient No. 45 was receiving an study. period. However, I also find that the unspecified level of Mellaril during the Regarding Patient No. 57, Dr. Denton same restrictions on the level of the washout period. (Denton, A–121 at 83.) testified that this patient received dose and the timing of administration, The Center argues that because of these Compazine for 2 days during the course i.e., not within 4 days of an evaluation, concomitant medications, Patient No. 45 of the study. (Denton, A–121 at 84.) would still apply during the washout should be excluded. (Center’s Post- However, I have reviewed the records period. Hearing Brief at 64.) for this patient, and I found that the Turning now to the Center’s In Dr. Denton’s written review of physician’s order sheet indicates that arguments, first, the Center argues that Patient No. 45, Dr. Denton wrote that Compazine, 10 mg PRN, was ordered on Patient No. 2 received Mellaril during Mellaril was given prior to the study, January 30, 1976, with the order the washout period. (Denton, A–121 at but was discontinued on December 26, running through February 20, 1976. (G– 72–74.) The problem with assessing 1975, about 10 days before the study 14.8 at 135.) A second order to Patient No. 2’s use of Mellaril is that drug was started. (Denton, A–121 at 83.) discontinue the Compazine was entered this patient’s records reveal only that Regarding the Peritrate, Dr. Denton on February 20, 1976. (G–14.8 at 136.) Mellaril, dose unspecified, was concluded that the use of this drug for There were no medication records discontinued at the same time that a period of one week was ‘‘irrelevant.’’ tracking actual administration of Cyclospasmol was begun. (G–14.5 at (Denton, A–121 at 83.) Compazine. I note that this patient’s 55.) The record of Mellaril use during I have reviewed the records in initial evaluation was on January 30 (G– the washout period is not included in evidence for Patient No. 45, but these 14.8 at 132), and the patient’s final the evidentiary record. records, which are illegible in parts, do evaluation was on May 11, 1976. (G– Dr. Leber, a witness for the Center, not appear to contain the chart of 14.8 at 131.) had testified regarding the effects of administration of Mellaril. (See G–14.7 The Center’s argument pertaining to Mellaril. Dr. Leber testified that at 310–333.) While the absence of Patient No. 57’s concomitant medication Mellaril, an anticholinergic, 64124 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices antipsychotic drug, has a great potential that Mellaril was administered four and I.D.1.c.4. (regarding Patient No. to adversely affect cognition, learning, times a day even on the day of initial 56).) and memory. (Leber, Tr. Vol. I at 68–69.) evaluation. I find this level of Mellaril In summary, the Center had alleged Patients who are receiving Mellaril can use by Patient No. 51 at the time of concomitant medication use in violation have their cognitive performance appear initial evaluation to be a basis for of the protocol by 21 of the 58 patients worse than it actually would have been, excluding this patient from the study. in the Rao study. Of these 21 patients, absent Mellaril. When the patient is Patient No. 10 received Valium during AHP has already conceded that 9 withdrawn from Mellaril, the patient’s the washout period. (Denton, A–121 at patients (Patient Nos. 9, 22, 23, 29, 32, cognitive performance may improve due 75.) In my review of this patient’s 36, 43, 56, 68) should be excluded for to the withdrawal of Mellaril. (Leber, Tr. records, I found that the physician order violation of the inclusion/exclusion Vol. I at 69.) Moreover, Mellaril is a sheets contained a notation which read, criteria. Additionally, it was conceded drug with a ‘‘very long half-life.’’ (Leber, ‘‘Valium 5 mg at 8 PM,’’ with the further by Dr. Denton, AHP’s witness reviewing Tr. Vol. I at 70.) That is to say, it can notation that the medication was to start the Rao study, that Patient No. 36 accumulate in the body. (Leber, Tr. Vol. on December 11, 1975, and continue should be excluded for the concomitant I at 70.) until January 19, 1976. (G–14.5 at 233.) use of Seconal at the time of final As for the administration of Mellaril However, a later notation indicated that evaluation. to Patient No. 2, I find this to be an Valium was discontinued on December After these conceded exclusions, apparent violation of the protocol’s 23, 1975, two weeks after it had been there remained 12 other patients cited restriction against giving a patient a initiated. (G–14.5 at 234.) This patient by the Center for concomitant major tranquilizer within 4 days of an had begun to receive the study drug on medication use, but whose exclusion evaluation, in this instance the initial December 18, 1975. (G–14.5 at 233.) The AHP contests. Of these patients, I have evaluation. (G–28.8 at 318.) I use the administration of Valium to this patient found that Patient Nos. 1, 2, 6, 17, 28, word ‘‘apparent,’’ since the necessary violated the protocol’s general and 51 should be excluded for records of Mellaril use are not in prohibition against the use of concomitant medication use. I further find that Patient Nos. 10, 14, 42, 45 and evidence. However, as was held in the psychoactive drugs except for bedtime 57 can be included, but that for the Commissioner’s Decision on OPE, the use of Noludar or chloral hydrate. (G– various reasons previously discussed, use of concomitant medication can be 28.8 at 318.) However, I do not find this the inclusion of these patients can be considered as ‘‘a fatal flaw’’ in the level of use of Valium to be cause to weighed against problems with the absence of detailed records which exclude this patient. Nevertheless, I records for these patients, and with the would permit evaluation of the effect of note the fact that this protocol violation fact that protocol violations were found the concomitant medication on the can be weighed in evaluating the in connection with these patients. I note results of the study. (Commissioner’s adequacy of the Rao study. Decision on OPE, slip op. at 52–53.) that even protocol violations which Patient No. 14 received Valium, 2 mg Without the necessary records regarding individually may not warrant rejection twice a day, beginning on December 15, Patient No. 2, I find that this patient of a study can be considered in the should have been excluded from the 1975. (G–14.5 at 334; Denton, A–121 at aggregate in determining whether a Rao study. 77.) This patient started on the study study is adequate and well-controlled. The Center next argues that Patient drug on December 19, 1975; Valium was (See Commissioner’s Decision on No. 51 also received Mellaril during the discontinued on December 23, 1975. (G– Benylin, 44 FR 51512 at 51531.) Lastly, washout period. (Center Post-Hearing 14.5 at 334.) As with the previously I find that Patient No. 24 can be Brief at Attachment B.) I have reviewed discussed patient, the administration of included. this patient’s medication charts, and I Valium to Patient No. 14 violated the e. Case Report Forms. AHP further have found that these records indicate protocol’s general prohibition against makes a general challenge to the ALJ’s that this patient received Mellaril, 25 the use of psychoactive drugs except for consideration of the lack of case report mg four times a day, from December 4, bedtime use of Noludar or chloral forms for 55 out of the 58 patients as 1975, to January 31, 1976, a time period hydrate. (G–28.8 at 318.) Nevertheless, I another factor to be weighed in which included the entire washout do not find this level of use of Valium reviewing the adequacy of the Rao period. (G–14.8 at 40, 41.) This patient to be cause to exclude this patient, but study. (AHP Exceptions at 137–39, began receiving the study drug on I note the fact of this protocol violation citing I.D. at 40, 42.) AHP argues that January 30, 1976. (G–14.8 at 40; Leber, can be weighed in evaluating the the case report forms were not needed G–64 at 14.) Dr. Denton, in his review adequacy of the Rao study. because hospital records (see G–14.5; G– of this patient’s records, wrote, ‘‘There Also cited by the Center for receiving 14.6; G–14.7; G–14.8) and computer is no practical necessity of the 3 week medications during the washout period, printouts (see G–11.2) regarding most of washout, when the final evaluation is in addition to the Center’s claims of the patients were available. (AHP done 3 months after the start of the concomitant medication use during the Exceptions at 139.) study.’’ (Denton, A–121 at 83.) Dr. study by these particular patients, were The Center argues that the case report Denton, however, did not address Patients No. 22 for receiving Mellaril forms were needed for several reasons. himself to the fact that the initial (Leber, G–64 at 12), Patient No. 29 for (Center Response to AHP Exceptions at evaluation of this patient may have been receiving both Doxepin, an 53; Center Post-Hearing Brief at 60–62, affected by the frequent and regular use antidepressant, and Mellaril (Leber, G– 65–66, 68–74.) The Center argues that of Mellaril. 64 at 13), and Patient No. 56 for for most of the patients, there are no The level of Mellaril used by Patient receiving Valium (Leber, G–64 at 14) results for the neurological examination No. 51 was a violation of two provisions during the washout period. I need not required by the protocol, the absence of of the protocol. Specifically, this patient discuss these three patients because which undermines any assurances by received more than three doses of a AHP has conceded that these patients AHP that the patients did not have a major tranquilizer in 1 week, and should be excluded for violations of the neurological cause for their senility. received a major tranquilizer within 4 inclusion/exclusion criteria. (See (Center Post-Hearing Brief at 61–62.) days of initial evaluation. (G–28.8 at sections I.D.1.c.2. (regarding Patient No. Additionally, there were no hospital 318.) In fact, records support a finding 22), I.D.1.c.3. (regarding Patient No. 29), records available for two of the Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64125 patients—Nos. 7 and 48—included in without access to the raw data only whether the Rao study was adequate the analysis. (Center Post-Hearing Brief when the report of the study: (1) Is and well-controlled. at 65–66.) For these reasons, it was published in the scientific literature, (2) f. Blinding and bias. Regarding the impossible to determine whether these is reliable, and (3) describes an adequate matter of bias, the Center argues that Dr. patients were given concomitant and well-controlled study. Rao did not remain blinded throughout medications to any extent. (Center Post- (Commissioner’s Decision on OPE, slip the clinical trial and for this reason was Hearing Brief at 65–66.) op. at 67.) biased in his observations. (Center Post- Regarding the computer printouts, the Additionally, it should be noted that Hearing Brief at 75; Center Response to Center argues that these documents are publication alone does not negate the AHP Exceptions at 53–54.) AHP argues inadequate because they do not contain necessity for raw data from a study to that the evidence fails to support the necessary information such as the be supplied to the agency. Regarding Center’s claims. (AHP Post-Hearing results of the physical examination, the published studies, the Commissioner’s Brief at 99–104; AHP Exceptions at 142– neurological examination, and the Decision on OPE ruled: 47.) While the ALJ discussed the issues of bias and blinding in the Initial laboratory tests. (Center Post-Hearing (P)ublished studies can be considered Brief at 70–72.) Moreover, the Center reliable and can be accepted without Decision, the ALJ made no ruling argues that computer printouts are not supporting raw data only if the reports of the regarding this matter. (I.D. at 41–42, 43.) an adequate supplement because the studies contain details adequate to support a Dr. Rao had died prior to the printouts do not record any of the scientific determination that the study is an commencement of the administrative subjects’ medical histories, concomitant adequate and well-controlled clinical hearing, so there was no direct medication use, the SCAG evaluations investigation. The determination of whether testimony from him on this point. The for ten of the placebo patients, nor the the report is adequate (and raw data underlying basis for the Center’s claims identities of investigators who made unneeded) is a discretionary determination lies in the fact that of the 16 made on the basis of the quality of the Cyclospasmol-treated subjects assigned each patient’s SCAG evaluation. (Id. at published data. Among the factors that 70–73.) to Dr. Rao, Dr. Rao rated 10 of these determine whether a published report is subjects as ‘‘markedly improved,’’ Dr. Mohs, a witness for the Center, sufficient are whether the protocol, the explained the reasons for needing the results, and the manner by which the study whereas the three other investigators in case report forms as follows: meets each of the requirements of (FDA the same study (Drs. Georgiev, Guzman regulations) are described in detail. and Paul), who together rated 16 (I)t makes it very difficult to evaluate the Cyclospasmol-treated subjects, only study when the original data forms are not (Commissioner’s Decision on OPE, slip rated one subject as ‘‘markedly available. It is difficult to determine how op. at 70–71 (citations omitted, well the records were kept and whether or improved.’’ (Mohs, G–62 at 12–13; Thal, emphasis added).) G–63 at 8, citing (G)-11.2 at 72–73 & (G)- not there were errors made in taking the data Turning now to the Rao study, I note from the original case report forms to the 14.2 at 254; Leber, G–64 at 18.) The analysis system. In other words, it makes it that while the Rao study was published Center argues that this disparity in impossible to verify whether the protocol in the Journal of the American ratings among the four evaluators was followed and whether the results, which Geriatrics Society, the article, which indicates that adequate measures were were eventually reported in the published was four pages in length, failed to not taken to minimize bias on the part article, accurately reflect the data that were provide any details regarding the patient of the observers and analysts of the data. collected. selection process, and completely failed (Center Response to AHP Exceptions at (Mohs, G–62 at 8.) to discuss concomitant medication use, 53–54.) Similar testimony was given by Dr. and further failed to discuss In support of its argument on the Leber, a witness for the Center, who concomitant diseases or conditions blindness issue, the Center cites to the testified in part, ‘‘The documentation which the patients had during the testimony of three of its witnesses—Drs. supplied by the sponsor (makes) it course of the study. (A–80 at 1–4.) The Leber, Thal, and Mohs. (Center Post- impossible to determine whether or not computer printouts which AHP cites are Hearing Brief at 75.) Each of these certain requirements of the protocol not sufficient to make up this deficit witnesses raised questions about the were actually carried out.’’ (Leber, G–64 because the printouts do not contain credibility of Dr. Rao’s ratings as at 16.) information such as the results of the compared with that of the three other The act requires that a new drug neurological examination required by investigators in the Rao study. application include ‘‘full reports of the protocol, nor do the printouts On this issue, Dr. Leber, a witness for investigations’’ which have been made identify which doctor performed which the Center, testified that there was ‘‘a to show whether such drug is effective SCAG evaluation. (I.D. at 39.) The marked inconsistency between (Dr.) in use. (21 U.S.C. 355(b)(1).) This hospital records, which do not contain Rao’s findings and those of his three co- statutory requirement was extensively SCAG or NOSIE scores but which do investigators.’’ (G–64 at 18.) Dr. Leber discussed in the Commissioner’s contain information regarding noted that of the 32 patients collectively Decision on OPE. In that decision, it concomitant medication use, are assigned to the four investigators in the was noted that neither the statute nor missing for two of the patients included Cyclospasmol arm, 12 of the 13 agency regulations imposes a per se in the analysis. (Center Post-Hearing patients reported to have shown the requirement that in every instance raw Brief at 65.) largest improvements from baseline on data be submitted in support of a new I find that Dr. Rao’s published report SCAG Item 19 were in Dr. Rao’s group. drug application. (Commissioner’s fails to contain details adequate to (G–64 at 18.) Additionally, Dr. Leber Decision on OPE, slip op. at 66.) The support the scientific determination testified that on the physician’s final Commissioner’s decision on OPE went necessary to find that the Rao study is global evaluation of each patient, a on to note that while raw data are not an adequate and well-controlled clinical ‘‘marked improvement,’’ the highest required in support of all NDAs, this investigation. Therefore, I find that the level of improvement, was reported by does not mean, however, that the unavailability of the raw data was a all investigators for 11 of the 32 patients submission of raw data may never be matter properly considered by the ALJ. in the Cyclospasmol arm, with 10 of required by the agency. The ‘‘full I conclude that the omission of the raw these 11 ‘‘marked improvements’’ being reports’’ requirement can be met data can be weighed in determining reported by Dr. Rao. (G–64 at 18.) Dr. 64126 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

Leber added that the hospital records evidence does seem to indicate a sort of 2. The Yesavage Study often failed to support the marked ‘‘grade inflation’’ on Dr. Rao’s part, as The Yesavage study was originally improvements which Dr. Rao reported. was suggested by Dr. Leber in his planned as a multicenter study (G–64 at 20.) Dr. Leber expressed the testimony, nevertheless the evidence is combining the results of three view that ‘‘at best, Dr. Rao’s use of the inconclusive regarding the question of investigators at three different sites. SCAG represents a sort of ‘grade Dr. Rao’s blinding. There is no evidence However, the results of one of these inflation.’ That is, patients who have which I find which is dispositive of the investigators were dropped at the either had only trivial or minimal Center’s claim of unblinding by Dr. Rao. request of FDA because of certain changes are rated as having very large Moreover, there is no evidence which questions about that portion of the improvements.’’ (G–64 at 20.) indicates that Dr. Rao’s patients were study. (I.D. at 43; see also G–10.2 at 1– Dr. Leber also cited numerous specific randomized between placebo and  2.) The results of the second investigator examples of patient evaluations which Cyclospasmol arms in a way different were not submitted by AHP, for reasons he found to be questionable. (G–64 at from that of the patients in other which are disputed by the Center but 20–22.) Among the patients cited by Dr. investigators’ groups, which might have which are not at issue in this appeal. Leber were Patient Nos. 15, 17, 20, 29, revealed the patient’s status to Dr. Rao. (I.D. at 43- 44.) In any case, only the and 63. All of these patients were I find that while the disparity in ratings results of Dr. Yesavage’s group were reported by Dr. Rao to have had a 3.0 among the investigators was an issue submitted as proof of efficacy for change on SCAG Item 19, yet the properly raised by the Center, Cyclospasmol. Hereinafter, the results clinical psychologist reports for the Rao nevertheless I find the evidence of Dr. Yesavage’s group will be referred study indicated that these patients ambiguous and not sufficient to support to as the Yesavage study. worsened during the study. (G–64 at 20– the Center’s claim. Therefore, I rule in The Yesavage study was a placebo- 22.) Other patients, including Patient favor of AHP on the issues of blinding controlled, parallel group study with the Nos. 16, 22, 24, 52, and 56 were also and bias. stated objective of evaluating ‘‘the reported by Dr. Rao to have had an g. Adequacy of the Rao study. In sum, efficacy of Cyclospasmol compared to improvement in their SCAG scores by I find that the Rao study was not placebo in improving symptoms usually 3.0 points, and, in one instance, a 4.0 adequate and well-controlled. In making associated with impaired brain function improvement, yet the clinical this determination, I have considered in the elderly, whether due to cerebral psychologist evaluation reported no the aggregate effect of the protocol arterial disease or diffuse cellular change in these patients or, in the case violations. As I previously discussed: (1) dysfunction.’’ (G–9.2 at 32.) Twenty- of the patient with the reported 4.0 The study failed to show that patients eight patients were enrolled at the start change, minimal improvement. (Leber, were examined for other causes of of the study. (I.D. at 43, citing G–9.2 at G–64 at 21–22.) dementia, and therefore the study did 32; G–11.1 at 10, 17.) Dr. Thal, another witness for the not adequately show that Alzheimer’s Under the protocol, patients selected Center, similarly expressed the view disease patients were included in the for the Yesavage study were to be that there were a number of items that study; (2) patients with concomitant ‘‘residing in a retirement, intermediate suggested a ‘‘credibility gap’’ in the Rao diseases and conditions, including care facility, convalescent, nursing or study. (Thal, G–63 at 8.) On this point, strokes, histories of alcoholism, severe other home for the aged and who exhibit Dr. Thal testified: diabetes, Parkinson’s disease, and other mild to moderate deterioration of brain First, although 4 different investigators serious diseases were admitted to the function as manifested by their behavior rated the patients, only Dr. Rao found a large study, although these patients were to or symptoms * * *.’’ (G–9.2 at 32.) number of markedly improved patients. have been excluded under the protocol; Accordingly, the patients selected for ** * The second problem is that Dr. Rao’s and (3) the widespread administration the study were drawn from one of three global improvement evaluation of marked of concomitant medications precluded improvement in the 10 patients is not nursing homes and from an any meaningful analysis of the effects of intermediate care facility (Lincoln Glen substantiated by other observers (including  NOSIE scores, clinical psychology notes, Cyclospasmol in the study. Also, I find Manor, Empress Convalescent Hospital, nursing notes, and doctors’ progress notes.) that Dr. Rao’s published report failed to Skyline Convalescent Hospital, or Overall, the discrepancies noted raise contain details adequate to support the Lincoln Glen Intermediate Care questions about the credibility of the data. scientific determination that the Rao Facility). (I.D. at 43, citing Yesavage, Tr. (Thal, G–63 at 8.) study is an adequate and well- IV at 43–44.) However, a few patients Regarding this issue, Dr. Richard C. controlled clinical investigation; the lived at home with relatives. (I.D. at 43, Mohs similarly testified: unavailability of the raw data was a 46; Yesavage, Tr. Vol. IV at 43–44.) matter properly considered by the ALJ, Subjects in the study were assessed Since (Dr. Rao) evaluated only 16 patients in this group (the Cyclospasmol arm) Dr. and the omission of the raw data can be on the basis of 28 outcome measures. Rao rated 62% of his Cyclospasmol patients weighed in determining whether the These measures included the Nurses as markedly improved while the other three Rao study was adequate and well- Observation Scale—Inpatient Evaluation physicians together only rated 1 of 16 controlled. I further find that the ALJ (NOSIE), which, in contrast to the patients as markedly improved (6%). This is did not err in refusing to admit AHP’s NOSIE in the Rao study, was used to very unlikely to have occurred by chance and reanalysis of the Rao study, since the give a single measure for each patient, suggests that Dr. Rao may not have been reanalysis was not timely filed and AHP the Hamilton Depression Scale, the blind to the drug conditions of the patients. did not make a motion justifying the Buschke Memory Test (BMT), the (Mohs, G–62 at 13.) potential delay resulting from the physician’s clinical global impression I have reviewed the evidence cited by document’s late submission. I did rule score, and the 24 measures—5 factors the Center in support of its argument, in favor of AHP on the issue of the plus 19 items—on the Sandoz Clinical but I do not find the evidence sufficient blinding and bias of Dr. Rao. However, Assessment—Geriatric (SCAG). (G–9.2 to support the serious charge that Dr. the favorable ruling on this issue is not at 45.) Rao became unblinded during the enough to counteract the aggregate effect At time of final analysis, the results of clinical trial and failed to report of the other deficiencies of the Rao 23 of the 28 patients in the study were becoming unblinded. While the study. analyzed on the basis of measurements Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64127 taken at Weeks 3, 6, 9, and 12. (I.D. at AHP Exceptions at 55–57.) The Center ‘‘undermin(es) the validity of the 43, citing G–64 at 24; see also G–11.1 at additionally argues that Parkinson’s results.’’ (41 FR 14406 at 14419.) 17.) However, additional and variable disease is a type of organic brain Having reviewed the Yesavage study, numbers of patients were excluded from syndrome (Denton, Tr. Vol. VII at 38), I find that the ALJ was correct in ruling the final analysis for which the patients’ and that patients with organic brain that Parkinson’s disease, though not baselines were compared with their syndrome were to have been excluded specifically excluded by the protocol, outcomes at Week 16, which was the under the Yesavage protocol’s would make it more difficult to final week of the study. (G–11.1 at 20– exclusionary criteria. (Center Response characterize the improvement of a 37.) For the SCAG rating, 20 patients, to AHP Exceptions at 56 n.26, citing G– demented patient. (I.D. at 45.) I including 12 Cyclospasmol and 8 9.2 at 34.) conclude that because dementia caused placebo patients, were used. (G–11.1 at Whether the inclusion or exclusion of by Parkinson’s disease is not a labeled 29–31.) For the BMT, the results of 17 a particular patient is consistent with indication for Cyclospasmol, Patient patients, including 10 Cyclospasmol the protocol is one factor which can be Nos. 34 and 37, who had Parkinson’s and 7 placebo patients, were analyzed. considered in reviewing a study, for it disease, should have been excluded (G–11.1 at 32.) For the Clinical Global goes towards proving whether the study from the study to prevent confounding Impression, the measures of 22 patients, was adequate and well-controlled. of the study’s results. of which 13 were Cyclospasmol However, conformance to a study’s The record also supports a finding patients and 9 were placebo patients, protocol is not an ironclad guarantee that Patient No. 18 had Parkinson’s were used. (G–11.1 at 33.) For the that the study will be found to be disease. Patient No. 18’s case record NOSIE scale, 15 patients, including 10 adequate and well-controlled. states that this patient had Cyclospasmol and 5 placebo patients, The burden of designing and ‘‘Parkinsonian tremor.’’ (G–12.4 at 108.) were used. (G–11.1 at 34–36.) For the conducting an adequate and well- Additionally, testimony indicates that Hamilton Depression Scale, 21 patients, controlled study lies with the proponent this patient received the drug, Sinemet, including 13 Cyclospasmol and 8 of the drug. (Commissioner’s Decision during the study. Sinemet is used in the placebo patients, were analyzed. (G– on Mysteclin, slip op. at 11; see treatment of Parkinson’s disease. 11.1 at 37.) AHP’s reasons for analyzing generally § 314.126.) Protocols can be (Denton, A–121 at 54.) different numbers of patients for each found to be inadequate. If a protocol is While the ALJ noted that the evidence outcome measure were not discussed in flawed, it does not matter if the protocol indicated that Patient No. 18 had the final analysis of the Yesavage study. was perfectly adhered to in its Parkinson’s disease, the ALJ declined to (See G–11.1 at 5- 45.) execution. (Cf. Commissioner’s Decision rule that this patient should have been Based upon the results of the 20 on Cothyrobal, 42 FR 28602 at 28604 excluded for having Parkinson’s disease patients whose outcomes were included and 28606 (Study found not to be because the Center failed to make this in the final analysis of the SCAG adequate and well-controlled because argument. (I.D. at B–2.) In view of the Factors, AHP reported a statistically design of study did not include test ALJ’s ruling on this matter, I, too, will significant difference in favor of arms for all components of a refrain from ruling that Patient No. 18 Cyclospasmol on SCAG Factor 1 combination drug.).) Moreover, FDA should be excluded despite the (‘‘cognitive dysfunction’’), and SCAG cannot be estopped in its review of evidence of Parkinson’s disease. Item 19 (‘‘overall impression of patient safety and effectiveness issues. (United Nevertheless, I rule that AHP’s failure to functional capacity’’). (G–11.1 at 19–20, States v. Articles of Drug * ** address this patient’s apparent 29, 78; Thal, G–63 at 16–17; Chaing, Tr. Hormonin, 498 F. Supp. 424, 437 (D.N.J. concurrent condition can be considered Vol. I at 52–53; Overall, A–116 at 6.) 1980), aff’d 672 F.2d 904 (3d Cir. 1981).) in the weighing of the Yesavage study. The ALJ ruled that the Yesavage study Turning now to the evidence ii. Outpatients. AHP further argues cannot be considered an adequate and regarding the Yesavage study, the record that the ALJ erred in ruling that three well-controlled study, in part, because: shows that Dr. Leon Thal, a witness for other patients—Patients Nos. 14, 16, and (1) Patients who did not meet the the Center, testified that Parkinson’s 18—should have been excluded from entrance criteria were included in the disease can cause dementia. (Thal, G–63 the study because these patients lived at study, (2) concomitant medication use at 12.) Specifically, Dr. Thal testified, home with their families, rather than in confounded the study, and (3) clinical ‘‘Patients with Parkinson’s disease do a nursing home as required by the significance was not demonstrated. AHP have dementia, however, the dementia protocol. (AHP Exceptions at 152, citing and the Center make the following may not be secondary to Alzheimer’s I.D. at 46.) AHP argues that the arguments challenging the ALJ’s disease but due to a dementia associated inclusion of these patients represented decision. with Parkinson’s disease which has a mere technical violations of the a. Selection of patients.—(i) different pathological basis.’’ (Thal, G– protocol, and that these patients need Parkinson’s Disease. AHP first argues 63 at 12.) not have been excluded. that the ALJ erred in ruling that two of FDA regulations require that a The relevant section of the Yesavage the patients in the study—Patient Nos. protocol for an adequate and well- study protocol provided that subjects for 34 and 37—had Parkinson’s disease and controlled study have a ‘‘method of the study shall be ‘‘(p)atients who are should have been excluded. (AHP selection of subjects (that) provides residing in a retirement, intermediate Exceptions at 149, citing I.D. at 53, 57.) adequate assurance that they have the care facility, convalescent, nursing AHP argues that this ruling is an error disease or condition being studied home or other home for the aged because the protocol for the Yesavage * * *.’’ (§ 314.126(b)(3).) In the ** *.’’ (G–9.2 at 32.) While the study did not exclude patients with Commissioner’s Decision on Lutrexin it purpose for this requirement is not Parkinson’s disease. (AHP Exceptions at was ruled, under an earlier edition of stated in the protocol, the ALJ, after 149.) the regulations, that it is necessary to hearing all the evidence, concluded that The Center argues that these two use ‘‘the most accurate diagnostic the purpose of this requirement was to patients should properly be excluded techniques available’’ to assure that assure that patients were taking the because Parkinson’s disease itself causes patients who do not have the condition study medication as directed, and to dementia, which could confound the under study are identified and excluded assure that the use of concomitant results of the study. (Center Response to from the study; the failure to do so medication would be monitored. (I.D. at 64128 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

46; AHP Exceptions at 152; see administration of the test drug. (Center evaluating the adequacy of the Yesavage generally Porter, Tr. Vol. IV at 43–46.) Response to AHP Exceptions at 59.) study. The ALJ’s conclusions on this point are FDA regulations require that a study b. Distribution of patients with not in dispute. use a design ‘‘that permits a valid strokes. Unlike the Rao study’s protocol, While the ALJ made a ruling comparison with a control to provide a which planned to exclude patients with regarding three of the study subjects, I quantitative assessment of drug effect.’’ strokes, the Yesavage study’s protocol note that testimony from Dr. Clarence (§ 314.126(b)(2).) The regulations also did not propose to exclude stroke Denton, an AHP witness, indicates that require that ‘‘(t)he method of assigning patients. This difference between the five patients—Patient Nos. 14, 15, 16, patients to treatment and control groups two studies’ protocols was not an issue 17, and 18—were outpatients. (Denton, minimize bias and * * * assure at the administrative hearing. A–121 at 48.) However, the evidence in comparability of the groups with respect AHP argues that the ALJ erred in the record does not include the case to pertinent variables such as * * * use holding that seven patients in the reports for Patient Nos. 15 and 17. of drugs or therapy other than the test Yesavage study had medical histories Perhaps for this reason, the ALJ drug.’’ (§ 314.126(b)(4).) Monitoring a indicating strokes, and that these mentions only Patient Nos. 14, 16, and patient’s medications during the course patients should have been 18 in his decision. (See I.D. at 46.) of a study is an important factor in the proportionately distributed between the However, I conclude that the design of an adequate and well- drug and placebo groups. (AHP testimonial evidence of Dr. Denton is a controlled study and is necessary for a Exceptions at 154, citing I.D. at 53, 57.) sufficient basis for reviewing the status valid comparison between a test article The Center, citing to the testimony of of all five of the outpatients. and a control. (See generally Dr. Thal, argues that AHP’s failure to Dr. Yesavage testified that the patients Commissioner’s Decision on OPE, slip identify patients with stroke histories who lived at home were seen by Dr. op. at 47–53.) and to see that such patients were William Garcia in the latter’s private While restricting the Yesavage study proportionately assigned between the office, although Dr. Yesavage was listed to patients who were in a nursing home Cyclospasmol  and the placebo groups on the case report forms as the patients’ and under constant medical supervision meant that the two groups cannot be doctor. (Yesavage, Tr. Vol. IV at 43, 46.) is one way to monitor concomitant found to be comparable. (Center Dr. Yesavage testified that Dr. Garcia medications, this restriction is not Response to AHP Exceptions at 60–61.) was not required by the protocol to perforce required to monitor I find the Center’s argument to have record concomitant medications into the concomitant medications. Although the merit. case report forms. (Yesavage, Tr. Vol. IV evidence indicated that there were Turning first to the testimony of Dr. at 45.) For nursing home patients, problems with recording of concomitant Thal, a witness for the Center, this concomitant medications were noted on medications 6 and with concomitant witness testified: the patient order sheets; regarding medication use (the latter of which will outpatients, Dr. Yesavage testified that There are some problems with the protocol be discussed in section I.D.2.d. of this he ‘‘presume(d)’’ that Dr. Garcia made in that the protocol does not attempt to document), these problems do not separate out patients who have Alzheimer’s notes in his private files regarding appear to be unique to the outpatients disease from those who had multiple strokes. concomitant medications for the in the Yesavage study. For these A problem with lumping together two groups outpatients. (Yesavage, Tr. Vol. IV at reasons, I will accept AHP’s argument of patients is that if they are unequally 44–46.) that the inclusion of outpatients was a distributed, the treatment effect seen may be The responsibility of recording all due to an effect on the treatment on one subjects’ concomitant medications, technical violation of the protocol and disorder and not the other. For example, if including that of the outpatients, onto was not grounds by itself to exclude a large number of patients with multiple the case report forms was given to Mr. these patients. strokes are in the treatment group, the effect Michael Adey, Dr. Yesavage’s assistant. Nevertheless, as I previously noted, of the drug would then be licensed for the (Yesavage, Tr. Vol. IV at 45–46.) For the even protocol violations which by treatment of both patients with multi-infarct nursing home patients, it was Mr. themselves may not warrant rejection of dementia and Alzheimer’s disease when in a study can be considered in the fact the drug may be totally non-effective in Adey’s responsibility to review the patients with Alzheimer’s disease. In order sheets, identify concomitant aggregate in determining whether a study is adequate and well-controlled. reviewing the case report forms for these medications, and record these into the patients, I found (7) patients with a history case report forms. (Yesavage, Tr. Vol. IV (See Commissioner’s Decision on or an examination compatible with stroke at 47.) For the outpatients, Mr. Adey Benylin, 44 FR 51512 at 51531.) Failure (patients 9, 25, 28, 29, 33, 34, 35). If these was similarly to review the medical to follow inclusion/exclusion criteria patients are removed from the statistical records from Dr. Garcia, identify can be an indication of an inattention to analysis, it is perfectly possible that all concomitant medications, and record detail and can be considered in deciding statistical significance would be lost in the this information into the case report whether the study was adequate and remaining patients. forms. (Yesavage, Tr. Vol. IV. at 48.) well-controlled. (Thal, G–63 at 11 (emphasis added).) The Center argues that the outpatients Therefore, I find with respect to the I have reviewed the records for all should properly be excluded because Yesavage study that the inclusion of patients in this study, and I have found there is no evidence to show that the outpatients in violation of the study’s that Dr. Thal was correct with regard to families of the outpatients kept careful protocol may be considered in six of the seven patients which Dr. Thal records of any concomitant medications identified as having histories of strokes. given at home, nor does the evidence 6 Dr. Yesavage testified that his research assistant I was unable to verify the diagnosis of may not have included all sleeping medications in show that Mr. Adey recorded in the case the case report records of concomitant medications. a stroke with regard to Patient No. 25, report forms concomitant medications (Yesavage, Tr. Vol. IV at 42.) Dr. Yesavage as there are no records in evidence for given at home. (Center Response to AHP explained that his research assistant was permitted this patient. However, regarding the Exceptions at 59.) Additionally, the to ‘‘use some judgment’’ in deciding which remaining six patients, the records medications to include on the case report forms Center argues that there is no evidence because it was not felt that it was important to support Dr. Thal’s testimony. Patient that the outpatients’ families kept include all concomitant medications regardless of No. 9’s records show a clinical diagnosis careful records regarding the their indications. (Yesavage, Tr. Vol. IV at 42.) of a stroke, specifically a cerebral Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64129 vascular accident with left hemiplegia. Similarly, in the Commissioner’s values because the BMT is an objective, (G–12.2 at 106, 109.) Patient No. 28’s Decision on Lutrexin, it was ruled, quantitative test of recent memory records show a diagnosis of a stroke. (G– ‘‘(T)he law is clear that the applicant dysfunction. (Center Response to AHP 12.6 at 309, 312–13.) Patient No. 29’s must provide substantial evidence of a Exceptions at 63.) By contrast, the SCAG records show a diagnosis of a stroke, drug’s effectiveness under its labeled is a subjective, observer-rated test. specifically a cerebral vascular accident conditions of use, not those under (Center Post-Hearing Brief at 86.) The with right hemiplegia. (G–12.7 at 4, 7– which an investigator chooses to test it.’’ Center argues that for this reason, the 8.) Patient No. 33’s records show a (41 FR 14406 at 14419.) BMT is more telling of baseline diagnosis of a stroke, specifically a The Center cites to the regulation comparability between the two study cerebral vascular accident with left requiring that the method of assigning groups. The Center further argues that hemiplegia. (G–12.7 at 107, 110–11.) subjects must assure comparability of the lack of baseline comparability on the Patient No. 34’s records show a the groups with respect to pertinent BMT rendered the Yesavage study not diagnosis of a stroke with left variables, including severity and adequate and well-controlled. (Center hemiparesis. (G–12.7 at 210, 215–16.) duration of disease. (Center Response to Reply to AHP Exceptions at 63.) Patient No. 35’s records indicate a AHP Exceptions, citing § 314.126(b)(4); Before discussing the merits of this diagnosis of stroke. (G–12.8 at 9.) see also Commissioner’s Decision on issue, the relevant parameters of the Additionally, Patient No. 7’s records Lutrexin, 41 FR 14406 at 14414.) SCAG and the BMT need to be indicate a diagnosis of a stroke (G–12.2 Necessarily, the group assignments must described. The SCAG required the at 5), although this patient was not be comparable with respect to the physician to rate the patient from a list identified by the Center in its brief as a disease itself. I therefore find that the of 19 Items. Each Item in the SCAG was stroke patient. failure to show that stroke patients were rated on a scale from ‘‘1’’ to ‘‘7,’’ with What the records do not reveal, either included in both the drug and the ‘‘1’’ indicating that the symptom was in the patient records or in the analysis placebo arms of the clinical trial can be ‘‘not present,’’ and ‘‘7’’ indicating that of the Yesavage study, is to which group considered as a flaw in the Yesavage the symptom was ‘‘severe.’’ (G–3.1 at 97;  (Cyclospasmol or placebo) these, or study, and can be weighed in see, e.g., G–14.2 at 6–8.) Eighteen of indeed any, of the patients were determining if the study was adequate these Items were then grouped into five assigned. (See G–12.1 through 12.8; G– and well-controlled. Factors for rating the patient. (G–11.1 at 11.1.) While AHP faults the ALJ’s c. Baseline comparability. AHP next 70.) The 19th Item, the Physician’s decision for failing to make a finding as argues that the ALJ erred in finding that Overall Assessment of the patient, was to how the stroke patients were the lack of comparability between the rated separately. (G–11.1 at 70 n.7.) The distributed, AHP offers no information drug and placebo groups at baseline for Factor upon which AHP now relies, in this regard. (AHP Exceptions at 155.) the Buschke Memory Test (BMT) Factor 1, Cognitive Dysfunction, was Based upon the evidence in the weighed against finding the Yesavage defined as including the following record, it cannot be ascertained whether study adequate and well-controlled. Items: (1) Confusion, (2) impaired both arms of the clinical trial included (AHP Exceptions at 156–57, citing I.D. mental alertness, (3) impaired recent stroke patients. For this reason, I find at 48, 53, 57.) The average BMT score  memory, and (4) disorientation. (G–11.1 that, strictly speaking, proportional at baseline for the Cyclospasmol group at 70–71, 75.) distribution of stroke patients is not the was ‘‘7.2’’ out of a possible score of The BMT, on the other hand, was crux of this issue; rather, it is the failure ‘‘15.0,’’ but was ‘‘3.6’’ for the placebo described by Dr. Yesavage, an AHP to show that stroke patients were group, a difference between the two  witness, as ‘‘a memory performance test included in both the Cyclospasmol groups which was statistically in which subjects are required to arm and the placebo arm of the clinical significant. (Schneiderman, G–65 at 10; remember and repeat words from a trial. Thal, G–63 at 13.) stimulus list of 15 objects.’’ (G–11.1 at As I previously ruled (see section AHP argues that the BMT measured 21.) I.D.1.b. of this document), in an only a narrow parameter of cognitive Regarding the differences between the adequate and well-controlled study, it is functioning, and that the results of other SCAG and the BMT, Dr. Thal, a Center not acceptable to group persons having tests at baseline should have been witness, testified: similar symptoms but distinct diseases weighed more heavily. Specifically, together into one study without AHP cites to the baseline measures for The SCAG is a subjective measure based on identifying which patient has which SCAG Factor 1 (‘‘cognitive an interviewer rating scale. The rating scale is such that it is neither objective nor as disease, otherwise, as in the Yesavage dysfunction’’), SCAG Item 3 (‘‘impaired accurate as the type of data that one would study, it will be impossible to assess a recent memory’’), SCAG Item 19 generate on the Buschke memory test. drug’s effectiveness on a particular (‘‘overall impression of patient Additionally, and more importantly, the disease. (Cf. Commissioner’s Decision functional capacity’’), the Hamilton SCAG measures many factors other than on Lutrexin, 41 FR 14406 at 14422 (In Depression Scale, and the NOSIE, which memory such as sociability, mood, etc. Only a study of premature labor, results were were comparable at baseline for the drug a small number of the SCAG items deal ruled incapable of scientific and placebo groups. (AHP Exceptions at directly with memory. interpretation because women with 158; I.D. at 48.) (Thal, G–63 at 14.) different conditions were evaluated The Center concedes that the BMT The main disagreement between together.)) It is, of course, essential to measures a narrower parameter of AHP’s witnesses and the Center’s show that a drug is tested on the cognitive dysfunction, specifically, witnesses lies in which test the population for which it is labeled. As recent memory dysfunction, but argues witnesses think should be given more was ruled in the Commissioner’s that impaired recent memory is the core weight. Dr. Thal testified that he would Decision on Cothyrobal, ‘‘Clearly, a of cognitive dysfunction and is, recommend relying upon the BMT as an study * * * must be conducted in therefore, a critical parameter. (Center indicator as to whether the two patients who have one of the labeled Post-Hearing Brief at 86, citing Thal, populations were similar, especially for indications if that study is to be used as Vol. VI at 45.) The Center further argues indications of cognitive dysfunction or proof of effectiveness for those that the BMT’s baseline values carry memory problems. (Thal, G–63 at 14.) indications.’’ (42 FR 28602 at 28610.) more weight than the SCAG’s baseline By contrast, Dr. Klerman, an AHP 64130 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices witness, testified that he would give an analgesic, an antibiotic, etc.). If the Regarding Inderal, Dr. Denton testified greater weight to the SCAG. (Klerman, investigator feels it is necessary to start or that Inderal in ‘‘a large dose, perhaps Tr. Vol. III at 87.) change a chronic medication during the more than 80 mg/day, might make Under FDA regulations, for a clinical course of the study, he will contact the Ives patients confused or depressed.’’ trial to be considered adequate and Medical Monitor to determine whether the (Denton, A–121 at 53.) Other possible patient may continue in the program. well-controlled, assignment of patients However, if during the course of the study side effects of Inderal include must be accomplished by a method that the investigator feels it is necessary to start disorientation, short term memory loss, minimizes bias and ‘‘assur(es) the patient on digoxin and/or diuretic clouded sensorium, and decreased comparability of the groups with respect therapy because of congestive heart failure he performance on neuropsychometric to pertinent variables such as * ** may do so, without consulting the Ives tests. (Denton, Tr. Vol. VII at 34–35.) As severity of disease * * *.’’ Medical Monitor, unless the severity of the for the effect of Inderal on Patient No. (§ 314.126(4).) With regard to the congestive heart failure interferes with the 2, Dr. Denton testified that he believed Yesavage study, short-term memory loss administration of the study drugs or creates the dosage to be ‘‘too small to influence is one of the characteristics of senile a major change in the patient’s mental state. cognitive functioning in any manner.’’ In either of the latter situations, the patient (Denton, A–121 at 53.) dementia. Therefore, the severity of the should be dropped from the study. impairment of recent memory Administration of all concomitant The administration of Elavil to Patient functioning is a pertinent variable in the medication must be reported on the case No. 2 deserves particular attention evaluation of senile dementia. report form, supplied by the sponsor, because of the frequency of this drug’s While SCAG Item 3 includes impaired including the name of the drug, dose, reason administration. Elavil is a psychoactive recent memory as a characteristic to be for use and date started. drug used in the treatment of depression. (Zung, Tr. Vol. III at 51.) evaluated, SCAG Item 3 is, nevertheless, (G–9.2 at 34–35 (emphasis in original).) While the case records in evidence for a subjective measure. The BMT Regarding concomitant medications, Patient No. 2 do not record the quantifies the severity of the recent the Center identified 12 patients who administration of Elavil, the testimony memory impairment through an received 11 different concomitant of Dr. Denton, a witness for AHP, objective test of short-term memory. As medications with possible confounding indicates that Patient No. 2 received 25 such, the BMT is an indicator of the effects. The patients identified by the mg of Elavil at night before sleep, but severity of this aspect of senile Center and the medications which these dementia. A statistically significant that this medication was stopped during patients were said to have taken the last 7 weeks of the study. (Denton, difference between the treatment and included Patient No. 2 (Aldomet, the placebo groups on this measure, A–121 at 52.) Since patients were in the Inderal, Elavil), Patient No. 5 (Inderal, Yesavage study for 19 weeks—3 weeks with the placebo group being worse, Valium), Patient No. 7 (Inderal), Patient does indicate a lack of comparability of prestudy washout followed by 16 No. 9 (Dalmane), Patient No. 16 weeks in the clinical trial (G–9.2 at between the treatment and placebo (Sinemet), Patient No. 18 (Sinemet), groups on one of the hallmarks of senile 32)—this would mean that Patient No. Patient No. 21 (Mellaril), Patient No. 24 2 was receiving Elavil nightly for the dementia. (Inderal, Serax), Patient No. 33 (Elavil), Therefore, I find that the statistically first 12 weeks of the 19 week study. Patient No. 34 (Benadryl, Phenergan), Despite Patient No. 2’s extended use significant difference between the two Patient No. 35 (Haldol), and Patient No. groups at baseline was a proper of a psychoactive drug, Dr. Denton 37 (Elavil, Sinemet). (See Center Post- testified that he did not believe that this consideration to be weighed in Hearing Brief at Attachment D.) The ALJ determining whether the Yesavage patient should have been excluded. also identified a 12th concomitant (Denton A–121 at 52.) Dr. Denton study was adequate and well-controlled. medication, Librium, which was given d. Concomitant medications. The law testified that, while a ‘‘strict to Patient No. 16, who received 10 mg interpretation of the protocol might regarding concomitant medications was of this drug. (I.D. at B–2; Denton, A–121 discussed in a previous section of this have eliminated’’ Patient No. 2 for the at 52.) AHP does not concede that any concomitant Elavil use, Dr. Denton decision, and I will not repeat it here. of these patients should be excluded. (See section I.D.1.d. of this document.) nonetheless concluded that this patient (AHP Post-Hearing Brief at 108; AHP need not be excluded because the The Yesavage study protocol contains Exceptions at 163.) The concomitant an extensive section pertaining to administration of Elavil was stopped medication use of each of these patients during the last two evaluations, ‘‘the concomitant medications, which in full will be discussed in turn. reads: crucial ones from an efficacy Patient No. 2, who was in the standpoint.’’ (Denton, A–121 at 52.) Treatment with vasodilating, anti- Cyclospasmol group, received three In considering this evidence, the ALJ convulsive, psychoactive, or narcotic agents, concomitant drugs during the study, was not persuaded by Dr. Denton’s ergot or reserpine derivatives or steroids specifically Aldomet, Inderal, and explanation for failing to exclude (other than estrogen) will not be allowed Elavil. (I.D. at B–1.) Regarding Aldomet, Patient No. 2. The ALJ found that the during this study. The patient may have chloral hydrate as a hypnotic. Occasional an antihypertensive drug, Patient No. 2 question remained as to whether Elavil doses of thioridazine or diazepam may be received 250 mg of this drug three times use during the beginning of the study used if deemed necessary; however, no more a day throughout the study. (G–12.1 at could have caused a SCAG score that than 16 doses of one of these agents may be 11, 29, 42, 57, 60, 63, 70.) Aldomet can was worse than it would have been taken per study and there should be no more affect mood and cognition. (Leber, G–64 without the drug. (I.D. at B–1.) When than three doses in any week. Other at 13.) the Elavil administration was ceased medication, which is considered necessary Additionally, according to the during the final two evaluations, this for the patient’s welfare and which will not testimony of Dr. Denton, a witness for alone may have caused any interfere with the study medication, may be AHP, Patient No. 2 received 40 mg of improvement in this Patient’s SCAG continued at the discretion of the investigator, but no new drug, other than Inderal twice a day throughout the score. (I.D. at B–1.) I agree with the those previously stated, should be started study. (Denton, A–121 at 52–53.) This ALJ’s analysis of this issue, and I during the course of this study, except that patient’s case records do not document conclude that the concomitant medication required for an acute purpose the administration of Inderal to this medication use of Elavil by Patient No. which would not disqualify the patient (e.g., patient. (See G–12.1 at 4–105.) 2 was grounds to exclude this patient. Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64131

For the next patient, Patient No. 5, a which can weighed against finding the confounding effect on the results of a Cyclospasmol patient, the case records Yesavage study to be adequate and well- study. (Zung, Tr. Vol. III at 23.) indicate that this patient received controlled. (Commissioner’s Decision on However, these explanations, too, are Valium (diazepam) ‘‘occasionally for OPE, slip op. at 52.) speculative. nervousness,’’ and Inderal ‘‘q.i.d.’’ Patient No. 16, an outpatient and a I note also that, as with the previously (quater in die, four times a day). (G–12.1 Cyclospasmol subject, received 10 mg discussed Yesavage patients, the records at 212; Denton, A–121 at 51, 53–54.) of Librium, a benzodiazepine, ‘‘only in evidence pertaining to Patient No. 18 The case records for this patient do not rarely,’’ according to the testimony contain no information regarding this reveal the dosage for these drugs, nor is offered by Dr. Denton. (A–121 at 52.) patient’s concomitant medications. (G– there a contemporaneous medication However, Dr. Denton gave no specific 12.4 at 101–201.) Once again, I state that record tracking the days or times at information regarding the dosage, or the absence of such records is a fact which either of these medications were dates and times of administration of which can be weighed against finding administered. (See G–12.1 at 206–308.) Librium, and the records in evidence for the study to be adequate and well- Regarding the administration of Patient No. 16 contain no information at controlled. (Commissioner’s Decision on Inderal, Patient No. 5’s case records do all pertaining to this patient’s use of OPE, slip op. at 52.) not indicate the dose given, but Dr. Librium. (G–12.4 at 1–100.) The Patient No. 24, a Cyclospasmol Denton testified that this patient administration of Librium could have subject, received both Inderal and Serax. received 10 mg of Inderal four times a had a confounding effect on the results Dr. Denton testified that this patient day. (Denton, A–121 at 53.) As was of this study, and the absence of received 20 mg of Inderal three times a previously stated, Dr. Denton also medication records is, as with the day, subsequently reduced to 20 mg, testified that Inderal in ‘‘a large dose, previous patient, a ‘‘fatal flaw’’ that can twice a day. (Denton, A–121 at 53.) Dr. perhaps more than 80 mg/day, might be weighed against finding the Yesavage Denton did not specify when this make patients confused or depressed.’’ study adequate and well-controlled. change in dosing schedule was made. (Denton, A–121 at 53.) Other possible (Commissioner’s Decision on OPE, slip However, this patient’s clinical records side effects include disorientation, short op. at 52.) contain a notation that this patient was term memory loss, clouded sensorium, Regarding Patient No. 18, a on Inderal 20 mg, twice a day, as of the and decreased performance on Cyclospasmol subject, Dr. Denton first visit, which was on January 10, neuropsychometric tests. (Denton, Tr. testified that this patient had been given 1982, and the patient continued this Vol. VII at 34–35.) Sinemet (carbidopa/levodopa), a drug medication throughout the study. (G– As for the administration of Valium to used in the treatment of Parkinson’s 12.6 at 12, 28, 41, 56, 59, 62, 71, 78, 87, Patient No. 5, Dr. Denton’s testified as disease, between the ratings taken at 94.) As previously discussed, Inderal follows: weeks 7 and 8. (Denton, A–121 at 50, can cause side effects such as confusion The hospital records reveal that the Valium 54–55.) The final rating was taken at and depression (Denton, A–121 at 53), was ordered on a prn (pro re nata, as week nine. (See G–12.4 at 190–201.) Dr. disorientation, short term memory loss, occasion arises) basis, which suggest that it Denton acknowledged that Sinemet can clouded sensorium, and decreased was used infrequently, and her referring have a ‘‘positive effect on cognition.’’ performance on neuropsychometric physician told me by telephone that it was (Denton, A–121 at 54; see generally tests. (Denton, Tr. Vol. VII at 34–35.) used 0–2 times per week. There were no Leber, G–64 at 14 (Sinemet use in Rao As for the administration of Serax, a medication sheets on this patient’s record. study).) Nevertheless, Dr. Denton benzodiazepine, to Patient No. 24, Dr. (Denton, A–121 at 51–52.) testified that he believed that if Sinemet Denton testified that 10 mg of Serax was It should be emphasized that Dr. had any effect on Patient No. 18, it was given to Patient No. 24 at bedtime as a Denton’s estimation of the only to make this patient worse. sedative. (Denton, A–121 at 52.) This ‘‘infrequency’’ of the administration of (Denton, A–121 at 54.) Dr. Denton based patient’s clinical records contain no Valium to Patient No. 5 is only his conclusion on the SCAG scores for mention of this medication or the speculation, in view of the fact that Patient No. 18. (Denton, A–121 at 54.) frequency and dosages given. (G–12.6 at there were no medication records for Dr. Dr. Denton stated that at baseline this 2–104.) This level of administration of Denton’s review, nor is there evidence patient’s SCAG score was 49, and that a benzodiazepine certainly violates the that this patient’s referring physician at visit 7 the score had improved to 43 intent of the protocol’s concomitant based his or her statements on any such (a lower score being a better score), but medication restriction, which permits medication records. that at visit 9 the score was again 49. ‘‘(o)ccasional doses of thioridazine or I further note that even if Dr. Denton (Denton, A–121 at 54.) diazepam,’’ but no more than 16 doses is correct in estimating the I find Dr. Denton’s proffered per study per patient, and no more than administration of Valium to Patient No. explanation that Sinemet made Patient 3 doses per week. (G–9.2 at 34.) For this 5 to be as much as 2 times per week No. 18’s SCAG score worse to be based reason, Patient No. 24 should have been during the 19 week study, that amount on mere speculation. Aside from the fact excluded. Additionally, the absence of of Valium—as much as 38 doses during that Dr. Denton’s explanation was written records tracking the strength, the study—is a clear violation of the inconsistent with his other testimony, in frequency, and length of administration protocol, which specifies, ‘‘Occasional which he testified that Sinemet can of this drug can be weighed against doses of thioridazine (Mellaril) or have a positive effect on cognition, I finding the Yesavage study to be diazepam (Valium) may be used if note that another possible explanation adequate and well-controlled. (OPE, slip deemed necessary; however, no more not addressed by Dr. Denton is that op. at 52–53.) than 16 doses of one of these agents may Patient No. 18’s SCAG score might have Patient No. 34 and Patient No. 37 both be taken per study * * * .’’ (G–9.2 at 34.) deteriorated even further had it not been had Parkinson’s disease. (G–12.7 at 210 The absence of detailed records for the Sinemet. Additionally, as Dr. (Patient No. 34); G–12.8 at 109, 113 tracking the administration of Valium Zung, a witness for AHP, testified, there (Patient No. 37); Mohs, G–62 at 16; Thal, and Inderal to Patient No. 5 makes it are instances where patients with G–63 at 12.) Patient No. 34, a impossible to fully evaluate the effect of Parkinson’s disease have a period of Cyclospasmol subject, received 25 mg these concomitant medications. The remission or spontaneous improvement of Benadryl twice a day. (G–12.7 at 217; inadequate records are a ‘‘fatal flaw’’ with the disease, which could have a Mohs, G–62 at 16; Thal, G–63 at 12.) 64132 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

Benadryl is a drug which has evaluation of this patient occurred on phase of the study. (G–9.2 at 168.) A indications for use for patients with September 17, 1981. further notation in this patient’s records Parkinson’s disease. (Zung, Tr. Vol. III at The clinical documents in evidence from this patient’s second evaluation, 52; see also G–12.7 at 217.) The side contain no record of Patient No. 9 being which occurred on August 24, 1982, effects of Benadryl can include administered Dalmane. (G–12.2 at 104– states, ‘‘Elavil still discontinued for diminished mental alertness, sedation, 205.) A single administration of a length of study.’’ (G–12.7 at 143.) sleepiness, dizziness, and confusion. benzodiazepine would not appear to be Although daily medication records (Zung, Tr. Vol. III at 52.) Phenergan, an confounding to this study. Nonetheless, are not in evidence for Patient No. 33, antiemetic, was also given to this the actual administration of Dalmane is I nevertheless rule, based upon the patient. (Denton, A–121 at 52.) not corroborated in this patient’s case records which are in evidence, that Patient No. 37, also a Cyclospasmol records. The failure of the case records Patient No. 33 properly was included in subject, received Sinemet 25/100 (25 mg to document the actual administration the study. Based upon the evidence, it carbidopa/100 mg levodopa) every four of Dalmane can be weighed against does not appear that this patient was hours to control symptoms of finding the Yesavage study to be receiving the concomitant medication of Parkinson’s disease. (Mohs, G–62 at 16; adequate and well-controlled. (OPE, slip Elavil during the study. Thal, G–63 at 12; Denton, A–121 at 54.) op. at 52–53.) Patient No. 35, a placebo patient, This patient also received 25 mg of Patient No. 21, also a placebo patient, received Haldol during the study. Elavil twice a day. (G–12.8 at 114.) The received 25 mg of Mellaril (thioridazine (Denton, A–121 at 56.) This patient’s frequency of administration of Elavil, a hydrochloride) twice a day throughout clinical documents in evidence contain psychoactive drug (Zung, Tr. Vol. III at the study. (Denton, A–121 at 55–56.) no record of this patient’s receiving this 51), warranted the exclusion of Patient This patient’s clinical records now in medication. (G–12.8 at 104–205.) No. 37. evidence contain no record of Patient Nonetheless, Dr. Denton testified that No. 21 having received Mellaril. (G–12.5 Patient No. 35 received a single, 1 mg Additionally, as I ruled in a previous at 105–208.) Mellaril can affect dose of Haldol, 91⁄2 weeks before final discussion, both Patient 34 and Patient cognitive performance and cause a evaluation. (Denton, A–121 at 56.) 37 should have been excluded because patient to perform worse on cognitive However, Dr. Denton’s testimony of their concomitant Parkinson’s tests than he or she might have but for appears inconsistent on this point, disease. (See section I.D.2.a. of this the Mellaril. (Leber, Tr. Vol. I at 69.) because he also testified that Patient No. document.) Moreover, I rule that the Administration of Mellaril at this 35 received Haldol ‘‘b.i.d.,’’ that is, bis concomitant medication use by these frequency was clearly a violation of the in die, or twice a day. patients can be weighed against finding protocol, which restricted thioridazine Additionally, I note that Patient No. the Yesavage study to be adequate and to occasional doses. (G–9.2 at 34.) This 35’s clinical records indicate that this well-controlled because the effect of the patient should have been excluded. patient received 10 mg of Isordil, a concomitant drugs may have Regarding Patient No. 33, the Center vasodilator, four times a day throughout confounded the results now attributed  had argued that this patient should have the study. (G–12.8 at 11, 40, 56, 59, 62, to Cyclospasmol . been excluded on the basis that this 71, 78, 87, 94.) This could have caused Patient No. 7, a placebo patient, patient received the concomitant a confounding effect. Neither the Center received Inderal twice a day during the medication of Elavil during the study. nor AHP address this part of the study. (G–12.2 at 7.) The case records (Center Post-Hearing Brief at 81 & patient’s record, nor does the ALJ for this patient do not record the dose Attachment D.) This patient’s records do discuss the apparent concomitant for this drug. However, Dr. Denton not reveal whether this patient was a Isordil use. Although there is sufficient testified that Patient No. 7 received 10 placebo patient or a Cyclospasmol evidence for me to conclude that Isordil mg of Inderal twice a day. (Denton, A– patient, and Patient No. 33’s medication was administered concomitantly, I will, 121 at 53.) Inderal can affect cognition. use was not discussed by Dr. Denton in in view of the fact that no party While this level of Inderal use may not his testimony. addressed this issue, instead weigh this itself be reason to exclude this patient, Regarding Patient No. 33’s evidence as a deficiency in the clinical nevertheless, the possible confounding concomitant medication use, a notation records for the Yesavage study. effect of this drug’s side effects can be in this patient’s records of the prestudy (Commissioner’s Decision on OPE, slip taken into consideration. Additionally, evaluation indicates that this patient op. at 52–53.) the failure of the case records to had received 25 mg of Elavil twice a day To summarize, a pervasive problem document Patient No. 7’s concomitant from January 4, 1979, through May 18, with the Yesavage study is the failure to medication use can be considered in 1982. There are no medication records adequately document concomitant evaluating the Yesavage study. in evidence but, based upon this medication use. In many instances, the (Commissioner’s Decision on OPE, slip notation in the prestudy evaluation, it case records do not even mention the op. at 52–53.) appears that the administration of Elavil concomitant medication at issue. In Regarding Patient No. 9, a placebo was reported to have been stopped 2 other instances, the medication is listed patient, Dr. Denton testified that orders weeks before Patient No. 33 was but the dosage is not, nor is the were given for this patient to receive 15 accepted into the Yesavage study. (G– schedule of administration for the drug. mg of Dalmane at bedtime ‘‘PRN.’’ Dr. 12.7 at 112.) The use of concomitant medications Denton conceded that Dalmane, a Other patient records in evidence is an important matter. Uncontrolled benzodiazepine, ‘‘might be considered a indicate that this patient’s first visit use of concomitant medications defeats contraindicated medication.’’ (Denton, during the study occurred on August 2, the scientific value of a study. A–121 at 56.) However, Dr. Denton 1982. (G–12.7 at 128.) According to the (Commissioner’s Decision on OPE, slip testified that Patient No. 9 was only protocol, at the first visit the patient was op. at 204.) Vague or incomplete records given Dalmane once during the study— to enter into a single-blind washout of concomitant medications are ‘‘fatal on September 14, 1981—and for this period. (G–9.2 at 36, 38.) This washout flaws’’ which weigh heavily against reason Dr. Denton did not believe this period was to last until the patient’s finding a study adequate and well- medication confounded the study. second visit, at which point the patient controlled. (Id. at 53.) Also, the number (Denton, A–121 at 56.) The final entered the double-blind medication of various concomitant medications Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64133 increases the difficulty of evaluating Overall, I find that the uncontrolled this matter, Mr. Chaing testified, ‘‘(The) Cyclospasmol’s effect. (Id. at 56.) use of concomitant medication and the Yesavage sample is large enough to Additionally, the proportionately large poor documentation of concomitant produce reliable and generalizable number of patients receiving medication use weighs against finding conclusions * * *. (T)here’s no single concomitant medications—12 out of 23 the Yesavage study to be adequate and minimum required sample size.’’ patients in the final analysis—weighs well-controlled. (Chaing, Tr. Vol. I at 22–23.) Dr. Overall against finding the Yesavage study e. Small sample size. AHP argues that testified, ‘‘There’s no merit in the adequate and well-controlled. (Id. at 57.) the ALJ erred in ruling that in view of criticism that a sample is too small from I conclude by ruling that, based upon the small sample size in the Yesavage an appropriately designed and both the patient case records and study—12 Cyclospasmol patients and conducted study which has produced testimonial evidence, Patient Nos. 2, 24, 8 placebo patients at week 16—it was statistically significant results.’’ 37, and 21 should have been excluded ‘‘inappropriate to generalize the (Overall, Tr. Vol. II at 55.) for concomitant medication use. results.’’ (AHP Exceptions at 166, AHP further argues that if a small Regarding Patient Nos. 5, 16, and 35, quoting I.D. at 57.) On this point, the study yields a result that is statistically their concomitant medication use could ALJ also had noted that earlier in the significant, this suggests that the drug not be properly evaluated because of study, at week 12 when 14 effect is ‘‘large’’ because ‘‘the variability incomplete case records. The testimony Cyclospasmol patients and 9 placebo of human response would make it offered by Dr. Denton regarding Patient patients were tested, there was no unlikely that statistical significance Nos. 5, 16, and 35 was vague and was statistically significant drug effect. (I.D. would be achieved in a small study if not sufficient to evaluate these subjects. at 52.) However, at week 16, when three the drug effect were small.’’ (AHP This absence of documentation of patients had been dropped from the Exceptions at 167.) The Center counters concomitant medication use can be study, statistical significance was that AHP is confusing the size of the weighed against finding the Yesavage reported. (I.D. at 52, citing Thal, G–63 drug effect with the variability inherent study to be adequate and well- at 17.) While the ALJ found that there in a small sample. (Center Response to controlled. had been no showing that the dropping AHP Exceptions at 69.) The Center As for Patient Nos. 7 and 9, assuming of the three patients resulted in further argues that in a small study, for the purposes of this discussion that statistical significance, the ALJ regardless of the size of the drug effect, Dr. Denton’s testimony completely and nevertheless observed, ‘‘The problem the results from only one or two subjects accurately described these patients’ with such a small sample size is that the can completely alter the study’s results. concomitant medication use, then these omission of one or two patients can (Center Response to AHP Exceptions at two patients were possibly properly change the results rather dramatically.’’ 69.) I find the Center’s arguments to included. However, the medication (I.D. at 52.) AHP objects to the ALJ’s have merit. regimens for Patient Nos. 7 and 9 were opinion on these points. Small samples have larger standard not corroborated in their case records, In support of its argument, AHP cites errors, i.e., the uncertainty in the results which weighs against finding the the testimony of Dr. Mantel, a encompasses a greater range of values Yesavage study to be adequate and well- statistician and witness for AHP, who, by which the mean of the population controlled. in connection with his testimony may vary. The size of the standard error Regarding Patient Nos. 34 and 37, I pertaining to the MDS–96 study, from a study is a measure of the degree previously ruled that these patients testified as follows regarding small to which the study’s results reflect the should have been excluded for studies: true value which would have been Parkinson’s disease. I note that I have found in the population-at-large having additionally found that Patient No. 37 As to Dr. Reich’s comment that ‘‘most often the disease or condition. In studies should have been excluded for a larger sample provides more convincing based on small samples, results may concomitant medication use. conclusions than a small one,’’ Dr. Reich is differ greatly from one study to the next As for Patient No. 18, if concomitant correct. If I wished to have my study provide more convincing conclusions, I would because the results of only a few medication use alone is considered, conduct a larger study employing a larger subjects can greatly affect the outcome and, assuming that Dr. Denton’s sample. But once a study is completed that of the study. testimony completely and accurately argument is no longer relevant. A significant While a small sample study can describes this patient’s concomitant result from a small study is, nevertheless, a indicate a statistically significant result, medication use, then this patient may significant result. And a significant result I note that the problem with a small properly have been included. However, from a small study would betoken an sample is that its larger standard error the failure of the case records to important effect. Large studies would very can make it difficult to identify, with a document this patient’s concomitant likely yield statistical significance if the true useful degree of precision, the true medication use weighs against finding effect were important. But with a very large value or result which would be found in study even a minor treatment effect would the Yesavage study to be adequate and lead to a statistically significant outcome. It the larger population having the disease well-controlled. Furthermore, I is recognized that the hypothesis of or condition under study. This concern previously found that Patient No. 18’s absolutely no treatment effect is almost never was expressed in the testimony of Dr. case records seem to indicate that this exactly true—thus, statistical significance Thal, a witness for the Center, who patient had Parkinson’s disease. AHP’s could reflect large study size yet only a very testified, ‘‘(A)s the number of patients in failure to address this patient’s apparent minor treatment effect. * * * As indicated a study decreases, the chance variation concurrent Parkinson’s disease can be above, statistical significance despite limited or the variability introduced by a single weighed against finding the Yesavage study size would betoken an important one or two patients grows.’’ (Thal, Tr. study to be adequate and well- treatment effect. Vol. VI at 48–49.) controlled. (Mantel, A–127 at 7–8.) Because of the larger standard error Regarding Patient No. 33, it appears AHP also cites the testimony of two with a small sample, the results from a from the records in evidence that this other of its witnesses, Mr. Danny S. study conducted on a small sample may patient was not receiving the Chaing and Dr. John E. Overall, who not reflect the true value which would concomitant medication of Elavil during testified regarding statistical power and have been obtained from the the study. sample size in the Yesavage study. On population-at-large having the disease 64134 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices or condition under study. Evidence of difference between treatment and On the other hand, three witnesses for effectiveness can be drawn from small control groups in a clinical trial, yet the AHP—Drs. Overall, Zung and samples, but for the evidence to be test drug may be found not to have had Klerman—testified that because reliable the sample needs to be carefully a clinically significant effect, i.e., the dementia has no known cure and selected beforehand. The sample must effect on the patient is not beneficial because this disease is a progressive be representative of the larger either in degree or type of effect. one, a 14 percent improvement on one population having the disease or (Commissioner’s Decision on Lutrexin, SCAG factor is, in their opinions, condition under study. 41 FR 14406 at 14419; Commissioner’s clinically significant. (Overall, Tr. Vol. The problems of generalizing results Decision on Benylin, 44 FR 51512 at II at 49; Zung, Tr. Vol. III at 7; Klerman, from a small study were also at issue in 51520 and 51521; Commissioner’s Tr. Vol. III at 70–71.) Based on the the Commissioner’s Decision on OPE, Decision on Mysteclin, slip op. at 24– testimony of these witnesses, AHP which stated: 29.) Estimates of clinical significance essentially is arguing that any (A) statistically significant result, when take into consideration other matters statistically significant result on any one based on a sample size of only five subjects, beyond a finding of statistical of the several tests used in the Yesavage does introduce the strong likelihood that the significance, such as identifying which study is necessarily clinically subjects were not representative of the larger parameters were said to have shown significant because there is no known population from which the sample was statistical significance and deciding cure for dementia. I do not find this drawn, and that there may be an inadvertent whether those parameters are important argument to be persuasive. lack of comparability in the test and control in a clinical setting. These In the United States Supreme Court groups, contrary to the requirements of (the decision of United States v. Rutherford, regulations). considerations are further discussed in the next section of this decision. (See 442 U.S. 544 (1979), the Court (Commissioner’s Decision on OPE, slip section I.D.2.f. of this document.) recognized that the statutory op. at 117; cf. Commissioner’s Decision Therefore, for the foregoing reasons, I requirement of proof of effectiveness on Lutrexin, 41 FR 14406 at 14419 (In find that the ALJ was correct in necessarily required a showing of some a study with a total of 32 patients, the considering the small sample size as a clinical benefit to the patient. In small size of the sample was identified factor to be considered in reviewing the relevant part, the Court stated, ‘‘(I)n the as a factor which ‘‘aggravated’’ the results of the Yesavage study. treatment of any illness, terminal or problems arising from the unreliability f. Clinical significance. AHP next otherwise, a drug is effective if it fulfills, of the diagnostic criteria used in the argues that the ALJ erred in finding that by objective indices, its sponsor’s claim study.)) the improvement on SCAG Factor 1 was of prolonged life, improved physical For the above discussed reasons, I not clinically significant. (AHP condition, or reduced pain.’’ (442 U.S. therefore find that the ALJ was correct Exceptions at 169, citing I.D. at 54, 57.) at 555.) Consistent with the Rutherford in observing that the omission of one or As was previously described (see decision, the United States Court of two patients can change the results of a section I.D.2.c. of this document), SCAG Appeals for the Third Circuit has ruled small sample study (I.D. at 52), and was Factor 1, ‘‘cognitive dysfunction,’’ that it is within the purview of the FDA correct in questioning whether it was included the following four items: (1) to decide whether a drug has clinical appropriate to generalize the results of Confusion, (2) impaired mental significance. (Warner-Lambert, 787 F.2d the Yesavage study. (I.D. at 57.) alertness, (3) impaired recent memory, at 154–56; see also Commissioner’s As for AHP’s argument that a and (4) disorientation. (G–11.1 at 70.) Decision on Mysteclin, slip op. at 24.) statistically significant result in a small AHP argues that the outcome on SCAG To reiterate some of the discussion of sample indicates that the drug effect is Factor 1 was clinically significant the previous section (see section I.D.2.e. ‘‘large,’’ I find this statement to be because dementia is a progressive of this document) regarding the inaccurate and misleading. (See AHP disease, and that any small difference between statistical and Exceptions at 167, citing Mantel, A–127 improvement would be important to clinical significance, a drug can have a at 7–8.) AHP seems to be implying that both the patient and the physician. statistically significant effect without a statistically significant result in a (AHP Exceptions at 170.) having a clinically significant effect. small study necessarily means that the The ALJ’s finding was based on the Statistical significance is an expression test drug had a significant clinical effect. testimony of two witnesses for the of the probability that an observed This implication is incorrect. Center, Drs. Mohs and Thal. These difference between the test drug and the Statistical significance is not the same witnesses both testified that the absolute control drug occurred by chance. as clinical significance. (Commissioner’s magnitude of change from baseline for Clinical significance, on the other hand, Decision on Benylin, 44 FR 51512 at SCAG Factor 1 was very small, is an evaluation of whether the test drug 51521.) Statistical significance is an approximately 1.9 change on a scale on offers a therapeutic benefit to the expression of the probability that an which patients in the study had been patient. (Commissioner’s Decision on observed difference between the mean shown to have a baseline value of 14.1. Mysteclin, slip op. at 25; outcome of the test drug group and the (Mohs, G–62 at 18; Thal, G–63 at 15– Commissioner’s Decision on Benylin, 44 mean outcome of the control drug group 16.) Drs. Mohs and Thal testified that FR 51512 at 51520 and 51521; occurred by chance. (Commissioner’s this degree of change—a 14 percent Commissioner’s Decision on Lutrexin, Decision on Benylin, 44 FR 51512 at improvement on one SCAG Factor— 41 FR 14406 at 14419.) Proof of 51520.) A clinically significant effect, would not be evident to most observers. statistical significance is insufficient however, is an expression of the degree (Mohs, G–62 at 18; Thal, G–63 at 15– without proof of clinical significance. of benefit which was observed in the 16.) It should be noted that the lowest/ (Commissioner’s Decision on OPE, slip study’s patients and which may be best score on SCAG Factor 1 would be op. at 60–62.) As the Court in Warner- expected in future patients. a 4; the highest/worst score would be a Lambert noted: 28. (See, e.g., G–12.1 at 38.) This would (Commissioner’s Decision on Benylin, The fact that the drug, not chance, can be 44 FR 51512 at 51520.) mean that from a baseline score of 14.1, assumed to have contributed to (the finding As has been noted in previous the score on SCAG Factor 1 had of statistical significance for) the factor Commissioner’s decisions, it is possible lowered/improved to approximately measured does not necessarily establish that to achieve a statistically significant 12.2. patients will receive a benefit from the drug. Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64135

The Commissioner has consistently required the results on SCAG Factor 1 will (AHP Post-Hearing Brief at 116.) a showing of some benefit as an element of translate into a clinically meaningful However, the ALJ ruled that because the the statutory requirement of effectiveness. reversal or slowing of the progress of number of tests and outcome measures (Warner-Lambert, 787 F.2d at 155 dementia. Moreover, AHP’s witnesses for each patient in the Yesavage study (citation omitted).) failed to address the fact that the were so numerous, it was ‘‘difficult to Turning now back to the evidence at statistically significant result on SCAG draw definitive conclusions from the hand, AHP’s argument in favor of Factor 1 stands alone and is not fact that statistical significance was finding clinical effectiveness for corroborated by the other measures. found on one factor (SCAG Factor 1).’’ Cyclospasmol was expressed in the I further note that when a comparable (AHP Exceptions at 172, quoting I.D. at testimony of Dr. Zung, an AHP witness, argument was advanced by the 54.) AHP argues that this was error, and who testified as follows: manufacturer in the Commissioner’s AHP further argues that the fact that I would say that first of all, we are dealing Decision on Lutrexin, that decision multiple outcome measures were used with an illness, which is the dementias, ruled that, notwithstanding the fact that does not lessen the strength of its SCAG where we know that there has been no drug there may be no alternatives for the Factor 1 finding, nor the SCAG Item 19 available for the treatment of this disease so proposed indication for the drug under finding, which was also reported to that there has been no improvement review, the act nonetheless requires that have been statistically significant. (AHP whatsoever on any drug that’s known. So the effectiveness of a drug be Post-Hearing Brief at 117.) AHP here we’re talking about an illness with demonstrated by substantial evidence. additionally argues that because the progressive deterioration so, therefore, in fact The Commissioner’s Decision went on various outcome measures were any treatment that would either arrest the specified in the protocol, the multiple development of the illness or in fact improve to note that this requirement does not the illness would definitely be significant. result in depriving patients of the only statistical analyses were not performed Factor 1 of the SCAG then, in fact, is specific known effective drug therapy for a to generate a post hoc hypothesis. (AHP to measure the cognitive dysfunction that’s proposed indication because, absent Post-Hearing Brief at 116.) associated with the dementia and that, of scientifically reliable evidence, that The Center argues that the ALJ was course, has been the indication for which the particular drug is not proven to be correct in his ruling, and also argues drug has been studied. effective for that indication. that the statistically significant results (Zung, Tr. Vol. III at 7–8.) (Commissioner’s Decision on Lutrexin, on SCAG Factor 1 and SCAG Item 19 In contradistinction to Dr. Zung’s 41 FR 14406 at 14411.) may be due to the multiple statistical testimony, the testimony offered by Dr. For these reasons, I do not find that tests employed. (Center Post-Hearing Mohs, a witness for the Center, was as AHP has fulfilled the requirement of Brief at 90–92; see also Mohs, G–62 at follows: proving clinical significance. 17; Thal G–63 at 16.) The Center argues g. Multiple tests. In the Yesavage that cognitive dysfunction is only one The absolute magnitude of change was study, 28 outcome measures were aspect of senile dementia, and that very small for the cognitive factor in the senile dementia has many SCAG, approximately 1.9 on a scale that had statistically analyzed, including the a baseline value of 14.1. This change would Nurses Observation Scale—Inpatient manifestations besides that of cognitive not be evident to most observers. Also, there Evaluation (NOSIE) score, the Hamilton impairment, such as impairments in was no corroboration even as a trend on the Depression Scale, the BMT, the clinical social functioning, orientation, other measures, such as, the NOSIE, the global impression score, and the 24 personality, and the ability to speak Buschke memory test or the clinical global measures—5 factors plus 19 items—on (aphasia). (Center Post-Hearing Brief at evaluation. Finally, there is a discrepancy the Sandoz Clinical Assessment— 91, citing Zung, Tr. Vol. III at 43–44.) between the overall item, item 19 on the Geriatric (SCAG) measure. (G–9.2 at 45.) The Center points to the fact that AHP SCAG, and (the) clinical global item did not specify cognitive impairment, completed by the investigator at the end of Each of these measures was also assessed for six time periods during the either on SCAG Factor 1 or SCAG Item the study. The overall item on the SCAG did 19, as the parameter of interest in tend to show an improvement for the study, including at baseline and at Cyclospasmol group, whereas the clinical weeks 3, 6, 9, 12, and 16. (G–11.1 at 29– advance of the study. (Center Response global item completed at the end of the study 37.) Of these 28 outcome measures, 2 to AHP Exceptions at 73.) In support of did not show any significant effect and these measures—SCAG Factor 1 (‘‘cognitive its argument, the Center quotes from the items presumably should be highly dysfunction’’) and SCAG Item 19 Yesavage study’s protocol as stating cor(r)elated. Because the effect claimed is so more generally that the purpose of the (‘‘overall impression of patient  small, not corroborated by other tests, and in functional capacity’’)—showed study was to evaluate Cyclospasmol fact inconsistent with tests that measure the statistical significance in favor of the ‘‘in improving symptoms usually same effect, I do not find the results to be  associated with brain function.’’ (Center clinically significant. Cyclospasmol group, based upon the results of the 20 patients whose Post-Hearing Brief at 90–91, quoting G– (Mohs, G–62 at 18.) outcomes were included in the final 9.2 at 32.) Similar testimony was offered by Dr. analysis of the SCAG. (G–11.1 at 19–20, The Center also cites to the testimony Thal, another witness for the Center, 29, 78; Thal, G–63 at 16–17; Chaing, Tr. of Dr. Zung, a witness for AHP. (Center who testified with reference to Response to AHP Exceptions at 72–73.)  Vol. I at 52–53; Overall, A–116 at 6.) Cyclospasmol , ‘‘If the drug fails to AHP argues that the results of SCAG When Dr. Zung was asked how show a clinically significant Factor 1 are ‘‘the most relevant and corrections for multiple comparisons are improvement on any global or clinical important indicator’’ of the efficacy of performed, he replied that there are two evaluation scale and fails to make a Cyclospasmol for senile dementia.7 methods for making such corrections. meaningful difference in the way a The first is to specify in advance, before (patient) lives his or her life, one must 7 I note that there was a difference between SCAG the statistical analysis is performed, the seriously question whether that drug Factor 1 in the Yesavage study, and SCAG Factor parameter of interest. The second should be marketed for a specific 1 in the Rao study. In the Yesavage study, SCAG method is to employ a statistical indication.’’ (Thal, G–63 at 16.) Factor 1 was called ‘‘Cognitive Dysfunction,’’ and correction for the number of multiple it was comprised of SCAG Items 1 through 4. In the Having reviewed the evidence, I do Rao study, SCAG Factor 1 was called ‘‘Mental comparisons which were made. (Zung, not find AHP’s argument to be Dysfunction,’’ and it was comprised of SCAG Items Tr. Vol. III at 62–63.) The Center argues persuasive. There is no indication that 1 through 4 and Item 8. (Chaing, Tr. Vol. I at 47.) that such corrections should have been 64136 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices made in the Yesavage study. I find the the small sample size was a proper ‘‘IND Process and Review Procedures’’ Center’s arguments to have merit. factor to be considered in reviewing the (MAPP 6030.1, Center for Drug A comparable issue was adjudicated results of the study, and can be weighed Evaluation and Research (CDER)). The in the Commissioner’s Decision on against the adequacy of the study; (6) documents specify the procedures for Mysteclin. Therein, it was ruled, that the improvement of patients on the issuance of and review and response ‘‘(E)ven if the subgroups and multiple SCAG Factor 1 was not clinically to material submitted in response to a endpoints had been identified in the significant; and (7) that the fact that notice of clinical hold. It is intended protocol, * * * some downward numerous statistical analyses were that these documents will clarify the adjustments in the p values should have employed and that the particular agency’s policy in regard to responses to been made to correct for the analyses of outcome of interest was not specified in clinical holds. The documents are made multiple subgroups and endpoints.’’ advance, nor were adjustments to the p available as part of the agency’s (Commissioner’s Decision on Mysteclin, value made, can be weighed against the commitment to review and respond to slip op. at 43; see also Commissioner’s adequacy of the study. data submitted in response to a clinical Decision on Deprol, 58 FR 50929 at II. Conclusion and Order hold within 30 days of receiving the 50933.) Similarly, in the submission, as stated in the November Commissioner’s Decision on Deprol, it The foregoing opinion in its entirety 1995, Presidential National Performance was noted that, ‘‘if enough pair-wise constitutes my findings of fact and Review report entitled ‘‘Reinventing the comparisons are made, some conclusions of law. Based on the Regulation of Drugs Made from comparisons will be ‘statistically foregoing discussion, findings, and Biotechnology.’’ significant’ by chance alone.’’ conclusions, I affirm the ALJ’s Initial ADDRESSES: (Commissioner’s Decision on Deprol, 58 Decision in all respects, except where CBER Information: For additional FR 50929 at 50933.) When multiple specifically stated otherwise. I find that copies of the documents submit comparisons are made, corrections in there is a lack of substantial evidence  written requests to the the p values are needed to maintain the that Cyclospasmol will have the effect Manufacturers Assistance and correct Type I error rate because the it purports or is represented to have Communication Staff (HFM–42), likelihood of a Type I error increases under the conditions of use prescribed, Center for Biologics Evaluation and with the number of individual recommended, or suggested in its Research (CBER), Food and Drug comparisons. (Commissioner’s Decision labeling. Accordingly, under 21 U.S.C.  Administration, 1401 Rockville on Deprol, 58 FR 50929 at 50933.) In 355(e)(3), the NDA for Cyclospasmol other words, as one great author more must be withdrawn. I further find that, Pike, Rockville, MD 20852–1448. expressively observed, ‘‘Fortune brings by reason of the lack of substantial Send one self-addressed adhesive in some boats that are not steered.’’ evidence of its effectiveness, label to assist that office in (Shakespeare, Cymbeline, IV, iii, 46.) Cyclospasmol is a ‘‘new drug’’ within processing your requests. The For these reasons, I find that in the meaning of 21 U.S.C. 321(p). document may also be obtained by weighing the adequacy of the Yesavage Therefore, under the Federal Food, mail or FAX by calling the CBER study, it is proper to consider the fact Drug, and Cosmetic Act, 21 U.S.C. FAX Information System at 1–888– that numerous statistical analyses were 355(e), and under authority delegated to CBER FAX, or 301–827–3844. employed, and to consider that the me by the Secretary (§ 5.10(a)(1)), the Persons with access to the Internet particular outcome of interest was not new drug application for Cyclospasmol may obtain the document using specified in advance, nor were and all amendments and supplements FTP, the World Wide Web (WWW), adjustments to the p value made. thereto, are hereby withdrawn, effective or bounce-back e-mail. For FTP Accordingly, I find no error in the ALJ’s January 2, 1997. access, connect to CBER at ‘‘ftp:// ftp.fda.gov/CBER/’’. For WWW ruling on this point. Dated: November 12, 1996. h. Adequacy of the Yesavage study. In access, connect to CBER at ‘‘http:/ sum, I find that the Yesavage study was Michael A. Friedman, /www.fda.gov/cber/cberftp.html’’. not adequate and well-controlled. In Deputy Commissioner for Operations. For bounce-back e-mail send a making this determination, I have [FR Doc. 96–30648 Filed 12–2–96; 8:45 am] message to considered the aggregate effect of the BILLING CODE 4160±01±P ‘‘[email protected]’’. protocol violations. I base my ruling CDER Information: For additional upon these findings: (1) That the copies of the documents contact the selection of patients for the study was [Docket No. 96D±0334] Drug Information Branch (HFD– 210), Division of Communications flawed by the inclusion of patients with Procedures for Issuance of and Review Management, Center for Drug the concomitant condition of and Response to Materials Submitted Evaluation and Research (CDER), Parkinson’s disease, and by the in Response to Clinical Hold for Food and Drug Administration, inclusion of outpatients, who were to be Investigational New Drug (IND) excluded under the protocol; (2) that the 5600 Fishers Lane, Rockville, MD Applications; Availability failure to show that stroke patients were 20857, 301–594–1012. The form included in both the drug and the AGENCY: Food and Drug Administration, may also be obtained by calling the placebo arms of the clinical trial can be HHS. CDER FAX–ON–DEMAND System considered as a flaw in the study; (3) ACTION: Notice. at 1–800–342–2722, or 1–301–827– that the fact that a statistically 0577. An electronic version of the significant difference between test and SUMMARY: The Food and Drug documents is also available via control groups existed on the BMT was Administration (FDA) is announcing the Internet using FTP, Gopher, or the a proper consideration; (4) that the availability of two documents entitled World Wide Web (WWW). For FTP, uncontrolled use of concomitant ‘‘Centerwide Policy on Issuance of and connect to the CDER anonymous medication and the poor documentation Response to Clinical Hold Letters for FTP server at cdvs2.cder.fda.gov of concomitant medication use weighs Investigational New Drug Applications’’ and change to the ‘‘guidance’’ against finding the Yesavage study to be (OD–R–8–96, Center for Biologics directory. For Gopher, connect to adequate and well-controlled; (5) that Evaluation and Research (CBER)) and the CDER Gopher server at Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64137

gopher.cder.fda.gov and select the within 30 days following the placement Dated: November 19, 1996. ‘‘Industry Guidance’’ menu option. of the hold, both CBER and CDER William B. Schultz, For WWW, connect to the FDA provide this notification in even shorter Deputy Commissioner for Policy. home page at http://www.fda.gov. timeframes, consistent with the [FR Doc. 96–30770 Filed 12–2–96; 8:45 am] Submit written comments on the procedures set forth in the CBER and BILLING CODE 4160±01±F documents to the Dockets Management CDER documents. Thus, a researcher or Branch (HFA–305), Food and Drug company that intends to begin testing a Administration, 12420 Parklawn Dr., biologic or new drug in humans, may Health Resources and Services rm. 1–23, Rockville, MD 20857. not begin or continue the study until Administration Corporations should submit two copies FDA releases the clinical hold. Removal of any comments and individuals may of the hold may be relayed by telephone Agency Information Collection submit one copy. Requests and or other rapid means of communication Activities: Proposed Collection: Comment Request comments should be identified with the unless FDA notified the sponsor in docket number found in brackets in the writing that once a correction or In compliance with the requirement heading of this document. Copies of the modification was made they could of Section 3506(c)(2)(A) of the documents and received comments are proceed as outlined in § 312.42(e). Paperwork Reduction Act of 1995 for available for public examination in the In the past, FDA had no internal opportunity for public comment on Dockets Management Branch (address proposed data collection projects, the above) between 9 a.m. and 4 p.m., operating procedures regarding how much time it may take to evaluate data Health Resources and Services Monday through Friday. Administration (HRSA) will publish FOR FURTHER INFORMATION CONTACT: submitted by the sponsor in response to the clinical hold. FDA is committed to periodic summaries of proposed Timothy W. Beth, Center for Biologics projects being developed for submission promptly reviewing and responding to Evaluation and Research (HFM– to OMB under the Paperwork Reduction data submitted in response to a clinical 630), Food and Drug Act of 1995. To request more hold and to do so within 30 days of Administration, 1401 Rockville information on the proposed project or Pike, Rockville, MD 20852–1448, receiving the submission. FDA believes to obtain a copy of the data collection 301–594–3074, or that the 30-day period meets the needs plans and instruments, call the HRSA Murray M. Lumpkin, Center for Drug of sponsors, will prevent delays during Reports Clearance Officer on (301) 443– Evaluation and Research (HFD–2), review of data, and will prevent 1129. Food and Drug Administration, unnecessary delays in the start or Comments are invited on: (a) whether 1451 Rockville Pike, Rockville, MD continuation of clinical studies. These the proposed collection of information 20852–1420, 301–594–5417. procedures are contained in CBER’s is necessary for the proper performance SUPPLEMENTARY INFORMATION: The Policy and Procedure Guide, OD–R–8– of the functions of the agency, including President’s November 1995 report, 96, ‘‘Centerwide Policy on Issuance of whether the information shall have ‘‘Reinventing the Regulation of Drugs and Response to Clinical Hold Letters practical utility; (b) the accuracy of the Made from Biotechnology,’’ outlined for Investigational New Drug agency’s estimate of the burden of the changes to the biologics regulations Applications,’’ dated August 20, 1996, proposed collection of information; (c) designed to reduce the burden of FDA and in CDER’s Manual of Policies and ways to enhance the quality, utility, and regulations on industry without Procedures, MAPP 6030.1, ‘‘IND Process clarity of the information to be reducing public health protection. One and Review Procedures,’’ dated June 20, collected; and (d) ways to minimize the of the recommended modifications was 1996. burden of the collection of information to have investigational new drug (IND) Although these documents do not on respondents, including through the use of automated collection techniques reviewers respond within 30 days create or confer any rights for or on any or other forms of information whether newly submitted information person and do not operate to bind FDA technology. supports the initiation or continuation or the public, they do represent the of a human investigation that the agency agency’s current thinking on time Proposed Project has put on clinical hold. periods for the review and response to Companies or individuals that intend Voluntary Customer Surveys of materials submitted in response to ‘‘Partners’’ of the Health Resources and to study IND’s or biologics in humans clinical hold for IND’s. generally are required first to submit an Services Administration—NEW IND application to the agency. They Interested persons may submit to the In response to Executive Order 12862, may proceed with the study 30 days Dockets Management Branch (address Setting Customer Service Standards, the after the agency receives the application above) written comments on the Health Resources and Services unless FDA puts the study on clinical procedure documents. FDA will review Administration (HRSA) is proposing to hold (§ 312.42 (21 CFR 312.42).) Section the comments received and, if conduct voluntary customer surveys of 312.42(a) describes a clinical hold as an appropriate, consider preparing revised its ‘‘partners’’ to assess strengths and ‘‘order issued by FDA to the sponsor to documents based upon that review. weaknesses in program services. HRSA delay a proposed clinical investigation Corporations should submit two copies partners are typically State or local or to suspend an ongoing investigation.’’ of any comments and individuals may governments, health care facilities, Section 312.42(d) states that the hold submit one copy. Comments are to be health care consortia, health care may be relayed to the sponsor by identified with the docket number providers, and researchers. Partner telephone or other rapid means of found in brackets in the heading of this surveys to be conducted by HRSA might communication and that FDA will document. Copies of the documents and include, for example, surveys of provide a written explanation of the received comments are available for grantees to determine satisfaction with basis of the hold to the sponsor no more public examination in the Dockets the technical assistance, or surveys of than 30 days following the hold. Management Branch (address above) providers who receive training from Though § 312.42(d) allows for between 9 a.m. and 4 p.m., Monday HRSA grantees to measure satisfaction communication of the reasons for a hold through Friday. with the training experience. Results of 64138 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices these surveys will be used to plan and will be requested from OMB to conduct telephone surveys are expected to be the redirect resources and efforts as needed partner surveys. Focus groups, in-class preferred methodologies. An estimate of to improve service. A generic approval evaluation forms, mail surveys, and annual burden is shown below.

Responses Average bur- Type of survey Number of re- per respond- den/response Total hours of spondents ent (hours) burden

In-class evaluations ...... 40,000 1 0.05 2,000 Mail/telephone surveys ...... 6,000 1 0.25 1,500 Focus groups ...... 100 1 1.5 150

Total ...... 46,100 1 0.08 3,650

Send comments to Patricia Royston, expected to begin their service period The Secretary, acting through the Service, HRSA Reports Clearance Officer, Room no later than September 30, 1997. shall establish a program to be known as the 14–36, Parklawn Building, 5600 Fishers Applications shall be considered as Indian Health Service Loan Repayment Lane, Rockville, MD 20857. Written Program (hereafter referred to as the ‘‘Loan meeting the deadline if they are either: Repayment Program’’) in order to assure an comments should be received within 60 1. Received on or before the deadline adequate supply of trained health days of this notice. date; or professionals necessary to maintain Dated: November 26, 1996. 2. Sent on or before the deadline date. accreditation of, and provide health care J. Henry Montes, (Applicants should request a legibly services to Indians through, Indian health programs. Associate Administrator for Policy dated U.S. Postal Service postmark or Coordination. obtain a legibly dated receipt from a Section 4(n) of the IHCIA, as amended [FR Doc. 96–30725 Filed 12–2–96; 8:45 am] commercial carrier or U.S. Postal by the Indian Health Care Improvement BILLING CODE 4160±15±P Service. Private metered postmarks shall Technical Corrections Act of 1996, Pub. not be acceptable as proof of timely L. 104–313, provides that: mailing.) ‘‘Health Profession’’ means allopathic Indian Health Service Applications received after the medicine, family medicine, internal monthly closing date will be held for medicine, pediatrics, geriatric medicine, Availability of Funds for Loan consideration in the next monthly obstetrics and gynecology, podiatric Repayment Program for Repayment of funding cycle. Applicants who do not medicine, nursing, public health nursing, Health Professions Educational Loans receive funding by September 30, 1997 dentistry, psychiatry, osteopathy, optometry, will be notified in writing. pharmacy, psychology, public health, social AGENCY: Indian Health Service, HHS. work, marriage and family therapy, ACTION: Notice. FORM TO BE USED FOR APPLICATION: chiropractic medicine, environmental health Applications will be accepted only if and engineering, an allied health profession, SUMMARY: The Indian Health Service they are submitted on the form entitled or any other health profession. (IHS) announces that approximately ‘‘Application for the Indian Health For the purposes of this program, the $11,706,000 in funds for fiscal year (FY) Service Loan Repayment Program,’’ term ‘‘Indian health program’’ is defined 1997 is available for the repayment of identified with the Office of in Section 108(a)(2)(A), as follows: health professions educational loans Management and Budget approval (undergraduate and graduate) in return number of OMB #0917–0014 (expires ... any health program or facility funded, in whole or in part, by the IHS for the benefit for full-time clinical service in Indian 11/30/99). health programs. The IHS estimates that of American Indians and Alaska Natives and ADDRESS: Application materials may be administered: 250 loan repayment awards averaging obtained by calling or writing to the a. Directly by the service; or $50,000 per award may be made with address below. In addition, completed b. By any Indian tribe or tribal or Indian this funding. applications should be returned to: IHS organization pursuant to a contract under: Funds are required to be expended by (1) The Indian Self-Determination Act; or September 30 of the fiscal year. This Loan Repayment Program, 12300 Twinbrook Parkway—Suite 100, (2) Section 23 of the Act of April 30, 1908, program is authorized by Section 108 of (25 U.S.C. 47), popularly known as the Buy the Indian Health Care Improvement Rockville, Maryland 20852, PH: 301/ Indian Act; or Act (IHCIA) as amended, 25 U.S.C. 1601 443–3396 [between 8:00 a.m. and 5:00 (3) By an urban Indian organization et seq. The IHS invites potential p.m. (EST) Monday through Friday, pursuant to Title V of this act. except Federal holidays]. applicants to request an application for Applicants may sign contractual participation in the Loan Repayment FOR FURTHER INFORMATION CONTACT: agreements with the Secretary for 2 Program. Please address inquires to Mr. Charles years. The IHS will repay all or a DATE: Applications for the FY 1997 Loan Yepa, Chief, IHS Loan Repayment portion of the applicant’s health Repayment Program will be accepted Program, Twinbrook Metro Plaza—Suite professions educational loans and evaluated monthly beginning 100, 12300 Twinbrook Parkway, (undergraduate and graduate) for tuition January 2, 1997 and will continue each Rockville, Maryland 20852, PH: 301/ expenses and reasonable educational month thereafter until all funds are 443–3396 [between 8:00 a.m. and 5:00 and living expenses in amounts up to exhausted. Subsequent monthly p.m. (EST) Monday through Friday, $30,000 per year for each year of deadline dates are scheduled for Friday except Federal holidays]. contracted service to be made in annual of the second full week of each month. SUPPLEMENTARY INFORMATION: Section payments to the participant for the Notice of awards will be mailed on the 108 of the IHCIA as amended by Public purpose of repaying his/her outstanding last working day of each month. Laws 100–713 and 102–573, authorizes health professions educational loans. Applicants selected for participation the IHS Loan Repayment Program and Repayment of health professions in the FY 1997 program cycle will be provides in pertinent part as follows: educations loans will be made to the Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64139 participant within 120 days after the obligated service in a priority site as specialties: anesthesiology, emergency participant’s entry on duty has been determined by the Secretary; and room medicine, general surgery, confirmed by the IHS. (5) sign an affidavit attesting to the obstetrics/gynecology, ophthalmology, The Secretary must approve the fact that they have been informed of the orthopedic surgery, otolaryngology/ contract before the disbursement of loan relative merits of the U.S. Public Health otorhinolaryngol, psychiatry and repayments can be made to the Service Commissioned Corps and the radiology. participant. Participants will be Civil Service as employment options. required to fulfill their contract service Upon approval of the applicant for The following factors are equal in agreements through full-time clinical participation in the Loan Repayment weight when applied, and are applied practice at an Indian health program site Program, the applicant will receive when all other criteria are equal and a determined by the Secretary. Loan confirmation of his/her loan repayment selection must be made between repayment sites are characterized by award and the duty site at which he/she applicants. physical, cultural, and professional will serve his/her loan repayment One or all of the following factors may isolation, and have histories of frequent obligation. be applicable to an applicant, and the staff turnover. All Indian health The IHS has identified the positions applicant who has the most of these program sites are annually prioritized in each Indian health program for which factors, all other criteria equal, would be by discipline, based on need or vacancy there is a need or vacancy and ranked selected. those positions in order of priority by by the Agency. • All health professionals will receive developing discipline specific An applicant’s length of current up to $30,000 per year, regardless of prioritized lists of sites. Ranking criteria employment in the IHS, tribal or urban their length of contract. Where for these sites include the following: program. payments under the Loan Repayment • Historically critical shortages • Availability for service earlier than Program result in an increase in Federal caused by frequent staff turnover; other applicants (first come, first • income tax liability, the IHS will pay up Current unmatched vacancies in a served); and Health Profession Discipline; to 31 percent of the participant’s total • • Date the individual’s application loan repayments to the Internal Revenue Projected vacancies in a Health Profession Discipline; was received. Service on the participant’s behalf for • all or part of the increased tax liability Ensuring that the staffing needs of Any individual who enters this of the participant. Indian health programs administered by program and satisfactorily completed Pursuant to Section 108(b), to be an Indian tribe or tribal or health his or her obligated period of service eligible to participate in the Loan organization receive consideration on an may apply to extend the contract on a Repayment Program an individual must: equal basis with programs that are year-by-year basis, as determined by the (1) A. be enrolled: administered directly by the Service; IHS, at the maximum amount of up to (i) in a course of study or program in and • $30,000 per year and additional 31 an accredited institution, as determined Giving priority to vacancies in Indian health programs that have a need percent for Federal Withholding. If by the Secretary, within any State and funds are available, the maximum be scheduled to complete such course of for health professionals to provide health care services as a result of amount will be funded in this manner study in the same year such individual and will not exceed the total of the applies to participate in the Loan individuals having breached Loan Repayment Program contracts entered individual’s outstanding eligible health Repayment Program. (This includes the professions educational loans. Commonwealth of Puerto Rico, the into under this section. Consistent with Commonwealth of the Northern Mariana this priority ranking, in determining Any individual who owes an Islands, the Virgin islands, Guam, which applications to approve and obligation for health professional American Samoa, the Federated States which contracts to accept, the IHS will service to the Federal Government or to of Micronesia, the Republic of the give priority to applications made by a State or other entity under an Marshall Islands, and the Republic of American Indians and Alaska Natives agreement with such State or other Palau); or and to individuals recruited through the entity is not eligible for the Loan (ii) in an approved graduate training efforts of Indian tribes or tribal or Indian Repayment Program unless such an program in a health profession; or organizations. obligation will be completely satisfied • With respect to priorities among the B. have a degree in a health profession prior to the beginning of service under various health professions, the statute and a license to practice; and this program in the year that an requires that of the total amount (2) A. be eligible for, or hold an application is made for this program. appointment as a Commissioned Officer appropriated for FY 1997 for loan in the Regular or Reserve Corps of the repayment contracts, not less than 25 This program is not subject to review Public Health Service; or percent be provided to applicants who under Executive Order 12372. B. be eligible for selection for civilian are nurses, nurse practitioners, or nurse (The Catalog of Federal Domestic Assistance service in the Regular or Reserve Corps midwives and not less than 10 percent number is 93.164.) be provided to applicants who are of the Public Health Service; or Dated: November 26, 1996 C. meet the professional standards for mental health professionals (other than civil service employment in the IHS; or nurses, nurse practitioners, or nurse Michael H. Trujillo, D. be employed in an Indian health midwives). This requirement does not Assistant Surgeon General Director. program without service obligation; and apply if the number of applications from [FR Doc. 96–30726 Filed 12–2–96; 8:45 am] (3) submit to the Secretary an these two groups, respectively, is not BILLING CODE 4160±16±M application and contract to the Loan sufficient to meet the requirement. Repayment Program; and • Subject to the above statutory (4) sign and submit to the Secretary, priority for nurses and mental health a written contract agreeing to accept practitioners, the IHS will give priority repayment of educational loans and to in funding among health professionals serve for the applicable period of to physicians in the following priority 64140 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

Substance Abuse and Mental Health letter of certification from SAMHSA, 60191, 630–595–3888 (formerly: Services Administration HHS (formerly: HHS/NIDA) which MetPath, Inc., CORNING MetPath attests that it has met minimum Clinical Laboratories) Current List of Laboratories Which standards. CORNING Clinical Laboratories, South Meet Minimum Standards To Engage in In accordance with Subpart C of the Central Divison, 2320 Schuetz Rd., St. Urine Drug Testing for Federal Guidelines, the following laboratories Louis, MO 63146, 800–288–7293 Agencies, and Laboratories That Have meet the minimum standards set forth (formerly: Metropolitan Reference Withdrawn From the Program in the Guidelines: Laboratories, Inc.) CORNING Clinical Laboratory, One AGENCY: Substance Abuse and Mental Aegis Analytical Laboratories, Inc., 624 Malcolm Ave., Teterboro, NJ 07608, Health Services Administration, HHS Grassmere Park Rd., Suite 21, 201–393–5000 (formerly: MetPath, (Formerly: National Institute on Drug Nashville, TN 37211, 615–331–5300 Inc., CORNING MetPath Clinical Abuse, ADAMHA, HHS). Alabama Reference Laboratories, Inc., Laboratories) ACTION: Notice. 543 South Hull St., Montgomery, AL 36103, 800–541–4931/334–263–5745 CORNING National Center for Forensic SUMMARY: The Department of Health and American Medical Laboratories, Inc., Science, 1901 Sulphur Spring Rd., Human Services notifies Federal 14225 Newbrook Dr., Chantilly, VA Baltimore, MD 21227, 410–536–1485/ agencies of the laboratories currently 22021, 703–802–6900 800–522–9235 (formerly: Maryland certified to meet standards of Subpart C Associated Pathologists Laboratories, Medical Laboratory, Inc., National of Mandatory Guidelines for Federal Inc., 4230 South Burnham Ave., Suite Center for Forensic Science) Workplace Drug Testing Programs (59 250, Las Vegas, NV 89119–5412, 702– CORNING Clinical Laboratories, 7470–A FR 29916, 29925). A similar notice 733–7866/800–433–2750 Mission Valley Rd., San Diego, CA listing all currently certified laboratories Associated Regional and University 92108–4406, 800–446–4728/619–686– will be published during the first week Pathologists, Inc. (ARUP), 500 Chipeta 3200 (formerly: Nichols Institute, of each month, and updated to include Way, Salt Lake City, UT 84108, 801– Nichols Institute Substance Abuse laboratories which subsequently apply 583–2787/800–242–2787 Testing (NISAT), CORNING Nichols for and complete the certification Baptist Medical Center—Toxicology Institute) Cox Health Systems, Department of process. If any listed laboratory’s Laboratory, 9601 I–630, Exit 7, Little Toxicology, 1423 North Jefferson certification is totally suspended or Rock, AR 72205–7299, 501–227–2783 Ave., Springfield, MO 65802, 800– revoked, the laboratory will be omitted (formerly: Forensic Toxicology 876–3652/417–269–3093 (formerly: from updated lists until such time as it Laboratory Baptist Medical Center) is restored to full certification under the Cox Medical Centers) Bayshore Clinical Laboratory, 4555 W. Dept. of the Navy, Navy Drug Screening Guidelines. Schroeder Dr., Brown Deer, WI 53223, Laboratory, Great Lakes, IL, P. O. Box If any laboratory has withdrawn from 414–355–4444/800–877–7016 the National Laboratory Certification 88–6819, Great Lakes, IL 60088–6819, Cedars Medical Center, Department of 847–688–2045/847–688–4171 Program during the past month, it will Pathology, 1400 Northwest 12th Ave., be identified as such at the end of the Diagnostic Services Inc., dba DSI, 4048 Miami, FL 33136, 305–325–5784 Evans Ave., Suite 301, Fort Myers, FL current list of certified laboratories, and Centinela Hospital Airport Toxicology will be omitted from the monthly listing 33901, 941–418–4700/800–735–5416 Laboratory, 9601 S. Sepulveda Blvd., Doctors Laboratory, Inc., P.O. Box 2658, thereafter. Los Angeles, CA 90045, 310–215– 2906 Julia Dr., Valdosta, GA 31604, FOR FURTHER INFORMATION CONTACT: Mrs. 6020 912–244–4468 Giselle Hersh, Division of Workplace Clinical Reference Lab, 8433 Quivira DrugProof, Division of Dynacare/ Programs, Room 13A–54, 5600 Fishers Rd., Lenexa, KS 66215–2802, 800– Laboratory of Pathology, LLC, 1229 Lane, Rockville, Maryland 20857; Tel.: 445–6917 Madison St., Suite 500, Nordstrom (301) 443–6014. CompuChem Laboratories, Inc., 1904 Medical Tower, Seattle, WA 98104, SUPPLEMENTARY INFORMATION: Alexander Drive, Research Triangle 800–898–0180/206–386–2672 Mandatory Guidelines for Federal Park, NC 27709, 919–549–8263/800– (formerly: Laboratory of Pathology of Workplace Drug Testing were developed 833–3984 (formerly: CompuChem Seattle, Inc., DrugProof, Division of in accordance with Executive Order Laboratories, Inc., A Subsidiary of Laboratory of Pathology of Seattle, 12564 and section 503 of Public Law Roche Biomedical Laboratory, Roche Inc.) 100–71. Subpart C of the Guidelines, CompuChem Laboratories, Inc., A DrugScan, Inc., P.O. Box 2969, 1119 ‘‘Certification of Laboratories Engaged Member of the Roche Group) Mearns Rd., Warminster, PA 18974, in Urine Drug Testing for Federal CORNING Clinical Laboratories, 4771 215–674–9310 Agencies,’’ sets strict standards which Regent Blvd., Irving, TX 75063, 800– ElSohly Laboratories, Inc., 5 Industrial laboratories must meet in order to 526–0947 (formerly: Damon Clinical Park Dr., Oxford, MS 38655, 601–236– conduct urine drug testing for Federal Laboratories, Damon/MetPath) 2609 agencies. To become certified an CORNING Clinical Laboratories, 875 General Medical Laboratories, 36 South applicant laboratory must undergo three Greentree Rd., 4 Parkway Ctr., Brooks St., Madison, WI 53715, 608– rounds of performance testing plus an Pittsburgh, PA 15220–3610, 800–284– 267–6267 on-site inspection. To maintain that 7515 (formerly: Med-Chek Harrison Laboratories, Inc., 9930 W. certification a laboratory must Laboratories, Inc., Med-Chek/Damon, Highway 80, Midland, TX 79706, participate in a quarterly performance MetPath Laboratories) 800–725–3784/915–563–3300 testing program plus periodic, on-site CORNING Clinical Laboratories, 4444 (formerly: Harrison & Associates inspections. Giddings Road, Auburn Hills, MI Forensic Laboratories) Laboratories which claim to be in the 48326, 800–444–0106/810–373–9120 Jewish Hospital of Cincinnati, Inc., 3200 applicant stage of certification are not to (formerly: HealthCare/Preferred Burnet Ave., Cincinnati, OH 45229, be considered as meeting the minimum Laboratories, HealthCare/MetPath) 513–569–2051 requirements expressed in the HHS CORNING Clinical Laboratories Inc., LabOne, Inc., 8915 Lenexa Dr., Overland Guidelines. A laboratory must have its 1355 Mittel Blvd., Wood Dale, IL Park, Kansas 66214, 913–888–3927/ Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64141

800–728–4064 (formerly: Center for Poisonlab, Inc., 7272 Clairemont Mesa Toxicology Testing Service, Inc., 5426 Laboratory Services, a Division of Blvd., San Diego, CA 92111, 619–279– N.W. 79th Ave., Miami, FL 33166, LabOne, Inc.) 2600/800–882–7272 305–593–2260 Laboratory Corporation of America Premier Analytical Laboratories, 15201 TOXWORX Laboratories, Inc., 6160 Holdings, 69 First Ave., Raritan, NJ I–10 East, Suite 125, Channelview, TX Variel Ave., Woodland Hills, CA 08869, 800–437–4986 (formerly: 77530, 713–457–3784/800–888–4063 91367, 818–226–4373/800–966–2211 Roche Biomedical Laboratories, Inc.) (formerly: Drug Labs of Texas) (formerly: Laboratory Specialists, Inc.; Laboratory Specialists, Inc., 113 Jarrell Presbyterian Laboratory Services, 1851 Abused Drug Laboratories; MedTox Dr., Belle Chasse, LA 70037, 504– East Third Street, Charlotte, NC Bio-Analytical, a Division of MedTox 392–7961 28204, 800–473–6640 Laboratories, Inc.) Marshfield Laboratories, Forensic Puckett Laboratory, 4200 Mamie St., UNILAB, 18408 Oxnard St., Tarzana, Toxicology Laboratory, 1000 North Hattiesburgh, MS 39402, 601–264– CA 91356, 800–492–0800/818–996– Oak Ave., Marshfield, WI 54449, 715– 3856/800–844–8378 7300 (formerly: MetWest-BPL 389–3734/800–331–3734 Scientific Testing Laboratories, Inc., 463 Toxicology Laboratory) MedExpress/National Laboratory Southlake Blvd., Richmond, VA UTMB Pathology-Toxicology Center, 4022 Willow Lake Blvd., 23236, 804–378–9130 Laboratory, University of Texas Memphis, TN 38118, 901–795–1515/ Scott & White Drug Testing Laboratory, Medical Branch, Clinical Chemistry 800–526–6339 600 S. 25th St., Temple, TX 76504, Division, 301 University Boulevard, Medical College Hospitals Toxicology 800–749–3788 Room 5.158, Old John Sealy, Laboratory, Department of Pathology, S.E.D. Medical Laboratories, 500 Walter Galveston, Texas 77555–0551, 409– 3000 Arlington Ave., Toledo, OH NE, Suite 500, Albuquerque, NM 772–3197 43614, 419–381–5213 87102, 505–727–8800/800–999–LABS Richard Kopanda, Medlab Clinical Testing, Inc., 212 Sierra Nevada Laboratories, Inc., 888 Willow St., Reno, NV 89502, 702– Executive Officer, Substance Abuse and Cherry Lane, New Castle, DE 19720, Mental Health Services Administration. 302–655–5227 334–3400 MedTox Laboratories, Inc., 402 W. SmithKline Beecham Clinical [FR Doc. 96–30757 Filed 12–2–96; 8:45 am] County Rd. D, St. Paul, MN 55112, Laboratories, 7600 Tyrone Ave., Van BILLING CODE 4160±20±U 800–832–3244/612–636–7466 Nuys, CA 91405, 818–989–2520/800– Methodist Hospital of Indiana, Inc., 877–2520 Department of Pathology and SmithKline Beecham Clinical DEPARTMENT OF HOUSING AND Laboratory Medicine, 1701 N. Senate Laboratories, 801 East Dixie Ave., URBAN DEVELOPMENT Blvd., Indianapolis, IN 46202, 317– Leesburg, FL 34748, 352–787–9006 929–3587 (formerly: Doctors & Physicians [Docket No. FR±4086±N±80] Methodist Medical Center Toxicology Laboratory) Office of the Assistant Secretary for Laboratory, 221 N.E. Glen Oak Ave., SmithKline Beecham Clinical Housing-Federal Housing Peoria, IL 61636, 800–752–1835/309– Laboratories, 3175 Presidential Dr., Commissioner; Notice of Proposed 671–5199 Atlanta, GA 30340, 770–452–1590 Information Collection for Public MetroLab-Legacy Laboratory Services, (formerly: SmithKline Bio-Science Comment 235 N. Graham St., Portland, OR Laboratories) 97227, 503–413–4512, 800–237– SmithKline Beecham Clinical AGENCY: Office of the Assistant 7808(x4512) Laboratories, 506 E. State Pkwy., Secretary for Housing-Federal Housing Minneapolis Veterans Affairs Medical Schaumburg, IL 60173, 847–447– Commissioner, HUD. 4379/800–447–4379 (formerly: Center, Forensic Toxicology ACTION: Notice. Laboratory, 1 Veterans Drive, International Toxicology Laboratories) Minneapolis, Minnesota 55417, 612– SmithKline Beecham Clinical SUMMARY: The proposed information 725–2088 Laboratories, 400 Egypt Rd., collection requirement described below National Toxicology Laboratories, Inc., Norristown, PA 19403, 800–523– will be submitted to the Office of 1100 California Ave., Bakersfield, CA 0289/610–631–4600 (formerly: Management and Budget (OMB) for 93304, 805–322–4250 SmithKline Bio-Science Laboratories) review, as required by the Paperwork Northwest Toxicology, Inc., 1141 E. SmithKline Beecham Clinical Reduction Act. The Department is 3900 South, Salt Lake City, UT 84124, Laboratories, 8000 Sovereign Row, soliciting public comments on the 800–322–3361 Dallas, TX 75247, 214–638–1301 subject proposal. Oregon Medical Laboratories, P.O. Box (formerly: SmithKline Bio-Science DATES: Comments due: February 3, 972, 722 East 11th Ave., Eugene, OR Laboratories) 1997. 97440–0972, 541–687–2134 South Bend Medical Foundation, Inc., Pathology Associates Medical 530 N. Lafayette Blvd., South Bend, ADDRESSES: Interested persons are Laboratories, East 11604 Indiana, IN 46601, 219–234–4176 invited to submit comments regarding Spokane, WA 99206, 509–926–2400/ Southwest Laboratories, 2727 W. this proposal. Comments should refer to 800–541–7891 Baseline Rd., Suite 6, Tempe, AZ the proposal by name and/or OMB PharmChem Laboratories, Inc., 1505–A 85283, 602–438–8507 Control Number and should be sent to: O’Brien Dr., Menlo Park, CA 94025, St. Anthony Hospital (Toxicology Oliver Walker, Housing, Department of 415–328–6200/800–446–5177 Laboratory), P.O. Box 205, 1000 N. Housing & Urban Development, 451–7th PharmChem Laboratories, Inc., Texas Lee St., Oklahoma City, OK 73102, Street, SW., Room 9116, Washington, Division, 7606 Pebble Dr., Fort Worth, 405–272–7052 DC 20410. TX 76118, 817–595–0294 (formerly: Toxicology & Drug Monitoring FOR FURTHER INFORMATION CONTACT: Harris Medical Laboratory) Laboratory, University of Missouri Ivy Jackson, Telephone number (202) Physicians Reference Laboratory, 7800 Hospital & Clinics, 2703 Clark Lane, 708–4560 ext. 2333 (this is not a toll- West 110th St., Overland Park, KS Suite B, Lower Level, Columbia, MO free number) for copies of the proposed 66210, 913–338–4070/800–821–3627 65202, 573–882–1273 forms and other available documents. 64142 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

SUPPLEMENTARY INFORMATION: The Dated: November 13, 1996. automated collection techniques or Department will submit the proposed Nicolas P. Retsinas, other forms of information technology, information collection to OMB for Assistant Secretary for Housing-Federal e.g., permitting electronic submission of review, as required by the Paperwork Housing Commissioner. responses. Reduction Act of 1995 (44 U.S.C. [FR Doc. 96–30766 Filed 12–2–96; 8:45 am] This Notice also lists the following Chapter 35, as amended). BILLING CODE 4210±27±M information: Title of Proposal: Housing and The Notice is soliciting comments Community Development Act of 1992, from members of the public and [Docket No. FR±4086±N±81] Amendments to Real Estate Settlement affecting agencies concerning the Procedures Act (RESPA). Office of the Assistant Secretary for proposed collection of information to: OMB Control Number: 2502–0491. (1) Evaluate whether the proposed Housing-Federal Housing Description of the need for the collection of information is necessary Commissioner; Notice of Proposed information and the proposed use: for the proper performance of the Information Collection for Public Amendments to RESPA in the Housing functions of the agency, including Comment and Community Development Act of whether the information will have AGENCY: Office of the Assistant 1992 added a new class of covered practical utility; (2) Evaluate the Secretary for Housing-Federal Housing transactions—subordinate mortgages. A accuracy of the agency’s estimate of the Commissioner, HUD. new settlement statement form HUD–1A burden of the proposed collection of ACTION: Notice. was developed to reflect the settlement information; (3) Enhance the quality, costs associated with these types of utility, and clarity of the information to SUMMARY: The proposed information transactions. be collected; and (4) Minimize the collection requirement described below Agency form numbers: HUD–1A. burden of the collection of information will be submitted to the Office of Members of the affected public: on those who are to respond; including Management and Budget (OMB) for Consumers who seek a subordinate lien through the use of appropriate review, as required by the Paperwork mortgage are required to receive certain automated collection techniques or Reduction Act. The Department is disclosures from the lender; including, other forms of information technology, soliciting public comments on the a Good Faith Estimate and HUD–1A. A e.g., permitting electronic submission of subject proposal. Controlled Business Disclosure is responses. DATES: Comments due: February 3, required where a settlement provider This Notice also lists the following 1997. refers the consumer to an affiliate. information: ADDRESSES: Interested persons are An estimation of the total numbers of invited to submit comments regarding hours needed to prepare the information Title of Proposal: Good Faith this proposal. Comments should refer to collection is 528,025, the number of Estimate, Special Information Booklet. the proposal by name and/or OMB respondents is 1,508,500, frequency of OMB Control Number: 2502–0265. Control Number and should be sent to: response is on occasion and the hours Description of the need for the Oliver Walker, Housing, Department of of response is 0.35 of an hour. Status of information and the proposed use: Housing & Urban Development, 451— the proposed information collection: Consumers who apply for a federally 7th Street, SW, Room 9116, Washington, Extension of a previously approved related mortgage to purchase a home are DC 20410. collection. required to receive from the mortgage FOR FURTHER INFORMATION CONTACT: Ivy Authority: Section 3506 of the Paperwork originator a Good Faith Estimate and a Jackson, Telephone number (202) 708– Reduction Act of 1995, 44 U.S.C. Chapter 35, Special Information Booklet. These 4560 ext. 2333 (this is not a toll-free as amended. borrowers are entitled to a HUD–1 number) for copies of the proposed Dated: November 13, 1996. statement reflecting actual costs at forms and other available documents. Nicolas, P. Retsinas, settlement. SUPPLEMENTARY INFORMATION: The Assistant Secretary for Housing-Federal Housing Commissioner. Agency form numbers: HUD–1. Department will submit the proposed information collection to OMB for [FR Doc. 96–30767 Filed 12–2–96; 8:45 am] Members of affected public: Mortgage review, as required by the Paperwork BILLING CODE 4210±27±M originators are required to provide Reduction Act of 1995 (44 U.S.C. consumer who seek a purchase money Chapter 35, as amended). mortgage the Good Faith Estimate and The Notice is soliciting comments [Docket No. FR±4185±N±01] the Special Information Booklet. from members of the public and Office of Administration; Notice of Attorneys or other settlement agents are affecting agencies concerning the Submission of Proposed Information required to provide the HUD–1 proposed collection of information to: Collection to OMB statement of settlement costs. (1) Evaluate whether the proposed An estimation of the total numbers of collection of information is necessary AGENCY: Office of Administration, HUD. hours needed to prepare the information for the proper performance of the ACTION: Notice. collection is 875,500 number of functions of the agency, including SUMMARY: The proposed information respondents is 3,470,000 frequency whether the information will have collection requirement described below response is on occasion, and the hours practical utility; (2) Evaluate the has been submitted to the Office of of response is 0.25 of an hour. accuracy of the agency’s estimate of the burden of the proposed collection of Management and Budget (OMB) for Status of the proposed information information; (3) Enhance the quality, emergency review and approval, as collection: Extension of a currently utility, and clarity of the information to required by the Paperwork Reduction approval collection. be collected; and (4) Minimize the Act. The Department is soliciting public Authority: Section 3506 of the Paperwork burden of the collection of information comments on the subject proposal. Reduction Act of 1995, 44 U.S.C. Chapter 35, on those who are to respond; including DATES: The due date for comments is: as amended. through the use of appropriate December 10, 1996. Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64143

ADDRESSES: Interested persons are Area (MSA) and the PHA’s jurisdiction; open to the public. The Jan. 9 meeting invited to submit comments regarding each development’s name, number, begins at 10 a.m. Agenda items include this proposal. Comments must be occupancy type and number of units, an update on BLM’s development of received within seven (7) days from the date site was developed, racial standards for healthy rangelands and date of this Notice. Comments should composition by bedroom size and guidelines for livestock grazing, a refer to the proposal by name and waiting list composition. For the discussion about recreation fees on should be sent to: Joseph F. Lackey, Jr. Section 8 program: the number of public lands facilities, updates from the HUD Desk Officer, Office of certificates and vouchers currently in Arcata, Clear Lake and Redding Management and Budget, New use by race and bedroom size; and the Resource Areas, and a discussion of Executive Office Building, Washington, length and composition of the waiting issues for future council consideration. D.C. 20503. list by race and bedroom size. PHAs A public comment period is set for 1 FOR FURTHER INFORMATION CONTACT: must provide current and proposed p.m. Depending on the number of Kay F. Weaver, Reports Management public housing tenant selection and persons wishing to speak, a time limit Officer, Department of Housing and assignment procedures along with any could be imposed. Urban Development, 451 Seventh Street, Consent Decrees, Voluntary Compliance On Jan. 10, the council will convene SW, Washington, DC 20410, telephone Agreements, or other documentation at 8 a.m. at the Arcata Resource Area (202) 708–0050. This is not a toll-free related to current occupancy problems Office, then depart for a tour of public number. Copies of available documents along with measures being taken to lands at the Somoa Dunes. The tour is submitted to OMB may be obtained correct such problems. open to the public, but participants from Ms. Weaver. (3) Description of the need for the must provide their own transportation. Summary minutes of the meeting will SUPPLEMENTARY INFORMATION: This information and its proposed use: HUD notice informs the public that the needs the information to assure be available for public review 30 days Department of Housing and Urban statutory and regulatory compliance. following the meeting at the Arcata Development (HUD) has submitted to The information will be used to approve Resource Area Office during regular OMB, for emergency processing, HUD the PHA’s plan for exception to business hours. Notice, Site-Based Waiting Lists. establish site-based waiting lists. FOR ADDITIONAL INFORMATION CONTACT: Title VI of the Civil Rights Act of 1964 (4) Description of the likely Lynda J. Roush, Area Manager, Arcata prohibits discrimination on the ground respondents, and proposed frequency of Resource Area, (707) 825–2300. of race, color, national origin, religion of response to the collection of Lynda J. Roush, sex in any program or activity receiving information: State, Local Governments Arcata Resource Area Manager. Federal financial assistance. HUD has will request exceptions on occasion. [FR Doc. 96–30736 Filed 12–2–96; 8:45 am] (5) Estimate of the total reporting implemented Title VI through BILLING CODE 4310±40±P regulations at 24 CFR Part 1. HUD has burden that will result from the existing authority under 24 CFR collection of information: 1.4(b)(2)(iii), to make exceptions from Reporting Burden: [OR±100±6321±01; GP7±0033 Case File #OR±51858] the community-wide waiting list Number of respondents: 52 regulation that are consistent with the (@ 72 hours per response) SUBJECT: Notice of Intent, Plan purpose of the regulation and Title VI to Total Estimated Burden Hours: 3,744 Amendment. prohibit discrimination in the Authority: Section 3507 of the Paperwork AGENCY: Prineville District, Central assignment of low-income families to Reduction Act of 1995, 44 U.S.C. Chapter 35, Oregon Resource Area, Interior. public housing units. HUD’s policy on as amended. ACTION: Notice of realty action, Notice of implementation of exceptions under the Dated: November 26, 1996. exchange proposal. community-wide waiting list regulation David S. Cristy, is included in the attached draft Notice. Director, IRM Policy and Management SUMMARY: In accordance with 43 CFR The Department has submitted the Division. 1610.2 and 1610.3 and 43 CFR 2200, proposal for the collection of [FR Doc. 96–30768 Filed 12–2–96; 8:45 am] notice is given that the Bureau of Land information to OMB for review, as BILLING CODE 4210±01±M Management in the State of Oregon, required by the Paperwork Reduction Vale District, Baker Resource Area, Act (44 U.S.C. Chapter 35). The intends to analyze a potential Department has requested emergency DEPARTMENT OF THE INTERIOR amendment to the Baker R.A. Resource clearance of the collection of Management Plan (RMP). The potential information, as described below, with Bureau of Land Management amendment will involve adjustment of approval being sought by December 9, land tenure designations. Currently the 1996: [CA±330±1010±00] Baker RMP designates only two land tenure adjustment categories. The (1) Title of the information collection Notice of Resource Advisory Council potential amendment would reclassify proposal: PHA’s Plan for Exception Meeting Request—Site-Based Waiting Lists those areas with special designations (2) Summary of the collection of AGENCY: Bureau of Land Management, into a ‘‘retention only’’ zone, thus information: Each PHA may request an Interior. adding an additional category. If exception to establish site-based waiting ACTION: Notice of meeting. necessary, the purpose of the plan lists by submitting its plan and the amendment would be to make available rationale for it to the local HUD office. SUMMARY: The Bureau of Land for exchange certain lands located in The plan must include all of the PHA’s Management’s Ukiah Resource Advisory Baker, Umatilla, Union, and Morrow general occupancy developments and/or Council will hold a business meeting Counties in Northeastern Oregon and all of the PHA’s mixed-population and and field tour Thursday and Friday, Jan. would facilitate exchange proposals that elderly-designated developments. The 9 and 10, 1997, at the BLM’s Arcata involve the Prineville District BLM, request must also include: accurate Resource Area Office, 1695 Heindon Baker R.A., numerous private property statistics for the Metropolitan Statistical Rd., Arcata, California. The meeting is holders, and a third party facilitator. 64144 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

Subject to valid existing rights, most and allocations in one or more of the described land within the Baker R.A. of the public lands referred to herein subject approved RMPs. Any approved will be suitable for disposal by exchange have been segregated from decisions which amend the applicable under section 206 of the Federal Land appropriation under the public land plans will be incorporated into the Policy and Management Act of 1976 laws and mineral laws for a period of plans and become part of the permanent (FLPMA), 43 U.S.C. 1716. Disposal of five years, beginning May 24, 1996. A planning record. Any refinements or the public lands considered for complete list of specific lands clarifications of management direction, exchange within the Central Oregon segregated will be available in the same priority of disposal or use of acquired R.A. are in conformance with current locations as the other elements of the lands will be incorporated into the Land Use Plans. These parcels are supporting record, as noted elsewhere applicable plans and documented generally considered to be isolated and in this notice. through published plan maintenance inefficient to manage. The total acreage DATES: A two purpose public comment reports, as provided under 43 CFR considered for disposal in both the period is provided at this time. 1610.5–4. Copies of the three existing Baker and Central Oregon Resource Publication of this Notice in the Federal approved plans (as amended) will be Areas totals approximately 95,000 acres. Register starts the 45 day comment available in the same locations as the The Baker and Central Oregon period necessary to meet public other elements of the supporting record, Resource Areas have received exchange notification requirements for both the as noted elsewhere in this notice. proposals from Clearwater Land Notice of Intent to prepare to prepare The decisions made through this Exchange for property from Pioneer plan amendments, an EIS and the analysis are expected to be implemented Resources, the JV Ranch and other Notice of Realty Action. through a relatively complex series of private entities, potentially affecting the land tenure adjustment actions over a public lands noted above. Some lands ADDRESSES: period of several years. Although the offered by these private landholders for Bureau of Land Management, Vale intent is to consummate the majority of this exchange are located along the District, Baker R.A., P.O. Box 987, the exchanges within approximately North Fork of the John Day River which Baker City, OR, 97. two years of the approval of the straddles the Grant, Morrow, and Prinville District, Central Oregon decision(s), some residual actions or Umatilla county lines. They adjoin a Resource Area, P.O. Box 550, independent land exchanges which are second piece of land that is located west Prineville, OR 97754. in conformance with the analysis and of the North Fork and includes Ditch and Cabin Creeks to the east, Wall Creek FOR FURTHER INFORMATION CONTACT: Ron decisions and associated approved Lane, Central Oregon, R.A. Realty RMPs may occur over a period of ten or on the west and are adjacent to Forest Specialist, (541) 416–6752 and Dorothy more years. In effect, this analysis will Service administered lands to the north. Mason, Baker R.A., Staff Supervisor, serve both to facilitate the ongoing Other lands considered for acquisition (541) 523–1256. project as well as future actions that fall are located on and in the vicinity of Rudio Mountain in Grant County and SUPPLEMENTARY INFORMATION: The under the programmatic nature of this analysis. Future exchanges or other land along the South Fork of the John Day Prineville District’s Two Rivers (1986) River. The Baker R.A. has designated and John Day (1985, 1995) Resource transfers would be subject to appropriate environmental analyses, the following ‘‘target’’ acquisition areas Management Plans and the Vale within which it would seek to acquire District’s Baker (1989, 1992) Resource public and interagency reviews and would be reported in the applicable private lands from willing land owners: Management Plan (RMPs) currently the west side of the Snake River from provide general management guidelines District or Resource Area periodic planning update reports which are Homestead to Huntington (including the for land tenure adjustments as well as Lookout Mountain area), the Pedro overall land resource use allocations distributed to known interested parties. The Baker R.A. RMP proposed plan Mountain area, the Dooley Mountain/ and resource protection or Burnt River Canyon area and along the enhancement. Although it is anticipated amendment and exchange proposal include public lands administered by Powder River downstream from Thief that the final decisions for land Valley Reservoir. Additionally, any exchanges considered through this the Baker R.A. located within the following areas. opportunity to acquire lands within or analysis will be in full conformance adjacent to land tenure retention zone 1 with the applicable RMPs, it is possible Willamette Meridian, Baker, Morrow, Union as identified in the land use plans, will that portions of some actions under and Umatilla Counties: also be considered for acquisition in some alternatives may not be in full T.1N. through 6N., R.23E. through 41E., both districts. conformance with the approved plans, T.1S, through 6S., R.23E. through 42E., The parcels identified for acquisition as required by 43 Code of Federal T.7S through 14S., R.36E. through 48E. through the exchange process are Regulations (CFR), Subpart 1610.5–3, Containing approximately 45,000 considered to contain high public ‘‘Conformity and Implementation’’. The acres of public land. values including significant forest environmental analysis and public and Public lands considered for disposal resources, anadromous fish and wildlife interagency review process anticipated in the Central Oregon R.A. Prineville, habitat, substantial recreational for this analysis are expected to fully are located within the following areas: opportunities and miles of riparian comply with the Bureau’s regulations habitat. They would block up and for land use planning, including land Willamette Meridian, Grant and Wheeler consolidate public lands managed by use plan amendments, public Counties: the BLM, adjacent to the National involvement and coordination with T.7S. through 18S., R.26E. through 35E. Forest. Other lands offered for other Federal agencies, State and local T.7S. through 9S., R.21E. through 25E. acquisition will be considered on the governments and Indian tribes, (43 CFR Containing approximately 50,000 basis of the following values: key 1610.2, 1610.3 and 1610.5–5). This will acres of public land. anadromous or other fisheries habitat, allow the analysis to consider land Contingent upon approval of the important wildlife habitats, wetlands tenure strategies which are inconsistent amended RMP, or an approved and riparian values, significant cultural/ with the current direction or conformance determination with the historic sites eligible for National substantially affect other resource uses existing approved Baker RMP, the above Register of Historic places, T&E/ Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64145 sensitive species habitat, Unique/ should be postmarked by January 17, SUMMARY: The National Park Service outstanding recreational values, provide 1997. announces the availability of the final legal public access, within or adjacent to Public meetings have been held in General Management Plan/Development special designated areas (ACEC, W&S John Day, Heppner, Pendleton, Concept Plan (GMP/DCP) and Rivers), manageability and cost of LaGrande and Baker City regarding this Environmental Impact Statement (EIS) administration, substantially improves proposal. Public open houses will be for the Klondike Gold Rush National manageability of existing BLM or other held in Heppner, Pendleton, La Grande Historical Park. The final GMP/DCP and public land, opportunities for and Baker City. The need for additional EIS describes a proposed action for the partnerships in management and meetings will be evaluated based on the three Alaska units and one Seattle unit acquisition, unique lands with ecologic, level of public input as a result of public of the park and three alternatives (two geologic, scientific or scenic values and notification procedures. Any public in Seattle) to provide additional significance in stabilizing business, meetings will be announced at least 15 opportunities for residents and visitors social and economic conditions and/or days in advance. to enjoy the park units while protecting lifestyles. Issues raised at initial scoping Detailed information concerning the the park’s cultural and natural that will be addressed in the analysis proposed exchange and plan resources. A no-action alternative also is include, but are not limited to, multiple amendment, including the EIS, will be evaluated. adjacent landowners desiring available at a later date at BLM offices DATES: A Record of Decision will be acquisition of BLM disposal tract(s), in Prineville, Baker City, John Day, and made no sooner than January 2, 1997. adjacent landowner(s) does not wish to Portland. In Heppner this information ADDRESSES: Copies of the statement are acquire BLM disposal tract(s), appraisal will be available in the public library. available on request from: issues, tribal, values/historic use areas, When the EIS is completed in the early Superintendent Willie Russell, Klondike county land base, water rights and spring of 1997, another comment period Gold Rush-Seattle, 117 South Main St, agricultural lands, outright sale of will be provided to allow for additional Seattle WA, 98104, telephone: (206) public lands, resource management of public input to the exchange and 553–7220, FAX: (206) 553–0614 or acquired tracts, resource management associated plan amendment. This Superintendent Clay Alderson, on tracts considered for disposal, late comment period will be announced in Klondike Gold Rush NHP, PO Box 517, successional forest stands/habitat, a Federal Register notice and local Skagway, AK 99840, telephone: (907) access and wildlife habitat. media. Any final decision will also be Parcels will be screened by an 983–2921, FAX: (907) 983–2046. published to these same standards and Public reading copies of the final interdisciplinary (ID) team through the applicable appeal or protest period(s) environmental impact statement (EIS) GMP/DCP EIS will be available for provided. review in the following locations: process. Public parcels will be Pursuant to 7 CFR, Part 1, Subpart B, inventoried for sensitive values Section 1.27, all written submissions in Office of Public Affairs, National Park including special status wildlife and response to this notice shall be made Service, Department of the Interior, plants, and cultural resources. available for public inspection 1849 C Street, Room 3424, Disciplines to be represented on the ID including the submitter’s name, unless Washington, DC 20240, telephone: team preparing the plan amendment the submitter specifically requests (202) 208–6843. Alaska System Support Office, National and EIS include, but are not limited to: confidentiality. Anonymous comments Park Service, 2525 Gambell Street, archaeology, anthropology, economics, will not be accepted. All written Room 404, Anchorage, Alaska 99503– lands and minerals, recreation, forestry, submissions from business entities and 2892, telephone: (907) 257–2650. fisheries, hydrology, botanical, soils, organizations, submitted on official Klondike Gold Rush National Park— wildlife, geology and hazardous letterhead, in response to this notice Seattle, 117 South Main St, Seattle, materials. shall be made available for public WA 98104, telephone: (206) 553– The value of lands proposed for inspection in their entirety. exchange have not yet been determined. 7220. Upon completion of final appraisal, Dated: November 20, 1996. Klondike Gold Rush National Historical acreage would be adjusted and/or James L. Hancock, Park, Second & Broadway, Skagway, money would be used to equalize the District Manager. AK 99840, telephone: (907) 983–2921. values. Lands will be exchanged on a [FR Doc. 96–30735 Filed 12–2–96; 8:45 am] Columbia Cascades Sytem Support value basis, based on current fair market BILLING CODE 4310±33±M Office & Library, NPS, 909 First Ave, value appraisals. 6th Floor, Seattle, WA 98104, Public lands would be transferred telephone: (206) 220–4154. subject to: (1) A reservation to the National Park Service SUPPLEMENTARY INFORMATION: Pursuant United States of a right-of-way for to section 102(2)(C) of the National ditches canals constructed by the Notice of Availability of the final Environmental Policy Act of 1969 authority of the United States. Act of General Management Plan/ (Pub.L. 91-190, as amended), the August 30, 1890 (43 U.S.C. 945); and (2) Development Concept Plan and National Park Service has prepared a all valid existing easements, leases, Environmental Impact Statement for final GMP/DCP and EIS that describes a permits, licenses, rights-of-way or other the Klondike Gold Rush National proposed action for the three Alaska rights, and other terms and conditions Historical Park units and one Seattle unit of the park that may be identified in the EIS. AGENCIES: National Park Service, and three alternatives (two in Seattle) to The BLM is inviting comments to be Interior. provide additional opportunities for considered in the preparation of the EIS residents and visitors to enjoy the park ACTION: Notice of Availability of the for the proposed exchange. Comments final General Management Plan/ units while protecting the park’s may be addressed to Dick Cosgriffe, Development Concept Plan and cultural and natural resources. Central Oregon Resource Area Manager, The proposed action (alternative C) in Environmental Impact Statement for the at the Prineville District Office and Alaska includes development concept Klondike Gold Rush National Historical Gloria Brown, Baker Resource Area plans for Dyea and the Chilkoot Trail Park. Manager in Baker City. Comments and would expand park management, 64146 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices development, resource (cultural and place in the park units. In Alaska, the Parks Canada, and state and federal land natural) protection, and maintenance park boundary in Dyea would be management agencies to assure components to meet most, but not all, of marked. Work toward a new crossing of compatible uses in areas adjacent to the the expected visitor-use increases and Nelson Slough and beach area access park. Maximum protection of cultural interests in the park. A Klondike History would continue. The existing road along and natural resources would be Research Center would be established, Nelson Slough would be graveled, but provided. Connections with the Brackett in cooperation with the city of Skagway remain one lane. The campground, Wagon Road and Canadian trails would and state of Alaska, to process, study, picnic area, and ranger station would be be examined. conserve, and store historical, moved to be within the park boundary; This document is a collaborative ethnographic, and natural history and the historic segments of the effort between two vastly separated artifacts. Part of the center’s function Chilkoot Trail would be marked. In National Park Service system support would be to provide interpretive and Skagway interpretive programs would offices and two park locations with educational programs, as well as the be slightly increased, as would the input from the city of Skagway, state of opportunity for interagency training and visitor center operation. Site bulletins Alaska, and international assistance academic research within Skagway. would be developed for each restored from Parks Canada. Specialized historic-building restoration building. There would be an increased The responsible officials for a Record skills would be made available on a emphasis on maintaining the restored of Decision on the proposed action are cost-reimbursable basis. Access to the historic buildings as that program is the NPS field directors in Alaska and Dyea area would be improved with a completed. In Seattle about 2,800 square the Pacific West areas. rerouted, gravel road with enhanced feet of additional lease space would be Dated: November 22, 1996. parking, picnic, interpretive, and trail acquired, and improvements would be Paul R. Anderson, opportunities. Selected Dyea townsite made to storage capabilities and the Acting Field Director, Alaska. streets would be cleared and signed. mezzanine area. Collections would be [FR Doc. 96–30663 Filed 12–2–96; 8:45 am] Archaeological inventory, surveys, and moved out of the basement and minor mapping; marking the historical improvements made to existing exhibits. BILLING CODE 4310±70±P segments; minor trail rerouting; and Pioneer Square and Washington Street increased interpretive programs would Landing and other appropriate Petroglyph National Monument, Final occur along the Chilkoot Trail. White waterfront location’s interpretive General Management Plan/ Pass archaeological inventory, exhibits would be developed and sited. Environmental Impact Statement surveying, mapping, and marking the A Friends of the Park group would be historic trail route would be completed; established. AGENCY: National Park Service, Interior. but no facilities are proposed in the Under alternative D for Alaska, park ACTION: Notice of availability of the unit. management, development, resource Final General Management Plan/ In Seattle, the proposed action would protection, and maintenance needs Environmental Impact Statement for lead to acquiring a permanent location would expand to meet all of the Petroglyph National Monument, for the park visitor center, park offices, expected visitor use increases and Albuquerque, New Mexico. and historic collections. In the interim, interests in the park well into the next expanded lease space at the present century. To accommodate the additional SUMMARY: Pursuant to section 102(2)(c) location would allow park offices to visitor use, there would be an increase of the National Environmental Policy move to accessible space on the third in operational activities, maintenance, Act of 1969 and Public Law 101–313 floor; and park collections would be interpretation, and resources (the legislation that established the moved to the mezzanine level of the management, while protecting park monument) the National Park Service building. The interpretive focus would resources from degradation. Park announces the availability of a Final shift with more emphasis toward the facilities would be upgraded with General Management Plan/Development role of the Pacific Northwest in the gold improvements to the visitor and Concept Plan/Environmental Impact rush. Additional interpretive administrative facilities in Skagway and Statement (GMP/DCP/EIS) for information (exhibits and walking tours) the development of new facilities in Petroglyph National Monument. would be developed within the Pioneer Dyea and along the Chilkoot Trail. The The Final GMP/DCP/EIS has been Square area. Interpretive exhibits, in day-use education center proposed in prepared in cooperation with the City of cooperation with the city of Seattle, alternative C would be expanded to Albuquerque, the State of New Mexico, would be added to the waterfront area provide for overnight use. This would and the Federal Aviation at Washington Street Landing. Contacts provide visitors with additional activity Administration. with the Skagway office would be options for a better understanding of The purpose of this Final GMP/DCP/ expanded with staff cross training. A park themes. Additional historic EIS is to set forth the basic management Friends of the Park group would be buildings would be acquired for philosophy of the monument and the organized. restoration and leased for commercial overall approaches to resource Under the No-Action Alternative activities, or retained for administrative management, visitor use, and facility (alternative A), the development of a purposes. A historical building development that would be new general management plan would restoration center and a Klondike implemented over the next 10–15 years. not take place. Management actions History Research Center would be Petroglyph National Monument, would react to situations as needed. In established in Skagway. Alternative D encompassing 7,244 acres, was Alaska, work toward a new crossing of (Substantial Change) was not developed established in June 1990 as a new unit Nelson Slough and beach area access for the Seattle unit. of the National Park System to preserve would continue, and the existing park The park would work with the state the estimated 15,000 prehistoric management and operations would of Alaska and city of Skagway to petroglyphs and other significant continue. In Seattle, the basic operation provide better access for the Dyea and natural and cultural resources that are would continue unchanged. Chilkoot Trail areas. The park would on the west side of Albuquerque, New Under alternative B (minimal also initiate and maintain additional Mexico. The monument is the first alternative), some actions would take cooperation with the city of Skagway, National Park System area specifically Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64147 established to protect and interpret rock a visitor center at Lava Shadows where Record of Decision will not be issued carvings and their setting. they would have access to selected prior to February 6, 1997. Public input has identified issues and petroglyphs. A heritage education center ADDRESSES: Questions about this concerns which include management would be built at Boca Negra Canyon. document should be addressed to responsibilities, cultural and natural Visitors would have more opportunities Superintendent, Petroglyph National resource protection, protection of sites to see the petroglyphs with a greater Monument, 6001 Unser Blvd. NW, and values of culturally affiliated sense of solitude than in alternative 1. Albuquerque, NM 87120 phone# (505) groups, and location and function of More areas of the monument would be 899–0205. visitor and administrative facilities such reserved for research, traditional and SUPPLEMENTARY INFORMATION: Public as visitor center, parking areas and trail cultural use, and occasional guided reading copies of the Final GMP/DCP/ heads, a heritage education center, and tours than in the other alternatives. EIS will be available for review at the a petroglyph research center. Other Horse and bicycle use would not be following locations: Office of Public issues addressed in the Final GMP/DCP/ permitted in this alternative except at Affairs, National Park Service 1849 C EIS include interpretation, education, two escarpment crossings. Overall Street, NW., Washington, DC 20240; visitor circulation and access, public impacts on cultural and natural Department of Interior Natural use of the monument, and boundary resources and values held by culturally Resources Library, 1849 C Street NW, adjustments. There are four alternatives affiliated groups would be similar to Washington, DC 20240; Petroglyph for the development, resource and in some cases slightly less under National Monument Las Imagines management, and visitor use of the this alternative than under alternative 1. Visitor Center, 4732 Unser Blvd.,NW., monument. The alternatives describe Albuquerque, New Mexico; and local different visitor experiences and Alternative 3: The overall approach would be to have easy access to the public libraries in Albuquerque, New different kinds and locations for Mexico. facilities under a common resource mesa-top views and the volcanoes as management and protection approach. well as petroglyph concentrations below Dated: November 25, 1996. All alternatives have a common the escarpment. Visitors would be Vickie E. White, resource management approach because directed to a visitor/heritage education Acting Superintendent, Petroglyph National of resource management laws and center at Rinconada Canyon. From the Monument. policies that apply to various aspects of visitor center, many visitors would [FR Doc. 96–30655 Filed 12–2–96; 8:45 am] all National Park System areas, drive to a new 10-mile mesa-top loop BILLING CODE 4310±70±P including cultural landscape and road that would provide easy access to archaeological site values, natural the mesa-top views and the volcanoes. resources and various other aspects of Parking and trails would be developed Maine Acadian Culture Preservation monument management. These at the volcanoes and geologic windows Commission; Notice of Meeting areas. Horse and bicycle use would be alternatives are summarized below: Notice is hereby given in accordance provided at three escarpment crossings. Alternative 1: The overall approach of with the Federal Advisory Committee This alternative would have the greatest alternative 1, the proposed action and Act (PL 92–463) that the Maine Acadian impact on natural resources, cultural the National Park Service’s preferred Culture Preservation Commission will resources and values held by culturally alternative, would be to provide various meet on Friday, December 20, 1996. The affiliated groups. ways for visitors of different ages and meeting will convene at 7:00 p.m. at le abilities to see and appreciate many of Alternative 4: The ‘‘no-action’’ musee et centre culturel du Mont- the monument’s significant resources. alternative, describes the conditions that Carmel on U.S. Route 1 in Lille, Visitors would be directed to a visitor would exist at the monument without a Aroostook County, Maine. center/heritage education center at Boca change in current management direction The Maine Acadian Culture Negra Canyon. Horseback and bicycle or an approved management plan— Preservation Commission was riding would be permitted only on providing a baseline for evaluating the appointed by the Secretary of the elected designated mesa-top trails and at changes and impacts that would occur Interior pursuant to the Maine Acadian three crossing points. No horses or under the three action alternatives. Culture Preservation Act (PL 101–543). bicycles would be allowed in There would be parking areas and minor The purpose of the Commission is to petroglyph viewing areas or trail improvements in some areas. There advise the National Park Service with archeological sites anywhere in the would be no new visitor center. This respect to: monument. Mesa top resources and alternative would have the fewest • The development and visitor experiences would be monitored facilities. Horseback and bicycle riding implementation of an interpretive to identify adverse impacts. Impacts on would be permitted within the program of Acadian culture in the state cultural and natural resources, the monument only where currently of Maine; and regional economy, visitors and values allowed. The interim visitor center at • The selection of sites for held by culturally affiliated groups Las Imagines would become the primary interpretation and preservation by would be minimal or, in some cases, visitor center, accommodating only a means of cooperative agreements. beneficial. New structures would impact limited number of visitors. The Agenda for this meeting is as the cultural landscape. There could be Archeological sites, petroglyphs, and follows: adverse impacts on values held by the cultural landscape would continue 1. Review and approval of the culturally affiliated groups from the to be adversely impacted by vandalism. summary report of the meeting held intrusion of bicycles and horses. October 17, 1996. Alternative 2: This alternative would DATES: The no action period will end 30 2. A talk by Dr. Barry Ancelet on the preserve the greatest portion of the days after the Environmental Protection history of Acadian French in Louisiana. monument and adjacent lands in as Agency publishes notice that the Final 3. Reports of Maine Acadian Culture natural a condition as possible, with the GMP/DCP/EIS has been filed with the Preservation Commission working fewest intrusions from development and Environmental Protection Agency. After groups. fewer opportunities for public access this period a Record of Decision can be 4. Report of the National Park Service and use. Visitors would be directed to issued by the National Park Service. A project staff. 64148 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

5. Opportunity for public comment. GEORGIA Resources of the Cuyahoga Valley), Truxell Rd., SE of jct. with Peninsula Rd., Camp Fulton County 6. Proposed agenda, place, and date of Manatoc, Peninsula vicinity, 96001514 the next Commission meeting. National NuGrape Company, 794 Ralph Camp Manatoc Legion Lodge, (Recreation The meeting is open to the public. McGill Blvd., Atlanta, 96001502 and Conservation Resources of the Further information concerning Richmond County Cuyahoga Valley), Truxell Rd., SE of jct. Commission meetings may be obtained with Peninsula Rd., Camp Manatoc, Bethlehem Historic District, Roughly Peninsula vicinity, 96001512 from the Superintendent, Acadia bounded by Wrightsboro Rd., M.L.K. Jr. National Park. Interested persons may Blvd., Railroad, Poplar, and Clay Sts., TENNESSEE make oral/written presentations to the Augusta, 96001501 Davidson County Commission or file written statements. Shiloh Orphanage, 1635 15th St., Augusta, Such requests should be made at least 96001500 Nashville National Cemetery, (Civil War Era National Cemeteries), 1420 Gallatin Rd., S, seven days prior to the meeting to: HAWAII Nashville, 96001516 Superintendent, Acadia National Park, P.O. Box 177, Bar Harbor, ME 04609– Kauai County TEXAS Civilian Conservation Corps Camp in Kok’e 0177; telephone (207) 288–5472. Clay County State Park, HI 550 at Kok’e State Park Dated: November 25, 1996. Headquarters, Koke’e, 96001504 State Highway 79 Bridge at the Red River, Len Bobinchock, (Historic Bridges of Texas MPS), OK 79 Maui County across the Red River at the OK-TX state Acting Superintendent, Acadia National Kalepolepo Fishpond, S. Kihei Rd., S of jct. line, Byers vicinity, 96001518 Park. with HI 31, Kalepolepo County Park, Kihei, Fannin County [FR Doc. 96–30654 Filed 12–02–96; 8:45 am] 96001503 BILLING CODE 4310±70±P State Highway 78 Bridge at the Red River, IDAHO (Historic Bridges of Texas MPS), OK 78, Ada County across the Red River at the OK-TX state line, Ravenna vicinity, 96001517 National Register of Historic Places; Tolleth House, 134 E. State Ave., Meridian, Notification of Pending Nominations 96001506 VERMONT

Nominations for the following Fremont County Addison County properties being considered for listing Island Park Land and Cattle Company Home Chipman’s Point, Jct. of VT 73A and in the National Register were received Ranch, US 20, approximately 1 mi. SW of Chipman Point Rd., Orwell, 96001519 Island Park, Island Park vicinity, 96001508 by the National Park Service before [FR Doc. 96–30719 Filed 12–2–96; 8:45 am] November 23, 1996. Pursuant to section Kootenai County BILLING CODE 4310±70±P 60.13 of 36 CFR Part 60 written Harrison Commercial Historic District, comments concerning the significance Roughly bounded by N. Lake Ave., W. of these properties under the National Harrison St., N. Coeur d’Alene., and Pine INTERNATIONAL TRADE Register criteria for evaluation may be St., Harrison, 96001505 COMMISSION forwarded to the National Register, Washington Water Power Bridges, .5 mi. W National Park Service, P.O. Box 37127, of jct. of Spokane and 4th Sts., Post Falls, [Investigation 332±373] 96001507 Washington, D.C. 20013–7127. Written Advice on Providing Temporary Duty- comments should be submitted by NEW YORK Free Entry for Certain Suits and Suit- December 18, 1996. Monroe County Type Jackets From Mexico Marilyn Harper, Curtis—Crumb Farm, 307 Curtis Rd., Hilton Acting Keeper of the National Register. vicinity, 96001509 AGENCY: United States International Trade Commission. ARIZONA OHIO ACTION: Institution of investigation and Maricopa County Summit County request for written submissions. Willo Historic District (Boundary Increase), Kendall, Virginia, State Park Historic District, EFFECTIVE DATE: November 26, 1996. (Historic Residential Subdivisions and (Recreation and Conservation Resources of Architecture in Central Phoenix MPS), the Cuyahoga Valley) 701, 801, 1000 SUMMARY: Following receipt on Roughly bounded by Edgemont and Truxell Rd. and 434 W. Streetsboro, November 21, 1996, of a letter from the Cambridge Rds. and 7th and 3rd Aves., Peninsula vicinity, 96001515 United States Trade Representative Phoenix, 96001497 Butler, H. Karl, Memorial, (Recreation and (USTR), the Commission instituted Conservation Resources of the Cuyahoga investigation No. 332–373, Advice on ARKANSAS Valley), Truxell Rd., SE of jct. with Providing Temporary Duty-Free Entry Pulaski County Peninsula Rd., Camp Manatoc, Peninsula vicinity, 96001510 for Certain Suits and Suit-Type Jackets Little Rock National Cemetery, (Civil War Era Camp Manatoc Concord Lodge and from Mexico, under section 332 of the National Cemeteries MPS), 2523 Adirondacks Historic District, (Recreation Tariff Act of 1930. USTR asked that the Confederate Blvd., Little Rock, 96001496 and Conservation Resources of the Commission provide advice as to the CONNECTICUT Cuyahoga Valley), Truxell Rd., SE of jct. probable effect of providing temporary with Peninsula Rd., Camp Manatoc, duty-free entry under criteria similar to New London County Peninsula vicinity, 96001513 those of Harmonized Tariff Schedule of Mill Brook Bridge, Blissville Rd., jct. of Mill Camp Manatoc Dining Hall, (Recreation and the United States (HTS) heading Brook, Lisbon, 96001498 Conservation Resources of the Cuyahoga 9802.00.90 for the suits and suit-type Valley), Truxell Rd., SE of jct. with DISTRICT OF COLUMBIA Peninsula Rd., Camp Manatoc, Peninsula jackets from Mexico classifiable in the vicinity, 96001511 HTS subheadings listed in the annex, District of Columbia State Equivalent Camp Manatoc Foresters Lodge and Kit but only where such garments contain Woodlawn Cemetery, 4611 Benning Rd., SE, Carson—Dan Boone Cabins Historic interlining fabrics that are cut but not Washington, 96001499 District, (Recreation and Conservation formed in the United States and that Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64149 otherwise meet the criteria of heading continuation of any duty as the requesting confidential treatment must 9802.00.90. USTR requested that the President determines to be necessary or conform with the requirements of Commission provide advice as to the appropriate to maintain the general section § 201.6 of the Commission’s probable effect of such action on level of reciprocal and mutually Rules of Practice and Procedure (19 affected segments of the U.S. textile and advantageous concessions with respect C.F.R. 201.6). All written submissions, apparel industries, workers in these to Canada or Mexico provided for by except for confidential business industries, and consumers of the NAFTA, subject to the consultation and information, will be made available in affected goods. layover requirements of section 103(a) the Office of the Secretary to the As requested by USTR, the of the NAFTA Implementation Act (19 Commission for inspection by interested Commission expects to submit its report U.S.C. 3313(a)). parties. The Commission may include by January 15, 1997. After considering the Commission’s confidential business information advice and all other factors specified by FOR FURTHER INFORMATION CONTACT: submitted in the course of this the NAFTA Implementation Act, the Information on general topics may be investigation in the President and President must submit the proposed obtained from Mary Elizabeth Sweet, USTR. If the Commission is authorized temporary tariff changes and Office of Industries (202–205–3455) and to publish a report, the Commission will accompanying advice and explanations legal aspects, from William Gearhart, not publish confidential business to the Congress pursuant to the layover Office of the General Counsel (202–205– information in a manner that would requirements of section 103 (a) of the 3091). The media should contact reveal the individual operations of the NAFTA Implementation Act. Although Margaret O’Laughlin, Office of Public firm supplying the information. USTR USTR’s letter did not identify the Affairs (202–205–1819). Hearing has indicated that all or part of the interlining fabrics in question, these Commission’s report may be classified. impaired individuals are advised that fabrics were identified by the information on this matter can be To be assured of consideration by the Committee for the Implementation of Commission, written statements relating obtained by contacting the TDD Textile Agreements (CITA) in a Federal terminal on (202–205–1810). to the investigation should be submitted Register notice of September 20, 1996 to the Commission at the earliest Background (61 FR 149439) in connection with practical date and should be received no similar changes to the Special Access On December 17, 1992, the President later than the close of business on Program for Caribbean Basin countries. entered into the North American Free December 16, 1996. All submissions According to CITA’s notice, imported should be addressed to the Secretary, Trade Agreement (NAFTA), approved interlining fabrics may be used in the by the Congress and implemented by United States International Trade suit jackets and suit-type jackets entered Commission, 500 E Street SW, Presidential Proclamation 6641 effective under the Special Access Program as of January 1, 1994. Among the Washington, DC 20436. provided they are cut in the United Persons with mobility impairments provisions proclaimed to implement States and are of a type described below: NAFTA obligations is heading who will need special assistance in 1. A chest plate, ‘‘hymo’’ piece or gaining access to the Commission 9802.00.90 which affords duty-free ‘‘sleeve header’’ of woven or weft- entry into the United States of apparel should contact the Office of the inserted warp knit construction of Secretary at 200–205–2000. and other textile goods assembled in course animal hair or manmade Mexico in which the textile components filaments used in the manufacture of the Issued: November 26, 1996. are made entirely from U.S.-formed-and- specified garments; By order of the Commission. cut fabrics. According to USTR’s letter, 2. A weft-inserted warp knit fabric Donna R. Koehnke, the impending loss of domestic supply that contains and exhibits properties of Secretary. of certain interlining fabrics has caused elasticity and resilience which render concern among U.S. firms that produce the fabric especially suitable for Annex suits and suit-type jackets containing attachment by fusing with a thermo- Men’s, boys’, women’s, and girls’ suits these interlining fabrics in production- plastic adhesive to the coat-front, side or suit-type jackets, of wool, fine animal sharing operations in Mexico and that body or back of the specified garments; hair, or manmade fibers and covered by import the finished garments under and the following HTS subheadings: heading 9802.00.90. Because these U.S.- 3. A woven fabric that contains and 6103.11.0000 formed interlining fabrics will no longer exhibits properties of resiliency which 6103.12.1000 be available when current inventories render the fabric especially suitable for 6103.12.2000 are exhausted, garments now imported attachment by fusing with a thermo- 6103.19.1000 by these U.S. firms under heading plastic adhesive to the coat-front, side 6103.19.1500 9802.00.90 would no longer qualify for body or back of the specified garments. 6103.19.9040 duty-free entry thereunder and would Written Submissions 6103.19.9050 be dutiable to the extent of the value 6103.21.0020 added in Mexico. Representatives of the The Commission has not scheduled a 6103.23.0007 U.S. textile and apparel industries have public hearing in connection with this 6103.23.0037 requested that the President authorize investigation. However, interested 6103.29.1015 temporary duty-free entry for the suits parties are invited to submit written 6103.31.0000 and suit-type jackets from Mexico that statements regarding the matters to be 6103.33.1000 contain imported interlining fabrics, addressed by the Commission in its 6103.33.2000 provided that the fabrics are cut in the report on this investigation. Commercial 6103.39.1000 United States and that the garments or financial information that a submitter 6103.39.8020 otherwise meet the criteria of heading desires the Commission to treat as 6103.39.8030 9802.00.90. Section 201(b)(1)(A) of the confidential must be submitted on 6104.11.0000 NAFTA Implementation Act (19 U.S.C. separate sheets of paper, each clearly 6104.13.1000 3331(b)(1)(A)) authorizes the President marked ‘‘Confidential Business 6104.13.2000 to proclaim such modifications or Information’’ at the top. All submissions 6104.19.1000 64150 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

6104.19.1500 6204.39.3020 Labor, Room N–5507, 200 Constitution 6104.19.8050 6204.39.8020 Avenue, N.W., Washington, D.C. 20210. 6104.19.8060 6204.39.8030 6104.21.0010 Notice to Interested Persons [FR Doc. 96–30749 Filed 11–27–96; 1:40 pm] 6104.23.0010 Notice of the proposed exemptions 6104.23.0026 BILLING CODE 7020±02±M will be provided to all interested 6104.29.1010 persons in the manner agreed upon by 6104.29.2012 the applicant and the Department 6104.29.2014 DEPARTMENT OF LABOR within 15 days of the date of publication 6104.31.0000 in the Federal Register. Such notice Pension and Welfare Benefits 6104.33.1000 shall include a copy of the notice of Administration 6104.33.2000 proposed exemption as published in the 6104.39.1000 [Application No. D±10014, et al.] Federal Register and shall inform 6104.39.2020 interested persons of their right to 6104.39.2030 Proposed Exemptions; Wells Fargo comment and to request a hearing 6203.11.1000 Bank, N.A., et al. (where appropriate). 6203.11.2000 AGENCY: Pension and Welfare Benefits SUPPLEMENTARY INFORMATION: The 6203.12.1000 Administration, Labor. proposed exemptions were requested in 6203.12.2010 ACTION: Notice of Proposed Exemptions. applications filed pursuant to section 6203.12.2020 408(a) of the Act and/or section 6203.19.2000 SUMMARY: This document contains 4975(c)(2) of the Code, and in 6203.19.3000 notices of pendency before the accordance with procedures set forth in 6203.19.9040 Department of Labor (the Department) of 29 CFR Part 2570, Subpart B (55 FR 6203.19.9050 proposed exemptions from certain of the 32836, 32847, August 10, 1990). 6203.21.0015 prohibited transaction restriction of the Effective December 31, 1978, section 6203.23.0015 Employee Retirement Income Security 102 of Reorganization Plan No. 4 of 6203.23.0055 Act of 1974 (the Act) and/or the Internal 1978 (43 FR 47713, October 17, 1978) 6203.29.2020 Revenue Code of 1986 (the Code). transferred the authority of the Secretary 6203.31.0010 of the Treasury to issue exemptions of 6203.31.0020 Written Comments and Hearing the type requested to the Secretary of 6203.33.1030 Requests Labor. Therefore, these notices of 6203.33.1040 All interested persons are invited to proposed exemption are issued solely 6203.33.1050 submit written comments or request for by the Department. 6203.33.1060 a hearing on the pending exemptions, The applications contain 6203.33.2010 unless otherwise stated in the Notice of representations with regard to the 6203.33.2020 Proposed Exemption, within 45 days proposed exemptions which are 6203.39.1010 from the date of publication of this summarized below. Interested persons 6203.39.1020 Federal Register Notice. Comments and are referred to the applications on file 6203.39.2010 request for a hearing should state: (1) with the Department for a complete 6203.39.2020 The name, address, and telephone statement of the facts and 6203.39.9020 number of the person making the representations. 6203.39.9030 comment or request, and (2) the nature 6204.11.0000 Wells Fargo Bank, N.A. (Wells Fargo) of the person’s interest in the exemption 6204.13.1000 Located in San Francisco, CA; Proposed and the manner in which the person 6204.13.2010 Exemption would be adversely affected by the 6204.13.2020 [Application No. D–10014] 6204.19.1000 exemption. A request for a hearing must 6204.19.2000 also state the issues to be addressed and Based on the facts and representations 6204.19.8050 include a general description of the set forth in the application, the 6204.19.8060 evidence to be presented at the hearing. Department is considering granting an 6204.21.0010 A request for a hearing must also state exemption under the authority of 6204.23.0005 the issues to be addressed and include section 408(a) of the Act and section 6204.23.0030 a general description of the evidence to 4975(c)(2) of the Code and in 6204.29.2010 be presented at the hearing. accordance with the procedures set 6204.29.4012 ADDRESSES: All written comments and forth in 29 CFR Part 2570, Subpart B (55 1 6204.29.4014 request for a hearing (at least three FR 32836, August 10, 1990). 6204.31.1010 copies) should be sent to the Pension Section I. Covered Transactions 6204.31.1020 and Welfare Benefits Administration, If the exemption is granted, the 6204.31.2010 Office of Exemption Determinations, 6204.31.2020 Room N–5649, U.S. Department of restrictions of section 406(a) of the Act 6204.33.1000 Labor, 200 Constitution Avenue, N.W., and the sanctions resulting from the 6204.33.2000 Washington, D.C. 20210. Attention: application of section 4975 of the Code, 6204.33.4010 Application No. stated in each Notice of by reason of section 4975(c)(1) (A) 6204.33.4020 Proposed Exemption. The applications through (D) of the Code, shall not apply, 6204.33.5010 for exemption and the comments effective October 1, 1995, to the 6204.33.5020 received will be available for public 1 For purposes of this proposed exemption, 6204.39.2010 inspection in the Public Documents reference to provisions of Title I of the Act, unless 6204.39.2020 Room of Pension and Welfare Benefits otherwise specified, refer also to the corresponding 6204.39.3010 Administration, U.S. Department of provisions of the Code. Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64151 purchase or redemption of shares by an (f) Any recommendation or evaluation instruments in which the Funds may employee benefit plan (the Plan), in made by Wells Fargo to an Independent invest, the investment policies and certain mutual funds that are either Fiduciary or Directing Participant is strategies that the Funds may utilize, affiliated with Wells Fargo (the implemented only at the express including a description of the risks. Affiliated Funds) or are unaffiliated direction of such Independent Fiduciary (E) A copy of the agreement between with Wells Fargo (the Third Party or Directing Participant. the Plan and Wells Fargo relating to Funds),2 in connection with the (g) The quarterly fee that is paid by a such Plan’s participation in the Portfolio participation by the Plan in the Wells Plan to Wells Fargo and its affiliates for Advisor Program. Fargo Portfolio Advisor Program (the asset allocation and related services (the (F) A written recommendation of a Portfolio Advisor Program). Outside Fee) rendered to such Plan specific Allocation Model together with In addition, the restrictions of section under the Portfolio Advisor Program is a copy of the Questionnaire and 406(b) of the Act and the sanctions offset by all gross investment response. resulting from the application of section management fees (the Advisory Fees) (G) Upon written request to Wells 4975 of the Code, by reason of section and administrative fees (the Fargo, a copy of its investment advisory 4975(c)(1) (E) and (F) of the Code, shall Administrative Fees) received from the agreement and sub-advisory agreement not apply, effective October 1, 1995, to Affiliated Funds by Wells Fargo, its pertaining to the Affiliated Funds as the provision, by Wells Fargo, of asset affiliates, its former affiliates and well as its distribution agreement allocation services to an independent unrelated parties, including all 12b–1 pertaining to the Third Party Funds. fiduciary of a participating Plan (the Fees and Administrative Fees that are (H) Copies of the proposed exemption Independent Fiduciary) or to a paid by the Affiliated Funds to Stephens and grant notice describing the participant (the Directing Participant) of Inc. (Stephens) and all 12b–1 Fees that exemptive relief provided herein. a Plan covered under the provisions of Wells Fargo receives from the Third (I) Written disclosures of Wells section 404(c) of the Act (the Section Party Funds, such that the sum of the Fargo’s affiliation or nonaffiliation with 404(c) Plan) which may result in the offset and the net Outside Fee (the Net the parties who act as sponsors, selection of portfolios by the Outside Fee) will always equal the distributors, administrators, investment Independent Fiduciary or the Directing Outside Fee and the selection of advisers and sub-advisers, custodians Participant in the Portfolio Advisor Affiliated or Third Party Funds will and transfer agents of the Third Party Program for the investment of Plan always be revenue neutral. Funds and the Affiliated Funds; and (h) With respect to its participation in assets. (2) In the case of a Section 404(c) the Portfolio Advisor Program, prior to This proposed exemption is subject to Plan, purchasing shares in the Affiliated the conditions set forth below in Section (A) Wells Fargo provides each II. Funds and the Third Party Funds, (1) Each Independent Fiduciary Directing Participant or Independent Section II. General Conditions receives the following written or oral Fiduciary (for dissemination to the Directing Participant) with copies of the (a) The participation by each Plan in disclosures from Wells Fargo: (A) A brochure describing the documents described above in the Portfolio Advisor Program is paragraphs (h)(1)(A)–(I); and, approved by an Independent Fiduciary Portfolio Advisor Program; a Portfolio (B) In addition to the written or Directing Participant, in the case of Advisor Program Account Agreement; a disclosures, an explanation will be a Section 404(c) Plan, and no Plan description of the allocation models (the provided to the Independent Fiduciary, investing therein is sponsored or Allocation Models) as discussed in upon request, by a Wells Fargo Personal maintained by Wells Fargo and/or its Representation 1; and a reference guide/ Financial Officer (the Personal Financial affiliates. disclosure statement providing details Officer) regarding the services offered (b) As to each Plan, the total fees that about the Portfolio Advisor Program, the under the Portfolio Advisor Program, are paid to Wells Fargo and its affiliates fees charged thereunder, the procedures including the operation and objectives constitute no more than reasonable for establishing, making additions to of the Funds. Such information will be compensation for the services provided. and withdrawing from Portfolio Advisor (c) With the exception of distribution- Program Accounts (the Accounts); and given to either the Independent related fees pursuant to Rule 12b–1 (the other related information. Fiduciary or the Directing Participant. 12b–1 Fees) of the Investment Company (B) A risk tolerance and goal analysis (3) If accepted as an investor in the Act of 1940 (the ’40 Act) which are questionnaire (the Questionnaire) as Portfolio Advisor Program, an offset, no Plan pays a fee or commission described in Representation 11. Independent Fiduciary or Directing by reason of the acquisition or (C) Copies of applicable prospectuses Participant is required to acknowledge, redemption of shares in the Funds. (the Prospectuses) for the Funds in writing, to Wells Fargo, prior to (d) The terms of each purchase or discussing the investment objectives of purchasing shares of the Funds that redemption of shares in the Funds the Funds; the policies employed to such Independent Fiduciary or remain at least as favorable to an achieve these objectives; the corporate Directing Participant has received investing Plan as those obtainable in an affiliation existing between Wells Fargo copies of the documents described in arm’s length transaction with an and its affiliates; the compensation paid paragraph (h)(1) of this Section II. unrelated party. to such entities; disclosures relating to (4) With respect to a Title I Plan that (e) Wells Fargo provides written rebalancing and reallocating Allocation does not permit participant-directed documentation to each Plan’s Models; and information explaining the investments as contemplated under Independent Fiduciary or Directing risks attendant to investing in the section 404(c) of the Act, written Participant of its recommendations or Affiliated Funds or the Third Party acknowledgement of the receipt of such evaluations with respect to the Funds. documents is provided by the Affiliated Funds or the Third Party (D) Upon written or oral request to Independent Fiduciary (i.e., the Plan Funds based upon objective criteria. Wells Fargo, a Statement of Additional administrator, trustee, investment Information supplementing the manager or named fiduciary, as the 2 The Affiliated Funds and the Third Party Funds applicable Prospectus, which describes recordholder of shares of the Funds.) are collectively referred to herein as the Funds. the types of securities and other Such Independent Fiduciary will be 64152 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices required to represent in writing to Wells allocations for the Allocation Model and provide such Independent Fiduciary or Fargo that such fiduciary is— the reasons therefor. Directing Participant with the (A) Independent of Wells Fargo and (6) At least annually, a written or oral Termination Form, at least annually its affiliates; inquiry from Wells Fargo to ascertain during the first quarter of each calendar (B) Capable of making independent whether the information provided on year, but in all cases where Wells Fargo decisions regarding the investment of the Questionnaire is still accurate and to changes the asset mix outside of the Plan assets; determine if such information should be current Allocation Model, when a Fund (C) Knowledgeable with respect to the updated. sub-class is to be divided, when Wells Plan in administrative matters and (7) At least annually, a termination Fargo determines that it is in the best funding matters related thereto; and form (the Termination Form) as interest of the Plan to use a Third Party (D) Able to make an informed described below in Section II(l) and (m). Fund instead of an Affiliated Fund and decision concerning participation in the (j) In the case of a Section 404(c) Plan, whenever the Outside Fee is increased. Portfolio Advisor Program. the Independent Fiduciary will decide Wells Fargo will provide such written (5) With respect to a Section 404(c) whether the information described in notice to the Independent Fiduciary or Plan or a Plan that is covered under Section II(i) above is to be distributed by Directing Participant at least 30 days Title II of the Act, the Directing Wells Fargo to the Directing Participants prior to the implementation of the Participant or the Independent of such Plan or whether the change. Fiduciary is required to acknowledge, in Independent Fiduciary will receive this (n) The instructions for the writing, receipt of such documents and information and then provide it to the Termination Form must— represent to Wells Fargo that such Directing Participants. (1) State that the authorization is individual is— (k) If authorized in writing by the terminable at will by the Independent (A) Independent of Wells Fargo and Independent Fiduciary or Directing Fiduciary or Directing Participant, its affiliates; Participant, the Plan is automatically without penalty to such, upon receipt (B) Knowledgeable with respect to the rebalanced on a periodic basis by Wells by Wells Fargo of written notice from Plan in administrative matters and Fargo to the Allocation Model the Independent Fiduciary or Directing funding matters related thereto; and, previously prescribed by the Participant; and (C) Able to make an informed Independent Fiduciary or Directing (2) Explain that any of the proposed decision concerning participation in the Participant, if one or more Fund Portfolio Advisor Program. changes noted above in paragraph (m) of allocations deviates from the Allocation this Section, will go into effect if the (i) Subsequent to its participation in Model prescribed by the Independent the Portfolio Advisor Program, each Independent Fiduciary or Directing Fiduciary or Directing Participant. Participant does not elect to withdraw Independent Fiduciary receives the (l) In rebalancing a Plan, by the effective date. following written or oral disclosures (1) Wells Fargo is bound by the from Wells Fargo with respect to Allocation Model and is limited in the (o) Wells Fargo maintains, for a period ongoing participation in the Portfolio degree of change that it can make to an of six years, the records necessary to Advisor Program: Allocation Model’s investment mix. enable the persons described in (1) Written confirmations of each (2) Wells Fargo is authorized to make paragraph (p) of this Section II to purchase or redemption transaction changes in the mix of asset classes in a determine whether the conditions of involving shares of an Affiliated Fund Plan Account within a range of 0–15 this exemption have been met, except or a Third Party Fund (including percent (plus or minus) for Stock and that— transactions resulting from the Bond Fund investments and within a (1) A prohibited transaction will not realignment of assets caused by a range of 0–30 percent (plus or minus) be considered to have occurred if, due change in the Allocation Model’s for Money Market Fund investments to circumstances beyond the control of investment mix and from periodic without obtaining the prior written Wells Fargo and/or its affiliates, the rebalancing of Account assets). approval of the Independent Fiduciary records are lost or destroyed prior to the (2) Telephone quotations of such or Directing Participant. end of the six year period; and Independent Fiduciary’s Plan Account (3) Wells Fargo may not change the (2) No party in interest other than balance. asset mix outside the authorized limits Wells Fargo shall be subject to the civil (3) A periodic, but not less frequently unless it provides the Independent penalty that may be assessed under than quarterly, statement of Account Fiduciary or Directing Participant with section 502(i) of the Act, or to the taxes specifying the net asset value of the 30 days’ advance written notice of the imposed by section 4975(a) and (b) of Plan’s assets in such Account, a proposed change and gives the the Code, if the records are not summary of purchase, sale and Independent Fiduciary or Directing maintained, or are not available for exchange activity and dividends Participant time to elect not to have the examination as required by paragraph received or reinvested and a summary of change made. (p) of this Section II below. cumulative realized gains and/or losses. (4) Wells Fargo may not divide a Fund (p)(1) Except as provided in section (4) Semiannual and annual reports sub-class unless it provides 30 days’ (p)(2) of this paragraph and that include financial statements for the advance written notice to the notwithstanding any provisions of Affiliated Funds and the Third Party Independent Fiduciary or Directing subsections (a)(2) and (b) of section 504 Funds as well as the fees paid to Wells Participant of the proposed change and of the Act, the records referred to in Fargo and its affiliates. gives such individual the opportunity to paragraph (o) of this Section II are (5) A quarterly newsletter or other object to the change. unconditionally available at their report pertaining to the applicable (5) Wells Fargo may not replace a customary location during normal Allocation Model which describes the Third Party Fund with an Affiliated business hours by: Allocation Model’s performance during Fund. (A) Any duly authorized employee or the preceding quarter, market (m) Although an Independent representative of the Department, the conditions and economic outlook and, if Fiduciary or Directing Participant may Internal Revenue Service (the Service) applicable, prospective changes in withdraw from the Portfolio Advisor or the Securities and Exchange Affiliated Fund and Third Party Fund Program at any time, Wells Fargo will Commission (the SEC); Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64153

(B) Any fiduciary of a participating (5) A Plan administrator, trustee, investment advisory firm that is Plan or any duly authorized investment manager or named fiduciary unrelated to Wells Fargo and/or its representative of such fiduciary; responsible for investment decisions in affiliates. It is the clearing broker for (C) Any contributing employer to any the case of a Title I Plan that does not WFSI and the sponsor and administrator participating Plan or any duly permit individual direction as for the Affiliated Funds. Stephens also authorized employee representative of contemplated by Section 404(c) of the serves as the principal underwriter or such employer; and Act. distributor of each Affiliated Fund’s (D) Any participant or beneficiary of (f) The term ‘‘Directing Participant’’ is shares. any participating Plan, or any duly a participant in a Plan, such as a Section (d) Wells Fargo Nikko Investment authorized representative of such 404(c) Plan, who is permitted under the Advisors (WFNIA) is a general participant or beneficiary. terms of the Plan to direct, and who partnership that was formerly 50 (p)(2) None of the persons described elects to so direct the investment of the percent owned by a subsidiary of Wells above in paragraphs (p)(1)(B)–(p)(1)(D) assets of his or her account in such Plan. Fargo and 50 percent owned by a of this paragraph (p) are authorized to EFFECTIVE DATE: If granted, this proposed subsidiary of The Nikko Securities Co., examine the trade secrets of Wells Fargo exemption will be effective as of Ltd., an unaffiliated Japanese securities or commercial or financial information October 1, 1995. firm. WFNIA is a registered investment which is privileged or confidential. adviser and serves as a sub-adviser to Summary of Facts and Representations Section III. Definitions certain of the Affiliated Funds. WFNIA Description of the Parties maintains its principal place of business For purposes of this proposed in San Francisco, California. exemption: 1. The parties to the transactions are (e) Wells Fargo Institutional Trust (a) The term ‘‘Wells Fargo’’ means described as follows: Company, N.A. (WFITC) is a trust Wells Fargo Bank, N.A. and any affiliate (a) Wells Fargo, a wholly owned company that was 99.9 percent owned of Wells Fargo, as defined in paragraph subsidiary of Wells Fargo & Company, is by WFNIA and 0.1 percent owned by (b) of this Section III. one of the sixteenth largest commercial Wells Fargo & Company. WFITC serves (b) An ‘‘affiliate’’ of Wells Fargo banks in the United States. Wells Fargo as the custodian for certain of the includes— provides a full range of banking services Affiliated Funds. WFITC maintains its (1) Any person directly or indirectly to commercial, agribusiness, real estate principal place of business in San through one or more intermediaries, and small business customers mainly in Francisco, California. controlling, controlled by, or under California. Its Investment Management Pursuant to an agreement dated June common control with Wells Fargo. Group manages personal trust accounts, 21, 1995, Wells Fargo & Company and (2) Any officer, director or partner in corporate 401(k) and other qualified Wells Fargo agreed to effect the sale of such person, and plans and mutual funds. Its holding all of their right, title and interest in the (3) Any corporation or partnership of company, Wells Fargo and Company, is capital stock of WFITC and the which such person is an officer, director a full-line banking firm serving partnership interest in WFNIA, or a 5 percent partner or owner. institutions, government and individual (c) The term ‘‘control’’ means the respectively, to Barclays Bank PLC, investors in the United States. Wells power to exercise a controlling Barclays California Corporation and Fargo & Company stock is publicly- influence over the management or Barclays Bank of Canada (collectively, policies of a person other than an traded on the New York Stock Barclays), all of which are unrelated to individual. Exchange. Wells Fargo maintains its Wells Fargo & Company, Wells Fargo or (d) The term ‘‘Plan or Plans’’ include corporate headquarters in San any of their affiliates. After Keogh plans, cash or deferred Francisco, California. consummation of the sale, which compensation plans, profit sharing In addition to serving as a custodian occurred on December 29, 1995, WFITC plans, pension and stock bonus plans, or trustee to employee benefit plans, and WFNIA became a part of BZW individual retirement accounts (IRAs), IRAs and SEP–IRAs, Wells Fargo Global Investors, an indirect wholly salary reduction simplified employee sponsors and serves as a mass submitter owned subsidiary of Barclays Bank PLC. pension plans (SARSEPs), simplified and identical adopter for master and The new entity is located in San employee pension plans (SEP–IRAs) prototype pension and profit sharing Francisco, California. and, in the case of a Section 404(c) Plan, plans, including Keogh plans, cash or (f) The Plans are qualified plans, the individual account of a Directing deferred plans, and pension and stock IRAs, SARSEPs and SEP–IRAs for Participant. bonus plans. Wells Fargo sponsors which Wells Fargo acts as master or (e) The term ‘‘Independent Fiduciary’’ prototype IRAs, SEP–IRAs and prototype plan sponsor, mass submitter means a Plan fiduciary which is SARSEPs. With respect to the subject sponsor and identical adopter, independent of Wells Fargo and its transactions, Wells Fargo serves as the custodian, directed trustee or affiliates and is either— investment adviser/manager, transfer recordkeeper. None of the Plans are (1) A Plan administrator, trustee, agent, selling agent and dividend sponsored by Wells Fargo or its investment manager or named fiduciary, disbursing agent to certain Affiliated affiliates. Funds. as the recordholder of shares of the Description of the Affiliated Funds Funds of a Section 404(c) Plan; (b) Wells Fargo Securities, Inc. (WFSI), (2) An individual covered by a Keogh a wholly owned broker-dealer of Wells 2. The Affiliated Funds consist of the Plan which invests in shares of the Fargo, is a full service broker-dealer Stagecoach Funds, Inc. (the Stagecoach Funds; registered with the SEC and a member Funds) and the Overland Express (3) An individual covered under a of the National Association of Securities Funds, Inc. (the Overland Funds), self-directed IRA, SEP–IRA or SARSEP Dealers. WFSI provides a full range of which are open-end investment which invests in shares of the Funds; brokerage services to retail and private companies registered under the ’40 Act. (4) An employee, officer or director of customers and is principally located in The Stagecoach Funds were organized Wells Fargo and/or its affiliates covered San Francisco, California. as a Maryland corporation in September by an IRA, a SEP–IRA or a SARSEP (c) Stephens of Little Rock, Arkansas, 1991 and currently offer sixteen subject to Title I of the Act; or is a full service broker-dealer and separate portfolios. The Overland Funds 64154 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices were organized as a Maryland guidance and policy direction in commission (in the form of a 12b–1 Fee) corporation in April 1987 and currently connection with the objectives of the from Stephens. offer shares in twelve separate Affiliated Funds. 6. WFNIA acts as the sub-adviser for portfolios. Each Affiliated Fund is Each Affiliated Fund portfolio pays certain portfolios. For services rendered, registered under the Securities Act of Wells Fargo Advisory Fees that are WFNIA is paid a fee that is computed 1933, as amended (the ’33 Act), and the computed daily and paid monthly at an daily and paid monthly at an annual ’40 Act. annual rate based on a percentage of the rate based on a percentage of the Each Affiliated Fund is designed to value of the portfolio’s average daily net portfolio’s average daily net assets. As provide a means of investing in separate assets. Currently, the annualized stated above, these sub-advisory fees are portfolios that are professionally Advisory Fees range from 0.05 percent paid by Wells Fargo out of its Advisory managed by Wells Fargo or sub-advised to 0.70 percent depending upon the Fees. Although WFNIA may provide by WFNIA. These portfolios may be sold portfolio. investment advice to such portfolios, through WFSI or Wells Fargo as selling In addition to the Advisory Fees, Wells Fargo retains final investment agent on behalf of the Affiliated Funds. Wells Fargo and WFTIC may receive discretion with respect to the Shares in the Stagecoach Funds and the custody, portfolio accounting, transfer management of the assets of each Overland Funds are currently being agency and shareholder servicing portfolio. offered by Wells Fargo to Plan expenses from the Affiliated Funds (i.e., 7. WFTIC currently acts as the customers, at no load. the Administrative Fees) which may be custodian of the assets of certain of the Overall management and supervision waived from time to time. For some Affiliated Funds and it receives a of each Affiliated Fund rests with such portfolios, the Administrative Fees are custodian fee for such services. The Fund’s Board of Directors (the included in that portion of Wells Fargo’s amount of this expense, to the extent Directors). The Directors approve all Advisory Fee that is paid to the sub- not included in the Advisory Fees is significant agreements involving the adviser. If not included in the Advisory 0.0167 percent of the daily net assets of appropriate Affiliated Fund and the Fee, the current fee for (a) custodial the applicable Affiliated Fund. persons and companies that furnish services is 0.0167 percent annually, (b) services. At least 40 percent of the $2,000 per month plus 0.07 percent on Description of the Third Party Funds Directors are unrelated to Wells Fargo the first $50 million, 0.045 percent on 8. The Third Party Funds are open- and its affiliates, including Stephens. the next $50 million and 0.02 percent end, diversified management Currently, fifteen Affiliated Funds are on the excess over $100 million for investment companies registered under being offered to investors under the portfolio accounting services, (c) a the ’40 Act whose sponsors, Portfolio Advisor Program. These Fund minimum of $3,000 monthly, plus administrators, distributors, investment portfolios range from the Stagecoach various transaction charges for transfer advisers and sub-advisers are not Corporate Stock Fund to the Overland agency services, and (d) 0.00 percent to affiliated with Wells Fargo or its U.S. Treasury Money Market Fund. The 0.30 percent for shareholder servicing. affiliates. The Third Party Funds may be Affiliated Funds are further divided into 4. Stephens serves as each Affiliated made available from time to time to eight asset sub-classes which range from Fund’s sponsor and administrator and Plans investing in the Portfolio Advisor Growth and Income to Cash. A number as distributor of portfolio shares. In Program. of the portfolios are sub-advised by general, Stephens manages all aspects of WFNIA whose sub-advisory fees are the administration and operation of the Description of the Portfolio Advisor paid by Wells Fargo from its Advisory portfolios of the Affiliated Funds. For Program Fees. services provided to the portfolio, 9. The Portfolio Advisor Program is an 3. Wells Fargo serves as each Stephens receives a fee that is computed asset allocation program that has been Affiliated Fund’s investment manager daily and paid monthly at an annual offered by Wells Fargo to Independent pursuant to an advisory agreement rate based on a percentage of the value Fiduciaries of Plans since October 1, entered into with such Fund. In of the portfolio’s average net assets. As 1995. It is designed to provide small- addition, Wells Fargo serves as the distributor, Stephens is the principal and medium-sized Plans with access to transfer agent, selling agent and underwriter of the shares of each the type of investment advice that is dividend disbursing agent of each Affiliated Fund. Stephens enters into typically available to larger investors. Affiliated Fund, as custodian of certain selling agreements with broker-dealers The Portfolio Advisor Program is of the Affiliated Funds and as and other financial institutions (i.e., intended to provide a format for shareholder servicing agent of the selling agents) which make such shares investment with the following Stagecoach Funds. available to their customers. Stephens features—a unified account statement For services rendered to the Affiliated receives 12b–1 Fees from certain of the covering all investments, automatic Funds by Wells Fargo, its affiliates or Affiliated Fund portfolios. These fees allocation of assets and contributions, a Stephens, the underlying contracts range from 0.05 percent of net assets single asset allocation fee and no sales entered thereunder must be approved by annually from the Stagecoach Funds to charges on purchases, redemptions, the Directors of each Affiliated Fund, 0.75 percent of net assets annually from reinvestments or transfers between including a majority of disinterested certain Overland Funds. In addition, investments.3 The minimum investment Directors. The contracts must be Stephens receives Administrative Fees required to establish a Portfolio Advisor approved for an initial period of up to from each Affiliated Fund portfolio Program Account is $10,000.4 two years and then reapproved by the ranging from 0.03 percent to 0.15 Directors or the shareholders of the percent annually of such portfolios’ net 3 Although shares in the Affiliated Funds can be Affiliated Funds and by the assets. marketed outside of the Portfolio Advisor Program, disinterested Directors, at least annually 5. WFSI has entered into selling such shares would generally carry load fees. thereafter. Subject to the supervision agreements with Stephens and acts as a 4 If an investor has already opened a Portfolio and direction of the Directors, Wells selling agent for certain Affiliated Fund Advisor Program Account with Wells Fargo with a minimum investment of $10,000, that same investor Fargo manages the investment and portfolios. However, with respect to may open a second Portfolio Advisor Program reinvestment of each Affiliated Fund’s Plans investing in the Affiliated Funds, Account with Wells Fargo with a minimum assets and provides investment WFSI will not receive a sales load or investment of $2,000. An investor having other Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64155

With respect to a Section 404(c) Plan, the Portfolio Advisor Program will open Participant with a recommended Wells Fargo will offer the Portfolio an Account with Wells Fargo. With Allocation Model and provide the Advisor Program to the Plan’s respect to the Independent Fiduciary of Directing Participant with the relevant Independent Fiduciary as an investment a Section 404(c) Plan, Wells Fargo will Prospectuses of the Funds in the option for the Plan or a portion of the ask such fiduciary to select the type of Allocation Model. Plan. Alternatively, the Plan’s Account that is to be established. The Alternatively, if the Independent Independent Fiduciary may decide to Independent Fiduciary of a Section Fiduciary chooses to have Wells Fargo utilize the Portfolio Advisor Program for 404(c) Plan may open a custody interact with it instead of the Directing all of the Plan’s investment needs. In Account for each individual Directing Participants, the Personal Financial either situation, Wells Fargo will afford Participant or, in the alternative, Officer will meet with the Independent the Independent Fiduciary the establish single custody Accounts in the Fiduciary and provide such fiduciary opportunity to decide whether Wells name of the Plan reflecting the grouping with a description of the Portfolio Fargo will interact directly with the of Directing Participants by similar asset Advisor Program for dissemination to Plan’s Directing Participants or Allocation Models.6 the Directing Participants. The Personal exclusively with the Independent 11. After opening an Account, the Financial Officer will also give the Fiduciary. Independent Fiduciary will obtain and Independent Fiduciary Questionnaires Wells Fargo will provide each complete an Account Agreement and for completion by the Directing Independent Fiduciary contemplating risk tolerance and goal analysis Participants. Based on the results of the investing in the Portfolio Advisor Questionnaire (which may be in paper returned Questionnaires, Wells Fargo Program with a brochure describing the or electronic form). Then, the will then recommend to the Program; an Account agreement; a Independent Fiduciary will present the Independent Fiduciary, the appropriate description of the Allocation Models; completed Account Agreement and Allocation Models and provide such and a reference guide/disclosure Questionnaire to a Personal Financial fiduciary with relevant Prospectuses of document providing detailed Officer or other representative of Wells the Funds in the recommended information about the Portfolio Advisor Fargo. The Questionnaire will be scored Allocation Models for distribution to the Program, the fees charged thereunder, to determine which one of several Directing Participants. the procedures for establishing, making Allocation Models is most appropriate 12. The Allocation Models are additions to and withdrawing from given the financial goals, objectives and designed to satisfy a variety of risk Accounts, and other related risk tolerances identified by the tolerances and investment horizons. At information. In the case of a Section Independent Fiduciary in the the outset, there will be only nine 404(c) Plan, this information may be Questionnaire.7 Allocation Models, some with growth- provided to either the Directing In the case of a Section 404(c) Plan, based investment objectives and others Participants by Wells Fargo or to the the Independent Fiduciary may elect to with income-based investment Independent Fiduciary depending upon have Wells Fargo meet with each objectives. In the future, more the arrangement such Independent Directing Participant. Then, a Personal Allocation Models may be added by Fiduciary has negotiated with Wells Financial Officer will provide Wells Fargo. Each Allocation Model will Fargo.5 information relating to the Portfolio have three asset classes and initially, 10. Individual IRA, SEP–IRA and Advisor Program as noted above, have nine asset sub-classes. Table I shows the single participant Keogh plan each Directing Participant complete the asset distribution for a sample Portfolio participants contemplating investing in Questionnaire, present the Directing Advisor Program Allocation Model.

TABLE I.ÐPORTFOLIO ADVISOR PROGRAM SAMPLE ALLOCATION MODEL [Moderate Medium-Term Model Allocation]

Min (per- Norm Max (per- Min (per- Norm Max (per- Class cent) (percent) cent) Fund type Asset sub-class cent) (percent) cent)

Stock Funds ...... 45 60 75 Third party ...... Growth ...... 0 15 30 Third party ...... Equity International ... 0 5 20 Affiliated ...... Growth & Income ...... 0 15 30 Affiliated ...... Equity Income ...... 0 15 30 Affiliated ...... Asset Allocation ...... 0 10 25 Bond Funds ...... 25 40 55 Affiliated ...... Total Return Bond ..... 0 15 30 Affiliated ...... Intermediate Bond ..... 0 15 30 Affiliated ...... Short-Term Bond ...... 0 10 25 Money Market Funds 0 0 30 Affiliated ...... Cash ...... 0 0 30 Note: A Third Party Fund will never be replaced by an Affiliated Fund whereas an Affiliated Fund may be replaced by a Third Party Fund. (See discussion in Representation 15 regarding extraordinary changes that are outside the accepted percentage bands.)

accounts with Wells Fargo of $10,000 or more that 6 If Wells Fargo establishes a single custody to the Questionnaire have changed from the are not Portfolio Advisor Program Accounts will not account in the name of a Section 404(c) Plan, it is previous year. If so, Wells Fargo will update the be eligible for this lower investment minimum. represented that Wells Fargo will not keep track of Questionnaire. However, in the event an investor the individual interests of the Directing 5 The Department wishes to point out that an wishes to change his or her Questionnaire during Participants. Instead, the Independent Fiduciary a quarter so that another Allocation Model is called Independent Fiduciary has the responsibility to will maintain such records or have a third party disseminate all information it receives to each recordkeeper perform this service. for, that new Allocation Model will be presented to Directing Participant investing in the Portfolio 7 Wells Fargo proposes to canvass each investor and approved by the investor and the change to the Advisor Program. annually to ascertain whether any of the answers new Allocation Model will be effected immediately. 64156 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

13. The Allocation Models are also authorize Wells Fargo to change the which is comprised of senior Wells developed and maintained by the Wells cash position in a given Allocation Fargo officers, is responsible for Fargo Bank Asset Allocation Committee Model in a range of 0–30 percent above selecting Affiliated Funds and Third (the Allocation Committee) which is or below the normal position to Party Funds that satisfy the asset comprised of senior investment officers accommodate extremes in the other two allocations specified by the Allocation of Wells Fargo’s Investment asset sub-classes.9 Wells Fargo will Committee for each Allocation Model. Management Group. The Allocation make changes in the asset mix within With the exception of the Growth and Committee is responsible for these authorized limits without seeking Equity International asset sub-classes, determining the overall asset allocation further approval from the Independent the Review Committee will select of each Allocation Model among the Fiduciary or the Directing Participant. portfolios of the Affiliated Funds for currently nine asset sub-class categories. However, Wells Fargo will not change investment. The Review Committee will The Allocation Committee integrates the asset mix outside those limits unless always select Third Party Funds for both quantitative and fundamental it provides the Independent Fiduciary investment to the extent an Allocation analysis to determine optimal or Directing Participant with 30 days’ Model calls for an allocation of assets in Allocation Models that match risk and advance written notice of the proposed the Equity International and Growth reward objectives. In this regard, the change 10 and gives the Independent sub-classes. If, however, the Review Allocation Committee does not rely Fiduciary or Directing Participant time Committee determines that investment upon a software program but rather to elect not to have the change made.11 in an Affiliated Fund is imprudent (e.g., examines current asset allocation 16. Wells Fargo’s Investment Review the Affiliated Fund does not meet the strategies and determines changes based Committee (the Review Committee), requirements of a necessary asset sub- on the present financial outlook, class), it will select a Third Party Fund estimates of expected returns, volatility 9 For any Allocation Model, it is represented that in lieu of an Affiliated Fund for a not more than 30 percent of an investor’s assets can particular sub-class of assets.12 If a in markets, asset class correlation, be placed in the Money Market Funds. If the range economic trends and various securities for cash is exceeded on a rebalancing date due to Third Party Fund is substituted for an valuation measures. These criteria are market forces, then the assets will be rebalanced to Affiliated Fund, the Review Committee provided by Wells Fargo to all Portfolio achieve the targeted percentages established in the must thereafter use only a Third Party relevant Allocation Model. The rebalancing will Fund (i.e., the same Third Party Fund or Advisor Program investors in the require a redemption of shares in the Money Market disclosure materials. Funds so that the percentage in cash will be aligned another Third Party Fund). In the 14. The Allocation Models may be with the relevant Allocation Model percentage. In applicants’ view, this precaution will adjusted by the Allocation Committee as addition, a corresponding purchase of funds in the remove any conflicts of interest that asset sub-classes that are below the targeted range may arise if the Review Committee is changes in the economy and market will be made. (See Representation 18 for a conditions dictate within the discussion of the rebalancing of Accounts.) faced with the prospect of selecting an permissible ranges described below in 10 Changes outside these limits may take the form Affiliated Fund over a Third Party Representation 15. Such adjustments of an extraordinary shift (such as the movement of Fund.13 may include changing the investment a large percentage of assets into cash if the Allocation Committee determines that such a move mix of the Allocation Models by altering 12 Changes in the Affiliated Funds or Third Party is warranted by economic conditions) or a change Funds used to satisfy the need for investment in a the proportion of assets invested among in the normal position for the allocation mix of a particular asset sub-class will only be made after the asset sub-classes. However, such particular Allocation Model which the Allocation Wells Fargo has notified all of the affected adjustments do not include the Committee considers necessary because of a more Independent Fiduciaries or Directing Participants in permanent shift in market or economic conditions. Allocation Committee’s adding to or writing and has explained that the proposed In either case, Wells Fargo will notify each changes will go into effect if the Independent deleting from Funds in an Allocation Independent Fiduciary whose Plan is invested in Fiduciaries or Directing Participants do not elect to Model without obtaining the written the relevant model or Directing Participant of the withdraw by the effective date of such change. (See consent of the Independent Fiduciary or change and give such Independent Fiduciary or Representation 27.) Directing Participant time to elect not to have the 13 If the Allocation Committee should later divide the Directing Participant. change made. The change will then be made for all In addition, the Allocation Committee the asset sub-classes for an Allocation Model into Independent Fiduciaries or Directing Participants one or more new sub-classes, the Review is subject to certain limitations in who do not elect otherwise. If a change is made to Committee will select Affiliated Fund Portfolios to changing the design of the Allocation the normal position for the allocation mix of a satisfy the call for investment in the new sub-class particular Allocation Model, Wells Fargo will be unless (a) there is no Affiliated Fund Portfolio Models. For example, the Allocation authorized to change the allocation of assets within Committee is required to design which invests in the new sub-class of assets; (b) a 15 percent range (30 percent in the case of cash) Wells Fargo’s Affiliated Fund is not performing as Allocation Models that include the above or below the newly established normal well as a similar Third Party Fund based upon such stock, bond and money market fund position without notifying the Independent measurable criteria as performance, expense ratio, asset classes and their respective sub- Fiduciary in advance. If, on the other hand, after standard deviation and, in the case of the Bond first notifying the Independent Fiduciary or Funds, the SEC yield; or (c) a Third Party Fund has classes. Directing Participant, Wells Fargo makes an been utilized initially for the asset sub-class that is 15. The Independent Fiduciary or extraordinary change to the asset allocation which being divided. Directing Participant will authorize moves it outside the authorized limit, Wells Fargo For example, Wells Fargo represents that ‘‘total Wells Fargo to change the asset mix of will be authorized to return the asset mix back return’’ is a recognized sub-class of the Bond Fund within the authorized limit without further notice, a given Allocation Model within a 15 asset class that is set forth in Table I. Assuming the but any other change which will result in the asset industry begins distinguishing between U.S. bonds percent range (i.e., 15 percent above or mix remaining outside the authorized limit will and foreign bonds, Wells Fargo explains that it may below the normal position for the stock only be made after giving 30 days’ advance written do this for the benefit of its investors. In this regard, and bond asset sub-classes).8 Movement notice and allowing the Independent Fiduciary or if an Affiliated Fund has been used as the Fund for Directing Participant the opportunity to elect not to within each sub-class of assets will also the total return sub-class, and Wells Fargo has have such change made. available two Bond Funds, each of which is be authorized within a range of no more 11 Assuming an Independent Fiduciary of a appropriate for the new sub-classes, Wells Fargo than 15 percent above or below the Section 404(c) Plan establishes a single custody explains that it will utilize these Affiliated Funds. normal position. The Independent Account with Wells Fargo in the name of the Plan, If an Affiliated Fund is being used for the U.S. bond it is represented that if a Directing Participant does sub-class, but Wells Fargo does not have an Fiduciary or Directing Participant will not wish to have his or her assets reallocated in appropriate Affiliated Fund for the foreign bond accordance with Wells Fargo’s recommendation, sub-class, it will select a Third Party Fund. Thus, 8 Movement within each sub-class will apply to such Directing Participant may choose another when the original sub-class is serviced by an the total assets held in an Independent Fiduciary’s Allocation Model or leave the Portfolio Advisor Affiliated Fund and that sub-class is divided, Wells or a Directing Participant’s Account. Program. Fargo states that it may use an Affiliated Fund, a Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64157

17. The asset allocation services Affiliated Funds and/or Third Party Disclosures provided by the Personal Financial Funds on the second to the last business 19. Aside from the Questionnaire Officer will not be binding on the day of each calendar quarter. For described above, in order for a Plan to Independent Fiduciary or Directing purposes of rebalancing, Wells Fargo participate in the Portfolio Advisor Participant. No action will be taken on will use the net asset values of the Program, Wells Fargo will provide an the recommendation unless and until affected Funds as of close of business Independent Fiduciary or Directing 14 the Independent Fiduciary or Directing for the preceding trading day. The Participant, with the following materials Participant accepts and approves in applicants represent that the act of and/or oral disclosures: (a) A copy of writing the particular Allocation Model rebalancing Accounts will not involve the agreement between the Plan and and the corresponding investment mix any exercise of investment discretion on Wells Fargo relating to the Plan’s (i.e., the investment allocation) the part of Wells Fargo or its affiliates participation in the Portfolio Advisor recommended by the Personal Financial because the rebalancing will be Program; (b) upon written request to Officer. The Independent Fiduciary or confined to bringing the Account into Wells Fargo, a copy of its investment Directing Participant can add or balance with the Allocation Model advisory agreement and sub-advisory withdraw Plan assets to or from the chosen by the Independent Fiduciary or agreement pertaining to the Affiliated respective Account at any time (subject the Directing Participant. Funds as well as its distribution to a $100 minimum redemption and Wells Fargo will also make periodic agreement pertaining to the Third Party purchase requirement) and can also changes (or reallocations) to the asset Funds; (c) a written recommendation of choose a different Allocation Model if mix of the Allocation Models and to the a specific Allocation Model together the Independent Fiduciary’s or mix and identity of the Affiliated Funds with a copy of the Independent Directing Participant’s investment needs and/or Third Party Funds that satisfy Fiduciary’s Questionnaire and answers; and goals have changed. Moreover, the Allocation Models. Such changes (d) a written or oral explanation of the Wells Fargo intends to ask Independent will be made to take into account Portfolio Advisor Program and the Fiduciaries or Directing Participants changes in the economy and market operation and objectives of the annually whether any information conditions and will be made Allocation Models; (e) sufficient and provided in the Questionnaire should be independently of the selection of Funds. understandable disclosure relating to changed or updated. The changes will also be confined to the rebalancing and reallocating the percentage bands set forth above in Allocation Models; (f) a copy of the Rebalancing and Reallocation of Plan Table I. When changes are made to the Accounts proposed and final exemptions granting Allocation Models, Wells Fargo will the relief requested herein; (g) written 18. Once an Independent Fiduciary or automatically realign each Plan Account disclosures of Wells Fargo’s affiliation Directing Participant has directed Wells to make the Account’s investment mix or nonaffiliation with the parties who Fargo to invest Plan assets that are held match the new investment mix of the act as sponsors, distributors, in an Account in a particular Allocation Allocation Model selected by the administrators, investment advisers and Model, Wells Fargo will invest the Independent Fiduciary or Directing sub- advisers, custodians and transfer Account in the Affiliated Funds and/or Participant. agents of the Third Party Funds and the Third Party Funds that the Allocation Wells Fargo will realign the Accounts’ Affiliated Funds; and (h) in the case of Committee has previously chosen to assets by shifting assets between a Section 404(c) Plan, to the extent satisfy the asset allocation called for by Affiliated Funds and Third Party Funds requested by the Independent Fiduciary, the Allocation Model. It is anticipated according to changes in the Allocation an explanation by a Personal Financial that, over time, disproportionate Model. This type of automatic Officer to Directing Participants in such earnings as between asset types will realignment will take place only within Plan of the services offered under the cause the Account’s investment mix to the percentage bands that have been Portfolio Advisor Program, the drift out of balance with the Allocation authorized by the Independent operation and objectives of the Funds Model originally chosen by the Fiduciary or Directing Participant. If an and copies of the documents described Independent Fiduciary or Directing Allocation Model changes such that in (a)–(g). Participant. assets would be allocated outside of the Wells Fargo will make available for For example, the Allocation Model authorized bands, Wells Fargo will inspection by the Independent chosen by the Independent Fiduciary or notify the affected Independent Fiduciary or Directing Participant at the Directing Participant may require that Fiduciary or Directing Participant of the time of enrollment in the Portfolio 60 percent of Account assets be invested proposed change and give each Advisor Program, copies of Prospectuses in the Stock Funds and 40 percent of individual an opportunity to elect not to of each Affiliated Fund and Third Party Account assets be invested in the Bond permit such change.15 Fund in which a Plan’s assets are Funds. If the Stock Funds perform better invested. The Prospectuses will also be than the Bond Funds during a particular 14 It is represented that neither Wells Fargo nor its mailed to the Independent Fiduciary, or period of time, more than 60 percent of affiliates will receive fees or commissions in connection with the rebalancing. It is also if applicable, to the Directing the Account’s assets will be invested in represented that the current percentage threshold Participant, after the initial investment the Stock Funds by the end of the for triggering rebalancing is a deviation of more of assets under the Portfolio Advisor period. than 5 percent above or below the targeted Program. These documents discuss the percentage for an asset sub-class. To correct this imbalance, Wells Fargo investment objectives of the Affiliated will move assets among investments by 15 In the preceding example, if the Allocation Model were to be changed such that the new Funds and the Third Party Funds, the buying and selling shares of the investment allocation is 55 percent in the Stock policies employed to achieve these Funds and 45 percent in the Bond Funds (a 5 objectives, the corporate affiliation Third Party Fund or a combination of the two. If, percent change that is within 15 percent of the on the other hand, a Third Party Fund is being used normal position for that Allocation Model), Wells existing between Wells Fargo and its for the total return sub-class, Wells Fargo must Fargo would then sell sufficient shares in the Stock utilize Third Party Funds for both the new divided Funds to reduce the percentage of assets invested notify each Independent Fiduciary or Directing sub-classes. In any event, Wells Fargo represents in such fund to 55 percent and invest the proceeds Participant affected and make changes to the that it will give all investors 30 days’ notice and the in the Bond Funds. If, however, a change of more Accounts of the Independent Fiduciaries or ability to object before any sub-class is divided. than 15 percent is proposed, Wells Fargo will first Directing Participants who did not elect otherwise. 64158 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices affiliates, the compensation paid to such change in an Allocation Model’s its asset allocation and related services, entities and any information explaining investment mix and from periodic Wells Fargo will charge each the risks attendant to investing in the rebalancing of Account assets); (b) participating Plan an annual Plan-level Affiliated Funds or Third Party Funds. telephone quotations of such investment fee. The Outside Fee will be In addition, upon written or oral Independent Fiduciary’s Account based on total assets under management request, an Independent Fiduciary or balance; (c) a periodic (but not less which are attributable to such Plan’s Directing Participant will be given a frequently than quarterly) statement of investment in both the Affiliated Funds Statement of Additional Information Account specifying the net asset value and the Third Party Funds. The supplementing the applicable of a Plan’s assets that are invested in annualized Outside Fee will be 1.95 Prospectus which describes the such Account, a summary of purchase, percent (for balances below $20,000), securities and other instruments in sale and exchange activity and 1.85 percent (for balances of between which the Funds may invest, the dividends received or reinvested and a $20,000 and $100,000, 1.65 percent (for investment policies and strategies that summary of cumulative realized gains/ balances between $100,000 and the Affiliated Funds or Third Party losses; (d) semiannual and annual $250,000) and 1.50 percent (for balances Funds may utilize, including a reports which will include financial above $250,000).17 From time to time, description of the risks. statements for the Funds and the fees Wells Fargo may reduce the Outside Fee 20. If accepted as an investor in the paid by the Funds to Wells Fargo and for promotional purposes. The duration Portfolio Advisor Program, the its affiliates; (e) a quarterly newspaper and promotional nature of such Independent Fiduciary or Directing or other report pertaining to the reductions will be disclosed to Participant will be required to applicable Allocation Model describing investors. The Outside Fee will be acknowledge in writing, prior to such Allocation Model’s performance computed quarterly on the average daily investing through the Program, that during the preceding quarter, market value of assets in the Plan’s Account such Independent Fiduciary or conditions and economic outlook and, if during the quarter and will be deducted Directing Participant has received applicable, prospective changes in directly from the Account on a quarterly copies of the aforementioned Affiliated Fund and Third Party Fund basis. documents. With respect to a Title I allocations for the Allocation Model and 23. Wells Fargo will receive Advisory Plan that does not permit participant- the reasons therefor; (f) a written or oral Fees from the Affiliated Funds ranging directed investments as contemplated inquiry at least once annually to from 0.05 percent to 0.70 percent, under section 404(c) of the Act, written determine if the information provided annually, depending upon the acknowledgement of the receipt of such in the Questionnaire is still accurate and applicable portfolio. A sub- advisory fee documents is provided by the to determine if such information should is paid by Wells Fargo out of its Independent Fiduciary (i.e., the Plan be updated; and (g) at least annually, a investment advisory fee to WFNIA. administrator, trustee, investment Termination Form that the Independent Wells Fargo may also receive manager or named fiduciary, as the Fiduciary may use to withdraw from the Administrative Fees from the Affiliated recordholder of shares of the Funds.) Portfolio Advisor Program together with Funds. As stated in Representation 3, if Such Independent Fiduciary will be instructions for using such form. such fees are not included in the required to represent in writing to Wells With respect to a Section 404(c) Plan, Advisory Fee for a portfolio, the current Fargo that such fiduciary is (a) the Independent Fiduciary will fee for (a) custodial services is 0.0167 independent of Wells Fargo and its determine whether the aforementioned percent annually, (b) $2,000 per month affiliates; (b) capable of making information is provided directly to the plus 0.07 percent on the first $50 independent decisions regarding the Directing Participants by Wells Fargo or million, 0.045 percent on the next $50 investment of Plan assets; (c) whether such fiduciary will receive this million and 0.02 percent on the excess knowledgeable with respect to the Plan information and disseminate it to the over $100 million for portfolio in administrative matters and funding Directing Participants. If custody accounting services, (c) a minimum of matters related thereto; and (d) able to accounts are established in the names of $3,000 monthly, plus various make an informed decision concerning the Directing Participants, such transaction charges for transfer agency participation in the Portfolio Advisor participants will receive individualized services, and (d) 0.00 percent to 0.30 Program. information. percent for shareholder servicing. With respect to a Section 404(c) Plan Further, Wells Fargo may receive 12b-1 Fee Structure or a Plan that is covered under Title II fees in the form of ‘‘trailing’’ of the Act, the Directing Participant or 22. As to each investing Plan, the total commissions of 0.05 percent to 0.50 the Independent Fiduciary is required to fees that are paid to Wells Fargo and its percent of assets invested with respect acknowledge, in writing, receipt of such affiliates will constitute no more than to Third Party Funds in the Portfolio documents and represent to Wells Fargo reasonable compensation for the Advisor Program. that such individual is (a) independent services provided.16 In this regard, for 24. With respect to the Affiliated of Wells Fargo and its affiliates; (b) Funds, Wells Fargo proposes to offset, knowledgeable with respect to the Plan 16 The fact that certain transactions and fee in administrative matters and funding arrangements are the subject of an administrative the selection or addition of Third Party Funds may matters related thereto; and, (c) able to exemption does not relieve the fiduciaries of the result in a Plan paying a larger overall aggregate fee Plans from the general fiduciary responsibility for the package of services than if the fiduciary had make an informed decision concerning provisions of section 404 of the Act. Thus, the selected Affiliated Funds. participation in the Portfolio Advisor Department cautions Independent Fiduciaries of 17 In the case of a Section 404(c) Plan, the Program. Plans investing in the Funds that they have an computation of the Outside Fee will be based on the 21. On an ongoing basis, Wells Fargo ongoing duty under section 404 of the Act to average daily value of all of the assets in the monitor the services provided to the Plans to assure Accounts of Directing Participants who invest in will provide the Independent Fiduciary that the services remain appropriate and that the the Portfolio Advisor Program. In other words, the with (a) written confirmations of each fees paid by the Plans for such services are Outside Fee is based on the aggregate asset value purchase and redemption of shares of an reasonable in relation to the value of the services of the Plan’s asset and not on the value of each Affiliated Fund or Third Party Fund provided. In considering whether to enter into the Directing Participant’s Account in the Portfolio arrangement for the provision of asset allocation Advisor Program. The result is that all Directing (including transactions resulting from services, the Department emphasizes that it expects Participants in a Section 404(c) Plan will be subject the realignment of assets caused by a the Independent Fiduciary to fully understand that to the same Outside Fee as well as the breakpoints. Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64159 quarterly, against its Outside Fee, (a) all Third Party Funds, Wells Fargo conflicts of interest that may exist as a Advisory Fees and Administrative Fees proposes to offset quarterly, against the result of the fact that the investment in that are paid by the Affiliated Funds to Outside Fee, all 12b-1 Fees that it certain Funds would generate higher Wells Fargo, its affiliated sub-advisers, receives. As stated in Representation 23, overall fees to Wells Fargo and its its former affiliates, WFNIA and WFITC, these fees currently range from 0.05 affiliates. In addition, by insuring that and to other unrelated parties and (b) all percent to 0.50 percent annually of net the sum of the offset and the Net 12b-1 Fees and Administrative Fees that assets invested. Outside Fee always equals the Outside are paid to Stephens.18 As stated in All such Fees described above will be Fee, Wells Fargo believes that the Representation 3, the annualized offset in accordance with the crediting selection of Affiliated or Third Party Advisory Fees currently range from 0.05 mechanism that is described in Funds will be revenue-neutral. percent to 0.70 percent of the portfolio’s Prohibited Transaction Exemption (PTE) Table II illustrates the revenue-neutral average daily net assets. As stated in 77–4 (42 FR 18732, April 8, 1977). After result of the offset arrangement. As Representation 4, the annualized 12b-1 the offset, Wells Fargo will be paid a Net Table II shows, if a Plan with an Fees that are paid to Stephens range Outside Fee that may be deducted from Account balance of $10,000 is invested from 0.05 to 0.75 percent of the net Plan Accounts. The Net Outside Fee, in a Portfolio in which 50 percent or assets of the Affiliated Funds. In together with the Advisory Fees, the $5,000 is invested, respectively, in an addition, the annualized Administrative Administrative Fees and 12b- 1 Fees Affiliated Fund and a Third Party Fund, Fees that are paid to Stephens range will equal the Outside Fee prior to any the Plan will be subject to an Outside from 0.03 percent to 0.15 percent of the offset. Wells Fargo believes that the Fee of $195 or 1.95 percent of assets portfolio’s net assets. With respect to the offset will eliminate any potential invested.

TABLE II.ÐEXAMPLE OF REVENUE-NEUTRAL FEE OFFSET

Percentage Offset (advisory, adminis- of assets al- Amount in- trative, 12b-1 fees) Fund type located to vested in Net outside Outside fee fund (per- fund fee (1.95%) cent) Percent Amount

Third Party ...... 0.50 5,000 0.25 12.50 85.00 97.50 Affiliated ...... 0.50 5,000 0.80 40.00 57.50 97.50

Total ...... 100.00 10,000 N/A 52.50 142.50 195.00

25. At the end of each quarter, Wells the amount of Advisory Fees, Allocation Model. In this example, gross Fargo will calculate the percentage of Administrative Fees and 12b-1 Fees that revenues for Wells Fargo, its affiliates gross revenues that it has received are received. This amount will be and where applicable, Stephens, as during the quarter in the form of expressed as a percentage of the average between the Affiliated Funds and the Advisory Fees, Administrative Fees and daily net value of Account assets. Wells Third Party Funds vary from 0.25 12b-1 Fees from the applicable Fargo proposes to reduce the Outside percent to 1.09 percent of the daily net Affiliated Fund or Third Party Fund. Fee for the quarter for each Plan by asset value (annualized), depending on Such percentage will also include all subtracting from the Outside Fee the which Affiliated Fund or Third Party 12b-1 Fees and Administrative Fees that Offset Percentage for the Allocation Fund is selected. The weighted average Model in which Plan assets were are paid to Stephens. These figures will of these revenues for the entire invested during the quarter. Only after be calculated as a percentage of the Allocation Model is 0.83 percent the Offset Percentage has been average daily net asset value of assets in (annualized), which is subtracted from subtracted will Wells Fargo deduct the the appropriate Fund. The weighted Outside Fee from the Plan Account in the 1.95 percent Outside Fee, thereby average of such revenues (the Offset the Portfolio Advisor Program. leaving a net Outside Fee of 1.12 Percentage) will then be calculated for 26. Table III shows the calculation of percent (annualized) for the quarter. each Allocation Model. This will yield the Offset Percentage for a sample

TABLE III.ÐEXAMPLE OF FEE OFFSET ON SAMPLE ALLOCATION MODEL

Percent- Total age of Weighted Fund type Sub-class revenues* assets al- fee per- (percent) located to centage fund

Third Party ...... Growth ...... 0.50 × 15.00 = 7.50 Third Party ...... Equity Intn'tl...... 0.25 × 5.00 = 1.25 Affiliated ...... Growth & Income ...... 1.09 × 10.00 = 10.90 Affiliated ...... Equity Income ...... 1.09 × 15.00 = 16.35 Affiliated ...... Asset Allocation ...... 0.80 × 10.00 = 8.00 Affiliated ...... Total Return ...... 1.03 × 15.00 = 15.45 Affiliated ...... Intermediate ...... 0.75 × 15.00 = 11.25

18 The Department notes that if the Advisory Fee offsetting will be required with respect to that that is offset includes a fee that is paid by Wells portion of the fee that is actually paid by Wells Fargo to an unrelated sub- adviser, no additional Fargo to such sub-adviser. 64160 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

TABLE III.ÐEXAMPLE OF FEE OFFSET ON SAMPLE ALLOCATION MODELÐContinued

Percent- Total age of Weighted Fund type Sub-class revenues* assets al- fee per- (percent) located to centage fund

Affiliated ...... Short-Term ...... 0.80 × 10.00 = 8.00 Affiliated ...... Cash ...... 0.75 × 5.00 = 3.75

Total ...... 100.00 82.45

Outside Fee ...... 1.95 Weighted Average of Wells Fargo Reve- 0.83 nues (82.45 ÷ 100). Net Account Fee (Annual)ÐWould be Cal- 1.12 culated Quarterly. * For the Affiliated Funds, total revenues include all fees that are paid to Wells Fargo, its affiliated sub-advisers, its former affiliates, Stephens and to other unrelated parties. For the Third Party Funds, total revenues include 12b-1 Fees. Any other fees that Wells Fargo may receive from the Third Party Funds are paid from the 12b-1 Fees.

Use of the Termination Form affiliates such that the Independent (g) Although Wells Fargo will have 27. Although an Independent Fiduciary or Directing Participant will discretion to change the investment mix maintain complete discretion with Fiduciary or Directing Participant may of an Allocation Model, it has been and respect to participating in the Portfolio withdraw from the Portfolio Advisor will be bound by the financial goals and Advisor Program. Program at any time, Wells Fargo will risk tolerances that the model represents (b) No Plan has paid or will pay a fee and it will be limited in the degree of provide each such individual with a or commission by reason of the Termination Form, at least annually, but change that it can make to an Allocation acquisition, redemption, reinvestment Model’s investment mix. in all cases where Wells Fargo changes or transfer of shares in the Funds. the asset mix outside of the current (c) As to each Plan, the total fees that (h) Any authorizations made by an Allocation Model, when Wells Fargo are paid to Wells Fargo and its affiliates Independent Fiduciary or Directing proposes to divide a Fund sub-class, have constituted or will constitute no Participant with respect to increases in when Wells Fargo determines that it is more than reasonable compensation for the Outside Fee, changes in the asset in the best interest of the Plan to use a the services provided. mix outside an Allocation Model, the Third Party Fund instead of an (d) Prior to investing in the Portfolio division of a Fund sub-class, or the Affiliated Fund and whenever the Advisor Program, each Independent substitution of a Third Party Fund for an Outside Fee is increased. Wells Fargo Fiduciary or Directing Participant have Affiliated Fund, have been and will be will provide such written notice to the received or will receive offering terminable at will and without penalty Independent Fiduciary or Directing materials and disclosures from Wells to the Plan, upon receipt by Wells Fargo Participant at least 30 days prior to the Fargo which set forth all material facts of written notice of termination from the implementation of the change. The concerning the purpose, fees, structure, Independent Fiduciary or the Directing written notification will include the operation, Account rebalancing, risks Participant. Termination Form that the Independent and participation in such program. (i) Each Independent Fiduciary or Fiduciary or Directing Participant may (e) Wells Fargo has provided or will Directing Participant has received and use to withdraw from the Portfolio provide written documentation to an will receive ongoing disclosures from Advisor Program. The Termination Independent Fiduciary or Directing Wells Fargo regarding the continued Form will be accompanied by Participant of its recommendations or participation in the Portfolio Advisor instructions on its use. The instructions evaluations based upon objective Program. will expressly (a) provide that the criteria. authorization is terminable at will and (f) The quarterly Outside Fee that is (j) All dealings between the Plans, the without penalty, upon receipt by Wells paid by a Plan to Wells Fargo for asset Funds and Wells Fargo have been and Fargo of written notice from the allocation and related services rendered will remain on a basis which is at least Independent Fiduciary or Directing to such Plan under the Portfolio Advisor as favorable to the Plans as such Participant; and (b) explain that the Program will be offset by (i) all Advisory dealings are with other shareholders of proposed change will go into effect if Fees (including sub-advisory fees) and the Funds. the Independent Fiduciary or Directing Administrative Fees received from the FOR FURTHER INFORMATION CONTACT: Ms. Participant does not elect to withdraw Affiliated Funds by Wells Fargo, its Jan D. Broady of the Department, by the effective date. affiliates, its former affiliates, and telephone (202) 219–8881. (This is not 28. In summary, it is represented that unrelated parties, (ii) all 12b-1 Fees and a toll-free number.) the transactions have satisfied or will Administrative Fees that are paid by the satisfy the statutory criteria for an Affiliated Funds to Stephens and (iii) all Cassemco, Inc. Retirement Plan and exemption under section 408(a) of the 12b-1 Fees Wells Fargo receives from Trust Agreement Located in Cookeville, Act because: the Third Party Funds, such that the Tennessee; Proposed Exemption (a) The investment of a Plan’s assets sum of the offset and the Net Outside [Application No. D–10350] in the Portfolio Advisor Program has Fee will always equal the Outside Fee been or will be made by a Plan fiduciary and the selection of Affiliated or Third The Department is considering or Directing Participant who is Party Funds will always be revenue granting an exemption under the independent of Wells Fargo and its neutral. authority of section 408(a) of the Act Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64161 and section 4975(c)(2) of the Code and In a letter dated September 4, 1996, party in interest with respect to the in accordance with the procedures set Mr. George S. Hastings, Jr., President of Plan. forth in 29 CFR Part 2570, Subpart B (55 AquaPro Corporation determined that The Sale is represented by the FR 32836, 32847, August 10, 1990). If the current fair market value of the applicant to be in the best interests of the exemption is granted, the Securities held by the Plan was $7.50 the Plan and its participants and restrictions of sections 406(a) and 406 for each of the 956 shares and $2.25 for beneficiaries because the Plan will be (b)(1) and (b)(2) of the Act and the each of the 956 warrants, or a total fair able to distribute the accrued vested sanctions resulting from the application market value of $9,321 for all the benefits and be able to terminate and of section 4975 of the Code, by reason Securities held by the Plan. avoid additional costs and expenses. of section 4975(c)(1) (A) through (E) of Mr. Hastings represents, that although Also, the applicant represents that the the Code, shall not apply to the the Securities are not currently rights of the participants and proposed cash sale (the Sale) by the registered or listed on a national beneficiaries are protected by the Plan of certain securities (the Securities) securities exchange, several million independent determination of the fair to Cassemco, Inc. the sponsoring dollars have been invested in the shares market value of the Securities by Mr. employer (the Employer) and party in of common stock of AquaPro Hastings and Bishop. interest with respect to the Plan; Corporation and acquired by outside 4. In summary, the applicant provided (1) the Sale is a one-time investors, paying $7.50 per share; also, represents that the proposed transaction transaction for cash, (2) the Plan pays no Mr. Hastings determined that the will satisfy the criteria of section 408(a) commissions nor incurs any expenses in automatic conversion feature of the of the Act because (a) the Sale of the connection with the proposed Sale, and warrants, effective on the expiration Securities involves a one-time (3) the Plan receives as consideration for date, December 31, 1997,19 gave the transaction for cash; (b) the Plan will the Sale no less than the fair market warrants a fair market value of $2.25 per not incur any commission payments nor value of the Securities as of the date of warrant. any other expenses from the Sale; (c) the the Sale. In addition, in a letter dated Plan will be able to distribute the November 6, 1995, Bishop Crown accrued vested benefits to Plan Summary or Facts and Representations Investment Research, Inc. (Bishop), participants and beneficiaries and terminate; (d) the Securities have been 1. The Employer, a Tennessee located in San Diego, California independently appraised by the corporation organized October 19, 1978, determined the Securities value was president of the issuing corporation; and is in the business of manufacturing $7.50 per share for the common stock (e) the Plan will receive as consideration protective sporting goods equipment for and the value of the warrants was $2.25 from the Sale an amount no less than sporting-goods dealers and supplying per warrant. The determination by the fair market value of the Securities as packaging materials for ammunition to Bishop was made for determining the of the date of the Sale. military prime contractors. exchange values when AquaPro FOR FURTHER INFORMATION CONTACT: Mr. Mrs. Barbara Nipper Tetreault is the Corporation acquired the limited C.E. Beaver of the Department, sole owner of the Employer, succeeding partnership holdings of the Plan, telephone (202) 219–8881. (This is not her late husband in 1991, when also she effective December 31, 1995, in Circle a toll-free number.) became the trustee and fiduciary of the Creek AquaCulture, L.P. Plan. The applicant and Mr. Hastings PanAgora Asset Management, Inc. The Plan is a defined benefit pension represent that both Mr. Hastings and (PanAgora) Located in Boston, plan with approximately $137,921.50 in Bishop are unrelated and independent Massachusetts; Proposed Exemption of the Plan and the trustee or sponsor of total assets and 31 participants, as of [Application No. D–10351] the Plan. September 3, 1996. The Employer, The Department is considering because of financial problems, 3. The applicant requests an administrative exemption from the granting an exemption under the discontinued funding the Plan in 1991. authority of section 408(a) of the Act On July 3, 1996, the Plan submitted a prohibited transaction provisions of the Act to enable the Plan to sell for cash and section 4975(c)(2) of the Code and formal notice of termination to the in accordance with the procedures set Pension Benefit Guaranty Corporation, the Securities at their fair market value to the Employer. Following the forth in 29 CFR Part 2570, Subpart B (55 and now the Plan is prepared to FR 32836, 32847, August 10, 1990). If distribute the accrued vested benefits of proposed Sale the applicant intends to complete the termination of the Plan by the exemption is granted, PanAgora the Plan to its participants and shall not be precluded from functioning beneficiaries. distributing the accrued vested benefits to the Plan participants and as a ‘‘qualified professional asset 2. The Securities, which the Plan manager’’ pursuant to Prohibited proposes to sell to the Employer, consist beneficiaries. The applicant represents that an additional funding contribution Transaction Exemption 84–14 (PTE 84– of 956 shares of common stock, and 956 14, 49 FR 9494, March 13, 1984) solely warrants that are exercisable at $10.50 will be made to the Plan so that on the date of distribution the Plan will pay the because of a failure to satisfy Section and expire December 31, 1997. The I(g) of PTE 84–14, as a result of Securities were issued to the Plan, participants and beneficiaries all their accrued benefits due under the terms of affiliation with E.F. Hutton & Company, effective December 31, 1995, by Inc. (Hutton) and Shearson Lehman AquaPro Corporation, a Tennessee the Plan. The applicant also represents that because of the limited trading Brothers, Inc. (Shearson), formerly corporation, in an exchange for the Shearson Lehman Hutton, Inc. (SLH). limited partnership holdings of the Plan activity of the Securities since they are not registered or listed on a national Effective Date: This exemption, if in a catfish farm, Circle Creek granted, will be effective as of AquaCulture, L.P., a Tennessee limited securities exchange, the Plan has not been able to sell the Securities to a non- September 22, 1989, the date on which partnership. The Plan acquired its PanAgora was formed. limited partnership holdings in the 19 The automatic conversion feature of the Summary of Facts and Representations Circle Creek AquaCulture, L.P. on May warrants provides that upon their expiration each 1, 1989, from an unrelated party for warrant converts to 3/10 share of the common stock 1. PanAgora is a Delaware corporation investment purposes. issued by AquaPro Corporation. that was formed on September 22, 1989. 64162 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

PanAgora originally was a wholly- 3. On May 2, 1985, Hutton entered a to benefit themselves and others owned subsidiary of The Boston plea of guilty (the Guilty Plea) to an through a stock parking scheme and Company, Inc. (TBC), which was in turn Information filed in the United States indirect fee arrangements with banks, a subsidiary of SLH. On April 27, 1990, District Court for the Middle District of and that Shearson mishandled the Nippon Life Insurance Company (NLI) Pennsylvania. The Information charged Funds’ cash balances and manipulated obtained a 50% interest in PanAgora; that Hutton had violated the federal stock purchases. On September 19, the remaining 50% interest was owned mail and wire fraud statutes in 1990, Shearson and the Department 25% by SLH and 25% by TBC. On May connection with its handling of certain executed a settlement agreement (the 20, 1993, the ownership was changed so checking accounts it maintained for the Settlement) regarding the Department’s that NLI owned 50% and SLH owned deposit of its own funds during the complaint. Without admitting or 50%. On July 31, 1993, as part of the period from July 1, 1980 to February 16, denying the Department’s allegations, reorganization accompanying the sale of 1982. The applicant represents that as a Shearson agreed pursuant to the the Shearson retail brokerage business, result of the Guilty Plea, Hutton agreed Settlement to make a payment to the the ownership changed to 50% NLI and to pay, and has paid, a criminal fine of affected Funds. 50% Lehman Brothers, Inc.20 $2,000,000 plus $750,000 to defray the 6. The applicant states that the PanAgora has a Board of Directors of costs of the government investigation. Inserras had left the employment of 10 persons. Four are designated by NLI, Hutton further agreed to establish, and Shearson in October 1985, long before three are designated by Lehman and has established, a restitution program the guilty pleas were entered in March three are PanAgora employees. for the benefit of commercial banks that 1989. The applicant further represents PanAgora is a registered investment may have been damaged by its actions. that although the Securities and adviser under the Investment Advisers None of the acts alleged in the Exchange Commission (SEC) instituted Information, however, involved funds or Act of 1940 (the Advisers Act). As of proceedings against Shearson as a result securities owned by any investment December 31, 1995, PanAgora managed of the Inserras’ activities, Shearson was advisory or brokerage clients of Hutton investments of $13,486,300,000 for 98 not charged with any criminal offenses. or any employee benefit plan for which clients, including 73 clients which are Shearson settled the SEC proceedings by Hutton or any affiliate is a party in plans subject to the Act, 5 foundations, accepting a censure by the SEC for interest. failure to exercise reasonable 10 governmental plans, 7 mutual funds 4. On May 16, 1988, Hutton entered and 3 offshore funds. supervision of the Inserras. As part of a plea of guilty (the Providence Plea) in the settlement with the SEC, Shearson 2. Shearson is a wholly-owned the United States District Court for the agreed to institute revised policies and subsidiary of Shearson Lehman Brothers District of Rhode Island on two counts procedures recommended by an Holdings Inc. (Shearson Holdings), 100 of violating the Bank Secrecy Act and independent consultant to prevent the percent of the issued and outstanding one count of conspiracy to violate that kinds of defalcations engaged in by the common stock of which is owned by Act. The applicant represents that Inserras. The applicant represents that American Express Company (AMEX). Hutton agreed to pay, and has paid, an the independent consultant thoroughly AMEX is a publicly-owned company aggregate fine of $1,010,000 as a result analyzed Shearson’s operations and whose stock is traded on the New York of the Providence Plea. The Information recommended systemic changes Stock Exchange. AMEX and its filed by the government in connection designed to preclude the types of subsidiaries form a diversified financial with the Providence Plea alleges that the unsupervised actions committed by the and travel services company. conduct of the two brokers, formerly Inserras. On January 13, 1988, over 90 percent employed at Hutton-Providence, was in 7. AMEX has represented that of the stock of E.F. Hutton Group Inc. violation of the Bank Secrecy Act. The although none of the unlawful conduct (Hutton Group), the parent company of Bank Secrecy Act requires the filing of involved Hutton’s investment Hutton, was tendered to SLBP a Currency Transaction Report, under management activities or any plans Acquisition Corporation (SLBP), a certain circumstances, if more than covered by the Act, the criminal wholly-owned subsidiary of Shearson $10,000 in cash is deposited with a activities described above could Holdings, pursuant to an Agreement and financial institution. The applicant preclude each component of AMEX, as Plan of Merger (Merger Agreement) represents that the brokers’ unlawful an affiliate of Hutton, from serving as a dated December 2, 1987, as amended on conduct occurred primarily in the ‘‘qualified professional asset manager’’ December 28, 1987, entered into among period from 1982 to 1983, and no such (QPAM) pursuant to sections I(g) and Shearson Holdings, SLBP, and the conduct transpired later than October V(d) of PTE 84–14. Similarly, AMEX has Hutton Group. On January 21, 1988, as 1984—more than three years before represented that the guilty pleas of the permitted by the terms of the Merger Shearson acquired its majority interest Inserras could preclude each component Agreement, SLBP assigned its right to in Hutton. of AMEX, as an affiliate of Shearson, 5. On March 3, 1989, George Inserra, purchase those shares so accepted to from serving as a QPAM, pursuant to a broker employed by Shearson, pled Shearson and Shearson purchased the sections I(g) and V(d) of PTE 84–14. shares. As a result of the acquisition of guilty to charges of securities fraud, soliciting commissions in connection Section I(g) of PTE 84–14 precludes a the Hutton Group stock, Shearson person who otherwise qualifies as a controls the Hutton Group and with an employee benefit plan, and filing a false income tax return. On the QPAM from serving as a QPAM if such indirectly controls Hutton. 21 same date, John Inserra, also employed person or an affiliate thereof has by Shearson as a broker, pled guilty to 20 On March 13, 1993, Shearson entered into an 21 For purposes of section I(g) of PTE 84–14, an asset purchase agreement with Primerica securities fraud conspiracy. Further, on ‘‘affiliate’’ of a person is defined, in relevant part, Corporation and its wholly-owned subsidiary, May 1, 1989, the Department filed a as ‘‘any person directly or indirectly, through one Smith Barney, providing for the sale to Smith complaint in the U.S. District Court for or more intermediaries, controlling, controlled by, Barney and its designated affiliates of substantially the Northern District of New York or under common control with the person * * *’’ all of the assets of the Shearson Lehman Brothers (PTE 84–14 section V(d)). As such, under this Division of Shearson and the SLB Asset alleging that Shearson, among others, definition, American Express and all its Management Division of Shearson. The remaining and its agents, misused assets of three subsidiaries (collectively, AMEX) would be business was renamed Lehman Brothers, Inc. New York Teamsters Funds (the Funds) considered affiliates of Shearson and Hutton. Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64163 within the 10 years immediately Court of Appeals for the Fifth Circuit,23 Plea. AMEX stated that as additional preceding the transaction been either who was retained to conduct an safeguards, the Shearson procedures convicted or released from independent inquiry into the cash forbid all Shearson employees from imprisonment as a result of certain management practices to which Hutton taking possession of currency for a criminal activity. PanAgora requests an pled guilty. The changes made pursuant customer, escorting a customer to a exemption to enable it to function as a to Judge Bell’s recommendation include financial institution to convert currency, QPAM despite its failure to satisfy restructuring of the financing, financial and/or advising a customer as to how to section I(g) of PTE 84–14 due to control, operations and general counsel ‘‘structure’’ a transaction with a affiliation with Hutton and Shearson functions, establishment of an financial institution in order to avoid and the pleas entered by Hutton and the independent audit committee with full reporting requirements under the Inserras.22 access to Hutton’s chief executive Currency Transaction Reporting Act. 8. The transactions covered by this officer and board of directors, and (G) Although the SEC instituted proposed exemption would include the development of a corporate code of proceedings against Shearson as a result full range of transactions that can be ethics, supplemented by educational of the Inserras’ activities, Shearson was executed by investment managers who and monitoring programs, in not charged with any criminal offense, qualify as QPAMs pursuant to PTE 84– conjunction with the Ethics Resource and Shearson expeditiously settled the 14. The applicant represents that the Center in Washington, D.C. SEC proceedings by accepting a censure requested exemption is not relevant to (D) In late December 1987, following by the SEC for failure to reasonably most transactions involving the the announcement of Shearson’s merger supervise the Inserras and the branch purchase/sale of securities, securities with Hutton Group, Shearson retained manager overseeing the Inserras. As part lending, investment in short-term outside counsel to investigate and of the settlement, Shearson committed instruments (such as repurchase advise with respect to Hutton’s to institute revised policies and agreements and bankers’ acceptances) compliance with the Bank Secrecy Act. procedures recommended by an and certain residential mortgage pools, The investigation revealed certain independent consultant and designed to since each such transaction is covered unreported currency transactions at prevent the kinds of defalcations by other class exemptions. However, the Hutton branch offices prior to engaged in by the Inserras. 10. The applicant asserts that failure applicant represents that the requested Shearson’s acquisition of Hutton. AMEX to grant the requested exemption will exemption, to enable access to the has represented that the United States prohibit employee benefit plans for exemptive relief afforded by PTE 84–14, Attorney for the Southern District of New York completed its inquiry into which PanAgora acts as investment is needed for PanAgora to engage in possible legal violations at Hutton manager from engaging in transactions various transactions involving branch offices and indicated it will take with parties in interest that would investments in real estate, mortgages, no further action. otherwise be permitted under PTE 84– and commodities, between plans over (E) In connection with Shearson’s 14, and will cause the plans to forego which PanAgora has investment application to the SEC for an exemption attractive investment opportunities. The discretion and parties in interest with from the provisions of section 9(a) of the applicant notes that it would be respect to such plans. Investment Company Act of 1940, deprived of its abilities to offer and 9. AMEX has represented that various Shearson agreed to retain independent render the full panoply of specialized measures have been taken by Hutton auditors: (i) To confirm that the investment advisory services demanded and Shearson, since the Hutton pleas Shearson currency reporting procedures by employee benefit plans covered by and the Inserra pleas, to ensure that are in place in each former Hutton the Act. The applicant represents that conduct such as that involved in such branch office; (ii) to review the currency neither of the Hutton pleas involved pleas will not recur. Among the steps reporting procedures to determine PanAgora in any way, and thus do not taken to prevent such conduct in the whether they are reasonably designed to impair the abilities of PanAgora to serve future are the following: ensure compliance with the Bank as independent investment manager. (A) Hutton has acted to recompense Secrecy Act and whether changes are With respect to the conduct and pleas its depository banks for any harm which needed to ensure ongoing compliance; of the Inserras, AMEX has pointed out may have been caused by the illegal acts and (iii) to report the results of the that the Inserras were not employees of involved in the Guilty Plea and the review to Shearson. AMEX has Shearson at the time they pled guilty to Providence Plea. represented that upon completion of the the charges against them, and Shearson (B) Hutton initiated changes in its auditor’s review, Shearson submitted was never charged with any criminal organizational structure and the report and recommendations to the offense in connection with their management practices: Realignment and SEC, together with a report by Shearson activities. The applicant represents that centralization of financial operations, setting forth the action proposed for the ability of PanAgora or any other computerized enhancement of Hutton’s implementation of the AMEX affiliate to act as a QPAM has not headquarters to monitor activity at the recommendations. AMEX stated that been affected by the activities of the branch and regional levels, and such proposed action has been taken. Inserras, which were neither authorized instruction of all employees on the (F) As of February 8, 1988, as part of nor condoned by Shearson or any other procedural revisions. the consolidation of the Hutton branch AMEX affiliate. (C) Hutton adopted recommendations offices into the Shearson branch office 11. In summary the applicant made by former Judge Griffin Bell, U.S. system, each Hutton branch adopted the represents that the proposed exemption same internal procedures for processing satisfies the criteria of section 408(a) of 22 In Prohibited Transaction Exemption 94–34 currency transactions as those followed the Act for the following reasons: (A) (PTE 94–34, 59 FR 19247, April 22, 1994), AMEX by Shearson. AMEX has represented Hutton’s criminal activity occurred obtained the relief proposed herein for itself and its that such procedures prevent the kind of prior to acquisition by Shearson, and wholly owned subsidiaries, including Lehman the activities of the Inserras did not Brothers, Inc., the successor to SLH. Although irregularities involved in the Providence PanAgora was then a subsidiary of AMEX, PTE 94– involve any criminal charges against 34 provided no relief for PanAgora because it was 23 Judge Bell has also served as Attorney General Shearson; (B) Both Hutton and Shearson not a wholly owned subsidiary. of the United States. have undertaken substantial reforms 64164 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices and put in place procedures designed to B. Effective October 25, 1996, the and 407(a) of the Act, and the taxes prevent any recurrence of the criminal restrictions of sections 406(b)(1) and imposed by section 4975 (a) and (b) of activity; (C) PanAgora will be able to 406(b)(2) of the Act and the taxes the Code by reason of section 4975(c) of engage in a broader variety of imposed by section 4975 (a) and (b) of the Code, shall not apply to transactions investment services on behalf of the Code by reason of section in connection with the servicing, employee benefit plans which demand 4975(c)(1)(E) of the Code shall not apply management and operation of a trust, such services; (D) The ability of to: provided: PanAgora to act as QPAM has not been (1) The direct or indirect sale, (1) Such transactions are carried out impaired by criminal acts that were exchange or transfer of certificates in the in accordance with the terms of a neither authorized nor condoned by initial issuance of certificates between binding pooling and servicing Shearson or any other AMEX affiliate; the sponsor or underwriter and a plan arrangement; and and (E) The other conditions of PTE 84– when the person who has discretionary (2) The pooling and servicing 14, combined with the procedures authority or renders investment advice agreement is provided to, or described adopted by Hutton and Shearson, afford with respect to the investment of plan in all material respects in the prospectus ample protection of the interests of assets in the certificates is (a) an obligor or private placement memorandum participants and beneficiaries of with respect to 5 percent or less of the provided to, investing plans before they employee benefit plans. fair market value of obligations or purchase certificates issued by the receivables contained in the trust, or (b) trust.26 FOR FURTHER INFORMATION CONTACT: Gary Lefkowitz of the Department, telephone an affiliate of a person described in (a); Notwithstanding the foregoing, section (202) 219–8881. (This is not a toll-free if: I.C. does not provide an exemption from (i) The plan is not an Excluded Plan; number.) the restrictions of section 406(b) of the (ii) Solely in the case of an acquisition Act or from the taxes imposed by reason SouthTrust Securities, Inc. (ST) Located of certificates in connection with the of section 4975(c) of the Code for the in Birmingham, Alabama; Proposed initial issuance of the certificates, at receipt of a fee by a servicer of the trust Exemption least 50 percent of each class of from a person other than the trustee or certificates in which plans have [Application No. D–10376] sponsor, unless such fee constitutes a invested is acquired by persons ‘‘qualified administrative fee’’ as I. Transactions independent of the members of the defined in section III.S. A. Effective October 25, 1996, the Restricted Group and at least 50 percent D. Effective October 25, 1996, the restrictions of sections 406(a) and 407(a) of the aggregate interest in the trust is restrictions of sections 406(a) and 407(a) acquired by persons independent of the of the Act and the taxes imposed by of the Act, and the taxes imposed by Restricted Group; section 4975 (a) and (b) of the Code by sections 4975 (a) and (b) of the Code by (iii) A plan’s investment in each class reason of sections 4975(c)(1) (A) through reason of section 4975(c)(1) (A) through of certificates does not exceed 25 (D) of the Code shall not apply to the (D) of the Code, shall not apply to any percent of all of the certificates of that transactions to which those restrictions following transactions involving trusts class outstanding at the time of the and certificates evidencing interests or taxes would otherwise apply merely acquisition; and because a person is deemed to be a party therein: (iv) Immediately after the acquisition (1) The direct or indirect sale, in interest or disqualified person of the certificates, no more than 25 (including a fiduciary) with respect to a exchange or transfer of certificates in the percent of the assets of a plan with initial issuance of certificates between plan by virtue of providing services to respect to which the person has the plan (or by virtue of having a the sponsor or underwriter and an discretionary authority or renders employee benefit plan when the relationship to such service provider investment advice are invested in described in section 3(14) (F), (G), (H) or sponsor, servicer, trustee or insurer of a certificates representing an interest in a trust, the underwriter of the certificates (I) of the Act or section 4975(e)(2) (F), trust containing assets sold or serviced (G), (H) or (I) of the Code), solely representing an interest in the trust, or by the same entity.25 For purposes of an obligor is a party in interest with because of the plan’s ownership of this paragraph B.(1)(iv) only, an entity certificates. respect to such plan; will not be considered to service assets (2) The direct or indirect acquisition contained in a trust if it is merely a II. General Conditions or disposition of certificates by a plan in subservicer of that trust; A. The relief provided under Part I is the secondary market for such (2) The direct or indirect acquisition available only if the following certificates; and or disposition of certificates by a plan in conditions are met: (3) The continued holding of the secondary market for such (1) The acquisition of certificates by a certificates acquired by a plan pursuant certificates, provided that the conditions plan is on terms (including the to subsection I.A. (1) or (2). set forth in paragraphs B.(1) (i), (iii) and certificate price) that are at least as Notwithstanding the foregoing, section (iv) are met; and favorable to the plan as they would be I.A. does not provide an exemption from (3) The continued holding of in an arm’s-length transaction with an the restrictions of sections 406(a)(1)(E), certificates acquired by a plan pursuant unrelated party; 406(a)(2) and 407 for the acquisition or to subsection I.B. (1) or (2). (2) The rights and interests evidenced holding of a certificate on behalf of an C. Effective October 25, 1996, the by the certificates are not subordinated Excluded Plan by any person who has restrictions of sections 406(a), 406(b) discretionary authority or renders 26 In the case of a private placement investment advice with respect to the 25 For purposes of this exemption, each plan memorandum, such memorandum must contain 24 participating in a commingled fund (such as a bank substantially the same information that would be assets of that Excluded Plan. collective trust fund or insurance company pooled disclosed in a prospectus if the offering of the separate account) shall be considered to own the certificates were made in a registered public 24 Section I.A. provides no relief from sections same proportionate undivided interest in each asset offering under the Securities Act of 1933. In the 406(a)(1)(E), 406(a)(2) and 407 for any person of the commingled fund as its proportionate interest Department’s view, the private placement rendering investment advice to an Excluded Plan in the total assets of the commingled fund as memorandum must contain sufficient information within the meaning of section 3(21)(A)(ii) and calculated on the most recent preceding valuation to permit plan fiduciaries to make informed regulation 29 CFR 2510.3–21(c). date of the fund. investment decisions. Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64165 to the rights and interests evidenced by such initial purchaser (or any transferee equipment, or qualified motor vehicle other certificates of the same trust; of such initial purchaser’s certificates) is leases (as defined in section III.U); (3) The certificates acquired by the required to obtain from its transferee a (e) ‘‘guaranteed governmental plan have received a rating at the time representation regarding compliance mortgage pool certificates,’’ as defined of such acquisition that is in one of the with the Securities Act of 1933, any in 29 CFR 2510.3–101(i)(2); three highest generic rating categories such transferees will be required to (f) fractional undivided interests in from either Standard & Poor’s Ratings make a written representation regarding any of the obligations described in Servicer (S&P’s), Moody’s Investors compliance with the condition set forth clauses (a)–(e) of this section B.(1); 27 Service, Inc. (Moody’s), Duff & Phelps in subsection II.A.(6) above. (2) property which had secured any of Inc. (D & P) or Fitch Investors Service, the obligations described in subsection Inc. (Fitch); III. Definitions B.(1); (4) The trustee is not an affiliate of For purposes of this exemption: (3) undistributed cash or temporary any member of the Restricted Group. A. ‘‘Certificate’’ means: investments made therewith maturing However, the trustee shall not be (1) a certificate— no later than the next date on which considered to be an affiliate of a servicer (a) that represents a beneficial distributions are to made to solely because the trustee has succeeded ownership interest in the assets of a certificateholders; and to the rights and responsibilities of the trust; and (4) rights of the trustee under the servicer pursuant to the terms of a (b) that entitles the holder to pass- pooling and servicing agreement, and pooling and servicing agreement through payments of principal, interest, rights under any insurance policies, providing for such succession upon the and/or other payments made with third-party guarantees, contracts of occurrence of one or more events of respect to the assets of such trust; or suretyship and other credit support default by the servicer; (2) a certificate denominated as a debt arrangements with respect to any (5) The sum of all payments made to instrument— obligations described in subsection and retained by the underwriters in (a) that represents an interest in a Real B.(1). connection with the distribution or Estate Mortgage Investment Conduit Notwithstanding the foregoing, the term placement of certificates represents not (REMIC) within the meaning of section ‘‘trust’’ does not include any investment more than reasonable compensation for 860D(a) of the Internal Revenue Code of pool unless: (i) the investment pool underwriting or placing the certificates; 1986; and consists only of assets of the type which the sum of all payments made to and (b) that is issued by and is an have been included in other investment retained by the sponsor pursuant to the obligation of a trust; pools, (ii) certificates evidencing assignment of obligations (or interests interests in such other investment pools therein) to the trust represents not more with respect to certificates defined in (1) have been rated in one of the three than the fair market value of such and (2) above for which ST or any of its highest generic rating categories by obligations (or interests); and the sum of affiliates is either (i) the sole S&P’s, Moody’s, D & P, or Fitch for at all payments made to and retained by underwriter or the manager or co- the servicer represents not more than manager of the underwriting syndicate, least one year prior to the plan’s reasonable compensation for the or (ii) a selling or placement agent. acquisition of certificates pursuant to servicer’s services under the pooling For purposes of this exemption, this exemption, and (iii) certificates and servicing agreement and references to ‘‘certificates representing evidencing interests in such other reimbursement of the servicer’s an interest in a trust’’ include investment pools have been purchased reasonable expenses in connection certificates denominated as debt which by investors other than plans for at least therewith; and are issued by a trust. one year prior to the plan’s acquisition (6) The plan investing in such B. ‘‘Trust’’ means an investment pool, of certificates pursuant to this certificates is an ‘‘accredited investor’’ the corpus of which is held in trust and exemption. as defined in Rule 501(a)(1) of consists solely of: C. ‘‘Underwriter’’ means: Regulation D of the Securities and (1) either (1) ST; Exchange Commission under the (a) secured consumer receivables that (2) any person directly or indirectly, Securities Act of 1933. bear interest or are purchased at a through one or more intermediaries, B. Neither any underwriter, sponsor, discount (including, but not limited to, controlling, controlled by or under trustee, servicer, insurer, nor any home equity loans and obligations common control with ST; or obligor, unless it or any of its affiliates secured by shares issued by a (3) any member of an underwriting has discretionary authority or renders cooperative housing association); syndicate or selling group of which ST investment advice with respect to the (b) secured credit instruments that or a person described in (2) is a manager plan assets used by a plan to acquire bear interest or are purchased at a or co-manager with respect to the certificates, shall be denied the relief discount in transactions by or between certificates. provided under Part I, if the provision business entities (including, but not D. ‘‘Sponsor’’ means the entity that of subsection II.A.(6) above is not limited to, qualified equipment notes organizes a trust by depositing satisfied with respect to acquisition or secured by leases, as defined in section 27 It is the Department’s view that the definition holding by a plan of such certificates, III.T); of ‘‘trust’’ contained in III.B. includes a two-tier provided that (1) such condition is (c) obligations that bear interest or are structure under which certificates issued by the first disclosed in the prospectus or private purchased at a discount and which are trust, which contains a pool of receivables placement memorandum; and (2) in the secured by single-family residential, described above, are transferred to a second trust which issues securities that are sold to plans. case of a private placement of multi-family residential and commercial However, the Department is of the further view that, certificates, the trustee obtains a real property (including obligations since the exemption provides relief for the direct or representation from each initial secured by leasehold interests on indirect acquisition or disposition of certificates purchaser which is a plan that it is in commercial real property); that are not subordinated, no relief would be available if the certificates held by the second trust compliance with such condition, and (d) obligations that bear interest or are were subordinated to the rights and interests obtains a covenant from each initial purchased at a discount and which are evidenced by other certificates issued by the first purchaser to the effect that, so long as secured by motor vehicles or trust. 64166 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices obligations therein in exchange for controlling, controlled by, or under fee is calculated are set forth in the certificates. common control with such other pooling and servicing agreement; and E. ‘‘Master Servicer’’ means the entity person; (4) The amount paid to investors in that is a party to the pooling and (2) Any officer, director, partner, the trust will not be reduced by the servicing agreement relating to trust employee, relative (as defined in section amount of any such fee waived by the assets and is fully responsible for 3(15) of the Act), a brother, a sister, or servicer. servicing, directly or through a spouse of a brother or sister of such T. ‘‘Qualified Equipment Note subservicers, the assets of the trust. other person; and Secured By A Lease’’ means an F. ‘‘Subservicer’’ means an entity (3) Any corporation or partnership of equipment note: which, under the supervision of and on which such other person is an officer, (1) Which is secured by equipment behalf of the master servicer, services director or partner. which is leased; loans contained in the trust, but is not N. ‘‘Control’’ means the power to (2) Which is secured by the obligation a party to the pooling and servicing exercise a controlling influence over the of the lessee to pay rent under the agreement. management or policies of a person equipment lease; and G. ‘‘Servicer’’ means any entity which other than an individual. (3) With respect to which the trust’s services loans contained in the trust, O. A person will be ‘‘independent’’ of security interest in the equipment is at including the master servicer and any another person only if: least as protective of the rights of the subservicer. (1) such person is not an affiliate of trust as would be the case if the H. ‘‘Trustee’’ means the trustee of the that other person; and trust, and in the case of certificates equipment note were secured only by (2) the other person, or an affiliate the equipment and not the lease. which are denominated as debt thereof, is not a fiduciary who has U. ‘‘Qualified Motor Vehicle Lease’’ instruments, also means the trustee of investment management authority or means a lease of a motor vehicle where: the indenture trust. renders investment advice with respect (1) The trust holds a security interest I. ‘‘Insurer’’ means the insurer or to any assets of such person. in the lease; guarantor of, or provider of other credit P. ‘‘Sale’’ includes the entrance into a (2) The trust holds a security interest support for, a trust. Notwithstanding the forward delivery commitment (as in the leased motor vehicle; and foregoing, a person is not an insurer defined in section Q below), provided: solely because it holds securities (1) The terms of the forward delivery (3) The trust’s security interest in the representing an interest in a trust which commitment (including any fee paid to leased motor vehicle is at least as are of a class subordinated to certificates the investing plan) are no less favorable protective of the trust’s rights as would representing an interest in the same to the plan than they would be in an be the case if the trust consisted of trust. arm’s-length transaction with an motor vehicle installment loan J. ‘‘Obligor’’ means any person, other unrelated party; contracts. than the insurer, that is obligated to (2) The prospectus or private V. ‘‘Pooling and Servicing make payments with respect to any placement memorandum is provided to Agreement’’ means the agreement or obligation or receivable included in the an investing plan prior to the time the agreements among a sponsor, a servicer trust. Where a trust contains qualified plan enters into the forward delivery and the trustee establishing a trust. In motor vehicle leases or qualified commitment; and the case of certificates which are equipment notes secured by leases, (3) At the time of the delivery, all denominated as debt instruments, ‘‘obligor’’ shall also include any owner conditions of this exemption applicable ‘‘Pooling and Servicing Agreement’’ also of property subject to any lease included to sales are met. includes the indenture entered into by in the trust, or subject to any lease Q. ‘‘Forward delivery commitment’’ the trustee of the trust issuing such securing an obligation included in the means a contract for the purchase or certificates and the indenture trustee. trust. sale of one or more certificates to be W. ‘‘ST’’ means SouthTrust K. ‘‘Excluded Plan’’ means any plan delivered at an agreed future settlement Securities, Inc. and its affiliates. with respect to which any member of date. The term includes both mandatory The Department notes that this the Restricted Group is a ‘‘plan sponsor’’ contracts (which contemplate obligatory proposed exemption is included within within the meaning of section 3(16)(B) delivery and acceptance of the the meaning of the term ‘‘Underwriter of the Act. certificates) and optional contracts Exemption’’ as it is defined in section L. ‘‘Restricted Group’’ with respect to (which give one party the right but not V(h) of Prohibited Transaction a class of certificates means: the obligation to deliver certificates to, Exemption 95–60 (60 FR 35925, July 12, (1) each underwriter; 1995), the Class Exemption for Certain (2) each insurer; or demand delivery of certificates from, (3) the sponsor; the other party). Transactions Involving Insurance (4) the trustee; R. ‘‘Reasonable compensation’’ has Company General Accounts at 35932. (5) each servicer; the same meaning as that term is Summary of Facts and Representations (6) any obligor with respect to defined in 29 CFR 2550.408c–2. obligations or receivables included in S. ‘‘Qualified Administrative Fee’’ 1. ST is the wholly-owned, separately the trust constituting more than 5 means a fee which meets the following capitalized investment banking percent of the aggregate unamortized criteria: subsidiary of South Trust Corporation principal balance of the assets in the (1) The fee is triggered by an act or (the Bank), a Birmingham, Alabama trust, determined on the date of the failure to act by the obligor other than based bank holding company which had initial issuance of certificates by the the normal timely payment of amounts assets of $24.8 billion as of September trust; or owing in respect of the obligations; 30, 1996 and operates eight affiliate (7) any affiliate of a person described (2) The servicer may not charge the banks with more than 500 offices in in (1)–(6) above. fee absent the act or failure to act Alabama, Florida, Georgia, Mississippi, M. ‘‘Affiliate’’ of another person referred to in (1); North Carolina, South Carolina and includes: (3) The ability to charge the fee, the Tennessee. The Bank also owns and (1) Any person directly or indirectly, circumstances in which the fee may be operates subsidiaries that engage in data through one or more intermediaries, charged, and an explanation of how the processing, trust, leasing, mortgage Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64167 banking, and investment and brokerage receivable investment trusts; (3) On or prior to the closing date, the services. consumer or commercial receivables sponsor acquires legal title to all assets ST was originally incorporated as investment trusts; and (4) guaranteed selected for the trust, establishes the SouthTrust Brokerage Services in 1985. governmental mortgage pool certificate trust and designates an independent In 1989, the investment division of investment trusts.29 entity as trustee. On the closing date, SouthTrust Bank of Alabama was 3. Commercial mortgage investment the sponsor conveys to the trust legal merged into SouthTrust Brokerage trusts may include mortgages on ground title to the assets, and the trustee issues Services, Inc., and the name of the leases of real property. Commercial certificates representing fractional corporation was changed to SouthTrust mortgages are frequently secured by undivided interests in the trust assets. Securities, Inc. ST maintains its ground leases on the underlying ST, alone or together with other broker- principal place in Birmingham, property, rather than by fee simple dealers, acts as underwriter or Alabama. ST is a registered broker- interests. The separation of the fee placement agent with respect to the sale dealer with the Securities and Exchange simple interest and the ground lease of the certificates. All of the public Commission. As a member of the interest is generally done for tax offerings of certificates presently National Association of Securities reasons. Properly structured, the pledge contemplated are to be underwritten by Dealers, ST maintains a fixed income of the ground lease to secure a mortgage ST on a firm commitment basis. In securities brokerage service for the provides a lender with the same level of addition, ST anticipates that it may initial placement and remarketing of security as would be provided by a privately place certificates on both a offerings originated by the firm as well pledge of the related fee simple interest. firm commitment and an agency basis. as other issues traded in the secondary The terms of the ground leases pledged ST may also act as the lead underwriter market. to secure leasehold mortgages will in all for a syndicate of securities Pursuant to a July 10, 1989 order of cases be at least ten years longer than underwriters. the Board of Governors of the Federal the term of such mortgages.30 Certificateholders will be entitled to receive monthly, quarterly or semi- Reserve System, ST is authorized to Trust Structure engage, to a limited extent, in annual installments of principal and/or underwriting and dealing in certain 4. Each trust is established under a interest, or lease payments due on the securities through a bank holding pooling and servicing agreement receivables, adjusted, in the case of company subsidiary. The underwriting between a sponsor, a servicer and a payments of interest, to a specified activities include one- to four-family trustee. The sponsor or servicer of a rate—the pass-through rate—which may mortgage-related securities, municipal trust selects assets to be included in the be fixed or variable. revenue bonds, commercial paper, and trust. These assets are receivables which When installments or payments are consumer receivable-related securities. may have been originated by a sponsor made on a semi-annual basis, funds are Pursuant to this order, ST may also or servicer of the trust, an affiliate of the not permitted to be commingled with provide full service brokerage services sponsor or servicer, or by an unrelated the servicer’s assets for longer than and investment advice and buy and sell lender and subsequently acquired by the would be permitted for a monthly-pay 31 securities solely as agent for the account trust sponsor or servicer. security. A segregated account is of customers. This order is subject to the established in the name of the trustee apply to trusts containing single-family residential (on behalf of certificateholders) to hold condition that ST does not derive more mortgages, provided that the applicable conditions than 10% of its average gross revenues funds received between distribution of PTE 83–1 are met. ST requests relief for single- dates. The account is under the sole from such activities during any two year family residential mortgages in this exemption rolling period. because it would prefer one exemption for all trusts control of the trustee, who invests the Affiliates of ST began securitizing of similar structure. However, ST has stated that it account’s assets in short-term securities may still avail itself of the exemptive relief assets in 1993. Since that time ST’s which have received a rating provided by PTE 83–1. comparable to the rating assigned to the affiliates have securitized nursing home 29 Guaranteed governmental mortgage pool certificates. In some cases, the servicer loans and multi-family conduit loans. certificates are mortgage-backed securities with The professionals of ST have also been respect to which interest and principal payable is may be permitted to make a single active participants in the area of tax- guaranteed by the Government National Mortgage deposit into the account once a month. Association (GNMA), the Federal Home Loan When the servicer makes such monthly exempt financing, including housing, Mortgage Corporation (FHLMC), or the Federal deposits, payments received from public finance and industrial National Mortgage Association (FNMA). The obligors by the servicer may be development issues. ST itself began Department’s regulation relating to the definition of plan assets (29 CFR 2510.3–101(i)) provides that commingled with the servicer’s assets securitizing assets in 1996 when it where a plan acquires a guaranteed governmental during the month prior to deposit. completed a securitization of mobile mortgage pool certificate, the plan’s assets include Usually, the period of time between home loans in a private placement. It is the certificate and all of its rights with respect to receipt of funds by the servicer and anticipated that ST will be involved as such certificate under applicable law, but do not, deposit of these funds in a segregated an underwriter or placement agent in solely by reason of the plan’s holding of such certificate, include any of the mortgages underlying account does not exceed one month. the future in asset securitizations. such certificate. The applicant is requesting Furthermore, in those cases where exemptive relief for trusts containing guaranteed Trust Assets governmental mortgage pool certificates because the distributions are made semi-annually, 2. ST seeks exemptive relief to permit certificates in the trusts may be plan assets. the servicer will furnish a report on the 30 Trust assets may also include obligations that operation of the trust to the trustee on plans to invest in pass-through are secured by leasehold interests on residential certificates representing undivided a monthly basis. At or about the time real property. See PTE 90–32 involving Prudential- this report is delivered to the trustee, it interests in the following categories of Bache Securities, Inc. (55 FR 23147, June 6, 1990 trusts: (1) Single and multi-family at 23150). will be made available to residential or commercial mortgage 31 It is the view of the Department that section 28 III.B.(4) includes within the definition of the term the obligations described in section III.B.(1), in investment trusts; (2) motor vehicle ‘‘trust’’ rights under any yield supplement or accordance with the terms of a yield supplement similar arrangement which obligates the sponsor or arrangement described in the pooling and servicing 28 The Department notes that PTE 83–1 [48 FR master servicer, or another party specified in the agreement, provided that such arrangements do not 895, January 7, 1983], a class exemption for relevant pooling and servicing agreement, to involve swap agreement or other notional principal mortgage pool investment trusts, would generally supplement the interest rates otherwise payable on contracts. 64168 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices certificateholders and delivered to or 6. For tax reasons, the trust must be beneficiary of all the documents and made available to each rating agency maintained as an essentially passive instruments deposited in the trust, and that has rated the certificates. entity. Therefore, both the sponsor’s as such is responsible for enforcing all 5. Some of the certificates will be discretion and the servicer’s discretion the rights created thereby in favor of multi-class certificates. ST requests with respect to assets included in a trust certificateholders. exemptive relief for two types of multi- are severely limited. Pooling and The trustee will be an independent class certificates: ‘‘strip’’ certificates and servicing agreements provide for the entity, and therefore will be unrelated to ‘‘fast-pay/slow-pay’’ certificates. Strip substitution of receivables by the ST, the trust sponsor or the servicer. ST certificates are a type of security in sponsor only in the event of defects in represents that the trustee will be a which the stream of interest payments documentation discovered within a substantial financial institution or trust on receivables is split from the flow of short time after the issuance of trust company experienced in trust activities. principal payments and separate classes certificates (within 120 days, except in The trustee receives a fee for its of certificates are established, each the case of obligations having an services, which will be paid by the representing rights to disproportionate original term of 30 years, in which case servicer or sponsor. The method of payments of principal and interest.32 the period will not exceed two years). compensating the trustee which is specified in the pooling and servicing ‘‘Fast-pay/slow-pay’’ certificates Any receivable so substituted is required to have characteristics agreement will be disclosed in the involve the issuance of classes of prospectus or private placement certificates having different stated substantially similar to the replaced receivable and will be at least as memorandum relating to the offering of maturities or the same maturities with the certificates. different payment schedules. Interest creditworthy as the replaced receivable. In some cases, the affected receivable 10. The servicer of a trust administers and/or principal payments received on would be repurchased, with the the receivables on behalf of the the underlying receivables are purchase price applied as a payment on certificateholders. The servicer’s distributed first to the class of the affected receivable and passed functions typically involve, among other certificates having the earliest stated through to certificateholders. things, notifying borrowers of amounts maturity of principal, and/or earlier due on receivables, maintaining records payment schedule, and only when that Parties to Transactions of payments received on receivables and class of certificates has been paid in full 7. The originator of a receivable is the instituting foreclosure or similar (or has received a specified amount) entity that initially lends money to a proceedings in the event of default. In will distributions be made with respect borrower (obligor), such as a home- cases where a pool of receivables has to the second class of certificates. owner or automobile purchaser, or been purchased from a number of Distributions on certificates having later leases property to a lessee. The different originators and deposited in a stated maturities will proceed in like originator may either retain a receivable trust, the receivables may be manner until all the certificateholders in its portfolio or sell it to a purchaser, ‘‘subserviced’’ by their respective have been paid in full. The only such as a trust sponsor. originators and a single entity may difference between this multi-class pass- Originators of receivables included in ‘‘master service’’ the pool of receivables through arrangement and a single-class the trusts will be entities that originate on behalf of the owners of the related pass-through arrangement is the order in receivables in the ordinary course of series of certificates. Where this which distributions are made to their business, including finance arrangement is adopted, a receivable certificateholders. In each case, companies for whom such origination continues to be serviced from the certificateholders will have a beneficial constitutes the bulk of their operations, perspective of the borrower by the local ownership interest in the underlying financial institutions for whom such subservicer, while the investor’s assets. In neither case will the rights of origination constitutes a substantial part perspective is that the entire pool of a plan purchasing a certificate be of their operations, and any kind of receivables is serviced by a single, subordinated to the rights of another manufacturer, merchant, or service central master servicer who collects certificateholder in the event of default enterprise for whom such origination is payments from the local subservicers on any of the underlying obligations. In an incidental part of its operations. Each and passes them through to particular, if the amount available for trust may contain assets of one or more certificateholders. distribution to certificateholders is less originators. The originator of the Receivables of the type suitable for than the amount required to be so receivables may also function as the inclusion in a trust invariably are distributed, all senior certificateholders trust sponsor or servicer. serviced with the assistance of a then entitled to receive distributions 8. The sponsor will be one of three computer. After the sale, the servicer will share in the amount distributed on entities: (i) A special-purpose or other keeps the sold receivables on the a pro rata basis.33 corporation unaffiliated with the computer system in order to continue servicer, (ii) a special-purpose or other monitoring the accounts. Although the 32 It is the Department’s understanding that where corporation affiliated with the servicer, records relating to sold receivables are a plan invests in REMIC ‘‘residual’’ interest or (iii) the servicer itself. Where the kept in the same master file as certificates to which this exemption applies, some receivables retained by the originator, of the income received by the plan as a result of sponsor is not also the servicer, the such investment may be considered unrelated sponsor’s role will generally be limited the sold receivables are flagged as business taxable income to the plan, which is to acquiring the receivables to be having been sold. To protect the subject to income tax under the Code. The included in the trust, establishing the investor’s interest, the servicer Department emphasizes that the prudence ordinarily covenants that this ‘‘sold requirement of section 404(a)(1)(B) of the Act would trust, designating the trustee, and require plan fiduciaries to carefully consider this assigning the receivables to the trust. flag’’ will be included in all records and other tax consequences prior to causing plan 9. The trustee of a trust is the legal relating to the sold receivables, assets to be invested in certificates pursuant to this owner of the obligations in the trust. including the master file, archives, tape exemption. extracts and printouts. 33 If a trust issues subordinated certificates, The trustee is also a party to or holders of such subordinated certificates may not The sold flags are invisible to the share in the amount distributed on a pro rata basis notes that the exemption does not provide relief for obligor and do not affect the manner in with the senior certificateholders. The Department plan investment in such subordinated certificates. which the servicer performs the billing, Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64169 posting and collection procedures secondary market, is affected by market categories: (a) prepayment fees; (b) late related to the sold receivables. However, forces, including investor demand, the payment and payment extension fees; the servicer uses the sold flag to identify pass-through interest rate on the and (c) expenses, fees and charges the receivables for the purpose of certificates in relation to the rate associated with foreclosure or reporting all activity on those payable on investments of similar types repossession, or other conversion of a receivables after their sale to investors. and quality, expectations as to the effect secured position into cash proceeds, Depending on the type of receivable on yield resulting from prepayment of upon default of an obligation. and the details of the servicer’s underlying receivables, and Compensation payable to the servicer computer system, in some cases the expectations as to the likelihood of will be set forth or referred to in the servicer’s internal reports can be timely payment. pooling and servicing agreement and adapted for investor reporting with little The pass-through rate for certificates described in reasonable detail in the or no modification. In other cases, the is equal to the interest rate on prospectus or private placement servicer may have to perform special receivables included in the trust minus memorandum relating to the certificates. 34 calculations to fulfill the investor a specified servicing fee. This rate is 15. Payments on receivables may be reporting responsibilities. These generally determined by the same made by obligors to the servicer at calculations can be performed on the market forces that determine the price of various times during the period servicer’s main computer, or on a small a certificate. The price of a certificate preceding any date on which pass- computer with data supplied by the and its pass-through, or coupon, rate through payments to the trust are due. main system. In all cases, the numbers together determine the yield to In some cases, the pooling and servicing produced for the investors are investors. If an investor purchases a agreement may permit the servicer to reconciled to the servicer’s books and certificate at less than par, that discount place these payments in non-interest reviewed by public accountants. augments the stated pass-through rate; bearing accounts maintained with itself The underwriter will be a registered conversely, a certificate purchased at a or to commingle such payments with its broker-dealer that acts as underwriter or premium yields less than the stated own funds prior to the distribution placement agent with respect to the sale coupon. dates. In these cases, the servicer would of the certificates. Public offerings of 13. As compensation for performing be entitled to the benefit derived from certificates are generally made on a firm its servicing duties, the servicer (who the use of the funds between the date of commitment basis. Private placement of may also be the sponsor or an affiliate payment on a receivable and the pass- certificates may be made on a firm thereof, and receive fees for acting in through date. Commingled payments commitment or agency basis. The lead that capacity) will retain the difference may not be protected from the creditors or co-managing underwriters may make between payments received on the of the servicer in the event of the a market in certificates offered to the receivables in the trust and payments servicer’s bankruptcy or receivership. In public. payable (at the pass-through rate) to In some cases, the originator and certificateholders, except that in some those instances when payments on servicer of receivables to be included in cases a portion of the payments on receivables are held in non-interest a trust and the sponsor of the trust receivables may be paid to a third party, bearing accounts or are commingled (although they may themselves be such as a fee paid to a provider of credit with the servicer’s own funds, the related) will be unrelated to ST. In other support. The servicer may receive servicer is required to deposit these cases, however, affiliates of ST may additional compensation by having the payments by a date specified in the originate or service receivables included use of the amounts paid on the pooling and servicing agreement into an in a trust or may sponsor a trust. receivables between the time they are account from which the trustee makes received by the servicer and the time payments to certificateholders. Certificate Price, Pass-Through Rate they are due to the trust (which time is 16. The underwriter will receive a fee and Fees set forth in the pooling and servicing in connection with the securities 11. In some cases, the sponsor will agreement). The servicer typically will underwriting or private placement of obtain the receivables from various be required to pay the administrative certificates. In a firm commitment originators pursuant to existing expenses of servicing the trust, underwriting, this fee would consist of contracts with such originators under including in some cases the trustee’s the difference between what the which the sponsor continually buys fee, out of its servicing compensation. underwriter receives for the certificates receivables. In other cases, the sponsor The servicer is also compensated to that it distributes and what it pays the will purchase the receivables at fair the extent it may provide credit sponsor for those certificates. In a market value from the originator or a enhancement to the trust or otherwise private placement, the fee normally third party pursuant to a purchase and arrange to obtain credit support from takes the form of an agency commission sale agreement related to the specific another party. This ‘‘credit support fee’’ paid by the sponsor. In a best efforts offering of certificates. In other cases, may be aggregated with other servicing underwriting in which the underwriter the sponsor will originate the fees, and is either paid out of the would sell certificates in a public receivables itself. interest income received on the offering on an agency basis, the As compensation for the receivables receivables in excess of the pass-through underwriter would receive an agency transferred to the trust, the sponsor rate or paid in a lump sum at the time commission rather than a fee based on receives certificates representing the the trust is established. the difference between the price at entire beneficial interest in the trust, or 14. The servicer may be entitled to which the certificates are sold to the the cash proceeds of the sale of such retain certain administrative fees paid public and what it pays the sponsor. In certificates. If the sponsor receives by a third party, usually the obligor. some private placements, the certificates from the trust, the sponsor These administrative fees fall into three underwriter may buy certificates as sells all or a portion of these certificates principal, in which case its for cash to investors or securities 34 The pass-through rate on certificates compensation would be the difference representing interests in trusts holding leases is between what it receives for the underwriters. determined by breaking down lease payments into 12. The price of the certificates, both ‘‘principal’’ and ‘‘interest’’ components based on an certificates that it sells and what it pays in the initial offering and in the implicit interest rate. the sponsor for these certificates. 64170 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

Purchase of Receivables by the Servicer provide such funds to cover payments payments and the amount of all servicer 17. The applicant represents that as to the full extent of its obligations under advances, along with other current the principal amount of the receivables the credit support mechanism. In some information as to collections on the in a trust is reduced by payments, the cases, however, the master servicer may receivables and draws upon the credit cost of administering the trust generally not be obligated to advance funds but support. Further, the master servicer is instead would be called upon to provide increases, making the servicing of the required to deliver to the trustee funds to cover defaulted payments to trust prohibitively expensive at some annually a certificate of an executive the full extent of its obligations as point. Consequently, the pooling and officer of the master servicer stating that insurer. Moreover, a master servicer servicing agreement generally provides a review of the servicing activities has typically can recover advances either that the servicer may purchase the been made under such officer’s from the provider of credit support or receivables remaining in the trust when supervision, and either stating that the from future payments on the affected the aggregate unpaid balance payable on master servicer has fulfilled all of its assets. obligations under the pooling and the receivables is reduced to a specified If the master servicer fails to advance percentage (usually 5 to 10 percent) of servicing agreement or, if the master funds, fails to call upon the credit servicer has defaulted under any of its the initial aggregate unpaid balance. support mechanism to provide funds to The purchase price of a receivable is obligations, specifying any such default. cover delinquent payments, or The master servicer’s reports are specified in the pooling and servicing otherwise fails in its duties, the trustee agreement and will be at least equal to: reviewed at least annually by would be required and would be able to independent accountants to ensure that (1) The unpaid principal balance on the enforce the certificateholders’ rights, as receivable plus accrued interest, less the master servicer is following its both a party to the pooling and servicing normal servicing standards and that the any unreimbursed advances of principal agreement and the owner of the trust made by the servicer; or (2) the greater master servicer’s reports conform to the estate, including rights under the credit master servicer’s internal accounting of (a) the amount in (1) or (b) the fair support mechanism. Therefore, the market value of such obligations in the records. The results of the independent trustee, who is independent of the accountants’ review are delivered to the case of a REMIC, or the fair market value servicer, will have the ultimate right to of the receivables in the case of a trust trustee; and enforce the credit support arrangement. (d) The credit support has a ‘‘floor’’ that is not a REMIC. When a master servicer advances dollar amount that protects investors funds, the amount so advanced is Certificate Ratings against the possibility that a large recoverable by the master servicer out of number of credit losses might occur 18. The certificates will have received future payments on receivables held by towards the end of the life of the trust, one of the three highest ratings available the trust to the extent not covered by whether due to servicer advances or any from either S&P’s, Moody’s, D&P or credit support. However, where the other cause. Once the floor amount has Fitch. Insurance or other credit support master servicer provides credit support (such as surety bonds, letters of credit, to the trust, there are protections in been reached, the servicer lacks an guarantees, or overcollateralization) will place to guard against a delay in calling incentive to postpone the recognition of be obtained by the trust sponsor to the upon the credit support to take credit losses because the credit support extent necessary for the certificates to advantage of the fact that the credit amount thereafter is subject to reduction attain the desired rating. The amount of support declines proportionally with only for actual draws. From the time this credit support is set by the rating the decrease in the principal amount of that the floor amount is effective until agencies at a level that is a multiple of the obligations in the trust as payments the end of the life of the trust, there are the worst historical net credit loss on receivables are passed through to no proportionate reductions in the experience for the type of obligations investors. These safeguards include: credit support amount caused by included in the issuing trust. (a) There is often a disincentive to reductions in the pool principal balance. Indeed, since the floor is a Provision of Credit Support postponing credit losses because the sooner repossession or foreclosure fixed dollar amount, the amount of 19. In some cases, the master servicer, activities are commenced, the more credit support ordinarily increases as a or an affiliate of the master servicer, value that can be realized on the percentage of the pool principal balance may provide credit support to the trust security for the obligation; during the period that the floor is in (i.e. act as an insurer). In these cases, the (b) The master servicer has servicing effect. master servicer, in its capacity as guidelines which include a general Disclosure servicer, will first advance funds to the policy as to the allowable delinquency full extent that it determines that such period after which an obligation 20. In connection with the original advances will be recoverable (a) out of ordinarily will be deemed uncollectible. issuance of certificates, the prospectus late payments by the obligors, (b) from The pooling and servicing agreement or private placement memorandum will the credit support provider (which may will require the master servicer to be furnished to investing plans. The be the master servicer or an affiliate follow its normal servicing guidelines prospectus or private placement thereof) or, (c) in the case of a trust that and will set forth the master servicer’s memorandum will contain information issues subordinated certificates, from general policy as to the period of time material to a fiduciary’s decision to amounts otherwise distributable to after which delinquent obligations invest in the certificates, including: holders of subordinated certificates, and ordinarily will be considered (a) Information concerning the the master servicer will advance such uncollectible; payment terms of the certificates, the funds in a timely manner. When the (c) As frequently as payments are due rating of the certificates, and any servicer is the provider of the credit on the receivables included in the trust material risk factors with respect to the support and provides its own funds to (monthly, quarterly or semi-annually, as certificates; cover defaulted payments, it will do so set forth in the pooling and servicing (b) A description of the trust as a legal either on the initiative of the trustee, or agreement), the master servicer is entity and a description of how the trust on its own initiative on behalf of the required to report to the independent was formed by the seller/servicer or trustee, but in either event it will trustee the amount of all past-due other sponsor of the transaction; Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64171

(c) Identification of the independent Securities and Exchange Commission, a Secondary Market Transactions trustee for the trust; complete exemption from the 25. ST anticipates that it may make a (d) A description of the receivables requirement to file quarterly reports on market in certificates for which it is lead contained in the trust, including the Form 10–Q and a modification of the or co-managing underwriter. types of receivables, the diversification disclosure requirements for annual of the receivables, their principal terms, reports on Form 10–K. If such an Retroactive Relief and their material legal aspects; exemption is obtained, these trusts 26. ST represents that it has not (e) A description of the sponsor and normally would continue to have the assumed that retroactive relief would be servicer; obligation to file current reports on granted prior to the date of its (f) A description of the pooling and Form 8–K to report material application, and therefore has not servicing agreement, including a engaged in transactions related to description of the seller’s principal developments concerning the trust and mortgage-backed and asset-backed representations and warranties as to the the certificates. While the Securities and securities based on such an assumption. trust assets and the trustee’s remedy for Exchange Commission’s interpretation However, ST requests the exemptive any breach thereof; a description of the of the periodic reporting requirements is relief granted to be retroactive to procedures for collection of payments subject to change, periodic reports October 25, 1996, the date of its on receivables and for making concerning a trust will be filed to the application, and would like to rely on distributions to investors, and a extent required under the Securities such retroactive relief for transactions description of the accounts into which Exchange Act of 1934. entered into prior to the date exemptive such payments are deposited and from 23. At or about the time distributions relief may be granted. which such distributions are made; are made to certificateholders, a report identification of the servicing will be delivered to the trustee as to the Summary compensation and any fees for credit status of the trust and its assets, 27. In summary, the applicant enhancement that are deducted from including underlying obligations. Such represents that the transactions for payments on receivables before report will typically contain information which exemptive relief is requested distributions are made to investors; a regarding the trust’s assets, payments satisfy the statutory criteria of section description of periodic statements received or collected by the servicer, the 408(a) of the Act due to the following: provided to the trustee, and provided to amount of prepayments, delinquencies, (a) The trusts contain ‘‘fixed pools’’ of or made available to investors by the servicer advances, defaults and assets. There is little discretion on the trustee; and a description of the events foreclosures, the amount of any part of the trust sponsor to substitute that constitute events of default under payments made pursuant to any credit receivables contained in the trust once the pooling and servicing contract and support, and the amount of the trust has been formed; a description of the trustee’s and the compensation payable to the servicer. (b) Certificates in which plans invest investors’ remedies incident thereto; Such report also will be delivered to or will have been rated in one of the three (g) A description of the credit support; made available to the rating agency or highest rating categories by S&P’s, (h) A general discussion of the agencies that have rated the trust’s Moody’s, D&P or Fitch. Credit support principal federal income tax certificates. will be obtained to the extent necessary consequences of the purchase, to attain the desired rating; ownership and disposition of the pass- In addition, promptly after each distribution date, certificateholders will (c) All transactions for which ST through securities by a typical investor; seeks exemptive relief will be governed (i) A description of the underwriters’ receive a statement prepared by the by the pooling and servicing agreement, plan for distributing the pass-through servicer, paying agent or trustee which is made available to plan securities to investors; and summarizing information regarding the fiduciaries for their review prior to the (j) Information about the scope and trust and its assets. Such statement will nature of the secondary market, if any, plan’s investment in certificates; include information regarding the trust (d) Exemptive relief from sections for the certificates. and its assets, including underlying 21. Reports indicating the amount of 406(b) and 407 for sales to plans is receivables. Such statement will substantially limited; and payments of principal and interest are typically contain information regarding provided to certificateholders at least as (e) ST may make a secondary market payments and prepayments, in certificates. frequently as distributions are made to delinquencies, the remaining amount of certificateholders. Certificateholders the guaranty or other credit support and Discussion of Proposed Exemption will also be provided with periodic a breakdown of payments between I. Differences between Proposed information statements setting forth principal and interest. material information concerning the Exemption and Class Exemption PTE underlying assets, including, where Forward Delivery Commitments 83–1 applicable, information as to the amount The exemptive relief proposed herein and number of delinquent and defaulted 24. To date, no forward delivery is similar to that provided in PTE 81– loans or receivables. commitments have been entered into by 7 [46 FR 7520, January 23, 1981], Class 22. In the case of a trust that offers ST in connection with the offering of Exemption for Certain Transactions and sells certificates in a registered any certificates, but ST may Involving Mortgage Pool Investment public offering, the trustee, the servicer contemplate entering into such Trusts, amended and restated as PTE or the sponsor will file such periodic commitments. The utility of forward 83–1 [48 FR 895, January 7, 1983]. reports as may be required to be filed delivery commitments has been PTE 83–1 applies to mortgage pool under the Securities Exchange Act of recognized with respect to offering investment trusts consisting of interest- 1934. Although some trusts that offer similar certificates backed by pools of bearing obligations secured by first or certificates in a public offering will file residential mortgages, and ST may find second mortgages or deeds of trust on quarterly reports on Form 10–Q and it desirable in the future to enter into single-family residential property. The Annual Reports on Form 10–K, many such commitments for the purchase of exemption provides relief from sections trusts obtain, by application to the certificates. 406(a) and 407 for the sale, exchange or 64172 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices transfer in the initial issuance of limited section 406(b) and section 407 Likewise, issues are raised under mortgage pool certificates between the relief for sales transactions. section 406(a)(1)(D) of the Act where a trust sponsor and a plan, when the plan fiduciary causes a plan to purchase II. Ratings of Certificates sponsor, trustee or insurer of the trust is certificates where trust funds will be a party-in-interest with respect to the After consideration of the used to benefit a party in interest. plan, and the continued holding of such representations of the applicant and Additionally, ST represents that a certificates, provided that the conditions information provided by S&P’s, trust sponsor, servicer, trustee, insurer, set forth in the exemption are met. PTE Moody’s, D&P and Fitch, the and obligor with respect to receivables 83–1 also provides exemptive relief Department has decided to condition contained in a trust, or an underwriter from section 406 (b)(1) and (b)(2) of the exemptive relief upon the certificates of certificates representing an interest in Act for the above-described transactions having attained a rating in one of the a trust may be a fiduciary with respect when the sponsor, trustee or insurer of three highest generic rating categories to an investing plan. ST represents that the trust is a fiduciary with respect to from S&P’s, Moody’s, D&P or Fitch. The the exercise of fiduciary authority by the plan assets invested in such Department believes that the rating any of these parties to cause the plan to certificates, provided that additional condition will permit the applicant invest in certificates representing an conditions set forth in the exemption flexibility in structuring trusts interest in the trust would violate are met. In particular, section 406(b) containing a variety of mortgages and section 406(b)(1), and in some cases relief is conditioned upon the approval other receivables while ensuring that section 406(b)(2), of the Act. of the transaction by an independent the interests of plans investing in Moreover, ST represents that to the fiduciary. Moreover, the total value of certificates are protected. The extent there is a plan asset ‘‘look certificates purchased by a plan must Department also believes that the ratings through’’ to the underlying assets of a not exceed 25 percent of the amount of are indicative of the relative safety of trust, the investment in certificates by a the issue, and at least 50 percent of the investments in trusts containing secured plan covering employees of an obligor aggregate amount of the issue must be receivables. The Department is with respect to receivables contained in acquired by persons independent of the conditioning the proposed exemptive a trust may be prohibited by sections trust sponsor, trustee or insurer. Finally, relief upon each particular type of asset- 406(a) and 407(a) of the Act. PTE 83–1 provides conditional backed security having been rated in After consideration of the issues exemptive relief from section 406(a) and one of the three highest rating categories involved, the Department has (b) of the Act for transactions in for at least one year and having been determined to provide the limited connection with the servicing and sold to investors other than plans for at sections 406(b) and 407(a) relief as 35 operation of the mortgage trust. least one year. specified in the proposed exemption. Under PTE 83–1, exemptive relief for III. Limited Section 406(b) and Section NOTICE TO INTERESTED PERSONS: The the above transactions is conditioned 407(a) Relief for Sales applicant represents that because those potentially interested participants and upon the sponsor and the trustee of the ST represents that in some cases a beneficiaries cannot all be identified, mortgage trust maintaining a system for trust sponsor, trustee, servicer, insurer, the only practical means of notifying insuring or otherwise protecting the and obligor with respect to receivables such participants and beneficiaries of pooled mortgage loans and the property contained in a trust, or an underwriter this proposed exemption is by the securing such loans, and for of certificates may be a pre-existing publication of this notice in the Federal indemnifying certificateholders against party in interest with respect to an Register. Comments and requests for a reductions in pass-through payments investing plan.36 In these cases, a direct hearing must be received by the due to defaults in loan payments or or indirect sale of certificates by that Department not later than 30 days from property damage. This system must party in interest to the plan would be a the date of publication of this notice of provide such protection and prohibited sale or exchange of property proposed exemption in the Federal indemnification up to an amount not under section 406(a)(1)(A) of the Act.37 less than the greater of one percent of Register. the aggregate principal balance of all 35 In referring to different ‘‘types’’ of asset-backed FOR FURTHER INFORMATION CONTACT: Gary trust mortgages or the principal balance securities, the Department means certificates Lefkowitz of the Department, telephone of the largest mortgage. representing interests in trusts containing different (202) 219–8881. (This is not a toll-free ‘‘types’’ of receivables, such as single family The exemptive relief proposed herein residential mortgages, multi-family residential number.) differs from that provided by PTE 83– mortgages, commercial mortgages, home equity General Information 1 in the following major respects: (1) loans, auto loan receivables, installment obligations The proposed exemption provides for consumer durables secured by purchase money The attention of interested persons is security interests, etc. The Department intends this directed to the following: individual exemptive relief rather than condition to require that certificates in which a plan class relief; (2) The proposed exemption invests are of the type that have been rated (in one (1) The fact that a transaction is the covers transactions involving trusts of the three highest generic rating categories by subject of an exemption under section containing a broader range of assets than S&P’s, D&P, Fitch or Moody’s) and purchased by 408(a) of the Act and/or section investors other than plans for at least one year prior 4975(c)(2) of the Code does not relieve single-family residential mortgages; (3) to the plan’s investment pursuant to the proposed Instead of requiring a system for exemption. In this regard, the Department does not a fiduciary or other party in interest of insuring the pooled receivables, the intend to require that the particular assets disqualified person from certain other proposed exemption conditions relief contained in a trust must have been ‘‘seasoned’’ provisions of the Act and/or the Code, upon the certificates having received (e.g., originated at least one year prior to the plan’s including any prohibited transaction investment in the trust). provisions to which the exemption does one of the three highest ratings available 36 In this regard, we note that the exemptive relief from S&P’s, Moody’s, D&P or Fitch proposed herein is limited to certificates with not apply and the general fiduciary (insurance or other credit support respect to which ST or any of its affiliates is either would be obtained only to the extent (a) the sole underwriter or manager or co-manager sponsor may be exempt under PTE 75–1, Part II of the underwriting syndicate, or (b) a selling or (relating to purchases and sales of securities by necessary for the certificates to attain placement agent. broker-dealers and their affiliates), if ST is not a the desired rating); and (4) The 37 The applicant represents that where a trust fiduciary with respect to plan assets to be invested proposed exemption provides more sponsor is an affiliate of ST, sales to plans by the in certificates. Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64173 responsibility provisions of section 404 L. 92–463, as amended, the National STATUS: Open. of the Act, which among other things Aeronautics and Space Administration MATTER TO BE CONSIDERED: require a fiduciary to discharge his announces a meeting of the NASA 1. Request from a Federal Credit Union to duties respecting the plan solely in the Advisory Council, Life and Microgravity Convert to a Community Charter. interest of the participants and Sciences and Applications Advisory 2. Request from a Federal Credit Union to beneficiaries of the plan and in a Committee, NASA–NIH Advisory Convert to a Group Community Charter. prudent fashion in accordance with Subcommittee on Behavioral and FOR FURTHER INFORMATION CONTACT: section 404(a)(1)(b) of the act; nor does Biomedical Research. Becky Baker, Secretary of the Board, it affect the requirement of section DATES: December 19, 1996, 8:30 a.m. to Telephone 703–518–6304. 401(a) of the Code that the plan must 5:30 p.m.; and December 20, 1996, 8:00 Beckey Baker, operate for the exclusive benefit of the a.m. to 12:30 p.m. Secretary of the Board. employees of the employer maintaining ADDRESSES: NASA Headquarters, Room [FR Doc. 96–30905 Filed 11–29–96; 2:37 pm] the plan and their beneficiaries; 7H46, 300 E Street SW, Washington, DC (2) Before an exemption may be BILLING CODE 7535±01±M 20546. granted under section 408(a) of the Act and/or section 4975(c)(2) of the Code, FOR FURTHER INFORMATION CONTACT: Ms. Diana P. Hoyt, Code UP, National the Department must find that the NUCLEAR REGULATORY exemption is administratively feasible, Aeronautics and Space Administration, COMMISSION Washington, DC 20546, 202/358–1893. in the interests of the plan and of its [DOCKET No. 50±368] participants and beneficiaries and SUPPLEMENTARY INFORMATION: The protective of the rights of participants meeting will be closed to the public on Arkansas Nuclear One, Unit 2; Notice and beneficiaries of the plan; Thursday, December 19, 1996, from 5:00 of Consideration of Issuance of (3) The proposed exemptions, if p.m. to 5:30 p.m. in accordance with 5 Amendment to Facility Operating granted, will be supplemental to, and U.S.C. 552b (c)(6), to allow for License, Proposed No Significant not in derogation of, any other discussion on qualifications of Hazards Consideration Determination, provisions of the Act and/or the Code, individuals being considered for and Opportunity for a Hearing including statutory or administrative membership to the Committee. The exemptions and transitional rules. remainder of the meeting will be open The U.S. Nuclear Regulatory Furthermore, the fact that a transaction to the public up to the seating capacity Commission (the Commission) is is subject to an administrative or of the room. The agenda for the meeting considering issuance of an amendment statutory exemption is not dispositive of is as follows: to Facility Operating License No. NPF– whether the transaction is in fact a —Review of the office of Life and 6 issued to Entergy Operations, Inc. for prohibited transaction; and Microgravity Sciences and operation of Arkansas Nuclear One, (4) The proposed exemptions, if Applications Status Unit 2 (ANO–2) located in Pope County, granted, will be subject to the express —Status of NASA–NIH Activities Arkansas. condition that the material facts and —Neurolab The proposed amendment would representations contained in each —Behavioral Studies change the Small-Break Loss-of-Coolant application are true and complete, and —Pharmacology Accident (SBLOCA) evaluation code that each application accurately —Global Health and Remote Sensing CENPD–137, Supplement 1–P, as the describes all material terms of the —Update on Centrifuge preferred evaluation method. This transaction which is the subject of the —NASA–Mir Studies methodology has been applied with a exemption. —ISS Prioritization steam generator tube plugging limit of —Science Institute Signed at Washington, DC, this 26th day of 30% and an associated 10% reduction —Committee Discussion Regarding in Reactor Coolant System (RCS) flow. November, 1996. Future Activities Ivan Strasfeld, Before issuance of the proposed It is imperative that the meeting be license amendment, the Commission Director of Exemption Determinations, held on these dates to accommodate the Pension and Welfare Benefits Administration, will have made findings required by the U.S. Department of Labor. scheduling priorities of the key Atomic Energy Act of 1954, as amended participants. Visitors will be requested [FR Doc. 96–30720 Filed 12–2–96; 8:45 am] (the Act) and the Commission’s to sign a visitor’s register. regulations. BILLING CODE 4510±29±P Dated: November 25, 1996. The Commission has made a Leslie M. Nolan, proposed determination that the amendment request involves no NATIONAL AERONAUTICS AND Advisory Committee Management Officer, significant hazards consideration. Under SPACE ADMINISTRATION National Aeronautics and Space Administration. the Commission’s regulations in 10 CFR [Notice 96±137] [FR Doc. 96–30771 Filed 12–2–96; 8:45 am] 50.92, this means that operation of the facility in accordance with the proposed BILLING CODE 7510±01±M NASA Advisory Council, Life and amendment would not (1) involve a Microgravity Sciences and significant increase in the probability or Applications Advisory Committee, consequences of an accident previously NATIONAL CREDIT UNION NASA±NIH Advisory Subcommittee on evaluated; or (2) create the possibility of ADMINISTRATION Behavioral and Biomedical Research; a new or different kind of accident from Meeting Notice of Meeting; Sunshine Act any accident previously evaluated; or AGENCY: National Aeronautics and (3) involve a significant reduction in a Space Administration. TIME AND DATE: 5:00 p.m., Friday, margin of safety. As required by 10 CFR December 6, 1996. ACTION: Notice of meeting. 50.91(a), the licensee has provided its PLACE: Board Room, 7th Floor, Room analysis of the issue of no significant SUMMARY: In accordance with the 7047, 1775 Duke Street, Alexandria, VA hazards consideration, which is Federal Advisory Committee Act, Pub. 22314–3428. presented below: 64174 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

Criterion 1—Does Not Involve a Significant SBLOCA analysis, but the increase in the page number of this Federal Register Increase in the Probability or Consequences results due to steam generator tube plugging notice. Written comments may also be of an Accident Previously Evaluated. is very small when compared to the increase delivered to Room 6D22, Two White The proposed change to reference CENPD– due to the methodology change. Flint North, 11545 Rockville Pike, 137, Supplement 1–P is administrative in The development of limits for a particular nature. The current referenced SBLOCA cycle will continue to conform to the Rockville, Maryland, from 7:30 a.m. to methodology is being supplemented with a methods described in NRC-approved 4:15 p.m. Federal workdays. Copies of more recently approved methodology which documentation. Technical specifications will written comments received may be has demonstrated acceptable results with continue to require that the core be operated examined at the NRC Public Document respect to 10 CFR 50.46 for the ANO–2 within these limits and specify appropriate Room, the Gelman Building, 2120 L SBLOCA analysis. CENPD–137, Supplement actions to be taken if the limits are violated. Street, NW., Washington, DC. 1–P has been independently reviewed and Each reload undergoes a 10 CFR 50.59 safety The filing of requests for hearing and approved by the NRC. Technical review to assure that operation of the unit petitions for leave to intervene is specifications will continue to require within the cycle-specific limits will not involve an unreviewed safety question. The discussed below. operation within the core operational limits By January 2, 1997, the licensee may for each cycle reload calculated by the safety analyses will continue to be performed approved reload design methodologies. utilizing NRC-approved methodologies. file a request for a hearing with respect Cycle-specific evaluations performed in Therefore, this change does not involve a to issuance of the amendment to the accordance with 10 CFR 50.59 demonstrate significant reduction in the margin of safety. subject facility operating license and that changes in fuel cycle design do not Therefore, based upon the reasoning any person whose interest may be involve an unreviewed safety question. presented above and the previous discussion affected by this proceeding and who Although there is an increase in the results of the amendment request, Entergy wishes to participate as a party in the (PCT, maximum cladding oxidation, and Operations has determined that the requested proceeding must file a written request core-wide cladding oxidation) of the change does not involve a significant hazards for a hearing and a petition for leave to consideration. SBLOCA analysis, the increase is primarily intervene. Requests for a hearing and a due to the methodology change. The more The NRC staff has reviewed the petition for leave to intervene shall be recently approved methodology allows steam licensee’s analysis and, based on this filed in accordance with the generator tube plugging up to 30% for review, it appears that the three SBLOCA analysis, but the increase in the Commission’s ‘‘Rules of Practice for results due to steam generator tube plugging standards of 10 CFR 50.92(c) are Domestic Licensing Proceedings’’ in 10 is very small when compared to the increase satisfied. Therefore, the NRC staff CFR Part 2. Interested persons should due to the methodology change. The safety proposes to determine that the consult a current copy of 10 CFR 2.714 analyses will continue to be performed amendment request involves no which is available at the Commission’s utilizing NRC-approved methodologies, and significant hazards consideration. Public Document Room, the Gelman specific reload changes will be evaluated per The Commission is seeking public Building, 2120 L Street, NW., 10 CFR 50.59. comments on this proposed Washington, DC, and at the local public Therefore, this change does not involve a determination. Any comments received document room located at the significant increase in the probability or within 30 days after the date of Tomlinson Library, Arkansas Tech consequences of any accident previously publication of this notice will be evaluated. University, Russellville, Arkansas Criterion 2—Does Not Create the considered in making any final 72801. If a request for a hearing or Possibility of a New or Different Kind of determination. petition for leave to intervene is filed by Accident from any Previously Evaluated. Normally, the Commission will not the above date, the Commission or an The proposed change to reference the issue the amendment until the Atomic Safety and Licensing Board, current NRC-approved SBLOCA expiration of the 30-day notice period. designated by the Commission or by the methodology is administrative in nature. The However, should circumstances change Chairman of the Atomic Safety and more recently approved methodology has during the notice period such that Licensing Board Panel, will rule on the demonstrated acceptable results for ANO–2. failure to act in a timely way would request and/or petition; and the No changes to plant operating procedures or result, for example, in derating or operating parameters are proposed. The Secretary or the designated Atomic safety analyses will continue to be performed shutdown of the facility, the Safety and Licensing Board will issue a utilizing NRC-approved methodologies, and Commission may issue the license notice of hearing or an appropriate specific reload changes will be evaluated per amendment before the expiration of the order. 10 CFR 50.59. No new equipment is being 30-day notice period, provided that its As required by 10 CFR 2.714, a introduced, and no equipment is being final determination is that the petition for leave to intervene shall set operated in a manner inconsistent with its amendment involves no significant forth with particularity the interest of design. hazards consideration. The final the petitioner in the proceeding, and Therefore, this change does not create the determination will consider all public how that interest may be affected by the possibility of a new or different kind of and State comments received. Should results of the proceeding. The petition accident from any previously evaluated. should specifically explain the reasons Criterion 3—Does Not Involve a Significant the Commission take this action, it will Reduction in the Margin of Safety. publish in the Federal Register a notice why intervention should be permitted The proposed change to reference the NRC- of issuance and provide for opportunity with particular reference to the approved CENPD–137, Supplement 1–P for a hearing after issuance. The following factors: (1) The nature of the SBLOCA methodology is administrative in Commission expects that the need to petitioner’s right under the Act to be nature. The margin of safety as defined by 10 take this action will occur very made party to the proceeding; (2) the CFR 50.46 has not been significantly infrequently. nature and extent of the petitioner’s reduced. There is an increase in the results Written comments may be submitted property, financial, or other interest in (PCT, maximum cladding oxidation, and by mail to the Chief, Rules Review and the proceeding; and (3) the possible core-wide cladding oxidation) of the Directives Branch, Division of Freedom effect of any order which may be SBLOCA analysis utilizing this methodology; however, the increase is primarily due to the of Information and Publications entered in the proceeding on the methodology change and remains within the Services, Office of Administration, U.S. petitioner’s interest. The petition should limits specified in 10 CFR 50.46. The more Nuclear Regulatory Commission, also identify the specific aspect(s) of the recently approved methodology allows steam Washington, DC 20555–0001, and subject matter of the proceeding as to generator tube plugging up to 30% for should cite the publication date and which petitioner wishes to intervene. Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64175

Any person who has filed a petition for hearing held would take place before [Docket No. 50±498] leave to intervene or who has been the issuance of any amendment. Houston Lighting and Power admitted as a party may amend the A request for a hearing or a petition petition without requesting leave of the Company, City Public Board of San for leave to intervene must be filed with Antonio, Central Power and Light Board up to 15 days prior to the first the Secretary of the Commission, U.S. prehearing conference scheduled in the Company, City of Austin, Texas; Notice Nuclear Regulatory Commission, proceeding, but such an amended of Withdrawal of Application for Washington, DC 20555–0001, Attention: petition must satisfy the specificity Amendment to Facility Operating requirements described above. Docketing and Services Branch, or may License Not later than 15 days prior to the first be delivered to the Commission’s Public Document Room, the Gelman Building, The U.S. Nuclear Regulatory prehearing conference scheduled in the Commission (the Commission) has 2120 L Street, NW., Washington, DC, by proceeding, a petitioner shall file a granted the request of Houston Lighting the above date. Where petitions are filed supplement to the petition to intervene & Power Company, et al., (the licensee) during the last 10 days of the notice which must include a list of the to withdraw its February 29, 1996, contentions which are sought to be period, it is requested that the petitioner application for proposed amendment to litigated in the matter. Each contention promptly so inform the Commission by Facility Operating License No. NPF–76 must consist of a specific statement of a toll-free telephone call to Western for the South Texas Project, Unit No. 1, the issue of law or fact to be raised or Union at 1–(800) 248–5100 (in Missouri located in Matagorda County, Texas. controverted. In addition, the petitioner 1–(800) 342–6700). The Western Union The proposed amendment would shall provide a brief explanation of the operator should be given Datagram have included the addition of Technical bases of the contention and a concise Identification Number N1023 and the Specification 3.10.8 to allow a one-time statement of the alleged facts or expert following message addressed to William only extension of the standby diesel opinion which support the contention D. Beckner, Director, Project Directorate generator (SDG) allowed outage time for and on which the petitioner intends to IV–1: petitioner’s name and telephone a cumulative of 21 days on ‘‘A’’ train rely in proving the contention at the number, date petition was mailed, plant SDG. In addition, it would have also hearing. The petitioner must also name, and publication date and page allowed a one-time only extension of provide references to those specific number of this Federal Register notice. the allowed outage time on ‘‘A’’ train sources and documents of which the A copy of the petition should also be essential cooling water loop for a petitioner is aware and on which the sent to the Office of the General cumulative 7 days. This one-time only petitioner intends to rely to establish Counsel, U.S. Nuclear Regulatory change would have become effective on those facts or expert opinion. Petitioner Commission, Washington, DC 20555– April 10, 1996, and expire on May 15, must provide sufficient information to 0001, and to Mr. Nicholas S. Reynolds, 1996. show that a genuine dispute exists with Winston & Strawn, 1400 L Street, NW, The Commission had previously the applicant on a material issue of law Washington, DC 20005–3502, attorney issued a Notice of Consideration of or fact. Contentions shall be limited to for the licensee. Issuance of Amendment published in matters within the scope of the the Federal Register on March 8, 1996 amendment under consideration. The Nontimely filings of petitions for (61 FR 9502). However, by letter dated contention must be one which, if leave to intervene, amended petitions, November 5, 1996, the licensee proven, would entitle the petitioner to supplemental petitions and/or requests withdrew the proposed change. relief. A petitioner who fails to file such for hearing will not be entertained For further details with respect to this a supplement which satisfies these absent a determination by the action, see the application for requirements with respect to at least one Commission, the presiding officer or the amendment dated February 29, 1996, contention will not be permitted to presiding Atomic Safety and Licensing and the licensee’s letter dated November participate as a party. Board that the petition and/or request 5, 1996, which withdrew the Those permitted to intervene become should be granted based upon a application for license amendment. The parties to the proceeding, subject to any balancing of the factors specified in 10 above documents are available for limitations in the order granting leave to CFR 2.714(a) (1)(i)–(v) and 2.714(d). public inspection at the Commission’s intervene, and have the opportunity to For further details with respect to this Public Document Room, the Gelman participate fully in the conduct of the Building, 2120 L Street, NW., action, see the application for hearing, including the opportunity to Washington, DC, and at the local public amendment dated November 24, 1996, present evidence and cross-examine document room located at the Wharton which is available for public inspection witnesses. County Junior College, J. M. Hodges If a hearing is requested, the at the Commission’s Public Document Learning Center, 911 Boling Highway, Commission will make a final Room, the Gelman Building, 2120 L Wharton, TX 77488. determination on the issue of no Street, NW., Washington, DC, and at the local public document room located at Dated at Rockville, Maryland, this 25th day significant hazards consideration. The of November 1996. the Tomlinson Library, Arkansas Tech final determination will serve to decide For the Nuclear Regulatory Commission. when the hearing is held. University, Russellville, Arkansas If the final determination is that the 72801. Thomas W. Alexion, amendment request involves no Project Manager, Project Directorate IV–1, Dated at Rockville, Maryland, this 26th day Division of Reactor Projects III/IV, Office of significant hazards consideration, the of November 1996. Nuclear Reactor Regulation. Commission may issue the amendment For the Nuclear Regulatory Commission. [FR Doc. 96–30711 Filed 12–2–96; 8:45 am] and make it immediately effective, notwithstanding the request for a Kombiz Salehi, BILLING CODE 7590±01±P hearing. Any hearing held would take Acting Project Manager, Project Directorate IV–1, Division of Reactor Projects III/IV, Office place after issuance of the amendment. Sunshine Act Meeting If the final determination is that the of Nuclear Reactor Regulation. amendment request involves a [FR Doc. 96–30712 Filed 12–2–96; 8:45 am] DATE: Weeks of December 2, 9, 16 and significant hazards consideration, any BILLING CODE 7590±01±P 23, 1996. 64176 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

PLACE: Commissioners’ Conference Office of the Secretary, Attn: Operations is able to assure consideration only of Room, 11555 Rockville Pike, Rockville, Branch, Washington, D.C. 20555 (301– comments received on or before this Maryland. 415–1661). date. STATUS: Public and Closed. In addition, distribution of this ADDRESSES: Mail comments to: Chief, meeting notice over the internet system Rules Review and Directives Branch, MATTERS TO BE CONSIDERED: is available. If you are interested in Division of Freedom of Information and Week of December 2 receiving this Commission meeting Publication Services, Mail Stop T–6D59, schedule electronically, please send an Friday, December 6 U.S. Nuclear Regulatory Commission, electronic message to [email protected] or Washington, DC 20555–0001. 9:30 a.m. [email protected]. Comments may be hand delivered to Meeting with Advisory Committee on Reactor Safeguards (ACRS) (Public Dated: November 29, 1996. 11545 Rockville Pike, Rockville, MD Meeting) William M. Hill, Jr. between 7:45 a.m. and 4:15 p.m. on (Contact: John Larkins, 301–415–7360) SECY Tracking Officer, Office of the Federal work-days. Comments may be 11:00 a.m. Secretary. submitted electronically as specified in Affirmation Session (Public Meeting) [FR Doc. 96–30909 Filed 11–29–96; 2:49 pm] the supplementary information section (Please Note: This item will be affirmed of this notice. immediately following the conclusion of BILLING CODE 7590±01±M FOR FURTHER INFORMATION CONTACT: the preceding meeting.) a. Certification of Two Evolutionary Matthew Chiramal, Instrumentation and Designs (tentative) Updated Standard Review Plan Controls Branch, Office of Nuclear (Contact: Andy Bates, 301–415–1663) Chapter 7: Availability Reactor Regulation, Mail Stop O–8H3, U.S. Nuclear Regulatory Commission, Week of December 9—Tentative AGENCY: Nuclear Regulatory Washington, DC 20555–0001, Commission. Thursday, December 12 Telephone No. (301) 415–2845. ACTION: Notice of availability and 3:30 p.m. SUPPLEMENTARY INFORMATION: The Affirmation Session (Public Meeting) (if request for comments. proposed revised text to Chapter 7 of needed) SUMMARY: The Nuclear Regulatory NUREG–0800, ‘‘Standard Review Plan Week of December 16—Tentative Commission (NRC) has prepared an for the Review of Safety Analysis update to Chapter 7 of NUREG–0800, Reports for Nuclear Power Plants—LWR Monday, December 16 ‘‘Standard Review Plan for the Review Edition,’’ (SRP), is being published as a 2:00 p.m. of Safety Analysis Reports for Nuclear draft report for comments. Further NRC Briefing on Inspection Criteria, Evolution Power Plants,’’ (SRP) for review and staff review and evaluation, including of Assessment, and SALP System (Public resolution of public comments, will be Meeting) comments. The updated SRP Chapter 7 incorporates changes in the NRC review needed before a final revision of Chapter Tuesday, December 17 criteria in the area of instrumentation 7 of the SRP can be published. 2:00 p.m. and control (I&C) systems, particularly The draft Chapter 7 of the SRP that is Meeting with Chairman of Nuclear Safety digital computer-based I&C systems of available for public review consists of Research Review Committee (NSRRC) nuclear power plants that have occurred revised SRP sections and appendices (Public Meeting) since the last major revision of the SRP with side-bars that show the major (Contact: Jose Cortez, 301–415–6596) in 1981. technical changes resulting from the 3:00 p.m. The revisions were derived from the updating of the existing SRP Chapter 7 Affirmation Session (Public Meeting) following programmatic areas: NRC sections and new sections, appendices Week of December 23—Tentative regulatory documents issued after the and branch technical positions. Three There are no meetings scheduled for the 1981 SRP revision; NRC staff positions new sections are added: Section 7.0, Week of December 23. related to digital I&C retrofits at Introduction, Section 7.8, Diverse By a vote of 4–0 on November 22, the operating nuclear power plants as Instrumentation and Control Systems, Commission determined pursuant to documented in relevant safety and Section 7.9, Data Communication U.S.C. 552b(e) and 10 CFR Sec. 9.107(a) evaluation reports; industry consensus Systems. Section 7.1 which contains the of the Commission’s rules that standards applicable to I&C systems; general I&C system requirements and ‘‘Affirmation of Petitions for NRC staff positions related to guidance has been revised to Commission Review of Director’s evolutionary and advanced light water incorporate (1) references to new reactor design reviews as presented in Decision on Certification of Gaseous regulatory guides (RGs) and branch SECY–91–292, ‘‘Digital Computer Diffusion Plants’’ be Held on November technical positions (BTPs) on digital Systems for Advanced Light Water 22, and on less than one week’s notice computer-based I&C system issues, (2) Reactors,’’ and the Staff Requirements to the public. review areas, acceptance criteria, and The schedule for Commission Memorandum on SECY–93–087, review process for digital computer- meetings is subject to change on short ‘‘Policy, Technical, and Licensing Issues based I&C systems, and (3) discussion of notice. To verify the status of meetings Pertaining to Evolutionary and standard plant reviews. Sections 7.2 call (Recording)—(301) 415–1292. Advanced Light Water Reactor (ALWR) through 7.9 that focus on specific Designs;’’ NRC design certification CONTACT PERSON FOR MORE INFORMATION: nuclear power plant I&C systems have safety evaluation reports for the General Bill Hill (301) 415–1661. been revised to add reference to the Electric Advanced Boiling Water digital I&C system guidance contained The NRC Commission Meeting Schedule Reactor Design and the ABB–CE System in the revised Section 7.1. Two new can be found on the Internet at: 80+ Design; and nuclear power plant appendices have been added and three http://www.nrc.gov/SECY/smj/schedule.htm operating experience. have been revised. Appendix 7.0–A is a This notice is distributed by mail to DATES: The comment period expires new appendix that describes the overall several hundred subscribers; if you no January 31, 1997. Comments received NRC review process for digital longer wish to receive it, or would like after this date will be considered if computer-based I&C systems and new to be added to it, please contact the practical to do so, but the Commission Appendix 7.1–C provides guidance with Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64177 respect to the NRC review according to Electronic Submission of Comments Michael Cushing, Director, Center for IEEE Standard 603. Revised Appendix The draft SRP Chapter 7 can be Partnership and Labor-Management 7.1–A addresses rule changes (10 CFR accessed from the NRC Homepage on Relations, Office of Personnel Part 52 and revisions to 10 CFR Part 50) the World Wide Web—URL: http:// Management, Theodore Roosevelt and identifies new regulatory guides on www.nrc.gov under the ‘‘News and Building, 1900 E Street, NW., Room the digital system design process. Information’’ or the ‘‘Nuclear Reactors’’ 7H28, Washington, DC 20415–0001, Revised Appendix 7.1–B incorporates menu options by selecting ‘‘Standard (202) 606–0010. digital I&C system topics into the review Review Plan Chapter 7, Instrumentation SUPPLEMENTARY INFORMATION: We invite for compliance with the requirements of and Controls—Draft report for interested persons and organizations to IEEE Standard 279 as stated in 10 CFR comments.’’ Specific guidance is submit written comments. Mail or 50.55a(h). Revised Appendix 7–A provided on-line to guide the user on deliver your comments to Michael includes the new BTPs. the various options available for Cushing at the address shown above. To The updated SRP Chapter 7 does not, reading, commenting on, and be considered at the December 11 by itself, establish any new or revised downloading the document. meeting, written comments should be requirements. It incorporates lessons Chapter 7 of the SRP is available in received by December 6. learned from the completed reviews of printed form on paper for inspection Office of Personnel Management I&C systems in the advanced light water and copying for a fee at the NRC Public James B. King, reactors and digital I&C system retrofits Document Room, 2120 L Street NW of operating reactors. The review Director. (Lower Level), Washington, DC 20555. [FR Doc. 96–30822 Filed 12–2–96; 8:45 am] guidance described in the updated SRP A limited number of copies of the BILLING CODE 6325±01±M Chapter 7 will be used by the NRC staff draft SRP Chapter 7 in the printed form in the evaluation of submittals in on paper are available free, to the extent connection with applications for of supply, upon written request to the RAILROAD RETIREMENT BOARD construction permits, standard design Office of Administration, Distribution certifications and design approvals, Section, U.S. Nuclear Regulatory Proposed Data Collection Available for combined operating licenses, and Commission, Washington, DC 20555. operating plant license amendments. Public Comment and Recommendations Work related to updating SRP Chapter Dated at Rockville, Maryland, this 25th day of November, 1996. 7 was performed in accordance with the SUMMARY: In accordance with the For the Nuclear Regulatory Commission. guidance in NUREG–1447, ‘‘Standard requirement of Section 3506(c)(2)(A) of Review Plan Update and Development Jared Wermiel, the Paperwork Reduction Act of 1995 Program—Implementing Procedures Chief, Instrumentation and Controls Branch, which provides opportunity for public Document,’’ dated May 1992. Division of Reactor Controls and Human comment on new or revised data Factors, Office of Nuclear Reactor Regulation. The purpose of this notice is to solicit collections, the Railroad Retirement public comment on whether the revised [FR Doc. 96–30713 Filed 12–2–96; 8:45 am] Board (RRB) will publish periodic text accurately and fully reflects BILLING CODE 7590±01±P summaries of proposed data collections. established NRC staff review criteria, COMMENTS ARE INVITED ON: (a) Whether positions and existing regulations. The the proposed information collection is updated draft SRP Chapter 7 and the OFFICE OF PERSONNEL necessary for the proper performance of supporting referenced documents MANAGEMENT the functions of the agency, including provide traceability back to the changes whether the information has practical The National Partnership Council made to the SRP Chapter 7 currently in utility; (b) the accuracy of the RRB’s effect. The draft SRP Chapter 7 is made AGENCY: Office of Personnel estimate of the burden of the collection available to the public as part of the Management. of the information; (c) ways to enhance NRC’s policy to inform the nuclear ACTION: Notice of meeting. the quality, utility, and clarity of the industry and the general public of information to be collected; and (d) regulatory procedures and policies. TIME AND DATE: 1:00 p.m., December 11, ways to minimize the burden related to Comments will be considered and 1996. the collection of information on revisions made to the draft SRP Chapter PLACE: OPM Conference Center, Room respondents, including the use of 7 as appropriate based on the comments 1350, Theodore Roosevelt Building, automated collection techniques or received. The final SRP Chapter 7 1900 E Street, NW., Washington, DC other forms of information technology. update will be issued in approximately 20415–0001. The conference center is Title and Purpose of Information mid-1997. SRP Chapter 7 will be revised located on the first floor. periodically, as appropriate, to Collection accommodate future new technologies, STATUS: This meeting will be open to the Employer’s Quarterly Report of information, and experience. The NRC public. Seating will be available on a Contributions Under the Railroad encourages comment from interested first-come, first-served basis. Unemployment Insurance Act; OMB parties; however, public review is not Individuals with special access needs 3220–0012. Under Section 8 of the intended to reopen a dialogue on the wishing to attend should contact OPM Railroad Unemployment Insurance Act merits of the requirements themselves, at the number shown below to obtain (RUIA), as amended by the Railroad but should be focused on the purpose appropriate accommodations. Unemployment Improvement Act of stated above. The NRC also requests MATTERS TO BE CONSIDERED: The 1988 (Pub. L. 100–647), the amount of specific comments on whether an National Partnership Council (NPC) will each employer’s contribution is appropriate level of detailed guidance approve and adopt its 1996 Report to determined by the RRB, primarily on has been provided for the NRC staff the President and will work on its the basis of RUIA benefit payments reviewers in the proposed Chapter 7 strategic action plan and meeting made to the employees of that employer. update particularly with regard to calendar for 1997. These experience based contributions digital I&C review criteria. CONTACT PERSON FOR MORE INFORMATION: take into account the frequency, volume 64178 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices and duration of RUIA benefits, both APPLICANTS: The Chubb Series Trust (the Insurance Products, Division of unemployment and sickness, ‘‘Trust’’), Chubb Investment Advisory Investment Management, at (202) 942– attributable to a railroad’s employees. Corporation (‘‘Chubb Investment 0670. Each employer’s contribution rate Advisory’’) and Morgan Guaranty Trust SUPPLEMENTARY INFORMATION: The includes a component for administrative Company of New York (‘‘Morgan’’). following is a summary of the expenses and a component to cover RELEVANT ACT SECTIONS: Order requested application. The complete application costs shared by all employers. The pursuant to Section 6(c) of the 1940 Act may be obtained for a fee from the regulations prescribing the manner and from Sections 9(a), 13(a), 15(a) and 15(b) Public Reference Branch of the SEC. conditions for remitting the of the 1940 Act and subparagraph Applicants’ Representations contributions and for adjusting (b)(15) of Rules 6e–2 and 6e–3(T) overpayments or underpayments of thereunder. 1. The Trust, organized as a Delaware contributions are contained in 20 CFR SUMMARY OF APPLICATION: Applicants business trust on October 28, 1993, is 345. seek an order granting exemptions from registered under the 1940 Act as an RRB Form DC–1, Employer’s the 1940 Act to the extent necessary to open-end management investment Quarterly Report of Contributions Under permit shares of any current or future company. The Trust currently consists the Railroad Unemployment Insurance series of the Trust and shares of any of five separate series. Additional series Act, is utilized by the RRB for the other investment company that is may be added in the future. reporting and remitting of quarterly designed to fund variable insurance 2. Chubb Investment Advisory, a contributions by railroad employers. products and for which Chubb wholly-owned subsidiary of Chubb Life One response is requested quarterly of Investment Advisory or Morgan or any Insurance Company of America (‘‘Chubb each respondent. Completion is of their affiliates may serve as Life’’), is registered under the mandatory. The RRB proposed a minor investment adviser, administrator, Investment Advisers Act of 1940, as editorial revision to Form DC–1 to insert manager, principal underwriter or amended, and serves as the Trust’s language required by the Paperwork sponsor (the Trust and such other investment manager. Reduction Act of 1995. investment companies are hereinafter 3. Morgan, a New York trust company referred to collectively as the ‘‘Funds’’) which conducts a general banking and Estimate of Annual Respondent Burden to be sold to and held by: (i) variable trust business, serves as the Trust’s sub- The estimated annual respondent annuity and variable life insurance investment adviser. Morgan is a wholly- burden is as follows: separate accounts of both affiliated and owned subsidiary of J.P. Morgan & Co. unaffiliated life insurance companies Incorporated, a bank holding company Annual (‘‘Participating Insurance Companies’’); organized under the laws of Delaware. # Time Burden 4. Trust shares currently are offered Form (s) re- (min) (hrs) and (ii) qualified pension and sponses only to separate accounts established by retirement plans outside the separate Chubb Life or its affiliated insurance account context (‘‘Plans’’). DC±1 ...... 2,200 25 917 companies to fund flexible premium life FILING DATE: The application was filed insurance policies. Applicants desire ADDITIONAL INFORMATION OR COMMENTS: on July 12, 1996. that the Funds have the flexibility to To request more information or to HEARING OR NOTIFICATION OF HEARING: An offer their shares to insurance company obtain a copy of the information order granting the application will be separate accounts that fund variable collection justification, forms, and/or issued unless the SEC orders a hearing. annuity and variable life insurance supporting material, please call the RRB Interested persons may request a contracts (including single premium, Clearance Officer at (312) 751–3363. hearing by writing to the Secretary of scheduled premium, modified single Comments regarding the information the SEC and serving Applicants with a premium and flexible premium) collection should be addressed to copy of the request, personally or by (collectively, ‘‘Variable Contracts’’) Ronald J. Hodapp, Railroad Retirement mail. Hearing requests should be established be affiliated or unaffiliated Board, 844 N. Rush Street, Chicago, received by the SEC by 5:30 p.m. on insurance companies. Illinois 60611–2092. Written comments December 20, 1996, and should be 5. Applicants state that Fund shares should be received within 60 days of accompanied by proof of service on also may be offered directly to Plans this notice. Applicants in the form of an affidavit or, outside the separate account context. Chuck Mierzwa, for lawyers, a certificate of service. The Plans may choose any of the Funds Clearance Officer. Hearing requests should state the nature as the sole investment option under the [FR Doc. 96–30734 Filed 12–2–96; 8:45 am] of the writer’s interest, the reason for the Plan or as one of several investment request, and the issues contested. BILLING CODE 7905±01±M options. Fund shares sold to Plans will Persons who wish to be notified of a be held by the trustee of the Plans as hearing may request notification by mandated by Section 403(a) of the SECURITIES AND EXCHANGE writing to the Secretary of the SEC. Employee Retirement Income Security COMMISSION ADDRESSES: SEC, Secretary, 450 Fifth Act (‘‘ERISA’’). Street, N.W., Washington, D.C. 20549. [Rel. No. IC±22351; File No. 812±10248] Applicants, The Chubb Series Trust and Applicants’ Legal Analysis Chubb Investment Advisory 1. In connection with the funding of The Chubb Series Trust, et al. Corporation, One Granite Place, scheduled premium variable life November 25, 1996. Concord, New Hampshire 03301, Attn. insurance contracts issued through a AGENCY: U.S. Securities and Exchange General Counsel, or Morgan Guaranty separate account registered under the Commission (‘‘SEC’’ or ‘‘Commission’’). Trust Company of New York, 60 Wall 1940 Act as a unit investment trust, Street, New York, New York 10260, Rule 6e–2(b)(15) provides partial ACTION: Notice of Application for Attn. Funds Management Division. Exemption under the Investment exemptions from Sections 9(a), 13(a), Company Act of 1940 (the ‘‘the 1940 FOR FURTHER INFORMATION CONTACT: 15(a) and 15(b) of the 1940 Act. The Act’’). Edward P. Macdonald, Staff Attorney, or relief provided by Rule 6e–2 extends to Patrice M. Pitts, Branch Chief, Office of a separate account’s investment adviser, Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64179 principal underwriter, and sponsor or 4. Applicants state that various factors diversified in accordance with depositor. The exemptions granted by have kept certain insurance companies regulations prescribed by the Treasury Rule 6e–2(b)(15) are available, however, from offering variable annuity and Department. The regulations provide only where the management investment variable life insurance contracts. These that, to meet the diversification company underlying the separate factors include: the cost of organizing requirements, all of the beneficial account offers its shares ‘‘exclusively to and operating an investment funding interests in the investment company variable life insurance separate accounts medium; the lack of expertise with must be held by the segregated asset of the life insurer, or any affiliated life respect to investment managers accounts of one or more insurance insurance company.’’ (principally with respect to stock and companies. Treas. Reg. § 1.817–5 (1989). 2. The use of a common management money market investments); and the The regulations do contain certain investment company as the underlying lack of name recognition by the public exceptions to this requirement, investment medium for both variable of certain insurers as investment however, one of which allows shares in annuity and variable life insurance professionals. Applicants maintain that an investment company to be held by separate accounts of a single insurance use of the Funds as common investment the trustee of a qualified pension or company (or of two or more affiliated media for the Variable Contracts would retirement plan without adversely insurance companies) is referred to as ease these concerns. Participating affecting the ability of shares in the ‘‘mixed funding.’’ The use of a common Insurance Companies would benefit not same investment company also to be management investment company as the only from the investment and held by the separate accounts of underlying investment medium for administrative expertise of the Funds’ insurance companies in connection variable annuity and/or variable life investment advisers, but also from the with their variable contracts. Treas. Reg. insurance separate accounts of cost efficiencies and investment § 1.817–5(f)(3)(iii). unaffiliated insurance companies is flexibility afforded by a large pool of 7. Applicants state that the referred to as ‘‘shared funding.’’ ‘‘Mixed funds. Applicants submit that mixed promulgation of Rules 6e–2 and 6e–3(T) and shared funding’’ denotes the use of and shared funding would benefit under the 1940 Act preceded the a common management investment Variable Contract owners by: (a) issuance of these Treasury regulations, company to fund the variable annuity eliminating a significant portion of the and that the sale of shares of the same and variable life insurance separate costs of establishing and administering investment company to both separate accounts of affiliated and unaffiliated separate funds; (b) permitting a greater accounts and Plans could not have been insurance companies. The relief granted amount of assets to be available for envisioned at the time of the adoption by Rule 6e–2(b)(15) is not available with investment by the Funds, thereby of Rules 6e–2 (b)(15) and 6e-3(T) (b)(15). respect to a scheduled premium variable promoting economies of scale, 8. Applicants therefore request relief life insurance separate account that permitting greater safety of investments from Sections 9(a), 13(a), 15(a) and 15(b) owns shares of an underlying fund that through greater diversification, and of the 1940 Act, and sub-paragraph also offers its shares to a variable making the addition of new portfolios (b)(15) of Rules 6e–2 and 6e-3(T) annuity separate account of the same more feasible; and (c) encouraging more thereunder, to the extent necessary to company or of any other affiliated or insurance companies to offer variable permit shares of the Funds to be offered unaffiliated life insurance company. insurance contracts, resulting in and sold now and in the future to Therefore, Rule 6e–2(b)(15) precludes increased competition with respect to separate accounts of Participating mixed and shared funding. both the design and the pricing of Insurance Companies in connection 3. In connection with the funding of variable insurance contracts, which can with both mixed and shared funding flexible premium variable life insurance be expected to result in greater product and to be sold directly to Plans. contracts issued through a separate variation and lower charges. 9. Section 9(a) of the 1940 Act account registered under the 1940 Act 5. Applicants assert that the relief provides that it is unlawful for any as a unit investment trust, Rule 6e– granted by sub-paragraph (b)(15) of person to serve as an investment adviser 3(T)(b)(15) provides partial exemptions Rules 6e–2 and 6e–3(T) should not be to, or principal underwriter for, any from Sections 9(a), 13(a), 15(a) and 15(b) affected by the proposed sale of Fund registered open-end investment of the 1940 Act. The exemptive relief shares to Plans Applicants note, company if an affiliated person of that extends to a separate account’s however, that because the relief under person is subject to a disqualification investment adviser, principal sub-paragraph (b)(15) of Rules 6e–2 and enumerated in Section 9(a)(1) or (2). underwriter, and sponsor or depositor. 6e–3(T) is available only where shares 10. Rules 6e–2 (b)(15) and 6e– The exemptions granted to a separate are offered exclusively to separate 3(T)(b)(15) provide exemptions from account by Rule 6e-3(T)(b)(15) are accounts of life insurance companies, Section 9(a) under certain available only where all of the assets of additional exemptive relief is necessary circumstances, subject to the limitations the separate account consist of the if shares of the Funds also are to be sold on mixed and shared funding. The relief shares of one or more registered to Plans. provided by sub-paragraph (b)(15)(i) of management investment companies 6. Applicants state that current tax Rules 6e–2 and 6e–3(T) permits a which offer their shares ‘‘exclusively to law permits the Funds to increase their person disqualified under Section 9(a) separate accounts of the life insurer, or asset base through the sale of Fund to serve as an officer, director, or of any affiliated life insurance company, shares to the Plans. Applicants state that employee of the life insurer, or any of offering either scheduled contracts or Section 817(h) of the Internal Revenue its affiliates, so long as that person does flexible contracts, or both; or which also Code of 1986, as amended (the ‘‘Code’’), not participate directly in the offer their shares to variable annuity imposes certain diversification management or administration of the separate accounts of the life insurer or requirements on the underlying assets of underlying fund. The relief provided by of an affiliated life insurance company.’’ Variable Contracts invested in the sub-paragraph (b)(15)(ii) of Rules 6e–2 Thus, Rule 6e–3(T) permits mixed Funds. The Code provides that such and 6e–3(T) permits the life insurer to funding with respect to a flexible Variable Contracts shall not be treated serve as the underlying fund’s premium variable life insurance as an annuity contract or life insurance investment adviser or principal separate account, but precludes shared contract for any period in which the underwriter, provided that none of the funding. underlying assets are not adequately insurer’s personnel who are ineligible 64180 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices pursuant to Section 9(a) participate in unique to insurance contracts and are respect to voting is not present with the management or administration of subject to extensive state regulation of Plans. the fund. insurance. Applicants maintain, 17. Applicants further assert that 11. Applicants state that the partial therefore, that in adopting Rule 6e–2, investment in the Funds by Plans will relief from Section 9(a) found in sub- the Commission expressly recognized not create any of the voting paragraph (b)(15) of Rules 6e–2 and that exemptions from pass-through complications occasioned by mixed and 6e–3(T), in effect, limits the amount of voting requirements were necessary ‘‘to shared funding because Plan investor monitoring necessary to ensure assure the solvency of the life insurer voting rights cannot be frustrated by compliance with Section 9 to that which and the performance of its contractual veto rights of insurers or state is appropriate in light of the policy and obligations by enabling an insurance regulators. purposes of that Section. Applicants regulatory authority or the life insurer to 18. Applicants state that some Plans state that those rules recognize that it is act when certain proposals reasonably may provide participants with the right not necessary for the protection of could be expected to increase the risks to give voting instructions. Applicants investors or the purposes fairly intended undertaken by the life insurer.’’ submit that there is no reason to believe by the policy and provisions of the 1940 Applicants state that flexible premium that participants in Plans generally, or Act to apply the provisions of Section variable life insurance contracts and those in a particular Plan, either as a 9(a) to the many individuals in an variable annuity contracts are subject to single group or in combination with insurance company complex, most of substantially the same state insurance other Plans, would vote in a manner whom will have no involvement in regulatory authority, and therefore, that would disadvantage Variable matters pertaining to investment corresponding provisions of Rule 6e– Contract owners. Accordingly, companies within that organization. 3(T) presumably were adopted in Applicants assert that the purchase of Applicants note that the Participating recognition of the same considerations Fund shares by Plans that provide Insurance Companies are not expected as the Commission applied in adopting voting rights to participants does not to play any role in the management or Rule 6e–2. Applicants submit that these present any complications not otherwise administration of the Funds. Therefore, considerations are no less important or occasioned by mixed and shared Applicants assert, applying the necessary when an insurance company funding. restrictions of Section 9(a) serves no funds its separate accounts on a mixed 19. Applicants state that no increased regulatory purpose. Applicants state and shared funding basis, and that such conflicts of interest would be present by that the relief requested should not be funding does not compromise the goals the granting of the requested relief. affected by the proposed sale of Fund of the insurance regulatory authorities Applicants assert that shared funding shares to the Plans because the Plans are or of the Commission. does not present any issues that do not not investment companies and are not, 15. Applicants further state that the already exist where a single insurance therefore, subject to Section 9(a). sale of Fund shares to Plans does not company is licensed to do business in 12. Sections 13(a), 15(a) and 15(b) of affect the relief requested in this regard. several states. Applicants note that the 1940 Act require ‘‘pass-through’’ As previously noted, Fund shares sold where different Participating Insurance voting with respect to underlying to Plans will be held by the trustees of Companies are domiciled in different investment company shares held by a such Plans as required by Section 403(a) states, it is possible that the state separate account. Sub-paragraph of ERISA. Section 403(a) also provides insurance regulatory body in a state in (b)(15)(iii) of Rules 6e–2 and 6e–3(T) that the trustees must have exclusive which one Participating Insurance under the 1940 Act provides partial authority and discretion to manage and Company is domiciled could require exemptions from the pass-through control the assets of the Plan with two action that is inconsistent with the voting requirement. More specifically, exceptions: (a) when the Plan expressly requirements of insurance regulators in sub-paragraph (b)(15)(iii)(A) of Rules provides that the trustees are subject to one or more other states in which other 6e–2 and 6e–3(T) provides that the the direction of a named fiduciary who Participating Insurance Companies are insurance company may disregard the is not a trustee, in which case the domiciled. Applicants submit that this voting instructions of its contract trustees are subject to proper directions possibility is no different or greater than owners with respect to the investment made in accordance with the terms of exists where a single insurer and its of an underlying investment company, the Plan and not contrary to ERISA; and affiliates offer their insurance products or any contract between an investment (b) when the authority to manage, in several states. company and its investment adviser, acquire or dispose of assets of the Plan 20. Applicants further submit that when required to do so by an insurance is delegated to one or more investment affiliation does not reduce the potential regulatory authority. managers pursuant to Section 402(c)(3) for differences in state regulatory 13. Sub-paragraph (b)(15)(iii)(B) of of ERISA. requirements. In any event, the Rule 6e–2 and sub-paragraph 16. Unless one of the two exceptions conditions (adapted from the conditions (b)(15)(iii)(A)(2) of Rule 6e–3(T) provide stated in Section 403(a) applies, Plan included in Rule 6e–3(T) (b)(15)) that the insurance company may trustees have the exclusive authority discussed below are designed to disregard voting instructions of its and responsibility for voting proxies. safeguard against any adverse effects contract owners if the contract owners Where a named fiduciary appoints an that these differences may produce. If a initiate any change in underlying investment manager, the investment particular state insurance regulator’s investment company’s investment manager has the responsibility to vote decision conflicts with the majority of objectives, principal underwriter, or any the shares held unless the right to vote other state regulators, the affected investment adviser, provided that such shares is reserved to the trustees or insurer may be required to withdraw its disregarding such voting instructions is to the named fiduciary. In any event, separate account’s investment in the reasonable and subject to the other there is no pass-through voting to the relevant Funds. provisions of paragraphs (b)(5)(ii) and participants in such Plans. Accordingly, 21. Applicants also argue that (b)(7)(ii) (B) and (C) of each rule. Applicants note that, unlike the case affiliation does not eliminate the 14. Applicants state that Rule 6e–2 with insurance company separate potential, if any exists, for divergent recognizes that variable life insurance accounts, the issue of the resolution of judgments as to when a Participating contracts have important elements material irreconcilable conflicts with Insurance Company could disregard Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64181

Variable Contract owner voting distributions in accordance with the Plans can make the decision quickly instructions. Potential disagreement is terms of the Plan. The life insurance and implement redemption of shares limited by the requirement that the company will make distributions in from a Fund and reinvest the monies in Participating Insurance Company’s accordance with the terms of the another funding vehicle without the disregard of voting instructions be both Variable Contract. same regulatory impediments or, as in reasonable and based on specified good 25. Applicants state that they do not the case with most Plans, even hold faith determinations. However, if a see any greater potential for material cash pending a suitable investment. Participating Insurance Company’s irreconcilable conflicts arising between Based on the foregoing, Applicants decision to disregard Variable Contract the interests of participants under the represent that even should the interests owner instructions represents a Plans and owners of the Variable of Variable Contract owners and the minority position or would preclude a Contracts issued by the separate interests of Plans and Plan participants majority vote approving a particular accounts of Participating Insurance conflict, the conflicts can be resolved change, such Participating Insurance Companies from possible future changes almost immediately in that trustees of Company may be required, at the in the federal tax laws than that which the Plans can, independently, redeem election of the relevant Fund, to already exists between variable annuity shares out of the Funds. withdraw its separate account’s contract owners and variable life 29. Applicants state that, regardless of investment in that Fund. No charge or insurance contract owners. the types of Fund shareholders, a penalty will be imposed as a result of 26. With respect to voting rights, Fund’s adviser is legally obligated to such a withdrawal. Applicants state that it is possible to manage the Funds in accordance with 22. Applicants submit that there is no provide an equitable means of giving each Fund’s investment objectives, reason why the investment policies of a such voting rights to Variable Contract policies and restrictions as well as any Fund with mixed funding would, or owners and to Plans. Applicants guidelines established by the Fund’s should, be materially different from represent that a Fund will inform each Board. Applicants assert that Chubb what those policies would, or should, be shareholder, including each separate Investment Advisory and Morgan will if such investment company or series account and Plan, of information manage the Funds without thereof funded only variable annuity or necessary for the shareholder meeting, consideration for the identity of variable life insurance contracts. including their respective share shareholders. Applicants therefore argue that there is ownership in the respective Funds. A Applicant’s Conditions no reason to believe that conflicts of Participating Insurance Company will interest would result from mixed then solicit voting instructions in Applicants have consented to the funding. Moreover, Applicants accordance with the ‘‘pass-through’’ following conditions: represent that the Funds will not be voting requirements of Rules 6e–2 and 1. A majority of the Board of Trustees managed to favor or disfavor any 6e–3(T). or Directors (each, a ‘‘Board’’) of each particular insurer or type of Variable 27. Applicants argue that the ability of Fund shall consist of persons who are Contract. the Funds to sell their respective shares not ‘‘interested persons’’ thereof, as 23. Applicants note that Section directly to Plans does not create a defined by Section 2(a)(19) of the 1940 817(h) of the Code imposes certain ‘‘senior security,’’ as such terms is Act and the Rules thereunder and as diversification requirements on the defined under Section 18(g) of the 1940 modified by any applicable orders of the underlying assets of variable annuity Act, with respect to any Variable Commission, except that if this and variable life insurance contracts Contract owner as opposed to a condition is not met by reason of death, held in the portfolios of management participant under a Plan. Regardless of disqualification, or bona fide resignation investment companies. Treasury the rights and benefits of Plan of any Board member, then the Regulation § 1.817–5(f)(3)(iii), which participants and Variable Contract operation of this condition shall be established diversification requirements owners under the respective Plans and suspended: (a) for a period of 45 days, for such portfolios, specifically permits Variable Contracts, the Plans and the if the vacancy or vacancies may be filled ‘‘qualified pension or retirement plans’’ separate accounts have rights only with by the Board; (b) for a period of 60 days, and separate accounts to share the same respect to their shares of the Funds. if a vote of shareholders is required to underlying management investment Such shares may be redeemed only at fill the vacancy or vacancies; or (c) for company. Therefore, Applicants have net asset value. No shareholder of any such longer period as the Commission concluded that neither the Code, the of the Funds has any preference over may prescribe by order upon Treasury regulations, nor the revenue any other shareholder with respect to application. rulings thereunder present any inherent distributions of assets or payment of 2. Each Fund’s Board will monitor the conflicts of interest if Plans, variable dividends. Fund for the existence of any material annuity and variable life insurance 28. Applicants state that there are no irreconcilable conflict between the separate accounts all invest in the same conflicts of interest between Variable interests of Variable Contract owners of management investment company. Contract owners and Plan participants all separate accounts and of Plan 24. Applicants note that while there with respect to the state insurance participants and Plans investing in the are differences in the manner in which commissioners’ veto powers over Fund, and determine what action, if distributions are taxed for variable investment objectives. The state any, should be taken in response to such annuity contracts, variable life insurance commissioners have been conflicts. A material irreconcilable insurance contracts and Plans, these tax given the veto power in recognition of conflict may arise for a variety of consequences do not raise any conflicts the fact that insurance company reasons, including: (a) an action by any of interest. When distributions are to be separate accounts cannot simply redeem state insurance regulatory authority; (b) made, and the separate account or the or transfer Fund shares; to accomplish a change in applicable federal or state Plan is unable to net purchase payments such redemptions and transfers, insurance, tax, or securities laws or to make the distributions, the separate complex and time consuming regulations, or a public ruling, private account or the Plan will redeem shares transactions must be undertaken. By letter ruling, no-action or interpretive of the Funds at their respective net asset contrast, trustees of Plans or the letter, or any similar action by value. The Plan will then make participants in participant-directed insurance, tax, or securities regulatory 64182 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices authorities; (c) an administrative or Participating Insurance Company, material conflict vote to decline such judicial decision in any relevant submitting the question as to whether offer. No Plan shall be required by proceeding; (d) the manner in which the such segregation should be condition 4 to establish a new funding investments of the Funds are being implemented to a vote of all affected medium for such Plan if (a) a majority managed; (e) a difference in voting Variable Contract owners and, as of Plan participants materially and instructions given by owners or variable appropriate, segregating the assets of adversely affected by the material annuity and variable life insurance any appropriate group (i.e., variable irreconcilable material conflict vote to contracts; (f) a decision by a annuity or variable life insurance decline such offer, or (b) pursuant to Participating Insurance Company to contract owners of one or more governing plan documents and disregard the voting instructions of Participating Insurance Companies) that applicable law, the Plan makes such Variable Contract owners; or (g) if votes in favor of such segregation, or decision without a vote by Plan applicable, a decision by a Plan to offering to the affected Variable Contract participants. disregard the voting instruction of Plan owners the option of making such a 6. Participants will be informed participants. change; and (c) establishing a new promptly in writing of a Board’s 3. Chubb Investment Advisory and registered management investment determination of the existence of a Morgan (or any other investment adviser company or managed separate account. material irreconcilable conflict and its of a Fund), any Participating Insurance If a material irreconcilable conflict implications. Company and any Plan that executes a arises because of a Participating 7. Participating Insurance Companies fund participation agreement upon Insurance Company’s decision to will provide pass-through voting becoming an owner of 10% or more of disregard contract owner voting privileges to all Variable Contract the assets of a Fund (collectively, instructions and that decision owners so long as the Commission ‘‘Participants’’) will report any potential represents a minority position or would continues to interpret the 1940 Act as or existing conflicts to the relevant preclude a majority vote, the requiring pass-through voting privileges Board. Participants will be obligated to Participating Insurance Company may for Variable Contract owners. assist the relevant Board in carrying out be required, at the election of the Fund, Accordingly, such Participating its responsibilities under these to withdraw its separate account’s Insurance Companies, where applicable, conditions by providing the Board with investment in such Fund, and no charge will vote shares of the Fund held in its all information reasonably necessary for or penalty will be imposed as a result separate accounts in a manner the Board to consider any issues raised. of such withdrawal. If a material consistent with voting instructions This responsibility includes, but is not irreconcilable conflict arises because of timely received from Variable Contract limited to, an obligation by each a Plan’s decision to disregard Plan owners. In addition, each Participating Insurance Company will vote shares of Participating Insurance Company to participant voting instructions, if a Fund held in its separate accounts for inform the Board whenever Variable applicable, and that decisions which it has not received timely voting Contract owner voting instructions are represents a minority position or would instructions, as well as shares it owns, disregarded and, if pass-through voting preclude a majority vote, the Plan may in the same proportion as those shares is applicable, an obligation by each Plan be required, at the election of the Fund, for which it has received voting to inform the Board whenever Plan to withdraw its investment in such instructions. Participating Insurance participant voting instructions are Fund, and no charge or penalty will be Companies will be responsible for disregarded. The responsibility to report imposed as a result of such withdrawal. such information and conflicts and to assuring that each of their separate The responsibility to take remedial assist the Boards will be contractual accounts investing in a Fund calculates action in the event of a Board obligations of all Participating Insurance voting privileges in a manner consistent determination of a material Companies and Plans investing in the with all other Participating Insurance irreconcilable conflict and to bear the Funds under their agreements governing Companies. The obligation to calculate cost of such remedial action will be a participation in the Funds, and such voting privileges and to vote a Fund’s contractual obligation of all agreements shall provide that these shares in a manner consistent with all Participating Insurance Companies and responsibilities will be carried out only other separate accounts investing in the Plans under their agreements governing with a view to the interests of Variable Fund will be a contractual obligation of participating in the Funds. These Contract owners and, if applicable, Plan all Participating Insurance Companies participants. responsibilities shall be carried out only under the agreements governing their 4. If a majority of a Fund’s Board with a view to the interests of Contract participation in the Fund. Each Plan members, or a majority of its owners and, as applicable, Plan will vote as required by applicable law disinterested Board members, determine participants. and governing Plan documents. that a material irreconcilable conflict 5. For purposes of condition 4, a 8. All reports of potential or existing exists, the relevant Participating majority of the disinterested members of conflicts of interest received by a Board, Insurance Companies and Plans, at their the relevant Board shall determine and all Board action with regard to (a) expense and to the extent reasonably whether any proposed action adequately determining the existence of a conflict, practical (as determined by a majority of remedies any material irreconcilable (b) notifying Participants of a conflict, the disinterested Board members), shall conflict. In no event will a Fund or and (c) determining whether any take whatever steps are necessary to Chubb Investment Advisory or Morgan proposed action adequately remedies a remedy or eliminate the material (or any other investment adviser of the conflict, will be properly recorded in irreconcilable conflict. Such steps could Funds) be required to establish a new the minutes of the appropriate Board or include: (a) withdrawing the assets funding medium for any Variable other appropriate records. Such minutes allocable to some or all of the separate Contract. No Participating Insurance or other records shall be made available accounts from the Fund or any of its Company shall be required by condition to the Commission upon request. series and reinvesting such assets in a 4 to establish a new funding medium for 9. Each Fund will notify all different investment medium, which any Variable Contract if a majority of Participating Insurance Companies that may include another series of the Fund Variable Contract owners materially and separate account prospectus disclosure or another Fund; (b) in the case of a adversely affected by the irreconcilable regarding potential risks of mixed and Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64183 shared funding may be appropriate. Participating Insurance Companies and shareholders more liquidity than is Each Fund shall disclose in its Plans under the agreements governing presently available on the Amex and prospectus that: (a) Its shares may be their participation in the Funds. less volatility in quoted prices per share offered to insurance company separate 13. If a Plan should become an owner when trading volume is light. accounts that fund both variable annuity of 10% or more of the assets of a Fund, Any interested person may, on or and variable life insurance contracts, such Plan will execute a participation before December 18, 1996, submit by and to Plans; (b) differences in tax agreement with such Fund which letter to the Secretary of the Securities treatment or other considerations may includes the conditions set forth herein and Exchange Commission, 450 Fifth cause the interests of various Variable to the extent applicable. A Plan will Street, N.W., Washington, D.C. 20549, Contract owners participating in the execute an application containing an facts bearing upon whether the Fund and the interests of Plans acknowledgment of this condition upon application has been made in investing in the Fund to conflict; and (c) such Plan’s initial purchase of the accordance with the rules of the the Board will monitor the Fund for any shares of any Fund. exchanges and what terms, if any, material conflicts and determine what Conclusion should be imposed by the Commission action, if any, should be taken. for the protection of investors. The 10. Each Fund will comply with all For the reasons set forth above, Commission, based on the information the provisions of the 1940 Act requiring Applicants represent that the voting by shareholders (for these exemptions requested are necessary and submitted to it, will issue an order purposes, the persons having a voting appropriate in the public interest and granting the application after the date interest in the shares of the Funds). In consistent with the protection of mentioned above, unless the particular, each such Fund either will investors and purposes fairly intended Commission determines to order a provide for annual meetings (except to by the policy and provisions of the 1940 hearing on the matter. the extent that the Commission may Act. For the Commission, by the Division of interpret Section 16 of the 1940 Act not For the Commission, by the Division of Market Regulation, pursuant to delegated to require such meetings) or comply Investment Management, pursuant to authority. with Section 16(c) of the 1940 Act delegated authority. Jonathan G. Katz, (although none of the Funds shall be Margaret H. McFarland, Secretary. one of the trusts described in Section Deputy Secretary. [FR Doc. 96–30680 Filed 12–2–96; 8:45 am] 16(c) of the 1940 Act) as well as Section [FR Doc. 96–30679 Filed 12–2–96; 8:45 am] 16(a) and, if applicable, Section 16(b) of BILLING CODE 8010±01±M BILLING CODE 8010±01±M the 1940 Act. Further, each Fund will act in accordance with the Commission’s interpretation of the Issuer Delisting; Notice of Application [Release 34±37983; File No. 600±23] requirements of Section 16(a) with To Withdraw From Listing and respect to periodic elections of Board Self-Regulatory Organizations; Registration; (Technitrol, Inc., Government Securities Clearing members and with whatever rules the Common Stock, $0.125, Par Value; Commission may promulgate with Corporation; Order Approving Common Stock Purchase Rights) File Application for Extension of respect thereto. No. 1±5375 11. If and to the extent Rule 6e–2 or Temporary Registration as a Clearing Rule 6e–3(T) is amended, or if Rule 6e– November 26, 1996. Agency 3 under the 1940 Act is adopted, to Technitrol, Inc. (‘‘Company’’) has November 25, 1996. provide exemptive relief from any filed an application with the Securities provisions of the 1940 Act or the rules and Exchange Commission On October 7, 1996, the Government thereunder with respect to mixed and (‘‘Commission’’), pursuant to Section Securities Clearing Corporation shared funding on terms and conditions 12(d) of the Securities Exchange Act of (‘‘GSCC’’) filed with the Securities and materially different from any 1934 (‘‘Act’’) and Rule 12d2–2(d) Exchange Commission (‘‘Commission’’) exemptions granted in the order promulgated thereunder, to withdraw a request pursuant to Section 19(a) of requested by Applicants, then the Funds the above specified securities the Securities Exchange Act of 1934 and/or the Participants, as appropriate, (‘‘Securities’’) from listing and (‘‘Act’’)1 that the Commission grant shall take such steps as may be registration on the American Stock GSCC full registration as a clearing necessary to comply with Rule 6e2 or Exchange, Inc. (‘‘Amex’’). agency under Section 17A of the Act2 or Rule 6e–3(T), as amended, and Rule 6e– The reasons alleged in the application in the alternative extend GSCC’s 3, as adopted, to the extent such rules for withdrawing the Securities from temporary registration as a clearing are applicable. listing and registration include the agency until such time as the 12. No less than annually, the following: Commission is able to grant GSCC Participants shall submit to each Board The decision of the Board on this permanent registration.3 The such reports, materials or data as each matter followed a study and was based Commission published notice of GSCC’s Board may reasonably request so that upon the belief that listing the Common request in the Federal Register on such Boards may carry out fully the Stock on the NYSE will be more October 25, 1996.4 No comments were obligations imposed upon them by the beneficial to shareholders of the received. This order extends GSCC’s conditions stated in this application. Company for the following reasons: Such reports, materials and data shall be 1. The Company believes that listing 1 15 U.S.C. § 78s(a) (1988). submitted more frequently if deemed its Common Stock on the NYSE will 2 15 U.S.C. § 78q–1 (1988). appropriate by the Boards. The result in increased visibility and 3 Letter from Sal Ricca, President and Chief obligations of Participating Insurance sponsorship for the Common Stock of Operating Officer, GSCC, to Richard Lindsey, Companies and Plans to provide these the Company that is presently available Director, Division of Market Regulation, Commission (October 2, 1996) (‘‘Registration reports, materials and data upon on the Amex. Letter’’). reasonable request of a Board shall be a 2. The Company believes that the 4 Securities Exchange Act Release No. 37844 contractual obligation of all NYSE will offer the Company’s (October 21, 1996), 61 FR 55341. 64184 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices temporary registration as a clearing requirements until GSCC submits its which requires that the rules of a agency through May 31, 1997.5 new selection procedures and the clearing agency assure the fair GSCC provides clearance and Commission has had an opportunity to representation of its shareholders (or settlement service for its members’ evaluate it. The Commission also members) and participants in the transactions in government securities. believes that at this time GSCC’s selection of its directors and GSCC offers its members services for temporary registration as a clearing administration of its affairs.7 Since that next-day settling trades, forward settling agency and GSCC’s exemption from the time, the Commission has extended trades, auction takedown activity, fair representation standards of Section ISCC’s temporary registration through repurchase transactions, the multilateral 17A(b)(3)(C) should be continued. November 30, 1996.8 netting of trades, the novation of netted It is therefore ordered that GSCC’s One of the primary reasons for ISCC’s trades, and daily marking-to-the-market. temporary registration as a clearing registration as a clearing agency was to In connection with GSCC’s clearance agency (File No. 600–23) be and hereby enable it to provide for the safe and and settlement services, GSCC provides is extended through May 31, 1997, efficient clearance and settlement of a centralized loss allocation procedure subject to the terms set forth above. international securities transactions by and maintains margin to offset netting For the Commission by the Division of providing links to centralized, efficient and settlement risks. Market Regulation, pursuant to delegated processing systems in the United States At the time of GSCC’s initial authority.10 and in foreign financial institutions. temporary registration, the Commission Margaret H. McFarland, ISCC continues to develop its capacity granted GSCC an exemption from 9 Deputy Secretary. to offer these services. compliance with the fair representation As a part of its temporary registration, requirements in Section 17A(b)(3)(C) of [FR Doc. 96–30677 Filed 12–2–96; 8:45 am] ISCC was granted an exemption from the Act.6 GSCC’s current selection BILLING CODE 8010±01±M the fair representation request of Section process for its board of directors permits 17A(b)(3)(C) of the Act due to ISCC’s any GSCC member to nominate [Release No. 34±37986; International Series limited participant base. In its letter candidates for election to the board and Release No. 1032; File No. 600±20] dated October 10, 1996, ISCC noted that to vote for candidates so nominated. it had filed a proposed rule change However, the shareholder agreement Self-Regulatory Organizations; which it believes will enable ISCC to requires that six directors be dealer International Securities Clearing comply with the fair representation participants, three directors be broker Corporation; Notice of Filing and Order requirements. Because ISCC’s proposal participants, and three directors be Granting Approval of a Request for an is still undergoing Commission review, clearing agent bank participants.7 As Extension of Temporary Registration the Commission is extending ISCC’s part of GSCC’s request for full clearing as a Clearing Agency Until May 31, temporary registration from clearing agency registration, GSCC has requested 1997 agency registration and ISCC’s that the Commission withdraw GSCC’s exemption from the fair representation November 25, 1996. exemption from the fair representation requirements of Section 17A(b)(3)(c). requirements.8 Notice is hereby given that on October Interested persons are invited to While GSCC states that it believes that 10, 1996, the International Securities submit written data, views, and its current selection process for its board Clearing Corporation (‘‘ISCC’’) filed arguments concerning the foregoing of directors assures members fair with the Securities and Exchange application. Such written data, views, representation, GSCC also states that it Commission (‘‘Commission’’) an and arguments will be considered by the plans to modify the method of electing application pursuant to Section 19(a)(1) Commission in granting permanent directors.9 Therefore, the Commission of the Securities Exchange Act of 1934 registration or instituting proceedings to will defer its decision on whether GSCC (‘‘Act’’),1 to extend ISCC’s temporary determine whether registration should meets the fair representation registration as a clearing agency.2 The be denied in accordance with Section Commission is publishing this notice 19(a)(1) of the Act.10 Persons making 5 On May 24, 1988, the Commission granted and order to solicit comments from written submissions should file six GSCC’s initial application for registration as a interested persons and to extend ISCC’s clearing agency pursuant to Sections 17A and 19(a) copies thereof with the Secretary, of the Act and Rule 17Ab2–1 [17 CFR 240.17Ab2– temporary registration as a clearing Securities and Exchange Commission, 1 (1966)] thereunder for a period of three years. agency through May 31, 1997. 450 Fifth Street, N.W., Washington, D.C. Securities Exchange Act Release No. 25740 (May On May 12, 1989, the Commission 20549. Copies of the application and all 24, 1988), 53 FR 19639. The Commission granted the application of ISCC for subsequently has extended GSCC’s registration written comments will be available for until November 30, Securities Exchange Act Release registration as a clearing agency Nos. 29067 (April 11, 1991), 56 FR 15652; 32385 pursuant to Sections 17A and 19(a) of 7 Currently, ISCC’s Board of Directors is (June 3, 1993), 58 FR 32405; 35787 (May 31, 1995), the Act3 and Rule 17Ab2–1(c) 4 authorized for a maximum of twenty-two members. 60 FR 30324; and 36508 (November 27, 1995), 60 thereunder on a temporary basis for a The twenty-two directors on the board of National FR 61719. period of eighteen months.5 At that Securities Clearing Corporation (‘‘NSCC’’), the sole 6 15 U.S.C. § 78q–1(b)(3)(C) (1988). shareholder of ISCC, serve as ISCC’s board of 7 In its order granting GSCC its initial temporary time, the Commission granted to ISCC a directors. approval, the Commission stated that while the temporary exemption from compliance 8 Securities Exchange Act Release Nos. 28606 composition of GSCC’s board of directors with Section 17A(b)(3)(C) of the Act 6 (November 16, 1990), 55 FR 47976; 30005 reasonably reflected GSCC’s anticipated initial (November 27, 1991), 56 FR 63747; 33233 membership, the Commission believed that it (November 22, 1993), 58 FR 63195; and 36529 10 17 CFR 200.30–3(a)(50)(i) (1996). would be appropriate to defer to a later date its (November 29, 1995), 60 FR 62511. 1 15 U.S.C. § 78s(a)(1) (1988). determination of whether GSCC’s process for 9 For example, ISCC has added two service 2 selecting its board of directors assures participants Letter from Julie Beyers, Associate Counsel, providers, Standard Chartered Bank and S.D. fair representation. This decision was based on the ISCC, to Christine Sibille, Division of Market Indeval, S.A. de C.V., to its Global Clearance fact that GSCC planned on expanding its services Regulation, Commission (October 10, 1996). Network to provide settlement and custody services during the temporary registration period and on the 3 15 U.S.C. §§ 78q–1 and 78s(a) (1988). in the Asian-Pacific Region and Mexico, uncertainty with regard to GSCC’s future 4 17 C.F.R. 240.17Ab2–1(c) (1996). respectively. Securities Exchange Act Release Nos. participant base. 5 Securities Exchange Act Release No. 26812 (May 36902 (February 28, 1996), 61 FR 8995 and 36605 8 Registration Letter, supra note 3. 12, 1989), 54 FR 21691. (January 30, 1996), 61 FR 4508. 9 Id. 6 15 U.S.C. § 78q–1(b)(3)(C) (1988). 10 15 U.S.C. § 78s(a)(1) (1988). Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64185 inspection at the Commission’s Public Proposed new language is italicized; A. Self-Regulatory Organization’s Reference Room, 450 Fifth Street, N.W., proposed deletions are in brackets. Statement of the Purpose of, and Washington, D.C. 20549. All Statutory Basis for, the Proposed Rule submissions should refer to File No. IM–2210–3. Use of Rankings in Investment Change Companies Advertisements and Sales 600–20 and should be submitted by Literature 1. Purpose January 2, 1997. It is therefore ordered, that ISCC’s (d) Time Periods In 1994, the Commission approved (1) Any investment company ranking set what is now IM–2210–3 of the NASD registration as a clearing agency (File forth in an advertisement or sales literature No. 600–20) be and hereby is must be, at a minimum, current to the most Conduct Rules, which provides temporarily approved through May 31, recent calendar quarter ended, in the case of guidelines for the use of rankings in 1997. advertising, prior to the submission for investment companies’ advertisements publication, or, in the case of sales literature, and sales literature (‘‘Guidelines’’).2 For the Commission by the Division of prior to use. Among other things, the Guidelines Market Regulation, pursuant to delegated (2) Except for money market mutual funds: authority.11 require that all rankings used in (A) advertisements and sales literature advertising and sales literature by Margaret H. McFarland, must not use any rankings, other than member firms to promote non-money rankings based on yield, based on a period Deputy Secretary. market mutual fund performance [FR Doc. 96–30678 Filed 12–2–96; 8:45 am] of less than one year. (B) any investment company ranking based include rankings over one, and, if BILLING CODE 8010±01±M on total return must be accompanied by available, five and ten year periods. rankings based on total return for [the] a one Prior to the Guidelines, there were no [Release No. 34±37987; File No. SR±NASD± year period for investment companies in specific standards for the use of 96±39] existence for one year; [the] one and five year rankings. Members generally had periods for investment companies in selected rankings for whatever time Self-Regulatory Organizations; Notice existence for at least five years; and [the] one, period that produced the most favorable five and ten year periods for investment of Filing of Proposed Rule Change by companies in existence for at least ten years rankings for an investment company. the National Association of Securities supplied by the same Ranking Entity [in the Since the approval of the Rankings Dealers, Incorporated Amending the category], relating to the same investment Guidelines, staff of NASD Regulation, Requirements for the Use in category, and based on the same time period; Inc. (‘‘NASDR’’) have considered the Advertisements and Sales Literature of provided that, if rankings for such one, five issue of whether to allow for greater Investment Company Rankings and ten year time periods are not published flexibility in the use of time periods by the Ranking Entity, then rankings other than those prescribed by the November 25, 1996. representing short, medium and long term Guidelines. The staff notes that some performance must be provided in place of Pursuant to Section 19(b)(1) of the rankings, which are based on adjusted Securities Exchange Act of 1934 rankings for the required time periods. (C) an investment company ranking based total return to reflect criteria and (‘‘Act’’), 15 U.S.C. 78s(b)(1), notice is on yield may be based only on the current methodologies established and imposed 1 hereby given that on October 17, 1996, SEC standardized yield. An investment by the ranking entities, use time periods the National Association of Securities company ranking based on the current SEC that do not meet the three specifically Dealers, Inc. (‘‘NASD’’ or ‘‘Association’’) standardized yield must be accompanied by prescribed time periods contained filed with the Securities and Exchange rankings based on total return for [the] a one within the Guidelines. For example, one Commission (‘‘Commission’’) the year period for investment companies in existence for one year; [the] one and five year ranking entity has developed a ranking proposed rule change as described in system that summarizes an investment items I, II, and III below, which Items periods for investment companies in existence for at least five years; and [the] one, company’s risk/reward profile for 3, 5 have been prepared by the self- five and ten year periods for investment and 10 year periods. This system regulatory organization. The companies in existence for at least ten years provides a composite ranking that seeks Commission is publishing this notice to supplied by the same Ranking entity [in the to measure how well an investment solicit comments on the proposed rule category], relating to the same investment company has balanced return and risk change from interested persons. category, and based on the same time period; provided that, if rankings for such, one, five in the past. This ranking entity does not I. Self-Regulatory Organization’s and ten year time periods are not published intend that its risk adjusted rankings Statement of the Terms of Substance of by the Ranking Entity, then rankings measure one year time periods and the Proposed Rule Change representing short, medium and long term considers such measurements to be performance must be provided in place of statistically meaningless and potentially The NASD is herewith filing a rankings for the required time periods. misleading. proposed rule change to Rule IM–2210– NASDR believes that performance- 3 of the NASD’s Conduct Rules to allow II. Self-Regulatory Organization’s Statement of the Purpose of, and adjusted rankings which use different for the use in advertisements and sales time periods than those prescribed by literature of investment company Statutory Basis for, the Proposed Rule Change the Guidelines can help investment rankings that represent short, medium company investors make informed and long term performance. Below is the In its filing with the Commission, the investment decisions if presented in a text of the proposed rule change. self-regulatory organization included way that is not misleading. NASDR staff statements concerning the purpose of determined that the Guidelines, as 11 17 C.F.R. § 240.30–3(a)(50) (1996). and basis for the proposed rule change originally approved, should be revised 1 On November 21, 1996, the NASD filed and discussed any comments it received Amendment No. 1 with the Commission. The consistent with the original goal that amendment clarified that rankings based on yield on the proposed rule change. The text would prevent selectivity of time may be based on periods of less than one year. The of these statements may be examined at periods. amendment also made technical amendments to the the places specified in Item IV below. The proposed rule change revises text of the rule. See Letter from John Ramsay, The self-regulatory organization has Deputy General Counsel, NASD Regulation, Inc. to subparagraphs (2) (B) and (C) to Katherine A. England, Assistant Director, Division prepared summaries, set forth in of Market Regulation, Commission, dated November Sections A, B, and C below, of the most 2 Securities Exchange Act Release No. 34354 (July 20, 1996. significant aspects of such statements. 12, 1994), 59 FR 36461 (July 18, 1994). 64186 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices paragraph (d) of IM–2210–3. The to prohibit the use in advertising and For the Commission, by the Division of proposed rule change clarifies that the sales literature of rankings containing Market Regulation, pursuant to delegated use of one, five and ten year time arbitrarily selected time periods while authority.5 periods is required if such time periods allowing time periods other than those Margaret H. McFarland, are published by the ranking entity.3 If originally prescribed by the rule in a Deputy Secretary. rankings for the required time periods way that is not misleading. [FR Doc. 96–30676 Filed 12–2–96; 8:45 am] are not published by the ranking entity, BILLING CODE 8010±01±M the proposed rule change provides that B. Self-Regulatory Organization’s rankings representing short, medium Statement on Burden on Competition and long term performance must be The NASD does not believe that the SMALL BUSINESS ADMINISTRATION provided in place of rankings for the proposed rule change will impose any required time periods. In its discussions MMG Ventures, L.P. (License No. 03/ inappropriate burden on competition. of how the terms ‘‘short,’’ ‘‘medium’’ 03±5205); Notice of Issuance of a Small and ‘‘long term’’ might be interpreted, C. Self-Regulatory Organization’s Business Investment Company NASDR staff considered time frames of Statement on Comments on the License 1–4 years, 5–5 years and 10 years or Proposed Rule Change Received From On July 26, 1995, an application was more, respectively, as an acceptable Members, Participants, or Others interpretation. The proposed rule filed by MMG Ventures, L.P., 217 E. change also replaces the phrase ‘‘in the No written comments were either Redwood Street—Suite 2241, Baltimore, category,’’ in subparagraphs (2) (B) and solicited or received by the NASD. Maryland, with the Small Business (C) with the phrase ‘‘relating to the same Administration (SBA) pursuant to III. Date of Effectiveness of the investment category.’’ to clarify that Section 107.102 of the Regulations Proposed Rule Change and Timing for when members provide rankings for governing small business investment Commission Action advertisements and sales literature, companies (13 C.F.R. 107.102 (1996)) for a license to operate as a small business rankings for the prescribed time periods Within 35 days of the publication of must be for the same investment investment company. this notice in the Federal Register or Notice is hereby given that, pursuant category of subcategory as the total within such longer period (i) as the to Section 301(d) of the Small Business return ranking that is being Commission may designate up to 90 Investment Act of 1958, as amended, accompanied by the prescribed ranking. days of such date if it finds such longer The proposed rule change makes clear after having considered the application period to be appropriate and publishes and all other pertinent information, SBA that the Guidelines apply to rankings its reasons for so finding or (ii) as to that use time periods other than the one, issued License No. 03/03–5206 on which the self-regulatory organization September 30, 1996 to MMG Ventures, five, and ten year periods prescribed in consents, the Commission will: the Guidelines if rankings for the L.P. to operate as a small business required time periods are not published (A) by order approve the proposed investment company. by the ranking entity. On the one hand, rule change, or (Catalog of Federal Domestic Assistance the proposed rule change provides an (B) institute proceedings to determine Program No. 59.011, Small Business option that relaxes the requirement to whether the proposed rule change Investment Companies) use standardized time periods. At the should be disapproved. Dated: November 19, 1996. same time, this option still assures that Don A. Christensen, IV. Solicitation of Comments rankings will continue to be reflected Associate Administrator for Investment. over an extended period and therefore Interested persons are invited to [FR Doc. 96–30689 Filed 12–2–96; 8:45 am] provide more than just a ‘‘snapshot’’ submit written data, views, and BILLING CODE 8025±01±P view. NASDR believes that the proposed arguments concerning the foregoing. rule change provides a flexible Persons making written submissions framework within which ranking should file six copies thereof with the Stratford Equity Partners, L.P. (License entities using different methodologies Secretary, Securities and Exchange No. 06/76±0313); Notice of Issuance of can provide useful information to Commission, 450 Fifth Street, N.W., a Small Business Investment Company investors in a way that is not harmful or Washington, D.C. 20549. Copies of the License misleading. submission, all subsequent On December 15, 1995, an application 2. Statutory Basis amendments, all written statements was filed by Stratford Equity Partners, with respect to the proposed rule The proposed rule change is L.P., 200 Crescent Court, Suite 1600, change that are filed with the Dallas, Texas, with the Small Business consistent with the provisions of Commission, and all written Sections 15A(b)(6) of the Act, 4 which Administration (SBA) pursuant to communications relating to the Section 107.102 of the Regulations require that the Association adopt and proposed rule change between the amend its rules to promote just and governing small business investment Commission and any person, other than companies (13 C.F.R. 107.102 (1996)) for equitable principles of trade and those that may be withheld from the generally provide for the protection of a license to operate as a small business public in accordance with the investment company. customers and the public interest, in provisions of 5 U.S.C. 552, will be that the proposed rule change continues Notice is hereby given that, pursuant available for inspection and copying at to Section 301(c) of the Small Business the Commission’s Public Reference 3 The Guidelines define ‘‘Ranking Entity’’ as Investment Act of 1958, as amended, ‘‘* * * any entity that provides general information Room. Copies of the filing will also be after having considered the application about investment companies to the public, that is available for inspection and copying at and all other pertinent information, SBA independent of the investment company and its the principal office of the NASD. All issued License No. 06/76–0313 on affiliates, and whose services are not procured by submissions should refer to File No. the investment company or any of its affiliates to September 30, 1996 to Stratford Equity assign the investment company a ranking.’’ SR–NASD–96–39 and should be 4 15 U.S.C. § 78o–3. submitted by December 24, 1996. 5 17 CFR 200.30–3(a)(12). Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64187

Partners, L.P. to operate as a small Percent Percent business investment company. Businesses and small agri- (Catalog of Federal Domestic Assistance For Physical Damage: cultural cooperatives with- Program No. 59.011, Small Business Homeowners with credit out credit available else- Investment Companies) available elsewhere ...... 8.000 Homeowners without credit where ...... 4.000 Dated: November 19, 1996. available elsewhere ...... 4.000 Don A. Christensen, Businesses with credit avail- The number assigned to this disaster Associate Administrator for Investment. able elsewhere ...... 8.000 for physical damage is 291506 and for [FR Doc. 96–30693 Filed 12–2–96; 8:45 am] Businesses and non-profit or- economic injury the number is 925600. BILLING CODE 8025±01±P ganizations without credit available elsewhere ...... 4.000 (Catalog of Federal Domestic Assistance Others (including non-profit Program Nos. 59002 and 59008). Dated: November 21, 1996. Wasserstein Perella SBIC, L.P. organizations) with credit available elsewhere ...... 7.125 (License No. 02/72±0569); Notice of Ginger Lew, For Economic Injury: Acting Administrator. Issuance of a Small Business Businesses and small agri- [FR Doc. 96–30690 Filed 12–2–96; 8:45 am] Investment Company License cultural cooperatives with- BILLING CODE 8025±01±P On December 7, 1994, an application out credit available else- where ...... 4.000 was filed by Wasserstein Perella SBIC, L.P., 31 West 52nd Street, New York, [License No. 06/06±0244] New York, with the Small Business The number assigned to this disaster Administration (SBA) pursuant to for physical damage is 291615 and for SBI Capital Corporation; Notice of Section 107.102 of the Regulations economic injury the number is 925700. Surrender of Licensee governing small business investment (Catalog of Federal Domestic Assistance Notice is hereby given that SBI companies (13 C.F.R. 107.102 (1996)) for Program Nos. 59002 and 59008.) Capital Corporation, 6305 Beverly Hill a license to operate as a small business Dated: November 25, 1996. Lane, Houston, Texas 77057, has investment company. John T. Spotila, surrendered its License to operate as a Notice is hereby given that, pursuant Acting Administrator. small business investment company to Section 301(c) of the Small Business under the Small Business Investment Investment Act of 1958, as amended, [FR Doc. 96–30694 Filed 12–2–96; 8:45 am] BILLING CODE 8025±01±P Act of 1958, as amended (the Act). SBI after having considered the application Capital Corporation was licensed by the and all other pertinent information, SBA Small Business Administration on issued License No. 02/72–0569 on October 22, 1981. # November 1, 1996 to Wasserstein [Declaration of Disaster Loan Area 2915] Under the authority vested by the Act Perella SBIC, L.P. to operate as a small and pursuant to the Regulations business investment company. Territory of Guam; Declaration of Disaster Loan Area promulgated thereunder, the surrender (Catalog of Federal Domestic Assistance of the License was accepted on this Program No. 59.011, Small Business date, and accordingly, all rights, Investment Companies) The Territory of Guam is hereby declared a disaster area as a result of privileges, and franchises derived Dated: November 19, 1996. damages caused by Typhoon Dale therefrom have been terminated. Don A. Christensen, which occurred on November 8, 1996. (Catalog of Federal Domestic Assistance Associate Administrator for Investment. Applications for loans for physical Program No. 59.011, Small Business [FR Doc. 96–30692 Filed 12–2–96; 8:45 am] damage as a result of this disaster may Investment Companies) BILLING CODE 8025±01±P be filed until the close of business on Dated: November 19, 1996. January 21, 1997 and for economic Donald A. Christensen, [Declaration of Disaster Loan Area #2916] injury until the close of business on Associate Administrator for Investment. August 21, 1997 at the address listed [FR Doc. 96–30691 Filed 12–2–96; 8:45 am] Florida; Declaration of Disaster Loan below: U.S. Small Business BILLING CODE 8025±01±P Area Administration, Disaster Area 4 Office, 1825 Bell Street, Suite 208, Sacramento, Pinellas County and the contiguous CA 95825, or other locally announced DEPARTMENT OF TRANSPORTATION counties of Hillsborough and Pasco in locations. The interest rates are: the State of Florida constitute a disaster Office of the Secretary area as a result of civil unrest in the City Percent of St. Petersburg which occurred on Reports, Forms and Recordkeeping October 24 and November 11, 1996. For Physical Damage: Requirements Applications for loans for physical Homeowners with credit damage as a result of this disaster may available elsewhere ...... 8.000 AGENCY: Office of the Secretary. Homeowners without credit be filed until the close of business on ACTION: Notice. January 24, 1997 and for economic available elsewhere ...... 4.000 injury until the close of business on Businesses with credit avail- SUMMARY: This notice lists those forms, able elsewhere ...... 8.000 reports, and recordkeeping requirements August 25, 1997 at the address listed Businesses and non-profit or- below: U.S. Small Business ganizations without credit imposed upon the public which were Administration, Disaster Area 2 Office, available elsewhere ...... 4.000 transmitted by the Department of One Baltimore Place, Suite 300, Atlanta, Others (including non-profit Transportation to the Office of GA 30308, or other locally announced organizations) with credit Management and Budget (OMB) for its locations. available elsewhere ...... 7.250 approval in accordance with the The interest rates are: For Economic Injury: requirements of the Paperwork 64188 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

Reduction Act of 1995 (44 U.S.C. Need for Information: U.S. And Description: chapter 35). The Federal Register foreign air carries will be able to provide Application of Delta Air Lines, Inc. Notice, Notice of Proposed Rulemaking the passenger manifest information for pursuant to 48 U.S.C. Section 41102 and (NPRM) with a 60-day comment period U.S. citizens and lawful permanent Subpart Q of the Department’s Rules of soliciting comments on the following residents to Department of Practice, applies for (1) a new or collection of information was published Transportation and Department of State amended certificate of public on September 10, 1996 [61 FR 47704]. in the case of an aviation accident no convenience and necessity to authorize DATES: Comments on this notice must be later than three hours following it to provide scheduled foreign air received on or before January 2, 1997. notification of the disaster. transportation from a point or points in Estimated Total Annual Burden on ADDRESSES: Written comments on the the United States to Manaus, Brasilia, DOT information collection requests Respondents: 1.1 to 1.4 million hours. Rio de Janeiro, Sao Paulo, Recife, Porto should be forwarded, as quickly as ADDRESSES: Send comments to the Alegre, Belem, Belo Horizonte, and possible, to Edward Clarke, Office of Office of Information and Regulatory Salvador de Bahia, Brazil and beyond Management and Budget, New Affairs, Office of Management and Brazil to Argentina, Uruguay, Paraguay Executive Office Building, Room 10202, Budget, 725–17th Street, NW, and Chile, and (2) designation and Washington, D.C. 20503. If you Washington, DC 20503, Attention DOT allocation of 14 U.S.-Brazil frequencies anticipate submitting substantive Desk Officer. available for U.S.-Brazil combination comments, but find that more than 10 Comments are Invited on: whether the services under the terms of the 1989 days from the date of publication are proposed collection of information is U.S.-Brazil Air Transport Services necessary for the proper performance of needed to prepare them, please notify Agreement. the functions of the Department, the OMB official of your intent Docket Number: OST–96–1964. including whether the information will immediately. Date filed: November 18, 1996. have practical utility; the accuracy of Due Date for Answers, Conforming FOR FURTHER INFORMATION CONTACT: the Department’s estimate of the burden Copies of the DOT information Applications, or Motion to Modify of the proposed information collection; Scope: December 16, 1996. collection request submitted to OMB ways to enhance the quality, utility and may be obtained from Mr. Charles Description: clarity of the information to be Application of Continental Airlines, McGuire, Office of the Secretary, Office collected; and ways to minimize the of Aviation Analysis, X–57, Department Inc. pursuant to 49 U.S.C. Sections burden of the collection of information 41108 and 41102 and Subpart Q of the of Transportation, Telephone number on respondents, including the use of (202) 366–4534. Department’s Rules of Practice, applies automated collection techniques or for a certificate of public convenience SUPPLEMENTARY INFORMATION: Section other forms of information technology. and necessity authorizing it to provide 3507 of Title 44 of the United States Issued in Washington, D.C. on November scheduled foreign air transportation of Code, as adopted by the Paperwork 26, 1996. persons, property and mail between the Reduction Act of 1995, requires that Phillip A. Leach, United States and Brazil and to combine agencies prepare a notice for publication Information Collection Officer, United States this authority with Continental’s other in the Federal Register, listing those Department of Transportation. exemption and certificate authority information collection requests [FR Doc. 96–30723 Filed 12–2–96; 8:45 am] consistent with applicable international submitted to OMB for approval or BILLING CODE 4910±62±P agreements. renewal under that Act. OMB reviews and approves agency submissions in Docket Number: OST–96–1968. Date filed: November 19, 1996. accordance with criteria set forth in that Notice of Applications for Certificates Act. In carrying out its responsibilities, Due Date for Answers, Conforming of Public Convenience and Necessity Applications, or Motion to Modify OMB also considers public comments and Foreign Air Carrier Permits Filed on the proposed forms and the reporting Scope: December 17, 1996. Under Subpart Q During the Week Description: and recordkeeping requirements. OMB Ending November 22, 1996 approval of an information collection Application of American Airlines, requirement must be renewed at least The following Applications for Inc. pursuant to Notice served once every three years. Certificates of Public Convenience and November 5, 1996 and 49 U.S.C. 41108 Title: Passenger Manifest. Necessity and Foreign Air Carrier and Subpart Q of the Department’s OMB Control Number: 2105—new. Permits were filed under Subpart Q of Regulations, applies for certificate of Type of Request: New collection. the Department of Transportation’s public convenience and necessity Affected Public: U.S. and foreign Procedural Regulations (See 14 CFR authorizing foreign air transportation of carriers, travel agents and the traveling 302.1701 et seq.). The due date for persons, property and mail between the public. Answers, Conforming Applications, or United States and points in India. Abstract: In some international Motions to modify Scope are set forth Docket Number: OST–96–1976. aviation disasters in the past, the State below for each application. Following Date filed: November 20, 1996. Department did not have a complete the Answer period DOT may process the Due Date for Answers, Conforming and accurate passenger manifest application by expedited procedures. Applications, or Motion to Modify information for use in notifying the Such procedures may consist of the Scope: December 18, 1996. families of victims in a timely manner. adoption of a show-cause order, a Description: This information collection requirement tentative order, or in appropriate cases Application of Condor Flugdienst would require U. S. air carriers, foreign a final order without further GMBH pursuant to 49 U.S.C. Section air carriers, and travel agents to collect proceedings. 41304 and Subpart the Regulations, complete and accurate passenger Docket Number: OST–96–1963. requests an amendment to its foreign air manifest information for U.S. citizens Date filed: November 18, 1996. carrier permit to provide scheduled and and lawful permanent residents in order Due Date for Answers, Conforming nonscheduled foreign air transportation that the families can be notified in a Applications, or Motion to Modify of persons, property and mail between timely manner. Scope: December 16, 1996. Germany and the United States. Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64189

Docket Number: OST–96–1977. Subject: Comp Telex Mail Vote 840, Date filed: November 22, 1996. Date filed: November 20, 1996. Composite Fare Construction Resos, R– Parties: Members of the International Due Date for Answers, Conforming 1—010e, R–2—002ee, R–3—017f. Air Transport Association. Applications, or Motion to Modify Intended effective date: February 1, Subject: PTC COMP 0039 dated Scope: December 18, 1996. 1997. November 22, 1996, Fare increase to Description: Docket Number: OST–96–1973. cover increased fuel costs, U.S. markets, Application of Hawaiian Airlines, Date filed: November 20, 1996. Minutes—PTC COMP 0041 dated Inc., pursuant to 49 U.S.C. Sections Parties: Members of the International November 21, 1996, Intended effective 41102, 41108, and Subpart Q of the Air Transport Association. date: December 15, 1996. Regulations, applies for a certificate of Subject: TC12 Telex Mail Vote 839, Paulette V. Twine, public convenience and necessity North Atlantic-Africa Reso 002— Chief, Documentary Services. authorizing scheduled foreign air Readopting Resolution, Intended [FR Doc. 96–30697 Filed 12–296; 8:45 am] transportation of persons, property, and effective date: January 1, 1997. BILLING CODE 4910±62±P mail between any point in the United Docket Number: OST–96–1974. States and any point in Canada, subject Date filed: November 20, 1996. to a condition that service to Vancouver, Parties: Members of the International Federal Railroad Administration Montreal and Toronto shall be Air Transport Association. separately authorized, to the extent Subject: TC1 Telex Mail Vote 838, [FRA Docket No. RSOR±6, Notice No. 43] necessary for such service to be Fares within South America, R–1— RIN 2130±AA81 consistent with the phase-in provisions 051d, R–2—041d, R–3—061d, R–4— for those three cities in the United 070j, R–5—071b, Intended effective Alcohol/Drug Regulations: Temporary States-Canada Air Transport Agreement date: December 1, 1996. Post-Accident Blood Testing signed on February 24, 1995. Docket Number: OST–96–1980. Procedures Paulette V. Twine, Date filed: November 22, 1996. AGENCY: Federal Railroad Chief, Documentary Services. Parties: Members of the International Administration (FRA). [FR Doc. 96–30698 Filed 12–2–96; 8:45 am] Air Transport Association. ACTION: Notice. BILLING CODE 4910±62±P Subject: PTC12 SATL–EUR 0007 dated November 1, 1996. South SUMMARY: Some of the currently Atlantic-Europe Resos rl–24, PTC12 distributed FRA post-accident Aviation Proceedings; Agreements SATL–EUR 0008 dated November 19, toxicology testing (PATT) kits contain Filed During the Week Ending 11/22/96 1996, PTC12 SATL–EUR FARES 0002 blood tubes with expiration dates dated November 19, 1996, r–1—001a, r– The following Agreements were filed ranging from October 1996 to January 9—064m, r–17—078f, r–2—001rr, r– with the Department of Transportation 1997. Since the blood tube lots that are 10—070y, r–18—078LL, r–3—002, r– under the provisions of 49 U.S.C 412 currently available will expire in a few 11—071mm, r–19—080c, r–4—005bb, r– and 414. Answers may be filed within months, FRA decided to delay replacing 12–071ey, r–20–080g, r–5–015v, r–13– 21 days of date of filing. the expiring tubes until new lots of 18– Docket Number: OST–96–1961. 073e, r–21–080r, r–6–017c, r–14–074x, 24 month blood tubes become available Date filed: November 18, 1996. r–22–085L, r–7–044m, r–15–075pp, r– in early 1997. This notice explains the Parties: Members of the International 23–087uu, r–8–054m, r–16—076w, r– procedures to be followed until FRA Air Transport Association. 24–092d, Intended effective date: April distributes replacement blood tubes. Subject: TC123 Telex Mail Vote 836, 1, 1997. FOR FURTHER INFORMATION CONTACT: Amend South Atlantic-Europe Fares, Docket Number: OST–96–1981. Lamar Allen, Alcohol and Drug Program Resos 057o (r–1) & 047o (r–2), Intended Date filed: November 22, 1996. Manager (RRS–11), Office of Safety, effective date: March 1, 1997. Parties: Members of the International FRA, 400 7th Street, S.W., Washington, Docket Number: ST–96–1962. Air Transport Association. D.C. 20590 (Telephone: (202) 632–3378) Date filed: November 18, 1996. Subject: PTC23 EUR–SWP 0004 dated or Patricia V. Sun, Trial Attorney (RCC– Parties: Members of the International November 15, 1996, Europe-Southwest 11), Office of Chief Counsel, FRA, 400 Air Transport Association. Pacific Resos r1–20, PTC23 EUR–SWP 7th Street, S.W., Washington, D.C. Subject: Comp Telex Mail Vote 837, 0005 dated November 19, 1996, PTC23 20590 (Telephone: (202) 632–3183). Amendment to Mileage Manual (Reso EUR–SWP Fares 0001 dated November 011a), Intended effective date: April 1, 15, 1996, r–1–001b, r–8–057c, r–15– Background 1997. 071ii, r–2–002, r–9–058c, r–16–071oo, Since 1986, FRA has included Docket Number: OST–96–1971. r–3–15v, r–10–065c, r–17–076d, r–4– Vacutainer brand 10 milliliter (mL) Date filed: November 20, 1996. 045c, r–11–067c, r–18–076f, r–5–047c, evacuated blood collection tubes, Parties: Members of the International r–12–068c, r–19–078w, r–6–048c, r–13– manufactured by Becton Dickinson Air Transport Association. 070hh, r–20–079dd, r–7–055c, r–14– (Becton), in its post-accident toxicology Subject: PTC23 AFR–TC3 0002 dated 071gg, Intended effective date: April 1, testing (post-accident) kits. Each November 15, 1996, R1–2; PTC23 AFR– 1997. individual post-accident kit (there are TC3 0003 dated November 15, 1996, Docket Number: OST–96–1982. three kits in each post-accident R3–5; PTC23 AFR–TC3 0004 dated Date filed: November 22, 1996. toxicology testing box) contains two November 15, 1996, R6, R–1—002qq, R– Parties: Members of the International Vacutainer brand grey-top glass tubes. 2—065y, R–3—003b, R–4—071t, R–5— Air Transport Association. These tubes, which have no interior 086v, R–6—015v. Intended effective Subject: PTC COMP 0038 dated coating, contain silicone, a rubber date: as early as December 15, 1996. November 22, 1996, Fare increase to stopper lubricant, sodium fluoride, an Docket Number: OST–96–1972. cover increased fuel costs, Non-U.S. antibacterial agent and mild Date filed: November 20, 1996. markets, Intended effective date: anticoagulant, and potassium oxalate, Parties: Members of the International December 15, 1996. an anticoagulant. On each tube, Becton Air Transport Association. Docket Number: OST–96–1983. has printed an expiration date, the date 64190 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices until which it warrants that the tube has professional’s ability to draw a blood that found in alcoholic beverages may sufficient vacuum to draw blood and specimen from the donor. As pressure be created. That is, under certain chemical additives that remain potent. from the body’s circulatory system extreme conditions, alcohol can appear Becton normally releases its blood tubes forces blood into the evacuated tube, in an individual’s urine, blood, or in lots which expire within 18–24 less vacuum will cause the blood to tissues without having been ingested. months of manufacture. draw slower or not at all. For alcohol to be produced under these Many of FRA’s post-accident kits that Until its expiration date, each grey- circumstances, both glucose and certain have been distributed to railroads top blood tube is warranted by Becton bacteria or yeast must be present. Other contain blood tubes that will expire to have 90% or more of its vacuum left factors, such as the storage temperature beginning this fall (from October 1996 to (at an estimated deterioration rate of no of the specimen or the condition of the January 1997). The replacement blood greater than 5% per year). If a particular body (if the donor is deceased), can also tube lots that are now available have tube draws inefficiently due to lack of be significant. Obviously, endogenous only a few months remaining before vacuum, a medical professional would production of alcohol is of concern in they expire. FRA has decided to delay ordinarily discard it and simply use the post-accident alcohol testing of both tube replacement until newly prepared another grey-top tube. surviving and deceased crew members. 18–24 month lots become available in The presence or absence of the The presence of alcohol-producing early 1997. chemical additives contained in grey- bacteria or yeast and glucose in a blood top tubes does not affect the detection sample of a surviving crew member can Interim Procedures of any of the drugs tested for in FRA’s occur only through a combination of Until the current inventory of blood post-accident testing panel, with the disease processes and is extremely rare. tubes in the field is replaced in early exception of parent cocaine. In fact, Direct contamination of a specimen is 1997, FRA authorizes railroads to each grey-top blood tube contains also extremely unlikely given the instruct local medical personnel to sodium fluoride, an inorganic substance collection and laboratory protocols of replace the expired tubes with their own that contributes to the detectability of FRA’s post-accident testing program, stock of unexpired 10 mL grey-top parent cocaine in blood, by helping to and the presence of sodium fluoride in tubes. (Substituted tubes must be 10 mL, stabilize the spontaneous conversion of sufficient amounts, such as the amounts not the 5 mL type, to ensure sufficient cocaine in vitro to cocaine metabolites contained in Vacutainer grey-top blood for analysis.) This action is (specifically to ecgonine methyl ester, or collection tubes. requested, but not required, and need EME). However, sodium fluoride does For surviving crew members, even if only be considered when expired tubes not impact either the stability or the the sodium fluoride in the tube were are discovered during an actual post- ability to detect the principal cocaine rendered totally inert by age, its absence accident collection. metabolite of interest, benzoylecgonine would not be a problem unless Tube replacement is always preferred (BE). Whether the amount of sodium contaminating bacteria or yeast were to using expired tubes, but, if no fluoride present in grey-top blood tubes present. The blood tube itself, with its opportunity for replacement arises, is sufficient to retard conversion of remaining vacuum, also serves to railroads are authorized to complete the parent cocaine continues to be a matter physically protect against that post-accident collection using the of scientific interest [see Iscenschmid et eventuality. In addition, FRA has in the expired blood tubes. FRA’s post- al, 1989; Brogan et al, 1992; Baselt et al, past tested specifically for accident testing program incorporates 1993; others]. Moreover, other factors, contaminating bacteria or yeast in both testing and analysis protocols designed including the pH of the sample and the the urine and the blood, if their to protect employees from unwarranted temperature of storage, can also affect presence is suspected. accusations of alcohol or drug use. the stability of parent cocaine in blood. For deceased crew members, As explained below, grey-top tubes Since it is an inorganic compound, postmortem alcohol generation is are the only commercial blood sodium fluoride oxidizes very slowly always a potential issue when collection tubes generally available that and in a vacuum environment is interpreting a positive alcohol result. In contain sodium fluoride. They are unlikely to deteriorate dramatically in FRA’s post-accident testing, there have FRA’s tubes of choice for FRA’s post- the first few months after tube been several cases where, given severe accident testing. expiration. In the period between trauma and the correct environmental expiration of the older grey-top tubes factors, alcohol was produced post- Scientific/Technical Issues and replacement with new ones, mortem in detectable amounts, even in Although FRA’s interim procedures anticipated to be 90 days or less, there the presence of fully potent sodium require railroads to replace expired will be little, if any, significant fluoride. blood tubes with unexpired tubes if difference in FRA’s ability to detect To account for this possibility, FRA possible, FRA believes that use of an parent cocaine. More importantly, there has taken and will continue to take expired blood tube, if necessary, will is no possibility that a ‘‘false positive’’ whatever scientific and technical steps not have a significant impact on the for cocaine or any of its metabolites are necessary to protect post-accident validity of post-accident test results. would occur because of an expired specimen donors from an incorrect Discussed below are the two primary blood tube. interpretation of a positive test result. scientific/technical issues concerning Sodium fluoride is also widely Among the procedures used by FRA to the use of expired tubes: (1) the integrity established as an effective antimicrobial rule out an alcohol positive as coming of the vacuum present in the tube (to agent in retarding endogenous alcohol from endogenous production are: draw blood properly), and (2) the production [see Harper and Correy, examining other tissues or fluids (i.e., potency of the chemical additives. 1988; Anderson and Prouty, 1995; urine, brain, vitreous) which may have Evacuated blood tubes that have Sulkowski et al, 1995; and others]. The been protected from trauma or recently expired (i.e., within the past production of ethyl alcohol in the body decomposition; determining that the several months) are not expected to is a well known phenomenon, distribution of alcohol in the various show a dramatic decrease in tube especially in post-mortem samples. In body fluids and tissues is inconsistent vacuum. Moreover, a loss of vacuum the presence of certain contaminating with that expected in a living person; only affects the efficiency of the medical microorganisms, alcohol identical to detecting the presence of other volatiles Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64191 or physiological byproducts which can be met or from the dispatcher shall be shortline railroad, operating in the State sometimes be present during post- recorded in writing by both the of Illinois.1 mortem decomposition; repetitive conductor and engineer, i.e., Engine The earliest the transaction could be analyses of a specimen to determine if (number) has passed (location) at (time). consummated was November 21, 1996, the alcohol concentration is increasing; In all DTC territory: the effective date of the exemption (7 and determining the identity of any 2. Once a movement authority is in days after the exemption was filed). microorganisms present to assess effect, no alterations may be made other whether they have alcohol-producing than those specifically prescribed by Pioneer owns and controls eleven capability. carrier operating rules. existing Class III shortline rail carriers: West Michigan Railroad Co., operating Authority: 49 U.S.C. 20103, 20107, 20111, 3. Conductors and engineers should 20112, 20113, 20140, 21301, 21304, and 49 retain for seven days copies of all en in Michigan; Fort Smith Railroad Co., CFR 1.49(m). route movement authorities transmitted operating in Arkansas; Alabama Issued in Washington, D.C. on November by radio. These records should be Railroad Co., operating in Alabama; 27, 1996. periodically inspected by carrier Mississippi Central Railroad Co., Grady C. Cothen, officials. operating in Mississippi and Tennessee; Deputy Associate Administrator for Safety. In addition to these recommended Alabama & Florida Railway Co., [FR Doc. 96–30759 Filed 12–2–96; 8:45 am] safety practices, FRA emphasizes that operating in Alabama; Decatur Junction BILLING CODE 4910±06±P strict adherence to existing FRA safety Railway Co., operating in Illinois; regulations will enhance safety of these Vandalia Railroad Company, operating rail operations. Railroad officials and in Illinois; Minnesota Central Railroad Notice of Safety Bulletin employees should be particularly aware Co., operating in Minnesota; KNRECO, of the following regulations and their Inc., d/b/a/ Keokuk Junction Railway, AGENCY: Federal Railroad effect on the safety of DTC operations: operating in Iowa and Illinois; Columbia Administration (FRA), Department of FRA regulations at 49 CFR & Northern Railway Co., which has a Transportation (DOT). 220.61(b)(5) require that both the right to operate in Mississipi; and ACTION: Notice of safety bulletin. conductor and engineer shall have a Rochelle Railroad Co., which operates SUMMARY: The FRA is issuing a Safety copy of all movement authorities in Illinois. transmitted by radio. FRA has Bulletin addressing recommended Pioneer states that: (i) The railroads traditionally interpreted this to mean safety practices for Direct Train Control will not connect with each other or any that the conductor and the engineer (DTC) operations. railroad in their corporate family; (ii) shall each have a copy. Both FOR FURTHER INFORMATION CONTACT: the acquisition of control is not part of crewmembers having their own copy of Doug Taylor, Staff Director, Operating a series of anticipated transactions that all movement authorities will, in Practices Division, Office of Safety would connect the eleven railroads with Assurance and Compliance, FRA, 400 accordance with the purpose of the rule, provide needed safety checks on each other or any railroad in their Seventh Street, S.W., Washington, D.C. corporate family; and (iii) the 20590 (telephone 202–632–3346). unauthorized train movements. FRA regulations at 49 CFR 217.9(b)(1) transaction does not involve a Class I SUPPLEMENTARY INFORMATION: require that a carrier’s program of carrier. Therefore, the transaction is Preliminary investigatory findings operational tests and inspections exempt from the prior approval following the head-on collision of two provide for operational testing and requirements of 49 U.S.C. 11323. See 49 CSX freight trains at Smithfield, West inspection under the various operating CFR 1180.2(d)(2). Virginia, on August 20, 1996, indicate conditions on the railroad. Under 49 U.S.C. 10502(g), the Board that existing carrier Direct Train Consequently, operational tests and Control 1 rules and procedures should may not use its exemption authority to inspections conducted in accordance be enhanced in order to reduce the risk relieve a rail carrier of its statutory therewith must include a representative of similar collisions. Therefore, the obligation to protect the interests of its number of tests and inspections following three safety practices are employees. Section 11326(c), however, specifically covering operations in DTC recommended in DTC territory: does not provide for labor protection for In non-signalled DTC territory—when territory. transactions under sections 11324 and a train holds an ‘‘after arrival of’’ block Issued in Washington, D.C. on November 11325 that involve only Class III rail authority: 25, 1996. carriers. Because this transaction 1. After the train to be met has been Bruce Fine, involves Class III rail carriers only, the visually identified by engine number Associate Administrator for Safety. Board, under the statute, may not and the rear end marker has passed the [FR Doc. 96–30737 Filed 12–2–96; 8:45 am] impose labor protective conditions for point of restriction, the train being BILLING CODE 4910±06±P this transaction. restricted shall establish positive radio If the notice contains false or contact with the train to be met in order misleading information, the exemption to confirm the identity of the passing Surface Transportation Board is void ab initio. Petitions to revoke the train. If radio contact cannot be [STB Finance Docket No. 33298] exemption under 49 U.S.C. 10502(d) established, the train dispatcher shall be may be filed at any time. The filing of contacted to provide the required Pioneer RailcorpÐAcquisition of a petition to revoke will not confirmation. The train identification Control ExemptionÐShawnee automatically stay the transaction. information received from the train to Terminal Railway Company, Inc. An original and 10 copies of all 1 This is an umbrella term and refers to methods Pioneer Railcorp. (Pioneer), a pleadings, referring to STB Finance of operation known variously as Direct Traffic noncarrier holding company, has filed a 1 Control (DTC), Track Warrant Control (TWC), Track notice of exemption to acquire, through See Shawnee Terminal Railway Company, Permit Control Systems (TPCS), Form D control Inc.—Acquisition and Operation Exemption—Cairo system (DCS), and similar methods of authorizing stock purchase, Shawnee Terminal Terminal Railroad Company, Finance Docket No. train movements. Railway Company, Inc., a Class III 33127 (STB served Oct. 11, 1996). 64192 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

Docket No. 33298, must be filed with samples from importations for the acknowledges that the degree of the Surface Transportation Board, Office purpose of verifying that the crystallinity is not an issue to the tile of the Secretary, Case Control Branch, importation is properly being entered industry. The fact that the issue is not 1201 Constitution Avenue, NW., into the commerce of the United States as critical to the industry as the other Washington, DC 20423. In addition, a under the correct subheading of the criteria stated in U.S. Note 1, e.g., fired copy of each pleading must be served on Harmonized Tariff Schedule of the to pyrometric cone 020, porosity, etc. Daniel A. LaKemper, Esq., Pioneer United States (HTSUS) and other may lead Customs to lessen the weight Railcorp, 1318 S. Johanson Road, Peoria, pertinent laws and regulations. of the crystallinity criteria for floor and IL 61607. Additional U.S. Note 1 to Chapter 69 of wall tile. However, in the absence of Decided: November 25, 1996. the HTSUS states: legislative change to the wording of U.S. Note 1 to Chapter 69 the issue must be By the Board, David M. Konschnik, For the purposes of this chapter, a Director, Office of Proceedings. ‘‘ceramic article is a shaped article having a addressed for Customs purposes. Issue 2: X-ray diffraction (XRD) is Vernon A. Williams, glazed or unglazed body of crystalline or substantially crystalline structure, the body currently the technique of choice for Secretary. of which is composed essentially of inorganic determining the degree of crystallinity [FR Doc. 96–30716 Filed 12–2–96; 8:45 am] nonmetallic substances and is formed and in these products. BILLING CODE 4915±00±P subsequently hardened by such heat Response: Four of the respondents treatment that the body, if reheated to noted this fact. Three went on to discuss pyrometric cone 020, would not become the significant cost, skill and effort the DEPARTMENT OF THE TREASURY more dense, harder, or less porous, but does method demands. One respondent notes not include any glass articles’’. [Emphasis that XRD should be viewed as a Customs Service added.] qualitative test for the purpose of As part of the Customs efforts to determining crystallinity. Customs [T.D. 96±80] increase voluntary compliance with the acknowledges that, with one exception, Crystallinity of Ceramic Floor and Wall law and regulations, inform the public, all of the facts presented by the Tile and involve the importing public in respondents regarding XRD are true. problem resolution, by a notice The exception is that, if done properly, AGENCY: U.S. Customs Service, published in the Federal Register on XRD can give quantitative results. It is Department of the Treasury. September 6, 1995 (60 FR 46329), possible that, due to the discussion of ACTION: Final notice on testing of floor Customs stated that it wished to define Issues 1 and 3, only a type of screening and wall tile for percent of crystallinity the concept of ‘‘substantially technique is required. necessary to satisfy Harmonized Tariff crystalline’’ in scientific terms based on Issue 3: The purpose of the Schedule of the United States criteria state-of-the-art ceramic technology. crystallinity criteria is to differentiate a that a ‘‘ceramic article’’ be a shaped However, before making any changes, ceramic tile from a glass article. product ‘‘of crystalline or substantially comments were invited on this issue. Response: While only one respondent crystalline structure.’’ made note of the U.S. Tariff Discussion of Comments Commission Tariff Classification Study SUMMARY: Customs has completed a The following discussion and (‘‘Schedule 5–Nonmetallic Minerals and review of the responses received as a conclusion applies only to floor and Products,’’ Nov. 15, 1960, pg 77–78) result of our request for comments on wall tile described in Chapter 69, discussion of crystallinity as it applies the testing for the percent of HTSUS. As a result of the notice, to ceramic articles, the study is very crystallinity of certain articles of Customs received six responses. The important in determining the intent of imported floor and wall tiles. These respondents have offered several issues the language of U.S. Note 1 to Chapter articles are classified for Customs which are discussed individually. 69. The respondent states that the use of purposes under subheadings covered by Issue 1: The degree of crystallinity of the concept of crystallinity is to U.S. Note 1 to Chapter 69 of the a ceramic is not addressed in any of the differentiate a ceramic product from a Harmonized Tariff Schedule of the major standards that govern the glass product. From a technical United States (HTSUS). There are many manufacture of ceramic articles. standpoint, this is reasonable since glass products imported under Chapter 69 Response: This comment was made articles are nearly completely that have vastly different physical by five of the six respondents. The amorphous, while ceramic goods requirements than floor and wall tiles. American Society for Testing and normally contain some degree of For this reason this study has been Materials (over 30 ASTM standards crystallinity. Depending on the raw limited to the physical parameter of including C373, most found in Volume materials used to make the product and crystallinity of floor and wall tiles. 15.02), the International Standards the manufacturing process used to Organization (ISO standards 13006 and EFFECTIVE DATE: Any changes in engineer the physical qualities into the 10454.1 through 10454.17), and the Customs laboratory testing procedures product that are necessary for its European Network (EN standards 87, will be effective regarding merchandise intended use, the degree of crystallinity 98–105, 121, 122, 155, 159, 163, 176– received for testing on or after December may vary significantly. Furthermore, the 178, 186–188, and 202) each have either 3, 1996. HTSUS describes a different process for accepted standards or draft standards the manufacture of ceramics compared FOR FURTHER INFORMATION CONTACT: Mr. for the production of ceramic floor and to the process of glass-making. This may Robert L. Zimmerman, Jr., Office of wall tile. Each standard writing body be used to differentiate a ceramic article Laboratories & Scientific Services, (504) has a definition for a ceramic floor and from a glass article for Customs 589–6311. wall tile, but none address the issue of purposes. SUPPLEMENTARY INFORMATION: crystallinity in their definition. Issue 4: Court ruling regarding According to one respondent, ‘‘substantially crystalline.’’ Background crystallinity is not an important factor to Response: One respondent refers to From time to time U.S. Customs the industry. From all of the information the Eastalco decision. In Eastalco Service employees take representative gathered on this subject, Customs Aluminum Co. V. United States, 13 CIT Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64193

864, 726 F. Supp. 1342 (1989), affirmed generally accepted by the scientific Agency, M/ADD, 301 Fourth Street, in 9 CAFC 16, 916 F. 2d 1568 (1990), community. Normally, a qualitative S.W., Washington, D.C. 20547, the Court considered whether certain analysis, using the XRD technique, that telephone (202) 619–4408; and OMB carbon blocks were ‘‘ceramic articles’’ indicates some degree of crystallinity review: Ms. Victoria Wassmer, Office of for tariff classification purposes. The exists in the article would be sufficient Information And Regulatory Affairs, Court held that a low level of to verify that the floor or wall tile article Office of Management and Budget, New crystallinity (determined to be has a sufficient crystalline nature to Executive Office Building, Docket approximately 5%) was insufficient to satisfy the criteria ‘‘crystalline or Library, Room 10202, NEOB, meet the ‘‘substantially crystalline’’ substantially crystalline structure’’ for Washington, D.C. 20503, Telephone requirement found in the tariff Customs purposes. (202) 395–3176. schedules. In responding to plaintiff’s Dated: November 26, 1996. SUPPLEMENTARY INFORMATION: Public argument, the CIT stated, ‘‘[w]hile fifty George D. Heavey, reporting burden for this collection of percent may not be the appropriate information (Paper Work Reduction Director, Laboratories and Scientific Services. dividing line on the issue of what Project: OMB No. 3116–0197) is constitutes substantial crystallinity [FR Doc. 96–30664 Filed 12–2–96; 8:45 am] estimated to average 1.15 hours per ** * the quantitative test has shown BILLING CODE 4820±02±P response, including the time for that a very low level of crystallinity is reviewing instructions, searching involved * * *.’’ Hence, the Court did existing data sources, gathering and not reach the question of the UNITED STATES INFORMATION maintaining the data needed, and appropriate dividing line for AGENCY completing and reviewing the collection determining substantial crystallinity. In of information. Responses are voluntary any event, for technical reasons, Proposed Collection; Comment and respondents will be required to Customs considers this case to be Request respond only one time. largely inapplicable here. Graphite (a AGENCY: United States Information Comments are requested on the crystalline form of carbon) was a Agency. proposed information collection constituent material used to fabricate concerning (a) whether the proposed ACTION: Proposed collection; Comment the blocks at issue in Eastalco. These request. collection of information is necessary blocks are normally used to line ovens for the proper performance of the and furnaces that must handle SUMMARY: The United States Information agency, including whether the extremely high temperatures. Floor and Agency, as part of its continuing effort information has practical utility; (b) the wall tiles have a vastly different to reduce paperwork and respondent accuracy of the Agency’s burden construction and application; they will, burden, invites the general public and estimates; (c) ways to enhance the therefore, have quite different physical other Federal agencies to comment on quality, utility, and clarity of the characteristics. In sum, it is logical that an information collection requirement information collected and (d) ways to the percent of crystallinity needed to concerning the public use form entitled minimize the burden of the collection of satisfy the subjective term ‘‘substantially ‘‘Surveys, Interviews, and Other information on the respondents, crystalline’’ may be different for Audience Research for Radio and TV including the use of automated products that are vastly different. Marti’’. This request for comment is collection techniques or other forms of Issue 5: Professional opinion of being made pursuant to the Paperwork information technology. Send comments percent of crystallinity. Reduction Act of 1995 (Pub. L. 104–13; regarding this burden estimate or any Response: All but one of the 44 U.S.C. 3506(c)(2)(A)). other aspect of this collection of respondents who are scientists/ The information collection activity information to the United States engineers state that, in their professional involved with this program is Information Agency, M/ADD, 301 opinion, only a minimal level of conducted pursuant to the mandate Fourth Street, S.W., Washington, D.C. crystallinity should be required for a given to the United States Information 20547; and to the Office of Information floor or wall tile to be considered Agency in accordance with P.L. 98–11, and Regulatory Affairs, Office of ‘‘substantially crystalline.’’ One scientist the Radio Broadcasting to Cuba Act, to Management and Budget, New did not offer an opinion on a minimum provide for the broadcasting of accurate Executive Office Building, Docket level of crystallinity. One of the ceramic information to the people of Cuba and Library, Room 10202, NEOB, engineers introduces a concept that the for other purposes. In addition, Public Washington, D.C. 20503. crystalline content of nearly all, if not Law 98–11 was amended by Public Law CURRENT ACTIONS: USIA is requesting all glass, ‘‘never exceeds a few percent 101–246, which established the reinstatement of this collection for a (less than 5%).’’ Customs finds these authority for TV Marti. three-year period and approval for a opinions to be significant. DATE: Comments are due on or before revision to the burden hours. Conclusion February 3, 1997. TITLE: Surveys, Interviews, and Other After careful consideration of all of COPIES: Copies of the Request for Audience Research for Radio and TV the comments received concerning the Clearance (OMB 83–I), supporting Marti. issues noted above, as of the effective statement, and other documents that ABSTRACT: Data from this information date of this notice in the Federal will be submitted to OMB for approval collection are used by USIA’s Office of Register, in making decisions on tariff may be obtained from the USIA Cuba Broadcasting (OCB) in fulfillment classification Customs will consider the Clearance Officer. Comments should be of its mandate to evaluate effectiveness term ‘‘crystalline or substantially submitted to the office of Information of Radio and TV Marti operations by crystalline’’ as used in U.S. Note 1 to and Regulatory Affairs of OMB, estimating the audience size and Chapter 69, as it pertains to floor and Attention: Desk Officer for USIA, and composition for broadcasts; and assess wall tile, to be satisfied for articles also to the USIA Clearance Officer. signal reception, credibility and having a level of crystallinity that is FOR FURTHER INFORMATION CONTACT: relevance of programming through this clearly discernable by x-ray diffraction Agency Clearance Officer, Ms. Jeannette research. or other analytical methodology that is Giovetti, United States Information Proposed Frequency of Responses: 64194 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

No. of Respondents...... 1,788 Recordkeeping Hours ...... 1.15 —— Total Annual Burden ...... 2,052 Dated: November 26, 1996. Rose Royal, Federal Register Liaison. [FR Doc. 96–30758 Filed 12–2–96; 8:45 am] BILLING CODE 8230±01±M federal register December 3,1996 Tuesday Fiscal Year1997;Notice Small CitiesDevelopmentGrantsfor Notice ofFundingAvailabilityforCDBG Development Housing andUrban Department of Part II 64195 64196 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

DEPARTMENT OF HOUSING AND appropriations, and the ‘‘cash flows’’ approximately 3 percent per annum. URBAN DEVELOPMENT generated by the assisted project. This This helps communities undertake NOFA makes available between $3 development projects that might not [Docket No. FR±4174±N±01] million and $9 million in FY 1997 otherwise be financially feasible. Notice of Funding Availability for: the funding through the HUD-administered In addition to any other security HUD-Administered Small Cities Small Cities CDBG program for the first arrangement that may be permitted or Community Development Block Grant year of multiyear plans requested required pursuant to 24 CFR 570.705(b), (CDBG) Program, Development through applications. In the event that and in order to reduce the risk to HUD GrantsÐFiscal Year 1997; and the HUD does not receive sufficient and individual borrowers beginning in Section 108 Loan Guarantee Program numbers of applications that are fiscal year 1998, HUD will establish a for Small Communities in New York fundable in the aggregate amount that debt service reserve with CDBG Small State HUD is setting aside in this NOFA, HUD Cities funds that will be used to make may publish a subsequent NOFA the first year’s Section 108 debt AGENCY: Office of the Assistant soliciting applications for the remainder obligation payments when they come Secretary for Community Planning and of the funds that HUD intends to set due (ending in August of any year under Development, HUD. aside for this initiative. Multiyear plans the current system). Early in the next ACTION: Notice of funding availability approved will not propose an amount of fiscal year, HUD will replenish the debt (NOFA) for CDBG Small Cities grant funds totaling more than $60 service reserve for purposes of the next Development Grants for Fiscal Year (FY) million for all years. year’s payments with another Small 1997. HUD encourages applications from Cities grant under the noncompetitive joint applicants in accordance with 24 authority of 24 CFR 570.432. HUD SUMMARY: This Notice of Funding CFR 570.422. The nature of riverfront intends to, subject to the conditions Availability (NOFA) announces the revitalization is such that waterfront stated in § 570.432 including the availability of CDBG Small Cities projects undertaken in tandem at availability of appropriations, continue development grants and guaranteed different points along the waterfront to replenish the debt service reserve loans to fund eligible development creates a ‘‘regional synergy’’ that account each year for each grant made activities related to the New York canal enhances the success of all projects in under this NOFA as long as any related system. This NOFA is part of the Canal the region. Corridor Initiative, a multiyear effort Section 108 loan remains outstanding. This NOFA sets out program designed to revitalize the economic base Combining Section 108 Loans with guidelines that will govern the of communities in upstate New York Multiyear Plans for CDBG Funding to through development projects and job Create a Financial Package application, application review, and creation along the canal system and award process for the CDBG New York Under the Section 108 program and State Small Cities grants made available connecting waterways. pursuant to 24 CFR 570.705(a)(2)(iii), a Eligible development activities are as part of the financial package for Canal New York State nonentitled Corridor Initiative projects. expected to be funded through a community/public entity eligible to DATES: combination of resources, including receive HUD-administered CDBG Small Applications are due on or prior Community Development Block Grant Cities funds may borrow an aggregate to January 2, 1997. Applications, if (CDBG) funds made available through amount of funds guaranteed under the mailed, must be postmarked by the this NOFA under the HUD-administered Section 108 Loan Guarantee program United States Postal Service no later Small Cities CDBG program and the that is five times the greater of: than midnight on January 2, 1997. Section 108 Loan Guarantee program. (A) The most recent CDBG Small Overnight delivery items received HUD expects to provide funds for the Cities grant approved for the applicant, within ten (10) days after January 2, selected development projects through a (B) The average of the most recent 1997 will be deemed to have been combination of CDBG and Section 108 three CDBG Small Cities grants received by that date, upon submission in an aggregate amount of approved for the applicant (excluding of documentary evidence that they were approximately $120 million or more any CDBG grant in the same fiscal year placed in transit with the overnight depending upon the proposals as the Section 108 Loan Guarantee delivery service by no later than submitted. commitment), or December 31, 1996. If an application is HUD expects that the typical project (C) The average amount of CDBG hand-delivered to the New York or the proposal would be a Section 108- Small Cities grants made to units of Buffalo Office, the application must be eligible development project that builds general local government in New York delivered to the appropriate office by no on the unique locational opportunities State in the previous fiscal year. later than 4:00 p.m. on the deadline afforded by the New York canal system In FY 1996, the average New York date. and connecting waterways to foster State CDBG Small Cities grant amount The above-stated application deadline commercial revitalization, business awarded was $600,723. This means that is firm as to date and hour. In the growth and expansion, and job creation under the Section 108 program, a interest of fairness to all competing that will result in the economic and typical New York State nonentitled applicants, HUD will treat as ineligible physical revitalization of the project community or county may borrow for consideration any application that is area. Such projects would utilize funds approximately $3 million. Given current not received by 4:00 p.m. on, or made available by the Section 108 Loan Section 108 Loan Guarantee rates and a postmarked by January 2, 1997. Guarantee program to provide the ‘‘up- 20-year financing term, the average Applicants should take this policy into front’’ financing, along with other annual straight line principal and account and make early submission of public or private resources to the extent interest payment of a $3 million their materials to avoid any risk of loss financially feasible. The loan guaranteed guaranteed Section 108 loan would be of eligibility brought about by by section 108 would be expected to be approximately $305,000 per year. In this unanticipated delays or other delivery- repaid with a combination of the CDBG example, a $100,000 a year CDBG grant related problems. funds requested as part of this for the 20 years would have the effect ADDRESSES: Completed applications will application, future CDBG of reducing the effective interest rate to be accepted at the following addresses: Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64197

1. For the nonentitled CDBG number takes into account the assistance under 24 CFR 570.703 is jurisdictions in and county of Ulster and comments received in response to that eligible under this NOFA (except as nonparticipating jurisdictions in the June 3, 1996 notice. stated in section I.C.3.a. of this NOFA, urban county of Dutchess: Department below). As emphasized in the selection I. Purpose and Substantive Description of Housing and Urban Development, factors (see section II.C. of this NOFA), Office of Community Planning and A. Authorities and Background however, the overall purpose of the eligible activity, or group of eligible Development, Attention: Small Cities 1. Authority Coordinator, 26 Federal Plaza, New activities, proposed for funding in York, NY 10278–0068. Telephone (212) Title I, Housing and Community response to this NOFA is the economic 264–0771; and Development Act of 1974 (the HCD Act) development of the area served by the 2. For the nonentitled CDBG (42 U.S.C. 5301–5320); 24 CFR part 570, proposed project. jurisdictions in and counties of Albany, subpart F. Because of the integral relationship of Cayuga, Clinton, Columbia, Erie, Essex, 2. Background CDBG grant funds and the Section 108 Greene, Herkimer, Madison, Monroe, Loan Guarantees, the scale of Montgomery, Niagara, Oneida, Title I of the Housing and Community development projects solicited, and the Onondaga, Ontario, Orleans, Oswego, Development Act of 1974 authorizes the expectation of a long-term stream of Rensselaer, Saratoga, Schenectady, Community Development Block Grant CDBG funds (subject to future Schuyler, Seneca, Tompkins, Warren, (CDBG) program. Section 106 of Title I appropriations) to make such projects permits the States to elect to assume the Washington, Wayne and Yates: economically feasible, this NOFA administrative responsibility for the Department of Housing and Urban solicits applications for multiyear plans. CDBG program for nonentitled areas Development, Community Planning and If an applicant’s multiyear plan is within their jurisdiction. Section 106 Development Division, Attention: Small selected on a competitive basis, the first provides that HUD will administer the Cities Coordinator, 465 Main Street, year will be funded, and HUD may fund CDBG program for nonentitled areas Lafayette Court, Buffalo, NY 14203– future years on a noncompetitive basis within any State that does not elect to 1780. Telephone (716) 551–5742. subject to acceptable performance, assume the administrative responsibility submission of an acceptable application FOR FURTHER INFORMATION CONTACT: for the program. Subpart F of 24 CFR Robert Duncan, Deputy Director, Office and certifications, and the provision of part 570 sets out the requirements for adequate appropriations for the CDBG of Block Grant Assistance, Department HUD’s administration of the CDBG of Housing and Urban Development, New York nonentitlement Small Cities program in nonentitled areas (Small program. Room 7286, 451 Seventh Street, SW, Cities program). The State of New York Washington, DC 20410, Telephone (202) has not elected to implement the CDBG 3. Other Program Requirements 708–3587; or Mr. Joseph D’Agosta, New Small Cities program. a. Abbreviated Consolidated Plan. York Regional Director, Office of With respect to this NOFA, subpart F, Each jurisdiction that applies for funds Community Planning and Development, at 24 CFR 570.421(a)(6), ‘‘Economic under this NOFA must have submitted Department of Housing and Urban development grants,’’ provides that in a consolidated plan, as provided at 24 Development, 26 Federal Plaza, New the event that a nonentitlement New CFR part 91. A jurisdiction that does not York, NY 10278–0068, Telephone (212) York State Small Cities applicant needs expect to be a participating jurisdiction 264–0771. a CDBG Small Cities grant, in addition in the HOME program under 24 CFR Persons with hearing or speech to a Section 108 Loan Guarantee, to part 92, may submit (or may have impairments may access these numbers make its economic development project submitted) an abbreviated consolidated via TTY by calling the Federal viable, HUD may fund such plan that is appropriate to the types and Information Relay Service at (800) 877– applications, as they are determined to amounts of assistance sought from HUD. 8339. be fundable in a specific amount up to (See 24 CFR 91.235.) If an applicant has SUPPLEMENTARY INFORMATION: the sum set aside for development an abbreviated consolidated plan projects in this Notice of Funding previously approved by HUD, the Paperwork Reduction Act Statement Availability. This NOFA proposes to applicant may update it, if necessary, if The information collection maximize the utilization of Section 108 the CDBG development activities requirements contained in this NOFA guaranteed loans in conjunction with proposed in the application contain any have been submitted to the Office of multiyear plans for use of CDBG funds new non-housing community Management and Budget (OMB) for to undertake eligible development development activity. review under the Paperwork Reduction projects. As a result of this approach, Any applicant that plans to undertake Act of 1995 (44 U.S.C. 3501–3520). The the funds announced in this NOFA a housing activity with funds under this OMB control number, when assigned, provide eligible small communities and NOFA needs to prepare and submit, at will be announced by separate notice in counties in New York State with a a minimum, an abbreviated the Federal Register. An agency may unique opportunity to propose programs consolidated plan that is appropriate to not conduct or sponsor, and a person is that focus on canal-related economic the types and amounts of housing not required to respond to, a collection development projects to expand assistance sought under this NOFA. of information unless the collection economic and job opportunities and act Even if the community’s Small Cities displays a valid control number. Prior to as a catalyst to spur community and application is approved, HUD must also this submission to OMB, HUD had, on neighborhood economic revitalization. approve the consolidated plan before June 3, 1996 (61 FR 27926) published in HUD encourages eligible communities the community may receive Small Cities the Federal Register a notice and to propose programs that are creative funding. Further, that applicant must request for comments on the New York and innovative in addressing their also include a certification that any State Small Cities CDBG program development needs. Although the focus housing activities in its CDBG Small concerning the collection of information of 24 CFR 570.421(a)(6) is broadly Cities application are consistent with for that program. The deadline for the described as economic development, as the consolidated plan. An applicant submission of comments was August 2, a technical matter any activity eligible seeking funds under this NOFA to 1996. HUD’s request for an OMB control for Section 108 Loan Guarantee address non-housing community 64198 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices development needs should prepare an housing construction, or other public and updates—will be made available in abbreviated consolidated plan that construction must comply with the accordance with the Freedom of describes the jurisdiction’s priority non- applicable requirements set forth in the Information Act (5 U.S.C. 552) and housing community development needs regulations. HUD’s implementing regulations at 24 eligible for assistance under the CDBG c. CDBG Program Requirements. The CFR part 15. program by eligibility category, provisions of 24 CFR part 570, subpart b. Units of General Local Government reflecting the needs of families for each F, as applicable, shall apply to CDBG Responsibilities. Units of general local type of activity, as appropriate, in terms grants made under this NOFA. government awarded assistance under this NOFA are subject to the provisions of dollar amounts estimated to meet the 4. Accountability in the Provision of of either paragraph b.(1), or paragraph priority need for the type of activity (see HUD Assistance: Documentation and b.(2) and b.(3), below. For units of local 24 CFR 91.235(c)(2)). The abbreviated Public Access Requirements; Applicant/ government awarded assistance under consolidated plan is subject to the same Recipient Disclosures citizen participation requirements as is this NOFA which in turn make the the jurisdiction’s Small Cities CDBG HUD has promulgated a final rule to assistance available on a application. Both must meet the citizen implement section 102 of the NONCOMPETITIVE BASIS for a participation requirements before they Department of Housing and Urban specific project or activity to a may be submitted to HUD. (See 24 CFR Development Reform Act of 1989 (HUD subrecipient, or a ‘‘Community Based 570.431) A Section 108 Loan Guarantee Reform Act) (Pub. L. 101–235; approved Development Organization’’ (CBDO) as application would also have to meet December 15, 1989). The final rule is defined in 24 CFR 570.204, paragraph these requirements if the jurisdiction codified at 24 CFR part 4. Section 102 b(1) applies. For units of local submits one to HUD for consideration. contains a number of provisions that are government awarded assistance under If possible, applicants should designed to ensure greater this NOFA, which in turn make the endeavor to submit the abbreviated accountability and integrity in the assistance available on a COMPETITIVE consolidated plan in advance of the provision of certain types of assistance BASIS for a specific project or activity Small Cities application due date. The administered by HUD. On January 16, to a subrecipient, or a CBDO, paragraphs latest time at which the abbreviated 1992 (57 FR 1942), HUD published a b. (2) and (3) apply. consolidated plan will be accepted by final rule implementing section 102. (1) Disclosures. The units of general HUD for the HUD-administered Small Although the rule has been amended local government receiving assistance Cities program in New York will be the and now appears in part 4, the January under this NOFA must make all application due date for the Small Cities 16, 1992 notice provided the public applicant disclosure reports available to application. Failure to submit the (including applicants for, and recipients the public for three years. Required abbreviated consolidated plan by the of, HUD assistance) with further update reports must be made available due date is not a curable technical information on the implementation of along with the applicant disclosure deficiency. Questions regarding the section 102. The documentation, public reports, but in no case for a period less abbreviated consolidated plan should be access, and applicant and recipient than three years. Each unit of general directed to the appropriate HUD field disclosure requirements of section 102 local government may use HUD Form office. apply to assistance awarded under this 2880 to collect the disclosures, or may Any application that is fundable, but NOFA as follows: develop its own form. does not have an approved consolidated a. HUD Responsibilities. (1) (2) Documentation and Public Access. plan, will receive a conditional approval Documentation and Public Access. HUD The recipient unit of general local subject to HUD’s approval of the will ensure that documentation and government must ensure that abbreviated consolidated plan. If HUD is other information regarding each documentation and other information unable to approve the abbreviated application submitted pursuant to this regarding each application submitted to consolidated plan within a reasonable NOFA are sufficient to indicate the basis the recipient by a subrecipient or CBDO period of time, but not less than 60 days upon which assistance was provided or applicant are adequate to indicate the from the date that the conditional denied. This material, including any basis upon which assistance was approval is announced, HUD reserves letters of support, will be made provided or denied. The unit of general the right to rescind the award. In such available for public inspection for a five- local government must make this event the funding will be awarded to the year period beginning not less than 30 material, including any letters of highest rated fundable applicant that days after the award of the assistance. support, available for public inspection did not receive funding under this Material will be made available in for a five-year period beginning not less competition. accordance with the Freedom of than 30 days after the award of the b. Section 3. Assistance provided Information Act (5 U.S.C. 552) and assistance. Unit of general local under this NOFA is subject to the HUD’s implementing regulations at 24 government recipients must also notify requirements of section 3 of the Housing CFR part 15. In addition, HUD will the public of the subrecipients or and Urban Development Act of 1968, include the recipients of assistance CBDO’s that receive the assistance. Each and the implementing regulations in 24 pursuant to this NOFA in its Federal recipient will develop documentation, CFR part 135. One of the purposes of Register notice of all recipients of HUD public access, and notification this NOFA, which is consistent with assistance awarded on a competitive procedures for its programs. section 3, is to give, to the greatest basis. (3) Disclosures. Units of general local extent feasible and consistent with (2) Disclosures. HUD will make government receiving assistance under Federal, State, and local laws and available to the public for five years all this NOFA must make all applicant regulations, job training, employment applicant disclosure reports (HUD Form disclosure reports available to the and other contracting opportunities 2880) submitted in connection with this public for five years. Required update generated from certain HUD financial NOFA. Update reports (also Form 2880) reports must be made available along assistance to low- and very low-income will be made available along with the with the applicant disclosure reports, persons. Public entities awarded funds applicant disclosure reports, but in no but in no case for a period less than under this NOFA that intend to use the case for a period of less than three years. three years. Each unit of general local funds for housing rehabilitation, All reports—both applicant disclosures government may use HUD Form 2880 to Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64199 collect the disclosures, or may develop limited to paying projected amounts due of the HCD Act) that are proposing its own form. on Section 108-guaranteed debt development activities related to the obligations over the projected term of B. Allocation of Grant Amounts and New York State Canal System or the loan. Section 108 Loan Guarantee connecting waterways, including, but The multiyear plans will be rated Commitments not limited to the Hudson River, Cayuga competitively against each other based Lake, Seneca Lake, Lake Champlain, 1. Total Available Funding on the selection criteria in section II.C. Lake George, Lake Erie, and Lake The nonentitlement CDBG funds for of this NOFA. Each applicant’s Ontario. Eligible applicants are further New York State for FY 1997 total multiyear plan must discuss the total limited to the nonentitled CDBG approximately $55,982,000. Of that amount of the Section 108 Loan jurisdictions in and counties of Albany, amount, this NOFA sets aside between Guarantee commitment that will be Cayuga, Clinton, Columbia, Erie, Essex, $3 million and $9 million for eligible requested, the term of the Section 108 Greene, Herkimer, Madison, guaranteed loan, a repayment schedule development grants for projects that Montgomery, Niagara, Oneida, for the Section 108 guaranteed loan that increase economic opportunities related Onondaga, Ontario, Orleans, Oswego, clearly identifies the amount and source to the New York State Canal System or Rensselaer, Saratoga, Schenectady, connecting waterways (see section I.C.1. of the projected funds, including the CDBG funds proposed to be used to Schuyler, Seneca, Tompkins, Ulster, of this NOFA, below, regarding eligible Warren, Washington, Wayne, and Yates, applicants). repay the Section 108 guaranteed loan over the course of the multiyear plan. and the nonparticipating jurisdictions in 2. Maximum Grant Amounts The multiyear period may not exceed 20 the urban counties of Dutchess and The maximum CDBG grant amount years. Monroe. that will be awarded from FY 1997 HUD intends to fund succeeding years 2. Joint Applicants funds for an eligible development of the plan on a noncompetitive basis, project pursuant to this NOFA is subject to acceptable performance, There may be several instances in $900,000. For a multiyear plan, HUD submission of an acceptable application which several communities have expects that no more than $5 million and certifications, and the provision of common economic development will be made available in funds under adequate appropriations for the HUD- opportunities that are more feasible if an this NOFA and future years’ CDBG administered Small Cities program. eligible development project were funds (subject to appropriations) to pay HUD reserves the right to lower the carried out jointly rather than on an the Section 108-guaranteed debt amount of funds for succeeding years if individual basis. In such cases, HUD obligation per grantee over the life of the respective recipients are not in encourages these communities to plan. Thus in the aggregate for all plans, compliance with performance develop regional solutions to regional HUD expects that no more than $60 requirements and applicable problems and propose a joint million will be available (subject to regulations. The application must list application from all affected appropriations) for Section 108 loan for each year of the multiyear period the communities. This NOFA authorizes payments over the life of all multiyear projected amount of CDBG funds eligible units of general local plans approved, limiting the set-asides requested for each year. The amount of government under section I.C.1. of this of CDBG funds for multiyear plans to an CDBG funds requested for each year NOFA, above, to submit a joint average of $3 million per year over a 20- need not be the same amount; however, application to carry out an eligible year period. the amount requested for each year development project that addresses should relate to the anticipated amounts 3. Availability of Section 108 Loan common problems faced by all of the Guarantees appropriate to meet the CDBG portion of the debt obligation on the Section 108 jurisdictions. A joint application must HUD expects to make $80 million in guaranteed loan, consistent with section be pursuant to a written cooperation Section 108 Loan Guarantee I.B.2. of this NOFA, above. For agreement submitted with the commitments, or higher, depending on subsequent years of the multiyear application. The cooperation agreement the CDBG development applications period and pursuant to 24 CFR 570.432, must authorize one of the participating approved in conjunction with grants HUD will adjust the actual CDBG grant units of government to act as the lead made under this NOFA. amount awarded to such amounts applicant that will submit the 4. Multiyear Requests and Repayment of required for the sole purpose of paying application to HUD, and must delineate Section 108 Loans With CDBG Funds any principal and interest amounts due the responsibilities of each participating unit of government with respect to the a. General. Pursuant to 24 CFR on the loan guaranteed by Section 108 Small Cities program. (See 24 CFR 570.432, HUD expects to approve as provided under the Section 108 note 570.422 for requirements regarding joint multiyear plans of up to twenty (20) contract, or in the event of a default any applications.) Except as otherwise years, for use of CDBG funds for the sole amounts due under the guarantee. noted, a joint application must meet all purpose of paying any amounts due on C. Eligibility debt obligations issued by such unit of of the requirements of this NOFA as an general local government (or its 1. Eligible Applicants application from a single unit of general designated public agency) and Eligible applicants are units of general local government. Applications under guaranteed by the Secretary pursuant to local government in New York State this NOFA may be submitted section 108 of the Housing and (excluding metropolitan cities, urban individually or jointly, subject to 24 Community Development Act of 1974, counties, units of government that are CFR 570.422. However, Section 108 as amended. participating in urban counties or Loan Guarantee applications must be b. Submission of multiyear request metropolitan cities even if only part of submitted individually and in and plan. Each application for a CDBG the participating unit of government is accordance with 24 CFR 570.704 by development grant under this NOFA located in the urban county or each unit of general local government should include a multiyear plan for metropolitan city, and Indian tribes that will receive a guarantee and issue CDBG funds, the use of which will be eligible for assistance under section 106 guaranteed obligations. 64200 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

3. Activities Eligible for CDBG Small any, to be made up (to the maximum Environmental Policy Act of 1969 and Cities Grants Under This NOFA extent feasible to fund the eligible the other provisions of law specified by Eligible activities are development development project) with loan funds the Secretary in 24 CFR part 58 that activities related to the New York State guaranteed by Section 108. HUD also would apply to the Secretary were he to Canal System or connecting waterways, reserves the right to determine the undertake such projects as Federal amount and number of years of the including, but not limited to the Hudson projects. multiyear plan, or Section 108 Loan River, Cayuga Lake, Seneca Lake, Lake Guarantee award per applicant, II. The Application Process Champlain, Lake George, Lake Erie and application, or project and to modify Eligible applicants seeking CDBG Lake Ontario. Development activities requests accordingly. assistance must apply in accordance must also meet the criteria below: HUD expects to approve CDBG grant with this NOFA. The CDBG application a. Eligible development projects and amounts for approvable applications at shall be accompanied by a request for activities to be financed with FY 1997 a range of ratios of CDBG grant funds Section 108 Loan Guarantee CDBG funds include the following: awarded to new Section 108 Loan commitments, as further described in (1) The activities listed under the Guarantee commitments. For example, section II.B. of this NOFA, below. Section 108 Loan Guarantee program at an applicant could request a CDBG grant Application requirements for the 24 CFR 570.703, except subparagraphs of $100,000 and propose to leverage Section 108 program are found in (j) Construction of housing by non-profit $2.5 million in new Section 108 Loan § 570.704. organizations, and (m) regarding Guarantee commitments, and another activities by ‘‘colonias;’’ and applicant could request a CDBG grant of A. Timing of submission (2) Capitalization of a Section 108 $1 million and propose to leverage $5 Applications for CDBG assistance debt service reserve/loan loss reserve as million in new Section 108 Loan must be submitted for receipt in the part of the financing of activities that are Guarantee commitments. However, in manner described under ‘‘Dates’’ and otherwise eligible under this NOFA. A no event will HUD make an award in ‘‘Addresses,’’ above. debt service reserve created from Small which the cumulative amount of CDBG B. Submission Requirements Cities grant funds should not, however, funds proposed for the full multiyear exceed one year’s Section 108 needs. period exceeds the amount of new 1. The CDBG application (an original b. Eligible activities to be funded Section 108 commitments. All plus two copies) shall be accompanied during FY 1998 and later years under applicants should discuss why their by a request for loan guarantee multiyear plans proposed pursuant to canal-related development project assistance under Section 108. If more this NOFA are limited to the repayment requires the particular level of CDBG than one jurisdiction applies jointly, of any amounts due on debt obligations grant assistance to Section 108 Loan each entity that will receive a guarantee issued by a units of general local Guarantee funds that is proposed. and issue guaranteed obligations must government and guaranteed by the In the case of an applicant that has submit a separate request. Each request Secretary pursuant to section 108 of the received a prior CDBG grant award for for Section 108 Loan Guarantee can be HCD Act. This includes planned an activity proposed in this application, either one or more of the following: repayments from CDBG funds, as well HUD reserves the right to consider the a. A formal application for Section as amounts due in the event of default, amount of the previous CDBG award 108 Loan Guarantee(s), including the as applicable. and the grant amount requested in documents listed at 24 CFR 570.704(b); b. A brief description of a Section 108 4. National Objectives and Primary response to this NOFA, and to adjust the Loan Guarantee application(s) to be Objective amount of a CDBG award under this NOFA, including, if appropriate, not submitted within 60 days (with HUD Each activity must meet one of the making an award. reserving the right to extend such period national objectives (i.e., benefit to low- In the event the applicant is awarded for good cause on a case-by-case basis) and moderate-income persons, a CDBG grant that has been reduced of a notice of CDBG selection (CDBG elimination of slums or blighting below the original request, the applicant awards will be conditioned on approval conditions, or meeting imminent threats will be required to modify its project of actual Section 108 loan to the health and safety of the plans and application to conform to the commitments). This description must be community). Pursuant to 24 CFR terms of HUD approval before execution sufficient to support the basic eligibility 570.420(e)(2), not less than 70 percent of of a grant agreement and/or a Section of the proposed project or activities for the total of grant funds from a grant 108 Loan Guarantee commitment. HUD Section 108 assistance; made under this NOFA and Section 108 reserves the right to reduce or de- c. A request for a Section 108 Loan Loan Guarantee funds received within a obligate the CDBG grant award if an Guarantee amendment (analogous to fiscal year must be expended for approvable Section 108 Loan Guarantee subparagraph a. or b. above) that activities that benefit low- and application is not submitted by the proposes to increase the amount of a moderate-income persons under the grantee in the required amounts on a previously approved application. criteria of § 570.208(a) or § 570.208(d) timely basis (see section II.B.1.b. After d. Applicants should note that an (5) or (6). approval of the CDBG grant, any application for a Section 108 Loan Guarantee commitment requires that the 5. Limitations on the Ratio of CDBG program amendments must meet the applicant certify that it has made efforts Grant Funds to Section 108 Loan provisions of 24 CFR 570.427. to obtain financing without the use of Guarantee Funds 6. Environmental Review Requirement the Section 108 Loan Guarantee and that HUD reserves the right, within the The HUD environmental review it cannot complete such financing maximum grant limit of $900,000 procedures contained in 24 CFR part 58 consistent with the timely execution of provided in section I.B.2. of this NOFA, apply to this program, according to 24 the program plans without the Section above, to determine a minimum or a CFR 570.604. Under part 58, grantees 108 Loan Guarantee. maximum amount of any CDBG grant assume all of the responsibilities for 2. In addition, an application for award under this NOFA with the environmental review, decisionmaking, CDBG grant funds shall include the difference from the amount requested, if and action pursuant to the National following: Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64201

a. A completed Standard Form 424, (3) The description of the activities to 1990 census data to determine the Application for Federal Assistance. be carried out with the CDBG grant and absolute number of persons in poverty b. A signed copy of certifications Section 108 Loan Guarantee funds residing within the applicant unit of required under the CDBG program, should also describe how they will general local government. Applicants including, but not limited to the Drug- create visible change and are part of a which are county governments are rated Free Workplace Certification, and the larger comprehensive revitalization separately from all other applicants. Certification Regarding Lobbying effort, and how they meet the selection Applicants in each group are compared pursuant to section 319 of the criteria, including performance in terms of the number of persons Department of Interior Appropriations measures and benchmarks for these whose incomes are below the poverty Act for Fiscal Year 1990 (31 U.S.C. activities; identify and describe the level. Individual scores are obtained by 1352), generally prohibiting use of project service area; and, as an aid to dividing each applicant’s absolute appropriated funds, and, if applicable, reviewing the multiyear plan, include a number of persons in poverty by the Disclosure of Lobbying Activities (SF– draft business plan with financial greatest number of persons in poverty of LLL). The applicant may use the projections for not less than a 5-year any applicant, and multiplying by 22. lobbying certification published with period. 2. Need—Percent of Persons in this NOFA. In addition to the above, HUD Poverty—(up to 22 points). HUD uses c. Form HUD–2880, Applicant/ encourages applicants to submit maps 1990 census data to determine the Recipient Disclosure/Update Report, as and related information generated by percent of persons in poverty residing required under 24 CFR 4.9 through 4.13. the community’s consolidated plan within the applicant unit of general The applicant may use the form computer software with their local government. Applicants in each published with this NOFA. applications, and depictions of group are compared in terms of the d. Abbreviated consolidated plan, if proposed projects. percentage of their population below the applicable; (Note that the Office of Community poverty level. Individual scores are e. A narrative statement, in Planning and Development’s obtained by dividing each applicant’s accordance with section I.A.3.a. of this Consolidated Plan computer software is percentage of persons in poverty by the NOFA, consisting of the following: available for applicants to use in highest percentage of persons in poverty (1) A description of the activities that defining their project area, planning and of any applicant, and multiplying by 22. will be carried out with the CDBG grant coordinating revitalization activities, 3. Program Impact—(up to 125 points) Within this selection factor, points funds and Section 108 Loan Guarantee and illustrating how activities will will be awarded as follows: funds. The narrative statement should physically and economically revitalize a. Quality of the Plan—(up to 60 explain how the use of CDBG grant the project area. HUD encourages points). In reviewing the applicant’s funds together with Section 108 Loan applicants to submit maps and other response to this criterion, HUD will Guarantee funds will meet the selection data generated with this software with consider the following: criteria in section II.C. of this NOFA, their applications.) (1) Economic and commercial below; d. The narrative statement and the revitalization. The extent to which the (2) A description of the multiyear response to all of the selection criteria proposed canal-related development plan for CDBG funds, the use of which in section II.D. of this NOFA, below, project will contribute to the physical will be limited to paying projected should preferably not exceed thirty (30) and economic revitalization of a amounts due on Section 108 guaranteed 8.5′′ by 11′′ typewritten pages. waterfront district, and the impact of the loan debt obligations over the projected D. Selection Criteria project in strengthening the economic term of the loan that is guaranteed by health of the entire community. the Section 108 Loan Guarantee. Each All applications will be considered (2) Regional impact. The extent to applicant’s multiyear plan must discuss for selection based on the following which the proposed canal-related the total amount of the Section 108 Loan criteria. As described in section II.B.2.d. development project relates to other Guarantee commitments that will be of this NOFA, above, each applicant’s waterfront development projects in the requested, the term of the Section 108 response to the narrative statement and region to create a regional synergy guaranteed loans, a repayment schedule all of the selection criteria should which contributes to regional economic for the Section 108 guaranteed loans preferably not exceed thirty (30) 8.5′′ by growth, including job creation, that clearly identifies the amount and 11′′ typewritten pages. Each application increased business activity and tourism. source of the projected funds, including will receive only one score. (3) Job creation. The extent to which the CDBG funds proposed to be used to A maximum of 184 points is possible the proposed canal-related development repay the Section 108 guaranteed loans under this NOFA, with the maximum project assisted by the requested CDBG over the course of the multiyear plan. points for each factor being: grant, Section 108 Loan Guarantees, and The multiyear period may not exceed 20 the multiyear CDBG program will create years. The description must list, for Points jobs, principally for low- and moderate- each year of the multiyear period, the income persons. projected amount of CDBG funds that NeedÐabsolute number of persons (4) Innovation and creativity. The will be needed each year to meet the in poverty ...... 22 NeedÐpercent of persons in poverty 22 extent to which the applicant Section 108 debt obligation. The amount Program Impact ...... 125 incorporated innovation and/or of CDBG funds requested for each year Outstanding performanceÐFHEO .... 15 creativity in the design and proposed need not be the same amount; however, implementation of the activities to be the amount requested for each year Total ...... 184 carried out with Section 108/CDBG should relate to the anticipated amounts funds. appropriate to meet the CDBG portion of Each of the four factors is outlined (5) Feasibility of the development the payment on the Section 108 below. All points for each factor are proposal. HUD will consider the guaranteed loans, consistent with the rounded to the nearest whole number. feasibility and quality of the applicant’s maximum grant amounts specified in 1. Need—Absolute Number of Persons canal-related development proposal for section I.B.2. of this NOFA; and in Poverty—(up to 22 points). HUD uses the use of CDBG funds and Section 108 64202 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices guaranteed loans to address the Resources, in Addition to Loan Funds Islander, and American Indian or applicant’s economic and community Guaranteed Under the Section 108 Loan Alaskan Native. For the purposes of this development needs, and the extent to Guarantee Program—(up to 20 points). section, the term ‘‘minority’’ does not which the canal-related development Leveraged funds include State and local include women as a separate category. proposal is logically, feasibly, and public funding and private financing. Counties claiming points under this substantially likely to achieve its stated d. The Capacity or Potential Capacity criterion must use county-wide statistics purpose. In evaluating feasibility, HUD of the CDBG applicant and the Section (excluding entitlement communities). In will also consider the extent to which 108 Public Entities to Carry Out the Plan the case of joint applications, points the proposal includes public/private Successfully—(up to 20 points). This will be awarded based on the partnerships, i.e. the involvement of may include factors such as the performance of the lead entity only. groups such as nonprofit organizations, applicant’s performance in the The following will be used to judge developers, financial institutions, and administration of its CDBG, HOME, or outstanding performance in these areas. others integral to the implementation of other programs; its previous experience, Please note that points for outstanding the project. if any, in administering a Section 108 performance may be claimed under each (6) Impact of the project in utilizing Loan Guarantee or CDBG grant; its criterion: the canal or related waterways to performance and capacity in carrying a. Housing Achievements—(up to 12 economically and physically revitalize out development projects; its ability to points total). the area. conduct prudent underwriting; its (1) Provision of Assisted Housing— b. Extent of Need for CDBG Assistance capacity to manage and service loans (up to 6 points). Providing assisted to Financially Support the Section 108 made with the guaranteed loan funds or housing for low- and moderate-income Loans and the Project—(up to 20 CDBG grant funds; and its capacity to families, located in a manner which points). HUD will use the following carry out its projects and programs in a provides housing choice in areas information to evaluate this criterion. In timely manner. The applicant should outside of minority or low- and utilizing this information, HUD will also describe any recent experience it moderate-income concentrations. consider the extent to which the has had in carrying out programs similar Points will be awarded if both of the applicant’s response demonstrates the to the one proposed in the application. following criteria are met: financial need for the CDBG grant to The capacity of subrecipients, (a) More than one-third of the housing support financially the loans guaranteed nonprofit organizations, and other assistance provided by the applicant in by the Section 108 Loan Guarantee entities that have a role in implementing the last five (5) years (excluding Section commitments. Note that if the applicant the proposed program will be included 8 existing and housing assistance proposes a generic loan fund to assist a in this review. HUD may rely on provided in place) has been in census certain category of project or business, information from performance reports, tracts (CT) or block numbering areas the applicant should demonstrate the financial status information, monitoring (BNA) having a percentage of minority impact of the use of the CDBG funds to reports, audit reports and other population which is less than the assist the project and the relationship of information available to HUD in making minority population in the community those funds to the use of Section 108 its determination under this criterion. as a whole; and (b) With regard to the Section 8 loans. Relevant information may e. Place-based factor—(5 points). The Existing Housing program, a community include: Secretary’s Representative for New (1) Project costs and financial York/New Jersey will award 5 points to must show the location (CT or BNA) of requirements; those proposals that demonstrate that its currently occupied family units by (2) The amount of any debt service or the canal-related development project race/ethnicity. Points will be awarded if operating reserve accounts to be proposed to be funded under this NOFA more than one-half of the minority established in connection with the is part of and follows an applicant’s assisted families occupy units in areas development project; existing comprehensive and coordinated which have a lower percentage of (3) The reasonableness of the costs of strategic plan for community and minority population than that of the any credit enhancement paid with economic revitalization. community as a whole. CDBG grant funds; 4. Fair Housing and Equal A community with no minorities (4) The amount of program income (if Opportunity Evaluation—(up to 15 must show the extent to which its any) to be received each year during the points). Documentation for the 15 points assisted housing is located outside areas repayment period for the guaranteed for these items is the responsibility of of concentrations of low- and moderate- loans; the applicant. Claims of outstanding income persons. In order to receive (5) Interest rates on those loans to performance must be based upon actual points under this criteria, applicants third parties (other than subrecipients) accomplishments. Clear, precise should follow the process outlined in (a) (either as an absolute rate or as a plus/ documentation will be required. Maps and (b) above, substituting low- and minus spread to the Section 108 rate); must have a census tract (CT) or block moderate-income persons and families (6) Underwriting guidelines used (or numbering area (BNA), and they must for minority persons or families. expected to be used) in determining be in accordance with the 1990 Census Applicants addressing the first criterion project feasibility; data. Additionally, maps must identify must use a map indicating the location (7) The amount of anticipated ‘‘cash the locations of areas with minorities by of all assisted housing and a narrative flow’’ the project is projected to generate census tract or BNA. If there are no indicating the number of units and the that will be available to make debt minority areas, applicants must state so type of assisted housing. The map also service payments on the Section 108— on the map. Only population data from must show the general location of low- guaranteed loans; and the 1990 Census will be acceptable for and moderate-income households and (8) Other relevant information. purposes of this section. minority households, giving the c. The Extent to Which the Proposal, Please note that a ‘‘minority’’ is a numbers and percentages for both. Compared to Other Canal-Related person belonging to, or culturally To qualify as housing assistance Development Proposals Submitted identified as, a member of any one of provided, the units being claimed must Pursuant to this NOFA, Leverages Other the following racial/ethnic categories: be part of a project located outside Non-Federal Public and Private Black, Hispanic, Asian or Pacific minority or lower income concentrated Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64203 areas which has, at a minimum, time employees is greater than the the CDBG grant may be awarded prior received a firm commitment from the percentage of minorities within the to HUD approval of the Section 108 funding agency. county or the community, whichever is commitments if HUD determines that (c) Points also may be awarded for higher. Applicants with no full-time such award will further the purposes of efforts which enable low- and moderate- employees may claim points based on the Act. CDBG funds shall not be income persons to remain in their part-time employment provided that disbursed to the public entity before the neighborhood when such they document that the only permanent issuance of the related Section 108 neighborhoods are experiencing employment is on a part-time basis. guaranteed obligations. CDBG awards revitalization and substantial c. Entrepreneurial Efforts and Local will be announced within 30 days of the displacement as a result of private Equal Employment. HUD encourages application due date, which is January reinvestment. Applicants requesting the use of minority contracting, 2, 1997. although it will not be used as an points under this criterion would not F. Program Administration need to meet the requirements of (a) and evaluation factor in this NOFA. In order to be consistent with the (b) in order to receive points. Points will D. Selection Process be awarded if more than one-half of the local nature of the program, funds families displaced were able to remain All applications will be ranked in awarded under this NOFA will be in their original neighborhood through order of points assigned, with the administered by the New York State the assistance of the applicant. applications receiving more points CPD Office. ranking above those receiving fewer Applicants must show that: G. Funding Award Process points. Applications will be funded in —The neighborhood experienced rank order. In accordance with section 102 of the revitalization; As discussed in section I.C.5. of this HUD Reform Act and HUD’s regulation —The amount of displacement was NOFA, above, HUD reserves the right to at 24 CFR part 4, HUD will notify the substantial; determine a minimum and a maximum public, by notice published in the —Displacement was caused by private amount of any CDBG award or Section Federal Register, of all award decisions reinvestment; 108 commitment per applicant, made by HUD under this competition. —Low- and moderate-income persons application, or project, the amount or In accordance with the requirements of were permitted to remain in the number of years for which multiyear section 102 of the Reform Act and neighborhood as a result of action CDBG funding is proposed, and to HUD’s regulations at 24 CFR part 4, taken by the applicant. modify requests accordingly. In HUD also will ensure that If the community is inhabited addition, if HUD determines that an documentation and other information predominantly by persons who are application rated, ranked, and fundable regarding each application submitted members of minority and/or low-income could be funded at a lesser CDBG grant under this Notice of Funding groups, points will be awarded if there amount than requested, consistent with availability is sufficient to indicate the is a balanced distribution of assisted feasibility of the funded project or basis upon which assistance was housing throughout the community. activities and the purposes of the Act, provided or denied. Additionally, in (2) Implementation of a Fair Housing HUD reserves the right to reduce the accordance with the Reform Act and the Action Plan—(up to 6 points). amount of the CDBG award and/or regulations, HUD will make this The applicant must describe how it increase or decrease the Section 108 material available for public inspection has implemented a Fair Housing Action Loan Guarantee commitments, if for a period of five years, beginning not Plan of its own or participated in a necessary, in accordance with such less than 30 calendar days after the date regional or countywide Fair Housing determination. on which assistance is provided. Action Plan. For the purposes of this HUD may decide not to award the full III. Technical Assistance NOFA, a Fair Housing Action Plan is a amount of CDBG grant funds available document that delineates specific under this NOFA, and may make any Prior to the application deadline, the actions to address fair housing problems remaining amounts available under a New York Offices will provide technical in the area covered by the applicant. future NOFA. assistance on request to individual The plan should list Fair Housing To review and rate applications, HUD applicants, including explaining and actions, set priorities and time period will establish a panel consisting responding to questions regarding for completion and include measures predominantly of HUD employees program regulations and the NOFA. In against which performance shall be assigned to the New York Field Offices. addition, HUD will conduct evaluated, identify resources from local, HUD will appoint HUD’s New York/ informational meetings around the State State, and private agencies and New Jersey State Secretary’s to discuss the Small Cities program, and organizations that have agreed to Representative to rate selection criterion will conduct application workshops in finance or support fair housing actions, II.C.3.e.— ‘‘Place-based factor.’’ HUD conjunction with these meetings. HUD and define the responsibilities of each may also include other HUD staff and employees are prohibited in these group or organization. If the applicant is persons not currently employed by HUD sessions, however, from advising implementing a Fair Housing Plan, the to obtain certain expertise and outside applicants how to make substantive application must include the plan being points of view, including views from improvements to their applicants and implemented, the actions taken to other Federal agencies. from disclosing other covered selection implement the plan, and the actions information described at 24 CFR 4.26. taken to address the fair housing E. Timing of Grant Awards Please contact the Buffalo or New York problems. The applicant should provide To the extent full Section 108 Offices for further information regarding written documentation of commitments applications are submitted concurrently these meetings. In order to ensure that from all involved parties. with the CDBG grant application, HUD’s the application deadline is met, it is b. Equal Opportunity Employment— approval of the related Section 108 Loan strongly suggested that applicants begin (up to 3 points). Under this factor, the Guarantee commitments will in most preparing their applications applicant must document that its cases be granted contemporaneously immediately and not wait for the percentage of minority permanent full- with CDBG grant approval. However, informational meetings. 64204 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

IV. Corrections to Deficient program to New York State, none of its All reports—both applicant disclosures Applications provisions will have an effect on the and updates—will be made available in Under no circumstances will HUD relationship between the Federal accordance with the Freedom of accept from the applicant unsolicited Government and New York State, or the Information Act (5 U.S.C. 552) and information regarding the application State’s political subdivisions. HUD’s implementing regulations at 24 after the application deadline has Family CFR part 15. passed. The General Counsel, as the Section 103 of the HUD Reform Act HUD may advise applicants of Designated Official for Executive Order technical deficiencies in applications 12606, The Family, has determined that Section 103 of the Department of and permit them to be corrected. A the policies announced in this NOFA Housing and Urban Development technical deficiency would be an error would not have the potential for Reform Act of 1989, and HUD’s or oversight which, if corrected, would significant impact on family formation, implementing regulation codified at not alter, in either a positive or negative maintenance, and general well-being subpart B of 24 CFR part 4, applies to fashion, the review and rating of the within the meaning of the Order. No the funding competition announced application. Examples of curable significant change in existing HUD today. These requirements continue to technical deficiencies would be a failure policies and programs will result from apply until the announcement of the to submit the proper certifications or issuance of this NOFA, as those policies selection of successful applicants. HUD failure to submit an application and programs relate to family concerns. employees, including those conducting containing an original signature by an technical assistance sessions or authorized official. Situations not Section 102 of the HUD Reform Act workshops and those involved in the considered curable would be, for Section 102 of the Department of review of applications and in the example, a failure to submit program Housing and Urban Development making of funding decisions, are limited impact descriptions. Reform Act of 1989 (HUD Reform Act) by section 103 from providing advance HUD will notify applicants in writing and the final rule codified at 24 CFR information to any person (other than an of any curable technical deficiencies in part 4, subpart A, published on April 1, authorized employee of HUD) applications. Applicants will have 14 1996 (61 FR 1448), contain a number of concerning funding decisions, or from calendar days from the date of HUD’s provisions that are designed to ensure otherwise giving any applicant an unfair correspondence to reply and correct the greater accountability and integrity in competitive advantage. Persons who deficiency. If the deficiency is not the provision of certain types of apply for assistance in this competition corrected within this time period, HUD assistance administered by HUD. On should confine their inquiries to the will reject the application as January 14, 1992, HUD published, at 57 subject areas permitted under section incomplete. FR 1942, a notice that also provides 103 and subpart B of 24 CFR part 4. Applicants should note that if an information on the implementation of abbreviated consolidated plan is not section 102. The documentation, public Applicants or employees who have submitted, the failure to submit a it in access, and disclosure requirements of ethics related questions should contact a timely manner is not considered a section 102 are applicable to assistance the HUD Ethics Law Division at (202) curable deficiency. awarded under this NOFA as follows: 708–3815. V. Other Matters Documentation and public access (This is not a toll-free number.) requirements. HUD will ensure that Environmental Impact documentation and other information Prohibition Against Lobbying Activities In accordance with 24 CFR 50.19(c)(5) regarding each application submitted The use of funds awarded under this of HUD’s regulations (as issued in a pursuant to this NOFA are sufficient to NOFA is subject to the disclosure final rule on September 27, 1996 (61 FR indicate the basis upon which requirements and prohibitions of 50914), this NOFA provides funding assistance was provided or denied. This section 319 of the Department of Interior under, and does not alter environmental material, including any letters of and Related Agencies Appropriations requirements of, a regulation previously support, will be made available for Act for Fiscal Year 1990 (31 U.S.C. published in the Federal Register. public inspection for a five-year period Therefore, this NOFA is categorically beginning not less than 30 days after the 1352) and the implementing regulations excluded from the requirements of the award of the assistance. Material will be at 24 CFR part 87. These authorities National Environmental Policy Act. The made available in accordance with the prohibit recipients of Federal contracts, environmental review provisions of this Freedom of Information Act (5 U.S.C. grants, or loans from using appropriated regulation are in 24 CFR 570.604. 552) and HUD’s implementing funds for lobbying the Executive or regulations at 24 CFR part 15. In Legislative Branches of the Federal Federalism addition, HUD will include the Government in connection with a The General Counsel, as the recipients of assistance pursuant to this specific contract, grant, or loan. The Designated Official under section 6(a) of NOFA in its Federal Register notice of prohibition also covers the awarding of Executive Order 12612, Federalism, has all recipients of HUD assistance contracts, grants, cooperative determined that this NOFA will not awarded on a competitive basis. agreements, or loans unless the have substantial, direct effects on States, Disclosures. HUD will make available recipient has made an acceptable on their political subdivisions, or on to the public for five years all applicant certification regarding lobbying. Under their relationship with the Federal disclosure reports (HUD Form 2880) 24 CFR part 87, applicants, recipients, Government, or on the distribution of submitted in connection with this and subrecipients of assistance power and responsibilities between NOFA. Update reports (also Form 2880) exceeding $100,000 must certify that no them and other levels of government. will be made available along with the Federal funds have been or will be spent While the NOFA will provide financial applicant disclosure reports, but in no on lobbying activities in connection assistance through the Small Cities case for a period less than three years. with the assistance. Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64205

Dated: November 22, 1996. adequate notice, at times and locations (1) Funds received under section 106 Andrew Cuomo, convenient to potential or actual of the Act are used to pay the proportion beneficiaries, and with accommodation of such fee or assessment that relates to Assistant Secretary for Community Planning the capital costs of such public and Development. for the handicapped; (5) Provides for a timely written improvements that are financed from Certification Required By Title I of the answer to written complaints and revenue sources other than under Title Housing and Community Development grievances, within 15 working days I of the Act; or Act of 1974, as Amended, With Respect where practicable; and (2) For purposes of assessing any to the Community Development Block (6) Identifies how the needs of non- amount against properties owned and Grant Program English speaking residents will be met occupied by persons of moderate in the case of public hearings where a income, the applicant certifies to the In accordance with the Housing and significant number of non-English Secretary that it lacks sufficient funds Community Development Act of 1974, speaking residents can be reasonably received under section 106 of the Act to as amended, the Applicant certifies that: expected to participate; comply with the requirements of (a) It possesses legal authority to make (e) The grant will be conducted and subparagraph (1) above; a grant submission and to execute a administered in compliance with: (k) Its notification, inspection, testing community development and housing (1) Title VI of the Civil Rights Act of and abatement procedures concerning program; 1964 (Public Law 88–352, 42 U.S.C. lead-based paint will comply with 24 (b) Its governing body has duly 2000d et seq.); and CFR 570.608; adopted or passed as an official act a (2) The Fair Housing Act (42 U.S.C. (l) It will comply with the acquisition resolution, motion or similar action 3601–20); and relocation requirements of the authorizing the person identified as the (f) It will affirmatively further fair Uniform Relocation Assistance and Real official representative of the applicant to housing; Property Acquisition Policies Act of submit the subject application and all (g) It has developed its application so 1970, as amended, as required under 24 understandings and assurances as to give maximum feasible priority to CFR 570.606(b) and Federal contained therein, and directing and activities which benefit low and implementing regulations; and the authorizing the person identified as the moderate income families or aid in the requirements in 24 CFR 570.606(c) official representative of the applicant to prevention or elimination of slums or governing the residential act in connection with the submission blight; the application may also include antidisplacement and relocation of the application and to provide such activities which the applicant certifies assistance plan under section 104(d) of additional information as may be are designed to meet other community the Act (including a certification that required; development needs having a particular the applicant is following such a plan); (c) Prior to submission of its urgency because existing conditions and the relocation requirements of 24 application to HUD, the applicant has pose a serious and immediate threat to CFR 570.606(d) governing optional met the citizen participation the health or welfare of the community, relocation assistance under section requirements of 24 CFR 570.431; and where other financial resources are 105(a)(11) of the Act; (d) It is following a detailed citizen not available to meet such needs; except (m) It has adopted and is enforcing: participation plan which: that the grant shall principally benefit (1) A policy prohibiting the use of (1) Provides for and encourages persons of low and moderate income in excessive force by law enforcement citizen participation, with particular a manner that ensures that not less than agencies within its jurisdiction against emphasis on participation by persons of 70 percent of such funds are used for any individuals engaged in nonviolent low and moderate income who are activities that benefit such persons; civil rights demonstrations; and residents of slum and blighted areas in (h) It has developed a community 2. A policy of enforcing applicable which funds are proposed to be used, development plan for the grant period State and local laws against physically and provides for participation of which identifies community barring entrance to or exit from a facility residents in low and moderate income development and housing needs and or location which is the subject of such neighborhoods as defined by the local specifies both short and long term nonviolent civil rights demonstrations jurisdiction; community development objectives that within its jurisdiction; (2) Provides citizens with reasonable have been developed in accordance (n) To the best of its knowledge and and timely access to local meetings, with the primary objective and belief: information, and records relating to the requirements of the Act; (1) No Federal appropriated funds applicant’s proposed use of funds, as (i) Any proposed housing activities have been paid or will be paid, by or on required by the regulations of the are consistent with its abbreviated behalf of it, to any person for Secretary, and relating to the actual use Consolidated Plan submitted or being influencing or attempting to influence of funds under the Act; submitted to HUD for approval pursuant an officer or employee of any agency, a (3) Provides for technical assistance to to 24 CFR 570.420(d) and 24 CFR Member of Congress, an officer or groups representative of persons of low 91.235. employee of Congress, or an employee and moderate income that request such (j) It will not attempt to recover any of a Member of Congress in connection assistance in developing proposals with capital costs of public improvements with the awarding of any Federal the level and type of assistance to be assisted in whole or in part with funds contract, the making of any Federal determined by the applicant; provided under section 106 of the Act grant, the making of any Federal loan, (4) Provides for public hearings to or with amounts resulting from a the entering into of any cooperative obtain citizen views and to respond to guarantee under section 108 of the Act agreement, and the extension, proposals and questions at all stages of by assessing any amount against continuation, renewal, amendment, or the community development program, properties owned and occupied by modification of any Federal contract, including at least the development of persons of low and moderate income, grant, loan, or cooperative agreement; needs, the review of proposed activities, including any fee charged or assessment (2) If any funds other than Federal and review of program performance, made as a condition of obtaining access appropriated funds have been paid or which hearings shall be held after to such public improvements, unless: will be paid to any person for 64206 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices influencing or attempting to influence Federal agency has designated a central B. Drug-Free Workplace Certification— an officer or employee of any agency, a point for the receipt of such notices. Paragraph o Member of Congress, an officer or Notice shall include the identification 1. By signing and/or submitting this employee of Congress, or an employee number(s) of each affected grant; application or grant agreement, the of a Member of Congress in connection (6) Taking one of the following applicant is providing the certification with this Federal contract, grant, loan, actions, within 30 calendar days of set out in paragraph (o). or cooperative agreement, it will receiving notice under subparagraph 2. The certification set out in complete and submit Standard Form- (4)(b), with respect to any employee paragraph (o) is a material LLL, ‘‘Disclosure Form to Report who is so convicted— representation of fact upon which Lobbying,’’ in accordance with its (a) Taking appropriate personnel reliance is placed when the agency instructions; and action against such an employee, up to awards the grant. If it is later (3) It will require that the language of and including termination, consistent determined that the applicant paragraph (n) of this certification be with the requirements of the knowingly rendered a false certification, included in the award documents for all Rehabilitation Act of 1973, as amended; or otherwise violates the requirements subawards at all tiers (including or of the Drug-Free Workplace Act, HUD, subcontracts, subgrants, and contracts (b) Requiring such employee to in addition to any other remedies under grants, loans, and cooperative participate satisfactorily in a drug abuse available to the Federal Government, agreements) and that all subrecipients assistance or rehabilitation program may take action authorized under the shall certify and disclose accordingly; approved for such purposes by a Drug-Free Workplace Act. (o) It will or will continue to provide Federal, State, or local health, law 3. For applicants other than a drug-free workplace by: enforcement, or other appropriate individuals, Alternate I applies. (This is (1) Publishing a statement notifying agency; the information to which applicants employees that the unlawful (7) Making a good faith effort to certify). manufacture, distribution, dispensing, continue to maintain a drug-free 4. For applicants who are individuals, possession, or use of a controlled workplace through implementation of Alternate II applies. (Not applicable to substance is prohibited in the paragraphs (1),(2), (3), (4), (5) and (6). CDBG applicants.) applicant’s workplace and specifying (8) The applicant may insert in the 5. Workplaces under grants, for the actions that will be taken against space provided below the site(s) for the applicants other than individuals, need employees for violation of such performance of work done in not be identified on the certification. If prohibition; connection with the specific grant: known, they may be identified in the (2) Establishing an ongoing drug-free grant application. If the applicant does awareness program to inform employees Place of Performance (Street address, not identify the workplaces at the time about— city, county, state, zip code) (a) The dangers of drug abuse in the lllllllllllllllllllll of application, or upon award, if there workplace; lllllllllllllllllllll is no application, the applicant must keep the identity of the workplace(s) on (b) The applicant’s policy of lllllllllllllllllllll maintaining a drug-free workplace; file in its office and make the lllllllllllllllllllll information available for Federal (c) Any available drug counseling, lllllllllllllllllllll rehabilitation, and employee assistance inspection. Failure to identify all known programs; and Check ll if there are workplaces on workplaces constitutes a violation of the (d) The penalties that may be imposed file that are not identified here; and applicant’s drug-free workplace upon employees for drug abuse (p) It will comply with the other requirements. violations occurring in the workplace; provisions of the Act and with other 6. Workplace identifications must (3) Making it a requirement that each applicable laws. include the actual address of buildings employee to be engaged in the lllllllllllllllllllll (or parts of buildings) or other sites performance of the grant be given a copy Signature where work under the grant takes place. of the statement required by paragraph lllllllllllllllllllll Categorical descriptions may be used (1); Title (e.g., all vehicles of a mass transit (4) Notifying the employee in the lllllllllllllllllllll authority or State highway department statement required by paragraph (1) Date while in operation, State employees in that, as a condition of employment each local unemployment office, Appendix to CDBG Certifications under the grant, the employee will— performers in concert halls or radio (a) Abide by the terms of the Instructions Concerning Lobbying and stations). statement; and Drug-Free Workplace Requirements 7. If the workplace identified to the (b) Notify the employer in writing of agency changes during the performance A. Lobbying Certification—Paragraph n his or her conviction for a violation of of the grant, the applicant shall inform a criminal drug statute occurring in the This certification is a material the agency of the change(s), if it workplace no later than five calendar representation of fact upon which previously identified the workplaces in days after such conviction; reliance was placed when this question (see paragraph five). (5) Notifying the agency in writing, transaction was made or entered into. 8. Definitions of terms in the within ten calendar days after receiving Submission of this certification is a Nonprocurement Suspension and notice under subparagraph (4)(b) from prerequisite for making or entering into Debarment common rule and Drug-Free an employee or otherwise receiving this transaction imposed by section Workplace common rule apply to this actual notice of such conviction. 1352, title 31, U.S. Code. Any person certification. Applicants’ attention is Employers of convicted employees must who fails to file the required called, in particular, to the following provide notice, including position title, certification shall be subject to a civil definitions from these rules: to every grant officer or other designee penalty of not less than $10,000 and not ‘‘Controlled substance’’ means a on whose grant activity the convicted more than $100,000 for each such controlled substance in Schedules I employee was working, unless the failure. through V of the Controlled Substances Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64207

Act (21 U.S.C. 812) and as further defined by regulation (21 CFR 1308.11 through 1308.15); ‘‘Conviction’’ means a finding of guilt (including a plea of nolo contendere) or imposition of sentence, or both, by any judicial body charged with the responsibility to determine violations of the Federal or State criminal drug statutes; ‘‘Criminal drug statute’’ means a Federal or non-Federal criminal statute involving the manufacture, distribution, dispensing, use, or possession of any controlled substance; ‘‘Employee’’ means the employee of a applicant directly engaged in the performance of work under a grant, including: (i) All ‘‘direct charge’’ employees; (ii) all ‘‘indirect charge’’ employees unless their impact or involvement is insignificant to the performance of the grant; and (iii) temporary personnel and consultants who are directly engaged in the performance of work under the grant and who are not on the applicant’s payroll. This definition does not include workers not on the payroll of the applicant (e.g., volunteers, even if used to meet a matching requirement; consultants or independent contractors not on the applicant’s payroll; or employees of subrecipients or subcontractors in covered workplaces).

BILLING CODE 4210±29±P 64208 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64209 64210 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64211 64212 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64213 64214 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64215 64216 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices 64217 64218 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Notices

[FR Doc. 96–30440 Filed 11–25–96; 11:03 am] BILLING CODE 4210±29±C federal register December 3,1996 Tuesday Coal Moisture;ProposedRule 30 CFRPart870 Enforcement Office ofSurfaceMiningReclamationand Interior Department ofthe Part III 64219 64220 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules

DEPARTMENT OF THE INTERIOR Request for public hearings: Submit been heard. To assist the transcriber and requests to Dr. Kewal Kohli, Office of ensure an accurate record, OSM Office of Surface Mining Reclamation Surface Mining Reclamation and requests that persons who testify at a and Enforcement Enforcement, U.S. Department of the hearing provide the transcriber a written Interior, 9 Parkway Center, Pittsburgh, copy of their testimony. 30 CFR Part 870 PA 15220, telephone (412) 937–2175. To assist OSM in preparing RIN 1029±AB78 FOR FURTHER INFORMATION CONTACT: Dr. appropriate questions, OSM also Kewal Kohli, telephone (412) 937–2175. requests that persons who plan to testify Coal Moisture submit to OSM at the address SUPPLEMENTARY INFORMATION: AGENCY: Office of Surface Mining previously specified for the submission I. Public Comment Procedures Reclamation and Enforcement, Interior. of written comments (see ADDRESSES) an II. Background advance copy of their testimony. ACTION: Proposed rule. III. Discussion of the Proposed Rules IV. Procedural Matters II. Background SUMMARY: The Office of Surface Mining Reclamation and Enforcement (OSM) I. Public Comment Procedures Section 402(a) of the SMCRA requires proposes to amend its regulations Written Comments all operators of coal mining operations governing how the excess moisture subject to its provisions to pay a allowance is determined for reclamation Written comments submitted on the reclamation fee on each ton of coal fee purposes. This action will define proposed rule should be specific, produced. In December 1977 OSM first terms and phrases related to the should be confined to issues pertinent promulgated regulations to implement collection and testing of coal samples to the proposed rule, and should this provisions (42 FR 62714, December used to determine the inherent and total explain the reason for any 13, 1977). Briefly, the regulations moisture of coal; identify acceptable recommended change. Where practical, require that the Abandoned Mine Land American Society for Testing and commenters should submit three copies (AML) fees must be paid on the actual Materials (ASTM) standard sampling of their comments. Comments received gross weight of the coal, at the time of and testing methods for high and low- after the close of the comment period the first transaction (sale, transfer of rank coals; prescribe frequencies for (see DATES) or delivered to addresses ownership, or use) involving the coal. other than those listed above (see collecting and testing coal samples; and This regulation has been in effect ADDRESSES), may not be considered or provide the coal industry with formulas basically unchanged since 1977. In included in the Administrative Record for use in calculating an excess moisture 1982, OSM revised the regulatory for the final rule. tonnage allowance for the purpose of language to clarify the point in time of reducing the weight of coal subject to Public Hearings fee determination and to stress that the the abandoned mine land reclamation OSM will hold public hearings on the actual gross weight of the coal must be fee. proposed rule by request only. The used for fee calculation. At that time The proposed regulatory revision is times, dates, and addresses for all OSM also specifically noted that no fees necessary to clarify and simplify hearings will be announced in the were owed on impurities physically technical guidance for all users, and to Federal Register at least 7 days prior to removed before the sale, transfer of provide the coal industry with standard any hearings which are to be held. Upon possession or use. In 1988, OSM again criteria for calculating an excess request, OSM will hold a public hearing revised this regulation to allow an moisture allowance on all coals subject on the proposed rule in Washington, operator who mined coal after July 1, to reclamation fee payment. The D.C. and in the State of Colorado. 1988, to elect to take an allowance for intended effect of this proposal is to Individuals wishing to attend, but not moisture contained in the coal at the enhance compliance with the provisions testify at any hearing should contact the time of sale that is determined to be in of section 402 of the Surface Mining person identified under FOR FURTHER excess of the inherent, or natural bed Control and Reclamation Act of 1977 INFORMATION CONTACT beforehand to moisture, in the coal. (SMCRA or the ACT). Operator use of verify that the hearing will be held, Initially, OSM adopted the excess the prescribed criteria will ensure that should also contact the person listed moisture allowance to address an all tonnage reductions for excess under FOR FURTHER INFORMATION inconsistency in the methods of moisture are taken on the same basis. CONTACT. determining coal weight under various DATES: Written comments: OSM will Any person interested in participating Federal taxation requirements. At the accept written comments on the at a hearing at a particular location, or time OSM proposed to amend its proposed rule until 5 p.m. Eastern time any disabled individual who requires regulation to allow a deduction for on February 3, 1997. special accommodation to attend a excess moisture, the ASTM Committee Public Hearings: OSM will accept public hearing, should inform Dr. Kohli on Coal and Coke, whose membership requests for public hearings until 5 p.m. (see FOR FURTHER INFORMATION CONTACT) included representatives of the Internal Eastern time on January 2, 1997. either orally or in writing of the desired Revenue Service (IRS) and OSM, was ADDRESSES: Written comments: Hand- hearing location by 5 p.m. Eastern time conducting a study to develop and/or deliver or mail to the Office of Surface on January 2, 1997. If no one has confirm precision statements for the Mining Reclamation and Enforcement, contacted Dr. Kohli to express an ASTM standard test method used to Administrative Record, Room 120, 1951 interest in participating in a hearing at estimate the bed moisture in high-rank Constitution Avenue, NW., Washington, a given location by that date the hearing coals, ASTM D1412–85, as it applied to D.C. 20240. will not be held. If only one person coals of all ranks. In a letter of Comments may also be sent through expresses an interest, a public meeting November 18, 1987, the IRS submitted the Internet to OSM’s Administrative rather than a hearing may be held and the following comment in response to Record, Internet address: the results will be included in the the OSM proposal, ‘‘the results of the [email protected]. Copies of any Administrative Record. ASTM or a similar study should be messages received electronically will be If a hearing is held, it will continue received before one test is prescribed for filed with the Administrative Record. until all persons wishing to testify have use by all taxpayers.’’ Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules 64221

As an interim measure, until adequate excess moisture allowance. The excess A third AML Payer Letter dated July and fully reliable testing procedures moisture contained in mined coal must 17, 1989, acknowledged that OSM became available for coals of all ranks, be found by collecting a coal sample would accept: Total moisture tests OSM’s 1988 adopted regulation and testing the sample to determine a performed by the operator’s customer, incorporated a suggestion made by the percentage of inherent moisture provided the operator maintains IRS. OSM decided to rely on a facts and estimated to be in the undisturbed coal documentation to support the test circumstances test to allow an operator as it lies in the seam. The operator must results; and, moisture percentages to elect to take an allowance for excess also collect and test coal at the shipping accepted by another taxing authority moisture provided the operator could point to find the estimated total only when the percentages were demonstrate, through competent moisture percentage in as-shipped coal. supported by actual test data. This evidence, that there was a reasonable The percentage of excess moisture that Letter provided notice that OSM would basis for determining the existence and may be deducted from the weight of the not accept the use of a core sample to amount of excess moisture. OSM’s coal for fee payment purposes is then establish inherent moisture. The use of standard of reasonableness required an calculated by finding the difference a weighted average in calculations, and operator to provide sufficient between the total moisture percentage the type of test documentation an documentation to sustain the weight and the inherent moisture percentage. operator would need to maintain are reduction. Although no specific time OSM has issued five AML Payer illustrated. periods were prescribed for testing, an Letters to provide technical guidance to On September 14, 1990, OSM issued operator was also required to prove that the coal industry and assist with the its fourth AML Payer Letter. This Letter time frames chosen to measure the application of this regulation. OSM has consolidated and replaced the guidance existence and amount of excess also published this guidance in the in the three previous AML Payer letters moisture were reasonable. OSM Payer Handbooks. The first AML on testing, completion of the Form The preamble to the 1988 rule Payer Letter, issued on June 16, 1988, OSM–1, and computing the excess discussed OSM’s willingness to accept provided for the operator to: Make an moisture allowance under various the standard ASTM test methods to inventory of any coal mined prior to scenarios. OSM also re-emphasized that determine inherent moisture, ASTM July 1, 1988, that was stockpiled, or total moisture should be determined for D1412–85, and total moisture, ASTM otherwise stored on the mine site; use each day’s shipments. In an AML Payer Letter issued on July D3302–82, pending the availability of the ASTM D1412 test as the standard 15, 1993, OSM was able to expand its more suitable alternatives. OSM test method to determine the estimated recognized that these tests were not testing frequency guidelines for inherent percentage of inherent moisture; always reliable for this purpose and moisture to include quarterly testing as establish an accurate estimate of the acknowledged its willingness to accept an alternative to monthly testing. This coal seam’s baseline inherent moisture other testing methods for some sub- came about as a result of research by taking one inherent moisture test in bituminous and lignite coals. OSM also conducted by the OSM engineering staff each month of the first 24 months a coal stated its intent to develop technical on actual excess moisture allowances seam is in continuous operation; and, guidance to assist operators and to taken for more than 4 years. The AML take one annual inherent moisture test assure uniform application of the excess Payer Letter advised operators that OSM after completion of the baseline study moisture allowance throughout the would accept either quarterly inherent period. The baseline can be based, in industry. moisture estimates based on tests taken As a result of the 1988 regulatory part, on information from existing once in a quarter, or monthly tests. The revision, under both OSM’s regulatory sources such as the United States ASTM had adopted the use of a requirements, and the IRS Ruling (86– Geological Survey or the Department of corehole sample to test for inherent 96), an operator may claim a reduction Energy, provided the operator uses its moisture. The AML Payer Letter in coal subject to reclamation fees, and own sampling and testing data to informed the industry that OSM also a reduction in coal subject to the black validate or update data obtained from accepts the use of corehole samples to lung tax, by estimating the excess these sources. An operator can use test coal for inherent moisture. OSM moisture contained in the coal. OSM either ASTM Standard Test Method for advised the industry that it cannot has notified the IRS of its intent to Total Moisture in Coal, D3302, or ASTM accept residual moisture as inherent propose a revision to its current Standard Practice for Proximate moisture because residual moisture and regulation, and will continue to consult Analysis of Coal and Coke, test method inherent moisture are not equal. This with the IRS throughout this rulemaking D3172, to determine an estimated total AML Payer Letter also informed the process. moisture percentage. Total moisture is industry that OSM will provide notice The final rule which OSM adopted in tested at the time of the initial bona fide when it proposes to adopt an alternative 1988, at 30 CFR § 870.12, allows an sale, transfer of ownership, or use of the procedure that will more accurately operator to elect to reduce the weight of coal. Operators are advised to maintain establish inherent moisture in low-rank coal tonnage subject to reclamation fee a full description and rationale for any coal. payment by a percentage of excess deviations from standard test methods, OSM’s audits of excess moisture moisture estimated to be contained in according to 30 CFR § 870.18(d). reduced tonnages find that operators the coal at the time of fee assessment. The second AML Payer Letter, issued frequently fail to conform to inherent OSM defines the term ‘‘excess on September 28, 1988, provided ten moisture test procedures described in moisture’’ as the difference between different examples illustrating how to AML Payer Letters, and do not provide ‘‘total moisture’’ and ‘‘inherent calculate an excess moisture allowance adequate support for procedures they do moisture.’’ The ASTM definitions are under various circumstances for coal use. Some operators mining large used for the terms ‘‘total moisture’’ and that was either raw, clean, or blended. volumes of low-rank coal base tonnage ‘‘inherent moisture,’’ at 30 CFR § 870.5. That Letter also provides instructions reductions on test data that is known to Standard laboratory test methods for completing the Coal Production and be unreliable. must be used to determine the estimated Reclamation Fee Report (Coal In October 1992, OSM conducted its amount of excess moisture contained in Reclamation Fee Report), Form OSM–1, own independent sampling and testing the coal that is used as the basis for an to report the excess moisture allowance. program in Wyoming’s Powder River 64222 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules

Basin to assess the reliability of existing existing definition of inherent moisture Revised section 870.18(c) would add ASTM methods and procedures for would be expanded to incorporate by definitions to further explain the determining inherent moisture in low- reference the specific ASTM sample meaning of terms as they are used in rank coal. In March 1993, OSM met collection methods and test procedures new §§ 870.19 and 870.20. ‘‘As-shipped with operators in Gillette, Wyoming, to shown in § 870.19, Table 2, Calculating coal’’ and ‘‘tipple coal’’ is defined as the provide them with the results of its INHERENT moisture percentage in coal found at the mine or loading study and inform them that OSM was HIGH-rank coal, and § 870.20, Table 4, facility. A precise meaning for a considering regulatory requirements for and Table 5, Calculating INHERENT ‘‘channel sample’’ and ‘‘core sample’’ is inherent moisture testing. This moisture percentage in LOW-rank coal. given and the definitions incorporate by rulemaking proposes to adopt a new The existing definition of total moisture reference the specific ASTM procedure requirement for establishing inherent would be expanded to incorporate by used to take the particular kind of moisture in low rank coal based, in part, reference ASTM criteria in § 870.19, sample. The ‘‘correction factor’’ is on the results of OSM’s Powder River Table 1, for Calculating the TOTAL added as the method used to establish Basin sampling and testing program. moisture percentage in HIGH-rank coal, the difference between the equilibrium and § 870.20, Table 3, for Calculating moisture and inherent moisture in low- III. Discussion of the Proposed Rules the TOTAL moisture percentage in rank coal under § 870.20. ‘‘Equilibrium At this time OSM is proposing to LOW-rank coal. The expansion of the moisture’’ is defined as the method used revise its regulations governing the existing definitions to incorporate by to estimate the inherent moisture in all excess moisture allowance to codify reference specific ASTM sample coals, and ASTM D1412 and ASTM regulatory technical requirements to be collection methods and test procedures D1412, Appendix XI, are incorporated met by an operator who elects to take an would provide precise technical by reference. Types of ‘‘high-rank coals’’ excess moisture allowance in either standards to facilitate operator and ‘‘low-rank coals’’ are defined to high- or low-rank coals. The proposal compliance with OSM’s requirements, explain how these terms are used incorporates by reference ASTM and to ensure that the same basis is used throughout § 870.5 and §§ 870.18–20. standards used for collecting and testing to calculate all excess moisture How To Calculate Excess Moisture in a coal sample as specified in § 870.19(a), allowances. Table 1 and Table 2, and § 870.20(a), HIGH-Rank Coal—Section 870.19 Tables 3, 4, and 5, as published in the General Rules for Calculating Excess A new § 870.19 would provide 1994 Annual Book of ASTM Standards, Moisture—Section 870.18 standard criteria for an operator to use Volume 05.05. A copy of the ASTM OSM proposes to modify 30 CFR to establish excess moisture in high- standards is available for inspection at § 870.18, Excess moisture content rank coal. Table 1 includes the ASTM the OSM Headquarters Office, Office of allowance at § 870.18 (a), (b), and (c). standard sample collection method, Surface Mining Reclamation and Section 870.18(a) requires an operator to ASTM D2234–89, Standard Test Enforcement, Administrative Record, demonstrate through competent Methods for Collection of a Gross Room 120, 1951 Constitution Avenue, evidence that the basis for determining Sample; and test procedure, ASTM– NW., Washington, DC, or at the Office the existence and amount of excess D3302–91, Standard Test Method for of the Federal Register, 800 North moisture is reasonable. OSM requires Total Moisture in Coal, that OSM would Capitol St., Washington, DC. The documentation to be updated as needed accept for use as the basis for proposed rule establishes a frequency to prove an excess moisture allowance calculating the percentage of total for using ASTM standard test methods taken by an operator continues to be moisture in as-shipped high-rank coal on coals of all ranks, and adopts the valid. Section 870.18(b) requires each day the coal is either shipped or method approved by the ASTM to standard laboratory analyses for testing used. establish inherent moisture in low-rank inherent and total moisture. Section The daily total moisture test results coal, the ASTM D1412–93, Appendix 870.18(c) requires an operator who would be converted to quarterly figures XI. Use of this procedure for low-rank blends coal mined from multiple seams to be reported to OSM on the OSM–1 coal would ensure excess moisture prior to the initial sale, transfer or use Coal Reclamation Fee Report. To allowances taken on low-rank coals are of the coal to test for variations in the calculate the quarterly total moisture on a comparable basis to those taken on inherent moisture amounts from percentage an operator would: (1) high-rank coal, and all excess moisture different seams. multiply the daily total moisture allowances are fair and equitable. This proposal would replace the percentage by the tonnage shipped or OSM’s proposal also includes an option reasonableness standard found at used that day, to find the daily total that would provide operators with a § 870.18(a), the generic laboratory test moisture tonnage; and, (2) add the daily method to calculate an allowance for the requirement at § 870.18(b), and the total moisture tonnage for each day in inherent moisture present in as-shipped requirement for a separate test of coal the quarter; and, (3) add the daily coal. This would be of particular benefit from each seam mined prior to blending tonnage shipped or used in the quarter, when an operator sells large volumes of the coal for sale, transfer of ownership to find the total tonnage shipped or used coal, and/or sells coal with a substantial or use. OSM proposes a revision to the during the quarter. Then, divide the variance between the total and inherent existing regulation that would recognize sum of the daily total moisture tonnage, moisture. the distinct differences in high- and step (2), by the sum of the daily tonnage low-rank coals in new §§ 870.19 and shipped or used in the quarter, step (3). Definitions—Section 870.5 870.20. Section 870.19 proposes This will result in the total moisture OSM would modify the existing acceptable standards for collecting and percentage in high-rank coal for the definition for excess moisture by testing a sample of high-rank coal to quarter which would be reported on the including, by reference, a formula for establish the percentage of inherent and OSM–1, Coal Reclamation Fee Report. use in calculating excess moisture in total moisture contained in the coal, and Table 2 provides three methods for high- and low-rank coals. The formula calculate the excess moisture allowance. sampling high-rank coal, and testing the to be used for high-rank coals is found Section 870.20 proposes like standards sample to determine the inherent in a new § 870.19 and the formula for for calculating the excess moisture moisture percentage that would be low-rank coals is in a new § 870.20. The allowance for low-rank coal. acceptable to OSM. To collect a coal Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules 64223 sample directly from a coal seam an monthly inherent moisture tonnage; (2) accept for use as the basis for operator could use either a core or a add the inherent moisture tonnage calculating the percentage of total channel sample method. If a core determined in (1) for each of the 3 moisture in as shipped low-rank coal sample is collected the operator would months to find the quarterly inherent each day the coal is either shipped or be required to collect the sample using moisture tonnage; (3) divide the used. procedures in ASTM D5192–91, inherent moisture tonnage found in (2) The daily total moisture test results Standard Practice for Collection of Coal by the total number of tons produced or would be converted to quarterly figures Samples from Core and to use shipped during the three months of the to be reported to OSM on the OSM–1 laboratory procedures in ASTM D1412– quarter; and, (4) report the weighted Coal Reclamation Fee Report. To 93, Standard Test Method for average percentage for the quarter to calculate the quarterly total moisture Equilibrium Moisture of Coal at 96 to 97 OSM on the OSM–1 form. After the first percentage an operator would: (1) Percent Relative Humidity and 30 °C to 24-months an operator would have to multiply the daily total moisture estimate the inherent moisture in the use an updated rolling average percentage by the tonnage shipped or sample. If a channel sample method is percentage to report inherent moisture used that day, to find the daily total used the operator would be required to percentages for all subsequent quarters moisture tonnage; (2) add the daily total collect the sample using procedures in in which a coal seam is continuously moisture tonnage for each day in the ASTM D4596–93, Standard Practice for mined. The rolling average percentage quarter; and, (3) add the daily tonnage Collection of Channel Samples of Coal would be calculated by: adding the shipped or used in the quarter, to find in a Mine and to use laboratory results of one inherent moisture test of the total tonnage shipped or used during procedures in either ASTM D1412–93, one coal sample collected during every the quarter. Then, divide the sum of the Standard Test Method for Equilibrium 12-month period to the inherent daily total moisture tonnage, step (2), by Moisture of Coal at 96 to 97 Percent moisture percentages for the preceding the sum of the daily tonnage shipped or Relative Humidity and 30 °C, or ASTM 23 tests, and dividing the sum of these used in the quarter, step (3). This will D3302–91, Standard Test Method for tests by 24. result in the total moisture percentage in Total Moisture in Coal to estimate the Section 870.19(a) provides instruction low-rank coal for the quarter which inherent moisture in the sample. To on how an operator would calculate the would be reported on the OMS–1, Coal collect a sample of blended coal, as- excess moisture in high-rank coal by Reclamation Fee Report. shipped coal, tipple coal, commingled using one of two methods. One method Table 4 provides instructions on how coal, or coal from slurry ponds an involves the simple subtraction of the an operator would determine the operator would use Procedures in inherent moisture percentage from the inherent moisture percentage of coal ASTM D2234–89, Standard Test total moisture percentage as it is found mined from a bench of low-rank coal by: collecting one sample of as-shipped coal Methods for Collection of a Gross in the existing rule. OSM expects that in each month of the calendar quarter Sample and laboratory procedures in most operators of small to medium size using ASTM D2234–89, Standard Test ASTM D1412–93, Standard Test mines would likely prefer to continue to Methods for Collection of a Gross Method for Equilibrium Moisture of Coal use this method. A new alternative Sample of Coal; and, testing each at 96 to 97 Percent Relative Humidity formula is added as a second method in sample for equilibrium moisture and 30 °C would be required to estimate § 870.19(a) that would allow an following laboratory procedures in the inherent moisture in the sample. adjustment in the excess moisture calculation for a percentage of inherent ASTM D1412–93, Standard Test An operator would be required to moisture contained in the as-shipped Method for Equilibrium Moisture of Coal select one of two options for timing coal. Some operators who either mine a at 96 to 97 Percent Relative Humidity inherent moisture tests, either quarterly large volume of coal, or mine coal with and 30 °C. or monthly. If a quarterly inherent a significant variance in total and The operator would calculate the moisture test is chosen, the operator inherent moisture, have requested inherent moisture percentage to report would have to report the results of one OSM’s approval to use this formula for to OSM for the quarter by averaging the inherent moisture test taken at any time calculating a tonnage reduction for results from the 3 monthly equilibrium during the quarter on the OSM–1 form excess moisture. OSM is now proposing moisture tests, and adding the for the quarter in which the test was this option as an alternative to the correction factor. Table 5 provides the taken. If monthly inherent moisture existing formula used to determine the methodology for establishing the testing is preferred, the operator would excess moisture percentage. The excess correction factor for all coal mined from be required to create a 24-month moisture percentage found in each bench of low-rank coal. inherent moisture baseline during the § 870.19(a) is multiplied by the tonnage Table 5 provides the method an first 24-months a coal seam is in shipped or used during the quarter to operator would be required to use to continuous operation. To create the 24- determine the excess moisture reduced establish a correction factor during the month inherent moisture baseline an tonnage for the quarter under first quarter an excess moisture operator would have to collect and test § 870.19(b). allowance is taken on low-rank coal one sample in each month of the mined from a bench. The correction calendar quarter. The quarterly inherent How to calculate excess moisture in factor would be found by using ASTM moisture percentage reported to OSM LOW-rank coal—Section 870.20 D1412 Appendix XI, Standard Test for the first 8 quarters a seam is in A new § 870.20 would provide Method for Equilibrium Moisture of Coal continuous operation would then be standard criteria for an operator to use at 96 to 97 Percent Relative Humidity based on a weighted average of the 3- to establish excess moisture in low-rank and 30 °C to collect 5 samples of coal monthly inherent moisture test results. coal. Table 3 includes the ASTM from a freshly exposed, unweathered To determine the quarterly weighted standard sample collection method, coal seam face during each month of the average inherent moisture percentage an ASTM D2234–89, Standard Test quarter. Each of the 15 samples, 5 in operator would have to: (1) multiply the Methods for Collection of a Gross each quarter, would be tested for inherent moisture percentage for one Sample, and test procedure, ASTM–D inherent moisture and equilibrium month by the number of tons produced 3302–91, Standard Test Method for moisture as required by ASTM D1412 or shipped in that month to find the Total Moisture in Coal, that OSM would Appendix XI, Standard Test Method for 64224 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules

Equilibrium Moisture of Coal at 96 to 97 fees that are owed. Top substantiate the effect on the coal mining industry, or on Percent Relative Humidity and 30 °C. calculated moisture deduction claimed, regional or national economies. OSM is The operator would be required to an operator (or other entity responsible attempting to provide a viable establish the correction factor for the for the payment of the reclamation fee) methodology that will enable coal mine first quarter and all later quarters by: is required to document by standard operators to calculate the correct averaging the 15 monthly inherent laboratory analysis the excess moisture allowance for excess moisture. OSM is moisture test results; and, averaging the content for each coal seam mined. This not attempting to specify any given 15 monthly equilibrium moisture test documentation must be updated as amount, or percentage, as an excess results; and, subtracting the average necessary to establish the continuing moisture allowance. For that reason it is inherent moisture from the average validity of the excess moisture content not possible to predict the cost that this equilibrium moisture. The correction allowance taken by the operator. revision will have in terms of the factor would apply only to coal mined Need For and Use: The information amount of the additional AML fees that from the bench that is sampled. The submitted will be used by OSM auditors the industry will pay and the to verify an operator’s compliance with correction factor could be changed at government collect or the industry save Section 402 of the Act and the any time provided new samples are and the government not collect. Based requirements of the regulation at 30 CFR taken and all procedures shown in on AML tonnages reported, and the total Table 5 are repeated. 870.18, 870.19, and 870.20. During an moisture allowances taken for 1995, the audit, operators must substantiate how industry saved approximately IV. Procedural Matters the calculation for excess moisture was $5,284,000 (rounded) in terms of the Federal Paperwork Reduction Act determined. Operators must retain their records for a 6-year period to allow for tonnage reported. With regard to In accordance with the Paperwork benefits, the proposed rule will ensure Reduction Act of 1995, Public Law 104– the audit of tax records. Courts have ruled that the AML fee is an excise tax. that all excess moisture allowances are 13, OSM is requesting comments from fair and equitable. OSM’s proposal also the public and the Office of The applicable provision of the Energy Policy Act of 1992 (Section 2515) includes an option that would provide Management and Budget (OMB) on the operators with a method to calculate an information collections contained in extended the fee through 2004. Respondents: Approximately 1,050 allowance for the inherent moisture this proposed rulemaking. Comments coal mining operators who take the coal present in as-shipped coal. This would should address: (a) Whether the moisture deduction allowance. be of particular benefit when an proposed collection of information is Total Annual Burden: OSM estimates operator sells large volumes of coal, necessary for the proper performance of that 2 hours will be required to prepare and/or sells coal with a substantial OSM, including whether the and maintain the documentation for variance between the total and inherent information will have practical utility; audit purposes per respondent. The moisture. (b) the accuracy of OSM’s estimate of total annual burden is estimated to be the burdens of the proposed collection To assist OSM in complying with the 2,100 hours. requirements of Executive Order 12866, of information; (c) ways to enhance the Send comments regarding these quality, utility, and clarity of the OSM invites comments on the potential burden estimates or any other aspect of costs and benefits of the proposed rule. information to be collected; and (d) these information collection ways to minimize the burden of requirements by January 2, 1997, to the Regulatory Flexibility Act collection on the respondents, including Office of Surface Mining Reclamation the use of automated collection and Enforcement, Information In accordance with the Regulatory techniques or other forms of information Collection Clearance Officer, SIB 120, Flexibility Act, 5 U.S.C. 601 et seq., the technology. No person is required to 1951 Constitution Avenue, NW., Department of the Interior has respond to a collection of information Washington, DC 20240; and the Office determined that this rule would not unless it displays a currently valid OMB of Information and Regulatory Affairs, have a significant economic effect on a Control Number. OSM’s Control Office of Management and Budget, substantial number of small entities for Numbers are displayed in 30 CFR Parts Attention: Interior Desk Officer, 725 the reason stated below. This proposed 710–955. 17th Street, NW, Washington, DC 20503. rule will provide two methods for 30 CFR Part 870 Please refer to OMB Control Number operators to calculate the excess 1029–090 in any correspondence. moisture in high-rank coal. OSM Title: Abandoned mine reclamation expects that most operators of small to Executive Order 12988 on Civil Justice fund—fee collection and coal medium size mines would likely prefer Reform production reporting. to continue to use the current method of OMB Control Number: 1029–0090. The Department of the Interior has calculation while operators who either Abstract: Section 402 of the Surface determined that this proposed rule mine a large volume of coal, or mine Mining Control and Reclamation Act of meets the requirements of sections (3)(a) coal with a significant variance in total 1977 requires operators of coal mining and 3(b)(2) of Executive Order 12988, and inherent moisture, will use the operations to pay a reclamation fee to Civil Justice Reform (56 FR 55195). proposed option as an alternative to the the Secretary for deposit in the Abandoned Mine Reclamation Fund for Executive Order 12866 existing formula used to determine the excess moisture percentage. Thus, for the purpose of reclaiming lands mined This proposed rule has been small operators any change from current and left abandoned, or inadequately determined to be significant under reclaimed, prior to the Act’s effective Executive Order 12866 and has been practices would be optional. date. Reclamation fees are to be paid on reviewed by the Office of Management Unfunded Mandates Reform Act each ton of coal produced. and Budget. Section 870.18 of the regulations The proposed rule is not considered This rule is not expected to impose a allows an operator to take an excess economically significant under section cost of $100 million or more in any moisture content allowance when 3(f)(1) of Executive Order 12866 and given year on any governmental entity calculating the amount of reclamation will not have a significant economic or the private sector. Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules 64225

National Environmental Policy Act Inherent moisture means moisture Capitol St., NW., Suite 700, Washington, that exists as an integral part of the coal DC. OSM has prepared a draft seam in its natural state, including environmental assessment (EA) of this Note: The incorporation by reference and water in pores, but excluding that proposed rule and has made a tentative availability of inspection copies are pending present in macroscopically visible finding that the proposed rule would approval by the Office of the Federal fractures, as determined according to not significantly affect the quality of the Register. § 870.19(a) or § 870.20(a). human environment under section (1) As-shipped coal means raw or 102(2)(C) of the National Environmental * * * * * prepared coal that is loaded for Policy Act of 1969 (NEPA), 42 U.S.C. Total moisture means the measure of shipment from the mine or loading 4332(2)(C). It is anticipated that a weight loss in an air atmosphere under facility. Finding of No Significant Impact rigidly controlled conditions of (2) Channel sample means a sample of (FONSI) will be approved for the final temperature, time and air flow, as coal collected according to ASTM determined according to either rule in accordance with OSM standard D4596–93 from a channel § 870.19(a) or § 870.20(a). procedures under NEPA. The EA is on extending from the top to the bottom of file in the OSM Administrative Record * * * * * a coal seam. at the address specified previously (see 3. Section 870.18 is revised to read as (3) Core sample means a cylindrical ADDRESSES). An EA will be completed follows: sample of coal that represents the on the final rule and a finding made on § 870.18 General rules for calculating thickness of a coal seam penetrated by the significance of any resulting impacts excess moisture. drilling according to ASTM standard prior to promulgation of the final rule. If you are an operator who mined coal D5192–91. (4) Correction factor means the Author after June 1988, you may deduct the weight of excess moisture in the coal to difference between the equilibrium The principal author of this proposed determine reclamation fees you owe moisture and the inherent moisture in rule is Dr. Kewal Kohli, Mining under § 870.12(b)(3)(i). Excess moisture low rank coals for the purpose of Engineer, Office of Surface Mining, U.S. is the difference between total moisture § 870.20(a). Department of the Interior, 3 Parkway and inherent moisture. To calculate (5) Equilibrium moisture means an Center, Pittsburgh, PA 15220. excess moisture in HIGH-rank coal, estimate of the inherent moisture in all Inquiries with respect to the proposed follow § 870.19. To calculate excess coals. The equilibrium moisture is rule should be directed to Dr. Kohli at moisture in LOW-rank coal, follow determined according to ASTM the address and telephone specified § 870.20. Report your calculations on standard D1412–93 and accompanying under FOR FURTHER INFORMATION OSM–1, Coal Reclamation Fee Report, appendices, as appropriate. CONTACT. for every calendar quarter in which you (6) High-rank coals means anthracite, List of Subjects in 30 CFR Part 870 claim a deduction. Some cautions: bituminous, and subbituminous A and (a) You or a customer of yours may do B coals. Incorporation by reference, Reporting any test required by §§ 870.19 and (7) Low-rank coals means and recordkeeping requirements, 870.20. But whoever does a test, you are subbituminous C and lignite coals. Surface mining, Underground mining. to keep test results and all related (8) Tipple coal means coal from a Dated: June 24, 1996. records for at least six years after the test mine or loading facility that is ready for Bob Armstrong, date. shipment. (b) If OSM disallows any or all of an 4. Sections 870.19 and 870.20 are Assistant Secretary, Land and Minerals allowance for excess moisture, you must Management. added to read as follows: submit an additional fee plus interest Accordingly, it is proposed to amend 30 computed according to § 870.15(c) and § 870.19 How to calculate excess CFR part 870 as set forth below: penalties computed according to moisture in high-rank coal. Here are the requirements for PART 870ÐABANDONED MINE § 870.15(f). (c) The following definitions are calculating the excess moisture in high- RECLAMATION FUNDÐFEE applicable to §§ 870.19 and 870.20. rank coal for a calendar quarter. COLLECTION AND COAL Applicable ASTM standards are Applicable ASTM standards are PRODUCTION REPORTING incorporated by reference as published incorporated by reference as published 1. The authority citation for part 870 in the 1994 Annual Book of ASTM in the 1994 Annual Book of ASTM is revised to read as follows: Standards, Volume 05.05. The Director Standards, Volume 05.05. The Director of the Federal Register approved this of the Federal Register approved this Authority: 30 U.S.C. 1201 et seq. incorporation by reference in incorporation by reference in 2. Section 870.5 is amended by accordance with 5 U.S.C. 552(a) and 1 accordance with 5 U.S.C. 552(a) and 1 revising definitions of ‘‘excess CFR part 51. Each applicable ASTM CFR part 51. Each applicable ASTM moisture,’’ ‘‘inherent moisture’’ and standard is incorporated as it exists on standard is incorporated as it exists on ‘‘total moisture’’ to read as follows: the date of the approval, and a notice of the date of the approval, and a notice of any change in it will be published in the any change in it will be published in the § 870.5 Definitions. Federal Register. You may obtain copies Federal Register. You may obtain copies * * * * * from the ASTM, 1916 Race Street, from the ASTM, 1916 Race Street, Excess moisture means the difference Philadelphia, Pennsylvania, 19103– Philadelphia, Pennsylvania, 19103– between total moisture and inherent 1187. A copy of the ASTM standards is 1187. A copy of the ASTM standards is moisture, calculated according to available for inspection at the Office of available for inspection at the Office of § 870.19 for high-rank coals or the Surface Mining Reclamation and Surface Mining Reclamation and difference between total moisture and Enforcement, Administrative Record, Enforcement, Administrative Record, inherent moisture calculated according Room 120, 1951 Constitution Avenue, Room 120, 1951 Constitution Avenue, to § 870.20 for low-rank coals. NW., Washington, DC, or at the Office NW., Washington, DC, or at the Office * * * * * of the Federal Register, 800 North of the Federal Register, 800 North 64226 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules

Capitol St., NW., Suite 700, Washington, EM= TM − IM moisture percentage calculated DC. according to Table 1 of this section. IM or Note: The incorporation by reference and equals inherent moisture percentage availability of inspection copies are pending calculated according to Table 2 of this  100 − TM approval by the Office of the Federal EM= TM − IM ×  section. Register.  100 − IM  (b) Multiply the excess moisture (a)(1) Calculate the excess moisture (2) EM equals excess moisture percentage by the tonnage shipped or percentage using one of these equations: percentage. TM equals total as-shipped used during the quarter.

TABLE 1 TO § 870.19.ÐCALCULATING TOTAL MOISTURE PERCENTAGE IN HIGH-RANK COAL 1

Collect and test each day you ship or use coal Convert daily test results to quarterly figures and report them

Collect a sample of as-shipped or used coal. 1. Multiply daily total moisture percentage by daily tonnage shipped or used. You now have Follow procedures in ASTM D2234±89 daily total moisture tonnage. Test the sample for daily total moisture per- 2. Add up daily total moisture tonnage for the quarter. centage. Follow laboratory procedures in 3. Add up daily tonnage shipped or used in the quarter. ASTM D3302±91. 4. Divide 2 by 3. Report this total moisture percentage in high-rank coal for the quarter on OSM±1, Coal Rec- lamation Fee Report. 1 See § 870.19 for the incorporation by reference of the ASTM standards.

TABLE 2 TO § 870.19.ÐCALCULATING INHERENT MOISTURE PERCENTAGE IN HIGH-RANK COAL 1

Choose from 3 ways to collect and test Choose from 2 ways to time the tests and convert the results for quarterly reporting

First First Collect a core sample. Follow procedures in Collect and test once each quarter. Report test results by quarter on OSM±1. Test results ASTM D5192±91. need no converting; they are in quarterly units already. Test the sample to estimate inherent moisture. Follow laboratory procedures in ASTM D1412±93. Or second Or second Collect a channel sample. Follow procedures in Create a 24-month baseline and update as follows: ASTM D4596±93. Test the sample to estimate inherent moisture. For reporting months 1±24... Follow laboratory procedures in ASTM Collect and test one sample each month. Each quarter, calculate a weighted average percent- D1412±93 or ASTM D3302±91. age of inherent moisture: • Multiply a month's inherent moisture percentage by tons produced or shipped. You now have the month's inherent moisture tonnage. • Add up 3 months of that inherent moisture tonnage. • Divide by tons produced or shipped in those 3 months. Report the quarter's weighted average percentage on OSM±1. Or third Collect a sample of blended coal, as-shipped For all subsequent months... coal, tipple coal, commingled coal, or coal Collect and test one sample for inherent moisture every 12 months. CalculateÐand report in from slurry ponds. Follow procedures in the following 4 quartersÐone updated rolling average percentage: ASTM D2234±89. • Add to the annual sample percentage the inherent moisture percentages for the preceding Test the sample to estimate inherent moisture. 23 tests. Follow laboratory procedures in ASTM • Divide by 24. D1412±93. Report the quarter's weighted average percentage on OSM±1. 1 See § 870.19 for the incorporation by reference of the ASTM standards.

any change in it will be published in the (a)(1) Calculate the excess moisture Federal Register. You may obtain copies percentage using one of these equations: § 870.20 How to calculate excess moisture from the ASTM, 1916 Race Street, in LOW-rank coal. Philadelphia, Pennsylvania, 19103– EM= TM − IM 1187. A copy of the ASTM standards is Here are the requirements for or calculating the excess moisture in low- available for inspection at the Office of Surface Mining Reclamation and rank coal for a calendar quarter.  100 − TM Applicable ASTM standards are Enforcement, Administrative Record, EM= TM − IM ×  incorporated by reference as published Room 120, 1951 Constitution Avenue,  100 − IM  in the 1994 Annual Book of ASTM NW., Washington, DC, or at the Office Standards, Volume 05.05. The Director of the Federal Register, 800 North (2) EM equals excess moisture of the Federal Register approved this Capitol St., NW., Suite 700, Washington, percentage. TM equals total as-shipped incorporation by reference in DC. moisture percentage calculated accordance with 5 U.S.C. 552(a) and 1 Note: The incorporation by reference and according to Table 1 of this section. IM CFR part 51. Each applicable ASTM availability of inspection copies are pending equals inherent moisture percentage standard is incorporated as it exists on approval by the Office of the Federal calculated according to Tables 2 and 3 the date of the approval, and a notice of Register. of this section. Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules 64227

(b) Multiply the excess moisture percentage by the tonnage shipped or used during the quarter.

TABLE 1 TO § 870.20.ÐCALCULATING TOTAL MOISTURE PERCENTAGE IN LOW-RANK COAL1

Collect and test each day you ship or use coal Convert test results to quarterly figures and report them

Collect a sample of as-shipped or used coal. Convert daily total moisture percentage to quarterly total moisture percentage: Follow procedures in ASTM D2234±89. 1. Multiply daily total moisture percentage by daily tonnage shipped or used. You now have Test the sample for daily total moisture per- daily total moisture tonnage. centage. Follow laboratory procedures in 2. Add up daily total moisture tonnage for the quarter. ASTM D3302±91. 3. Add up daily tonnage shipped or used in the quarter. 4. Divide 2 by 3. Report this total moisture percentage in low-rank coal for the quarter on OSM±1, Coal Rec- lamation Fee Report. 1 See § 870.20 for the incorporation by reference of the ASTM standards.

TABLE 2 TO § 870.20.ÐCALCULATING INHERENT MOISTURE PERCENTAGE IN LOW-RANK COAL 1

Collect and test once a month Convert test results to quarterly figures and report them

Collect 1 sample of as-shipped coal. Follow Calculate inherent moisture percentage for the quarter: procedures in ASTM D2234±89. • Average the 3 equilibrium moisture results from your monthly tests. Test the sample for equilibrium moisture. Fol- • Add to this average a Correction Factor that you calculate for the first quarter according to low laboratory procedures in ASTM D1412± Table 5 below. 93. Report this inherent moisture percentage for the quarter on OSM±1. 1 See § 870.20 for the incorporation by reference of the ASTM standards.

TABLE 3 TO § 870.20.ÐCALCULATING THE CORRECTION FACTOR FOR TABLE 4 1

Collect and test each month in the first quarter Convert test results into a correction factor for all quarterly reports

Collect 5 samples of a freshly exposed, Use the test results to calculate a correction factor: unweathered coal seam face. Follow proce- • Average the 15 inherent moisture results from your monthly tests. dures in ASTM D1412±93 Appendix XI. • Average the 15 equilibrium moisture results from your monthly tests. • Subtract the average equilibrium moisture from the average inherent moisture. Test each sample for two things: You now have a correction factor for the first quarter the deduction is taken, and all later quar- • Inherent moisture ters. Use it in Table 4 above. You may change the correction factor at any time by repeating • Equilibrium moisture. the steps in this table. Follow laboratory procedures in ASTM D1412± A correction factor applies to only the bench you sample. 93 Appendix XI. 1 See § 870.20 for the incorporation by reference of the ASTM standards.

[FR Doc. 96–30134 Filed 12–2–96; 8:45 am] BILLING CODE 4310±05±M federal register December 3,1996 Tuesday Rule under InstrumentFlightRules;Proposed Operations inSingle-EngineAircraft Commercial Passenger-Carrying 14 CFRPart135 Federal AviationAdministration Transportation Department of Part IV 64229 64230 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules

DEPARTMENT OF TRANSPORTATION SUPPLEMENTARY INFORMATION: Persons interested in being placed on Comments Invited the mailing list for future NPRMs Federal Aviation Administration should request from the above office a Interested persons are invited to copy of Advisory Circular No. 11–2A, 14 CFR Part 135 participate in the making of the Notice of Proposed Rulemaking [Docket No. 28743; Notice No. 96±14] proposed rule by submitting such Distribution System, which describes written data, views, or arguments as the application procedure. RIN 2120±AG22 they may desire. Comments relating to Rationale Commercial Passenger-Carrying the environmental, energy, federal, or economic impact that might result from In the past, the rationale against Operations in Single-Engine Aircraft single-engine IFR passenger-carrying under Instrument Flight Rules adopting the proposals in this notice are also invited. Substantive comments operations centered on the hazards of AGENCY: Federal Aviation should be accompanied by cost losing an engine. Analysis indicates, Administration, DOT. estimates, if appropriate. Comments however, a far more significant accident ACTION: Notice of Proposed Rulemaking. should identify the regulatory docket or category: flight under visual flight rules notice number and should be submitted (VFR) into instrument meteorological SUMMARY: The Federal Aviation in triplicate to the Rules Docket address conditions (IMC). A recent NTSB study Administration (FAA) is proposing to specified above. All comments received of aviation in Alaska indicated that VFR revise the conditions and limitations in on or before the specified closing date flight into IMC caused a Part 135 for instrument flight rule (IFR), for comments will be considered by the disproportionate number of fatal passenger-carrying operations in single- Administrator before taking action on accidents in part 135 operations in that engine aircraft. The proposed rule will this proposed rulemaking. The state. Multi-engine airplanes are able to expand the passenger-carrying proposals contained in this notice may file and fly with passengers under IFR, provisions of the current rule, add be changed in light of comments while single-engine airplanes are only equipment requirements, as well as received. All comments received will be able (with few exceptions) to carry maintenance requirements to monitor available, both before and after the passengers under VFR. Thus, multi- engine reliability, and delete the limited closing dates for comments, in the Rules engine airplanes have the advantage of IFR provisions of the existing rule for Docket, for examination by interested contact with ATC, position following, both single and multi-engine aircraft. persons. A report summarizing each en route and terminal weather Currently, operation of single-engine substantive contact with FAA personnel information, and the higher altitude aircraft carrying passengers is concerned with this rulemaking will be ensuring obstacle clearance and radio authorized for visual flight rules (VFR) filed in the docket. Commenters wishing reception in the IFR system. The FAA or for limited operations in instrument the FAA to acknowledge receipt of their Administrator, in a November 18, 1994, meteorological conditions (IMC). Single- comments submitted in response to this letter to pilots (‘‘Winter Operations engine cargo operations are authorized notice must include a pre-addressed, Emphasis Program 1994,’’ available in the docket), expressed his concern about to operate under IFR without these stamped postcard on which the the number of accidents that occur limitations. VFR flight into IMC is the following statement is made: when pilots are flying just below a low most significant cause of fatal accidents ‘‘Comments to Docket No. 28743.’’ The ceiling and collide with the terrain. He in Alaska and is a serious problem for postcard will be date stamped and stated that one of the safest steps single-engine aircraft nationally. This returned to the commenter. action would increase the safety of available was to take advantage of the single-engine, passenger-carrying Availability of NPRMs IFR system. Aircraft flying at published cruising altitude that guarantees operations by allowing planned An electronic copy of this document obstacle clearance and radio reception instrument flight in the IFR system and may be downloaded, using a modem have considerably more time to glide to by imposing certain other conditions and suitable communications software, a landing and maneuver to a safe and limitations. from the FAA regulations section of the landing area than those flying below the DATES: Comments must be received by Fedworld electronic bulletin board February 3, 1997. ceiling. service ((703) 321–3339), the Federal The number of accidents involving ADDRESSES: Comments on this notice Register’s electronic bulletin board VFR flight into IMC is substantial. It is should be submitted in triplicate to: service ((202) 512–1661), or the FAA’s concern with this safety hazard that Federal Aviation Administration, Office Aviation Rulemaking Advisory prompted the FAA to reconsider its of the Chief Counsel, Attn: Rules Docket Committee Bulletin Board service ((800) limitations on single-engine IFR flight (AGC–200), Room 915–G, Docket No. 322–2722 or (202) 267–5948). with passengers under part 135. 28743, 800 Independence Ave., SW, Internet users may reach the FAA’s Additionally, the FAA has considered Washington, DC 20591. Comments must web page at http://www.faa.gov or the the action of Canada that allowed be marked Docket No. 28743. Comments Federal Register’s web page a http:// single-engine passenger-carrying IFR l also may be submitted electronically to www.access.gpo.gov/su docs for under certain conditions, and the the following Internet address: access to recently published rulemaking petitions for exemption of the Alaska [email protected]. Comments may documents. Air Carrier Association and individual be examined in room 915G weekdays Any person may obtain a copy of this operators. While this action will not between 8:30 a.m. and 5 p.m. except on NPRM by submitting a request to the eliminate VFR flight into IFR conditions Federal holidays. Federal Aviation Administration, Office accidents, it is expected that it will FOR FURTHER INFORMATION CONTACT: of Rulemaking, ARM–1, 800 reduce the accident rate. Ms. Katherine Hakala, Flight Standards Independence Ave, SW, Washington, Service, Federal Aviation DC 20591, or by calling (202) 267–9677. Background Administration, 800 Independence Ave, Communications must identify the Prior to October 10, 1978, passenger- SW, Washington, DC 20591 (202) 267– notice number or docket number of this carrying, single-engine instrument flight 8166/3760. NPRM. rule (SEIFR) operations were permitted Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules 64231 if an aircraft could descend to VFR study to determine if demonstrable into IMC accounted for only 15 percent conditions in the event of an engine differences exist between single- and of the total accidents, but 54 percent of failure. This provision allowed multi-engine aircraft in visual the fatal accidents. The NTSB operations in IMC or over-the-top of a meteorological conditions (VMC) and recommended that the FAA proceed ceiling, as long as VFR conditions IMC. The study, Part 135 Single-Engine with rulemaking to allow SEIFR existed below that ceiling (i.e., a buffer Instrument Flight Rules Operations in passenger-carrying operations in zone). In 1978, part 135 was Instrument Meteorological Conditions, turbine-powered aircraft and evaluate substantially revised for passenger- February 24, 1994, (available in the whether extending the rule to all single- carrying operations over the top or in docket) reviewed the basis for the engine aircraft would provide a positive IFR conditions to require an aircraft to Canadian action and available data from effect on safety. be able to descend under VFR if its a number of sources on powerplant/ Prior to the Alaska aviation study, the engine fails (43 FR 46742, October 10, systems reliability and activity exposure NTSB conducted a study of the 1978). This revision also provided for data. emergency medical service (EMS) ‘‘limited IFR’’ operations which, if VFR In September 1994, the FAA asked the helicopters because their accident rate conditions were forecast within 15 Aviation Rulemaking Advisory was twice the rate experienced by part minutes flying time, allowed flight in Committee (ARAC) to review the 135 on demand helicopter operations IMC for the first 15 minutes of flight, Canadian policy on SEIFR, re-examine and one and half times the rate for all and thereafter only if those IFR FAA policies for commercial IMC and turbine-powered helicopters. For the conditions were unforecast. The pilot night operations by single-engine report, ‘‘Safety Study—Commercial can operate in IFR conditions if aircraft, determine conditions or Emergency Medical Service Helicopter unforecast weather conditions are limitations that such operations should Operations’’ (NTSB 1988), an encountered while en route on a flight meet, and recommend any changes. The exploration of the rapidly growing planned to be conducted under VFR. ARAC formed a working group that commercial EMS helicopter industry The pilot can make an IFR approach at included representatives of the FAA, and its operations, the NTSB the destination airport if unforecast Transport Canada-Aviation, the investigated and evaluated 59 helicopter weather conditions are encountered that European Joint Aviation Authority, accidents. The Board determined that do not allow an approach under VFR. Australian Civil Aviation, several marginal weather conditions and This rule had the effect of eliminating European national aviation authorities, inadvertent flight into IMC remain the the buffer zone provisions, restricting aircraft and engine manufacturers, trade most serious hazard that VFR planned flights under IFR in IMC, and associations, pilot unions, and helicopters encounter. ‘‘The Board restricting VFR over-the-top flights to commercial operators. The committee believes that although the IFR system is scattered or broken sky conditions. An recommended that § 135.181 be revised not designed optimally for IFR exception to the two-pilot requirement, to permit SEIFR passenger-carrying helicopters and that the nature of the or autopilot requirement, is provided for operations provided certain EMS helicopter mission further limited IFR operations in § 135.103. requirements for equipment and complicates this problem, the safety Limited IFR can be conducted as a training were met. The ARAC proposal, advantages offered by IFR helicopters single-pilot operation in aircraft with although not technically limited to a flown by current and proficient pilots nine or fewer passenger seats. Cargo- particular type of aircraft, proposed are great enough that EMS programs only, single-engine aircraft can operate certain conditions that are met at should seriously consider obtaining this under IFR or over the top without these present only by turbine-powered capability.’’ restrictions. aircraft. The ARAC also recommended The Alaska Air Carriers Association Since 1978, the FAA has received 12 approval of the Alaska Air Carrier in its petition for exemption has stated, petitions for exemptions from or Association’s (AACA) petition for and the NTSB study confirmed, that in amendments to § 135.181 to allow the exemption, which covers both turbine- many areas, only single-engine aircraft use of all or specific models of single- powered and reciprocating engine can be operated because of the engine aircraft in passenger-carrying IFR aircraft. Both the ARAC and the FAA limitations of the landing strips, which operations. The most recent petitions study focused on the issue of engine severely restrict the availability of air are still pending. Internationally, reliability. transport in these areas. The petitioners commercial operators in several Recently, the National Transportation further stated that under the current countries have sought permission to Safety Board (NTSB) completed a study rule, unless clear weather is forecast conduct passenger operations in IMC of operations in Alaska Aviation Safety over the entire route from 15 minutes with single-engine aircraft. Canada, In Alaska, (Safety Study NTSB/SS–95/ from the departure airport to the following a cooperative effort with the 03, PB95–917006). The NTSB noted that destination, passenger-carrying, single- engine manufacturers, aircraft unlike the rest of the U.S., commuter engine commercial operations are not manufacturers, and users that produced airline service in Alaska is ‘‘dominated permitted. In many areas, aircraft are the a well-documented case, has allowed by single-engine airplanes powered by a only means of transportation; weather SEIFR passenger-carrying operations in reciprocating engine operating under forecasts, when available, rarely predict turbine-powered airplanes since VFR and crewed by one pilot.’’ After continuing VFR conditions. Alaska, they February 1993, with a number of reviewing Alaska aviation accidents stated, was particularly disadvantaged specific requirements for equipment and from 1988 to 1993 (which include single by the current rule. Recent legislation training. Other countries are also and multi-engine aircraft), the NTSB requires the FAA to consider the special considering permitting SEIFR concluded that ‘‘VFR flight into IMC needs of Alaska when developing its passenger-carrying operations. that results in fatal accidents continues rules. In response to the petitions, the to be the most significant safety problem As suggested by the NTSB, the FAA Canadian action, and changes in in Alaskan aviation.’’ VFR flight in IMC reviewed accident data from 1983 to technology that have resulted in in Alaska accounted for 67 percent (6 of 1996 on both reciprocating and turbine increasingly reliable engines and aircraft 9) fatal commuter airline accidents and engines. Data indicated that there were systems, the FAA asked its Office of 47 percent (7 of 15) fatal air taxi 67 accidents in on-demand operations Integrated Safety Analysis to conduct a accidents. Overall, in Alaska, VFR flight that involved VFR flight into IFR 64232 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules conditions; single-engine aircraft were standby battery that can maintain 150 weather-related errors resulting from involved in 75 percent of these percent of the minimum electrical load attempts to maintain VFR flight. accidents. Although the number of such for at least one hour would be required. Analysis of part 135 scheduled accidents is known, the rate of such In addition, the limited IFR airplane accident data revealed patterns accidents cannot be determined because conditions of current § 135.181 would in accident causal factors that are very the FAA does not collect data on the be eliminated. The proposed rule similar to those for on demand number of flights or flight hours for on- changes would not affect cargo-only operations. Analysis of business demand operations under part 135; operations. airplane accidents that occurred during therefore, it is not possible to evaluate The FAA originally limited passenger- part 91 operations provided additional existing data on accidents involving carrying SEIFR operations because of perspective on the relative contribution turbine-powered and reciprocating- concern about the consequences of of systems and equipment reliability powered single-engine aircraft. engine loss. The February 1994 FAA problems to accidents. Accidents Disposition of Pending Petitions study, which focused on the difference involving propulsion and other system between single-engine and multi-engine failures in IMC were infrequent The FAA currently has similar aircraft, found that data that specifically occurrences even though part 91 petitions for exemptions to § 135.181 address the issue of the reliability of operators are not subject to the same from the Alaskan Air Carriers single-engine aircraft in IMC under part restrictions or level of regulation and Association, Mid-Atlantic Freight, 135 are necessarily limited to cargo-only oversight as part 135 operators. Atlantic Aero, Wright Air Service, Inc., operations because relatively few The FAA recognizes that engine Taquan Air Service, Inc., and Telford passenger-carrying operations occur failure in a single-engine aircraft results Aviation, Inc. In developing this Notice under these conditions. In addition, the in an inability to sustain flight. The of Proposed Rulemaking, the FAA FAA does not require manufacturers FAA has determined, however, that considered the merits of each of the and operators of small aircraft and allowing SEIFR passenger-carrying individual petitions and proposed powerplants to have established operations will enhance safety over VFR appropriate points and databases capable of providing flights in marginal weather conditions recommendations from them. This information needed to support and over flights under the limited IFR notice formally disposes of those reliability evaluations. Data available provisions of part 135. Aircraft petitions. collected from various sources were operating under IFR are part of the Discussion of the Proposed Rule found to be frequently incomplete and national IFR system, which includes air The purpose of this rule is to improve inconsistent in reporting format, traffic monitoring and control system; the safety of single-engine, passenger- limiting their usefulness. this system ensures that both pilots and carrying operations by allowing The 1994 FAA study analysis of air traffic controllers know where the operators to take advantage of the IFR NTSB data for part 135 on-demand aircraft is and can work together to system. This proposal would allow airplane accidents for 1988 to 1990 avoid hazards and complete the flight planned flight at a minimum en route indicated that although propulsion safely. Immediate emergency assistance altitude that ensures obstacle clearance system accidents account for a higher is available in the event of an and ATC communications over a percent of total accidents for single- emergency. Data from the Rescue published route, thereby reducing the engine (18 percent) than for multi- Coordination Center have shown that occurrence of continued VFR flight into engine airplanes (6 percent), only 2 of should an accident occur, aircraft that IMC. Parts 91 and 135 currently require the 24 accidents caused by propulsion were operating under the IFR system are additional aircraft equipment, pilot systems occurred in IMC. Accidents located within a few hours; aircraft that training, experience, and qualification, involving propulsion system failure in were operating under the VFR system and weather and fuel requirements to IMC appear to be very infrequent often take days to locate. operate under IFR. Operations under the occurrences. This can be attributed in The FAA does not expect that existing limited IFR rules must meet the part to the limits on passenger-carrying operators currently flying multi-engine requirements for IFR operations with operations of aircraft in IMC; however, aircraft will switch to single-engine the exception that a second pilot or cargo-only IFR operations are included aircraft simply because of this rule autopilot authorization is not needed. in these data. Weather was a casual change; decisions about the type of The current equipment, pilot, weather, factor in 24 percent of all accidents; aircraft to operate are complex. fuel, and other differences for VFR and improper flightcrew actions contributed Operators must weigh numerous factors IFR operations are outlined in the Table to 95 percent of weather-related when selecting aircraft, including at the end this section. This NPRM accidents. Mechanical problems, customer base and geographical proposes to remove the limited IFR however, were a factor in only one- location. Whatever choice operators operations and allow SEIFR operations single-engine and one multi-engine make, the FAA remains convinced that with additional conditions and weather-related accident, suggesting the proposed rule change will increase limitations that will further enhance the that accidents involving equipment safety of single-engine, passenger- safety of SEIFR operations over VFR and failure during flight in instrument carrying operations. conditions are relatively rare events in limited IFR operations. New Requirements The FAA is proposing to change part on-demand air carrier operations. The 135 to allow passenger-carrying SEIFR data also show that most accidents in In addition to the inspections subject to the following conditions: IMC result in fatal or serious injuries, requirements of part 43, the FAA is • A means of engine trend monitoring regardless of the type of flight plan or proposing to adopt the ARAC suggestion would be required in addition to the class of airplane. FAA data on part 135 for engine wear and trend monitoring. inspection requirements of 14 CFR part accidents involving single-engine Such monitoring provides an early 91; and aircraft from 1985 to 1992 indicated that indication of engine wear and increases • Two independent electrical power the most common causes of accidents engine reliability. The engine trend generating sources or, in addition to the were weather, poor in-flight planning monitoring system would require an oil original electrical power source, a and decision-making, and other analysis at 100-hour inspection or every Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules 64233 annual inspection if less than 100 hours The FAA considered requiring reciprocating-powered airplanes will have accrued. electrical or vacuum redundancy to not be able to upgrade for IFR or would The oil analysis program is an drive the gyroscopic instruments, find the cost prohibitive. Single-engine, important tool in determining the however, the precise configuration of reciprocating-powered helicopters as relative state of engine health. Samples that redundancy is not proposed. The they currently exist are not certificated of engine oil are collected at selected FAA is requesting comments on the for IFR operations. Consequently, they intervals (usually around the 100-hour feasibility, benefit, and cost of two would not be affected by this rule interval or less) The oil samples are independent sources of energy for change. identified by make and model of engine, gyroscopic instruments for single engine Other Issues Considered total time on the engine, and last oil and aircraft. If, for single-engine aircraft, the filter change. The sample is then sent to rate of turn exception is maintained as The FAA reviewed suggestions made a laboratory in which the oil is stated in the current 135.163(h), the by the ARAC and the petitions subjected to a series of tests in which FAA will require that training and submitted, but decided against adopting the amount of trace elements, such as testing on emergency and partial panel other limitations on SEIFR passenger- iron and aluminum, are identified. A operations be provided and evaluated. carrying operations. Some of the ARAC report is sent back to the operator Comments are further requested on suggestions would have limited the rule recommending another 100 hours of whether the rate-of-turn indicator to turbine-powered aircraft (e.g., use of operation or, because of an abnormal powered from a separate source, auto-ignition/continuous ignition amount of a particular element found in coupled with required training and system); the suggested requirement for the oil, a particular maintenance action; testing, should be considered adequate mean time between failure data and this action may be a simple filter for single-engine IFR passenger simulator training would have severely change, or a borescope inspection, other operations. limited the rule, at least in the short- maintenance inspection/test, or a Based on the comments received, the term, to a single aircraft, the Cessna complete teardown and rebuild of the FAA may adopt additional provisions Caravan. The FAA does not believe that engine. Regular oil analysis allows the for a redundant source of power for the such a limitation is justified because operator to track the engine’s condition gyroscopic instruments or electrical flying IFR improves the safety of all accurately and predict failures before systems in the final rule. operations over flying VFR in marginal they would occur. The FAA is proposing to delete the weather conditions and flight under the Current IFR requirements require a existing limited IFR provisions, which current limited IFR provisions. generator or generators (or alternator) allow opeators to take off in IFR A number of suggested requirements able to supply all probable conditions if VFR conditions are were not adopted because they are combinations of continuous in-flight forecast for the remainder of the route already covered under existing rules; for electrical loads for required equipment from a distance no further than 15 example, autopilot training and and for recharging the battery. The FAA minutes flight time for the departure proficiency checks are currently is also proposing to adopt a airport. This revision eliminates safety required. The FAA decided that the modification of the ARAC suggestion for deficiencies of the conduct of suggested requirement for an air two independent electrical power ‘‘unplanned’’ IFR flight. Under the transport pilot certificate for commuter generating sources; the proposed rule limited IFR rule, pilots can only operations was unnecessary because of would specifically allow a standby conduct IFR operations en route and on size and complexity of single-engine battery to serve as a second power an approach if weather conditions were aircraft. Current requirements for single- source if the battery can maintain 150 unforecast, which means the pilots may engine, IFR provide for at least a percent of the minimum electrical load not have planned for IFR and may have commercial certificate with appropriate for at least one hour. This requirement to develop and file a flight plan in flight, category and class ratings, and if introduces redundancy for the generator while coping with unexpected weather required, type ratings, 1,200 hours of and alternator and ensures that, if a conditions. Limited IFR also allows flight time including 500 hours of cross generator or alternator fails, the aircraft these operations to be conducted as a country, 100 hours of night, and at least will still be able to use critical single pilot operation, without a second 50 hours of actual instrument flight navigation and communication pilot or autopilot that is required for time. Other ARAC suggestions were not equipment, for a period of time in other IFR operations. In addition, the proposed because they go beyond what which to effect a safe approach and limitations on weather forecasting have is required for aircraft certification (e.g., landing. The FAA will consider, and made this provisions impractical in manual throttles and auto ignition); the requests comments on other redundant many parts of the U.S. FAA decided that it was inappropriate or standby electrical systems. It is the FAA’s intent that, because to alter certification rules through this Section 135.163 (h) currently requires multi-engine operators can already avail rulemaking. The ARAC proposal for two independent sources of energy themselves of unrestricted IFR, the IFR-approved area navigation (with means of selecting either) for proposed removal of the limited IFR equipment that provides immediate powering all gyroscopic instruments. Of provision in § 135.181(c) (2) and the identification of and heading to the these sources, at least one must be an exception to the second-in-command nearest airport was not proposed in this engine-driven pump or generator; each requirement for limited IFR operations NPRM. The safety benefit of this source must be capable of driving all in § 135.103 would not impact these equipment has not been established. gyroscopic instruments, and installed so operators. The FAA invites comments Finally, the FAA has not proposed the that failure of one instrument or source from operators who used the limited IFR ARAC and other petitioners’ suggestion does not interfere with the energy provision regarding the economic for a radar altimeter. Such altimeters are supply to the remaining instruments or impact of this proposal. only required for Category II and III the other energy source, unless, for The proposed changes would allow operations; the FAA believes that the single-engine aircraft, the rate-of-turn SEIFR operations in single-engine benefits of such altimeters for other indicator has a source of energy separate airplanes and turbine-powered operations have not been established to from the bank and pitch and direction helicopters that can be equipped for IFR a sufficient degree to justify the indicators. flight. A number of single-engine considerable costs. 64234 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules

Canada adopted a limitation on flights single-engine airplanes are limited by Deletion of the word ‘‘conditions’’ in mountainous areas in its SEIFR rule; their service ceilings; others are limited clarifies that any operation for which an the AACA in its petition proposed a by the lack of pressurization or oxygen. IFR flight plan is filed must have a limitation for mountainous areas as In some areas, the lack of navigational second pilot or an autopilot, even if the defined by § 95.17. The Atlantic Aero, equipment also will limit flight over flight can be conducted in VFR Inc. and Mid-Atlantic Freight Inc. 1994 mountainous terrain. The FAA further conditions. petition for exemption proposed to limit notes that some pressurized single- Section 135.103 would be deleted SEIFR operations to routes where the engine aircraft can cruise at altitudes because it is no longer needed. minimum en route altitude (MEA) was that provide much more time for making Section 135.163 would be revised to no greater than 10,000 feet mean sea a safe landing should the engine fail. add, for single-engine aircraft reference level (MSL). Taquan Air proposed to Finally, the difficulties of finding a safe to alternators as well as the proposed limit SEIFR operations to routes where landing area for all aircraft are not requirement for two independent unique to mountainous terrain; densely the MEA was no greater than 12,000 feet electrical power generating sources or a populated areas may pose similar MSL. The FAA decided that a standby battery. problems. mountainous terrain restriction was not Section 135.181 would be revised by needed. The definition of mountainous Section-by-Section Discussion of dropping all of the limited IFR terrain in part 95 is very broad and Proposed Changes conditions. Only the performance requirements for multi-engine aircraft would limit flight unnecessarily. Under Section 135.83 would be amended to would remain. part 95, almost all of Alaska, Hawaii, change the reference to § 135.181 to and the western third of the country are make it consistent with the revised rule. Section 135.421 would be revised to classified as mountainous. Single- Section 135.101 would be revised to add the requirement for engine trend engine cargo IFR operations and limited eliminate the reference to § 135.103, monitoring for aircraft used in IFR operations are not similarly which would be deleted, and to delete passenger-carrying SEIFR operations. restricted. The FAA notes that some the work ‘‘conditions’’ after IFR. BILLING CODE 4910±13±M Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules 64235 64236 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules 64237 64238 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules

BILLING CODE 4910±13±C Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules 64239

Regulatory Evaluation Summary unnecessarily or disproportionately agency rule that may result in the Proposed changes to Federal burdened by Federal Regulations. The expenditure by State, local, and tribal regulations must undergo several RFA requires an analysis if a proposed governments, in the aggregate, or by the economic analyses. First, Executive rule would have ‘‘a significant economic private sector, of $100 million or more order 12866 directs that each Federal impact on a substantial number of small (adjusted annually for inflation) in any entities.’’ The definitions of small one year. Section 204(a) of the Act, 2 agency shall propose or adopt a entities and guidance material for U.S.C. 1534(a), require the Federal regulation only upon a reasoned making determinations required by the agency to develop an effective process determination that the benefits of the RFA are contained in the Federal to permit timely input by elected intended regulation justify its costs. Register (47 FR 32825, July 29, 1982). officers (or their designees) of State, Second, the Regulatory Flexibility Act Federal Aviation Administration (FAA) local, and tribal governments on a of 1980 requires agencies to analyze the order 2100.14A outlines the agency’s proposed ‘‘significant intergovernmental economic effect of regulatory changes procedures and criteria for mandate.’’ A ‘‘significant on small entities. Third, the Office of implementing the RFA. intergovernmental mandate’’ under the Management and Budget directs With respect to the propose rule, a Act is any provision in a Federal agency agencies to assess the effect of ‘‘small entity’’ is an operator of aircraft regulation that would impose an regulatory changes on international for hire with nine or fewer aircraft. A enforceable duty upon State, local, and trade. In conducting these analyses, the ‘‘significant economic impact on a small tribal governments, in the aggregate, of FAA has determined that this rule: (1) entity’’ is defined as an annualized net $100 million (adjusted annually for Would generate benefits that justify its compliance cost for operators of aircraft inflation) in any one year. Section 203 costs and is not ‘‘significant regulatory for hire which in 1996 dollars is of the Act, 2 U.S.C. 1533, which action’’ as defined in the Executive $125,100 for scheduled operators whose supplements section 204(a), provides Order; (2) is not significant as defined aircraft have more than 60 seats. It is that before establishing any regulatory in Department of Transportation $69,900 for scheduled operators whose requirements that might significantly or Regulatory Policies and procedures; and fleets have aircraft with seating uniquely affect small governments, the (3) would not constitute a barrier to capacities of 60 or fewer seats (other agency shall have developed a plan that, international trade. These analyses, scheduled operators) and $4,900 for among other things, provides for notice available in the docket, are summarized unscheduled operators. A substantial to potentially affected small below. number of small entities is defined as a governments, if any, and for a Cost-Benefit Analysis number that is 11 or more and which is meaningful and timely opportunity to more than one-third of small operators The FAA proposes to update and provide input in the development of subject to the proposed rule: revise the regulations to allow single- regulatory proposals. The analysis shows that the This proposal rule does not meet the engine, passenger carrying aircraft to annualized cost of the proposed rule cost thresholds described above. operate under the safer instrument flight (assuming no cost savings) is about Furthermore, this proposed rule would rules. This proposal would require $1,400 per aircraft and the annualized not impose a significant cost on small additional conditions and requirements safety and non-safety benefits is about governments and would not uniquely that will further enhance the safety of $2,050 per aircraft. Therefore, the affect those small governments. single engine instrument flight rules annualized net savings is about $650 per Therefore, the requirements of Title II of (SEIFR) operations. aircraft. the Unfunded Mandates Reform Act of The cost of this proposed rule is The FAA has determined that 1995 do not apply. estimated at $33.9 million ($27.5 operators with eight aircraft or more million, discounted). The most costly would incur a significant positive Paperwork Reduction Act provision is on the requirement for an impact. However, fewer than one-third This proposed rule contains not autopilot, which is estimated at $25.6 of the entities would incur a significant information collection requests million ($20.9 million discounted) and positive cost impact. Therefore, the FAA requiring approval of the Office of represents about 76 percent of the total. has determined that a substantial Management and Budget pursuant to the The FAA concludes that the expected number of operators would not be Paperwork Reduction Act (44 U.S.C. quantitative benefits would be a positively or negatively impacted in a 3507 et seq.). minimum of $185.0 million or $129.9 significant way. million discounted. This action would International Civil Aviation increase the safety of single-engine International Trade Impact Statement Organization and Joint Aviation passenger-carrying operations because it This proposed rule is not expected to Regulations would allow them to operate under have any impact on trade opportunities In keeping with U.S. obligations instrument flight rules. The proposal for U.S. firms doing business overseas or under the Convention on International would reduce the incentive for foreign firms doing business in the Civil Aviation, it is FAA policy to operators to conduct low altitude United States. The proposed rule would comply with International Civil operations under marginal weather primarily affect U.S. operators of aircraft Aviation Organization Standards and conditions in order to not lose business. for hire that provide domestic service. Recommended Practices to the It would require operators to meet the maximum extent practicable. The FAA Unfunded Mandates Reform Act more stringent requirements for such has determined that this proposal, if Assessment flights including additional aircraft adopted, would not present any major equipment. Title II of the Unfunded Mandates differences. Reform Act of 1995 (the Act), enacted as Initial Regulatory Flexibility Pub. L. 104–4 on March 22, 1995, Federalism Implications Assessment requires each Federal agency, to the The changes proposed by this NPRM The Regulatory Flexibility Act of 1980 extent permitted by law, to prepare a would not have a substantial direct (RFA) was enacted by Congress to written assessment of the effects of any effect on the States, on the relationship ensure that small entities are not Federal mandate in a proposed or final between the National Government and 64240 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Proposed Rules the States, or on the distribution of § 135.101 Second in command required § 135.181 Performance requirements: power and responsibilities among the under IFR. Multi-engine aircraft operated over-the-top various levels of government. Therefore, Except as provided in § 135.105, no or in IFR conditions. in accordance with Executive Order person may operate an aircraft carrying (a) * * * 12612, it is determined that the passengers under IFR unless there is a proposed amendments would not have (1) Operate a single-engine aircraft second in command in the aircraft. carrying passengers over-the-top; or federalism implications requiring the 3. Section 135.103 is removed and preparation of a Federalism Assessment. reserved. * * * * * Conclusion 4. Section 135.163 is amended to (c) Without regard to paragraph (a) of revise paragraphs (f) and (g) to read as this section, if the latest weather reports For the reasons discussed in the or forecasts, or any combination of preamble, and based on the findings in follows: them, indicate that the weather along the Initial Regulatory Flexibility § 135.163 Equipment requirements: the planned route (including takeoff and Determination and the International Aircraft carrying passengers under IFR. landing) allows flight under VFR under Trade Impact Analysis, the FAA has * * * * * the ceiling (if a ceiling exists) and that determined that this proposed the weather is forecast to remain so regulation is not significant under (f) For a single-engine aircraft: until at least 1 hour after the estimated Executive Order 12866. In addition, the (1) two independent electrical power time of arrival at the destination, a FAA certifies that this proposal, if generating sources each of which is able person may operate an aircraft over-the- adopted, will not have a significant to supply all probable combinations of top. economic impact on a substantial continuous inflight electrical loads for number of small entities under the required instruments and equipment; or * * * * * criteria of the Regulatory Flexibility Act. (2) in addition to single electrical 6. Section 135.421 is amended to add This proposal is not considered power generating source, a standby paragraph (c) to read as follows: significant under DOT Order 2100.5, battery that is capable of providing 150 Policies and Procedures for percent of the minimum electrical load § 135.421 Additional maintenance Simplification, Analysis, and Review of for at least one hour to operate requirements. Regulations. navigation and communication * * * * * equipment. List of Subjects in 14 CFR Part 135 (c) For each single engine aircraft to (g) For multi-engine aircraft, at least Air taxis, Aircraft, Aviation safety, be used in passenger-carrying IFR two generators or alternators each of operations, each certificate holder must Safety, Single-engine aircraft. which is on a separate engine, of which For the reasons set out in the incorporate into the manufacturer’s any combination of one-half of the total recommended maintenance program or preamble, 14 CFR part 135 is proposed number are rated sufficiently to supply to be amended as set forth below: FAA approved maintenance program, the electrical loads of all required an engine trend monitoring program PART 135ÐAIR TAXI OPERATORS instruments and equipment necessary including an oil analysis at each 100 AND COMMERCIAL OPERATORS for safe emergency operation of the hour interval and a record of the aircraft except that for multi-engine findings. 1. The authority citation for part 135 helicopters, the two required generators continues to read as follows: may be mounted on the main rotor drive Issued in Washington, DC. on November 21, 1996. Authority: 49 USC 106(g), 40113, 44701– train; and 44702, 44705, 44709, 44711–44713, 44715– * * * * * Thomas C. Accardi, 44717, 44722. 5. Section 135.181 is amended to Director, Flight Standards Service. 2. Section 135.101 is revised to read revise paragraph (a)(1) and (c) to read as [FR Doc. 96–30365 Filed 12–2–96; 8:45 am] as follows: follows: BILLING CODE 4910±13±M federal register December 3,1996 Tuesday Rule Falsification ofSecurityRecords;Interim 14 CFRParts107and108 Federal AviationAdministration Transportation Department of Part V 64241 64242 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Rules and Regulations

DEPARTMENT OF TRANSPORTATION in triplicate to the Rules Docket address if it accepts a certification from an air specified above. carrier that the air carrier has complied Federal Aviation Administration Except as noted below, all comments with 14 CFR § 108.33. (14 CFR Part 108 received, as well as a report contains the security requirements for 14 CFR Parts 107 and 108 summarizing each substantive public air carriers.) Section 108.33 provides for contact with FAA personnel on this [Docket No. 28745; Amendment Nos. 107± the same application, verification, and 9 and 108±14] rulemaking, will be filed in the docket. criminal records check process to be The docket is available for public carried out by the air carrier. Air carriers RIN 2120±AG27 inspection before and after the comment are directly regulated by the FAA, and closing date. the FAA monitors their compliance Falsification of Security Records All comments received on or before with part 108. the closing date will be considered by Section 107.31(f) also provides that AGENCY: Federal Aviation the Administrator. Late-filed comments the airport operator is deemed in Administration (FAA), DOT. will be considered to the extent compliance if it accepts certification ACTION: Final rule; request for practicable. The rule may be changed in from an airport tenant, other than an air comments. light of the comments received. carrier, that the tenant has complied Commenters wishing the FAA to with § 107.31(b)(1) for its employees, SUMMARY: The FAA is adopting rules acknowledge receipt of their comments unless a criminal history records check that prohibit fraudulent or intentionally submitted in response to this notice is required. Tenants are not directly false statements in certain security must include a pre-addressed, stamped regulated by the FAA, and the FAA has records. This action responds to recent postcard with those comments on which relied upon good faith adherence to the events indicating that persons may be the following statement is made: access investigation process to ensure making such statements in security ‘‘Comments to Docket No. 28745.’’ The that the appropriate security measures records. This action is intended to postcard will be date stamped and are carried out. provide a means for the FAA to take mailed to the commenter. The FAA has recently determined that legal enforcement action against persons some tenants have submitted Background who make such statements, and thereby certifications to airport operators enhance the security of civil aviation. It has recently come to the FAA’s without having performed the required DATES: Effective date November 27, attention that persons may be verification of the applicant’s 1996. Comments must be received by submitting fraudulent or intentionally employment history. This leads the January 23, 1997. false statements in records used to airport operator to issue identification ADDRESSES: Comments on this rule obtain identification media from an media that permit unescorted access to should be submitted in triplicate to: airport operator that provides the SIDA when the tenant has not Federal Aviation Administration, Office unescorted access to security verified prior employment or of the Chief Counsel, Attn: Rules Docket identification display areas (SIDA’s) on established that the applicants have no (AGC–200), Room 915–G, Docket No. airports, and in other required records. prohibited criminal convictions. 28745, 800 Independence Ave., SW, Part 107 of Title 14, Code of Federal Further, the FAA has determined that Washington, DC 20591. Comments must Regulations, sets forth the requirements there may be some fraudulent or be marked Docket No. 28745. Comments for airport security. Identification media intentionally false records of required also may be submitted electronically to must be worn at all times in the SIDA screener training. These records are the following Internet address: by all persons with unescorted access essential to the FAA’s and the air [email protected]. Comments may authority. The SIDA includes the most carriers’ monitoring of screener training. be examined in room 915G weekdays security-sensitive portions of the This training is essential to the effective between 8:30 a.m. and 5 p.m. except on airport, including the areas immediately detection of weapons and explosive Federal holidays. next to the terminals in which air carrier devices to prevent their being placed aircraft board and off-load passengers. FOR FURTHER INFORMATION CONTACT: aboard aircraft. Training and screening Section 107.31 requires that an access may be conducted by air carrier Robert Cammaroto and Linda C. investigation be conducted for each Valencia, Office of Civil Aviation employees, or by a contractor of an air person applying for unescorted access carrier. Security Policy and Planning, Civil privileges to the SIDA. This Aviation Security Division, ACP–100, investigation involves the completion of Good Cause Justification for Immediate Federal Aviation Administration, 800 an application by the individual that Adoption and No Notice Independence Avenue, SW., requires various information, including The FAA finds that good cause exists Washington, DC 20591, telephone (202) a ten-year employment history. The for issuing this final rule without prior 267–3413. most recent five years of employment notice and opportunity for comment. SUPPLEMENTARY INFORMATION: must be verified. In specified Prior notice is impracticable, circumstances the applicant’s unnecessary, and contrary to public Comments Invited fingerprint must be obtained and an FBI interest. Interested persons are invited to criminal history records check must be It is impracticable to provide prior participate in this rulemaking by conducted. The airport may not grant notice because the FAA would be submitting such written data, views, or unescorted access to the SIDA for any prevented from adequately and arguments as they may desire. person until the access investigation is immediately protecting persons Comments relating to the completed and must deny unescorted traveling in air transportation through environmental, energy, federalism, or access to any person who has one or prohibiting the submission of fraudulent economic impact that might result from more of the specified criminal or intentionally false records for persons this rule are also invited. Substantive convictions within the previous ten who directly carry out required security comments should be accompanied by years. measures. Prior notice is unnecessary cost estimates. Comments must identify Under § 107.31(f) the airport operator because these rules prohibit practices— the regulatory docket and be submitted is deemed in compliance with § 107.31 fraud and intentional falsification—that Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Rules and Regulations 64243 long have been understood by the These rules apply to all ‘‘persons.’’ other criminal activities. The final rule public and the industry to be improper, Under 14 CFR § 1.1, ‘‘person’’ means an will amend parts 107 and 108 to prevent and that may constitute criminal individual, firm, partnership, such activities. violations. No one has a right or corporation, company, association, The FAA has not identified any costs justification to intentionally falsify joint-stock association, or governmental with this proposal. The proposal does records required by Federal regulation. entity. Thus, a company that is a tenant not obligate a person to take an action Prior notice would be contrary to on an airport, or a company that that is not otherwise required. public interest in that it would delay the contracts with an air carrier to provide Enforcement actions may be taken by FAA’s ability to take action against screening services, is a person within the FAA against persons who violate the those who make fraudulent or the meaning of the rule. In the case of rules, at a cost to the agency, but the intentionally false statements in security an intentionally false certification made number of cases cannot be determined. records. Failure of the FAA to act now by a tenant, potentially both the tenant In addition, because this final rule will may cause a continuing security risk. By and the individual making the not be included in the airport or the air acting immediately, the FAA is certification could be held in violation carrier security programs, affected providing additional deterrence to those of § 107.2. entities will not incur any costs to who may falsify security records. It is in Related Activity implement these proposed the public interest to make clear that requirements. such activities will not be tolerated and The FAA is investigating the alleged The primary benefit of this rule is to may be met with legal enforcement incidents of false records, and in deter falsification of important security action. conducting audits to determine the records. It also provides the FAA with For the same reasons, these rules are extent of the problem. The FAA intends a compliance tool in the event that a effective immediately. It must be clear to raise this issue with airport consortia. person intentionally falsifies a security that no intentional falsification of The FAA is considering what additional record in violation of the rule. The FAA security records will be tolerated and regulatory action may be advisable in cannot quantify the security benefits of the additional security afforded the the future. this rule, but believes that this action traveling public should not be delayed. Paperwork Reduction Act will significantly enhance civil aviation Discussion of the Rules security by increasing the reliability and In accordance with the Paperwork integrity of security records. The FDA is adopting new §§ 107.2 Reduction Act of 1995 (44 U.S.C. Much of the effectiveness of the air and 108.4. These rules specifically 3507(d)), there are no requirements for carriers’ and airports’ security programs prohibit a person from making any information collection associated with depends on strictly limiting access to fraudulent or intentionally false this final rule. statement or entry on any security the SIDA. Sophisticated criminal program, record, application, report, International Compatibility elements are actively seeking ways to access or identification medium, or any The FAA has reviewed corresponding gain access to the SIDA, and it is other document that is kept, made, or International Civil Aviation important that the FAA, air carriers, and used to show compliance under parts Organization international standards airports guard against such terrorist 107 or 108. and recommended practices and Joint activities. The consequences of not It is important that all such records be Aviation Airworthiness Authorities protecting such access can be accurate. They are used to ensure that requirements and has identified no catastrophic. Between 1982 and 1991, all required security measures have differences in these amendments and terrorist bombings of U.S. air carriers been carried out. Fraudulent or the foreign regulations. have resulted in 275 deaths and 24 intentionally false records may conceal injuries, while hijackings incidents have a significant security risk that should be Regulatory Evaluation resulted in 24 deaths and 127 injuries. addressed immediately. Executive Order 12866 directs that Given the lack of cost and given the Fraud or intentional falsification of each Federal agency shall propose or potential benefits of avoided fatalities required records may also be a violation adopt a regulation only upon a reasoned and injuries, this evaluation finds this of certain criminal statutes. These rules determination that the benefits of the final rule cost beneficial. provide a civil enforcement remedy intended regulation justify its costs. In Regulatory Flexibility Determination where appropriate. conducting the evaluation reflected in These rules are modeled on similar this document, the FAA has determined The Regulatory Flexibility Act (RFA) provisions elsewhere in 14 CFR, such as that this rule is not ‘‘a significant of 1980 was enacted by Congress to §§ 21.2, 43.12, 61.59, and 65.20. These regulatory action’’ as defined in the ensure that small entities are not provisions have long been in the Executive Order and the Department of unnecessarily or disproportionately regulations and have worked well. An Transportation Regulatory Policies and burdened by Government regulations. intentionally false statement consists of Procedures. The FAA invites the public The RFA requires a Regulatory (1) a false representation, (2) in to provide comments, and supporting Flexibility Analysis if a rule has a reference to a material fact, (3) made data, on these determinations. All significant economic impact on a with knowledge of its falsity. A comments received will be considered. substantial number of small business fraudulent statement consists of these Air carriers and airports have security entities. FAA Order 2100.14A, three elements, plus (4) it was made programs which are intended to protect Regulatory Flexibility Criteria and with the intent to deceive, and (5) action the public from the threat of aircraft Guidance, established threshold costs was taken in reliance upon the hijacking and other criminal activities and small entity size standards for representation. See, Hart v. McLucus, affecting air transportation. The FAA complying with RFA requirements. As 535 F.2d 516, 519 (9th Cir. 1976). There proposes to strengthen the rules against was discussed above, there is no cost have been many cases under the the falsification of security documents. associated with this rule. Therefore, the existing rules interpreting these terms, Falsifying the information on such FAA certifies that the rule does not have which will assist in understanding these documents can have a detrimental effect a significant economic impact on a rules. on the ability to thwart terrorist and substantial number of small entities. 64244 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Rules and Regulations

International Trade Impact Analysis 14 CFR Part 108 medium, or identification medium In accordance with the Office of Air carriers, Aircraft, Airmen, issued under this part. Management and Budget memorandum Airports, Arms and munitions, PART 108ÐAIRPLANE OPERATOR dated March 1983, federal agencies Explosives, Law enforcement officers, SECURITY engaged in rulemaking activities are Reporting and recordkeeping required to assess the effects of requirements, Security measures, X- 4. The authority citation for part 108 regulatory changes on international rays. continues to read as follows: trade. The FAA finds that this final rule The Amendment Authority: 49 U.S.C. 106(g), 5103, 40113, will not have an adverse impact on 40119, 44701–44702, 44705, 44901–44905, trade opportunities for either U.S. firms In consideration of the foregoing, the 44907, 44913–44914, 44932, 44935–44936, doing business overseas or foreign firms Federal Aviation Administration 46105. doing business in the United States. amends parts 107 and 108 of title 14, 5. Section 108.1 is amended by This finding is based on the fact that Code of Federal Regulations (14 CFR removing the ‘‘and’’ after paragraph this rule will impose no costs on both parts 107 and 108) as follows: (a)(2), removing the period and adding domestic and foreign air carriers, so in its place a semi-colon in paragraph neither will have a trade advantage over PART 107ÐAIRPORT SECURITY (a)(3), removing the period and adding the other. 1. The authority citation for part 107 in its place a ‘‘; and’’ in paragraph (a)(4), Federalism Implications continues to read as follows: and adding paragraph (a)(5) to read as The regulations herein will not have Authority: 49 U.S.C. 106(g), 5103, 40113, follows: substantial direct effects on the states, 40119, 44701–44702, 44706, 44901–44905, 44907, 44913–44914, 44932, 44935–44936, § 108.1 Applicability. on the relationship between the national 46105. (a) * * * government and the states, or on the (5) Each person who files an distribution of power and 2. Section 107.1 is amended by application or makes entries into any responsibilities among the various removing the ‘‘and’’ after paragraph record or report that is kept, made or levels of government. Therefore, in (a)(2), removing the period and adding used to show compliance under this accordance with Executive Order 12612, in its place ‘‘; and’’ in paragraph (a)(3), part, or to exercise any privileges under it is determined that this rule will not and adding paragraph (a)(4) to read as this part. have sufficient federalism implications follows: * * * * * to warrant the preparation of a § 107.1 Applicability and definitions. Federalism Assessment. 6. Section 108.4 is added to read as (a) * * * follows: Conclusion (4) Each person who files an § 108.4 Falsification. For the reasons discussed in the application or makes entries into any preamble, and based on the findings in record or report that is kept, made, or No person may make, or cause to be the Regulatory Flexibility Determination used to show compliance under this made, any of the following: and the International Trade Impact part, or to exercise any privileges under (a) Any fraudulent or intentionally Analysis, the FAA has determined that this part. false statement in any application for this regulation is not a ‘‘significant * * * * * any security program, access medium, regulatory action’’ under Executive 3. Section 107.2 is added to read as or identification medium, or any Order 12866. In addition, the FAA follows: amendment thereto, under this part. (b) Any fraudulent or intentionally certifies that this rule will not have a § 107.2 Falsification. significant economic impact, positive or false entry in any record or report that No person may make, or cause to be negative, on a substantial number of is kept, made, or used to show made, any of the following: compliance with this part, or to exercise small entities under the criteria of the (a) Any fraudulent or intentionally Regulatory Flexibility Act. This rule is any privileges under this part. false statement in any application for (c) Any reproduction or alteration, for not considered significant under Order any security program, access medium, DOT 2100.5, Policies and Procedures for fraudulent purpose, of any report, or identification medium, or any record, security program, access Simplification, Analysis, and Review of amendment thereto, under this part. Regulations. medium, or identification medium (b) Any fraudulent or intentionally issued under this part. List of Subjects false entry in any record or report that is kept, made, or used to show Issued in Washington, DC, on November 14 CFR Part 107 compliance with this part, or exercise 27, 1996. Airports, Arms and munitions, Law any privileges under this part. Linda Hall Daschle, enforcement officers, Reporting and (c) Any reproduction or alteration, for Acting Administrator. recordkeeping requirements, Security fraudulent purpose, of any report, [FR Doc. 96–30776 Filed 11–27–96; 3:23 pm] measures. record, security program, access BILLING CODE 4910±13±M i

Reader Aids Federal Register Vol. 61, No. 233 Tuesday, December 3, 1996

CUSTOMER SERVICE AND INFORMATION CFR PARTS AFFECTED DURING DECEMBER

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±523±5227 publishes separately a List of CFR Sections Affected (LSA), which aids lists parts and sections affected by documents published since the revision date of each title. Laws 1 CFR 375...... 64031 For additional information 523±5227 462...... 63944 19 CFR Presidential Documents Executive orders and proclamations 523±5227 3 CFR Proposed Rules: 122...... 64041 The United States Government Manual 523±5227 Proclamations: 6959...... 63691 Other Services 21 CFR Administrative Orders: 73...... 64027 Electronic and on-line services (voice) 523±4534 Presidential 510...... 63710 Privacy Act Compilation 523±3187 Determinations: TDD for the hearing impaired 523±5229 No. 97±6 of November 520...... 63711 26, 1996 ...... 63693 524...... 63712 Proposed Rules: ELECTRONIC BULLETIN BOARD No. 97±7 of November 26, 1996 ...... 63695 892...... 63769 Free Electronic Bulletin Board service for Public Law numbers, 24 CFR Federal Register finding aids, and list of documents on public 5 CFR inspection. 202±275±0920 Proposed Rules: 81...... 63944 213...... 63762 Proposed Rules: FAX-ON-DEMAND 985...... 63930 You may access our Fax-On-Demand service. You only need a fax 7 CFR machine and there is no charge for the service except for long 723...... 63697 29 CFR distance telephone charges the user may incur. The list of 1464...... 63697 4001...... 63988 documents on public inspection and the daily Federal Register’s 1806...... 63928 4043...... 63988 table of contents are available using this service. The document 1910...... 63928 4065...... 63988 numbers are 7050-Public Inspection list and 7051-Table of 1922...... 63928 Contents list. The public inspection list will be updated 1944...... 63928 30 CFR immediately for documents filed on an emergency basis. 1951...... 63928 Proposed Rules: 1955...... 63928 NOTE: YOU WILL ONLY GET A LISTING OF DOCUMENTS ON 870...... 64220 1956...... 63928 FILE AND NOT THE ACTUAL DOCUMENT. Documents on 1965...... 63928 32 CFR public inspection may be viewed and copied in our office located 3550...... 63928 at 800 North Capitol Street, N.W., Suite 700. The Fax-On-Demand 318...... 63712 telephone number is: 301±713±6905 12 CFR 33 CFR 1...... 63972 110...... 63715 FEDERAL REGISTER PAGES AND DATES, DECEMBER 7...... 63972 8...... 63700 37 CFR 63691±64006...... 2 12...... 63958 1...... 64027 64007±64244...... 3 543...... 64007 251...... 63715 544...... 64007 252...... 63715 545...... 64007 257...... 63715 552...... 64007 259...... 63715 556...... 64007 575...... 64007 Proposed Rules: 910...... 64021 202...... 64042 912...... 64021 38 CFR 14 CFR 17...... 63719 25...... 63952 40 CFR 39 ...... 63702, 63704, 63706, 63707 52...... 64028, 64029 107...... 64242 70...... 63928 108...... 64242 180...... 63721 Proposed Rules: 721...... 63726 39...... 63762 Proposed Rules: 71 ...... 63764, 63765, 63766, 52...... 64042 63767, 63768 70...... 64042 135...... 64230 82...... 64045 17 CFR 42 CFR 240...... 63709 401...... 63740 403...... 63740 18 CFR 405...... 63740 Proposed Rules: 411...... 63740 4...... 64031 413...... 63740 ii Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Reader Aids

447...... 63740 493...... 63740 45 CFR 1610...... 63749 1617...... 63754 1632...... 63755 1633...... 63756 47 CFR 1...... 63758 2...... 63758 15...... 63758 24...... 63758 73...... 63759 97...... 63758 Proposed Rules: Ch. I...... 63774, 63778 1...... 64045 73 ...... 63809, 63810, 63811 49 CFR 1...... 64029 106...... 64030 190...... 64030 50 CFR 679...... 63759 Proposed Rules: 285...... 63812 630...... 63812 644...... 63812 648...... 64046 678...... 63812 679 ...... 63812, 63814, 64047 Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Reader Aids iii

REMINDERS Ports designation-- Preparation, adoption, and of spectrum; comments The items in this list were Atlanta, GA; comments submittal-- due by 12-4-96; editorially compiled as an aid due by 12-6-96; Prevention of significant published 11-20-96 to Federal Register users. published 10-7-96 deterioration and Radio stations; table of Inclusion or exclusion from Federal Seed Act: nonattainment new assignments: this list has no legal Imported seed and source review; Federal Kansas; comments due by significance. screenings; comments regulatory review; 12-2-96; published 10-24- due by 12-3-96; published comments due by 12-5- 96 10-4-96 96; published 10-25-96 Minnesota; comments due RULES GOING INTO Air quality implementation by 12-2-96; published 10- EFFECT TODAY AGRICULTURE DEPARTMENT plans; approval and 24-96 promulgation; various Farm Service Agency New Mexico; comments due AGRICULTURE States: by 12-2-96; published 10- Farm marketing quotas, DEPARTMENT California; comments due by 24-96 Commodity Credit acreage allotments, and 12-2-96; published 11-1- FEDERAL ELECTION Corporation production adjustments: 96 COMMISSION Loan and purchase programs: Peanuts; comments due by Colorado; comments due by Reports by political Price support levels-- 12-3-96; published 11-25- 96 12-2-96; published 10-3- committees: Peanuts; published 11-25- 96 COMMERCE DEPARTMENT Best efforts; comments due 96 Maryland; comments due by by 12-6-96; published 10- COMMERCE DEPARTMENT Export Administration 12-2-96; published 10-31- 9-96 Bureau Patent and Trademark Office 96 FEDERAL RESERVE Export licensing: Patent cases: New Jersey; comments due SYSTEM Commerce control list-- Correspondence practice by 12-2-96; published 10- Bank holding companies and changes; signature and Commercial 31-96 change in bank control filing requirements; communications New York et al.; comments (Regulation Y): satellites; enhanced correction; published 12-3- due by 12-5-96; published Board approval requirement national and foreign 96 11-5-96 to engage de novo in policy controls; ENVIRONMENTAL Virginia; comments due by permissible nonbanking comments due by 12-5- PROTECTION AGENCY 12-6-96; published 11-6- activities; comments due 96; published 10-21-96 Air pollution control; new 96 by 12-2-96; published 11- COMMERCE DEPARTMENT motor vehicles and engines: Hazardous waste: 1-96 Patent and Trademark Office Gasoline spark-ignition and State underground storage FEDERAL RETIREMENT diesel compression-ignition Patent cases: tank program approvals-- THRIFT INVESTMENT marine engines; emission Nucleotide and/or amino Massachusetts; comments BOARD standards; published 10-4- acid sequence listings; Administrative errors 96 due by 12-2-96; changes; comments due published 10-31-96 correction; comments due Air quality implementation by 12-3-96; published 10- Pesticide programs: by 12-5-96; published 11-5- plans; approval and 4-96 96 promulgation; various Pesticides and ground water Patent practitioners; HEALTH AND HUMAN States: strategy; State registration examination, SERVICES DEPARTMENT Colorado; published 10-4-96 continuing education management plan regulation; comments due Food and Drug Maryland; correction; requirement, and annual Administration published 12-3-96 fee; comments due by 12-6- by 12-6-96; published 11- 6-96 Food for human consumption: New York; withdrawal; 96; published 9-30-96 Infant formula; current good published 12-3-96 EDUCATION DEPARTMENT Pesticides; tolerances in food, animal feeds, and raw manufacturing practice, HOUSING AND URBAN Elementary and secondary agricultural commodities: quality control procedures, DEVELOPMENT education: Sodium bicarbonate, etc.; etc.; comments due by DEPARTMENT Impact aid program; comments due by 12-6- 12-6-96; published 9-23- Community facilities: comments due by 12-6- 96; published 11-6-96 96 Youthbuild program; 96; published 10-7-96 Superfund program: Human drugs: administrative costs; Postsecondary education: Sunscreens; photochemistry National oil and hazardous published 10-4-96 Strengthening institutions and photobiology; substances contingency program, strengthening meeting; comments due plan-- COMMENTS DUE NEXT historically black colleges by 12-6-96; published 8- WEEK and universities program, National priorities list 15-96 update; comments due etc.; Federal regulatory Medical devices: by 12-2-96; published AGRICULTURE review; comments due by 10-31-96 Current good manufacturing DEPARTMENT 12-6-96; published 10-7- practice regulations; Agricultural Marketing 96 National priorities list incorporation into quality Service ENVIRONMENTAL update; comments due system regulation; by 12-2-96; published Kiwifruit research, promotion, PROTECTION AGENCY comments due by 12-6- 10-31-96 and consumer information Air programs: 96; published 10-7-96 order; comments due by 12- Stratospheric ozone FEDERAL HOUSING AND URBAN 2-96; published 10-2-96 protection-- COMMUNICATIONS DEVELOPMENT COMMISSION AGRICULTURE Refrigerant recycling; DEPARTMENT DEPARTMENT reclamation Practice and procedure: Community development block Animal and Plant Health requirements extension; Omnibus Consolidated grants: Inspection Service comments due by 12-2- Appropriations Act of Hispanic-serving institutions Exportation and importation of 96; published 11-1-96 1997-- work study program; animals and animal Air quality implementation Wireless communications comments due by 12-2- products: plans: service; thirty megahertz 96; published 10-2-96 iv Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / Reader Aids

INTERIOR DEPARTMENT reclamation plan AlliedSignal Inc.; comments Motor carriers and freight Land Management Bureau submissions: due by 12-2-96; published forwarders; tariff Land resource management: Texas; comments due by 10-3-96 requirement for Disposition; sales-- 12-4-96; published 11-4- Construcciones transportation of Townsites; land disposal 96 Aeronauticas, S.A.; household goods; for school purposes; LIBRARY OF CONGRESS comments due by 12-2- comments due by 12-4- 96; published 10-23-96 96; published 11-4-96 comments due by 12-2- Copyright Office, Library of 96; published 10-3-96 Jetstream; comments due Congress TREASURY DEPARTMENT Special laws and rules; by 12-2-96; published 11- Copyright office and mineral lands nonmineral 8-96 procedures: Alcohol, Tobacco and entries; comments due by McDonnell Douglas; Firearms Bureau Registration of claims-- 12-2-96; published 11-1- comments due by 12-2- 96 ``Best Edition'' of 96; published 10-23-96 Alcohol, tobacco, and other Range management: published copyrighted Class E airspace; comments excise taxes: Grazing administration; works; comments due due by 12-5-96; published Firearms; categories of Alaska reindeer; by 12-6-96; published 11-1-96 comments due by 12-2- 11-15-96 persons prohibited from Commercial space launch receiving firearms; 96; published 11-1-96 MANAGEMENT AND activities, licensed; financial definitions; comments due Wild and scenic rivers; BUDGET OFFICE responsibility requirements; by 12-5-96; published 9-6- comments due by 12-4-96; Federal Procurement Policy comments due by 12-2-96; 96 published 11-4-96 Office published 10-2-96 INTERIOR DEPARTMENT Acquisition regulations: Rulemaking petitions; Alcoholic beverages: Minerals Management Cost Accounting Standards summary and disposition; Distilled spirits, wine, and Service Board-- comments due by 12-2-96; Natural gas from Indian beer; importation; Cost accounting practices published 10-4-96 leases; valuation; comments comments due by 12-3- changes; comments due TRANSPORTATION due by 12-3-96; published 96; published 11-5-96 by 12-2-96; published DEPARTMENT 11-25-96 9-18-96 Maritime Administration TREASURY DEPARTMENT INTERIOR DEPARTMENT National Park Service TRANSPORTATION Subsidized vessels and Customs Service Historic preservation programs; DEPARTMENT operators: State, Tribal, and local Federal Aviation Maritime security program; Articles conditionally free, government; procedures; Administration establishment; comments subject to reduced rate, comments due by 12-2-96; Airworthiness directives: due by 12-2-96; published etc.: 11-18-96 published 10-2-96 de Havilland; comments due Containers designated as INTERIOR DEPARTMENT by 12-5-96; published 10- TRANSPORTATION instruments of Surface Mining Reclamation 3-96 DEPARTMENT international traffic in and Enforcement Office Airbus; comments due by Surface Transportation point-to-point local traffic; Permanent program and 12-2-96; published 10-23- Board comments due by 12-3- abandoned mine land 96 Tariffs and schedules: 96; published 10-4-96