Vol. 77 Thursday, No. 3 January 5, 2012

Pages 419–728

OFFICE OF THE FEDERAL REGISTER

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Contents Federal Register Vol. 77, No. 3

Thursday, January 5, 2012

Agricultural Marketing Service Education Department NOTICES NOTICES Agency Information Collection Activities; Proposals, Applications for New Awards: Submissions, and Approvals: Field Initiated Projects Program, 480–484 Specialty Crop Block Grant Program, 470–471 Meetings: Equity and Excellence Commission, 484–485 Agriculture Department See Agricultural Marketing Service Energy Department See Food and Nutrition Service See Energy Efficiency and Renewable Energy Office See Forest Service See Federal Energy Regulatory Commission NOTICES Centers for Disease Control and Prevention Meetings: NOTICES Fusion Energy Sciences Advisory Committee, 485 Agency Information Collection Activities; Proposals, Submissions, and Approvals, 507–509 Energy Efficiency and Renewable Energy Office Statement of Organization, Functions, and Delegations of NOTICES Authority, 509–511 Meetings: Wind Plant Performance; Modeling and Testing Needs for Children and Families Administration Complex Air Flow Characterization, 485–486 PROPOSED RULES Affects of Current SACWIS Regulations on Tribes Engraving and Printing Bureau Administering a Title IV–E Program, 467–468 NOTICES Privacy Act; Systems of Records, 551–552 Civil Rights Commission NOTICES Environmental Protection Agency Meetings; Sunshine Act, 472 RULES EPAAR Clause for Compliance with Policies for Coast Guard Information Resources Management, 427–429 RULES National Emissions Standards for Hazardous Air Pollutants Drawbridge Operations: from Secondary Lead Smelting, 556–591 Atlantic Intracoastal Waterway, Wrightsville Beach, NC, Regulation of Fuels and Fuel Additives: 423 Identification of Additional Qualifying Renewable Fuel Corson Inlet, Stathmere, NJ, 420 Pathways under Renewable Fuel Standard Program, Long Island, NY Inland Waterway from East Rockaway 700–727 Inlet to Shinnecock Canal, NY, 421–423 PROPOSED RULES Sacramento River, Paintersville, CA, 419 Regulation of Fuels and Fuel Additives: St. Johns River, Jacksonville, FL, 419–420 Identification of Additional Qualifying Renewable Fuel Pathways under Renewable Fuel Standard Program, Commerce Department 462–467 See International Trade Administration NOTICES See National Oceanic and Atmospheric Administration Control of Emissions from New Highway Vehicles and See Patent and Trademark Office Engines: Approval of New Scheduled Maintenance for Selective Commodity Futures Trading Commission Catalytic Reduction Technologies, 488–497 NOTICES Control of Emissions from New Nonroad Compression- Agency Information Collection Activities; Proposals, Ignition Engines: Submissions, and Approvals: Approval of New Scheduled Maintenance for Selective Rules Relating to Regulation of Domestic Exchange- Catalytic Reduction Technologies, 497–499 Traded Options, 477–478 Federal Communications Commission Consumer Product Safety Commission PROPOSED RULES NOTICES Program Carriage Rules; Revisions, 468–469 Meetings; Sunshine Act, 478 Petitions: Federal Emergency Management Agency Exception from the Lead Content Limits, 478–479 RULES Changes in Flood Elevation Determinations, 423–427 Defense Nuclear Facilities Safety Board NOTICES NOTICES Major Disaster Declarations: Meetings; Sunshine Act, 479–480 Virginia; Amendment No. 4, 513 Department of Transportation Federal Energy Regulatory Commission See Pipeline and Hazardous Materials Safety NOTICES Administration Combined Filings, 486–487

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Paper Hearing Procedures: Food and Nutrition Service ITC Holdings Corp., 487–488 NOTICES Emergency Food Assistance Program: Federal Highway Administration Availability of Foods for Fiscal Year 2012, 471–472 NOTICES Limitation on Claims against a Proposed Transportation Forest Service Project, 531–532 NOTICES Request for Nominations: Federal Housing Finance Agency National Advisory Committee for Implementation of the National Forest System Land Management Planning NOTICES Privacy Act of 1974; System of Records, 499–506 Rule; Correction, 472 Health and Human Services Department Federal Maritime Commission See Centers for Disease Control and Prevention NOTICES See Children and Families Administration Agreements Filed, 506 See National Institutes of Health NOTICES Federal Motor Carrier Safety Administration Agency Information Collection Activities; Proposals, NOTICES Submissions, and Approvals, 506–507 Qualification of Drivers; Exemption Applications; Diabetes Mellitus, 532–537 Homeland Security Department Qualification of Drivers; Exemption Applications; Epilepsy See Coast Guard and Seizure Disorders, 537–539 See Federal Emergency Management Agency Qualification of Drivers; Exemption Applications; Vision, See Transportation Security Administration 539–546 Interior Department Federal Railroad Administration See Fish and Wildlife Service See Land Management Bureau NOTICES Adjustment of Nationwide Significant Risk Threshold, 546– See National Park Service 547 International Trade Administration NOTICES Federal Reserve System Anti-circumvention Inquiries: PROPOSED RULES Certain Steel Threaded Rod from the People’s Republic of Enhanced Prudential Standards and Early Remediation China, 473–474 Requirements for Covered Companies, 594–663 International Trade Commission Federal Transit Administration NOTICES NOTICES Complaints: Fiscal Year 2011 Public Transportation on Indian Certain Portable Communication Devices, 515–516 Reservations Program Project Selections, 547–551 Limitation on Claims against a Proposed Transportation Justice Department Project, 531–532 NOTICES Lodging of Consent Decrees Under CERCLA, 516–517 Financial Crimes Enforcement Network Lodging of Consent Decrees Under the Clean Air Act, 517– NOTICES 518 Agency Information Collection Activities; Proposals, Lodging of Consent Decrees Under the Clean Water Act, Submissions, and Approvals, 552–553 518 Land Management Bureau Fiscal Service NOTICES NOTICES Conveyance of Public Lands for Recreation and Public Surety Companies Acceptable on Federal Bonds; Purposes: Amendments: Clark County, NV; Correction, 514 Evergreen National Indemnity Co., 553 Records of Decision; Availability: Surety Companies Acceptable on Federal Bonds; North Steens 230 kilovolt Transmission Line, Harney Terminations: County, OR, 514–515 Western Bonding Co., 553–554 National Institutes of Health Fish and Wildlife Service NOTICES RULES Meetings: Endangered and Threatened Wildlife and Plants: Center for Scientific Review, 511–513 Removal of the Regulation that Excludes U.S. Captive- Bred Scimitar-Horned Oryx, Addax, and Dama National Oceanic and Atmospheric Administration Gazelle from Certain Prohibitions, 431–438 RULES PROPOSED RULES Fisheries of the Exclusive Economic Zone Off Alaska: Endangered and Threatened Wildlife and Plants: Inseason Adjustment to the 2012 Gulf of Alaska Pollock Listing Two Distinct Population Segments of Broad- and Pacific Cod Total Allowable Catch Amounts, Snouted Caiman, 666–697 438–440

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NOTICES Surface Transportation Board 2012 Annual Determination for Sea Turtle Observer NOTICES Requirement, 474–476 Release of Waybill Data, 551 Endangered and Threatened Species: Southern Oregon/Northern California Coast Coho Salmon Evolutionarily Significant Unit Recovery Plan, 476 Transportation Department Meetings: See Federal Highway Administration Science Advisory Board, 476–477 See Federal Motor Carrier Safety Administration See Federal Railroad Administration National Park Service See Federal Transit Administration NOTICES See Pipeline and Hazardous Materials Safety National Register of Historic Places: Administration Pending Nominations and Related Actions, 515 See Surface Transportation Board See Transportation Security Administration Nuclear Regulatory Commission PROPOSED RULES Transportation Security Administration Measurement and Control of Combustible Gas Generation NOTICES and Dispersal, 441–442 Agency Information Collection Activities; Proposals, Patent and Trademark Office Submissions, and Approvals: PROPOSED RULES Enhanced Security Procedures at Certain Airports in the Changes to Implement Miscellaneous Post Patent Provisions Washington, DC, Area, 513–514 of the Leahy–Smith America Invents Act, 442–448 Changes to Implement the Preissuance Submissions by Treasury Department Third Parties Provision of the Leahy–Smith America See Engraving and Printing Bureau Invents Act, 448–457 See Financial Crimes Enforcement Network Implementation of Statute of Limitations Provisions for See Fiscal Service Office Disciplinary Proceedings, 457–461 Pipeline and Hazardous Materials Safety Administration RULES Separate Parts In This Issue Clarification and Further Guidance on the Fireworks Approvals Policy, 429–431 Part II Environmental Protection Agency, 556–591 Public Debt Bureau See Fiscal Service Part III Securities and Exchange Commission Federal Reserve System, 594–663 NOTICES Self-Regulatory Organizations; Proposed Rule Changes: Part IV Chicago Board Options Exchange, Inc., 518–520 Interior Department, Fish and Wildlife Service, 666–697 Chicago Board Options Exchange, Inc. and National Stock Exchange, Inc., 521–527 Options Clearing Corp., 520 Part V The National Securities Clearing Corp., 528–529 Environmental Protection Agency, 700–727 Small Business Administration NOTICES Reader Aids Disaster Declarations: Alaska, 530 Consult the Reader Aids section at the end of this page for Vermont; Amendment 7, 530 phone numbers, online resources, finding aids, reminders, Virginia; Amendment 1, 530 and notice of recently enacted public laws. To subscribe to the Federal Register Table of Contents State Department LISTSERV electronic mailing list, go to http:// NOTICES listserv.access.gpo.gov and select Online mailing list Advisory Committee on Private International Law; Charter archives, FEDREGTOC-L, Join or leave the list (or change Renewal, 530–531 settings); then follow the instructions.

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CFR PARTS AFFECTED IN THIS ISSUE

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

10 CFR Proposed Rules: 50...... 441 52...... 441 100...... 441 12 CFR Proposed Rules: 252...... 594 33 CFR 117 (5 documents) .....419, 420, 421, 423 37 CFR Proposed Rules: 1 (2 documents) ...... 442, 448 11...... 457 40 CFR 80...... 462 Proposed Rules: 80...... 700 42 CFR 63...... 556 44 CFR 65 (2 documents) ...... 423, 425 45 CFR Proposed Rules: 1355...... 467 47 CFR Proposed Rules: 76...... 468 48 CFR 1552...... 427 49 CFR 173...... 429 50 CFR 17...... 431 679...... 438 Proposed Rules: 17...... 666

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Rules and Regulations Federal Register Vol. 77, No. 3

Thursday, January 5, 2012

This section of the FEDERAL REGISTER email David H. Sulouff, Chief, Bridge DEPARTMENT OF HOMELAND contains regulatory documents having general Section, Eleventh Coast Guard District; SECURITY applicability and legal effect, most of which telephone (510) 437–3516, email are keyed to and codified in the Code of [email protected] If you have Coast Guard Federal Regulations, which is published under 50 titles pursuant to 44 U.S.C. 1510. questions on viewing the docket, call Renee V. Wright, Program Manager, 33 CFR Part 117 The Code of Federal Regulations is sold by Docket Operations, telephone (202) [Docket No. USCG–2011–1028] the Superintendent of Documents. Prices of 366–9826. new books are listed in the first FEDERAL Drawbridge Operation Regulation; St. REGISTER issue of each week. SUPPLEMENTARY INFORMATION: The Johns River, Jacksonville, FL California Department of Transportation has requested a temporary change to the AGENCY: Coast Guard, DHS. DEPARTMENT OF HOMELAND operation of the Paintersville ACTION: Notice of temporary deviation SECURITY Drawbridge, mile 33.4, over Sacramento from regulations. River, at Paintersville, CA. The Coast Guard SUMMARY: The Commander, Seventh drawbridge navigation span provides a Coast Guard District, has issued a vertical clearance of 24 feet above Mean 33 CFR Part 117 temporary deviation from the regulation High Water in the closed-to-navigation governing the operation of the Florida [Docket No. USCG–2011–1066] position. The draw opens on signal from East Coast automated railroad bridge May 1 through October 31 from 6 a.m. across the St. Johns River, mile 24.9, in Drawbridge Operation Regulation; to 10 p.m. and from November 1 Sacramento River, Paintersville, CA Jacksonville, Florida. The regulation is through April 30 from 9 a.m. to 5 p.m. set forth in 33 CFR 117.325(b). The AGENCY: Coast Guard, DHS. At all other times the draw shall open deviation is necessary to enable the ACTION: Notice of temporary deviation on signal if at least four hours notice is bridge owner to repair the bridge. This from regulations. given to the drawtender at the Rio Vista deviation will result in the bridge bridge across the Sacramento River, remaining closed to navigation during SUMMARY: The Commander, Eleventh mile 12.8, as required by 33 CFR extensive periods of daylight hours. Coast Guard District, has issued a 117.189(a). Navigation on the waterway DATES: This deviation is effective from temporary deviation from the regulation is commercial and recreational. 8 a.m. on January 15, 2012 through governing the operation of the 5 p.m. on March 29, 2012. Paintersville Drawbridge across Either leaf of the double bascule ADDRESSES: Documents mentioned in Sacramento River, mile 33.4, at drawspan may be secured in the closed- to-navigation position from 7 a.m., this preamble as being available in the Paintersville, CA. The deviation is docket are part of docket USCG–2011– necessary to allow California January 6, 2012 to 6 p.m. on April 4, 2012, to allow Caltrans to conduct 1028 and are available online by going Department of Transportation to paint to http://www.regulations.gov, inserting and perform routine maintenance on the painting and maintenance on the bridge. The opposite leaf will continue to USCG–2011–1028 in the ‘‘Keyword’’ drawbridge. This deviation allows box and then clicking ‘‘Search’’. They operate normally, providing unlimited single leaf operation of the double leaf are also available for inspection or vertical clearance and 77 feet horizontal bascule style drawbridge during the copying at the Docket Management clearance between leafs. A work project. Facility (M–30), U.S. Department of DATES: This deviation is effective from platform will be installed below the Transportation, West Building Ground 7 a.m., January 6, 2012 to 6 p.m. on secured leaf, reducing vertical clearance Floor, Room W12–140, 1200 New Jersey April 4, 2012. by 6 feet. This temporary deviation has Avenue SE., Washington, DC 20590, ADDRESSES: Documents mentioned in been coordinated with waterway users. between 9 a.m. and 5 p.m., Monday this preamble as being available in the No objections to the proposed through Friday, except Federal holidays. docket are part of the docket USCG– temporary deviation were raised. FOR FURTHER INFORMATION CONTACT: If 2011–1066 and are available online by In accordance with 33 CFR 117.35(e), you have questions on this rule, call or going to http://www.regulations.gov, the drawbridge must return to its regular email Michael Lieberum, Seventh inserting USCG–2011–1066 in the operating schedule immediately at the District Bridge Branch, Coast Guard; ‘‘Keyword’’ box and then clicking end of the designated time period. This telephone (305) 415–6744, email ‘‘Search’’. They are also available for deviation from the operating regulations [email protected]. If you inspection or copying at the Docket is authorized under 33 CFR 117.35. have questions on viewing the docket, Management Facility (M–30), U.S. call Renee V. Wright, Program Manager, Dated: December 9, 2011. Department of Transportation, West Docket Operations, telephone (202) Building Ground Floor, Room W12–140, D.H. Sulouff, 366–9826. 1200 New Jersey Avenue SE., District Bridge Chief, Eleventh Coast Guard SUPPLEMENTARY INFORMATION: The bridge Washington, DC 20590, between 9 a.m. District. owner has determined that extensive and 5 p.m., Monday through Friday, [FR Doc. 2011–33769 Filed 1–4–12; 8:45 am] repairs are required on the Florida East except Federal holidays. BILLING CODE 9110–04–P Coast automated railroad bridge over the FOR FURTHER INFORMATION CONTACT: If St. Johns River in Jacksonville, Florida. you have questions on this rule, call or This temporary deviation will enable

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the bridge owner to make necessary DEPARTMENT OF HOMELAND regulations set out in 33 CFR 117.714 to repairs to the bridge. The bridge SECURITY facilitate the replacement of the bridge provides a vertical clearance of 5 feet railings. above mean high water in the closed Coast Guard Under the regular operating schedule, position and a horizontal clearance of the bridge operates as follows: The draw 195 feet. 33 CFR Part 117 shall open on signal; however, from October 1 through May 15 from 10 p.m. The normal operating schedule for the [Docket No. USCG–2011–1139] to 6 a.m. and from 6 a.m. to 10 p.m. on bridge is set forth in 33 CFR 117.325(b). Drawbridge Operation Regulation; December 25 the draw need open only 33 CFR 117.325(b) states that the draw Corson Inlet, Stathmere, NJ if at least two hours notice is provided. is normally in the fully open position, The Corson Inlet Bridge (CR–619) at displaying flashing green lights to AGENCY: Coast Guard, DHS. mile 0.9, across Corson Inlet in indicate that vessels may pass. When a ACTION: Notice of temporary deviation Strathmere, NJ has a vertical clearance train approaches, large signs on both the from regulations. in the closed position to vessels of 15 upstream and downstream sides of the feet above mean high water (MHW). bridge flash ‘‘Bridge Coming Down,’’ the SUMMARY: The Commander Fifth Coast Guard District has issued a temporary Under this temporary deviation, the lights go to flashing red, and siren Corson Inlet Bridge will be closed to signals sound. After an eight minute deviation from the regulations governing the operation of the Corson vessels requiring an opening, from delay, the draw lowers and locks if there 5 a.m. on January 15, 2012 to 5 p.m. on are no vessels under the draw. The draw Inlet Bridge (County Route 619), across Corson Inlet, mile 0.9 in Strathmere, NJ. February 15, 2012. The drawbridge will remains down for a period of eight The deviation is necessary to facilitate not be able to open in the event of an minutes or while the approach track the replacement of the steel railing. This emergency. Vessels that can pass under circuit is occupied. After the train has deviation restricts operation of the draw the bridge without a bridge opening may cleared, the draw opens and the lights span; no openings will be allowed do so at all times. Vessels have an return to flashing green. during the course of the project, while alternate ocean route to the south The deviation will be in effect from 8 the railings on the moveable span through Townsends Inlet. a.m. on January 15, 2012 through 5 p.m. portion of the bridge are replaced. Though the span will be closed for the project, the 15 feet of vertical navigation on March 29, 2012. As a result of this DATES: This deviation is effective from deviation, the Florida East Coast 5 a.m. on January 15, 2012 until 5 p.m. clearance will remain available throughout the project. Furthermore, the automated railroad bridge over the St. on February 15, 2012. 50 feet of horizontal clearance will be Johns River will remain closed to ADDRESSES: Documents mentioned in reduced to 25 feet temporarily only if/ navigation from 8 a.m. until 11:30 a.m. this preamble as being available in the when barges are used beneath the span docket are part of docket USCG–2011– and from 12:30 p.m. until 5 p.m. to facilitate this project. Sundays through Thursdays from 8 a.m. 1139 and are available online by going Historically, there were no vessel to http://www.regulations.gov, inserting on January 15, 2012 through 5 p.m. on openings provided for the months of USCG–2011–1139 in the ‘‘Keyword’’ March 29, 2012. This deviation will January through February in 2011. The box and then clicking ‘‘Search’’. They affect all vessel traffic transiting under Coast Guard has coordinated the are also available for inspection or the bridge. Vessels may not pass restrictions with the Cape May County copying at the Docket Management underneath the bridge in closed Bridge Commission/contractor and will Facility (M–30), U.S. Department of position, and there are no alternate inform the other users of the waterways Transportation, West Building Ground routes for vessel traffic. Due to the through our Local and Broadcast Floor, Room W12–140, 1200 New Jersey nature of the repair work, it would take Notices to Mariners of the closure Avenue SE., Washington, DC 20590, a minimum of two hours to open in an periods for the bridge so that vessels can between 9 a.m. and 5 p.m., Monday emergency as the bridge would have to arrange their transits to minimize any through Friday, except Federal holidays. be rebalanced before it could open. impact caused by the temporary FOR FURTHER INFORMATION CONTACT: If deviation. In accordance with 33 CFR 117.35(e), you have questions on this rule, call or In accordance with 33 CFR 117.35(e), the drawbridge must return to its regular email Terrance Knowles, Environmental the drawbridge must return to its regular operating schedule immediately at the Protection Specialist, Fifth Coast Guard operating schedule immediately at the end of the designated time period. This District; telephone (757) 398–6587, end of the designated time period. deviation from the operating regulations email [email protected]. If This deviation from the operating is authorized under 33 CFR 117.35. you have questions on viewing the regulations is authorized under 33 CFR docket, call Renee V. Wright, Program Dated: December 22, 2011. 117.35. Manager, Docket Operations, telephone W.D. Baumgartner, (202) 366–9826. Dated: December 22, 2011. Rear Admiral, U.S. Coast Guard, Commander, SUPPLEMENTARY INFORMATION: The Cape Waverly W. Gregory, Jr., Seventh Coast Guard District. May County Bridge Commission, who Bridge Program Manager, Fifth Coast Guard [FR Doc. 2011–33819 Filed 1–4–12; 8:45 am] owns and operates this bascule District. BILLING CODE 9110–04–P drawbridge, has requested a temporary [FR Doc. 2011–33824 Filed 1–4–12; 8:45 am] deviation from the current operating BILLING CODE 9110–04–P

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DEPARTMENT OF HOMELAND procedures are ‘‘impracticable, Guard expects minimal marine traffic SECURITY unnecessary, or contrary to the public transit through this bridge during the interest.’’ Under 5 U.S.C. 553(b)(B), the proposed effective dates of this rule, and Coast Guard Coast Guard finds that good cause exists all vessels known to use this waterway for not publishing a notice of proposed can pass through the bridge with a 33 CFR Part 117 rulemaking (NPRM) with respect to this single span opening. [Docket No. USCG–2011–1132] rule because it would be impracticable As a result, the Coast Guard is and contrary to the public interest to publishing this temporary final rule to RIN 1625–AA09 give prior notice and opportunity for help facilitate completion of the bridge comment. As is more fully discussed rehabilitation before the 2012 boating Drawbridge Operation Regulation; below, the rehabilitation work has season begins. Long Island, New York Inland already begun on this bridge under a Discussion of Rule Waterway From East Rockaway Inlet to temporary deviation published on Shinnecock Canal, NY September 30, 2011, (76 FR 60733) and The Coast Guard is publishing this AGENCY: Coast Guard, DHS. that work was unexpectedly delayed. temporary final rule, extending single span openings from December 22, 2011 ACTION: Temporary final rule. This rule provides a time extension so that the rehabilitation can be completed through May 25, 2012, to help facilitate SUMMARY: The Coast Guard has in the shortest possible time frame. completion of bridge rehabilitation temporarily changed the drawbridge Without this rule the work would have repairs. The rehabilitation repairs must operation regulations that govern the to be suspended thereby delaying the be completed before the bridge can open operation of the Smith Point Bridge, ultimate completion date. Further, as both spans for the passage of vessel mile 6.1, across Narrow Bay, between stated in the temporary deviation this traffic for the 2012 boating season. Smith Point and Fire Island, New York. waterway is used primarily by The main navigation channel This temporary final rule is necessary to recreational boaters who can safely pass provides 55 feet of horizontal clearance facilitate the completion of a major through the reduced horizontal with unobstructed vertical clearance bridge rehabilitation project. clearance caused by this rule, the during a bridge opening. DATES: This temporary final rule is majority of whom do not operate during During this temporary final rule the effective from January 5, 2012, through the months when this rule will be in main channel will provide 27.5 feet of May 25, 2012. The rule has been effect. horizontal clearance with unobstructed enforced with actual notice since Under 5 U.S.C. 553(d)(3), the Coast vertical clearance during a bridge December 22, 2011. Guard finds that good cause exists for opening. making this rule effective less than 30 The Coast Guard believes that this ADDRESSES: Documents indicated in this days after publication in the Federal temporary final rule should meet the preamble as being available in the Register for the reasons stated above. reasonable needs of navigation because docket, are part of docket USCG–2011– the vessels that normally use this bridge Basis and Purpose 1132 and are available online by going are recreational vessels that can safely to http://www.regulations.gov, inserting The Smith Point Bridge across Narrow pass through a 27.5 foot horizontal USCG–2011–1132 in the ‘‘Keyword’’ Bay, mile 6.1, between Smith Point and clearance due to their relative small box, and then clicking ‘‘Search.’’ This Fire Island, New York, has a vertical size. In addition, most of the above material is also available for inspection clearance in the closed position of 16 recreational vessels do not operate or copying at the Docket Management feet at mean high water and 18 feet at during the months when this rule will Facility (M–30), U.S. Department of mean low water. The drawbridge be in effect. Transportation, West Building Ground operation regulations are listed at 33 Floor, Room W12–140, 1200 New Jersey CFR 117.799(d). Regulatory Analyses Avenue SE., Washington, DC 20590, The waterway users are We developed this rule after between 9 a.m. and 5 p.m., Monday predominantly recreational vessels of considering numerous statutes and through Friday, except Federal holidays. various sizes. executive orders related to rulemaking. FOR FURTHER INFORMATION CONTACT: If On September 30, 2011, the Coast Below we summarize our analyses you have questions on this rule, call or Guard published a temporary deviation based on 13 of these statutes or email Ms Judy Leung-Yee, Project (76 FR 60733) from the regulations executive orders. Officer, First Coast Guard District Bridge allowing single span bridge openings Branch, (212) 668–7165, judy.k.leung- from September 26, 2011 through Regulatory Planning and Review [email protected]. If you have questions on December 21, 2011, in order to facilitate This rule is not a significant viewing the docket, call Renee V. bridge rehabilitation construction at regulatory action under section 3(f) of Wright, Program Manager, Docket Smith Point Bridge. Under the Executive Order 12866, Regulatory Operations, telephone (202) 366–9826. temporary deviation the bridge was Planning and Review, as supplemented SUPPLEMENTARY INFORMATION: allowed to open only one of the two by Executive Order 13563, Improving moveable spans for the passage of Regulation and Regulatory Review, and Regulatory Information vessels from September 26, 2011, does not require an assessment of The Coast Guard is issuing this through December 21, 2011. potential costs and benefits under temporary final rule without prior The bridge owner, Suffolk County section 6(a)(3) of Executive Order notice and opportunity to comment Department of Public Works, recently 12866. The Office of Management and pursuant to authority under section 4(a) advised the Coast Guard that the Budget has not reviewed it under that of the Administrative Procedure Act cleaning and painting operations Order. (APA) (5 U.S.C. 553(b)). delayed the structural steel repairs and The Coast Guard determined that this This provision authorizes an agency requested an extension of 156 days to rule is not a significant regulatory action to issue a rule without prior notice and complete the rehabilitation project for the following reasons. The bridge opportunity to comment when the necessary to allow the bridge to return presently cannot open two spans for agency for good cause finds that those to its full two span operation. The Coast vessel traffic due to the fact that

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rehabilitation repairs have not been impose a substantial direct cost of likely to have a significant adverse effect completed. This action will facilitate compliance on them. We have analyzed on the supply, distribution, or use of completion of the bridge repairs. Most this rule under that Order and have energy. The Administrator of the Office vessel traffic that uses this waterway determined that it does not have of Information and Regulatory Affairs can fit through the bridge with a single implications for federalism. has not designated it as a significant span opening. energy action. Therefore, it does not Unfunded Mandates Reform Act require a Statement of Energy Effects Small Entities The Unfunded Mandates Reform Act under Executive Order 13211. Under the Regulatory Flexibility Act of 1995 (2 U.S.C. 1531–1538) requires (5 U.S.C. 601–612), we have considered Federal agencies to assess the effects of Technical Standards whether this rule would have a their discretionary regulatory actions. In The National Technology Transfer significant economic impact on a particular, the Act addresses actions and Advancement Act (NTTAA) (15 substantial number of small entities. that may result in the expenditure by a U.S.C. 272 note) directs agencies to use The term ‘‘small entities’’ comprises State, local, or tribal government, in the voluntary consensus standards in their small businesses, not-for-profit aggregate, or by the private sector of regulatory activities unless the agency organizations that are independently $100,000,000 (adjusted for inflation) or provides Congress, through the Office of owned and operated and are not more in any one year. Though this rule Management and Budget, with an dominant in their fields, and will not result in such an expenditure, explanation of why using these governmental jurisdictions with we do discuss the effects of this rule standards would be inconsistent with populations of less than 50,000. elsewhere in this preamble. applicable law or otherwise impractical. The Coast Guard certifies under 5 Voluntary consensus standards are Taking of Private Property U.S.C. 605(b) that this rule will not have technical standards (e.g., specifications a significant economic impact on a This rule will not cause a taking of of materials, performance, design, or substantial number of small entities. private property or otherwise have operation; test methods; sampling This rule will affect the following taking implications under Executive procedures; and related management entities, some of which may be small Order 12630, Governmental Actions and systems practices) that are developed or entities: the owners or operators of Interference with Constitutionally adopted by voluntary consensus vessels intending to transit the bridge Protected Property Rights. standards bodies. that cannot transit through a 27.5 foot This rule does not use technical Civil Justice Reform horizontal clearance. The bridge standards. Therefore, we did not presently cannot open two spans for the This rule meets applicable standards consider the use of voluntary consensus passage of vessel traffic because the in sections 3(a) and 3(b)(2) of Executive standards. rehabilitation repairs are not completed. Order 12988, Civil Justice Reform, to Environment This action will facilitate completion of minimize litigation, eliminate the bridge repairs. Most vessel traffic ambiguity, and reduce burden. We have analyzed this rule under Department of Homeland Security that uses this waterway can fit through Protection of Children the bridge with a single span opening. Management Directive 023–01 and If you think that your business, We have analyzed this rule under Commandant Instruction M16475.lD, organization, or governmental Executive Order 13045, Protection of which guides the Coast Guard in jurisdiction qualifies as a small entity Children from Environmental Health complying with the National and that this rule would have a Risks and Safety Risks. This rule is not Environmental Policy Act of 1969 significant economic impact on it, an economically significant rule and (NEPA) (42 U.S.C. 4321–4370f), and please submit a comment (see would not create an environmental risk have concluded that this action is one ADDRESSES) explaining why you think it to health or risk to safety that might of a category of actions which do not qualifies and how and to what degree disproportionately affect children. individually or cumulatively have a this rule would economically affect it. Indian Tribal Governments significant effect on the human environment. This rule is categorically Assistance for Small Entities This rule does not have tribal excluded, under figure 2–1, paragraph Under section 213(a) of the Small implications under Executive Order (32)(e), of the Instruction. Business Regulatory Enforcement 13175, Consultation and Coordination Under figure 2–1, paragraph (32)(e), of Fairness Act of 1996 (Pub. L. 104–121), with Indian Tribal Governments, the Instruction, an environmental in the NPRM we offered to assist small because it does not have a substantial analysis checklist and a categorical entities in understanding the rule so direct effect on one or more Indian exclusion determination are not that they could better evaluate its effects tribes, on the relationship between the required for this rule. on them and participate in the Federal Government and Indian tribes, List of Subjects in 33 CFR Part 117 rulemaking process. or on the distribution of power and responsibilities between the Federal Bridges. Collection of Information Government and Indian tribes. For the reasons discussed in the This rule calls for no new collection Energy Effects preamble, the Coast Guard amends 33 of information under the Paperwork CFR part 117 as follows: Reduction Act of 1995 (44 U.S.C. 3501– We have analyzed this rule under 3520). Executive Order 13211, Actions PART 117—DRAWBRIDGE Concerning Regulations That OPERATION REGULATIONS Federalism Significantly Affect Energy Supply, A rule has implications for federalism Distribution, or Use. We have ■ 1. The authority citation for part 117 under Executive Order 13132, determined that it is not a ‘‘significant continues to read as follows: Federalism, if it has a substantial direct energy action’’ under that order because Authority: 33 U.S.C. 499; 33 CFR 1.05–1; effect on State or local governments and it is not a ‘‘significant regulatory action’’ Department of Homeland Security Delegation would either preempt State law or under Executive Order 12866 and is not No. 0170.1.

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■ 2. In Sec. 117.799, paragraph (d) is www.regulations.gov, inserting USCG– this draw opened approximately 35 suspended and paragraph (k) is added to 2011–1134 in the ‘‘Keywords’’ box, and times per month. The Atlantic Ocean is read as follows: then clicking ‘‘Search’’. This material is the alternate route for vessels and the also available for inspection or copying bridge will be able to open in the event § 117.799 Long Island, New York Inland Waterway from East Rockaway Inlet to the Docket Management Facility (M–30), of an emergency. Shinnecock Canal. U.S. Department of Transportation, In accordance with 33 CFR 117.35(e), West Building Ground Floor, Room the draw must return to its original * * * * * (k) The draws of the West Bay Bridge, W12–140, 1200 New Jersey Avenue SE., operating schedule immediately at the mile 0.0, across Quantuck Canal, Beach Washington, DC 20590, between 9 a.m. end of the designated time period. This Lane Bridge, mile 1.1, across Quantuck and 5 p.m., Monday through Friday, deviation from the operating regulations Canal, and the Quoque Bridge, mile 1.1, except Federal Holidays. is authorized under 33 CFR 117.35. across Quoque Canal, shall open on FOR FURTHER INFORMATION CONTACT: If Dated: December 30 2011. signal from October 1 through April 30 you have questions on this rule, call or W.D. Lee, from 8 a.m. to 4 p.m. and from May 1 email Mr. Bill H. Brazier, Bridge Rear Admiral, District Commander, Fifth through September 30, from 6 a.m. to 10 Management Specialist, Fifth Coast Coast Guard District. p.m. The draw of the Smith Point Guard District, telephone (757) 398– [FR Doc. 2012–51 Filed 1–3–12; 4:15 pm] 6422, email [email protected]. If Bridge, mile 6.1, across Narrow Bay, BILLING CODE 4910–15–P need open only one of the two movable you have questions on reviewing the spans for the passage of vessel traffic docket, call Renee V. Wright, Program from December 22, 2011 through May Manager, Docket Operations, (202) 366– DEPARTMENT OF HOMELAND 25, 2012. The draw shall open on signal 9826. SECURITY from December 22 through April 30 SUPPLEMENTARY INFORMATION: The North from 8 a.m. to 4 p.m. and from May 1 Carolina Department of Transportation, Federal Emergency Management through May 25, 6 a.m. through 10 p.m. who owns and operates this bascule-lift Agency At all other times during these periods, type bridge, has requested a temporary the draws shall open as soon as possible deviation from the current operating 44 CFR Part 65 but no more than one hour after a regulations set out in 33 CFR [Docket ID FEMA–2011–0002] request to open is received. 117.821(a)(4), to facilitate the structural Dated: December 21, 2011. repair of the bridge. Changes in Flood Elevation The S.R. 74 Bridge across the AIWW James B. McPherson, Determinations mile 283.1, at Wrightsville Beach, NC Captain, U.S. Coast Guard, Acting has a vertical clearance in the closed AGENCY: Federal Emergency Commander, First Coast Guard District. position of 20 feet, above mean high Management Agency, DHS. [FR Doc. 2011–33832 Filed 1–4–12; 8:45 am] water. ACTION: Final rule. BILLING CODE 9110–04–P Under the regular operating schedule, the drawbridge shall open on signal for SUMMARY: Modified Base (1% annual- chance) Flood Elevations (BFEs) are DEPARTMENT OF HOMELAND commercial vessels at all times; and on finalized for the communities listed SECURITY signal for pleasure vessels except between 7 a.m. and 7 p.m. when the below. These modified BFEs will be Coast Guard drawbridge need only open on the hour. used to calculate flood insurance Under this temporary deviation, the premium rates for new buildings and 33 CFR Part 117 structural repairs will restrict the their contents. operation of the draw span to the DATES: The effective dates for these [Docket No. USCG–2011–1134] closed-to-navigation position, each day modified BFEs are indicated on the Drawbridge Operation Regulations; from 7 p.m. to 7 a.m., beginning on following table and revise the Flood Atlantic Intracoastal Waterway (AIWW), Tuesday, January 3, 2012 and ending on Insurance Rate Maps (FIRMs) in effect Wrightsville Beach, NC Thursday, March 15, 2012; except vessel for the listed communities prior to this openings will be provided with at least date. AGENCY: Coast Guard, DHS. two hours advance notice given to the ADDRESSES: The modified BFEs for each ACTION: Notice of temporary deviation bridge operator. Each day between 7 community are available for inspection from regulations. a.m. and 7 p.m., the drawbridge will at the office of the Chief Executive continue to operate as set out in 33 CFR Officer of each community. The SUMMARY: The Commander, Fifth Coast 117.821(a). Guard District, has approved a respective addresses are listed in the Vessels may transit under the table below. temporary deviation from the drawbridge while it is in the closed regulations governing the operation of position. The Atlantic Intracoastal FOR FURTHER INFORMATION CONTACT: Luis the S.R. 74 Bridge across the AIWW, Waterway serves a variety of vessels Rodriguez, Chief, Engineering mile 283.1, at Wrightsville Beach, NC. from tug and barge traffic to recreational Management Branch, Federal Insurance The deviation restricts the operation of vessels traveling from Florida to Maine. and Mitigation Administration, Federal the draw span to facilitate the structural The Coast Guard will inform Emergency Management Agency, 500 C repair of the bridge. unexpected users of the waterway Street SW., Washington, DC 20472, DATES: This deviation is effective from through our local and broadcast Notices (202) 646–4064, or (email) 7 p.m. on January 3, 2012 until 7 a.m. to Mariners of the limited operating [email protected]. on March 15, 2012. schedule for the drawbridge so that SUPPLEMENTARY INFORMATION: The ADDRESSES: Documents mentioned in vessels can arrange their transits to Federal Emergency Management Agency this preamble as being available in the minimize any impacts caused by the (FEMA) makes the final determinations docket USCG–2011–1134 and are temporary deviation. In 2011, from listed below of the modified BFEs for available online by going to http:// January thru March, 7 p.m. to 7 a.m., each community listed. These modified

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BFEs have been published in required by 44 CFR 60.3, are the under the criteria of section 3(f) of newspapers of local circulation and minimum that are required. They Executive Order 12866 of September 30, ninety (90) days have elapsed since that should not be construed to mean that 1993, Regulatory Planning and Review, publication. The Deputy Federal the community must change any 58 FR 51735. Insurance and Mitigation Administrator existing ordinances that are more Executive Order 13132, Federalism. has resolved any appeals resulting from stringent in their floodplain This final rule involves no policies that this notification. management requirements. The have federalism implications under The modified BFEs are not listed for community may at any time enact Executive Order 13132, Federalism. each community in this notice. stricter requirements of its own or Executive Order 12988, Civil Justice However, this final rule includes the pursuant to policies established by other Reform. This final rule meets the address of the Chief Executive Officer of Federal, State, or regional entities. applicable standards of Executive Order the community where the modified BFE These modified BFEs are used to meet 12988. determinations are available for the floodplain management inspection. requirements of the NFIP and also are List of Subjects in 44 CFR Part 65 The modified BFEs are made pursuant used to calculate the appropriate flood Flood insurance, Floodplains, to section 206 of the Flood Disaster insurance premium rates for new Reporting and recordkeeping Protection Act of 1973, 42 U.S.C. 4105, buildings built after these elevations are requirements. and are in accordance with the National made final, and for the contents in those Flood Insurance Act of 1968, 42 U.S.C. Accordingly, 44 CFR part 65 is buildings. The changes in BFEs are in amended to read as follows: 4001 et seq., and with 44 CFR part 65. accordance with 44 CFR 65.4. For rating purposes, the currently effective community number is shown National Environmental Policy Act. PART 65—[AMENDED] and must be used for all new policies This final rule is categorically excluded and renewals. from the requirements of 44 CFR part ■ 1. The authority citation for part 65 The modified BFEs are the basis for 10, Environmental Consideration. An continues to read as follows: the floodplain management measures environmental impact assessment has Authority: 42 U.S.C. 4001 et seq.; that the community is required either to not been prepared. Reorganization Plan No. 3 of 1978, 3 CFR, adopt or to show evidence of being Regulatory Flexibility Act. As flood 1978 Comp., p. 329; E.O. 12127, 44 FR 19367, already in effect in order to qualify or elevation determinations are not within 3 CFR, 1979 Comp., p.376. the scope of the Regulatory Flexibility to remain qualified for participation in § 65.4 [Amended] the National Flood Insurance Program Act, 5 U.S.C. 601–612, a regulatory (NFIP). flexibility analysis is not required. ■ 2. The tables published under the These modified BFEs, together with Regulatory Classification. This final authority of § 65.4 are amended as the floodplain management criteria rule is not a significant regulatory action follows:

Location and case Date and name of newspaper Effective date of Community State and county No. where notice was published Chief executive officer of community modification No.

Alabama: Baldwin (FEMA City of Orange June 22, 2011; June 29, 2011; The Honorable Tony Kennon, Mayor, City June 14, 2011 ...... 015011 Docket No.: Beach (11–04– The Islander. of Orange Beach, 4099 Orange Beach B-1211). 4328P). Boulevard, Orange Beach, AL 36561. Madison (FEMA City of Huntsville June 22, 2011; June 29, 2011; The Honorable Tommy Battle, Mayor, October 27, 2011 ...... 010153 Docket No.: (10–04–7862P). The Huntsville Times. City of Huntsville, 308 Fountain Circle, B-1211). 8th Floor, Huntsville, AL 35801. Arizona: Maricopa City of Peoria (11– June 2, 2011; June 9, 2011; The Honorable Bob Barrett, Mayor, City October 7, 2011 ...... 040050 (FEMA Dock- 09–0647P). The Arizona Business Ga- of Peoria, 8401 West Monroe Street, et No.: zette. Peoria, AZ 85345. B-1206). Maricopa Unincorporated June 2, 2011; June 9, 2011; The Honorable Andrew Kunasek, Chair- October 7, 2011 ...... 040037 (FEMA Dock- areas of Maricopa The Arizona Business Ga- man, Maricopa County Board of Super- et No.: County (11–09– zette. visors, 301 West Jefferson Street, 10th B-1206). 0647P). Floor, Phoenix, AZ 85003. Navajo (FEMA Town of Snowflake May 27, 2011; June 3, 2011; The Honorable Kelly Willis, Mayor, Town October 3, 2011 ...... 040070 Docket No.: (10–09–1783P). The White Mountain Inde- of Snowflake, 81 West 1st South, B-1206). pendent. Snowflake, AZ 85937. California: Shasta (FEMA Unincorporated June 1, 2011; June 8, 2011; The Honorable Les Baugh, Chairman, October 6, 2011 ...... 060358 Docket No.: areas of Shasta The Red Bluff Daily News. Shasta County Board of Supervisors, B-1206). County (10–09– 1450 Court Street, Suite 308B, Red- 3227P). ding, CA 96001. Tehama (FEMA Unincorporated June 1, 2011; June 8, 2011; The Honorable Gregg Avilla, Chairman, October 6, 2011 ...... 065064 Docket No.: areas of Tehama The Anderson Valley Post. Tehama County Board of Supervisors, B-1206). County (10–09– 727 Oak Street, Red Bluff, CA 96080. 3227P). Colorado: Douglas Unincorporated July 7, 2011; July 14, 2011; The Honorable Jill Repella, Chair, Doug- June 30, 2011 ...... 080049 (FEMA Docket areas of Douglas The Douglas County News- las County Board of Commissioners, No.: B-1219). County (11–08– Press. 100 3rd Street, Castle Rock, CO 80104. 0044P). Kentucky: Fayette Lexington-Fayette June 22, 2011; June 29, 2011; The Honorable Jim Gray, Mayor, Lex- October 27, 2011 ...... 210067 (FEMA Docket Urban County The Lexington Herald-Leader. ington-Fayette Urban County Govern- No.: B-1211). Government (11– ment, 200 East Main Street, Lexington, 04–0368P). KY 40507. Nevada: Clark City of Las Vegas June 23, 2011; June 30, 2011; The Honorable Oscar B. Goodman, June 16, 2011 ...... 325276 (FEMA Docket (11–09–1593P). The Las Vegas Review-Jour- Mayor, City of Las Vegas, 400 Stewart No.: B-1211). nal. Avenue, Las Vegas, NV 89101.

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Location and case Date and name of newspaper Effective date of Community State and county No. where notice was published Chief executive officer of community modification No.

North Carolina: Alamance City of Burlington May 6, 2011; May 13, 2011; The Honorable Ronnie K. Wall, Mayor, September 12, 2011 ...... 370002 (FEMA Dock- (10–04–4375P). The Times-News. City of Burlington, 425 South Lexington et No.: Avenue, Burlington, NC 27216. B-1206). Alamance Town of Elon (10– May 6, 2011; May 13, 2011; The Honorable Jerry R. Tolley, Mayor, September 12, 2011 ...... 370411 (FEMA Dock- 04–4375P). The Times-News. Town of Elon, 104 South Williamson et No.: Avenue, Elon, NC 27244. B-1206). Buncombe Unincorporated May 13, 2011; May 20, 2011; Ms. Wanda Greene, Buncombe County September 19, 2011 ...... 370031 (FEMA Dock- areas of Bun- The Asheville Citizen-Times. Manager, 205 College Street, Suite et No.: combe County 300, Asheville, NC 28801. B-1206). (10–04–2274P). Davidson Unincorporated May 6, 2011; May 13, 2011; Mr. Robert Hyatt Davidson, County Man- September 12, 2011 ...... 370307 (FEMA Dock- areas of Davidson The High Point Enterprise. ager, 913 Greensboro Street, Lex- et No.: County (10–04– ington, NC 27292. B-1206). 3473P). Guilford (FEMA City of High Point May 6, 2011; May 13, 2011; The Honorable Rebecca R. Smothers, September 12, 2011 ...... 370113 Docket No.: (10–04–3473P). The High Point Enterprise. Mayor, City of High Point, 211 South B-1206). Hamilton Street, High Point, NC 27261. Madison (FEMA Unincorporated March 30, 2011; April 6, 2011; Mr. Steve Garrison, Madison County August 4, 2011 ...... 370152 Docket No.: areas of Madison The News-Record & Sentinel. Manager, 2 North Main Street, Mar- B-1206). County (10–04– shall, NC 28753. 8485P). Union (FEMA Unincorporated June 2, 2011; June 9, 2011; Ms. Cynthia Coto, Union County Man- October 7, 2011 ...... 370234 Docket No.: areas of Union The Charlotte Observer and ager, Union County Government Cen- B-1209). County (11–04– The Enquirer-Journal. ter, 500 North Main Street, Room 918, 1541P). Monroe, NC 28112. Union (FEMA Village of Marvin June 2, 2011; June 9, 2011; The Honorable Nick Dispenziere, Mayor, October 7, 2011 ...... 370514 Docket No.: (11–04–1541P). The Charlotte Observer and Village of Marvin, 10004 New Town B-1209). The Enquirer-Journal. Road, Marvin, NC 28173.

(Catalog of Federal Domestic Assistance No. the table below and revise the Flood The modifications are made pursuant 97.022, ‘‘Flood Insurance.’’) Insurance Rate Maps (FIRMs) in effect to section 201 of the Flood Disaster Dated: December 20, 2011. prior to this determination for the listed Protection Act of 1973, 42 U.S.C. 4105, Sandra K. Knight, communities. and are in accordance with the National Deputy Associate Administrator for From the date of the second Flood Insurance Act of 1968, 42 U.S.C. Mitigation, Department of Homeland publication of these changes in a 4001 et seq., and with 44 CFR part 65. Security, Federal Emergency Management newspaper of local circulation, any For rating purposes, the currently Agency. person has ninety (90) days in which to effective community number is shown [FR Doc. 2011–33772 Filed 1–4–12; 8:45 am] request through the community that the and must be used for all new policies BILLING CODE 9110–12–P Deputy Federal Insurance and and renewals. Mitigation Administrator reconsider the The modified BFEs are the basis for changes. The modified BFEs may be the floodplain management measures DEPARTMENT OF HOMELAND changed during the 90-day period. that the community is required either to SECURITY ADDRESSES: The modified BFEs for each adopt or to show evidence of being community are available for inspection already in effect in order to qualify or Federal Emergency Management at the office of the Chief Executive to remain qualified for participation in Agency Officer of each community. The the National Flood Insurance Program respective addresses are listed in the (NFIP). 44 CFR Part 65 table below. These modified BFEs, together with [Docket ID FEMA–2011–0002; Internal FOR FURTHER INFORMATION CONTACT: Luis the floodplain management criteria Agency Docket No. FEMA–B–1235] Rodriguez, Chief, Engineering required by 44 CFR 60.3, are the Management Branch, Federal Insurance minimum that are required. They Changes in Flood Elevation and Mitigation Administration, Federal Determinations should not be construed to mean that Emergency Management Agency, 500 C the community must change any AGENCY: Federal Emergency Street SW., Washington, DC 20472, existing ordinances that are more Management Agency, DHS. (202) 646–4064, or (email) stringent in their floodplain [email protected]. ACTION: Interim rule. management requirements. The SUPPLEMENTARY INFORMATION: The community may at any time enact SUMMARY: This interim rule lists modified BFEs are not listed for each stricter requirements of its own or communities where modification of the community in this interim rule. pursuant to policies established by other Base (1% annual-chance) Flood However, the address of the Chief Federal, State, or regional entities. The Elevations (BFEs) is appropriate because Executive Officer of the community changes in BFEs are in accordance with of new scientific or technical data. New where the modified BFE determinations 44 CFR 65.4. flood insurance premium rates will be are available for inspection is provided. National Environmental Policy Act. calculated from the modified BFEs for Any request for reconsideration must This interim rule is categorically new buildings and their contents. be based on knowledge of changed excluded from the requirements of 44 DATES: These modified BFEs are conditions or new scientific or technical CFR part 10, Environmental currently in effect on the dates listed in data. Consideration. An environmental

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impact assessment has not been Executive Order 13132, Federalism. PART 65—[AMENDED] prepared. This interim rule involves no policies Regulatory Flexibility Act. As flood that have federalism implications under ■ 1. The authority citation for part 65 elevation determinations are not within Executive Order 13132, Federalism. continues to read as follows: Executive Order 12988, Civil Justice the scope of the Regulatory Flexibility Reform. This interim rule meets the Authority: 42 U.S.C. 4001 et seq.; Act, 5 U.S.C. 601–612, a regulatory applicable standards of Executive Order Reorganization Plan No. 3 of 1978, 3 CFR, flexibility analysis is not required. 12988. 1978 Comp., p. 329; E.O. 12127, 44 FR 19367, Regulatory Classification. This 3 CFR, 1979 Comp., p. 376. List of Subjects in 44 CFR Part 65 interim rule is not a significant § 65.4 [Amended] regulatory action under the criteria of Flood insurance, Floodplains, section 3(f) of Executive Order 12866 of Reporting and recordkeeping ■ The tables published under the September 30, 1993, Regulatory requirements. authority of § 65.4 are amended as Accordingly, 44 CFR part 65 is Planning and Review, 58 FR 51735. follows: amended to read as follows:

Location and case Date and name of newspaper Effective date of Community State and county No. where notice was published Chief executive officer of community modification No.

Alabama: Baldwin ...... City of Gulf Shores October 7, 2011; October 14, The Honorable Robert S. Craft, Mayor, September 29, 2011 ...... 015005 (11–04–5389P). 2011; The Islander. City of Gulf Shores, 1905 West 1st Street, Gulf Shores, AL 36547. Baldwin ...... City of Gulf Shores October 11, 2011; October 18, The Honorable Robert S. Craft, Mayor, October 4, 2011 ...... 015005 (11–04–6730P). 2011; The Islander. City of Gulf Shores, 1905 West 1st Street, Gulf Shores, AL 36547. Madison ...... City of Huntsville September 8, 2011; September The Honorable Tommy Battle, Mayor, January 13, 2012 ...... 010153 (11–04–3252P). 15, 2011; The Huntsville City of Huntsville, 308 Fountain Circle, Times. 8th Floor, Huntsville, AL 35801. Mobile ...... Unincorporated October 27, 2011; November 3, The Honorable Merceria Ludgood, Chair, March 2, 2012 ...... 015008 areas of Mobile 2011; The Press-Register. Mobile County Commission, 205 Gov- County (11–04– ernment Street, Mobile, AL 36644. 1739P). California: Butte ...... Unincorporated October 7, 2011; October 14, The Honorable Steve Lambert, Chairman, February 13, 2012 ...... 060017 areas of Butte 2011; The Chico Enterprise- Butte County Board of Supervisors, County (11–09– Record. 3159 Nelson Avenue, Oroville, CA 3448P). 95965. Napa ...... City of Napa (11– October 14, 2011; October 21, The Honorable Jill Techel, Mayor, City of February 20, 2012 ...... 060207 09–3313P). 2011; The Napa Valley Reg- Napa, 955 School Street, Napa, CA ister. 94559. Napa ...... Unincorporated October 14, 2011; October 21, The Honorable Bill Dodd, Chairman, February 20, 2012 ...... 060205 areas of Napa 2011; The Napa Valley Reg- Napa County Board of Supervisors, County (11–09– ister. 1195 3rd Street, Suite 310, Napa, CA 3313P). 94559. San Mateo ...... City of San Carlos October 7, 2011; October 14, The Honorable Andy Klein, Mayor, City of February 13, 2012 ...... 060327 (11–09–1259P). 2011; The San Mateo Daily San Carlos, 600 Elm Street, San Car- Journal. los, CA 94070. Solano ...... City of Fairfield (11– October 20, 2011; October 27, The Honorable Harry T. Price, Mayor, February 24, 2012 ...... 060370 09–1570P). 2011; The Daily Republic. City of Fairfield, 1000 Webster Street, Fairfield, CA 94533. Colorado: Adams ...... City of Commerce October 25, 2011; November 1, The Honorable Paul Natale, Mayor, City March 2, 2012 ...... 080006 City (10–08– 2011; The Commerce City of Commerce City, 7887 East 60th Av- 1048P). Sentinel Express. enue, Commerce City, CO 80022. Adams & City of Aurora (11– October 6, 2011; October 13, The Honorable Ed Tauer, Mayor, City of February 10, 2012 ...... 080002 Arapahoe. 08–0699P). 2011; The Aurora Sentinel. Aurora, 15151 East Alameda Parkway, Aurora, CO 80012. Florida: Broward ...... City of Deerfield October 6, 2011; October 13, The Honorable Peggy Noland, Mayor, September 29, 2011 ...... 125101 Beach (11–04– 2011; The Sun-Sentinel. City of Deerfield Beach, 150 Northeast 7254P). 2nd Avenue, Deerfield Beach, FL 33441. St. Johns ...... Unincorporated October 5, 2011; October 12, The Honorable Joseph Bryan. Chairman, February 9, 2012 ...... 125147 areas of St. Johns 2011; The St. Augustine St. Johns County Board of Commis- County (11–04– Record. sioners, 500 San Sebastian View, St. 4627P). Augustine, FL 32084. Seminole ...... City of Altamonte October 27, 2011; November 3, The Honorable Patricia Bates, Mayor, October 20, 2011 ...... 120290 Springs (11–04– 2011; The Orlando Sentinel. City of Altamonte Springs, 225 New- 7292P). buryport Avenue, Altamonte Springs, FL 32701. Seminole ...... Unincorporated October 27, 2011; November 3, The Honorable Brenda Carey, Chair, October 20, 2011 ...... 120289 areas of Seminole 2011; The Orlando Sentinel. Seminole County Board of Commis- County (11–04– sioners, 1101 East 1st Street, Sanford, 7523P). FL 32771. Georgia: Columbia ...... Unincorporated November 2, 2011; November The Honorable Ron C. Ross, Chairman, October 27, 2011 ...... 130059 areas of Columbia 9, 2011; The Columbia Columbia County Board of Commis- County (11–04– County News-Times. sioners, 630 Ronald Reagan Drive 5127P). Building B, 2nd Floor, Evans, GA 30809.

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Location and case Date and name of newspaper Effective date of Community State and county No. where notice was published Chief executive officer of community modification No.

Liberty ...... City of Hinesville September 30, 2011; October The Honorable James Thomas, Jr., September 26, 2011 ...... 130125 (11–04–0768P). 7, 2011; The Coastal Courier. Mayor, City of Hinesville, 115 East Mar- tin Luther King, Jr. Drive, Hinesville, GA 31313. Liberty ...... Unincorporated September 30, 2011; October The Honorable John D. McIver, Chair- September 26, 2011 ...... 130123 areas of Liberty 7, 2011; The Coastal Courier. man, Liberty County Board of Commis- County (11–04– sioners, 112 North Main Street, 0768P). Hinesville, GA 31310. Mississippi: DeSoto City of Olive Branch October 27, 2011; November 3, The Honorable Sam Rikard, Mayor, City March 2, 2012 ...... 280286 (11–04–4496P). 2011; The DeSoto Times- of Olive Branch, 9200 Pigeon Roost Tribune. Road, Olive Branch, MS 38654. Nevada: Clark ...... City of Henderson October 6, 2011; October 13, The Honorable Andy A. Hafen, Mayor, February 10, 2012 ...... 320005 (11–09–3801P). 2011; The Las Vegas Re- City of Henderson, 240 Water Street, view-Journal. Henderson, NV 89015. Clark ...... Unincorporated October 6, 2011; October 13, The Honorable Susan Brager, Chair, February 10, 2012 ...... 320003 areas of Clark 2011; The Las Vegas Re- Clark County Board of Commissioners, County (11–09– view-Journal. 500 South Grand Central Parkway, Las 3801P). Vegas, NV 89155. Utah: Box Elder ...... City of Willard (11– September 28, 2011; October The Honorable Ken Braegger, Mayor, February 2, 2012 ...... 490011 08–0207P). 5, 2011; The Box Elder City of Willard, 80 West 50 South, Wil- News Journal. lard, UT 84340. Wyoming: Campbell ...... City of Gillette (11– October 18, 2011; October 25, The Honorable Tom Murphy, Mayor, City February 22, 2012 ...... 560007 08–0780P). 2011; The News-Record. of Gillette, 201 East 5th Street, Gillette, WY 82717. Campbell ...... Unincorporated October 18, 2011; October 25, The Honorable Stephen F. Hughes, February 22, 2012 ...... 560081 areas of Campbell 2011; The News-Record. Chairman, Campbell County Board of County (11–08– Commissioners, 500 South Gillette Av- 0780P). enue, Suite 1100, Gillette, WY 82717.

(Catalog of Federal Domestic Assistance No. ADDRESSES: EPA has established a I. General Information 97.022, ‘‘Flood Insurance.’’) docket for this action under Docket ID A. Does this action apply to me? Dated: December 20, 2011. No. EPA–HQ–OARM–2010–0764. All Sandra K. Knight, documents in the docket are listed on Entities potentially affected by this action include firms that are performing Deputy Associate Administrator for the www.regulations.gov Web site. Mitigation, Department of Homeland Although listed in the index, some or will perform under contract for the Security, Federal Emergency Management information is not publicly available, EPA. This includes firms in all industry Agency. e.g., CBI or other information whose groups. [FR Doc. 2011–33773 Filed 1–4–12; 8:45 am] disclosure is restricted by statute. II. Background Certain other material, such as BILLING CODE 9110–12–P In May, 2010 during the review of copyrighted material, is not placed on clause 1552.211–79 the EPA Office of the Internet and will be publicly Environmental Information (OEI), the available only in hard copy form. Office of Acquisition Management ENVIRONMENTAL PROTECTION Publicly available docket materials are AGENCY (OAM) and other offices found available either electronically through information within this clause to be www.regulations.gov or in hard copy at 48 CFR Part 1552 outdated. The administrative updates to the Office of Environmental (OEI) the clause will bring it in line with Information Docket, EPA/DC, EPA West, current EPA policy. [EPA–HQ–OARM–2010–0764; FRL–9616–2] Room 3334, 1301 Constitution Avenue NW., Washington, DC. The Public III. Final Rule EPAAR Clause for Compliance With Reading Room is open from 8:30 a.m. to EPA Policies for Information This rule amends the EPAAR to revise 4:30 p.m., Monday through Friday, Resources Management the clause 1552.211–79, Compliance excluding legal holidays. The telephone with EPA Policies for Information AGENCY: Environmental Protection number for the Public Reading Room is Resources Management. The proposed Agency (EPA). (202) 566–1744, and the telephone rule was published on May 6, 2011. No ACTION: Final rule. number for the OEI Docket is (202) 566– Comments were received. 1752. IV. Statutory and Executive Order SUMMARY: EPA will amend the EPA FOR FURTHER INFORMATION CONTACT: Reviews Acquisition Regulation (EPAAR) to Donna S. Blanding, Policy, Training, revise the content of a clause that A. Executive Order 12866: Regulatory and Oversight Division, Office of addresses compliance policies for Planning and Review and Executive Acquisition Management (3802R), information resources management in Order 13563: Improving Regulation and Environmental Protection Agency, 1200 contracts. This revision incorporates to Regulatory Review Pennsylvania Avenue NW., Washington, the EPAAR, administrative changes to DC 20460; telephone number: (202) This action is not a ‘‘significant update terminology and Web site links 564–1130; fax number: (202) 565–2475; regulatory action’’ under the terms of related to EPA policies for information email address: Executive Order (EO)12866 (58 FR resources management. [email protected]. 51735, October 4, 1993) and E.O. 13563 DATES: This final rule is January 20, (76 FR 3821, January 21, 2011). 2012. SUPPLEMENTARY INFORMATION: Therefore, no review is required by the

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Office of Information and Regulatory or the private sector. The rule imposes comments on this rule and no Affairs within the Office of Management no enforceable duty on any State, Local comments were received from tribal and Budget (OMB). or Tribal governments or the private officials. sector. Thus, the rule is not subject to B. Paperwork Reduction Act G. Executive Order 13045: Protection of the requirements of Sections 202 and Children From Environmental Health This action does not impose an 205 of the UMRA. information collection burden under the and Safety Risks provisions of the Paperwork Reduction E. Executive Order 13132: Federalism Executive Order 13045, entitled Act, 44 U.S.C. 3501 et seq. No Executive Order 13132, entitled ‘‘Protection of Children from information is collected under this ‘‘Federalism’’ (64 FR 43255, August 10, Environmental Health and Safety Risks’’ action. 1999), requires EPA to develop an (62 FR 19885, April 23, 1997), applies accountable process to ensure to any rule that: (1) Is determined to be C. Regulatory Flexibility Act (RFA), as ‘‘meaningful and timely input by State economically significant as defined Amended by the Small Business and Local officials in the development under Executive Order 12886, and (2) Regulatory Enforcement Fairness Act of of regulatory policies that have concerns an environmental health or 1996 (SBREFA), 5 U.S.C. 601 et seq. federalism implications.’’ ‘‘Policies that safety risk that may have a The Regulatory Flexibility Act have federalism implications’’ is proportionate effect on children. This generally requires an agency to prepare defined in the Executive Order to rule is not subject to Executive Order a regulatory flexibility analysis of any include regulations that have 13045 because it is not an economically rule subject to notice and comment ‘‘substantial direct effects on the States, significant rule as defined by Executive rulemaking requirements under the on the relationship between the national Order 12866, and because it does not Administrative Procedure Act or any government and the States, or on the involve decisions on environmental other statute; unless the agency certifies distribution of power and health or safety risks. that the rule will not have a significant responsibilities among the various economic impact on a substantial levels of government.’’ H. Executive Order 13211: Actions That number of small entities. Small entities This rule does not have federalism Significantly Affect Energy Supply, include small businesses, small implications. It will not have substantial Distribution, or Use organizations, and small governmental direct effects on the States, on the This rule is not subject to Executive jurisdictions. relationship between the national Order 13211, ‘‘Actions Concerning For purposes of assessing the impact government and the States, or on the Regulations That Significantly Affect of today’s final rule on small entities, distribution of power and Energy Supply, Distribution of Use’’ (66 ‘‘small entity’’ is defined as: (1) A small responsibilities among the various FR 28335 (May 22, 2001), because it is business that meets the definition of a levels of government, as specified in not a significant regulatory action under small business found in the Small Executive Order 13132. Today’s rule on Executive Order 12866. Business Act and codified at 13 CFR Compliance with EPA Policies for I. National Technology Transfer and 121.201; (2) a small governmental Information Resources Management Advancement Act of 1995 (NTTAA) jurisdiction that is a government of a provides updates to outdated city, county, town, school district or information currently in the clause, Section 12(d) (15 U.S.C 272 note) of special district with a population of less these changes are administrative. Thus, NTTA, Public Law 104–113, directs than 50,000; and (3) a small Executive Order 13132 does not apply EPA to use voluntary consensus organization that is any not-for-profit to this rule. In the spirit of Executive standards in its regulatory activities, enterprise which is independently Order 13132, and consistent with EPA unless to do so would be inconsistent owned and operated and is not policy to promote communications with applicable law, or otherwise dominant in its field. between EPA and State and Local impractical. Voluntary consensus After considering the economic governments, EPA specifically solicited standards are technical standards (e.g. impacts of this rule on small entities, I comments from State and Local officials materials specifications, test methods, certify that this action will not have a on this rule and no comments were sampling procedures and business significant economic impact on a received. practices) that are developed or adopted by voluntary consensus standards substantial number of small entities. F. Executive Order 13175: Consultation bodies. The NTTA directs EPA to This action revises a current EPAAR and Coordination With Indian Tribal provide Congress, through OMB, clause and does not impose Governments requirements involving capital explanations when the Agency decides investment, implementing procedures, Executive Order 13175, entitled not to use available and applicable or record keeping. This rule will not ‘‘Consultation and Coordination with voluntary consensus standards. Indian Tribal Governments’’ (65 FR have a significant economic impact on J. Executive Order 12898: Federal small entities. 67249, November 9, 2000), requires EPA to develop an accountable process to Actions To Address Environmental D. Unfunded Mandates Reform Act ensure ‘‘meaningful and timely input by Justice in Minority Populations and Title II of the Unfunded Mandates tribal officials in the development of Low-Income Populations Reform Act of 1995 (UMRA), Public regulatory policies that have tribal Executive Order (EO) 12898 (59 FR Law 104–4, establishes requirements for implications.’’ This rule does not have 7629 (Feb. 16, 1994) establishes Federal Federal agencies to assess the effects of tribal implications, as specified in executive policy on environmental their regulatory actions on State, Local, Executive Order 13175. This rule on justice. Its main provision directs and Tribal governments and the private EPA’s Policies for Information Federal agencies, to the greatest extent sector. Resources Management provides practicable and permitted by law, to This rule contains no Federal guidance on the interaction between make environmental justice part of their mandates (under the regulatory contracting officials and contractors mission by identifying and addressing, provisions of the Title II of the UMRA) only. This Executive Order 13175 does as appropriate, disproportionately high for State, Local, and Tribal governments not apply to this rule. EPA solicited and adverse human health or

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environmental effects of their programs, automated data base for delivery to EPA DEPARTMENT OF TRANSPORTATION policies, and activities on minority or use by EPA or contractors operating populations and low-income EPA programs. Pipeline and Hazardous Materials Safety Administration populations in the United States. (2) The analysis of requirements for, EPA has determined that this rule will not have disproportionately high and study of the feasibility of, evaluation of 49 CFR Part 173 adverse human health or environmental alternatives for, or design and development of a computer program or [Docket No. PHMSA–2011–0315; Notice No. effects on minority or low-income 11–13] populations because it does not affect automated data base for use by EPA or the level of protection provided to contractors operating EPA programs. Clarification and Further Guidance on human health or the environment. This (3) Services that provide EPA the Fireworks Approvals Policy rulemaking does not involve human personnel access to or use of computer AGENCY: Pipeline and Hazardous health or environmental affects. or word processing equipment, Materials Safety Administration software, or related services. K. Congressional Review Act (PHMSA), DOT. The Congressional Review Act, 5 (4) Services that provide EPA ACTION: Clarification. U.S.C. 801 et seq., as added by the Small personnel access to or use of: Data Business Regulatory Enforcement communications; electronic messaging SUMMARY: This clarification provides Fairness Act of 1996, does not apply services or capabilities; electronic further guidance on PHMSA’s policy because this action is not a rule, for bulletin boards, or other forms of that it will only accept fireworks purposes of 5 U.S.C. 804(3). electronic information dissemination; approvals applications from fireworks This rulemaking does not involve electronic record-keeping; or any other manufacturers or their designated agents technical standards. Therefore, EPA is automated information services. and grant approvals only to manufacturers of fireworks devices. not considering the use of any voluntary (b) General. The Contractor shall consensus standards. This clarification and additional perform any IRM-related work under guidance follows the issuance of Docket List of Subjects in 48 CFR Part 1552 this contract in accordance with the No. PHMSA–2010–0353; Notice 10–9, Environmental protection, IRM policies, standards, and procedures published on June 29, 2011. Government procurement. set forth on the Office of Environmental DATES: The policy clarification Information policy Web site. Upon Dated: November 18, 2011. discussed in this document is effective receipt of a work request (i.e. delivery John R. Bashista, January 5, 2012. order, task order, or work assignment), Director, Office of Acquisition Management. FOR FURTHER INFORMATION CONTACT: Mr. the Contractor shall check this listing of Ryan Paquet, Director, Approvals and Therefore, 48 CFR Chapter 1552 is directives. The applicable directives for Permits Division, Office of Hazardous amended as set forth below: performance of the work request are Materials Safety, (202) 366–4512, PART 1552—DESCRIBING AGENCY those in effect on the date of issuance PHMSA, 1200 New Jersey Avenue SE., NEEDS of the work request. The 2100 Series Washington, DC 20590. (2100–2199) of the Agency’s Directive SUPPLEMENTARY INFORMATION: ■ 1. The authority citation for part 1552 System contains the majority of the continues to read as follows: Agency’s IRM policies, standards, and I. Introduction Authority: 5 U.S.C. 301; Sec. 205(c), 63 procedures. This document provides clarification and further guidance on PHMSA’s Stat. 390, as amended, 40 U.S.C. 486(c); and (c) Section 508 requirements. Contract Office of Hazardous Materials Safety 41 U.S.C. 418b. deliverables are required to be (OHMS), Clarification of the Fireworks ■ 2. Revise 1552.211–79 to read as compliant with Section 508 Approval Policy published on June 29, follows: requirements. The Environmental 2011 (76 FR 38053). Specifically, this 1552.211–79 Compliance With EPA Protection Agency policy for 508 document provides clarification and Policies for Information Resources compliance can be found on the additional guidance on how we intend Management. Agency’s Directive System identified in to implement our policy with respect to: As prescribed in 1511.011–79, insert section (d) of this clause under policy (1) EX classification approvals with the following clause: number CIO 2130.0, Accessible expiration dates; (2) applications from Compliance with EPA Policies for Electronic and Information Technology. non-manufacturers that seek to add new Information Resources Management Additional information on Section 508 item names to existing EX classification (a) Definition. Information Resources including EPA’s 508 policy can be approvals; and (3) applications from Management (IRM) is defined as any found at www.epa.gov/accessibility. non-manufacturers that were denied planning, budgeting, organizing, (d) Electronic access. A complete prior to June 29, 2011. directing, training, promoting, listing, including full text, of documents In addition to addressing questions as controlling, and managing activities included in the 2100 Series of the to how we intend to implement our associated with the burden, collection, earlier policy clarification, this Agency’s Directive System is creation, use and dissemination of document clarifies our policy regarding maintained on the EPA Public Access information. IRM includes both the transfer of EX classification information itself and the management Server on the Internet at http://epa.gov/ approvals. of information and related resources docs/irmpoli8/. such as personnel, equipment, funds, [FR Doc. 2011–33844 Filed 1–4–12; 8:45 am] II. Background and technology. Examples of these BILLING CODE P The transportation of an explosive services include but are not limited to (fireworks device) requires an EX the following: classification approval issued by (1) The acquisition, creation, or PHMSA, commonly referred to as an EX modification of a computer program or number. The EX number is a unique

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identifier that indicates the device has classification approval, the 29, 2011 to add an additional item name been classed and approved for manufacturer or its designated agent to an existing EX approval. transportation in the U.S., and is must be the entity who submits an If anyone other than the manufacturer specific to a particular device as application for renewal and all or its designated agent holds an existing specified in 49 CFR 173.56(j) and the supporting documentation to EX classification approval and it is American Pyrotechnic Association [email protected]. The manufacturer desired to add additional items to that (APA) Standard 87–1. must sign and certify that the device for approval, then the manufacturer or its PHMSA understands that it is a which the approval is requested designated agent must submit the EX common industry practice for fireworks conforms to the APA Standard 87–1, classification approval as a new devices produced by one manufacturer and the descriptions and technical application. to be marketed and sold under different information contained in the V. Firework Applications Denied trade names. Further, in the past, each application are complete and accurate Before June 29, 2011 retailer, importer or distributor, in in accordance with § 173.56(j)(3). Firework applications resubmitted addition to the manufacturer, applied All EX approvals with expiration after June 29, 2011 by any person, for and received an EX classification dates held by non-manufacturers will company or entity other than the approval for the identical fireworks expire as follows: Fireworks EX manufacturer or its designated agent device. This practice resulted in approvals expiring January 1, 2012 that were previously denied will not be PHMSA processing multiple through December 31, 2012 will expire accepted unless those applications are applications and issuing multiple two years from the date indicated in the submitted by the manufacturer or its approvals for the same fireworks device. approval. For example, a fireworks EX designated agent as the applicant. The This redundant and burdensome approval expiring on January 1, 2012 manufacturer must sign and certify that process did not promote the safe will be extended until January 1, 2014. the device for which the approval is transportation of explosives (fireworks A revised EX classification approval requested conforms to the APA devices); instead, it impeded the will be automatically sent to the Standard 87–1, and the descriptions and conduct of business for both the approval holder on record with the new technical information contained in the fireworks industry and PHMSA. expiration date. After December 31, application are complete and accurate On June 29, 2011, we issued a 2014, the manufacturer or its designated in accordance with § 173.56(j)(3). clarification of our policy to issue agent must submit the application for fireworks classification approvals only renewal and all supporting VI. Non-Transferability of EX to fireworks manufacturers, and accept documentation to [email protected]. Approvals fireworks classification applications The manufacturer must sign and certify only from fireworks manufacturers or EX approvals are non-transferrable, that the device for which the approval and therefore, may not be sold or their U.S. designated agents. This policy is requested conforms to the APA clarification was intended to restate the transferred. Accordingly, EX approvals Standard 87–1, and the descriptions and cannot be acquired in connection with requirements of the Hazardous Materials technical information contained in the Regulations (HMR), enhance safety by any sale of assets, sale of business, application are complete and accurate acquisition or merger. PHMSA may find ensuring accountability of in accordance with § 173.56(j)(3). manufacturing, and reducing the a company in violation of the HMR Fireworks EX classification approvals number of duplicate applications and should a manufacturer attempt to use an expiring January 1, 2013 through EX classification approvals being issued EX approval issued by PHMSA to December 31, 2015 will expire on the for identical fireworks devices. another company for manufacturing of Since the policy clarification was date noted in the EX approval and will the device. The manufacturer or its issued, we have received questions not be extended. The manufacturer or designated agent must submit an about how we intend to implement it its designated agent must submit an application for a new approval. The with respect to: (1) EX classification application for renewal and all manufacturer must sign and certify that approvals with expiration dates; (2) supporting documentation to the device for which the approval is applications from non-manufacturers [email protected]. The manufacturer requested conforms to the APA that seek to add new item names to must sign and certify that the device for Standard 87–1, and the descriptions and existing EX classification approvals; and which the approval is requested technical information contained in the (3) applications from non-manufacturers conforms to the APA Standard 87–1, application are complete and accurate that were denied prior to June 29, 2011. and the descriptions and technical in accordance with § 173.56(j)(3). If We have also received questions information contained in the approved, PHMSA will issue a new EX about our policy regarding the transfer application are complete and accurate approval to the manufacturer specified of EX classification approvals, which in accordance with § 173.56(j)(3). For in the application. example, a fireworks EX Approval was not addressed in the prior Summary clarification notice. expiring on March 22, 2014 will expire To address these questions regarding on March 22, 2014. PHMSA’s Office of Hazardous our fireworks approvals policy, we are All fireworks EX approvals with Materials Safety (OHMS), Approvals providing the following clarification expiration dates will expire by the end Office will continue to issue approvals and additional guidance. of 2015. only to fireworks manufacturers and accept applications only from IV. Requests To Add Additional Item III. EX Classification Approvals With manufacturers or their designated Names to Existing EX Classification Expiration Dates agents. Consistent with this policy, we Approvals After June 29, 2011, only a will only reissue EX classification manufacturer that holds a valid EX We often receive applications to add approvals with expiration dates that classification approval may reapply to fireworks device item names to an have been submitted by the have the EX number renewed. existing EX classification approval. manufacturer or its designated agent. If Regardless of who originally applied for Only a manufacturer or its designated the manufacturer was not the original the approval, to renew the EX agent may submit a request after June applicant, the manufacturer or its

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designated agent must submit the Act, and a person will need to qualify populations of the addax may still exist application as a new application. for an exemption or obtain an in remote desert areas, but probably However, we will provide an extended authorization under the current fewer than 600 occur in the wild. Only expiration date of two years for EX statutory and regulatory requirements to small numbers of dama gazelle are classification approvals that expire conduct any prohibited activities. estimated to occur in the species’ through December 31, 2012. DATES: This rule becomes effective on historical range, with recent estimates of Additionally, we will only accept April 4, 2012. An extended effective fewer than 700 in the wild. Captive- applications that seek to add new item date is being provided to facilitate in breeding programs operated by zoos and names to existing EX classification outreach to the affected communities. private ranches have increased the approvals from the manufacturer or its Several major industry events are number of these antelopes, while designated agent. If the manufacturer occurring in the beginning of 2012 genetically managing their herds and was not the original applicant, the where Service attendance will provide providing founder stock necessary for application must be submitted by the greater communication on the impacts reintroduction. The Sahelo-Saharan manufacturer or its designated agent as of this rule and will ensure greater Interest Group (SSIG) of the United a new application. Further, applications compliance by the affected Nations Environment Program estimated from non-manufacturers that were communities. In addition, an extended that there are 4,000–5,000 scimitar- denied prior to June 29, 2011 must be effective date will allow the affected horned oryx, 1,500 addax, and 750 resubmitted by the manufacturer. community to either legally sell their dama gazelle in captivity worldwide, Finally, EX approvals are non- specimens, if they choose to divest many of which are held in the United transferable, and therefore may not be themselves of these species, or to apply States. Based on a 2010 census of its sold or transferred. for authorization or permits to continue members, the Exotic Wildlife Issued in Washington, DC, on December carrying out previously approved Association (EWA) estimates there are 30, 2011. activities. 11,032 scimitar-horned oryx, 5,112 Magdy El-Sibaie, ADDRESSES: You may obtain information addax, and 894 dama gazelle on EWA Associate Administrator for Hazardous about permits or other authorizations to member ranches. Materials Safety, Pipeline and Hazardous carry out otherwise prohibited activities On September 2, 2005 (the same date Materials Safety Administration. by contacting the U.S. Fish and Wildlife that we listed the three antelopes as [FR Doc. 2011–33853 Filed 1–4–12; 8:45 am] Service, Division of Management endangered), the Service also published BILLING CODE 4910–60–P Authority, Branch of Permits, 4401 N. a new regulation (70 FR 52310) at 50 Fairfax Drive, Room 212, Arlington, VA CFR 17.21(h) to govern certain activities 22203; telephone: (703) 358–2104 or with U.S. captive-bred animals of these DEPARTMENT OF THE INTERIOR (toll free) (800) 358–2104; facsimile: three species. For live antelopes, (703) 358–2281; email: including embryos and gametes, and Fish and Wildlife Service [email protected]; Web sport-hunted trophies of these three site: http://www.fws.gov/international/ species, the regulation authorized 50 CFR Part 17 index.html. certain otherwise prohibited activities where the purpose of the activity is [Docket No. FWS–R9–IA–2010–0056; FOR FURTHER INFORMATION CONTACT: FF09A30000 123 FXGO16710900000R4] Robert R. Gabel, Chief, Division of associated with the management of the Management Authority, U.S. Fish and species in a manner that contributed to RIN 1018–AX29 Wildlife Service, 4401 N. Fairfax Drive, increasing or sustaining captive Suite 212, Arlington, VA 22203; numbers or to potential reintroduction Endangered and Threatened Wildlife to range countries. These activities and Plants; Removal of the Regulation telephone 703–358–2093; fax 703–358– 2280. If you use a telecommunications include take; export or re-import; That Excludes U.S. Captive-Bred delivery, receipt, carrying, transport or Scimitar-Horned Oryx, Addax, and devise for the deaf (TDD), call the Federal Information Relay Service shipment in interstate or foreign Dama Gazelle From Certain commerce in the course of a commercial Prohibitions (FIRS) at 800–877–8339. SUPPLEMENTARY INFORMATION: activity; and sale or offer for sale in AGENCY: Fish and Wildlife Service, interstate or foreign commerce. Interior. Background The promulgation of the regulation at ACTION: Final rule. On September 2, 2005 (70 FR 52319), 50 CFR 17.21(h) was challenged as the Service determined that the violating section 10 of the Act and the SUMMARY: We, the U.S. Fish and scimitar-horned oryx (Oryx dammah), National Environmental Policy Act (42 Wildlife Service (Service), are revising addax (Addax nasomaculatus), and U.S.C. 4321 et seq.) in the United States the regulations that implement the dama gazelle (Gazella dama) were District Court for the District of Endangered Species Act of 1973, as endangered throughout their ranges Columbia (see Friends of Animals, et al., amended (Act), by removing the under the Act (16 U.S.C. 1531 et seq.). v. Ken Salazar, Secretary of the Interior exclusion of U.S. captive-bred live The numbers of these species of and Rebecca Ann Cary, et al., v. Rowan wildlife and sport-hunted trophies of antelopes in the wild have declined Gould, Acting Director, Fish and three endangered antelopes—scimitar- drastically in the deserts of North Africa Wildlife Service, et al., 626 F. Supp. 2d horned oryx, addax, and dama gazelle— over the past 50 years. The causes of 102 (D.D.C. 2009)). The Court found that from the prohibition of certain decline are habitat loss (desertification, the rule for the three antelope species activities, such as take and export, permanent human settlement, and violated section 10(c) of the Act by not under the Act. This change to the competition with domestic livestock), providing the public an opportunity to regulations is in response to a court regional military activity, and comment on activities being carried out order that found that the rule for these uncontrolled killing. With the exception with these three antelope species. On three species violated section 10(c) of of reintroduced animals, no sightings of June 22, 2009, the Court remanded the the Act. These three antelope species the scimitar-horned oryx have been rule to the Service for action consistent remain listed as endangered under the reported since the late 1980s. Remnant with its opinion.

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To comply with the Court’s order, the Summary of Comments and Our more harm than good. Two other Service published a proposed rule on Responses commenters encouraged the Service to July 7, 2011 (76 FR 39804), to remove In our proposed rule (July 7, 2011; 76 consider all avenues and remedies and the regulation at 50 CFR 17.21(h), thus FR 39804), we asked interested parties the effects they would have on the three eliminating the exclusion for U.S. to submit comments or suggestions antelope species. Our Response: The Service agrees that captive-bred scimitar-horned oryx, regarding the proposal to eliminate the the Court’s finding left us no options but addax, and dama gazelle from certain regulation at 50 CFR 17.21(h). The to rescind the current regulation at 50 prohibitions under the Act. Under the comment period for the proposed rule CFR 17.21(h). While the Service agrees proposed rule, any person who intend lasted for 30 days, ending August 8, that the Court did not mandate us to to conduct an otherwise prohibited 2011. We received 93 individual apply the same permitting scheme comments during the comment period. activity with U.S. captive-bred scimitar- established in 50 CFR 17.22 or the Comments were received from 2 State horned oryx, addax, or dama gazelle registration process identified in 50 CFR would need to qualify for an exemption agencies; 8 nongovernment 17.21(g), we could find no alternative or obtain authorization for such activity organizations, several of which approach other than existing statutory under the Act and applicable commented jointly; and 86 individuals, and regulatory procedures. Further, no regulations. most of whom either own ranches that commenters provided reasonable currently maintain animals of the three Removal of 50 CFR 17.21(h) alternatives to this approach (see Issue antelope species or are associated with 15, below). Consequently, with the such ranches. Many of the comments Under 50 CFR 17.21(h), individuals elimination of the regulation at 50 CFR did not specifically address the reason carrying out certain activities that 17.21(h), anyone wishing to carry out for which the proposal was made—that otherwise prohibited activities would would contribute to increasing or the exclusion violated the provisions of sustaining the captive numbers of the need to either apply for a permit (50 section 10(c) of the Act—nor did they CFR 17.22) or for the captive-bred three species were not required to notify present alternatives to the proposal to the Service of those activities involving wildlife registration (50 CFR 17.21(g)). eliminate the regulation; instead the The Service disagrees with the first these species, provided that those comments focused either on the impact commenter’s statement that, because the activities met the criteria established to the ranches if the regulation were Court did not rule on the merits of within these regulations. As the Service eliminated or on the listing of the whether the ranches were meeting the was not notified of any proposed species. Of the commenters, six enhancement criteria, the Court found activities, it could not in turn provide supported the proposal to eliminate the that these ranches provide the public an opportunity to comment regulation, and 90 opposed the proposal enhancement. The Court did not rule on those proposed activities. By either directly or indirectly. Comments one way or another on the merits of the eliminating the regulation at 50 CFR pertained to several key issues. These plaintiffs’ case regarding the actions 17.21(h) and requiring individuals to issues, and our responses, are discussed conducted on ranches under sections submit an application, as described in below. 10(c) or 10(d). In addition, under 50 50 CFR 17.21(g) or 17.22, requesting Issue 1: One commenter stated that CFR 17.21(g) and 17.22, we cannot authorization to carry out an otherwise sections 10(c) and 10(d) of the Act unquestionably accept that the activities prohibited activity, the Service can mandates the Service to provide the of a ranch with these species have a provide the public a 30-day period to required informational notice and an presumptive enhancement value and comment on any proposed activities. opportunity to comment, but that the therefore issue a permit or other The elimination of this regulation does Court did not require the Service to authorization ‘pro forma.’ Any applicant develop a new permitting scheme or not alter the current listing status of the requesting authorization to carry out an adopt current permitting processes to species, but does now require that the otherwise prohibited activity would provide notice and comment. The Service must grant individuals need to provide adequate information commenter went on to assert that the and documentation in their application authorization prior to their conducting Court, by finding that the plaintiffs did to show that they are meeting the any activity that is prohibited by the not have standing to challenge the issuance criteria established at 50 CFR Act. merits of whether the activities 17.21(g) or 17.22 before authorization The Service considered whether there conducted on the ranches met the can be granted by the Service. were alternative means to comply with criteria of section 10(a)(1)(A) of the Act, Issue 2: A large number (57) of the Court’s ruling without requiring had concluded that the ranches were, commenters expressed concern that ranches or other facilities holding these therefore, meeting the enhancement ranchers and other private holders of species to obtain a permit or other criteria and that any future permitting captive-bred scimitar-horned oryx, authorization. However, the Service was should be ‘pro forma.’ addax, and dama gazelle would no unable to identify an alternative other Three nongovernment organizations longer have an economic incentive to than the currently established concluded that the Court gave the manage the species if the exclusions regulations at 50 CFR 17.21(g) and Service no options but to vacate the were removed. Some commenters went further in stating that the removal of the 17.22—providing for the registration of regulation and apply the same permitting scheme currently outlined in exclusion would have substantial captive-bred wildlife or issuance of a 50 CFR 17.22 for these three antelope. negative economic impacts on game permit—that would provide the public One commenter stated that, by farms and related support industries, an opportunity to comment on proposed choosing to impose a permit system local economies, and jobs. Two activities being carried out with these instead of some other means of commenters stated that because most species. In addition, the Service did not addressing the Court’s finding, the businesses involved with these species receive any comments or suggestions Service failed to consider other options. are extremely small, often with only one from the public that presented a viable The commenter expressed the opinion or two employees, the proposed alternative (see Summary of Comments that using the current permitting regulation would be a significant burden and Our Responses, below). process would cause the three species and that any pressure that affects local

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business and citizens may have a major activities that may be authorized. commenters were concerned that impact on the viability of local Provided that the ranch, zoo, or removal of the exclusion that allows economies. One commenter stated that individual is carrying out activities that breeding and hunting of these animals the review and statistical findings of the benefit or enhance the propagation or without a permit would impede private annual economic impact of removing survival of the species, as was captive propagation of these species. the exclusion was ‘‘abstract at best, and previously required under the They expressed the view that the incomplete, misleading, and regulation at 50 CFR 17.21(h), otherwise requirement of obtaining authorization irresponsible to reality.’’ This prohibited activities, including limited or permits before carrying out commenter stated that the use of $100 hunting for herd management purposes, previously exempted activities would million by the Office of Management can be authorized. Ranches may need to cause a significant loss of critical and Budget (OMB) as the benchmark in redesign their marketing efforts, but this genetic diversity because private evaluating the merits of the economic change to the regulations should not holders, who retain most of the captive impact of the consequences associated stop ranches from conducting activities animals of these three species in the with permit requirements has no that were previously authorized under United States, might dispose of their quantitative support. The commenter 50 CFR 17.21(h). current stock. Captive groups of these felt that OMB could not accurately The Service acknowledges the species would shrink, and, potentially, quantify the financial impact of lifting commenter’s concern regarding the the species would be allowed to go the permit requirements for these three benchmark in evaluating the merits of extinct. In addition, they stated that the species. Several commenters said that the economic impact on ranches. exclusion allows greater numbers of the Service should keep the exclusion However, the use of $100 million is set these animals to be bred than the for captive-bred individuals for the very by Executive Order and the Small numbers bred by zoos, wildlife parks, reason that these species are doing fine Business Regulatory Enforcement and individuals alone, thus maintaining without any further government Fairness Act. The Service does not have a larger and more diverse gene pool, regulation. the ability to establish an alternative which allows some ranchers to Our Response: The elimination of this benchmark or how the review is contribute selected animals for possible regulation should not result in lower conducted. reintroduction to their natural economic incentives or a negative Issue 3: Two commenters wrote that environment. economic impact, provided that the the removal of the exclusion leaves the Our Response: The Service does not ranches were carrying out activities that Service with two possible solutions: believe that ranchers or other holders of were approved under the regulation. either the species is allowed to go these species that are working for the The regulation at 50 CFR 17.21(h) extinct or the U.S. Government provides conservation of the species will reduce authorized certain otherwise prohibited subsidies for a mandated conservation or eliminate their herds just because a activities without a permit for plan. The commenters felt that both of permit or other authorization will now individuals or ranches that carried out these options have negative outcomes— be required. Ranches that currently have activities that contributed to increasing one results in extinction of the species other endangered hoofstock already or sustaining captive numbers of these and the other increases government obtain permits for the same activities species. Further, the regulation required spending at a time when cutbacks are with those other species. The Act does each person or ranch claiming the needed. not regulate possession or purely benefits of the exclusion to maintain Our Response: The Service disagrees intrastate activities (with the exception accurate records of activities, including that the removal of this regulation will of take). Provided that a ranch was births, deaths, and transfers of result in either the extinction of the legally carrying out activities that were specimens. These same activities could species or the need to subsidize authorized under 50 CFR 17.21(h) be authorized under 50 CFR 17.21(g) or conservation efforts. Many facilities and before the elimination of that regulation, 17.22. Thus, there should be little or no ranches that currently maintain these the ranch should be able to continue reduction of allowable activities. With species will continue to do so, those activities under a permit or the elimination of 50 CFR 17.21(h), regardless of whether or not they are registration. There should be no ranches, zoos, and private individuals exempt from prohibitions under the Act. reduction in herds that were actually that maintain these three species will We are confident of this because a being used for conservation purposes. need to submit an application, number of similar species, also bred and It is possible, however, that the including a nominal application fee, in maintained in U.S. ranches, are subject number of ranches or private order to receive authorization for to the same permitting and registration individuals that currently maintain activities that previously could have requirements we will apply to the three these species could reduce the size of been conducted without a permit. We antelope species when 50 CFR 17.21(h) their herds or remove them from their do not believe, however, that the is removed (see DATES, above). The property under the belief that permitting process, including the species will not become extinct due to maintaining them would be an application fee or possible submission our actions under this rulemaking. economic burden. This reduction in the of records that should already be Further, the Service cannot provide number of herds should not maintained, will result in any subsidies to private ranches or facilities significantly influence the genetics of significant financial burden. This is to continue to maintain these species. the remaining herds, if they are being particularly so given that the Service We are confident, however, that such properly maintained. has made efforts in recent years to subsidies are not necessary and that Issue 5: One commenter stated that streamline the permitting process and many, if not all, operations will the numbers of animals maintained on issue permits to authorize multiple continue to maintain these species and ranches given in the proposed rule were activities for an extended period of time. provide an ongoing conservation benefit incorrectly low and that the Exotic The Service does recognize, however, to the species. Wildlife Association (EWA) has that there may be an economic impact Issue 4: Thirty-two commenters numbers that are more accurate. if people believe that the elimination of pointed out that intensive wildlife Our Response: The numbers this regulation changes the status of the management by U.S. ranchers is the identified in the proposed rule were species and therefore creates a change in reason the species exist today. These estimates based on the information

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available at the time the rule was animals that can be used as a source of Issue 9: Three commenters thought drafted. The Service is aware that EWA stock for reintroduction programs in the the Federal government should not has conducted surveys that indicated future, if such actions are feasible and regulate the harvest of animals that are the actual numbers might be higher. beneficial to the long-term survival of not native to the United States. They felt This does not affect what the Service is the species, as has been done for a that no permits should be needed to legally required to do given the Court number of other species. provide a sustainable environment order. We have incorporated EWA’s Issue 8: Numerous commenters raised where exotic species can thrive and estimates into this final rule (see questions about the current listing of the increase in numbers. The Texas Background, above). three species as endangered under the Department of Agriculture (DOA) Issue 6: The Association of Zoos and Act. One commenter said that the U.S. believes that ‘‘regulating the domestic Aquariums (AZA) expressed concern captive-bred animals of these three management of these animals is beyond that the elimination of the exclusion species of exotic antelopes should never the fundamental intent of the from prohibited activities for the captive have been included in the listing of the Endangered Species Act.’’ animals of these three species would species as endangered, because, in their Our Response: The Service disagrees. undermine their goal of maintaining opinion, the Act was not meant to cover The Act specifically covers any species genetic diversity. They expressed privately owned animals. Three that is listed as endangered or concerns that their members’ efforts in commenters suggested that the Service threatened, whether it is native to the moving listed species have been remove these species from the List of United States or non-native and whether hampered by permit delays of 6 to 9 Endangered and Threatened Wildlife at it is in captivity or in the wild. The months while enhancement findings are 50 CFR 17.11(h). Two commenters prohibitions apply to all listed being made, which is problematic recommended that the Service not specimens. But the Act’s prohibitions because there are very few in situ finalize any permit scheme for these are limited. Therefore, no permits are conservation programs available for three species until the Service has fully required to breed or maintain a listed these species. exhausted all options for altering the species. It is only when an individual Our Response: The Service is unclear current endangered species listing status attempts to carry out an activity that is on how the removal of 50 CFR 17.21(h) for U.S. captive herds, making permits otherwise prohibited under the Act, will affect the ability of AZA facilities unnecessary for these captive animals. such as transport in interstate or foreign to maintain the genetic diversity of the One commenter argued that to eliminate commerce in the course of a commercial captive populations or to move animals this exclusion without removing these activity, import or export, or take, that as part of this effort. Barring any failure species from the List of Endangered and the Service has a mandate to regulate on the part of the applicant to meet the Threatened Wildlife would violate the the activity. criteria for permit issuance, in only President’s January 18, 2011, Executive Issue 10: The Texas Parks & Wildlife limited cases has the permitting process Order (E.O. 13563), which requires Department (TPW) expressed concern for AZA facilities exceeded 120 days. Federal agencies to ‘‘identify and about the possible unintended Except for the import or export of consider regulatory approaches that consequences of the proposed rule. If animals, no permits will be required for reduce burdens and maintain flexibility the exclusion is revoked, the TPW is zoos to move animals among and freedom of choice for the public.’’ concerned that some owners may institutions strictly for population Our Response: The proposed rule release animals onto previously management purposes if there is no only addressed the Court’s finding that unoccupied range, leading to commercial activity involved. the regulations at 50 CFR 17.21(h) uncontrolled population growth, Issue 7: Three nongovernmental violate section 10(c) of the Act. damage to native plant communities, organizations, in expressing their Discussion of the listing status of these and other potentially negative impacts support for the proposed rule, felt that species, including changing that status, on native habitat. Another commenter rescinding the regulation would further is outside the scope of this rulemaking. expressed the same concern about the avoid a precedent that commercial Two petitions have been submitted to huge herds of free-ranging exotics that exploitation is automatically authorized the Service to request reconsideration of have escaped from captivity throughout merely on the theory that captive the listing status of these species, but Texas, and believed it was important breeding, in and of itself, will enhance the Service must complete this that private landowners be able to the survival of listed species. rulemaking now in order to comply continue to control and manage exotic Our Response: While the Service does with the Court order; we cannot delay animals in order to prevent destruction believe that captive breeding can this action until the time when the of vegetation and degradation of wild provide a significant benefit to petitions have been fully addressed. habitats by large numbers of native and endangered species, such benefits can In addition to taking this action as exotic ungulates. The commenter only be realized when the breeding necessary to comply with the Court’s thought it was, ‘‘critical that the state be program is scientifically based and order, the Service does not agree that provided the option for exclusive conducted in a manner that contributes eliminating 50 CFR 17.21(h) will violate jurisdiction over the management of to the continued survival of the species. the January 18, 2011, Executive Order. non-native, non-indigenous exotic pig, This was the basis for establishing the In fact, the Executive Order calls on goat, sheep, elk, deer, antelope, and regulation at 50 CFR 17.21(h). However, Federal agencies to develop regulations gazelle species within the borders of breeding just to breed, without adequate that ‘‘allow for public participation and that State.’’ The commenter felt that this attention to genetic composition and an open exchange of ideas.’’ While the would be consistent with the public demographics of the breeding elimination of 50 CFR 17.21(h) has been trust doctrine, under which the States population, may not provide a clear perceived as having a significant are entrusted with regulatory oversight conservation benefit to an endangered economic impact on some ranches, it of native wildlife resources and impacts species. Even absent 50 CFR 17.21(h), has been determined that the benefits of of native wildlife. ranches, zoos, and private individuals this action justify its costs by impose the Our Response: The Service does not holding these three species should be least burden on society and identifying expect this rule to result in the able to continue to maintain viable, specify avenues for carrying out intentional release of significant well-managed, captive groups of otherwise prohibited activities. numbers of the three species into

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previously unoccupied areas of the compensate current owners for any professional wildlife management, and United States. However, the Service perceived loss of revenue. Such demonstrated success in preserving does recognize that there are free- compensation or assuming custody of these species. ranging herds of exotic species in Texas these species is not within the Service’s Our Response: The removal of the and other States that have a negative authority. Further, the Service disagrees regulation at 50 CFR 17.21(h) is based impact on native vegetation and that the elimination of 50 CFR 17.21(h) on the Court decision that the regulation wildlife. The Service also supports constitutes a taking, because it does not is in violation of section 10(c) of the efforts carried out by various States to deprive the owners of these animals Act. The Service could see no other control these exotic species to reduce from continuing to derive an economic option than to remove this regulation to their impacts on native ecosystems. benefit from them. This rule is not a ensure that we complied with the Court There are a number of exotic ungulates taking of property because individuals order. This action is not a reflection of listed under the Act as either can obtain authorization for the same the Service’s position on hunting or endangered or threatened that are otherwise prohibited activities with successes that have been achieved with commonly held on ranches in Texas and these three endangered antelopes when the three antelope species or any other other States. We encourage cooperation issuance criteria are met as they had species. between State wildlife agencies and under 50 CFR 17.21(h). Provided that a Issue 14: Two commenters thought ranches that maintain exotic species to rancher meets the criteria for obtaining that current conditions within the develop best management practices to a permit, which are similar or identical native range of these species are not reduce the escape of exotic species. to the criteria established at 50 CFR conducive to reintroduction. They Ongoing efforts are needed to coordinate 17.21(h) for carrying out otherwise expressed the opinion that few Federal and State efforts to control the prohibited activities, the rancher will be governments of the native countries spread of these listed exotics onto able to obtain a permit or authorization want to protect or increase the numbers pristine areas where native wildlife and to carry out the same activities that the of these species and stated that the vegetation could be affected. rancher currently conducts. This rule repatriation project of the Second Ark Through the Act, Congress gave does not infringe on any property rights Foundation and Exotic Wildlife jurisdiction to determine which species or adversely affect the free market when Association has met with many qualify as endangered or threatened, activities are conducted in a manner roadblocks. and responsibility for their protection consistent with the requirements of the Our Response: The Service and recovery, to the Service and the Act. understands that many factors National Marine Fisheries Service. Issue 12: A number of commenters contribute to the successful States are essential partners in raised the issue of hunting of these reintroduction of a species to its native endangered species conservation, but species. Two commenters said that the range. We acknowledge that the Second only the Service can authorize activities Service should protect endangered Ark Foundation and Exotic Wildlife with these species that would be exotic wildlife from hunting and further Association have been confronted with otherwise prohibited, and nothing killing. Three other commenters stated obstacles to providing specimens for under the public trust doctrine affects that hunters have saved most of these reintroduction, and we understand that this legal regime. animals from decline and feel that such reintroduction programs can often Issue 11: One commenter pointed out hunting these animals should not be be difficult in developing countries for that the Service has no plan or way of viewed as a threat to species numbers. any species. Currently, we are aware taking custody of or caring for any of the It is their supposition that the steady that there are only a limited number of unwanted animals resulting from the hunting demand for these species has in situ conservation programs available elimination of the exclusion at 50 CFR ensured the continued propagation and for these species, but that does not affect 17.21(h). The commenter also felt that survival of the species. They pointed to how we must apply the requirements of the Service or nongovernment the conservation success story of North the Act to their captive animals in the organizations that support the American elk, white-tailed deer, United States. elimination of the regulation should waterfowl, and turkeys as evidence that Issue 15: Many commenters expressed provide a plan to reimburse or their survival is due in large part to the concerns that the current permitting compensate the owners of these animals American hunter. process does not work well and is a for their lost revenue and investment if Our Response: The Service has stated disincentive to ranching operations. the regulation is eliminated. Another on numerous occasions that Two commenters thought the Service commenter questioned whether taking scientifically based hunting programs should create an alternative permitting away the incentive for landowners to can provide a benefit to the long-term process that includes an online propagate these species was in fact a survival of a species. The American submission process to register herds and case of ‘‘de facto taking.’’ A third hunter has clearly provided benefits to obtain take permits electronically, commenter felt it would be a taking if many species. Hunting of exotic species develop the ability to receive electronic the final rule impedes his ability to have within the United States can also benefit reports, develop scientifically based cull economic benefit from maintaining the survival of the species involved if requirements, and allocate permit herds of these antelopes. Two other the hunting program and other activities application fees to in situ conservation commenters did not think the with the species are carried out in a efforts. One commenter suggested that government had the right to control manner that contributes to increasing or the Service implement a herd inventory personal property. Finally, another sustaining the number of animals in monitoring program to get additional commenter said that the proposed captivity or to potential reintroduction information for making permitting elimination of 50 CFR 17.21(h) infringes to range countries. decisions. Several commenters provided on the free market and private property Issue 13: Several commenters specific examples of how to improve the rights. suggested that the removal of the permitting process to reduce Our Response: The commenter is exclusion at 50 CFR 17.21(h) is not unnecessary burdens in the interest of correct that the Service has no plans to based on logic, but rather on political the species. Suggestions included take custody of any animals currently opinions and personal philosophies to combining the application processes for held on private property or to end all hunting over sound science, registration under the captive wildlife

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registration (50 CFR 17.21(g)) and take how to improve our current permitting definition within the regulations, is permits (50 CFR 17.22) or revising the process to contact the Service’s Division outside the scope of this rulemaking. applications to be clearer. Other of Management Authority, Branch of However, the Act specifically covers comments included moving to an Permits (see ADDRESSES, above). any species that is listed as endangered electronic application process, making Issue 16: Two commenters or threatened, whether it is in captivity, permits valid for a longer period of time, recommended that the public comment including those that are captive-bred or and reviewing and processing period for permit applications, which is wild. The prohibitions apply to all applications in a more timely manner. currently 30 days, should be eliminated, listed specimens. Changes to the One commenter, while believing no or reduced to no more than 14 days. In definition would not be a basis for regulation is needed, could accept some addition, they suggested only comments exempting privately raised animals. form of moderately priced, multi-year offered by knowledgeable persons that Consistent with the Court’s ruling that permit that requires limited annual actually own or deal with the species the regulation at 50 CFR 17.21(h) is in report data. One commenter said should be considered. violation of section 10(c) of the Act and expectations related to transfers Our Response: Section 10(c) of the following consideration of all between facilities, including breeding- Act specifies that the comment period comments, the Service is eliminating only and hunting-only operations, must be 30 days. Because the 30-day the regulation at 50 CFR 17.21(h). When be well defined in order to provide comment period is set by statute, we the final rule takes effect (see DATES, landowners with a transparent process. cannot shorten it by regulation. In above), individuals who intend to carry Two commenters suggested working addition, the Act states that comments out otherwise prohibited activities will with a State’s wildlife authority to are welcome from any interested party, need to have authorization either under regulate and oversee the permitting and therefore all comments that are 50 CFR 17.21(g) or 17.22. process to increase cooperation with received during an open comment Required Determinations landowners. The AZA suggested that period are considered . there needs to be a provision that allows Issue 17: One commenter suggested Regulatory Planning and Review— AZA institutions to engage in time- that any new regulations should include Executive Order 12866: The Office of sensitive international movement of an anti-harassment provision with a Management and Budget (OMB) has these animals for noncommercial $10,000 fine for those who use the determined that this rule is not purposes, such as breeding loans or information made available through the significant under Executive Order reintroduction, without having to obtain application process to directly or 12866. OMB bases its determination additional permits. indirectly harass or otherwise interfere upon the following four criteria: Several commenters expressed with the applicant’s operation or (a) Whether the rule will have an opinions on what would constitute business. Harassment should include annual effect of $100 million or more on enhancement or furthering the the use of deception or the economy or adversely affect an conservation of the species so that misrepresentation to get access to the economic sector, productivity, jobs, the permits or authorizations could be applicant’s private operations. environment, or other units of granted. Three nongovernment Our Response: The Service does not government. organizations were concerned that the have the authority to include an anti- (b) Whether the rule will create existing permitting system would harassment provision in our regulations inconsistencies with other Federal undermine the conservation of these under the Act. There are other legal agencies’ actions. antelope species due to questions on remedies to address harassment. (c) Whether the rule will materially whether or not current permits are being Information that is made available affect entitlements, grants, user fees, issued in accordance with the Act. One through the public comment process is loan programs, or the rights and commenter suggested that permits must intended to provide the public an obligations of their recipients. provide flexibility in harvest allowances understanding of the activities being (d) Whether the rule raises novel legal to allow managers to maintain balanced proposed. It is not intended to provide or policy issues. numbers relative to habitat carrying anyone with the opportunity to harass Regulatory Flexibility Act: Under the capacities. Another commenter directly or indirectly, or to interfere in Regulatory Flexibility Act (as amended recommended that the permit address lawfully conducted activities. by the Small Business Regulatory additional harvest protocols and Issue 18: One commenter Enforcement Fairness Act (SBREFA) of emergency response for when properties recommended that the definition of 1996), whenever a Federal agency is enter severe, extreme, or exceptional ‘‘captive-bred’’ be amended, ‘‘to reflect required to publish a notice of drought. only those animals and genetic rulemaking for any proposed or final Our Response: These comments are materials designated for potential rule, it must prepare and make available outside the scope of this rulemaking reintroduction under the direction of for public comment a regulatory because they do not address the Court’s scientists of the Association of Zoos and flexibility analysis that describes the ruling that 50 CFR 17.21(h) violates Aquariums (AZA) institutions for all effect of the rule on small entities (i.e., section 10(c) of the Act and the non-native, non-indigenous exotic pig, small businesses, small organizations, rescission of 17.21(h). Nevertheless, the goat, sheep, elk, deer, antelope and and small government jurisdictions) (5 Service appreciates the comments and gazelle species.’’ The commenter U.S.C. 601 et seq.). However, no will consider them as we develop ways suggested that this could be used as a regulatory flexibility analysis is required to improve the efficiency and basis to exempt privately raised animals if the head of an agency certifies that the effectiveness of our permitting process. on Texas ranches from any rules rule will not have a significant We are currently working on certain defining ‘‘captive-bred’’ animals. economic impact on a substantial improvements, such as the development Our Response: The proposed rule number of small entities. Thus, for a of electronic applications and more only addressed the Court’s finding that regulatory flexibility analysis to be timely review processes. We are the regulations at 50 CFR 17.21(h) required, impacts must exceed a considering other efficiency violate section 10(c) of the Act. threshold for ‘‘significant impact’’ and a improvements as well. We encourage Discussion of the definition of ‘‘captive- threshold for a ‘‘substantial number of anyone who has recommendations on bred’’, including changing that small entities.’’ See 5 U.S.C. 605(b).

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SBREFA amended the Regulatory fraction of these are sold for breeding or Federalism: This revision to part 17 Flexibility Act to require Federal as trophies annually. Addax and dama does not contain significant Federalism agencies to provide a statement of the gazelle are fewer in number (several implications. A federalism impact factual basis for certifying that a rule hundred each), but more valuable as summary statement under Executive will not have a significant economic both breeding stock and trophies, with Order 13132 is not required. impact on a substantial number of small values of mature animals up to $4,000– Civil Justice Reform: Under Executive entities. $6,000 each. Assuming 2,000 animals of Order 12988, the Office of the Solicitor The U.S. Small Business these two species at a value of $4,000 has determined that this rule does not Administration (SBA) defines a small each, the total value is $8,000,000, but unduly burden the judicial system and business as one with annual revenue or again the revenue generated by these meets the requirements of subsections employment that meets or is below an animals will be a fraction of this amount 3(a) and 3(b)(2) of the Order. established size standard. We expect because breeding operations will retain Paperwork Reduction Act: The Office that the majority of the entities involved a significant portion of their animals for of Management and Budget approved in taking, exporting, re-importing, and further breeding. Individuals and the information collection in part 17 selling in interstate or foreign commerce captive-breeding operations will now and assigned OMB Control Numbers of these three endangered antelopes are need to qualify for an exemption or 1018–0093 and 1018–0094. This rule considered small as defined by the SBA. obtain endangered species permits or does not contain any new information This rule requires individuals and other authorization to engage in certain collections or recordkeeping captive-breeding operations of the three otherwise prohibited activities. Permit requirements for which OMB approval endangered antelopes to apply for application fees of $100–$200 will be is required under the Paperwork authorization and pay an application fee required for anyone seeking permits, Reduction Act of 1995 (44 U.S.C. 3501 of $100 to $200 every 1–5 years, and we estimate up to 400 potential et seq.). We may not conduct or sponsor depending on the type of permit or permit applicants, although some and a person is not required to respond authorization, when conducting certain authorizations will remain in effect for to a collection of information unless it otherwise prohibited activities. While up to 5 years from one application. This displays a currently valid OMB control there are no accurate numbers of U.S. rule does not have a negative effect on number. facilities with these animals, estimates this part of the economy. It will affect National Environmental Policy Act range as high as about 400. It is not clear all businesses, whether large or small, (NEPA): The Service has determined if all of these facilities would be the same. There is not a conducting activities that would be that this rule is a regulatory change that disproportionate share of benefits for is administrative and legal in nature. otherwise prohibited under the Act; small or large businesses. however, if the total is 400 and they all The rescission of this rule responds to b. Will not cause a major increase in require permits for continuing activities a Court ruling finding that 50 CFR costs or prices for consumers; they have been conducting under the 17.21(h) violates section 10(c) of the Act individual industries; Federal, State, exclusion that is being rescinded, the and remanding to the agency for further tribal, or local government agencies; or maximum annual cost to all of them for proceedings consistent with its opinion. geographic regions. This rule will result obtaining permits would be about As such, the rule is categorically in a small increase in the number of $50,000–60,000. The regulatory change excluded from further NEPA review as is not major in scope and creates only applications for permits or other provided by 43 CFR 46.210(i) of the a modest financial or paperwork burden authorizations to conduct otherwise Department of the Interior’s on the affected members of the general prohibited activities with these three Implementation of the National public. endangered antelope species. Environmental Policy Act of 1969 We, therefore, certify that this rule c. Will not have significant adverse regulations (73 FR 61292; October 15, will not have a significant economic effects on competition, employment, 2008). No further documentation will be effect on a substantial number of small investment, productivity, innovation, or made. entities as defined under the Regulatory the ability of U.S.-based enterprises to Government-to-Government Flexibility Act (5 U.S.C. 601 et seq.). A compete with foreign-based enterprises. Relationship with Tribes: Under the regulatory flexibility analysis is not Unfunded Mandates Reform Act: President’s memorandum of April 29, required. Accordingly, a small entity Under the Unfunded Mandates Reform 1994, ‘‘Government-to-Government compliance guide is not required. Act (2 U.S.C. 1501, et seq.): Relations with Native American Tribal Small Business Regulatory a. This rule will not significantly or Governments’’ (59 FR 22951) and 512 Enforcement Fairness Act: This rule is uniquely affect small governments. A DM 2, we have evaluated possible not a major rule under 5 U.S.C. 804(2), small government agency plan is not effects on federally recognized Indian the Small Business Regulatory required. Tribes and have determined that there Enforcement Fairness Act. This rule: b. This rule will not produce a are no effects. a. Will not have an annual effect on Federal requirement of $100 million or Energy Supply, Distribution or Use: the economy of $100 million or more. greater in any year and is not a On May 18, 2001, the President issued This rule removes the regulation at 50 ‘‘significant regulatory action’’ under Executive Order 13211 on regulations CFR 17.21(h) that excludes U.S. captive- the Unfunded Mandates Reform Act. that significantly affect energy supply, bred scimitar-horned oryx, addax, and Takings: Under Executive Order distribution, and use. This rule does not dama gazelle from certain prohibitions 12630, this rule will not have significant significantly affect energy supplies, of the Act. Current estimates indicate takings implications. A takings distribution, and use. Therefore, this that about 12,000 to 13,000 of these implication assessment is not required. action is a not a significant energy animals occur in captive-breeding This rule does not have takings action, and no Statement of Energy operations in the United States. About implications because individuals can Effects is required. 11,000 are scimitar-horned oryx with a still obtain authorization for the same List of Subjects in 50 CFR Part 17 value of $1,500 to $3,000 each (based on otherwise prohibited activities with internet advertisements), for a total these three endangered antelopes when Endangered and threatened species, value of $33,000,000, although only a issuance criteria are met. Exports, Imports, Reporting and

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recordkeeping requirements, harvest specifications for GOA FOR FURTHER INFORMATION CONTACT: Transportation. groundfish, unless otherwise modified Obren Davis, (907) 586–7228. or superseded through publication of a Regulation Promulgation SUPPLEMENTARY INFORMATION: NMFS notification in the Federal Register. manages the groundfish fishery in the For the reasons given in the preamble, Comments must be received at the GOA exclusive economic zone we are amending part 17, subchapter B following address no later than 4:30 according to the Fishery Management of chapter I, title 50 of the Code of p.m., A.l.t., January 20, 2012. Plan for Groundfish of the Gulf of Federal Regulations, as follows: ADDRESSES: You may submit comments Alaska (FMP) prepared by the North PART 17—[AMENDED] on this document, identified by NOAA– Pacific Fishery Management Council NMFS–2011–0307, by any of the (Council) under authority of the ■ 1. The authority citation for part 17 following methods: Magnuson-Stevens Fishery continues to read as follows: • Electronic Submission: Submit all Conservation and Management Act. electronic public comments via the Regulations governing fishing by U.S. Authority: 16 U.S.C. 1361–1407; 16 U.S.C. vessels in accordance with the FMP 1531–1544; 16 U.S.C. 4201–4245; Pub. L. 99– Federal e-Rulemaking Portal 625, 100 Stat. 3500; unless otherwise noted. www.regulations.gov. To submit appear at subpart H of 50 CFR part 600 comments via the e-Rulemaking Portal, and 50 CFR part 679. § 17.21 [Amended] first click the ‘‘submit a comment’’ icon, The final 2011 and 2012 harvest ■ 2. Amend § 17.21 by removing then enter NOAA–NMFS–2011–0307 in specifications for groundfish in the GOA paragraph (h). the keyword search. Locate the (76 FR 11111, March 1, 2011) and Pacific cod revision (76 FR 81860, Dated: December 27, 2011. document you wish to comment on from the resulting list and click on the December 29, 2011) set the 2012 pollock Eileen Sobeck, ‘‘Submit a Comment’’ icon on that line. TAC at 121,649 metric tons (mt) and the Acting Assistant Secretary for Fish and 2012 Pacific cod TAC at 58,650 mt in • Mail: Address written comments to Wildlife and Parks. the GOA. In December 2011, the Glenn Merrill, Assistant Regional [FR Doc. 2012–23 Filed 1–3–12; 11:15 am] Council recommended a 2012 pollock Administrator, Sustainable Fisheries BILLING CODE 4310–55–P TAC of 116,444 mt for the GOA, which Division, Alaska Region NMFS, Attn: is less than the 121,649 mt established Ellen Sebastian. Mail comments to P.O. by the final 2011 and 2012 GOA harvest Box 21668, Juneau, AK 99802–1668. DEPARTMENT OF COMMERCE specifications. The Council also • Fax: Address written comments to recommended a 2012 Pacific cod TAC National Oceanic and Atmospheric Glenn Merrill, Assistant Regional of 65,700 mt for the GOA, which is more Administration Administrator, Sustainable Fisheries than the 58,650 mt established by the Division, Alaska Region NMFS, Attn: final 2011 and 2012 harvest 50 CFR Part 679 Ellen Sebastian. Fax comments to (907) specifications for groundfish in the [Docket No. 101126522–0640–02] 586–7557. GOA. The Council’s recommended 2012 • Hand Delivery to the Federal TACs, and the area and seasonal RIN 0648–XA917 Building: Address written comments to apportionments, are based on the Stock Fisheries of the Exclusive Economic Glenn Merrill, Assistant Regional Assessment and Fishery Evaluation Zone Off Alaska; Inseason Adjustment Administrator, Sustainable Fisheries report (SAFE), dated November 2011, to the 2012 Gulf of Alaska Pollock and Division, Alaska Region NMFS, Attn: which NMFS has determined is the best Pacific Cod Total Allowable Catch Ellen Sebastian. Deliver comments to available scientific information for these Amounts 709 West 9th Street, Room 420A, fisheries. Juneau, AK. Steller sea lions occur in the same AGENCY: National Marine Fisheries Instructions: Comments must be location as the pollock and Pacific cod Service (NMFS), National Oceanic and submitted by one of the above methods fisheries and are listed as endangered Atmospheric Administration (NOAA), to ensure that the comments are under the Endangered Species Act Commerce. received, documented, and considered (ESA). Pollock and Pacific cod are a ACTION: Temporary rule; inseason by NMFS. Comments sent by any other principal prey species for Steller sea adjustment; request for comments. method, to any other address or lions in the GOA. The seasonal individual, or received after the end of apportionment of pollock and Pacific SUMMARY: NMFS is adjusting the 2012 the comment period, may not be cod harvest is necessary to ensure the total allowable catch (TAC) amounts for considered. All comments received are groundfish fisheries are not likely to the Gulf of Alaska (GOA) pollock and a part of the public record and will cause jeopardy of extinction or adverse Pacific cod fisheries. This action is generally be posted for public viewing modification of critical habitat for necessary because NMFS has on www.regulations.gov without change. Steller sea lions. The regulations at determined these TACs are incorrectly All personal identifying information § 679.20(a)(5)(iv) specify how the specified, and will ensure the GOA (e.g., name, address) submitted pollock TAC will be apportioned. The pollock and Pacific cod TACs are the voluntarily by the sender will be regulations at § 679.20(a)(6)(ii) and appropriate amounts based on the best publicly accessible. Do not submit § 679.20(a)(12)(i) specify how the Pacific available scientific information for confidential business information, or cod TAC shall be apportioned. pollock and Pacific cod in the GOA. otherwise sensitive or protected In accordance with § 679.25(a)(1)(iii) This action is consistent with the goals information. NMFS will accept and (a)(2)(i)(B), the Administrator, and objectives of the Fishery anonymous comments (enter ‘‘N/A’’ in Alaska Region, NMFS (Regional Management Plan for Groundfish of the the required fields if you wish to remain Administrator), has determined that, Gulf of Alaska. anonymous). Attachments to electronic based on the November 2011 SAFE DATES: Effective 1200 hrs, Alaska local comments will be accepted in Microsoft report for this fishery, the current GOA time (A.l.t.), January 5, 2012, until the Word or Excel, WordPerfect, or Adobe pollock and Pacific cod TACs are effective date of the final 2012 and 2013 PDF file formats only. incorrectly specified. Consequently,

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pursuant to § 679.25(a)(1)(iii), the Pursuant to § 679.20(a)(5)(iv), Table 6 Western, Central, and Eastern GOA Regional Administrator is adjusting the of the final 2011 and 2012 harvest consistent with this adjustment. 2012 GOA pollock TAC to 116,444 mt specifications for groundfish in the GOA and the 2012 GOA Pacific cod TAC to (76 FR 11111, March 1, 2011) is revised 65,700 mt. for the 2012 pollock TACs in the

TABLE 6—FINAL 2012 DISTRIBUTION OF POLLOCK IN THE CENTRAL AND WESTERN REGULATORY AREAS OF THE GOA; SEASONAL BIOMASS DISTRIBUTION, AREA APPORTIONMENTS; AND SEASONAL ALLOWANCES OF ANNUAL TAC [Values are rounded to the nearest metric ton and percentages are rounded to the nearest 0.01]

Season 1 Shumagin Chirikof Kodiak Total 2 (Area 610) (Area 620) (Area 630)

A (Jan 20–Mar 10) ...... 5,797 (22.64%) 14,023 (54.76%) 5,787 (22.60%) 25,607 B (Mar 10–May 31) ...... 5,797 (22.64%) 17,221 (67.25%) 2,589 (10.11%) 25,607 C (Aug 25–Oct 1) ...... 9,338 (36.47%) 7,282 (28.44%) 8,986 (35.10%) 25,606 D (Oct 1–Nov 1) ...... 9,338 (36.47%) 7,282 (28.44%) 8,986 (35.10%) 25,606

Annual Total ...... 30,270 45,808 26,348 102,426 1 As established by § 679.23(d)(2)(i) through (iv), the A, B, C, and D season allowances are available from January 20 to March 10, March 10 to May 31, August 25 to October 1, and October 1 to November 1, respectively. The amounts of pollock for processing by the inshore and off- shore components are not shown in this table. 2 The WYK and SEO District pollock TACs are not allocated by season and are not included in the total pollock TACs shown in this table. Note: Seasonal allowances may not total precisely to annual TAC total due to rounding down, rather than up.

Pursuant to § 679.20(a)(6)(ii) and groundfish in the GOA (76 FR 11111, revised for the 2012 Pacific cod TACs in § 679.20(a)(12)(i), Table 8 of the final March 1, 2011) and Pacific cod revision the Western, Central, and Eastern GOA 2011 and 2012 harvest specifications for (76 FR 81860, December 29, 2011) is consistent with this adjustment.

TABLE 8—FINAL 2012 SEASONAL APPORTIONMENTS AND ALLOCATION OF PACIFIC COD TOTAL ALLOWABLE CATCH AMOUNTS IN THE GOA; ALLOCATIONS FOR THE WESTERN GOA AND CENTRAL GOA SECTORS AND THE EASTERN GOA INSHORE AND OFFSHORE PROCESSING COMPONENTS [Values are rounded to the nearest metric ton and percentages to the nearest 0.01. Seasonal allowances may not total precisely to annual allocation amount]

A Season B Season Regulatory area and Annual sector allocation Sector % of annual Seasonal allowances Sector % of annual Seasonal allowances (mt) non-jig TAC (mt) non-jig TAC (mt)

Western GOA: Jig (1.5% of TAC) ..... 315 N/A 189 N/A 126 Hook-and-line CV ..... 290 0.70 145 0.70 145 Hook-and-line C/P .... 4,100 10.90 2,257 8.90 1,843 Trawl CV ...... 7,952 27.70 5,736 10.70 2,216 Trawl C/P ...... 497 0.90 186 1.50 311 All Pot CV and Pot C/P ...... 7,869 19.80 4,100 18.20 3,769

Total ...... 21,024 60.00 12,614 40.00 8,410

Central GOA: Jig (1.0% of TAC) ..... 427 N/A 256 N/A 171 Hook-and-line < 50 CV ...... 6,174 9.32 3,938 5.29 2,235 Hook-and-line ≥ 50 CV ...... 2,835 5.61 2,372 1.10 464 Hook-and-line C/P .... 2,158 4.11 1,736 1.00 422 Trawl CV ...... 17,581 21.14 8,936 20.45 8,645 Trawl C/P ...... 1,775 2.00 847 2.19 928 All Pot CV and Pot C/P ...... 11,755 17.83 7,538 9.97 4,217

Total ...... 42,705 60.00 25,623 40.00 17,082

Eastern GOA ...... 1,971 Inshore (90% of Annual TAC) 1,774 Offshore (10% of Annual TAC) 197 Note: Seasonal apportionments may not total precisely due to rounding.

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Classification allow for harvests that exceed the prior notice and opportunity for public This action responds to the best appropriate allocations for Pacific cod comment. Under § 679.25(c)(2), available information recently obtained based on the best scientific information interested persons are invited to submit from the fishery. The Assistant available. NMFS was unable to publish written comments on this action to the Administrator for Fisheries, NOAA a notice providing time for public above address until January 20, 2012. (AA), finds good cause to waive the comment because the most recent, This action is required by § 679.22 requirement to provide prior notice and relevant data only became available as and § 679.25 and is exempt from review opportunity for public comment of December 29, 2011, and additional under Executive Order 12866. time for prior public comment would pursuant to the authority set forth at 5 Authority: 16 U.S.C. 1801 et seq. U.S.C. 553(b)(B) as such requirement is result in conservation concerns for the impracticable and contrary to the public ESA-listed Steller sea lions. Dated: December 30, 2011. interest. This requirement is The AA also finds good cause to Alan D. Risenhoover, impracticable and contrary to the public waive the 30-day delay in the effective Director, Office of Sustainable Fisheries, interest as it would prevent NMFS from date of this action under 5 U.S.C. National Marine Fisheries Service. responding to the most recent fisheries 553(d)(3). This finding is based upon [FR Doc. 2011–33849 Filed 1–4–12; 8:45 am] data in a timely fashion and would the reasons provided above for waiver of BILLING CODE 3510–22–P

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Proposed Rules Federal Register Vol. 77, No. 3

Thursday, January 5, 2012

This section of the FEDERAL REGISTER PDR reference staff at 1– (800) –397– environmental quality and monitor contains notices to the public of the proposed 4209, (301) 415–4737, or by email to Federal agency actions to ensure that issuance of rules and regulations. The [email protected]. The PRM is Federal statutes enacted to protect purpose of these notices is to give interested available in ADAMS under ADAMS human health and the environment are persons an opportunity to participate in the Accession Number ML11301A094. fully and properly implemented. With rule making prior to the adoption of the final • rules. Federal Rulemaking Web Site: regard to the NRC, the NRDC asserts Supporting materials related to the that, since its inception in 1970, it has petition for rulemaking can be found at sought to improve the environmental, NUCLEAR REGULATORY http://www.regulations.gov by searching health, and safety conditions at the COMMISSION on Docket ID NRC–2011–0189. Address nuclear facilities licensed by the NRC questions about NRC dockets to Carol and its predecessor agency. 10 CFR Parts 50, 52, and 100 Gallagher; telephone: (301) 492–3668; email: [email protected]. III. Petition [Docket No. PRM–50–103; NRC–2011–0189] FOR FURTHER INFORMATION CONTACT: Mark Leyse, an NRDC consultant, Measurement and Control of Cindy Bladey, Chief, Rules, researched and authored the PRM. The Combustible Gas Generation and Announcements, and Directives Branch, PRM requests that the NRC amend its Dispersal Division of Administrative Services, regulations ‘‘to enhance hydrogen Office of Administration, U.S. Nuclear mitigation at all [nuclear power plants] AGENCY: Nuclear Regulatory Regulatory Commission, Washington, regulated by NRC.’’ The PRM includes Commission. DC 20555–0001, telephone: (301) 492– six separate rulemaking requests ACTION: Petition for rulemaking; notice 3667, email: [email protected]. pertaining to pressurized water reactors of receipt. SUPPLEMENTARY INFORMATION: (PWRs) and boiling water reactors SUMMARY: The U.S. Nuclear Regulatory I. Introduction (BWRs). Commission (NRC or the Commission) First, the petitioner requests that the On October 14, 2011, Mr. C. Jordan has received a petition for rulemaking NRC ‘‘revise 10 CFR 50.44 to require Weaver, a Project Scientist for the (PRM), dated October 14, 2011, from the that all PWRs (with large dry Natural Resources Defense Council, Inc. Natural Resources Defense Council, Inc. containments, sub-atmospheric (NRDC or petitioner) submitted a cover (NRDC or the petitioner). The petitioner containments, and ice condenser letter and a petition for rulemaking requests that the NRC amend its containments) and BWR Mark IIIs (PRM) to revise 10 CFR 50.44 (ADAMS regulations regarding the measurement operate with systems for combustible Accession No. ML11301A094). The and control of combustible gas gas control that would effectively and PRM, which was an attachment to the generation and dispersal within a power safely control the potential total NRDC cover letter signed by Mr. reactor system. The NRC is not quantity of hydrogen that could be Weaver, was itself signed by Mr. Mark instituting a public comment period for generated in different severe accident Edward Leyse. Mr. Leyse has previously this PRM at this time. scenarios.’’ The petitioner states that the filed several other petitions for total quantity of hydrogen could exceed DATES: January 5, 2012. rulemaking with the NRC on matters the amount generated from the metal- ADDRESSES: You can access publicly related to the NRC’s requirements on the water reaction of 100 percent of the fuel available documents related to this emergency core cooling system (ECCS). cladding because of contributions action, including the petition for See PRM–50–73 (ADAMS Accession produced by the metal-water reaction rulemaking, using the following No. ML012560310); PRM–50–73A with non-fuel components of the methods: (ADAMS Accession No. ML020300271); reactor. The petitioner presents • NRC’s Public Document Room PRM–50–76 (ADAMS Accession No. information from various analyses and (PDR): The public may examine and ML022240009); PRM–50–84 (ADAMS reports to support this request. have copies made, for a fee, publicly Accession No. ML070871368); PRM– available documents at the NRC’s PDR, 50–93 (ADAMS Accession No. Second, the petitioner requests that Room O1–F21, One White Flint North, ML093290250); PRM–50–95 (ADAMS the NRC revise 10 CFR 50.44 to ‘‘require 11555 Rockville Pike, Rockville, Accession No. ML102770018). The that BWR Mark Is and BWR Mark IIs Maryland 20852. NRDC PRM was docketed by the NRC operate with systems for combustible • NRC’s Agencywide Documents on October 27, 2011 as PRM–50–103. gas control or inerted containments that Access and Management System would effectively and safely control the (ADAMS): Publicly available documents II. Petitioner potential total quantity of hydrogen that created or received at the NRC are The NRDC is a national, nonprofit, could be generated in different severe available online in the NRC Library at membership environmental accident scenarios.’’ The petitioner http://www.nrc.gov/reading-rm/ organization incorporated in New York states that the total quantity of hydrogen adams.html. From this page, the public in 1970. The NRDC has offices in could exceed the amount generated can gain entry into ADAMS, which Washington, DC, New York City, San from the metal-water reaction of 100 provides text and image files of the Francisco, Chicago, Los Angeles, and percent of the fuel cladding because of NRC’s public documents. If you do not Beijing. The staff membership of NRDC contributions produced by the metal- have access to ADAMS or if there are consists of lawyers, scientists, and water reaction with non-fuel problems in accessing the documents policy experts. The NRDC states that its components of the reactor. The located in ADAMS, contact the NRC’s purpose is to maintain and enhance petitioner presents information from

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various analyses and reports to support regarding hydrogen igniter systems to PRM 50–103 in a manner consistent this request. support this request. with the process the Commission has Third, the petitioner requests that the established for addressing the IV. Determination of Petition NRC revise 10 CFR 50.44 ‘‘to require recommendations from the Fukushima that PWRs and BWR Mark IIIs operate In PRM 50–103, the petitioner raises Task Force Report and is not providing with systems for combustible gas six issues regarding the measurement a separate opportunity for public control that would be capable of and control of combustible gas comment on this PRM at this time. precluding local concentrations of generation and dispersal within a reactor system. The Commission is Dated at Rockville, Maryland, this 29th day hydrogen in the containment from of December 2011. exceeding concentrations that would currently reviewing the For the Nuclear Regulatory Commission. support combustions, fast deflagrations, ‘‘Recommendations for Enhancing or detonations that could cause a loss of Reactor Safety in the 21st Century: The Andrew L. Bates, containment integrity or loss of Near-Term Task Force Review of Acting Secretary of the Commission. necessary accident mitigating features.’’ Insights from the Fukushima Dai-ichi [FR Doc. 2011–33817 Filed 1–4–12; 8:45 am] The petitioner presents information Accident’’ (Fukushima Task Force BILLING CODE 7590–01–P from various analyses and reports to Report, ML111861807), dated July 12, support this request. 2011. The six requests included in the Fourth, the petitioner asserts that PRM relate to Recommendation 6 of the DEPARTMENT OF COMMERCE ‘‘[t]he current requirement that Fukushima Task Force Report: ‘‘[t]he hydrogen monitors be functional within task force recommends, as part of the United States Patent and Trademark 90-minutes after the initiation of safety longer term review, that the NRC Office injection is inadequate for protecting identify insights about hydrogen control public and plant worker safety.’’ Thus, and mitigation inside containment or in 37 CFR Part 1 the petitioner requests that the NRC other buildings as additional [Docket No. PTO–P–2011–0072] revise 10 CFR 50.44 to ‘‘require that information is revealed through further PWRs and BWR Mark IIIs operate with study of the Fukushima Dai-ichi RIN 0651–AC66 combustible gas and oxygen monitoring accident.’’ systems that are qualified in accordance The Commission has recently directed Changes To Implement Miscellaneous with 10 CFR 50.49. Petitioner also staff to engage promptly with Post Patent Provisions of the Leahy- requests that NRC revise 10 CFR 50.44 stakeholders to review and assess the Smith America Invents Act recommendations of the Fukushima to require that after the onset of a severe AGENCY: United States Patent and accident, combustible gas monitoring Task Force Report for the purpose of Trademark Office, Commerce. systems be functional within a providing the Commission with fully- ACTION: Notice of proposed rulemaking. timeframe that enables the proper informed options and monitoring of quantities of hydrogen recommendations. See U.S. Nuclear SUMMARY: The Leahy-Smith America indicative of core damage and indicative Regulatory Commission, ‘‘Near-Term Invents Act expands the scope of of a potential threat to the containment Report and Recommendations for information that any party may cite in integrity.’’ The petitioner presents Agency Actions Following the Events in a patent file, to include written information from various analyses and Japan,’’ Staff Requirements statements made by a patent owner reports to support this request. Memorandum SECY–11–0093, August before a Federal court or the United Fifth, the petitioner requests that the 19, 2011 (ADAMS Accession No. States Patent and Trademark Office NRC revise 10 CFR 50.44 to ‘‘require ML112310021) and U.S. Nuclear (Office) regarding the scope of any claim that licensees of PWRs and BWR Mark Regulatory Commission, ‘‘Engagement of the patent, and it provides for how IIIs perform analyses that demonstrate of Stakeholders Regarding the Events in such information may be considered in containment structural integrity would Japan,’’ Staff Requirements ex parte reexamination, inter partes be retained in the event of a severe Memorandum COMWDM–11–0001/ review, and post grant review. The accident.’’ Additionally, the petitioner COMWCO–11–0001, August 22, 2011 Leahy-Smith America Invents Act also requests that the NRC revise 10 CFR (ADAMS Accession No. ML112340693). provides for an estoppel that may attach 50.44 to require licensees of BWR Mark The NRC has, therefore, decided to with respect to ex parte reexamination Is and BWR Mark IIs to perform consider the issues raised by the PRM based on an inter partes review or post analyses ‘‘using the most advanced in a manner consistent with the process grant review proceeding. The Office is codes, which demonstrate containment the Commission has established for revising the rules of practice to structural integrity would be retained in addressing the recommendations from implement these post-patent provisions, the event of a severe accident.’’ The the Fukushima Task Force Report. Thus, as well as other miscellaneous petitioner presents information from the NRC will defer review of this PRM provisions of the Leahy-Smith America various analyses and reports to support until the Commission gives further Invents Act. this request. direction on Recommendation 6, to Sixth, the petitioner requests that the determine whether review of this PRM DATES: Comment Deadline Date: To be NRC revise 10 CFR 50.44 to ‘‘require should be integrated with the effort ensured of consideration, written that licensees of PWRs with ice related to the NRC staff’s review of comments must be received on or before condenser containments and BWR Mark Fukushima Task Force March 5, 2012. IIIs (and any other NPPs that would Recommendation 6. The NRC is not ADDRESSES: Comments should be sent operate with hydrogen igniter systems) requesting public comment at this time by electronic mail addressed to: perform analyses that demonstrate but may do so in the future, if it decides [email protected]. hydrogen igniter systems would public comment would be appropriate. Comments may also be submitted by effectively and safely mitigate hydrogen mail addressed to: Mail Stop in different severe accident scenarios.’’ V. Conclusion Comments—Patents, Commissioner for The petitioner presents information The NRC will coordinate Patents, P.O. Box 1450, Alexandria, VA, from various analyses and reports consideration of the issues raised by 22313–1450, marked to the attention of

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Kenneth M. Schor, Senior Legal of Patent Appeals and Interferences’’ as post grant review proceedings, once Advisor, Office of Patent Legal the ‘‘Patent Trial and Appeal Board’’ they become effective. In addition, the Administration, Office of the Associate and the replacement of references to third party requester (to whom the inter Commissioner for Patent Examination interference proceedings with references partes review or post grant review Policy. to derivation proceedings. The post estoppel statutes are directed) may Comments may also be sent by grant review, inter partes review, and inform the Office of a final written electronic mail message over the derivation provisions of sections 3 and decision in an inter partes review or Internet via the Federal eRulemaking 6 of the Leahy-Smith America Invents post grant review of the patent subject Portal. See the Federal eRulemaking Act will be implemented by separate to the ex parte reexamination by filing Portal Web site (http:// rulemakings. a ‘‘Notification of Existence of Prior or Concurrent Proceedings and Decisions www.regulations.gov) for additional I. Background instructions on providing comments via Thereon’’ pursuant to Manual of Patent the Federal eRulemaking Portal. Section 6(g) of the Leahy-Smith Examining Procedure (MPEP) § 2282 Although comments may be America Invents Act amends 35 U.S.C. (8th ed. 2001) (Rev. 8, July 2010). MPEP submitted by postal mail, the Office 301 to expand the information that can § 2282 provides that ‘‘in order to ensure prefers to receive comments by be submitted in the file of an issued a complete file, with updated status electronic mail message over the patent by including written statements information regarding prior or Internet because sharing comments with made by a patent owner before a Federal concurrent proceedings regarding the the public is more easily accomplished. court or the Office regarding the scope patent under reexamination, the Office Electronic comments are preferred to be of any claim of the patent. The will, at any time, accept from any submitted in plain text, but also may be provision limits the Office’s use of such parties, for entry into the reexamination submitted in ADOBE® portable written statements to determining the file, copies of notices of suits and other document format or MICROSOFT meaning of a patent claim in ex parte proceedings involving the patent and WORD® format. Comments not reexamination proceedings that have copies of decisions or papers filed in the submitted electronically should be already been ordered and in inter partes court from litigations or other submitted on paper in a format that review and post grant review proceedings involving the patent.’’ facilitates convenient digital scanning proceedings that have been instituted. [Emphasis added] into ADOBE® portable document This provision is effective on September Section 6(h)(1) of the Leahy-Smith format. 16, 2012. America Invents Act amends 35 U.S.C. The comments will be available for Section 6(a) and (d) of the Leahy- 303 to expressly identify the authority public inspection at the Office of the Smith American Invents Act also of the Director to initiate reexamination Commissioner for Patents, currently contains provisions in new 35 U.S.C. based on patents and publications cited located in Madison East, Tenth Floor, 315(e)(1) and 35 U.S.C. 325(e)(1) for in a prior reexamination request under estopping a third party requester from 600 Dulany Street, Alexandria, Virginia. 35 U.S.C. 302, as well as on those cited filing a request for ex parte Comments also will be available for under 35 U.S.C. 301 (which was reexamination, in certain instances viewing via the Office’s Internet Web previously expressly authorized). This where the third party requester filed a site (http://www.uspto.gov). Because provision is effective on September 16, petition for inter partes review or post comments will be made available for 2012. grant review and a final written decision public inspection, information that the Section 3(i) of the Leahy-Smith under 35 U.S.C. 318(a) or 35 U.S.C. submitter does not desire to make America Invents Act replaces 328(a) has been issued. In addition, a public, such as an address or phone interference proceedings with third party requester may not maintain number, should not be included in the derivation proceedings; section 3(j) an ex parte reexamination if the comments. replaces the title ‘‘Board of Patent estoppel provisions are met during the Appeals and Interferences’’ with ‘‘Patent FOR FURTHER INFORMATION CONTACT: pendency of the ex parte reexamination Trial and Appeal Board’’ in 35 U.S.C. Kenneth M. Schor, Senior Legal Advisor proceeding. The estoppel provisions 134, 145, 146, 154, and 305; Section 6(a) ((571) 272–7710), or Joseph F. Weiss, Jr., apply to the real party(ies) in interest of replaces inter partes reexamination with Legal Advisor ((571) 272–7759), Office the inter partes review or post grant inter partes review of a patent; Section of Patent Legal Administration, Office of review petitioner and any privy of such 6(d) provides for post-grant review of the Associate Commissioner for Patent a petitioner. This provision is effective patents; and Section 7 amends 35 U.S.C. Examination Policy. on September 16, 2012. 6(b) to define the duties of the Patent SUPPLEMENTARY INFORMATION: Section 6 In view of the estoppel provisions, the Trial and Appeal Board. of the Leahy-Smith America Invents Act Office needs to be aware of any final replaces the current inter partes written decision in an inter partes II. Discussion of Specific Rules reexamination proceedings with inter review or post grant review regarding Title 37 of the Code of Federal partes review proceedings, and creates the patentability of claims. Current Regulations, Part 1, is proposed to be new post grant review proceedings. See § 1.565(a) requires the patent owner to amended as follows: Public Law 112–29, 125 Stat. 284 ‘‘inform the Office of any prior or The undesignated center heading (2011). Section 6 of the Leahy-Smith concurrent proceedings in which the before § 1.501: It is proposed that the America Invents Act also provides for patent is or was involved such as undesignated center heading be revised an estoppel that may attach with respect interferences, reissues, ex parte to read ‘‘Citation of prior art and written to ex parte reexamination based on an reexaminations, inter partes statements.’’ inter partes review or post grant review reexaminations, or litigation and the Section 1.501: Proposed § 1.501 is proceeding. The Office is proposing to results of such proceedings.’’ Because rewritten to reflect the amendment to 35 revise the rules of practice in title 37 of current § 1.565(a) uses open language to U.S.C. 301 by section 6(g)(1) of the the Code of Federal Regulations (CFR) to provide a non-exhaustive listing of Leahy-Smith America Invents Act. New implement these post-patent provisions, proceedings that patent owner must 35 U.S.C. 301(a)(2) would permit a along with changes in nomenclature inform the Office about, the current rule submission under 35 U.S.C. 301 and pertaining to the renaming of the ‘‘Board will include inter partes review and 1.501 to contain, in addition to prior art

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(currently provided for in § 1.501), a written statement eligible for the patent owner by frequent ‘‘statements of the patent owner filed in submission under 35 U.S.C. 301(a)(2), submissions of prior art made during a a proceeding before a Federal court or even though it may be later entered into reexamination proceeding, as well as the Office in which the patent owner a Federal court or Office proceeding by unwarranted interruption and delay of took a position on the scope of any a party other than the patent owner. See the reexamination proceeding, which claim of a particular patent’’ (claim H.R. Rep. No. 112–98, Part 1, at page 46 would be contrary to the mandate under scope statements of the patent owner). (2011) (‘‘[t]his addition will counteract 35 U.S.C. 305 and 35 U.S.C. 314(c) that Proposed § 1.501 provides that a the ability of patent owners to offer all reexamination proceedings are to be submission can include prior art and differing interpretations of prior art in ‘‘conducted with special dispatch claim scope statements of the patent different proceedings’’). within the Office.’’ owner. The term ‘‘Federal court’’ in 35 Section 1.501(b): Proposed Section 1.501(d): Proposed § 1.501(d) U.S.C. 301(a)(2) is understood to also § 1.501(b)(1) is directed to the 35 U.S.C. restates existing § 1.501(b), to permit the include the United States Court of 301(b) requirement that the submission person making the submission to International Trade. include an explanation ‘‘in writing [of] exclude his or her identity from the Section 1.501(a): Proposed the pertinency and manner of applying patent file by anonymously filing the § 1.501(a)(1), like current § 1.501(a), the prior art or written statements’’ to at submission. Section 1.501(e): Proposed § 1.501(e) provides for submission to the Office of least one patent claim. Proposed requires that a submission made under prior art directed to patents or printed § 1.501(b)(1) requires an explanation as to how the information in the § 1.501 must reflect that a copy of the publications allegedly bearing on the submission is pertinent to the claim(s) submission has been served upon the patentability of any claim of a particular of the patent and how it is applied to patent owner at the correspondence patent. Section 1.501(a)(2) newly each of those claims. In some instances, address of record in the patent, and that permits submission of statements of the a combination of prior art and written service was carried out in accordance patent owner filed in a proceeding statements may be cited, while in other with § 1.248. Service is required to before a Federal court or the Office in situations only prior art or written provide notice to the patent owner of which the patent owner took a position statements may be cited. In either the submission. The presence of a on the scope of any claim of a patent situation, an explanation as to how the certificate of service compliant with (claim scope statements). Any statement cited information applies to those § 1.248(b) is prima facie evidence of submitted under this paragraph must be specific claims must be included with compliance with § 1.501(e). If service accompanied by any other documents, the submission of patent owner upon patent owner is unsuccessful, the pleadings, or evidence from the statements under 35 U.S.C. 301(a)(2). submission must include proof of a proceeding in which the statement was Section 1.501(b)(1) requires an bona fide attempt to serve. Proof of a filed that address the statement; and the explanation of the additional bona fide attempt to serve must include statement and accompanying information required by 35 U.S.C. 301(c) a statement of facts with an explanation information under this paragraph must (as a result of the Leahy-Smith America of the inability to serve the submission be submitted in redacted form to Invents Act), because the additional upon patent owner, along with all exclude information subject to an information addresses and provides supporting evidence of the attempt of applicable protective order. For context to the written statement of the service. The statement of facts must be example, a third party may submit a patent owner; thus, it provides an signed by a person having firsthand deposition of the patent owner additional explanation as to how the knowledge of the facts recited, regarding occurring during the course of the cited information is pertinent to the unsuccessful service. The statement of Federal court proceeding where the claim(s). facts should include the steps taken to patent owner discusses the scope of a Proposed § 1.501(b)(2) is directed to locate and serve the patent owner. A patent claim. A party submitting any the substance of the second sentence of statement of facts which provides a submission that includes § 1.501(a)(2) current § 1.501(a), which provides mere conclusion or assertion of information should also consider regulatory authorization for a patent unsuccessful service will not satisfy this providing the following information to owner submitter to include an requirement. Copies of documentary assist the Office in identifying the explanation of how the claims differ proof such as certified/registered mail proceeding where the patent owner from the prior art submitted. Proposed receipts, cover letters, telegrams or other claim scope statement was made: (1) § 1.501(b)(2) simply adds statements of forms of evidence that support a finding The forum in which the statement was patent owner under 35 U.S.C. 301(a)(2) that the patent owner could not be made (the specific Federal court or the to the current regulatory authorization. served should be made part of the Office); (2) the Federal court or Office Section 1.501(c): Proposed § 1.501(c) statement of facts. A submission will proceeding designation (case citation or restates the last sentence of existing not be entered into the patent’s Image numerical designation); (3) the status of § 1.501(a) directed to the timing for a File Wrapper (IFW) if it does not the proceeding; (4) the relationship of submission under §§ 1.502 and 1.902 include either proof of service the proceeding to the patent in which when there is a reexamination compliant with § 1.248(b) or a sufficient the submission is being made; (5) an proceeding pending for the patent in explanation and proof of a bona fide identification of the specific papers of which the submission is made. Pursuant attempt of service, and if such a the proceeding containing the statement to current §§ 1.502 and 1.902, entry submission is inadvertently entered, it of the patent owner; and (6) an (into the official patent file) of a proper will be expunged. Where a submission identification of the portion(s) of the submission that is made after the date complies with the rule, all information papers relevant to the written statement of an order to reexamine will be delayed included in the submission will be being asserted to constitute a statement (with certain exceptions specified in made of record in the IFW of the patent. of the patent owner under 35 U.S.C. §§ 1.502 and 1.902) until the A best practice for patent owners is to 301(a)(2). Any patent owner statement reexamination proceeding has been regularly monitor the IFW record of regarding the scope of any claim of a concluded by the issuance and their patents in the event that a third particular patent made outside of a publication of a reexamination party was unsuccessful in serving the Federal court or Office proceeding is not certificate. This prevents harassment of patent owner at the correspondence

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address of record. Such regular (pursuant to § 1.510(b)(2)) must explain existing inter partes reexamination. As monitoring allows a patent owner to be how each § 1.501(a)(2) statement is was the case for implementation of aware of all information added to its being used to determine the proper §§ 1.915(b)(7) and 1.915(b)(8) for inter patent files. meaning of a patent claim in connection partes reexamination, the certification Section 1.501(f): Proposed § 1.501(f) with the applied prior art. This must be and identification to be implemented limits the use of statements of the patent explained for each claim for which the via new §§ 1.510(b)(6) and 1.510(b)(7) owner and accompanying information § 1.501(a)(2) statement is being used in address Congress’s desire to prevent submitted under § 1.501(a)(2) to what is the request, and the explanation will be harassment of the patent owner by third provided for in 35 U.S.C. 301(d). Thus, considered by the Office during the parties. See H.R. Rep. No. 112–98 (Part statements of the patent owner and examination stage, if reexamination is 1), at 48. accompanying information submitted ordered. At the order stage, the Office Section 1.515: Section 1.515 is revised under paragraph (a)(2) may only be used will use the broadest reasonable to add: ‘‘A statement pursuant to for determination of the proper meaning interpretation of the claims, without § 1.501(a)(2) will not be considered by of a patent claim in: (1) An ex parte consideration to any § 1.501(a)(2) the examiner in the examiner’s reexamination proceeding that has been statement relied upon in the detailed determination on the request.’’ New 35 ordered pursuant to 35 U.S.C. 304; (2) explanation of a request. U.S.C. 301(d) states: ‘‘A written an inter partes review proceeding that New § 1.510(b)(6) requires that the statement submitted pursuant to has been instituted pursuant to 35 request contain a certification that the subsection (a)(2), and additional U.S.C. 314; and (3) a post grant review statutory estoppel provisions of inter information submitted pursuant to proceeding that has been instituted partes review and post grant review do subsection (c) [of 35 U.S.C. 301], shall pursuant to 35 U.S.C. 324. Proposed not bar the third party from requesting not be considered by the Office for any § 1.501(f) follows from new 35 U.S.C. ex parte reexamination. To complement purpose other than to determine the 301(d), which provides that ‘‘a written this revision, § 1.510(b)(7) requires that proper meaning of a patent claim in a statement submitted pursuant to the request contain, as part of the proceeding that is ordered * * * subsection (a)(2)’’ ‘‘shall not be certification, a statement identifying the pursuant to section 304.’’ The Office considered by the Office for any real party(ies) in interest to the extent interprets 35 U.S.C. 301(d) as purpose other than to determine the necessary to determine whether an inter prohibiting it from considering a proper meaning of a patent claim in a partes review or post grant review filed § 1.501(a)(2) written statement when proceeding that is ordered or instituted subsequent to an ex parte reexamination making the determination of whether to pursuant to section 304, 314, or 324.’’ bars the third party from maintaining a order ex parte reexamination under 35 The reference to 35 U.S.C. 314 is pending ex parte reexamination. An ex U.S.C. 303. See also H.R. Rep. No. 112– understood to apply to inter partes parte reexamination requester has the 98, Part 1, at page 46 (2011). In making review, and not to inter partes option to remain anonymous. In order to the § 1.515(a) determination of whether reexamination, because inter partes do so, the requester must: (1) Submit the to order ex parte reexamination, the reexamination is being replaced by inter statement identifying the real party(ies) Office will generally (except in the rare partes review on the date that 35 U.S.C. in interest as a separate paper; (2) title case of an expired patent), give the 301(d) becomes effective (i.e., the paper as a statement identifying the claims the broadest reasonable September 16, 2012). While inter partes real party(ies) in interest; (3) request in interpretation consistent with the reexamination proceedings already the paper that the Office to retain the specification (See In re Yamamoto, 740 ordered will continue after September paper in confidence by sealing it; and F.2d 1569, 222 USPQ 934 (Fed. Cir. 16, 2012, 35 U.S.C. 314 is understood (4) include, in a clear and conspicuous 1984)). Consideration of the evidentiary not to apply to such proceedings. manner, an appropriate instructional weight to be accorded to a 35 U.S.C. Section 1.510: Proposed § 1.510(b)(2) label designating the statement as a non- 301(a)(2) statement (as to the meaning of is revised, and new §§ 1.510(b)(6) and public submission, e.g., NOT OPEN TO the claims with respect to the ultimate (b)(7) are added to implement THE PUBLIC FOR OFFICE USE ONLY. patentability decision) will not be given provisions of the Leahy-Smith America The Office will then maintain the real unless reexamination is ordered. If Invents Act. Section 1.510(b)(2) is party(ies) in interest statement as a reexamination is ordered, the patent revised to require that a request for sealed, non-public submission. owner statements submitted pursuant to reexamination identify every claim for The estoppel provisions of inter 35 U.S.C. 301(a)(2) will be considered to which reexamination is requested, and partes review and post grant review are the fullest extent possible when for any statement of the patent owner provided in new 35 U.S.C. 315(e)(1) and determining the scope of any claims in submitted pursuant to § 1.501(a)(2) 325(e)(1), respectively. These estoppel the patent which are subject to which is relied upon in the detailed provisions bar a request for ex parte reexamination. explanation, explain how that statement reexamination (or maintenance of an ex Section 1.552: § 1.552 is rewritten to is being used to determine the proper parte reexamination) by a third party include new subsection § 1.552(d) to meaning of a patent claim in connection requester, the requester’s real party(ies) reflect the amendment of 35 U.S.C. 301 with prior art applied to that claim. New in interest, or a privy, where the by section 6(g)(1) of the Leahy-Smith 35 U.S.C. 301(d) provides that a requester petitioned for an inter partes America Invents Act. Proposed statement of the patent owner, pursuant review or post grant review of a claim § 1.552(d) states: ‘‘Any statement of the to § 1.501(a)(2), may be relied upon in in the patent that resulted in a final patent owner and any accompanying the ex parte reexamination proceeding written decision with respect to that information submitted pursuant to only after reexamination has been claim on any ground that the petitioner § 1.501(a)(2) which is of record in the ordered. In order to comply with the raised or reasonably could have raised patent being reexamined (which requirement of 35 U.S.C. 302 that the during that inter partes review or post includes any reexamination files for the ‘‘request must set forth the pertinency grant review. The certification and patent) may be used after a and manner of applying cited prior art identification in new §§ 1.510(b)(6) and reexamination proceeding has been to every claim for which reexamination 1.510(b)(7) are consistent with the ordered to determine the proper is requested,’’ the ‘‘detailed practice of real party(ies) in interest meaning of a patent claim when explanation’’ provided in the request identification certification used for applying patents or printed

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publications.’’ New 35 U.S.C. 301(a)(2) of sections 3 and 6 of the Leahy-Smith Office has complied with Executive permits a submission under 35 U.S.C. America Invents Act: (1) Section 6(g) Order 13563. Specifically, the Office 301 to contain ‘‘statements of the patent which amends 35 U.S.C. 301, to expand has, to the extent feasible and owner filed in a proceeding before a the scope of information that can be applicable: (1) Made a reasoned Federal court or the Office in which the submitted in the file of an issued patent; determination that the benefits justify patent owner took a position on the (2) the provisions of sections 6(a) and the costs of the rule; (2) tailored the rule scope of any claim of a particular 6(d) (which newly enact inter partes to impose the least burden on society patent.’’ Thus, written statements cited review and post grant review, consistent with obtaining the regulatory under new 35 U.S.C. 301(a)(2) may be respectively) that provide for estoppels objectives; (3) selected a regulatory considered after an ex parte effective as to proceedings before the approach that maximizes net benefits; reexamination proceeding has been Office, including but not limited to (4) specified performance objectives; (5) ordered, but not in making the reexamination; and (3) sections 3(j) and identified and assessed available determination of whether to order ex 7 which change the title ‘‘Board of alternatives; (6) involved the public in parte reexamination under 35 U.S.C. Patent Appeals and Interferences’’ to an open exchange of information and 303. See 35 U.S.C. 301(d). See also H.R. ‘‘Patent Trial and Appeal Board,’’ and perspectives among experts in relevant Rep. No. 112–98, Part 1, at page 46 change references to interference disciplines, affected stakeholders in the (2011). proceedings to derivation proceedings. private sector and the public as a whole, The Office also proposes to change Therefore, the changes in this and provided on-line access to the the nomenclature in title 37 CFR to proposed rule are merely procedural rulemaking docket; (7) attempted to reflect renaming the ‘‘Board of Patent and/or interpretive. See Bachow promote coordination, simplification, Appeals and Interferences’’ as the Communs., Inc. v. FCC, 237 F.3d 683, and harmonization across government ‘‘Patent Trial and Appeal Board,’’ 690 (DC Cir. 2001) (rules governing an agencies and identified goals designed including changes for the new trial application process are procedural to promote innovation; (8) considered proceedings of inter partes review, post under the Administrative Procedure approaches that reduce burdens and grant review, and derivation. Act); Inova Alexandria Hosp. v. Shalala, maintain flexibility and freedom of Specifically, the Office proposes to 244 F.3d 242, 350 (4th Cir. 2001) (rules choice for the public; and (9) ensured change ‘‘Board of Patent Appeals and for handling appeals were procedural the objectivity of scientific and Interferences’’ to the ‘‘Patent Trial and where they did not change the technological information and Appeal Board’’ in 37 CFR parts 1, 11, substantive standard for reviewing processes. and 41 (in §§ 1.1(a)(1)(ii), 1.4(a)(2), claims); Nat’l Org. of Veterans’ E. Executive Order 13132 1.6(d)(9), 1.8(a)(2)(i)(C), 1.9(g), 1.17(b), Advocates v. Sec’y of Veterans Affairs, (Federalism): This rulemaking does not 1.36(b), 1.48(j), 1.136(a)(1)(iv), 260 F.3d 1365, 1375 (Fed. Cir. 2001) contain policies with federalism 1.136(a)(2), 1.136(b), 1.181(a)(1), (rule that clarifies interpretation of a implications sufficient to warrant 1.181(a)(3), 1.191, 1.197(a), 1.198, statute is interpretive). preparation of a Federalism Assessment 1.248(c), 1.294(b), 1.301, 1.303(a), Accordingly, prior notice and under Executive Order 13132 (Aug. 4, 1.304(a)(1), 1.304(a)(1)(ii), 1.324(d), opportunity for public comment are not 1999). 1.550(a), 1.701(a)(3), 1.701(c)(3), required pursuant to 5 U.S.C. 553(b) or F. Executive Order 13175 (Tribal 1.702(a)(3), 1.702(b)(4), 1.702(e), (c) (or any other law) and thirty-day Consultation): This rulemaking will not: 1.703(a)(5), 1.703(b)(4), 1.703(e), advance publication is not required (1) Have substantial direct effects on one 1.704(c)(9), 1.937(a), 1.959, 1.979(a), pursuant to 5 U.S.C. 553(d) (or any other or more Indian tribes; (2) impose 1.979(b), 1.981, 1.983(a), 1.983(c), law). See Cooper Techs. Co. v. Dudas, substantial direct compliance costs on 1.983(d), 1.983(f), 11.5(b)(1), 11.6(d), 536 F.3d 1330, 1336–37 (Fed. Cir. 2008) Indian tribal governments; or (3) 41.1(a), 41.2, 41.10(a)–(c), and 41.77(a), (stating that 5 U.S.C. 553, and thus 35 preempt tribal law. Therefore, a tribal and in the title of part 41). The Office U.S.C. 2(b)(2)(B), does not require notice summary impact statement is not likewise proposes to add specific and comment rulemaking for required under Executive Order 13175 references to trial proceedings before the ‘‘interpretative rules, general statements (Nov. 6, 2000). Patent Trial and Appeal Board to of policy, or rules of agency G. Executive Order 13211 (Energy §§ 1.5(c), 1.6(d), 1.6(d)(9), 1.11(e), organization, procedure, or practice.’’) Effects): This rulemaking is not a 1.136(a)(2), 1.136(b), 1.178(b), 1.248(c), (quoting 5 U.S.C. 553(b)(A)). The Office, significant energy action under 1.322(a)(3), 1.324(a), 1.324(d), 1.565(a), however, is publishing these changes for Executive Order 13211 because this 1.565(e), 1.985(a), 1.985(b), 1.993, comment as it seeks the benefit of the rulemaking is not likely to have a 10.1(s), 11.10(b)(3)(iii), and public’s views on the Office’s proposed significant adverse effect on the supply, 11.57(b)(1)(i). Finally, the Office implementation of these provisions of distribution, or use of energy. Therefore, proposes to add specific references to the Leahy-Smith America Invents Act. a Statement of Energy Effects is not derivation proceedings to §§ 1.48(j), B. Regulatory Flexibility Act: As prior required under Executive Order 13211 1.55(a)(3)(i), 1.55(a)(4)(i)(A), 1.103(g), notice and an opportunity for public (May 18, 2001). 1.136(a)(1)(v), 1.313(b)(4), 1.701(a)(1), comment are not required pursuant to 5 H. Executive Order 12988 (Civil 1.701(c)(1)(i–ii), 1.701(c)(2)(iii), U.S.C. 553 or any other law, neither a Justice Reform): This rulemaking meets 1.702(b)(2), 1.702(c), 1.703(b)(2)(i–ii), regulatory flexibility analysis nor a applicable standards to minimize 1.703(b)(3)(iii), 1.703(c)(1–2), certification under the Regulatory litigation, eliminate ambiguity, and 1.703(d)(3), and 5.3(b). Flexibility Act (5 U.S.C. 601 et seq.) is reduce burden as set forth in sections required. See 5 U.S.C. 603. 3(a) and 3(b)(2) of Executive Order III. Rulemaking Considerations C. Executive Order 12866 (Regulatory 12988 (Feb. 5, 1996). A. Administrative Procedure Act Planning and Review): This rulemaking I. Executive Order 13045 (Protection (APA): This proposed rule revises has been determined to be not of Children): This rulemaking does not existing rules governing prior art significant for purposes of Executive concern an environmental risk to health citations and patent owner statements in Order 12866 (Sept. 30, 1993). or safety that may disproportionately a patent file and ex parte reexamination D. Executive Order 13563 (Improving affect children under Executive Order to implement the following provisions Regulation and Regulatory Review): The 13045 (Apr. 21, 1997).

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J. Executive Order 12630 (Taking of proposed rulemaking involves Policy. Comments should also be Private Property): This rulemaking will information collection requirements submitted to the Office of Information not effect a taking of private property or which are subject to review by the and Regulatory Affairs, Office of otherwise have taking implications Office of Management and Budget Management and Budget, New under Executive Order 12630 (Mar. 15, (OMB) under the Paperwork Reduction Executive Office Building, Room 10202, 1988). Act of 1995 (44 U.S.C. 3501–3549). The 725 17th Street NW., Washington, DC K. Congressional Review Act: Under collection of information involved in 20503, Attention: Desk Officer for the the Congressional Review Act this notice has been submitted to OMB Patent and Trademark Office. provisions of the Small Business under OMB control number 0651–00xx. Notwithstanding any other provision Regulatory Enforcement Fairness Act of The proposed collection will be of law, no person is required to respond 1996 (5 U.S.C. 801 et seq.), prior to available at OMB’s Information to, nor shall a person be subject to a issuing any final rule, the United States Collection Review Web site (http:// penalty for failure to comply with, a Patent and Trademark Office will www.reginfo.gov/public/do/PRAMain). collection of information subject to the submit a report containing the final rule Needs and Uses: This information requirements of the Paperwork and other required information to the collection is necessary so that the public Reduction Act, unless that collection of United States Senate, the United States may file, in a patent, submissions of information displays a currently valid House of Representatives, and the patents and printed publications, and OMB control number. Comptroller General of the Government statements of the patent owner filed in List of Subjects in 37 CFR Part 1 Accountability Office. The changes in a proceeding before a Federal court or this notice are not expected to result in the Office in which the patent owner Administrative practice and an annual effect on the economy of 100 took a position on the scope of any procedure, Courts, Freedom of million dollars or more, a major increase claim of the patent. The public may use information, Inventions and patents, in costs or prices, or significant adverse this information to aid in ascertaining Reporting and record keeping effects on competition, employment, the patentability and/or scope of the requirements, Small businesses, and investment, productivity, innovation, or claims of the patent. Biologics. the ability of United States-based Title of Collection: Post Patent Public For the reasons set forth in the enterprises to compete with foreign- Submissions. preamble, 37 CFR Part 1 is proposed to based enterprises in domestic and OMB Control Number: 0651–00xx. be amended as follows: export markets. Therefore, this notice is Method of Collection: By mail, not expected to result in a ‘‘major rule’’ facsimile, hand delivery, or PART 1—RULES OF PRACTICE IN as defined in 5 U.S.C. 804(2). electronically to the Office. PATENT CASES L. Unfunded Mandates Reform Act of Affected Public: Individuals or 1995: The changes proposed in this households; businesses or other for- 1. The authority citation for 37 CFR notice do not involve a Federal profits; and not-for-profit institutions. Part 1 continues to read as follows: intergovernmental mandate that will Estimated Number of Respondents: Authority: 35 U.S.C. 2(b)(2), unless result in the expenditure by State, local, 1,000 responses per year. otherwise noted. and tribal governments, in the aggregate, Estimated Time Per Response: The 2. The undesignated center heading of 100 million dollars (as adjusted) or Office estimates that the responses in before § 1.501 is revised to read as more in any one year, or a Federal this collection will take the public 10 follows: private sector mandate that will result hours. in the expenditure by the private sector Estimated Total Annual Respondent Citation of Prior Art and Written of 100 million dollars (as adjusted) or Burden Hours: 10,000 hours per year. Statements more in any one year, and will not Estimated Total Annual Respondent 3. Section 1.501 is revised to read as significantly or uniquely affect small Cost Burden: $3,400,000 per year. follows: governments. Therefore, no actions are The Office is soliciting comments to: necessary under the provisions of the (1) Evaluate whether the proposed § 1.501 Citation of prior art and written Unfunded Mandates Reform Act of information requirement is necessary for statements in patent files. 1995. See 2 U.S.C. 1501 et seq. the proper performance of the functions (a) Information content of submission: M. National Environmental Policy of the Office, including whether the At any time during the period of Act: This rulemaking will not have any information will have practical utility; enforceability of a patent, any person effect on the quality of the environment (2) evaluate the accuracy of the Office’s may file a written submission with the and is thus categorically excluded from estimate of the burden; (3) enhance the Office under this section, which is review under the National quality, utility, and clarity of the directed to the following information: Environmental Policy Act of 1969. See information to be collected; and (4) (1) Prior art consisting of patents or 42 U.S.C. 4321 et seq. minimize the burden of collecting the printed publications which the person N. National Technology Transfer and information on those who are to making the submission states to have a Advancement Act: The requirements of respond, including by using appropriate bearing on the patentability of any claim section 12(d) of the National automated, electronic, mechanical, or of the patent; or Technology Transfer and Advancement other technological collection (2) Statements of the patent owner Act of 1995 (15 U.S.C. 272 note) are not techniques or other forms of information filed in a proceeding before a Federal applicable because this rulemaking does technology. court or the Office in which the patent not contain provisions which involve Please send comments on or before owner took a position on the scope of the use of technical standards. March 5, 2012 to Mail Stop Comments— any claim of the patent. Any statement O. Paperwork Reduction Act: The Patents, Commissioner for Patents, P.O. submitted under this paragraph must be Paperwork Reduction Act of 1995 (44 Box 1450, Alexandria, VA, 22313–1450, accompanied by any other documents, U.S.C. 3501 et seq.) requires that the marked to the attention of Raul Tamayo, pleadings, or evidence from the Office consider the impact of paperwork Legal Advisor, Office of Patent Legal proceeding in which the statement was and other information collection Administration, Office of the Associate filed that address the written statement, burdens imposed on the public. This Commissioner for Patent Examination and such statement and accompanying

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information under this paragraph must section 301(a)(2) will be considered determination, will become a part of the be submitted in redacted form to when determining the scope of any official file of the patent, and will be exclude information subject to an claims in the patent subject to mailed to the patent owner at the applicable protective order. Submission reexamination. address provided for in § 1.33(c) and to of a statement of the patent owner made 4. Section 1.510 is amended by the person requesting reexamination. outside of a Federal court or Office revising paragraph (b)(2), and adding * * * * * proceeding and later filed for inclusion new paragraphs (b)(6) and (b)(7), to read 6. Section 1.552 is amended by in a Federal court or Office proceeding as follows: adding new paragraph (d) to read as is not permitted by this section, and follows: such a submission will not be entered § 1.510 Request for ex parte reexamination. into the patent file. § 1.552 Scope of reexamination in ex parte (b) Explanation included: A * * * * * reexamination proceedings. submission pursuant to paragraph (a) of (b) * * * * * * * * this section: (2) An identification of every claim (d) Any statement of the patent owner (1) Must explain in writing the for which reexamination is requested, and any accompanying information pertinence and manner of applying any and a detailed explanation of the submitted pursuant to § 1.501(a)(2) prior art submitted under paragraph pertinency and manner of applying the which is of record in the patent being (a)(1) of this section and any written cited prior art to every claim for which reexamined (which includes any statement and accompanying reexamination is requested. For each reexamination files for the patent) may information submitted under paragraph statement and accompanying be used after a reexamination (a)(2) of this section to at least one claim information of the patent owner proceeding has been ordered to of the patent, in order for the submitted pursuant to § 1.501(a)(2) determine the proper meaning of a submission to become a part of the which is relied upon in the detailed patent claim when applying patents or official file of the patent; and explanation, the request must explain printed publications. (2) May, if the submission is made by how that statement is being used to the patent owner, include an determine the proper meaning of a Dated: December 30, 2011. explanation of how the claims differ patent claim in connection with the David J. Kappos, from any prior art submitted under prior art applied to that claim and how Under Secretary of Commerce for Intellectual paragraph (a)(1) of this section or any each relevant claim is being interpreted. Property and Director of the United States written statements and accompanying If appropriate, the party requesting Patent and Trademark Office. information submitted under paragraph reexamination may also point out how [FR Doc. 2011–33813 Filed 1–4–12; 8:45 am] (a)(2) of this section. claims distinguish over cited prior art. BILLING CODE 3510–16–P (c) Reexamination pending: If a * * * * * reexamination proceeding has been (6) A certification that the statutory DEPARTMENT OF COMMERCE requested and is pending for the patent estoppel provisions of both inter partes in which the submission is filed, entry review (35 U.S.C. 315(e)(1)) and post United States Patent and Trademark of the submission into the official file of grant review (35 U.S.C. 325(e)(1)) do not Office the patent is subject to the provisions of prohibit the ex parte reexamination. §§ 1.502 and 1.902. (7) A statement identifying the real 37 CFR Part 1 (d) Identity: If the person making the party(ies) in interest to the extent submission wishes his or her identity to necessary to determine whether any [Docket No. PTO–P–2011–0073] be excluded from the patent file and inter partes review or post grant review RIN 0651–AC67 kept confidential, the submission papers filed subsequent to an ex parte must be submitted anonymously reexamination bars a pending ex parte Changes To Implement the without any identification of the person reexamination filed by the real Preissuance Submissions by Third making the submission. party(ies) in interest or its privy from Parties Provision of the Leahy-Smith (e) Service of the submission: A being maintained. America Invents Act submission made under this section 5. Section 1.515 is amended by must reflect that a copy of the revising paragraph (a) to read as follows: AGENCY: United States Patent and submission has been served upon the Trademark Office, Commerce. patent owner at the correspondence § 1.515 Determination of the request for ex ACTION: Notice of proposed rulemaking. address of record in the patent, in parte reexamination. accordance with § 1.248, or that a bona (a) Within three months following the SUMMARY: The United States Patent and fide attempt of service was made. A filing date of a request for an ex parte Trademark Office (Office) is proposing submission that fails to include either reexamination, an examiner will changes to the rules of patent practice proof of service or a sufficient consider the request and determine to implement the preissuance explanation and proof of a bona fide whether or not a substantial new submissions by third parties provision attempt of service will not be entered question of patentability affecting any of the Leahy-Smith America Invents into the patent file, and will be claim of the patent is raised by the Act. This provision provides a expunged if inadvertently entered. request and the prior art cited therein, mechanism for third parties to (f) Consideration of statements of with or without consideration of other contribute to the quality of issued patent owner: Statements of the patent patents or printed publications. A patents by submitting to the Office, for owner and accompanying information statement and any accompanying consideration and inclusion in the submitted under paragraph (a)(2) of this information submitted pursuant to record of patent applications, any section shall not be considered by the § 1.501(a)(2) will not be considered by patents, published patent applications, Office for any purpose other than as the examiner in the examiner’s or other printed publications of provided for in 35 U.S.C. 301(d) . If determination on the request. The potential relevance to the examination reexamination is ordered, the patent examiner’s determination will be based of the applications. A preissuance owner statements submitted pursuant to on the claims in effect at the time of the submission may be made in any non-

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provisional utility, design, and plant submitter does not desire to make The Office plans to permit third-party application, as well as in any continuing public, such as an address or phone preissuance submissions to be filed via or reissue application. A third-party number, should not be included in the the Office electronic filing system (EFS– preissuance submission must include a comments. Web). However, third-party preissuance submissions, whether submitted in concise description of the asserted FOR FURTHER INFORMATION CONTACT: paper or electronically via EFS–Web, relevance of each document submitted Nicole D. Haines, Legal Advisor ((571) would not be automatically entered into and be submitted within a certain 272 7717), Pinchus M. Laufer, Senior the electronic image file wrapper (IFW) statutorily specified time period. The Legal Advisor ((571) 272–7726), or for an application. Instead, preissuance third party must submit a fee as Hiram H. Bernstein, Senior Legal submissions submitted by third parties prescribed by the Director and a Advisor ((571) 272–7707), Office of would be reviewed to determine statement that the submission complies Patent Legal Administration, Office of compliance with 35 U.S.C. 122(e) and with all of the statutory requirements. the Associate Commissioner for Patent new 37 CFR 1.290 before being entered The third-party preissuance submission Examination Policy. provision of the Leahy-Smith America into the IFW. Third parties filing Invents Act is effective on September SUPPLEMENTARY INFORMATION: The preissuance submissions electronically 16, 2012, and applies to any application Leahy-Smith America Invents Act was via EFS–Web, will receive immediate, filed before, on, or after September 16, enacted into law on September 16, 2011. electronic acknowledgment of the 2012. See Public Law 112–29, 125 Stat. 284 Office’s receipt of the submission, Comment Deadline: Written (2011). This notice proposes changes to instead of waiting for the Office to mail comments must be received on or before the rules of practice to implement a return postcard. March 5, 2012. Section 8 of the Leahy-Smith America The current EFS–Web Legal Framework prohibits third-party ADDRESSES: Comments should be sent Invents Act, which provides a submissions under 37 CFR 1.99 and 37 by electronic mail message over the mechanism for third parties to submit to CFR 1.291 in patent applications Internet addressed to: the Office, for consideration and because electronically filed documents [email protected]. inclusion in the record of a patent are instantly loaded into the IFW. See Comments may also be submitted by application, any patents, published Legal Framework for Electronic Filing postal mail addressed to: Mail Stop patent applications, or other printed publications of potential relevance to System—Web (EFS–Web), 74 FR 55200, Comments—Patents, Commissioner for 55202, 55206–7 (October 27, 2009). Patents, P.O. Box 1450, Alexandria, VA, the examination of the application. Section 8 of the Leahy-Smith America Because third-party preissuance 22313 1450, marked to the attention of submissions would be permitted to be Nicole D. Haines, Legal Advisor, Office Invents Act amends 35 U.S.C. 122 by adding 35 U.S.C. 122(e), which filed electronically under the proposed of Patent Legal Administration, Office of rule, the Office intends to protect the Associate Commissioner for Patent enumerates certain conditions that apply to a third-party preissuance applicants by establishing procedures to Examination Policy. determine whether a third-party Comments may also be sent by submission to the Office in a patent application. Pursuant to 35 U.S.C. preissuance submission is in electronic mail message over the compliance with the requirements of Internet via the Federal eRulemaking 122(e), third-party preissuance submissions of patents, published new 37 CFR 1.290 before entering the Portal. See the Federal eRulemaking submission into the IFW of an patent applications, or other printed Portal Web site (http:// application or making the submission publications must be made in patent www.regulations.gov) for additional available to an examiner for applications before the earlier of: (a) The instructions on providing comments via consideration. The Office intends to date a notice of allowance under 35 the Federal eRulemaking Portal. complete such determination, for both U.S.C. 151 is given or mailed in the Although comments may be paper and electronic submissions, application; or (b) the later of (i) six submitted by postal mail, the Office promptly following receipt of the months after the date on which the prefers to receive comments by submission so that compliant application is first published under 35 electronic mail message over the preissuance submissions would be U.S.C. 122 by the Office, or (ii) the date Internet because sharing comments with quickly entered into the IFW and made the public is more easily accomplished. of the first rejection under 35 U.S.C. 132 available to the examiner for Electronic comments are preferred to be of any claim by the examiner during the consideration. Non-compliant third- submitted in plain text, but also may be examination of the application. 35 party preissuance submissions would ® submitted in ADOBE portable U.S.C. 122(e) also requires a concise not be entered into the IFW of an document format or MICROSOFT description of the asserted relevance of application or considered and would be ® WORD format. Comments not each document submitted, a fee as discarded. Also, no refund of the submitted electronically should be prescribed by the Director, and a required fees would be provided in the submitted on paper in a format that statement by the person making the event a preissuance submission is facilitates convenient digital scanning third-party preissuance submission that determined to be non-compliant. If an into ADOBE® portable document the submission was made in compliance electronic mail message address is format. with 35 U.S.C. 122(e). A preissuance provided with a third party preissuance The comments will be available for submission by a third party may be submission, the Office may attempt to public inspection at the Office of the made in any non-provisional utility, notify the third party submitter of such Commissioner for Patents, currently design, or plant application, as well as non-compliance; however, the statutory located in Madison East, Tenth Floor, in any continuing or reissue application. time period for making a preissuance 600 Dulany Street, Alexandria, Virginia. The preissuance submissions by third submission would not be tolled by the Comments also will be available for parties provision of the Leahy-Smith initial non-compliant submission. viewing via the Office’s Internet Web America Invents Act takes effect on The Office does not plan to require site (http://www.uspto.gov). Because September 16, 2012. This provision that the third party serve the applicant comments will be made available for applies to any patent application filed with a copy of the third-party’s public inspection, information that the before, on, or after September 16, 2012. preissuance submission. Nor does the

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Office intend to directly notify the The Office plans to have examiners preissuance submissions in this applicant upon entry of a third-party acknowledge in the record of the patent rulemaking pursuant to its authority preissuance submission. However, the application the examiner’s under 35 U.S.C. 41(d)(2), which contents of a compliant third-party consideration of the documents provides that fees for all processing, preissuance submission will be made submitted. This will be done in a services, or materials relating to patents available to the applicant via its entry in manner similar to that of the examiner’s not specified in 35 U.S.C. 41 are to be the IFW of the patent application. By consideration of applicant-submitted set at amounts to recover the estimated not requiring service of third-party documents filed as part of an IDS. For average cost to the Office of such preissuance submissions on the example, the examiner would indicate processing, services, or materials. See 35 applicant, the Office is underscoring at the bottom of each page of a U.S.C. 41(d)(2). The current rules of that such third-party submissions will preissuance submission ‘‘All documents practice (37 CFR 1.99) provide for a not create a duty on the part of the considered except where lined third-party submission of up to ten applicant to independently file the through,’’ along with the examiner’s documents for the fee set forth in 37 submitted documents with the Office in electronic initials and the examiner’s CFR 1.17(p) (currently $180.00). The an information disclosure statement electronic signature on the final page of Office expects the processing costs to (IDS). Additionally, challenges the submission. See, e.g., Manual of the Office for third-party preissuance regarding whether service of a third- Patent Examining Procedure (MPEP) submissions under new 37 CFR 1.290 to party preissuance submission was § 609.05(b) (8th ed. 2001) (Rev. 8, July be equivalent to the processing costs to proper could negatively impact the 2010). Such indication by the examiner the Office for submissions under 37 CFR pendency of the application. placed at the bottom of each page of a 1.99. Accordingly, the Office has 35 U.S.C. 122(e) does not limit third- preissuance submission would mean determined that the fee set forth in 37 party preissuance submissions to that the examiner has considered the CFR 1.17(p) would also be applicable to pending applications. A third-party listed documents and their third-party preissuance submissions preissuance submission made within accompanying concise descriptions. under 37 CFR 1.290 and proposes to the statutory time period, and otherwise Striking through a document would require the fee set forth in 37 CFR compliant, would be entered even if the mean that the examiner did not consider 1.17(p) for every ten documents, or application to which the submission is either the document or its fraction thereof, listed in each third- directed has been abandoned. An accompanying concise description (e.g., party preissuance submission. examiner would not consider such because the document was listed The Office proposes to provide an preissuance submission unless the improperly, a copy of the document was exemption from this fee requirement application resumes a pending status not submitted, or a concise description where a preissuance submission lists (e.g., the application is revived, the was not provided for that document). three or fewer total documents and is notice of abandonment is withdrawn, Since it would be advantageous for the first preissuance submission etc.). The abandonment of an examiners to have the best art before submitted in an application by a third application will not, however, toll the them prior to issuing the first Office party or a party in privity with the third statutory time period for making a action on the merits, and because a first party. The Office is providing this fee preissuance submission. Additionally, a action allowance in the application exemption for the first preissuance third-party preissuance submission could close the time period for making submission in an application by a third made within the statutory time period, a preissuance submission under 35 party containing three or fewer total and otherwise compliant, would be U.S.C. 122(e), third parties should documents because the submission of a entered even if the application to which consider providing any preissuance limited number of documents is more the submission is directed has not been submission at the earliest opportunity. likely to assist in the examination published. Additionally, because highly relevant process and thus offset the cost of Compliant third-party preissuance documents can be obfuscated by processing the submission. Moreover, submissions would be considered by the voluminous submissions, third parties keeping the size of the fee exempted examiner when the examiner next takes should limit any preissuance submission to three or fewer total up the application for action following submission to the most relevant documents will help to focus the the entry of the preissuance submission documents and should avoid submitting attention of third parties on finding and into the IFW. An examiner would documents that are cumulative in submitting only the most relevant art to consider the documents and concise nature. Third parties need not submit the claims at hand. Where one third descriptions submitted in a compliant documents that are cumulative of each party takes advantage of the fee third-party preissuance submission in other or that are cumulative of exemption in an application, another the same manner that the examiner information already under consideration third party is not precluded from also considers information and concise by the Office. Third parties are taking advantage of the fee exemption in explanations of relevance submitted as reminded that 35 U.S.C. 122(e) requires the same application provided that the part of an IDS. Generally with the next that the documents submitted be ‘‘of third parties are not in privity with each Office action, a copy of the third party’s potential relevance to the examination other. listing of documents, with an indication of the application’’ and that the The Office proposes to implement 35 of which documents were considered by relevance of each document submitted U.S.C. 122(e) in a new rule 37 CFR the examiner, would be provided to the must be provided in an accompanying 1.290 and to eliminate § 1.99. While applicant. Documents considered by the concise description. current § 1.99 provides for third-party examiner would be printed on the The Director is proposing to set the submissions of patents, published patent. Accordingly, an applicant would fees for third-party preissuance patent applications, or printed not need to file an IDS to have the same submissions to recover costs to the publications, it does not permit an documents that were previously Office for third-party preissuance accompanying concise description of submitted by a third party as part of a submissions to the Office. 35 U.S.C. relevance of each document and limits compliant preissuance submission 122(e) expressly provides for ‘‘such fee the time period for such submissions to considered by the examiner in the as the Director may prescribe.’’ The up to two months after the date of the application. Office is setting fees for third-party patent application publication, or the

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mailing of a notice of allowance, each document being submitted and electronic format. In such situations, the whichever is earlier. By contrast, new within time periods that are the same or third party may submit evidence in the 35 U.S.C. 122(e) and proposed 37 CFR greater than those permitted under form of affidavits, declarations, or other 1.290 permit third parties to submit the § 1.99. evidence. Such evidence will not be same types of documents, but with an Section 1.290: Section 1.290(a) as counted toward the document count, accompanying concise description of proposed provides that a third party unless the document is in the form of a relevance of each document submitted may submit, for consideration and entry patent document or other printed and provide third parties with the same in the record of a patent application, publication and the document, itself, is or more time to file preissuance any patents, published patent listed and submitted for consideration submissions with the Office when applications, or other printed by the examiner. compared with current 37 CFR 1.99. publications of potential relevance to Section 1.290(b) as proposed sets Accordingly, the Office proposes to the examination of the application if the forth the time periods in which a third eliminate 37 CFR 1.99 in favor of new submission complies with 35 U.S.C. party may file a preissuance submission. 37 CFR 1.290. 122(e) and the requirements of § 1.290, Under § 1.290(b) as proposed, any third- The Office also plans to eliminate the and provides that the submission will party submission under this section public use proceeding provisions of 37 not be entered or considered by the must be filed before the earlier of: (1) CFR 1.292. Because Section 6 of the Office if the submission is not in The date a notice of allowance under Leahy-Smith America Invents Act compliance with 35 U.S.C. 122(e) and § 1.311 is given or mailed in the makes available a post-grant review § 1.290. Because § 1.290(a) as proposed application; or (2) the later of: (i) six proceeding in which prior public use requires preissuance submissions be months after the date on which the may be raised, the pre-grant public use directed to patent applications, the application is first published by the proceeding set forth in 37 CFR 1.292 is Office would not accept preissuance Office under 35 U.S.C. 122(b) and no longer considered necessary. submissions directed to issued patents. § 1.211, or (ii) the date the first rejection Additionally, information on prior Such submissions should be filed in under § 1.104 of any claim by the public use may be submitted by third accordance with § 1.501. Section examiner is given or mailed during the parties by way of a protest in a pending 1.290(a) as proposed does not require examination of the application. application when the requirements of 37 that the application be published. For The time periods provided for in CFR 1.291 have been met, and example, the Office would accept a § 1.290(b) are statutory and cannot be utilization of 37 CFR 1.291 would compliant preissuance submission waived. Thus, the Office cannot grant promote Office efficiency with respect directed to an application in which a any request for extension of the to treatment of these issues. Requests for nonpublication request has been filed § 1.290(b) time periods. Also, a public use proceeding under 37 CFR pursuant to 35 U.S.C. 122(b)(2)(B)(i) and preissuance submissions must be filed 1.292 are also very rare. The few public § 1.213. Preissuance submissions under before, not on, the dates identified in use proceedings conducted each year § 1.290 as proposed may be directed to § 1.290(b)(i), (b)(2)(i), and (b)(2)(ii). A are a source of considerable delay in the non-provisional utility, design, and preissuance submission under § 1.290 is involved applications and seldom lead plant applications, as well as to filed on its date of receipt in the Office to the rejection of claims. continuing and reissue applications. as set forth in § 1.6 (the provisions of In view of the proposed elimination of Also, § 1.290(a) as proposed limits the § 1.8 do not apply to a preissuance 37 CFR 1.99 and 37 CFR 1.292, the type of information that may be submission under § 1.290). Third-party Office proposes to amend 37 CFR 1.17 submitted to patent publications, which preissuance submissions that are not to eliminate the document submission include patents and published patent timely filed would not be entered or fees pertaining to 37 CFR 1.99 and 37 applications, and other printed considered and would be discarded. CFR 1.292. The Office also proposes to publications of potential relevance to Proposed § 1.290(b)(2)(i) highlights a amend 37 CFR 1.17 to add the the examination of a patent application. distinction in the statutory language of document submission fees pertaining to For example, a submission under 35 U.S.C. 122(c) and (e) with respect to new 37 CFR 1.290. § 1.290 could not include unpublished publication of the application. 35 U.S.C. For ease of compliance, the Office internal documents or other non-patent 122(c) broadly refers to ‘‘publication of proposes to amend 37 CFR 1.291 to documents which do not qualify as the application,’’ whereas new 35 U.S.C. make the requirements for submitting ‘‘printed publications.’’ See MPEP 122(e) refers to an application ‘‘first protests against pending patent § 2128. In the case of a preissuance published under section 122 by the applications more clear and, where submission that includes a lengthy Office.’’ The § 1.290(b)(2)(i) time period appropriate, more consistent with the document, a third party could submit would be initiated only by publications proposed requirements of new 37 CFR the relevant portion of the document by the Office under 35 U.S.C. 122(b) and 1.290. (e.g., one chapter of a book) in lieu of § 1.211, and would not be initiated by the entire document where it is practical a publication by the World Intellectual Discussion of Specific Rules to do so. Because 35 U.S.C. 122(e) does Property Organization (WIPO). Thus, an Title 37 of the Code of Federal not limit the type of information that earlier publication by WIPO of an Regulations, Part 1, is proposed to be may be submitted to prior art, there is international application designating amended as follows: no requirement in § 1.290(a) as the U.S. filed on or after November 29, Section 1.99: Section 1.99 is proposed proposed that the information submitted 2000, would not be considered a to be removed and reserved. Section be prior art documents in order to be publication that would initiate the 1.99 is unnecessary because proposed considered by the examiner. Further, in § 1.290(b)(2)(i) time period for an § 1.290 provides for third-party those situations where a third party is application which entered the national preissuance submissions of patents, asserting that a document submitted is stage from the international application published patent applications, and other prior art, the third party bears the after compliance with 35 U.S.C. 371. printed publications to the Office for burden of establishing the date of the Further, where the Office republishes an consideration and inclusion in the document where the date is not application due to material mistake of record of a patent application, with a apparent from the document regardless the Office pursuant to 37 CFR 1.221(b), concise description of the relevance of whether the document is in paper or the date on which the application is

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republished will be considered the date description of the asserted relevance of prosecution of the patent application) the application is ‘‘first published by the each document submitted.’’ The concise under § 1.56. Such statement is Office’’ under § 1.290(b)(2)(i). description should explain why the intended to avoid potential misuse of The proposed new § 1.290(b)(2)(ii) respective document has been preissuance submissions by applicants time period would be initiated by the submitted and how it is of potential (e.g., by employing a third party ‘‘straw date the first rejection under § 1.104 of relevance to the examination of the man’’) to attempt to circumvent the IDS any claim by the examiner is given or application in which the preissuance rules. mailed during the examination of the submission has been filed. Unless there Section 1.290(d)(5)(ii) as proposed application. The § 1.290(b)(2)(ii) time is no concise description provided for a requires a statement by the party making period would not be initiated, for document that is listed, or the concise the submission that the submission example, by a first Office action that description is merely a bare statement complies with the requirements of 35 only contains a restriction requirement that the document is relevant and thus U.S.C. 122(e) and § 1.290. To facilitate or where the first Office action is an does not amount to a meaningful compliance by third parties, the Office action under Ex parte Quayle, 1935 Dec. concise description, the Office does not proposes to provide a form for third- Comm’r Pat. 11 (1935). propose to otherwise evaluate the party preissuance submissions under Section 1.290(c) as proposed requires sufficiency of the concise description. It § 1.290 that includes the statements a preissuance submission to be made in would be a best practice that each required by §§ 1.290(d)(5)(i) and (ii). writing. For a paper filing, the third concise description point out the Section 1.290(e) as proposed sets forth party may include a self-addressed relevant pages or lines of the respective the requirements for identifying the postcard with the preissuance document, particularly where the documents submitted and listed submission to receive an document is lengthy and complex and pursuant to § 1.290(d)(1). Section acknowledgment by the Office that the the third party can identify a highly 1.290(e) requires that U.S. patents and preissuance submission has been relevant section, such as a particular U.S. patent application publications be received. For an electronic filing, the figure or paragraph. The third party may listed in a separate section from other third party will receive immediate, present the concise description in a documents. Separating the listing of electronic acknowledgment of the format that would best explain to the U.S. patents and U.S. patent application Office’s receipt of the submission. In examiner the relevance of the publications from the listing of other either case, the third party will not accompanying document, such as in a documents would facilitate printing the receive any communications from the narrative description or a claim chart. U.S. patents and U.S. patent application Office relating to the submission other Third parties should refrain from publications considered by the than the self-addressed postcard or submitting a verbose description of examiner in a third-party preissuance electronic acknowledgment of receipt. relevance not only because the statute submission on the face of the patent. Section 1.290(c) as proposed also calls for a ‘‘concise’’ description but also Section 1.290(e)(1) as proposed requires that the application to which because a focused description is more requires that each U.S. patent be the third-party submission is directed be effective in drawing the examiner’s identified by patent number, first named identified on each page of the attention to the relevant issues. inventor, and issue date. Section submission by application number (i.e., Section 1.290(d)(3) as proposed 1.290(e)(2) as proposed requires that the series code and serial number), requires submission of a legible copy of each U.S. patent application publication except for the copies of the documents each listed document. See § 1.98(a)(2) be identified by patent application that are being submitted pursuant to and MPEP § 609.04(a). Where only the publication number, first named § 1.290(d)(3). By requiring identification relevant portion of a document is listed, inventor, and publication date. Section by application number, third-party the third party could submit only a copy 1.290(e)(3) as proposed requires that preissuance submissions could be of that portion (e.g., where a particular each foreign patent or published foreign timely matched with the application file chapter of a book is listed and not the patent application be identified by the and routed to the examiner. entire book). When a copy of only a country or patent office that issued the Section 1.290(d)(1) as proposed relevant portion of a document is patent or published the application, an provides that any third-party submitted, the third party should also appropriate document number, first submission under § 1.290 must include submit copies of pages of the document named inventor, and the publication a list of the documents being submitted, that provide identifying information date indicated on the patent or and the listing must include a heading (e.g., a copy of the cover, the title page, published application. Requiring U.S. that identifies the listing as a third-party the copyright information page, etc.). and foreign patent and published patent preissuance submission under § 1.290. Under § 1.290(d)(3) as proposed, a third application documents to be identified Proposed § 1.290(e) also sets forth the party need not submit copies of U.S. by the first named inventor should aid requirements for identifying the patents and U.S. patent application in identifying the listed documents in documents being submitted and listed publications, unless required by the the event the application number, pursuant to § 1.290(d)(1). The Office Office, as such documents are readily publication number, or other proposes to provide a form similar to accessible to examiners. appropriate document number data is forms PTO/SB/08A and 08B to assist Section 1.290(d)(4) as proposed inadvertently transposed or otherwise third parties in preparing the listing of requires an English language translation misidentified. Section 1.290(e)(4) as documents in accordance with of all relevant portions of any listed proposed requires that each non-patent §§ 1.290(d)(1) and (e) and to ensure that non-English language document to be publication be identified by publisher, the documents are properly made of considered by the examiner. author, title, pages being submitted, record in the application file. Section 1.290(d)(5)(i) as proposed publication date, and place of Section 1.290(d)(2) as proposed requires a statement by the party making publication, where such information is requires a concise description of the the submission that the party is not an available. The qualifier ‘‘where asserted relevance of each listed individual who has a duty to disclose available’’ applies to each item of document. 35 U.S.C. 122(e) requires that information with respect to the information specified in § 1.290(e)(4). each third-party preissuance submission application (i.e., each individual Thus, if an item of information is not be accompanied by a ‘‘concise associated with the filing and available for a particular non-patent

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publication (e.g., publisher more than three, but ten or fewer total invite challenges based on allegations of information), the third party need not documents: and (3) a $360.00 fee would misidentification. provide that information, and the be required for the first preissuance Section 1.290(h) as proposed provides citation of the non-patent publication submission by a third party containing that in the absence of a request by the would not be improper as a result of not more than ten, but twenty or fewer total Office, an applicant has no duty to, and providing that information. Further, documents. For a second or subsequent need not, reply to a submission under § 1.290(e)(4) as proposed does not preissuance submission by the same § 1.290. Likewise, because the preclude additional information not third party: (1) A $180.00 fee would be prosecution of a patent application is an specified in § 1.290(e)(4) from being required where the second or ex parte proceeding, no further response provided (e.g., journal title and volume/ subsequent preissuance submission by from a third party with respect to an issue information for a journal article). the third party contains ten or fewer examiner’s treatment of the third party’s Section 1.290(e)(4) as proposed also total documents; and (2) a $360.00 fee preissuance submission would be provides that the third party bears the would be required where the second or permitted or considered. burden of establishing the date of a non- subsequent preissuance submission by Section 1.290(i) as proposed provides patent publication where the non-patent the same third party contains more than that the provisions of § 1.8 do not apply publication is asserted by the third party ten, but twenty or fewer total to the time periods set forth in § 1.290. to be prior art and the date is not documents. Section 1.291: The Office proposes to amend portions of § 1.291 for clarity and apparent from the document, regardless To implement the fee exemption in also for consistency with new 35 U.S.C. whether the document is in paper or § 1.290(g) and avoid potential misuse of 122(e) and proposed § 1.290. electronic form. such exemption, the Office proposes to Section 1.290(f) as proposed requires Section 1.291(b) is proposed to be require that exemption-eligible amended to clarify that the application payment of the fee set forth in § 1.17(p) preissuance submissions be for every ten documents or fraction publication date is the date the accompanied by a statement of the third application was published under 35 thereof being submitted, except where party that, to the knowledge of the the submission is accompanied by the U.S.C. 122(b), and § 1.211 and is also person signing the statement after proposed to be amended by including statement set forth in proposed making reasonable inquiry, the § 1.290(g). The Office proposes to ‘‘given or’’ before ‘‘mailed’’ to provide submission is the first and only for electronic notification of the notice determine the document count based on preissuance submission submitted in the § 1.290(d)(1) listing of documents. of allowance (i.e., e-Office action). the application by the third party or a Section 1.291(b)(1) is proposed to be Thus, if a document is listed but a copy party in privity with the third party. To of the document is not submitted, the amended to more clearly define the time preclude a third party from making period for submitting protests under listed document would be counted multiple preissuance submissions in the toward the document count. If a copy of § 1.291 that are accompanied by same application on the same day and a document is submitted but the applicant consent. Specifically, asserting that each such submission is document is not listed, the document § 1.291(b)(1) is proposed to be amended the first preissuance submission being would not be counted or considered and to provide that, if a protest is submitted in the application by the would be discarded. A third party accompanied by the written consent of third party, the § 1.290(g) statement would be permitted to cite less than an the applicant, the protest will be would require that the submission be entire publication in the § 1.290(d)(1) considered if the protest is filed before the ‘‘first and only’’ preissuance listing, which would be counted as one a notice of allowance under § 1.311 is submission. This statement would not, document. Further, while a third party given or mailed in the application. This however, preclude the third party from would be permitted to cite different amendment would provide a definite publications that are all available from making more than one preissuance standard for both the Office and third the same electronic source, such as a submission in an application, where the parties and would give more certainty as Web site, each such publication would need for the subsequent submissions to when a protest under § 1.291 that is be counted as a separate document. was not known at the time the earlier accompanied by applicant consent Section 1.290(g) as proposed provides submission including the § 1.290(g) would or would not be accepted by the an exemption from the § 1.290(f) fee statement was filed with the Office. Office. Moreover, it is reasonable that requirement where a preissuance Such additional submissions would not the time period for submission ends submission listing three or fewer total be exempt from the § 1.290(f) fee when a notice of allowance is given or documents is the first preissuance requirement. mailed in the application in view of the submission submitted in an application The Office does not propose to current publication process. by a third party, or a party in privity entertain challenges to the accuracy of Under the current publication with the third party. Where one third such third-party statements because, process, final electronic capture of party takes advantage of the fee pursuant to § 11.18(b), whoever information to be printed in a patent exemption in an application, another knowingly and willfully makes any will begin as soon as an allowed third party is not precluded from also false, fictitious, or fraudulent statements application is received in the Office of taking advantage of the fee exemption in or representations to the Office shall be Patent Publication, immediately after the same application as long as the third subject to the penalties set forth under the notice of allowance has been given parties are not in privity with each 18 U.S.C. 1001. Section 11.18(b) applies or mailed. See MPEP § 1309. other. For example, applying the current to any paper presented to the Office, Section 1.291(c)(1) is proposed to be 37 CFR 1.17(p) fee of $180.00 in whether by a practitioner or non- amended to set forth the requirements accordance with proposed §§ 1.290(f) practitioner. for identifying the information being and (g): (1) No fee would be required for Additionally, the Office does not submitted and listed, consistent with the first preissuance submission by a propose to require an explicit proposed § 1.290(e). Section third party containing three or fewer identification of a real party in interest 1.291(c)(1)(i) as proposed to be amended total documents; (2) a $180.00 fee would because such identification might requires that each U.S. patent be be required for the first preissuance discourage some third parties from identified by patent number, first named submission by a third party containing making a preissuance submission or inventor, and issue date. Section

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1.291(c)(1)(ii) as proposed to be Office, as such documents are readily (quoting 5 U.S.C. 553(b)(A)). The Office, amended requires that each U.S. patent accessible to examiners. however, is publishing these changes application publication be identified by Section 1.292: Section 1.292 is and the Regulatory Flexibility Act patent application publication number, proposed to be removed and reserved. certification discussion below, for first named inventor, and publication The practice of providing a pre-grant comment as it seeks the benefit of the date. Section 1.291(c)(1)(iii) as proposed public use proceeding as set forth in public’s views on the Office’s proposed to be amended requires that each foreign § 1.292 is no longer considered implementation of this provision of the patent or published foreign patent necessary, and is inefficient as Leahy-Smith America Invents Act. application be identified by the country compared to alternative mechanisms B. Regulatory Flexibility Act: For the or patent office that issued the patent or available to third parties for raising reasons set forth herein, the Deputy published the application, an prior public use; for example, as General Counsel for General Law of the appropriate document number, first provided for by § 1.291 protests, where United States Patent and Trademark named inventor, and the publication appropriate, and also by Section 6 of the Office has certified to the Chief Counsel date indicated on the patent or Leahy-Smith America Invents Act for Advocacy of the Small Business published application. Section which makes available a post-grant Administration that changes proposed 1.291(c)(1)(iv) as proposed to be review proceeding. in this notice will not have a significant amended requires that each non-patent Sections 1.17 and 41.202: Sections economic impact on a substantial publication be identified by publisher, 1.17 and 41.202 would also be amended number of small entities. See 5 U.S.C. author, title, pages being submitted, to change or remove references to 605(b). This notice proposes changes to publication date, and place of §§ 1.99 and 1.292, for consistency with the rules of practice to implement publication, where such information is the proposed addition of new § 1.290 section 8 of the Leahy-Smith America available. The qualifier ‘‘where such and removal of §§ 1.99 and 1.292. Invents Act, which provides a information is available’’ applies to each Section 1.17(i) would also be amended mechanism for third parties to submit to item of information specified in to correct a misidentification of the Office, for consideration and § 1.291(c)(1)(iv). Thus, if an item of § 1.53(b)(3) to § 1.53(c)(3) concerning inclusion in the record of a patent the fee for converting a provisional information is not available for a application, any patents, published application filed under § 1.53(c) into a particular non-patent publication (e.g., patent applications, or other printed nonprovisional application under publisher information), the protestor publications of potential relevance to § 1.53(b). need not provide that information, and the examination of the application. the citation of the non-patent Rulemaking Considerations The changes proposed in this notice publication would not be improper as a A. Administrative Procedure Act: This concern requirements for third parties result of not providing that information. submitting patents, published patent Further, § 1.291(c)(1)(iv) as proposed to notice proposes changes to the rules of applications, or other printed be amended does not preclude practice concerning the procedure for publications in a patent application. additional information not specified in filing third party preissuance The burden to all entities, including § 1.291(c)(1)(iv) from being provided submissions. The changes proposed in small entities, imposed by these rules is (e.g., journal title and volume/issue this notice do not change the a minor addition to that of the current information for a journal article). substantive criteria of patentability. regulations for third-party submissions Section 1.291(c)(1)(v) as proposed to be Therefore, the changes in this proposed under § 1.99. Consistent with the amended requires that each item of rule are merely procedural and/or current regulations, the Office will other information be identified by date, interpretive. See Bachow Communs., continue to require third parties filing if known. Requiring U.S. and foreign Inc. v. FCC, 237 F.3d 683, 690 (DC Cir. patent and published patent application 2001) (rules governing an application submissions to, for example, file a documents to be identified by the first process are procedural under the listing of the documents submitted named inventor should aid in Administrative Procedure Act); Inova along with a copy of each document, identifying the listed documents in the Alexandria Hosp. v. Shalala, 244 F.3d with minor additional formatting event the application number, 242, 350 (4th Cir. 2001) (rules for requirements. Additional requirements publication number, or other handling appeals were procedural proposed in this notice are requirements appropriate document number data is where they did not change the of statute (e.g., the concise explanation) inadvertently transposed or otherwise substantive standard for reviewing and thus the sole means of misidentified. claims); Nat’l Org. of Veterans’ accomplishing the purpose of the Section 1.291(c)(2) is proposed to be Advocates v. Sec’y of Veterans Affairs, statute. Because of the expanded scope amended to change ‘‘explanation’’ to 260 F.3d 1365, 1375 (Fed. Cir. 2001) of submissions under this rulemaking ‘‘description’’ to conform to proposed (rule that clarifies interpretation of a and additional requirements by statute, § 1.290(d)(2). This amendment would statute is interpretive). the Office believes this will take a total clarify that there is no difference Accordingly, prior notice and of 10 hours at a cost of $3,400.00 per between the concise description of opportunity for public comment are not submission. Furthermore, the Office relevance for a third-party preissuance required pursuant to 5 U.S.C. 553(b) or estimates that no more than 730 small submission and the concise description (c) (or any other law) and thirty-day entity third parties will make of relevance for a protest. advance publication is not required preissuance submissions per year. Section 1.291(c)(3) is proposed to be pursuant to 5 U.S.C. 553(d) (or any other Therefore, the changes proposed in this amended to clarify that copies of law). See Cooper Techs. Co. v. Dudas, notice will not have a significant information submitted must be legible. 536 F.3d 1330, 1336–37 (Fed. Cir. 2008) economic impact on a substantial See § 1.98(a)(2) and MPEP § 609.04(a). (stating that 5 U.S.C. 553, and thus 35 number of small entities. Section 1.291(c)(3) is also proposed to U.S.C. 2(b)(2)(B), does not require notice C. Executive Order 12866 (Regulatory be amended to provide that copies of and comment rulemaking for Planning and Review): This rulemaking U.S. patents and U.S. patent application ‘‘interpretative rules, general statements has been determined to be not publications would not need to be of policy, or rules of agency significant for purposes of Executive submitted, unless required by the organization, procedure, or practice.’’) Order 12866 (Sept. 30, 1993).

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D. Executive Order 13563 (Improving affect children under Executive Order and other information collection Regulation and Regulatory Review): The 13045 (Apr. 21, 1997). burdens imposed on the public. This Office has complied with Executive J. Executive Order 12630 (Taking of rulemaking proposes changes to the Order 13563. Specifically, the Office Private Property): This rulemaking will rules of practice that would impact has, to the extent feasible and not effect a taking of private property or existing information collection applicable: (1) Made a reasoned otherwise have taking implications requirements previously approved by determination that the benefits justify under Executive Order 12630 (Mar. 15, the Office of Management and Budget the costs of the rule; (2) tailored the rule 1988). (OMB) under OMB Control Number to impose the least burden on society K. Congressional Review Act: Under 0651–0062. Accordingly, the Office will consistent with obtaining the regulatory the Congressional Review Act submit to the OMB a proposed revision objectives; (3) selected a regulatory provisions of the Small Business to the information collection approach that maximizes net benefits; Regulatory Enforcement Fairness Act of requirements under 0651–0062. The (4) specified performance objectives; (5) 1996 (5 U.S.C. 801 et seq.), prior to proposed revision will be available at identified and assessed available issuing any final rule, the United States the OMB’s Information Collection alternatives; (6) involved the public in Patent and Trademark Office will Review Web site (www.reginfo.gov/ an open exchange of information and submit a report containing the final rule public/do/PRAMain). perspectives among experts in relevant and other required information to the Needs and Uses: This information disciplines, affected stakeholders in the United States Senate, the United States collection is necessary so that the public private sector and the public as a whole, House of Representatives, and the may submit patents, published patent and provided on-line access to the Comptroller General of the Government applications, and other printed rulemaking docket; (7) attempted to Accountability Office. The changes in publications to the Office for promote coordination, simplification, this notice are not expected to result in consideration in a patent application. and harmonization across government an annual effect on the economy of 100 The Office will use this information, as agencies and identified goals designed million dollars or more, a major increase appropriate, during the patent to promote innovation; (8) considered in costs or prices, or significant adverse examination process to assist in approaches that reduce burdens and effects on competition, employment, evaluating the patent application. The maintain flexibility and freedom of investment, productivity, innovation, or Office will provide a form (PTO/SB/429) choice for the public; and (9) ensured the ability of United States-based to assist the public in making a the objectivity of scientific and enterprises to compete with foreign- submission of patents, published patent technological information and based enterprises in domestic and applications, and other printed processes. export markets. Therefore, this notice is publications for consideration in a E. Executive Order 13132 not expected to result in a ‘‘major rule’’ patent application. (Federalism): This rulemaking does not as defined in 5 U.S.C. 804(2). Title of Collection: Third-Party contain policies with federalism L. Unfunded Mandates Reform Act of Submissions and Protests. implications sufficient to warrant 1995: The changes proposed in this OMB Control Number: 0651–0062. preparation of a Federalism Assessment notice do not involve a Federal Form Numbers: PTO/SB/429. under Executive Order 13132 (Aug. 4, intergovernmental mandate that will Method of Collection: By mail, 1999). result in the expenditure by State, local, facsimile, hand delivery, or F. Executive Order 13175 (Tribal and tribal governments, in the aggregate, electronically to the Office. Consultation): This rulemaking will not: of 100 million dollars (as adjusted) or Affected Public: Individuals or (1) Have substantial direct effects on one more in any one year, or a Federal households; businesses or other for- or more Indian tribes; (2) impose private sector mandate that will result profits; and not-for-profit institutions. substantial direct compliance costs on in the expenditure by the private sector Estimated Number of Respondents: Indian tribal governments; or (3) of 100 million dollars (as adjusted) or 1,030 responses filed per year. preempt tribal law. Therefore, a tribal more in any one year, and will not Estimated Time per Response: The summary impact statement is not significantly or uniquely affect small Office estimates that the responses in required under Executive Order 13175 governments. Therefore, no actions are this collection will take the public 10 (Nov. 6, 2000). necessary under the provisions of the hours. G. Executive Order 13211 (Energy Unfunded Mandates Reform Act of Estimated Total Annual Respondent Effects): This rulemaking is not a 1995. See 2 U.S.C. 1501 et seq. Burden Hours: 10,300 hours per year. significant energy action under M. National Environmental Policy Estimated Total Annual Respondent Executive Order 13211 because this Act: This rulemaking will not have any Cost Burden: $3,502,000 per year. rulemaking is not likely to have a effect on the quality of environment and Estimated Total Annual Non-hour significant adverse effect on the supply, is thus categorically excluded from Respondent Cost Burden: $185,400 per distribution, or use of energy. Therefore, review under the National year in the form of filing fees. a Statement of Energy Effects is not Environmental Policy Act of 1969. See The Office is soliciting comments to: required under Executive Order 13211 42 U.S.C. 4321 et seq. (1) Evaluate whether the proposed (May 18, 2001). N. National Technology Transfer and information requirement is necessary for H. Executive Order 12988 (Civil Advancement Act: The requirements of the proper performance of the functions Justice Reform): This rulemaking meets section 12(d) of the National of the Office, including whether the applicable standards to minimize Technology Transfer and Advancement information will have practical utility; litigation, eliminate ambiguity, and Act of 1995 (15 U.S.C. 272 note) are not (2) evaluate the accuracy of the Office’s reduce burden as set forth in sections applicable because this rulemaking does estimate of the burden; (3) enhance the 3(a) and 3(b)(2) of Executive Order not contain provisions which involve quality, utility, and clarity of the 12988 (Feb. 5, 1996). the use of technical standards. information to be collected; and (4) I. Executive Order 13045 (Protection O. Paperwork Reduction Act: The minimize the burden of collecting the of Children): This rulemaking does not Paperwork Reduction Act of 1995 (44 information on those who are to concern an environmental risk to health U.S.C. 3501 et seq.) requires that the respond, including by using appropriate or safety that may disproportionately Office consider the impact of paperwork automated, electronic, mechanical or

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other technological collection (1) The date a notice of allowance submitted, publication date, and place techniques or other forms of information under § 1.311 is given or mailed in the of publication, where available. If not technology. application; or apparent from the document, the third Please send comments on or before (2) The later of: party bears the burden of establishing March 5, 2012 to Mail Stop Comments— (i) Six months after the date on which the date of a non-patent publication Patents, Commissioner for Patents, P.O. the application is first published by the where asserted to be prior art. Box 1450, Alexandria, VA 22313–1450, Office under 35 U.S.C. 122(b) and (f) Any third-party submission under marked to the attention of Raul Tamayo, § 1.211, or this section must be accompanied by the Legal Advisor, Office of Patent Legal (ii) The date the first rejection under fee set forth in § 1.17(p) for every ten Administration, Office of the Associate § 1.104 of any claim by the examiner is documents or fraction thereof being Commissioner for Patent Examination given or mailed during the examination submitted. Policy. Comments should also be of the application. (g) The fee otherwise required by submitted to the Office of Information (c) Any third-party submission under paragraph (f) of this section is not and Regulatory Affairs, Office of this section must be made in writing, required for a submission listing three Management and Budget, New and identify on each page of the or fewer total documents that is Executive Office Building, Room 10202, submission, except for copies required accompanied by a statement by the 725 17th Street NW., Washington, DC by paragraph (d)(3) of this section, the party making the submission that, to the 20503, Attention: Desk Officer for the application to which the submission is knowledge of the person signing the Patent and Trademark Office. directed by application number. statement after making reasonable Notwithstanding any other provision (d) Any third-party submission under inquiry, the submission is the first and of law, no person is required to respond this section must include: only submission under 35 U.S.C. 122(e) to, nor shall a person be subject to a (1) A list of the documents being submitted in the application by the penalty for failure to comply with, a submitted; party or a party in privity with the collection of information subject to the (2) A concise description of the party. requirements of the Paperwork asserted relevance of each listed (h) In the absence of a request by the Reduction Act, unless that collection of document; Office, an applicant has no duty to, and (3) A legible copy of each listed information displays a currently valid need not, reply to a submission under document, or the portion which caused OMB control number. this section. it to be listed, other than U.S. patents (i) The provisions of § 1.8 do not List of Subjects in 37 CFR Part 1 and U.S. patent application apply to the time periods set forth in publications, unless required by the Administrative practice and this section. procedure, Courts, Freedom of Office; (4) An English language translation of 4. Section 1.291 is amended by Information, Inventions and patents, revising the introductory text of Reporting and record keeping all relevant portions of any listed non- English language document to be paragraph (b) and paragraphs (b)(1) and requirements, Small Businesses. (c) to read as follows: For the reasons set forth in the considered by the examiner; and preamble, 37 CFR part 1 is proposed to (5) A statement by the party making § 1.291 Protests by the public against be amended as follows: the submission that: pending applications. (i) The party is not an individual who * * * * * PART 1—RULES OF PRACTICE IN has a duty to disclose information with (b) The protest will be entered into PATENT CASES respect to the application under § 1.56; the record of the application if, in and addition to complying with paragraph 1. The authority citation for 37 CFR (ii) The submission complies with the (c) of this section, the protest has been part 1 continues to read as follows: requirements of 35 U.S.C. 122(e) and served upon the applicant in accordance this section. Authority: 35 U.S.C. 2(b)(2). with § 1.248, or filed with the Office in (e) The list of documents required by 2. Section 1.99 is removed and duplicate in the event service is not paragraph (d)(1) of this section must list reserved. possible; and, except for paragraph U.S. patents and U.S. patent application (b)(1) of this section, the protest was publications in a separate section from § 1.99 [Reserved] filed prior to the date the application other documents, include a heading that 3. Section 1.290 is added as follows: was published under 35 U.S.C. 122(b) identifies the listing as a third-party and § 1.211, or a notice of allowance § 1.290 Submissions by third parties in preissuance submission under § 1.290, under § 1.311 was given or mailed, applications. and identify each: (a) A third party may submit, for (1) U.S. patent by patent number, first whichever occurs first. consideration and entry in the record of named inventor, and issue date; (1) If a protest is accompanied by the a patent application, any patents, (2) U.S. patent application publication written consent of the applicant, the published patent applications, or other by patent application publication protest will be considered if the protest printed publications of potential number, first named inventor, and is filed before a notice of allowance relevance to the examination of the publication date; under § 1.311 is given or mailed in the application if the submission is in (3) Foreign patent or published application. compliance with 35 U.S.C. 122(e) and foreign patent application by the * * * * * this section. A third-party submission in country or patent office that issued the (c) In addition to compliance with an application will not be entered or patent or published the application, first paragraphs (a) and (b) of this section, a considered by the Office if the named inventor, an appropriate protest must include: submission is not in compliance with 35 document number, and the publication (1) A listing of the patents, U.S.C. 122(e) and this section. date indicated on the patent or publications, or other information relied (b) Any third-party submission under published application; and upon identifying: this section must be filed before the (4) Non-patent publication by (i) Each U.S. patent by patent number, earlier of: publisher, author, title, pages being first named inventor, and issue date;

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(ii) Each U.S. patent application the date on which the misconduct Internet because sharing comments with publication by patent application forming the basis of the proceeding was the public is more easily accomplished. publication number, first named made known to an officer or employee Electronic comments are preferred to be inventor, and publication date; of the United States Patent and submitted in plain text, but also may be (iii) Each foreign patent or published Trademark Office (Office or USPTO), as submitted in ADOBE® portable foreign patent application by the prescribed in the regulations governing document format or MICROSOFT country or patent office that issued the disciplinary proceedings. The Office WORD® format. Comments not patent or published the application, an initiates disciplinary proceedings via submitted electronically should be appropriate document number, first three types of disciplinary complaints: submitted on paper in a format that named inventor, and the publication complaints predicated on the receipt of facilitates convenient digital scanning date indicated on the patent or a probable cause determination from the into ADOBE® portable document published application; Committee on Discipline; complaints format. (iv) Each printed publication is seeking reciprocal discipline; and Comments will be made available for identified by publisher, author, title, complaints seeking interim suspension public inspection at the Office of pages being submitted, publication date, based on a serious crime conviction. Enrollment and Discipline, located on and place of publication, where This notice proposes that the one-year the 8th Floor of the Madison West available; and statute of limitations commences, with Building, 600 Dulany Street, (vi) Each item of other information by respect to complaints predicated on the Alexandria, Virginia. Comments also date, if known. receipt of a probable cause will be available for viewing via the (2) A concise description of the determination from the Committee on Office’s Internet Web site (http:// relevance of each item listed pursuant to Discipline, the date on which the www.uspto.gov). Because comments will paragraph (c)(1) of this section; Director, Office of Enrollment and be made available for public inspection, (3) A legible copy of each listed Discipline (OED Director) receives from information that the submitter does not patent, publication, or other item of the practitioner a complete, written desire to make public, such as an information in written form, or at least response to a request for information address or phone number, should not be the pertinent portions thereof, other and evidence; with respect to included in the comments. than U.S. patents and U.S. patent complaints based on reciprocal FOR FURTHER INFORMATION CONTACT: application publications, unless discipline, the date on which the OED William R. Covey, Deputy General required by the Office; Director receives a certified copy of the Counsel for Enrollment and Discipline * * * * * record or order regarding the and Director of the Office of Enrollment 5. Section 1.292 is removed and practitioner being publicly censured, and Discipline, by telephone at (571) reserved. publicly reprimanded, subjected to 272–4097. probation, disbarred, suspended, or § 1.292 [Reserved] SUPPLEMENTARY INFORMATION: Under 35 disciplinarily disqualified; and, with U.S.C. 32, the Office may take Dated: December 30, 2011. respect to complaints for interim disciplinary action against any person, David J. Kappos, suspension based on a serious crime agent, or attorney who fails to comply Under Secretary of Commerce for Intellectual conviction, the date on which the OED with the regulations established under Property and Director of the United States Director receives a certified copy of the 35 U.S.C. 2(b)(2)(D). Procedural Patent and Trademark Office. record, docket entry, or judgment regulations governing the investigation [FR Doc. 2011–33811 Filed 1–4–12; 8:45 am] demonstrating that the practitioner has of possible grounds for discipline and been convicted of a serious crime. BILLING CODE 3510–16–P the conduct of disciplinary proceedings DATES: To be ensured of consideration, are set forth at 37 CFR 11.19 et seq. written comments must be received on Section 32 of Title 35, United States DEPARTMENT OF COMMERCE or before March 5, 2012. Code, as amended by the AIA, requires ADDRESSES: Comments should be sent that a disciplinary proceeding be United States Patent and Trademark by electronic mail message over the commenced not later than the earlier of Office Internet addressed to: either 10 years after the date on which [email protected]. Comments may the misconduct forming the basis for the 37 CFR Part 11 also be submitted by mail addressed to: proceeding occurred, or one year after [Docket No. PTO–C–2011–0089] Mail Stop OED–Ethics Rules, United the date on which the misconduct States Patent and Trademark Office, forming the basis for the proceeding is RIN 0651–AC76 P.O. Box 1450, Alexandria, Virginia made known to an officer or employee of the Office, as prescribed in the Implementation of Statute of 22313–1450, marked to the attention of regulations established under 35 U.S.C. Limitations Provisions for Office William R. Covey, Deputy General 2(b)(2)(D). Thus, the AIA’s amendment Disciplinary Proceedings Counsel for Enrollment and Discipline and Director of the Office of Enrollment directs the Office to establish AGENCY: United States Patent and and Discipline. Comments may also be regulations clarifying when misconduct Trademark Office, Commerce. sent by electronic mail message over the forming the basis for a disciplinary ACTION: Notice of proposed rulemaking, Internet via the Federal eRulemaking proceeding is made known to the Office. request for comments. Portal. See the Federal eRulemaking Prior to the AIA’s amendment to 35 Portal Web site (http:// U.S.C. 32, disciplinary actions for SUMMARY: The Leahy-Smith America www.regulations.gov) for additional violations of the USPTO Code of Invents Act (AIA) requires that instructions on providing comments via Professional Responsibility were disciplinary proceedings be commenced the Federal eRulemaking Portal. generally understood to be subject to a not later than the earlier of the date that Although comments may be five-year statute of limitations pursuant is 10 years after the date on which the submitted by postal mail, the Office to 28 U.S.C. 2462. See, e.g., Sheinbein misconduct forming the basis of the prefers to receive comments by v. Dudas, 465 F.3d 493, 496 (Fed. Cir. proceeding occurred, or one year from electronic mail message over the 2006). With the AIA’s new 10-year

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limitation period, Congress provided the regarding a possible ethical violation; the third step—before the practitioner Office with five additional years to bring therefore, the OED Director always has had the opportunity to present his an action, thus ensuring that the Office conducts an initial review of the or her side of the story. had additional flexibility to initiate ‘‘a allegations. Moreover, the OED Director Based on current caseload and staffing [disciplinary] proceeding for the vast recognizes that issuing a request for levels, the OED Director has set a goal bulk of misconduct that is discovered, information to the practitioner—the to complete the preliminary screening while also staying within the limits of second step—typically triggers anxiety and issue a § 11.22(f)(1)(ii) request, what attorneys can reasonably be for the practitioner, may interfere with when warranted, to the practitioner expected to remember,’’ Congressional the practitioner’s practice, and may under investigation within 60 calendar Record S1372–1373 (daily ed. March 8, cause the practitioner to incur legal days of the initial receipt by the OED 2011) (statement of Sen. Kyl). Therefore, expenses in responding to investigative Director of information suggesting the new 10-year limitation period inquiries by OED. For this reason also, possible misconduct. OED will allow indicates congressional intent to extend OED does not contact the practitioner the practitioner 30 calendar days to the time permitted to file a disciplinary automatically upon receipt of provide a complete, written response action against a practitioner who information alleging a practitioner and, as discussed below, may grant a violates the USPTO Code of Professional committed an ethical violation. In short, reasonable request for an extension of Responsibility, rather than to allow such the OED Director seeks the practitioner’s time to respond. actions to become time-barred. See id. at side of the story, if at all, only after the A complete response to an initial S1372 (‘‘[A] strict five-year statute of OED Director preliminarily screens the § 11.22(f) request frequently raises limitations that runs from when the information and determines that factual issues that require further misconduct occurs, rather than from possible grounds for discipline exist. investigation before the OED Director when it reasonably could have been See 37 CFR 11.22(d). can determine whether actual grounds discovered, would appear to preclude a During the preliminary screening for discipline exist. Hence, after the section 32 proceeding for a significant process, an OED staff attorney reviews OED Director receives the practitioner’s number of cases of serious the allegations to determine whether response to the § 11.22(f)(1)(ii) request, misconduct’’). they implicate any of the Disciplinary the OED Director moves to the third The one-year limitation period in the Rules of the USPTO Code of step: conducting a thorough AIA reflects that disciplinary actions Professional Responsibility. To this end, investigation of the allegations to should be filed in a timely manner from the attorney may seek out additional uncover all relevant incriminating and the date when misconduct forming the evidence (review Office records, request exculpating evidence. The third step is basis of a disciplinary complaint against additional information from the person time-consuming because it involves the a practitioner is made known to ‘‘that making the allegations or from third OED Director undertaking a thorough section of PTO charged with conducting persons, etc.) to ensure that the matter fact-finding (e.g., reviewing issues section 32 proceedings,’’ Congressional is disciplinary in nature and the raised for the first time by the Record S1372 (daily ed. March 8, 2011) allegations are supported by objective practitioner, obtaining information from (statement of Sen. Kyl). The proposed evidence. any person who may be reasonably regulation satisfies the goal of The OED’s preliminary screening may expected to provide information or commencing section 32 proceedings obviate the need to seek information evidence in connection with the without undue delay. from the practitioner because the investigation pursuant to § 11.22(f)(iii) Generally speaking, there are four screening often reveals that the and from non-grieving clients pursuant steps taken by the OED Director prior to allegations do not present a basis for to § 11.22(f)(2)) and performing legal the filing of a § 11.32 disciplinary filing a § 11.32 disciplinary action analyses of issues. It is in the interests complaint against a practitioner: (1) against the practitioner. Under such of the public as well as the practitioner Preliminary screening of the allegations circumstances, the OED Director closes under investigation that OED conduct a made against the practitioner, see the case without contacting the thorough investigation prior to § 11.22(d); (2) requesting of information practitioner. Hence, the preliminary determining whether the matter should from the practitioner about his or her screening helps ensure that a be submitted to the Committee on alleged conduct, see § 11.22(f)(1)(ii); (3) practitioner is not subjected to a Discipline pursuant to § 11.32. Hence, conducting a thorough investigation premature request for information or its such additional follow-up investigative after providing the practitioner an attendant stress, turmoil, and cost. The and legal work can take several months opportunity to respond to the screening also ensures that the Office to complete. allegations, see § 11.22(a); and (4) does not expend its limited resources After completing an investigation of submitting the investigated case to the seeking information from a practitioner the allegations against a practitioner, the Committee on Discipline for a unnecessarily. OED Director has the authority to close determination of whether there is After the preliminary screening, if the the investigation without pursuing probable cause to bring charges against OED Director determines that the disciplinary action, issue a warning to the practitioner, see § 11.32. allegations establish possible grounds the practitioner, enter into a proposed The first step is the preliminary for discipline, the OED Director seeks settlement agreement with the screening of allegations to evaluate the practitioner’s side of the story—the practitioner, or convene the Committee whether they merit providing the second step prior to filing a § 11.32 on Discipline to determine whether practitioner the opportunity to address action. Specifically, the OED Director there is probable cause to file a § 11.32 them. Allegations are often incomplete requests information or evidence from action against the practitioner. See 37 and do not provide the OED Director the practitioner pursuant to CFR 11.22(h). Based on current caseload with a full picture of what may have § 11.22(f)(1)(ii). The practitioner will and staffing levels, the OED Director has transpired. In other words, mere then have an opportunity to respond to set a goal to submit a matter to the allegations do not necessarily provide the allegations levied against him or her. Committee on Discipline for a probable the OED Director with a reasonable Typically, the OED Director does not cause determination—the fourth step— basis for automatically seeking and cannot have sufficient information within 10 months of the initial receipt information from the practitioner to complete a thorough investigation— by the OED Director of the allegations

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that a practitioner engaged in practitioner rarely put the Office on whether probable cause exists that the misconduct. notice of misconduct forming the basis practitioner engaged in misconduct. Under the proposed regulation, the of a disciplinary proceeding because The Office also carefully considered, one-year statute of limitations begins to such statements often do not provide a but decided against proposing, an run for § 11.32 actions when the OED complete, objective picture of what alternative regulation that starts the one- Director receives the practitioner’s transpired between the practitioner and year limitation period for § 11.32 actions complete, written response to a the client. It is also unfair to the on the date on which the OED Director § 11.22(f)(1)(ii) request. The proposed practitioner that the basis of a decides, after conducting a preliminary regulation reflects that a complete disciplinary proceeding be predicated screening of the initial information response to a § 11.22(f)(1)(ii) request only on the allegations levied against about a practitioner, to obtain the usually is a significant step in making him or her without providing the practitioner’s side of the story. Such a a practitioner’s misconduct known to practitioner an opportunity to respond regulation would not provide the OED the OED Director in an informed and to the allegations. As discussed above, Director the same degree of flexibility in meaningful way. This step in the this basic notion of fairness to the allowing extensions of time for the process gives the practitioner an practitioner against whom allegations of practitioner to respond to opportunity to respond to the misconduct have been made is one main § 11.22(f)(1)(ii) requests. Moreover, it allegations levied against him or her. purpose of the proposed regulation. would encroach on the sense of fair play Basic notions of fairness to the Second, a regulation that proposes that permeates the proposed regulation. practitioner, and integrity of the commencing the one-year limitation The Office also considered, but chose process, are primary purposes for period on the date the OED Director not to propose, two other regulations providing an opportunity to respond. initially receives allegations about a starting the one-year limitation period Additionally, the proposed regulation practitioner’s alleged misconduct would for § 11.32 actions. The first would start provides the OED Director with needed unnecessarily restrict the OED Director’s the limitation period on the date that flexibility in obtaining information from ability to grant reasonable extensions of the OED Director submits a fully the practitioner. On a case-by-case basis, time to respond to the OED Director’s investigated case to a Committee on the OED Director has the authority to initial request for information. As Discipline panel pursuant to 37 CFR grant extensions of time to respond to a discussed above, such extensions are 11.32. The second would start the one- § 11.22(f)(1)(ii) request for information. important to the practitioner. But the year limitation period on the date the Such extensions may be important to OED Director might be compelled to Committee on Discipline forwards its the practitioner because they often give deny an extension of time out of probable cause determination to the the practitioner the time needed to necessity if the Office only had one year OED Director pursuant to 37 CFR secure legal counsel, conduct his or her from the date of initial receipt of 11.23(b)(2). own inquiry, and prepare a complete, allegations about a practitioner to obtain In addition to actions filed under 37 written response to the OED Director’s and consider the practitioner’s side of request. The OED Director grants such the story; conduct and conclude an CFR 11.32, the OED Director requests where it is appropriate to do so, investigation; prepare and submit the commences reciprocal disciplinary taking into consideration whether an matter to the Committee on Discipline; complaints under 37 CFR 11.24 and extension would jeopardize the timely and prepare and file a disciplinary complaints for interim suspension completion of the investigation in light complaint based on the Committee’s predicated upon conviction of a serious of any approaching deadline under the probable cause determination. Likewise, crime under 37 CFR 11.25. Complaints statute of limitations. Historically, the it would not be in the best interest of the under § 11.24 and § 11.25 are not OED Director has granted 30-, 60-, or Office not to grant an extension because submitted to the Committee on even 90-day extensions of time to the OED Director strives to present all Discipline for a probable cause practitioners. Under the proposed available, relevant evidence to the determination but are filed directly with regulation, the OED Director is able to Committee on Discipline in every the USPTO Director. See 37 CFR 11.24 continue to afford a practitioner a § 11.32 disciplinary action. By and 11.25. Complaints under § 11.24 reasonable period of time to address comparison, the proposed regulation and § 11.25, however, must include a allegations of ethical violations because follows the long-standing practice of certified copy of the record showing that the limitation period would not affording a practitioner a reasonable a practitioner was disciplined by commence until after the practitioner opportunity to respond to the another authority or convicted of a provides a complete, written response. allegations levied against him or her. serious crime. Id. Obtaining certified The Office carefully considered, but Third, the Office is concerned that copies of the requisite records is how decided against proposing, a regulation starting the one-year limitation period the OED Director learns in a meaningful that commences the one-year limitation from the date the OED Director initially way of misconduct which can form the period for § 11.32 actions on the date on receives an allegation of misconduct basis of a disciplinary proceeding which the OED Director initially might encourage dilatory responses and brought under § 11.24 and § 11.25. receives allegations about a practitioner. other delay tactics by practitioners, It is OED’s practice to request a The Office did not choose such a which would not be in the public certified copy of the requisite records regulation for three reasons. First, the interest. For example, a practitioner within 60 calendar days of receiving Office usually receives information could simply choose to hinder the information suggesting that a about a practitioner from a client who investigation by providing incomplete practitioner has been disciplined by alleges that the practitioner acted responses to § 11.22(f)(1)(ii) requests another authority or has been convicted improperly. While mere allegations of with the purpose of having the one-year of a serious crime. It also is OED’s ethical violations may alert the Office limitation period run without the OED practice to contact the practitioner that a client is subjectively dissatisfied Director having received the within the same 60-day period for the with a practitioner, they often do not practitioner’s side of the story. This purpose of providing the practitioner an provide sufficient objective evidence would result in a less than thorough opportunity to explain whether he or that misconduct has occurred. The investigation being submitted to the she is the same person who was accuser’s naked assertions about a Committee on Discipline to determine disciplined by another licensing

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authority or convicted of a serious practitioner being publicly censured, certification under the Regulatory crime. publicly reprimanded, subjected to Flexibility Act (5 U.S.C. 601 et seq.) is Here, the proposed regulation starts probation, disbarred, suspended or required. See 5 U.S.C. 603. the one-year limitation period as of the disciplinarily disqualified; (b) for Nevertheless, the Deputy General date the OED Director receives a complaints filed pursuant to section Counsel for General Law of the United certified copy of the requisite records. 11.25, the date on which the OED States Patent and Trademark Office has Thus, for reciprocal discipline Director receives a certified copy of the certified to the Chief Counsel for complaints filed pursuant to § 11.24(a), record, docket entry or judgment Advocacy, Small Business this notice proposes that the one-year demonstrating that the practitioner has Administration, that the changes in this limitation period commences the date been convicted of a serious crime; and notice of proposed rulemaking will not on which the OED Director receives a (c) for complaints filed pursuant to have a significant economic impact on certified copy of the record or order § 11.32, the date on which the OED a substantial number of small entities regarding the practitioner being publicly Director receives from the practitioner, (Regulatory Flexibility Act, 5 U.S.C. censured, publicly reprimanded, who is the subject of an investigation 605(b)). The primary purpose of the subjected to probation, disbarred, commenced under section § 11.22(a), a proposed rule is to establish regulations suspended, or disciplinarily complete, written response to a request pursuant to recent revisions to 35 U.S.C. disqualified. For interim suspension for information and evidence issued 32 that govern time limits for the Office complaints filed pursuant to § 11.25(a), pursuant to § 11.22(f)(1)(ii). to commence a disciplinary action. This the limitation period begins the date on proposed rule does not increase or Rulemaking Considerations which the OED Director receives a change the burdens of practitioners certified copy of the record, docket Administrative Procedure Act: This involved in disciplinary proceedings or entry, or judgment demonstrating that notice proposes to prescribe regulations the investigation process. There are the practitioner has been convicted of a to implement the statute of limitations approximately 42,000 individuals serious crime. Based on current provisions for commencing a registered to practice before the Office caseload and staffing levels, the OED disciplinary proceeding pursuant to the in patent matters and many unregistered Director has set a goal to file § 11.24 and AIA. These proposed changes involve attorneys who practice before the Office § 11.25 complaints with the USPTO rules of agency practice and procedure in trademark matters. In a typical year, Director within 60 calendar days of the and/or interpretive rules. See Bachow the Office considers approximately 150 date when OED obtains certified copies Commc’ns Inc. v. FCC, 237 F.3d 683, to 200 matters concerning possible of the requisite records. 690 (DC Cir. 2001) (rules governing an misconduct by individuals who practice application process are procedural Discussion of Specific Rule before the Office in patent and/or under the Administrative Procedure trademark matters, and fewer than 100 Section 11.22 would be revised to add Act); Inova Alexandria Hosp. v. Shalala, matters per year lead to a formal subsection (f)(3), which would specify 244 F.3d 342, 350 (4th Cir. 2001) (rules disciplinary proceeding or settlement. that the OED Director shall request for handling appeals were procedural Thus, only a relatively small number of information and evidence from the where they did not change the individuals are involved in the practitioner prior to convening a panel substantive standard for reviewing disciplinary process. Additionally, of the Committee on Discipline under claims); Nat’l Org. of Veterans’ based on the Office’s experience in § 11.32. As discussed above, the second Advocates v. Sec’y of Veterans Affairs, investigations that precede the step prior to filing a complaint in a 260 F.3d 1365, 1375 (Fed. Cir. 2001) disciplinary process, the Office does not § 11.32 action is to request information (rule that clarifies interpretation of a anticipate this proposed rule will result or evidence from the practitioner statute is interpretive). in a significant increase, if any, in the pursuant to § 11.22(f)(1)(ii). This allows Accordingly, prior notice and number of individuals who are the practitioner to provide the OED opportunity for public comment are not impacted by a disciplinary proceeding Director with his or her views as to the required pursuant to 5 U.S.C. 553(b) or or investigation. Accordingly, the allegations during the course of the (c) (or any other law), and thirty-day changes in this notice of proposed investigation. advance publication is not required rulemaking will not have a significant Section 11.34 would be revised to add pursuant to 5 U.SC. 553(d) (or any other economic impact on a substantial subsection (d), which would specify the law). See Cooper Techs. Co. v. Dudas, number of small entities. time in which the OED Director may file 536 F.3d 1330, 1336–37 (Fed. Cir. 2008) Executive Order 13132 (Federalism): a disciplinary complaint against an (stating that 5 U.S.C. 553, and thus 35 This notice of proposed rulemaking individual subject to the disciplinary U.S.C. 2(b)(2)(B), does not require notice does not contain policies with authority of the Office. Specifically, in and comment rulemaking for federalism implications sufficient to accordance with the AIA, a complaint ‘‘interpretative rules, general statements warrant preparation of a Federalism shall be filed not later than the earlier of policy, or rules of agency Assessment under Executive Order of either ten years after the date on organization, procedure, or practice’’) 13132 (August 4, 1999). which the misconduct forming the basis (quoting 5 U.S.C. 553(b)(A)). The Office, Executive Order 12866 (Regulatory for the proceeding occurred, or one year however, is publishing these proposed Planning and Review): This notice of after the date on which the misconduct changes and the Regulatory Flexibility proposed rulemaking has been forming the basis for the proceeding is Act certification discussion below, for determined to be not significant for made known to an officer or employee comment as it seeks the benefit of the purposes of Executive Order 12866 of the Office. The date on which the public’s views on the Office’s proposed (September 30, 1993). misconduct forming the basis for the implementation of these provisions of Executive Order 13563 (Improving proceeding is made known to an officer the AIA. Regulation and Regulatory Review): The or employee of the Office is: (a) For Regulatory Flexibility Act: As prior Office has complied with Executive complaints filed pursuant to section notice and an opportunity for public Order 13563. Specifically, the Office 11.24, the date on which the OED comment are not required pursuant to 5 has, to the extent feasible and Director receives a certified copy of the U.S.C. 553 or any other law, neither a applicable: (1) Made a reasoned record or order regarding the regulatory flexibility analysis nor a determination that the benefits justify

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the costs of the rule; (2) tailored the rule of 100 million dollars (as adjusted) or PART 11—REPRESENTATION OF to impose the least burden on society more in any one year, or a Federal OTHERS BEFORE THE UNITED consistent with obtaining the regulatory private sector mandate that will result STATES PATENT AND TRADEMARK objectives; (3) selected a regulatory in the expenditure by the private sector OFFICE approach that maximizes net benefits; of 100 million dollars (as adjusted) or 1. The authority citation for 37 CFR (4) specified performance objectives; (5) more in any one year, and will not Part 11 continues to read as follows: identified and assessed available significantly or uniquely affect small alternatives; (6) involved the public in governments. Therefore, no actions are Authority: 5 U.S.C. 500, 15 U.S.C. 1123, an open exchange of information and necessary under the provisions of the 35 U.S.C. 2(b)(2), 32, 41. perspectives among experts in relevant Unfunded Mandates Reform Act of 2. Section 11.22 is amended to add disciplines, affected stakeholders in the 1995. See 2 U.S.C. 1501 et seq. paragraph (f)(3) as follows: private sector and the public as a whole, and provided on-line access to the National Environmental Policy Act: * * * * * rulemaking docket; (7) attempted to This rulemaking will not have any effect (f) Request for information and promote coordination, simplification, on the quality of the environment and evidence by OED Director. and harmonization across government is thus categorically excluded from * * * * * agencies and identified goals designed review under the National (3) The OED Director shall request to promote innovation; (8) considered Environmental Policy Act of 1969. See information and evidence from the approaches that reduce burdens and 42 U.S.C. 4321 et seq. practitioner prior to convening a panel maintain flexibility and freedom of of the Committee on Discipline under National Technology Transfer and choice for the public; and (9) ensured § 11.32. Advancement Act: The requirements of the objectivity of scientific and * * * * * section 12(d) of the National technological information and 3. Section 11.34 is amended to add Technology Transfer and Advancement processes. paragraph (d) as follows: Executive Order 13175 (Tribal Act of 1995 (15 U.S.C. 272 note) are not Consultation): This rulemaking will not: applicable because this rulemaking does § 11.34 Complaint. (1) Have substantial direct effects on one not contain provisions which involve * * * * * or more Indian tribes; (2) impose the use of technical standards. (d) Time for filing a complaint. A substantial direct compliance costs on Paperwork Reduction Act: This complaint shall be filed not later than Indian tribal governments; or (3) rulemaking does not create any the earlier of either ten years after the preempt tribal law. Therefore, a tribal information collection requirements date on which the misconduct forming summary impact statement is not under the Paperwork Reduction Act of the basis for the proceeding occurred, or required under Executive Order 13175 1995 (44 U.S.C. 3501 et seq.). one year after the date on which the (Nov. 6, 2000). misconduct forming the basis for the Executive Order 13211 (Energy Notwithstanding any other provision of law, no person is required to respond to, proceeding is made known to an officer Effects): This rulemaking is not a or employee of the Office. The date on nor shall a person be subject to a significant energy action under which the misconduct forming the basis penalty for failure to comply with, a Executive Order 13211 because this for the proceeding is made known to an collection of information subject to the rulemaking is not likely to have a officer or employee of the Office is: significant adverse effect on the supply, requirements of the Paperwork (1) with respect to complaints under distribution, or use of energy. Therefore, Reduction Act, unless that collection of § 11.24, the date on which the OED a Statement of Energy Effects is not information displays a currently valid Director receives a certified copy of the required under Executive Order 13211 OMB control number. record or order regarding the (May 18, 2001). Congressional Review Act: Under the practitioner being publicly censured, Executive Order 12988 (Civil Justice Congressional Review Act provisions of publicly reprimanded, subjected to Reform): This rulemaking meets the Small Business Regulatory probation, disbarred, suspended, or applicable standards to minimize Enforcement Fairness Act of 1996 (5 disciplinarily disqualified; litigation, eliminate ambiguity, and U.S.C. 801 et seq.), prior to issuing any (2) with respect to complaints under reduce burden as set forth in sections final rule, the USPTO will submit a § 11.25, the date on which the OED 3(a) and 3(b)(2) of Executive Order report containing the final rule and Director receives a certified copy of the 12988 (Feb. 5, 1996). record, docket entry, or judgment Executive Order 13045 (Protection of other required information to the United States Senate, the United States House demonstrating that the practitioner has Children): This rulemaking does not been convicted of a serious crime; and concern an environmental risk to health of Representatives, and the Comptroller General of the Government (3) with respect to complaints under or safety that may disproportionately § 11.32, the date on which the OED Accountability Office. However, this affect children under Executive Order Director receives from the practitioner, action is not a major rule as defined by 13045 (Apr. 21, 1997). who is the subject of an investigation 5 U.S.C. 804(2). Executive Order 12630 (Taking of commenced under section § 11.22(a), a Private Property): This rulemaking will List of Subjects in 37 CFR Part 11 complete, written response to a request not effect a taking of private property or for information and evidence issued otherwise have taking implications Administrative practice and pursuant to § 11.22(f)(1)(ii). under Executive Order 12630 (Mar. 15, procedure, Inventions and patents, Dated: December 30, 2011. 1988). Lawyers, Reporting and recordkeeping David J. Kappos, Unfunded Mandates Reform Act of requirements. 1995: The changes proposed in this Under Secretary of Commerce for Intellectual notice do not involve a Federal For the reasons set forth in the Property and Director of the United States intergovernmental mandate that will preamble, the United States Patent and Patent and Trademark Office. result in the expenditure by State, local, Trademark Office proposes to amend 37 [FR Doc. 2011–33814 Filed 1–4–12; 8:45 am] and tribal governments, in the aggregate, CFR Part 11 as follows: BILLING CODE 3510–16–P

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ENVIRONMENTAL PROTECTION producers or importers of fuel produced describes our rationale for identifying AGENCY pursuant to these pathways to generate these additional fuel pathways, Renewable Identification Numbers including GHG lifecycle analyses, in the 40 CFR Part 80 (RINs), providing that the fuel meets the ‘‘Rules and Regulations’’ section of this [EPA–HQ–OAR–2011–0542; FRL–9502–1] other requirements specified in the RFS Federal Register because we view this regulations to qualify it as renewable as a noncontroversial action and RIN 2060–AR07 fuel. anticipate no adverse comment. We Regulation of Fuels and Fuel DATES: Written comments must be have explained our reasons for this Additives: Identification of Additional received by February 6, 2012. A request action in the preamble to the direct final Qualifying Renewable Fuel Pathways for a public hearing must be received by rule. Under the Renewable Fuel Standard January 20, 2012. If we receive no adverse comment, we Program ADDRESSES: Submit your comments, will not take further action on this identified by Docket ID No. EPA–HQ– proposed rule. If EPA receives relevant AGENCY: Environmental Protection OAR–2011–0542, by mail to Air and Agency (EPA). adverse comment or a hearing request Radiation Docket, Docket No. EPA–HQ– on a distinct provision of this ACTION: Proposed rule. OAR–2011–0542, Environmental rulemaking, we will publish a timely Protection Agency, Mailcode: 6406J, SUMMARY: EPA is issuing a proposed withdrawal in the Federal Register rule that identifies additional fuel 1200 Pennsylvania Ave. NW., indicating which portion of the rule is Washington, DC 20460. Comments may pathways that EPA has determined meet being withdrawn. Any distinct also be submitted electronically or the biomass-based diesel, advanced amendment, paragraph, or section of through hand delivery/courier by biofuel or cellulosic biofuel lifecycle today’s rule not withdrawn will become following the detailed instructions in greenhouse gas (GHG) reduction effective on the date set out in the direct ADDRESSES section of the direct final requirements specified in Clean Air Act the rule located in the rules section of this final rule. We will address all public section 211(o), the Renewable Fuel Federal Register. comments in any subsequent final rule Standard Program, as amended by the based on this proposed rule. We will not Energy Independence and Security Act FOR FURTHER INFORMATION CONTACT: Vincent Camobreco, Office of institute a second comment period on of 2007 (EISA). This proposed rule this action. Any parties interested in describes EPA’s evaluation of biofuels Transportation and Air Quality (MC6401A), Environmental Protection commenting must do so at this time. For produced from camelina oil, energy further information about commenting cane, giant reed, and napiergrass; it also Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460; telephone on this rule, see the ADDRESSES section includes an evaluation of renewable of this document. gasoline and renewable gasoline number: (202) 564–9043; fax number: blendstocks, as well as biodiesel from (202) 564–1686; email address: II. Does this action apply to me? esterification, and clarifies our [email protected]. definition of renewable diesel. SUPPLEMENTARY INFORMATION: Entities potentially affected by this This proposed rule adds these action are those involved with the pathways to Table in regulations as I. Why is EPA issuing a proposed rule? production, distribution, and sale of pathways which have been determined This document proposes to take transportation fuels, including gasoline to meet one or more of the GHG action to identify additional qualifying and diesel fuel or renewable fuels such reduction thresholds specified in CAA renewable fuel pathways under the as ethanol and biodiesel. Regulated 211(o), and assigns each pathway a Renewable Fuel Standard Program. We categories and entities affected by this corresponding D-Code. It allows have published a direct final rule that action include:

1 NAICS 2 Category Codes SIC Codes Examples of potentially regulated entities

Industry ...... 324110 2911 Petroleum Refineries. Industry ...... 325193 2869 Ethyl alcohol manufacturing. Industry ...... 325199 2869 Other basic organic chemical manufacturing. Industry ...... 424690 5169 Chemical and allied products merchant wholesalers. Industry ...... 424710 5171 Petroleum bulk stations and terminals. Industry ...... 424720 5172 Petroleum and petroleum products merchant wholesalers. Industry ...... 454319 5989 Other fuel dealers. 1 North American Industry Classification System (NAICS). 2 Standard Industrial Classification (SIC) system code.

This table is not intended to be D, E and F of title 40 of the Code of www.regulations.gov or email. Clearly exhaustive, but rather provides a guide Federal Regulations. If you have any mark the part or all of the information for readers regarding entities likely to be question regarding applicability of this that you claim to be CBI. For CBI regulated by this action. This table lists action to a particular entity, consult the information in a disk or CD ROM that the types of entities that EPA is now person in the preceding FOR FURTHER you mail to EPA, mark the outside of the aware could be potentially regulated by INFORMATION CONTACT section above. disk or CD ROM as CBI and then this action. Other types of entities not identify electronically within the disk or listed in the table could also be III. What should I consider as I prepare CD ROM the specific information that is regulated. To determine whether your my comments for EPA? claimed as CBI). In addition to one entity is regulated by this action, you A. Submitting information claimed as complete version of the comment that should carefully examine the CBI. Do not submit information you includes information claimed as CBI, a applicability criteria of Part 80, subparts claim as CBI to EPA through copy of the comment that does not

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contain the information claimed as CBI Renewable gasoline and renewable transport of the final fuel to the must be submitted for inclusion in the gasoline blendstock (new fuel consumer. public docket. Information so marked types) • Use of the fuel—including will not be disclosed except in • Produced from crop residue, slash, combustion emissions from use of the accordance with procedures set forth in pre-commercial thinnings, tree fuel in a vehicle. 40 CFR part 2. residue, annual cover crops, and Many of the pathways evaluated in B. Tips for Preparing Your Comments. cellulosic components of separated this proposal rely on a comparison to When submitting comments, remember yard waste, separated food waste, the lifecycle GHG analysis work that to: and separated municipal solid was done as part of the Renewable Fuel • Identify the rulemaking by docket waste (MSW). Standard Program (RFS2) Final Rule, number and other identifying • Using the following processes—all published March 26, 2010. information (subject heading, Federal utilizing natural gas, biogas, and/or More information on the different Register date and page number). biomass as the only process energy pathways evaluated is included below. • Follow directions—The agency may sources—qualifying as cellulosic For additional information on our GHG ask you to respond to specific questions biofuel: lifecycle analyses for this proposal, as or organize comments by referencing a Æ Thermochemical pyrolysis. well as the text of the proposed Code of Federal Regulations (CFR) part Æ Thermochemical gasification. regulatory changes, see the direct final or section number. Æ Biochemical direct fermentation. rule which is located in the Rules • Explain why you agree or disagree; Æ Biochemical fermentation with section of this Federal Register. Camelina: Current information suggest alternatives and substitute catalytic upgrading. suggests that camelina has limited niche language for your requested changes. Æ Any other process that uses biogas markets and will be produced on land • and/or biomass as the only process Describe any assumptions and that would otherwise remain fallow. energy sources. provide any technical information and/ Therefore, increased production of Esterification (new production process) or data that you used. camelina-based renewable fuel is not • • Process used to produce biodiesel If you estimate potential costs or expected to result in significant land use from soy bean oil, oil from annual burdens, explain how you arrived at change emissions. For the purposes of your estimate in sufficient detail to covercrops, algal oil, biogenic waste this proposed analysis, EPA is allow for it to be reproduced. oils/fats/greases, non-food grade • projecting there will be no land use Provide specific examples to corn oil, Canola/rapeseed oil, and emissions associated with camelina illustrate your concerns, and suggest camelina oil—qualifying as production for use as a renewable fuel alternatives. biomass-based diesel and advanced feedstock. • Explain your views as clearly as biofuel. Taking into account the assumption of possible, avoiding the use of profanity This proposed rule adds these no land use change emissions when or personal threats. pathways to Table 1 to § 80.1426 and camelina is used to produce renewable • Make sure to submit your assigns each pathway one or more D- fuel, and considering that other sources comments by the comment period Codes. of GHG emissions related to camelina deadline identified. Determining whether a fuel pathway biodiesel or renewable diesel C. Docket Copying Costs. You may be satisfies the CAA’s lifecycle GHG production have comparable GHG charged a reasonable fee for reduction thresholds for renewable fuels emissions to biodiesel from soybean oil, photocopying docket materials, as requires a comprehensive evaluation of we are proposing that camelina-based provided in 40 CFR part 2. the lifecycle GHG emissions of the biodiesel and renewable diesel should IV. Identification of Additional renewable fuel as compared to the be treated in the same manner as soy- Qualifying Renewable Fuel Pathways lifecycle GHG emissions of the baseline based biodiesel and renewable diesel in Under the Renewable Fuel Standard gasoline or diesel fuel that it replaces. qualifying as biomass-based diesel and (RFS) Program As mandated by CAA section 211(o), the advanced biofuel for purposes of RIN GHG emissions assessments must generation since the GHG emission EPA is issuing a proposed rule to evaluate the aggregate quantity of GHG performance of the camelina-based fuels identify in the RFS regulations emissions (including direct emissions will be at least as good and in some additional renewable fuel production and significant indirect emissions such respects better than that modeled for pathways that we have determined meet as significant emissions from land use fuels made from soybean oil. EPA found the greenhouse gas (GHG) reduction changes) related to the full fuel as part of the Renewable Fuel Standard requirements of the RFS program. This lifecycle, including all stages of fuel and final rulemaking that soybean biodiesel proposed rule describes EPA’s feedstock production, distribution, and resulted in a 57% reduction in GHG evaluation of: use by the ultimate consumer. emissions compared to the baseline Camelina oil (new feedstock) In examining the full lifecycle GHG petroleum diesel fuel. Furthermore, • Biodiesel and renewable diesel impacts of renewable fuels for the RFS approximately 80% of the lifecycle (including jet fuel and heating program, EPA considers the following: impacts from soybean biodiesel were oil)—qualifying as biomass-based • Feedstock production—based on from land use change emissions which diesel and advanced biofuel. agricultural sector models that include are assumed to be not significant for the • Naphtha and liquefied petroleum direct and indirect impacts of feedstock camelina pathway considered. Thus, gas (LPG)—qualifying as advanced production. EPA is proposing to include camelina biofuel. • Fuel production—including process oil as a potential feedstock under the Energy cane, giant reed, and napiergrass energy requirements, impacts of any raw same biodiesel and renewable diesel cellulosic biomass (new feedstocks) materials used in the process, and pathways for which soybean oil • Ethanol, renewable diesel benefits from co-products produced. currently qualifies. We are also (including renewable jet fuel and • Fuel and feedstock distribution— proposing to include a pathway for jet heating oil), and naphtha— including impacts of transporting fuel, naphtha, and LPG produced from qualifying as cellulosic biofuel. feedstock from production to use, and camelina oil through hydrotreating. This

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is based on the fact that our analysis co-products (i.e., the allocation or feedstocks considered are expected to shows that even when all of the co- displacement approach). have similar or lower GHG emissions products are used to generate RINs the In cases where there are no pathways than switchgrass associated with other lifecycle GHG emissions for RIN- for generating RINs for the co-products components of the biofuel lifecycle. generating co-products including diesel from the hydrotreating process it would As a hypothetical worst case, if the replacement fuel, jet fuel, naphtha and be appropriate to use the displacement calculated increases in growing and LPG produced from camelina oil will all method for capturing the credits of co- harvesting the new feedstocks are meet the 50% GHG emissions reduction products produced. This is the case for incorporated into the lifecycle GHG threshold. most of the original feedstocks included emissions calculated for switchgrass, We are also proposing that two in Table 1 to § 80.1426. If the and other lifecycle components are existing pathways for RIN generation in displacement approach is used when jet projected as having similar GHG the RFS regulations that list ‘‘renewable fuel is the primary product produced it impacts to switchgrass (including land diesel’’ as a fuel product produced results in lower emissions then the use change associated with switchgrass through a hydrotreating process include production maximized for diesel fuel production), the overall lifecycle GHG jet fuel. This applies to two pathways in production. Therefore, since the reductions for biofuel produced from Table 1 to § 80.1426 of the RFS hydrotreating process maximized for energy cane, giant reed, and napiergrass regulations which both list renewable diesel fuel meets the 50% lifecycle GHG still meet the 60% reduction threshold diesel made from soy bean oil, oil from threshold for the feedstocks in question, for cellulosic biofuel, the lowest being a annual covercrops, algal oil, biogenic the process maximized for jet fuel 64% reduction (for napiergrass F–T waste oils/fats/greases, or non-food would also qualify. diesel) compared to the petroleum grade corn oil using hydrotreating as a Thus, we are proposing that the baseline. We believe these are process. We are proposing that if parties references to ‘‘renewable diesel’’ in conservative estimates, as use of energy Table 1 include jet fuel, consistent with produce jet fuel from the hydrotreating cane, giant reed, or napiergrass as a our regulatory definition of ‘‘non-ester process and co-process renewable feedstock is expected to have smaller renewable diesel,’’ since doing so biomass and petroleum they can land-use GHG impacts than switchgrass, clarifies the existing regulations while generate advanced biofuel RINs (D code due to their higher yields. ensuring that Table 1 to § 80.1426 5) for the jet fuel produced. We are also appropriately identifies fuel pathways Although this analysis assumes proposing that if they do not co-process that meet the GHG reduction thresholds energy cane, giant reed, and napiergrass renewable biomass and petroleum they associated with each pathway. biofuels produced for sale and use in can generate biomass-based diesel RINs We note that although the definition the United States will most likely come (D code 4) for the jet fuel produced. of renewable diesel includes jet fuel and from domestically produced feedstock, § 80.1401 of the RFS regulations heating oil, we are also proposing to list we also intend for the proposed currently defines non-ester renewable in Table 1 of section 80.1426 of the pathways to cover energy cane, giant diesel as a fuel that is not a mono-alkyl RFS2 regulations jet fuel and heating oil reed, and napiergrass from other ester and which can be used in an as specific co-products in addition to countries. We do not expect incidental engine designed to operate on listing renewable diesel to assure amounts of biofuels from feedstocks conventional diesel fuel or be heating clarity. This clarification also pertains to produced in other nations to impact our oil or jet fuel. The reference to jet fuel all the feedstocks already included in average GHG emissions. Moreover, other in this definition was added by direct Table 1 for renewable diesel. countries most likely to be exporting final rule dated May 10, 2010. Table 1 Energy grasses: Based on our energy cane, giant reed, or napiergrass to § 80.1426 identifies approved fuel comparison of switchgrass and the three or biofuels produced from these pathways by fuel type, feedstock source feedstocks considered here, EPA is feedstocks are likely to be major and fuel production processes. The proposing that cellulosic biofuel producers which typically use similar table, which was largely adopted as part produced from the cellulose, cultivars and farming techniques. of the March 26, 2010 RFS2 final rule, hemicellulose and lignin portions of Therefore, GHG emissions from identifies jet fuel and renewable diesel energy cane, giant reed, and napiergrass producing biofuels with energy cane, as separate fuel types. Accordingly, in has similar or better lifecycle GHG giant reed, or napiergrass grown in other light of the revised definition of impacts than biofuel produced from the countries should be similar to the GHG renewable diesel enacted after the RFS2 cellulosic biomass from switchgrass. emissions we estimated for U.S. energy rule, there is ambiguity regarding the Our proposed analysis suggests that the cane, giant reed, or napiergrass, though extent to which references in Table 1 to three feedstocks considered have GHG they could be slightly (and ‘‘renewable diesel’’ include jet fuel. impacts associated with growing and insignificantly) higher or lower. For The original lifecycle analysis for the harvesting the feedstock that are similar example, the renewable biomass renewable diesel from hydrotreating to switchgrass. Emissions from growing provisions under the Energy pathways listed in Table 1 to § 80.1426 and harvesting energy cane are Independence and Security Act would was not based on producing jet fuel but approximately 4 kg CO2eq/mmBtu prohibit direct conversion of previously rather other transportation diesel fuel higher than switchgrass, emissions from unfarmed land in other countries into products, namely a diesel fuel growing and harvesting giant reed are cropland for energy grass-based replacement. As discussed in the direct approximately 2 kg CO2eq/mmBtu renewable fuel production. final rule, the hydrotreating process can lower than switchgrass, and emissions Furthermore, any energy grass produce a mix of products including jet from growing and harvesting production on existing cropland fuel, diesel, naphtha, LPG and propane. napiergrass are approximately 6 kg internationally would not be expected Also, as discussed, there are differences CO2eq/mmBtu higher than switchgrass. to have land use impacts beyond what in the process configured for maximum These are small changes in the overall was considered for switchgrass jet fuel production vs. the process lifecycle, representing at most a 6% production. Even if there were maximized for diesel fuel production change in the energy grass lifecycle unexpected larger differences, EPA and the lifecycle results vary depending impacts in comparison to the petroleum believes the small amounts of feedstock on what approach is used to consider fuel baseline. Furthermore, the three or fuel potentially coming from other

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countries will not impact our threshold similar or lower GHG emissions esterification process as part of the analysis. profiles, including the following biodiesel pathways for which only Based on our assessment of feedstocks: ‘‘trans-esterification’’ was specifically switchgrass in the RFS2 final rule and • Cellulosic biomass from crop referenced in Table 1 to § 40 CFR this comparison of GHG emissions from residue, slash, pre-commercial 80.1426. switchgrass and energy cane, giant reed, thinnings and tree residue, annual cover and napiergrass, we do not expect crops; V. Additional Changes to Listing of variations to be large enough to bring • Cellulosic components of separated Available Pathways in Table 1 of the overall GHG impact of fuel made yard waste; 80.1426 from energy cane, giant reed or napier • Cellulosic components of separated We are also proposing two changes to grass to come close to the 60% food waste; and Table 1 to 80.1426 that were proposed threshold for cellulosic biofuel. • Cellulosic components of separated on July 1, 2011 (76 FR 38844). The first Therefore, EPA is proposing to include MSW. change adds ID letters to pathways to cellulosic biofuel produced from the For more information on the facilitate references to specific cellulose, hemicelluloses and lignin reasoning for extension to these other pathways. The second change adds portions of energy cane, giant reed, and feedstocks refer to the feedstock ‘‘rapeseed’’ to the existing pathway for napiergrass under the same pathways production and distribution section or renewable fuel made from canola oil. for which cellulosic biomass from the RFS2 rulemaking (75 FR 14793– On September 28, 2010, EPA switchgrass qualifies under the RFS2 14795). published a ‘‘Supplemental final rule. Based on these results, today’s Determination for Renewable Fuels Renewable gasoline and renewable proposed rule includes pathways for the Produced Under the Final RFS2 gasoline blendstock: Three renewable generation of cellulosic biofuel RINs for Program from Canola Oil’’ (FR Vol. 75, gasoline and renewable gasoline renewable gasoline or renewable No. 187, pg 59622–59634). In the July 1, blendstock pathways were compared to gasoline blendstock produced by 2011 NPRM (76 FR 38844) we proposed baseline petroleum gasoline, using the catalytic pyrolysis and upgrading, to clarify two aspects of the same value for baseline gasoline as in gasification and upgrading, direct supplemental determination. First we the RFS2 final rule analysis. The results fermentation, fermentation and proposed to amend the regulatory of the proposed analysis indicate that upgrading, all utilizing natural gas, language in Table 1 to § 80.1426 to the renewable gasoline and renewable biogas, and/or biomass as the only on- clarify that the currently-approved gasoline blendstock pathways result in site process energy sources or any pathway for canola also applies more a GHG emissions reduction of 65–129% process utilizing biogas and/or biomass generally to rapeseed. While ‘‘canola’’ or better compared to the gasoline fuel as the only on-site energy sources, and was specifically described as the it would replace using corn stover as a using corn stover as a feedstock or the feedstock evaluated in the supplemental feedstock. Since the renewable gasoline feedstocks noted above. In order to determination, we had not intended the and renewable gasoline blendstock qualify for RIN generation, the fuel must supplemental determination to cover pathways which use corn stover as a meet the other definitional criteria for just those varieties or sources of feedstock all exceed the 60% lifecycle renewable fuel (e.g., produced from rapeseed that are identified as canola, GHG threshold requirements for renewable biomass, and used to reduce but to all rapeseed. As described in the cellulosic biofuel, and since these or replace petroleum-based July 1, 2011 NPRM, we currently pathways capture the likely current transportation fuel, heating oil or jet interpret the reference to ‘‘canola’’ in technologies and since future fuel) specified in the Clean Air Act and Table 1 to § 80.1426 to include any technology improvements are likely to the RFS regulations. rapeseed. To eliminate ambiguity Direct Esterification: Using the same increase efficiency and lower GHG caused by the current language, methodology as was used for the yellow emissions, we are proposing that all however, we proposed to replace the grease modeling under RFS2, but using processes producing renewable gasoline term ‘‘canola’’ in that table with the high energy and materials use or renewable gasoline blendstock from term ‘‘canola/rapeseed’’. Canola is a assumptions and omitting the glycerin corn stover can qualify if they fall in the type of rapeseed. While the term co-product credit, we estimate the GHG following process characterizations: ‘‘canola’’ is often used in the American • Catalytic pyrolysis and upgrading emissions reduction for the continent and in Australia, the term utilizing natural gas, biogas, and/or esterification of specified feedstocks ‘‘rapeseed’’ is often used in Europe and with any level of FFA process is ¥71%. other countries to describe the same biomass as the only process energy ¥ sources. Since the GHG threshold is at 50% for crop. We received no adverse comments • Gasification and upgrading utilizing biomass-based diesel and advanced on our July 1, 2011 proposal but are re- natural gas, biogas, and/or biomass as biofuel, we believe that there is a large proposing it here in case we receive the only process energy sources. enough margin in the results to adverse comment in response to the • Direct fermentation utilizing natural reasonably conclude that biodiesel direct final rule also published today. gas, biogas, and/or biomass as the only using esterification of specified Second, we wish to clarify that process energy sources. feedstocks with any level of FFA although the GHG emissions of • Fermentation and upgrading content meets the biomass-based diesel producing fuels from canola feedstock utilizing natural gas, biogas, and/or and advanced biofuel 50% lifecycle grown in the U.S. and Canada was biomass as the only process energy GHG reduction threshold. Therefore, we specifically modeled as the most likely sources. are proposing to include the process source of canola (or rapeseed) oil used • Any process utilizing biogas and/or ‘‘esterification’’ as an approved for biodiesel produced for sale and use biomass as the only process energy biodiesel production process in Table 1 in the U.S., we also intended that the sources. to § 40 CFR 80.1426. In addition, approved pathway cover canola/ As was the case for extending corn consistent with the modeling conducted rapeseed oil from other countries, and stover results to other feedstocks in the for RFS2, we are proposing to interpret we propose to interpret our regulations RFS2 final rule, we are proposing to the RFS regulations as they existed prior in that manner. We expect the vast extend these results to feedstocks with to today’s rule as including a direct majority of biodiesel used in the U.S.

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and produced from canola/rapeseed oil enterprise which is independently F. Executive Order 13175 (Consultation will come from U.S. and Canadian owned and operated and is not and Coordination With Indian Tribal crops. Incidental amounts from crops dominant in its field. Governments) produced in other nations will not After considering the economic This proposed rule does not have impact our average GHG emissions. impacts of this action on small entities, tribal implications, as specified in Therefore, EPA proposes to interpret the I certify that this proposed rule will not Executive Order 13175 (65 FR 67249, approved canola pathway as covering have a significant economic impact on November 9, 2000). It applies to canola/rapeseed regardless of country a substantial number of small entities. gasoline, diesel, and renewable fuel origin. This proposed rule will not impose any producers, importers, distributors and VI. Statutory and Executive Order new requirements on small entities. The marketers. This action makes relatively Reviews relatively minor corrections and minor corrections and modifications to modifications this proposed rule makes the RFS regulations, and does not A. Executive Order 12866: Regulatory to the final RFS2 regulations do not impose any enforceable duties on Planning and Review impact small entities. We continue to be communities of Indian tribal This action is not a ‘‘significant interested in the potential impacts of the governments. Thus, Executive Order regulatory action’’ under the terms of rule on small entities and welcome 13175 does not apply to this action. Executive Order 12866 (58 FR 51735, comments on issues related to such Nonetheless, EPA specifically solicits October 4, 1993) and is therefore not impacts. additional comment on this proposed subject to review under Executive action from tribal officials. D. Unfunded Mandates Reform Act Orders 12866 and 13563 (76 FR 3821, G. Executive Order 13045: Protection of January 21, 2011). This proposed rule does not contain Children From Environmental Health B. Paperwork Reduction Act a Federal mandate that may result in Risks and Safety Risks This action does not impose any new expenditures of $100 million or more EPA interprets EO 13045 (62 FR information collection burden. The for State, local, and tribal governments, 19885, April 23, 1997) as applying only corrections, clarifications, and in the aggregate, or the private sector in to those regulatory actions that concern modifications to the final RFS2 any one year. We have determined that health or safety risks, such that the regulations contained in this rule are this action will not result in analysis required under section 5–501 of within the scope of the information expenditures of $100 million or more the EO has the potential to influence the collection requirements submitted to the for the above parties and thus, this rule regulation. This action is not subject to EO 13045 because it does not establish Office of Management and Budget is not subject to the requirements of an environmental standard intended to (OMB) for the final RFS2 regulations. sections 202 or 205 of UMRA. mitigate health or safety risks. OMB has approved the information This proposed rule is also not subject collection requirements contained in the to the requirements of section 203 of H. Executive Order 13211: Actions existing regulations at 40 CFR part 80, UMRA because it contains no regulatory Concerning Regulations That subpart M under the provisions of the requirements that might significantly or Significantly Affect Energy Supply, Paperwork Reduction Act, 44 U.S.C. uniquely affect small governments. It Distribution, or Use 3501 et seq. and has assigned OMB only applies to gasoline, diesel, and This proposed rule is not subject to control numbers 2060–0637 and 2060– renewable fuel producers, importers, Executive Order 13211 (66 FR 18355 0640. The OMB control numbers for distributors and marketers and makes (May 22, 2001)), because it is not a EPA’s regulations in 40 CFR are listed relatively minor corrections and significant regulatory action under in 40 CFR part 9. modifications to the RFS2 regulations. Executive Order 12866. C. Regulatory Flexibility Act E. Executive Order 13132 (Federalism) I. National Technology Transfer and The Regulatory Flexibility Act (RFA) Advancement Act This action does not have federalism generally requires an agency to prepare implications. It will not have substantial Section 12(d) of the National a regulatory flexibility analysis of any direct effects on the States, on the Technology Transfer and Advancement rule subject to notice and comment relationship between the national Act of 1995 (‘‘NTTAA’’), Public Law rulemaking requirements under the government and the States, or on the 104–113, 12(d) (15 U.S.C. 272 note) Administrative Procedure Act or any distribution of power and directs EPA to use voluntary consensus other statute unless the agency certifies responsibilities among the various standards in its regulatory activities that the rule will not have a significant levels of government, as specified in unless to do so would be inconsistent economic impact on a substantial with applicable law or otherwise Executive Order 13132. This action only number of small entities. Small entities impractical. Voluntary consensus applies to gasoline, diesel, and include small businesses, small standards are technical standards (e.g., renewable fuel producers, importers, organizations, and small governmental materials specifications, test methods, distributors and marketers and makes jurisdictions. sampling procedures, and business relatively minor corrections and For purposes of assessing the impacts practices) that are developed or adopted modifications to the RFS2 regulations. of today’s rule on small entities, small by voluntary consensus standards Thus, Executive Order 13132 does not entity is defined as: (1) A small business bodies. NTTAA directs EPA to provide apply to this action. as defined by the Small Business Congress, through OMB, explanations Administration’s (SBA) regulations at 13 In the spirit of Executive Order 13132, when the Agency decides not to use CFR 121.201; (2) a small governmental and consistent with EPA policy to available and applicable voluntary jurisdiction that is a government of a promote communications between EPA consensus standards. city, county, town, school district or and State and local governments, EPA This action does not involve technical special district with a population of less specifically solicits comment on this standards. Therefore, EPA did not than 50,000; and (3) a small proposed action from State and local consider the use of any voluntary organization that is any not-for-profit officials. consensus standards.

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J. Executive Order 12898: Federal DEPARTMENT OF HEALTH AND Access information for these Actions To Address Environmental HUMAN SERVICES teleconferences is in the Supplementary Justice in Minority Populations and Information section. Low-Income Populations Administration for Children and Written comments must be submitted Families to the office listed in the ADDRESSES Executive Order (EO) 12898 (59 FR section below on or before April 6, 7629 (Feb. 16, 1994)) establishes Federal 45 CFR Part 1355 2012. executive policy on environmental Notice of Tribal Consultation Meetings ADDRESSES: You may submit written justice. Its main provision directs comments about this topic by any of the Federal agencies, to the greatest extent Regarding How the Current SACWIS Regulations Affect Tribes following methods: practicable and permitted by law, to • Administering a Title IV–E Program Federal eRulemaking Portal: http:// make environmental justice part of their www.regulations.gov. Follow the mission by identifying and addressing, AGENCY: Children’s Bureau, ACYF, ACF, instructions for submitting comments. as appropriate, disproportionately high HHS. • Email: [email protected]. and adverse human health or Please include ‘‘Comments on Tribal environmental effects of their programs, ACTION: Notice of Tribal Consultation. Consultation’’ in the subject line of the policies, and activities on minority message. populations and low-income SUMMARY: Title IV–E rules provide • Mail or Courier Delivery: Terry populations in the United States. Federal Financial Participation (FFP) Watt, Director, Division of State through a beneficial cost allocation Systems, Children’s Bureau, EPA has determined that this methodology if a State or Tribe proposed rule will not have Administration on Children, Youth and implements a comprehensive Statewide Families, Administration for Children disproportionately high and adverse Automated Child Welfare Information and Families, 1250 Maryland Avenue human health or environmental effects System (SACWIS) to track and manage SW., 8th Floor, Washington, DC 20024. on minority or low-income populations child protection, foster care and If you choose to use an express, because it does not affect the level of adoption assistance activities. With the overnight, or other special delivery protection provided to human health or continuing implementation of the method, please verify first that they are the environment. These amendments Fostering Connections to Success and able to deliver to the above address would not relax the control measures on Increasing Adoptions Act of 2008 (Pub. during the normal workweek. We sources regulated by the RFS regulations L. 110–351) we wish to analyze the encourage you to submit comments and therefore would not cause impact of the State-centric SACWIS electronically so that they are received emissions increases from these sources. rules on Tribes and Tribal child welfare in a timely manner. All comments agencies, to determine if Tribes have VII. Statutory Provisions and Legal received will be posted without change sufficient flexibility and latitude to to http://www.regulations.gov including Authority build information systems that will any personal information provided. meet their business needs. Statutory authority for the rule Written comments and comments finalized today can be found in section The Children’s Bureau’s (CB) Division provided during consultation will 211 of the Clean Air Act, 42 U.S.C. of State Systems (DSS) has been receive equal consideration by CB. assigned responsibility to undertake 7545. Additional support for the FOR FURTHER INFORMATION CONTACT: If consultation with Tribes in this area. To procedural and compliance related you have questions about this process, offer Tribes the opportunity for aspects of today’s rule, including the or want further information about informed comment on the implications current Federal regulations governing recordkeeping requirements, come from that the State-centric rules have on their Sections 114, 208, and 301(a) of the child welfare automation, please contact ability to build and operate information Mr. Peter Howe, John F. Kennedy Clean Air Act, 42 U.S.C. 7414, 7542, and systems that will support their title IV– 7601(a). Federal Building, Room 2000 West, 15 E programs, we will provide an New Sudbury Street, Boston, MA 02203; List of Subjects in 40 CFR Part 80 education session on the SACWIS voice: (617) 565–1515; by email at: regulations. This will be followed by a [email protected]. Environmental protection, consultation to listen to the concerns Administrative practice and procedure, and ideas from Tribal leaders and their SUPPLEMENTARY INFORMATION: Agriculture, Air pollution control, representatives about the existing Teleconferences: The teleconference Confidential business information, SACWIS rules and how CB can support on February 15, 2012 at 1 p.m. EST is Diesel Fuel, Energy, Forest and Forest title IV–E Tribal agencies in building reserved for Tribal leaders; the teleconference on February 16, 2012 at Products, Fuel additives, Gasoline, information systems that will meet their 3 p.m. EST is intended for their Imports, Labeling, Motor vehicle business needs. We propose two such combined meetings via teleconferences representatives. Access information for pollution, Penalties, Petroleum, these teleconferences is as follows: Reporting and recordkeeping to reach a broad audience of interested February 15 call in: (888) 989–8183; requirements. parties. The teleconference on February 15, 2012, is intended for consultation Password: 368–9268. Dated: November 30, 2011. with Tribal leaders; the teleconference February 16 call in: (888) 673–9785; Lisa P. Jackson, on February 16, 2012, is intended to Password: 621–8061. Administrator. engage in consultation with their The teleconferences will be recorded, [FR Doc. 2011–31577 Filed 1–4–12; 8:45 am] representatives. and a summary of the content will be published within 45 days of the BILLING CODE 6560–50–P DATES: The meeting dates and times for February 16, 2012 call. teleconferences are: SACWIS Background: Sections • February 15, from 1–3 p.m. EST. 474(a)(3)(C) and (D) of the Social • February 16, from 3–5 p.m. EST. Security Act (the Act) provide States,

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and now Tribes, with the opportunity to Tribal self-governance in child welfare, FEDERAL COMMUNICATIONS access additional funding through title permitting Tribes to access title IV–E COMMISSION IV–E to plan, design, develop, reimbursement directly from the Federal implement, and operate a SACWIS. The government, rather than working 47 CFR Part 76 regulations at 45 CFR 1355.50–1355.57 through a State’s IV–E program. As [MB Docket No. 11–131; DA 11–2025] were established in response to Tribes were awarded title IV–E implementing legislation and were development grants, staff from their Revision of the Commission’s Program issued on December 22, 1993, and did Child Welfare programs expressed Carriage Rules not consider the program needs of interest in acquiring automated AGENCY: Federal Communications Tribal title IV–E agencies. technology. It became evident to CB that SACWIS systems are described in Commission. the SACWIS model might not meet the detail in program instructions issued by ACTION: Proposed rule; extension of CB. A general program description, and needs of Tribes. reply comment period. links to statutes, regulations, and other Our desire to hold a consultation program guidance related to SACWIS reflects our growing familiarity with the SUMMARY: The Media Bureau extends can be found at: http://www.acf.hhs.gov/ automation needs and preferences of the deadline for filing reply comments programs/cb/systems/sacwis/ Tribes and our desire to seek ideas on the Notice of Proposed Rulemaking federal.htm. Two Action Transmittals about how CB can support title IV–E (‘‘NPRM’’) in this proceeding which was that can be found there are of particular Tribal agencies build information published in the Federal Register on interest in understanding SACWIS systems that will support their business September 29, 2011. The extension will enable commenters to adequately rules. They are: needs. CB invites Tribal leaders and • review and respond to the comments ACF–OISM–001, issued on their representatives to join in a filed in response to the NPRM. February 24, 1995, provided the CB’s consultation via teleconference to initial guidance and policy on SACWIS provide input on the following DATES: The reply comment period for planning, designing, development and questions: the proposed rule published September implementation. 29, 2011 (76 FR 60675) is extended. • ACF–OSS–05, issued on August 21, Questions: Please identify the Submit reply comments on or before 1998, provides additional guidance on question to which you are responding. January 11, 2012. the implementation and operation of a If you have additional comments about ADDRESSES: You may submit reply SACWIS, and supersedes some sections SACWIS, please identify them by citing comments, identified by MB Docket No. of AT–ACF–OISM–001. the related section of regulations or 11–131, by any of the following Program Instructions (PI) whose program guidance. methods: topics may be directly relevant to Tribes (1) What are the obstacles for your • Federal eRulemaking Portal: http:// include: www.regulations.gov. Follow the • ACYF–CB–PI–09–11, issued on Tribe in building a child welfare information system in general and a instructions for submitting comments. September 17, 2009, describes the • SACWIS-type system specifically? Federal Communications Federal Advance Planning Document Commission’s Electronic Comment (APD) regulations that Tribes have to (2) What information do you consider Filing System (ECFS) Web site: http:// comply with to claim title IV–B and/or critical to managing your child welfare www.fcc.gov/cgb/ecfs/. Follow the title IV–E FFP for child welfare program? instructions for submitting comments. information technology projects, (3) Is there any special information • Mail: Filings can be sent by hand or equipment and services. that Tribes need or will need in order messenger delivery, by commercial • ACYF–CB–PI–11–07, issued on July to operate child welfare programs overnight courier, or by first-class or 5, 2011, describes for States and Tribes overnight U.S. Postal Service mail. All the changes to the regulations at 45 CFR funded with title IV–E dollars? Tribes may also provide written filings must be addressed to the Part 95 related to the APD process used Commission’s Secretary, Office of the comments through the methods cited in to obtain approval of FFP for acquiring Secretary, Federal Communications the ADDRESSES section, regardless of automated data processing equipment Commission. and services. participation in the teleconference for • People With Disabilities: Contact • ACYF–CB–PI–11–08, issued on July consultation. Please note that Federal the FCC to request reasonable 7, 2011, describes changes regarding the representatives attending the accommodations (accessible format APD waiver process within the Federal consultation teleconferences will not be documents, sign language interpreters, regulations at 45 CFR part 95, and offers able to respond directly during the CART, etc.) by email: [email protected] guidance when requesting a waiver to consultations to questions raised by the or phone: (202) 418–0530 or TTY: (202) use a commercial-off-the-shelf (COTS) participants. 418–0432. software product designed for the title For detailed instructions on IV–E or title IV–B programs. Authority: HHS ACF Tribal Consultation Review of these Action Transmittals Policy. submitting comments and additional information on the rulemaking process, and PI may help participants pinpoint Dated: December 22, 2011. see the SUPPLEMENTARY INFORMATION questions for Federal participants in the Bryan Samuels, education portion of the teleconference. section of the NPRM. Since the SACWIS regulations were Commissioner, Administration on Children, FOR FURTHER INFORMATION CONTACT: issued 18 years ago, Federal child Youth and Families. David Konczal, [email protected], welfare laws have reflected changes [FR Doc. 2011–33336 Filed 1–4–12; 8:45 am] of the Media Bureau, Policy Division, associated with the enactment of several BILLING CODE 4184–25–P (202) 418–2120. major child welfare legislative SUPPLEMENTARY INFORMATION: This is a initiatives. The Fostering Connections to summary of the Order in MB Docket No. Success and Increasing Adoptions Act 11–131, DA 11–2025, adopted and of 2008 Public Law 110–351 enabled released on December 15, 2011, which

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extends the reply comment deadline deadlines for filing comments and reply that extensions of time for filing established in the NPRM published comments at 60 and 90 days, comments in rulemaking proceedings under FCC No. 11–119 at 76 FR 60675, respectively, after publication of the shall not be routinely granted. In this September 29, 2011. The full text of this NPRM in the Federal Register. A case, however, an extension of the reply document is available for public summary of the NPRM was published in comment period is warranted to enable inspection and copying during normal the Federal Register on September 29, commenters to adequately review and business hours in the FCC Reference 2011 (76 FR 60675). Accordingly, the respond to the comments filed in Center, Portals II, 445 12th Street SW., filing dates were initially established as response to the NPRM. Room CY–A257, Washington, DC 20554. November 28, 2011 for comments and 3. Accordingly, it is ordered that, The complete text may also be December 28, 2011 for reply comments. pursuant to section 4(i) of the purchased from the Commission’s copy Communications Act of 1934, as 2. On December 13, 2011, the contractor, Best Copy and Printing, Inc., amended, 47 U.S.C. 154(i), and §§ 0.61, National Cable & Telecommunications 445 12th Street SW., Room CY–B402, 0.283, and 1.46 of the Commission’s Association (‘‘NCTA’’), Media Access Washington, DC 20554. The full text rules, 47 CFR 0.61, 0.283, and 1.46, the Project, and Public Knowledge filed a may also be downloaded at: http:// Motion for Extension of Time filed by joint request to extend the reply www.fcc.gov. Alternative formats are NCTA, Media Access Project, and comment deadline by two weeks, until available to persons with disabilities by Public Knowledge is granted, and the January 11, 2012. They claim that the sending an email to [email protected] or deadline to file reply comments in this comments filed in response to the by calling the Consumer & proceeding is extended to January 11, NPRM reflect divergent views and Governmental Affairs Bureau at (202) 2012. 418–0530 (voice), (202) 418–0432 opposing arguments on virtually every Federal Communications Commission. (TTY). issue and note further that the current reply comment deadline falls in the Steven A. Broeckaert, Summary of the Order middle of the holiday season. We grant Senior Deputy Chief, Policy Division, Media 1. On August 1, 2011, the Commission the requested extension. As set forth in Bureau. released an NPRM on revisions to the Section 1.46 of the Commission’s Rules, [FR Doc. 2011–33847 Filed 1–4–12; 8:45 am] program carriage rules. The NPRM set 47 CFR 1.46, the Commission’s policy is BILLING CODE 6712–01–P

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Notices Federal Register Vol. 77, No. 3

Thursday, January 5, 2012

This section of the FEDERAL REGISTER FOR FURTHER INFORMATION CONTACT: Guam, American Samoa, the U.S. Virgin contains documents other than rules or Trista Etzig at the above physical Islands, and the Commonwealth of the proposed rules that are applicable to the address, by telephone (202) 690–4942, Northern Mariana Islands). public. Notices of hearings and investigations, or by email at mail to: scblockgrants@ Estimated Number of Responses: 56. committee meetings, agency decisions and usda.gov. Estimated Number of Responses per rulings, delegations of authority, filing of petitions and applications and agency SUPPLEMENTARY INFORMATION: Respondent: 1. statements of organization and functions are Title: Specialty Crop Block Grant Estimated Total Annual Burden on examples of documents appearing in this Program—Farm Bill. Respondents: 560 hours. section. OMB Number: 0581–0248. Before funds are dispersed, State Expiration Date of Approval: 3 years departments of agriculture must from date of OMB approval. complete the following forms: DEPARTMENT OF AGRICULTURE Type of Request: Extension and (a) Grant Agreement. The Grant revision of a currently approved Agreement sets forth the agreed upon Agricultural Marketing Service information collection. responsibilities of AMS project work. It [Doc. No. AMS–FV–11–0084] Abstract: The information collection also indicates the agreed upon grant requirements in this request are applied funding dollar amounts and the Specialty Crop Block Grant Program— only to those State departments of beginning date and ending date of the Farm Bill Request for Extension and agriculture who voluntarily participate project work and the Grant Agreement. Revision of a Currently Approved in the SCBGP–FB. The information One copy of this Grant Agreement is Information Collection collected is needed to certify that grant required to be returned to AMS with the participants are complying with grantee’s signatures and dated for each AGENCY: Agricultural Marketing Service, applicable program regulations. Data grant. USDA. collected is the minimum information Estimate of Burden: Public reporting ACTION: Request for comments. necessary to effectively carry out the burden for this collection of information requirements of the program, and to is estimated to average 2 hours per SUMMARY: In accordance with the fulfill the intent of section 101 of the response. Paperwork Reduction Act of 1995 (44 Competitiveness Act of 2004, as Respondents: State departments of U.S.C. Chapter 35), this document amended by section 10109 of the Food, agriculture. announces the Agricultural Marketing Conservation, and Energy Act of 2008, Estimated Number of Respondents: Service’s (AMS) intention to request (2008 Farm Bill) (Pub. L. 110–246). 56. approval, from the Office of State departments of agriculture who Estimated Number of Responses: 56. Management and Budget, for an wish to participate in the SCBGP–FB Estimated Number of Responses per extension of and revision to the would have to submit the following: Respondent: 1. currently approved information (a) SF–424, ‘‘Application for Federal Estimated Total Annual Burden on collection under the Specialty Crop Assistance,’’ (approved under OMB Respondents: 112 hours. Block Grant Program—Farm Bill collection number 4040–0004) is (b) Form SF–270, ‘‘Request for (SCBGP–FB). required to apply for Federal assistance. Advance and Reimbursement’’ DATES: Comments on this document (b) SF–424A, ‘‘Budget Information- (approved under OMB collection must be received by March 5, 2012 to Non-Construction Programs,’’ (approved number 0348–0004) is required be assured of consideration. under OMB collection number 0348– whenever the grantees request an ADDRESSES: Interested persons are 0044) is required to show each project’s advance or reimbursement of Federal invited to submit comments concerning budget breakdown. grant funds. AMS expects that at least this information collection document. (c) Form SF–424B, ‘‘Assurances-Non- three (3) SF–270 forms will be Comments should be submitted online Construction Programs,’’ (approved submitted during the grant agreement at www.regulations.gov or sent to Docket under OMB collection number 0348– period. Clerk, Fruit and Vegetable Programs, 0040) to assure the Federal government (c) Annual Performance Report. The Agricultural Marketing Service, U.S. of the applicant’s legal authority to Annual Performance Report is required Department of Agriculture, Stop 0235, apply for Federal assistance. if a grant period is more than one year 1400 Independence Avenue SW., (d) State Plan Narrative. Completed in length. The Annual Performance Washington, DC 20250–0243; or by applications must include a State Plan Report is written documentation facsimile to (202) 720–0016. All Narrative to show how grant funds will required to notify AMS about the work comments should reference the docket be utilized to enhance the activities and progress towards number (AMS–FV–11–0084), the date, competitiveness of specialty crops. completing the grantee’s and and the page number of this issue of the Estimate of Burden: Public reporting subgrantee’s established project Federal Register. All comments burden for this collection of information activities, goals and outcomes. AMS received will be posted without change, is estimated to average 10 hours per expects that at least two (2) Annual including any personal information response. Performance Reports will be submitted provided, online at http://www. Respondents: State departments of during the grant agreement period. regulations.gov and will be made agriculture. Estimate of Burden: Public reporting available for public inspection at the Estimated Number of Respondents: 56 burden for this collection of information above physical address during regular (All 50 States, the District of Columbia, is estimated to average 3 hours per business hours. the Commonwealth of Puerto Rico, response.

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Respondents: State departments of is estimated to average 3 hours per comments will become a matter of agriculture. response. public record. Estimated Number of Respondents: Respondents: State departments of Dated: December 22, 2011. 56. agriculture. David R. Shipman, Estimated Number of Responses: 112. Estimated Number of Respondents: Acting Administrator. Estimated Number of Responses per 56. [FR Doc. 2011–33793 Filed 1–4–12; 8:45 am] Respondent: 2. Estimated Number of Responses: 56. Estimated Total Annual Burden on Estimated Number of Responses per BILLING CODE 3410–02–P Respondents: 336 hours. Respondent: 1. (d) Final Performance Report. The Estimated Total Annual Burden on DEPARTMENT OF AGRICULTURE Final Performance Report is written Respondents: 168 hours. information required by AMS within 90 Finally, State departments of Food and Nutrition Service days after the ending date of the Grant agriculture are required to retain records Agreement. This information is utilized pertaining to the SCBGP–FB for 3 years Emergency Food Assistance Program; as final documentation of completion of after completion of the grant period or Availability of Foods for Fiscal Year the project activities, goals and until final resolution of any audit 2012 outcomes. findings or litigation claims relating to Estimate of Burden: Public reporting AGENCY: Food and Nutrition Service, the SCBGP–FB. This is a part of normal USDA. burden for this collection of information business practice. ACTION: Notice. is estimated to average 6 hours per This program would not be response. maintained by any other agency, SUMMARY: This notice announces the Respondents: State departments of therefore, the requested information will surplus and purchased foods that the agriculture. not be available from any other existing Department expects to make available Estimated Number of Respondents: records. for donation to States for use in 56. AMS is committed to compliance providing nutrition assistance to the Estimated Number of Responses: 56. Estimated Number of Responses per with the Government Paperwork needy under The Emergency Food Respondent: 1. Elimination Act (GPEA) (44 U.S.C. 3540 Assistance Program (TEFAP) in Fiscal Estimated Total Annual Burden on note), which requires Government Year (FY) 2012. The foods made Respondents: 336 hours. agencies in general to provide the public available under this notice must, at the (e) Request for Grant Amendment. A the option of submitting information or discretion of the State, be distributed to State department of agriculture transacting business electronically to eligible recipient agencies for use in participating in the SCBGP–FB would the maximum extent possible. The SF– preparing meals and/or for distribution have to submit a Request for Grant 424, SF–424A, and SF–424B forms and to households for home consumption. Amendment to AMS if there is a change State Plan (Narrative) can be completed DATES: Effective Date: October 1, 2011. in key personnel, scope or objectives of electronically and are required to be FOR FURTHER INFORMATION CONTACT: the grant, budget changes that exceed submitted electronically through www. Ashley Bress, Policy Branch, Food more than 20% of a project’s total grants.gov. Distribution Division, Food and budget, and/or or an extension of the The SF–425 and SF–270 forms can be Nutrition Service, U.S. Department of grant period not to exceed three filled out electronically and submitted Agriculture, 3101 Park Center Drive calendar years. electronically. Alexandria, Virginia 22302–1594 or Estimate of Burden: Public reporting The Annual Performance Report, telephone (703) 305–2662. burden for this collection of information Final Performance Report, Audit Report, SUPPLEMENTARY INFORMATION: In is estimated to average 1 hour per and Request for Grant Amendment can accordance with the provisions set forth response. be submitted electronically. The Grant in the Emergency Food Assistance Act Respondents: State departments of Agreement requires an original of 1983 (EFAA), 7 U.S.C. 7501, et seq., agriculture. signature and can be submitted by mail. and the Food and Nutrition Act of 2008, Estimated Number of Respondents: Comments are invited on: (1) Whether 7 U.S.C. 2036, the Department makes 56. the proposed collection of information foods available to States for use in Estimated Number of Responses: 56. is necessary for the proper performance providing nutrition assistance to those Estimated Number of Responses per of the functions of the agency, including in need through TEFAP. In accordance Respondent: 2. whether the information will have with section 214 of the EFAA, 7 U.S.C. Estimated Total Annual Burden on practical utility; (2) the accuracy of the 7515, 60 percent of each State’s share of Respondents: 112 hours. agency’s estimate of the burden of the TEFAP foods is based on the number of (f) SF–425 ‘‘Federal Financial Report proposed collection of information, people with incomes below the poverty (approved under OMB collection including the validity of the level within the State and 40 percent on number 0348–0061) is to be completed methodology and assumptions used; (3) the number of unemployed persons 90 days after the expiration date of the ways to enhance the quality, utility, and within the State. State officials are grant period to comply with various clarity of the information to be responsible for establishing the network legal and regulatory requirements as collected; and (4) ways to minimize the through which the foods will be used by described within the form. burden of the collection of information eligible recipient agencies (ERA) in (g) Audit Report. A State is required on those who are to respond, including providing nutrition assistance to those to conduct an audit of SCBGP–FB the use of appropriate automated, in need, and for allocating foods among expenditures and an audit report is electronic, mechanical, or other those ERAs. States have full discretion required to be submitted to AMS no technological collection techniques or in determining the amount of foods that later than 30 days after completion of other forms of information technology. will be made available to ERAs for use the audit. All responses to this document will in preparing meals and/or for Estimate of Burden: Public reporting be summarized and included in the distribution to households for home burden for this collection of information request for OMB approval. All consumption.

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The types of foods the Department spaghetti sauce, spinach, sweet name, resume, and completed form AD– expects to make available to States for potatoes, tomatoes, diced tomatoes, 755 (Advisory Committee Membership distribution through TEFAP in FY 2012 tomato sauce, mixed vegetables, tomato Background Information). The form AD– are described below. soup, vegetable soup, apricots, 755 may be obtained from Forest applesauce, mixed fruit, peaches, pears, Service contact person or from the Surplus Foods beef, beef stew, chicken, pork, and following Web site: http:// Surplus foods donated for distribution salmon; and the following bottled www.fs.usda.gov/Internet/ under TEFAP are Commodity Credit juices: Apple, cherry apple, cran-apple, FSE_DOCUMENTS/ Corporation (CCC) foods purchased grape, grapefruit, orange, and tomato. stelprdb5203568.pdf . The package must under the authority of section 416 of the The amounts of each item purchased be sent to the address below. Agricultural Act of 1949, 7 U.S.C. 1431 will depend on the prices the (section 416) and foods purchased Dated: December 30, 2011. Department must pay, as well as the Pearlie S. Reed, under the surplus removal authority of quantity of each item requested by the Assistant Secretary of Administration. section 32 of the Act of August 24, 1935, States. Changes in agricultural market 7 U.S.C. 612c (section 32). The types of conditions may result in the availability [FR Doc. 2011–33823 Filed 1–4–12; 8:45 am] foods typically purchased under section of additional types of foods or the non- BILLING CODE 3410–11–P 416 include dairy, grains, oils, and availability of one or more types listed peanut products. The types of foods above. purchased under section 32 include meat, poultry, fish, vegetables, dry Dated: December 27, 2011. COMMISSION ON CIVIL RIGHTS beans, juices, and fruits. Audrey Rowe, Approximately $37.5 million in Administrator, Food and Nutrition Service. Sunshine Act Notice surplus foods acquired in FY 2011 are [FR Doc. 2011–33673 Filed 1–4–12; 8:45 am] AGENCY: United States Commission on being delivered to States in FY 2012. BILLING CODE 3410–30–M Civil Rights. These foods include carrots, chicken (leg quarters, thighs/drumsticks), corn, ACTION: Notice of meeting. fig pieces, oranges, peaches, pears, DEPARTMENT OF AGRICULTURE pistachios, dried plums, potatoes, and DATE AND TIME: Friday, January 13, 2012; tomato sauce. Other surplus foods may Forest Service 9:30 a.m. EST. be made available to TEFAP throughout PLACE: 624 Ninth Street NW., Room 540, National Advisory Committee for the year. The Department would like to Washington, DC 20425. Implementation of the National Forest point out that food acquisitions are System Land Management Planning Meeting Agenda based on changing agricultural market Rule; Correction conditions; therefore, the availability of This meeting is open to the public. foods is subject to change. AGENCY: USDA Forest Service. I. Approval of Agenda ACTION: Notice; correction. II. Approval of the December 19, 2011 Purchased Foods Meeting Minutes In accordance with section 27 of the SUMMARY: The Forest Service published III. Program Planning Update and Food and Nutrition Act of 2008, 7 a notice in the Federal Register on discussion of projects: U.S.C. 2036, the Secretary is directed to December 29, 2011, concerning the • Update on 2012 Statutory purchase about $260.25 million worth intent to establish an advisory Enforcement Report planning of foods in FY 2012 for distribution committee and call for nominations. • Update on 2012 Trafficking Briefing through TEFAP. These foods are made The document contained incorrect planning available to States in addition to those dates. The published document • Scheduling of 2012 Immigration surplus foods which otherwise might be contained a due date for nominations of Briefing provided to States for distribution under February 13, 2012. The correction is • Review of Concept Papers/Approval TEFAP. February 21, 2012. IV. Management and Operations For FY 2012, the Department FOR FURTHER INFORMATION CONTACT: • Staff Director’s report anticipates purchasing the following Tony Tooke, U.S. Department of • Chief of Regional Programs’ Report foods for distribution through TEFAP: Agriculture, Forest Service, National V. State Advisory Committee Issues: Dehydrated potatoes, dried plums, Forest System, Ecosystem Management • Re-Chartering the Hawaii SAC raisins, frozen ground beef, frozen Coordination; telephone: (202) 205– VI. Adjourn whole chicken, frozen ham, frozen 0830, fax: (202) 205–1758, or email: FOR FURTHER INFORMATION CONTACT: turkey roast, blackeye beans, garbanzo [email protected]. Individuals who use Lenore Ostrowsky, Acting Chief, Public beans, great northern beans, light red telecommunication devices for the deaf Affairs Unit, (202) 376–8591. kidney beans, lentils, lima beans, pinto (TDD) may call the Federal Information Hearing-impaired persons who will beans, egg mix, shell eggs, lowfat bakery Relay Service (FIRS) at 1 (800) 877–8339 attend the meeting and require the mix, egg noodles, white and yellow corn between 8 a.m. and 8 p.m., Eastern services of a sign language interpreter grits, spaghetti, macaroni, oats, peanut Standard Time, Monday through Friday. should contact Pamela Dunston at (202) butter, roasted peanuts, rice, whole Correction 376–8105 or at [email protected] grain rotini, vegetable oil, ultra high at least seven business days before the temperature fluid 1 percent milk, bran In the Federal Register of December scheduled date of the meeting. flakes, corn flakes, oat cereal, rice 29, 2011, in FR doc. 2011–33535, on cereal, corn cereal, and corn and rice page 81911, in the first column, correct Dated: January 3, 2012. cereal; the following canned items: the ‘‘Dates’’ caption to read: David B. Snyder, Green beans, blackeye beans, kidney Written nominations must be received Attorney-Advisor, Alternate Certifying beans, refried beans, vegetarian beans, by February 21, 2012. Nominations Officer. carrots, cream corn, whole kernel corn, must contain a completed application [FR Doc. 2012–42 Filed 1–3–12; 4:15 pm] peas, sliced potatoes, pumpkin, packet that includes the nominee’s BILLING CODE 6335–01–P

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DEPARTMENT OF COMMERCE in any straight length, that have been the scope of the Steel Threaded Rod forged, turned, cold-drawn, cold-rolled, Order.3 International Trade Administration machine straightened, or otherwise Merchandise Subject to the Minor cold-finished, and into which threaded [A–570–932] Alterations Antidumping grooves have been applied. In addition, Circumvention Inquiry Certain Steel Threaded Rod From the the steel threaded rod, bar, or studs People’s Republic of China: Initiation subject to the order are non-headed and The merchandise subject to this of Anti-Circumvention Inquiry threaded along greater than 25 percent antidumping circumvention inquiry of their total length. A variety of finishes consists of steel threaded rod from the AGENCY: Import Administration, or coatings, such as plain oil finish as PRC produced by Gem-Year containing International Trade Administration, a temporary rust protectant, zinc coating greater than 1.25 percent chromium, by Department of Commerce. (i.e., galvanized, whether by weight, and otherwise meeting the SUMMARY: In response to a request from electroplating or hot-dipping), paint, requirements of the scope of the Steel Vulcan Threaded Products Inc. and other similar finishes and coatings, Threaded Rod Order as listed under the (‘‘Petitioner’’), the Department of may be applied to the merchandise. ‘‘Scope of the Order’’ section above. Commerce (the ‘‘Department’’) is Included in the scope of the order are Initiation of Minor Alterations initiating an anti-circumvention inquiry steel threaded rod, bar, or studs, in Antidumping Circumvention to determine whether certain imports which: (1) Iron predominates, by Proceeding are circumventing the antidumping duty weight, over each of the other contained Section 781(c)(1) of the Act provides order on certain steel threaded rod from elements; (2) the carbon content is 2 that the Department may find the People’s Republic of China percent or less, by weight; and (3) none (‘‘PRC’’).1 circumvention of an antidumping duty of the elements listed below exceeds the order when products which are of the DATES: Effective Date: January 5, 2012. quantity, by weight, respectively class or kind of merchandise subject to FOR FURTHER INFORMATION CONTACT: Toni indicated: • an antidumping duty order have been Dach, AD/CVD Operations, Office 9, 1.80 percent of manganese, or ‘‘altered in form or appearance in minor Import Administration, International • 1.50 percent of silicon, or • respects * * * whether or not included Trade Administration, U.S. Department 1.00 percent of copper, or in the same tariff classification.’’ The of Commerce, 14th Street and • 0.50 percent of aluminum, or • Department notes that, while the statute Constitution Avenue NW., Washington, 1.25 percent of chromium, or is silent as to what factors to consider • DC 20230; telephone: (202) 482–1655. 0.30 percent of cobalt, or in determining whether alterations are • SUPPLEMENTARY INFORMATION: 0.40 percent of lead, or properly considered ‘‘minor,’’ the • 1.25 percent of nickel, or legislative history of this provision Background • 0.30 percent of tungsten, or indicates there are certain factors which • On November 17, 2011, pursuant to 0.012 percent of boron, or should be considered before reaching a • section 781(c) of the Tariff Act of 1930, 0.10 percent of molybdenum, or circumvention determination. In • as amended (the ‘‘Act’’), and 19 CFR 0.10 percent of niobium, or conducting a circumvention inquiry • 351.225(i), Petitioner submitted a 0.41 percent of titanium, or under section 781(c) of the Act, the • request for the Department to initiate an 0.15 percent of vanadium, or Department has generally relied upon • anti-circumvention inquiry of Gem-Year 0.15 percent of zirconium. ‘‘such criteria as the overall physical Industrial Co., Ltd. (‘‘Gem-Year’’) to Steel threaded rod is currently characteristics of the merchandise, the determine whether double-arming bolts classifiable under subheading expectations of the ultimate users, the (‘‘DA bolts’’), a type of steel threaded 7318.15.5050, 7318.15.5090, and use of the merchandise, the channels of rod produced in the PRC containing 7318.15.2095 of the United States marketing and the cost of any more than 1.25 percent chromium, are Harmonized Tariff Schedule modification relative to the total value circumventing the Steel Threaded Rod (‘‘HTSUS’’). Although the HTSUS of the imported products.’’ 4 Order.2 In its request, Petitioner subheading is provided for convenience contends that Gem-Year’s higher- and customs purposes, the written Overall Physical Characteristics chromium DA bolts are of the same description of the merchandise is Petitioner maintains that steel class or kind as the merchandise dispositive. threaded rod with the addition of covered by the Steel Threaded Rod Excluded from the scope of the order chromium is produced in the same Order, and the addition of small are: (a) Threaded rod, bar, or studs manner and to the same specifications amounts of chromium above the 1.25 which are threaded only on one or both as subject steel threaded rod.5 Petitioner percent threshold in the scope of the ends and the threading covers 25 provides a declaration supporting these order is a minor alteration that percent or less of the total length; and claims in its Circumvention Request.6 (b) threaded rod, bar, or studs made to constitutes circumvention. Expectations of the Ultimate Users American Society for Testing and Scope of the Order Materials (‘‘ASTM’’) A193 Grade B7, Petitioner indicates that it is unaware The merchandise covered by the order ASTM A193 Grade B7M, ASTM A193 of any instances where customers would is steel threaded rod. Steel threaded rod Grade B16, or ASTM A320 Grade L7. 3 See Notice of Scope Rulings, 76 FR 10558, is certain threaded rod, bar, or studs, of Prior Scope Ruling carbon quality steel, having a solid, 10559 (February 25, 2011). 4 See S. Rep. No.71, 100th Cong., 1st Sess. 100 circular cross section, of any diameter, Among previous scope rulings (1987) (‘‘In applying this provision, the Commerce concerning the Steel Threaded Rod Department should apply practical measurements 1 See Certain Steel Threaded Rod from the Order, the Department on September 10, regarding minor alterations, so that circumvention People’s Republic of China: Notice of Antidumping 2010, responded to a request for a scope can be dealt with effectively, even where such Duty Order, 74 FR 17154 (April 14, 2009) (‘‘Steel ruling by Hubbell Power Systems, Inc. alterations to an article technically transform it into Threaded Rod Order’’). a differently designated article.’’). 2 See the Petitioner’s November 17, 2011 and determined that DA bolts meeting 5 See Circumvention Request at 16. submission (‘‘Circumvention Request’’) at 2. the description of the scope are within 6 Id. at 16–17.

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expect or request steel threaded rod Based on the information provided by 2012, pursuant to its authority under the with small amounts of chromium Petitioner, the Department finds there is Endangered Species Act (ESA). Through added, other than to circumvent the sufficient basis to initiate an an AD, NMFS identifies fisheries order.7 Petitioner argues that the antidumping anti-circumvention operating in the Atlantic Ocean, Gulf of applicable standard for DA bolts does inquiry, pursuant to section 781(c) of Mexico, and Pacific Ocean that will be not address the chemistry of the steel, the Act, to determine whether the required to take observers upon NMFS’ focusing instead on basic dimensions, merchandise subject to the inquiry request. The purpose of observing zinc coating, and tensile strength, none (identified in the ‘‘Merchandise Subject identified fisheries is to learn more of which are affected by the additional to the Minor Alterations Antidumping about sea turtle interactions in a given amounts of chromium.8 Circumvention Inquiry’’ section above) fishery, evaluate existing measures to involves a minor alteration to subject prevent or reduce prohibited sea turtle Use of the Merchandise merchandise that is so insignificant as takes, and to determine whether Petitioner states that the uses of DA to render the resulting merchandise additional measures to implement the bolts, i.e., fasteners in the utility subject to the Steel Threaded Rod prohibition against sea turtle takes may industry, are typical applications of Order. be necessary. Fisheries identified in the steel threaded rod.9 The Department will not order the 2010 AD (see Table 1) remain on the AD suspension of liquidation of entries of and are therefore required to carry Channels of Marketing any additional merchandise at this time. observers upon NMFS’ request, until Petitioner states that the channels of However, in accordance with 19 CFR 2014. marketing for the chromium-added DA 351.225(l)(2), if the Department issues a ADDRESSES: See SUPPLEMENTARY bolts and the subject steel threaded rod preliminary affirmative determination, we will then instruct U.S. Customs and INFORMATION for a listing of all Regional are the same, noting that both products Offices. are marketed through distributors.10 Border Protection to suspend liquidation and require a cash deposit of FOR FURTHER INFORMATION CONTACT: Cost of Modification estimated duties, at the applicable rate, Kristy Long, Office of Protected Petitioner indicates that the addition for each unliquidated entry of the Resources, (301) 713–2322; Ellen Keane, of small amounts of chromium involves merchandise at issue, entered or Northeast Region, (978) 282–8476; minimal additional cost compared to withdrawn from warehouse for Dennis Klemm, Southeast Region, (727) the overall costs of the merchandise in consumption on or after the date of 824–5312; Elizabeth Petras, Southwest question.11 initiation of the inquiry. Region, (562) 980–3238; Kim Maison, The Department will, following Pacific Islands Region, (808) 944–2257. Circumstances Under Which the consultation with interested parties, Individuals who use a Subject Products Entered the United establish a schedule for questionnaires telecommunications device for the States and comments on the issues. The hearing impaired may call the Federal Petitioner argues that entry summary Department intends to issue its final Information Relay Service at 1-(800) information indicates that the additional determination within 300 days of the 877–8339 between 8 a.m. and 4 p.m. chromium was added to deliberately date of publication of this initiation Eastern time, Monday through Friday, avoid antidumping duties. Petitioner notice. excluding Federal holidays. points to documents contained in the This notice is published in SUPPLEMENTARY INFORMATION: accordance with sections 781(c) of the entry summary for Gem-Year’s entries of Availability of Published Materials higher-chromium DA bolts to support Act and 19 CFR 351.225(i). its claim that the chromium content of Dated: December 22, 2011. Information regarding the Sea Turtle Observer Requirement for Fisheries (72 the DA bolts was manipulated in an Christian Marsh, attempt to circumvent the order.12 FR 43176, August 3, 2007) may be Acting Assistant Secretary for Import obtained at www.nmfs.noaa.gov/pr/ Because Gem-Year’s merchandise would Administration. species/turtles/regulations.htm or from be subject to the PRC-wide deposit rate [FR Doc. 2011–33768 Filed 1–4–12; 8:45 am] of 206.00 percent, Petitioner asserts that any NMFS Regional Office at the BILLING CODE 3510–DS–P addresses listed below: Gem-Year and its customers have a Æ strong financial incentive to avoid NMFS, Northeast Region, 55 Great paying antidumping duties.13 DEPARTMENT OF COMMERCE Republic Drive, Gloucester, MA 01930– 2298; Æ Timing of the Entries National Oceanic and Atmospheric NMFS, Southeast Region, 263 13th Petitioner asserts that the addition of Administration Avenue South, St. Petersburg, FL 33701; Æ NMFS, Southwest Region, 501 W. chromium after the issuance of the Steel RIN 0648–XA892 Threaded Rod Order and the Ocean Blvd., Suite 4200, Long Beach, CA 90802–4213; or Department’s determination in the 2012 Annual Determination for Sea Æ NMFS, Pacific Islands Region, related scope request concerning DA Turtle Observer Requirement Protected Resources, 1601 Kapiolani bolts indicates that this addition of Boulevard, Suite 1100, Honolulu, HI chromium is an attempt to circumvent AGENCY: National Marine Fisheries 96814–4700. the Steel Threaded Rod Order.14 Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Purpose of the Sea Turtle Observer Commerce. 7 Id. at 17. Requirement 8 ACTION: Notice. Id. Under the ESA, 16 U.S.C. 1531 et seq., 9 Id. at 19. SUMMARY: 10 Id. The National Marine NMFS has the responsibility to 11 Id. Fisheries Service (NMFS) is providing implement programs to conserve marine 12 Id. at 19–20. notification that the agency will not life listed as endangered or threatened. 13 Id. at 20. identify additional fisheries to observe All sea turtles found in U.S. waters are 14 Id. at 20. on the Annual Determination (AD) for listed as either endangered or

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threatened under the ESA. Kemp’s ESA authorize the issuance of this rule may result in civil or criminal ridley (Lepidochelys kempii), regulations to enforce the take penalties under the ESA. leatherback (Dermochelys coriacea), and prohibitions. NMFS may grant NMFS and/or interested cooperating hawksbill (Eretmochelys imbricata) sea exceptions to the take prohibitions with entities will pay the direct costs for turtles are listed as endangered. an incidental take statement or an vessels to carry observers. These include Loggerhead (Caretta caretta), green incidental take permit issued pursuant observer salary and insurance costs. (Chelonia mydas), and olive ridley to ESA section 7 or 10, respectively. To NMFS may also evaluate other potential (Lepidochelys olivacea) sea turtles are do so, NMFS must determine that the direct costs, should they arise. Once listed as threatened, except for breeding activity that will result in incidental selected, a fishery will be eligible to be colony populations of green turtles in take is not likely to jeopardize the observed for 5 years without further Florida and on the Pacific coast of continued existence of the affected action by NMFS. This will enable NMFS Mexico, and breeding colony listed species. For some Federal to develop an appropriate sampling populations of olive ridleys on the fisheries and most state fisheries, NMFS protocol to investigate whether, how, Pacific coast of Mexico, which are listed has not granted an exception primarily when, where, and under what as endangered. Due to the inability to because we lack information about conditions incidental takes are distinguish between populations of fishery-sea turtle interactions. occurring; to evaluate whether existing green and olive ridley turtles away from measures are minimizing or preventing the nesting beach, NMFS considers The most effective way for NMFS to takes; and to determine whether these turtles endangered wherever they learn more about sea turtle-fishery additional measures are needed to occur in U.S. waters. While some sea interactions in order to prevent or conserve and recover turtles. turtle populations have shown signs of minimize take is to place observers recovery, many populations continue to aboard fishing vessels. In 2007, NMFS 2012 Annual Determination decline. issued a regulation (50 CFR 222.402) to Incidental take, or bycatch, in fishing establish procedures through which NMFS is providing notification that gear is one of the main sources of sea each year NMFS will identify, pursuant the agency will not identify additional turtle injury and mortality nationwide. to specified criteria and after notice and fisheries to observe for the 2012 AD, Section 9 of the ESA prohibits the take opportunity for comment, those pursuant to its authority under the ESA. (including harassing, harming, fisheries in which the agency intends to NMFS is not identifying additional pursuing, hunting, shooting, wounding, place observers (72 FR 43176, August 3, fisheries at this time given lack of killing, trapping, capturing, or collecting 2007). These regulations specify that resources to implement new or expand or attempting to engage in any such NMFS may place observers on U.S. existing observer programs to focus on conduct), including incidental take, of fishing vessels, either recreational or sea turtles (50 CFR 222.402(a)(4)). endangered sea turtles. Pursuant to commercial, operating in U.S. territorial Fisheries identified in the 2010 AD (see section 4(d) of the ESA, NMFS has waters, the U.S. exclusive economic Table 1) remain on the AD and are issued regulations extending the zone (EEZ), or on the high seas, or on therefore required to carry observers, prohibition of take, with exceptions, to vessels that are otherwise subject to the upon NMFS’ request, until 2014. NMFS threatened sea turtles (50 CFR 223.205 jurisdiction of the U.S. Failure to did not identify additional fisheries to and 223.206). Sections 9 and 11 of the comply with the requirements under observe in the 2011 AD.

TABLE 1—STATE AND FEDERAL COMMERCIAL FISHERIES INCLUDED ON THE ANNUAL DETERMINATION

Years eligible to Fishery carry observers

Trawl Fisheries: Atlantic shellfish bottom trawl ...... 2010–2014 Mid-Atlantic bottom trawl ...... 2010–2014 Mid-Atlantic mid-water trawl (including pair trawl) ...... 2010–2014 Southeastern U.S. Atlantic, Gulf of Mexico shrimp trawl ...... 2010–2014 Gillnet Fisheries: CA halibut, white seabass and other species set gillnet (>3.5 in mesh) ...... 2010–2014 CA yellowtail, barracuda, and white seabass drift gillnet (mesh size >3.5 in. and <14 in.) ...... 2010–2014 Chesapeake Bay inshore gillnet ...... 2010–2014 Long Island inshore gillnet ...... 2010–2014 Mid-Atlantic gillnet ...... 2010–2014 North Carolina inshore gillnet ...... 2010–2014 Northeast sink gillnet ...... 2010–2014 Southeast Atlantic gillnet ...... 2010–2014 Trap/Pot Fisheries: Atlantic blue crab trap/pot ...... 2010–2014 Atlantic mixed species trap/pot ...... 2010–2014 Northeast/mid-Atlantic American lobster trap/pot ...... 2010–2014 Pound Net/Weir/Seine Fisheries: Mid-Atlantic haul/beach seine ...... 2010–2014 Mid-Atlantic menhaden purse seine ...... 2010–2014 U.S. mid-Atlantic mixed species stop seine/weir/pound net (except the NC roe mullet stop net) ...... 2010–2014 Virginia pound net ...... 2010–2014

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Dated: December 29, 2011. Monday through Friday, except Federal DEPARTMENT OF COMMERCE P. Michael Payne, holidays. Chief, Permits and Conservation Division, • Via fax: (707) 825–4840. Please National Oceanic and Atmospheric Office of Protected Resources, National include the following on the cover page Administration (NOAA) Marine Fisheries Service. of the fax: ‘‘Attn: Recovery Coordinator/ Science Advisory Board [FR Doc. 2011–33852 Filed 1–4–12; 8:45 am] SONCC Coho Salmon Public Draft BILLING CODE 3510–22–P Recovery Plan Comments.’’ AGENCY: Office of Oceanic and FOR FURTHER INFORMATION CONTACT: Julie Atmospheric Research (OAR), National Oceanic and Atmospheric DEPARTMENT OF COMMERCE Weeder ((707) 825–5168), email [email protected]. Administration (NOAA), Department of National Oceanic and Atmospheric Commerce (DOC). SUPPLEMENTARY INFORMATION: NMFS is Administration ACTION: Notice of public meeting. charged with the recovery of Pacific RIN 0648–XA907 salmon and steelhead species listed SUMMARY: This notice sets forth the under the Endangered Species Act schedule and proposed agenda of a Endangered and Threatened Species; (ESA). Recovery means that listed forthcoming meeting of the NOAA Recovery Plan Southern Oregon/ species and their ecosystems are Science Advisory Board. The members Northern California Coast Coho restored, and their future secured, so will discuss and provide advice on Salmon Evolutionarily Significant Unit that the protections of the ESA are no issues outlined in the section on Matters to be Considered. AGENCY: National Marine Fisheries longer necessary. The ESA specifies that Time and Date: The meeting is Service (NMFS), National Oceanic and recovery plans must include: (1) A scheduled for: Tuesday, January 31, Atmospheric Administration (NOAA), description of management actions 2012, from 3–5 p.m. Eastern Standard Commerce. necessary to achieve the plan’s goals for the conservation and survival of the Time. ACTION: Notice of availability; request for comments. species; (2) objective, measurable ADDRESSES: Conference call. Public criteria which, when met, would result access is available at: NOAA, SSMC 3, SUMMARY: NMFS announces the in the species being removed from the Room 11836, 1315 East-West Highway availability for public review of the draft list; and (3) estimates of time and costs Silver Spring, Md. Recovery Plan (Plan) for the Southern required to achieve the plan’s goal and Status: The meeting will be open to Oregon/Northern California Coast the intermediate steps towards that goal. public participation with a 5-minute (SONCC) Coho Salmon (Oncorhynchus Section 4(f) of the ESA, as amended in public comment period from 4:50–4:55 kisutch) Evolutionarily Significant Unit 1988, requires that public notice and an p.m. The SAB expects that public (ESU). NMFS is soliciting review and opportunity for public review and statements presented at its meetings will comment from the public and all comment be provided during recovery not be repetitive of previously interested parties on the Plan, and will plan development. NMFS is hereby submitted verbal or written statements. consider all substantive comments soliciting relevant information on In general, each individual or group received during the review period SONCC Coho Salmon ESU populations making a verbal presentation will be before submitting the Plan for final and their freshwater/marine habitats. In limited to a total time of one minute. approval. In addition, public meetings addition, NMFS is soliciting comment Written comments should be received in will be announced as opportunities for on the contents of the proposed the SAB Executive Director’s Office by providing comments on the Draft Plan recovery plan. January 26, 2012 to provide sufficient (dates to be determined). Persons wishing to review the Draft time for SAB review. Written comments DATES: Comments must be received no Plan can obtain an electronic copy (i.e., received by the SAB Executive Director later than 5 p.m. Pacific daylight time CD ROM) from Ms. Cynthia Anderson after January 26, 2012, will be on March 5, 2012. NMFS will accept by calling (707) 825–5162 or by distributed to the SAB, but may not be anonymous comments (enter N/A in the emailing a request to reviewed prior to the meeting date. required fields, if you wish to remain [email protected] with the SUPPLEMENTARY INFORMATION: The anonymous). You may submit subject line ‘‘CD ROM Request for Science Advisory Board (SAB) was attachments to electronic comments in SONCC Coho Salmon Draft Recovery established by a Decision Memorandum Microsoft Word, Excel, or Adobe PDF Plan.’’ Electronic copies of the Draft dated September 25, 1997, and is the file formats only. Plan are also available on line on the only Federal Advisory Committee with ADDRESSES: You may submit comments following NMFS Web site: http:// responsibility to advise the Under by any of the following methods: swr.nmfs.noaa.gov/recovery. Secretary of Commerce for Oceans and • Via email: Atmosphere on strategies for research, Public Meetings [email protected] (No files education, and application of science to larger than 5MB can be accepted). Public meetings are planned. operations and information services. • Via U.S. Mail: Julie Weeder, Information on locations, dates, and SAB activities and advice provide National Marine Fisheries Service, 1655 times will be posted on the Web site necessary input to ensure that National Heindon Road, Arcata, CA 95521, Attn: listed above. Oceanic and Atmospheric Administration (NOAA) science Recovery Coordinator/SONCC Coho Authority: 16 U.S.C. 1531 et seq. Salmon Public Draft Recovery Plan programs are of the highest quality and Comments. Dated: December 29, 2011. provide optimal support to resource • Hand delivered: National Marine Susan Pultz, management. Fisheries Service, 1655 Heindon Road, Acting Chief, Endangered Species Division, Matters To Be Considered: The Arcata, CA 95521, Attn: Recovery Office of Protected Resources, National meeting will include the following Coordinator/SONCC Coho Salmon Marine Fisheries Service. topics: (1) Review of new members for Public Draft Recovery Plan Comments. [FR Doc. 2011–33850 Filed 1–4–12; 8:45 am] the Environmental Information Services Business hours are 8 a.m. to 4:30 p.m. BILLING CODE 3510–22–P Working Group (2) Review of renewal of

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membership terms for the Ecosystem concerning each proposed collection of • Whether the proposed collection of Sciences and Management Working information, including each proposed information is necessary for the proper Group and (3) Update from the Research extension of an existing collection of performance of the functions of the and Development Portfolio Review Task information, and to allow 60 days for Commission, including whether the Force and discussion of next actions. public comment in response to the information will have a practical use; For the latest agenda, please visit the notice. This notice solicits comments on • The accuracy of the Commission’s SAB Web site at http:// rules related to risk disclosure estimate of the burden of the proposed www.sab.noaa.gov. concerning exchange traded commodity collection of information, including the options. FOR FURTHER INFORMATION CONTACT: Dr. validity of the methodology and Cynthia Decker, Executive Director, DATES: Comments must be submitted on assumptions used; Science Advisory Board, NOAA, Rm. or before March 5, 2012. • Ways to enhance the quality, 11230, 1315 East-West Highway Silver ADDRESSES: Comments may be mailed to usefulness, and clarity of the Spring, Maryland 20910. (Phone: (301) William Penner, Division of Clearing information to be collected; and 734–1156, Fax: (301) 713–1459, Email: and Intermediary Oversight, U.S. • Ways to minimize the burden of [email protected]). Commodity Futures Trading collection of information on those who Commission, 1155 21st Street NW., Dated: December 28, 2011. are to respond, including through the Washington, DC 20581. use of appropriate automated electronic, Terry Bevels, FOR FURTHER INFORMATION CONTACT: mechanical, or other technological Acting Chief Financial Officer/Chief Ryne Miller, (202) 418–5921; Fax: (202) collection techniques or other forms of Administrative Officer, Office of Oceanic and Atmospheric Research, National Oceanic and 418–5536; email: [email protected]. information technology; e.g., permitting Atmospheric Administration. SUPPLEMENTARY INFORMATION: Under the electronic submission of responses. [FR Doc. 2011–33774 Filed 1–4–12; 8:45 am] PRA, Federal agencies must obtain Rules Relating to Regulation of BILLING CODE 3510–KD–P approval from the Office of Management Domestic Exchange-Traded Options, and Budget (OMB) for each collection of OMB Control Number 3038–0007— information they conduct or sponsor. Extension ‘‘Collection of information’’ is defined COMMODITY FUTURES TRADING in 44 U.S.C. 3502(3) and 5 CFR The rules require futures commission COMMISSION 1320.3(c) and includes agency requests merchants and introducing brokers: (1) To provide their customers with Agency Information Collection or requirements that members of the standard risk disclosure statements Activities: Rules Relating to Regulation public submit reports, keep records, or concerning the risk of trading of Domestic Exchange-Traded Options provide information to a third party. Section 3506(c)(2)(A) of the PRA, 44 commodity interests; and (2) to retain AGENCY: Commodity Futures Trading U.S.C. 3506(c)(2)(A), requires Federal all promotional material and the source Commission. agencies to provide a 60-day notice in of authority for information contained ACTION: Extension of an existing the Federal Register concerning each therein. The purpose of these rules is to collection. proposed collection of information, ensure that customers are advised of the including each proposed extension of an risks of trading commodity interests and SUMMARY: The Commodity Futures existing collection of information, to avoid fraud and misrepresentation. Trading Commission (CFTC) is before submitting the collection to OMB This information collection contains the announcing an opportunity for public for approval. To comply with this recordkeeping and reporting comment on the proposed collection of requirement, the CFTC is publishing requirements needed to ensure certain information by the agency. notice of the proposed collection of regulatory compliance with Commission Under the Paperwork Reduction Act of information listed below. rules relating to this issue. 1995 (PRA), 44 U.S.C. 3501 et seq., With respect to the following The Commission estimates the burden Federal agencies are required to publish collection of information, the CFTC of this collection of information as notice in the Federal Register invites comments on: follows:

ESTIMATED ANNUAL REPORTING BURDEN

Estimated Estimated number Reports annually Estimated total number Regulation of respondents by each Total annual average number of hours of annual or recordkeepers respondent responses of hours burden in fiscal per year per response year

Reporting: 38.3, 38.4, 40.2 and 40.3 (Proce- dure for designation or self-cer- tification) ...... 13.00 2.00 26.00 25.00 650 33.7—(Risk disclosure) ...... 120.00 115.00 13,800.00 0.08 1,104.00

Subtotal (Reporting require- ments) ...... 133.00 13,826.00 1,754.00

Recordkeeping: 33.8—(Retention of promotional material) ...... 170.00 1.00 170.00 25.00 4,250.00

Subtotal (Recordkeeping require- ments)

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ESTIMATED ANNUAL REPORTING BURDEN—Continued

Estimated Estimated number Reports annually Estimated total number Regulation of respondents by each Total annual average number of hours of annual or recordkeepers respondent responses of hours burden in fiscal per year per response year

Grand total (Reporting and recordkeeping) ...... 303.00 13,996.00 6,004.00

There are no capital costs or operating SUMMARY: The Consumer Product Safety Directorate for Health Sciences, and maintenance costs associated with Commission (‘‘Commission’’ or ‘‘CPSC’’ Consumer Product Safety Commission, this collection. or ‘‘we’’ or ‘‘us’’) has received a petition 4330 East West Highway, Bethesda, MD Dated: December 30, 2011. requesting an exception from the 100 20814; email: [email protected]. Sauntia S. Warfield, ppm lead content limit under section SUPPLEMENTARY INFORMATION: Under 101(b) of the Consumer Product Safety Assistant Secretary of the Commission. section 101(a) of the CPSIA, consumer Improvement Act of 2008 (‘‘CPSIA’’), as products designed or intended primarily [FR Doc. 2011–33841 Filed 1–4–12; 8:45 am] amended by Public Law 112–28. We are for children 12 years old and younger BILLING CODE P reopening the comment period for 30 that contain lead content in excess of days. 100 ppm manufactured after August 12, DATES: Submit comments by February 6, 2011, are considered to be banned CONSUMER PRODUCT SAFETY 2012. hazardous substances under the Federal COMMISSION ADDRESSES: You may submit comments, Hazardous Substances Act (‘‘FHSA’’). Section 101(b)(1) of the CPSIA Sunshine Act Meeting Notice identified by Docket No. CPSC–2011– 0087, by any of the following methods: provides for a functional purpose exception from lead content limits TIME AND DATE: Wednesday, January 11, Electronic Submissions under certain circumstances. The 2012; 10 a.m.–11 a.m. Submit electronic comments in the exception allows us, on our own PLACE: Hearing Room 420, Bethesda following way: initiative, or upon petition by an Towers, 4330 East West Highway, Federal eRulemaking Portal: http:// interested party, to exclude a specific Bethesda, Maryland. www.regulations.gov. Follow the product, class of product, material, or STATUS: Closed to the Public. instructions for submitting comments. component part from the lead limits established for children’s products Matter To Be Considered To ensure timely processing of comments, the Commission is no longer under the CPSIA if, after notice and a Compliance Status Report accepting comments submitted by hearing, we determine that: (i) The The Commission staff will brief the electronic mail (email), except through: product, class of product, material, or Commission on the status of compliance http://www.regulations.gov. component part requires the inclusion of lead because it is not practicable or matters. Written Submissions For a recorded message containing the not technologically feasible to latest agenda information, call (301) Submit written submissions in the manufacture such product, class of 504–7948. following way: product, material, or component part, as Mail/Hand delivery/Courier (for the case may be, in accordance with FOR FURTHER INFORMATION CONTACT: paper, disk, or CD–ROM submissions), section 101(a) of the CPSIA by removing Todd A. Stevenson, Office of the preferably in five copies, to: Office of the the excessive lead or by making the lead Secretary, U.S. Consumer Product Secretary, U.S. Consumer Product inaccessible; (ii) the product, class of Safety Commission, 4330 East West Safety Commission, Room 502, 4330 product, material, or component part is Highway, Bethesda, MD 20814, (301) East West Highway, Bethesda, MD not likely to be placed in the mouth or 504–7923. 20814; telephone (301) 504–7923. ingested, taking into account normal Dated: January 3, 2012. Instructions: All submissions received and reasonably foreseeable use and Todd A Stevenson, must include the agency name and abuse of such product, class of product, Secretary. petition number for this rulemaking. All material, or component part by a child; [FR Doc. 2012–64 Filed 1–3–12; 4:15 pm] comments received may be posted and (iii) an exception for the product, without change, including any personal BILLING CODE 6355–01–P class of product, material, or component identifiers, contact information, or other part will have no measurable adverse personal information provided, to: effect on public health or safety, taking CONSUMER PRODUCT SAFETY http://www.regulations.gov. Do not into account normal and reasonably COMMISSION submit confidential business foreseeable use and abuse. Under information, trade secret information, or section 101(b)(1)(B) of the CPSIA, there [Docket No. CPSC–2011–0087] other sensitive or protected information is no measurable adverse effect on electronically. Such information should public health or safety if the exception Petition Requesting Exception From be submitted in writing. will result in no measurable increase in the Lead Content Limits; Reopening of Docket: For access to the docket to blood lead levels of a child. Given the the Comment Period read background documents or highly technical nature of the comments received, go to: http://www. AGENCY: U.S. Consumer Product Safety information sought, including data on Commission. regulations.gov. the lead content of the product and test FOR FURTHER INFORMATION CONTACT: methods used to obtain those data, we ACTION: Comment request. Kristina Hatlelid, Ph.D., M.P.H., believe that the notice and solicitation

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for written comments would provide the Safety Commission, Bethesda, MD deliver waste safely and efficiently to most efficient process for obtaining the 20184; telephone (301) 504–7923. WTP. During Session II, the Board will necessary information, as well as Through this notice, we are reopening receive testimony regarding the status of provide adequate opportunity for all the comment period to give all actions related to DOE’s implementation interested parties to participate in the interested parties additional time to plan for the Board’s Recommendation proceedings. However, we would have comment on the petition. Thus, the 2011–1, Safety Culture at the Waste the option to hold a public hearing or comment period is reopened until Treatment and Immobilization Plant, public meeting, if appropriate, to February 6, 2012. which was issued on June 9, 2011. The determine whether a petition for a Dated: December 28, 2011. Board will also examine the link functional purpose exception should be Todd A. Stevenson, between the safety culture of DOE and its contractors and the ability of the granted. Secretary, U.S. Consumer Product Safety On September 29, 2011, Joseph L. Commission. WTP project to identify and resolve technical issues, such as those Ertl, Inc., (‘‘petitioner’’), submitted a [FR Doc. 2011–33631 Filed 1–4–12; 8:45 am] petition requesting an exception from discussed in Session I, in a timely BILLING CODE 6355–01–P the lead content limit of 100 ppm under manner. The public hearing portion of section 101(b) of the CPSIA for its die- this proceeding is authorized by 42 cast, ride-on pedal tractors, scaled for U.S.C. 2286b. DEFENSE NUCLEAR FACILITIES children ages 3–10 years old. The FOR FURTHER INFORMATION CONTACT: SAFETY BOARD petitioner states that the components of Brian Grosner, General Manager, its pedal tractors are made of aluminum Sunshine Act Notice Defense Nuclear Facilities Safety Board, metal die castings, which are the best 625 Indiana Avenue NW., Suite 700, alloy of choice for pedal tractor AGENCY: Defense Nuclear Facilities Washington, DC 20004–2901, (800) 788– production, based on weight, cost, Safety Board. 4016. This is a toll-free number. structural properties, surface finish and ACTION: Notice of public meeting. SUPPLEMENTARY INFORMATION: Public coatings, corrosion resistance, and participation in the hearing is invited. SUMMARY: Pursuant to the provisions of bearing properties and wear resistance. The Board is setting aside time at the the ‘‘Government in the Sunshine Act’’ The pedal tractor components are end of each session of the hearing for (5 U.S.C. 552b), and as authorized by 42 manufactured via the aluminum die- presentations and comments from the U.S.C. 2286b, notice is hereby given of casting process. Although the petitioner public. Requests to speak may be the Defense Nuclear Facilities Safety states that it is able to meet the lead submitted in writing or by telephone. Board’s (Board) public hearing and content requirements of 300 ppm for its The Board asks that commenters meeting described below. The Board pedal tractor components, it is unable to describe the nature and scope of their invites any interested persons or groups meet consistently the 100 ppm lead oral presentations. Those who contact to present any comments, technical content limits, due to alloys used in the the Board prior to close of business on information, or data concerning safety aluminum die-cast process. March 16, 2012, will be scheduled to issues related to the matters to be Accordingly, the petitioner requests an speak at the session of the hearing most considered. exception from the 100 ppm lead relevant to their presentations. At the content limit to continue to manufacture DATES: Time and Date of Meeting: beginning of Session I, the Board will its pedal tractors with components Session I: 1 p.m.–4 p.m., March 22, post a schedule for speakers at the above the 100 ppm lead content limit. 2012; Session II: 6 p.m.–9 p.m., March entrance to the hearing room. Anyone In the Federal Register of November 22, 2012. who wishes to comment or provide 16, 2011 (76 FR 70975) we invited PLACE: Three Rivers Convention Center, technical information or data may do so comments on the issues raised by the 7016 West Grandridge Boulevard, in writing, either in lieu of, or in petition. Interested parties could view a Kennewick, Washington 99352. addition to, making an oral copy of the petition under supporting STATUS: Open. While the Government in presentation. The Board Members may and related materials identified by the Sunshine Act does not require that question presenters to the extent Docket No. CPSC–2011–0087, through the scheduled discussion be conducted deemed appropriate. Documents will be http://www.regulations.gov or on the in a meeting, the Board has determined accepted at the hearing or may be sent CPSC Web site at: http://www.cpsc.gov/ that an open meeting in this specific to the Board’s Washington, DC, office. library/foia/foia12/brief/ertlpetition.pdf case furthers the public interests The Board will hold the record open or obtain a copy of the petition by underlying both the Sunshine Act and until April 23, 2012, for the receipt of writing or calling the Office of the the Board’s enabling legislation. additional materials. The hearing will Secretary, Consumer Product Safety MATTERS TO BE CONSIDERED: In Session I be presented live through Internet video Commission, Bethesda, MD 20184; of this public hearing and meeting, the streaming. A link to the presentation telephone (301) 504–7923. Board will receive testimony from the will be available on the Board’s Web site Recently, however, we learned that Department of Energy (DOE) and its (www.dnfsb.gov). A transcript of the part of the petition was omitted contractors concerning the status of hearing, along with a DVD video inadvertently from the public docket. actions related to unresolved technical recording, will be made available by the Accordingly, to give interested parties a safety issues in the design of the Waste Board for inspection and viewing by the meaningful opportunity to comment, we Treatment and Immobilization Plant public at the Board’s Washington office have made the entire petition available (WTP). This will include actions and at DOE’s public reading room at the for viewing through http://www. discussed in DOE’s implementation DOE Federal Building, 1000 regulations.gov or on the CPSC Web site plan for the Board’s Recommendation Independence Avenue SW., at: http://www.cpsc.gov/library/foia/ 2010–2, Pulse Jet Mixing at the Waste Washington, DC 20585. The Board foia12/brief/ertlpetition.pdf. Interested Treatment and Immobilization Plant, specifically reserves its right to further parties may also obtain a copy of the issued on December 17, 2010, and schedule and otherwise regulate the petition by writing or calling the Office progress in defining the infrastructure course of the meeting and hearing, to of the Secretary, Consumer Product needs at the Tank Farms in order to recess, reconvene, postpone, or adjourn

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the meeting and hearing, conduct toward producing (1) new scientific Note: The regulations in 34 CFR part 86 further reviews, and otherwise exercise knowledge, or (2) better understanding apply to institutions of higher education its power under the Atomic Energy Act of the subject, problem studied, or body (IHEs) only. of 1954, as amended. of knowledge. II. Award Information Dated: January 3, 2012. In carrying out a development activity under an FI Project development grant, Type of Award: Discretionary grants. Peter S. Winokur, Estimated Available Funds: a grantee must use knowledge and Chairman. $4,000,000. understanding gained from research to [FR Doc. 2012–44 Filed 1–3–12; 4:15 pm] Estimated Range of Awards: $195,000 create materials, devices, systems, or BILLING CODE 3670–01–P to $200,000. methods, including designing and Estimated Average Size of Awards: developing prototypes and processes, $200,000. that are beneficial to the target DEPARTMENT OF EDUCATION Maximum Award: We will reject any population. ‘‘Target population’’ means application that proposes a budget Applications for New Awards; the group of individuals, organizations, exceeding $200,000 for a single budget Disability and Rehabilitation Research or other entities expected to be affected period of 12 months. The Assistant Projects and Centers Program—Field by the project. There may be more than Secretary for Special Education and Initiated Projects Program one target population because a project Rehabilitative Services may change the may affect those who receive services, maximum amount through a notice AGENCY: Office of Special Education and provide services, or administer services. published in the Federal Register. Rehabilitative Services, National Note: Different selection criteria are used Institute on Disability and Note: The maximum amount includes for FI Project research grants (84.133G–1) and direct and indirect costs. Rehabilitation Research (NIDRR), development grants (84.133G–2). Applicants Department of Education. must clearly indicate in the application Estimated Number of Awards: 20. ACTION: Notice. whether they are applying for a research Note: The Department is not bound by any grant (84.133G–1) or a development grant estimates in this notice. Overview Information (84.133G–2) and must address the selection Maximum Project Period: We will criteria relevant for their grant type. Without Disability and Rehabilitation Research exception, NIDRR will review each reject any application that proposes a Projects and Centers Program—Field application based on the grant designation project period exceeding 36 months. Initiated Projects Program made by the applicant. Applications will be The Assistant Secretary for Special determined ineligible and will not be Education and Rehabilitative Services Notice inviting applications for new may change the maximum project awards for fiscal year (FY) 2012. reviewed if they do not include a clear designation as a research grant or a period through a notice published in the Catalog of Federal Domestic Assistance development grant. Federal Register. (CFDA) Numbers: 84.133G–1 (Research) and Note: This program is in concert with III. Eligibility Information 84.133G–2 (Development). NIDRR’s currently approved long range plan DATES: Applications Available: (the Plan). The Plan is comprehensive and 1. Eligible Applicants: States; public January 5, 2012. integrates many issues relating to disability or private agencies, including for-profit Deadline for Transmittal of and rehabilitation research topics. The Plan, agencies; public or private Applications: March 5, 2012. which was published in the Federal Register organizations, including for-profit on February 15, 2006 (71 FR 8165), can be organizations; IHEs; and Indian tribes Full Text of Announcement accessed on the Internet at: www.ed.gov/ and tribal organizations. I. Funding Opportunity Description about/offices/list/osers/nidrr/policy.html. 2. Cost Sharing or Matching: Cost sharing is required by 34 CFR 350.62 Purpose of Program: The purpose of Through the implementation of the and will be negotiated at the time of the the Field Initiated (FI) Projects program Plan, NIDRR seeks to (1) improve the grant award. is to develop methods, procedures, and quality and utility of disability and rehabilitation technology that maximize rehabilitation research; (2) foster an IV. Application and Submission the full inclusion and integration into exchange of expertise, information, and Information society, employment, independent training to facilitate the advancement of 1. Address to Request Application living, family support, and economic knowledge and understanding of the Package: You can obtain an application and social self-sufficiency of individuals unique needs of individuals with package via the Internet or from the with disabilities, especially individuals disabilities from traditionally Education Publications Center (ED with the most severe disabilities. underserved populations; (3) determine Pubs). To obtain a copy via the Internet, Another purpose of the FI Projects the best strategies and programs to use the following address: www.ed.gov/ program is to improve the effectiveness improve rehabilitation outcomes for fund/grant/apply/grantapps/index.html. of services authorized under the individuals with disabilities from To obtain a copy from ED Pubs, write, Rehabilitation Act of 1973, as amended. underserved populations; (4) identify fax, or call the following: ED Pubs, U.S. NIDRR makes two types of awards research gaps; (5) identify mechanisms Department of Education, P.O. Box under the FI Projects program: Research of integrating research and practice; and 22207, Alexandria, VA 22304. grants (CFDA 84.133G–1) and (6) disseminate findings. Telephone, toll free: 1–(877) 433–7827. development grants (CFDA 84.133G–2). Program Authority: 29 U.S.C. 764. Fax: (703) 605–6794. If you use a In carrying out a research activity telecommunications device for the deaf under an FI Project research grant, a Applicable Regulations: (a) The (TDD), call, toll free: 1–(877) 576–7734. grantee must identify one or more Education Department General You can contact ED Pubs at its Web hypotheses or research questions and, Administrative Regulations (EDGAR) in site, also: www.EDPubs.gov or at its based on the hypotheses or research 34 CFR parts 74, 75, 77, 80, 81, 82, 84, email address: [email protected]. questions identified, perform an 85, 86, and 97. (b) The regulations for If you request an application from ED intensive, systematic study directed this program in 34 CFR part 350. Pubs, be sure to identify this

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competition as follows: CFDA number domain or arena under which they are You can obtain a DUNS number from 84.133G–1 or 84.133G–2. applying. In their applications, DUN and Bradstreet. A DUNS number Individuals with disabilities can applicants should clearly indicate can be created within one business day. obtain a copy of the application package whether they are applying for a research If you are a corporate entity, agency, in an accessible format (e.g., braille, grant in the area of (1) Community institution, or organization, you can large print, audiotape, or compact disc) Living and Participation; (2) Health and obtain a TIN from the Internal Revenue by contacting the person or team listed Function; (3) Technology; (4) Service. If you are an individual, you under Accessible Format in section VIII Employment; or (5) Demographics. can obtain a TIN from the Internal of this notice. 3. Submission Dates and Times: Revenue Service or the Social Security 2. Content and Form of Application Applications Available: January 5, Administration. If you need a new TIN, Submission: Requirements concerning 2012. please allow 2–5 weeks for your TIN to the content of an application, together Deadline for Transmittal of become active. with the forms you must submit, are in Applications: March 5, 2012. The CCR registration process may take the application package for this Applications for grants under this five or more business days to complete. competition. competition must be submitted If you are currently registered with the Page Limit: The application narrative electronically using the Grants.gov CCR, you may not need to make any (Part III of the application) is where you, Apply site (Grants.gov). For information changes. However, please make certain the applicant, address the selection (including dates and times) about how that the TIN associated with your DUNS criteria that reviewers use to evaluate to submit your application number is correct. Also note that you your application. We recommend that electronically, or in paper format by will need to update your CCR you limit Part III to the equivalent of no mail or hand delivery if you qualify for registration on an annual basis. This more than 50 pages, using the following an exception to the electronic may take three or more business days to standards: submission requirement, please refer to complete. • A ‘‘page’’ is 8.5″ x 11″, on one side section IV. 7. Other Submission In addition, if you are submitting your only, with 1″ margins at the top, bottom, Requirements of this notice. application via Grants.gov, you must (1) and both sides. We do not consider an application be designated by your organization as an • Double space (no more than three that does not comply with the deadline Authorized Organization Representative lines per vertical inch) all text in the requirements. (AOR); and (2) register yourself with application narrative, including titles, Individuals with disabilities who Grants.gov as an AOR. Details on these headings, footnotes, quotations, need an accommodation or auxiliary aid steps are outlined at the following references, and captions, as well as all in connection with the application Grants.gov Web page: www.grants.gov/ text in charts, tables, figures, and process should contact the person listed aapplicants/get_registered.jsp. graphs. under FOR FURTHER INFORMATION 7. Other Submission Requirements: • Use a font that is either 12 point or CONTACT in section VII of this notice. If larger or no smaller than 10 pitch the Department provides an Applications for grants under this (characters per inch). accommodation or auxiliary aid to an competition must be submitted • Use one of the following fonts: individual with a disability in electronically unless you qualify for an Times New Roman, Courier, Courier connection with the application exception to this requirement in New, or Arial. process, the individual’s application accordance with the instructions in this The recommended page limit does not remains subject to all other section. apply to Part I, the cover sheet; Part II, requirements and limitations in this a. Electronic Submission of the budget section, including the notice. Applications narrative budget justification; Part IV, 4. Intergovernmental Review: This the assurances and certifications; or the program is not subject to Executive Applications for grants under the FI one-page abstract, the resumes, the Order 12372 and the regulations in 34 Projects program, CFDA Number bibliography, or the letters of support. CFR part 79. 84.133G–1 (Research) or 84.133G–2 However, the page limit does apply to 5. Funding Restrictions: We reference (Development), must be submitted all of the application narrative section regulations outlining funding electronically using the [Part III]. restrictions in the Applicable Governmentwide Grants.gov Apply site The application package will provide Regulations section of this notice. at www.Grants.gov. Through this site, instructions for completing all 6. Data Universal Numbering System you will be able to download a copy of components to be included in the Number, Taxpayer Identification the application package, complete it application. Each application must Number, and Central Contractor offline, and then upload and submit include a cover sheet (Standard Form Registry: To do business with the your application. You may not email an 424); budget requirements (ED Form Department of Education, you must— electronic copy of a grant application to 524) and narrative justification; other a. Have a Data Universal Numbering us. required forms; an abstract, Human System (DUNS) number and a Taxpayer We will reject your application if you Subjects narrative, Part III narrative; Identification Number (TIN); submit it in paper format unless, as resumes of staff; and other related b. Register both your DUNS number described elsewhere in this section, you materials, if applicable. and TIN with the Central Contractor qualify for one of the exceptions to the Applicants should consult NIDRR’s Registry (CCR), the Government’s electronic submission requirement and Long-Range Plan when preparing their primary registrant database; submit, no later than two weeks before applications. The Plan is organized c. Provide your DUNS number and the application deadline date, a written around the following research domains TIN on your application; and statement to the Department that you and arenas: (1) Community Living and d. Maintain an active CRR registration qualify for one of these exceptions. Participation; (2) Health and Function; with current information while your Further information regarding (3) Technology; (4) Employment; and (5) application is under review by the calculation of the date that is two weeks Demographics. Applicants should Department and, if you are awarded a before the application deadline date is indicate, for each application, the grant, during the project period. provided later in this section under

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Exception to Electronic Submission elsewhere in this section, and submit FURTHER INFORMATION CONTACT in Requirement. your application in paper format. section VII of this notice and provide an You may access the electronic grant • You must submit all documents explanation of the technical problem application for the FI Projects electronically, including all information you experienced with Grants.gov, along program—CFDA Number 84.133G–1 you typically provide on the following with the Grants.gov Support Desk Case (Research) or 84.133G–2 forms: the Application for Federal Number. We will accept your (Development)—at www.Grants.gov. Assistance (SF 424), the Department of application if we can confirm that a You must search for the downloadable Education Supplemental Information for technical problem occurred with the application package for this competition SF 424, Budget Information—Non- Grants.gov system and that that problem by the CFDA number. Do not include Construction Programs (ED 524), and all affected your ability to submit your the CFDA number’s alpha suffix in your necessary assurances and certifications. application by 4:30:00 p.m., • search (e.g., search for 84.133, not You must upload any narrative Washington, DC time, on the 84.133G). sections and all other attachments to application deadline date. The Please note the following: your application as files in a .PDF Department will contact you after a • When you enter the Grants.gov site, (Portable Document) read-only, non- determination is made on whether your you will find information about modifiable format. Specifically, do not application will be accepted. upload an interactive or fillable .PDF submitting an application electronically Note: The extensions to which we refer in through the site, as well as the hours of file. If you upload a file type other than a read-only, non-modifiable .PDF or this section apply only to the unavailability operation. of, or technical problems with, the Grants.gov • Applications received by Grants.gov submit a password-protected file, we system. We will not grant you an extension are date and time stamped. Your will not review that material. if you failed to fully register to submit your • Your electronic application must application must be fully uploaded and application to Grants.gov before the comply with any page-limit submitted and must be date and time application deadline date and time or if the requirements described in this notice. stamped by the Grants.gov system no technical problem you experienced is • After you electronically submit unrelated to the Grants.gov system. later than 4:30:00 p.m., Washington, DC your application, you will receive from time, on the application deadline date. Grants.gov an automatic notification of Exception to Electronic Submission Except as otherwise noted in this receipt that contains a Grants.gov Requirement: You qualify for an section, we will not accept your tracking number. (This notification exception to the electronic submission application if it is received—that is, date indicates receipt by Grants.gov only, not requirement, and may submit your and time stamped by the Grants.gov receipt by the Department.) The application in paper format, if you are system—after 4:30:00 p.m., Washington, Department then will retrieve your unable to submit an application through DC time, on the application deadline application from Grants.gov and send a the Grants.gov system because— date. We do not consider an application second notification to you by email. • You do not have access to the that does not comply with the deadline This second notification indicates that Internet; or requirements. When we retrieve your the Department has received your • You do not have the capacity to application from Grants.gov, we will application and has assigned your notify you if we are rejecting your upload large documents to the application a PR/Award number (an ED- Grants.gov system; and application because it was date and time specified identifying number unique to • stamped by the Grants.gov system after your application). No later than two weeks before the 4:30:00 p.m., Washington, DC time, on • We may request that you provide us application deadline date (14 calendar the application deadline date. original signatures on forms at a later days or, if the fourteenth calendar day • The amount of time it can take to date. before the application deadline date upload an application will vary Application Deadline Date Extension falls on a Federal holiday, the next depending on a variety of factors, in Case of Technical Issues with the business day following the Federal including the size of the application and Grants.gov System: If you are holiday), you mail or fax a written the speed of your Internet connection. experiencing problems submitting your statement to the Department, explaining Therefore, we strongly recommend that application through Grants.gov, please which of the two grounds for an you do not wait until the application contact the Grants.gov Support Desk, exception prevent you from using the deadline date to begin the submission toll free, at 1–(800) 518–4726. You must Internet to submit your application. process through Grants.gov. obtain a Grants.gov Support Desk Case • If you mail your written statement to You should review and follow the Number and must keep a record of it. the Department, it must be postmarked Education Submission Procedures for If you are prevented from no later than two weeks before the submitting an application through electronically submitting your application deadline date. If you fax Grants.gov that are included in the application on the application deadline your written statement to the application package for this competition date because of technical problems with Department, we must receive the faxed to ensure that you submit your the Grants.gov system, we will grant you statement no later than two weeks application in a timely manner to the an extension until 4:30:00 p.m., before the application deadline date. Grants.gov system. You can also find the Washington, DC time, the following Education Submission Procedures business day to enable you to transmit Address and mail or fax your pertaining to Grants.gov under News your application electronically or by statement to: Lynn Medley, U.S. and Events on the Department’s G5 hand delivery. You also may mail your Department of Education, 400 Maryland system home page at http://www.G5.gov. application by following the mailing Avenue SW., room 5140, Potomac • You will not receive additional instructions described elsewhere in this Center Plaza (PCP), Washington, DC point value because you submit your notice. 20202–2700. Fax: (202) 245–7323. application in electronic format, nor If you submit an application after Your paper application must be will we penalize you if you qualify for 4:30:00 p.m., Washington, DC time, on submitted in accordance with the mail an exception to the electronic the application deadline date, please or hand delivery instructions described submission requirement, as described contact the person listed under FOR in this notice.

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b. Submission of Paper Applications by Note for Mail or Hand Delivery of Paper contribute to advances in knowledge, Mail Applications: If you mail or hand deliver improvements in policy and practice, your application to the Department— and public benefits for individuals with If you qualify for an exception to the (1) You must indicate on the envelope disabilities. Applicants should propose electronic submission requirement, you and—if not provided by the Department—in projects that are designed to be Item 11 of the SF 424 the CFDA number, may mail (through the U.S. Postal consistent with these goals. We Service or a commercial carrier) your including suffix letter, if any, of the competition under which you are submitting encourage applicants to include in their application to the Department. You applications a description of how must mail the original and two copies your application; and (2) The Application Control Center will results will measure progress towards of your application, on or before the mail to you a notification of receipt of your achievement of anticipated outcomes application deadline date, to the grant application. If you do not receive this (including a discussion of measures of Department at the following address: notification within 15 business days from the effectiveness), the mechanisms that will U.S. Department of Education, application deadline date, you should call be used to evaluate outcomes associated Application Control Center, Attention: the U.S. Department of Education with specific problems or issues, and CFDA Number 84.133G–1 (Research) or Application Control Center at (202) 245– 6288. how the proposed activities will support 84.133G–2 (Development), LBJ new intervention approaches and Basement Level 1, 400 Maryland V. Application Review Information strategies. Submission of the Avenue SW., Washington, DC 20202– information identified in this section is 4260. 1. Selection Criteria: The selection voluntary, except where required by the You must show proof of mailing criteria for this competition are from 34 selection criteria listed in the consisting of one of the following: CFR 350.54 and 350.55 and are listed in application package. (1) A legibly dated U.S. Postal Service the application package. 3. Special Conditions: Under 34 CFR postmark. Note: There are two different sets of 74.14 and 80.12, the Secretary may (2) A legible mail receipt with the selection criteria for the FI projects program: impose special conditions on a grant if date of mailing stamped by the U.S. One set to evaluate applications proposing to the applicant or grantee is not Postal Service. carry out research activities (CFDA 84.133G– financially stable; has a history of (3) A dated shipping label, invoice, or 1), and a second set to evaluate applications unsatisfactory performance; has a proposing to carry out development activities financial or other management system receipt from a commercial carrier. (CFDA 84.133G–2). Each applicant will be (4) Any other proof of mailing evaluated using the selection criteria for the that does not meet the standards in 34 acceptable to the Secretary of the U.S. type of project the applicant designates in its CFR parts 74 or 80, as applicable; has Department of Education. application. not fulfilled the conditions of a prior grant; or is otherwise not responsible. If you mail your application through 2. Review and Selection Process: We the U.S. Postal Service, we do not remind potential applicants that in VI. Award Administration Information accept either of the following as proof reviewing applications in any 1. Award Notices: If your application of mailing: discretionary grant competition, the is successful, we notify your U.S. (1) A private metered postmark. Secretary may consider, under 34 CFR Representative and U.S. Senators and (2) A mail receipt that is not dated by 75.217(d)(3), the past performance of the send you a Grant Award Notification the U.S. Postal Service. applicant in carrying out a previous (GAN). We may notify you informally, If your application is postmarked after award, such as the applicant’s use of also. the application deadline date, we will funds, achievement of project If your application is not evaluated or not consider your application. objectives, and compliance with grant not selected for funding, we notify you. Note: The U.S. Postal Service does not conditions. The Secretary may also 2. Administrative and National Policy uniformly provide a dated postmark. Before consider whether the applicant failed to Requirements: We identify relying on this method, you should check submit a timely performance report or administrative and national policy with your local post office. submitted a report of unacceptable requirements in the application package quality. and reference these and other c. Submission of Paper Applications by In addition, in making a competitive requirements in the Applicable Hand Delivery grant award, the Secretary also requires Regulations section of this notice. If you qualify for an exception to the various assurances including those We reference the regulations outlining electronic submission requirement, you applicable to Federal civil rights laws the terms and conditions of an award in (or a courier service) may deliver your that prohibit discrimination in programs the Applicable Regulations section of paper application to the Department by or activities receiving Federal financial this notice and include these and other hand. You must deliver the original and assistance from the Department of specific conditions in the GAN. The two copies of your application by hand, Education (34 CFR 100.4, 104.5, 106.4, GAN also incorporates your approved on or before the application deadline 108.8, and 110.23). application as part of your binding Additional factors we consider in date, to the Department at the following commitments under the grant. selecting an application for an award are address: U.S. Department of Education, 3. Reporting: (a) If you apply for a as follows: Application Control Center, Attention: grant under this competition, you must The Secretary is interested in CFDA Number 84.133G–1 (Research) or ensure that you have in place the outcomes-oriented research or 84.133G–2 (Development), 550 12th necessary processes and systems to development projects that use rigorous Street SW., Room 7041, Potomac Center comply with the reporting requirements scientific methodologies. To address Plaza, Washington, DC 20202–4260. in 2 CFR part 170 should you receive this interest, applicants are encouraged funding under the competition. This The Application Control Center to articulate goals, objectives, and does not apply if you have an exception accepts hand deliveries daily between expected outcomes for the proposed under 2 CFR 170.110(b). 8 a.m. and 4:30:00 p.m., Washington, research or development activities. (b) At the end of your project period, DC time, except Saturdays, Sundays, Proposals should describe how results you must submit a final performance and Federal holidays. and planned outputs are expected to report, including financial information,

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as directed by the Secretary. If you VII. Agency Contacts ACTION: Notice of an open meeting. receive a multi-year award, you must FOR FURTHER INFORMATION CONTACT: submit an annual performance report SUMMARY: This notice sets forth the that provides the most current Either Lynn Medley or Marlene Spencer schedule and proposed agenda of an up- performance and financial expenditure as follows: Lynn Medley, U.S. coming meeting of the Equity and information as directed by the Secretary Department of Education, 400 Maryland Excellence Commission (Commission). under 34 CFR 75.118. The Secretary Avenue SW., room 5140, PCP, The notice also describes the functions may also require more frequent Washington, DC 20202–2700. of the Commission. Notice of this performance reports under 34 CFR Telephone: (202) 245–7338 or by email: meeting is required by section 10(a)(2) 75.720(c). For specific requirements on [email protected]. Marlene Spencer, of the Federal Advisory Committee Act reporting, please go to www.ed.gov/ U.S. Department of Education, 400 (FACA) and is intended to notify the fund/grant/apply/appforms/ Maryland Avenue SW., room 5133, PCP, public of their opportunity to attend. appforms.html. Washington, DC 20202–2700. DATES: January 23, 2012. Telephone: (202) 245–7532 or by email: Time: 9 a.m. to 4:30 p.m. Eastern Note: NIDRR will provide information by [email protected]. Standard Time. letter to grantees on how and when to submit If you use a TDD, call the Federal the performance report. ADDRESSES: The Commission will meet Relay Service (FRS), toll free, at 1–(800) in Washington, DC at the United States 4. Performance Measures: NIDRR 877–8339. Department of Education at 400 assesses the quality of its funded VIII. Other Information Maryland Avenue SW, Washington, DC projects through review of grantee 20202, in Barnard Auditorium. Accessible Format: Individuals with performance and products. Each year, FOR FURTHER INFORMATION CONTACT: Jim NIDRR examines a portion of its disabilities can obtain this document and a copy of the application package in Eichner, Designated Federal Official, grantees to determine: Equity and Excellence Commission, • an accessible format (e.g., braille, large The number of accomplishments print, audiotape, or compact disc) by U.S. Department of Education, 400 (e.g., new or improved tools, methods, contacting the Grants and Contracts Maryland Avenue SW, Washington, DC discoveries, standards, interventions, Services Team, U.S. Department of 20202. Email: programs, or devices) developed and/or Education, 400 Maryland Avenue SW., [email protected]. Telephone: tested with NIDRR funding that have room 5075, PCP, Washington, DC (202) 453–5945. been judged by expert panels to be of 20202–2550. Telephone: (202) 245– SUPPLEMENTARY INFORMATION: On high quality and to advance the field. 7363. If you use a TDD, call the FRS, toll January 23, 2012 from 9 a.m. to 4:30 • The average number of publications free, at 1–800) 877–8339. p.m. Eastern Standard Time, the Equity per award that are based on NIDRR- Electronic Access to This Document: and Excellence Commission will hold funded research and development The official version of this document is an open meeting in Washington, DC in activities and are in refereed journals. the document published in the Federal the Barnard Auditorium at the U.S. • The percentage of new grants that Register. Free Internet access to the Department of Education’s main assess the effectiveness of interventions, official edition of the Federal Register building at 400 Maryland Avenue SW., programs, and devices using rigorous and the Code of Federal Regulations is Washington, DC 20202. and appropriate methods. available via the Federal Digital System The purpose of the Commission is to at: www.gpo.gov/fdsys. At this site you collect information, analyze issues, and Each grantee must annually report on can view this document, as well as all obtain broad public input regarding how its performance through NIDRR’s other documents of this Department the Federal government can increase Annual Performance Report (APR) form. published in the Federal Register, in educational opportunity by improving NIDRR uses APR information submitted text or Adobe Portable Document school funding equity. The Commission by grantees to assess progress on these Format (PDF). To use PDF you must will also make recommendations for measures. have Adobe Acrobat Reader, which is restructuring school finance systems to 5. Continuation Awards: In making a available free at the site. achieve equity in the distribution of continuation award, the Secretary may You may also access documents of the educational resources and further consider, under 34 CFR 75.253, the Department published in the Federal student performance, especially for the extent to which a grantee has made Register by using the article search students at the lower end of the ‘‘substantial progress toward meeting feature at: www.federalregister.gov. achievement gap. The Commission will the objectives in its approved Specifically, through the advanced examine the disparities in meaningful application.’’ This consideration search feature at this site, you can limit educational opportunities that give rise includes the review of a grantee’s your search to documents published by to the achievement gap, with a focus on progress in meeting the targets and the Department. systems of finance, and recommend projected outcomes in its approved appropriate ways in which Federal Dated: December 30, 2011. application, and whether the grantee policies could address such disparities. has expended funds in a manner that is Alexa Posny, The agenda for the Commission’s consistent with its approved application Assistant Secretary for Special Education and January 23, 2012 meeting will include and budget. In making a continuation Rehabilitative Services. discussion of particular language for grant, the Secretary also considers [FR Doc. 2011–33807 Filed 1–4–12; 8:45 am] certain portions of the report and whether the grantee is operating in BILLING CODE 4000–01–P reaching consensus on particular compliance with the assurances in its recommendations. The Commission approved application, including those may have breakout sessions, most likely applicable to Federal civil rights laws DEPARTMENT OF EDUCATION during the second half of the meeting, that prohibit discrimination in programs Equity and Excellence Commission to discuss particular issues. The or activities receiving Federal financial Commission plans to discuss the assistance from the Department (34 CFR AGENCY: Office for Civil Rights, U.S. establishment of two or more 100.4, 104.5, 106.4, 108.8, and 110.23). Department of Education. subcommittees to discuss

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recommendations the Commission may DATES: Tuesday, February 28, 2012, Public Participation: The meeting is make regarding teachers and school 9 a.m.–5:45 p.m. and Wednesday, open to the public. If you would like to leaders; what documents and February 29, 2012, 9 a.m.–12 p.m. file a written statement with the information should be included in the ADDRESSES: Doubletree Bethesda Hotel Committee, you may do so either before materials that will supplement the main and Executive Meeting Center, 8120 or after the meeting. If you would like Commission report; and/or other Wisconsin Avenue Bethesda, Maryland to make oral statements regarding any of subjects within the Commission’s 20814. the items on the agenda, you should charter. If time permits, these FOR FURTHER INFORMATION CONTACT: contact Dr. Ed Synakowski at (301) 903– subcommittees may meet in the Edmund J. Synakowski, Designated 8584 (fax) or afternoon to outline their specific tasks Federal Officer, Office of Fusion Energy [email protected] (email). and timing for subsequent meetings. Sciences; U.S. Department of Energy; Reasonable provision will be made to Due to time constraints, there will not 1000 Independence Avenue SW., include the scheduled oral statements be a public comment period, but, Washington, DC 20585–1290; during the public comments time on the individuals wishing to provide Telephone: (301) 903–4941. agenda. The Chairperson of the comments may contact the Equity Committee will conduct the meeting to SUPPLEMENTARY INFORMATION: Commission via email at facilitate the orderly conduct of Purpose of the Meeting: To complete [email protected]. For business. Public comment will follow the charge given to the Committee in the comments related to the upcoming the 10-minute rule. letter from the Director, Office of meeting, please submit comments no Science, dated July 22, 2011, to respond Minutes: The minutes of the meeting later than January 13, 2012. to the following questions: will be available for public review and Individuals interested in attending the 1. What areas of research on new copying within 30 days on the Fusion meeting must register in advance international facilities provide Energy Sciences Advisory Committee because seating may be limited. Please compelling scientific opportunities for Web site at: http://www.science.doe.gov/ contact Jim Eichner at (202) 453–5945 or US researchers over the next 10–20 ofes/fesac.shtml. by email at [email protected]. years? Issued at Washington, DC, on December 29, Individuals who will need 2. What research modes would best 2011. accommodations for a disability in order facilitate international research LaTanya R. Butler, to attend the meeting (e.g., interpreting collaborations in plasma and fusion Acting Deputy Committee Management services, assistive listening devices, or sciences? Officer. materials in alternative format) should 3. What areas of research in materials [FR Doc. 2011–33801 Filed 1–4–12; 8:45 am] notify Jim Eichner at (202) 245–5945 no science and technology provide BILLING CODE 6450–01–P later than January 13, 2012. We will compelling opportunities for US attempt to meet requests for researchers in the near term and in the accommodations after this date but ITER era? DEPARTMENT OF ENERGY cannot guarantee their availability. The meeting site is accessible to individuals Tentative Agenda Office of Energy Efficiency and with disabilities. February 28, 2012, 9 a.m.–5:45 p.m. Renewable Energy Records are kept of all Commission • DOE/SC perspective and FY13 proceedings and are available for public Wind Plant Performance—Public Congressional Budget Request. Meeting on Modeling and Testing inspection at the Department of • FES perspective and FY 2013 Education, 400 Maryland Avenue SW., Needs for Complex Air Flow Congressional Budget Request for FES. Characterization Washington, DC 20202 from the hours • Briefing on the Chinese Fusion of 9 a.m. to 5 p.m. Eastern Standard Program. AGENCY: Office of Energy Efficiency and Time. • Basic Research Directions using the Renewable Energy, Department of Russlynn Ali, National Ignition Facility. Energy (DOE). • Assistant Secretary, Office for Civil Rights. Status of ITER Project. • ACTION: Notice of public meeting. [FR Doc. 2011–33800 Filed 1–4–12; 8:45 am] Report from the Subcommittee dealing with opportunities for BILLING CODE 4000–01–P SUMMARY: This notice announces a collaborations on new tokamaks and public meeting for interested parties to stellarators overseas AND research provide DOE information on modeling modes that best facilitate international needs and experimental validation DEPARTMENT OF ENERGY collaborations in plasma and fusion techniques for complex flow science. phenomena in and around off-shore and Fusion Energy Sciences Advisory February 29, 2012, 9 a.m.–12 p.m. on-shore utility-scale wind power Committee plants. DOE is requesting this • Report from the Subcommittee information to support the development dealing with materials science and AGENCY: Office of Science, Department of cost-effective wind power technology research opportunities. of Energy. deployment. • Public Comments. ACTION: Notice of open meeting. Note: The FESAC meeting will be DATES: The meeting will be held SUMMARY: This notice announces a broadcast live on the Internet. You may find Tuesday, January 17, 2012, from 7:30 meeting of the Fusion Energy Sciences out how to access this broadcast by going to a.m. to 5 p.m., and Wednesday, January the following site prior to the start of the 18, 2012, 7:30 a.m. to 5 p.m. Advisory Committee (FESAC). The meeting. A video record of the meeting, Federal Advisory Committee Act (Pub. including the presentations that are made ADDRESSES: University Memorial Center L. 92–463, 86 Stat. 770) requires that will be archived at this Web site after the at the University of Colorado, Boulder, public notice of these meetings be meeting ends: http://doe.granicus.com/ 1669 Euclid Avenue, Boulder, CO announced in the Federal Register. ViewPublisher.php?view_id=3. 80309.

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FOR FURTHER INFORMATION CONTACT: 4. Experimental Data Validation TENTATIVE AGENDA—Continued Mark Higgins at Techniques [Subject To Change] [email protected]. EE–2B, 1000 Participants will examine the Independence Avenue SW., requirements for, as well as the 1 p.m.–3 p.m. Plenary Session #4: Open Washington, DC 20585. Comments and Q&A. feasibility and efficacy of, existing and 3 p.m.–3:20 Break. SUPPLEMENTARY INFORMATION: The future experimental techniques for cost p.m. purpose of the meeting is for DOE to effective, high fidelity data collection. 3:20 p.m.–5 Plenary Session #3: Sum- obtain input on existing gaps and future Both field and laboratory experiments p.m. mary. opportunities in regards to complex will be explored. flow modeling and experimental This meeting is intended to collect Registration and Accommodations validation. Ultimately, research in this information from individuals involved area may lead to significant in planning, deployment, operation, and A room-block for meeting participants improvements in wind plant efficiency regulation of wind energy projects, has been established at the Boulderado, and performance, leading to a reduced individuals involved in meteorological the Boulder Marriott, and Millennium cost of energy for wind power. The and oceanic disciplines relevant to Harvest House. meeting is an opportunity for offshore and onshore wind energy, and Issued in Washington, DC on December 27, participants to provide, based on their interested members of the public. 2011. individual experience, information and However, the meeting will not focus on Jose Zayas, facts regarding this topic. It is not the environmental impact or management Program Manager, Wind and Hydropower object of this session to obtain any issues, which are being addressed by Technologies, Energy Efficiency and group position or consensus. Rather, separate efforts. While participation is Renewable Energy, Department of Energy. DOE is seeking as many open to all interested parties, the [FR Doc. 2011–33802 Filed 1–4–12; 8:45 am] recommendations as possible from all breakout structure of the meeting will BILLING CODE 6450–01–P individuals at this meeting. limit its overall size to about 80 The public meeting will consist of an participants. When the meeting is fully initial plenary session in which invited subscribed, registration will be closed. DEPARTMENT OF ENERGY speakers will survey available Please email Raphael Tisch at information and needs for various [email protected] with Federal Energy Regulatory applications related to complex flow registration inquiries. Commission modeling and validation testing. For the Combined Notice of Filings #1 remainder of the meeting, breakout TENTATIVE AGENDA groups will be used to provide [Subject To Change] Take notice that the Commission participants an opportunity to present to received the following electric rate DOE information on specific areas Day 1 filings: regarding existing gaps in observations Docket Numbers: ER10–2278–001; and computational products. These 7:30 a.m.–8 Registration and Continental groups will be an opportunity to ER10–2277–001; ER10–3203–001. a.m. Breakfast. Applicants: Cogentrix Virginia provide comment on information needs 8 a.m.—8:30 Plenary Session #1: Wel- Leasing Corporation. for the following topics: a.m. come and Introduction. 8:30 a.m.–9:30 Plenary Session #2: Over- Description: Supplement to Updated 1. Wind Turbine Scale Modeling and a.m. view of Break-Out Group Market Power Analysis and Request for Validation Requirements Topics. Category 1 Seller Status of Portsmouth Participants will examine inflow and 9:30 a.m.–10 Form Break-Out Groups. Genco, LLC, et al. outflow characteristics in the vicinity of a.m. Filed Date: 12/28/11. 10 a.m.–10:20 Break. a single wind turbine, as well as the Accession Number: 20111228–5033. a.m. Comments Due: 5 p.m. ET 1/18/12. implications for aerodynamic loading of 10:20 a.m.–12 Break-Out Group Session the rotor and overall structure. Several p.m. #1: Sub-topic Issue. Docket Numbers: ER10–2566–002. temporal and spatial scales shall be 12 p.m.–1 p.m. Lunch. Applicants: Duke Energy Carolinas, considered. 1 p.m.–3 p.m. Break-Out Group Session LLC. #2: Sub-topic Issue. Description: Notice of change in status 2. Wind Plant Scale Modeling and 3 p.m.–3:20 Break. of Duke Energy Carolinas, LLC. Validation Requirements p.m. Filed Date: 12/27/11. Participants will examine complex 3:20 p.m.–5 Break-Out Group Session Accession Number: 20111227–5124. aerodynamic phenomena in, around, p.m. #3: Open Comments. Comments Due: 5 p.m. ET 1/17/12. Docket Numbers: ER12–698–000. and through wind plants, including Day 2 turbine-wake interaction, wake-wake Applicants: PJM Interconnection, interaction, complex terrain, and 7:30 a.m.–8 Registration and Continental L.L.C. turbulence effects. Several temporal and a.m. Breakfast. Description: Original Service spatial scales shall be considered. 8 a.m.–8:30 Plenary Session: Day 1 Agreement No. 3159; Queue No. W2– a.m. Progress Report. 073 to be effective 12/1/2011. 3. Regional Scale Modeling and 8:30 a.m.–9:30 Break-Out Group Session Filed Date: 12/27/11. Validation Requirements a.m. #4: Wrap-up Comments. Accession Number: 20111227–5094. Participants will examine the 9:30 a.m.–10 Break-Out Group Session Comments Due: 5 p.m. ET 1/17/12. meteorological effects at the regional, a.m. #5: Prep for Plenary Dis- cussion. Docket Numbers: ER12–699–000. multi-wind plant scale. This exploration 10 a.m.–10:20 Break. Applicants: ALLETE, Inc. of atmospheric science topics shall a.m. Description: Notice of Termination of include model nesting, long-term data 10:20 a.m.–12 Plenary Session #3: Break- ALLETE, Inc.—Superior Water, Light collection requirements, and down- p.m. Out Group Overviews. and Power Company ESA. wind effects of wind plants. 12 p.m.–1 p.m. Lunch. Filed Date: 12/27/11.

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Accession Number: 20111227–5121. Description: FERC–65B Notice of customers through formula rate billings Comments Due: 5 p.m. ET 1/17/12. Material Change in Facts for The AES amounts associated with the tax effects Docket Numbers: ER12–700–000. Corporation. of amortized goodwill reported in Applicants: Central Vermont Public Filed Date: 12/28/11. Account 211, Miscellaneous Paid-In Service Corporati, ISO New England Accession Number: 20111228–5029. Capital. It also over-accrued its Inc. Comments Due: 5 p.m. ET 1/18/12. allowance for funds used during Description: CVPS, ISO–NE and The filings are accessible in the construction (AFUDC).’’ ITC also Public Serv. Co of NH Local Service Commission’s eLibrary system by challenges recommendations 2–4 in the Agreement No. 69 to be effective 1/1/ clicking on the links or querying the Audit Report: 2012. docket number. 2. Remove the overstated equity Filed Date: 12/28/11. Any person desiring to intervene or amounts associated with the tax effects Accession Number: 20111228–5011. protest in any of the above proceedings of amortized goodwill reported in Comments Due: 5 p.m. ET 1/18/12. must file in accordance with Rules 211 Account 211. File all correcting entries and supporting documentation with the Docket Numbers: ER12–701–000. and 214 of the Commission’s Division of Audits within 30 days of the Applicants: New York Independent Regulations (18 CFR 385.211 and issuance of a final audit report in this System Operator, Inc. 385.214) on or before 5 p.m. Eastern docket. Description: NYISO Tariff Revisions time on the specified comment date. Protests may be considered, but 3. Record and file, with supporting re: Coordinated Transaction Scheduling documentation, all correcting entries to be effective 12/31/9998. intervention is necessary to become a party to the proceeding. and calculations to correct all account Filed Date: 12/28/11. balances affected by the over-accrual of Accession Number: 20111228–5026. eFiling is encouraged. More detailed information relating to filing AFUDC. Comments Due: 5 p.m. ET 1/18/12. 4. Adjust formula rate billings, as requirements, interventions, protests, Docket Numbers: ER12–702–000. appropriate, for amounts service, and qualifying facilities filings Applicants: PacifiCorp. inappropriately recovered from can be found at: http://www.ferc.gov/ Description: PacifiCorp submits tariff customers associated with the tax effects docs-filing/efiling/filing-req.pdf. For filing per 35.15: Termination of CEP of amortized goodwill and related over- other information, call (866) 208–3676 Funding Point to Point Transmission accrual of AFUDC. Compute interest on Agreements to be effective 1/12/2012. (toll free). For TTY, call (202) 502–8659. the adjustments in accordance with 18 Filed Date: 12/28/11. Dated: December 28, 2011. CFR 35.19a. File a refund analysis with Accession Number: 20111228–5035. Nathaniel J. Davis, Sr., the Commission within 30 days of the Comments Due: 5 p.m. ET 1/18/12. Deputy Secretary. issuance of a final audit report in this Docket Numbers: ER12–703–000. [FR Doc. 2011–33828 Filed 1–4–12; 8:45 am] docket. Applicants: PJM Interconnection, BILLING CODE 6717–01–P The scope of the paper hearing is L.L.C. limited to these challenged findings and Description: PJM Interconnection, recommendations. L.L.C. submits tariff filing per DEPARTMENT OF ENERGY In accordance with section 41.3, ITC 35.13(a)(2)(iii: Original Service and any other interested entity, Agreement No. 3168 ? PJM Queue # Federal Energy Regulatory including the Commission staff, shall W2–049 to be effective 11/28/2011. Commission file, within 45 days of this notice, an Filed Date: 12/28/11. [Docket No. PA10–13–000] initial memorandum that addresses the Accession Number: 20111228–5065. relevant facts and applicable law that Comments Due: 5 p.m. ET 1/18/12. ITC Holdings Corp.; Notice of Paper support the position or positions taken Docket Numbers: ER12–704–000. Hearing Procedure regarding the matters at issue. Reply Applicants: Pacific Gas and Electric memoranda may be filed by participants Take notice that on October 31, 2011, Company. who filed initial memoranda. Reply ITC Holdings Corp. and ITC Midwest Description: Pacific Gas and Electric memoranda must be filed within 20 LLC (collectively, ITC) filed a request Company submits tariff filing per days of the due date for initial for Commission review of certain 35.13(a)(2)(iii: Lathrop Irrigation District memoranda. Pursuant to section 41.3, findings and recommendations in the IA and WDT SA to be effective 1/1/ subpart T of Part 385 of the September 30, 2011 Audit Report (Audit 2012. Commission’s regulations shall apply to Report) in this docket issued by the Filed Date: 12/28/11. all filings. Further, pursuant to section Director of the Office of Enforcement Accession Number: 20111228–5077. 41.4, each entity’s memorandum should under authority delegated to him by Comments Due: 5 p.m. ET 1/18/12. set out the facts and argument as section 375.311 of the Commission’s prescribed for briefs in 18 CFR 385.706 Docket Numbers: ER12–705–000. regulations, 18 CFR 375.311 (2011). ITC (2011). Section 41.5 also requires that Applicants: ITC Midwest LLC. submitted its request for review under the facts stated in the memorandum Description: ITC Midwest LLC Part 41 of the Commission’s regulations, must be sworn to by persons having submits tariff filing per 35.13(a)(2)(iii: 18 CFR Part 41.2. In accordance with knowledge thereof, which latter fact Filing of a Notice of Succession to be section 41.3, ITC requested the use of must affirmatively appear in the effective 2/28/2012. shortened procedures. Pursuant to affidavit. Filed Date: 12/28/11. section 41.3, the Commission directs the eFiling is encouraged. More detailed Accession Number: 20111228–5079. commencement of a paper hearing. The information relating to filing Comments Due: 5 p.m. ET 1/18/12. Commission further provides requirements, interventions, protests, Take notice that the Commission clarification on the scope of the paper service, and qualifying facilities filings received the following public utility hearing. can be found at: http://www.ferc.gov/ holding company filings: ITC’s filing states that it challenges docs-filing/efiling/filing-req.pdf. For Docket Numbers: PH12–5–000. the Audit Report’s findings that ITC other information, call (866) 208–3676 Applicants: The AES Corporation. Midwest ‘‘improperly recovered from (toll free). For TTY, call (202) 502–8659.

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Dated: December 29, 2011. to be phased-in between the 2007 and before 150,000 mile intervals for Nathaniel J. Davis, Sr., 2010 model years. medium and heavy heavy-duty Deputy Secretary. Diesel vehicle and engine engines.4 [FR Doc. 2011–33829 Filed 1–4–12; 8:45 am] manufacturers began planning to meet Pursuant to 40 CFR 86.1834–01(b)(7), those requirements by optimizing BILLING CODE 6717–01–P a manufacturer must submit a request to engine designs for low emissions and EPA for approval of any new scheduled adding high-efficiency aftertreatment maintenance that it wishes to perform systems. Manufacturers examined the during durability determination and ENVIRONMENTAL PROTECTION use of several different types of NOX recommend to purchasers. New AGENCY reduction technologies, including NOX scheduled maintenance is maintenance absorbers, exhaust gas recirculation, and that did not exist prior to the 1980 selective catalytic reduction (SCR). SCR [FRL–9616–1] model year (such as DEF refills), systems use a nitrogen-containing including that which is the direct result Control of Emissions From New reducing agent that usually contains of the implementation of new Highway Vehicles and Engines; urea and is known as diesel exhaust technology not found in production Approval of New Scheduled fluid (DEF). The DEF is injected into the prior to the 1980 model year (such as Maintenance for Selective Catalytic exhaust gas upstream of a catalyst. For SCR technology). In their approval Reduction Technologies continued functioning of the systems, requests to EPA, manufacturers are the reducing agent needs to be required to submit a variety of AGENCY: Environmental Protection replenished periodically by refilling the information, including a Agency (EPA). DEF tank. recommendation as to the maintenance ACTION: Notice of approval. Maintenance performed on vehicles, category (i.e., emission-related or non- engines, subsystems, or components emission-related, and critical or non- SUMMARY: This notice announces that used to determine exhaust, evaporative, critical). If the suggested maintenance is EPA has granted certain diesel vehicle or refueling emission deterioration emission-related, manufacturers must and engine manufacturers’ requests for factors is classified as either emission- indicate the maximum feasible approval of emission-related related or non-emission-related and maintenance interval. Manufacturers maintenance and scheduled scheduled or un-scheduled. Any must also provide detailed evidence, maintenance intervals for replenishment emission-related scheduled data, or other substantiation supporting of reducing agent in connection with maintenance must be technologically the need for the new scheduled their use of selective catalytic reduction necessary to ensure in-use compliance maintenance, the categorization of such (SCR) technologies. EPA’s approval with the emission standards. maintenance, and the suggested Manufacturers must demonstrate to EPA pertains to the use of SCR with 2011 interval, if the maintenance is emission- that all of the emission-related and later model year (MY) diesel-fueled related. maintenance to be performed is light-duty vehicles and light-duty trucks If EPA approves a request for new technologically necessary and must be along with medium-duty passenger scheduled maintenance, the Agency approved prior to being performed or vehicles and chassis-certified diesel then designates that maintenance as being included in maintenance vehicles up to 14,000 pounds gross emission-related or non-emission- instructions provided to purchasers. 40 vehicle weight (GVW) and 2012 and related. For emission-related CFR 86.094–25(b)(3), 86.094–25(b)(4), later MY heavy-duty diesel engines. maintenance, EPA will further designate 86.1834–01(b)(3) and 86.1834–01(b)(4) FOR FURTHER INFORMATION CONTACT: that maintenance as critical or non- establish minimum allowable David Dickinson, Compliance Division, critical. A designation of critical maintenance intervals for various Office of Transportation and Air maintenance will be made if the emission-related technologies. EPA Quality, U.S. Environmental Protection component receiving the maintenance determined that emission-related Agency, 1200 Pennsylvania Avenue meets the regulatory definition of maintenance for the specified (6405J), NW., Washington, DC 20460. critical emission-related component in technologies at intervals shorter than Telephone: (202) 343–9256. Fax: (202) 40 CFR 86.1834–01(b)(6). Critical those listed in paragraphs (b)(3) and 343–2800. Email: emission-related components include (b)(4) are not technologically necessary, [email protected]. catalytic converters. 40 CFR 86.1834– except as provided for in paragraphs 01(b)(6) requires that critical emission- SUPPLEMENTARY INFORMATION: (b)(7). Paragraphs (b)(7) of those related maintenance must have a regulatory sections allows I. Background reasonable likelihood of being manufacturers to request new scheduled performed in use, as shown by the EPA adopted new emission standards maintenance and maintenance intervals manufacturer.5 for light-duty vehicles on February 10, or a change to existing scheduled Examples of 2000.1 At that time, EPA established an maintenance interval, including an emission standard of 0.07 grams per 4 Id. interval shorter than that prescribed in 5 40 CFR 86.094(b)(6)(ii) and 86.1834–01(b)(6)(ii). mile for each manufacturer’s average paragraphs (b)(3) and (b)(4). For light- Both sections present the following conditions as full life NOX emissions of its vehicles in duty, medium-duty, and heavy-duty acceptable of having a reasonable likelihood that each model year. For heavy-duty diesel-cycle engines, emission-related the maintenance item will be performed in-use: vehicles and engines, EPA published a maintenance for certain emission- (A) Data are presented which establish for the Administrator a connection between emissions and rule setting stringent new requirements related components cannot occur before 2 vehicle performance such that as emissions increase on January 18, 2001. Among other 100,000 miles of use.3 Thereafter, due to lack of maintenance, vehicle performance requirements, the diesel engine NOX emission-related maintenance cannot will simultaneously deteriorate to a point emission standard was set at 0.20 grams again occur before 100,000 mile unacceptable for typical driving. per brake horsepower-hour (g/bhp-hr), (B) Survey data are submitted which adequately intervals for light heavy-duty engines, or demonstrate to the Administrator that, at an 80 percent confidence level, 80 percent of such 1 65 FR 6734 (February 10, 2000). 3 40 CFR 86.1834–01(b)(4)(ii) and 40 CFR 86.004– engines already have this critical maintenance item 2 66 FR 5002 (January 18, 2001). 25(b)(4)(iii). performed in-use at the recommended interval(s)

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demonstrations that maintenance will scheduled maintenance. We stated our * * * SCR systems are a new type of have a reasonable likelihood of being belief that because catalysts are listed in technology designed to meet the newest performed in use include: Data the (b)(3) and (b)(4) provisions as emission standards and the DEF refill establishing that a vehicle’s engine critical emission-related components, intervals represent a new type of scheduled maintenance; therefore, EPA believes that performance will deteriorate to an and lack of replenishing agent renders manufacturers may request from EPA the unacceptable point due to poor SCR catalysts inoperative, SCR system ability to perform the new scheduled emissions performance, survey data maintenance would meet the definition maintenance of DEF refills. Requests from demonstrating an eighty percent of critical emission-related manufacturers for new scheduled confidence level that maintenance is in maintenance. Therefore, allowable maintenance intervals must include: (1) fact performed in use, and installation maintenance requirements would apply Detailed evidence supporting the need for the of a clearly displayed signal system to to SCR systems, including SCR maintenance requested and (2) supporting alert drivers that maintenance is catalysts, reducing agent, reducing agent data or other substantiation for the recommended maintenance category and for required. When approving a new storage tanks, dosing valves, and all the interval suggested for the emission scheduled maintenance request, EPA lines and hoses. Additionally, because maintenance. Any emission-related also establishes a technologically manufacturers indicated that packaging maintenance must be technologically necessary maintenance interval, based constraints would prevent them from necessary to assure in-use compliance with on the evidence submitted by industry being able to equip their vehicles with the emission standards since minimum and any other information available to reducing agent storage tanks of service intervals are established in part to the Agency. sufficient size to allow reducing agent ensure that the control of emissions is not In 2007, EPA issued guidance replenishment to comply with the compromised by a manufacturer’s overly frequent scheduling of emission-related indicating how the above-described general maintenance intervals of maintenance. regulatory requirements for allowable 100,000 or 150,000 miles, EPA clarified maintenance could impact EPA that manufacturers would likely need to Upon review of industry-wide and certification decisions regarding request a change to the scheduled manufacturer-specific evidence and implementation of SCR technologies for maintenance interval pursuant to the supporting data, EPA approved new light-duty and heavy-duty diesel (b)(7) provision. scheduled maintenance intervals for vehicles and engines.6 That guidance In that same 2007 guidance, EPA also DEF equal to the scheduled oil change announced that EPA would consider stated that an SCR system utilizing a interval for light-duty vehicles and service operations performed on SCR reducing agent that needs to be trucks for the 2009 and 2010 model systems to be critical emission-related periodically replenished could be an years. For heavy-duty vehicles and adjustable parameter as set forth in 40 engines through the 2011 model year, (C) A clearly displayed visible signal system CFR 86.094–22(e)(1) and 86.1833– EPA approved new scheduled approved by the Administrator is installed to alert maintenance intervals for DEF tanks the vehicle driver that maintenance is due. A signal 01(a)(1). Those regulatory provisions establish the requirements for based on ratios to a given vehicle’s fuel bearing the message ‘‘maintenance needed’’ or capacity. Vocational heavy-duty ‘‘check engine,’’, or a similar message approved by determining the physically adjustable the Administrator, shall be actuated at the ranges of parameters, and EPA’s 2007 vehicles (e.g., dump trucks, concrete appropriate mileage point or by component failure. guidance addressed its determination mixers, refuse trucks, and other This signal must be continuous while the engine is centrally-fueled vehicles) were in operation and not be easily eliminated without under the regulations that operation performance of the required maintenance. Resetting without DEF is within the scope of such permitted a DEF tank maintenance interval no less than the vehicle’s fuel the signal shall be a required step in the ranges. EPA’s 2007 guidance also maintenance operation. The method for resetting capacity (i.e., a 1:1 ratio of DEF refill to provided industry-wide notice that SCR the signal system shall be approved by the fuel refill). For other heavy-duty Administrator. system designs and information vehicles, a longer interval was approved (D) A manufacturer may desire to demonstrate submitted by manufacturers during depending upon whether the vehicle through a survey that a critical maintenance item certification could be used to provide is likely to be performed without a visible signal on was equipped with a DEF level EPA with assurance that DEF levels will a maintenance item for which there is no prior in- indicator that would be constantly use experience without the signal. To that end, the remain at proper ranges during the viewable by the operator. For those manufacturer may in a given model year market up operation of their vehicles and engines heavy-duty vehicles with a DEF level to 200 randomly selected vehicles per critical while in use.7 emission-related maintenance item without such indicator, EPA approved a DEF tank visible signals, and monitor the performance of the II. Previous Model Year Approval of refill interval no less than twice the critical maintenance item by the owners to show compliance with paragraph (b)(6)(ii)(B) of this New Scheduled Maintenance for SCR range of the vehicle’s fuel capacity (i.e., section. This option is restricted to two consecutive Systems a 2:1 ratio). For those heavy-duty model years and may not be repeated until any vehicles without a DEF level indicator, previous survey has been completed. If the critical In 2009, EPA approved manufacturer- maintenance involves more than one engine family, specific and industry-wide new EPA approved a DEF tank refill interval the sample will be sales weighted to ensure that it scheduled maintenance interval no less than three times the range of the is representative of all the families in question. requests for diesel-cycle motor vehicles vehicle’s fuel capacity (i.e., a 3:1 ratio). (E) The manufacturer provides the maintenance When evaluating the evidence, data, free of charge, and clearly informs the customer that and motor vehicle engines equipped 8 and justifications presented by the maintenance is free in the instructions provided with SCR systems. At that time, EPA under § 86.087–38. stated that: manufacturers to support their (F) Any other method which the Administrator requested intervals, EPA identified as approves as establishing a reasonable likelihood 7 EPA issued guidance on December 30, 2009. significant the impact a larger sized DEF that the critical maintenance will be performed in- U.S. Environmental Protection Agency, Dear tank would have on vehicle design and use. Manufacturer Letter regarding ‘‘Revised Guidance vehicle weight. To merely accommodate 6 U.S. Environmental Protection Agency, CISD for Certification of Heavy-Duty Diesel Engines the inclusion of a DEF tank into vehicle 07–07, ‘‘Dear Manufacturer Letter Regarding Using Selective Catalyst Reduction Certification Procedure for Light-Duty and Heavy- (SCR)Technologies,’’ December 30, 2009, reference design, heavy-duty vehicle Duty Diesel Vehicles and Heavy-Duty Diesel number CISD–09–04 (HDDE), available at http:// manufacturers had to redesign their Engines Using Selective Catalytic Reduction (SCR) iaspub.epa.gov/otaqpub/ configurations by taking such measures Technologies,’’ March 27, 2007, available at: display_file.jsp?docid=20532&flag=1. http://iaspub.epa.gov/otaqpub/ as reducing the number of batteries, display_file.jsp?docid=16677&flag=1. 8 74 FR 57672 (November 9, 2009). designing space-saver configurations,

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lengthening frame rails, moving light-duty vehicles and light-duty trucks 2. Ford Request compressed air tanks inside the frame (and heavy-duty engines that are EPA has received information from rails, and redesigning fuel tank chassis-certified for NOX) equipped Ford (regarding its chassis-certified 11 configurations. Light-duty car and truck with SCR systems. The Alliance vehicles) that is similar to the concerns manufacturers had similar vehicle presented several reasons why the SCR raised by the Alliance. In addition, Ford design issues related to their inherently maintenance interval should be notes that by attempting to go to a space constrained vehicles: they had to equivalent to the service interval, longer service interval, for example a choose whether to reduce interior including: ‘‘vehicles will be designed 16–20 gallon DEF tank to meet a two oil vehicle space or find a place to and equipped to ensure vehicle change interval, would not be feasible accommodate a DEF tank in the engine compliance with emission standards; with the space limitations and compartment of vehicle’s undercarriage. DEF will be readily available and performance requirements that are Aside from vehicle design issues, the accessible to drivers; maintenance is necessary for typical medium-duty addition of a large DEF tank onto any likely to be performed; there are vehicle (chassis-certified) design. In given vehicle represents a significant engineering constraints on packaging a addition to the market concerns addition of weight to the vehicle. The large DEF tank on light duty vehicles; associated with a loss in fuel capacity, addition of a significant amount of and there is a significant penalty on fuel cargo or truck bed space due to a larger weight to a given vehicle, in turn, economy and performance associated DEF tank not being acceptable to its presents its own concerns: added with carrying both a larger DEF tank and customers, Ford also notes the ‘‘hard- vehicle weight more quickly the weight of a large amount of DEF.’’ point’’ packaging issues with attempting deteriorates engine performance, and With regard to the engineering to place a large DEF tank in the engine added vehicle weight decreases fuel constraints associated with packaging a compartment or in the vehicles economy. With those considerations in large quantity of DEF on light duty undercarriage.12 mind, EPA announced its approval of vehicles, the Alliance notes that it is the requested maintenance intervals: impractical to install a DEF tank of 3. Isuzu Request sufficient size to achieve a 100,000 mile After reviewing this data and information, EPA also received information from EPA believes that longer refill intervals than scheduled maintenance interval. ‘‘Light Isuzu for its medium-duty vehicle those noted above would require larger and duty vehicles are constrained in the (chassis-certified vehicles with GVW of heavier DEF tanks, and the design and amount of space that can be dedicated 8,501 to 10,000 pounds) engine families. engineering work performed by to a DEF tank. In addition to the DEF Isuzu requested a maintenance interval manufacturers thus far indicate that the tank, SCR vehicles must package an SCR based on the rate of DEF consumption. recommended DEF refill intervals noted catalyst, SCR mixer and DEF dosing and Isuzu presented that the DEF above approximate the maximum feasible heating mechanisms.’’ The Alliance consumption rate of 2% the rate of maintenance intervals associated with cites an example of a current production reasonable DEF tank sizes. The maintenance diesel fuel consumption renders it intervals recommended ensure that the vehicle that provides a 6.1 gallon DEF ‘‘impossible’’ to equip a vehicle with a functions and operational efficiency of such tank to achieve a 10,000 mile change DEF tank large enough to operate for the vehicles are not overly compromised. Based interval ratio tied to the oil change full 120,000 mile maintenance interval on this information we believe the intervals interval. To accommodate a 100,000 without DEF. Isuzu requested its noted above are warranted.9 mile maintenance requirement would interval based on reasons of EPA’s 2009 approval also noted that, require 60 gallons of DEF and would technological necessity, including ‘‘while not a specific criterion under take approximately 8 cubic feet of maintenance is likely to be performed paragraph (b)(7) of the regulations, space—and would also be almost on schedule, there is limited space because DEF refill maintenance is equivalent to installing 4 extra fuel available on vehicles for a large DEF considered ‘critical emission-related tanks. ‘‘To reduce the existing usable tank, the physical properties of DEF maintenance,’ paragraph (b)(6) requires volume to such an extent would result present limitations, and DEF is publicly that there be a reasonable likelihood in an uncompetitive vehicle in terms of and readily available to drivers. usable passenger or cargo volume.’’ that the DEF maintenance refill will be B. Heavy-Duty Requests performed in use.’’ 10 EPA then noted With regard to the Alliance’s concerns the number of means available to make regarding the potential for a significant 1. Engine Manufacturers Association such a showing, including a clearly penalty on fuel economy and Request performance associated with carrying displayed visible signal system or the The Engine Manufacturers presentation of supporting data. both a larger DEF tank and the weight of a large amount of DEF, they note the Association (‘‘EMA’’) renewed its III. Current Requests for New simple impracticability for light duty previous request for maintenance Scheduled Maintenance for SCR vehicles to carry the weight of a DEF intervals for DEF refill for heavy-duty Systems tank sufficient in size to achieve a on-highway diesel fueled engines and vehicles.13 EMA presents that the A. Light-Duty Requests 100,000 mile maintenance interval. Noting that such a tank could weigh as 12 1. Alliance of Automobile much as 540 lbs it could affect fuel Ford notes the undercarriage is already fully utilized with the engine, exhaust system, catalytic Manufacturers Request economy almost as much as 10% on a converters, mufflers, fuel tank, etc severely limiting EPA has received information from 3800 lb curb weight vehicle. The any available space for a DEF tank. Ford also notes the Alliance of Automobile Alliance also notes similar handling that DEF tanks represent a significant weight performance (acceleration, braking, and challenge which affects performance and fuel Manufacturers (the ‘‘Alliance’’), that efficiency. To increase a DEF tank for every 2 oil requested re-approval of new scheduled turning) along with passenger space, change interval would increase a tank weight by 72 maintenance for DEF refilling at service cargo carrying and/or towing capacity. lbs as one example. intervals (i.e., oil change intervals) for 13 EMA members include AGCO Corporation, 11 The Alliance represents BMW Group, Chrysler American Honda Motor Company, Inc., Briggs & LLC, Ford Motor Company, General Motors, Jaguar Stratton Corporation, Caterpillar Inc., Chrysler 9 74 FR 57671, 57674 (November 9, 2009). Land Rover, Mazda, Mercedes-Benz, Mitsubishi Group LLC, Cummins Inc., Daimler Trucks North 10 See 40 CFR 86.1834–01(b)(6)(ii) and 86.094– Motors, Porsche, Toyota, and Volkswagen. EPA also America LLC, Deere & Company, DEUTZ 25(b)(6)(ii). received similar information from Mahindra. Corporation, Dresser Waukesha, Fiat Powertrain

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determinations of technological of systems Volvo has developed to vehicles. The SCR Engine necessity that EPA made in 2009 still ensure that vehicle operators refill DEF Manufacturers state that such approval apply today for DEF refill intervals.14 tanks.’’ Volvo states that to ensure is necessary and appropriate to reflect Specifically, EMA believes that ‘‘while efficient and practical operation its current and anticipated changes in the SCR-related urea infrastructure has trucks are designed in such a way that vehicle designs, significant changes in continued to develop, the space and they necessarily have space and weight inducement strategies, and the weight constraints that are inherent to constraints. Thus, there are inherent increased availability of DEF since the design and operation of [heavy-duty limits on the size of add-on EPA’s last approval in 2009. on-highway] vehicles, and the components, such as DEF tanks, that The SCR Engine Manufacturers note underlying DEF consumption rate, have can be installed on the vehicles and that much of the information required in not changed. As a result, the need and such limits are unavoidable. In this a (b)(7) petition was confirmed by EPA justification for the previously-approved context Volvo states that its trucks are in its 2009 notice and thus needs no reduced DEF maintenance intervals also designed to operate using DEF at all further elaboration. EPA has already have not changed.’’ EMA requests that times and that the size of the DEF tanks, concluded that replenishment of DEF is EPA’s previously approved new like the vehicle’s fuel tank, dictates the ‘‘technologically necessary’’ critical scheduled maintenance intervals for vehicle’s range of operation. Volvo emission-related maintenance, and that DEF be extended for the 2012 and later maintains that the 2:1 ratio remains the 1:1, 2:1, and 3:1 ratios were model years.15 technologically necessary for model ‘‘maximum feasible’’ maintenance year 2012 engines and vehicles as intervals based on information available 2. Volvo Request nothing about the design, constraints or in 2009. There has been no change in By letter dated April 28, 2011, Volvo functionality of Volvo vehicles and the need for DEF replenishment or Powertrain North America and Volvo engines has changed (since the 2009 designation of the category of Powertrain Japan (collectively, ‘‘Volvo’’) approval) so as to permit the use of maintenance since 2009. The SCR submitted a request that EPA extend its larger tanks. Volvo also presents that it Engine Manufacturers new petition for a previous approval of alternative has implemented controls to assure that 1:1 DEF interval reflects what is scheduled maintenance intervals for there is ‘‘more than a ‘reasonable believed to be the ‘‘maximum feasible DEF tanks used in SCR systems. Volvo likelihood’ that the recommended DEF interval’’ based on reasonable tank sizes, believes that the intervals EPA refill intervals will be complied with in- given the latest information regarding previously approved remain use. Volvo asserts that it has equipped SCR systems and DEF availability. technologically necessary, ‘‘as nothing its SCR-based systems with visible Included in the SCR Engine about the design, constraints or warning systems and driver Manufacturers’ petition is their position functionality of Volvo vehicles and inducements such that vehicle regarding the threshold criteria that EPA engines has changed so as to permit the performance will deteriorate to an should follow for setting a use of larger tanks.’’ Volvo further states unacceptable point, in order to compel ‘‘technologically necessary maintenance that ‘‘The inherent nature of vehicle vehicle operators to refill the DEF tank. interval.’’ They claim that the general space and weight constraints makes Volvo initially developed these maintenance regulations, including the significantly larger DEF tanks infeasible strategies in consultation with EPA staff introductory paragraph of (b)(2) which on a practical basis. That said, larger in order to ensure its engines met EPA helps frame the established intervals in DEF tanks also are not necessary in light certification requirements, and has since (b)(3) and (b)(4), provides guidance on improved its strategies for current and what ‘‘technologically necessary’’ means Technologies S.p.A., Ford Motor Company, Hino future model year engines. In its when it states that any emission-related Motors, Ltd., Isuzu Manufacturing Services of maintenance ‘‘must be technologically America, Inc., Kohler Company, Komatsu Ltd., request, Volvo further describes the Kubota Engine America Corporation, Navistar, Inc., specific steps it has taken to design its necessary to assure in-use compliance Onan—Cummins Power Generation, PACCAR Inc., SCR systems to protect against operation with the emission standards.’’ Thus EPA Scania CV AB, Tognum America, Inc., Volkswagen of its vehicles without DEF and to must first determine whether an interval of America, Inc., Volvo Powertrain Corporation, shorter than the regulatory default is Wa¨rtsila¨ North America, Inc., Yamaha Motor prevent SCR system tampering. In Corporation, and Yanmar America Corporation. addition, Volvo seeks the flexibility to necessary in order to assure in-use 14 EMA cites from EPA’s 2009 FR Notice: ‘‘EPA utilize a 1:1 ratio in light of its 40% compliance. They note that in the 2009 believes that in light of the existing tight space power reduction (see further notice EPA specifically addressed the constraints and the overall desire to maximize clarification below in the SCR Engine unique nature of liquid DEF cargo-carrying capacity, minimize emissions and meet consumer operation demands, and the built- Manufacturers request submitted after replenishment and the need to strike a in DEF tank size buffer to insure DEF refills, that the Volvo request—EPA assumes this is reasonable balance between conflicting the DEF tank sizes associated with the 2:1 refill and the flexibility that Volvo is seeking). design goals. 3:1 intervals are technologically necessary. EPA Thus, the SCR Engine Manufacturers believes that requiring tank sizes above these ratios 3. SCR Engine Manufacturers Request maintain that the words will cause increases in space constraints and weight that would not be appropriate for these [HDOH] EPA has also received requests for ‘‘technologically necessary’’ are used in vehicles. * * * After reviewing this data and scheduled maintenance intervals for two contexts. First, as noted above, information, EPA believes that longer refill intervals 2012 and later model years from a group (b)(2) requires all maintenance that than those noted above would require larger and meets the definition of ‘‘emission- heavier DEF tanks. And the design and engineering of SCR engine manufacturers work performed by manufacturers thus far indicate (collectively the ‘‘SCR Engine related maintenance’’ ‘‘must be that the recommended DEF refill intervals noted Manufacturers’’ 16) that specifically ask technologically necessary to assure in- above approximate the maximum feasible for EPA to approve the use of a 1:1 DEF use compliance with the emission maintenance interval associated with reasonable DEF tank sizes. The maintenance intervals to fuel ratio for vehicles with a DEF standards.’’ Consistent with this recommended ensure that the functions and level indicator, in addition to vocational provision is (b)(7)(ii) which requires operational efficiency of such vehicles are not that any alternative interval set by EPA overly compromised. Based on this information we 16 This group includes Chrysler Group, LLC, be ‘‘a technologically necessary believe the intervals noted above are warranted.’’ Cummins Inc., Daimler Trucks North America LLC, maintenance interval’’ (emphasis See 74 FR at 57674. Detroit Diesel Corporation, Ford Motor Company, 15 EMA expressly states that one of its members— Mack Trucks Inc., PACCAR Inc., UD Trucks added). Thus the term ‘‘technologically Navistar, Inc.—does not support EMA’s request. Corporation, and Volvo Group North America. necessary’’ merely describes the

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category of maintenance that is intervals due to DEF infrastructure advancements developed to reduce CO2 allowable but not what the specific developed at diesel refueling stations. emissions—tanks that are larger than the interval must be. Subsequently, the SCR EPA has also received information tanks EPA determined to be the maximum Engine Manufacturers note that once from the SCR Engine Manufacturers reasonably required in 2009. In addition, this indicating that EPA should set the could inadvertently cause manufacturers to EPA makes this threshold determination restrict application of the most fuel efficient (as required in (b)(7)) then the Agency, minimum required DEF refill interval at engines to vehicles that have reduced range with a level of discretion, examines the an interval equal to the vehicle’s fuel between fuel and DEF refills, such that they information submitted by the petitioner. capacity (i.e., a 1:1 ratio) for all heavy will be unattractive to the line-haul fleets Such information includes the duty engines.18 They claim that this that consume the most fuel. petitioner’s position on what is the shorter maintenance interval is The commenters elaborated that: ‘‘necessary and appropriate to reflect ‘‘maximum feasible maintenance’’ To meet the next round of GHG reduction including any supporting data or other current and anticipated changes in vehicle designs, significant changes in requirements, some manufacturers expect to substantiation for the interval suggested. increase DEF dosing by as much as 100% Rather than looking at the ‘‘maximum inducement strategies, and the over current levels. These increased levels of level’’ that is technologically feasible, increased availability of DEF.’’ They dosing will require a corresponding increase the term ‘‘feasible’’ requires EPA to look note that certification practices of the in DEF tank capacity and size to meet the at the overall practicality and EPA regarding inducement practices for existing 2:1 tank ratio requirements. For reasonableness of a particular proposed SCR-equipped engines make it example, increasing DEF dosing by 40% on average would require an increase in DEF interval. The maximum feasible interval ‘‘essentially impossible for an SCR vehicle to operate without regular DEF tank size of approximately 40% (depending is used as a point of reference for EPA replenishment.’’ They state that the on how much extra capacity was included in to evaluate the reasonableness of the severity of inducements related to DEF the tanks used in previous model years). The manufacturers’ recommended interval. shape, size and location of DEF tanks on a levels (e.g. severe reduction in engine According to the SCR Engine truck frame are constrained by a number of power and/or vehicle speed) is Manufacturers, ‘‘The maximum possible factors including: the need to place the tank ‘‘extraordinary and must be taken into interval for DEF replenishment is below the filler-neck; the need for clearance account’’ when EPA is determining from other components such as fuel tanks, established in each case by the total appropriate maintenance intervals. They battery boxes, air tanks, diesel particulate load capacity of the vehicle in question, state that ‘‘in light of these severe filters, and the drive axle and wheels; the the space available for a given DEF tank inducements, it is reasonable to expect need for gravity feed; body installation size, the fuel efficiency and greenhouse that a driver with a 1:1 tank ratio will requirements; clear-back-of-cab requirements; gas impact of various DEF dosing rates, operate under a firm discipline that the weight distribution requirements; bridge the desired operating range of the formula and related axle placement issues; DEF tank must be refilled every time the and fuel capacity/driving range demands. vehicle between fuel and DEF refills, fuel tanks are filled, as opposed to a and the impact of extra weight on driver with a 2:1 or greater tank ratio They state that another consequence vehicle performance, safety, and who may become accustomed to filling of the greenhouse gas regulations is compliance with U.S. Department of the DEF tank only when necessary, and more attention to improved Transportation regulatory requirements. is therefore more likely to rely on gauge aerodynamics and weight reduction, DEF tank size must also be balanced levels, warnings, and inducements to which are harmed by the need for a 2:1 against the need to carry cargo, or to trigger refills.’’ DEF tank size requirement. They claim enable the vehicle to meet the purpose The SCR Engine Manufacturers also that EPA should allow manufacturers to for which it was built, to determine state that EPA’s promulgation of new use all available options to increase fuel what is feasible in the most economical standards regulating greenhouse gases economy and meet greenhouse gas way possible while achieving increase the size and weight restraints standards. They state the possible harm compliance.’’ associated with DEF tank size. of allowing shorter maintenance intervals is minimal, given the severe The SCR Engine Manufacturers EPA has announced new [greenhouse gas] suggest that as EPA performs its case-by- standards for HDOH trucks, and negative inducements associated with failure to replenish the DEF tank. case analysis, the likelihood of the manufacturers have moved to voluntarily maintenance being performed in-use is increase the fuel efficiency of their vehicles 4. Navistar’s Opposition to Renewed the most important factor in establishing in advance of the effective dates of those Requests regulations. Within these regulations, EPA the precise maintenance interval. EPA recognizes the impact of weight savings on EPA has received information from explained that ‘‘minimum service fuel efficiency and GHG emissions. In Navistar expressing its opposition to intervals are established in part to addition, manufacturers have developed any extension of EPA’s previously ensure that the control of emissions is innovative new DEF dosing strategies to approved DEF refill intervals. Navistar not compromised by a manufacturer’s reduce CO2 emissions. These new strategies may involve increasing the DEF dosing rate. maintains that the touchstone of overly frequent scheduling of emission- allowable maintenance is whether it is related maintenance.’’ 17 They also state Increasing the DEF dosing rate also makes it more and more difficult to satisfy a 2:1 tank reasonably likely that the maintenance that EPA explained in its 2009 notice size ratio without increasing the size of the will be performed. To this point, it that while the likelihood of DEF tank above the size EPA previously states that EPA’s own certification maintenance being performed in-use considered the maximum reasonable size. guidance ensures that maintenance will was a specific criteria under (b)(6), it For this reason, if the application of the 1:1 not occur, or at least not for lengthy was also a factor that was ‘‘important to tank ratio is not expanded, EPA will periods of time. It also states that EPA’s note’’ with regard to EPA’s (b)(7) effectively be mandating larger DEF tanks, inducements to cause drivers to findings. Further, EPA then concluded with their accompanying weight increase, in order to accommodate technology replenish DEF do not work and, and by that it was reasonable to base the DEF definition, ensure that maintenance will refilling event on diesel refueling 19 18 Letters dated August 18, 2011 and September not occur. Separately, Navistar 27, 2011 to Karl Simon, EPA, Director, Compliance 17 EPA made this statement in its 2009 Notice, see and Innovative Strategies Division from R. Latane 19 Navistar throughout its comments returns to its 74 FR at 57673. Montague, Hogan Lovells. theme that EPA’s certification scheme allows DEF

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contends that the previously approved recommend(s).’’ 22 Lastly, Navistar notes such vehicles are not overly intervals are not ‘‘technologically that EPA is well aware that they have compromised. necessary’’ under EPA’s regulations. developed for production and A. Light-Duty Requests The purpose of EPA’s maintenance introduced other SCR technology (i.e. regulations is to reduce the amount of EGNR) that provides a maintenance As EPA explained in its 2009 notice, driver attention emissions systems interval in the range of 35,000 to automobile manufacturers have stated it require in order to ensure that certified upwards of 45,000 miles. takes approximately an 8 gallon DEF engines comply with emission tank to ensure that DEF will last for the standards on the road. Navistar claims IV. Discussion length of a typical oil change interval. Assuming an oil change interval of that the Clean Air Act (CAA) and EPA’s As set forth above, EPA in its 2007 regulations require that SCR engine 10,000 miles, a DEF tank size of guidance states that SCR system manufacturers make efforts to improve approximately 80 gallons would be maintenance meets the regulatory the durability of their driver-dependent required to meet a 100,000 mile DEF definition of critical emission-related emission control systems after MY 2009. refill maintenance interval. Even a 16– maintenance. EPA has further clarified Navistar points to EPA’s statement from 20 gallon DEF tank (to meet a 2 oil the 2009 approval (‘‘expectation that that allowable maintenance change interval) would interfere with SCR-related technologies and the urea requirements apply to SCR systems, the space that is necessary for typical infrastructure will continue to develop including SCR catalysts, reducing agent, light-duty vehicle design and and mature.’’), as evidence that EPA reducing agent storage tanks, dosing transportation needs of the consumer. must require continuous valves, and all lines and hoses. Interior cabin volume and cargo space improvement.20 Navistar states that Additionally, because manufacturers are highly valued attributes in light-duty ‘‘other SCR technology is now available indicated that packaging constraints vehicles and trucks. Manufacturers have that offers exponentially longer would prevent them from being able to historically strived to optimize these maintenance ranges, weighs less and equip their vehicles with reducing agent attributes, even to the point of switching conserves fuel more.’’ Navistar storage tanks of sufficient size to allow a vehicle from rear-wheel drive to front- maintains that EPA’s approved reducing agent replenishment to comply wheel drive to gain the extra interior maintenance for liquid, urea-based SCR with required maintenance intervals of cabin space taken up by where the drive is not about ‘‘technological necessity’’. 100,000 or 150,000 miles, EPA clarified shaft tunnel existed, or switching the SCR engine manufacturers can easily that manufacturers would likely need to size of the spare tire from a quadruple the refill interval with little request a change to the scheduled conventional sized tire to a small or no effort. They also suggest that EPA maintenance interval pursuant to the temporary tire to gain additional trunk cannot legally accept SCR engine (b)(7) provision. space. Thus any significant interior, manufacturers’ lack of effort and extend Also set forth above, manufacturers cargo or trunk space used to store a DEF the same illegal DEF-replacement have in fact requested such changes for tank would be unacceptable to maintenance intervals for future model more frequent scheduled maintenance customers. There are also packaging years. ‘‘Because other SCR technology is to accommodate DEF refilling events for concerns with placing a large DEF tank in the engine compartment or in the proven to be available with a previous, current, and future model vehicles undercarriage. Most vehicle maintenance interval in the range of years. When EPA reviewed those undercarriages are already crowded 35,000 to 45,000 miles, EPA’s own manufacturer requests in 2009, it with the engine, exhaust system, allowable maintenance regulations determined that maintenance associated including catalytic converters and require that liquid, urea-based SCR meet with refill of DEF tanks was new mufflers, fuel tank, etc. limiting any that same benchmark.’’ scheduled maintenance and that the Navistar also chooses to contrast available space for a DEF tank. manufacturer-requested maintenance liquid, urea-based SCR systems with In addition to the inherently space request and scheduled maintenance other emission control technologies to constrained areas on the vehicle to place intervals were appropriate and suggest that the maintenance interval both fuel tanks and DEF tanks (an announced that determination in the additional 8 gallon tank represents a tied with DEF refills is unnecessarily 23 short They note EPA’s approval of new Federal Register. The broad-level very significant demand for space) the scheduled maintenance for exhaust considerations EPA evaluated when addition of the weight associated with recirculation valves at 67,500 miles.21 considering the maintenance interval the DEF represents significant concerns Navistar states that EPA’s basis for requests were the space and weight (e.g. performance and efficient defining ‘‘technologically necessary’’ constraints presented by incorporating a operation) on the operation of the has always been ‘‘the longest interval DEF tank into vehicle design, as well as vehicle. For example, assuming a that any manufacturer the impact a DEF tank’s inclusion could density of 9 lb/gallon, an 8 gallon DEF have on engine performance. In our tank represents an additional 72 lbs on refills to be deferred for lengthy periods of time. As 2009 Federal Register notice, we a vehicle already looking to optimize such, Navistar maintains that EPA has illegally concluded that the requested intervals performance. Adding additional DEF amended its allowable maintenance regulations to were appropriate because we tank size to even accommodate a two- eliminate the requirement that maintenance be shown as likely to occur. Similarly, Navistar points determined that manufacturer- oil change interval is not feasible or to EPA’s 2001 rulemaking and maintains that EPA recommended DEF refill intervals practical given these weight constraints. ‘‘concluded its maintenance inducements do not approximated the maximum feasible A requirement for a larger DEF tank may create a reasonable likelihood that the maintenance maintenance intervals associated with will be performed. (See 2011 Rule at 5053 (finding also have an adverse effect on the ability no ‘‘adequate safeguards in place to ensure the reasonable DEF tank sizes. We also of a manufacturer to meet greenhouse [DEF] is used throughout the life of the vehicle.’’) concluded that the maintenance gas emission standards and fuel 20 Navistar maintains that SCR engine makers intervals recommended ensure that the economy standards. could have substantially increased the 2009–2011 functions and operational efficiency of Presently, no manufacturer has DEF replacement intervals by doubling the size of the DEF tank and decreasing urea consumption by presented any indication that things half. 22 45 FR 4136, 4141 (January 21, 1980). have changed in any material fashion 21 73 FR 79089 (December 24, 2008). 23 74 FR 57671 (November 9, 2009). that would allow for the installation of

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larger DEF tanks and/or less frequent maintenance interval in the range of with a diesel fuel capacity of 200 DEF refilling intervals on light duty 35,000 to upwards of 45,000 miles, gallons and achieving 6.5 miles per vehicles and trucks. More importantly, Navistar presents no further evidence gallon fuel efficiency. Similarly, a EPA is aware of no technological regarding this technology. Navistar has medium heavy-duty engine would advances in this area and believes that presented no evidence that such require 375 gallons of DEF weighing none are likely to occur in the near technology is currently available in the 3,275 lbs to meet a 150,000 mile future. The space and weight constraints marketplace and can meet all interval. EPA believes that such tank presented by inclusion of a DEF tank requirements of the Clean Air Act and sizes are clearly not reasonably feasible into vehicle design are inherent. Forcing the regulations promulgated thereunder. in light of the weight and space manufacturers to install larger DEF EPA knows of no application for demands and constraints on heavy-duty tanks would not only be impractical for certification of engines using such trucks and the consumer demand for as manufacturers, it would also present technology; nor have any engines using much cargo-carrying capacity as utility constraints for consumers, such technology on heavy-duty engines possible.25 drivers, and operators. Therefore, been introduced within the United The Agency also believes that alternative maintenance intervals States. In any case, such technology intervals that are not as long as 150,000 remain technologically necessary for would be different technology than the miles but are longer than 2:1 would refilling DEF tanks used on SCR DEF-based SCR technology being used require DEF tanks that are too large or systems. by current SCR manufacturers. If engine too heavy to be feasibly incorporated EPA notes that the DEF refill families using such EGNR technology into vehicles. Available data show that maintenance interval being equivalent become established in the marketplace heavy-duty engines equipped with SCR- to and occurring with the oil change and can meet all of the requirements in based systems will consume DEF at a interval is a fairly long interval (e.g. EPA’s regulations, then it might be rate that is approximately 2%-4% of the 7,500 to 12,500 miles) for light-duty appropriate to revisit this issue, rate of diesel fuel consumption. Because vehicles and trucks and is not likely to although the fact that such technology is of inherent space and weight constraints result in overly frequent maintenance substantially different from DEF-based in the configuration and efficient under typical vehicle driving. EPA also SCR would be relevant for determining operation of heavy-duty vehicles, there believes that an adequate DEF supply whether the establishment of this are size limits on the DEF tanks. will be available to perform the DEF technology is relevant to the Currently, there are truck weight limits refills at the stated intervals. EPA establishment of maintenance intervals that manufacturers must address when believes it important to also consider for DEF-based SCR. making adding or modifying truck when, where and how often vehicle For vocational vehicles such as dump designs. EPA expects and believes that owners or operators are most likely to trucks, concrete mixers, refuse trucks manufacturers are taking significant and perform the DEF refill maintenance. For and similar typically centrally-fueled appropriate steps in order to install light-duty vehicles and light-duty applications, EPA believes the DEF tank reasonably sized DEF tanks to achieve trucks, EPA believes the requested DEF refill interval should equal the range (in the DEF refills intervals noted. For refill interval’s association with the oil miles or hours) of the vehicle operation example, manufacturers are taking such change interval is appropriate given the that is no less that the vehicle’s fuel steps as reducing the number of likelihood of DEF availability at service capacity (i.e., a 1:1 ratio). For all other batteries on vehicles despite customer stations and the likelihood that DEF vehicles, EPA believes the DEF tank demands or designing space saver refill would occur during such service. refill interval must provide a range of configurations, in some instances Recognizing that alternative vehicle operation that is no less than extending an already very limited frame maintenance intervals for DEF refilling twice the range of vehicle’s fuel capacity rail distance to incorporate the DEF 24 remain technologically necessary due to (i.e., a 2:1 ratio). As EPA has noted tanks and SCR systems, moving space and weight constraints, EPA previously, assuming that 25,000 compressed air tanks inside the frame believes that the above-described gallons of diesel fuel were consumed to rails, redesigning fuel tank alternative maintenance intervals reach a 150,000 mile interval (the configurations at significant costs, and requested by light-duty vehicle interval applicable to catalyst otherwise working with significant size manufacturers are appropriate. maintenance for heavy-duty engines), and weight constraints to incorporate B. Heavy-Duty Requests and assuming a 3% DEF consumption DEF tanks. EPA was provided with rate, 750 gallons of DEF weighing examples of the consequences of EPA continues to believe it is approximately 6,750 pounds would be reasonable to base the DEF refilling requiring heavy-duty vehicles to required to meet a 150,000 mile accommodate a DEF refill interval of event on diesel refueling intervals given maintenance interval for DEF refill. A that it is likely that the DEF refill 5:1, and the information provided to the line-haul truck is allowed a maximum Agency strongly suggested that great maintenance would be undertaken at gross vehicle weight of 85,000 pounds compromises would be required in cost, the time of fuel refill due to DEF of which approximately 45,000 pounds weight and utility of vehicles. Increased infrastructure developed at diesel is for cargo carrying. A DEF tank of this refueling stations. EPA agrees with size would reduce the cargo-carrying 25 Navistar states, at page 5 of its comments, that manufacturers that the DEF refilling capacity by 15%. Another example from ‘‘[d]eviation from ‘minimum’ maintenance is rare intervals requested by EMA, as a the line-haul industry suggests that a and intended * * * to be temporary. As noted threshold matter, are ‘‘technologically DEF tank size of over 900 gallons would above, EPA has found that DEF refill is a new type necessary.’’ EPA knows of no SCR be needed to reach the 150,000 mile of maintenance and is not fairly considered as part of the maintenance of the catalyst covered under technology that is currently available interval for a common highway vehicle (b)(4). In any case, it is clearly of a different type that is yet capable of attaining higher than normal physical maintenance of an emission- mileage without a DEF refill. Although 24 As SCR-equipped vehicles uniformly have a related part and EPA must make its determination Navistar maintains that EPA is aware of constantly viewable DEF level indicator, EPA is not of maintenance interval based on the particular its ‘‘EGNR’’ technology that it has including a DEF tank refill interval equal to no less maintenance being applied. Even Navistar’s than three times the range of the vehicle’s fuel comments do not suggest that 150,000 miles would ‘‘developed for production and capacity (i.e., a 3:1 ratio) for vehicles without such be an appropriate maintenance interval for DEF introduced’’ that provides a an indicator. refill.

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tank sizes and weights on the magnitude where such enlarged DEF tanks can of a vehicle. For example, refuse trucks of 150 to 325 lbs. would be required and reasonably be located or the effects on are designed with appropriate fuel in some cases diesel fuel volumes such tanks on operational efficiency. In capacity to operate over residential and would need to be reduced. The extra addition, in determining the minimum commercial customer routes and have weight associated with the DEF required maintenance interval for DEF, Navistar enough reserve driving range to then to meet the 2:1 refill intervals represents suggests that manufacturers can double allow delivery of payload to a landfill a significant challenge to manufacturers maintenance intervals by lowering often in remote locations. If a seeking to meet both weight and size engine-out emissions, which would manufacturer maintained fuel tank size requirements for their vehicle designs. reduce the DEF dosing frequency and in and increased the frequency at which In addition, requiring a longer DEF refill turn extend the refill interval for a fixed the trucks must refuel, these trucks may interval may result in increased DEF tank size. The Agency reviewed the not be able to accomplish their intended greenhouse gases and decreased fuel potential for engine manufacturers to mission without making additional economy. EPA believes that in light of lower engine-out NOx through in- stops for fuel. Fueling stations may not the existing tight space constraints and cylinder control techniques such as be directly located along the remote the overall desire to maximize cargo- injection timing retard and exhaust gas route to some landfills, necessitating carrying capacity to minimize emissions recirculation (EGR). It is clear that unplanned trip deviations. At the very and meet consumer operational lowering engine-out NOx will directly least, these trucks would be impaired in demands, and the built-in DEF tank size lower the quantity of DEF that is needed the ability to accomplish their mission. buffer to ensure DEF refills, that the to meet the NOx standard and hence Similarly, line-haul trucks are designed proposed DEF tank sizes are conceptually might extend the DEF with necessary fuel capacity to deliver technologically necessary and are also refill interval. However, as documented freight over significant interstate reasonable and appropriate. EPA in the EPA rulemaking that set a distances while minimizing the need for believes that requiring tank sizes above Nonconformance Penalty (NCP) for the refueling stops. Increasing the frequency these ratios will cause increases in 2004 NOx standards, for the relevant at which the trucks must refuel space constraints and weight that would range of NOx control (around 2 g/bhp- compromises the ability to accomplish not be appropriate for these vehicles. hr NOx engine out) and these specific their mission. Increasing the frequency Similarly, EMA notes that under its in-cylinder NOx control technologies, of refueling stops poses a serious request, manufacturers would employ each one gram of NOx reduction is negative consequence to the end user of the 1:1 refilling ratio for only a small expected to result in a 5 percent these trucks given their use in number of vocational applications and increase in fuel consumption.26 It can commercial applications where the time those vehicle applications have very also be estimated that the DEF to accomplish a mission is business limited vehicle space available to house consumption rate is approximately one critical. EPA does not believe its surplus DEF. Such applications (e.g., a percent of fuel consumption per one allowable maintenance provisions are garbage truck, concrete mixer, beverage gram of NOx reduction. Since the intended to drive this type of impact. truck, or airport refueler) will also be increase in fuel consumption to reduce Navistar also suggests that SCR engine refueled daily at central locations. At NOx by one gram is approximately five approximately 0.134 ft3 per gallon, any makers are legally required to make times higher than the increase in DEF efforts to improve the time between extra DEF would displace significant consumption to treat that same one space available to vehicle components maintenance for their SCR systems. gram of NOx, it is clear that reducing However, the regulations do not require and subsystems on both the vocational engine-out NOx in order to extend the trucks at the 1:1 refill interval as well as this, and EPA must review the DEF refill interval would require an technological necessity of maintenance the 2:1 vehicles. increase in the fuel tank size five times In its comments, Navistar suggests intervals based on the existing factual that of the volume savings in the DEF circumstances. Current circumstances that a longer DEF refill maintenance tank size in order to keep the same interval in the range of 35,000 to 45,000 do not indicate that a larger refueling interval. In other words, maintenance interval is appropriate. miles should be approved. As noted reducing engine-out NOx in order to above, one of Navistar’s justifications for While EPA’s statement made in the extend the DEF refill interval while this longer interval is the claim that 2009 notice indicates that EPA will keeping the same diesel refueling other technology is available that would continue to monitor the evolution of interval would cause the fuel tank to need a maintenance interval no shorter SCR systems along with urea grow larger necessitating a reduction in than this. However, as discussed, EPA infrastructure to determine whether the the DEF tank volume at a ratio of 5:1. has no evidence that such technology is frequency of DEF refills can be adjusted, Since that increased fuel tank size actually available at this time, nor does this does not imply that adjustment is would then necessitate a smaller DEF EPA believe that the availability of this necessary or appropriate, or in which tank, the resulting service interval other technology would necessarily direction such adjustment would go. In would be shortened not lengthened. impact the maintenance interval needed addition, regarding Navistar’s reference It could be argued that there’s no need for DEF-based SCR. to a 1980 EPA rulemaking regarding Navistar also argues that engine to increase fuel tank size in response to EPA’s consideration of the longest manufacturers using SCR should have higher fuel consumption rates because interval that any manufacturer made efforts to increase DEF-refill operators can simply refuel at greater recommends, while EPA does look at intervals since 2009 and that it is frequencies. To this point, it is such information, that interval does not ‘‘certainly feasible’’ for SCR systems to important to note that the effective necessarily become the interval meet such a range. Although Navistar operating range of a vehicle on a single determined under (b)(7). In some maintains that SCR engine makers can tank of fuel is a key design parameter instances EPA may set an even more easily quadruple the refill interval with that determines the mission capability frequent interval and in others the little or no effort, Navistar suggests one Agency may set a less frequent interval; 26 ‘‘Final Technical Support Document: way to reach this interval is to double Nonconformance Penalties for 2004 Highway Heavy EPA’s determination of what is a DEF tank size, and Navistar makes no Duty Diesel Engines’’, EPA420–R–02–021, August feasible interval for an engine family or effort to present evidence depicting 2002. an industry is based on a number of

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factors including manufacturer(s) a shorter maintenance interval for a (b)(6). Indeed, although EPA ‘‘noted’’ recommended intervals, any physical or particular engine family or application the likelihood of performance in its technological constraints, burdens that than that approved for the industry if 2009 notice, EPA did so in order to may be placed on the operator and what the manufacturer can show that a provide the regulated community with a are reasonable expectations of durability shorter interval is the maximum feasible complete picture of how the allowable from an operator’s perspective, among interval necessary for the particular maintenance provisions should be read other factors. engine or vehicle configuration being together and how they complement each After reviewing this data and certified. other. In addition, EPA notes that the information, EPA believes that longer Navistar and the SCR Engine determination of what is maximally refill intervals than those noted above Manufacturers suggest, respectively, feasible under (b)(7) does not require, or would require larger and heavier DEF that the ‘‘likelihood of the maintenance in fact include, a consideration of the tanks, and the design and engineering being performed in-use’’ is the inducements (as described above). EPA work performed by manufacturers thus touchstone of allowable maintenance, or nevertheless believes that such far indicate that the recommended DEF is the most important factor in inducements clearly and sufficiently refill intervals noted above establishing the precise maintenance provide the necessary demonstration of approximates the maximum feasible interval. At the outset, EPA believes it likelihood of maintenance. maintenance intervals associated with is important to note the context of the Conversely, with respect to the reasonable DEF tank sizes, given the term ‘‘reasonable likelihood of being arguments from the SCR Engine substantial negative consequences of performed in-use’’ within paragraph Manufacturers, the fact that longer DEF refill interval requirements. (b)(6)(ii). For critical emission-related maintenance is likely to occur does not The maintenance intervals maintenance (including critical affect the determination of what is the recommended ensure that the functions emission-related maintenance under appropriate ‘‘technologically necessary and operational efficiency of such paragraph (b)(6)(i), as well as such maintenance interval.’’ While the vehicles are not overly compromised. maintenance as determined by EPA likelihood of maintenance and the Based on this information we believe under (b)(7)), manufacturers are technological necessity of regular the intervals noted above are warranted. required to show such likelihood prior maintenance are both required elements EPA is not approving a 1:1 DEF to performance of such maintenance on under (b)(7), and the desire to increase maintenance interval across the heavy- durability test vehicles. Manufacturers the likelihood of maintenance may duty engine class at this time. EPA notes can satisfy this requirement by meeting inform the particular form of the that manufacturers have been meeting a one of the specified conditions in maintenance interval (i.e. having DEF 2:1 ratio for DEF tank size for the past paragraphs (b)(6)(ii) (A) through (F). refill maintenance be at the same time two years and the commenters have not Paragraph (b)(7) does not specify any as oil change), the two requirements are yet provided sufficient evidence that additional showing required of the separate and distinct. The this ratio will be infeasible in the future. manufacturer should an alternative ‘‘technologically necessary maintenance Moreover, the information EPA has maintenance interval for emission- interval’’ requirement is motivated by a received to date has not shown that any related critical maintenance be desire to minimize the amount of change in the maintenance interval is approved. Thus, if a manufacturer can emission-related maintenance, which is necessary or appropriate throughout the show compliance with one of the distinct from the need to make sure that heavy-duty engine category, rather than specified conditions in (b)(6)(ii), the such maintenance is likely to occur. As for particular applications, or that a manufacturer has met the regulatory noted, the SCR Engine Manufacturers refill interval as low as 1:1, rather than requirement to show a ‘‘reasonable have not shown that the 1:1 1.8:1 or 1.5:1, is necessary or likelihood of [the maintenance] being maintenance interval is ‘‘technologically appropriate. EPA recognizes that the performed in-use’’ as required under necessary.’’ Therefore, while EPA agrees implementation of the future standards paragraph (b)(7). As noted in the 2009 that the DEF refill maintenance is likely for greenhouse gases, beginning as early notice, SCR engine manufacturers (or to occur in use, the 1:1 interval does not as the 2013 model year, may have some vehicle manufacturers) are using a meet the requirements of (b)(7). implications for this issue, but the SCR clearly displayed visible signal system Engine Manufacturers have not shown approved by EPA, meeting the V. Approval of New Scheduled that these standards, which are phased requirements of (b)(6)(ii)(C). In addition, Maintenance for SCR Systems in and are not applicable in the 2012 SCR engine manufacturers are going A. Light-Duty Approval model year, will cause the 2:1 refill beyond the minimum requirements of interval to be infeasible across the (b)(6)(ii) and are designing, and are For the reasons set forth above, EPA industry, and certainly not in the 2012 expected by EPA to design (under the finds it appropriate to approve new model year. While EPA agrees that the adjustable parameter regulatory scheduled maintenance intervals for warnings and inducements in place for provisions) their systems to include DEF refill equal to the scheduled oil failure to replenish DEF will restrict the inducements that will adequately trigger change interval for all light-duty ability of operators to run without DEF, the operators to refill the DEF tanks by vehicles and light-duty trucks, medium and have made operation without DEF reducing vehicle performance to a point duty vehicles and other chassis certified virtually unheard of, a DEF tank ratio of unacceptable for typical driving, which vehicles up to 14,000 pounds for 2011 1:1 will increase the likelihood that would meet the requirements of and later model years. operators will need to make more 27 (b)(6)(ii)(A). Section (b)(7) does not B. Heavy-Duty Approval frequent stops to replenish DEF, and include an affirmative requirement on possibly may need to stop solely to the petitioner to demonstrate nor on For the reasons set forth above, EPA replenish DEF, which may place a EPA to find a likelihood of maintenance again approves new scheduled greater burden on the operator in terms being performed beyond that which is maintenance intervals for DEF based on of the frequency of DEF refills. clearly and specifically prescribe at ratios to a given vehicle’s fuel capacity EPA also notes that the regulations for engine certified heavy-duty engines allow any manufacturer to petition EPA 27 See EPA’s draft guidance at 76 FR 32886 (June and vehicles for 2012 and later model under the ‘‘paragraph (b)(7) process’’ for 7, 2011). years. Vocational heavy-duty vehicles

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(e.g., dump trucks, concrete mixers, Dated: December 23, 2011. engine during its service accumulation refuse trucks, and other centrally-fueled Gina McCarthy, for emission testing purposes. vehicles) are permitted a DEF tank Assistant Administrator for Air and Maintenance performed on NRCI maintenance interval no less than the Radiation. engines is classified as critical emission- vehicle’s fuel capacity (i.e., a 1:1 ratio of [FR Doc. 2011–33842 Filed 1–4–12; 8:45 am] related maintenance if it includes any DEF refill to fuel refill). For all other BILLING CODE–P adjustment, cleaning, repair, or heavy-duty vehicles, EPA approves a replacement of critical emission-related DEF tank refill interval no less than components. As set forth at 40 CFR 1039.125(a)(1), 1039.125(a)(2), and twice the range of the vehicle’s fuel ENVIRONMENTAL PROTECTION 1039.125(a)(3), a manufacturer may capacity (i.e., a 2:1 ratio). AGENCY schedule critical emission-related [FRL–9615–9] C. Reasonable Likelihood of maintenance on these types of Maintenance Being Performed In Use Control of Emissions From New components if certain conditions are Nonroad Compression-Ignition met, including a demonstration that the As stated above, because DEF refills Engines: Approval of New Scheduled maintenance is reasonably likely to be are considered ‘‘critical emission-related done at the recommended intervals, and Maintenance for Selective Catalytic maintenance,’’ manufacturers must depending upon the size of the engine Reduction Technologies ‘‘show the reasonable likelihood of such and the type of emission-related maintenance being performed in use.’’ AGENCY: Environmental Protection component, an EPA-prescribed 40 CFR 86.094–25(b)(6)(ii) and Agency (EPA). minimum hour maintenance interval. 86.1834(b)(6)(ii) provide a number of ACTION: Notice. For example, a manufacturer of engines means by which manufacturers may below 130 kW may not schedule demonstrate such a reasonable SUMMARY: This notice announces that maintenance more frequently than 3,000 likelihood. Among those means of EPA has granted manufacturers new hours for catalytic converters and if the demonstration are visible signal systems emission-related scheduled engines are at or above 130 kW then a manufacturer may not schedule the to alert drivers and operators that maintenance and maintenance intervals catalytic converter maintenance more maintenance is needed, or data for the replenishment of the nitrogen- frequently than 4,500 hours. demonstrating that drivers or operators containing reducing agent for selective catalytic reduction (SCR) technologies In addition, should a manufacturer are induced to perform maintenance. used with nonroad compression- desire a new or shorter scheduled EPA intends to review specific ignition (NRCI) engines for 2011 and maintenance interval (that it wishes to manufacturer certification applications later model years. Replenishment of recommend to purchasers and perform in order to review whether these reducing agent for SCR technologies is during service accumulation on regulatory requirements are met. considered critical emission-related emission-data engines) not found under § 1039.125(a)(2) and 1039.125(a)(3), and D. Applicability maintenance. instead utilize § 1039.125(a)(5), then the FOR FURTHER INFORMATION CONTACT: The Agency, as stated above, has manufacturer must submit a request to David Dickinson, Compliance Division, EPA for approval. A request for a shorter approved alternative maintenance U.S. Environmental Protection Agency, requests to ensure the proper maintenance interval includes new 1200 Pennsylvania Ave. NW., (405J), scheduled maintenance on emission- functioning of SCR systems by allowing Washington, DC 20460. Telephone: an appropriately frequent refilling of related components that were not in (202) 343–9256. Email address: widespread use with NRCI engines DEF tanks. We approve these requests [email protected]. before 2011. Requests from for all future model years. EPA SUPPLEMENTARY INFORMATION: manufacturers for new scheduled expressly reserves its ability to review I. Background maintenance intervals must include: (1) this approval at any time in the future, A description of the proposed should any technological advances be EPA adopted new emission standards maintenance step, (2) the recommended made that would allow for more or less for NRCI engines on June 29, 2004.1 We maximum feasible interval for this frequent DEF refilling or otherwise call expect that many manufacturers will maintenance, (3) the rationale with this approval into question. use SCR systems to meet the final Tier supporting evidence to support the need IV NO reduction requirements for their VI. Procedures for Manufacturer X for the maintenance at the diesel engines. SCR systems use a recommended interval, and (4) a Objections nitrogen-containing reducing agent that demonstration that the maintenance Any manufacturer may request a usually contains urea and is known as will be done at the recommended hearing on this determination. The diesel exhaust fluid (DEF). The DEF is interval on in-use engines. request must be in writing and include injected into the exhaust gas upstream In considering requests for new a statement specifying the of a catalyst and requires periodic scheduled maintenance EPA will manufacturer’s objections to this replenishment (maintenance) by evaluate the information provided to refilling the DEF tank. EPA and any other available determination, and data in support of NRCI engine manufacturers are information to establish alternate such objections. If, after review of the required to provide written instructions specifications for maintenance intervals manufacturer’s objections and for properly maintaining and using the as deemed appropriate. supporting data, we find that the request engine, including the emission control EPA believes the existing allowable raises a substantial factual issue, we system, to purchasers of new engines. scheduled maintenance hour intervals shall provide the manufacturer with a These maintenance instructions, applicable to catalytic converters are hearing in accordance with 40 CFR including the hours associated with the generally applicable to SCR systems 86.1853–01 with respect to such issue. maintenance intervals, also apply to the which contain a catalyst, but that SCR systems are a new type of technology 1 69 FR 38958 (June 29, 2004). and that DEF refills are a new type of

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maintenance uniquely associated with approximately 2% to 4% of the rate of The requestors also suggest that their SCR systems. Therefore, the 3,000 hour diesel fuel consumption (consumption recommended DEF refill intervals are (engines below 130 kW) and 4,500 hour rates could be even higher as one the maximum intervals since longer (engines at or above 130 kW) intervals requestor noted), it would be technically intervals would require larger and are generally applicable to SCR systems, infeasible to equip a nonroad engine or heavier tanks, which may jeopardize the but are not controlling in determining piece of equipment with a DEF tank engine or equipment’s mission or the appropriate DEF refill interval. As large enough to operate for the standard functionality. One of the requestors noted, the SCR systems are a new type 3,000- or 4,500-hour maintenance noted, by way of example, that its of technology designed to meet the interval without DEF refill. For average engines used in modern newest emission standards and the DEF example, considering a representative agriculture and construction machines refill intervals represent a new type of range of construction and agricultural would consume as much as 1,000 to scheduled maintenance; therefore, EPA equipment, to meet the 3,000- to 4,500- 2,200 gallons of DEF in order to meet believes that manufacturers may request hour maintenance requirements: the 4,500-hour regulated interval. Such from EPA the ability to perform the new • A skid steer loader with a 50 tanks (weighing 9,000/20,000 pounds) scheduled maintenance of DEF refills. kilowatt (kW) engine, that normally would be essentially impossible to II. Current Requests carries a maximum of 25 gallons of fuel, install given the limitations in available would require a DEF capacity of space and visibility for operators on EPA has received information from machines, with impacts on safety, along 2 approximately 150 gallons, weighing the Engine Manufacturers Association, over 1,400 pounds and requiring more with massive increases of machine as well as AGCO, Caterpillar, and than 20 cubic feet (ft3) of space. weight which would pose serious IVECO supporting their requests for new • A bulldozer with a 150 kW engine, problems in operability in agricultural recommended scheduled maintenance that normally carries a maximum of 110 lands along with worsening machine intervals for their SCR systems. fuel consumption resulting in higher Several of the requests noted that the gallons of fuel, would require a DEF CO emissions. Such constraints include DEF is essential for the proper capacity of approximately 900 gallons, 2 the need to work and pass in very functioning of the SCR system, and weighing over 8,000 pounds and 3 narrow openings in orchards, safety and thereby constitutes a ‘‘critical’’ requiring more than 120 ft of space. • visibility concerns, and the operability maintenance component.3 A combine harvester with a 250 kW The requests primarily seek EPA’s engine, that normally carries a of other components on the equipment approval of a DEF tank that provides a maximum of 250 gallons of fuel, would (including clearance between the DEF range of operation that is equal to the require a DEF capacity of approximately tank on tires). This requestor also asks engine or equipment’s fuel capacity— 900 gallons, weighing over 8,000 EPA to consider the shelf-life of DEF at this is known as a 1:1 ratio—for 2011 pounds—almost half as much as the normal ambient temperatures as 18 and later model year nonroad engines.4 combine’s grain tank capacity—and months, much less than the 3- to 5-year In determining the recommended DEF requiring more than 120 ft3 of space. period which roughly corresponds to refill intervals, several of the requestors • A large off-highway mining truck the interval of 4,500 hours. applied ‘‘good engineering judgment’’ as with a 900 kW engine, that normally A separate request noted the described in the March 27, 2007 SCR carries a maximum of 500 gallons of important relationship between DEF certification guidance for on-highway fuel, would require a DEF capacity of and fuel volume, packaging and engines.5 Some noted that since SCR approximately 5,500 gallons, weighing serviceability concerns, along with tilt systems may consume DEF at a rate of over 50,000 pounds and requiring more capability and weight concerns in than 735 ft3 of space. support of its recommended 1:1 DEF 2 The EMA members participating in nonroad Several of the requests suggested that refill ratio. A 1:1 ratio develops the diesel engine activities include: Caterpillar Inc., in order to apply good engineering correct machine operating habit to fill Cummins Inc., Deere & Company, Daimler Trucks the DEF at each fuel fill interval, and North America LLC, Deutz Corporation, Fiat judgment EPA must strike the proper Powertrain Technologies S.p.A., Hino Motors, Ltd., balance between the dictates of from a vehicle design standpoint many Isuzu Manufacturing Services of America, Inc., operating nonroad equipment (which of its applications are taking away fuel Komatsu Ltd., Kubota Engine America Corporation, requires DEF tanks of small enough tank volume to create space for the DEF MTU Detroit Diesel Corporation, AB Volvo, and tank and provide instances where the Yanmar America Corporation. weight and size so as not to hinder the 3 40 CFR 1039.801 defines a critical emission- engine’s or equipment’s function while DEF tank is nestled in the fuel tank area. related component to include, in part, any also not causing too frequent stops or In terms of serviceability, the optimal component whose primary purpose is to reduce downtime) and what the requestors placement of the DEF tank is close to emissions. suggest is EPA’s need to ensure the fuel tank so both can be refueled 4 Several of the requests also seek a 2:1 DEF refill conveniently at the same time. As the ratio if there is no DEF level indicator. However, emission compliance in use. The because EPA has already made clear that such DEF requestors suggest that mobile nonroad filler neck on the fuel tank is already level indicator is otherwise necessary (see footnote engines and equipment are directly accessible from ground level, placing 8) the Agency is not evaluating the 2:1 ratio request analogous to ‘‘vocational’’ on-highway the DEF tank nearby ensures that it is at this time. Separately, a couple of the requests also accessible. Providing such seek a DEF tank size that is capable of sustaining vehicles, in that they typically are a minimum of 120 hours of operation for engines refueled on a daily basis from a central accessibility increases the limitations on used in part-time and full-time stationary location and so are well-suited to the the design and placement of the DEF applications when the engine is provided with a refilling of their DEF tanks on the same tank. Tanks sized for a 1:1 ratio are very large, and possibly unlimited fuel supply. One 6 much more likely to fit within the of those requests has been withdrawn. The other daily basis. does not provide sufficient evidence to support why allowable space on a piece of equipment the recommended interval is the appropriate 6 In EPA’s November 9, 2009 approval of new than a larger tank. Examples were maintenance interval for these particular scheduled maintenance for SCR-equipped on- provided by the requestor noting where applications. Thus, the Agency is not taking action highway engines and vehicles, the Agency found 2:1 tanks would not fit. This requestor to approve the requests at this time, but may act in that for vocational vehicles the DEF refill interval the future if more detailed information on this issue should equal the range of the vehicle operation that also noted that a 2:1 DEF tank would is provided to EPA. is no less than the vehicle’s fuel capacity (i.e. a 1:1 add 65 to 220 pounds to machines and 5 See CISD–07–07, p. 2. ratio). 74 FR 57671. would negatively affect the ability to

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carry payload, which is one of the expects EPA to provide guidance on an EPA notes that the regulations allow primary functions of the majority of appropriate final inducement once the any manufacturer to petition EPA under construction machines. Lastly, SCR system runs out of DEF. the ‘‘paragraph (a)(5) process’’ for a new construction machines must operate in maintenance interval for a particular III. Discussion a variety of conditions and operate often engine family or application than that on steep slopes. Equipment with 1:1 EPA believes that SCR systems are a approved for the industry if the DEF tanks of the correct design creates new technology and are properly manufacturer can show that a certain a lower risk of losing DEF fluid suction considered a critical emission-related interval is the appropriate maintenance pickup when operating on extreme tilt component since their primary purpose interval for the particular engine as compared to larger tanks. is to control emissions. In addition, the configuration being certified. In order to fulfill the obligation to replenishment of DEF as part of EPA also notes that all critical demonstrate that the maintenance will maintaining the SCR system’s emission-related maintenance must be done at the recommended interval on functionality is considered to be critical have a reasonable likelihood of being in-use engines, requestors noted that emission-related maintenance under done at the recommended intervals on manufacturers will deploy warnings and 1039.125(a). in-use engines. Paragraph 1039.125(a)(1) inducements should the DEF level EPA believes it appropriate to sets forth several methods by which become too low. In addition to these evaluate the DEF refill rates by taking such demonstration can be made, initial inducements, should the operator into consideration the space and weight including data showing that if a lack of ignore them, then the requestors noted constraints typically involved with the maintenance increases emissions, it also that manufacturers will employ ‘‘severe range of NRCI engines using SCR unacceptably degrades the engine’s inducement’’ intended to disable the systems, including safety and impacts of performance. In the context of SCR functionality of the engine or weight and dosing rates on greenhouse systems and the potential of an empty 7 equipment. gas emissions and fuel efficiency. EPA DEF tank and an inoperable SCR Furthermore, EPA notes that several believes it must also take into system, EPA notes that equipment current SCR systems include the final consideration the likelihood that the under such operating conditions are inducement of either having the engine maintenance of DEF refills will be expected to shut down or idle only. shut down or idle only (with no power) performed by the owner or operator.9 Engine manufacturers employing such when no DEF is present in the DEF tank final inducements meet the (or the system is no longer able to dose In our 2009 Federal Register notice regarding heavy-duty on-highway requirements of (a)(1) and furthermore with DEF), and such SCR systems meet meet the requirement under (a)(5) for EPA’s expectations of what is required engines and vehicles using SCR 8 systems, we concluded that the DEF refill intervals based on a 1:1 ratio. for nonroad SCR systems. As an For the reasons set forth above, EPA example, one manufacturer noted that requested intervals were appropriate approves a new scheduled maintenance ‘‘To provide the necessary assurance because we determined that interval for DEF refill that shall be no that the DEF tank will be refilled, each manufacturer-recommended DEF refill less than the equipment’s fuel capacity vehicle will be equipped with a intervals approximated the maximum (i.e., a 1:1 ratio of DEF refill to fuel constant viewable DEF level indicator feasible maintenance intervals refill) for 2011 and later model year included in the vehicle dashboard associated with reasonable DEF tank nonroad engines. display. * * * the operator display sizes. We also concluded that the system includes a visible warning signal maintenance intervals recommended IV. Procedures for Objections ensure that the functions and that indicates when the level of DEF in Anyone may request a hearing on this the tank is low and will need refilling. operational efficiency of such vehicles 10 determination. The request must be in As a final inducement, the system also are not overly compromised. EPA writing and include a description of includes programmed engine derates knows of no SCR technology for NRCI your objection and any supporting data. that limit engine performance once the engines that is yet capable of attaining The request must be made by February DEF level drops below certain levels, longer operation (generally beyond one 6, 2012. If, after review of any objection thereby limiting vehicle performance.’’ tank full of diesel) without a DEF refill. and supporting data, we find that the EMA, in its request, noted that should As noted by the requests, there are request raises a substantial factual issue, operators fail to notice audible or visible significant space and weight constraints we will hold a hearing in accordance warning signals indicating low DEF, associated with increasing the DEF tank with 40 CFR Part 1068 Subpart G. then the manufacturers may also use a size in order to accommodate a 2:1 refill reduction in engine power or equipment ratio. EPA believes it appropriate to take Dated: December 23, 2011. utility to provide more dramatic notice into consideration the need for locating Gina McCarthy, that the DEF tank needs refilling. This the DEF tank in close proximity to the Assistant Administrator, Office of Air and ‘‘severe inducement’’ is intended to fuel tank and the remainder of the SCR Radiation. disable the functionality of the engine or system, as well as the increased [FR Doc. 2011–33840 Filed 1–4–12; 8:45 am] equipment, and to substantially limit likelihood that the DEF tank will be BILLING CODE P the likelihood that the engine or refilled if it becomes standard operating equipment could perform any useful practice to refill the DEF tank at the work, but is not intended to prohibit the same time as the fuel tank. EPA believes engine or equipment’s mobility or that such nonroad equipment is similar FEDERAL HOUSING FINANCE ability to idle. EMA also notes that it to centrally-fueled heavy-duty on- AGENCY highway vehicles and that there is a [No. 2011–N–14] 7 EMA suggests that a severe inducement would sufficient basis and a reasonable reduce the engine to 60% of the rated speed and expectation that DEF tank refills will Privacy Act of 1974; System of 50% rated torque. occur on a timely basis. 8 EPA held a public webinar on July 26, 2011. Records Copies of the presentation used at this webinar can be found at: www.epa.gov/otaq/cert/documents/ 9 40 CFR 1039.125(a)(5). AGENCY: Federal Housing Finance nrci-scr-web-conf.2011-07-25.pdf. 10 74 FR 57561 (November 9, 2009). Agency.

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ACTION: Notice of the establishment of DATES: The addition of these new I. Comments new systems of records and removal of systems of records will become effective FHFA seeks public comments on the existing systems of records. February 14, 2012 without further three proposed new systems of records notice unless comments necessitate and will take all comments into SUMMARY: In accordance with the otherwise. FHFA will publish a new requirements of the Privacy Act of 1974, consideration. See 5 U.S.C. 552a(e)(4) notice if the effective date is delayed in and (11). as amended (Privacy Act), the Federal order to review comments or if changes Housing Finance Agency (FHFA) gives Instructions: In addition to are made based on comments received. referencing ‘‘Comments/2011–N–14,’’ notice of the proposed establishment of To be assured of consideration, three new Privacy Act systems of please reference the title and number of comments must be received on or before the system of records your comment records and the removal of four existing February 6, 2012. Privacy Act systems of records. addresses. The three proposed new systems are: ADDRESSES: Submit comments only Posting and Public Availability of ‘‘Emergency Notification System’’ once, identified by ‘‘2011–N–14,’’ using Comments: All comments received will (FHFA–14); ‘‘Payroll, Retirement, Time any one of the following methods: be posted without change on the FHFA and Attendance, and Leave Records’’ • Email: Comments to Alfred M. Web site at http://www.fhfa.gov, and (FHFA–15); and ‘‘Personnel Pollard, General Counsel, may be sent will include any personal information Investigative Records’’ (FHFA–16). The by email to [email protected]. provided. In addition, copies of all proposed new systems will replace Please include ‘‘2011–N–14’’ in the comments received will be available for systems of records issued by FHFA’s subject line of the message. examination by the public on business predecessor agencies, the Office of • Federal eRulemaking Portal: http:// days between the hours of 10 a.m. and Federal Housing Enterprise Oversight www.regulations.gov. Follow the 3 p.m., at the Federal Housing Finance (OFHEO) and the Federal Housing instructions for submitting comments. If Agency, Fourth Floor, 1700 G Street Finance Board (FHFB). Proposed you submit your comment to the NW., Washington, DC 20552. To make systems (FHFA–14) and (FHFA–15) will Federal eRulemaking Portal, please also an appointment to inspect comments, replace OFHEO systems ‘‘OFHEO–2 Pay send it by email to FHFA at please call the Office of General Counsel and Leave System’’ and ‘‘OFHEO–6 [email protected] to ensure at (202) 414–6924. Emergency Contingency Plan and timely receipt by FHFA. Please include II. Introduction Personnel Locator System,’’ and FHFB ‘‘2011–N–14’’ in the subject line of the system ‘‘FHFB–1 Employee Attendance message. This notice satisfies the Privacy Act Records.’’ Proposed system (FHFA–16) • U.S. Mail, United Parcel Service, requirement that an agency publish a will replace FHFB system ‘‘FHFB–5 Federal Express, or Other Mail Service: system of records notice in the Federal Personnel Investigative Records.’’ The mailing address for comments is: Register when there is an addition to FHFA has previously published a Alfred M. Pollard, General Counsel, the agency’s system of records. Congress system of records notice (‘‘Financial Attention: Comments/2011–N–14, has recognized that application of all Management System’’ (FHFA–2), 74 FR Federal Housing Finance Agency, 1700 requirements of the Privacy Act to 31949 (July 6, 2009)); however, in G Street NW., Washington, DC 20552. certain categories of records may have publishing that notice, FHFA did not Please note that all mail sent to the an undesirable and often unacceptable explicitly state that OFHEO and FHFB FHFA via the U.S. Postal Service is effect upon agencies in the conduct of system of records notices were being routed through a national irradiation necessary public business. replaced. Notice is hereby given that the facility, a process that may delay Consequently, Congress established systems of records notice ‘‘OFHEO–1 delivery by approximately two weeks. general exemptions and specific Financial Management System’’ and For any time-sensitive correspondence, exemptions that could be used to ‘‘FHFB–2 General Travel and please plan accordingly. exempt records from provisions of the Transportation Files’’ have been • Hand Delivered/Courier: The hand Privacy Act. Congress also required that replaced by ‘‘Financial Management delivery address is: Alfred M. Pollard, exempting records from provisions of System’’ (FHFA–2). Upon the effective General Counsel, Attention: Comments/ the Privacy Act would require the head date of this notice, the replaced OFHEO 2011–N–14, Federal Housing Finance of an agency to publish a determination system, ‘‘OFHEO–1’’ published at 63 FR Agency, 1700 G Street NW., to exempt a record from the Privacy Act 9007 (February 23, 1998) and ‘‘FHFB–2’’ Washington, DC 20552. The package as a rule in accordance with the as amended at 71 FR 61053 (October 17, should be logged at the Guard’s Desk, Administrative Procedure Act. The 2006) will be removed. First Floor, on business days between 9 Director of FHFA has determined that In addition, upon the effective date of a.m. to 5 p.m. records and information in these three this notice, the replaced FHFB systems, new systems of records are not exempt See SUPPLEMENTARY INFORMATION for ‘‘FHFB–1’’ published at 60 FR 46120 additional information on submission from the requirements of the Privacy (September 5, 1995), as amended at 62 and posting of comments. Act. FR 66865 (December 22, 1997) and 71 As required by the Privacy Act, 5 FR 61052 (October 17, 2006), and FOR FURTHER INFORMATION CONTACT: U.S.C. 552a(r), and pursuant to ‘‘FHFB–5’’ (originally published as Stacy Easter, Privacy Act Officer, paragraph 4c of Appendix I to OMB ‘‘FHFB–7 Agency Personnel [email protected] or (202) 414–3762, or Circular No. A–130, ‘‘Federal Agency Investigative Records’’ at 60 FR 46120 David A. Lee, Senior Agency Official for Responsibilities for Maintaining (September 5, 1995)), as amended at 64 Privacy, [email protected] or (202) 414– Records About Individuals,’’ dated FR 14920 (March 29, 1999), 68 FR 39947 3804 (not toll free numbers), Federal February 8, 1996 (61 FR 6427, 6435 (July 3, 2003), and 71 FR 61052 (October Housing Finance Agency, 1700 G Street February 20, 1996), FHFA has submitted 17, 2006); and the replaced OFHEO NW., Washington DC 20552. The a report describing the three new systems, ‘‘OFHEO–2’’ published at 63 telephone number for the systems of records covered by this FR 9007 (February 23, 1998), and Telecommunications Device for the Deaf notice to the Committee on Oversight ‘‘OFHEO–6’’ published at 71 FR 6085 is (800) 877–8339. and Government Reform of the House of (February 6, 2006) will be removed. SUPPLEMENTARY INFORMATION: Representatives, the Committee on

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Homeland Security and Governmental information about references; types and information for employees and Affairs of the Senate, and the Office of dates of investigations; investigative contractor personnel. The system Management and Budget. reports; dates, levels and types of provides for high-speed message clearances; and other information delivery that reaches employees and III. Proposed Systems of Records pertinent to granting or denying a contractor personnel in response to The first proposed system is security clearance or making a threat alerts issued by the Department of ‘‘Emergency Notification System’’ suitability determination. This proposed Homeland Security, weather related (FHFA–14). The proposed system will system of records will replace the emergencies, or other critical situations contain records related to FHFA system of records issued by FHFA’s that disrupt the operations and employees and contractor personnel predecessor agency FHFB. The replaced accessibility of a worksite. The system who provide emergency contact FHFB system, ‘‘FHFB–5 Personnel also provides for personnel information, including personal phone Investigative Records,’’ was originally accountability during an emergency, numbers, home and email addresses, published at 60 FR 46120 (September 5, through personnel sign-in and rapid and names and contact information of 1995—originally published as ‘‘FHFB–7 alert and notification. emergency points of contact. This Agency Personnel Investigative ROUTINE USES OF RECORDS MAINTAINED IN THE proposed system of records will replace Records’’), as amended at 62 FR 66865 the system of records issued by FHFA’s SYSTEM, INCLUDING CATEGORIES OF USERS AND (December 22, 1997), 68 FR 39947 (July THE PURPOSE OF SUCH USES: predecessor agency OFHEO. The 3, 2003), and 71 FR 61052 (October 17, replaced OFHEO system, ‘‘OFHEO–6 In addition to those disclosures 2006). generally permitted under 5 U.S.C. Emergency Contingency Plan and The three proposed new systems and 552a(b) of the Privacy Act, all or a Personnel Locator System’’ was the routine uses for each are set out in portion of the records or information published at 71 FR 6085 (February 6, their entirety and described in detail contained in this system may be 2006). below. The second proposed system is disclosed outside FHFA as a routine use ‘‘Payroll, Retirement, Time and FHFA–14 as follows: Attendance, and Leave Records’’ (1) When (a) it is suspected or (FHFA–15). The proposed system will SYSTEM NAME: confirmed that the security or contain records of individual’s name; Emergency Notification System. confidentiality of information in the home address; telephone numbers; SECURITY CLASSIFICATION: system of records has been compromised; (b) FHFA has determined Social Security number; organization Sensitive but unclassified. code; pay rate; salary; grade; length of that as a result of the suspected or service; pay and leave records; source SYSTEM LOCATIONS: confirmed compromise there is a risk of documents for posting time and leave Federal Housing Finance Agency, harm to economic or property interests, attendance; and deductions for 1700 G Street NW., Washington, DC identity theft or fraud, or harm to the Medicare; Old-Age, Survivors, and 20552; 1625 Eye Street NW., security or integrity of this system or Disability Insurance (also known as Washington, DC 20006; 1750 other systems or programs (whether Social Security); bonds; Federal Pennsylvania Avenue NW., Washington, maintained by FHFA or another agency Employee Group Life Insurance; union DC 20006; and any alternate work site or entity) that rely upon the dues; taxes; allotments; retirement; utilized by employees of the Federal compromised information; and (c) the charities; Federal Government and Housing Finance Agency (FHFA) or by disclosure is made to such agencies, commercial health benefits; Flexible individuals assisting such employees. entities, and persons who are reasonably Spending Account; Long Term Care necessary to assist in connection with Insurance; Thrift Savings Plan CATEGORIES OF INDIVIDUALS COVERED BY THE FHFA’s efforts to respond to the contributions; 401k plan contributions; SYSTEM: suspected or confirmed compromise awards; shift schedules; pay differential; This system contains records on and prevent, minimize, or remedy such tax lien data; wage garnishments; and current and former employees, harm. any other information pertaining to detailees, interns, fellows, volunteers, (2) Where there is an indication of a payroll, retirement, time and persons who work at FHFA under the violation or potential violation of law, attendance, and leave. This proposed Intergovernmental Personnel Act, and whether civil, criminal or regulatory in system of records will replace the current and former contractor nature, and whether arising by general systems of records issued by FHFA’s personnel. statute or particular program statute, or predecessor agencies, FHFB and by regulation, rule or order issued CATEGORIES OF RECORDS IN THE SYSTEM: OFHEO. The replaced FHFB system pursuant thereto, the relevant records in ‘‘FHFB–1 Employee Attendance The records in the system contain the the system of records may be referred, Records’’ was published at 60 FR 46120 individual’s name, division, office, as a routine use, to the appropriate (September 5, 1995), as amended at 62 home, work and personal electronic agency, whether federal, state, local, FR 66865 (December 22, 1997), and at mail addresses, work, home and cellular foreign or a financial regulatory 71 FR 61052 (October 17, 2006), and the telephone numbers, Blackberry PIN and organization charged with the OFHEO system, ‘‘OFHEO–2 Pay and telephone numbers, and other responsibility of investigating or Leave System,’’ was published at 63 FR emergency contact information. prosecuting such violation or charged 9007 (February 23, 1998). AUTHORITY FOR MAINTENANCE OF THE SYSTEM: with enforcing or implementing the The third proposed system is 5 U.S.C. 301 and Executive Order statute, or rule, regulation or order ‘‘Personnel Investigative Records’’ 12656, Assignment of Emergency issued pursuant thereto. (FHFA–16). The proposed system will Preparedness Responsibilities, dated (3) To any individual during the contain individual’s name; date of birth; November 18, 1988. course of any inquiry or investigation current and former home addresses; conducted by FHFA, or in connection work histories; education and financial PURPOSE(S): with civil or criminal litigation, if FHFA information; Social Security number; The purpose of the system of records has reason to believe that the individual information about family members; is to maintain emergency contact to whom the record is disclosed may

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have further information about the (11) To officials of a labor Administration General Records matters related therein, and those organization when relevant and Schedules and FHFA Records Retention matters appeared to be relevant at the necessary to their duties of exclusive and Disposition Schedules. Disposal is time to the subject matter of the inquiry. representation concerning personnel by shredding or other appropriate (4) To any individual with whom policies, practices, and matters affecting disposal systems. FHFA contracts to reproduce, by typing, working conditions. photocopy or other means, any record (12) To the Office of Management and SYSTEM MANAGER(S) AND ADDRESS: within this system for use by FHFA and Budget and the General Accountability Office of the Deputy Chief Operating its employees in connection with their Office when relevant and necessary to Officer, Federal Housing Finance official duties or to any individual who carry out their responsibilities or to Agency, 1625 Eye Street NW., is utilized by FHFA to perform clerical perform other functions within their Washington, DC 20006. or stenographic functions relating to the jurisdiction. NOTIFICATION PROCEDURES: official business of FHFA. (13) To the Office of the Inspector Direct inquiries as to whether this (5) To members of advisory General for investigating allegations of committees that are created by FHFA or system contains a record pertaining to abuse or misconduct, or to perform an individual to the Privacy Act Officer, by Congress to render advice and other functions within the jurisdiction recommendations to FHFA or to Federal Housing Finance Agency, 1700 of the Office of the Inspector General. G Street NW., Washington, DC 20552, or Congress, to be used solely in (14) To any Federal Government [email protected] in accordance with the connection with their official, authority for the purpose of procedures set forth in 12 CFR part designated functions. coordinating and reviewing agency 1204. (6) To a court, magistrate, or other continuity of operations plans or administrative body in the course of emergency contingency plans developed RECORD ACCESS PROCEDURES: presenting evidence, including for responding to Department of Direct requests for access to a record disclosures to counsel or witnesses in Homeland Security threat alerts, to the Privacy Act Officer, Federal the course of civil discovery, litigation, weather related emergencies, or other Housing Finance Agency, 1700 G Street or settlement negotiations, or in critical situations. NW., Washington, DC 20552, or connection with criminal proceedings, [email protected] in accordance with the when FHFA is a party to the proceeding DISCLOSURE TO CONSUMER REPORTING AGENCIES: procedures set forth in 12 CFR part or has a significant interest in the 1204. proceeding, to the extent that the None. CONTESTING RECORD PROCEDURES: information is determined to be relevant POLICIES AND PRACTICES FOR STORING, and necessary. RETRIEVING, ACCESSING, RETAINING, AND Direct requests to contest or appeal an (7) To the Department of Justice when DISPOSING OF RECORDS IN THE SYSTEM: adverse determination for a record to (a) FHFA, or any component thereof; or the Privacy Act Appeals Officer, Federal STORAGE: (b) any employee of FHFA in his or her Housing Finance Agency, 1700 G Street official capacity; or (c) any employee of The records are maintained in NW., Washington, DC 20552, or the agency in his or her individual electronic format, paper form, and [email protected] in accordance with the capacity where the Department of magnetic disk or tape. Electronic procedures set forth in 12 CFR part Justice or FHFA has agreed to represent records are stored in computerized 1204. the employee; or (d) the United States, databases. Paper and magnetic disk or where FHFA determines that litigation tape records are stored in locked file RECORD SOURCE CATEGORIES: is likely to affect FHFA or any of its rooms, locked file cabinets, or locked Record source is from the individuals components, is a party to the litigation safes. on whom the records are maintained. or has an interest in such litigation, and RETRIEVABILITY: EXEMPTIONS CLAIMED FOR THE SYSTEM: the use of such records by the The records are retrieved by email None. Department of Justice or FHFA is address, the individual’s name, assigned deemed by FHFA to be relevant and file number, or some other personal FHFA–15 necessary to the litigation provided, identifier. SYSTEM NAME: however, that in each case it has been determined that the disclosure is SAFEGUARDS: Payroll, Retirement, Time and compatible with the purpose for which Records are safeguarded in a secured Attendance, and Leave Records. the records were collected. environment. Buildings where records SECURITY CLASSIFICATION: (8) To a Member of Congress, to a are stored have security cameras and 24- Sensitive but unclassified. Congressional staff member or to a hour security guard service. Congressional Committee in response to Computerized records are safeguarded SYSTEM LOCATIONS: an inquiry from the Member of through use of access codes and other (1) Payroll files, retirement case files, Congress, the Congressional staff information technology security time and attendance records and member or Congressional Committee measures. Paper records are safeguarded reports, and service history files: made at the written request of the by locked file rooms, locked file Federal Housing Finance Agency individual about whom the record is cabinets, or locked safes. Access to (FHFA), 1625 Eye Street NW., maintained. records is restricted to those who Washington, DC 20006; (9) To contractor personnel, grantees, require the records in the performance (2) Notices of personnel action and volunteers, interns, and others of official duties related to the purposes other pay-related records: Government performing or working on a contract, for which the system is maintained. Employees Services Division, National service, grant, cooperative agreement, or Finance Center, U.S. Department of project for FHFA. RETENTION AND DISPOSAL: Agriculture, Attn: CS–0106, P.O. Box (10) To appropriate federal agencies The records are retained and disposed 60000, New Orleans, LA 70160–0001; and other public authorities for use in of in accordance with the appropriate (3) Retired official personnel files: records management inspections. National Archives and Records National Archives and Records

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Administration, National Personnel benefits; to prepare related reports to photocopy or other means, any record Records Center (Civilian Personnel other Federal agencies including the within this system for use by FHFA and Records Center), 1411 Boulder Department of Treasury and the Office its employees in connection with their Boulevard, Valmeyer, IL 62295; and of Personnel Management; and to locate official duties or to any individual who (4) Any alternate work site utilized by FHFA employees and determine such is utilized by FHFA to perform clerical employees of FHFA or by individuals matters as their period of service, type or stenographic functions relating to the assisting such employees. For of leave, qualifications, benefits, and official business of FHFA. administrative purposes, duplicate pay. (5) To members of advisory systems may exist within FHFA at the committees that are created by FHFA or duty station of each employee. ROUTINE USES OF RECORDS MAINTAINED IN THE by Congress to render advice and SYSTEM, INCLUDING CATEGORIES OF USERS AND recommendations to FHFA or to CATEGORIES OF INDIVIDUALS COVERED BY THE THE PURPOSES OF SUCH USES: Congress, to be used solely in SYSTEM: In addition to those disclosures connection with their official, This system contains records on generally permitted under 5 U.S.C. designated functions. current and former employees, 552a(b) of the Privacy Act, all or a (6) To a court, magistrate, or other detailees, interns, fellows, volunteers, portion of the records or information administrative body in the course of persons who work at FHFA under the contained in this system may be presenting evidence, including Intergovernmental Personnel Act, and disclosed outside FHFA as a routine use disclosures to counsel or witnesses in current and former contractor as follows: the course of civil discovery, litigation, personnel. (1) When (a) it is suspected or or settlement negotiations, or in confirmed that the security or CATEGORIES OF RECORDS IN THE SYSTEM: connection with criminal proceedings, confidentiality of information in the when FHFA is a party to the proceeding The records in the system contain the system of records has been individual’s name; home address; or has a significant interest in the compromised; (b) FHFA has determined telephone numbers; Social Security proceeding, to the extent that the that as a result of the suspected or number; organization code; pay rate; information is determined to be relevant confirmed compromise there is a risk of salary; grade; length of service; pay and and necessary. harm to economic or property interests, leave records; source documents for (7) To the Department of Justice when identity theft or fraud, or harm to the posting time and attendance; and (a) FHFA, or any component thereof; or security or integrity of this system or deductions for Medicare; Old-Age, (b) any employee of FHFA in his or her other systems or programs (whether Survivors, and Disability Insurance (also official capacity; or (c) any employee of maintained by FHFA or another agency known as Social Security); bonds; the agency in his or her individual or entity) that rely upon the Federal Employee Group Life Insurance; capacity where the Department of compromised information; and (c) the union dues; taxes; allotments; Justice or FHFA has agreed to represent disclosure is made to such agencies, retirement; charities; Federal the employee; or (d) the United States, entities, and persons who are reasonably Government and commercial health where FHFA determines that litigation necessary to assist in connection with benefits; Flexible Spending Account; is likely to affect FHFA or any of its FHFA’s efforts to respond to the Long Term Care Insurance; Thrift components, is a party to the litigation suspected or confirmed compromise Savings Plan contributions; 401k plan or has an interest in such litigation, and and prevent, minimize, or remedy such contributions; awards; shift schedules; the use of such records by the harm. pay differential; tax lien data; and wage Department of Justice or FHFA is (2) Where there is an indication of a deemed by FHFA to be relevant and garnishments; and any other violation or potential violation of law, information pertaining to payroll, necessary to the litigation provided, whether civil, criminal or regulatory in however, that in each case it has been retirement, time and attendance, and nature, and whether arising by general leave. The payroll, retirement, and leave determined that the disclosure is statute or particular program statute, or compatible with the purpose for which records described in this notice form a by regulation, rule or order issued part of the information contained in the the records were collected. pursuant thereto, the relevant records in (8) To a Member of Congress, to a National Finance Center’s integrated the system of records may be referred, Congressional staff member or to a Personnel and Payroll System (PPS). as a routine use, to the appropriate Congressional Committee in response to Personnel records contained in PPS are agency, whether federal, state, local, an inquiry from the Member of covered under the government-wide foreign or a financial regulatory Congress, the Congressional staff systems of records notice published by organization charged with the member or Congressional Committee the Office of Personnel Management responsibility of investigating or made at the written request of the (OPM/GOVT–1 and OPM/GOVT–5). prosecuting such violation or charged individual about whom the record is AUTHORITY FOR MAINTENANCE OF THE SYSTEM: with enforcing or implementing the maintained. 5 U.S.C. 301, the Federal Home Loan statute, or rule, regulation or order (9) To contractor personnel, grantees, Bank Act (12 U.S.C. 1421–1449), and issued pursuant thereto. volunteers, interns, and others the Federal Housing Enterprises (3) To any individual during the performing or working on a contract, Financial Safety and Soundness Act of course of any inquiry or investigation service, grant, cooperative agreement, or 1992 (12 U.S.C. 4501, et seq.), both as conducted by FHFA, or in connection project for FHFA. amended by the Housing and Economic with civil or criminal litigation, if FHFA (10) To appropriate federal agencies Recovery Act of 2008, Public Law No. has reason to believe that the individual and other public authorities for use in 110–289, 122 Stat. 2654 (2008). to whom the record is disclosed may records management inspections. have further information about the (11) To officials of a labor PURPOSE(S): matters related therein, and those organization when relevant and The purpose of the system of records matters appeared to be relevant at the necessary to their duties of exclusive is for FHFA’s operations for payroll, time to the subject matter of the inquiry. representation concerning personnel time and attendance, leave, insurance, (4) To any individual with whom policies, practices, and matters affecting tax, retirement, qualifications, and FHFA contracts to reproduce, by typing, working conditions.

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(12) To the Office of Management and (23) To any member of the public for RECORD ACCESS PROCEDURES: Budget and the General Accountability employment verification at an Direct requests for access to a record Office when relevant and necessary to employee’s written request. to the Privacy Act Officer, Federal carry out their responsibilities or to (24) To any judgment creditor for the Housing Finance Agency, 1700 G Street perform other functions within their purpose of wage garnishment. NW., Washington, DC 20552, or jurisdiction. [email protected] in accordance with the DISCLOSURE TO CONSUMER REPORTING (13) To the Office of the Inspector AGENCIES: procedures set forth in 12 CFR part General for investigating allegations of 1204. None. abuse or misconduct, or to perform CONTESTING RECORD PROCEDURES: other functions within the jurisdiction POLICIES AND PRACTICES FOR STORING, Direct requests to contest or appeal an of the Office of the Inspector General. RETRIEVING, ACCESSING, RETAINING, AND adverse determination for a record to (14) To the Department of Agriculture, DISPOSING OF RECORDS IN THE SYSTEM: the Privacy Act Appeals Officer, Federal National Finance Center to provide STORAGE: Housing Finance Agency, 1700 G Street personnel, payroll, and related services The records are maintained in NW., Washington, DC 20552, or and systems involving FHFA electronic format, paper form, and [email protected] in accordance with the employees. magnetic disk or tape. Electronic procedures set forth in 12 CFR part (15) To the Department of the records are stored in computerized 1204. Treasury, Bureau of the Public Debt to databases. Paper and magnetic disk or provide financial management services tape records are stored in locked file RECORD SOURCE CATEGORIES: and systems, including local and rooms, locked file cabinets, or locked Record source is from the individuals temporary duty travel, involving FHFA safes. on whom the records are maintained, employees. official personnel records of individuals (16) To the Internal Revenue Service RETRIEVABILITY: on whom the records are maintained, and appropriate State and local taxing The records are retrieved by the time and attendance records, authorities. individual’s name, Social Security withholding certificates, third-party (17) To appropriate Federal agencies number, birth date, or some other benefit providers, and other pay-related to effect salary or administrative offsets, personal identifier. records prepared by the individual or the Office of Human Resources or for other purposes connected with SAFEGUARDS: Management. the collection of debts owed to the Records are safeguarded in a secured United States. environment. Buildings where records EXEMPTIONS CLAIMED FOR THE SYSTEM: (18) To the Office of Child Support are stored have security cameras and None. Enforcement, Administration for 24-hour security guard service. Children and Families, Department of Computerized records are safeguarded FHFA–16 Health and Human Services for the through use of access codes and other SYSTEM NAME: purpose of locating individuals to information technology security Personnel Investigative Records. establish paternity, establish and modify measures. Paper records are safeguarded orders of child support enforcement by locked file rooms, locked file SECURITY CLASSIFICATION: actions as required by the Personal cabinets, or locked safes. Access to Sensitive but unclassified. Responsibility and Work Opportunity records is restricted to those who SYSTEM LOCATIONS: Reconciliation Act, the Federal Parent require the records in the performance Locator System and the Federal Tax of official duties related to the purposes Federal Housing Finance Agency, Offset System. for which the system is maintained. 1700 G Street NW., Washington, DC (19) To the Office of Child Support 20552; 1625 Eye Street NW., Enforcement for release to the Social RETENTION AND DISPOSAL: Washington, DC 20006; 1750 Security Administration for verifying The records are retained and disposed Pennsylvania Avenue NW., Washington, Social Security numbers in connection of in accordance with the appropriate DC 20006; and any alternate work site with the operation of the Federal Parent National Archives and Records utilized by employees of the Federal Locator System by the Office of Child Administration General Records Housing Finance Agency (FHFA) or by Support Enforcement. Schedules and FHFA Records Retention individuals assisting such employees. (20) To the Office of Child Support and Disposition Schedules. Disposal is For administrative purposes, duplicate Enforcement for release to the by shredding or other appropriate systems may exist within FHFA at the Department of Treasury for purposes of disposal systems. duty station of each employee. For background investigations adjudicated administering the Earned Income Tax SYSTEM MANAGER(S) AND ADDRESS: Credit Program and verifying a claim by the Department of State (DOS) or the Office of Human Resources with respect to employment in a tax Office of Personnel Management (OPM), Management, Federal Housing Finance return. DOS and OPM may retain copies of Agency, 1625 Eye Street NW., those files pursuant to their records (21) To commercial benefit providers, Washington, DC 20006. retention schedules. carriers, vendors, contractor personnel, and agents to process claims and NOTIFICATION PROCEDURE: CATEGORIES OF INDIVIDUALS COVERED BY THE provide related administrative services Direct inquiries as to whether this SYSTEM: involving FHFA employees. system contains a record pertaining to This system contains records on (22) To any Federal, state, or local an individual to the Privacy Act Officer, current and former employees, government agency compiling tax Federal Housing Finance Agency, 1700 detailees, interns, fellows, volunteers, withholding, retirement contributions, G Street NW., Washington, DC 20552, or persons who work at FHFA under the or allotments to charities, labor unions, [email protected] in accordance with the Intergovernmental Personnel Act, and wage garnishments, and other procedures set forth in 12 CFR part current and former contractor authorized recipients. 1204. personnel.

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CATEGORIES OF RECORDS IN THE SYSTEM: suspected or confirmed compromise or has an interest in such litigation, and The records in the system contain the and prevent, minimize, or remedy such the use of such records by the individual’s name, date of birth, harm. Department of Justice or FHFA is citizenship, current and former home (2) Where there is an indication of a deemed by FHFA to be relevant and addresses, work histories, education and violation or potential violation of law, necessary to the litigation provided, financial information, Social Security whether civil, criminal or regulatory in however, that in each case it has been number, information about family nature, and whether arising by general determined that the disclosure is members, information about references, statute or particular program statute, or compatible with the purpose for which types and dates of investigations, by regulation, rule or order issued the records were collected. investigative reports (including those pursuant thereto, the relevant records in (8) To a Member of Congress, to a from Federal and State law enforcement the system of records may be referred, Congressional staff member or to a agencies, DOS, Department of Defense, as a routine use, to the appropriate Congressional Committee in response to OPM, and other federal entities), dates, agency, whether federal, state, local, an inquiry from the Member of levels and types of clearances, and any foreign or a financial regulatory Congress, the Congressional staff other information pertinent to granting organization charged with the member or Congressional Committee or denying a security clearance or responsibility of investigating or made at the written request of the making a suitability determination. prosecuting such violation or charged individual about whom the record is with enforcing or implementing the maintained. AUTHORITY FOR MAINTENANCE OF THE SYSTEM: statute, or rule, regulation or order (9) To contractor personnel, grantees, Executive Order 10450, Security issued pursuant thereto. (3) To any individual during the volunteers, interns, and others Requirements for Government performing or working on a contract, Employment, dated April 27, 1953; and course of any inquiry or investigation conducted by FHFA, or in connection service, grant, cooperative agreement, or Executive Order 12958, Classified project for FHFA. National Security Information, dated with civil or criminal litigation, if FHFA April 17, 1995. has reason to believe that the individual (10) To appropriate federal agencies to whom the record is disclosed may and other public authorities for use in PURPOSE(S): have further information about the records management inspections. The purpose of the system of records matters related therein, and those (11) To officials of a labor is to collect and maintain records of matters appeared to be relevant at the organization when relevant and processing of personnel-security related time to the subject matter of the inquiry. necessary to their duties of exclusive clearance actions, to record suitability (4) To any individual with whom representation concerning personnel determinations, to record whether FHFA contracts to reproduce, by typing, policies, practices, and matters affecting security clearances are issued or denied, photocopy or other means, any record working conditions. and to verify eligibility for access to within this system for use by FHFA and (12) To the Office of Management and classified information or assignment to its employees in connection with their Budget and the General Accountability a sensitive position. Records may also official duties or to any individual who Office when relevant and necessary to be used for personnel actions, such as is utilized by FHFA to perform clerical carry out their responsibilities or to removal from sensitive duties, removal or stenographic functions relating to the perform other functions within their from employment, or revocation of a official business of FHFA. jurisdiction. (5) To members of advisory security clearance. (13) To the Office of the Inspector committees that are created by FHFA or General for investigating allegations of ROUTINE USES OF RECORDS MAINTAINED IN THE by Congress to render advice and abuse or misconduct, or to perform SYSTEM, INCLUDING CATEGORIES OF USERS AND recommendations to FHFA or to other functions within the jurisdiction THE PURPOSES OF SUCH USES: Congress, to be used solely in of the Office of the Inspector General. In addition to those disclosures connection with their official, generally permitted under 5 U.S.C. designated functions. (14) To disclose information to an 552a(b) of the Privacy Act, all or a (6) To a court, magistrate, or other agency in the executive, legislative, or portion of the records or information administrative body in the course of judicial branch, or the District of contained in this system may be presenting evidence, including Columbia Government, in response to disclosed outside FHFA as a routine use disclosures to counsel or witnesses in its request related to issuing a security as follows: the course of civil discovery, litigation, clearance or conducting a security or (1) When (a) it is suspected or or settlement negotiations, or in suitability investigation of an confirmed that the security or connection with criminal proceedings, individual. Only information that is confidentiality of information in the when FHFA is a party to the proceeding relevant and necessary to the requesting system of records has been or has a significant interest in the agency’s decision on the matter will be compromised; (b) FHFA has determined proceeding, to the extent that the released. that as a result of the suspected or information is determined to be relevant (15) To verify a security clearance in confirmed compromise there is a risk of and necessary. response to an inquiry from a security harm to economic or property interests, (7) To the Department of Justice when office of an agency in the executive, identity theft or fraud, or harm to the (a) FHFA, or any component thereof; or legislative, or judicial branch, or the security or integrity of this system or (b) any employee of FHFA in his or her District of Columbia Government. Also, other systems or programs (whether official capacity; or (c) any employee of to provide FHFA employees and maintained by FHFA or another agency the agency in his or her individual contractor personnel access to classified or entity) that rely upon the capacity where the Department of data or areas, when their official duties compromised information; and (c) the Justice or FHFA has agreed to represent require such access. disclosure is made to such agencies, the employee; or (d) the United States, entities, and persons who are reasonably where FHFA determines that litigation DISCLOSURE TO CONSUMER REPORTING necessary to assist in connection with is likely to affect FHFA or any of its AGENCIES: FHFA’s efforts to respond to the components, is a party to the litigation None.

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POLICIES AND PRACTICES FOR STORING, CONTESTING RECORD PROCEDURES: Carriers LLC; Seaboard Marine, Ltd.; RETRIEVING, ACCESSING, RETAINING AND Direct requests to contest or appeal an and West Coast Industrial Express, LLC. DISPOSING OF RECORDS IN THE SYSTEM: adverse determination for a record to Filing Party: Wade S. Hooker, Esq.; STORAGE: the Privacy Act Appeals Officer, Federal 211 Central Park W; New York, NY The records are maintained in Housing Finance Agency, 1700 G Street 10024. electronic format, paper form, and NW., Washington, DC 20552, or Synopsis: The amendment removes magnetic disk or tape. Electronic [email protected] in accordance with the West Coast Industrial Express as a party records are stored in computerized procedures set forth in 12 CFR part to the agreement. databases. Paper and magnetic disk or 1204. Agreement No.: 012115–001. Title: HSDG–CCNI USWC–Europe tape records are stored in locked file RECORD SOURCE CATEGORIES: rooms, locked file cabinets, or locked Vessel Sharing Agreement. safes. Record source is from the individuals Parties: Compania Chilena De on whom the records are maintained, Navegacion Interoceanica, S.A and RETRIEVABILITY: official personnel records of individuals Hamburg Sudamerikanische The records are retrieved by the on whom the records are maintained, Dampfschiffahrts-Gesellschaft KG. individual’s name, Social Security the Office of Personnel Management and Filing Party: Wade S. Hooker, Esq.; number, date of birth, or some other Departments of State and Defense 211 Central Park W; New York, NY personal identifier. investigative files, employment 10024. information maintained by FHFA’s Synopsis: The amendment deletes SAFEGUARDS: personnel office, current and former Europe, Canada, Panama, and portions Records are safeguarded in a secured FHFA employees, other individuals of the U.S. West Coast from the environment. Buildings where records who provide information during the geographic scope of the agreement, are stored have security cameras and 24- course of an investigation, Federal law reduces the number of vessels to be hour security guard service. enforcement agencies, and external and operated by the parties, revises the Computerized records are safeguarded internal inquiries. space allocations of the parties, and through use of access codes and other EXEMPTIONS CLAIMED FOR THE SYSTEM: renames and restates the agreement. information technology security Agreement No.: 012149. measures. Paper records are safeguarded Pursuant to 5 U.S.C. 552a(k)(5), a record contained in this system is Title: MSC/CMA CGM U.S. East by locked file rooms, locked file Coast-West Coast South America Space cabinets, or locked safes. Access to exempt from 5 U.S.C. 552a(c)(3), (d), (e)(1), (e)(4)(G), (e)(4)(H), (e)(4)(I) and (f), Charter Agreement. records is restricted to those who Parties: MSC Mediterranean Shipping require the records in the performance to the extent that disclosure would reveal the identity of a source who Company, S.A. and CMA CGM, S.A. of official duties related to the purposes Filing Party: Marc J. Fink, Esquire; for which the system is maintained. furnished information to the Federal Government under an express promise Cozen O’Connor; 1627 I Street NW., RETENTION AND DISPOSAL: that his or her identity would be held Suite 1100; Washington, DC 20006– 4007. The records are retained and disposed in confidence. Synopsis: The agreement authorizes of in accordance with the appropriate Dated: December 28, 2011. Med Shipping to charter space to CMA National Archives and Records Edward J. DeMarco, in the trade between the U.S. East Coast Administration General Records Acting Director, Federal Housing Finance and the Bahamas, on the one hand, and Schedules and FHFA Records Retention Agency. the West Coast of South America, on the and Disposition Schedules. Disposal is [FR Doc. 2011–33794 Filed 1–4–12; 8:45 am] other. by shredding or other appropriate disposal systems. BILLING CODE 8070–01–P By Order of the Federal Maritime Commission. SYSTEM MANAGER(S) AND ADDRESS: Dated: December 30, 2011. Office of Human Resources FEDERAL MARITIME COMMISSION Rachel E. Dickon, Management, Federal Housing Finance Assistant Secretary. Notice of Agreements Filed Agency, 1625 Eye Street NW., [FR Doc. 2011–33808 Filed 1–4–12; 8:45 am] Washington, DC 20006. The Commission hereby gives notice BILLING CODE 6730–01–P NOTIFICATION PROCEDURE: of the filing of the following agreements Direct inquiries as to whether this under the Shipping Act of 1984. system contains a record pertaining to Interested parties may submit comments DEPARTMENT OF HEALTH AND an individual to the Privacy Act Officer, on the agreements to the Secretary, HUMAN SERVICES Federal Maritime Commission, Federal Housing Finance Agency, 1700 [Document Identifier OS–0990–New; 30-day G Street NW., Washington, DC 20552, or Washington, DC 20573, within ten days notice] [email protected] in accordance with the of the date this notice appears in the procedures set forth in 12 CFR part Federal Register. Copies of the Agency Information Collection 1204. agreements are available through the Request. 30-Day Public Comment Commission’s Web site (www.fmc.gov) Request RECORD ACCESS PROCEDURES: or by contacting the Office of Direct requests for access to a record Agreements at (202) 523–5793 or AGENCY: Office of the Secretary, HHS. to the Privacy Act Officer, Federal [email protected]. In compliance with the requirement Housing Finance Agency, 1700 G Street Agreement No.: 011707–008. of section 3506(c)(2)(A) of the NW., Washington, DC 20552, or Title: Gulf/South America Discussion Paperwork Reduction Act of 1995, the [email protected] in accordance with the Agreement. Office of the Secretary (OS), Department procedures set forth in 12 CFR part Parties: BBC Chartering & Logistic of Health and Human Services, is 1204. GMBH & Co. KG; Industrial Maritime publishing the following summary of a

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proposed collection for public Proposed Project: Teen Pregnancy behavior and teenage pregnancy when comment. Interested persons are invited Prevention Replication Evaluation they are replicated in similar and in to send comments regarding this burden Study: Baseline Data Collection—OMB different settings and for different estimate or any other aspect of this No. OS–0990–NEW—The Office of populations. collection of information, including any Adolescent Health. The findings from this evaluation will of the following subjects: (1) The Abstract be of interest to the general public, to necessity and utility of the proposed policy-makers, and to organizations The Office of Adolescent Health information collection for the proper interested in teen pregnancy prevention. performance of the agency’s functions; (OAH), Office of the Assistant Secretary OAH and ASPE are proposing (2) the accuracy of the estimated for Health (OASH), U.S. Department of baseline data collection activity as part burden; (3) ways to enhance the quality, Health and Human Services (HHS), is of the TPP Replication Evaluation. utility, and clarity of the information to overseeing and coordinating adolescent be collected; and (4) the use of pregnancy prevention evaluation efforts Respondents will be asked to answer automated collection techniques or as part of the Teen Pregnancy carefully selected questions about other forms of information technology to Prevention Initiative. OAH is working demographics and risk and protective minimize the information collection collaboratively with the Office of the factors related to teen pregnancy. burden. Assistant Secretary for Planning and Information from this data collection To obtain copies of the supporting Evaluation (ASPE), the Centers for will be used to perform meaningful statement and any related forms for the Disease Control and Prevention (CDC), analysis to determine significant proposed paperwork collections and the Administration for Children and program effects. referenced above, email your request, Families (ACF) on adolescent pregnancy Respondents: The survey data will be including your address, phone number, prevention evaluation activities. collected through private, self- OMB number, and OS document OAH will jointly oversee with ASPE administered questionnaires completed identifier, to the Teen Pregnancy Prevention by study participants, i.e. adolescents [email protected], or call Replication Evaluation Study (TPP assigned to a select school or the Reports Clearance Office on (202) Replication Study). The TPP Replication community teen pregnancy prevention 690–5683. Send written comments and Study will be a random assignment program or a control group. Surveys will recommendations for the proposed evaluation which will determine the be distributed and collected by trained information collections within 30 days extent to which evidence-based program professional staff. of this notice directly to the OS OMB models that have been shown to be Estimated Annualized Burden Table Desk Officer; faxed to OMB at (202) effective in an earlier trial, demonstrate 395–5806. effects on adolescent sexual risk Reporting Burden on Study Participants

TEEN PREGNANCY PREVENTION REPLICATION EVALUATION STUDY

Annual num- Number of Average Instrument ber of responses per burden hours Total annual respondents respondent per response burden hours

Baseline instrument ...... 5,250 1 0.5 2,625

Keith A. Tucker, Send written comments to CDC Desk application and directory processes that Office of the Secretary, Paperwork Reduction Officer, Office of Management and allow individuals to apply to Act Clearance Officer. Budget, Washington, DC 20503 or by fax fellowships online, track applicant and [FR Doc. 2011–33827 Filed 1–4–12; 8:45 am] to (202) 395–5806. Written comments alumni information. BILLING CODE 4150–30–P should be received within 30 days of The mission of SEPDPO is to provide this notice. leadership in public health training and DEPARTMENT OF HEALTH AND Proposed Project education, and manage innovative, evidence-based programs to prepare the HUMAN SERVICES Fellowship Management System, health workforce to meet public health OMB No. 0920–0765—Revision— challenges of the 21st century. Centers for Disease Control and Scientific Education and Professional Prevention Development Program Office (SEPDPO), Professionals in public health, Office of Surveillance, Epidemiology epidemiology, medicine, economics, [30-Day–12–0765] and Laboratory Services (OSELS), information science, veterinary Centers for Disease Control and medicine, nursing, public policy, and Agency Forms Undergoing Paperwork Prevention (CDC). other related professions seek Reduction Act Review opportunities, through CDC fellowships, Background and Brief Description The Centers for Disease Control and to broaden their knowledge, skills, and Prevention (CDC) publishes a list of SEPDPO is requesting approval to experience to improve the science and information collection requests under revise and extend for three years; CDC’s practice of public health. CDC fellows review by the Office of Management and use of the online Fellowship are assigned to state, tribal, local and Budget (OMB) in compliance with the Management System (FMS) to allow territorial public health agencies; federal Paperwork Reduction Act (44 U.S.C. public health agencies and government agencies, including CDC, Chapter 35). To request a copy of these organizations to submit fellowship and HHS operational divisions, such as requests, call Daniel Holcomb, the CDC assignment proposals electronically, Indian Health Service; and to Reports Clearance Officer, at (404) 639– using FMS. The FMS system will nongovernmental organizations, 5960 or send an email to [email protected]. continue to be used for its electronic including academic institutions, tribal

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organizations, and private public health type of public health agency or long-term employment and sustained organizations. organization submitting the proposal; public health capacity of state and local FMS provides an efficient and proposed fellow activities, including health departments and other non- effective way for processing fellowship training and opportunities for service federal public health agencies and application data, selecting qualified and collaboration; and how the fellow organizations. candidates, maintaining a current will be supported, including the type alumni database, documenting the The annual burden table has been and extent of mentorship and updated to reflect the number of impact of the fellowships on alumni supervision the fellow will receive. careers, and generating reports. This respondents from nonfederal public proposed revision will provide a secure This revision enhances FMS to health agencies or organizations that site within this existing electronic include a function that will result in a submit assignment proposals to host system for designated employees of standardized process for submitting and fellows. Some alumni are deceased or public health agencies and reviewing host assignment proposals cannot be located. Response burden organizations to submit fellowship across fellowships. The electronic assumes response from an individual assignment proposals electronically. assignment proposal process that FMS responding alumnus, on average, every Designated employees of public provides optimizes the matching of 3 years (which is likely an overestimate health agencies or organizations will qualified fellowship candidates with of frequency). There is no cost to answer a standardized set of core host sites and will result in an optimal respondents other than their time. The questions within FMS about the fit between fellows and their total estimated annual burden hours are proposed assignments, including the assignments—ultimately leading to 1201.

ESTIMATED ANNUALIZED BURDEN HOURS

Average annualized Type of Number of Frequency of burden per respondents respondents response response (in hours)

Public Health Agency or Organization ...... 226 1 1.5 Fellowship applicants ...... 1122 1 40/60 Fellowship alumni ...... 454 1 15/60

Dated: December 29, 2011. Proposed Project addition, the survey will measure Daniel Holcomb, Evaluation of the National Tobacco behaviors related to smoking cessation Reports Clearance Officer, Centers for Disease Prevention and Control Public and behaviors related to interpersonal Control and Prevention. Education Campaign—New—National communication about smoking. [FR Doc. 2011–33798 Filed 1–4–12; 8:45 am] Center for Chronic Disease Prevention Information will also be collected on demographic variables including age, BILLING CODE 4163–18–P and Health Promotion (NCCDPHP), Centers for Disease Control and sex, race, education, income, primary Prevention (CDC). language, and marital status. DEPARTMENT OF HEALTH AND Background and Brief Description Data from this survey will be used to HUMAN SERVICES estimate the extent to which smokers The Centers for Disease Control and and non-smokers in the U.S. were Centers for Disease Control and Prevention (CDC) requests OMB exposed to The Campaign and to Prevention approval to collect information needed examine the statistical relationships for evaluating the CDC’s National between adults’ exposure to The Tobacco Prevention and Control Public [30-Day–12–12CO] Campaign and changes in outcome Education Campaign (The Campaign). variables of interest including attempts This campaign, which is expected to Agency Forms Undergoing Paperwork to quit smoking. launch in February/March 2012, is the Reduction Act Review first Federally-funded media campaign Information will be collected through in the U.S. that describes the harms on-line questionnaires involving adult The Centers for Disease Control and from smoking and will feature televised smokers and non-smokers in the U.S., Prevention (CDC) publishes a list of advertisements that will air nationally ages 18–54. Respondents who are information collection requests under along with complementary ads on radio, smokers will be recruited from two review by the Office of Management and the Internet, in print, and other forms of sources: a probability sample drawn Budget (OMB) in compliance with the media. from the Knowledge Networks Paperwork Reduction Act (44 U.S.C. CDC plans to conduct an initial KnowledgePanel®, a panel that uses chapter 35). To request a copy of these baseline survey of adults before the address-based postal mail sampling to requests, call the CDC Reports Clearance launch of The Campaign and a generate a probability-based online Officer at (404) 639–5960 or send an longitudinal follow-up survey of those panel of U.S. adults, and a supplemental email to [email protected]. Send written participants approximately three to four sample from SSI, a leading provider of comments to CDC Desk Officer, Office of months later. Information will be online sampling in the U.S. Management and Budget, Washington, collected about adult smokers’ Respondents who are non-smokers will DC or by fax to (202) 395–5806. Written awareness of and exposure to campaign be recruited from Knowledge Networks. comments should be received within 30 advertisements, and about their The target number of complete pre-/ days of this notice. knowledge, attitudes, and beliefs related post-campaign questionnaires for to smoking and secondhand smoke. In smokers is 5,000. The target number of

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complete pre-/post-campaign 2,000 completed post-campaign Non- recognition and recall estimates that questionnaires for non-smokers is 2,000. smoker Follow-up Questionnaires. For assess basic exposure as well as To obtain the target number of both respondent groups, the estimated frequency of ad exposure. Data from this complete pre-/post-campaign responses, burden per response is 25 minutes for information collection will also be used approximately 34,660 respondents will each baseline questionnaire. In addition, to examine statistical associations be contacted through an initial the estimated burden per response is 25 between exposure to The Campaign and screening and consent process. The minutes for each post-campaign (follow- pre-post changes in specific outcomes of estimated burden per response is two up) questionnaire. interest which will include knowledge, minutes. attitudes, beliefs and intentions related An estimated 11,600 smokers will be Data from this information collection to smoking and cessation as well as recruited to complete the Smoker will be used to estimate awareness of behavioral outcomes including quit Baseline Questionnaire in order to yield and exposure to The Campaign among 5,000 completed post-campaign Smoker smokers and non-smokers nationally as attempts and cigarette consumption. Follow-Up Questionnaires. An well as among the planned subset of OMB approval is requested for one estimated 2,666 non-smokers will be smokers in high-delivery geographic year. There are no costs to respondents recruited to complete the Non-smoker areas for The Campaign. These estimates other than their time. The total Baseline Questionnaire in order to yield will take the form of self-reported ad estimated burden hours are 10,015.

ESTIMATED ANNUALIZED BURDEN HOURS

Average Number of Number of burden per Type of respondent Form name respondents responses per response respondent (in hours)

General Population ...... Screening and Consent Process ...... 34,660 1 2/60 Adults, ages 18–54 in the U.S...... Smoker Baseline Questionnaire ...... 11,600 1 25/60 Smoker Follow-Up Questionnaire ...... 5,000 1 25/60 Non-Smoker Baseline Questionnaire ...... 2,666 1 25/60 Non-Smoker Follow-up Questionnaire ...... 2,000 1 25/60

Dated: December 29, 2011. and coordination in the development operational support, and Daniel Holcomb, and administration of the Centers for recommendations in matters concerning Reports Clearance Officer, Centers for Disease Disease Control and Prevention’s (CDC) organizational performance and Control and Prevention. financial management policies; (2) management services within FMO; (6) [FR Doc. 2011–33799 Filed 1–4–12; 8:45 am] provides leadership and advice on coordinates the development of, and BILLING CODE 4163–18–P matters of public health policy, budget maintains, strategic management and formulation, budget and performance performance measurement tools within integration, and Congressional FMO; (7) monitors FMO organizational DEPARTMENT OF HEALTH AND appropriations for CDC and the Agency performance and provides HUMAN SERVICES for Toxic Substances and Disease recommendations on performance Registry (ATSDR); (3) collaborates with improvement; (8) provides management, Centers for Disease Control and the CDC Office of the Director (OD) in oversight, and administrative support Prevention the development and implementation of for FMO service desk operations; (9) long-range, strategic program and provides direction, strategy, analysis, Statement of Organization, Functions, and operational support in all aspects of and Delegations of Authority financial plans; Delete in its entirety the title and FMO’s human resources operations; (10) Part C (Centers for Disease Control functional statements for the Travel provides leading practices in and Prevention) of the Statement of Management Activity (CAJE12). government financial management Organization, Functions, and Delete in its entirety the title and practices to FMO; (11) develops, Delegations of Authority of the functional statements for the Office of implements, and manages recruiting, Department of Health and Human Organizational Excellence (CAJE13) and hiring, retention, and succession Services (45 PR 67772–76, dated the Office of Formulation, Evaluation, strategies; (12) coordinates creation and October 14, 1980, and corrected at 45 FR and Analysis (CAJE14) and insert the implementation of operating standards/ 69296, October 20, 1980, as amended following: procedures and processes, and monitors most recently at 76 FR 66308–66309, Office of Management Services compliance; (13) develops, implements, dated October 26, 2011) is amended to (CAJE13). (1) Collaborates and and manages professional development reflect the reorganization of the maintains liaison with CDC strategy and plan for FMO; (14) Financial Management Office within the management officials to monitor and develops and implements FMO’s Office of the Chief Operating Officer, address priority issues of concern to communication strategy and plan; (15) Centers for Disease Control and CDC leadership; (2) manages the manages the development and Prevention. Financial Management Office’s (FMO) communication of financial Section C–B, Organization and operational budget processes, including management policies; (16) serves as Functions, is hereby amended as planning, execution, and monitoring; (3) FMO’s point of contact on all matters follows: manages FMO’s acquisition processes; concerning facilities management and Delete items (1), (2) and (3) of the (4) analyzes and provides space utilization; and (17) serves as functional statements for the Financial recommendations on workload FMO’s coordinator of COOP activities. Management Office (CAJE), and insert efficiency and resource utilization; (5) Appropriations, Legislation, and the following: (1) Provides leadership provides direction, strategy, analysis, Formulation Office (CAJE14). (1)

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Provides leadership, consultation, Program Offices, and Budget Execution Quality Control and Quality Assurance guidance, and advice on matters of Services on capital asset procedures; reviews and participates in internal public health and financial policy; (2) (13) manages financial accounting for all reviews; and (11) assists with leads all CDC/ATSDR Congressional assets for CDC, including real and undelivered order adjustments or appropriations activities; (3) develops personal property, equipment, land, obligations as needed. CDC/ATSDR’s annual financial and leases, software, personal property, and Delete in its entirety the title and public health policy request in stockpiles; (14) conducts financial and function statements for the Grants and accordance with DHHS, Office of inventory reconciliations for all Asset Management Branch (CAJEK). Management and Budget (OMB), and applicable assets, including inventory After the functional statements for the Congressional requirements, policies, such as Vaccine for Children and Budget Execution Branch 6 (CAJES) procedures, and regulations; (4) Strategic National Stockpile, real and insert the following: maintains liaison with the DHHS, OMB, personal property, equipment, leases, Travel, IPAC, and International other government organizations, and leasehold improvements, land, and Payment Branch (CAJET). (1) Manages Congress on appropriations and others as needed; (15) leads and directs all activities, policies, quality control, financial policy matters; (5) develops grants management activities within and audit support for accounts payable materials for, and participates in, public FMO; (16) provides training and and disbursement functions for travel, health policy and financial reviews and assistance to CDC project officers and IPAC, and international payments; (2) hearings before DHHS, OMB, and grants management officials on various serves as the CDC subject matter expert Congress; (6) collaborates with other financial management aspects of grants; on all financial matters dealing with all parts of CDC, and outside stakeholders, (17) serves as liaison with grantees and travel, IPAC, and international in the development and implementation other operating divisions for financial payments; (3) ensures all travel, IPAC, of agency-wide financial and public questions/inquiries related to grants; and international payments are made in health program plans; and (7) provides (18) manages the process to perform accordance with applicable Federal and guidance and advice on the grant processing for commitments, international laws and standards, such as appropriations law; (4) serves as consolidation of budget and obligations, advances, disbursements, liaison with the Department of Treasury, performance information as part of and accruals; (19) manages grants the CIOs, as well as outside customers, CDC’s annual budget request. transactions, such as vendor set-up, to provide financial information and Delete the functional statements for establishing sub-accounts, Common reconcile travel, IPAC, and international the Accounting Branch (CAJEB) and the Accounting Number set-up within the payment issues; (5) compiles and Commercial Payment Branch (CAJEE) Payment Management System (PMS), submits a variety of cash management and insert the following: reconciling sync file to PMS, and and travel reports required by the Accounting Branch (CAJEB). (1) posting files from PMS; (20) conducts Oversees and provides accounting for Department of Treasury and various grant reviews, monitors rates of the Agency; (2) manages accounting other outside agencies; (6) provides expenditure for existing grant awards, treatment for CDC on all business training and advice on payment, travel and supports Program in grant systems implementations and upgrades and disbursement issues; (7) manages execution; and (21) records undelivered to current business systems; (3) manages transactions related to accounts payable, order adjustments or obligations as all financial audit reviews for FMO and such as processing cables, needed. conducts risk assessment on internal reimbursements, IPAC disbursements, controls; (4) prepares SF 133 Report on Commercial Payment Branch (CAJEE). and payments for Foreign nationals and Budget Execution for CDC (1) Manages all activities, policies, visiting fellows; (8) completes all Appropriation and IDDAs, FACTS I and quality control, and audit support for reconciliations of sub-legers to general IT Report and Year-End Closing accounts payable and disbursement ledger related to travel, IPAC, and Statement (2108 Report), and SF 224 or functions for commercial payments; (2) international payments; (9) responds to their equivalent and all other required serves as the CDC subject matter expert traveler inquiries for vouchers and financial reports as applicable; (5) on all financial matters dealing with certifies payments; (10) manages change prepares, analyzes fluctuations, and commercial payments; (3) ensures all of station payment processing; (11) coordinates explanation for differences commercial payments are made in perform quality control and quality on all required financial statements and accordance with applicable Federal assurance reviews; (12) provides notes: (6) performs GPRA reporting laws and standards, such as expertise, guidance, oversight, and analysis for compliance; (7) ensures Appropriations Law; (4) serves as interpretation of policies, laws, rules compliance of Federal and Department liaison with the Department of Treasury, and regulations for all aspects of travel reporting requirements; (8) coordinates the Centers/Institutes/Offices (CIO’s), as procedures and policies at CDC, accounting policy issues with the well as outside customers, to provide including the use of the automated Department of Health and Human financial information and reconcile travel system, local travel, domestic and Services (DHHS) Office of Financial commercial payment issues; (5) foreign temporary duty travel, and Policy and FMO’s Office of Management provides training and advice on change of station travel for civil service Services; (9) manages Fund Balance commercial payment and disbursement employees, foreign service employees, with Treasury, including authority, issues; (6) manages transactions related commissioned officers, CDC fellows, disbursements (payroll and non- to commercial accounts payable and etc.; (13) communicates and implements payroll), collections, deposit funds and disbursements; (7) completes all departmental travel policies; (14) budget clearing accounts; (10) prepares reconciliations of sub-legers to general manages the administrative aspects of manual and ADI journal vouchers for ledger related to commercial payments; travel for the agency, including corrections to the general ledger; (11) (8) compiles and submits a variety of enforcement of travel card policy, performs monthly, quarterly, and year- cash management and commercial delegation of authority, distribution of end close out process of the general reports required by Treasury and cash purchase memos, and approval of ledger; (12) serves as liaison with the various outside agencies; (9) responds to first-class memos; (15) serves as liaison Procurements and Grants Office, commercial inquiries for invoices and with travel provider for travel contract Buildings and Facilities Offices, certifies payments; (10) performs matters; (16) provides the CDC’s

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Emergency Operations Center travel Group, Developmental Therapeutics Study Health, 6701 Rockledge Drive, Room 5166, support; and (17) develops CDC Section. MSC 7844, Bethesda, MD 20892, (301) 806– conference travel planning and Date: January 30–31, 2012. 3323, [email protected]. reporting for DHHS and Congress. Time: 8 a.m. to 5 p.m. (Catalogue of Federal Domestic Assistance Agenda: To review and evaluate grant Program Nos. 93.306, Comparative Medicine; Dated: December 22, 2011. applications. 93.333, Clinical Research, 93.306, 93.333, Sherri A. Berger, Place: Marina del Rey Marriott, 4100 93.337, 93.393–93.396, 93.837–93.844, Chief Operating Officer, Centers for Disease Admiralty Way, Marina del Rey, CA 90292. 93.846–93.878, 93.892, 93.893, National Control and Prevention. Contact Person: Sharon K Gubanich, Ph.D., Institutes of Health, HHS) Scientific Review Officer, Center for [FR Doc. 2011–33791 Filed 1–4–12; 8:45 am] Scientific Review, National Institutes of Dated: December 29, 2011. BILLING CODE 4163–18–M Health, 6701 Rockledge Drive, Room 6214, Jennifer S. Spaeth, MSC 7804, Bethesda, MD 20892, (301) 408– Director, Office of Federal Advisory 9512, [email protected]. Committee Policy. DEPARTMENT OF HEALTH AND Name of Committee: Digestive, Kidney and [FR Doc. 2011–33834 Filed 1–4–12; 8:45 am] HUMAN SERVICES Urological Systems Integrated Review Group, BILLING CODE 4140–01–P Clinical, Integrative and Molecular National Institutes of Health Gastroenterology Study Section. Date: January 30, 2012. Center for Scientific Review; Notice of Time: 8 a.m. to 7 p.m. DEPARTMENT OF HEALTH AND Closed Meetings Agenda: To review and evaluate grant HUMAN SERVICES applications. Pursuant to section 10(d) of the Place: Hyatt Regency Bethesda, One National Institutes of Health Federal Advisory Committee Act, as Bethesda Metro Center, Bethesda, MD 20814. amended (5 U.S.C. App.), notice is Contact Person: Mushtaq A Khan, Ph.D., Center for Scientific Review; Notice of hereby given of the following meetings. Scientific Review Officer, Center for Closed Meetings The meetings will be closed to the Scientific Review, National Institutes of Health, 6701 Rockledge Drive, Room 2176, Pursuant to section 10(d) of the public in accordance with the MSC 7818, Bethesda, MD 20892, (301) 435– Federal Advisory Committee Act, as provisions set forth in sections 1778, [email protected]. amended (5 U.S.C. App.), notice is 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., Name of Committee: Genes, Genomes, and hereby given of the following meetings. as amended. The grant applications and Genetics Integrated Review Group, Molecular The meetings will be closed to the the discussions could disclose Genetics B Study Section. public in accordance with the confidential trade secrets or commercial Date: January 30–31, 2012. provisions set forth in sections property such as patentable material, Time: 8 a.m. to 5 p.m. 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., and personal information concerning Agenda: To review and evaluate grant as amended. The grant applications and individuals associated with the grant applications. the discussions could disclose applications, the disclosure of which Place: Westin Los Angeles Airport Hotel, confidential trade secrets or commercial would constitute a clearly unwarranted 5400 West Century Boulevard, Los Angeles, CA 90045. property such as patentable material, invasion of personal privacy. Contact Person: Richard A Currie, Ph.D., and personal information concerning Name of Committee: Center for Scientific Scientific Review Officer, Center for individuals associated with the grant Review Special Emphasis Panel, PAR–11– Scientific Review, National Institutes of applications, the disclosure of which 259: Pregnancy in Women with Disabilities. Health, 6701 Rockledge Drive, Room 5128, would constitute a clearly unwarranted Date: January 24, 2012. MSC 7840, Bethesda, MD 20892, (301) 435– Time: 11 a.m. to 4 p.m. 1219, [email protected]. invasion of personal privacy. Agenda: To review and evaluate grant Name of Committee: Center for Scientific Name of Committee: Center for Scientific applications. Review Special Emphasis Panel Program Review Special Emphasis Panel, Special Pilot Place: National Institutes of Health, 6701 Project, Proteome Technologies. Clinical Studies in Nephrology and Urology. Rockledge Drive, Bethesda, MD 20892, Date: January 30, 2012. Date: January 12–13, 2012. (Telephone Conference Call). Time: 1 p.m. to 2:30 p.m. Time: 8 a.m. to 5 p.m. Contact Person: Priscah Mujuru, RN, MPH, Agenda: To review and evaluate grant Agenda: To review and evaluate grant DRPH, COHNS, Scientific Review Officer, applications. applications. Center for Scientific Review, National Place: The Westin Los Angeles Airport Place: National Institutes of Health, 6701 Institutes of Health, 6701 Rockledge Drive, Hotel, 5400 W Century Boulevard, Los Rockledge Drive, Bethesda, MD 20892 Room 3139, MSC 7770, Bethesda, MD 20892, Angeles, CA 90045. (Virtual Meeting). (301) 594–6594, [email protected]. Contact Person: Richard A Currie, Ph.D., Contact Person: Ryan G Morris, Ph.D., Name of Committee: Oncology 1—Basic Scientific Review Officer, Center for Scientific Review Officer, Center for Translational Integrated Review Group, Scientific Review, National Institutes of Scientific Review, National Institutes of Cancer Etiology Study Section. Health, 6701 Rockledge Drive, Room 1108, Health, 6701 Rockledge Drive, Room 4205, Date: January 30–31, 2012. MSC 7890, Bethesda, MD 20892, (301) 435– MSC 7814 Bethesda, MD 20892, (301) 435– Time: 8 a.m. to 5 p.m. 1219, [email protected]. 1501, [email protected]. Agenda: To review and evaluate grant Name of Committee: Center for Scientific This notice is being published less than 15 applications. Review Special Emphasis Panel, Chronic days prior to the meeting due to the timing Place: The Mandarin Oriental, 1330 Fatigue Syndromes. limitations imposed by the review and Maryland Avenue SW., Washington, DC Date: January 31–February 1, 2012. funding cycle. 20024. Time: 8 a.m. to 6 p.m. Name of Committee: Emerging Contact Person: Elaine Sierra-Rivera, Ph.D., Agenda: To review and evaluate grant Technologies and Training Neurosciences Scientific Review Officer, Center for applications. Integrated Review Group, Bioengineering of Scientific Review, National Institutes of Place: National Institutes of Health, 6701 Neuroscience, Vision and Low Vision Health, 6701 Rockledge Drive, Room 6184, Rockledge Drive, Bethesda, MD 20892, Technologies Study Section. MSC 7804, Bethesda, MD 20892, (301) 435– (Virtual Meeting). Date: January 31, 2012. 1779, [email protected]. Contact Person: Lynn E Luethke, Ph.D., Time: 8 a.m. to 6 p.m. Name of Committee: Oncology 2— Scientific Review Officer, Center for Agenda: To review and evaluate grant Translational Clinical Integrated Review Scientific Review, National Institutes of applications.

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Place: Ritz Carlton Washington DC, 1150 Topics in Infectious Diseases and Date: February 6–7, 2012. 22nd Street NW., Washington, DC 20037. Microbiology. Time: 8 a.m. to 5 p.m. Contact Person: Robert C Elliott, Ph.D., Date: February 3, 2012. Agenda: To review and evaluate grant Scientific Review Officer, Center for Time: 1 p.m. to 3 p.m. applications. Scientific Review, National Institutes of Agenda: To review and evaluate grant Place: Doubletree Guest Suites Santa Health, 6701 Rockledge Drive, Room 5190, applications. Monica, 1707 Fourth Street, Santa Monica, MSC 7846, Bethesda, MD 20892, (301) 435– Place: National Institutes of Health, 6701 CA 90401. 3009, [email protected]. Rockledge Drive, Bethesda, MD 20892 Contact Person: Mark D. Lindner, Ph.D., Name of Committee: Center for Scientific (Telephone Conference Call). Scientific Review Officer, Center for Review Special Emphasis Panel, Contact Person: Liangbiao Zheng, Ph.D., Scientific Review, National Institutes of Neurotechnology 2. Scientific Review Officer, Center for Health, 6701 Rockledge Drive, Room 3182, Date: January 31, 2012. Scientific Review, National Institutes of MSC 7770, Bethesda, MD 20892, (301) 435– Time: 5 p.m. to 6 p.m. Health, 6701 Rockledge Drive, Room 3202, 0913, [email protected]. Agenda: To review and evaluate grant MSC 7808, Bethesda, MD 20892, (301) 996– Name of Committee: Endocrinology, applications. 5819, [email protected]. Metabolism, Nutrition and Reproductive Place: Ritz-Carlton Washington DC, 1150 Name of Committee: Center for Scientific Sciences Integrated Review Group, Cellular, 22nd Street NW., Washington, DC 20037. Review Special Emphasis Panel, RFA Panel: Molecular and Integrative Reproduction Contact Person: Robert C Elliott, Ph.D., Innovations in Molecular Imaging Probes. Study Section. Scientific Review Officer, Center for Date: February 3, 2012. Date: February 6, 2012. Scientific Review, National Institutes of Time: 1:30 p.m. to 5 p.m. Time: 8 a.m. to 5 p.m. Health, 6701 Rockledge Drive, Room 3130, Agenda: To review and evaluate grant Agenda: To review and evaluate grant MSC 7850, Bethesda, MD 20892, (301) 435– applications. applications. 3009, [email protected]. Place: Serrano Hotel, 405 Taylor Street, Place: Embassy Suites at the Chevy Chase San Francisco, CA 94102. Pavilion, 4300 Military Road NW., Name of Committee: Center for Scientific Contact Person: David L Williams, Ph.D., Washington, DC 20015. Review Special Emphasis Panel, PAR–11– Scientific Review Officer, Center for Contact Person: Gary Hunnicutt, Ph.D., 228: Shared Instrumentation: Cell Biology, Scientific Review, National Institutes of Scientific Review Officer, Center for Physiology and Robotics. Health, 6701 Rockledge Drive, Room 5110, Scientific Review, National Institutes of Date: February 1, 2012. MSC 7854, Bethesda, MD 20892, (301) 435– Health, 6701 Rockledge Drive, Room 6164, Time: 1 p.m. to 3 p.m. 1174, [email protected]. MSC 7892, Bethesda, MD 20892, (301) 435– Agenda: To review and evaluate grant 0229, [email protected]. applications. (Catalogue of Federal Domestic Assistance Place: National Institutes of Health, 6701 Program Nos. 93.306, Comparative Medicine; Name of Committee: Digestive, Kidney and Rockledge Drive, Bethesda, MD 20892 93.333, Clinical Research, 93.306, 93.333, Urological Systems Integrated Review Group, (Virtual Meeting). 93.337, 93.393–93.396, 93.837–93.844, Pathobiology of Kidney Disease Study Contact Person: Dominique Lorang-Leins, 93.846–93.878, 93.892, 93.893, National Section. Ph.D., Scientific Review Officer, National Institutes of Health, HHS) Date: February 6–7, 2012. Institutes of Health, Center for Scientific Dated: December 29, 2011. Time: 8 a.m. to 6 p.m. Agenda: To review and evaluate grant Review, 6701 Rockledge Dr., Bethesda, MD Jennifer S. Spaeth, 20872, (301) 435–2204, [email protected]. applications. Director, Office of Federal Advisory Place: Hyatt Regency Bethesda, One Name of Committee: Center for Scientific Committee Policy. Bethesda Metro Center, 7400 Wisconsin Review Special Emphasis Panel, [FR Doc. 2011–33836 Filed 1–4–12; 8:45 am] Avenue, Bethesda, MD 20814. Multidisciplinary Healthcare Delivery BILLING CODE 4140–01–P Contact Person: Atul Sahai, Ph.D., Research AREA Grant Applications. Scientific Review Officer, Center for Date: February 2, 2012. Scientific Review, National Institutes of Time: 8 a.m. to 5 p.m. Health, 6701 Rockledge Drive, Room 2188, Agenda: To review and evaluate grant DEPARTMENT OF HEALTH AND HUMAN SERVICES MSC 7818, Bethesda, MD 20892, (301) 435– applications. 1198, [email protected]. Place: Hyatt Regency Hotel on Capitol Hill, Name of Committee: Oncology 2— 400 New Jersey Avenue NW., Washington, National Institutes of Health Translational Clinical Integrated Review DC 20001. Group, Clinical Oncology Study Section. Contact Person: Priscah Mujuru, RN, MPH, Center for Scientific Review; Notice of Date: February 6–7, 2012. DRPH, COHNS, Scientific Review Officer, Closed Meetings Time: 8 a.m. to 5 p.m. Center for Scientific Review, National Agenda: To review and evaluate grant Institutes of Health, 6701 Rockledge Drive, Pursuant to section 10(d) of the applications. Room 3139, MSC 7770, Bethesda, MD 20892, Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is Place: Embassy Suites at the Chevy Chase (301) 594–6594, [email protected]. Pavilion, 4300 Military Road NW., Name of Committee: Center for Scientific hereby given of the following meetings. The meetings will be closed to the Washington, DC 20015. Review Special Emphasis Panel, Contact Person: Malaya Chatterjee, Ph.D., Pathophysiology and Clinical Studies of public in accordance with the Scientific Review Officer, Center for Osteonecrosis of the Jaw. provisions set forth in sections Scientific Review, National Institutes of Date: February 3, 2012. 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., Health, 6701 Rockledge Drive, Room 6192, Time: 11 a.m. to 5 p.m. as amended. The grant applications and MSC 7804, Bethesda, MD 20892, (301) 806– Agenda: To review and evaluate grant the discussions could disclose 2515, [email protected]. applications. confidential trade secrets or commercial Name of Committee: Emerging Place: Hyatt Regency Bethesda, One property such as patentable material, Technologies and Training Neurosciences Bethesda Metro Center, 7400 Wisconsin and personal information concerning Integrated Review Group, Neuroscience and Avenue, Bethesda, MD 20814. individuals associated with the grant Ophthalmic Technologies Study Section. Contact Person: Yi-Hsin Liu, Ph.D., Date: February 6–7, 2012. Scientific Review Officer, Center for applications, the disclosure of which would constitute a clearly unwarranted Time: 8 a.m. to 4 p.m. Scientific Review, National Institutes of Agenda: To review and evaluate grant Health, 6701 Rockledge Drive, Room 4214, invasion of personal privacy. applications. MSC 7814, Bethesda, MD 20892, (301) 435– Name of Committee: Biobehavioral and Place: Sheraton Delfina, 530 Pico 1781, [email protected]. Behavioral Processes Integrated Review Boulevard, Santa Monica, CA 90405. Name of Committee: Center for Scientific Group, Adult Psychopathology and Disorders Contact Person: Yvonne Bennett, Ph.D., Review Special Emphasis Panel, AREA of Aging Study Section. Scientific Review Officer, Center for

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Scientific Review, National Institutes of Dated: December 29, 2011. (Presidentially Declared Disasters); 97.039, Health, 6701 Rockledge Drive, Room 5199, Jennifer S. Spaeth, Hazard Mitigation Grant. MSC 7846, Bethesda, MD 20892, (301) 379– Director, Office of Federal Advisory 3793, [email protected]. W. Craig Fugate, Committee Policy. Name of Committee: Brain Disorders and Administrator, Federal Emergency [FR Doc. 2011–33835 Filed 1–4–12; 8:45 am] Clinical Neuroscience Integrated Review Management Agency. Group, Aging Systems and Geriatrics Study BILLING CODE 4140–01–P [FR Doc. 2011–33778 Filed 1–4–12; 8:45 am] Section. BILLING CODE 9111–23–P Date: February 6, 2012. Time: 8 a.m. to 5 p.m. Agenda: To review and evaluate grant DEPARTMENT OF HOMELAND DEPARTMENT OF HOMELAND applications. SECURITY SECURITY Place: Sheraton Delfina Santa Monica Hotel, 530 West Pico Boulevard, Santa Federal Emergency Management Transportation Security Administration Monica, CA 90405. Agency Contact Person: James P Harwood, Ph.D., [Docket No. TSA–2005–20118] Scientific Review Officer, Center for Scientific Review, National Institutes of [Internal Agency Docket No. FEMA–4042– Intent To Request Renewal From OMB DR; Docket ID FEMA–2011–0001] Health, 6701 Rockledge Drive, Room 5168, of One Current Public Collection of MSC 7840, Bethesda, MD 20892, (301) 435– Information; Maryland Three Airports: 1256, [email protected]. Virginia; Amendment No. 4 to Notice of a Major Disaster Declaration Enhanced Security Procedures at Name of Committee: Brain Disorders and Certain Airports in the Washington, Clinical Neuroscience Integrated Review AGENCY: Federal Emergency DC, Area Group, Diseases and Pathophysiology of the Management Agency, DHS. Visual System Study Section. AGENCY: Transportation Security ACTION: Date: February 6–7, 2012. Notice. Administration, DHS. Time: 8 a.m. to 5 p.m. Agenda: To review and evaluate grant SUMMARY: This notice amends the notice ACTION: 60-Day notice. applications. of a major disaster declaration for the SUMMARY: Place: Ritz Carlton Hotel, 1150 22nd Street Commonwealth of Virginia (FEMA– The Transportation Security NW., Washington, DC 20037. 4042–DR), dated November 4, 2011, and Administration (TSA) invites public Contact Person: Jerry L Taylor, Ph.D., related determinations. comment on one currently approved Scientific Review Officer, Center for Information Collection Request (ICR), Scientific Review, National Institutes of DATES: Effective Date: December 28, Office of Management and Budget Health, 6701 Rockledge Drive, Room 5202, 2011. (OMB) control number 1652–0029, MSC 7846, Bethesda, MD 20892, (301) 435– FOR FURTHER INFORMATION CONTACT: abstracted below that we will submit to 1175, [email protected]. Peggy Miller, Office of Response and OMB for renewal in compliance with Name of Committee: Musculoskeletal, Oral Recovery, Federal Emergency the Paperwork Reduction Act (PRA). and Skin Sciences Integrated Review Group, Management Agency, 500 C Street SW., The ICR describes the nature of the Arthritis, Connective Tissue and Skin Study information collection and its expected Section. Washington, DC 20472, (202) 646–3886. Date: February 6–7, 2012. SUPPLEMENTARY INFORMATION: The notice burden. This collection requires Time: 8:30 a.m. to 5 p.m. of a major disaster declaration for the individuals to successfully complete a Agenda: To review and evaluate grant Commonwealth of Virginia is hereby security threat assessment in order to applications. amended to include the following areas operate an aircraft to or from one of the Place: Bethesda North Marriott Hotel & among those areas determined to have three Maryland airports that are located Conference Center, 5701 Marinelli Road, been adversely affected by the event within the Washington, DC, Bethesda, MD 20852. Metropolitan Area Flight Restricted Contact Person: Aftab A Ansari, Ph.D., declared a major disaster by the President in his declaration of Zone (Maryland Three Airports), or to Scientific Review Officer, Center for serve as an airport security coordinator Scientific Review, National Institutes of November 4, 2011. at one of these three airports. Health, 6701 Rockledge Drive, Room 4108, Culpeper, Fluvanna, Goochland, and MSC 7814, Bethesda, MD 20892, (301) 237– Orange Counties for Individual Assistance. DATES: Send your comments by March 9931, [email protected]. Spotsylvania County and the City of 5, 2012. Name of Committee: Center for Scientific Fredericksburg for Individual Assistance ADDRESSES: Comments may be emailed Review Special Emphasis Panel, Shared (already designated for Public Assistance). to [email protected] or delivered to the Instrumentation: NCRR High End Grant Culpeper and Northampton Counties for TSA PRA Officer, Office of Information Program. Public Assistance. Technology (OIT), TSA–11, Date: February 7, 2012. The following Catalog of Federal Domestic Transportation Security Administration, Time: 4 p.m. to 5 p.m. Assistance Numbers (CFDA) are to be used Agenda: To review and evaluate grant 601 South 12th Street, Arlington, VA for reporting and drawing funds: 97.030, 20598–6011. applications. Community Disaster Loans; 97.031, Cora Place: Sheraton Delfina, 530 Pico Brown Fund; 97.032, Crisis Counseling; FOR FURTHER INFORMATION CONTACT: Boulevard, Santa Monica, CA 90405. 97.033, Disaster Legal Services; 97.034, Joanna Johnson at the above address, or Contact Person: Yvonne Bennett, Scientific Disaster Unemployment Assistance (DUA); by telephone (571) 227–3651. Review Officer, Center for Scientific Review, 97.046, Fire Management Assistance Grant; SUPPLEMENTARY INFORMATION: National Institutes of Health, 6701 Rockledge 97.048, Disaster Housing Assistance to Drive, Room 5199, MSC 7846, Bethesda, MD Individuals and Households in Presidentially Comments Invited 20892, (301) 379–3793, [email protected]. Declared Disaster Areas; 97.049, In accordance with the Paperwork (Catalogue of Federal Domestic Assistance Presidentially Declared Disaster Assistance— Program Nos. 93.306, Comparative Medicine; Disaster Housing Operations for Individuals Reduction Act of 1995, (44 U.S.C. 3501 93.333, Clinical Research, 93.306, 93.333, and Households; 97.050, Presidentially et seq.), an agency may not conduct or 93.337, 93.393–93.396, 93.837–93.844, Declared Disaster Assistance to Individuals sponsor, and a person is not required to 93.846–93.878, 93.892, 93.893, National and Households—Other Needs; 97.036, respond to a collection of information Institutes of Health, HHS) Disaster Grants—Public Assistance unless it displays a valid OMB control

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number. The ICR documentation is airport security coordinator, as well as Sec. 24, N1⁄2SW1⁄4SE1⁄4NE1⁄4, available at http://www.reginfo.gov. provide the following information to N1⁄2SE1⁄4SE1⁄4NE1⁄4. Therefore, in preparation for OMB TSA as part of the application process: The area described contains 10 acres, more review and approval of the following full name, Social Security number, or less in Clark County, Nevada. information collection, TSA is soliciting current Airmen Certificate and medical Authority: 43 CFR 2741.5. comments to— certificate, date of birth, home address, Vanessa L. Hice, (1) Evaluate whether the proposed home and work phone numbers, email information requirement is necessary for address, emergency contact number, Assistant Field Manager, Las Vegas Field Office. the proper performance of the functions aircraft make and model, and FAA of the agency, including whether the aircraft registration number. TSA [FR Doc. 2011–33809 Filed 1–4–12; 8:45 am] information will have practical utility; receives approximately 312 applications BILLING CODE 4310–HC–P (2) Evaluate the accuracy of the annually, and estimates respondents agency’s estimate of the burden; spend approximately 180 minutes to DEPARTMENT OF THE INTERIOR (3) Enhance the quality, utility, and submit the information to TSA, which is clarity of the information to be a total annual burden of 56,160 hours. collected; and Bureau of Land Management (4) Minimize the burden of the Issued in Arlington, Virginia, on December [OR–65891, L51010000 ER0000 collection of information on those who 29, 2011. LVRWH09H0560 LLORB00000] are to respond, including using Joanna Johnson, appropriate automated, electronic, TSA Paperwork Reduction Act Officer, Office Notice of Availability of the Record of mechanical, or other technological of Information Technology. Decision for the North Steens 230 collection techniques or other forms of [FR Doc. 2011–33792 Filed 1–4–12; 8:45 am] Kilovolt Transmission Line, Harney information technology. BILLING CODE 9110–05–P County, OR Information Collection Requirement AGENCY: Bureau of Land Management, Interior. OMB Control Number 1652–0029; DEPARTMENT OF THE INTERIOR Maryland Three Airports: Enhanced ACTION: Notice of availability. Security Procedures at Certain Airports Bureau of Land Management SUMMARY: The Bureau of Land in the Washington, DC Area, 49 CFR [LLNV05600.L14300000 Management (BLM) announces the part 1562. Codified under 49 CFR part .EU0000.LVTFF1000770.241A00; N–76649; availability of the Record of Decision 1562, TSA has responsibility for ground 12–08807; TAS: 14X5232] (ROD) for the North Steens 230 kilovolt security requirements and security (kV) Transmission Line Project. The procedures at three Maryland airports Correction for Conveyance of Public Secretary of the Interior approved the that are located within the Washington, Lands for Recreation and Public ROD on December 28, 2011, which DC, Metropolitan Area Flight Restricted Purposes in Clark County, NV constitutes the Department’s final Zone (Maryland Three Airports), and for decision. individuals operating aircraft to or from AGENCY: Bureau of Land Management, ADDRESSES: these three airports. The Maryland Interior. Copies of the ROD are Three Airports are College Park Airport ACTION: Notice of Realty Action. available upon request from the District (CGS), Potomac Airfield (VKX), and Manager, BLM Burns District Office, SUMMARY: This Notice corrects a Notice Washington Executive/Hyde Field 28910 Hwy 20 West, Hines, Oregon of Realty Action published in the (W32). The information collected is 97738, or at the following Web site: Federal Register on April 26, 2004, (69 used to determine compliance with 49 http://www.blm.gov/or/districts/burns/ FR22547–22548), which listed an CFR part 1562. plans/index.php. incorrect legal land description for the Part 1562 allows an individual who is FOR FURTHER INFORMATION CONTACT: Skip South Hills Church Community in the approved by TSA to operate an aircraft Renchler, Realty Specialist, telephone; City of Las Vegas, Clark County, to or from one of the Maryland Three (541) 573–4443; address; BLM Burns Nevada. Airports or to serve as an airport District Office, 28910 Hwy 20 West, security coordinator in one of these FOR FURTHER INFORMATION CONTACT: Hines, Oregon 97738; email: ______three airports. In order to be approved, Shawna Woods, (702) 515–5099, or BLM OR BU NS Transmission Line an individual is required to successfully email: [email protected]. Persons who [email protected]. complete a security threat assessment. use a telecommunications device for the SUPPLEMENTARY INFORMATION: The As part of this threat assessment, an deaf (TDD) may call the Federal applicant, Echanis, LLC, a subsidiary of individual (pilot or airport security Information Relay Service (FIRS) at 1– Columbia Energy Partners, LLC, filed coordinator) is required to undergo a (800) 877–8339 to contact the above right-of-way (ROW) applications for criminal history records check and a individual during normal business ROWs with the BLM and the U.S. Fish check of Government terrorist watch hours. The FIRS is available 24 hours a and Wildlife Service for construction, lists and other databases to determine day, 7 days a week, to leave a message operation, maintenance, and whether the individual poses, or is or question with the above individual. termination of a 29-mile-long, 230kV suspected of posing, a threat to You will receive a reply during normal transmission line that would connect transportation or national security. An business hours. the proposed Echanis Wind Energy individual will not receive TSA’s SUPPLEMENTARY INFORMATION: The Project, located on private land on the approval under this analysis if TSA erroneous legal land description is on north end of Steens Mountain, with determines or suspects the individual of page 22547, 3rd column, line 6. The Harney Electric Cooperative’s existing being a threat to national or legal land description is corrected to transmission system near Diamond transportation security. Prospective read: Junction, Oregon. pilots must be fingerprinted at the The ROD approves the BLM-preferred Ronald Reagan Washington National Mount Diablo Meridian Alternative, now the Selected Airport’s (DCA) badging office with the T. 22 S., R. 61 E., Alternative, and will result in the grant

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of ROWs for construction, operation, Places, National Park Service, 1201 Eye St. Louis County maintenance and termination of a 230- St. NW., 8th floor, Washington DC Engine House No. 1, 101 E. 3rd St., Duluth, kV transmission line, tensioning sites 20005; or by fax, (202) 371–6447. 11001040 and related access across lands Written or faxed comments should be NEW JERSEY administered by the BLM. The route for submitted by January 20, 2012. Before the Selected Alternative would originate including your address, phone number, Ocean County at the Echanis Wind Energy Project email address, or other personal Bartlett—Rockhill—Bartlett House, Bartlett substation, south of Diamond, Oregon identifying information in your Ln., Tuckerton, 11001041 and connect to Harney Electric comment, you should be aware that NORTH CAROLINA Cooperative’s existing 115-kV your entire comment—including your transmission line near Crane, Oregon. personal identifying information—may Edgecombe County The Selected Alternative would not be made publicly available at any time. Lincoln Park Historic District, 800 blk. cross the Malheur National Wildlife While you can ask us in your comment Ellison Dr., 800–900 & 1000–1002 Leggett Refuge administered by the U.S. Fish to withhold your personal identifying Rd. & 800 Carver Pl., Rocky Mount, and Wildlife Service. This alternative information from public review, we 11001042 will enable the construction of the cannot guarantee that we will be able to SOUTH CAROLINA Echanis Wind Energy Project on private do so. Marlboro County land. The effects of the wind project on private land are analyzed in the Final J. Paul Loether, McLaurin—Roper—McColl Farmstead, 1104 Laurin Willis Rd., Clio, 11001043 Environmental Impact Statement (EIS) Chief, National Register of Historic Places, because they are ‘‘connected actions’’ National Historic Landmarks Program. UTAH under the National Environmental FLORIDA Wayne County Policy Act of 1969. Miami-Dade County This BLM-preferred Alternative was Horseshoe Canyon Archeological District (Boundary Increase), Horseshoe Canyon evaluated in the Final EIS. The Notice Bryan, William Jennings, House, 3115 Brickell Ave., Miami, 11001029 Detached Unit, Canyonlands NP., of Availability of the Final EIS for the Hanksville, 11001044 North Steens 230kV Transmission Line ILLINOIS Project was published in the Federal WISCONSIN Winnebago County Register on October 21, 2011 (76 FR Clark County Garrison—Coronado—Haskill Historic 65509). Tufts, William B. and Jennie, House, 321 E. District, Roughly bounded by Salem, Because this decision is approved by 4th St., Neillsville, 11001045 Summer, Main, Court, Whitman & the Secretary of the Interior, it is not [FR Doc. 2011–33790 Filed 1–4–12; 8:45 am] subject to administrative appeal (43 CFR Winnebago Sts., & Fisher, Ridge, & North BILLING CODE 4312–51–P 4.410(a)(3)). Aves., Rockford, 11001030 Authority: 40 CFR 1506.6. KANSAS Mike Pool, Cowley County INTERNATIONAL TRADE COMMISSION Deputy Director, Bureau of Land Winfield National Bank Building, 901 Main Management. St., Winfield, 11001031 [DN 2861] [FR Doc. 2011–33810 Filed 1–4–12; 8:45 am] Marion County BILLING CODE 4310–33–P Certain Portable Communication Peabody City Park (New Deal-Era Resources Devices; Receipt of Amended of Kansas MPS), W. 2nd & Locust Sts., Complaint; Solicitation of Comments Peabody, 11001032 DEPARTMENT OF THE INTERIOR Relating to the Public Interest Riley County National Park Service AGENCY: U.S. International Trade Rocky Ford School (Public Schools of Kansas Commission. [NPS–WASO–NRNHL–1211–9092; 2200– MPS), 1669 Barnes Rd., Manhattan, ACTION: Notice. 3200–665] 11001033 Shawnee County SUMMARY: Notice is hereby given that National Register of Historic Places; ATSF Motive Power Building, 1001 NE. the U.S. International Trade Notification of Pending Nominations Commission has received an amended and Related Actions Atchison, Topeka, 11001034 Church of the Holy Name, 1110 SW. 10th complaint entitled In Re Certain Nominations for the following Ave., Topeka, 11001035 Portable Communication Devices, DN properties being considered for listing Harmon, John C., House, 915 SW. Buchanan, 2861; the Commission is soliciting or related actions in the National Topeka, 11001036 comments on any public interest issues Register were received by the National Wyandotte County raised by the amended complaint. FOR FURTHER INFORMATION CONTACT: Park Service before December 10, 2011. Kansas City, Kansas High School Gymnasium Pursuant to section 60.13 of 36 CFR part and Laboratory, (Public Schools of Kansas James R. Holbein, Secretary to the 60, written comments are being MPS), 1017 N. 9th St., Kansas City, Commission, U.S. International Trade accepted concerning the significance of 11001038 Commission, 500 E Street SW., the nominated properties under the Mann, Horace, Elementary School (Public Washington, DC 20436, telephone (202) National Register criteria for evaluation. Schools of Kansas MPS), 824 State Ave., 205–2000. The public version of the Comments may be forwarded by United Kansas City, 11001037 complaint can be accessed on the States Postal Service, to the National MINNESOTA Commission’s electronic docket (EDIS) Register of Historic Places, National at http://edis.usitc.gov, and will be Park Service, 1849 C St. NW., MS 2280, Hennepin County available for inspection during official Washington, DC 20240; by all other Buzza Company Building, 1006 W. Lake St., business hours (8:45 a.m. to 5:15 p.m.) carriers, National Register of Historic Minneapolis, 11001039 in the Office of the Secretary, U.S.

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International Trade Commission, 500 E In particular, the Commission is and Procedure (19 CFR 201.10, Street SW., Washington, DC 20436, interested in comments that: 210.50(a)(4)). telephone (202) 205–2000. (i) Explain how the articles By order of the Commission. potentially subject to the orders are used General information concerning the Issued: December 29, 2011. Commission may also be obtained by in the United States; James R. Holbein, accessing its Internet server (http:// (ii) Identify any public health, safety, www.usitc.gov). The public record for or welfare concerns in the United States Secretary to the Commission. this investigation may be viewed on the relating to the potential orders; [FR Doc. 2011–33771 Filed 1–4–12; 8:45 am] Commission’s electronic docket (EDIS) (iii) Indicate the extent to which like BILLING CODE 7020–02–P at http://edis.usitc.gov. Hearing- or directly competitive articles are impaired persons are advised that produced in the United States or are information on this matter can be otherwise available in the United States, DEPARTMENT OF JUSTICE obtained by contacting the with respect to the articles potentially Commission’s TDD terminal on (202) subject to the orders; and Notice of Lodging of Proposed Natural 205–1810. (iv) Indicate whether Complainant, Resource Damages Consent Decree Complainant’s licensees, and/or third Under the Comprehensive SUPPLEMENTARY INFORMATION: The party suppliers have the capacity to Environmental Response, Commission has received a complaint, replace the volume of articles Compensation, and Liability Act as amended, filed on behalf of Digitude potentially subject to an exclusion order Innovations LLC on December 16, 2011. and a cease and desist order within a Notice is hereby given that on The complaint alleges violations of commercially reasonable time. December 29, 2011, a proposed Consent section 337 of the Tariff Act of 1930 (19 Written submissions must be filed no Decree in United States and State of U.S.C. 1337) in the importation into the later than by close of business, five New Mexico v. Freeport-McMoRan Corp. United States, the sale for importation, business days after the date of et al. (‘‘Freeport-McMoRan Consent and the sale within the United States publication of this notice in the Federal Decree’’), Civil Action No. 1:11–cv–1140 after importation of certain portable Register. There will be further (D. N.M.), was lodged with the United communication devices. The complaint opportunities for comment on the States District Court for the District of names Research In Motion Ltd. of public interest after the issuance of any New Mexico. Canada; Research In Motion Corp. of final initial determination in this The Complaint in this case was filed Irving, TX; HTC Corporation of Taiwan; investigation. against Freeport-McMoRan Corporation, HTC America, Inc. of Bellevue, WA; LG Persons filing written submissions Freeport-McMoRan Chino Mines Electronics, Inc. of South Korea; LG must file the original document and 12 Company, Freeport-McMoRan Tyrone Electronics U.S.A. Inc. of Englewood true copies thereof on or before the Inc., Freeport-McMoRan Tyrone Mining Cliffs, NJ; LG Electronics MobileComm deadlines stated above with the Office LLC, and Freeport-McMoRan Cobre U.S.A. Inc. of San Diego, CA; Motorola of the Secretary. Submissions should Mining Company (collectively Mobility Holdings, Inc. of Libertyville, refer to the docket number (‘‘Docket No. ‘‘Freeport-McMoRan’’) on December 29, Illinois; Samsung Electronics Co., Ltd. 2861’’) in a prominent place on the 2011. The cause of action is based on of South Korea; Samsung Electronics cover page and/or the first page. The Section 107(a) of the Comprehensive America, Inc. of Ridgefield Park, New Commission’s rules authorize filing Environmental Response, Jersey; Samsung Telecommunications submissions with the Secretary by Compensation, and Liability Act of America, LLC of Richardson, TX; Sony facsimile or electronic means only to the 1980, as amended (‘‘CERCLA’’), 42 Corporation of Japan; Sony Corporation extent permitted by section 201.8 of the U.S.C. 9607(a). The Complaint alleges of America of New York, NY; Sony rules (see Handbook for Electronic that Freeport-McMoRan is civilly liable Electronics, Inc. of San Diego, CA; Sony Filing Procedures, http://www.usitc.gov/ for payment of damages for injuries to Ericsson Mobile Communication AB of secretary/fed_reg_notices/rules/ natural resources belonging to, managed Sweden; Sony Ericsson Mobile documents/handbook_on_electronic_ by, or controlled by the United States Communication (USA) Inc. of Research filing.pdf. Persons with questions and the State of New Mexico that Triangle Park, NC; Amazon.com, Inc. of regarding electronic filing should resulted from hazardous substance Seattle, WA; Nokia Corporation of contact the Secretary (202) 205–2000). releases at and from Freeport- Finland; Nokia Inc. of Irving, TX; Any person desiring to submit a McMoRan’s Chino Mine, Tyrone Mine, Pantech & Curitel Communication, Inc. document to the Commission in and Cobre Mine in southwestern New of South Korea; Pantech Wireless, Inc. confidence must request confidential Mexico. The Complaint further alleges of Atlanta, Georgia as respondents. treatment. All such requests should be that surface waters, ground water, The complainant, proposed directed to the Secretary to the terrestrial habitat and wildlife, and respondents, other interested parties, Commission and must include a full migratory birds have been injured, and members of the public are invited statement of the reasons why the destroyed, or lost as a result of releases to file comments, not to exceed five Commission should grant such of hazardous substances at and from the pages in length, on any public interest treatment. See 19 CFR 201.6. Documents mine sites. issues raised by the complaint. for which confidential treatment by the Under the settlement, Freeport- Comments should address whether Commission is properly sought will be McMoRan will pay $5.5 million to the issuance of an exclusion order and/or a treated accordingly. All nonconfidential United States Department of the cease and desist order in this written submissions will be available for Interior’s Natural Resource Damage investigation would negatively affect the public inspection at the Office of the Assessment and Restoration Fund, public health and welfare in the United Secretary. which can be used to restore, States, competitive conditions in the This action is taken under the rehabilitate, replace, or acquire the United States economy, the production authority of section 337 of the Tariff Act equivalent of wildlife and wildlife of like or directly competitive articles in of 1930, as amended (19 U.S.C. 1337), habitat injured, destroyed, or lost as a the United States, or United States and of sections 201.10 and 210.50(a)(4) result of releases at the mine sites. consumers. of the Commission’s Rules of Practice Freeport-McMoRan will also convey to

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the New Mexico State Parks Division lodged with the United States District decree in United States, et al. v. Essroc approximately 715 acres of land Court for the District of Rhode Island. Cement Company, Civil Action No. adjacent to the City of Rocks State Park The Decree resolves claims of the 2:11–cv–0650–DSC was lodged with the in Grant County, New Mexico to further United States and the State of Rhode United States District Court for the offset natural resource losses at the mine Island pursuant to Sections 106 and 107 Western District of Pennsylvania. sites. Finally, Freeport-McMoRan will of the Comprehensive Environmental In this action the United States and reimburse the Department of Interior’s Response, Compensation, and Liability Indiana, Pennsylvania, Puerto Rico and remaining unpaid past natural resource Act (‘‘CERCLA’’), 42 U.S.C. 9606, 9607, West Virginia sought injunctive relief damage assessment costs, which amount against seven parties in connection with and civil penalties for violations of the to $59,750.99. the Davis Liquid Waste Superfund Site following statutory and regulatory The Department of Justice will receive located in Smithfield, Rhode Island requirements of the Clean Air Act (the for a period of thirty (30) days from the (‘‘Site’’). The Decree requires the settling ‘‘Act’’) at Essroc cement plants: the date of this publication comments defendants to perform the remedial Prevention of Significant Deterioration relating to the Freeport-McMoRan action selected in the Amended Record (‘‘PSD’’) provisions of the Act, 42 U.S.C. Consent Decree. Comments should be of Decision (‘‘Amended ROD’’) issued 7470 to 7492; the nonattainment New addressed to the Assistant Attorney on September 20, 2010. Source Review (‘‘nonattainment NSR’’) General, Environment and Natural The Department of Justice will receive provisions of the Act, 42 U.S.C. 7501 to Resources Division, and either emailed for a period of thirty (30) days from the 7515; the federally-approved and to [email protected] or date of this publication comments enforceable state implementation plans, mailed to P.O. Box 7611, U.S. relating to the Decree. Comments should or SIPs, which incorporate and/or Department of Justice, Washington, DC be addressed to the Assistant Attorney implement the above-listed Federal PSD 20044–7611, and should refer to United General, Environmental and Natural and/or nonattainment NSR States and State of New Mexico v. Resources Division, and either emailed requirements; and, Title V of the Act, 42 Freeport-McMoran Corp. et al., Case No. to [email protected] or U.S.C. 7661 to 7661f, and Title V’s 1:11–cv–1140 (D. N.M.), D.J. Ref. 90–11– mailed to P.O. Box 7611, U.S. implementing Federal and state 3–08069. Department of Justice, Washington, DC regulations. The proposed consent During the public comment period, 20044–7611, and should refer to United decree requires installation and the Freeport-McMoRan Consent Decree States and State of Rhode Island v. continuous operation of a selective non- may also be examined on the following Ashland, Inc., et al., Civil Action No. catalytic reduction system (SNCR) for Department of Justice Web site: http:// 11–558, D.J. Ref. 90–11–2–137/3. NOX at five cement kilns. The proposed www.usdoj.gov/enrd/ During the public comment period, consent decree also requires testing a Consent_Decrees.html. A copy of the the Consent Decree also may be selective catalytic reduction system Freeport-McMoRan Consent Decree may examined on the following Department (SCR) for NOX control at two cement also be obtained by mail from the of Justice Web site: http:// kilns. If the SCR tests are unsuccessful, Consent Decree Library, P.O. Box 7611, www.usdoj.gov/enrd/ Essroc will apply SNCR at each of the U.S. Department of Justice, Washington, Consent_Decrees.html. A copy of the kilns. For controlling SO2, Essroc will DC 20044–7611 or by faxing or emailing Decree may also be obtained by mail install a Dry Scrubber/Lime Injection a request to ‘‘Consent Decree Copy’’ from the Consent Decree Library, P.O. system at seven cement kilns. Two ([email protected]), fax no. Box 7611, U.S. Department of Justice, cement kilns, under the proposed (202) 514–0097, phone confirmation Washington, DC 20044–7611 or by settlement, will be permanently retired. number (202) 514–5271. If requesting a faxing or emailing a request to ‘‘Consent As mitigation for violations under the copy from the Consent Decree Library Decree Copy’’ Act, Essroc will replace old engines in by mail, please enclose a check in the ([email protected]), fax no. several off-road vehicles at its facilities. amount of $14.75 (25 cents per page (202) 514–0097, phone confirmation Essroc will also pay a civil penalty of reproduction cost) payable to the U.S. number (202) 514–5271. If requesting a $1.7 million, with 50 percent ($850,000) Treasury or, if requesting by email or copy from the Consent Decree Library, payable to the United States and the fax, forward a check in that amount to please enclose a check in the amount of remander allocated among the four the Consent Decree Library at the $71.00 (25 cents per page reproduction states. address given above. cost) payable to the U.S. Treasury or, if The Department of Justice will receive by email or fax, forward a check in that for a period of thirty (30) days from the Ronald G. Gluck, amount to the Consent Decree Library at date of this publication comments Assistant Section Chief, Environmental the address given above. If requesting a relating to the proposed consent decree. Enforcement Section, Environment and Comments should be addressed to the Natural Resources Division. copy exclusive of exhibits, please enclose a check in the amount of $17.00. Assistant Attorney General, [FR Doc. 2011–33803 Filed 1–4–12; 8:45 am] Environment and Natural Resources BILLING CODE 4410–15–P Ronald Gluck, Division, and either emailed to Assistant Chief, Environmental Enforcement [email protected] or Section, Environment and Natural Resources mailed to P.O. Box 7611, U.S. DEPARTMENT OF JUSTICE Division. Department of Justice, Washington, DC [FR Doc. 2011–33804 Filed 1–4–12; 8:45 am] Notice of Lodging of Consent Decree 20044–7611, and should refer to United BILLING CODE 4410–15–P Under the Comprehensive States, et al. v. Essroc Cement Company, Environmental Response, Civil Action No. 2:11–cv–0650–DSC (DJ Compensation, and Liability Act No. 90–5–2–1–09608). DEPARTMENT OF JUSTICE During the public comment period, Notice is hereby given that on Notice of Lodging of Consent Decree the proposed consent decree, may also December 29, 2011, a proposed Consent Under the Clean Air Act be examined on the following Decree (‘‘Decree’’) in United States and Department of Justice Web site, http:// State of Rhode Island v. Ashland, Inc., Notice is hereby given that on www.usdoj.gov/enrd/ et al., Civil Action No. 11–558, was December 29, 2011, a proposed consent Consent_Decrees.html. A copy of the

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proposed consent decree may also be Comments should be addressed to the organization. The Commission is obtained by mail from the Consent Assistant Attorney General, publishing this notice to solicit Decree Library, P.O. Box 7611, U.S. Environment and Natural Resources comments on the proposed rule change Department of Justice, Washington, DC Division, and either emailed to from interested persons. 20044–7611, or by faxing or emailing a [email protected] or I. Self-Regulatory Organization’s request to ‘‘Consent Decree Copy’’ mailed to P.O. Box 7611, U.S. Statement of the Terms of Substance of ([email protected]), fax no. Department of Justice, Washington, DC the Proposed Rule Change (202) 514–0097, phone confirmation 20044–7611, and should refer to the number (202) 514–5271. If requesting a matter as United States v. County of The Exchange proposes to amend the copy from the Consent Decree Library Erie, D.J. Ref. 90–7–1–09728. CBOE Stock Exchange (‘‘CBSX’’) Fees by mail, please enclose a check in the During the public comment period, Schedule. The text of the proposed rule amount of $21.50 (25 cents per page the Consent Decree may also be change is available on the Exchange’s reproduction cost) payable to the U.S. examined on the following Department Web site (http://www.cboe.org/legal), at Treasury or, if requesting by email or of Justice Web site, http://www.usdoj. the Exchange’s Office of the Secretary, fax, please forward a check in that gov/enrd/Consent_Decrees.html. A copy and at the Commission’s Public amount to the Consent Decree Library at of the Consent Decree may also be Reference Room. the address given above. obtained by mail from the Consent II. Self-Regulatory Organization’s Decree Library, P.O. Box 7611, U.S. Robert Brook, Statement of the Purpose of, and Department of Justice, Washington, DC Assistant Chief, Environmental Enforcement Statutory Basis for, the Proposed Rule 20044–7611 or by faxing or emailing a Section, Environment and Natural Resources Change Division. request to ‘‘Consent Decree Copy’’ In its filing with the Commission, the [FR Doc. 2011–33821 Filed 1–4–12; 8:45 am] ([email protected]), fax no. (202) 514–0097, phone confirmation self-regulatory organization included BILLING CODE 4410–15–P number (202) 514–5271. If requesting a statements concerning the purpose of copy from the Consent Decree Library and basis for the proposed rule change DEPARTMENT OF JUSTICE by mail, please enclose a check in the and discussed any comments it received amount of $8.75 (25 cents per page on the proposed rule change. The text Notice of Lodging of the Consent reproduction cost) payable to the U.S. of those statements may be examined at Decree Under the Resource Treasury or, if requesting by email or the places specified in Item IV below. Conservation and Recovery Act and fax, forward a check in that amount to The Exchange has prepared summaries, the Clean Water Act the Consent Decree Library at the set forth in sections A, B, and C below, address given above. of the most significant parts of such Notice is hereby given that on statements. December 22, 2011, a proposed Consent Ronald G. Gluck, Decree in United States v. County of Assistant Section Chief, Environmental A. Self-Regulatory Organization’s Erie (‘‘Erie’’), Civil Action No. 1:11–cv– Enforcement Section, Environment and Statement of the Purpose of, and 01083 (WMS), was lodged with the Natural Resource Division. Statutory Basis for, the Proposed Rule United States Court for the Western [FR Doc. 2011–33805 Filed 1–4–12; 8:45 am] Change District of New York. BILLING CODE 4410–15–P 1. Purpose The proposed Consent Decree resolves Erie’s Resource Conservation CBSX proposes to amend its and Recovery Act (‘‘RCRA’’) violations SECURITIES AND EXCHANGE CBOEdirect Connectivity Charges. stemming from its failure to meet COMMISSION Currently, the CBSX Fees Schedule cathodic protection requirements, applies CBOE’s CBOEdirect release detection requirements, and [Release No. 34–66067; File No. SR–CBOE– Connectivity Charges to CBSX users.3 other record-keeping requirements in to 2011–127] However, CBOE recently filed a proposed rule change to increase its relation to its Underground Storage Self-Regulatory Organizations; CBOEdirect Connectivity Charges.4 Tanks (‘‘USTs’’) at sixteen facilities Chicago Board Options Exchange, Because CBSX does not desire to adopt throughout the county. The Consent Incorporated; Notice of Filing and all of the proposed changes to CBOE’s Decree also resolves Erie’s Clean Water Immediate Effectiveness of a Proposed CBOEdirect Connectivity Charges, CBSX Act (‘‘CWA’’) violations stemming from Rule Change To Amend the CBOE hereby proposes to amend its Fees its failure to prepare and implement Stock Exchange Fees Schedule Spill Prevention Control and Schedule to adopt its own CBOEdirect Countermeasure plans (‘‘SPCC plans’’) December 29, 2011. Connectivity Charges. at eleven facilities throughout the Pursuant to Section 19(b)(1) of the Currently, CBSX assesses a monthly county that utilize applicable above Securities Exchange Act of 1934 (the Network Access Port fee of $250 for ground storage tanks. Under the terms of ‘‘Act’’),1 and Rule 19b–4 thereunder,2 regular access and $500 for Sponsored the Consent Decree, Erie will pay a notice is hereby given that on December User access, as those are the amounts of $275,000 penalty, prepare and 20, 2011, Chicago Board Options the Network Access Port fees on CBOE. implement eleven SPCC plans, and Exchange, Incorporated (the ‘‘Exchange’’ In SR–CBOE–2011–121, CBOE proposes undertake a full RCRA audit to certify or ‘‘CBOE’’) filed with the Securities to increase the fees charged for access to to the United States that it is in and Exchange Commission a Network Access Port to $500 per complete compliance with all RCRA (‘‘Commission’’) the proposed rule month for regular access and $1000 per requirements at the thirty-six facilities it change as described in Items I, II, and month for Sponsored User access. CBSX owns or operates that utilize USTs. III below, which items have been desires to keep the Network Access Port The Department of Justice will receive prepared by the self-regulatory fee rates at their current levels and not for a period of thirty (30) days from the date of this publication comments 1 15 U.S.C. 78s(b)(1). 3 See CBSX Fees Schedule, Section 1. relating to the Consent Decree. 2 17 CFR 240.19b–4. 4 See SR–CBOE–2011–121.

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increase them to the levels proposed by market participants, and in the same IV. Solicitation of Comments CBOE. amounts as previously assessed. Interested persons are invited to CBOE also proposes to increase their The proposed changes to increase the submit written data, views, and monthly CMI and FIX charges from $80 fees assessed for CMI Login IDs and FIX arguments concerning the foregoing, to $500 per month for regular access and Login IDs are also reasonable because including whether the proposed rule $160 to $1000 per month for Sponsored the amounts of such fees are 5 change is consistent with the Act. User access. CBSX does not desire to significantly lower than those assessed Comments may be submitted by any of adopt these increases. Instead, CBSX on other exchanges,10 and because such the following methods: proposes to adopt more moderate increases will assist in recouping increases, from $80 to $100 for regular expenditures recently made to upgrade Electronic Comments access and $160 to $200 for Sponsored the CBOEdirect connectivity equipment. • User access. Sizable investment [sic] This proposed change is equitable and Use the Commission’s Internet were recently made to upgrade the not unfairly discriminatory because the comment form (http://www.sec.gov/ equipment involved in the CMI Client fees, as before, will be assessed to all rules/sro.shtml); or Application Servers and FIX Ports, and market participants. Assessing higher • Send an email to rule- thereby increasing these fees will help fees for Sponsored Users is equitable [email protected]. Please include File recoup such costs and maintain such and not unfairly discriminatory because Number SR–CBOE–2011–127 on the equipment in the future. Moreover, Sponsored Users are able to access the subject line. following these changes, CBSX Exchange and use the equipment connectivity costs will still be lower provided without purchasing a trading Paper Comments than those assessed for connectivity at permit. As such, Trading Permit Holders • Send paper comments in triplicate other exchanges. Along with the who have purchased a trading permit to Elizabeth M. Murphy, Secretary, proposed CBOE changes, ISE assesses a will have a higher level of commitment Securities and Exchange Commission, FIX fee of $1200 for a minimum of two to transacting business on the Exchange 100 F Street NE., Washington, DC monthly login IDs (so, $600 for one), or and using Exchange facilities than 20549–1090. a fee of $2,400 for a higher-volume Sponsored Users. user.6 The NASDAQ Stock Market LLC’s All submissions should refer to File Options Market (‘‘NOM’’) assesses a fee B. Self-Regulatory Organization’s Number SR–CBOE–2011–127. This file of $500 per FIX port per month, as Statement on Burden on Competition number should be included on the 7 well. Regarding the Sponsored User CBOE does not believe that the subject line if email is used. To help the fees, the Exchange currently charges a proposed rule change will impose any Commission process and review your different rate for regular access and burden on competition not necessary or comments more efficiently, please use Sponsored User access, and merely appropriate in furtherance of the only one method. The Commission will proposes to increase the rates in equal purposes of the Act. post all comments on the Commission’s proportion. Internet Web site (http://www.sec.gov/ The proposed changes are to take C. Self-Regulatory Organization’s rules/sro.shtml). Copies of the effect January 1, 2012. Statement on Comments on the submission, all subsequent Proposed Rule Change Received From amendments, all written statements 2. Basis Members, Participants, or Others with respect to the proposed rule change that are filed with the The proposed rule change is No written comments were solicited Commission, and all written consistent with Section 6(b) of the Act,8 or received with respect to the proposed in general, and furthers the objectives of rule change. communications relating to the Section 6(b)(4) 9 of the Act in particular, proposed rule change between the in that it is designed to provide for the III. Date of Effectiveness of the Commission and any person, other than equitable allocation of reasonable dues, Proposed Rule Change and Timing for those that may be withheld from the fees, and other charges among CBOE Commission Action public in accordance with the provisions of 5 U.S.C. 552, will be Trading Permit Holders and other The proposed rule change is persons using Exchange facilities. The available for Web site viewing and designated by the Exchange as printing in the Commission’s Public proposed ‘‘change’’ to add the Network establishing or changing a due, fee, or Access Port fees into the CBSX Fees Reference Room, 100 F Street NE., other charge, thereby qualifying for Washington, DC 20549, on official Schedule is reasonable because the effectiveness on filing pursuant to business days between the hours of amounts of the fees are not changing. Section 19(b)(3)(A) of the Act 11 and 10 a.m. and 3 p.m. Copies of the filing This proposed ‘‘change’’ is equitable subparagraph (f)(2) of Rule 19b–4 12 also will be available for inspection and and not unfairly discriminatory because thereunder. At any time within 60 days copying at the principal office of the the fees, as before, will be assessed to all of the filing of the proposed rule change, Exchange. All comments received will the Commission summarily may 5 be posted without change; the See SR–CBOE–2011–121. temporarily suspend such rule change if 6 Commission does not edit personal See ISE Schedule of Fees, page 8. The it appears to the Commission that such Commission notes that the ISE fees cited by the identifying information from action is necessary or appropriate in the Exchange were modified as of December 1, 2011. As submissions. You should submit only of December 23, 2011, ISE assesses a FIX fee of public interest, for the protection of information that you wish to make $1000 for a minimum of two monthly login IDs and investors, or otherwise in furtherance of does not have a separate fee for a higher-volume the purposes of the Act. available publicly. All submissions user. See Securities Exchange Act Release No. should refer to File Number SR–CBOE– 65916 (December 8, 2011), 76 FR 77881 (December 2011–127 and should be submitted on 14, 2011) (SR–ISE–2011–80). 10 See ISE Schedule of Fees, page 8 and NOM 7 See NOM Rule 7053. Rule 7053 and also SR–CBOE–2011–121. or before January 26, 2012. 8 15 U.S.C. 78f(b). 11 15 U.S.C. 78s(b)(3)(A). 9 15 U.S.C. 78f(b)(4). 12 17 CFR 240.19b–4(f)(2). 13 17 CFR 200.30–3(a)(12).

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For the Commission, by the Division of against another stock or ETF, including III. Discussion Trading and Markets, pursuant to delegated where one of the reference ETFs 13 authority. measured by the index is a gold- or Section 17A(b)(3)(F) of the Act Kevin M. O’Neill, silver-based ETF.5 Generally, OCC requires, among other things, that the Deputy Secretary. believes that a relative performance rules of a clearing agency be designed to [FR Doc. 2011–33789 Filed 1–4–12; 8:45 am] index should be considered to be an promote the prompt and accurate BILLING CODE 8011–01–P index of securities since the clearance and settlement of securities components of a relative performance transactions and derivative index are ETFs or other securities. transactions.9 The proposed rule change SECURITIES AND EXCHANGE However, OCC would like to confirm is similar to a proposed rule change the COMMISSION the jurisdictional treatment of relative Commission approved previously with [Release No. 34–66070; File No. SR–OCC– performance indexes in situations in respect to the jurisdictional status CBOE 2011–13] which a reference security of an Gold ETF Volatility Index and clarifies underlying relative performance index that OCC will clear and treat as Self-Regulatory Organizations; is an ETF designed to measure the securities any relative performance Options Clearing Corporation; Order return of gold or silver. To accomplish index, including in situations in which Approving Proposed Rule Change, as this purpose, OCC is adding an one of the reference securities of a Modified by Amendments No. 1, No. 2, interpretation following Section 2 in relative performance index is an ETF and No. 3, Relating to Relative Article XVII of its By-Laws,6 clarifying designed to measure the return of gold Performance Indexes that OCC will clear and treat as or silver. Any uncertainty regarding the December 29, 2011. securities any relative performance jurisdictional status of a product could index. The Commission and Commodity presumably interfere with OCC’s ability I. Introduction Futures Trading Commission (‘‘CFTC’’) to provide clearance and settlement On September 21, 2011, the Options have previously approved changes to services with respect to the product. Clearing Corporation (‘‘OCC’’) filed with OCC’s By-Laws clarifying that options The proposed rule change, by allowing the Securities and Exchange on the CBOE Gold ETF Volatility Index OCC to clarify in its rules the treatment Commission (‘‘Commission’’) the will be cleared and treated as of a relative performance index, should proposed rule change SR–OCC–2011–13 securities.7 facilitate the clearance and settlement of pursuant to Section 19(b)(1) of the In its capacity as a ‘‘derivatives such products and, thus, should help Securities Exchange Act of 1934 clearing organization’’ registered as such promote the prompt and accurate (‘‘Act’’) 1 2 and Rule 19b–4 thereunder. with the CFTC, OCC filed the proposed clearance and settlement of securities On October 4, 2011, OCC filed rule change for prior approval by the transactions and of derivative Amendment No. 1 to the proposed rule CFTC pursuant to provisions of the transactions. change. The proposed rule change, as Commodity Exchange Act (the ‘‘CEA’’) modified by Amendment No. 1, was IV. Conclusion in order to foreclose any potential published for comment in the Federal liability under the CEA based on an Register on October 11, 2011.3 On On the basis of the foregoing, the November 17, 2011, OCC filed argument that the clearing by OCC of Commission finds that the proposal is Amendment No. 2 and Amendment No. such options as securities options consistent with the requirements of the 3 to the proposed rule change. The constitutes a violation of the CEA. OCC Act and in particular with the proposed rule change, as modified by amended the rule filing at the request of requirements of Section 17A of the Amendments No. 1, No. 2 and No. 3 was the CFTC to clarify that OCC will clear Act 10 and the rules and regulations published in the Federal Register on and treat as options on securities any thereunder. 4 options on relative performance indexes November 29, 2011. The Commission It is therefore ordered, pursuant to received no comment letters on the for which a reference security is an Section 19(b)(2) of the Act,11 that the proposed rule change, as modified by exchange-traded fund designed to 8 proposed rule change, as modified by Amendments No. 1, No. 2, and No. 3. measure the return of gold or silver. Amendments No. 1, No. 2, and No. 3, This order approves the proposed rule change as modified by Amendments No. 5 The staff notes that on August 17, 2011, the (File No. SR–OCC–2011–13) be, and 12 1, No. 2, and No. 3. Commission issued an Order granting approval to hereby is, approved. this proposed rule change. See Securities Exchange For the Commission by the Division of II. Description Act Release No. 34–65149, 76 FR 52729 (August 23, 2011). Trading and Markets, pursuant to delegated The purpose of the proposed rule 6 The staff notes that OCC is also adding a authority.13 change is to remove any potential cloud definition of ‘‘relative performance index’’ to Kevin M. O’Neill, on the jurisdictional status of relative Section 1, which will be defined as an index Deputy Secretary. performance indexes. NASDAQ OMX designed to measure the relative performance of a reference security or reference index in relation to [FR Doc. 2011–33795 Filed 1–4–12; 8:45 am] PHLX has proposed to trade options on another reference security or reference index. indexes (‘‘Alpha Index Options’’) that 7 See Securities Exchange Act Release No. 34– BILLING CODE 8011–01–P 62290, 75 FR 35861 (June 23, 2010); CFTC Order measure the relative total returns of a 9 15 U.S.C. 78q–1(b)(3)(F). Exempting the Trading and Clearing of Certain stock or exchange-traded fund (‘‘ETF’’) 10 Products Related to the CBOE Gold ETF Volatility 15 U.S.C. 78q–1. Index and Similar Products, 75 FR 81977 11 15 U.S.C. 78s(b)(2). 1 15 U.S.C. 78s(b)(1). (December 29, 2010). 12 In approving this proposed rule change the 2 17 CFR 240.19b–4. 8 The staff notes that Amendment Nos. 2 and 3 Commission has considered the proposed rule’s 3 Securities Exchange Act Release No. 65483 provide that the interpretation will not include impact of efficiency, competition, and capital (October 4, 2011), 76 FR 62981 (October 11, 2011). options on relative performance indexes for which formation. See 15 U.S.C. 78c(f). 4 Securities Exchange Act Release No. 65807 a reference security is an exchange-traded fund 13 17 CFR 200.30–3(a)(12). (September 21, 2011), 76 FR 73752 (November 29, designed to measure the return of a commodity 2011). other than gold or silver.

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SECURITIES AND EXCHANGE Following the completion of the As a limited liability company, COMMISSION Transaction, NSX would become a ownership of CBSX is represented by wholly-owned subsidiary of CBSX. NSX limited liability membership interests. [Release No. 34–66071; File Nos. SR– would remain a Delaware for-profit The holders of such interests are CBOE–2011–107 and SR–NSX–2011–14] stock corporation, with the authority to referred to as ‘‘Owners.’’ CBOE is one of Self-Regulatory Organizations; issue 1,000 shares of common stock, 100 the Owners of CBSX and owns all Chicago Board Options Exchange, shares of which would be issued and outstanding ‘‘Series A’’ Voting Shares 10 Incorporated and National Stock would be held in their entirety by of CBSX, representing just under 50% of Exchange, Inc.; Order Granting CBSX. At all times, all of the all outstanding shares of CBSX.11 The Accelerated Approval to Proposed outstanding stock of NSX would be outstanding ‘‘Series B’’ Voting Shares of Rule Changes in Connection With the owned by CBSX. NSX would remain CBSX are held by nine broker-dealers. Proposed Acquisition of the National registered as a national securities As provided in Section 8.9 of the 5 Stock Exchange, Inc. by CBOE Stock exchange under Section 6 of the Act, CBSX Operating Agreement, the Exchange, LLC and accordingly, NSX would remain a outstanding Series A Voting Shares, in self-regulatory organization (‘‘SRO’’).6 the aggregate, are entitled to a number December 29, 2011. NSX has proposed to amend its of votes equal to 50% of the total Certificate of Incorporation and By-Laws number of Voting Shares outstanding on I. Introduction to reflect and address the acquisition of each matter submitted to a vote of the On November 28, 2011, each of the NSX by CBSX following the Owners. Each outstanding Series B Chicago Board Options Exchange, Transaction. In addition, NSX has Voting Share is entitled to one vote on Incorporated (‘‘CBOE’’) and the National proposed other changes to its governing each matter submitted to a vote of the Stock Exchange, Inc. (‘‘NSX’’) filed with documents that are not directly related Owners.12 the Securities and Exchange to the Transaction to update and The CBSX Approval Order and the Commission (‘‘Commission’’), pursuant enhance the governing documents and CBSX Notice of Filing describe various to Section 19(b)(1) of the Securities generally make them consistent with characteristics of CBSX, including: the Exchange Act of 1934 (‘‘Act’’) 1 and Rule parallel provisions contained in the relationship between CBSX and CBOE; 19b–4 thereunder,2 proposed rule governing documents of other SROs. changes in control of CBSX; the changes in connection with the These changes are discussed below. regulatory jurisdiction of the Commission and CBOE over the proposed acquisition of NSX by CBOE B. CBSX Stock Exchange, LLC (‘‘CBSX’’) (the controlling parties and the Owners; and ‘‘Transaction’’). On December 2, 2011, In 2007, the Commission approved the ownership and voting restrictions on 7 the proposed rule changes were the establishment of CBSX as a facility Owners.13 These provisions, as 8 published for comment in the Federal of CBOE. As the SRO for CBSX, CBOE Register.3 The Commission received no has regulatory responsibility for the indirectly, of record or beneficially, an aggregate comments on either proposed rule activities of CBSX. CBSX administers amount of Shares that would result in a greater than the CBOE Stock Exchange, a fully twenty percent (20%) Percentage Interest in CBSX change. This order approves each of the LLC (the ‘‘Concentration Limitation’’). proposed rule changes on an accelerated automated trading platform for In addition, the Certificate of Incorporation of basis. securities other than options (the ‘‘CBSX CBOE Holdings, Inc., the owner of CBOE (‘‘CBOE Trading Facility’’). As a limited liability Holdings’’), provides that no person (either alone or II. Background company, the governance structure and together with its related persons) may beneficially own more than 20% of the total outstanding shares A. The Transaction operating authority of CBSX are set forth of CBOE Holdings stock. See Article Sixth (b) of the in the Operating Agreement of CBSX Amended and Restated Certificate of Incorporation Currently, NSX is wholly and directly (‘‘CBSX Operating Agreement’’) and the of CBOE Holdings, Inc. See also Securities owned by NSX Holdings, Inc. (‘‘NSX CBSX Certificate of Formation. In Exchange Act Release No. 62158 (May 24, 2010), 75 Holdings’’). Under a Purchase connection with the establishment of FR 30082 (May 28, 2010) (SR–CBOE–2008–88). 10 ‘‘Voting Shares’’ means those Shares entitled to Agreement (the ‘‘Purchase Agreement’’) the CBSX Trading Facility, CBOE vote on matters submitted to the Owners, which dated September 28, 2011 by and adopted Rule 3.32 pertaining to Voting Shares are held by the Voting Owners. See between NSX, NSX Holdings, and ownership concentration and affiliation Section 2.1(a)(28) of the CBSX Operating CBSX, CBSX would acquire all of the limitations.9 Agreement. outstanding capital stock of NSX on the 11 As noted in Section 3.2 of the CBSX Operating Agreement, it is the intention of the Owners that no date of or after all conditions precedent 5 15 U.S.C. 78f. other members of CBSX (other than Affiliates of to closing have been satisfied or waived, 6 NSX would continue to adhere to the CBOE) be owners of Series A Voting Shares, and including approval by the Commission undertakings in the Order Instituting that no additional Series A Voting Shares be of these proposed rule changes.4 Administrative and Cease-and-Desist Proceedings authorized, created or issued for such purpose; Pursuant to Sections 19(h) and 21C of the Act, provided however, that this provision is not Making Findings, and Imposing Sanctions, intended to limit or restrict any rights of CBOE to 1 15 U.S.C. 78s(b)(1). including those related to a Regulatory Oversight transfer any of its Series A Voting Shares with the 2 17 CFR 240.19b–4. Committee and the separation of the regulatory prior approval of the Commission as provided for 3 See Securities Exchange Act Release Nos. 65843 functions from the commercial interests of NSX. in Article VI, including Section 6.14 of the CBSX (November 28, 2011), 76 FR 75577 (December 2, See Securities Exchange Act Release No. 51714 Operating Agreement, or any other provision 2011) (SR–CBOE–2011–107) (‘‘CBOE Notice’’) and (May 19, 2005). thereof, or any rights to be acquired by a transferee 65842 (November 28, 2011), 76 FR 75586 7 15 U.S.C. 78c(a)(2). of those Shares as provided therein. (December 2, 2011) (SR–NSX–2011–14) (‘‘NSX 8 See Securities Exchange Act Release No. 55389 12 The CBSX Operating Agreement also provides Notice’’). (March 2, 2007), 72 FR 10575 (March 8, 2007) (SR– for Series C Non-Voting Restricted Shares. Such 4 Conditions precedent to closing the Transaction CBOE–2006–110) (the ‘‘CBSX Approval Order’’). Shares are not entitled to vote on any matter are formal requirements set forth in the Purchase See also Securities Exchange Act Release No. 55172 submitted to a vote of the Owners and there are Agreement and include delivery of certain (January 25, 2007), 72 FR 4745 (February 1, 2007) currently no Series C shares outstanding. See documents (such as officers’ certificates, legal (SR–CBOE–2006–110) (the ‘‘CBSX Notice of Section 8.9 of the CBSX Operating Agreement. opinions, and agreements), compliance by each Filing’’). 13 Section 6.12(a) of the CBSX Operating party with specified representations, warranties and 9 CBOE Rule 3.32(a) provides, in part: For as long Agreement provides that no person (other than covenants, and receipt of necessary approvals by as CBSX LLC operates as a facility of CBOE, no CBOE), either alone or together with its Affiliates, each party. See NSX Notice, supra note 3, at note Trading Permit Holder, either alone or together with may directly or indirectly own an aggregate amount 1. its Affiliates, at any time, may own, directly or Continued

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contained in the CBSX Operating coordination with persons engaged in applicability of the Concentration Agreement and applicable CBOE rules, regulating, clearing, settling, and Limitation to persons and the broader will remain unchanged after the processing information with respect to, category of their ‘‘Related Persons’’ 21 Transaction except as otherwise and facilitating transactions in rather than to persons and their described below. securities; to remove impediments to ‘‘Affiliates.’’ 22 The proposal also In connection with the Transaction, and perfect the mechanism of a free and amends Section 6.12(c) and (e) of the CBOE proposes to amend and restate the open market and a national market CBSX Operating Agreement to impose CBSX Operating Agreement to be system; and, in general, to protect on NSX equity trading permit holders effective as of the closing of the investors and the public interest. the Ownership Concentration Transaction. CBOE also proposes to As noted above, following the Limitation prohibitions described in adopt new CBOE Rule 2.50 regarding its Transaction, NSX will be a wholly- those paragraphs, which are currently policy with respect to NSX. These owned subsidiary of CBSX. NSX will only imposed on CBOE Trading Permit changes are discussed below. remain registered as a national Holders. This change recognizes CBSX’s securities exchange under Section 6 of III. Discussion and Commission new ownership of NSX and is intended the Act,18 and, accordingly, NSX will Findings to guard against members of NSX remain an SRO. The Commission obtaining an ownership stake in CBSX After careful consideration, the believes that the ownership of NSX by that could potentially be used to Commission finds that each proposed CBSX would not impose any burden on influence the performance by NSX of rule change is consistent with the competition not necessary or regulatory authority over such members requirements of the Act and the rules appropriate in furtherance of the or others. The Commission finds that and regulations thereunder applicable to purposes of the Act.19 Though CBSX is these changes, which are necessary to a national securities exchange.14 In not itself an SRO, as a holding company reflect the change in ownership of NSX particular, the Commission finds that of an SRO, its activities with respect to after the Transaction, are consistent the proposed rule changes are consistent the operation of NSX must be consistent with the Act. with Section 6(b)(1) of the Act,15 which, with, and must not interfere with, the The proposal makes similar among other things, requires a national self-regulatory obligations of NSX. amendments to Section 8.10 of the securities exchange to be so organized A. CBOE–2011–107 CBSX Operating Agreement to expand and have the capacity to be able to carry applicability of the voting restriction out the purposes of the Act and to 1. Changes To Accommodate CBSX’s described in that section to persons and enforce compliance by its members and Ownership of NSX their Related Persons and to provide persons associated with its members CBOE’s proposed rule change that if any person, not just a CBOE with the provisions of the Act, the rules includes several amendments designed Trading Permit Holder, exceeds the and regulations thereunder, and the to accommodate CBSX’s ownership of Concentration Limitation set forth in rules of the exchange. Further, the NSX. These amendments address the Section 6.12 of the CBSX Operating Commission finds that the proposed fact that CBSX will effectively serve as Agreement, then the Owner and its rule changes are consistent with Section a holding company for NSX after the Related Persons will have no voting 6(b)(3) of the Act,16 which requires that Transaction to the extent related to rights with respect to the shares in the rules of a national securities CBSX’s control of NSX. The changes excess of such limitation unless it exchange assure the fair representation also clarify CBSX’s rights and satisfies certain requirements set forth of its members in the selection of its responsibilities relating to its role as a in proposed Section 8.10(b) through (d) directors and administration of its holding company of a registered of the CBSX Operating Agreement. The affairs, and provide that one or more national securities exchange. For proposed rule change also extends the directors shall be representative of example, CBOE’s proposal amends applicability of the voting restriction in issuers and investors and not be Section 1.6 of the CBSX Operating Section 8.10 of the CBSX Operating associated with a member of the Agreement to reflect CBSX’s new Agreement to cover voting agreements, exchange, broker, or dealer. The purpose to act as a holding company of plans, and arrangements. Commission also finds that the NSX (in addition to its current purpose Further, the proposal amends Section proposed rule change are consistent to act as a trading market for securities 9.15(a)(9) of the CBSX Operating with Section 6(b)(5) of the Act,17 which other than options as a facility of Agreement to clarify that with respect to requires, among other things, that the CBOE). The proposal also amends the sale of material assets or ownership rules of a national securities exchange several provisions in the CBSX interests that requires approval pursuant be designed to prevent fraudulent and Operating Agreement to clarify that to Section 9.15, ‘‘material assets or manipulative acts and practices; to certain references to CBSX include its ownership interests’’ includes promote just and equitable principles of subsidiaries, including NSX.20 subsidiaries of CBSX. In addition, the trade; to foster cooperation and In addition, the proposal amends proposed rule change adds Section Section 6.12 of the CBSX Operating 15.19 to the CBSX Operating Agreement of Shares that would result in a greater than 20% Agreement to provide that the Percentage Interest in CBSX. In addition, Section Ownership Concentration Limitation 21 See Section 2.1(a)(23) of the CBSX Operating 8.10 provides that if an Owner of Series B Voting Agreement defining ‘‘Related Person.’’ Shares that is also a CBOE member owns more than described in that section, which 22 Section 2.1(a)(1) of the CBSX Operating 20% of the outstanding Voting Shares (‘‘Excess currently carves out CBOE (because Agreement defines ‘‘Affiliate’’ as, with respect to Shares’’), alone or together with any Affiliate, such CBOE owns greater than 20% of CBSX) any person, any other person that directly, or Owner will have no voting rights with respect to the does not apply to CBOE Holdings as indirectly through one or more intermediaries, Excess Shares. well (because CBOE Holdings indirectly controls, is controlled by, or is under common 14 In approving the proposed rule change, the owns CBOE). It also expands the control with, such person. As used in this Commission has considered its impact on definition, ‘‘control’’ means the possession, directly efficiency, competition, and capital formation. See or indirectly, of the power to direct or cause the 15 U.S.C. 78c(f). 18 15 U.S.C. 78f. direction of management and policies of a person, 15 15 U.S.C. 78f(b)(1). 19 15 U.S.C. 78f(b)(8). whether through the ownership of voting securities, 16 15 U.S.C. 78f(b)(3). 20 See, e.g., Sections 1.6 and 9.15(a)(9) and (10) by contract or otherwise with respect to such 17 15 U.S.C. 78f(b)(5). of the CBSX Operating Agreement. person.

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to obligate CBSX, when voting as NSX’s responsibilities as an SRO.23 the U.S. federal courts, the Commission, sole shareholder in an election of the Specifically, the revisions: CBOE, and NSX for the purposes of any NSX board of directors, to vote in favor • Clarify that the Owners suit, action, or proceeding pursuant to of ETP Holder Directors (a certain class acknowledge that the books, records, U.S. federal securities laws or the rules of directors defined in the NSX Bylaws premises, officers, directors, agents, and or regulations thereunder, commenced that are intended to provide NSX employees of the Owners will be or initiated by the Commission arising members with fair representation in the deemed to be the books, records, out of, or relating to, the CBSX Trading governance of NSX consistent with the premises, officers, directors, agents, and Facility or the CBSX’s control of NSX, Act) that were nominated in accordance employees of CBOE for the purpose of as applicable. and subject to oversight pursuant to the with the procedures set forth in NSX’s In addition, the proposed rule change governing documents. Act, but only to the extent they are related to the CBSX Trading Facility; amends Sections 9.15(c) and 9.16 of the 2. Preservation of the Self-Regulatory and CBSX Operating Agreement to provide Function of NSX • Add a provision in which the that CBSX directors agree to comply Owners acknowledge that the books, with the federal securities laws and the After the Transaction, NSX would records, premises, officers, directors, rules and regulations thereunder, and to become a subsidiary of CBSX. Although agents, and employees of the Owners cooperate with the Commission, CBOE, CBSX is not an SRO and, therefore, does will be deemed to be the books, records, and NSX pursuant to their regulatory not itself have self-regulatory functions, premises, officers, directors, agents, and authority, as applicable, and the its activities with respect to the employees of NSX for the purpose of provisions of the CBSX Operating operation of NSX must be consistent and subject to oversight pursuant to the Agreement. The proposal also amends with, and not interfere with, NSX’s self- Act, but only to the extent they are Section 9.15(c) of the CBSX Operating regulatory obligations. To address this related to the activities of NSX. Agreement to provide that CBSX concern, the proposal adds various Similarly, the proposed rule change directors will take into consideration provisions to the CBSX Operating amends Section 6.15(b) of the CBSX whether any actions taken or proposed Agreement that are designed to protect Operating Agreement concerning access to be taken as a director for or on behalf the independence of the self-regulatory by NSX to CBSX personnel and of CBSX, or any failure or refusal to act, function of NSX and to clarify NSX’s records 24 to add the provision that the would constitute interference with rights with respect to CBSX. books, records, premises, officers, CBOE’s or NSX’s regulatory functions directors, agents, and employees of and responsibilities, as applicable, in For example, the proposed rule CBSX will be deemed to be the books, violation of the CBSX Operating change adds Section 5.7(b) to the CBSX records, premises, officers, directors, Agreement or the Act.27 These Operating Agreement, which, among agents, and employees of NSX for the provisions are designed to foster other things: purpose of and subject to oversight compliance with the federal securities • Requires CBSX Owners, the CBSX pursuant to the Act, but only to the laws and to emphasize the board of directors, CBSX officers, and extent related to the activities of NSX.25 considerations that are necessary on the CBSX employees (for so long as CBSX The proposal also amends Section part of CBSX’s directors to reflect NSX’s controls NSX and to the extent related 6.15(c) of the CBSX Operating responsibilities as an SRO. to the activities of NSX) to give due Agreement to provide that CBSX and Additionally, the proposal amends regard to the preservation of the the Owners and their respective officers, Section 14.1(a) of the CBSX Operating 26 independence of the self-regulatory directors, agents, and employees, Agreement to provide that, for so long function of NSX and to NSX’s irrevocably submit to the jurisdiction of as CBSX controls NSX, before any obligations under the Act; amendment, alteration, or repeal of any 23 Section 6.15(a) of the CBSX Operating • Prohibits CBSX Owners, the CBSX Agreement currently provides: ‘‘The Owners provision of the CBSX Operating board of directors, CBSX officers, and acknowledge that to the extent they are related to Agreement, to the extent related to CBSX employees from taking any [CBSX’s] activities, the books, records, premises, CBSX’s control of NSX, will be effective, officers, directors, agents, and employees of the such amendment, alteration, or repeal actions that would interfere with the Owners shall be deemed to be the books, records, effectuation of any decisions by the NSX premises, officers, directors, agents, and employees must be submitted to the NSX board of board of directors relating to NSX’s of CBOE for the purpose of and subject to oversight directors, and if CBOE and the NSX pursuant to the Exchange Act.’’ board of directors determine that such regulatory functions, including 24 Section 6.15(b) of the CBSX Operating disciplinary matters, or with NSX’s amendment, alteration, or repeal must Agreement currently provides: ‘‘The books, records, be filed with or filed with and approved ability to carry out its responsibilities premises, officers, directors, agents, and employees under the Act; and of [CBSX] shall be deemed to be the books, records, by the Commission, then such premises, officers, directors, agents, and employees amendment, alteration, or repeal will • Requires CBSX to comply with of CBOE for the purpose of and subject to oversight not become effective until filed with or federal securities laws and the rules and pursuant to the Exchange Act.’’ 25 filed with and approved by the regulations thereunder, and requires CBSX’s complete records and books of account must be subject at all times to inspection and Commission, as the case may be. The CBSX and its officers, directors, examination by CBOE (to the extent related to the proposal also adds a 10-day notice employees, and agents to cooperate with CBSX Trading Facility), NSX (to the extent related provision for any amendment, the Commission and NSX pursuant to to CBSX’s control of NSX), and the Commission at no additional charge to CBOE, NSX, and the alteration, or repeal of the CBSX and to the extent of their regulatory Commission, as applicable. See Section 13.2 of the Operating Agreement made pursuant to authority. CBSX Operating Agreement. Section 14.1(a) to provide CBOE and In addition, the proposed rule amends 26 Revisions to Section 6.15(c) (consent to NSX with sufficient opportunity to jurisdiction) and (d) (consent in writing to review any potential regulatory impacts Section 6.15(a) of the CBSX Operating applicability) of the CBSX Operating Agreement Agreement to reflect the acquisition by also extend the requirements of these provisions to CBSX of the NSX SRO and to ensure all agents and employees of CBSX and its Owners, 27 Interference with respect to the CBSX Trading access by NSX to the Owners of CBSX rather than only agents and employees whose Facility will be determined by the CBSX board principal place of business and residence is outside designees of CBOE. See Section 9.15(c) of the CBSX that is necessary for NSX to perform its of the United States. Operating Agreement.

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of such amendment, alteration, or repeal requires, among other things, that a would qualify as a ‘‘Regulated Securities before it becomes effective. national securities exchange be so Exchange Subsidiary.’’ Further, to ensure unencumbered organized and have the capacity to carry 5. Facility of CBOE access to all relevant information, out the purposes of the Act, and to regardless of whether such information comply and enforce compliance by its The proposed rule change amends is considered ‘‘confidential,’’ the members and persons associated with various provisions to clarify that the proposal amends Section 15.2 of the its members, with the provisions of the operations of CBSX that relate to the CBSX Operating Agreement to provide Act, the rules and regulations CBSX Stock Exchange trading facility that nothing in the CBSX Operating thereunder, and the rules of the are a facility of CBOE under the Act, Agreement will be interpreted to limit exchange. Proposed Rule 2.50 while the aspect of CBSX that relates to or impede the rights of the Commission, represents CBOE’s commitment, as a its control of NSX will not be a CBOE, or NSX to access and examine controlling owner of CBSX, to support ‘‘facility’’ of CBOE. For example, the any Confidential Information (as NSX in the fulfillment of NSX’s role as proposal amends Section 1.7 of the defined in the CBSX Operating an SRO. CBSX Operating Agreement to clarify Agreement) pursuant to the U.S. federal that the CBSX Trading Facility (and not securities laws and the rules thereunder, 4. CBOE Holdings and Regulated CBSX to the extent it will act as a or to limit or impede the ability of an Securities Exchange Subsidiaries holding company for NSX) is a facility Owner or an officer, director, agent, or of CBOE under the Act, and therefore CBOE is wholly-owned by CBOE employee of an Owner to disclose any the CBSX Trading Facility will be Holdings, and as discussed above, CBOE Confidential Information to the subject to self-regulation by CBOE, with owns a controlling interest in CBSX. Commission, CBOE, or NSX. Proposed oversight by the Commission.30 Section 15.2 of the CBSX Operating The CBOE Holdings Certificate of Agreement also provides that the Incorporation contains provisions that 6. Additional Changes obligation of Owners not to disclose are applicable to ‘‘Regulated Securities Finally, the proposed rule change Confidential Information described in Exchange Subsidiaries’’ of CBOE makes several non-substantive technical that section does not apply to CBOE’s or Holdings, which entities are defined as and conforming changes throughout the NSX’s communications with the ‘‘any national securities exchange CBSX Operating Agreement, including: Commission with respect to the conduct controlled, directly or indirectly, by updating the name and date of the CBSX of the CBSX Trading Facility’s business [CBOE Holdings], including, but not Operating Agreement; updating the 29 or NSX’s business, respectively. limited to CBOE.’’ Various provisions current Owners and their current in the CBOE Holdings Certificate of percentage interests and CBSX shares 3. CBOE Rule 2.50 Incorporation reference ‘‘Regulated owned; 31 replacing references to CBOE The CBOE proposed rule change Securities Exchange Subsidiary,’’ members with CBOE trading permit proposes to adopt new CBOE Rule 2.50, including Articles Sixth (voting and holders; 32 updating the table of contents which is intended to foster and preserve ownership limitations), Eleventh and section references; and adding new the self-regulatory function of NSX. (amendments to the CBOE Holdings defined terms and renumbering the Specifically, CBOE Rule 2.50(a) Certificate of Incorporation must be defined terms as necessary.33 In proposes a policy that CBOE, as a submitted to the board of each connection with the updates to reflect controlling owner of CBSX, will not take Regulated Securities Exchange the current Owners, the proposed rule any action related to NSX’s activities Subsidiary), Twelfth (amendments to change amends the definition of ‘‘Super that would interfere with NSX’s efforts the CBOE Holdings Bylaws must be Majority of the Owners’’ to mean, to carry out its self-regulatory submitted to the board of each subject to the regulatory requirements obligations under the Act and the rules Regulated Securities Exchange described in Section 1.8 of the CBSX and regulations thereunder. Subsidiary), Fourteenth (submission to Operating Agreement, the affirmative Additionally, proposed CBOE Rule jurisdiction arising out of or relating to vote of both (i) all of the Owners of the 2.50(b) provides that CBOE will Regulated Securities Exchange Series A Voting Shares at the time, and ‘‘exercise its powers as a partial owner Subsidiaries’ activities), Fifteenth (ii) Owners of the Series B Voting of CBSX to support the fulfillment by (confidential information of Regulated Shares who then retain ownership of NSX of its self-regulatory obligations, Securities Exchange Subsidiaries and Series B Voting Shares and represent at including the appropriate allocation by access to CBOE Holdings’ books and least a twenty (20%) percentage interest NSX of such financial, technological, records by Regulated Securities in CBSX, which more accurately technical and personnel resources as Exchange Subsidiaries), and Sixteenth corresponds to CBSX’s current may be necessary or appropriate for (cooperation with the SEC and each ownership structure.34 The Commission NSX to meet its obligations under the Regulated Securities Exchange finds these non-substantive changes to [Act].’’ The purpose of proposed CBOE Subsidiary, consent to applicability of be consistent with the Act as they are Rule 2.50(a) is to provide that CBOE various provisions, due regard to will, through its control interest in preservation of regulatory 30 See also Sections 1.8, 6.2(e), 6.15(c) and (d), CBSX and consistent with its independence, and consideration of 9.2(d), 9.15(a)(14) and 14.1(a) for additional relationship with CBSX, work with NSX effect of actions on each Regulated clarifications. to establish and maintain adequate and Securities Exchange Subsidiary). NSX, 31 See Section 3.2(d), signature page, and Exhibit appropriate resources to enable NSX to to the extent it is indirectly controlled A to the CBSX Operating Agreement. 32 See Sections 6.12(c) and (e) and 8.10 of the perform its self-regulatory obligations. by CBOE Holdings by virtue of CBOE CBSX Operating Agreement. CBOE Rule 2.50 is designed to Holdings’ control of CBOE and CBOE’s 33 See Section 2.1 of the CBSX Operating facilitate NSX’s ability to fulfill its self- controlling interest in CBSX, which in Agreement. regulatory obligations and, therefore, is turn will wholly-own NSX after the 34 See Section 2.1(a)(26). This change is consistent with the Act, including consummation of the Transaction, consistent with the original structure of CBSX 28 under which a super majority could be obtained Section 6(b)(1) of the Act, which with an affirmative vote of CBOE and two initial 29 See CBOE Holdings Certificate of Incorporation owners, who all initially had ten (10%) percentage 28 15 U.S.C. 78f(b)(1). Article Fifth (a)(xi). interests in CBSX.

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necessary to reflect the acquisition by designated officers, and the NSX’s with or filed with and approved by the CBSX of NSX following the Transaction. continuing self-regulatory Commission.38 For purposes of clarity responsibilities pursuant to NSX’s regarding Commission approval of NSX B. NSX–2011–14 registration under Section 6 of the Act. proposed rule changes, specific NSX proposes to amend its Certificate Currently, the NSX Board consists of reference to Section 19 of the Act and of Incorporation and By-Laws to reflect thirteen director positions, of which the rules promulgated thereunder is also and address NSX’s proposed new seven are Independent, three are ETP introduced to Articles VII and XI. ownership pursuant to which NSX will Holder, two are At Large, and one is the Finally, consistent with similar become wholly-owned by CBSX NSX Chief Executive Officer. The provisions in the governing documents following the Transaction. In addition, Transaction contemplates that all of other exchanges,39 the proposed A&R NSX is making several other changes to current Exchange directors and Certificate in Article V is amended to its governing documents that are not committee members, including the allow directors (other than ETP Holder directly related to the Transaction to Chief Executive Officer, will resign from Directors) to be removed with or update and enhance the governing the Board and committees, as without cause by a majority vote of documents and generally make them applicable, effective upon closing. At stockholders. This amendment is consistent with parallel provisions such time, the vacancies on the Board intended to promote efficient NSX contained in the governing documents and committees of the Board will be governance while continuing to protect of other SROs. Certain provisions of the filled in accordance with applicable and preserve the fair representation of current NSX By-Laws that are historic in procedures contained in the A&R By- ETP Holders through the ETP Holder nature are also proposed to be deleted Laws. Candidates with the necessary Director election process contained in as no longer applicable. qualifications will be appointed in NSX’s By-Laws. Except as described below, NSX’s accordance with Sections 3 or 5, as The Commission believes that the governing documents, rules, and applicable, of the A&R By-Laws to fulfill proposed A&R Certificate, as amended manner of operation, including the expired portion of any vacancies to accommodate the Transaction, is restrictions on ownership and transfer, created by the resignation. Thereafter, designed to facilitate the NSX’s ability registration as a national securities directors and committee members will to fulfill its self-regulatory obligations exchange under Section 6 of the Act, be nominated and elected in accordance and are, therefore, consistent with the and the continuance of NSX as an Act. In particular, the Commission 35 36 with the A&R By-Laws. SRO will remain unchanged. believes the changes are consistent with In addition, the NSX proposal also 1. Amended and Restated Certificate of Section 6(b)(1) of the Act,40 which contains the CBSX Operating Incorporation of NSX requires, among other things, that a Agreement, as revised in the Under the proposed rule change, the national securities exchange be so contemporaneous rule filing CBOE– requirement that NSX be at all times organized and have the capacity to carry 2011–107 and as described above, since wholly-owned by NSX Holdings is out the purposes of the Act, and to provisions in the CBSX Operating comply and enforce compliance by its Agreement are relevant to NSX’s proposed to be changed to allow for the members and persons associated with structure and operations. The proposed consummation of the Transaction and its members, with the provisions of the amendments to the NSX governing acquisition of all of the outstanding Act, the rules and regulations documents and the CBSX Operating NSX stock by CBSX. To make clear that thereunder, and the rules of the Agreement are intended to provide NSX NSX will be entirely owned by CBSX exchange. with the authority and ability to (regardless of whether outstanding NSX effectively fulfill its self-regulatory stock is voting or non-voting), the 2. Second Amended and Restated By- duties pursuant to the Act and the rules proposed A&R Certificate would be Laws of NSX modified in Article IV to provide that, promulgated thereunder. The proposed Under the proposed rule change, due amendments also modernize and at all times, all of the outstanding stock of NSX shall be owned by CBSX. to the transfer of ownership of NSX enhance the ownership and voting from NSX Holdings to CBSX, references limitations in order to guard against In addition, new language is proposed to be added to Articles VII and XI of the in the NSX By-Laws specific to NSX undue influence over or interference Holdings are proposed to be replaced with the NSX’s regulatory functions and NSX Certificate of Incorporation designed to enable NSX Board and the with references to CBSX. Specifically, fulfillment of its regulatory obligations Section 3.2(c) is proposed to be under the Act. Commission to continue to exercise modified to provide that no two or more The proposed Amended and Restated oversight of NSX. In conformity with directors of NSX may be partners, NSX Certificate of Incorporation (the similar language in other governing ‘‘A&R Certificate’’) and Second documents of other exchanges,37 NSX officers, or directors of the same person Amended and Restated NSX By-Laws proposes to add a provision to each of or be affiliated with the same person, (the ‘‘A&R By-Laws’’), amended as Articles VII and XI to make clear that unless such affiliation is with a national described below, and NSX Rules (which before any amendment to, or repeal of, securities exchange or CBSX. In are proposed to remain unchanged) any provision of the NSX By-Laws and/ addition, Section 10.2 is proposed to be would continue to govern the activities or Certificate of Incorporation shall be modified to provide that in no event of NSX. These revised documents reflect effective, those changes shall be shall members of the CBSX Board who NSX’s status as a wholly-owned submitted to the NSX Board and, if such are not also members of the NSX Board, subsidiary of CBSX, continued amendment or repeal must be filed with or filed with and approved by the 38 See A&R Certificate of Incorporation, Articles management of NSX by the NSX Board Seventh and Eleventh. of Directors (‘‘NSX Board’’) and Commission, then the proposed changes 39 See A&R Certificate of Incorporation, Article shall not become effective until filed Fifth, (b). See also, e.g., Article II, Section 7(a) of 35 See 15 U.S.C. 78c(a)(26). the Amended and Restated By-Laws of BATS 36 See Securities Exchange Act Release No. 53963 37 See, e.g., Article 6 of the Certificate of Exchange, Inc. and Article II, Section 7(a) of the (June 8, 2006), 71 FR 34660 (June 15, 2006) (SR– Incorporation of EDGA Exchange, Inc. and Article Amended and Restated Bylaws of EDGA Exchange, NSX–2006–03) (Commission order approving NSX’s 9 of the Certificate of Incorporation of C2 Options Inc. demutualization). Exchange, Inc. 40 15 U.S.C. 78f(b)(1).

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or any officers, staff, counsel, or are not Independent, is eliminated.43 that it believes a distinction is necessary advisors of CBSX who are not also Finally, the category of CBOE Director, in order to promote, in the event of a officers, staff, counsel, or advisors of and corresponding provisions vacancy of an ETP Holder Director, the NSX (or any committees of NSX), be discussing CBOE ownership of Class B fair representation of ETP Holders on allowed to participate in any meetings stock and related Board representation, the NSX Board.52 For non-ETP Holder of the NSX Board (or any committee of are proposed to be deleted as obsolete.44 Directors, the A&R By-Laws provide, NSX) pertaining to the self-regulatory As a result, the proposed NSX Board consistent with current Exchange By- function of NSX (including disciplinary composition after the closing of the Laws, that any vacancy may be filled by matters). These amendments recognize Transaction will consist of not fewer vote of a majority of the directors then CBSX as direct owner of NSX while than seven (7) and not more than in office, although less than a quorum, preserving a mechanism to prevent twenty-five (25) directors 45 and at all or by a sole remaining director, undue influence over NSX’s self- times shall include the Chief Executive provided such new director qualifies for regulatory functions. Officer of NSX, at least 50% Non- the category in which the vacancy In connection with the ownership of Industry Directors (at least one of whom exists. A director elected to fill a NSX by CBSX, new Section 10.1(b) will shall be an Independent Director), and vacancy shall hold office until the next provide that, for so long as CBSX such number of ETP Holder Directors as annual meeting of stockholders, subject controls NSX, NSX shall promptly is necessary to comprise at least 20% of to the election and qualification of his inform the CBSX board of directors, in the NSX Board.46 For purposes of or her successor and to his or her earlier writing, in the event that NSX has, or calculating the percentage of Non- death, resignation, disqualification, or experiences, a deficiency related to its Industry Directors, the Chief Executive removal.53 Regarding the filling of ability to carry out its obligations as a Officer of NSX is excluded.47 vacancies of ETP Holder Directors, the national securities exchange under the By-Law provisions relating to the ETP Holder Director Nominating Act, including if NSX does not have or terms of office of each type of director Committee shall either recommend an is not appropriately allocating such are also amended from staggered three- individual to the NSX Board to be financial, technological, technical, and year terms to one-year terms (other than elected to fill such vacancy or provide personnel resources as may be necessary the CEO Director, which individual’s a list of recommended individuals to the term expires upon ceasing to be NSX Board from which the NSX Board or appropriate for NSX to meet its 48 obligations under the Act. This Exchange Chief Executive Officer). shall elect the individual to fill such provision will assist the CBSX board in NSX stated that the change to annual vacancy. The NSX Board shall elect its oversight of NSX, and will also assist from staggered three-year director terms, only individuals recommended by the which is consistent with provisions of ETP Holder Director Nominating CBOE, pursuant to CBOE Rule 2.50, in 49 CBOE’s commitment, as a controlling other SROs, promotes efficient Committee. The proposed amendments Exchange governance and effective ETP owner of CBSX, to support NSX in the conform to analogous provisions of the Holder representation.50 fulfillment of NSX’s role as an SRO. governance documents of another With respect to the filling of vacancies 54 In addition, in conformity with the exchange. on the NSX Board,51 the A&R By-Laws board composition provisions of other The Commission finds that the are proposed to be amended to SROs,41 certain NSX Board composition proposed changes regarding the differentiate the procedure depending composition of the Board are consistent changes are proposed in order to on whether the vacancy is of an ETP streamline and promote the efficiency with the Act, including Section 6(b)(1) Holder Director or another type of of the Act,55 which requires, among and effectiveness of NSX Board director. Under current NSX By-Laws, other things, that a national securities governance. Specifically, By-Law no such distinction is made. NSX stated exchange be organized to carry out the provisions regarding the number of purposes of the Act and comply with directors on the NSX Board are 43 See A&R By-Laws Section 1.5 (definitions) and the requirements of the Act. The proposed to be amended to allow any deletions to current By-Laws in Sections 3.2(b) and Commission notes that the proposed number between (and including) seven 3.4(e). changes are consistent with the board (7) and twenty-five (25). In addition, the 44 See deletions to current By-Laws in Sections composition provisions of other SROs.56 requirement that at least 50% of NSX 1.5, 3.2(b), 3.3, 3.4(d), 3.5(g) and 3.7. 45 Certain other edits are proposed to the Board members be ‘‘Independent’’ See A&R By-Laws Section 3.2(a). 46 See A&R By-Laws Section 3.2(b). See also current NSX By-Laws to promote clarity Directors is proposed to be replaced Third Amended and Restated Bylaws of the C2 and efficient governance. Such edits with a requirement that at least 50% of Options Exchange, Inc. Article III, Section 3.1; generally are intended to conform NSX’s NSX Board members be ‘‘Non-Industry’’ Second Amended and Restated Bylaws of CBOE Section III, Article 3.1; and the Amended and governing documents to analogous Directors, at least one of whom must provisions contained in the governing 42 Restated By-Laws of BATS Exchange, Inc., Article qualify as Independent. The category III, Section 2. documents of other exchanges.57 of ‘‘At Large’’ Directors, which under 47 See Third Amended and Restated Bylaws of the Specifically, in order to promote fair current By-Laws means directors who C2 Options Exchange, Inc., Article III, Section 3.1; representation among all ETP Holders, and Second Amended and Restated Bylaws of the 41 See, e.g., Third Amended and Restated Bylaws CBOE. Section III, Article 3.1. 48 52 See NSX Notice, supra note 3, at 76 FR 75589. of the C2 Options Exchange, Inc.; Second Amended See A&R By-Laws Section 3.4(a) through (e). 53 and Restated By-Laws of CBOE; Amended and 49 See Third Amended and Restated Bylaws of the See A&R By-Laws Section 3.7(a)(i). Restated By-Laws of BATS Exchange, Inc.; and the C2 Options Exchange, Inc., Article III, Section 3.1; 54 See Third Amended and Restated Bylaws of the Amended and Restated Bylaws of EDGA Exchange, Second Amended and Restated Bylaws of the CBOE C2 Options Exchange, Inc., Article III, Section 3.5. Inc. Article III, Section 3.1. 55 15 U.S.C. 78f(b)(1). 42 See A&R By-Laws Section 3.2 (Board 50 See NSX Notice, supra note 3, at 76 FR 75589. 56 See, e.g., Third Amended and Restated Bylaws composition requirements) and 1.1 (definitions of 51 See A&R By-Laws Section 3.7. See also Third of the C2 Options Exchange, Inc.; Second Amended ‘‘Industry Director’’ and ‘‘Non-Industry Director’’). Amended and Restated Bylaws of the C2 Options and Restated By-Laws of CBOE; Amended and See also e.g., Third Amended and Restated Bylaws Exchange, Inc., Article III, Section 3.5; Second Restated By-Laws of BATS Exchange, Inc.; and of the C2 Options Exchange, Inc., Article III, Section Amended and Restated Bylaws of the CBOE Section Amended and Restated Bylaws of EDGA Exchange, 1; Second Amended and Restated Bylaws of the III, Article 3.5; Amended and Restated By-Laws of Inc. CBOE Article III, Section 1; and the Amended and BATS Exchange, Inc., Article III, Section 6; and 57 See A&R By-Laws Section 3.5(d) and (e). See Restated By-Laws of BATS Exchange, Inc., Article Amended and Restated Bylaws of EDGA Exchange, also, e.g., Amended and Restated By-Laws of BATS I. Inc., Article III, Section 6. Exchange, Inc., Article III, Section 4.

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A&R By-Laws Section 3.5(d) is proposed amendments to NSX’s By-Laws are C. Accelerated Approval to be amended to provide that no ETP proposed to be amended to provide for Holder, together with its affiliates, may NSX Board review and, as necessary, The Commission finds good cause, account for more than fifty percent Commission approval, prior to the pursuant to Section 19(b)(2) of the (50%) of the signatures endorsing a effectiveness of any amendments to the Act,64 for approving each of the particular candidate, and any signatures Exchange’s By-Laws.60 proposed rule changes prior to the 30th of such ETP Holder, together with its Consistent with the proposed edits to day after the date of publication of affiliates, in excess of fifty percent the A&R Certificate and similar notice in the Federal Register. Both the (50%) limitation shall be disregarded. provisions in the governing documents NSX Notice and the CBOE Notice were Similarly, in order to promote fair of other exchanges,61 the proposed A&R published in the Federal Register on representation among all ETP Holders, By-Laws are further proposed to be December 2, 2011. Pursuant to Section in an election among ETP Holders of modified to allow directors (other than 19(b)(2)(C)(iii) of the Act,65 the candidates for ETP Holder Director, ETP Holder Directors) to be removed Commission may not approve a A&R By-Laws Section 3.5(e) is proposed with or without cause by a majority vote proposed rule change earlier than 30 to be amended to provide that any vote of stockholders. This amendment, days after the date of publication thereof must be cast for a person duly consistent with a parallel proposed unless the Commission finds good cause nominated on the list of candidates and amendment to the NSX A&R Certificate, for so doing. In the case of the CBOE that no ETP Holder, together with its is intended to promote efficient and NSX proposals, the 30th day occurs affiliates, may account for more than Exchange governance while protecting in three days and falls on a non- twenty percent (20%) of the votes cast the fair representation of ETP Holders business day (a Sunday). Further, the for a candidate, and any votes cast by through the ETP Holder Director comment period on each proposal has such ETP Holder, together with its election process as set forth in the A&R closed, and the Commission has not affiliates, in excess of such twenty By-Laws. received comment on either proposal. In percent (20%) limitation shall be In addition, to clarify that the light of the Commission’s findings that disregarded. These provisions are confidentiality provisions of Section the proposals are consistent with the intended to guard against the exercise of 10.3 may not be interpreted to limit Act, the Commission believes that good undue influence in the selection of ETP Commission jurisdiction over NSX cause exists to accelerate approval of Holder directors. books and records, a clarifying each proposal by a few days in order to In addition, the A&R By-Laws have statement is proposed to be added to accommodate the closing of the been revised to include a fuller A&R By-Laws Section 10.3 to provide Transaction in calendar year 2011. description of the composition and that nothing in Section 10.3 shall be authority of Exchange committees.58 interpreted as to limit or impede the IV. Conclusion The description of the Executive rights of the Commission to access and For the foregoing reasons, the Committee, which has authority to act examine Exchange confidential Commission finds that each of the on behalf of the full NSX Board under information pursuant to the federal proposed rule changes are consistent certain circumstances, is amended to securities laws and the rules and with the Act and the rules and clarify that the composition regulations thereunder, or to limit or regulations thereunder applicable to a requirements of such committee must impede the ability of any officers, national securities exchange. mirror the requirements applicable to directors, employees, or agents of NSX the full Board.59 Regarding other to disclose such confidential It is therefore ordered, pursuant to Exchange committees, descriptions of information to the Commission.62 Section 19(b)(2) of the Act,66 that the the duties and composition Finally, the proposed A&R By-Laws proposed rule changes (SR–CBOE– requirements are included for each of contain several other non-substantive, 2011–107 and SR–NSX–2011–14) be the ETP Holder Director Nominating conforming edits to the A&R By-Laws and hereby are approved on an Committee, the Executive Compensation that are consistent with the principles accelerated basis. Committee, the Audit Committee, the discussed above, as well as the Act and For the Commission, by the Division Governance and Nominating the rules promulgated thereunder.63 of Trading and Markets, pursuant to Committee, the Appeals Committee, and delegated authority.67 the Business Conduct Committee. 60 See A&R By-Laws Section 8.1. See also, e.g., Reference to a Securities Committee was Amended and Restated By-Laws of BATS Exchange, Kevin M. O’Neill, deleted. Inc., Article IX, Section 1. 61 See A&R By-Laws Section 3.8. See also, e.g., Deputy Secretary. Consistent with analogous provisions Article II, Section 7(a) of the Amended and Restated [FR Doc. 2011–33826 Filed 1–4–12; 8:45 am] contained in the governing documents By-Laws of BATS Exchange, Inc.; and Article II, BILLING CODE 8011–01–P of other exchanges, the procedures for Section 7(a) of the Amended and Restated Bylaws of EDGA Exchange, Inc. responsibility for maintenance of committee 58 See A&R By-Laws Sections 5.5 through 5.13. 62 See A&R By-Laws Section 10.3. composition in connection with new committee See also, e.g., Amended and Restated By-Laws of 63 Non-substantive, conforming edits to the A&R appointments resides with the Chairman); 5.6 BATS Exchange, Inc., Article V, Section 6, and By-Laws are reflected in the following Sections of (specifying that the Regulatory Oversight Article VI, Section 2. the A&R By-Laws: 3.2(d) (clarifying that directors Committee shall at all times be comprised entirely 59 See A&R By-Laws Section 5.5(a), which may not serve if subject to statutory disqualification of Non-Industry Directors); and 6.3 (clarifying that provides, in part, that the Executive Committee at as such term is defined in the Act); 3.7(c) (providing officer disqualification will terminate an officer’s all times shall include the Chief Executive Officer that any grace periods for re-qualification of a term of office). Relevant definitions are also added of NSX, at least 50% Non-Industry Directors, at director must be for only a reasonable length of to Section 1.1. least one Independent Director and such number of time); 3.17(clarifying that NSX Board authority to 64 15 U.S.C. 78s(b)(2). ETP Holder Directors as is necessary to comprise at interpret Exchange By-Laws remains subject to the 65 least 20% of the Executive Committee. See also, Act); 5.2(clarifying that the composition 15 U.S.C. 78s(b)(2)(C)(iii). e.g., Amended and Restated By-Laws of BATS requirements set forth in description of each 66 15 U.S.C. 78s(b)(2). Exchange, Inc., Article V, Section 6(e). committee in Article V control, and that 67 17 CFR 200.30–3(a)(12).

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SECURITIES AND EXCHANGE As approved, the service will be provide members with a screen-based COMMISSION available to NSCC members on a view of their trade data residing in voluntary basis to provide those Trade Risk Pro for a given day [Release No. 34–66068; File No. SR–NSCC– 2011–10] members electing to participate in the aggregated and organized according to service with: (1) Post-trade data relating parameters set by the member. Displays Self-Regulatory Organizations; The to unsettled equity and fixed income provided to participating members will National Securities Clearing securities trades for a given day that offer the option to view aggregate and Corporation; Order Granting Approval have been compared or recorded net value, to view share exposure across of a Proposed Rule Change To Amend through NSCC’s trade capture markets and other liquidity Rules Relating To the Creation of a mechanisms on that day (‘‘RP Trade destinations, and to see exposure at the Service To Provide Post-Trade Date Data’’) and (2) other information CUSIP and individual trade levels. In Information based upon data the participating conformance with NSCC’s Rule 49 member may itself provide at start of or (Release of Clearing Data and Clearing December 29, 2011. throughout the day (‘‘RP Member- Fund Data), each member will only be I. Introduction provided Data’’), as provided in NSCC’s able to view information with respect to Rules and Procedures governing the its own clearing account(s). Trade Risk On November 7, 2011, The National proposed service (RP Trade Date Data Pro will be a reporting service only and Securities Clearing Corporation and RP Member-provided Data shall any action taken by a member as a result (‘‘NSCC’’) filed proposed rule change collectively be referred to as ‘‘RP of any alert, parameter breach, or other SR–NSCC–2011–10 with the Securities Transaction Data’’). This will include information associated with the service and Exchange Commission allowing members the ability to input or will be at the discretion of the member (‘‘Commission’’) pursuant to Section load trade information from prior days and not either in whole or part by 19(b)(1) of the Securities Exchange Act into the system to supplement their NSCC. 1 of 1934 (‘‘Act’’). Notice of the proposed view of overall risk exposure. As such, NSCC will create a new Rule 54 rule change was published in the the Trade Risk Pro service will offer an (Trade Risk Pro) and Procedure XVII Federal Register on November 25, industry-wide post-trade reporting (Trade Risk Pro) to reflect the proposed 2 2011. The Commission received no system that will allow members to rule changes described below. The new comment letters. For the reasons monitor their U.S. equity and fixed- rule change also will amend Rule 58 discussed below, the Commission is income trading exposure. (Limitations of Liability) and will granting approval of the proposed rule update Rule 1 (Definitions) to include change. Overview of the Trade Risk Pro Service definitions for RP Trade Data, RP II. Description Through Trade Risk Pro, NSCC will Member-provided Data, and RP utilize market and other information to Transaction Data, as described more NSCC is creating an optional service report post-trade activity to fully below. for NSCC members, ‘‘Trade Risk Pro’’ or participating members. Such reporting ‘‘DTCC Trade Risk Pro,’’ which will will incorporate RP Trade Date Data 1. Establishing and Maintaining Risk enable members to monitor intraday from transactions in equity and Entities and Limits trading activity of their organizations, municipal and corporate debt securities As an initial step in using the Trade their correspondent firms, or both after such transactions have: (1) Passed Risk Pro service, members will be through review of post-trade data. An through the NSCC’s edit checks and not required to establish Risk Entities (e.g., effective risk management structure been pended or rejected and (2) been trading activity of a single desk, a provides for multiple check points, recorded or compared through NSCC’s correspondent, single or multiple NSCC including pre-trade controls and post- Universal Trade Capture and/or Real- clearing number(s), or a combination of trade surveillance. Industry participants Time Trade Matching trade capture and entities). Trade Risk Pro will provide have indicated to NSCC that pre-trade comparison systems. In addition, Trade members with the ability to create Risk monitoring as a stand-alone risk Risk Pro will allow participating Entities through the defining and management tool may not provide members to input or load start of day updating of the data structure and adequate protection for firms or against and intraday positions (i.e., RP Member- relationships for the entities to which systemic risk. For example, many orders provided Data) to allow members to they assign a parameter or risk limit. are never actually executed and thus a view their organization’s (or one or The Risk Entity definitions entered by pre-trade filter could overestimate more correspondent’s) aggregate open members will drive position potential positions or could generate positions in securities cleared through calculations and displays in Trade Risk false positives if not combined with NSCC. Within Trade Risk Pro, members Pro. Trade Risk Pro will provide information about what orders are will be able to create ‘‘Risk Entities’’ to members with a facility to set share and actually executed. In addition, clearing track activity for specific dollar limits with respect to each Risk firms only see their correspondents’ correspondents and clients as well as Entity at a gross and net level, and it orders that are routed through the their own trading desks and to define may provide for additional limits as clearing firm’s trading desks or through the rules for the aggregation of trade NSCC may determine from time to time the firm’s order entry systems. Orders data, to set parameters on open are appropriate. sent directly to the market can bypass positions allowable for each Risk Entity, Through the use of trade arrays, each pretrade controls. Trade Risk Pro will and to receive alerts for the display of member may define the Risk Entities so provide NSCC’s members with a method breaches or near breaches of the that only trades that the member intends to monitor clearing activity in their parameters.3 Trade Risk Pro will to belong to that Risk Entity are accounts and to set parameters that will included. For each trade, relevant data enable them to monitor exposure. 3 Members will be able to input such limits into elements to create a trade array may the Trade Risk Pro interface in order to receive include: (1) The member’s account 1 15 U.S.C. 78s(b)(1). system alerts in the event of a breach; however, number(s), (2) the executing broker, (3) 2 Securities Exchange Act Release No. 65788 these limits will not trigger a block by NSCC on any (November 18, 2011), 76 FR 72741 (November 25, activity processed through NSCC’s clearance and the submitting market or firm, and (4) 2011). settlement systems. other categories as allowed by NSCC

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from time to time. Use of these elements time to time will be supplied to 6. Implementation Time Frame will create an array so that each members in an end of day report. transaction will be assigned by virtue of NSCC will implement the above the array to one or more Risk Entities. 3. No Effect on Trade Guaranty and changes during the first quarter of 2012 Users can assign multiple trade arrays to Other Considerations or soon thereafter, with the actual implementation date announced to a single Risk Entity. The rule change will provide that any members through an Important Notice. Once implemented, updates and reports and data supplied to members changes made to Risk Entities by the through Trade Risk Pro is not intended III. Discussion member will take effect overnight with to impact the timing or status of the a cut-off time designated by NSCC from guaranty of any transaction in CNS or Section 17A(b)(3)(F) of the Act 4 time to time. Although Trade Risk Pro Balance Order Securities. In addition, requires, among other things, that the will prohibit double counting of trades the issuance of information or data rules of a clearing agency be designed to within the same Risk Entity, it is through Trade Risk Pro to a member or remove impediments to and perfect the possible that two separate Risk Entities the lack of the issuance of information mechanism of a national system for the may contain defined elements as will not of itself indicate or have any prompt and accurate clearance and specified by the member that cause a bearing on the status of any trade settlement of securities transactions.5 specific trade to be included into both including, but not limited to, as Risk Entities. The Commission believes that by compared, locked-in, validated, providing its members with a 2. Limit Monitoring guaranteed, or not guaranteed. mechanism to their monitor post-trade Trade Risk Pro will aggregate and 4. Limitation of Liability activity on an intraday basis, the make available position information for proposed rule change should enhance purposes of the member’s limit Trade Risk Pro provides members the risk management ability of those monitoring. The aggregate data will be with a facility to review and monitor members using the service. By the sum of RP Member-provided data trade activity in a manner they select, providing for enhanced risk and RP Trade Date Data with the including providing members with the management, the proposed rule change aggregated data defined as RP ability to populate the service (but not should help remove impediments to and Transaction Data in NSCC’s Rules and limited to the ability to input or load perfect the mechanism of the national Procedures. RP Trade Date Data, RP positions), define Risk Entities and set system for the prompt and accurate Member-provided Data, and other limits, and receive alerts and position clearance and settlement of securities relevant data will be aggregated and data of their choosing. Since NSCC is transactions. sorted, and the data will then be not the originator of information made Accordingly, for the reasons stated displayed to the member. The display available through Trade Risk Pro, NSCC may include shares and values on a will make clear that it is not responsible above the Commission believes that the gross or net basis or any other total for the completeness or accuracy of proposed rule change is consistent with aggregation and sorting methods as Trade Date Data or other information or NSCC’s obligation under Section 17A of NSCC may from time to time make data which it receives from members or the Exchange Act and the rules and 6 available to members. RP Trade Date third parties used in offering the Trade regulations thereunder. Data will be carried at contract amount Risk Pro service, for information or data IV. Conclusion unless another pricing method is that is received and compared or implemented by NSCC. RP Member- recorded by NSCC, or for any errors, On the basis of the foregoing, the provided Data will be priced according omissions, or delays which may occur Commission finds that the proposed to information provided by the member. in the transmission of such data or rule change is consistent with the Intraday allocations in the settlement information. In addition, because not all requirements of the Act, particularly system will not be taken into transactions are submitted to NSCC on with the requirements of Section 17A of consideration because they are not fully a real-time basis, NSCC can only the Act, and the rules and regulations effective until money settlement provide members using the service with thereunder. completes (i.e., after the day cycle). The Trade Date Data as it becomes compared totals will be compared to the or recorded. Accordingly, members It is therefore ordered, pursuant to parameters set by the members, and the should be aware that such Trade Date Section 19(b)(2) of the Act, that the members will be alerted to breaches Data may not be complete. proposed rule change (File No. SR– based upon their set parameters. The NSCC–2011–10) be and hereby is alerts may take the form of visual screen 5. Indemnification approved. changes or other notification methods. Since each member may use the For the Commission by the Division of The service will also provide updated information for purposes of its own Trading and Markets, pursuant to delegated information when the alert is resolved discretion, the rule change will provide authority.7 (e.g., when the Risk Entity is within the that any member participating in Trade relevant limit as a result of an offsetting Kevin M. O’Neill, Risk Pro shall indemnify NSCC and any transaction reducing the position or the Deputy Secretary. or all of its employees, officers, participant raises the limit for a Risk [FR Doc. 2011–33825 Filed 1–4–12; 8:45 am] directors, shareholders, agents, and Entity). Information such as alert BILLING CODE 8011–01–P participants who may sustain any loss, history, members’ Risk Entity liability or expense as a result of a third definitions, end of day positions, and party claim related to any act or other data that NSCC provides from 5 omission of the member made in 15 U.S.C. 78q–1(b)(3)(F). 6 In approving this proposal, the Commission has 4 Post-implementation of Trade Risk Pro, NSCC reliance upon data or information considered its impact on efficiency, competition, may eventually at its discretion provide for real- transmitted through Trade Risk Pro by and capital formation. 15 U.S.C. 78c(f). time updates. NSCC to the member. 7 17 CFR 200.30–3(a)(12).

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SMALL BUSINESS ADMINISTRATION EIDL Loan Application Deadline Date: services of governmental nature may file [Disaster Declaration #12784 and #12785] 08/06/2012. disaster loan applications at the address ADDRESSES: Submit completed loan listed above or other locally announced Vermont Disaster Number VT–00021 applications to: U.S. Small Business locations. Administration, Processing and The following areas have been AGENCY: U.S. Small Business Disbursement Center, 14925 Kingsport determined to be adversely affected by Administration. Road, Fort Worth, TX 76155. the disaster: ACTION: Amendment 7. FOR FURTHER INFORMATION CONTACT: A. Primary Counties: Bering Strait REAA, SUMMARY: This is an amendment of the Escobar, Office of Disaster Assistance, Lower Kuskokwim REAA, Lower Presidential declaration of a major U.S. Small Business Administration, Yukon REAA, North Slope disaster for the State of Vermont 409 3rd Street SW., Suite 6050, Borough, Southwest Region REAA. (FEMA—4022—DR), dated 09/01/2011. Washington, DC 20416. The Interest Rates are: Incident: Tropical Storm Irene. SUPPLEMENTARY INFORMATION: The notice Incident Period: 08/27/2011 through of the President’s major disaster Percent 09/02/2011. declaration for the Commonwealth of Effective Date: 12/22/2011. Virginia, dated 11/04/2011 is hereby For Physical Damage: Physical Loan Application Deadline Non-Profit Organizations with amended to extend the deadline for Credit Available Elsewhere ... 3.125 Date: 12/15/2011. filing applications for physical damages EIDL Loan Application Deadline Date: Non-Profit Organizations with- as a result of this disaster to 03/05/2012. out Credit Available Else- 06/01/2012. All other information in the original where ...... 3.000 ADDRESSES: Submit completed loan declaration remains unchanged. For Economic Injury: applications to: U.S. Small Business (Catalog of Federal Domestic Assistance Non-Profit Organizations with- Administration, Processing And Numbers 59002 and 59008) out Credit Available Else- Disbursement Center, 14925 Kingsport where ...... 3.000 Road, Fort Worth, TX 76155. James E. Rivera, FOR FURTHER INFORMATION CONTACT: A. Associate Administrator for Disaster The number assigned to this disaster Escobar, Office of Disaster Assistance, Assistance. for physical damage is 12976B and for U.S. Small Business Administration, [FR Doc. 2011–33839 Filed 1–4–12; 8:45 am] economic injury is 12977B. 409 3rd Street SW., Suite 6050, BILLING CODE 8025–01–P (Catalog of Federal Domestic Assistance Washington, DC 20416. Numbers 59002 and 59008) SUPPLEMENTARY INFORMATION: The notice SMALL BUSINESS ADMINISTRATION James E. Rivera, of the President’s major disaster Associate Administrator for Disaster declaration for the State of Vermont, [Disaster Declaration #12976 and #12977] Assistance. dated 09/01/2011 is hereby amended to [FR Doc. 2011–33837 Filed 1–4–12; 8:45 am] extend the deadline for filing Alaska Disaster # AK–00022 BILLING CODE 8025–01–P applications for physical damages as a AGENCY: U.S. Small Business result of this disaster to 12/15/2011. Administration. All other information in the original ACTION: Notice. declaration remains unchanged. DEPARTMENT OF STATE (Catalog of Federal Domestic Assistance SUMMARY: This is a Notice of the Numbers 59002 and 59008) Presidential declaration of a major [Public Notice 7714] disaster for Public Assistance Only for James E. Rivera, the State of Alaska (FEMA–4050–DR), Department of State Advisory Associate Administrator for Disaster dated 12/22/2011. Committee on Private International Assistance. Incident: Severe Winter Storms and Law: Notice of Renewal of Charter [FR Doc. 2011–33831 Filed 1–4–12; 8:45 am] Flooding. BILLING CODE 8025–01–P Incident Period: 11/08/2011 through The Charter of the Department of 11/10/2011 State’s Advisory Committee on Private Effective Date: 12/22/2011. International Law has been renewed, SMALL BUSINESS ADMINISTRATION Physical Loan Application Deadline effective for a two-year period. Pursuant Date: 02/21/2012. [Disaster Declaration #12909 and #12910] to the Federal Advisory Committee Act, Economic Injury (EIDL) Loan notification of the renewal was provided Virginia Disaster Number VA–00037 Application Deadline Date: 09/24/2012. to the Senate Foreign Relations ADDRESSES: Submit completed loan Committee, the House Foreign Affairs AGENCY: U.S. Small Business applications to: U.S. Small Business Committee, and the Library of Congress Administration. Administration, Processing and on December 16, 2011. The Advisory ACTION: Amendment 1. Disbursement Center, 14925 Kingsport Committee assists the State Department Road, Fort Worth, TX 76155. to monitor domestic and international SUMMARY: This is an amendment of the FOR FURTHER INFORMATION CONTACT: A. Presidential declaration of a major developments in private international Escobar, Office of Disaster Assistance, disaster for the Commonwealth of law; provides a means for state, local U.S. Small Business Administration, Virginia (FEMA–4042–DR), dated and private sector viewpoints to be 409 3rd Street SW., Suite 6050, 11/04/2011. made available to the Department; and Incident: Earthquake. Washington, DC 20416. provides information to assist in the Incident Period: 08/23/2011 through SUPPLEMENTARY INFORMATION: Notice is development of positions for efforts to 10/25/2011. hereby given that as a result of the harmonize or negotiate uniform rules of Effective Date: 12/21/2011. President’s major disaster declaration on private law at the international level Physical Loan Application Deadline 12/22/2011, Private Non-Profit through model national laws, legal Date: 03/05/2012. organizations that provide essential guidelines, treaties, and other means.

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The Advisory Committee focuses on SUMMARY: This notice announces final of Decision issued on December 7, 2011. work undertaken or proposed in various environmental actions taken by FHWA, The FEIS and ROD are available by international bodies, including but not FTA, and other agencies that are final contacting FHWA at the address above limited to the Hague Conference on within the meaning of Federal or can be downloaded from the project Private International Law; the United transportation law. The actions relate to Web site at Nations Commission on International the Interstate 5 Columbia River Crossing www.columbiarivercrossing.org. Trade Law (UNCITRAL), the Project in Clark County, Washington This notice applies to all FHWA, International Institute for the and Multnomah County, Oregon. FTA, and other agency decisions on the Unification of Private Law (UNIDROIT), DATES: By this notice, FHWA and FTA listed project as of the issuance date of and the Organization of American States are advising the public of final agency this notice and all laws under which (OAS). actions subject to 23 U.S.C. 139(l). A such actions were taken, including, but Topics considered by the Advisory claim seeking judicial review of the not limited to those arising under the Committee have included, for example: Federal agency actions announced following laws, as amended: jurisdiction and enforcement of foreign herein for the listed transportation 1. General: National Environmental judgments; party choice of forum; project will be barred unless the claim Policy Act [42 U.S.C. 4321–4347]; arbitration rules; enforcement of foreign is filed on or before July 3, 2012. Federal-Aid Highway Act [23 U.S.C. arbitral awards; the protection of FOR FURTHER INFORMATION CONTACT: John 109]; the Federal transit statutes [49 minors; inter-country adoption; child McAvoy, Major Project Manager, U.S.C. Chapter 53]. abduction; cross-border insolvency; Federal Highway Administration, 2. Air: Clean Air Act, as amended [42 electronic commerce; secured finance; Western Federal Lands Highway U.S.C. 7401–7671(q)]. 3. Land: Section 4(f) of the carriage of goods by sea and by other Division, 610 E. Fifth Street, Vancouver, Department of Transportation Act of modes of transportation; cross-border WA 98661; telephone: (360) 619–7591; 1966 [49 U.S.C. 303]; Landscaping and securities transactions; online dispute and email: [email protected], or Scenic Enhancement (Wildflowers) [23 resolution; international leasing and Terence Plaskon, Environmental U.S.C. 319]. franchising; and other topics of current Protection Specialist, Office of Planning interest in private law as they arise. 4. Wildlife: Endangered Species Act and the Environment, FTA; telephone: [16 U.S.C. 1531–1544]; Anadromous Advisory Committee meetings are (202) 366–0442; and email: terence. open to the public, and participation by Fish Conservation Act [16 U.S.C. [email protected]. FHWA and FTA 757(a)–757(f)]; Fish and Wildlife the public is encouraged. Interested headquarters are located at 1200 New persons, organizations, academic Coordination Act [16 U.S.C. 661– Jersey Avenue SE., Washington, DC 667(e)]; Magnuson-Stevenson Fishery centers and others can participate in all 20590. Office hours are from 9 a.m. to aspects of the Committee’s work. Conservation and Management Act of 5:30 p.m., EST, Monday through Friday, 1976, as amended [16 U.S.C. 1801 et Notices of meetings are published in the except Federal holidays. Federal Register at least 15 calendar seq.]; Migratory Bird Treaty Act [16 SUPPLEMENTARY INFORMATION: Notice is U.S.C. 703–712]. days prior to the meeting date, unless hereby given that FHWA, FTA and other circumstances require that the meeting 5. Historic and Cultural Resources: agencies have taken final agency actions Section 106 of the National Historic be held with a shorter notice period. by issuing licenses, permits, and Interested parties can obtain additional Preservation Act of 1966, as amended approvals for the transportation project [16 U.S.C. 470f]; Archaeological information from the Office of the in the States of Oregon and Washington. Assistant Legal Adviser for Private Resources Protection Act of 1977 [16 Federal Lead Agencies: Federal U.S.C. 470aa–470mm]; Archaeological International Law (L/PIL), Department Highway Administration (FHWA) and of State, at (202) 776–8420, fax 776– and Historic Preservation Act [16 U.S.C. Federal Transit Administration (FTA). 469–469c–2]; Native American Grave 8482, or by email to Tricia Smeltzer at Project Sponsors: Oregon and [email protected]. Protection and Repatriation Act [25 Washington Departments of U.S.C. 3001–3013]. Dated: December 23, 2011. Transportation (ODOT, WSDOT), 6. Social and Economic: Civil Rights Harold S. Burman, Southwest Washington Regional Act of 1964 [42 U.S.C. 2000(d)– Executive Director, Department of State Transportation Council (RTC), Metro, 2000(d)(1)); American Indian Religious Advisory, Committee on Private International Clark County Public Transportation Freedom Act [42 U.S.C. 1996); Farmland Law. Benefit Area (C–TRAN), and Tri-County Protection Policy Act [7 U.S.C. 4201– [FR Doc. 2011–33830 Filed 1–4–12; 8:45 am] Metropolitan Transportation District 4209]; the Uniform Relocation BILLING CODE 4710–08–P (TriMet). Project Description: The Assistance and Real Property project is a bridge, transit, highway, and Acquisition Policies Act of 1970, as bicycle and pedestrian improvement amended [42 U.S.C. 61]. DEPARTMENT OF TRANSPORTATION project, consisting of a new river 7. Wetlands and Water Resources: crossing over the Columbia River, Clean Water Act, 33 U.S.C. 1251–1377 Federal Highway Administration improvements to highway interchanges [Section 404, Section 401, Section 319]; and the local street network, bicycle and Coastal Zone Management Act [16 Federal Transit Administration pedestrian improvements, and an U.S.C. 1451–1465]; Land and Water extension of light rail from the Expo Conservation Fund [16 U.S.C. 4601–4– Notice of Limitation on Claims Against Center in Portland (OR) to Clark College 4601–11]; Safe Drinking Water Act [42 a Proposed Transportation Project in Vancouver (WA). The actions by the U.S.C. 300f et seq.]; Rivers and Harbors AGENCY: Federal Highway Federal and other agencies on this Act of 1899 [33 U.S.C. 401–406]; TEA– Administration (FHWA), Federal project, as well as the laws under which 21 Wetlands Mitigation [23 U.S.C. Transit Administration (FTA), DOT. such actions were taken, are described 103(b)(6)(m), 133(b)(11)]; Flood Disaster in the Final Environmental Impact ACTION: Notice of limitation on claims Protection Act [42 U.S.C. 4001–4129]. Statement (FEIS) for the project 8. Executive Orders: E.O. 11990 for judicial review of actions by FHWA, published in the Federal Register on Protection of Wetlands; E.O. 11988 FTA and other agencies. September 23, 2011, and in the Record Floodplain Management; E.O. 12898,

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Federal Actions to Address Electronic Access vehicle if that person has no established Environmental Justice in Minority You may see all the comments online medical history or clinical diagnosis of Populations and Low Income through the Federal Document diabetes mellitus currently requiring Populations; E.O. 11593 Protection and Management System (FDMS) at: http:// insulin for control’’ (49 CFR Enhancement of Cultural Resources; www.regulations.gov. 391.41(b)(3)). FMCSA established its diabetes E.O. 13007 Indian Sacred Sites; E.O. Docket: For access to the docket to exemption program, based on the 13287 Preserve America; E.O. 13175 read background documents or Agency’s July 2000 study entitled ‘‘A Consultation and Coordination with comments, go to http:// Indian Tribal Governments; E.O. 11514 Report to Congress on the Feasibility of www.regulations.gov and/or Room a Program to Qualify Individuals with Protection and Enhancement of W12–140 on the ground level of the Environmental Quality; E.O. 13112 Insulin-Treated Diabetes Mellitus to West Building, 1200 New Jersey Avenue Operate in Interstate Commerce as Invasive Species. (Catalog of Federal SE., Washington, DC, between 9 a.m. Domestic Assistance Program Number Directed by the Transportation Act for and 5 p.m., Monday through Friday, the 21st Century.’’ The report concluded 20.205, Highway Planning and except Federal holidays. Construction. The regulations that a safe and practicable protocol to Privacy Act: Anyone may search the allow some drivers with ITDM to implementing Executive Order 12372 electronic form of all comments regarding intergovernmental operate CMVs is feasible. The received into any of DOT’s dockets by September 3, 2003 (68 FR 52441), consultation on Federal programs and the name of the individual submitting activities apply to this program.) Federal Register notice in conjunction the comment (or of the person signing with the November 8, 2005 (70 FR Nothing in this notice creates a cause of the comment, if submitted on behalf of action under these executive orders. 67777), Federal Register notice provides an association, business, labor union, or the current protocol for allowing such Issued on: December 29, 2011. other entity). You may review DOT’s drivers to operate CMVs in interstate John McAvoy, Privacy Act Statement for the Federal commerce. FHWA Major Project Manager, Vancouver, Docket Management System (FDMS) These twenty-two applicants have WA. published in the Federal Register on had ITDM over a range of 1 to 23 years. Lucy Garliauskas, January 17, 2008 (73 FR 3316), or you These applicants report no severe Associate Administrator for Planning and may visit http://edocket.access.gpo.gov/ hypoglycemic reactions resulting in loss Environment, Washington, DC. 2008/pdf/E8-785.pdf. of consciousness or seizure, requiring [FR Doc. 2011–33784 Filed 1–4–12; 8:45 am] Background the assistance of another person, or BILLING CODE 4910–57–P resulting in impaired cognitive function On November 16, 2011, FMCSA that occurred without warning published a notice of receipt of Federal symptoms, in the past 12 months and no diabetes exemption applications from DEPARTMENT OF TRANSPORTATION recurrent (2 or more) severe twenty individuals and requested hypoglycemic episodes in the past 5 Federal Motor Carrier Safety comments from the public (76 FR years. In each case, an endocrinologist Administration 71112). The public comment period verified that the driver has closed on December 16, 2011, and no [FMCSA Docket No. FMCSA–2011–0300] demonstrated a willingness to properly comments were received. monitor and manage his/her diabetes FMCSA has evaluated the eligibility Qualification of Drivers; Exemption mellitus, received education related to of the twenty applicants and determined Applications; Diabetes Mellitus diabetes management, and is on a stable that granting the exemptions to these insulin regimen. These drivers report no AGENCY: Federal Motor Carrier Safety individuals would achieve a level of other disqualifying conditions, Administration (FMCSA), DOT. safety equivalent to or greater than the including diabetes-related ACTION: Notice of final disposition. level that would be achieved by complications. Each meets the vision complying with the current regulation SUMMARY: FMCSA announces its requirement at 49 CFR 391.41(b)(10). 49 CFR 391.41(b)(3). decision to exempt twenty-two The qualifications and medical Two individuals, Mr. Matthew J. individuals from its rule prohibiting condition of each applicant were stated Cipolloni (NJ) and Mr. Michael K. persons with insulin-treated diabetes and discussed in detail in the November Schulist (MI) were both published in a mellitus (ITDM) from operating 16, 2011, Federal Register notice and notice of comments published on commercial motor vehicles (CMVs) in they will not be repeated in this notice. October 17, 2011 (76 FR 64165). They interstate commerce. The exemptions were both granted exemptions on Discussion of Comment will enable these individuals to operate December 19, 2011 but their names were CMVs in interstate commerce. FMCSA did not receive any inadvertently omitted from the Notice of comments in this proceeding. DATES: The exemptions are effective Final Disposition published on that date January 5, 2012. The exemptions expire (76 FR 78718) and they are now Basis for Exemption Determination on January 5, 2014. included in this notice. Under 49 U.S.C. 31136(e) and 31315, FOR FURTHER INFORMATION CONTACT: FMCSA may grant an exemption from Diabetes Mellitus and Driving Elaine M. Papp, Chief, Medical the diabetes requirement in 49 CFR Experience of the Applicants Programs Division, (202) 366–4001, 391.41(b)(3) if the exemption is likely to [email protected], FMCSA, Room The Agency established the current achieve an equivalent or greater level of W64–224, Department of requirement for diabetes in 1970 safety than would be achieved without Transportation, 1200 New Jersey because several risk studies indicated the exemption. The exemption allows Avenue SE., Washington, DC 20590– that drivers with diabetes had a higher the applicants to operate CMVs in 0001. Office hours are from 8:30 a.m. to rate of crash involvement than the interstate commerce. 5 p.m., Monday through Friday, except general population. The diabetes rule To evaluate the effect of these Federal holidays. provides that ‘‘A person is physically exemptions on safety, FMCSA SUPPLEMENTARY INFORMATION: qualified to drive a commercial motor considered medical reports about the

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applicants’ ITDM and vision, and for two years unless revoked earlier by • Fax: 1–(202) 493–2251. reviewed the treating endocrinologists’ FMCSA. The exemption will be revoked Instructions: Each submission must medical opinion related to the ability of if the following occurs: (1) The person include the Agency name and the the driver to safely operate a CMV while fails to comply with the terms and docket numbers for this notice. Note using insulin. conditions of the exemption; (2) the that all comments received will be Consequently, FMCSA finds that in exemption has resulted in a lower level posted without change to http://www. each case exempting these applicants of safety than was maintained before it regulations.gov, including any personal from the diabetes requirement in 49 CFR was granted; or (3) continuation of the information provided. Please see the 391.41(b)(3) is likely to achieve a level exemption would not be consistent with Privacy Act heading below for further of safety equal to that existing without the goals and objectives of 49 U.S.C. information. the exemption. 31136(e) and 31315. If the exemption is Docket: For access to the docket to Conditions and Requirements still effective at the end of the 2-year read background documents or period, the person may apply to FMCSA comments, go to http://www. The terms and conditions of the for a renewal under procedures in effect regulations.gov at any time or Room exemption will be provided to the at that time. W12–140 on the ground level of the applicants in the exemption document Issued on: December 22, 2011. West Building, 1200 New Jersey Avenue and they include the following: (1) That SE., Washington, DC, between 9 a.m. Larry W. Minor, each individual submit a quarterly and 5 p.m., Monday through Friday, monitoring checklist completed by the Associate Administrator for Policy. except Federal holidays. The Federal treating endocrinologist as well as an [FR Doc. 2011–33777 Filed 1–4–12; 8:45 am] Docket Management System (FDMS) is annual checklist with a comprehensive BILLING CODE 4910–EX–P available 24 hours each day, 365 days medical evaluation; (2) that each each year. If you want acknowledgment individual reports within 2 business that we received your comments, please DEPARTMENT OF TRANSPORTATION days of occurrence, all episodes of include a self-addressed, stamped severe hypoglycemia, significant Federal Motor Carrier Safety envelope or postcard or print the complications, or inability to manage acknowledgement page that appears diabetes; also, any involvement in an Administration after submitting comments on-line. accident or any other adverse event in [Docket No. FMCSA–2011–0367] Privacy Act: Anyone may search the a CMV or personal vehicle, whether or electronic form of all comments not it is related to an episode of Qualification of Drivers; Exemption received into any of our dockets by the hypoglycemia; (3) that each individual Applications; Diabetes Mellitus name of the individual submitting the provide a copy of the ophthalmologist’s comment (or of the person signing the or optometrist’s report to the medical AGENCY: Federal Motor Carrier Safety comment, if submitted on behalf of an examiner at the time of the annual Administration (FMCSA). association, business, labor union, etc.). medical examination; and (4) that each ACTION: Notice of applications for You may review DOT’s Privacy Act individual provide a copy of the annual exemption from the diabetes mellitus Statement for the FDMS published in medical certification to the employer for requirement; request for comments. the Federal Register on January 17, retention in the driver’s qualification SUMMARY: FMCSA announces receipt of 2008 (73 FR 3316), or you may visit file, or keep a copy in his/her driver’s applications from seventeen individuals http://edocket.access.gpo.gov/2008/pdf/ qualification file if he/she is self- for exemption from the prohibition E8-785.pdf. employed. The driver must also have a against persons with insulin-treated copy of the certification when driving, FOR FURTHER INFORMATION CONTACT: diabetes mellitus (ITDM) operating for presentation to a duly authorized Elaine M. Papp, Chief, Medical commercial motor vehicles (CMVs) in Federal, State, or local enforcement Programs Division, (202) 366–4001, interstate commerce. If granted, the official. [email protected], FMCSA, exemptions would enable these Department of Transportation, 1200 Conclusion individuals with ITDM to operate CMVs New Jersey Avenue SE., Room W64– Based upon its evaluation of the in interstate commerce. 224, Washington, DC 20590–0001. twenty-two exemption applications, DATES: Comments must be received on Office hours are from 8:30 a.m. to 5 FMCSA exempts, George T. Beard (VA), or before February 6, 2012. p.m., Monday through Friday, except Gary L. Breitenbach (SC), Matthew J. ADDRESSES: You may submit comments Federal holidays. Cipolloni (NJ), Matthew G. Denisov bearing the Federal Docket Management SUPPLEMENTARY INFORMATION: (NE), Marlin L. Enquist (SD), Steven W. System (FDMS) Docket No. FMCSA– Background Gerling (IA), Jackie D. Greenlee (MO), 2011–0367 using any of the following Justin W. Jackson (OK), Edward L. Keith methods: Under 49 U.S.C. 31136(e) and 31315, (IL), David T. Kylander (MO), Eugene J. • Federal eRulemaking Portal: Go to FMCSA may grant an exemption from Nowicki (MI), Jonathan R. Oskin (PA), http://www.regulations.gov. Follow the the Federal Motor Carrier Safety Kevin A. Perdue (MD), Michael E. Pleak on-line instructions for submitting Regulations for a 2-year period if it finds (IN), Sarah M. Powell (NM), Michael K. comments. ‘‘such exemption would likely achieve a Schulist (MI), Christopher C. • Mail: Docket Management Facility; level of safety that is equivalent to or Stephenson (KS), Richard F. VanPelt U.S. Department of Transportation, 1200 greater than the level that would be (NY), Michael A. Villareal (AZ), Richard New Jersey Avenue SE., West Building achieved absent such exemption.’’ The L. White (MS), Jon W. Wood (MN) and Ground Floor, Room W12–140, statute also allows the Agency to renew Paul A. Wright (NY) from the ITDM Washington, DC 20590–0001. exemptions at the end of the 2-year requirement in 49 CFR 391.41(b)(3), • Hand Delivery: West Building period. The seventeen individuals listed subject to the conditions listed under Ground Floor, Room W12–140, 1200 in this notice have recently requested ‘‘Conditions and Requirements’’ above. New Jersey Avenue SE., Washington, such an exemption from the diabetes In accordance with 49 U.S.C. 31136(e) DC, between 9 a.m. and 5 p.m., Monday prohibition in 49 CFR 391.41(b)(3) and 31315 each exemption will be valid through Friday, except Federal holidays. which applies to drivers of CMVs in

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interstate commerce. Accordingly, the diabetes management and monitoring, certifies that Mr. Gutierrez understands Agency will evaluate the qualifications has stable control of his diabetes using diabetes management and monitoring, of each applicant to determine whether insulin, and is able to drive a CMV has stable control of his diabetes using granting the exemption will achieve the safely. Mr. Cox meets the vision insulin, and is able to drive a CMV required level of safety mandated by the requirements of 49 CFR 391.41(b)(10). safely. Mr. Gutierrez meets the vision statutes. His optometrist examined him in 2011 requirements of 49 CFR 391.41(b)(10). and certified that he does not have His optometrist examined him in 2011 Qualifications of Applicants diabetic retinopathy. He holds a Class A and certified that he does not have Randall T. Buffkin CDL from New York. diabetic retinopathy. He holds a Class A CDL from Oklahoma. Mr. Buffkin, age 50, has had ITDM Dennis D. Dingman since 2011. His endocrinologist Mr. Dingman, 63, has had ITDM since Matthew D. Hulse examined him in 2011 and certified that 2001. His endocrinologist examined him Mr. Hulse, 42, has had ITDM since he has had no severe hypoglycemic in 2011 and certified that he has had no 2010. His endocrinologist examined him reactions resulting in loss of severe hypoglycemic reactions resulting in 2011 and certified that he has had no consciousness, requiring the assistance in loss of consciousness, requiring the severe hypoglycemic reactions resulting of another person, or resulting in assistance of another person, or in loss of consciousness, requiring the impaired cognitive function that resulting in impaired cognitive function assistance of another person, or occurred without warning in the past 12 that occurred without warning in the resulting in impaired cognitive function months and no recurrent (2 or more) past 12 months and no recurrent (2 or that occurred without warning in the severe hypoglycemic episodes in the more) severe hypoglycemic episodes in past 12 months and no recurrent (2 or last 5 years. His endocrinologist certifies the last 5 years. His endocrinologist more) severe hypoglycemic episodes in that Mr. Buffkin understands diabetes certifies that Mr. Dingman understands the last 5 years. His endocrinologist management and monitoring, has stable diabetes management and monitoring, certifies that Mr. Hulse understands control of his diabetes using insulin, has stable control of his diabetes using diabetes management and monitoring, and is able to drive a CMV safely. Mr. insulin, and is able to drive a CMV has stable control of his diabetes using Buffkin meets the vision requirements safely. Mr. Dingman meets the vision insulin, and is able to drive a CMV of 49 CFR 391.41(b)(10). His optometrist requirements of 49 CFR 391.41(b)(10). safely. Mr. Hulse meets the vision examined him in 2011 and certified that His optometrist examined him in 2011 requirements of 49 CFR 391.41(b)(10). he does not have diabetic retinopathy. and certified that he does not have His optometrist examined him in 2011 He holds a Class A Commercial Driver’s diabetic retinopathy. He holds a Class R and certified that he does not have License (CDL) from North Carolina. operator’s license from Colorado. diabetic retinopathy. He holds a Class A CDL from Kansas. Gary L. Camden Daryl F. Gilbertson Mr. Camden, 58, has had ITDM since Mr. Gilbertson, 34, has had ITDM Jeremy L. Igert 2005. His endocrinologist examined him since 2011. His endocrinologist Mr. Igert, 35, has had ITDM since in 2011 and certified that he has had no examined him in 2011 and certified that 2008. His endocrinologist examined him severe hypoglycemic reactions resulting he has had no severe hypoglycemic in 2011 and certified that he has had no in loss of consciousness, requiring the reactions resulting in loss of severe hypoglycemic reactions resulting assistance of another person, or consciousness, requiring the assistance in loss of consciousness, requiring the resulting in impaired cognitive function of another person, or resulting in assistance of another person, or that occurred without warning in the impaired cognitive function that resulting in impaired cognitive function past 12 months and no recurrent (2 or occurred without warning in the past 12 that occurred without warning in the more) severe hypoglycemic episodes in months and no recurrent (2 or more) past 12 months and no recurrent (2 or the last 5 years. His endocrinologist severe hypoglycemic episodes in the more) severe hypoglycemic episodes in certifies that Mr. Camden understands last 5 years. His endocrinologist certifies the last 5 years. His endocrinologist diabetes management and monitoring, that Mr. Gilbertson understands certifies that Mr. Igert understands has stable control of his diabetes using diabetes management and monitoring, diabetes management and monitoring, insulin, and is able to drive a CMV has stable control of his diabetes using has stable control of his diabetes using safely. Mr. Camden meets the vision insulin, and is able to drive a CMV insulin, and is able to drive a CMV requirements of 49 CFR 391.41(b)(10). safely. Mr. Gilbertson meets the vision safely. Mr. Igert meets the vision His optometrist examined him in 2011 requirements of 49 CFR 391.41(b)(10). requirements of 49 CFR 391.41(b)(10). and certified that he does not have His ophthalmologist examined him in His optometrist examined him in 2011 diabetic retinopathy. He holds a Class A 2011 and certified that he does not have and certified that he does not have CDL from Indiana. diabetic retinopathy. He holds a Class B diabetic retinopathy. He holds a Class A Loren A. Cox CDL from Wisconsin. CDL from Missouri. Mr. Cox, 53, has had ITDM since Alfred Gutierrez, II Neil E. Karvonen 2011. His endocrinologist examined him Mr. Gutierrez, 36, has had ITDM since Mr. Karvonen, 24, has had ITDM in 2011 and certified that he has had no 2009. His endocrinologist examined him since 1994. His endocrinologist severe hypoglycemic reactions resulting in 2011 and certified that he has had no examined him in 2011 and certified that in loss of consciousness, requiring the severe hypoglycemic reactions resulting he has had no severe hypoglycemic assistance of another person, or in loss of consciousness, requiring the reactions resulting in loss of resulting in impaired cognitive function assistance of another person, or consciousness, requiring the assistance that occurred without warning in the resulting in impaired cognitive function of another person, or resulting in past 12 months and no recurrent (2 or that occurred without warning in the impaired cognitive function that more) severe hypoglycemic episodes in past 12 months and no recurrent (2 or occurred without warning in the past 12 the last 5 years. His endocrinologist more) severe hypoglycemic episodes in months and no recurrent (2 or more) certifies that Mr. Cox understands the last 5 years. His endocrinologist severe hypoglycemic episodes in the

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last 5 years. His endocrinologist certifies the last 5 years. His endocrinologist past 12 months and no recurrent (2 or that Mr. Karvonen understands diabetes certifies that Mr. Morton understands more) severe hypoglycemic episodes in management and monitoring, has stable diabetes management and monitoring, the last 5 years. His endocrinologist control of his diabetes using insulin, has stable control of his diabetes using certifies that Mr. Risley understands and is able to drive a CMV safely. Mr. insulin, and is able to drive a CMV diabetes management and monitoring, Karvonen meets the vision requirements safely. Mr. Morton meets the vision has stable control of his diabetes using of 49 CFR 391.41(b)(10). His optometrist requirements of 49 CFR 391.41(b)(10). insulin, and is able to drive a CMV examined him in 2011 and certified that His ophthalmologist examined him in safely. Mr. Risley meets the vision he does not have diabetic retinopathy. 2011 and certified that he has stable requirements of 49 CFR 391.41(b)(10). He holds a Class A CDL from nonproliferative diabetic retinopathy. His optometrist examined him in 2011 Washington. He holds a Class A CDL from Virginia. and certified that he does not have Damon A. Kruger Richard A. Norstebon diabetic retinopathy. He holds a Class A CDL from Indiana. Mr. Kruger, 32, has had ITDM since Mr. Norstebon, 54, has had ITDM 1993. His endocrinologist examined him since 2005. His endocrinologist Steven L. Schmenk in 2011 and certified that he has had no examined him in 2011 and certified that Mr. Schmenk, 54, has had ITDM since severe hypoglycemic reactions resulting he has had no severe hypoglycemic 2009. His endocrinologist examined him in loss of consciousness, requiring the reactions resulting in loss of in 2011 and certified that he has had no assistance of another person, or consciousness, requiring the assistance severe hypoglycemic reactions resulting resulting in impaired cognitive function of another person, or resulting in in loss of consciousness, requiring the that occurred without warning in the impaired cognitive function that assistance of another person, or past 12 months and no recurrent (2 or occurred without warning in the past 12 resulting in impaired cognitive function months and no recurrent (2 or more) more) severe hypoglycemic episodes in that occurred without warning in the the last 5 years. His endocrinologist severe hypoglycemic episodes in the past 12 months and no recurrent (2 or certifies that Mr. Kruger understands last 5 years. His endocrinologist certifies more) severe hypoglycemic episodes in diabetes management and monitoring, that Mr. Norstebon understands diabetes the last 5 years. His endocrinologist has stable control of his diabetes using management and monitoring, has stable certifies that Mr. Schmenk understands insulin, and is able to drive a CMV control of his diabetes using insulin, diabetes management and monitoring, safely. Mr. Kruger meets the vision and is able to drive a CMV safely. Mr. has stable control of his diabetes using requirements of 49 CFR 391.41(b)(10). Norstebon meets the vision insulin, and is able to drive a CMV His optometrist examined him in 2011 requirements of 49 CFR 391.41(b)(10). safely. Mr. Schmenk meets the vision and certified that he does not have His ophthalmologist examined him in requirements of 49 CFR 391.41(b)(10). diabetic retinopathy. He holds a Class A 2011 and certified that he has stable His optometrist examined him in 2011 CDL from Colorado. nonproliferative diabetic retinopathy. and certified that he does not have He holds a Class D operator’s license Bryan R. Lee diabetic retinopathy. He holds a Class A from North Dakota. Mr. Lee, 39, has had ITDM since 2010. CDL from Ohio. Donald J. Olbinski His endocrinologist examined him in Benny L. Westbrooks 2011 and certified that he has had no Mr. Olbinski, 58, has had ITDM since severe hypoglycemic reactions resulting 2006. His endocrinologist examined him Mr. Westbrooks, 60, has had ITDM in loss of consciousness, requiring the in 2011 and certified that he has had no since 2011. His endocrinologist assistance of another person, or severe hypoglycemic reactions resulting examined him in 2011 and certified that resulting in impaired cognitive function in loss of consciousness, requiring the he has had no severe hypoglycemic that occurred without warning in the assistance of another person, or reactions resulting in loss of past 12 months and no recurrent (2 or resulting in impaired cognitive function consciousness, requiring the assistance more) severe hypoglycemic episodes in that occurred without warning in the of another person, or resulting in the last 5 years. His endocrinologist past 12 months and no recurrent (2 or impaired cognitive function that certifies that Mr. Lee understands more) severe hypoglycemic episodes in occurred without warning in the past 12 diabetes management and monitoring, the last 5 years. His endocrinologist months and no recurrent (2 or more) has stable control of his diabetes using certifies that Mr. Olbinski understands severe hypoglycemic episodes in the insulin, and is able to drive a CMV diabetes management and monitoring, last 5 years. His endocrinologist certifies safely. Mr. Lee meets the vision has stable control of his diabetes using that Mr. Westbrooks understands requirements of 49 CFR 391.41(b)(10). insulin, and is able to drive a CMV diabetes management and monitoring, His optometrist examined him in 2011 safely. Mr. Olbinski meets the vision has stable control of his diabetes using and certified that he does not have requirements of 49 CFR 391.41(b)(10). insulin, and is able to drive a CMV diabetic retinopathy. He holds an His ophthalmologist examined him in safely. Mr. Westbrooks meets the vision operator’s license from Michigan. 2011 and certified that he does not have requirements of 49 CFR 391.41(b)(10). diabetic retinopathy. He holds a Class B His opthalmologist examined him in Earl T. Morton CDL from Illinois. 2011 and certified that he does not have Mr. Morton, 58, has had ITDM since diabetic retinopathy. He holds a Class A 2011. His endocrinologist examined him Kevin E. Risley CDL from Texas. in 2011 and certified that he has had no Mr. Risley, 50, has had ITDM since Request for Comments severe hypoglycemic reactions resulting 2010. His endocrinologist examined him in loss of consciousness, requiring the in 2011 and certified that he has had no In accordance with 49 U.S.C. 31136(e) assistance of another person, or severe hypoglycemic reactions resulting and 31315, FMCSA requests public resulting in impaired cognitive function in loss of consciousness, requiring the comment from all interested persons on that occurred without warning in the assistance of another person, or the exemption petitions described in past 12 months and no recurrent (2 or resulting in impaired cognitive function this notice. We will consider all more) severe hypoglycemic episodes in that occurred without warning in the comments received before the close of

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business on the closing date indicated DEPARTMENT OF TRANSPORTATION diabetes exemption applications from in the date section of the notice. eighteen individuals and requested Federal Motor Carrier Safety FMCSA notes that section 4129 of the comments from the public (76 FR Administration Safe, Accountable, Flexible and 72031). The public comment period closed on December 21, 2011, and no Efficient Transportation Equity Act: A [FMCSA Docket No. FMCSA–2011–0301] comments were received. Legacy for Users requires the Secretary Qualification of Drivers; Exemption FMCSA has evaluated the eligibility to revise its diabetes exemption program Applications; Diabetes Mellitus of the eighteen applicants and established on September 3, 2003 (68 FR determined that granting the 52441).1 The revision must provide for AGENCY: Federal Motor Carrier Safety exemptions to these individuals would individual assessment of drivers with Administration (FMCSA), DOT. achieve a level of safety equivalent to or diabetes mellitus, and be consistent ACTION: Notice of final disposition. greater than the level that would be with the criteria described in section achieved by complying with the current SUMMARY: 4018 of the Transportation Equity Act FMCSA announces its regulation 49 CFR 391.41(b)(3). for the 21st Century (49 U.S.C. 31305). decision to exempt eighteen individuals from its rule prohibiting persons with Diabetes Mellitus and Driving Section 4129 requires: (1) Elimination insulin-treated diabetes mellitus (ITDM) Experience of the Applicants of the requirement for 3 years of from operating commercial motor The Agency established the current experience operating CMVs while being vehicles (CMVs) in interstate commerce. requirement for diabetes in 1970 treated with insulin; and (2) The exemptions will enable these because several risk studies indicated establishment of a specified minimum individuals to operate CMVs in that drivers with diabetes had a higher period of insulin use to demonstrate interstate commerce. rate of crash involvement than the stable control of diabetes before being DATES: The exemptions are effective general population. The diabetes rule allowed to operate a CMV. January 5, 2012. The exemptions expire provides that ‘‘A person is physically In response to section 4129, FMCSA on January 5, 2014. qualified to drive a commercial motor made immediate revisions to the FOR FURTHER INFORMATION CONTACT: vehicle if that person has no established diabetes exemption program established Elaine M. Papp, Chief, Medical medical history or clinical diagnosis of by the September 3, 2003 notice. Programs Division, (202) 366–4001, diabetes mellitus currently requiring FMCSA discontinued use of the 3-year [email protected], FMCSA, Room insulin for control’’ (49 CFR 391.41(b)(3)). driving experience and fulfilled the W64–224, Department of FMCSA established its diabetes requirements of section 4129 while Transportation, 1200 New Jersey Avenue SE., Washington, DC 20590– exemption program, based on the continuing to ensure that operation of Agency’s July 2000 study entitled ‘‘A CMVs by drivers with ITDM will 0001. Office hours are from 8:30 a.m. to 5 p.m., Monday through Friday, except Report to Congress on the Feasibility of achieve the requisite level of safety Federal holidays. a Program to Qualify Individuals with required of all exemptions granted SUPPLEMENTARY INFORMATION: Insulin-Treated Diabetes Mellitus to under 49 U.S.C. 31136(e). Operate in Interstate Commerce as Section 4129(d) also directed FMCSA Electronic Access Directed by the Transportation Act for to ensure that drivers of CMVs with You may see all the comments online the 21st Century.’’ The report concluded ITDM are not held to a higher standard through the Federal Document that a safe and practicable protocol to than other drivers, with the exception of Management System (FDMS) at: http:// allow some drivers with ITDM to limited operating, monitoring and www.regulations.gov. operate CMVs is feasible. The medical requirements that are deemed Docket: For access to the docket to September 3, 2003 (68 FR 52441), Federal Register notice in conjunction medically necessary. read background documents or comments, go to http:// with the November 8, 2005 (70 FR The FMCSA concluded that all of the www.regulations.gov and/or Room 67777), Federal Register notice provides operating, monitoring and medical W12–140 on the ground level of the the current protocol for allowing such requirements set out in the September 3, West Building, 1200 New Jersey Avenue drivers to operate CMVs in interstate 2003 notice, except as modified, were in SE., Washington, DC, between 9 a.m. commerce. compliance with section 4129(d). and 5 p.m., Monday through Friday, These eighteen applicants have had Therefore, all of the requirements set except Federal holidays. ITDM over a range of 1 to 31 years. out in the September 3, 2003 notice, Privacy Act: Anyone may search the These applicants report no severe except as modified by the notice in the electronic form of all comments hypoglycemic reactions resulting in loss Federal Register on November 8, 2005 received into any of DOT’s dockets by of consciousness or seizure, requiring (70 FR 67777), remain in effect. the name of the individual submitting the assistance of another person, or resulting in impaired cognitive function Issued on: December 22, 2011. the comment (or of the person signing the comment, if submitted on behalf of that occurred without warning Larry W. Minor, an association, business, labor union, or symptoms, in the past 12 months and no Associate Administrator for Policy. other entity). You may review DOT’s recurrent (2 or more) severe [FR Doc. 2011–33786 Filed 1–4–12; 8:45 am] Privacy Act Statement for the Federal hypoglycemic episodes in the past 5 BILLING CODE 4910–EX–P Docket Management System (FDMS) years. In each case, an endocrinologist published in the Federal Register on verified that the driver has January 17, 2008 (73 FR 3316), or you demonstrated a willingness to properly may visit http://edocket.access.gpo.gov/ monitor and manage his/her diabetes mellitus, received education related to 1 Section 4129(a) refers to the 2003 notice as a 2008/pdf/E8-785.pdf. diabetes management, and is on a stable ‘‘final rule.’’ However, the 2003 notice did not issue Background a ‘‘final rule’’ but did establish the procedures and insulin regimen. These drivers report no standards for issuing exemptions for drivers with On November 21, 2011, FMCSA other disqualifying conditions, ITDM. published a notice of receipt of Federal including diabetes-related

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complications. Each meets the vision a CMV or personal vehicle, whether or DEPARTMENT OF TRANSPORTATION requirement at 49 CFR 391.41(b)(10). not it is related to an episode of The qualifications and medical hypoglycemia; (3) that each individual Federal Motor Carrier Safety condition of each applicant were stated provide a copy of the ophthalmologist’s Administration and discussed in detail in the November or optometrist’s report to the medical [Docket No. FMCSA–2011–0389] 21, 2011, Federal Register notice and examiner at the time of the annual they will not be repeated in this notice. medical examination; and (4) that each Qualification of Drivers; Exemption Discussion of Comment individual provide a copy of the annual Applications; Epilepsy and Seizure medical certification to the employer for Disorders FMCSA received two comments in retention in the driver’s qualification this proceeding. The comments were AGENCY: Federal Motor Carrier Safety file, or keep a copy in his/her driver’s considered and discussed below. Administration (FMCSA), DOT. Laura J. Krol of the Pennsylvania qualification file if he/she is self- employed. The driver must also have a ACTION: Notice of applications for Department of Transportation has exemption, request for comments. reviewed the driving histories of Gerald copy of the certification when driving, R. Curran, Shawn K. Fleming and for presentation to a duly authorized SUMMARY: FMCSA announces receipt of Kenneth B. Pratt and supports granting Federal, State, or local enforcement applications from 15 individuals for an them waivers. official. exemption from the prohibition against Michael R. Simmons of Hoenwald, Conclusion persons with a clinical diagnosis of Tennessee expressed his epilepsy or any other condition which disappointment that he cannot obtain a Based upon its evaluation of the is likely to cause a loss of consciousness Federal waiver, as he is an intrastate eighteen exemption applications, or any loss of ability to operate a driver. FMCSA exempts, Mark A. Aspden commercial motor vehicle (CMV) from In response to this comment, (MA), Rodney C. Backus (NY), Peter A. operating CMVs in interstate commerce. FMCSA’s exemption process supports Breister (WI), Gerald R. Curran (PA), If granted, the exemptions would enable drivers with ITDM who seek to operate Shawn K. Fleming (PA), Daniel C. these individuals with seizure disorders in interstate commerce. French (VA), Garry W. Garrison (WI), to operate CMVs in interstate commerce. Basis for Exemption Determination Gregory L. Horton (GA), Anthony B. DATES: Comments must be received on Under 49 U.S.C. 31136(e) and 31315, Jones (WI), Jay T. Kirschmann (ND), or before February 6, 2012. FMCSA may grant an exemption from Patrick G. Landers (NY), Paul J. ADDRESSES: You may submit comments the diabetes requirement in 49 CFR Marshall (UT), Robert J. Pierce (MI), bearing the Federal Docket Management 391.41(b)(3) if the exemption is likely to Kenneth B. Pratt (PA), James G. Rahn System (FDMS) Docket ID FMCSA– achieve an equivalent or greater level of (IA), Ward A. Stone (WI), Todd J. 2011–0389 using any of the following safety than would be achieved without Timmerman (WI) and James L. Weinert methods: • the exemption. The exemption allows (OH) from the ITDM requirement in 49 Federal eRulemaking Portal: Go to the applicants to operate CMVs in CFR 391.41(b)(3), subject to the http://www.regulations.gov. Follow the interstate commerce. conditions listed under ‘‘Conditions and on-line instructions for submitting To evaluate the effect of these Requirements’’ above. comments. exemptions on safety, FMCSA • Mail: Docket Management Facility; considered medical reports about the In accordance with 49 U.S.C. 31136(e) U.S. Department of Transportation, 1200 applicants’ ITDM and vision, and and 31315 each exemption will be valid New Jersey Avenue SE., West Building reviewed the treating endocrinologists’ for two years unless revoked earlier by Ground Floor, Room W12–140, medical opinion related to the ability of FMCSA. The exemption will be revoked Washington, DC 20590–0001. the driver to safely operate a CMV while if the following occurs: (1) The person • Hand Delivery: West Building using insulin. fails to comply with the terms and Ground Floor, Room W12–140, 1200 Consequently, FMCSA finds that in conditions of the exemption; (2) the New Jersey Avenue SE., Washington, each case exempting these applicants exemption has resulted in a lower level DC, between 9 a.m. and 5 p.m., Monday from the diabetes requirement in 49 CFR of safety than was maintained before it through Friday, except Federal holidays. 391.41(b)(3) is likely to achieve a level was granted; or (3) continuation of the • Fax: 1–(202) 493–2251. of safety equal to that existing without exemption would not be consistent with Each submission must include the the exemption. the goals and objectives of 49 U.S.C. Agency name and the docket ID for this Notice. Note that DOT posts all Conditions and Requirements 31136(e) and 31315. If the exemption is still effective at the end of the 2-year comments received without change to The terms and conditions of the period, the person may apply to FMCSA http://www.regulations.gov, including exemption will be provided to the for a renewal under procedures in effect any personal information included in a applicants in the exemption document at that time. comment. Please see the Privacy Act and they include the following: (1) That heading below. each individual submit a quarterly Issued on: December 27, 2011. Docket: For access to the docket to monitoring checklist completed by the Larry W. Minor, read background documents or treating endocrinologist as well as an Associate Administrator for Policy. comments, go to http:// annual checklist with a comprehensive [FR Doc. 2011–33779 Filed 1–4–12; 8:45 am] www.regulations.gov at any time or medical evaluation; (2) that each Room W12–140 on the ground level of BILLING CODE 4910–EX–P individual reports within 2 business the West Building, 1200 New Jersey days of occurrence, all episodes of Avenue SE., Washington, DC, between 9 severe hypoglycemia, significant a.m. and 5 p.m., Monday through complications, or inability to manage Friday, except Federal holidays. The diabetes; also, any involvement in an FDMS is available 24 hours each day, accident or any other adverse event in 365 days each year. If you want

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acknowledgment that we received your the decision whether that person’s Joseph D’Angelo comments, please include a self- condition is likely to cause the loss of Mr. D’Angelo is a 55-year-old CMV addressed, stamped envelope or consciousness or loss of ability to driver in the state of New York. He had postcard or print the acknowledgement control a CMV should be made on an a single seizure at the age of 14 in 1970. page that appears after submitting individual basis by the medical He has remained on anti-seizure comments on-line. examiner in consultation with the medication since that time. The dosage Privacy Act: Anyone may search the treating physician. Before certification is and frequency of the anti-seizure electronic form of all comments considered, it is suggested that a medications have remained the same received into any of our dockets by the 6-month waiting period elapse from the since 2002. His doctor states that his name of the individual submitting the time of the episode. Following the condition would not interfere with his comment (or of the person signing the waiting period, it is suggested that the ability to safely operate a commercial comment, if submitted on behalf of an individual have a complete neurological motor vehicle. association, business, labor union, etc.). examination. If the results of the You may review the DOT’s complete examination are negative and anti- Michael Drake Privacy Act Statement in the Federal seizure medication is not required, then Mr. Drake is a 37-year-old CMV driver Register published on April 11, 2000 the driver may be qualified. in the state of Delaware. Mr. Drake had (65 FR 19477–78; Apr. 11, 2000). This In those individual cases where a surgery in July 2009 to remove the part information is also available at http:// driver had a seizure or an episode of of his brain that was the focus of his Docketinfo.dot.gov. loss of consciousness that resulted from seizures. His last seizure was July 2009. FOR FURTHER INFORMATION CONTACT: a known medical condition (e.g., drug He is on the same anti-seizure Elaine Papp, Chief, Medical Programs reaction, high temperature, acute medication, with the dosage and Division (202) 366–4001, or via email at infectious disease, dehydration, or acute frequency remaining the same for over [email protected], or by letter metabolic disturbance), certification 10 years. His Neurologist states that FMCSA, Room W64–113, Department of should be deferred until the driver has there should be no restriction Transportation, 1200 New Jersey fully recovered from that condition, has preventing him from having a CDL and Avenue SE., Washington, DC 20590– no existing residual complications, and that would likely obtain a level of safety 0001. Office hours are from 8:30 a.m. to is not taking anti-seizure medication. that is equivalent or greater than other 5 p.m., Monday through Friday, except Drivers with a history of epilepsy/ drivers. Federal holidays. seizures off anti-seizure medication and Virgil Godbey seizure-free for 10 years may be SUPPLEMENTARY INFORMATION: qualified to operate a CMV in interstate Mr. Godbey is a 52-year-old CMV Background commerce. Interstate drivers with a driver in the state of Ohio. He was history of a single unprovoked seizure diagnosed with complex partial Under 49 U.S.C. 31315 and 31136(e), epilepsy in 2006. His last seizure was in FMCSA may grant an exemption for a may be qualified to drive a CMV in interstate commerce if seizure-free and 2006. He takes anti-seizure medication. 2-year period if it finds ‘‘such The dosage and frequency of the anti- exemption would likely achieve a level off anti-seizure medication for a 5-year period or more. seizure medications have remained the of safety that is equivalent to or greater same for 5 years. He has a good safety than the level that would be achieved Summary of Applications record in relation to his personal driving absent such exemption.’’ The statutes Christopher Boddie record and his physician states he is in also allow the Agency to renew excellent health. exemptions at the end of the 2-year Mr. Boddie is a 52-year-old driver in period. The fifteen individuals listed in the state of Pennsylvania. He had a Ricki Gutermann this notice have recently requested an single seizure event in March 2011 that Mr. Gutermann is a 45-year-old driver exemption from the epilepsy his physician believes was the result of from the state of Wisconsin. He prohibition in 49 CFR 391.41(b)(8), uncontrolled hypertension. He was previously held a CDL and drove a truck which applies to drivers who operate placed on anti-seizure medication and for Mobil Oil. He was involved in a non- CMVs as defined in 49 CFR 390.5, in anti-hypertensive medications in March job related motor vehicle accident and interstate commerce. Section 2011 and discontinued use in August of sustained a traumatic head injury. He 391.41(b)(8) states that a person is the same year. He states his blood was prescribed anti-seizure medication physically qualified to drive a pressure is under control and he and had two seizures in 1998 while commercial motor vehicle if that person continues to take his anti-hypertensive physicians were adjusting his has no established medical history or medication. medication. His last seizure was July clinical diagnosis of epilepsy or any Roger Corvasce 1998. His physician states he is taking other condition which is likely to cause the same anti-seizure medication, with the loss of consciousness or any loss of Mr. Corvasce is a 40-year-old CMV the dosage and frequency remaining the ability to control a commercial motor driver form the state of New York. He same for 13 years. The physician states vehicle. was diagnosed with a brain tumor and that he feels it is appropriate to allow FMCSA provides medical advisory had surgery to remove it successfully in him to be recertified to drive criteria for use by medical examiners in January 2010. He was put on anti- commercial vehicles. determining whether drivers with seizure medication as a precaution after certain medical conditions should be the surgery. His last seizure was Glen Hogan certified to operate commercial motor December 2009. He remains on the same Mr. Hogan is a 57-year-old CMV vehicles in intrastate commerce. The anti-seizure medication, with the dosage driver in the state of Wisconsin. Mr. advisory criteria indicates that if an and frequency remaining the same for Hogan had a single seizure event in individual has had a sudden episode of 2 years. His physician states he that his February 2010 and has been on the same a non-epileptic seizure or loss of condition is stable. He would like to anti-seizure medication since that time, consciousness of unknown cause which operate tractor trailer trucks in interstate with the dosage and frequency did not require anti-seizure medication, commerce. remaining the same for 22 months. His

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last seizure was November 2009. He the medication since October 2010. He within one month. Surgery was follows up regularly with his physician remains asymptomatic and his performed to remove the congenital and his blood levels are in a therapeutic physician states she is in favor of defect and she was placed on anti- range. His physician states that he allowing him to drive without seizure medication, which was believes that in granting Mr. Hogan the restrictions. discontinued in November 2011. She exemption, he would maintain the same would like to begin driving a bus again. Mr. Andy McNeal level of safety as other CMV drivers. Mr. McNeal is a 49-year-old driver in Request for Comments Jordan Hyster the state of Indiana. In 2007, he had a In accordance with 49 U.S.C. 31315 Mr. Hyster is a 22-year-old CMV single seizure event and was diagnosed and 31136(e), FMCSA requests public driver in the state of Ohio. Mr. Hyster with a brain tumor. He had the tumor comment from all interested persons on was diagnosed with epilepsy in 2005 removed successfully and his last the exemption applications described in and placed on anti-seizure medication. seizure was May 2007. He is taking anti- this notice. We will consider all His last seizure was in January 2009, seizure medication, with the dosage and comments received before the close of after being told to stop his medication frequency for over 4 years. He has had business on the closing date indicated by previous physician. He is again on an electro-encephalogram (EEG) in 2009 earlier in the notice. anti-seizure medication. The dosage and that showed no epileptiform activity Issued on: December 22, 2011. frequency of the anti-seizure medication and an Magnets Imaging Resonance Larry W. Minor, has remained the same for 23 months. (MRI) in 2010 showed no evidence of His physician states that he believes that tumor recurrence. His physician states Associate Administrator for Policy. Mr. Hyster will likely achieve a level of that although there is no way to [FR Doc. 2011–33781 Filed 1–4–12; 8:45 am] safety expected of drivers as long as he guarantee his never having another BILLING CODE 4910–EX–P remains on medication. seizure, neurological examination currently shows no deficits which David R. Kietzman would impair his safe operation of a DEPARTMENT OF TRANSPORTATION Mr. Keitzman is a 49-year-old CMV motor vehicle. driver in the state of Wisconsin. In Federal Motor Carrier Safety December 2007 he underwent surgery to Lonnie Reiker Administration remove a right parietal vascular Mr. Reiker is a 52-year-old driver who malformation. His physician states that drives in the state of Illinois. Mr. Reiker [Docket No. FMCSA–2011–0325] this brain abnormality was the cause of was diagnosed with a brain tumor in Qualification of Drivers; Exemption his seizures. He has been on the same December 2009 following a single Applications; Vision anti-seizure medications with the seizure event in November 2009. He had dosage and frequency remaining the surgery in March 2010 to remove the AGENCY: Federal Motor Carrier Safety same since October 2008. His last tumor and has been given anti-seizure Administration (FMCSA), DOT. seizure was October 2008. His physician medication following the surgery. The ACTION: Notice of applications for states that he is neurologically normal. dosage and frequency of the anti-seizure exemptions; request for comments. His current employer states that he has medication has remained the same for been an intrastate tractor semi-trailer more than 2 years. His last seizure was SUMMARY: FMCSA announces receipt of driver for them since 1991 and has December 2009. Three subsequent MRIs applications from twelve individuals for proven to be a safe, competent, and indicate no tumor re-growth. His exemption from the vision requirement conscientious driver. physician states that, in his opinion, at in the Federal Motor Carrier Safety this time Mr. Reiker’s driving safety is Regulations. If granted, the exemptions Joseph Kogut equivalent to other CMV drivers. would enable these individuals to Mr. Kogut is a 53-year-old CMV driver qualify as drivers of commercial motor Mark A. Smith in the state of North Carolina. He was vehicles (CMVs) in interstate commerce involved in a motor vehicle accident in Mr. Smith is a 51-year-old CMV driver without meeting the Federal vision 1982 and sustained a head injury. in the state of California. He had a single requirement. Following the accident, he had a single episode of loss of consciousness in seizure. He has taken the same anti- August 2010. He is taking the same anti- DATES: Comments must be received on seizure medication for more than 29 seizure medication with the dosage and or before February 6, 2012. years with no change in dosage or frequency remaining the same for 16 ADDRESSES: You may submit comments frequency of use. His physician states months. His last seizure was August bearing the Federal Docket Management that he feels that Mr. Kogut should be 2010. He is under the regular care of a System (FDMS) Docket No. FMCSA– allowed to drive CMVs. neurologist, who states he is stable and 2011–0325 using any of the following doing very well. He states further that methods: Philip McLain Mr. Smith is likely to achieve a level of • Federal eRulemaking Portal: Go to Mr. McLain is 47-year old CMV driver safety that is equivalent or greater than http://www.regulations.gov. Follow the in the state of Maine. He had a the level of any other person to drive. on-line instructions for submitting nighttime seizure-like episode in August He would be driving a semi truck and comments. 2010. He was diagnosed subsequently seeks to work five days on and then two • Mail: Docket Management Facility; with AVM (Arteriovenous days off. U.S. Department of Transportation, 1200 Malformation), a brain congenital New Jersey Avenue SE., West Building condition. He underwent surgery to Cheryl Woskie Ground Floor, Room W12–140, remove the defect and has had no Ms. Woskie is a 41-year-old Class B Washington, DC 20590–0001. further seizures or seizure-like episodes. bus driver in the state of Massachusetts. • Hand Delivery: West Building His last seizure was in August 2010. He She was diagnosed with a Cavernoma, Ground Floor, Room W12–140, 1200 was given anti-seizure medication a brain malformation, in October 2010, New Jersey Avenue SE., Washington, following the operation and has been off causing her to have three seizures DC, between 9 a.m. and 5 p.m., Monday

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through Friday, except Federal 391.41(b)(10) which applies to drivers of Mickey E. Lawson Holidays. CMVs in interstate commerce. • Mr. Lawson, 50, has had amblyopia in Fax: 1 (202) 493–2251. Accordingly, the Agency will evaluate his left eye since birth. The best Instructions: Each submission must the qualifications of each applicant to corrected visual acuity in his right eye include the Agency name and the determine whether granting an is 20/20 and in his left eye, 20/400. docket numbers for this notice. Note exemption will achieve the required Following an examination in 2011, his that all comments received will be level of safety mandated by statute. optometrist noted, ‘‘I see no visual posted without change to http:// Qualifications of Applicants reason that Mr. Lawson would not be www.regulations.gov, including any able to continue driving commercially personal information provided. Please Rene Amaya (as he has for many years).’’ see the Privacy Act heading below for Mr. Lawson reported that he has further information. Mr. Amaya, age 36, has had driven straight trucks for 10 years, Docket: For access to the docket to amblyopia in his left eye since birth. accumulating 21 million miles and read background documents or The best corrected visual acuity in his tractor-trailer combinations for 15 years, comments, go to http:// right eye is 20/15 and in his left eye, 20/ accumulating 577,000 miles. He holds a www.regulations.gov at any time or 200. Following an examination in 2011, Class A CDL from North Carolina. His Room W12–140 on the ground level of his optometrist noted, ‘‘In my medical driving record for the last 3 years shows the West Building, 1200 New Jersey opinion, Rene Amaya has sufficient no crashes and no convictions for Avenue SE., Washington, DC, between 9 vision to perform the driving tasks moving violations in a CMV. a.m. and 5 p.m., Monday through required to operate a commercial Robbey J. Nelson Friday, except Federal holidays. The vehicle.’’ Mr. Amaya reported that he FDMS is available 24 hours each day, has driven straight trucks for 2 years, Mr. Nelson, 42, has had keratoconus 365 days each year. If you want accumulating 78,000 miles and tractor- in his left eye since 2002. The best acknowledgment that we received your trailer combinations for 2c years, corrected visual acuity in his right eye comments, please include a self- accumulating 102,500 miles. He holds a is 20/20 and in his left eye, 20/100. addressed, stamped envelope or Class A Commercial Driver’s License Following an examination in 2011, his postcard or print the acknowledgment (CDL) from New Mexico. His driving optometrist noted, ‘‘This patient has page that appears after submitting record for the last 3 years shows no normal color vision and has sufficient vision to operate a motor vehicle comments on-line. crashes and no convictions for moving Privacy Act: Anyone may search the commercial or otherwise.’’ Mr. Nelson violations in a CMV. electronic form of all comments reported that he has driven straight received into any of our dockets by the Brian K. Cline trucks for 20 years, accumulating name of the individual submitting the 500,000 miles and tractor-trailer comment (or of the person signing the Mr. Cline, 32, has had amblyopia in combinations for 20 years, accumulating comment, if submitted on behalf of an his left eye since childhood. The best 400,000 miles. He holds a Class A CDL association, business, labor union, etc.). corrected visual acuity in his right eye from North Carolina. His driving record You may review DOT’s Privacy Act is 20/20 and in his left eye, 20/60. for the last 3 years shows no crashes and Statement for the FDMS published in Following an examination in 2011, his no convictions for moving violations in the Federal Register on January 17, 2008 optometrist noted, ‘‘In my medical a CMV. opinion, with his vision correction, his (73 FR 3316), or you may visit http:// Thomas M. Nubert edocket.access.gpo.gov/2008/pdf/E8- vision allows him to perform 785.pdf. commercial driving tasks.’’ Mr. Cline Mr. Nubert, 55, has had reduced reported that he has driven straight vision in his right eye due to a birth FOR FURTHER INFORMATION CONTACT: trucks for 31⁄2; years, accumulating defect. The best corrected visual acuity Elaine M. Papp, Chief, Medical 88,000 miles and tractor-trailer in his right eye is 20/400 and in his left Programs Division, (202) 366–4001, combinations for 3 years, accumulating eye, 20/20. Following an examination in [email protected], FMCSA, 18,000 miles. He holds a Class A CDL 2011, his optometrist noted, ‘‘I feel that Department of Transportation, 1200 from North Carolina. His driving record he does have sufficient vision to New Jersey Avenue SE., Room W64– for the last 3 years shows no crashes and perform the driving tasks to operate a 224, Washington, DC 20590–0001. commercial vehicle.’’ Office hours are from 8:30 a.m. to 5 no convictions for moving violations in a CMV. Mr. Nubert reported that he has p.m., Monday through Friday, except driven straight trucks for 26 years, Federal holidays. Robert E. Judd accumulating 572,000 miles and tractor- SUPPLEMENTARY INFORMATION: trailer combinations for 8 years, Mr. Judd, 49, has had amblyopia in Background accumulating 240,000 miles. He holds a his left eye since birth. The best Class A CDL from Ohio. His driving Under 49 U.S.C. 31136(e) and 31315, corrected visual acuity in his right eye record for the last 3 years shows no FMCSA may grant an exemption from is 20/20 and in his left eye, 20/200. crashes and no convictions for moving the Federal Motor Carrier Safety Following an examination in 2011, his violations in a CMV. Regulations for a 2-year period if it finds optometrist noted, ‘‘It is my opinion that ‘‘such exemption would likely achieve a Mr. Judd has sufficient vision to Terri D. Payne level of safety that is equivalent to or perform driving tasks in a commercial Ms. Payne, 43, has had amblyopia in greater than the level that would be vehicle.’’ Mr. Judd reported that he has her left eye since birth. The best achieved absent such exemption.’’ driven straight trucks for 9 years, corrected visual acuity in her right eye FMCSA can renew exemptions at the accumulating 135,000 miles. He holds is 20/20 and in her left eye, 20/70. end of each 2-year period. The twelve an operator’s license from Indiana. His Following an examination in 2011, her individuals listed in this notice have driving record for the last 3 years shows optometrist noted, ‘‘Based upon my each requested such an exemption from no crashes and no convictions for findings and medical expertise, I, W.E. the vision requirement in 49 CFR moving violations in a CMV. Robinson, Jr., hereby certify Terri D.

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Payne to be visually able to safely Lawrence D. Ventimiglia DEPARTMENT OF TRANSPORTATION operate a commercial motor vehicle.’’ Ms. Payne reported that she has driven Mr. Ventimiglia, 46, has had reduced Federal Motor Carrier Safety straight trucks for 12 years, vision in his right eye since birth. The Administration best corrected visual acuity in his right accumulating 57,600 miles. She holds a [Docket No. FMCSA–2011–0298] Class D operator’s license from eye is count-finger vision and in his left Kentucky. Her driving record for the last eye, 20/25. Following an examination in Qualification of Drivers; Exemption 3 years shows no crashes and no 2011, his optometrist noted, ‘‘I certify Applications; Vision convictions for moving violations in a that Larry has sufficient vision to CMV. perform the driving tasks required to AGENCY: Federal Motor Carrier Safety operate a commercial vehicle.’’ Mr. Administration (FMCSA), DOT. Michael C. Reese Ventimiglia reported that he has driven ACTION: Notice of final disposition. Mr. Reese, 46, has had amblyopia in straight trucks for less than 3 years, his right eye since childhood. The best accumulating about 31,200 miles. He SUMMARY: FMCSA announces its corrected visual acuity in his right eye holds a Class A CDL from Nevada. His decision to exempt seven individuals is 20/400 and in his left eye, 20/20. driving record for the last 3 years shows from the vision requirement in the Following an examination in 2011, his no crashes and no convictions in a Federal Motor Carrier Safety optometrist noted, ‘‘In my opinion, you CMV. Regulations (FMCSRs). The exemptions have sufficient vision to perform the will enable these individuals to operate driving taks required to operate a Chadwick L. Wyatt commercial motor vehicles (CMVs) in commercial vehicle.’’ Mr. Reese interstate commerce without meeting Mr. Wyatt, 34, has had a central reported that he has driven tractor- the prescribed vision requirement. The corneal scar in his left eye since trailer combinations for 15 years, Agency has concluded that granting childhood. The best corrected visual accumulating 61,500 miles. He holds a these exemptions will provide a level of acuity in his right eye is 20/20 and in Class A CDL from Georgia. His driving safety that is equivalent to or greater his left eye, 20/100. Following an record for the last 3 years shows no than the level of safety maintained examination in 2011, his optometrist crashes and no convictions for moving without the exemptions for these CMV violations in a CMV. noted, ‘‘Patient can recognize traffic drivers. control colors and has sufficient vision Mark C. Reineke to operate a commercial vehicle.’’ Mr. DATES: The exemptions are effective Wyatt reported that he has driven January 5, 2012. The exemptions expire Mr. Reineke, 60, has had macular on January 5, 2014. scarring in his left eye due to a straight trucks for 21⁄2 years, traumatic injury sustained in 1981. The accumulating 137,500 miles and tractor- FOR FURTHER INFORMATION CONTACT: best corrected visual acuity his right eye trailer combinations for 21⁄2 years, Elaine M. Papp, Chief, Medical is 20/25 and in his left eye is finger- accumulating 137,500 miles. He holds a Programs Division, (202) 366–4001, count vision. Following an examination Class A CDL from North Carolina. His [email protected], FMCSA, in 2011, his ophthalmologist noted, ‘‘I driving record for the last 3 years shows Department of Transportation, 1200 believe Mr. Reineke to have sufficient no crashes and no convictions for New Jersey Avenue SE., Room W64– vision to operate a commercial vehicle.’’ moving violations in a CMV. 224, Washington, DC 20590–0001. Mr. Reineke reported that he has Office hours are from 8:30 a.m. to 5 p.m. driven straight trucks for 6 years, Request for Comments Monday through Friday, except Federal holidays. accumulating 18,000 miles and tractor- In accordance with 49 U.S.C. 31136(e) trailer combinations for 4 years, and 31315, FMCSA requests public SUPPLEMENTARY INFORMATION: accumulating 60,000 miles. He holds a comment from all interested persons on Electronic Access Class A CDL from New Mexico. His the exemption petitions described in You may see all the comments online driving record for the last 3 years shows this notice. The Agency will consider all through the Federal Document no crashes and no convictions for comments received before the close of Management System (FDMS) at http:// moving violations in a CMV. business February 6, 2012. Comments www.regulations.gov. will be available for examination in the Robert T. Reynolds Docket: For access to the docket to docket at the location listed under the Mr. Reynolds, 51, has had retinal vein read background documents or occlusion in his right eye for the past ADDRESSES section of this notice. The comments, go to http:// five years. The best corrected visual Agency will file comments received www.regulations.gov at any time or acuity in his right eye is 20/400 and in after the comment closing date in the Room W12–140 on the ground level of his left eye, 20/20. Following an public docket, and will consider them to the West Building, 1200 New Jersey examination in 2011, his the extent practicable. Avenue SE., Washington, DC, between 9 ophthalmologist noted, ‘‘Due to the fact In addition to late comments, FMCSA a.m. and 5 p.m., Monday through your vision is stable, I believe you have will also continue to file, in the public Friday, except Federal holidays. The sufficient vision to perform you job as docket, relevant information that FDMS is available 24 hours each day, a commercial vehicle operator.’’ Mr. becomes available after the comment 365 days each year. If you want Reynolds reported that he has driven closing date. Interested persons should acknowledgment that we received your straight trucks for 23 years, monitor the public docket for new comments, please include a self- accumulating 3.4 million miles and material. addressed, stamped envelope or tractor-trailer combinations for 5 years Issued on: December 22, 2011. postcard or print the acknowledgement accumulating 1 million miles. He holds page that appears after submitting a Class D operator’s license from Ohio. Larry W. Minor, comments on-line. His driving record for the last 3 years Associate Administrator for Policy. Privacy Act: Anyone may search the shows no crashes and no convictions in [FR Doc. 2011–33788 Filed 1–4–12; 8:45 am] electronic form of all comments a CMV. BILLING CODE 4910–EX–P received into any of our dockets by the

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name of the individual submitting the conditions were not recently developed. the applicants’ vision as well as their comment (or of the person signing the Three of the applicants were either born driving records and experience with the comment, if submitted on behalf of an with their vision impairments or have vision deficiency. association, business, labor union, etc.). had them since childhood. The four To qualify for an exemption from the You may review DOT’s Privacy Act individuals sustained their vision vision requirement, FMCSA requires a Statement for the FDMS published in conditions as an adult and have had person to present verifiable evidence the Federal Register on January 17, them for a period of five to twenty seven that he/she has driven a commercial 2008 (73 FR 3316), or you may visit years. vehicle safely with the vision deficiency http://edocket.access.gpo.gov/2008/pdf/ Although each applicant has one eye for the past 3 years. Recent driving E8-785.pdf. which does not meet the vision performance is especially important in requirement in 49 CFR 391.41(b)(10), evaluating future safety, according to Background each has at least 20/40 corrected vision several research studies designed to On November 10, 2011, FMCSA in the other eye, and in a doctor’s correlate past and future driving published a notice of receipt of opinion, has sufficient vision to perform performance. Results of these studies exemption applications from certain all the tasks necessary to operate a CMV. support the principle that the best individuals, and requested comments Doctors’ opinions are supported by the predictor of future performance by a from the public (76 FR 70213). That applicants’ possession of valid driver is his/her past record of crashes notice listed seven applicants’ case commercial driver’s licenses (CDLs) or and traffic violations. Copies of the histories. The seven individuals applied non-CDLs to operate CMVs. Before studies may be found at Docket Number for exemptions from the vision issuing CDLs, States subject drivers to FMCSA–1998–3637. requirement in 49 CFR 391.41(b)(10), for knowledge and skills tests designed to We believe we can properly apply the drivers who operate CMVs in interstate evaluate their qualifications to operate a principle to monocular drivers, because commerce. CMV. data from the Federal Highway Under 49 U.S.C. 31136(e) and 31315, All of these applicants satisfied the Administration’s (FHWA) former waiver FMCSA may grant an exemption for a testing requirements for their State of study program clearly demonstrate the 2-year period if it finds ‘‘such residence. By meeting State licensing driving performance of experienced exemption would likely achieve a level requirements, the applicants monocular drivers in the program is of safety that is equivalent to or greater demonstrated their ability to operate a better than that of all CMV drivers than the level that would be achieved commercial vehicle, with their limited collectively (See 61 FR 13338, 13345, absent such exemption.’’ The statute vision, to the satisfaction of the State. March 26, 1996). The fact that also allows the Agency to renew While possessing a valid CDL or non- experienced monocular drivers exemptions at the end of the 2-year CDL, these seven drivers have been demonstrated safe driving records in the period. Accordingly, FMCSA has authorized to drive a CMV in intrastate waiver program supports a conclusion evaluated the seven applications on commerce, even though their vision that other monocular drivers, meeting their merits and made a determination disqualified them from driving in the same qualifying conditions as those to grant exemptions to each of them. interstate commerce. They have driven required by the waiver program, are also CMVs with their limited vision for likely to have adapted to their vision Vision and Driving Experience of the careers ranging from 5 to 50 years. In the deficiency and will continue to operate Applicants past 3 years, none of the drivers were safely. The vision requirement in the involved in crashes, and one was The first major research correlating FMCSRs provides: convicted of a moving violation in a past and future performance was done A person is physically qualified to CMV. in England by Greenwood and Yule in drive a commercial motor vehicle if that The qualifications, experience, and 1920. Subsequent studies, building on person has distant visual acuity of at medical condition of each applicant that model, concluded that crash rates least 20/40 (Snellen) in each eye were stated and discussed in detail in for the same individual exposed to without corrective lenses or visual the November 10, 2011 notice (76 FR certain risks for two different time acuity separately corrected to 20/40 70213). periods vary only slightly (See Bates (Snellen) or better with corrective and Neyman, University of California lenses, distant binocular acuity of a least Basis for Exemption Determination Publications in Statistics, April 1952). 20/40 (Snellen) in both eyes with or Under 49 U.S.C. 31136(e) and 31315, Other studies demonstrated theories of without corrective lenses, field of vision FMCSA may grant an exemption from predicting crash proneness from crash of at least 70° in the horizontal meridian the vision requirement in 49 CFR history coupled with other factors. in each eye, and the ability to recognize 391.41(b)(10) if the exemption is likely These factors—such as age, sex, the colors of traffic signals and devices to achieve an equivalent or greater level geographic location, mileage driven and showing requirement red, green, and of safety than would be achieved conviction history—are used every day amber (49 CFR 391.41(b)(10)). without the exemption. Without the by insurance companies and motor FMCSA recognizes that some drivers exemption, applicants will continue to vehicle bureaus to predict the do not meet the vision requirement, but be restricted to intrastate driving. With probability of an individual have adapted their driving to the exemption, applicants can drive in experiencing future crashes (See Weber, accommodate their vision limitation interstate commerce. Thus, our analysis Donald C., ‘‘Accident Rate Potential: An and demonstrated their ability to drive focuses on whether an equal or greater Application of Multiple Regression safely. The seven exemption applicants level of safety is likely to be achieved by Analysis of a Poisson Process,’’ Journal listed in this notice are in this category. permitting each of these drivers to drive of American Statistical Association, They are unable to meet the vision in interstate commerce as opposed to June 1971). A 1964 California Driver requirement in one eye for various restricting him or her to driving in Record Study prepared by the California reasons, including retinopathy, intrastate commerce. Department of Motor Vehicles prosthesis, central scaring, amblyopia, To evaluate the effect of these concluded that the best overall crash melanoma and completely detached exemptions on safety, FMCSA predictor for both concurrent and retina. In most cases, their eye considered the medical reports about nonconcurrent events is the number of

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single convictions. This study used 3 Those requirements are found at 49 DEPARTMENT OF TRANSPORTATION consecutive years of data, comparing the CFR 391.64(b) and include the experiences of drivers in the first 2 years following: Federal Motor Carrier Safety Administration with their experiences in the final year. (1) That each individual be physically Applying principles from these [Docket No. FMCSA–2009–0303] studies to the past 3-year record of the examined every year (a) by an seven applicants, none of the applicants ophthalmologist or optometrist who attests that the vision in the better eye Qualification of Drivers; Exemption were involved in crashes, and one was Applications; Vision convicted of a moving violation in a continues to meet the requirement in 49 CMV; failure to stop at a traffic signal. CFR 391.41(b)(10), and (b) by a medical AGENCY: Federal Motor Carrier Safety All the applicants achieved a record of examiner who attests that the individual Administration (FMCSA), DOT. safety while driving with their vision is otherwise physically qualified under ACTION: Notice of renewal of impairment, demonstrating the 49 CFR 391.41; (2) that each individual exemptions; request for comments. likelihood that they have adapted their provide a copy of the ophthalmologist’s driving skills to accommodate their or optometrist’s report to the medical SUMMARY: FMCSA announces its condition. As the applicants’ ample examiner at the time of the annual decision to renew the exemptions from driving histories with their vision medical examination; and (3) that each the vision requirement in the Federal deficiencies are good predictors of individual provide a copy of the annual Motor Carrier Safety Regulations for 17 future performance, FMCSA concludes medical certification to the employer for individuals. FMCSA has statutory their ability to drive safely can be retention in the driver’s qualification authority to exempt individuals from projected into the future. file, or keep a copy in his/her driver’s the vision requirement if the We believe that the applicants’ qualification file if he/she is self- exemptions granted will not intrastate driving experience and history compromise safety. The Agency has employed. The driver must also have a provide an adequate basis for predicting concluded that granting these copy of the certification when driving, their ability to drive safely in interstate exemption renewals will provide a level commerce. Intrastate driving, like for presentation to a duly authorized of safety that is equivalent to or greater interstate operations, involves Federal, State, or local enforcement than the level of safety maintained substantial driving on highways on the official. without the exemptions for these interstate system and on other roads Discussion of Comments commercial motor vehicle (CMV) built to interstate standards. Moreover, drivers. driving in congested urban areas FMCSA received no comments in this DATES: This decision is effective January exposes the driver to more pedestrian proceeding. 28, 2012. Comments must be received and vehicular traffic than exists on on or before February 6, 2012. interstate highways. Faster reaction to Conclusion ADDRESSES: You may submit comments traffic and traffic signals is generally Based upon its evaluation of the seven required because distances between bearing the Federal Docket Management exemption applications, FMCSA them are more compact. These System (FDMS) numbers: FMCSA– exempts Adam O. Carson (MS), Michael conditions tax visual capacity and 2009–0303, using any of the following driver response just as intensely as P. Eisenreich (MN), Carlton G. Frank methods: • interstate driving conditions. The (FL), Roger W. Hammock (AL), John T. Federal eRulemaking Portal: Go to veteran drivers in this proceeding have Thor (MN), George Ulferts (IA) and http://www.regulations.gov. Follow the operated CMVs safely under those Donald F. Wilton (CA) from the vision on-line instructions for submitting conditions for at least 3 years, most for requirement in 49 CFR 391.41(b)(10), comments. • much longer. Their experience and subject to the requirements cited above Mail: Docket Management Facility; driving records lead us to believe that (49 CFR 391.64(b)). U.S. Department of Transportation, 1200 each applicant is capable of operating in In accordance with 49 U.S.C. 31136(e) New Jersey Avenue SE., West Building Ground Floor, Room W12–140, interstate commerce as safely as he/she and 31315, each exemption will be valid Washington, DC 20590–0001. has been performing in intrastate for 2 years unless revoked earlier by • Hand Delivery or Courier: West commerce. Consequently, FMCSA finds FMCSA. The exemption will be revoked Building Ground Floor, Room W12–140, that exempting these applicants from if: (1) The person fails to comply with the vision requirement in 49 CFR 1200 New Jersey Avenue SE., the terms and conditions of the 391.41(b)(10) is likely to achieve a level Washington, DC, between 9 a.m. and exemption; (2) the exemption has of safety equal to that existing without 5 p.m., Monday through Friday, except the exemption. For this reason, the resulted in a lower level of safety than Federal holidays. Agency is granting the exemptions for was maintained before it was granted; or • Fax: 1–(202) 493–2251. the 2-year period allowed by 49 U.S.C. (3) continuation of the exemption would Instructions: Each submission must 31136(e) and 31315 to the seven not be consistent with the goals and include the Agency name and the applicants listed in the notice of objectives of 49 U.S.C. 31136 and 31315. docket number for this notice. Note that November 10, 2011 (76 FR 70213). If the exemption is still effective at the DOT posts all comments received We recognize that the vision of an end of the 2-year period, the person may without change to http:// applicant may change and affect his/her apply to FMCSA for a renewal under www.regulations.gov, including any ability to operate a CMV as safely as in procedures in effect at that time. personal information included in a the past. As a condition of the comment. Please see the Privacy Act exemption, therefore, FMCSA will Issued on: December 22, 2011. heading below. impose requirements on the seven Larry W. Minor, Docket: For access to the docket to individuals consistent with the Associate Administrator for Policy. read background documents or grandfathering provisions applied to [FR Doc. 2011–33787 Filed 1–4–12; 8:45 am] comments, go to http:// drivers who participated in the BILLING CODE 4910–EX–P www.regulations.gov at any time or Agency’s vision waiver program. Room W12–140 on the ground level of

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the West Building, 1200 New Jersey Donald E. Halvorson (NM) requirements. These factors provide an Avenue SE., Washington, DC, between Gerald Harrison (FL) adequate basis for predicting each 9 a.m. and 5 p.m., Monday through Roger D. Kool (IA) driver’s ability to continue to drive Friday, except Federal holidays. The Phillip J.C. Locke (CO) safely in interstate commerce. Federal Docket Management System Rashawn L. Morris (VA) Therefore, FMCSA concludes that (FDMS) is available 24 hours each day, Brian T. Nelson (MN) extending the exemption for each James C. New (MS) renewal applicant for a period of two 365 days each year. If you want Christopher M. Rivera (NM) acknowledgment that we received your Richard S. Robb (NM) years is likely to achieve a level of safety comments, please include a self- Robert E. Whitney (IL) equal to that existing without the addressed, stamped envelope or James M. Wood (NC) exemption. postcard or print the acknowledgement The exemptions are extended subject Request for Comments page that appears after submitting to the following conditions: (1) That comments on-line. each individual has a physical FMCSA will review comments Privacy Act: Anyone may search the examination every year (a) by an received at any time concerning a electronic form of all comments ophthalmologist or optometrist who particular driver’s safety record and received into any of our dockets by the attests that the vision in the better eye determine if the continuation of the name of the individual submitting the continues to meet the requirements in exemption is consistent with the comment (or of the person signing the 49 CFR 391.41(b)(10), and (b) by a requirements at 49 U.S.C. 31136(e) and comment, if submitted on behalf of an medical examiner who attests that the 31315. However, FMCSA requests that association, business, labor union, etc.). individual is otherwise physically interested parties with specific data You may review DOT’s Privacy Act qualified under 49 CFR 391.41; (2) that concerning the safety records of these Statement for the FDMS published in each individual provides a copy of the drivers submit comments by February 6, the Federal Register on January 17, ophthalmologist’s or optometrist’s 2012. 2008 (73 FR 3316), or you may visit report to the medical examiner at the FMCSA believes that the http://edocket.access.gpo.gov/2008/pdf/ time of the annual medical examination; requirements for a renewal of an E8-785.pdf. and (3) that each individual provide a exemption under 49 U.S.C. 31136(e) and FOR FURTHER INFORMATION CONTACT: copy of the annual medical certification 31315 can be satisfied by initially Elaine M. Papp, Chief, Medical to the employer for retention in the granting the renewal and then Programs Divison, (202) 366–4001, driver’s qualification file and retains a requesting and evaluating, if needed, [email protected], FMCSA, copy of the certification on his/her subsequent comments submitted by Department of Transportation, 1200 person while driving for presentation to interested parties. As indicated above, New Jersey Avenue SE., Room W64– a duly authorized Federal, State, or local the Agency previously published 224, Washington, DC 20590–0001. enforcement official. Each exemption notices of final disposition announcing Office hours are from 8:30 a.m. to 5 p.m. will be valid for two years unless its decision to exempt these 17 Monday through Friday, except Federal rescinded earlier by FMCSA. The individuals from the vision requirement holidays. exemption will be rescinded if: (1) The in 49 CFR 391.41(b)(10). The final SUPPLEMENTARY INFORMATION: person fails to comply with the terms decision to grant an exemption to each and conditions of the exemption; (2) the of these individuals was made on the Background exemption has resulted in a lower level merits of each case and made only after Under 49 U.S.C. 31136(e) and 31315, of safety than was maintained before it careful consideration of the comments FMCSA may renew an exemption from was granted; or (3) continuation of the received to its notices of applications. the vision requirements in 49 CFR exemption would not be consistent with The notices of applications stated in 391.41(b)(10), which applies to drivers the goals and objectives of 49 U.S.C. detail the qualifications, experience, of CMVs in interstate commerce, for a 31136(e) and 31315. and medical condition of each applicant two-year period if it finds ‘‘such for an exemption from the vision exemption would likely achieve a level Basis for Renewing Exemptions requirements. That information is of safety that is equivalent to or greater Under 49 U.S.C. 31315(b)(1), an available by consulting the above cited than the level that would be achieved exemption may be granted for no longer Federal Register publications. absent such exemption.’’ The than two years from its approval date Interested parties or organizations procedures for requesting an exemption and may be renewed upon application possessing information that would (including renewals) are set out in for additional two year periods. In otherwise show that any, or all, of these 49 CFR part 381. accordance with 49 U.S.C. 31136(e) and drivers are not currently achieving the 31315, each of the 17 applicants has Exemption Decision statutory level of safety should satisfied the entry conditions for immediately notify FMCSA. The This notice addresses 17 individuals obtaining an exemption from the vision Agency will evaluate any adverse who have requested renewal of their requirements (74 FR 60022; 75 FR evidence submitted and, if safety is exemptions in accordance with FMCSA 4623). Each of these 17 applicants has being compromised or if continuation of procedures. FMCSA has evaluated these requested renewal of the exemption and the exemption would not be consistent 17 applications for renewal on their has submitted evidence showing that with the goals and objectives of merits and decided to extend each the vision in the better eye continues to 49 U.S.C. 31136(e) and 31315, FMCSA exemption for a renewable two-year meet the requirement specified at will take immediate steps to revoke the period. They are: 49 CFR 391.41(b)(10) and that the vision exemption of a driver. Teddy S. Bioni (PA) impairment is stable. In addition, a John K. Butler (CT) review of each record of safety while Issued on: December 22, 2011. James J. Coffield (NM) driving with the respective vision Larry W. Minor, Roy E. Crayne (WA) deficiencies over the past two years Associate Administrator for Policy. Ralph G. Debardi (WV) indicates each applicant continues to [FR Doc. 2011–33785 Filed 1–4–12; 8:45 am] James A. DuBay (MI) meet the vision exemption BILLING CODE 4910–EX–P

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DEPARTMENT OF TRANSPORTATION personal information included in a exemption for a renewable two-year comment. Please see the Privacy Act period. They are: Federal Motor Carrier Safety heading below. Donald J. Bierwith, Jr. (CT) Administration Docket: For access to the docket to Arthur L. Bousema (CA) [Docket No. FMCSA–2000–7918; FMCSA– read background documents or Norman E. Braden (CO) 2001–10578; FMCSA–2003–15268; FMCSA– comments, go to http:// Theodore W. Cozat (MI) 2003–15892; FMCSA–2005–21711; FMCSA– www.regulations.gov at any time or Matthew W. Daggs (MO) 2005–22194; FMCSA–2005–22727; FMCSA– Room W12–140 on the ground level of Donald R. Date, Jr. (MD) 2006–25246; FMCSA–2007–0017] the West Building, 1200 New Jersey Gordon R. Fritz (WI) Avenue SE., Washington, DC, between Ronald K. Fultz (KY) Qualification of Drivers; Exemption 9 a.m. and 5 p.m., Monday through John E. Kimmet, Jr. (WA) Applications; Vision Friday, except Federal holidays. The Robert S. Larrance (TN) AGENCY: Federal Motor Carrier Safety Federal Docket Management System Robert C. Leathers (MO) Administration (FMCSA), DOT. (FDMS) is available 24 hours each day, Jason L. Light (WA) ACTION: Notice of renewal of 365 days each year. If you want Donald R. McCracken (OR) exemptions; request for comments. acknowledgment that we received your Kenneth R. Murphy (WA) comments, please include a self- Michael J. Richard (LA) SUMMARY: FMCSA announces its addressed, stamped envelope or Robert E. Sanders (LA) decision to renew the exemptions from postcard or print the acknowledgement Robert A. Sherry (PA) the vision requirement in the Federal page that appears after submitting Stephen G. Sniffin (CT) Motor Carrier Safety Regulations for 19 comments on-line. John R. Snyder (WA) individuals. FMCSA has statutory Privacy Act: Anyone may search the The exemptions are extended subject authority to exempt individuals from electronic form of all comments to the following conditions: (1) That the vision requirement if the received into any of our dockets by the each individual has a physical exemptions granted will not name of the individual submitting the examination every year (a) by an compromise safety. The Agency has comment (or of the person signing the ophthalmologist or optometrist who concluded that granting these comment, if submitted on behalf of an attests that the vision in the better eye exemption renewals will provide a level association, business, labor union, etc.). continues to meet the requirements in of safety that is equivalent to or greater You may review DOT’s Privacy Act 49 CFR 391.41(b)(10), and (b) by a than the level of safety maintained Statement for the FDMS published in medical examiner who attests that the without the exemptions for these the Federal Register on January 17, individual is otherwise physically commercial motor vehicle (CMV) 2008 (73 FR 3316), or you may visit qualified under 49 CFR 391.41; (2) that drivers. http://edocket.access.gpo.gov/2008/pdf/ each individual provides a copy of the DATES: This decision is effective January E8-785.pdf. ophthalmologist’s or optometrist’s 27, 2012. Comments must be received FOR FURTHER INFORMATION CONTACT: report to the medical examiner at the on or before February 6, 2012. Elaine M. Papp, Chief, Medical time of the annual medical examination; ADDRESSES: You may submit comments Programs Divison, (202) 366–4001, and (3) that each individual provide a bearing the Federal Docket Management [email protected], FMCSA, copy of the annual medical certification System (FDMS) numbers: FMCSA– Department of Transportation, 1200 to the employer for retention in the 2000–7918; FMCSA–2001–10578; New Jersey Avenue SE., Room W64– driver’s qualification file and retains a FMCSA–2003–15268; FMCSA–2003– 224, Washington, DC 20590–0001. copy of the certification on his/her 15892; FMCSA–2005–21711; FMCSA– Office hours are from 8:30 a.m. to 5 p.m. person while driving for presentation to 2005–22194; FMCSA–2005–22727; Monday through Friday, except Federal a duly authorized Federal, State, or local FMCSA–2006–25246; FMCSA–2007– holidays. enforcement official. Each exemption 0017, using any of the following SUPPLEMENTARY INFORMATION: will be valid for two years unless rescinded earlier by FMCSA. The methods: Background • Federal eRulemaking Portal: Go to exemption will be rescinded if: (1) The http://www.regulations.gov. Follow the Under 49 U.S.C. 31136(e) and 31315, person fails to comply with the terms on-line instructions for submitting FMCSA may renew an exemption from and conditions of the exemption; (2) the comments. the vision requirements in 49 CFR exemption has resulted in a lower level • Mail: Docket Management Facility; 391.41(b)(10), which applies to drivers of safety than was maintained before it U.S. Department of Transportation, 1200 of CMVs in interstate commerce, for a was granted; or (3) continuation of the New Jersey Avenue SE., West Building two-year period if it finds ‘‘such exemption would not be consistent with Ground Floor, Room W12–140, exemption would likely achieve a level the goals and objectives of 49 U.S.C. Washington, DC 20590–0001. of safety that is equivalent to or greater 31136(e) and 31315. • Hand Delivery or Courier: West than the level that would be achieved Basis for Renewing Exemptions Building Ground Floor, Room W12–140, absent such exemption.’’ The 1200 New Jersey Avenue SE., procedures for requesting an exemption Under 49 U.S.C. 31315(b)(1), an Washington, DC, between 9 a.m. and (including renewals) are set out in 49 exemption may be granted for no longer 5 p.m., Monday through Friday, except CFR part 381. than two years from its approval date Federal holidays. and may be renewed upon application Exemption Decision • Fax: 1–(202) 493–2251. for additional two year periods. In Instructions: Each submission must This notice addresses 19 individuals accordance with 49 U.S.C. 31136(e) and include the Agency name and the who have requested renewal of their 31315, each of the 19 applicants has docket number for this notice. Note that exemptions in accordance with FMCSA satisfied the entry conditions for DOT posts all comments received procedures. FMCSA has evaluated these obtaining an exemption from the vision without change to http:// 19 applications for renewal on their requirements (65 FR 66286; 66 FR www.regulations.gov, including any merits and decided to extend each 13825; 66 FR 53826; 66 FR 66966; 68 FR

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10300; 68 FR 37197; 68 FR 48989; 68 FR careful consideration of the comments FOR FURTHER INFORMATION CONTACT: Mr. 52811; 68 FR 61860; 68 FR 69434; 70 FR received to its notices of applications. Ronald Ries, Office of Railroad Safety, 41811; 70 FR 48797; 70 FR 57353; 70 FR The notices of applications stated in FRA, 1200 New Jersey Avenue SE., 61165; 70 FR 61493; 70 FR 71884; 70 FR detail the qualifications, experience, Washington, DC 20590, (202) 493–6299, 72689; 71 FR 646; 71 FR 4632; 72 FR and medical condition of each applicant or [email protected]; or Kathryn 180; 72 FR 9397; 72 FR 52422; 72 FR for an exemption from the vision Shelton, Office of Chief Counsel, FRA, 58359; 72 FR 62897; 72 FR 67340; 72 FR requirements. That information is 1200 New Jersey Avenue SE., 71995; 73 FR 5259; 74 FR 34394; 74 FR available by consulting the above cited Washington, DC 20590, (202) 493–6038, 60021; 74 FR 65845; 74 FR 64124; 75 FR Federal Register publications. or [email protected]. 1451). Each of these 19 applicants has Interested parties or organizations SUPPLEMENTARY INFORMATION: requested renewal of the exemption and possessing information that would has submitted evidence showing that otherwise show that any, or all, of these Background the vision in the better eye continues to drivers are not currently achieving the The NSRT is an average of the risk meet the requirement specified at 49 statutory level of safety should indexes for gated public crossings CFR 391.41(b)(10) and that the vision immediately notify FMCSA. The nationwide where train horns are impairment is stable. In addition, a Agency will evaluate any adverse routinely sounded. FRA developed this review of each record of safety while evidence submitted and, if safety is risk index to serve as one threshold of driving with the respective vision being compromised or if continuation of permissible risk for quiet zones deficiencies over the past two years the exemption would not be consistent established under this rule across the indicates each applicant continues to with the goals and objectives of 49 nation. Thus, a community that is trying meet the vision exemption U.S.C. 31136(e) and 31315, FMCSA will to establish and/or maintain its quiet requirements. These factors provide an take immediate steps to revoke the zone, pursuant to 49 CFR Part 222, can adequate basis for predicting each exemption of a driver. compare the Quiet Zone Risk Index driver’s ability to continue to drive Issued on: December 27, 2011. calculated for its specific crossing safely in interstate commerce. Larry W. Minor, corridor to the NSRT to determine Therefore, FMCSA concludes that Associate Administrator for Policy. whether sufficient measures have been extending the exemption for each taken to compensate for the excess risk [FR Doc. 2011–33783 Filed 1–4–12; 8:45 am] renewal applicant for a period of two that results from prohibiting routine years is likely to achieve a level of safety BILLING CODE 4910–EX–P sounding of the locomotive horn. (In the equal to that existing without the alternative, a community can establish exemption. DEPARTMENT OF TRANSPORTATION its quiet zone in comparison to the Risk Request for Comments Index With Horns, which is a corridor- Federal Railroad Administration specific measure of risk to the motoring FMCSA will review comments public when locomotive horns are received at any time concerning a [Docket No. FRA–1999–6439, Notice No. 23] routinely sounded at every public particular driver’s safety record and highway-rail grade crossing within the determine if the continuation of the Adjustment of Nationwide Significant quiet zone.) exemption is consistent with the Risk Threshold In 2006, when the final rule titled, requirements at 49 U.S.C. 31136(e) and ‘‘Use of Locomotive Horns at Highway- 31315. However, FMCSA requests that AGENCY: Federal Railroad Rail Grade Crossings,’’ was amended, interested parties with specific data Administration (FRA), Department of the NSRT was 17,030 (71 FR 47614, concerning the safety records of these Transportation (DOT). August 17, 2006). In 2007, FRA drivers submit comments by February 6, ACTION: Notice of adjustment of recalculated the NSRT to be 19,047 (72 2012. nationwide significant risk threshold. FR 14850, March 29, 2007). In 2008, FMCSA believes that the FRA recalculated the NSRT to be 17,610 requirements for a renewal of an SUMMARY: In accordance with Appendix (73 FR 30661, May 28, 2008). In 2009, exemption under 49 U.S.C. 31136(e) and D to Title 49 Code of Federal FRA recalculated the NSRT to be 18,775 31315 can be satisfied by initially Regulations (CFR) Part 222, Use of (74 FR 45270, September 1, 2009). In granting the renewal and then Locomotive Horns at Highway-Rail 2010, FRA recalculated the NSRT to be requesting and evaluating, if needed, Grade Crossings, FRA is updating the 14,007 (75 FR 82136, December 29, subsequent comments submitted by Nationwide Significant Risk Threshold 2010). interested parties. As indicated above, (NSRT). This action is needed to ensure New NSRT the Agency previously published that the public has the proper threshold notices of final disposition announcing of permissible risk for calculating quiet Using collision data from 2006 to its decision to exempt these 19 zones established in relationship to the 2010, FRA has recalculated the NSRT individuals from the vision requirement NSRT. This is the fifth update to the based on formulas identified in in 49 CFR 391.41(b)(10). The final NSRT, which has fallen from 14,007 to Appendix D to 49 CFR part 222. In decision to grant an exemption to each 13,722. making this recalculation, FRA noted of these individuals was made on the DATES: The effective date is January 5, that the total number of gated, non- merits of each case and made only after 2012. whistle-ban crossings was 42,150.

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Applying the fatality rate and injury activities for public transportation and for the operational expenses of rate to the probable number of fatalities services on and around Indian existing transit services. and casualties predicted to occur at each reservations. Project Implementation: Grantees of the 42,150 identified crossings and FOR FURTHER INFORMATION CONTACT: selected for competitive discretionary the predicted cost of the associated Successful and unsuccessful applicants funding should work with their FTA injuries and fatalities, FRA calculates should contact the appropriate FTA regional office to finalize the grant the NSRT to be 13,722. Regional office (Appendix A) for application in FTA’s Transportation Issued in Washington, DC, on December information regarding applying for the Electronic Awards Management System 29, 2011. funds or program specific information. (TEAM) for the projects identified in Robert C. Lauby, In the event the contact information Table I so that funds can be obligated Acting Associate Administrator for Railroad provided by your tribe in the expeditiously. FTA funds may only be Safety/Chief Safety Officer. application has changed, please contact used for eligible purposes defined under [FR Doc. 2011–33782 Filed 1–4–12; 8:45 am] your tribal liaison with the current 49 U.S.C 5311 and described in FTA BILLING CODE 4910–06–P information in order to expedite the Circular 9040.1F. In cases where the grant award process. For general allocation amount is less than the program information, contact Lorna R. proposer’s requested amount, grantees DEPARTMENT OF TRANSPORTATION Wilson, Office of Transit Programs, at should work with their regional office to (202) 366–0893, email: reduce scope or scale the project such Federal Transit Administration [email protected]. A TDD is that a completed phase or project is Fiscal Year 2011 Public Transportation available at 1–(800) 877–8339 (TDD/ accomplished. A discretionary project on Indian Reservations Program FIRS). identification number has been assigned to each project for tracking purposes Project Selections SUPPLEMENTARY INFORMATION: A total of and must be used in the TEAM $15.075 million is available for the FY AGENCY: Federal Transit Administration, application. The post-award reporting 2011 Tribal Transit program. A total of DOT. requirements include submission of the 116 applicants requested $41.587 ACTION: Tribal Transit Program Federal Financial Report (FFR) and million, indicating significant demand announcement of project selections. Milestone Report in TEAM as for funds for new transit services, appropriate (see FTA Circular 9040. IF). SUMMARY: The U.S. Department of enhancement or expansion of existing Transportation’s (DOT) Federal Transit transit services, and planning studies The grantee must comply with all Administration (FTA) announces the including operational planning. Project applicable Federal statutes, regulations, selection of projects funded with proposals were evaluated based on each executive orders, FTA circulars, and Section 5311 (c), Public Transportation applicant’s responsiveness to the other Federal requirements in carrying on Indian Reservations program funds program evaluation criteria outlined in out the project supported by the FTA in support of the Tribal Transit Program. FTA’s, July 25, 2011 NOFA. FTA also grant. Funds allocated in this Funding was announced in the Tribal took into consideration the current announcement must be obligated in a Transit Program (TTP) Notice of status of previously funded applicants. grant by September 30, 2014. Funding Availability on July 25, 2011. A total of 67 applications have been Issued in Washington, DC, this 29th day of The TTP makes funds available to selected for funding. The projects December, 2011. federally recognized Indian Tribes or selected as shown in Table 1 will Peter M. Rogoff, Alaska Native villages, groups, or provide funding for transit planning Administrator. communities in support of capital studies/and or operational planning, projects, operating costs, and planning startup projects for new transit service, Appendix A

FTA REGIONAL AND METROPOLITAN OFFICES

Mary Beth Mello, Regional Administrator, Region 1–Boston, Kendall Robert C. Patrick, Regional Administrator, Region 6–Ft. Worth, 819 Square, 55 Broadway, Suite 920, Cambridge, MA 02142–1093, Tel. Taylor Street, Room 8A36, Ft. Worth, TX 76102, Tel. (817) 978– (617) 494–2055. 0550. Regional Tribal Liaisons: Laurie Ansaldi and Judi Molloy. Regional Tribal Liaison: Lynn Hayes. States served: Connecticut, Maine, Massachusetts, New Hampshire, States served: Arkansas, Louisiana, Oklahoma, New Mexico and Rhode Island, and Vermont. Texas. Anthony Carr, Acting Regional Administrator, Region 2–New York, One Mokhtee Ahmad, Regional Administrator, Region 7–Kansas City, MO, Bowling Green, Room 429, New York, NY 10004–1415, Tel. (212) 901 Locust Street, Room 404, Kansas City, MO 64106, Tel. (816) 668–2170, Regional Tribal Liaison: Darin Allan. 329–3920. States served: New Jersey, New York. Regional Tribal Liaisons: Joni Roeseler and Cathy Monroe. New York Metropolitan Office, Region 2–New York, One Bowling States served: Iowa, Kansas, Missouri, and Nebraska. Green, Room 428, New York, NY 10004–1415, Tel. (212) 668–2202.

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FTA REGIONAL AND METROPOLITAN OFFICES—Continued Brigid Hynes-Cherin, Regional Administrator, Region 3–Philadelphia, Terry Rosapep, Regional Administrator, Region 8–Denver, 12300 West 1760 Market Street, Suite 500, Philadelphia, PA 19103–4124, Tel. Dakota Ave., Suite 310, Lakewood, CO 80228–2583, Tel. (720) 963– (215) 656–7100. 3300. States served: Delaware, Maryland, Pennsylvania, Virginia, West Vir- Regional Tribal Liaisons: Jennifer Stewart and David Beckhouse. ginia, and District of Columbia. Washington, D.C. Metropolitan Office, 1990 K Street, NW., Room 510, States served: Colorado, Montana, North Dakota, South Dakota, Utah, Washington, DC 20006, Tel. (202) 219–3562. and Wyoming. Yvette Taylor, Regional Administrator, Region 4–Atlanta, 230 Peach- Leslie T. Rogers, Regional Administrator, Region 9–San Francisco, tree Street, NW Suite 800, Atlanta, GA 30303, Tel. (404) 865–5600. 201 Mission Street, Room 1650, San Francisco, CA 94105–1926, Tel. (415) 744–3133. Regional Tribal Liaison: Tajsha LaShore Regional Tribal Liaison: Eric Eidlin. States served: Alabama, Florida, Georgia, Kentucky, Mississippi, North States served: American Samoa, Arizona, California, Guam, Hawaii, Carolina, Puerto Rico, South Carolina, Tennessee, and Virgin Is- Nevada, and the Northern Mariana Islands. lands. Los Angeles Metropolitan Office, Region 9–Los Angeles, 888 S. Figueroa Street, Suite 1850, Los Angeles, CA 90017–1850, Tel. (213) 202–3952. Marisol Simon, Regional Administrator, Region 5–Chicago, 200 West Rick Krochalis, Regional Administrator, Region 10–Seattle, Jackson Adams Street, Suite 320, Chicago, IL 60606, Tel. (312) 353–2789. Federal Building, 915 Second Avenue, Suite 3142, Seattle, WA 98174–1002, Tel. (206) 220–7954. Regional Tribal Liaisons: Joyce Taylor and Angelica Salgado Regional Tribal Liaison: Bill Ramos. States served: Illinois, Indiana, Michigan, Minnesota, Ohio, and Wis- States served: Alaska, Idaho, Oregon, and Washington. consin. Chicago Metropolitan Office, Region 5–Chicago, 200 West Adams Street, Suite 320, Chicago, IL 60606, Tel. (312) 353–2789.

BILLING CODE 4910–57–P

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[FR Doc. 2011–33780 Filed 1–4–12; 8:45 am] United States Department of the 20228, by phone at (202) 874–5915, or BILLING CODE 4910–57–C Treasury, Bureau of Engraving and by email at [email protected]. Printing (BEP) gives notice of alterations SUPPLEMENTARY INFORMATION: On June to its Privacy Act system of records 29, 2009, the Bureau of Engraving and DEPARTMENT OF TRANSPORTATION entitled ‘‘Treasury/BEP .027—Access Printing, a bureau within the United Control and Alarm Monitoring Systems States Department of the Treasury, Surface Transportation Board (ACAMS).’’ published its inventory of Privacy Act Release of Waybill Data DATES: Comments must be received no systems of records at 74 FR 31090. later than February 6, 2012. The Included within that inventory was a The Surface Transportation Board has proposed alterations to the system of system of records entitled ‘‘Treasury/ received a request from Neville Peterson records will become February 9, 2012 BEP .027—Access Control and Alarm LLP on behalf of Trinity Industries, Inc. unless the BEP receives comments that Monitoring Systems (ACAMS).’’ BEP (WB605–8–12/20/11) for permission to would result in a contrary proposes to amend that system of use certain data from the Board’s 2009 determination. records by adding language under the ‘‘categories of records in the system’’ Carload Waybill Sample. A copy of this ADDRESSES: Comments should be sent to request may be obtained from the Office Office of the Chief Counsel, United and ‘‘retention and disposal’’ sections. Under the existing system of records, of Economics. States Department of the Treasury, The waybill sample contains the following information is maintained Bureau of Engraving and Printing, 14th confidential railroad and shipper data; concerning individuals issued ‘‘Escort and C Streets SW., Washington, DC therefore, if any parties object to these Visitor’’ badges (including official 20228, Room 419–A, Attention: requests, they should file their visitors and contractors who are allowed Revisions to PA Systems of Records. objections with the Director of the to move within a BEP facility only with Comments can be faxed to (202) 874– Board’s Office of Economics within 14 an escort): full name; date of issue; and 5710, or emailed to calendar days of the date of this notice. date, time, and location of each passage [email protected]. For emails, The rules for release of waybill data are through a security control point. please place ‘‘Revisions to SOR’’ in the codified at 49 CFR 1244.9. BEP is incorporating scanning subject line. Comments will be made Contact: Scott Decker, (202) 245– technology in its facilities to allow for available for public inspection upon 0330. a visitor’s identification (e.g., driver’s written request. The BEP will make license or passport) to be scanned, and Jeffrey Herzig, such comments available for public for the information contained on that Clearance Clerk. inspection and copying at the above- piece of identification to be used in [FR Doc. 2011–33820 Filed 1–4–12; 8:45 am] listed location, on official business days generating an Escort Visitor badge. This between the hours of 9 a.m. and 5 p.m. BILLING CODE 4915–01–P will speed the process by which a Eastern time. Persons wishing to inspect visitor’s information is entered into an the comments submitted must request Escort Visitor badge. It will also allow DEPARTMENT OF THE TREASURY an appointment by telephoning (202) BEP to maintain a photograph of a 874–5915. All comments received, visitor that is issued an Escort Visitor Bureau of Engraving and Printing including attachments and other badge. This amendment will help BEP supporting materials, are part of the make full use of its scanning technology Privacy Act of 1974; Amended System public record and subject to public in processing Escort Visitor badges and of Records disclosure. You should submit only further ensure the security of BEP information that you wish to make AGENCY: Bureau of Engraving and facilities by capturing photographs. available publicly. Printing, Treasury. BEP is amending the ‘‘categories of ACTION: Notice of proposed alteration to FOR FURTHER INFORMATION CONTACT: Keir records in the system’’ by including in a system of records. X. Bancroft, Privacy Officer, United the information maintained for visitors States Department of the Treasury, issued Escort Visitor badges all data SUMMARY: In accordance with the Bureau of Engraving and Printing, 14th contained on their personal Privacy Act of 1974, as amended, the and C Streets SW., Washington, DC identification, such as photograph, date

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of birth, home address, driver’s license identification card presented when ADDRESSES: Written comments should number, and passport number. seeking an Escort Visitor badge is be submitted to: Regulatory Policy and BEP is also amending the ‘‘retention maintained in the BEP ACAMS.’’ Programs Division, Financial Crimes and disposal’’ parameters set forth in * * * * * Enforcement Network, Department of this system by detailing that data the Treasury, P.O. Box 39, Vienna, scanned from personal identification RETENTION AND DISPOSAL: Virginia 22183, Attention: PRA other than full name and photograph are Description of the change: Remove Comments—SAR–Securities and disposed of immediately upon current entry and in its place add the Futures Industry. Comments also may collection. The only data on an following: be submitted by electronic mail to the identification card that BEP uses for ‘‘The retention period is two (2) years, following Internet address: developing an Escort Visitor badge are except that for official visitors, [email protected], again the name and photograph of the visitor. contractors, and others issued ‘‘Escort with a caption, in the body of the text, BEP’s scanning hardware collects that Visitor’’ badges, information other than ‘‘Attention: PRA Comments—SAR– data and digitizes them for use in name and photograph scanned from Securities and Futures Industry.’’ ACAMS. The scanning hardware, identification cards is disposed of Inspection of comments. Comments however, also collects all of the other immediately upon collection.’’ may be inspected, between 10 a.m. and data on the identification card. That is * * * * * 4 p.m., in the FinCEN reading room in because the entire card is scanned, not Vienna, VA. Persons wishing to inspect just certain portions of the card. Dated: December 22, 2011. the comments submitted must request Depending on the type of card, the other Melissa Hartman, an appointment with the Disclosure data collected from the identification Deputy Assistant Secretary for Privacy, Officer by telephoning (703) 905–5034 card may include date of birth, home Transparency, and Records. (Not a toll free call). address, driver’s license number, and [FR Doc. 2011–33816 Filed 1–4–12; 8:45 am] FOR FURTHER INFORMATION CONTACT: The passport number. ACAMS only retains BILLING CODE 4810–39–P FinCEN Regulatory Helpline at (800) the name and photograph of a visitor 949–2732, select option 3. from an identification card. The SUPPLEMENTARY INFORMATION: DEPARTMENT OF THE TREASURY scanning hardware immediately deletes Title: Suspicious Activity Reporting any remaining data. The update to the Financial Crimes Enforcement Network by the Securities and Futures Industry, retention and disposal parameters 31 CFR 1026.320, and 31 CFR 1023.320. reflects BEP’s ability to use its electronic Proposed Collection; Comment OMB Number: 1506–0019. scanning technology to instantaneously Request; Renewal of Suspicious Form Number: FinCEN Form 111 delete information that is not necessary Activity Reporting by the Securities (BSA–SAR) 3. when creating an Escort Visitor badge. and Futures Industry Abstract: The statute generally The altered system of records report referred to as the ‘‘Bank Secrecy Act,’’ has been submitted to the Committee on AGENCY: Financial Crimes Enforcement Titles I and II of Public Law 91–508, as Oversight and Government Reform of Network (‘‘FinCEN’’), Treasury. amended, codified at 12 U.S.C. 1829b, the House of Representatives, the ACTION: Notice and request for 12 U.S.C. 1951–1959, and 31 U.S.C. Committee on Homeland Security and comments. 5311–5332, authorizes the Secretary of Governmental Affairs of the Senate and the Treasury, inter alia, to require the Office of Management and Budget, SUMMARY: FinCEN invites comment on financial institutions to keep records pursuant to 5 U.S.C. 552a(r) and the renewal of an information collection and file reports that are determined to Appendix I to OMB Circular A–130, requirement for the recordkeeping and have a high degree of usefulness in ‘‘Federal Agency Responsibilities for reporting of suspicious activity criminal, tax, and regulatory matters, or Maintaining Records About activities by the Securities and Futures in the conduct of intelligence or Individuals,’’ dated November 30, 2000. Industry,1 Office of Management and counter-intelligence activities, to protect For the reasons set forth in the Budget Control Number 1506–0019. The against international terrorism, and to preamble, BEP proposes to amend its report, (BSA–SAR) 2 will be used by the implement counter-money laundering system of records entitled ‘‘BEP .027— securities and futures industry to report programs and compliance procedures.4 Access Control and Alarm Monitoring suspicious activity to the Department of Regulations implementing Title II of the Systems (ACAMS),’’ as follows: the Treasury. This request for comments Bank Secrecy Act appear at 31 CFR also covers 31 CFR 1026.320 and 31 Chapter X. The authority of the Treasury/BEP .027 CFR 1023.320. This request for Secretary to administer the Bank SYSTEM NAME: comments is being made pursuant to the Secrecy Act has been delegated to the Paperwork Reduction Act of 1995, Access Control and Alarm Monitoring Director of FinCEN. Public Law 104–13, 44 U.S.C. The Secretary of the Treasury was Systems (ACAMS). 3506(c)(2)(A). granted authority in 1992, with the * * * * * DATES: Written comments are welcome enactment of 31 U.S.C. 5318(g), to CATEGORIES OF RECORDS IN THE SYSTEM: and must be received on or before require financial institutions to report suspicious transactions. On July 1, 2002, Description of the change: Category March 5, 2012. FinCEN issued a final rule requiring (C) is revised to read: ‘‘(C) Official visitors, contractors, and 1 The securities and futures industry are those entities regulated by the Security and Exchange 3 See footnote 2. others issued ‘‘Escort Visitor’’ badges: Commission (SEC) and the Commodity Futures 4 Language expanding the scope of the Bank photograph; full name; date of birth; Trading Commission (CFTC) as regulated under 31 Secrecy Act to intelligence or counter-intelligence home address; driver’s license number; CFR Chapter X. activities to protect against international terrorism passport number; date of issue; and 2 The BSA–SAR was approved by OMB under was added by Section 358 of the Uniting and control number 1506–0065. This single report Strengthening America by Providing Appropriate date, time, and location of each passage replaces the SAR–DI, C, MSB and SF. The current Tools Required to Intercept and Obstruct Terrorism through a security control point; and SAR–SF, as posted at www.fincen.gov/forms, may Act of 2001 (the ‘‘USA PATRIOT Act’’), Public Law any additional data contained on an be used through March 2013. 107–56.

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brokers or dealers in securities (‘‘broker- the Bank Secrecy Act must be retained The Circular may be viewed and dealers’’) to report suspicious for five years. downloaded through the Internet at transactions (‘‘Broker-Dealer SAR rule’’), www.fms.treas.gov/c570. Request for Comments (67 FR 44048). The final Broker-Dealer Questions concerning this notice may SAR rule can also be found at 31 CFR Comments submitted in response to be directed to the U.S. Department of 1023.320. On August 5, 2002, FinCEN this notice will be summarized and/or the Treasury, Financial Management issued a final rule requiring futures included in the request for OMB Service, Financial Accounting and commission merchants and introducing approval. All comments will become a Services Division, Surety Bond Branch, brokers in commodities to report matter of public record. Comments are 3700 East-West Highway, Room 6F01, suspicious transactions (‘‘FCM SAR invited on: (a) Whether the collection of Hyattsville, MD 20782. rule’’), (67 FR 50751). The final FCM information is necessary for the proper Dated: December 20, 2011. SAR rule can also be found at 31 CFR performance of the functions of the Laura Carrico, 1026.320. agency, including whether the The information collected is required Director, Financial Accounting and Services information shall have practical utility; Division. to be provided pursuant to 31 U.S.C. (b) the accuracy of the agency’s estimate [FR Doc. 2011–33738 Filed 1–4–12; 8:45 am] 5318(g), 31 CFR 1026.320 and 31 CFR of the burden of the collection of 1023.320. This information will be information; (c) ways to enhance the BILLING CODE 4810–35–M made available, in accordance with quality, utility, and clarity of the strict safeguards, to appropriate criminal information to be collected: (d) ways to DEPARTMENT OF THE TREASURY law enforcement and regulatory minimize the burden of the collection of personnel, and to the registered information on respondents, including Fiscal Service securities associations and national through the use of automated collection securities exchanges (so-called self- techniques or other forms of information Surety Companies Acceptable on regulatory organizations) for use in technology; and (e) estimates of capital Federal Bonds: Termination; Western official performance of their duties, for or start-up costs and costs of operation, Bonding Company regulatory purposes and in maintenance and purchase of services to investigations and proceedings provide information. AGENCY: Financial Management Service, involving domestic and international Fiscal Service, Department of the Dated: December 29, 2011. money laundering, terrorist financing, Treasury. James H. Freis, Jr., tax violations, fraud, and other financial ACTION: Notice. crimes. Director, Financial Crimes Enforcement Broker-dealers, futures commission Network. SUMMARY: This is Supplement No. 4 to merchants, and introducing brokers in [FR Doc. 2011–33855 Filed 1–4–12; 8:45 am] the Treasury Department Circular 570; commodities required to report BILLING CODE 4810–02P–P 2011 Revision, published July 1, 2011, suspicious transactions, or reporting at 76 FR 38892. such transactions voluntarily, will be FOR FURTHER INFORMATION CONTACT: subject to the protection from liability DEPARTMENT OF THE TREASURY Surety Bond Branch at (202) 874–6850. contained in 31 U.S.C. 5318(g)(3) and to Fiscal Service SUPPLEMENTARY INFORMATION: Notice is the prohibition contained in 31 U.S.C. hereby given that the Certificate of 5318(g)(2) against notifying any person Surety Companies Acceptable on Authority issued by the Treasury to involved in the transaction that a Federal Bonds: Amendment— Western Bonding Company (NAIC# suspicious activity report has been filed. Evergreen National Indemnity 13191) under 31 U.S.C. 9305 to qualify Type of Review: Renewal of a Company as an acceptable surety on Federal currently approved information bonds is terminated effective today. collection. AGENCY: Financial Management Service, Federal bond-approving officials should Affected public: Business or other for- Fiscal Service, Department of the annotate their reference copies of the profit institutions. Treasury. Treasury Department Circular 570 Frequency: As required. Estimated Reporting and ACTION: Notice. (‘‘Circular’’), 2011 Revision, to reflect Recordkeeping Burden: 1 hour 5. this change. Estimated number of respondents = SUMMARY: This is Supplement No. 5 to With respect to any bonds, including 8,300. the Treasury Department Circular 570, continuous bonds, currently in force Estimated Total Annual Responses = 2011 Revision, published July 1, 2011, with above listed Company, bond- 8,300. at 76 FR 38892. approving officers should secure new bonds with acceptable sureties in those Estimated Total Annual Reporting FOR FURTHER INFORMATION CONTACT: instances where a significant amount of and Recordkeeping Burden: 8,300 Surety Bond Branch at (202) 874–6850. hours. liability remains outstanding. In An agency may not conduct or SUPPLEMENTARY INFORMATION: The addition, in no event, should bonds that sponsor, and a person is not required to underwriting limitation for Evergreen are continuous in nature be renewed. respond to, a collection of information National Indemnity Company (NAIC The Circular may be viewed and unless the collection of information #12750), which was listed in the downloaded through the Internet at displays a valid OMB control number. Treasury Department Circular 570, www.fms.treas.gov/c570. Records required to be retained under published on July 1, 2011, is hereby Questions concerning this notice may amended to read $3,220,000. be directed to the U.S. Department of 5 The reporting and recordkeeping burden of the Federal bond-approving officers the Treasury, Financial Management regulations (31 CFR 1026.320 and 1023.320) is should annotate their reference copies Service, Financial Accounting and reflected in the burden for the BSA–SAR as approved under 1506–0065. This listed burden is of the Treasury Department Circular 570 Services Division, Surety Bond Branch, assigned to maintain control number 1506–0019 (‘‘Circular’’), 2011 Revision, to reflect 3700 East-West Highway, Room 6F01, active as a reporting requirement. this amendment. Hyattsville, MD 20782.

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Dated: December 20, 2011. Laura Carrico, Director, Financial Accounting and Services Division, Financial Management Service. [FR Doc. 2011–33739 Filed 1–4–12; 8:45 am] BILLING CODE 4810–35–M

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Part II

Environmental Protection Agency

40 CFR Part 63 National Emissions Standards for Hazardous Air Pollutants From Secondary Lead Smelting; Final Rules

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ENVIRONMENTAL PROTECTION related to emissions during periods of the telephone number for the Air and AGENCY startup, shutdown, and malfunction. Radiation Docket and Information DATES: This final action is effective on Center is (202) 566–1742. 40 CFR Part 63 January 5, 2012. The incorporation by FOR FURTHER INFORMATION CONTACT: For [EPA–HQ–OAR–2011–0344; FRL–9610–9] reference of certain publications listed questions about this final action, contact in the rule is approved by the Director RIN 2060–AQ68 Mr. Nathan Topham, Office of Air of the Federal Register as of January 5, Quality Planning and Standards, Sector 2012. National Emissions Standards for Policies and Programs Division, U.S. ADDRESSES: Hazardous Air Pollutants From The EPA has established a Environmental Protection Agency, Secondary Lead Smelting docket for this action under Docket ID Research Triangle Park, NC 27711; No. EPA–HQ–OAR–2011–0344. All telephone number: (919) 541–0483; fax AGENCY: Environmental Protection documents in the docket are listed on number: (919) 541–3207; and email Agency (EPA). the http://www.regulations.gov Web address: [email protected]. For ACTION: Final rule. site. Although listed in the index, some additional contact information, see the information is not publicly available, following SUPPLEMENTARY INFORMATION SUMMARY: This action finalizes the e.g., confidential business information section. residual risk and technology review (CBI) or other information whose conducted for the secondary lead disclosure is restricted by statute. SUPPLEMENTARY INFORMATION: For smelting source category regulated Certain other material, such as specific information regarding the risk under national emission standards for copyrighted material, is not placed on assessment and exposure modeling hazardous air pollutants. These final the Internet, and will be publicly methodology, contact Dr. Michael amendments include revisions to the available only in hard copy form. Stewart, Office of Air Quality Planning emissions limits for lead compounds; Publicly available docket materials are and Standards, Health and revisions to the standards for fugitive available either electronically through Environmental Impacts Division, Air emissions; the addition of total http://www.regulations.gov, or in hard Toxics Assessment Group (C504–06), hydrocarbon and dioxin and furan copy at the EPA Docket Center, EPA U.S. Environmental Protection Agency, emissions limits for reverberatory and West Building, Room Number 3334, Research Triangle Park, NC 27711; electric furnaces; the addition of a work 1301 Constitution Ave. NW., telephone number: (919) 541–7524; fax practice standard for mercury Washington, DC. The Public Reading number: (919) 541–0840; and email emissions; the modification and Room hours of operation are 8:30 a.m. address: [email protected]. For addition of testing and monitoring, to 4:30 p.m. Eastern Standard Time information about the applicability of recordkeeping, and reporting (EST), Monday through Friday. The this NESHAP to a particular entity, requirements; related notifications; and telephone number for the Public contact the appropriate person listed in revisions to the regulatory provisions Reading Room is (202) 566–1744, and Table 1 to this preamble.

TABLE 1—LIST OF EPA CONTACTS FOR THE NESHAP ADDRESSED IN THIS ACTION

NESHAP for OECA contact a OAQPS contact b

Secondary Lead Smelting ...... Maria Malave, (202) 564–7027, Nathan Topham, (919) 541– [email protected]. 0483, [email protected]. a EPA’s Office of Enforcement and Compliance Assurance. b EPA’s Office of Air Quality Planning and Standards.

Acronyms and Abbreviations. The NTTAA National Technology Transfer and based on evaluations performed by the following acronyms and abbreviations Advancement Act EPA in order to conduct our risk and are used in this document. OP Office of Policy technology review. In this action, we are ppbv parts per billion by volume CAA Clean Air Act finalizing decisions and revisions for ppbw parts per billion by weight the rule. Some of the significant CBI confidential business information ppmv parts per million by volume CDX Central Data Exchange ppmw parts per million by weight comments and our responses are CEMS continuous emission monitoring REL recommended exposure limit summarized in this preamble. A system RFA Regulatory Flexibility Act summary of the public comments on the CPMS continuous parameter monitoring RIA Regulatory Impact Analysis proposal not presented in the preamble, system RIN Regulatory Information Number and the EPA’s responses to those D/F dioxins and furans RTR Risk and Technology Review ERT Electronic Reporting Tool comments, is available in Docket ID No. SRF short rotary furnace HAP hazardous air pollutants EPA–HQ–OAR–2011–0344. A tracked TEF toxic equivalency factor HQ hazard quotient changes version of the regulatory ICR information collection request TEQ toxic equivalency quotient language that incorporates the changes lbs/yr pounds per year THC total hydrocarbons TTN Technology Transfer Network in this action is available in the docket. MACT maximum achievable control Organization of This Document. The technology UMRA Unfunded Mandates Reform Act UPL upper prediction limit following outline is provided to aid in MIR maximum individual risk locating information in the preamble. NAAQS National Ambient Air Quality WWW World Wide Web Standards I. General Information NESHAP National Emission Standards for Background Information Document. A. Does this action apply to me? Hazardous Air Pollutants On May 19, 2011 (76 FR 29032), the B. What is the affected source? ng/dscm nanograms per dry standard cubic EPA proposed revisions to the C. Where can I get a copy of this meter Secondary Lead Smelting NESHAP document?

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D. Judicial Review TABLE 2—NESHAP AND INDUSTRIAL becomes a reconstructed source and is II. Background SOURCE CATEGORIES AFFECTED BY subject to the relevant standards for a III. Summary of the Final Rule THIS FINAL ACTION new affected source. The reconstructed A. What are the final rule amendments for source must comply with the the Secondary Lead Smelting source a b requirements for a new affected source category? NESHAP and source NAICS MACT category Code Code B. What are the effective and compliance upon initial startup of the reconstructed dates of the standards? source, or by March 5, 2012, whichever Secondary Lead is later. C. What are the requirements for Smelting ...... 331492 0205 submission of performance test data to C. Where can I get a copy of this a the EPA? North American Industry Classification document? IV. Summary of Significant Changes Since System. Proposal b Maximum Achievable Control Technology. In addition to being available in the A. Changes to the Risk Assessment Table 2 of this preamble is not docket, an electronic copy of this final Performed Under CAA Section 112(f) intended to be exhaustive, but rather action will also be available on the B. Changes to the Technology Review provides a guide for readers regarding World Wide Web through the Performed Under CAA Section 112(d)(6) entities likely to be affected by the final Technology Transfer Network (TTN). C. Other Changes Since Proposal Following signature, a copy of the final V. Summary of Significant Comments and action for the source category listed. To determine whether your facility would action will be posted on the TTN’s Responses policy and guidance page for newly A. Use of Lead Primary NAAQS as a be affected, you should examine the Measure of Acceptability of Risk for applicability criteria in the appropriate proposed and promulgated rules at the Public Health NESHAP. As defined in the source following address: http://www.epa.gov/ B. Total Enclosure Requirements category listing report published by the ttn/caaa/new.html. The TTN provides C. Work Practice Standard Requirements EPA in 1992, the Secondary Lead information and technology exchange in D. Emission Standards for Organic HAP Smelting source category is defined as various areas of air pollution control. From Rotary Furnaces any facility at which lead-bearing scrap Additional information is available on E. The EPA’s Risk Assessment Supporting materials (including, but not limited to the residual risk and technology review the Proposed Rule (RTR) web page at http://www.epa.gov/ F. Miscellaneous Changes to the Regulatory lead acid batteries) are recycled by smelting into elemental lead or lead ttn/atw/rrisk/rtrpg.html. This Text information includes source category G. Emission Testing Methods and alloys.1 For clarification purposes, all Frequency reference to lead emissions in this descriptions and detailed emissions and H. Startup, Shutdown, and Malfunction preamble means ‘‘lead compounds’’ other data that were used as inputs to VI. Summary of Cost, Environmental, and (which is a hazardous air pollutant) and the risk assessments. Economic Impacts all reference to lead production means D. Judicial Review A. What are the affected facilities? elemental lead (which is not a B. What are the air quality impacts? Under CAA section 307(b)(1), judicial C. What are the cost impacts? hazardous air pollutant) as provided review of this final action is available D. What are the economic impacts? under CAA section 112(b)(7). only by filing a petition for review in If you have any questions regarding E. What are the benefits? the United States Court of Appeals for the applicability of any aspect of this VII. Statutory and Executive Order Reviews the District of Columbia Circuit by NESHAP, please contact the appropriate A. Executive Orders 12866: Regulatory March 5, 2012. Under CAA section Planning and Review, and Executive person listed in Table 1 of this preamble 307(b)(2), the requirements established Order 13563: Improving Regulation and in the preceding FOR FURTHER by this final rule may not be challenged Regulatory Review INFORMATION CONTACT section. B. Paperwork Reduction Act separately in any civil or criminal C. Regulatory Flexibility Act B. What is the affected source? proceedings brought by the EPA to D. Unfunded Mandates Reform Act The final rule applies to owners and enforce the requirements. E. Executive Order 13132: Federalism operators of secondary lead smelters. Section 307(d)(7)(B) of the CAA F. Executive Order 13175: Consultation The affected source for this subpart is further provides that ‘‘[o]nly an and Coordination With Indian Tribal objection to a rule or procedure which Governments any of the following sources at a secondary lead smelter: Blast, was raised with reasonable specificity G. Executive Order 13045: Protection of during the period for public comment Children From Environmental Health reverberatory, rotary, and electric Risks and Safety Risks furnaces; refining kettles; agglomerating (including any public hearing) may be H. Executive Order 13211: Actions furnaces; dryers; process fugitive raised during judicial review.’’ This Concerning Regulations That emissions sources; buildings containing section also provides a mechanism for Significantly Affect Energy Supply, lead bearing materials; and fugitive dust us to convene a proceeding for Distribution, or Use sources. A new affected source is any reconsideration, ‘‘[i]f the person raising I. National Technology Transfer and affected source at a secondary lead an objection can demonstrate to the EPA Advancement Act that it was impracticable to raise such J. Executive Order 12898: Federal Actions smelting facility of which the construction or reconstruction objection within [the period for public To Address Environmental Justice in comment] or if the grounds for such Minority Populations and Low-Income commenced after May 19, 2011. If Populations components of an existing affected objection arose after the period for K. Congressional Review Act source are replaced such that the public comment (but within the time specified for judicial review) and if such I. General Information replacement meets the definition of reconstruction in 40 CFR 63.2 and the objection is of central relevance to the A. Does this action apply to me? reconstruction commenced on or after outcome of the rule.’’ Any person May 19, 2011, then the existing source seeking to make such a demonstration to Regulated Entities. Categories and us should submit a Petition for entities potentially regulated by this 1 USEPA. Documentation for Developing the Reconsideration to the Office of the action are shown in Table 2 of this Initial Source Category List—Final Report, USEPA/ Administrator, U.S. EPA, Room 3000, preamble. OAQPS, EPA–450/3–91–030, July, 1992. Ariel Rios Building, 1200 Pennsylvania

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Ave. NW., Washington, DC 20460, with materials, or other modifications; III. Summary of the Final Rule a copy to both the person(s) listed in the enclose systems or processes to A. What are the final rule amendments preceding FOR FURTHER INFORMATION eliminate emissions; collect, capture, or for the Secondary Lead Smelting source CONTACT section, and the Associate treat HAP when released from a process, category? General Counsel for the Air and stack, storage, or fugitive emissions Radiation Law Office, Office of General point; and/or are design, equipment, EPA promulgated the National Counsel (Mail Code 2344A), U.S. EPA, work practice, or operational standards. Emission Standards for Hazardous Air Pollutant Emissions: Secondary Lead 1200 Pennsylvania Ave. NW., In the second stage of the regulatory Washington, DC 20460. Smelting on June 13, 1997 (62 FR process, we undertake two different 32216). The standards are codified at 40 II. Background analyses, as required by the CAA: CFR part 63, subpart X. The secondary Section 112 of the CAA establishes a section 112(d)(6) of the CAA calls for us lead smelting industry consists of two-stage regulatory process to address to review these technology-based facilities that recycle lead-bearing scrap emissions of hazardous air pollutants standards and to revise them ‘‘as material, typically lead acid batteries, (HAP) from stationary sources. In the necessary (taking into account into elemental lead or lead alloys. The first stage, after the EPA has identified developments in practices, processes, source category covered by this MACT categories of sources emitting one or and control technologies)’’ no less standard currently includes 16 facilities, more of the HAP listed in CAA section frequently than every 8 years; and including one facility that is not 112(b), section 112(d) calls for us to within 8 years after promulgation of the currently operating and one facility that promulgate NESHAP for those sources. technology standards, CAA section is in the process of being constructed. ‘‘Major sources’’ are those that emit, or 112(f) calls for us to evaluate the risk to This section describes the final have the potential to emit, any single public health remaining after amendments to the secondary lead HAP at a rate of 10 tons per year (tpy) application of the technology-based smelting NESHAP.2 These revisions or more, or 25 tpy or more of any standards and to revise the standards, if include changes to the stack and combination of HAP. For major sources, necessary, to provide an ample margin fugitive metal HAP emission standards, these technology-based standards must of safety to protect public health or to the addition of new THC and D/F reflect the maximum degree of emission prevent, taking into consideration costs, emission limits, the addition of a work reductions of HAP achievable (after energy, safety, and other relevant practice standard to separate plastics considering cost, energy requirements, factors, an adverse environmental effect. from automotive batteries to prevent and non-air quality health and In doing so, the EPA may adopt dioxin emissions, the addition of work environmental impacts) and are standards equal to existing MACT practice standards to minimize mercury commonly referred to as maximum standards if the EPA determines that the emissions, and changes to the achievable control technology (MACT) existing standards are sufficiently requirements that apply during periods standards. protective. NRDC v. EPA, 529 F.3d of startup, shutdown, and malfunction. For MACT standards, the statute 1077, 1083 (DC Cir. 2008). In addition to these changes described specifies certain minimum stringency On May 19, 2011, the EPA published below, we are making minor changes to requirements, which are referred to as a proposed rule in the Federal Register the regulatory text to correct editorial floor requirements and may not be for the Secondary Lead Smelting errors and to make plain language based on cost considerations. See CAA NESHAP, 40 CFR part 63, subpart X that revisions. We have evaluated the cost, section 112(d)(3). For new sources, the took into consideration the residual risk emissions reductions, energy MACT floor cannot be less stringent and technology review (RTR) analyses. implications and cost effectiveness of all than the emission control that is Today’s action provides the EPA’s final of the standards being promulgated in achieved in practice by the best determinations pursuant to the RTR this final rule and have determined that controlled similar source. The MACT provisions of CAA section 112 for the these measures are cost effective, standards for existing sources can be Secondary Lead Smelting source technically feasible and will provide the less stringent than floors for new category, and also promulgates first-time public with an ample margin of safety sources, but they cannot be less standards under section 112 (d)(2) from exposure to emissions from the stringent than the average emission (MACT) for certain hazardous air secondary lead smelter source category. limitation achieved by the best- pollutants emitted by secondary lead See Cost Impacts of the Revised performing 12 percent of existing smelters. Specifically, we are taking the NESHAP for the Secondary Lead sources in the category or subcategory following actions: Smelting Source Category, which is (or the best-performing five sources for • available in the docket, for information categories or subcategories with fewer Revising some requirements of the on the costs and cost effectiveness of NESHAP related to control of metal HAP than 30 sources). In developing MACT, each of the standards being promulgated emissions based on our risk assessment and we must also consider control options in this final rule. that are more stringent than the floor, technology reviews. • under CAA section 112(d)(2). We may Finalizing first-time total hydrocarbon 1. Stack and Fugitive Metal HAP establish standards more stringent than (THC) and dioxin and furan (D/F) emissions Emission Standards limits and a plastic separation work practice the floor, based on the consideration of For the reasons provided in Section standard to prevent dioxin formation. the cost of achieving the emissions • Finalizing work practice standards for IV.A of this preamble and in the support reductions, any non-air quality health mercury. documents in the docket, we have and environmental impacts, and energy • Revising the requirements in the determined that the risks associated requirements. In promulgating MACT NESHAP related to emissions during periods with emissions from this source standards, CAA section 112(d)(2) directs of startup, shutdown, and malfunction us to consider the application of (SSM). 2 Note that the EPA is reprinting portions of the measures, processes, methods, systems, • Incorporating the use of plain language language from the 1997 NESHAP here so the entire rule appears in one place, for readers’ convenience. or techniques that reduce the volume of into the rule. The EPA is not amending, reopening or otherwise or eliminate HAP emissions through • Addressing technical and editorial reconsidering these reprinted portions of the 1997 process changes, substitution of corrections in the rule. rule.

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category are unacceptable primarily due 1.0 mg/dscm for each stack at existing where dust from fabric filters, to fugitive emissions of lead. We have sources. For new sources, a lead sweepings or used fabric filters are further determined that there have been emissions limit of 0.20 mg/dscm applies processed. The facilities are also developments in practices, processes, to each individual stack at a modified or required to adopt a list of specified work and control technologies that warrant ‘‘greenfield’’ new facility. practice standards to minimize fugitive • revisions to the MACT standard (i.e., the A requirement for the facility to emissions. standards promulgated pursuant to operate sources of fugitive lead section 112(d)(2) and (3)) for this source emissions within total enclosures that 2. Organic HAP Emissions Standards category. Therefore, to satisfy the are maintained under negative pressure requirements of CAA sections 112(d)(6) and vented to a control device. These To satisfy CAA sections 112(d)(2) and and 112(f), we are revising the MACT sources of fugitive emissions include 112(d)(3), we are also revising the standard to include: the smelting furnaces, smelting furnace MACT standard to include first-time • A facility wide, flow weighted charging areas, lead taps, slag taps, D/F and THC emission limits (with THC average lead 3 emissions limit from molds during tapping, battery breakers, serving as a surrogate for non-dioxin stacks of 0.20 mg/dscm and an refining kettles, casting areas, dryers, organic HAP). These emission limits are individual stack lead emissions limit of material handling areas, and areas summarized in Table 3 of this preamble.

TABLE 3—SUMMARY OF NEW THC AND D/F EMISSION LIMITS

Source type D/F Emission THC Emission limit a Limit b

New and Existing Collocated Blast and Reverberatory Furnaces ...... 0.50 c 20 Existing Blast Furnaces ...... 170 c 360 New Blast Furnaces ...... 10 c 70 New and Existing Reverberatory and Electric Furnaces ...... 1.0 12

a ng/dscm on a TEQ basis, corrected to 7 percent O2. b ppmv as propane, corrected to 4 percent CO2. c Emission limit is unchanged from 1997 NESHAP.

3. Startup, Shutdown, and Malfunction eliminated that incorporation of the separate lead-emission standards for periods of startup and shutdown.4 The United States Court of Appeals General Provisions’ requirement that the source develop an SSM plan. We have The EPA has revised this final rule to for the District of Columbia Circuit require sources to meet a work practice vacated portions of two provisions in also eliminated or revised certain recordkeeping and reporting that related standard that requires the development the EPA’s CAA section 112 regulations of standard operating procedures governing the emissions of HAP during to the SSM exemption. The EPA has attempted to ensure that we have not designed to minimize emissions of THC periods of startup, shutdown, and for each start-up and shutdown scenario malfunction (SSM). Sierra Club v. EPA, included in the regulatory language any provisions that are inappropriate, anticipated for all units subject to THC 551 F.3d 1019 (DC Cir. 2008), cert. limits. Temperature monitoring is the unnecessary, or redundant in the denied, 130 S. Ct. 1735 (2010). metric used to determine continuous absence of the SSM exemption. Specifically, the Court vacated the SSM compliance with emission standards for exemption contained in 40 CFR In establishing the standards in this THC. This metric is inappropriate as a 63.6(f)(1) and 40 CFR 63.6(h)(1), that rule, the EPA has taken into account measure of the destruction efficiency of was part of a regulation, commonly startup and shutdown periods and, for these organic pollutants during periods referred to as the ‘‘General Provisions the reasons explained below, has of startup and shutdown. Rule’’, that the EPA promulgated under established different standards for non- The EPA is not including a standard CAA section 112. When incorporated dioxin organic HAP during those for dioxins and furans during periods of into CAA section 112(d) regulations for periods. startup and shutdown. This is because specific source categories, these two dioxins and furans will not be emitted Information on periods of startup and provisions exempted sources from the during those periods. During startup shutdown in the industry indicate that requirement to comply with the and shutdown, scrap feed materials otherwise applicable CAA section lead emissions during these periods do (including chlorinated plastics and 112(d) emission standard during periods not increase (consistent with our flame retardants) that contain the of SSM. engineering judgment that lead precursors needed for dioxin formation We have eliminated the SSM emissions would not increase during are not introduced into the smelter 5 so exemption for secondary lead smelting these periods because lead-bearing feed there are no conditions that could give facilities in this rule. Consistent with is not being smelted during these rise to dioxin and furan emissions. Sierra Club v. EPA, the EPA has periods). Furthermore, all lead-emitting The EPA determined that it is not established standards in this rule for all processes are controlled by either technically and economically feasible periods of operation. We have also control devices or work practices and for units subject to THC limits to revised Table 1 to subpart X (the these controls would not typically be perform stack testing for this pollutant General Provisions table) in several affected by startup or shutdown. during periods of startup and shutdown respects. For example, we have Therefore, the EPA is not adopting due to technical and economic

3 Throughout this preamble, all references to lead activities, there are no startup and shutdown 5 ‘‘Shutdown’’ is defined as a period ‘‘when no emissions means lead compounds as listed by standards for process fugitive emissions since lead bearing materials are being fed to the furnace Congress at section 112(b)(1) of the Act. startup and shutdown do not occur for the activities and smelting operations have ceased * * *’’. 4 Since startup and shutdown refers to the generating such emissions. Section 63.542 (definition of ‘‘shutdown’’). smelting process, and not to ancillary management

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impracticality associated with testing and duration of various malfunctions exceedance of the relevant emission secondary lead smelting furnaces during that might occur. As such, the standard. (See, e.g., State these periods. The furnaces are heated performance of units that are Implementation Plans: Policy Regarding during periods of startup through slow malfunctioning is not ‘‘reasonably’’ Excessive Emissions During feeding of natural gas and small foreseeable. See, e.g., Sierra Club v. Malfunctions, Startup, and Shutdown amounts of coke, with no lead acid EPA, 167 F. 3d 658, 662 (DC Cir. 1999) (September 20, 1999); Policy on Excess batteries fed to the furnace during these (EPA typically has wide latitude in Emissions During Startup, Shutdown, periods. Test crews would have to be determining the extent of data-gathering Maintenance, and Malfunctions on-site prior to a period of startup or necessary to solve a problem.) We (February 15, 1983).) The EPA is shutdown occurring and may need to generally defer to an agency’s decision therefore adding to the final rule an break up a single test over multiple to proceed on the basis of imperfect affirmative defense to civil penalties for startups or shutdowns, the length of scientific information, rather than to exceedances of emission limits that are which could vary depending on the type ‘‘invest the resources to conduct the caused by malfunctions. See 40 CFR of secondary lead smelting furnace perfect study’’. See also, Weyerhaeuser 63.542 (defining ‘‘affirmative defense’’ being tested, that would happen v. Costle, 590 F.2d 1011, 1058 (DC Cir. to mean, in the context of an infrequently to gather enough data to 1978) (‘‘In the nature of things, no enforcement proceeding, a response or complete a three-run test. See also general limit, individual permit, or even defense put forward by a defendant, section V.G of this preamble discussing any upset provision can anticipate all regarding which the defendant has the these standards further. upset situations. After a certain point, burden of proof, and the merits of which Periods of startup, normal operations, the transgression of regulatory limits are independently and objectively and shutdown are all predictable and caused by ‘uncontrollable acts of third evaluated in a judicial or administrative routine aspects of a source’s operations. parties’, such as strikes, sabotage, proceeding). We also have added other However, by contrast, malfunction is operator intoxication or insanity, and a regulatory provisions to specify the defined as a ‘‘sudden, infrequent, and variety of other eventualities, must be a elements that are necessary to establish not reasonably preventable failure of air matter for the administrative exercise of this affirmative defense; the source must pollution control and monitoring case-by-case enforcement discretion, not prove by a preponderance of the equipment, process equipment or a for specification in advance by evidence that it has met all of the process to operate in a normal or usual regulation.’’). In addition, the goal of a elements set forth in 63.552 (see 40 CFR manner * * *’’ (40 CFR 63.2). The EPA best-controlled or best-performing 22.24). The criteria ensure that the has determined that CAA section 112 source is to operate in such a way as to affirmative defense is available only does not require that emissions that avoid malfunctions of the source and where the event that causes an occur during periods of malfunction be accounting for malfunctions could lead exceedance of the emission limit meets factored into development of CAA to standards that are significantly less the narrow definition of malfunction in section 112 standards. Under section stringent than levels that are achieved 40 CFR 63.2 (sudden, infrequent, not 112, emissions standards for new by a well-performing non- reasonable preventable and not caused sources must be no less stringent than malfunctioning source. The EPA’s the level ‘‘achieved’’ by the best approach to malfunctions is consistent by poor maintenance and or careless controlled similar source and for with CAA section 112 and is a operation). For example, to successfully existing sources generally must be no reasonable interpretation of the statute. assert the affirmative defense, the source less stringent than the average emission In section 3.2.1 of the separate response must prove by a preponderance of the limitation ‘‘achieved’’ by the best to comment document, we respond to evidence that excess emissions ‘‘[w]ere performing 12 percent of sources in the comments that emissions during caused by a sudden, infrequent, and category. There is nothing in section 112 malfunctions should be accounted for in unavoidable failure of air pollution that directs the agency to consider assessing risk pursuant to CAA section control and monitoring equipment, malfunctions in determining the level 112(f)(2). process equipment, or a process to ‘‘achieved’’ by the best performing or In the event that a source fails to operate in a normal or usual manner best controlled sources when setting comply with the applicable CAA section * * *.’’ The criteria also are designed to emission standards. Moreover, while the 112(d) standards as a result of a ensure that steps are taken to correct the EPA accounts for variability in setting malfunction event, the EPA would malfunction, to minimize emissions in emissions standards consistent with the determine an appropriate response accordance with 40 CFR 63.552 and to section 112 case law, nothing in that based on, among other things, the good prevent future malfunctions. For case law requires the agency to consider faith efforts of the source to minimize example, the source must prove by a malfunctions as part of that analysis. emissions during malfunction periods, preponderance of the evidence that Section 112 uses the concept of ‘‘best including preventative and corrective ‘‘[r]epairs were made as expeditiously as controlled’’ and ‘‘best performing’’ unit actions, as well as root cause analyses possible when the applicable emission in defining the level of stringency that to ascertain and rectify excess limitations were being exceeded * * *’’ section 112 performance standards must emissions. The EPA would also and that ‘‘[a]ll possible steps were taken meet. Applying the concept of ‘‘best consider whether the source’s failure to to minimize the impact of the excess controlled’’ or ‘‘best performing’’ to a comply with the CAA section 112(d) emissions on ambient air quality, the unit that is malfunctioning presents standard was, in fact, ‘‘sudden, environment and human health * * *.’’ significant difficulties, as malfunctions infrequent, not reasonably preventable’’ In any judicial or administrative are sudden and unexpected events. and was not instead ‘‘caused in part by proceeding, the Administrator may Further, accounting for malfunctions poor maintenance or careless challenge the assertion of the affirmative would be difficult, if not impossible, operation.’’ 40 CFR 63.2 (definition of defense and, if the respondent has not given the myriad different types of malfunction). met its burden of proving all of the malfunctions that can occur across all Finally, the EPA recognizes that even requirements in the affirmative defense, sources in the category and given the equipment that is properly designed and appropriate penalties may be assessed difficulties associated with predicting or maintained can sometimes fail and that in accordance with CAA section 113 accounting for the frequency, degree, such failure can sometimes cause an (see also 40 CFR 22.27).

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The EPA is including an affirmative both ensure that its emission limitations performance test data in electronic defense in the final rule in an attempt are ‘‘continuous’’ as required by 42 format, making it possible to move to an to balance a tension, inherent in many U.S.C. 7602(k) and account for electronic data submittal system that types of air regulations, to ensure unplanned upsets and thus support the would increase the ease and efficiency adequate compliance while reasonableness of the standard as a of data submittal and improve data simultaneously recognizing that despite whole. accessibility. the most diligent of efforts, emission One major advantage of submitting B. What are the effective and performance test data through the limits may be exceeded under compliance dates of the standards? circumstances beyond the control of the Electronic Reporting Tool (ERT) is a source. The EPA must establish The revisions to the MACT standards standardized method to compile and emission standards that ‘‘limit the being promulgated in this action are store much of the documentation quantity, rate, or concentration of effective on January 5, 2012. For the required to be reported by this rule. emissions of air pollutants on a MACT standards being addressed in this Another advantage is that the ERT continuous basis’’ 42 U.S.C. 7602(k) action, the compliance date for the clearly states what testing information revised SSM requirements is the (defining ‘‘emission limitation and would be required. Another important effective date of the standards, January emission standard’’). See generally benefit of submitting these data to the 5, 2012. The compliance date for Sierra Club v. EPA, 551 F.3d 1019, 1021 EPA at the time the source test is existing sources for the revised stack (DC Cir. 2008). Thus, the EPA is conducted is that it should substantially lead emission limit and the revised required to ensure that section 112 reduce the effort involved in data fugitive emission standard including the collection activities in the future. When emissions limitations are continuous. requirement to adopt work practice the EPA has performance test data in The affirmative defense for malfunction standards and install total enclosures for hand, there will likely be fewer or less events meets this requirement by specified process fugitive emission substantial data collection requests in ensuring that even where there is a sources, and for the new D/F and THC conjunction with prospective required malfunction, the emission limitation is emission limits, is 2 years from the residual risk assessments or technology still enforceable through injunctive effective date of the standard, January 6, reviews. This results in a reduced relief. While ‘‘continuous’’ limitations, 2014. New sources must comply with burden on both affected facilities (in on the one hand, are required, there is the all of the standards immediately terms of reduced labor to respond to also case law indicating that in many upon the effective date of the standard, data collection requests) and the EPA situations it is appropriate for the EPA January 5, 2012, or upon startup, (in terms of preparing and distributing to account for the practical realities of whichever is later. data collection requests and assessing technology. For example, in Essex C. What are the requirements for the results). Chemical v. Ruckelshaus, 486 F.2d 427, State, local, and tribal agencies can submission of performance test data to 433 (DC Cir. 1973), the DC Circuit also benefit from a more streamlined the EPA? acknowledged that in setting standards and accurate review of electronic data under CAA section 111 ‘‘variant In this action, as a step to increase the submitted to them. The ERT allows for provisions’’ such as provisions allowing ease and efficiency of data submittal an electronic review process rather than for upsets during startup, shutdown and and improve data accessibility, the EPA a manual data assessment making equipment malfunction ‘‘appear is requiring the electronic submittal of review and evaluation of the data and necessary to preserve the reasonableness select performance test data. calculations easier and more efficient. of the standards as a whole and that the Specifically, the EPA is requiring As mentioned above, data entry will record does not support the ‘never to be owners and operators of secondary lead be through an electronic emissions test exceeded’ standard currently in force.’’ smelting facilities to submit electronic report structure called the Electronic See also, Portland Cement Association copies of performance test reports Reporting Tool or ERT. The ERT will v. Ruckelshaus, 486 F.2d 375 (DC Cir. required under 40 CFR 63.543 to the generate an electronic report which will 1973). Though intervening case law EPA’s WebFIRE database. The WebFIRE be submitted using the Compliance and such as Sierra Club v. EPA and the CAA database was constructed to store Emissions Data Reporting Interface 1977 amendments undermine the performance test data for use in (CEDRI). The submitted report is relevance of these cases today, they developing emission factors. A transmitted through the EPA’s Central support the EPA’s view that a system description of the WebFIRE database is Data Exchange (CDX) network for that incorporates some level of available at http://cfpub.epa.gov/ storage in the WebFIRE database making flexibility is reasonable. The affirmative oarweb/index.cfm?action=fire.main. submittal of data very straightforward defense simply provides for a defense to The EPA must have performance test and easy. A description of the ERT can civil penalties for excess emissions that data to conduct effective reviews of be found at http://www.epa.gov/ttn/ are proven to be beyond the control of CAA sections 112 and 129 standards, as chief/ert/index.html and CEDRI can be the source. By incorporating an well as for many other purposes accessed through the CDX Web site affirmative defense, the EPA has including compliance determinations, (www.epa.gov/cdx). formalized its approach to upset events. emission factor development, and The requirement to submit In a Clean Water Act setting, the Ninth annual emission rate determinations. In performance test data electronically to Circuit required this type of formalized conducting these required reviews, the the EPA does not create any additional approach when regulating ‘‘upsets EPA has found it ineffective and time performance testing and would apply beyond the control of the permit consuming, not only for us, but also for only to those performance tests holder.’’ Marathon Oil Co. v. EPA, 564 other regulatory agencies and for source conducted using test methods that are F.2d 1253, 1272–73 (9th Cir. 1977). But owners and operators, to locate, collect, supported by the ERT. The ERT see Weyerhaeuser Co. v. Costle, 590 and submit performance test data contains a specific electronic data entry F.2d 1011, 1057–58 (DC Cir. 1978) because of varied locations for data form for most of the commonly used (holding that an informal approach is storage and varied data storage methods. EPA reference methods. A listing of the adequate). The affirmative defense In recent years, though, stack testing pollutants and test methods supported provisions give the EPA the flexibility to firms have typically collected by the ERT is available at http://

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www.epa.gov/ttn/chief/ert/index.html. Assessment for the Secondary Lead concentrations from a secondary lead We believe that industry will benefit Smelting Source Category. smelter could be up to about 20 times from this new electronic data submittal During the public comment period for the NAAQS for lead based on actual requirement. Having these data, the EPA the proposed rule, several parties emissions. The maximum lead will be able to develop improved submitted comments and suggested exceedances at populated census block emission factors, make fewer revisions regarding the emissions used centroids were between one and three information requests, and promulgate for the risk assessment, and also times the NAAQS. There is some better regulations. The information to be submitted other information relevant to uncertainty associated with the fugitive reported is already required for the the risk assessment (see docket ID EPA– emissions estimates that is derived from existing test methods and is necessary to HQ–OAR–2011–0344 for all public the uncertainty involved in determining evaluate the conformance to the test comments). After considering these the housekeeping and enclosure factors. method. submissions, the EPA revised its This uncertainty could have important Finally, another benefit of submitting analyses. Revised methods, model impacts on the estimated fugitive data to WebFIRE electronically is that inputs, and risk results are presented in emissions and the resulting modeled these data will greatly improve the the report: Residual Risk Assessment for ambient concentration. For example, if overall quality of the existing and new the Secondary Lead Smelting Source the level of control assumed through the emission factors by supplementing the Category, which is available in the use of full enclosure and robust pool of emissions test data for docket for this rulemaking. In addition, housekeeping were both increased from establishing emissions factors and by a discussion of the updated emissions 75 percent to 85 percent, the estimated ensuring that the factors are more information used in the final risk fugitive emissions at the RSR facility representative of current industry assessment can be found in the would be about 43 pounds (roughly operational procedures. A common memorandum titled: Development of the three times lower than those estimated complaint heard from industry and RTR Emissions Dataset for the in this rule). If the level of control regulators is that emission factors are Secondary Lead Smelting Source assumed through the use of full outdated or not representative of a Category, which can also be found in enclosure and robust housekeeping particular source category. With timely the docket for this rulemaking. were both decreased from 75 percent to receipt and incorporation of data from Considering the updated emissions 65 percent, the estimated fugitive most performance tests, the EPA will be information received during the public emissions at the RSR facility would be able to ensure that emission factors, comment period for the proposed rule, about 240 pounds (roughly two times when updated, represent the most our final risk analysis estimates that the higher than those estimated in this rule). current range of operational practices. In primary NAAQS for lead, used in this As shown in this example, changing the summary, in addition to supporting rule as a measure of acceptable risk from estimates of control efficiency achieved regulation development, control strategy air-borne lead emissions, could be with full enclosure and robust development, and other air pollution exceeded at 9 of 15 facilities based on housekeeping practices by 10 percent control activities, having an electronic actual emissions, largely due to fugitive each could impact the resulting fugitive database populated with performance dust emissions (see Table 4). At these 9 emission estimates for facilities test data will save industry, state, local, facilities, fugitive dust emissions employing that level of control by two tribal agencies, and the EPA significant account for about 94 to 99 percent of the to three times. These estimates could estimated 3-month maximum lead significantly impact the resulting risk time, money, and effort while improving 6 the quality of emission inventories and, concentrations. Our analysis also estimates since most of the impact of as a result, air quality regulations. estimates that approximately 200 people lead emissions was due to fugitive dust live in areas around three of these emissions. While there are uncertainties IV. Summary of Significant Changes facilities where 3-month maximum lead associated with estimating fugitive Since Proposal concentrations are estimated to be emissions, we conclude that the A. Changes to the Risk Assessment between one and three times above the methodology used in this rulemaking Performed Under CAA Section 112(f) lead NAAQS. Allowable stack emissions provided reasonable estimates of of lead also resulted in modeled fugitive emissions for these sources. For In the proposed rulemaking, the EPA concentrations exceeding the NAAQS, further details, see Development of the presented a number of options for with modeled lead ambient air levels as RTR Emissions Dataset for the additional controls on the Secondary high as 8 and 10 times above the Secondary Lead Smelting Source Lead Smelting source category. In that NAAQS. This analysis also estimates Category, available in docket ID EPA– notice, the EPA solicited comment on that 3-month maximum lead HQ–OAR–2011–0344, which describes the proposed options as well as on all how we developed these fugitive of the analyses and data upon which the 6 For all facilities, the percent contribution of emissions estimates and provides a fugitive and stack emissions to modeled ambient presentation of our estimates compared options were based, including the risk lead concentrations has only been estimated for the methods and results presented in the model receptor representing the site of maximum to estimates submitted via the ICR and draft document: Residual Risk lead impact. estimates reported to the TRI.

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TABLE 4—SECONDARY LEAD SMELTING FACILITY MODELED MAXIMUM AMBIENT LEAD CONCENTRATIONS CONSIDERING ACTUAL EMISSIONS a [Rolling 3-month average values]

Highest Concentra- modeled tion is X Facility name City State lead con- times the centration NAAQS (μg/m3)

Doe Run Company-Buick Mill ...... Boss ...... MO 2.36 20 Sanders Lead Co ...... Troy ...... AL 2.16 10 Exide Corporation ...... Vernon ...... CA 1.14 8 Battery Recycling Co ...... Arecibo ...... PR 0.76 5 Gulf Coast Recycling, Inc ...... Tampa ...... FL 0.38 3 Exide Technologies–Canon Hollow Plant ...... Forest City ...... MO 0.47 3 Gopher Resource Corp ...... Eagan ...... MN 0.35 2 Frisco Battery Recycling ...... Frisco ...... TX 0.23 2 Exide Tech/Reading Smelter ...... Reading ...... PA 0.25 2 Quemetco, Inc ...... Industry ...... CA 0.17 1 Exide Technologies ...... Muncie ...... IN 0.15 1 Exide Technologies/B R Smelter ...... Baton Rouge ...... LA 0.14 1 Revere Smelting & Refining Corp ...... Middletown ...... NY 0.10 0.7 Quemetco, Inc ...... Indianapolis ...... IN 0.07 0.5 East Penn Mfg. Co Inc/Smelter Plt ...... Lyon Station ...... PA 0.02 0.1 a Values of 1 or less in the last column indicate that modeled lead concentrations are at or below the NAAQS for lead.

We also note that there were changes estimates that the cancer MIR values cancer risks due to actual emissions are to our cancer, acute, and PB–HAP from both multipathway case study above 1 in a million also contributes to multipathway case study analyses (see analyses (i.e., in Frisco, TX and our determination of unacceptability, section 3.4 of the risk assessment Middletown, NY; see section 3.2 of the but to a lesser extent. While the document) for non-lead HAP as a result final risk assessment document) are less estimated maximum individual cancer of the updated risk assessment than 1 in a million (as compared to an risks due to actual emissions would, by performed for the final rule. With estimated multipathway MIR of 30 in a themselves, not generally lead us to a respect to our updated cancer risk million and less than 1 in a million in determination that risks are assessment, we estimate that the the Frisco, TX and Middletown, NY unacceptable, the fact that they occur maximum individual risk (MIR) of multipathway case study analyses for along with the exceedences of the lead cancer due to actual emissions is 50 in the proposed rule). Notably, the primary NAAQS adds to our concern a million predominantly due to fugitive reduction in multipathway risks about these exposures, and further dust emissions of arsenic and cadmium resulted from updated emissions supports our proposed determination as compared to the analysis at proposal information received during the public that risks are unacceptable. To provide of risk of 50 in a million but based on comment period with respect to these acceptable levels of risk with an ample a different secondary lead facility. facilities. margin of safety, we are finalizing the Moreover, approximately 700 people Taking into account all the results of requirement that secondary lead were estimated to have cancer risks the final risk assessment, and similar to smelting facilities must operate the above 10 in a million and approximately the proposed rulemaking, we conclude following fugitive dust emissions 80,000 people were estimated to have that risks to public health due to sources within total enclosures that cancer risks above 1 in a million emissions from this source category are must be maintained at negative pressure considering all facilities in this source unacceptable. Our conclusion is at all times and vented to a control category (as compared to the analysis at primarily based on risk from exposure device designed to capture lead proposal of 1,500 above 10 in a million to air-borne lead emissions but also particulate: Smelting furnaces, smelting and 128,000 above 1 in a million). In considers other risk metrics such as furnace charging areas, lead taps, slag addition, the MIR due to MACT cancer and non-cancer risks associated taps, molds during tapping, battery allowable emissions remains 200 in a with actual and allowable stack breakers, refining kettles, casting areas, million predominantly from stack emissions of non-lead HAPs, especially dryers, material handling areas emissions of arsenic. The updated arsenic and cadmium. As mentioned managing lead bearing materials, and worst-case acute hazard quotient (HQ) above, actual lead emissions resulted in areas where dust from fabric filters, value is 20 at two facilities (based on the modeled concentrations of lead above sweepings, or used fabric filters are REL for arsenic; the REL is the only the lead NAAQS at 9 of 15 facilities. processed. As further described in available acute health benchmark value Thus, we note that allowable stack Section IV.C of this preamble, based on for arsenic and all other pollutants had emissions of lead and other HAP metals public comments, we are not adopting HQ values less than or equal to 1), and fugitive emissions of lead must be the proposed alternative to demonstrate driven by both stack and fugitive dust reduced to assure that lead compliance by monitoring lead at or emissions of arsenic (as compared to concentrations in ambient air beyond near the property boundary based on a analysis at proposal of an acute HQ the facility fenceline are acceptable— 3-month rolling average in lieu of value of 30 based on the REL for arsenic that is, do not exceed the lead NAAQS constructing total enclosures. (See 76 FR at one facility driven by emissions from (the measure of risk acceptability for 29056.) We are finalizing the proposed stacks). Finally, the risk assessment exposure to air-borne lead in this rule). requirement for facilities to conduct supporting the final rulemaking The fact that maximum individual fugitive emission work practices as well

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as to enclose fugitive emission sources. significantly lower than those facilities for blast furnaces that commence As further described in Section IV.C of that do not have enclosures. We have construction or reconstruction after May this preamble, we are also promulgating considered the public comments on this 19, 2011. a revised list of required work practices issue, and have decided to adopt the 2. Definitions based on a number of comments requirements largely as proposed. This received regarding the necessity, requirement is identical to that adopted • Definitions have been added for efficacy, and safety of the work practices to eliminate unacceptable risk for ‘‘affected source’’ and ‘‘new source’’ to which the EPA proposed. fugitive emissions pursuant to CAA clarify when the standards for new We are also finalizing the proposed section 112 (f)(2). However, as described sources would apply. requirement limiting stack lead in Section IV.C of this preamble, based • A definition of ‘‘lead-bearing emissions to 0.2 mg/dscm as a facility- on public comments, we are not material’’ has been added to the rule to wide emissions average and limiting adopting the proposed alternative to clarify requirements for material stack lead emissions from any single demonstrate compliance by monitoring handling area enclosures and work stack to 1.0 mg/dscm. lead at or near their property boundary practices for fugitive emissions. After implementation of the controls based on a 3-month rolling average in • The definition of ‘‘material storage required in this final rule, we estimate lieu of constructing total enclosures. and handling’’ has been revised to that there will be no one living at a (See 76 FR 29056.) We are finalizing the exclude transfer of raw materials in census block centroid exposed to proposed requirement for facilities to enclosed containers. ambient concentrations above the conduct fugitive emission work • The definition of ‘‘plant roadway’’ NAAQS due to these facilities and the practices as well as to enclose fugitive has been revised to exclude roadways cancer MIR due to actual emissions will emission sources. As further described inside total enclosures. • decrease from 50 in a million to 7 in a in Section IV.C of this preamble, we are The definition of ‘‘process vent’’ million. also promulgating a revised list of has been revised to specify that it includes only vents from lead B. Changes to the Technology Review required work practices based on a processing equipment and from Performed Under CAA Section 112(d)(6) number of comments received regarding the necessity, efficacy, and safety of the buildings containing lead bearing Based on the technology review under work practices which the EPA material. • CAA section 112(d)(6), the EPA proposed. Definitions for ‘‘leeward,’’ proposed to change the stack lead We are also finalizing the requirement ‘‘windward,’’ and ‘‘natural draft emission limits from 2.0 mg/dscm for limiting stack lead emissions to 0.2 mg/ opening’’ have been added to the rule to any individual stack to a facility-wide, dscm as a facility-wide emissions clarify the differential pressure and flow-weighted average emission limit of average and limiting stack lead monitoring requirements and the 0.20 mg/dscm with a limit of 1.0 mg/ emissions from any single stack to 1.0 requirement to maintain an inward flow dscm applicable to any individual stack. mg/dscm as proposed. of air through enclosure openings. The proposed limit was based on We note that although we have • The definition of ‘‘total enclosure’’ emissions data collected from industry, adopted the same standards under both was modified by specifically including which indicated that well-performing CAA sections 112(f)(2) and 112(d)(6), modified text from 40 CFR 265.1101 and baghouses currently used by much of these standards rest on independent EPA method 204 ‘‘Criteria for and the industry are capable of achieving statutory authorities and independent Verification of a Permanent or outlet lead concentrations significantly rationales. Consequently, these Temporary Total Enclosure’’ rather than lower than the limit of 2.0 mg/dscm standards remain independent and citing the reference to the requirements adopted in the 1997 MACT standard. legally severable. for a hazardous waste containment area. We have considered the public We also clarified the requirement for comments on this issue and are C. Other Changes Since Proposal total enclosures to be vented to a control adopting the limits as proposed. We received over 30 public comments device designed to capture lead Under CAA section 112(d)(6), we also on the proposed rule. After considering particulates. proposed a fugitive emission standard these comments, we are making the 3. Enclosure Requirements requiring operation of the following following additional changes to the process fugitive emission sources in proposal. The rationale for these and • The proposed requirement to total enclosures that are maintained any other significant changes can be maintain an in-draft velocity of 300 feet under negative pressure at all times and found in this preamble and in the per minute at enclosure openings (see vented to a control device: Smelting comment response document available 76 FR 29072) was replaced with a furnaces, smelting furnace charging in the docket. requirement to maintain an inward flow areas, lead taps, slag taps, and molds of air through all natural draft openings. during charging, battery breakers, 1. Stack Emission Limits • The proposed requirement for a refining kettles, casting areas, dryers, • The EPA is not adopting numerical back-up power source for the agglomerating furnaces and limits for THC and D/F emissions from differential pressure monitors required agglomerating furnace product taps, rotary furnaces pending further data- for the total enclosures (see 76 FR material handling areas for any lead gathering and analysis for this furnace 29077) was eliminated, and a reporting bearing materials, and areas where dust type. requirement was added to identify from fabric filters, sweepings, or used • For units constructed after June 9, periods when the power was lost to the fabric filters are processed. This 1994, the EPA is adding a limit for THC monitoring system. proposed requirement was based on and D/F for collocated blast and • The proposed rule (see 76 FR information collected from the industry reverberatory furnaces when the 29072) has been modified to clarify that that indicated that several operating reverberatory furnace is not operating, activities required for inspection of facilities currently enclose most or all of and is amending the D/F limits for blast fabric filters and maintenance of filters their process fugitive emission sources, furnaces for units that commenced that are in need of removal and and that the ambient lead construction after June 9, 1994. We also replacement are not required to be concentrations near these facilities are added a THC and D/F new source limit conducted inside of total enclosures.

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• Lead ingot product handling, storm the CERCLA reportable quantity for lead V. Summary of Significant Comments water and wastewater treatment, intact (e.g., 10 pounds). and Responses battery storage areas, and clean battery A. Use of Lead Primary NAAQS as a casing plastic handling activities are not 5. Testing and Monitoring Requirements Measure of Acceptability of Risk for subject to the total enclosure • The performance testing Public Health requirement. requirements (see 76 FR 29074) have Commenters from both the 4. Fugitive Emission Work Practice been modified to allow facilities to use environmental and industry sectors Requirements EPA Method 12 or Method 29 for lead challenged the EPA’s use of the lead • The proposed maintenance compounds. primary NAAQS as a measure of requirements (see 76 FR 29073) have • A provision was added allowing for acceptability of risk in this rule. The been modified to allow emergency biannual testing of lead compounds and EPA disagrees with these comments. repairs of ductwork or structure leaks to THC for sources that demonstrate The EPA has reasonably applied the occur outside of enclosures if the time concentrations that are less than 50 lead primary NAAQS as a measure of to construct a temporary enclosure percent of the applicable limit. evaluating acceptability or would exceed the time to make a unacceptability of risk from exposure to • An exemption was provided for temporary or permanent repair. The lead emissions from sources in this proposed rule has been modified to THC testing if a facility has installed category. The lead primary NAAQS extend the deadline for required and is using a THC CEMS. targets protection to children living near maintenance and repair on total • The time between D/F testing (see sources, such as secondary lead enclosures to one week after 76 FR 29072) was changed from once smelters, who are exposed at the level identification of any gaps, breaks, every 5 years to once every 6 years, in of the standard—the population most separations, leak points or other anticipation that most facilities would sensitive to the health impacts of these possible routes for emissions of lead to be on a biannual testing schedule for emissions. Moreover, using the lead the atmosphere. The final rule also lead and THC, and this schedule would primary NAAQS to assess acceptability clarifies that once an item that is not allow coordination of the two required of risk does not amount to an otherwise subject to total enclosure tests. impermissible implementation of the requirements has been cleaned, its lead primary NAAQS as industry • The conditions for the performance maintenance is no longer subject to the commenters would have it. Full enclosure requirement. tests (see 76 FR 29072) were changed responses to these comments are found • The proposed rule has been edited from ‘‘under such conditions as the in the Response to Comment Document to allow for existing control devices to Administrator specifies * * *’’ to for this rulemaking, available in docket treat the ventilation from temporary ‘‘maximum representative operating ID EPA–HQ–OAR–2011–0344. conditions for the process’’. enclosures constructed for maintenance B. Total Enclosure Requirements purposes if the device and its permit • The EPA also added a provision Comment: Several commenters account for increased airflow and stating that sources which operate a supported a requirement for total emissions for this activity. HEPA filter or WESP system • enclosures of enumerated sources of The roof washing proposed work downstream of a primary particulate practice (see 76 FR 29073) has been fugitive emissions. Some of those (lead) control device are not subject to commenters did not support the removed from the list of required a bag leak detection system (BLDS) fugitive emission work practices. alternative that would have allowed requirement. • The specific proposed water ambient monitoring in lieu of total application rate of 0.48 gallons per 6. Other Changes enclosures. square yard (see 76 FR 29073) has been According to one commenter, ‘‘The removed from the road washing • A provision was added for sources purpose of establishing emission requirement. to develop procedures to minimize standards and control technology • The proposed battery storage area emissions of THC limits during periods regulations is to reduce, by empirically inspection frequency (see 76 FR 29073) of startup and shutdown. proven technical means, the release of hazardous air pollutants into the has been changed from twice per day to • We modified the proposed plastic atmosphere.’’ The commenter therefore once per week to maintain consistency separation work practice requirement with inspection frequency required recommended that the EPA require (see 76 FR 29072) to include only under other regulatory programs. enclosures in all instances to limit • The proposed requirement to plastic battery casing materials from fugitive emissions. collect wash water in a container that is automotive batteries (which comprise According to another commenter, not open to the atmosphere (see 76 FR the vast majority of input plastics). ‘‘The non-cancer and cancer risk 29073) has been removed. • The proposed recordkeeping and reductions associated with total • The proposed rule (see 76 FR reporting requirements were revised to enclosures of all lead bearing processes 29073) has been revised to clarify that be consistent with the other changes to reduce fugitive emissions are clearly lead-bearing dust must be collected and made to the rule. demonstrated for all facilities in the post transported within closed conveyor control scenario contained in the A tracked changes version of the systems or in sealed, lead-proof residual risk assessment. These benefits regulatory language incorporating the containers while other lead bearing also have been observed based on our material must be contained and covered changes in this action is available in the experience with total enclosures that are in a manner that prevents spillage or docket. Additionally, a summary of the under negative pressure and vented to dust formation. public comments that are not in the air pollution controls. * * * The annual • The proposed requirement for preamble can be found in the comment geometric mean of lead measured [in cleaning after an accidental release (see response document available in the ambient air near the facility] dropped 76 FR 29073) has been clarified to docket. from a high of 0.71 mg/m3 (1987) to 0.06 include only those releases that exceed mg/m3 (1993) after all of the point source

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and fugitive emission controls were in HQ–OAR–2011–0344. About half of the (e.g., lead taps, charging hoppers, etc.) place. The benefits of requiring total existing facilities currently have such can be an effective method to control enclosures as demonstrated by the full enclosures, and a few other facilities emissions from these sources. We also ambient monitoring results were clearly are currently constructing such recognize that these devices are apparent to the Department and enclosures. The prevalence of total important to minimize exposure of surrounding community. Based on that enclosures in the secondary lead workers to lead dust. However, we note experience, we do not support the smelting source category suggests that that the enclosure hoods are not 100 alternative of allowing partial this measure is cost effective and it is percent effective at controlling these enclosures with an air monitoring clearly technically feasible. There is emissions, and that process fugitives requirement option in this rulemaking.’’ more certainty that fugitive emissions that are amenable to control with hoods Another commenter stated ‘‘We do are well controlled through the use of are not the only source of fugitive not support allowing partial enclosures total enclosures than would exist with emissions from secondary lead with an air monitoring requirement the proposed alternative to use fenceline processes. We thus disagree that option, since the total enclosures have ambient monitoring. The work practice enclosure hoods without total been shown to be extremely effective in standards in the final rule have been enclosures represent a better alternative reducing fugitive emissions of lead and revised from those proposed to ensure for controlling all fugitive emissions. the other metal HAPs from these that there are no requirements that pose Comment: Several commenters sources.’’ safety hazards, are unnecessary to objected to requiring monitoring of both One commenter indicated that neither achieve emission reductions, or result in building pressure differential and the proposed alternative (total enclosure or duplicative burden on regulated in-draft velocity at building openings for the ambient monitoring alternative) facilities. The work practice standards the total enclosures and stated that the complies with CAA section 112(d)(6) in the final rule are already duplicate monitoring requirements are but did state that ‘‘additional health risk implemented at some of the facilities. redundant and unjustified. The reductions would occur if a facility used Furthermore, we assumed at proposal commenters also requested that the EPA total enclosure.’’ This commenter also that total enclosures would be required abandon its proposed specific minimum stated that the EPA should require total at all facilities regardless of which velocity requirement at doorway enclosures and work practice standards option they chose. The facilities that do openings or lower the proposed beyond those included in the proposed not operate total enclosures are unlikely requirement of 300 feet per minute. Two rule to control fugitive dust emissions of to achieve fenceline ambient commenters stated that ‘‘A number of arsenic and cadmium and achieve concentrations at or below the lead the existing total enclosures in this reductions in cancer and non-cancer primary NAAQS. The monitoring data industry do not meet the proposed 300 risks from these pollutants. just mentioned and the ICR responses feet per minute in-draft velocity Alternatively, one commenter indicated that the facilities which have requirement, and their modification to disagreed that total enclosure is the totally enclosed their processes are achieve 300 feet per minute would most effective method to reduce generally achieving ambient require substantial expenditures.’’ One emissions. According to the commenter, concentrations substantially lower than commenter stated that much larger ‘‘Capturing emissions from secondary those which have not totally enclosed. volumes of air would be exhausted from lead smelting sources at the point of Since we based our analysis at proposal the smelter buildings and that ‘‘the emission and controlling such on the assumption that all facilities greater the volume of air exhausted, the emissions through the use of baghouses would have to construct total enclosures greater the emissions of lead. Therefore equipped with secondary HEPA and assumed that the rule would increasing exhaust volumes above filtration systems represents a better impose those costs on all sources which current levels could possibly have alternative to constructing and have not yet installed total enclosures, negative impacts.’’ The commenters maintaining total enclosures around our cost analysis has already accounted requested an exemption from secondary lead smelting sources.’’ for the cost of total enclosure. See 76 FR demonstration of compliance with the Response: As explained at 76 FR at 29064 and the cost impacts memo in-draft requirements for access points 29059 in the proposed rule and below, that supported the proposed rule that are normally closed. One the EPA is amending the NESHAP for (docket ID EPA–HQ–OAR–2011–0344– commenter requested clarification of the fugitive emissions of lead both because 0040 at page 8). The total enclosure use of the terms ‘‘leeward’’ and these emissions pose an unacceptable requirements in section 63.544 ensure ‘‘windward’’ in the context of the risk under CAA section 112(f) and that process fugitive emissions sources differential pressure monitoring. because it is technically appropriate and and other fugitive dust emissions One commenter stated that they have necessary to do so pursuant to section sources will not generate fugitive demonstrated that none of these total 112(d)(6). With respect to what changes emissions that escape the facility enclosure monitoring requirements and to adopt, we agree with those uncontrolled. The work practice continuous monitoring systems are commenters who argued that total standards for process fugitive emissions necessary to reduce actual emissions of enclosures maintained under negative sources and fugitive dust emissions HAP. The commenter recommended pressure are the most effective means by sources in section 63.545 ensure that continued compliance with the original which to reduce fugitive emissions. fugitive dust is not generated outside of 1997 NESHAP, which requires facilities Facilities in this source category that total enclosures and that fugitive dust to demonstrate that total enclosures implement total enclosures as a means generated inside total enclosures is not were maintained under constant of controlling fugitive emissions are able carried outside of those enclosures. negative pressure by maintaining to achieve significantly lower ambient We note that one commenter’s process enclosure hoods at the lead concentrations near the boundaries statements appear to pertain to process prescribed face velocities. As an of their facilities, as clearly fugitive emissions from secondary lead alternative, measurements of face demonstrated in the Summary of smelters that are captured by enclosure velocity at doorways and windows and Ambient Lead Monitoring Data Around hoods and vented to a control device. pressure measurements at prescribed Secondary Lead Smelting Facilities We agree that enclosure hoods near intervals would provide a viable document available in docket ID EPA– sources of process fugitive emissions monitoring option.

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Response: We agree with the Comment: Several commenters commenter suggested that the rule ‘‘be commenters that monitoring of both objected to the enclosure requirement at changed to require initiation of repairs building differential pressure and in- all areas where fabric filters are handled within 24 hours of discovery and draft velocity at building openings is or processed. One commenter stated completion of repairs as soon as unnecessary. However, we disagree that that ‘‘This is impractical in that all practicable. Rather than seeking and continuous monitoring of differential baghouses are not and cannot be located obtaining approval for extensions from pressure is overly prescriptive. We within enclosures. Therefore, in the the Administrator, the source should be believe that monitoring of building replacement of used bag filters, there required to file and to keep a record differential pressure is the most accurate will always be a point in which the bags listing when the problem was means by which to ensure that the must be handled in order to get them discovered, when the repair was building is under negative pressure at into a closed container for transport.’’ initiated and when the repair was all times. This method provides direct Two commenters stated that ‘‘The first completed.’’ Another commenter stated measurements that the building is point at which used fabric filters are that ‘‘the presence of leak points is indeed maintained at negative pressure. ‘handled’ is upon removal from the irrelevant to collection as long as the Some commenters stated persuasively baghouse cell, usually on a catwalk size and location of these leak points that specifying doorway velocities could running along the side of the baghouse. does not change over time. Once a require substantial additional in-draft, It is not appropriate to require all such facility documents that any total which could cause strain to building areas to be placed within total enclosure criteria (for negative pressure) structures, wind chill problems for enclosures. Best practices in the are met, the presence of existing leak workers, and pilot lights being industry when replacing fabric filters points is irrelevant.’’ extinguished. We have therefore not are to place the used filter bags in sealed One commenter requested that the adopted the proposed requirement to plastic bags or other closed containers EPA allow facilities to route emissions measure in-draft velocity at the in the cell while the filters are being from partial or temporary enclosures to openings of the total enclosures but replaced, but prior to removing the used control devices that meet the have retained the continuous filters to the catwalk.’’ performance requirements stated in the differential pressure monitoring Response: We agree that the proposed rule. According to the commenter, ‘‘This requirement. However, we have altered requirement to enclose all areas where compliance option is requested, because the differential pressure requirement fabric filters are handled or processed as written, the provisions would require from 0.02 mm of mercury to 0.013 mm may be impractical at times, the manufacturer’s specification alone and of mercury to be consistent with EPA enclosure of a catwalk being an not allow use of an otherwise compliant Method 204’s criteria for verification of example. We also agree that fabric filters control device.’’ cannot be enclosed under the a permanent or temporary total Response: With regard to the enclosure. With regard to the comment circumstances described in these comment that the proposed that increased volumes of air exhausted comments. We have therefore revised maintenance practices were overly through control devices would increase the regulatory text to require used fabric prescriptive, we have revised the overall emissions, it is unclear to us filters to be placed in sealed plastic bags regulatory text to require performance of how directing previously uncontrolled or containers before removal from the maintenance ‘‘in a manner that fugitive emissions through a fabric filter baghouse cell. minimizes emissions of fugitive dust’’ would increase the overall emissions C. Work Practice Standard that includes several options to control from a structure. Requirements for Fugitive Emissions Comment: Several commenters fugitive emissions. With regard to the objected to requiring a back-up power Comment: Several industry comment pertaining to inspection and source for the differential pressure respondents expressed concern about maintenance of fabric filters, we have monitors. According to the commenters, the proposed requirement to perform all edited the regulatory text such that this during a power outage, the ‘‘negative maintenance activities for any enclosure requirement does not apply to pressure would not be maintained and equipment potentially contaminated inspection and maintenance practices the pressure drop monitors would with lead bearing material inside an for fabric filters. simply be measuring and documenting enclosure. We also agree with commenters that this known and predictable fact * * *. Two commenters requested making prompt and timely repairs for The same information could be obtained clarification that once an item that is not leaks is often more effective than first by requiring facilities to note periods already subject to total enclosure constructing a total enclosure around when power has been lost to the requirements has been cleaned, its the leak. However, we believe that the ventilation fans such that negative maintenance or repair is not subject to formulation to initiate repairs ‘‘as soon pressure could not be maintained.’’ One the enclosure requirements. Both as practicable’’ is too vague. We have commenter recommended requiring an commenters also gave an example of edited the regulatory text to require uninterruptible power supply for the circumstances where the best course of completion of repairs to enclosures control device as well as the total action would be to make an immediate within one week and inserted language enclosure monitoring system or repair on a leak in an elevated duct allowing facilities to initiate immediate removing the current requirement. rather than wait until a temporary repairs of ductwork or structure leaks Response: We agree with the structure was constructed. One without an enclosure provided that the commenters’ assessment that a back-up commenter expressed concern that time necessary to construct a temporary power source for the building inspection and maintenance of filters enclosure would exceed the time differential pressure monitors is not that are in need of removal and necessary to make a temporary or needed. We also agree with the replacement would need to be permanent repair. This change ensures commenters’ suggestion to include a performed within a total enclosure. that the requirement is technically recordkeeping provision for power Two commenters stated that 72 hours practicable and the most cost-effective outages that occur for the building to make repairs to any gaps or leak means for fixing leaks while minimizing ventilation systems. The regulatory text points in enclosures or structures was the period during which the leak causes has been edited accordingly. not feasible to implement. One emissions.

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We disagree with the commenter that and minimum water application rates to requirement to pave ‘‘all areas subject to the presence of a leak point is irrelevant individual facilities and, as relevant, vehicle traffic’’ to ‘‘all areas subject to to collection as long as the size and their permitting authorities.’’ According routine vehicle traffic.’’ The commenter location of these leak points do not to the commenter, ‘‘EPA should further noted that areas not subject to routine change over time. Total enclosures are exempt pavement cleaning on days traffic do not have the potential to designed with openings of specific size when natural precipitation makes generate significant quantities of and location to provide appropriate cleaning unnecessary or when sand or a fugitive dust and that paving these areas airflow into a building and to maintain similar material has been spread on would increase the amount of storm the negative pressure at all locations. plant roadways to provide traction on water generated. Multiple leak points at different ice or snow.’’ Response: We agree with the locations of non-uniform size would be Two commenters also expressed commenter that there may be some difficult to measure and document. It concerns that the rule requires instances where paving and cleaning a would also be difficult to ensure that the pavement cleaning in the battery roadway is impractical. We have building negative pressure is uniform at breaking, furnace, refining and casting included an exemption in the rule for all locations. areas when a total enclosure is not used. limited access and limited use roadways We agree with the commenter that According to the commenters, certain that access remote, infrequently used facilities should be allowed to route locations within these areas are not locations on the facility’s property. See emissions from partial temporary capable of being cleaned on a routine 40 CFR 63.545(c)(2). enclosures to existing control devices basis due to safety, access, or other Comment: Two commenters objected that meet the performance specification reasons. The commenters give an to the proposed frequency of inspection stated in the rule provided the control example of paved areas under process of the unenclosed battery storage areas. device has the capability to equipment as being an area that is not One commenter ‘‘finds this requirement accommodate the additional air flow safe to access during operation of the to impose an administrative burden of and that its permit accounts for the equipment. One commenter also stated minimal value.’’ According to the additional air flow and emissions. The that roadway cleaning and washing of commenter, ‘‘Spent lead acid batteries, regulatory text has been edited truck tires and undercarriages are even if accidentally broken and leaking, accordingly. redundant requirements with no pose minimal potential for generation of Comment: Several commenters incremental benefit. fugitive dust containing HAPs. expressed concerns about the Response: We agree with the Inspection of these areas is typically requirement in the proposed rule for commenters’ suggestion to remove the required on a weekly basis as part of the cleaning of building rooftops. The minimum water application rate facilities’ Resource Conservation and commenters stated that the EPA did not requirement from the regulatory text. Recovery Act obligations and such provide a basis to demonstrate that roof We note that the proposal did include frequency is sufficient to satisfy the washing is effective or necessary. One an exemption for cleaning on days when intent of this proposed rule as well.’’ commenter stated that roof cleaning was natural precipitation makes cleaning One commenter suggests that unnecessary to operate in compliance unnecessary or when sand or a similar identifying and mitigating leaks within with the current lead NAAQS, and that material has been spread on plant 72 hours will prevent generation of current work practices are sufficient to roadways to provide traction on ice or fugitive lead emissions. The commenter meet the standard. Several commenters snow. That exemption remains in the also states that it is unclear whether also stated that roof cleaning is final rule. See 40 CFR 63.545(c)(2). batteries stored in partial enclosures are potentially dangerous to workers and in With regard to the comments exempted from the twice daily some cases not possible due to the regarding pavement cleaning inspection requirement and proposes rooftop construction and weather requirements when total enclosures are the following regulatory language conditions. Several commenters noted not used, we note that the final rule incorporating both of these issues. that the requirement unnecessarily requires total enclosures rather than applied at all times, even when natural including them as an option. You must inspect any batteries that are not stored in a partial or total enclosure once precipitation makes cleaning Furthermore, it is our understanding each day and move any broken batteries to unnecessary. that in the cases where mobile sweeping a partial or total enclosure within 72 hours Response: We agree that the proposed or wet washing equipment is not of detection. You must also clean residue roof washing requirement may not be feasible (e.g., underneath process from broken batteries within 72 hours of feasible and may cause worker safety equipment), facilities can utilize hand identification. Storage of batteries in trucks hazards in some cases, and we have held vacuum equipment to clean these and railcars consistent with Department of therefore removed this activity from the areas. Therefore, we do not believe it is Transportation requirements are specifically exempted from these requirements. list of required fugitive emission work appropriate to exempt these areas from practices. the cleaning requirements since these Response: We agree with the Comment: Several commenters areas contain fugitive lead which can be commenters that requiring inspection of opposed the specific requirement for a emitted and reach human and these areas on a twice daily basis is not mobile vacuum sweeper used for environmental receptors. necessary. We have modified the pavement cleaning when a water flush We disagree with the commenter that regulatory text to require inspection of is used. The commenters stated that the roadway cleaning and undercarriage these areas once per week—consistent EPA provides no justification for the washing are redundant requirements. with requirements implementing the minimum water application rate of 0.48 While truck tires may be a significant hazardous waste subtitle of RCRA (see gallons per square yard of pavement source of lead bearing material on the 40 CFR 264.174 and 264.1101(c)(4) (and cleaned or evidence that equipment roadway, we understand that they are the EPA sees no reason to deviate from currently used could achieve this rate. not the only source. Therefore, we have these long-standing requirements here, The commenters suggested that this maintained both requirements in the given that they were adopted to be specific requirement be replaced with a final rule. ‘‘protective of human health and the ‘‘requirement that pavement be Comment: One commenter environment’’ from management of periodically cleaned, leaving methods, recommended modifying the hazardous waste)—with removal of

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broken batteries within 72 hours of The definition of lead bearing from the slag-processing rotary furnace detection. We have also clarified that material in the rule clarifies that lead at RSR’s Middletown, NY facility. One the inspection requirement does not bearing materials must contain at least commenter stated that rotary furnace apply to battery storage areas that are in 100 ppm of lead (measured via Toxicity standards should not be based on a total enclosure. We do not believe that Characteristic Leaching Procedure (EPA emissions that are not from stand-alone an exemption for storage of batteries in Method 1311) lead test results <5 mg/l). rotary furnace operations. The trucks and railcars is necessary since the Intact batteries and lead ingot product commenter stated that the EPA should inspection frequency was reduced to are excluded from this requirement. not derive standards for rotary furnaces once per week. Comment: Some commenters agreed from performance of a different source Comment: One commenter objected to that the secondary lead facilities operate type or subcategory that includes a the requirement to collect wash water in a separation process at their battery furnace combination (i.e., reverberatory/ a container that is not open to the breakers to separate polypropylene short rotary furnace). The commenter atmosphere. The commenter stated that battery case material as a valuable also contends that there are insufficient ‘‘Covering of these collection tanks is recyclable commodity. However, not all data available to establish limits for not necessary because lead dissolved spent lead acid batteries are amenable to D/F and THC from rotary furnaces. The and/or suspended in water does not separation. Certain battery types such as commenter contends that the EPA used have a pathway for becoming a fugitive small sealed-lead-acid batteries and one source that is not representative of emission.’’ certain industrial lead-acid batteries are or similar to true rotary furnace Response: We agree with the fed into the blast furnace without ever operation to establish the limits for commenter that so long as the contents passing through the facility’s battery ‘‘rotary furnaces.’’ The commenter in the container are wet, there should be breaker. These batteries are either too stated that the emissions limit no fugitive emissions. We have removed small or too large to be broken by the established in the proposed rule is the requirement to collect wash water in automated battery breaking equipment. arbitrary because it is not based on a sealed container. One commenter requested that the EPA operations of rotary furnaces using lead Comment: Two commenters requested estimate the cost of the systems that bearing materials from lead acid changes to the requirement to transport would be required. Another commenter batteries as feedstock. lead bearing materials in sealed leak- offered that mandatory separation could The commenter notes that RSR’s proof containers. One commenter be used for facilities that are not Middletown, NY facility, whose test proposed that containers be ‘‘covered’’ meeting TEQ limits as one of several data were used as the basis for the THC rather than ‘‘sealed leak-proof’’ and that options to reduce emissions. Two and D/F limits, only uses their rotary an exemption be made for off-road commenters stated that the current furnace to process one type of lead dump trucks. The suggestion was made dioxin emission levels pose no bearing material, reverberatory slag, and because ‘‘sealed leak-proof containers incremental health risk presented by this furnace is not representative of the * * * cannot be attained, but covers can background dioxin and that there is no full capabilities of rotary furnace be for most trucks used in such valid justification for imposing this operation. The commenter notes that transport * * *. no approved sealing burden. JCI’s Florence Recycling Center plans to covers are made for the 30-ton, 6-wheel, Response: Based on these comments, utilize stand-alone rotary furnaces to off-road dump trucks used at the we have revised the proposed plastics process lead paste, battery components, facility.’’ One commenter supported the separation work practice requirement to and ‘‘other materials with recoverable requirement for transporting lead be specific to automotive batteries, quantities of lead.’’ The commenter bearing materials within an enclosure or which should be amenable to separation further notes that the emissions from in a sealed container, but suggested that based on current practices used in the RSR’s short rotary furnace (SRF) and lead bearing materials with little industry. We agree with the commenters drying kiln are combined, and it is potential for production of fugitive lead that some industrial batteries are not unclear from information in the docket dust from transportation should be easily processed in battery breakers and whether testing of the SRF occurred at excluded, including intact batteries, raw that the retrofits or additional a location prior to the combination of materials with lead content that is not equipment required to process such these exhaust streams. The commenter also stated that JCI considered recoverable such as iron, batteries are not justified since and RSR differ in raw materials used in caustic, coal, wood, sulfur and other automotive batteries make up the vast the facilities’ operations. RSR’s Title V similar materials, and products from the majority of lead acid batteries processed application for its Middletown facility recycling process. at these facilities. We believe that Response: We agree that the proposed plastics separation from automotive indicates that RSR may process automotive, industrial, and specialty- requirement for material transport batteries is sufficient to minimize type lead-acid batteries as well as lead should be modified. The intent of the emissions of organic HAP. We further bearing materials received from lead- proposed requirement was to prevent note that the use of battery breakers to acid battery manufacturing plants and fugitive lead dust formation outside of separate plastics from automotive scrap metal in its reverberatory furnace. a total enclosure. We have therefore batteries is clearly a development in JCI’s furnace feed is from automotive modified the requirement at 63.545(c)(7) practices that limits emissions of and marine batteries and from lead to read as follows: organic HAP, including dioxin, and is therefore an appropriate part of a bearing materials from other JCI ‘‘You must transport all lead bearing dust standard under CAA section 112(d)(6). facilities. The commenter contends that, within closed conveyor systems or in sealed, since the EPA considered no data leak-proof containers, unless the transport D. Emission Standards for Organic HAP representative of a rotary furnace activities are contained within an enclosure. From Rotary Furnaces All other lead bearing material must be operation such as that which will be contained and covered for transport outside Comment: We received several operated at the JCI Florence Recycling of a total enclosure in a manner that prevents comments on the proposed D/F and Center, a numeric limit for this category spillage or dust formation. Intact batteries THC MACT floor limits for the rotary cannot be assigned. and lead ingot product are exempt from the furnace subcategory that were based on One commenter also stated that the requirement to be covered for transport.’’ data (two test runs, see 76 FR at 29049) stack test for RSR’s SRF that was used

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to develop D/F and THC emission limits slag. See 76 FR at 29049–29050. (A not substantively alter our decisions for ‘‘rotary furnaces’’ included only two complete test consists of three test runs.) under section 112(f). The modeling successful test runs and therefore must When calculating variability using a showed 9 of 15 facilities above the lead be considered inadequate for setting limited dataset (in this case, the two test NAAQS, down from 12 of 14 facilities emission limits since 40 CFR 63.7(e)(3) runs) the effect of variability can be at proposal. The maximum modeled requires three test runs for compliance substantial. Id. The proposed THC and lead concentration in the source demonstration purposes. D/F standards likewise were based on category decreased from about 23 times One commenter supports the two test runs and similarly reflected the NAAQS to about 16 times the individual stack emission limits for enormous statistical variability due to NAAQS. We still find that risks from THC and D/F but provides comment on the limited data. Id. at 29049/1. The this source category are not acceptable the EPA’s consideration of statistical EPA does not believe that these data are and that revisions under section variability for the rotary furnace sufficient to adopt a standard even for 112(f)(2) are therefore required, and subcategory. The commenter stated that the rotary furnace which was tested, further find that it is necessary under the Upper Prediction Limit (UPL) tends much less a rotary furnace which may section 112(d)(6) to revise the standards to inflate the variability because the be different. Accordingly, we are not for fugitive emissions considering the statistical procedure attempts to adopting standards for organic HAP developments in cost-effective control accommodate the highest emission emissions from rotary furnaces at this technologies for their control. measurement at the same facility and time and instead we intend to issue Comment: Three commenters stated not necessarily the variability between CAA section 114 information requests to that the EPA’s multipathway risk facilities as the MACT floor is intended sources operating rotary furnaces to estimates are incorrect because they to achieve. Additionally, the UPL is obtain more representative emission relied on incorrect dioxin and furan very dependent on the number of valid data and plan to propose standards for emissions from Exide’s Frisco, Texas samples. The commenter contends that, organic HAP in a future action. facility. The commenters contend that a when a suitable number of samples have However, we note that the lead emission dioxin and furan test conducted in been collected, the 99 percent standards included in this action do October 2010 at the Frisco facility confidence limit (CL) represents a range apply to rotary furnaces processing slag revealed an emissions rate of 6.2E–08 for which there is 99 percent certainty or lead acid batteries. tons/year on a toxic equivalency that the interval contains the true mean. quotient (TEQ) basis, 69 times lower The commenter suggests that caution be E. The EPA’s Risk Assessment than the estimate used by the EPA. One used when determining a MACT floor Supporting the Proposed Rule commenter noted that the exact effect from limited test data and that the 99 Comment: Two commenters stated that the difference in emissions would percent CL is more appropriate for this that the EPA’s methodology is have on the calculated risks is unknown particular industry. unreliable and incorrect. The since the EPA has not placed the full One commenter noted that the EPA commenters stated that the EPA methodology behind its multipathway did not consider a secondary lead overestimated the baseline fugitive risk calculations in the record. However, smelting facility in Puerto Rico that emissions for the Exide Frisco facility the commenter noted that assuming the operates a stand-alone rotary furnace. whose (faulty) estimates then became relationship between emissions and risk The commenter contends that even if it the basis for estimating all other is approximately linear, the EPA’s were appropriate to set MACT floor facilities’ fugitive emission rates. The calculated risk would be approximately emission rates or standards for rotary commenter stated that the EPA scaled 69 times lower than that estimated at furnaces, the EPA would have to obtain Exide’s reported fugitive emissions of proposal and less than 1 in a million. and consider data from the Puerto Rico 0.296 tpy for the blast and reverberatory The commenter further requested that facility. According to the commenter, furnace fugitive emissions to 0.32 tpy the EPA disclose its multipathway risk failure to consider data from the facility based on the assumption that fugitives calculation methodology and allow for ‘‘undermines the RTR Proposed Rule would not be on the same operating public notice-and-comment. Another and any attempt by EPA to establish schedule as process emissions. The commenter stated that the EPA’s emission standards for the rotary commenter contends that this scaling is overestimation of dioxin and furan furnace subcategory.’’ The commenter inappropriate since furnace fugitives emissions may lead to unwarranted contends that the EPA should issue a can only occur when the associated public concern about the Frisco facility. separate ICR for the Puerto Rico facility process furnaces are operating. The The commenter requested that the EPA and publish a supplemental notice of commenter further stated that the EPA include a clarifying explanation proposed rulemaking that takes into also double-counted the fugitives of 0.32 regarding the Frisco emissions data and account the emission information for tpy by assigning the value to each of the the lower multipathway risk in the final this facility. blast and reverberatory furnaces, despite rule as well as in the risk assessment Response: The EPA agrees that rotary the fact that Exide reported the value as document. furnaces fueled by natural gas could be combined emissions for both the Response: As noted in previous different from rotary furnaces operating reverberatory and blast furnace. responses, the final risk assessment using different fuel types, and that Response: The commenter is correct reflects updated emission information rotary furnaces processing slag could be in both respects. The EPA has received during the public comment different types of rotary furnaces than accordingly adjusted its calculation of period for the proposed rule. We also those processing lead acid batteries. the fugitive emissions from Exide’s note that the updated dioxin/furan test More basically, the EPA simply has Frisco facility (thereby reducing the data were not made available to the insufficient data on which to facility’s fugitive dust emissions EPA, despite repeated requests, until promulgate organic HAP standards for estimate) and adjusted the emissions June 2011. With respect to the estimated rotary furnaces. The proposed standards estimates for each facility to reflect the emissions of D/F, the commenter is for THC and D/F were based on less revised estimate of the Frisco facility. correct that EPA overestimated these than one single complete test, consisting The resulting risk results have also been emissions at proposal by a factor of 69 only of two test runs from the natural adjusted. We note that the updated for the reasons stated. Considering this gas fueled rotary furnace processing emissions estimates and risk results did updated emissions information, the EPA

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estimates that multipathway risk since the two MIR values are location that do not require installation of a associated with the Exide Frisco facility dependent and are at locations that are CEMS. is less than 1 in a million (and so widely separated. The commenter Response: The term ‘‘modified contributes very little to the estimates of further noted that the EPA has indicated source’’ appeared in the proposed rule risk posed by this source category, and in other contexts that when populations at 40 CFR 63.548(l) under the proposed is not a driver of the determination that are exposed via more than one pathway, requirement to install a CEMS for risks from this source category are the combination of exposures across measuring lead emissions on all new or unacceptable). See Residual Risk pathways must also represent a modified sources. We agree with the Assessment for the Secondary Lead reasonable maximum exposure. commenter that the terminology of Smelting Source Category, available in Response: The EPA disagrees with the ‘‘reconstructed’’ source would be more the docket, at pages 32–33. commenter. While highly unlikely (and appropriate for this requirement and This additional information does not noted as being highly unlikely in the have changed the regulatory language warrant any reopening of the proposed risk assessment document), it is accordingly. rule or comment period, however. First, theoretically possible for the person Comment: Three commenters the EPA fully disclosed its with the highest chronic inhalation requested clarification of the term multipathway risk methodology; the cancer risk to also be the same person ‘‘affected source’’ as used in the commenter’s assertions to the contrary with the highest individual proposed rule. The proposed rule uses are simply mistaken. Thus, the risk multipathway cancer risk. The EPA the terms ‘‘new sources’’, ‘‘existing assessment document along with its notes that the multipathway risk source’’ and ‘‘modified source’’ without appendices was available in the docket assessment does not provide a specific clarifying whether it is referring to for the proposed rulemaking and location for the MIR; thus, it is possible secondary lead smelters generally, or to describes in detail the methodology (although highly unlikely) that the potential emissions sources within used in the assessment. See the Residual person with the highest inhalation MIR secondary lead smelters. There is a Risk Assessment for the Secondary Lead is also consuming fish (at the fish seeming contradiction between the use Smelting Source Category, at page 10, ingestion rates described in the of the term ‘‘affected source’’ in the available in the docket. Also see docket multipathway report) from the proposed rule and the definition in 40 ID EPA–HQ–OAR–2011–0344–0037 for theoretically contaminated lake. That CFR Part 63, Subpart A general a thorough discussion of the EPA’s being said, however, we note that provisions. One commenter also human health multipathway risk considering updated emissions understands that the terms ‘‘new assessment methodology. information for this facility, updated sources’’ and ‘‘existing sources’’, as used Second, the new information multipathway results indicate in the proposed rule, are consistent with reinforces the tentative conclusion the multipathway risk associated with the the definitions as used in CAA § 112(a). EPA reached at proposal: risks Exide Frisco facility are well below one The commenter ‘‘understands EPA associated with emissions of dioxin and in a million. Considering these updated intends to address any addition of units furans from the secondary lead source results, multipathway risk would not to an ‘existing source’ consistent with category are not primary drivers in the appreciable add to any inhalation risk the provisions of the CAA’’ and unacceptable risks from this source associated with this facility. understands that the analysis as category (i.e. dioxin and furan emissions Comment: Commenter 94 stated that explained in Nine Metal Fabrication are not the reason that risks from the EPA improperly calculated the and Finishing Area Source Categories, secondary lead smelter emissions are inhalation cancer MIR for the Exide 40 CFR Part 63 (6X) NESHAP, Questions unacceptable). See 76 FR at 29055/2. Frisco facility in a vacant field to the and Answers, April 2011 would apply The new analysis reinforces that risks north of the facility within the facility’s with respect to implementation of any posed by dioxin and furan emissions are property line. The commenter noted amendments to subpart X requirements. acceptable, since emission levels are 69 that the lifetime cancer risk of the MEI The Q&A explains that the ‘‘CAA uses times less than estimated at proposal cannot be at a location within the the word ‘source’ to mean the entire (when risks from CDD and CDFs were facility property line. facility in terms of the classification of already considered to be at an Response: The commenter is correct ‘new’ vs. ‘existing’ whereas for the acceptable level). Thus, this already and the EPA has corrected the receptor Subpart 6X rule, what is referred to as acceptable level of risk is less than location resulting in a change in the the ‘affected source’ is actually one of estimated and less than one in a million. results in the final risk assessment. The the processes at the facility’’. The EPA does not agree that further MIR for this facility is now located at a Response: The EPA has clarified the comment on this issue is warranted, populated census block (based on the application of these terms in the final since further comment would not have 2001 census). rule. The definition in 40 CFR part 63, a practical effect on the rule.7 subpart A requires each relevant Comment: One commenter stated that F. Miscellaneous Changes to the standard to define the ‘‘affected source,’’ the EPA inappropriately summed risks Regulatory Text as the collection of equipment, from the inhalation and multipathway Comment: Three commenters activities, or both within a single risk assessments at the Exide Frisco requested that the EPA replace the term contiguous area and under common facility. The commenter noted that it is ‘‘modified source’’ with ‘‘reconstructed control that is included in a CAA impossible for the person with the source.’’ Neither the proposed rule nor section 112(c) source category or highest chronic inhalation cancer risk to the EPA’s general Part 63 regulations subcategory for which a section 112(d) also be the same person with the highest define the term ‘‘modified source.’’ The standard or other relevant standard is individual multipathway cancer risk term is defined in the CAA, but that established pursuant to CAA section definition would require a source to 112 unless a different definition is 7 The comment that EPA’s standards for dioxin install maximum achievable control warranted based on a published and furans do not result in significant risk technology and impose a ‘‘new source’’ justification as to why this definition reduction is misplaced given that the EPA is not adopting any risk-based (i.e., section 112(f)(2)) requirement like CEMS on a modified would result in significant standards based on the need for reduction of source, rather than appropriately administrative, practical, or emissions of dioxin and furan. imposing the existing source provisions implementation problems and why the

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different definition would resolve those essentially unchanged from the material, they are either in a stabilized problems. We have adopted a definition definition in the proposed rule. form that will not create fugitive dust or of ‘‘affected source’’ in this rulemaking Fugitive dust formation has been in a container that prevents fugitive dust as any of the listed individual sources identified as the major contributor to formation. These materials include: lead at a secondary lead smelter. This ambient lead concentrations near ingot products, stormwater and application of the term ‘‘affected secondary lead smelters. Piles where wastewater, intact batteries, lead bearing source’’ is the same as was used in the lead bearing materials are stored were material that is stored in closed 1997 NESHAP for secondary lead. The identified as one of the major sources of containers or enclosed mechanical term ‘‘affected source’’ is used in the fugitive lead emissions. However, there conveyors, and clean battery casing final rule primarily in the context of was no definition for lead-bearing material. new sources. This definition is material in the proposed rule that could Comment: One commenter requested appropriate for the secondary lead be used to make a determination of a change to the definition of ‘‘plant source category because the chief source which materials needed to be handled roadway’’ specifically to exclude of emissions from these facilities are the in a manner that prevents dust finished lead product storage areas and furnaces, and as these furnaces are formation. By adding a definition of roadways or traffic areas located within replaced or reconstructed, the ‘‘lead bearing material’’ to the rule, we enclosed buildings. replacement equipment would be have clarified and quantified the Response: We accept the commenter’s subject to the standard for a new source. definition of ‘‘materials storage and suggestion to exclude roadways or A ‘‘new source’’ has also been defined handling area.’’ traffic areas located within enclosed as any affected source at a secondary The EPA is using the Toxicity buildings from the definition of ‘‘plant lead facility that undergoes construction Characteristic Leaching Procedure roadway.’’ However, we do not believe or reconstruction after May 19, 2011, the (TCLP), EPA Method 1311 to measure that it is appropriate to exclude finished date of the proposed CAA section which materials are lead-bearing, and lead product storage areas since these 112(f)(2) and 112(d)(6) rules. A building using the characteristic level of 5.0 mg/ areas may be located in close proximity that is constructed for the purpose of l (in the extract from the test) as the to areas that may require cleaning (e.g., controlling fugitive emissions from an specific level for being lead-bearing. See slag storage areas). existing source is not considered to be 40 CFR 261.24. This assures that only Comment: One commenter requested a new source because it is effectively a materials with at least 100 ppm total a change to the definition of process control device for fugitive emissions. lead will be considered to be ‘lead- vent. As currently drafted, it appears Comment: One commenter noted that bearing’. See EPA Method 1311 section overly broad and could lead to the last sentence in the current 2.2 which describes that the liquid to confusion concerning the ventilation definition of ‘‘Materials storage and solid ratio of material tested should be systems that must be tested. handling area’’ has been deleted in the 20:1 (i.e. 5 mg/l in the TCLP extract is Response: We have made revisions to proposed definition. This sentence equal to at least 100 ppm in the material the regulatory text to clarify that the reads: ‘‘Materials storage and handling being tested). The specific definition of term ‘‘process vent’’ includes various area does not include areas used lead bearing material chosen ensures process vents and vents from buildings exclusively for storage of blast furnace that materials that contain relatively containing lead bearing material. Vents slag.’’ The commenter disagreed with substantial amounts of lead (0.01 from office or other non-process areas the EPA’s assessment that this is a percent) are included while minimizing are not considered to be process vents. minor change. ‘‘EPA should provide an additional testing burden for facilities Comment: Two comments were explanation of what changed who must determine what does or does received on the terminology used for a circumstances justify a new rule.’’ Two not meet the definition. Testing burden lead CEMS. According to the other commenters requested that the is minimized because facilities already commenter, ‘‘Paragraph 63.548(m) definition be modified to exclude the use the TCLP to determine whether or specifies that lead CEMS be ‘continuous transfer of raw materials of any type in not the wastes they manage are emission rate monitors.’ The standard is enclosed conveyors. The commenter hazardous, pursuant to subtitle C of the a concentration standard, not an stated that ‘‘as currently worded, the Resource Conservation and Recovery emission rate standard, so the term enclosure requirement proposed would Act. Imposing a different threshold for ‘‘continuous emission rate monitor’’ is apply to handling of fabric filter dust in defining material as ‘‘lead bearing’’ not appropriate’’. Since flow and enclosed conveyors, containers, or in could thus impose duplicative or concentration monitors are needed to wet slurried form, which is conflicting requirements between calculate compliance with the flow unnecessary.’’ The commenter subpart X and other regulatory regimes. weighted average, one commenter suggested revising the definition to Furthermore, the TCLP is a test protocol recommended a requirement for flow include the following: ‘‘Material storage which includes a grinding step, which and concentration monitors rather than and handling area shall not include any is a conservative measure of citing a type of monitoring system that closed containers or enclosed determining whether a material could is not applicable to the standard. mechanical conveyors.’’ generate fugitive emissions. See Method Response: We agree with the Response: A definition of ‘‘lead 1311 steps 7.1.3 and 7.2.10. commenter that the term continuous bearing material’’ has been added to the To address the concern that fabric emissions rate monitor is not final rule. Rather than include or filter dust in enclosed conveyors, appropriate. We have replaced the term exclude any one particular material in containers or wet slurries must be ‘‘continuous emissions rate monitor’’ the definition of ‘‘materials storage and additionally handled only inside an with ‘‘continuous emissions monitoring handling area’’ based on the originating enclosure, we have added an exemption system.’’ process, this definition establishes lead from the enclosure requirement for Comment: Two commenters noted content as the criterion for determining materials that are ‘‘lead bearing’’ but are that the term ‘‘accidental release’’ is not whether materials must be handled in not expected to generate fugitive lead defined in the rule. The commenters such a manner as to prevent lead dust dust. While these materials do contain recommended that the EPA use the formation. The definition of ‘‘materials lead in amounts that could otherwise CERCLA reportable quantity threshold storage and handling area’’ remains meet the definition of lead bearing of 10 pounds to define an accidental

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release of lead-containing dust. Two there are eight subsections applicable to commenter contends that the East Penn commenters recommended that the 40 CFR 63.544(d) and subsection (d)(2) facility currently conducts biannual requirement to initiate cleaning within further refers to meeting requirements testing for lead and still maintains one hour of a release be changed to through (d)(8). compliance with the lead NAAQS and require that the facility initiate cleaning Response: The EPA agrees with the applicable subpart X emission activities within one hour after commenter and has made the suggested standards. The commenter further discovery of an accidental release. change in the regulatory text at 40 CFR argued that the EPA has not Response: We accept the commenters’ 63.544(d). demonstrated any environmental suggestion to use the CERCLA Comment: One commenter noted that benefits associated with annual testing reportable quantity threshold of 10 proposed 40 CFR 63.543(i) requires that versus biannual testing for well pounds to define an accidental release sources conduct testing for process controlled facilities. The commenter of lead-containing dust. We also accept vents, ‘‘* * * under such conditions as contends that the East Penn facility has the commenters’ suggestion to require the administrator specifies based on made strategic decisions to invest initiation of cleaning within one hour of representative performance of the capital resources to reduce lead discovery of an accidental release. affected source for the period being emissions and that the removal of the Comment: One commenter tested.’’ The commenter requested that biannual testing exemption would recommended that the definition of the EPA replace this ‘‘cumbersome’’ unnecessarily increase the annual ‘‘maintenance activity’’ be changed from language with ‘‘* * * under normal operating costs of the facility. ‘‘any of the following routine operating conditions.’’ Response: We agree with the maintenance and repair activities that Response: We have modified the text commenter that a biannual testing generate fugitive lead dust:’’ to ‘‘any of to require sources to conduct testing exemption for well performing facilities the following maintenance and repair ‘‘under maximum representative can be retained in this NESHAP. We activities when they generate fugitive operating conditions for the process.’’ have added an exemption for any stacks lead dust:’’ The term maximum is included to that report a lead concentration of 0.1 Response: We do not agree with the ensure that the testing occurs during a mg/dscm or lower allowing biannual commenter’s proposed change to the time period of full production at the testing. The concept of decreased testing definition of ‘‘maintenance activity.’’ If facility that is representative of normal frequency for well-performing sources this definition was adopted, the facility operation. This language allows sources was discussed in the proposal as a part would be allowed to proceed with a to develop test conditions which of the fenceline monitoring approach maintenance activity and then, if the approximate the variability they can (see 76 FR at 29057). activity began generating dust, controls reasonably encounter during normal Comment: Two commenters disagreed would need to be adopted but operation. Parametric monitoring with the annual testing requirement for otherwise-controllable lead emissions requirements, based on parameters total hydrocarbons (THC). One would be released to ambient air. measured during the performance test, commenter stated that since the risk However, we have modified the would then reasonably reflect this assessment did not identify significant definition to read ‘‘any of the following operating variability and afford the risks drivers among the organic HAP routine maintenance and repair source flexibility in its day-to-day represented by THC, the THC testing activities that could generate fugitive operation. Cf. Cement Kiln Recycling should be conducted concurrently with lead dust.’’ This definition ensures that Coalition v. EPA, 255 F.855, 866–67 (DC the dioxin and furan tests every 5 years proactive, rather than reactive, actions Cir. 2001) (upholding use of such data with continuous compliance would be taken for activities with the to set MACT standards under CAA demonstrated via afterburner potential to generate lead dust. section 112(d)(3)). temperature monitoring. Another Comment: One commenter stated that Comment: One commenter noted that commenter stated that requiring annual a definition of lead-bearing material Table 3 of the proposed rule is THC tests is redundant and unnecessary should be added and should include improperly labeled, ‘‘table 3 to Subpart if a CEMS is installed and operated per such characteristics as the material X of Part 60—Toxic Equivalency 40 CFR 63.543(k). should be semi-granular, have a lead Factors.’’ As the commenter points out, Response: We disagree with the content of greater than 10 percent, and the table is included in 40 CFR part 63, commenter that THC testing should be produce visible fugitive emissions when not 40 CFR part 60. conducted on the same schedule as handled or transported. Response: The EPA agrees with the dioxins and furans. Testing for THC is Response: As noted above, we have commenter and has made the suggested substantially less expensive than testing added a definition of lead-bearing change to Table 3 of the proposed rule. for dioxins and furans and we do not material to the regulatory text. However, Comment: Two commenters pointed believe annual THC testing presents an we believe that a 10 percent lead out that there is a typographical error in unnecessary burden. However, we have content is too high. We have defined Equation 2 of the proposed rule at 40 added an exemption allowing biannual lead-bearing material in the rule as CFR 63.543(c). The definition of the testing of THC for any stack that reports material with lead content of 5 mg/l or term CELI includes the word lead, concentrations that are less than half of greater as measured by the TCLP though the equation is not applicable to the applicable emissions limit. Annual (Method 1311), which means that lead. stack testing is obviously not required if materials would need to contain at least Response: The EPA agrees with the a THC CEMS is used. 100 ppm of lead. This is equivalent to commenter and has adjusted the Comment: Three commenters stated the toxicity characteristic level for a definition of the term CELI in Equation that the EPA should allow facilities to hazardous waste containing lead as 2 of 40 CFR 63.543(c) accordingly. use EPA Method 12 for lead compounds defined at 40 CFR 261.24. to calculate compliance with the Comment: One commenter noted that G. Emission Testing Methods and process vent limitations in order to be 40 CFR 63.544(d) of the proposed rule Frequency consistent with testing requirements makes reference to the requirements in Comment: Two commenters stated that exist in many facility permits. subsections (d)(1) through (d)(4). their support for biannual testing for Response: We agree that facilities However, as the commenter points out, well performing facilities. One should be given the option of using EPA

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Method 12. The regulatory text has been which compliance with the THC gas and small amounts of coke with no edited accordingly. standard has been demonstrated during lead acid batteries fed to the furnace. It Comment: Three commenters stated startup of a furnace. The blast furnace is impossible for furnace exhaust to be that the BLDS exemption for baghouses crucible must be heated for up to 12 maintained within the window equipped with HEPA filters should be hours before raw materials can be prescribed by 40 CFR 63.548(h)(4) retained. One commenter stated that to charged. The reverberatory furnace cold during periods of startup and shutdown. install BLDS’s on HEPA filtered stacks startups occur over an extended period However, the inability to maintain this is excessive and unwarranted. The also. There is no introduction of temperature in secondary lead smelter commenter also believes that annual feedstock during the warm-up process furnace exhaust does not indicate high stack testing for sources equipped with and, therefore, no emissions of process- emissions of THC during these periods. HEPA filtration is not necessary. related THC emissions. Emissions In fact, the emissions are likely minimal Another commenter argued that the cost during this time period will consist because there are no plastics being fed associated with using BLDS is not entirely of combustion products to the furnace and minimal fuel use commensurate with their limited ability. associated with the fuels natural gas and (mostly natural gas). Temperature is The commenter stated that BLDS’s are foundry coke. The afterburner or post thus not the appropriate measure of inherently reactive whereas baghouses combustion system are equipped with continuous compliance during these equipped with HEPA filtration actually rudimentary burners that provide periods and we are unaware of another prevent emissions in the event of a bag supplementary heat but rely on the metric that can be used to determine failure. Further, the commenter argued excess heat contained within the continuous compliance with a that HEPA secondary collection combined furnace exhaust gases during numerical standard for these furnaces pressure differential is an effective production operations to achieve an during startup and shutdown. In terms method to monitor baghouse afterburner temperature that assures the of staff scheduling, test crews would performance. The commenter contends efficient combustion of the process off- have to be on-site and ready to begin that the BLDS requirement will pose an gases. The afterburner supplementary THC testing at the beginning of a period unnecessary and redundant burden on burners are not sufficient to maintain of startup or shutdown, have multiple facilities that proactively chose to install the required temperature during furnace test crews on site for startup or HEPA filtration systems and that the startup and shutdown sequences. The shutdown periods lasting longer than proposed revisions are a disincentive for proposed revisions to subpart X should 12 hours, and be prepared to stop and facilities to install HEPA filters. Finally, include definitions of startup and restart measurements to coincide with the commenter stated that the proposed shutdown for collocated blast and process trips that can occur during BLDS requirement and the elimination reverberatory furnaces that clearly startup and shutdown of secondary lead of the BLDS exemption for HEPA filters define when alternative THC standards smelting furnaces. Since startups and are arbitrary and not supported by test would apply and how compliance with shutdowns of these furnaces are not data. an alternative standard is monitored. necessarily scheduled long in advance, Response: We agree with the Response: The EPA has revised this scheduling such testing to coincide with commenters that baghouses equipped final rule to require sources to meet a the beginning of startup or shutdown with HEPA filters do not need bag leak work practice standard that requires the periods would require having testing detection systems as well. The development of standard operating crews on-site nearly full time. These measurement of pressure drop across a procedures designed to minimize staff resource issues would dramatically HEPA filter provides the indicia of emissions of THC for each start-up and increase the cost of testing during superior performance for determining shutdown scenario anticipated for all startup and shutdown periods. continuous compliance. However, we units subject to THC emission limits. For these technical and economic disagree that sources should be exempt We considered whether temperature reasons, we have determined that from annual stack testing based solely (the metric used to determine conducting manual test methods during on the use of a HEPA filter. The continuous compliance for the THC these secondary lead furnace startup or emission standard includes calculation standard in this rule) or performance shutdown periods for THC to be of a facility-wide emission average and testing and enforcement of numeric impracticable within the meaning of testing the process vents subject to that emission limits would be practicable CAA section 112(h)(2)(B). As a result, limit is needed to determine during periods of startup and shutdown. we have established a separate work compliance. Monitoring pressure drop The EPA determined that there are a practice standard for emissions of THC across HEPA filters is a means for number of significant technical during periods of startup and shutdown. determining continuous compliance, challenges associated with emissions This work practice standard requires the similar to a bag leak detection system in measurements of THC emissions during development of standard operating baghouses without HEPA filters. In both periods of startup and shutdown for this procedures designed to minimize cases, periodic stack tests are necessary industry. These challenges make emissions of THC for each start-up and to ensure that lead emissions are below establishing and complying with shutdown scenario anticipated for all the applicable emission standard. numerical emissions limits units subject to THC limits. However, we note that we have impracticable. This startup and shutdown work included a biannual testing exemption There are multiple factors informing practice applies only to the THC for stacks that report lead this decision. Temperature is obviously emission limits. We have no reason to concentrations less than 0.1 mg/dscm. an inappropriate measure to determine provide startup or shutdown provisions continuous compliances for these for emissions of lead from any source H. Startup, Shutdown, and Malfunction furnaces during periods of startup and because the fabric filters used to control Comment: One commenter expressed shutdown when the furnaces are being particulate and lead emissions are not concerns related to the total heated during startup (or cooled during less effective during startup or hydrocarbon (THC) standard during shutdown) from ambient to the steady shutdown periods (nor would we expect start-up periods. According to the state operating temperature. The sources to have any difficulty meeting commenter, it will be impossible to furnaces are heated during periods of the lead standard since lead-bearing meet the minimum temperature at startup through slow feeding of natural feed is not charged during either startup

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or shutdown conditions). Additionally, will cut lead and arsenic emissions by estimate methods used for this analysis the metrics for determining continuous an estimated 68 percent from current and is available in the docket. compliance with these standards are actual emission levels based on the ICR The majority of the capital costs appropriate for periods of startup and data collected for this rulemaking. The estimated for compliance with this shutdown. Therefore, we have final rule will result in estimated annual action are for purchasing new established the separate work practice lead emissions reductions of 7.2 tpy enclosures and the associated control standard only for THC for periods of from process and process fugitive devices that would be required for these startup and shutdown. sources and annual lead emissions enclosures. For each facility, we During these periods, we do not reductions of 6.4 tpy from fugitive dust estimated the square footage of new believe dioxins and furans can form sources from 2009 baseline emissions enclosures required based on the size of because there are no chlorinated plastics (for a total annual reduction of 13.6 tons enclosures currently in place compared or flame-retardants being fed as these per year). The expected annual to facilities that we considered to be materials are only introduced as reduction in total metal HAP 8 is 8.2 tpy totally enclosed with a similar impurities with the lead feed material. from process and process fugitive production capacity. We further Therefore, we have not included a sources and the expected annual assumed that the facilities that required standard for dioxins and furans during reduction is 7.2 tpy from fugitive dust a substantial degree of new enclosure periods of startup and shutdown sources (total annual metal HAP would re-configure their facilities, because these pollutants are not reductions are estimated at 15.4 tons). particularly the storage areas, to reduce emitted. We estimate that these controls will also the footprint of areas subject to total Periods of startup, normal operations, reduce emissions of particulate matter enclosure requirements. and shutdown are all predictable and (PM) (combined total of fine and coarse Based on our analysis of the facility routine aspects of a source’s operations. PM) by 135 tpy. configurations, seven facilities were However, by contrast, malfunction is Based on the emissions data available considered already to be totally defined as a ‘‘sudden, infrequent, and to the EPA, we believe that all facilities enclosed. Two facilities are currently not reasonably preventable failure of air will be able to comply with the final installing enclosure structures and pollution control and monitoring emissions limits for THC and D/F equipment that we anticipate will meet equipment, process equipment or a without additional controls. However, the requirements. Consequently, the process to operate in a normal or usual we expect that emissions reductions capital costs do not include estimates manner * * *’’ (40 CFR 63.2). The EPA will occur due to increased for these nine facilities. We estimate has determined that malfunctions temperatures of afterburners and from that the remaining six facilities will should not be viewed as a distinct improved work practices. Nevertheless, require new building installations, operating mode and, therefore, any it is difficult to estimate accurate thereby incurring capital costs. For the emissions that occur at such times do reductions from these actions and, one facility currently under not need to be factored into therefore, we are not providing construction, we estimated one development of CAA section 112(d) quantified estimates of reductions for additional baghouse would be required. Typical enclosure costs were standards, which, once promulgated, THC and D/F. estimated using information and apply at all times. C. What are the cost impacts? algorithms from the Permanent Total VI. Summary of Cost, Environmental, As a result of this final rule, certain Enclosures chapter in the EPA Air and Economic Impacts secondary lead smelting facilities are Pollution Control Cost Manual. New baghouse costs were estimated using a A. What are the affected facilities? expected to incur capital costs for the following types of control measures: model based primarily on the cost We anticipate that the 15 secondary replacement of existing baghouses with information for recent baghouse lead smelting facilities currently or new, higher-performing baghouses, installations submitted by facilities in recently operating in the continental replacement of bags in existing the ICR survey. The total capital cost United States and Puerto Rico as well as baghouses with better-performing estimate for the enclosures, the one facility currently under materials, construction of new ductwork system, and control devices at construction in South Carolina will be enclosures for processes not currently the seven facilities is approximately $38 affected by this final rule. enclosed, modification of partially million, at an annualized cost of $6.4 million in 2009 dollars (an average of B. What are the air quality impacts? enclosed structures to meet the requirements of total enclosure, and about $1 million per facility). The EPA estimated the emissions We also estimated annual costs for the installation of fabric filters on reductions that are expected to result required work practices in this action. enclosures. from these final amendments to the The capital costs for each facility were Based on the ICR survey information, 1997 NESHAP compared to the 2009 estimated based on the number and we estimated that additional costs baseline emissions estimates calculated types of upgrades we estimate that would be required to implement the based on ICR data. The ICR data and facility will require. Each facility was work practices at 12 of the 16 facilities. RTR emissions memo are available in evaluated for its ability to meet the final The total annual costs to implement the the docket to this action. A detailed limits for lead emissions, THC fugitive emissions work practices are documentation of the analysis can be emissions, D/F emissions, and fugitive approximately $3 million per year. For compliance with the stack lead found in the document in the docket dust emissions. The memorandum concentration limit, we compared each titled: Cost Impacts of the Revised titled: Cost Impacts of the Revised stack emission point’s lead NESHAP for the Secondary Lead NESHAP for the Secondary Lead concentration (reported to the EPA Smelting Source Category. Smelting Source Category includes a Emissions of lead and arsenic from under the ICR) to the requirement of 1.0 complete description of the cost secondary lead smelters have declined mg/dscm of lead for any one stack. If the over the last 15 years as a result of 8 Total metal HAP consists of antimony, arsenic, reported concentration exceeded 0.5 federal rules, state rules and on the beryllium, cadmium, chromium, lead, manganese, mg/dscm (one half the standard), we industry’s own initiative. The final rule nickel and selenium. assumed that the facility would either

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upgrade the baghouse with new bags least as well as the average baghouse additional energy use as part of our and additional maintenance or identified in our data set. These analysis of whether the standards are completely replace the baghouse, analyses indicate that nine baghouses warranted under CAA section 112(d)(6). depending on the age of the baghouse would need to be replaced, and two See Cost Impacts of the Revised (as explained further below). This cost baghouses would require additional NESHAP for the Secondary Lead estimate presents an upper-end estimate maintenance. To estimate costs, we used Smelting Source Category, available in of the cost impacts of the final rule that a model based primarily on the cost docket ID EPA–HQ–OAR–2011–0344, at assumes facilities will strive to operate information submitted in the ICR for page 7.) well below the standard to ensure recent baghouse installations in this The capital cost estimated for process variability does not cause industry. We assumed an increase in additional differential pressure monitors emission rates approaching the maintenance cost based on more for total enclosures is $106,000. The maximum level allowed by the frequent bag changes (from once every cost for all additional monitoring and standard. If the baghouse was less than 5 years to once every 2 years). The total recordkeeping requirements, including 10 years old and the lead concentration capital cost for nine new baghouses at in the outlet was not appreciably over five facilities is estimated to be the baghouse monitoring, is estimated at one half the standard (i.e., 0.5 mg/ approximately $11.5 million, and total $791,000. dscm), we assumed that the baghouse annual costs were estimated to be The total annualized costs for the would require maintenance and bag approximately $2.7 million. final rule are estimated at $13.4 million replacement. If the baghouse was more New limits are being promulgated for (2009 dollars). Table 5 of this preamble than 10 years old and the lead THC and D/F emissions from provides a summary of the estimated concentration was appreciably over the reverberatory and electric furnaces. We costs and emissions reductions standard, we assumed the baghouse anticipate all operating affected units associated with the final amendments to would be replaced. We then compared will be able to meet the limits without the Secondary Lead Smelting NESHAP each facility’s emissions with the flow- installing additional controls; however, presented in today’s action. More detail weighted, facility-wide concentration we have estimated additional costs of on the estimated costs of today’s final limit of 0.20 mg/dscm using the $260,000 per year for facilities to rule can be found in Cost Impacts of the assumption that baghouses needing increase the temperature of their revised NESHAP for the Secondary Lead replacement based on the 1.0 mg/dscm existing afterburners to ensure Smelting Source Category, available in individual stack limit would be continuous compliance with the the docket ID EPA–HQ–OAR–2011– replaced with units that performed at standards. (We also considered this 0344.

TABLE 5—ESTIMATED COSTS AND REDUCTIONS FOR THE PROMULGATED STANDARDS IN THIS ACTION

Estimated Estimated Cost effectiveness in $ per ton total Final amendment capital cost annual cost Total HAP emissions reductions HAP reduction ($MM) ($MM) (tons per year) ($ per pound)

Revised stack lead emissions limit ... 11.5 2.7 8.2 of metal HAP a (7.2 of which is $0.33 MM per ton, ($170 per lead). pound). Total enclosure of fugitive emissions 38 6.4 5.2 of metal HAP a (4.6 of which is $1.0 MM per ton, ($500 per pound). sources. lead). Fugitive control work practices ...... 0 3.0 2.0 of metal HAP a (1.8 of which is $1.5 MM per ton, ($750 per pound). lead). THC and D/F concentration limits ..... 0 0.3 29.6 b ...... $0.01 MM per ton. Additional testing and monitoring ...... 0.3 0.79 N/A ...... N/A. a Metal HAP consisting of antimony, arsenic, beryllium, cadmium, chromium, lead, manganese, nickel, and selenium. b Based on total organic HAP reductions as a co-benefit of compliance with standards for dioxins and furans.

The EPA notes that the cost emissions are also cost effective, based this sector are generally inelastic to effectiveness of the controls for stack largely on the fact that much of the price changes as shown in the Economic emissions of metal HAP are within the industry has implemented some or all of Impact Analysis at page 4. Thus, if range of values the agency has the measures required in this final rule. producers could pass through the entire determined to be reasonable in other The cost effectiveness for THC and D/ cost of the rule to consumers, we would section 112 rules. Indeed, EPA F is presented as a point of information. expect prices to increase by no more determined that a value of $175 per Since those standards are MACT floor than one percent, with no change in pound of metal HAP removed was standards adopted pursuant to sections output. Conversely, if producers could reasonable when determining standards 112(d)(3), considerations of cost and not pass through any of the cost by for the iron and steel foundry source cost-effectiveness played no part in increasing the price, we would expect category, an area source standard EPA’s consideration. output to decline by less than one reflecting the less rigorous Generally D. What are the economic impacts? percent. Available Control Technology under section 112(d)(5). See 73 FR at 249. We performed an economic impact Hence, the overall economic impact of Thus, EPA regards the cost effectiveness analysis for secondary lead consumers this proposed rule should be low on of the standards for metal HAP here as and producers nationally. Most most of the affected industry and its reasonable, for purposes of the secondary lead producers will incur consumers. For more information, standards adopted pursuant to sections annual compliance costs of much less please refer to the Economic Impact 112(f)(2) (ample margin of safety than 1 percent of their sales, but one Analysis for this rulemaking that is in determination) and 112(d)(6). The firm will incur costs of greater than 1 docket ID EPA–HQ–OAR–2011–0344. measures required to control fugitive percent. Both demand and supply in

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E. What are the benefits? reductions were calculated based on have been documented in the docket for The estimated reductions in lead total PM reductions. Reducing exposure this action. to PM is associated with significant emissions that will be achieved by this 2.5 B. Paperwork Reduction Act final rule will provide significant human health benefits, including The information collection benefits to public health. For example, avoiding mortality and respiratory requirements in this rule have been the EPA’s 2008 Regulatory Impact morbidity. Researchers have associated submitted for approval to the Office of Analysis (RIA) that was completed for PM2.5 exposure with adverse health Management and Budget (OMB) under the lead NAAQS (which is available in effects in numerous toxicological, the Paperwork Reduction Act, 44 U.S.C. the docket for this action and also on clinical and epidemiological studies 11 3501 et seq. The Information Collection the EPA’s Web site) 9 described (U.S. EPA, 2009). When adequate data Request (ICR) document prepared by the monetized benefits calculated for that and resources are available and an RIA EPA has been assigned EPA ICR number action associated with reduced exposure is required, the EPA generally quantifies 1686.09. The information collection to lead. several health effects associated with requirements are not enforceable until As noted in that RIA, there were also exposure to PM2.5 (e.g., U.S. EPA, several other lead-related health effects 2010) 12. These health effects include OMB approves them. The information for which the EPA was unable to premature mortality for adults and requirements are based on notification, quantify a monetized benefit— infants, cardiovascular morbidities such recordkeeping, and reporting particularly among adults. These as heart attacks, hospital admissions, requirements in the NESHAP General potential impacts included and respiratory morbidities such as Provisions (40 CFR part 63, subpart A), hypertension, non-fatal strokes, asthma attacks, acute and chronic which are mandatory for all operators reproductive effects and premature bronchitis, hospital and emergency subject to national emissions standards. mortality, among others. department visits, work loss days, These recordkeeping and reporting When viewed in this context, the restricted activity days, and respiratory requirements are specifically authorized reductions in concentrations of ambient symptoms. Although the EPA has not by CAA section 114 (42 U.S.C. 7414). lead that will be achieved with this RTR quantified certain outcomes including All information submitted to the EPA for secondary lead smelters are expected adverse effects on birth weight, pre-term pursuant to the recordkeeping and to provide important benefits to both births, pulmonary function and other reporting requirements for which a children and adults. The EPA did not cardiovascular and respiratory effects, claim of confidentiality is made is quantify these benefits because this rule the scientific literature suggests that safeguarded according to agency policies set forth in 40 CFR part 2, did not trigger the requirement for exposure to PM2.5 is also associated with conducting an RIA under Executive subpart B. these impacts (U.S. EPA, 2009). We are promulgating new paperwork Order 12866, in addition to resource Finally, the final rule will provide and data limitations for this rule. requirements to the Secondary Lead human health benefits through However, as noted at proposal, this rule Smelting source category in the form of reductions in arsenic and cadmium should result in areas attaining the lead stack testing for THC and D/F as emissions, as well as reductions in NAAQS where the secondary lead described in 40 CFR 63.543(h)–(k). In emissions of organic HAP (including smelting source dominates the areas’ conjunction with setting THC limits for dioxins and furans). ambient lead concentrations. See 76 FR reverberatory and electric furnaces, additional monitoring and at 29063–64. Although these standards VII. Statutory and Executive Order recordkeeping is required for furnace are not adopted to implement the lead Reviews outlet temperature on these units. We NAAQS, and rest on legal and policy believe temperature monitors currently justifications that are unrelated to the A. Executive Orders 12866: Regulatory exist in these locations and that the requirements for adopting, revising, and Planning and Review, and Executive facilities will not incur a capital cost implementing a NAAQS (e.g., CAA Order 13563: Improving Regulation and due to this requirement (and received sections 112(d)(2), (3), 6 and CAA Regulatory Review no comments to indicate otherwise). section 112(f)(2) as opposed to CAA Under Executive Order 12866 (58 FR Additionally, increased monitoring is sections 107–110), nonetheless these 51735, October 4, 1993), this action is a required for demonstrating negative rules will aid in the attainment of the ‘‘significant regulatory action.’’ This 10 pressure in all total enclosures. To lead NAAQS. action is a significant regulatory action provide the public with an estimate of In addition to the benefits likely to be because it raises novel legal and policy the relative magnitude of the burden achieved for lead reductions, we also issues. Accordingly, the EPA submitted associated with an assertion of the estimate that this final RTR rule will this action to the Office of Management affirmative defense position adopted by achieve about 39 to 63 tons of and Budget (OMB) for review under a source, the EPA has provided reductions in PM emissions as a co- 2.5 Executive Order 12866 and Executive administrative adjustments to this ICR benefit of the HAP reductions annually. Order 13563 (76 FR 3821, January 21, to show what the notification, See Development of the RTR Emissions 2011), and any changes made in recordkeeping and reporting Dataset for the Secondary Lead response to OMB recommendations requirements associated with the Smelting Source Category at section 8.3, assertion of the affirmative defense which is available in the docket for 11 might entail. The EPA’s estimate for the information on how the PM emission U.S. Environmental Protection Agency (U.S. 2.5 EPA). 2009. Integrated Science Assessment for required notification, reports and Particulate Matter (Final Report). EPA–600–R–08– records for any individual incident, 9 http://www.epa.gov/ttn/ecas/regdata/RIAs/ 139F. National Center for Environmental finalpbriach5.pdf. Assessment—RTP Division. . $3,141 and is based on the time and same types of controls on these sources (or may rely 12 U.S. Environmental Protection Agency (U.S. effort required of a source to review on the controls in these rules as part of a control EPA). 2010. Regulatory Impact Analysis for the relevant data, interview plant strategy). EPA cannot, of course, pre-judge the SIP Proposed Federal Transport Rule. Office of Air process. What is clear is that this rule should Quality Planning and Standards, Research Triangle employees, and document the events contribute significantly to attainment of the lead Park, NC. . caused an exceedance of an emissions

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limit. The estimate also includes time to a total labor cost of $52,000 per year. action will not have a significant produce and retain the record and Burden is defined at 5 CFR 1320.3(b). economic impact on those companies reports for submission to the EPA. The An agency may not conduct or (see: Small Business Analysis for the EPA provides this illustrative estimate sponsor, and a person is not required to Secondary Lead Smelting Source of this burden because these costs are respond to, a collection of information Category). All other affected parent only incurred if there has been a unless it displays a currently valid OMB companies are not small businesses violation and a source chooses to take control number. The OMB control according to the SBA small business advantage of the affirmative defense. numbers for the EPA’s regulations in 40 size standard for the affected NAICS Given the variety of circumstances CFR are listed in 40 CFR part 9. When code (NAICS 331419). under which malfunctions could occur, these ICRs are approved by OMB, the Although this final rule will not have as well as differences among sources’ agency will publish a technical a significant economic impact on a operation and maintenance practices, amendment to 40 CFR part 9 in the substantial number of small entities, the we cannot reliably predict the severity Federal Register to display the OMB EPA nonetheless has tried to reduce the and frequency of malfunction-related control numbers for the approved impact of this rule on small entities. To excess emissions events for a particular information collection requirements reduce the impacts, we are source. It is important to note that the contained in the final rules. promulgating stack limits for lead that allow sources to meet a standard based EPA has no basis currently for C. Regulatory Flexibility Act estimating the number of malfunctions on aggregated emissions that are based The Regulatory Flexibility Act (RFA) on a weighted average approach (with for which an affirmative defense to generally requires an agency to prepare each stack required to achieve a penalties might be asserted. Current a regulatory flexibility analysis of any specified minimum level of control) and historical records would be an rule subject to notice and comment have been established at the least inappropriate basis, as source owners or rulemaking requirements under the stringent levels that we estimate will operators previously operated their Administrative Procedure Act or any still result in acceptable risks to public facilities in recognition that they were other statute unless the agency certifies health with an ample margin of safety. exempt from the requirement to comply that the rule will not have a significant Moreover, the compliance testing with emissions standards during economic impact on a substantial requirements were established in a way malfunctions. Of the number of excess number of small entities. Small entities that minimizes the costs for testing and emissions events reported by source include small businesses, small reporting while still providing the operators, only a small number would organizations, and small governmental agency the necessary information be expected to result from a malfunction jurisdictions. needed to ensure continuous (based on the definition above), and For purposes of assessing the impacts compliance with the standards. For only a subset of excess emissions caused of this final rule on small entities, small more information, please refer to Small by malfunctions would result in the entity is defined as: (1) A small business Business Analysis for the Secondary source choosing to assert the affirmative as defined by the Small Business Lead Smelting Source Category, which defense. Thus we believe the number of Administration’s (SBA) regulations at 13 is available in docket ID EPA–HQ– instances in which source operators CFR 121.201; (2) a small governmental OAR–2011–0344. might be expected to assert the jurisdiction that is a government of a affirmative defense will be extremely city, county, town, school district or D. Unfunded Mandates Reform Act small. For this reason, we estimate no special district with a population of less This action does not contain a federal more than 2 or 3 such occurrences for than 50,000; and (3) a small mandate under the provisions of Title II all sources subject to subpart X over the organization that is any not-for-profit of the Unfunded Mandates Reform Act 3-year period covered by this ICR. We enterprise that is independently owned of 1995 (UMRA), 2 U.S.C. 1531–1538 for expect to gather information on such and operated and is not dominant in its state, local, or tribal governments or the events in the future and will revise this field. private sector. The action would not estimate as better information becomes For this source category, which has result in expenditures of $100 million or available. We estimate 16 regulated the NAICS code 331419 (i.e., Secondary more for state, local, and tribal entities are currently subject to subpart Smelting and Refining of Nonferrous governments, in aggregate, or the private X and will be subject to all standards. Metal (except copper and aluminum)), sector in any 1 year. The action imposes The annual monitoring, reporting, and the SBA small business size standard is no enforceable duties on any state, local recordkeeping burden for this collection 750 employees according to the SBA or tribal governments or the private (averaged over the first 3 years after the small business standards definitions. sector. Thus, this action is not subject to effective date of the standards) for these We have estimated the cost impacts and the requirements of sections 202 or 205 amendments to subpart X (Secondary have determined that the impacts do not of the UMRA. Lead Smelting) is estimated to be constitute a significant economic impact This action is also not subject to the $790,000 per year. This includes 1,600 on a substantial number of small entities requirements of section 203 of UMRA labor hours per year at a total labor cost (see: Small Business Analysis for the because it contains no regulatory of $347,000 per year, and total non-labor Secondary Lead Smelting Source requirements that might significantly or capital and operation and maintenance Category, which is available in the uniquely affect small governments (O&M) costs of $440,000 per year. This docket for this action). because it contains no requirements that estimate includes performance tests, After considering the economic apply to such governments nor does it notifications, reporting, and impacts of today’s final rule on small impose obligations upon them. recordkeeping associated with the new entities, I certify that this action will not requirements for front-end process vents have a significant economic impact on E. Executive Order 13132: Federalism and back-end process operations. The a substantial number of small entities. This action does not have federalism total burden for the federal government Two of the eight parent companies implications. It will not have substantial (averaged over the first 3 years after the affected are considered a small entity direct effects on the states, on the effective date of the standard) is per the definition provided in this relationship between the national estimated to be 1,150 hours per year at section. However, we estimate that this government and the states, or on the

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distribution of power and V.A of this preamble and the Residual J. Executive Order 12898: Federal responsibilities among the various Risk Assessment for the Secondary Lead Actions To Address Environmental levels of government, as specified in Smelting Source Category, which is Justice in Minority Populations and Executive Order 13132. These final available in the docket for this action, Low-Income Populations rules primarily affect private industry, for discussions of post-control risks. Executive Order 12898 (59 FR 7629, and do not impose significant economic February 16, 1994) establishes federal costs on state or local governments. H. Executive Order 13211: Actions Concerning Regulations That executive policy on environmental Thus, Executive Order 13132 does not justice. Its main provision directs apply to this action. Significantly Affect Energy Supply, Distribution, or Use federal agencies, to the greatest extent F. Executive Order 13175: Consultation practicable and permitted by law, to and Coordination With Indian Tribal This action is not a ‘‘significant make environmental justice part of their Governments energy action’’ as defined in Executive mission by identifying and addressing, Order 13211 (66 FR 28355 (May 22, This action does not have tribal as appropriate, disproportionately high 2001)), because it is not likely to have and adverse human health or implications, as specified in Executive a significant adverse energy effect on the Order 13175 (65 FR 67249, November 9, environmental effects of their programs, supply, distribution, or use of energy. policies, and activities on minority 2000). It will not have substantial direct This action will not create any new effect on tribal governments, on the populations and low-income requirements for sources in the energy populations in the United States. relationship between the federal supply, distribution, or use sectors. government and Indian tribes, or on the The EPA has determined that this Further, we have concluded that these final rule will not have distribution of power and final rules are not likely to have any responsibilities between the federal disproportionately high and adverse adverse energy effects (and indeed, human health or environmental effects government and Indian tribes, as rejected certain types of control options, specified in Executive Order 13175. on minority or low-income populations such as standards based on use of wet because it increases the level of Thus, Executive Order 13175 does not electrostatic precipitators, in part apply to this action. environmental protection for all affected because of adverse energy implications). populations without having any G. Executive Order 13045: Protection of I. National Technology Transfer and disproportionately high and adverse Children From Environmental Health Advancement Act human health or environmental effects Risks and Safety Risks on any population, including any This action is not subject to Executive Section 12(d) of the National minority or low-income population. Order 13045 (62 FR 19885, April 23, Technology Transfer and Advancement To examine the potential for any 1997) because it is not economically Act of 1995 (NTTAA), Public Law 104– environmental justice issues that might significant as defined in Executive 113, 12(d) (15 U.S.C. 272 note) directs be associated with each source category, Order 12866. However, the agency does the EPA to use voluntary consensus we evaluated the distributions of HAP believe there is a disproportionate risk standards (VCS) in its regulatory related cancer and non-cancer risks to children due to current emissions of activities, unless to do so would be across different social, demographic, lead from this source category. Children inconsistent with applicable law or and economic groups within the living near secondary lead smelters are otherwise impractical. VCS are populations living near the facilities the subpopulation most susceptible to technical standards (e.g., materials where these source categories are effects of air-borne lead, as explained in specifications, test methods, sampling located. The development of detail in Section V.A above. The procedures, and business practices) that demographic analyses to inform the primary NAAQS for lead targets are developed or adopted by VCS consideration of environmental justice protection to this population, and is a bodies. NTTAA directs the EPA to issues in EPA rulemakings is evolving. reasonable measure for evaluating provide Congress, through OMB, In the case of Secondary Lead acceptability of risk here, again as explanations when the agency decides Smelting, we focused on populations explained in Section V.A. Modeled not to use available and applicable VCS. within 50 km of the 15 facilities in this ambient air lead concentrations, based This action involves technical source category with emissions sources on actual emission levels, from about 9 standards. The EPA requires use of subject to the MACT standard. More of the 15 facilities in this source ASME PTC 19.10–1981, ‘‘Flue and specifically, for these populations we category are in excess of the NAAQS for Exhaust Gas Analyses’’ for its manual evaluated exposures to HAP that could lead. Also, the results of the methods of measuring the oxygen or result in cancer risks of 1-in-1 million demographic analysis indicate that of carbon dioxide content of the exhaust or greater, or population exposures to the 84,000 people exposed to a cancer gas. These parts of ASME PTC 19.10– ambient air lead concentrations above risk greater than 1-in-1 million, the age 1981 are acceptable alternatives to EPA the level of the NAAQS for lead. We 0 to 17 demographic percentage (of 30 Method 3B. This standard is available compared the percentages of particular percent) is 3 percentage points higher from the American Society of demographic groups within the focused than the corresponding national Mechanical Engineers (ASME), Three populations to the total percentages of percentage for this demographic group Park Avenue, New York, NY 10016– those demographic groups nationwide. (of 27 percent). This suggests that 5990. The results of this analysis are children may be at a slightly Under 40 CFR 63.7(f) and 40 CFR documented in the technical report: disproportionate risk of exposure to 63.8(f) of subpart A of the General Risk and Technology Review—Final cancer risks from this source category. Provisions, a source may apply to the Analysis of Socio-Economic Factors for However, the control measures EPA for permission to use alternative Populations Living Near Secondary promulgated in this notice will result in test methods or alternative monitoring Lead Smelting Facilities which can be lead concentration levels at or below the requirements in place of any required found in the docket for this rulemaking. lead NAAQS at all facilities, thereby testing methods, performance The actions in today’s final rule will mitigating the risk of future adverse specifications, or procedures in the final significantly decrease the risks due to health effects to children. See Section rule. HAP emissions from this source

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category for all demographic groups and 63.541 Applicability. defendant, regarding which the mitigate any disproportionate risks due 63.542 Definitions. defendant has the burden of proof, and to those emissions. 63.543 What are my standards for process the merits of which are independently vents? and objectively evaluated in a judicial K. Congressional Review Act 63.544 What are my total enclosure or administrative proceeding. The Congressional Review Act, 5 standards? 63.545 What are my standards for fugitive Agglomerating furnace means a U.S.C. 801, et seq., as added by the dust sources? furnace used to melt into a solid mass Small Business Regulatory Enforcement 63.546 Compliance dates. flue dust that is collected from a Fairness Act of 1996, generally provides 63.547 Test methods. baghouse. that, before a rule may take effect, the 63.548 Monitoring requirements. Bag leak detection system means an agency promulgating the rule must 63.549 Notification requirements. instrument that is capable of monitoring 63.550 Recordkeeping and reporting submit a rule report, which includes a particulate matter (dust) loadings in the copy of the rule, to each House of the requirements. 63.551 Implementation and enforcement. exhaust of a baghouse in order to detect Congress and to the Comptroller General bag failures. A bag leak detection system of the United States. The EPA will 63.552 Affirmative defense to civil penalties for exceedance of emissions includes, but is not limited to, an submit a report containing this final rule limit during malfunction. instrument that operates on and other required information to the Table 1 to Subpart X of Part 63—General triboelectric, light scattering, United States Senate, the United States Provisions Applicability to Subpart X transmittance or other effect to monitor House of Representatives, and the Table 2 to Subpart X of Part 63—Emissions relative particulate matter loadings. Comptroller General of the United Limits for Secondary Lead Smelting Battery breaking area means the plant Furnaces States prior to publication of the final location at which lead-acid batteries are rule in the Federal Register. A major Table 3 to Subpart X of Part 63—Toxic broken, crushed, or disassembled and rule cannot take effect until 60 days Equivalency Factors separated into components. after it is published in the Federal Subpart X—National Emission Blast furnace means a smelting Register. This action is not a ‘‘major Standards For Hazardous Air furnace consisting of a vertical cylinder rule’’ as defined by 5 U.S.C. 804(2). The Pollutants From Secondary Lead atop a crucible, into which lead-bearing final rules will be effective on January Smelting charge materials are introduced at the 5, 2012. top of the furnace and combustion air is List of Subjects for 40 CFR Part 63 § 63.541 Applicability. introduced through tuyeres at the (a) You are subject to this subpart if Environmental protection, bottom of the cylinder, and that uses you own or operate any of the following Administrative practice and procedures, coke as a fuel source and that is affected sources at a secondary lead Air pollution control, Hazardous operated at such a temperature in the smelter: Blast, reverberatory, rotary, and substances, Incorporation by reference, combustion zone (greater than 980 electric furnaces; refining kettles; Intergovernmental relations, Reporting Celsius) that lead compounds are agglomerating furnaces; dryers; process and recordkeeping requirements. chemically reduced to elemental lead fugitive emissions sources; buildings metal. Dated: December 16, 2011. containing lead bearing materials; and Blast furnace charging location means Lisa P. Jackson, fugitive dust sources. The provisions of the physical opening through which raw Administrator. this subpart do not apply to primary materials are introduced into a blast For the reasons stated in the lead processors, lead refiners, or lead furnace. preamble, part 63 of title 40, chapter I, remelters. Collocated blast furnace and of the Code of Federal Regulations is (b) Table 1 to this subpart specifies reverberatory furnace means operation amended as follows: the provisions of subpart A of this part at the same location of a blast furnace that apply to owners and operators of and a reverberatory furnace where the PART 63—[AMENDED] secondary lead smelters subject to this vent streams of the furnaces are mixed subpart. before cooling, with the volumetric flow ■ 1. The authority citation for part 63 (c) If you are subject to the provisions continues to read as follows: rate discharged from the blast furnace of this subpart, you are also subject to being equal to or less than that Authority: 42 U.S.C. 7401, et seq. title V permitting requirements under 40 discharged from the reverberatory ■ 2. Section 63.14 is amended by CFR parts 70 or 71, as applicable. furnace. (d) Emissions standards in this revising paragraph (p)(2) to read as Dryer means a chamber that is heated subpart apply at all times. follows: and that is used to remove moisture § 63.14 Incorporations by reference. § 63.542 Definitions. from lead-bearing materials before they are charged to a smelting furnace. * * * * * Terms used in this subpart are (p) * * * defined in the Clean Air Act, in subpart Dryer transition equipment means the (2) Office Of Air Quality Planning A of this part, or in this section as junction between a dryer and the charge And Standards (OAQPS), Fabric Filter follows: hopper or conveyor, or the junction Bag Leak Detection Guidance, EPA–454/ Affected source means any of the between the dryer and the smelting R–98–015, September 1997, IBR following sources at a secondary lead furnace feed chute or hopper located at approved for §§ 63.548(e)(4), smelter: Blast, reverberatory, rotary, and the ends of the dryer. 63.7525(j)(2), and 63.11224(f)(2). electric furnaces; refining kettles; Electric furnace means a smelting furnace consisting of a vessel into which * * * * * agglomerating furnaces; dryers; process reverberatory furnace slag is introduced ■ fugitive emissions sources; buildings 3. Revise subpart X to read as follows: containing lead bearing materials; and and that uses electrical energy to heat Subpart X—National Emission Standards fugitive dust sources. the reverberatory furnace slag to such a for Hazardous Air Pollutants From Affirmative defense means, in the temperature (greater than 980 Celsius) Secondary Lead Smelting context of an enforcement proceeding, a that lead compounds are reduced to Sec. response or defense put forward by a elemental lead metal.

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Fugitive dust source means a construction or reconstruction of which Rotary furnace (also known as a rotary stationary source of hazardous air is commenced after May 19, 2011. A reverberatory furnace) means a furnace pollutant emissions at a secondary lead building that is constructed for the consisting of a refractory-lined chamber smelter that is not associated with a purpose of controlling fugitive that rotates about a horizontal axis and specific process or process fugitive vent emissions from an existing source is not that uses one or more flames to heat the or stack. Fugitive dust sources include, considered to be a new source. walls of the furnace and lead-bearing but are not limited to, roadways, storage Partial enclosure means a structure scrap to such a temperature (greater piles, lead bearing material handling comprised of walls or partitions on at than 980 Celsius) that lead compounds transfer points, lead bearing material least three sides or three-quarters of the are chemically reduced to elemental transport areas, lead bearing material perimeter surrounding stored materials lead metal. storage areas, other lead bearing or process equipment to prevent the Secondary lead smelter means any material process areas, and buildings. entrainment of particulate matter into facility at which lead-bearing scrap Furnace and refining/casting area the air. material, primarily, but not limited to, means any area of a secondary lead Pavement cleaning means the use of lead-acid batteries, is recycled into smelter in which: vacuum equipment, water sprays, or a elemental lead or lead alloys by (1) Smelting furnaces are located; combination thereof to remove dust or smelting. (2) Refining operations occur; or other accumulated material from the Shutdown means the period when no (3) Casting operations occur. paved areas of a secondary lead smelter. lead bearing materials are being fed to Lead alloy means an alloy in which Plant roadway means any area of a the furnace and smelting operations the predominant component is lead. secondary lead smelter outside of a total have ceased during which the furnace is Lead bearing material means material enclosure that is subject to vehicle cooled from steady-state operating with a lead content equal to or greater traffic, including traffic by forklifts, temperature to ambient temperature. than 5 mg/l as measured by EPA front-end loaders, or vehicles carrying Smelting means the chemical Method 1311 (Under Method 1311, only whole batteries or cast lead ingots. reduction of lead compounds to materials with at least 100 ppm lead Excluded from this definition are elemental lead or lead alloys through will be considered to be lead bearing). employee and visitor parking areas, processing in high-temperature (greater Leeward wall means the furthest provided they are not subject to traffic than 980 Celsius) furnaces including, exterior wall of a total enclosure that is by vehicles carrying lead-bearing but not limited to, blast furnaces, opposite the windward wall. materials. reverberatory furnaces, rotary furnaces, Maintenance activity means any of and electric furnaces. the following routine maintenance and Pressurized dryer breaching seal repair activities that could generate means a seal system connecting the Startup means the period when no led fugitive lead dust: dryer transition pieces which is bearing materials have been fed to the (1) Replacement or repair of maintained at a higher pressure than the furnace and smelting operations have refractory, or any internal or external inside of the dryer. not yet commenced during which the part of equipment used to process, Process fugitive emissions source furnace is heated from ambient handle or control lead-containing means a source of hazardous air temperature to steady-state operating materials. pollutant emissions at a secondary lead temperature. (2) Replacement of any duct section smelter that is associated with lead Total enclosure means a containment used to convey lead-containing exhaust. smelting or refining, but is not the building that is completely enclosed (3) Metal cutting or welding that primary exhaust stream from a smelting with a floor, walls, and a roof to prevent penetrates the metal structure of any furnace, and is not a fugitive dust exposure to the elements and to assure equipment, and its associated source. Process fugitive emissions containment of lead bearing material components, used to process lead- sources include, but are not limited to, with limited openings to allow access containing material such that lead dust smelting furnace charging points, and egress for people and vehicles. The within the internal structure or its smelting furnace lead and slag taps, total enclosure must provide an components can become fugitive lead refining kettles, agglomerating furnaces, effective barrier against fugitive dust dust. and drying kiln transition pieces. emissions such that the direction of air (4) Resurfacing, repair or removal of Process vent means furnace vents, flow through any openings is inward ground, pavement, concrete, or asphalt. dryer vents, agglomeration furnace and the enclosure is maintained under Materials storage and handling area vents, vents from battery breakers, vents constant negative pressure. means any area of a secondary lead from buildings containing lead bearing Vehicle wash means a device for smelter in which lead-bearing materials material, and any ventilation system removing dust and other accumulated (including, but not limited to, broken controlling lead emissions. material from the wheels, body, and battery components, reverberatory Refining kettle means an open-top underside of a vehicle to prevent the furnace slag, flue dust, and dross) are vessel that is constructed of cast iron or inadvertent transfer of lead stored or handled between process steps steel and is indirectly heated from contaminated material to another area of including, but not limited to, areas in below and contains molten lead for the a secondary lead smelter or to public which materials are stored in open purpose of refining and alloying the roadways. piles, bins, or tubs, and areas in which lead. Included are pot furnaces, Wet suppression means the use of material is prepared for charging to a receiving kettles, and holding kettles. water, water combined with a chemical smelting furnace. Reverberatory furnace means a surfactant, or a chemical binding agent Natural draft opening means any refractory-lined furnace that uses one or to prevent the entrainment of dust into permanent opening in an enclosure that more flames to heat the walls and roof the air from fugitive dust sources. remains open during operation of the of the furnace and lead-bearing scrap to Windward wall means the exterior facility and is not connected to a duct such a temperature (greater than 980 wall of a total enclosure that is most in which a fan is installed. Celsius) that lead compounds are impacted by the wind in its most New source means any affected source chemically reduced to elemental lead prevailing direction determined by a at a secondary lead smelting facility the metal. wind rose using available data from the

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closest representative meteorological process vent gas at or below 0.20 process vent (no later than 12 calendar station. milligrams of lead per dry standard months following the previous cubic meter (0.000087 grains of lead per compliance test), unless you install and § 63.543 What are my standards for dry standard cubic foot). operate a CEMS meeting the process vents? (c) You must meet the applicable requirements of § 63.8. (a) For existing sources, you must emissions limits for total hydrocarbons (2) If an annual compliance test maintain the concentration of lead and dioxins and furans from furnace demonstrates that a process vent compounds in any process vent gas at sources specified in Table 2 of this emitted lead compounds at 0.10 or below 1.0 milligrams of lead per dry subpart. There are no standards for milligram of lead per dry standard cubic standard cubic meter (0.00043 grains of dioxins and furans during periods of meter or less during the time of the lead per dry standard cubic foot). You startup and shutdown. annual compliance test, you may submit must maintain the flow-weighted (d) If you combine furnace emissions a written request to the Administrator average concentration of lead from multiple types of furnaces and applying for an extension of up to 24 compounds in vent gases from a these furnaces do not meet the calendar months from the previous secondary lead smelting facility at or definition of collocated blast and compliance test to conduct the next below 0.20 milligrams of lead per dry reverberatory furnaces, you must compliance test for lead compounds. standard cubic meter (0.000087 grains of calculate your emissions limit for the (h) Following the initial performance lead per dry standard cubic foot). combined furnace stream using or compliance test to demonstrate (1) You must demonstrate compliance Equation 2 of this section. compliance with the total hydrocarbons with the flow weighted average emissions limits in paragraphs (c) and emissions limit on a 12-month rolling (f) of this section, you must conduct an average basis, calculated monthly using annual performance test for total the most recent test data available. hydrocarbons emissions from each (2) Until 12 monthly weighted average process vent that has established limits emissions rates have been accumulated, for total hydrocarbons (no later than 12 calculate only the monthly average calendar months following the previous weighted emissions rate. compliance test), unless you install and (3) You must use Equation 1 of this operate a CEMS meeting the section to calculate the flow-weighted Where: requirements of § 63.8. If an annual average concentration of lead CEL = Flow-weighted average emissions limit compliance test demonstrates that a (concentration) of combined furnace compounds from process vents: process vent emitted total hydrocarbons vents. at less than 50 percent of the allowable n = Number of furnace vents. limit during the time of the annual Fi = Flow rate from furnace vent i in dry standard cubic feet per minute. compliance test, you may submit a CEli = Emissions limit (concentration) of written request to the Administrator pollutant in furnace vent i as specified applying for an extension of up to 24 in Table 2 of this subpart. calendar months from the previous (e) If you combine furnace emissions compliance test to conduct the next with the furnace charging process compliance test for total hydrocarbons. fugitive emissions and discharge them (i) Following the initial performance Where: to the atmosphere through a common or compliance test to demonstrate compliance with the dioxins and furans CFWA = Flow-weighted average concentration emissions point, you must demonstrate of all process vents. compliance with the applicable total emissions limits specified in paragraph n = Number of process vents. hydrocarbons concentration limit (c) of this section, you must conduct a Fi = Flow rate from process vent i in dry specified in paragraph (c) of this section performance test for dioxins and furans standard cubic feet per minute, as at a location downstream from the point emissions from each process vent that measured during the most recent at which the two emissions streams are has established limits for dioxins and compliance test. furans at least once every 6 years C = Concentration of lead in process vent i, combined. i (f) If you do not combine the furnace following the previous compliance test. as measured during the most recent (j) You must conduct the performance compliance test. charging process fugitive emissions with the furnace process emissions, and tests specified in paragraphs (g) through (4) Each month, you must use the discharge such emissions to the (i) of this section under maximum concentration of lead and flow rate atmosphere through separate emissions representative operating conditions for obtained during the most recent points, you must maintain the total the process. During the performance compliance test performed prior to or hydrocarbons concentration in the test, you may operate the control device during that month to perform the exhaust gas at or below 20 parts per at maximum or minimum representative calculation using Equation 1 of this million by volume, expressed as operating conditions for monitored section. propane and corrected to 4 percent control device parameters, whichever (5) If a continuous emissions carbon dioxide. results in lower emission reduction. monitoring system (CEMS) is used to (g) Following the initial performance Upon request, you must make available measure the concentration of lead in a or compliance test to demonstrate to the Administrator such records as vent, the monthly average lead compliance with the lead emissions may be necessary to determine the concentration and monthly average flow limits specified in paragraph (a) or (b) conditions of performance tests. rate must be used rather than the most of this section, you must conduct (k) At all times, you must operate and recent compliance test data. performance tests according to the maintain any affected source, including (b) For new sources that begin schedule in paragraph (g)(1) or (2) of associated air pollution control construction or reconstruction after May this section. equipment and monitoring equipment, 19, 2011 you must maintain the (1) Conduct an annual performance in a manner consistent with safety and concentration of lead compounds in any test for lead compounds from each good air pollution control practices for

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minimizing emissions. Determination of battery storage areas, areas where lead wet wash or a vacuum equipped with a whether such operation and bearing material is stored in closed filter rated by the manufacturer to maintenance procedures are being used containers or enclosed mechanical achieve 99.97 percent capture efficiency will be based on information available conveyors, and areas where clean for 0.3 micron particles in a manner that to the Administrator that may include, battery casing material is handled. does not generate fugitive lead dust. but is not limited to, monitoring results, (c) You must construct and operate (2) Plant roadways and paved areas. review of operation and maintenance total enclosures for the sources listed in You must pave all areas subject to procedures, review of operation and paragraph (a) of this section as specified vehicle traffic and you must clean the maintenance records, and inspection of in paragraphs (c)(1) and (2) of this pavement twice per day, except on days the source. section. The total enclosure must be free when natural precipitation makes (l) If you own or operate a unit subject of significant cracks, gaps, corrosion or cleaning unnecessary or when sand or a to emission limits in Table 2 of this other deterioration that could cause lead similar material has been spread on subpart, you must minimize the unit’s bearing material to be released from the plant roadways to provide traction on startup and shutdown periods following primary barrier. Measures must be in ice or snow. Limited access and limited the manufacturer’s recommended place to prevent the tracking of lead use roadways such as unpaved roads to procedures, if available. You must bearing material out of the unit by remote locations on the property may be develop and follow standard operating personnel or by equipment used in exempt from this requirement if they are procedures designed to minimize handling the material. An area must be used infrequently (no more than one emissions of total hydrocarbon for each designated to decontaminate equipment round trip per day). startup or shutdown scenario and any rinsate must be collected and (3) Accidental releases. You must anticipated. You must submit a signed properly managed. initiate cleaning of all affected areas statement in the Notification of (1) You must ventilate the total within one hour after detection of any Compliance Status report that indicates enclosure continuously to ensure accidental release of lead dust that that you conducted startups and negative pressure values of at least 0.013 exceeds 10 pounds (the Comprehensive shutdowns according to the mm of mercury (0.007 inches of water). Environmental Response, manufacturer’s recommended (2) You must maintain an inward flow Compensation, and Liability Act procedures, if available, and the of air through all natural draft openings. (CERCLA) reportable quantity for lead at standard operating procedures designed (d) You must inspect enclosures and 40 CFR 302.4). to minimize emissions of total facility structures that contain any lead- (4) Battery storage areas. You must hydrocarbons. bearing materials at least once per inspect any batteries that are not stored (m) In addition to complying with the month. You must repair any gaps, in a total enclosure once each week and applicable emissions limits for dioxins breaks, separations, leak points or other move any broken batteries to an and furans listed in Table 2 to this possible routes for emissions of lead to enclosure within 72 hours of subpart, you must operate a process to the atmosphere within one week of identification. You must clean residue separate plastic battery casing materials identification unless you obtain from broken batteries within 72 hours of from all automotive batteries prior to approval for an extension from the identification. introducing feed into a furnace. Administrator before the repair period is (5) Materials storage and handling exceeded. areas. You must wash each vehicle at § 63.544 What are my total enclosure each exit of the material storage and standards? § 63.545 What are my standards for handling areas. The vehicle wash must (a) You must operate the process fugitive dust sources? include washing of tires, undercarriage fugitive emissions sources and fugitive (a) You must prepare, and at all times and exterior surface of the vehicle dust sources listed in paragraphs (a)(1) operate according to, a standard followed by vehicle inspection. through (9) of this section in a total operating procedures manual that (6) Equipment maintenance. You enclosure that is maintained at negative describes in detail the measures that must perform all maintenance activities pressure at all times and vented to a will be put in place and implemented to that could generate lead dust in a control device designed to capture lead control the fugitive dust emissions from manner that minimizes emissions of particulate. The total enclosure must the sources listed in paragraphs (a)(1) fugitive dust. This must include one or meet the requirements specified in through (7) of this section. more of the following: paragraph (c) of this section. (1) Plant roadways. (i) Performing maintenance inside a (1) Smelting furnaces. (2) Plant buildings. total permanent enclosure maintained at (2) Smelting furnace charging areas. (3) Accidental releases. negative pressure. (3) Lead taps, slag taps, and molds (4) Battery storage area. (ii) Performing maintenance inside a during tapping. (5) Equipment maintenance. temporary enclosure and use a vacuum (4) Battery breakers. (6) Material storage areas. system either equipped with a filter (5) Refining kettles, casting areas. (7) Material handling areas. rated by the manufacturer to achieve a (6) Dryers. (b) You must submit the standard capture efficiency of 99.97 percent for (7) Agglomerating furnaces and operating procedures manual to the 0.3 micron particles or routed to an agglomerating furnace product taps. Administrator or delegated authority for existing control device permitted for (8) Material handling areas for any review and approval when initially this activity. lead bearing materials except those developed and any time changes are (iii) Performing maintenance inside a listed in paragraph (b) of this section. made. partial enclosure and use of wet (9) Areas where dust from fabric (c) The controls specified in the suppression sufficient to prevent dust filters, sweepings or used fabric filters standard operating procedures manual formation. are processed. must at a minimum include the (iv) Decontamination of equipment (b) Total enclosures are not required requirements specified in paragraphs prior to removal from an enclosure. in the following areas: lead ingot (c)(1) through (7) of this section. (v) Immediate repair of ductwork or product handling areas, stormwater and (1) Cleaning. Where a cleaning structure leaks without an enclosure if wastewater treatment areas, intact practice is specified, you must clean by the time to construct a temporary

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enclosure would exceed the time to paragraphs (a)(1) through (5) of this (1) If the measured percent carbon make a temporary or permanent repair, section to determine compliance with dioxide is greater than 0.4 percent in or if construction of an enclosure would the emissions standards for lead each compliance test, you must cause a higher level of emissions than compounds specified in § 63.543(a) and determine the correction factor using if an enclosure were not constructed. (b). Equation 2 of this section. (vi) Activities required for inspection (1) EPA Method 1 at 40 CFR part 60, of fabric filters and maintenance of appendix A–1 to select the sampling filters that are in need of removal and port location and the number of traverse replacement are not required to be points. conducted inside of total enclosures. (2) EPA Method 2 at 40 CFR part 60, Used fabric filters must be placed in appendix A–1 or EPA Method 5D at 40 Where: sealed plastic bags or containers prior to CFR part 60, appendix A–3, section 8.3 F = Correction factor (no units). removal from a baghouse. for positive pressure fabric filters, to CO2 = Percent carbon dioxide measured (7) Material transport. You must measure volumetric flow rate. using EPA Method 3A or 3B at 40 CFR part 60, appendix A–2, where the collect and transport all lead bearing (3) EPA Method 3, 3A, or 3B at 40 dust (i.e. lead bearing material which is measured carbon dioxide is greater than CFR part 60, appendix A–2 to determine 0.4 percent. a dust) within closed conveyor systems the dry molecular weight of the stack or in sealed, leak-proof containers gas. (2) If the measured percent carbon unless the collection and transport (4) EPA Method 4 at 40 CFR part 60, dioxide is equal to or less than 0.4 activities are contained within a total appendix A–3 to determine moisture percent, you must use a correction enclosure. All other lead bearing content of the stack gas. factor (F) of 10. material must be contained and covered (3) You must determine the corrected for transport outside of a total enclosure (5) EPA Method 12 or Method 29 at total hydrocarbons concentration by in a manner that prevents spillage or 40 CFR part 60, appendix A–8 to multiplying the measured total dust formation. Intact batteries and lead determine compliance with the lead hydrocarbons concentration by the ingot product are exempt from the compound emissions standards. The correction factor (F) determined for each requirement to be covered for transport. minimum sample volume must be 2.0 (d) Your standard operating dry standard cubic meters (70 dry compliance test. procedures manual must specify that standard cubic feet) for each run. You (d) You must use the following test records be maintained of all pavement must perform three test runs and you methods in appendix A of part 60 listed cleaning, vehicle washing, and battery must determine compliance using the in paragraphs (d)(1) through (5) of this storage inspection activities performed average of the three runs. section, as specified, to determine to control fugitive dust emissions. (b) You must use the following test compliance with the emissions (e) You must pave all grounds on the methods in appendix A of part 60 listed standards for dioxins and furans facility or plant groundcover sufficient in paragraphs (b)(1) through (4) of this specified in § 63.543(c). to prevent wind-blown dust. You may section, as specified, to determine (1) EPA Method 1 at 40 CFR part 60, use dust suppressants on unpaved areas compliance with the emissions appendix A–1 to select the sampling that will not support a groundcover standards for total hydrocarbons port location and the number of traverse (e.g., roadway shoulders, steep slopes, specified in § 63.543(c) through (f). points. limited access and limited use (1) EPA Method 1 at 40 CFR part 60, (2) EPA Method 2 at 40 CFR part 60, roadways). appendix A–1 to select the sampling appendix A–1 or EPA Method 5D at 40 (f) As provided in § 63.6(g), as an port location and number of traverse CFR part 60, appendix A–3, section 8.3 alternative to the requirements specified points. for positive pressure fabric filters to in this section, you can demonstrate to (2) The Single Point Integrated measure volumetric flow rate. the Administrator (or delegated State, Sampling and Analytical Procedure of (3) EPA Method 3A or 3B at 40 CFR local, or Tribal authority) that an Method 3B to measure the carbon part 60, appendix A–2 to determine the alternative measure(s) is equivalent or dioxide content of the stack gases when oxygen and carbon dioxide better than a practice(s) described in using either EPA Method 3A or 3B at 40 concentrations of the stack gas. this section. CFR part 60, appendix A–2. (4) EPA Method 4 at 40 CFR part 60, § 63.546 Compliance dates. (3) EPA Method 4 at 40 CFR part 60, appendix A–3 to measure moisture appendix A–3 to determine moisture (a) For affected sources that content of the stack gases. content of the stack gas. commenced construction or (4) EPA Method 25A at 40 CFR part (5) EPA Method 23 at 40 CFR part 60, reconstruction on or before May 19, 60, appendix A–7 to measure total appendix A–7 to determine the dioxins 2011, you must demonstrate compliance and furans concentration. with the requirements of this subpart no hydrocarbons emissions. The minimum sampling time must be 1 hour for each (e) You must determine the dioxins later than January 6, 2014. and furans toxic equivalency by (b) For affected sources that run. You must perform a minimum of following the procedures in paragraphs commenced construction or three test runs. You must calculate a 1- (e)(1) through (3) of this section. reconstruction after May 19, 2011, you hour average total hydrocarbons must demonstrate compliance with the concentration for each run and use the (1) Measure the concentration of each requirements of this subpart by January average of the three 1-hour averages to dioxins and furans congener shown in 5, 2012 or upon startup of operations, determine compliance. Table 3 of this subpart using EPA whichever is later. (c) You must correct the measured Method 23 at 40 CFR part 60, appendix total hydrocarbons concentrations to 4 A–7. You must correct the concentration § 63.547 Test methods. percent carbon dioxide as specified in of dioxins and furans in terms of toxic (a) You must use the test methods paragraphs (c)(1) through (3) of this equivalency to 7 percent O2 using from appendix A of part 60 as listed in section. Equation 3 of this section.

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Where: (5) Monthly check of bag cleaning (5) The initial adjustment of the Cadj = Dioxins and furans concentration mechanisms for proper functioning system must, at a minimum, consist of adjusted to 7 percent oxygen. through visual inspection or equivalent establishing the baseline output by Cmeas = Dioxins and furans concentration means. adjusting the sensitivity (range) and the measured in nanograms per dry standard (6) Monthly check of bag tension on averaging period of the device, and cubic meter. reverse air and shaker-type baghouses. establishing the alarm set points and the (20.9–7) = 20.9 percent oxygen—7 percent Such checks are not required for shaker- alarm delay time. oxygen (defined oxygen correction type baghouses using self-tensioning basis). (6) Following initial adjustment, you 20.9 = Oxygen concentration in air, percent. (spring loaded) devices. must not adjust the sensitivity or range, (7) Quarterly confirmation of the %O2 = Oxygen concentration measured on a averaging period, alarm set points, or dry basis, percent. physical integrity of the baghouse alarm delay time, except as detailed in through visual inspection of the the approved standard operating (2) For each dioxins and furans baghouse interior for air leaks. procedures manual required under congener measured as specified in (8) Quarterly inspection of fans for paragraph (a) of this section. You cannot paragraph (e)(1) of this section, multiply wear, material buildup, and corrosion increase the sensitivity by more than the congener concentration by its through visual inspection, vibration 100 percent or decrease the sensitivity corresponding toxic equivalency factor detectors, or equivalent means. by more than 50 percent over a 365 day specified in Table 3 to this subpart. (9) Except as provided in paragraphs period unless such adjustment follows a (3) Sum the values calculated as (g) and (h) of this section, continuous complete baghouse inspection that specified in paragraph (e)(2) of this operation of a bag leak detection system, demonstrates that the baghouse is in section to obtain the total concentration unless a system meeting the good operating condition. of dioxins and furans emitted in terms requirements of paragraph (m) of this (7) For negative pressure, induced air of toxic equivalency. section for a continuous emissions baghouses, and positive pressure monitoring system is installed for § 63.548 Monitoring requirements. baghouses that are discharged to the monitoring the concentration of lead. atmosphere through a stack, you must (a) You must prepare, and at all times (d) The procedures you specify in the install the bag leak detector downstream operate according to, a standard standard operating procedures manual of the baghouse and upstream of any operating procedures manual that for baghouse maintenance must include, wet acid gas scrubber. describes in detail procedures for at a minimum, a preventative (8) Where multiple detectors are inspection, maintenance, and bag leak maintenance schedule that is consistent required, the system’s instrumentation detection and corrective action plans for with the baghouse manufacturer’s and alarm may be shared among all baghouses (fabric filters or cartridge instructions for routine and long-term detectors. filters) that are used to control process maintenance. (f) You must include in the standard vents, process fugitive, or fugitive dust (e) The bag leak detection system operating procedures manual required emissions from any source subject to the required by paragraph (c)(9) of this by paragraph (a) of this section a lead emissions standards in §§ 63.543, section, must meet the specification and corrective action plan that specifies the 63.544, and 63.545, including those requirements of paragraphs (e)(1) procedures to be followed in the case of used to control emissions from building through (8) of this section. a bag leak detection system alarm. The ventilation. (1) The bag leak detection system must be certified by the manufacturer to corrective action plan must include, at (b) You must submit the standard a minimum, the procedures that you operating procedures manual for be capable of detecting particulate matter emissions at concentrations of will use to determine and record the baghouses required by paragraph (a) of time and cause of the alarm as well as this section to the Administrator or 1.0 milligram per actual cubic meter (0.00044 grains per actual cubic foot) or the corrective actions taken to minimize delegated authority for review and emissions as specified in paragraphs approval. less. (2) The bag leak detection system (f)(1) and (f)(2) of this section. (c) The procedures that you specify in sensor must provide output of relative (1) The procedures used to determine the standard operating procedures particulate matter loadings. the cause of the alarm must be initiated manual for inspections and routine (3) The bag leak detection system within 30 minutes of the alarm. maintenance must, at a minimum, must be equipped with an alarm system (2) The cause of the alarm must be include the requirements of paragraphs that will alarm when an increase in alleviated by taking the necessary (c)(1) through (9) of this section. relative particulate loadings is detected corrective action(s) that may include, (1) Daily monitoring of pressure drop over a preset level. but not be limited to, those listed in across each baghouse cell. (4) You must install and operate the paragraphs (f)(2)(i) through (vi) of this (2) Weekly confirmation that dust is bag leak detection system in a manner section. being removed from hoppers through consistent with the guidance provided (i) Inspecting the baghouse for air visual inspection, or equivalent means in ‘‘Office of Air quality Planning and leaks, torn or broken filter elements, or of ensuring the proper functioning of Standards (OAQPS) Fabric Filter Bag any other malfunction that may cause removal mechanisms. Leak Detection Guidance’’ EPA–454/R– an increase in emissions. (3) Daily check of compressed air 98–015, September 1997 (incorporated (ii) Sealing off defective bags or filter supply for pulse-jet baghouses. by reference, see § 63.14) and the media. (4) An appropriate methodology for manufacturer’s written specifications (iii) Replacing defective bags or filter monitoring cleaning cycles to ensure and recommendations for installation, media, or otherwise repairing the proper operation. operation, and adjustment of the system. control device.

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(iv) Sealing off a defective baghouse demonstrate compliance with the described in paragraphs (k)(1) through compartment. standard for total hydrocarbon by (5) of this section. (v) Cleaning the bag leak detection meeting the requirements of § 63.543(l). (1) You must install and maintain a system probe, or otherwise repairing the (1) Continuous temperature minimum of one building digital bag leak detection system. monitoring. You must install, calibrate, differential pressure monitoring system (vi) Shutting down the process maintain, and continuously operate a at each of the following three walls in producing the particulate emissions. device to monitor and record the each total enclosure that has a total (g) Baghouses equipped with high temperature of the afterburner or ground surface area of 10,000 square efficiency particulate air (or HEPA) furnace exhaust streams consistent with feet or more: filters as a secondary filter used to the requirements for continuous (i) The leeward wall. control emissions from any source monitoring systems in § 63.8. (ii) The windward wall. subject to the lead emission standards in (2) Prior to or in conjunction with the (iii) An exterior wall that connects the § 65.543(a) or (b), are exempt from the initial performance or compliance test leeward and windward wall at a requirement to be equipped with a bag to determine compliance with location defined by the intersection of a leak detection system. You must § 63.543(c), you must conduct a perpendicular line between a point on monitor and record the pressure drop performance evaluation for the the connecting wall and a point on its across each HEPA filter system daily. If temperature monitoring device furthest opposite exterior wall, and the pressure drop is outside the limit(s) according to § 63.8(e). The definitions, intersecting within plus or minus ten specified by the filter manufacturer, you installation specifications, test meters of the midpoint of a straight line must take appropriate corrective procedures, and data reduction between the two other monitors measures, which may include but not be procedures for determining calibration specified. The midpoint monitor must limited to those given in paragraphs drift, relative accuracy, and reporting not be located on the same wall as either (g)(1) through (4) of this section. described in Performance Specification of the other two monitors. (1) Inspecting the filter and filter 2, 40 CFR part 60, appendix B, sections (2) You must install and maintain a housing for air leaks and torn or broken 2, 3, 5, 7, 8, 9, and 10 must be used to minimum of one building digital filters. conduct the evaluation. The differential pressure monitoring system (2) Replacing defective filter media, or temperature monitoring device must at the leeward wall of each total otherwise repairing the control device. meet the following performance and enclosure that has a total ground surface (3) Sealing off a defective control equipment specifications: area of less than 10,000 square feet. device by routing air to other control (3) The digital differential pressure (i) The recorder response range must devices monitoring systems must be certified by include zero and 1.5 times the average (4) Shutting down the process the manufacturer to be capable of temperature identified in paragraph producing the particulate emissions. measuring and displaying negative (j)(3) of this section. (h) Baghouses followed by a wet pressure in the range of 0.01 to 0.2 electrostatic precipitator used as a (ii) The monitoring system calibration millimeters mercury (0.005 to 0.11 secondary control device for any source drift must not exceed 2 percent of 1.5 inches of water) with a minimum subject to the lead emission standards in times the average temperature identified accuracy of plus or minus 0.001 § 63.543(a) or (b), are exempt from the in paragraph (j)(3) of this section. millimeters of mercury (0.0005 inches of requirement to be equipped with a bag (iii) The monitoring system relative water). leak detection system. accuracy must not exceed 20 percent. (4) You must equip each digital (i) If you use a wet scrubber to control (iv) The reference method must be a differential pressure monitoring system particulate matter and metal hazardous National Institute of Standards and with a continuous recorder. air pollutant emissions from a process Technology calibrated reference (5) You must calibrate each digital vent to demonstrate continuous thermocouple-potentiometer system or differential pressure monitoring system compliance with the emissions an alternate reference, subject to the in accordance with manufacturer’s standards, you must monitor and record approval of the Administrator. specifications at least once every 12 the pressure drop and water flow rate of (3) You must monitor and record the calendar months or more frequently if the wet scrubber during the initial temperature of the afterburner or the recommended by the manufacturer. performance or compliance test furnace exhaust streams every 15 (l) Except as provided in paragraphs conducted to demonstrate compliance minutes during the initial performance (l)(2) or (3) of this section, all new or with the lead emissions limit under or compliance test for total reconstructed sources subject to the § 63.543(a) or (b). Thereafter, you must hydrocarbons and dioxins and furans requirements under § 63.543 must monitor and record the pressure drop and determine an arithmetic average for install, calibrate, maintain, and operate and water flow rate values at least once the recorded temperature a CEMS for measuring lead emissions. every hour and you must maintain the measurements. In addition to the General Provisions pressure drop and water flow rate at (4) To demonstrate continuous requirements for CEMS in § 63.8(c) that levels no lower than 30 percent below compliance with the standards for total are referenced in Table 1 to this subpart, the pressure drop and water flow rate hydrocarbons and dioxins and furans, you must comply with the requirements measured during the initial performance you must maintain an afterburner or for CEMS specified in paragraph (m) of or compliance test. exhaust temperature such that the this section. (j) You must comply with the average temperature in any 3-hour (1) Sources subject to the emissions requirements specified in paragraphs period does not fall more than 28 limits for lead compounds under (j)(1) through (4) of this section to °Celsius (50 °Fahrenheit) below the § 63.543(b) must install a CEMS for demonstrate continuous compliance average established in paragraph (j)(3) of measuring lead emissions within 180 with the total hydrocarbons and dioxins this section. days of promulgation by the EPA of and furans emissions standards. During (k) You must install, operate, and performance specifications for lead periods of startup and shutdown, the maintain a digital differential pressure CEMS. requirements of paragraph (j)(4) of this monitoring system to continuously (2) Prior to 180 days after the EPA section do not apply. Instead, you must monitor each total enclosure as promulgates performance specifications

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for CEMS used to measure lead (ii) When data are not available for 48 (1) Electronic records of the bag leak concentrations, you must use the or more hours, the maximum daily detection system output. procedure described in § 63.543(g)(1) to emissions rate based on the previous 30 (2) An identification of the date and determine compliance. days must be used. time of all bag leak detection system (3) Vents from control devices that alarms, the time that procedures to serve only to control emissions from § 63.549 Notification requirements. determine the cause of the alarm were buildings containing lead bearing (a) You must comply with all of the initiated, the cause of the alarm, an materials are exempt from the notification requirements of § 63.9. explanation of the corrective actions requirement to install a CEMS for Electronic notifications are encouraged taken, and the date and time the cause measuring lead emissions. if suitable for the specific case (e.g., by of the alarm was corrected. (m) If a CEMS is used to measure lead electronic media such as Excel (3) All records of inspections and emissions, you must install a spreadsheet, on CD or hard copy), and maintenance activities required under continuous emissions monitoring when required by this subpart. § 63.548(c) as part of the practices system with a sensor in a location that (b) You must submit the fugitive dust described in the standard operating provides representative measurement of control standard operating procedures procedures manual for baghouses the exhaust gas flow rate at the sampling manual required under § 63.545(a) and required under § 63.548(a). location of the CEMS used to measure the standard operating procedures (4) Electronic records of the pressure lead emissions, taking into account the manual for baghouses required under drop and water flow rate values for wet manufacturer’s recommendations. The § 63.548(a) to the Administrator or scrubbers used to control metal flow rate sensor is that portion of the delegated authority along with a hazardous air pollutant emissions from system that senses the volumetric flow notification that the smelter is seeking process fugitive sources as required in rate and generates an output review and approval of these plans and § 63.548(i). proportional to that flow rate. procedures. You must submit this (5) Electronic records of the output (1) The continuous emissions notification no later than January 7, from the continuous temperature monitoring system must be designed to 2013. For sources that commenced monitor required in § 63.548(j)(1), and measure the exhaust gas flow rate over construction or reconstruction after an identification of periods when the 3- a range that extends from a value of at January 5, 2012, you must submit this hour average temperature fell below the least 20 percent less than the lowest notification no later than 180 days minimum established under expected exhaust flow rate to a value of before startup of the constructed or § 63.548(j)(4), and an explanation of the at least 20 percent greater than the reconstructed secondary lead smelter, corrective actions taken. highest expected exhaust gas flow rate. but no sooner than January 5, 2012. For (6) Electronic records of the (2) The continuous emissions an affected source that has received a continuous pressure monitors for total monitoring system must be equipped construction permit from the enclosures required in § 63.548(k), and with a data acquisition and recording Administrator or delegated authority on an identification of periods when the system that is capable of recording or before January 5, 2012, you must pressure was not maintained as required values over the entire range specified in submit this notification no later than in § 63.544(c)(1). paragraph (m)(1) of this section. January 7, 2014. (3) You must perform an initial (7) Records of any time periods power relative accuracy test of the continuous § 63.550 Recordkeeping and reporting was lost to the continuous pressure emissions monitoring system in requirements. monitors for total enclosures required in accordance with the applicable (a) You must comply with all of the § 63.548(k) and records of loss of power Performance Specification in appendix recordkeeping and reporting to the air handling system maintaining B to part 60 of this chapter. requirements specified in § 63.10 that negative pressure on total enclosures. (4) You must operate the continuous are referenced in Table 1 to this subpart. (8) Records of the inspections of emissions monitoring system and record (1) Records must be maintained in a facility enclosures required in data during all periods of operation of form suitable and readily available for § 63.544(d). the affected facility including periods of expeditious review, according to (9) Records of all cleaning and startup, shutdown, and malfunction, § 63.10(b)(1). However, electronic inspections required as part of the except for periods of monitoring system recordkeeping and reporting if suitable practices described in the standard malfunctions, repairs associated with for the specific case (e.g., by electronic operating procedures manual required monitoring system malfunctions, and media such as Excel spreadsheet, on CD under § 63.545(a) for the control of required monitoring system quality or hard copy), and when required by fugitive dust emissions. assurance or quality control activities this subpart. (10) Electronic records of the output including, as applicable, calibration (2) Records must be kept on site for of any CEMS installed to monitor lead checks and required zero and span at least 2 years after the date of emissions meeting the requirements of adjustments. occurrence, measurement, maintenance, § 63.548(m). (5) If you have a CEMS to measure corrective action, report, or record, (11) Records of the occurrence and lead emissions, you must calculate the according to § 63.10(b)(1). duration of each malfunction of average lead concentration and flow rate (b) The standard operating procedures operation (i.e., process equipment) or monthly to determine compliance with manuals required in §§ 63.545(a) and the air pollution control equipment and § 63.543(a). 63.548(a) must be submitted to the monitoring equipment. (6) When the continuous emissions Administrator in electronic format for (12) Records of actions taken during monitoring system is unable to provide review and approval of the initial periods of malfunction to minimize quality assured data, the following submittal and whenever an update is emissions in accordance with apply: made to the procedure. § 63.543(k), including corrective actions (i) When data are not available for (c) You must maintain for a period of to restore malfunctioning process and periods of up to 48 hours, the highest 5 years, records of the information listed air pollution control and monitoring recorded hourly emissions rate from the in paragraphs (c)(1) through (13) of this equipment to its normal or usual previous 24 hours must be used. section. manner of operation.

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(13) Records of any periods of startup an explanation of the corrective actions test methods compatible with the or shutdown of a furnace and actions taken. Electronic Reporting Tool are subject to taken to minimize emissions during that (8) Records of the temperature this requirement to be submitted period in accordance with § 63.543(l). monitor output, in 3-hour block electronically into EPA’s WebFIRE (d) You must comply with all of the averages, for those periods when the database. reporting requirements specified in temperature monitored pursuant to (ii) Within 60 days after the date of § 63.10 of the General Provisions that § 63.548(j) fell below the level completing each CEMS performance are referenced in Table 1 to this subpart. established in § 63.548(j)(4). evaluation test, as defined in § 63.2 and (1) You must submit reports no less (9) Certification that the plastic required by this subpart, you must frequent than specified under separation process for battery breakers submit the relative accuracy test audit § 63.10(e)(3) of the General Provisions. required in § 63.543(m) was operated at data electronically into EPA’s Central (2) Once a source reports a violation all times the battery breaker was in Data Exchange by using the Electronic of the standard or excess emissions, you service. Reporting Tool as mentioned in must follow the reporting format (10) Records of periods when the paragraph (e)(14)(i) of this section. Only required under § 63.10(e)(3) until a pressure was not maintained as required data collected using test methods request to reduce reporting frequency is in § 63.544(c) or power was lost to the compatible with the Electronic approved by the Administrator. continuous pressure monitoring system Reporting Tool are subject to this as required in § 63.548(k). (e) In addition to the information requirement to be submitted (11) If a malfunction occurred during required under the applicable sections electronically into EPA’s WebFIRE the reporting period, the report must of § 63.10, you must include in the database. include the number, duration, and a reports required under paragraph (d) of brief description for each type of (iii) All reports required by this this section the information specified in malfunction that occurred during the subpart not subject to the requirements paragraphs (e)(1) through (14) of this reporting period and caused or may in paragraph (e)(14)(i) and (ii) of this section. have caused any applicable emissions section must be sent to the (1) Records of the concentration of limitation to be exceeded. The report Administrator at the appropriate lead in each process vent, and records must also include a description of address listed in § 63.13. The of the rolling 12-month flow-weighted actions taken during a malfunction of an Administrator or the delegated authority average concentration of lead affected source to minimize emissions may request a report in any form compounds in vent gases calculated in accordance with § 63.543(k), suitable for the specific case (e.g., by monthly as required in § 63.543(a), including actions taken to correct a electronic media such as Excel except during the first year when the malfunction. spreadsheet, on CD or hard copy). The concentration is calculated using the (12) A summary of the fugitive dust Administrator retains the right to method described in § 63.543(a)(2). control measures performed during the require submittal of reports subject to (2) Records of the concentration of required reporting period, including an paragraph (e)(14)(i) and (ii) of this total hydrocarbon and dioxins and explanation of the periods when the section in paper format. furans in each process vent that has procedures outlined in the standard § 63.551 Implementation and enforcement. established limits for total hydrocarbon operating procedures manual pursuant and dioxins and furans as required in to § 63.545(a) were not followed and the (a) This subpart can be implemented § 63.543(c). corrective actions taken. The reports and enforced by the U.S. EPA, or a (3) Records of all periods when must not contain copies of the daily delegated authority such as the monitoring using a CEMS for lead or records required to demonstrate applicable State, local, or tribal agency. total hydrocarbon was not in compliance with the requirements of the If the U.S. EPA Administrator has compliance with applicable limits. standard operating procedures manuals delegated authority to a State, local, or (4) Records of all alarms from the bag required under § 63.545(a). tribal agency, then that agency, in leak detection system specified in (13) Records of any periods of startup addition to the U.S. EPA, has the § 63.548. or shutdown of a furnace including an authority to implement and enforce this (5) A description of the procedures explanation of the periods when the subpart. Contact the applicable U.S. taken following each bag leak detection procedures required in § 63.543(l) were EPA Regional Office to find out if this system alarm pursuant to § 63.548(f)(1) not followed and the corrective actions subpart is delegated to a State, local, or and (2). taken. tribal agency. (6) A summary of the records (14) You must submit records (b) In delegating implementation and maintained as part of the practices pursuant to paragraphs (e)(14)(i) enforcement authority of this subpart to described in the standard operating through (iii) of this section. a State, local, or tribal agency under procedures manual for baghouses (i) As of January 1, 2012 and within subpart E of this part, the authorities required under § 63.548(a), including an 60 days after the date of completing contained in paragraph (c) of this explanation of the periods when the each performance test, as defined in section are retained by the procedures were not followed and the § 63.2 and as required in this subpart, Administrator of U.S. EPA and cannot corrective actions taken. you must submit performance test data, be transferred to the State, local, or (7) An identification of the periods except opacity data, electronically to tribal agency. when the pressure drop and water flow EPA’s Central Data Exchange by using (c) The authorities that cannot be rate of wet scrubbers used to control the Electronic Reporting Tool (see delegated to State, local, or tribal process fugitive sources dropped below http://www.epa.gov/ttn/chief/ert/ert_ agencies are as specified in paragraphs the levels established in § 63.548(i), and tool.html/). Only data collected using (c)(1) through (4) of this section.

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(1) Approval of alternatives to the (ii) Could not have been prevented (9) A written root cause analysis has requirements in §§ 63.541, 63.543 through careful planning, proper design been prepared, the purpose of which is through 63.544, § 63.545, and § 63.546. or better operation and maintenance to determine, correct, and eliminate the (2) Approval of major alternatives to practices. primary causes of the malfunction and test methods under § 63.7(e)(2)(ii) and (iii) Did not stem from any activity or the excess emissions resulting from the (f), as defined in § 63.90, and as required event that could have been foreseen and malfunction event at issue. The analysis in this subpart. avoided, or planned for. shall also specify, using best monitoring (3) Approval of major alternatives to (iv) Were not part of a recurring methods and engineering judgment, the monitoring under § 63.8(f), as defined in pattern indicative of inadequate design, § 63.90, and as required in this subpart. amount of excess emissions that were operation, or maintenance. the result of the malfunction. (4) Approval of major alternatives to (2) Repairs were made as recordkeeping and reporting under expeditiously as possible when the (b) Notification. The owner or § 63.10(f), as defined in § 63.90, and as applicable emissions limitations were operator of the affected source required in this subpart. being exceeded. Off-shift and overtime experiencing an exceedance of its § 63.552 Affirmative defense to civil labor were used, to the extent emissions limit(s) during a malfunction, penalties for exceedance of emissions limit practicable to make these repairs. shall notify the Administrator by during malfunction. (3) The frequency, amount and telephone or facsimile transmission as In response to an action to enforce the duration of the excess emissions soon as possible, but no later than two standards set forth in this subpart, you (including any bypass) were minimized business days after the initial may assert an affirmative defense to a to the maximum extent practicable occurrence of the malfunction, it wishes claim for civil penalties for exceedances during periods of such emissions. to avail itself of an affirmative defense of such standards that are caused by (4) If the excess emissions resulted to civil penalties for that malfunction. malfunction, as defined at § 63.2. from a bypass of control equipment or The owner or operator seeking to assert Appropriate penalties may be assessed, a process, then the bypass was an affirmative defense, shall also submit however, if you fail to meet your burden unavoidable to prevent loss of life, a written report to the Administrator of proving all of the requirements in the personal injury, or severe property within 45 days of the initial occurrence affirmative defense. The affirmative damage. of the exceedance of the standard in this (5) All possible steps were taken to defense shall not be available for claims subpart to demonstrate, with all minimize the impact of the excess for injunctive relief. necessary supporting documentation, (a) Affirmative defense. To establish emissions on ambient air quality, the that it has met the requirements set forth the affirmative defense in any action to environment and human health. in paragraph (a) of this section. The enforce such a limit, you must timely (6) All emissions monitoring and owner or operator may seek an meet the notification requirements in control systems were kept in operation paragraph (b) of this section, and must if at all possible, consistent with safety extension of this deadline for up to 30 prove by a preponderance of evidence and good air pollution control practices. additional days by submitting a written that: (7) All of the actions in response to request to the Administrator before the (1) The excess emissions: the excess emissions were documented expiration of the 45-day period. Until a (i) Were caused by a sudden, by properly signed, contemporaneous request for an extension has been infrequent, and unavoidable failure of operating logs. approved by the Administrator, the air pollution control and monitoring (8) At all times, the affected source owner or operator is subject to the equipment, process equipment, or a was operated in a manner consistent requirement to submit such report process to operate in a normal or usual with good practices for minimizing within 45 days of the initial occurrence manner. emissions. of the exceedance.

TABLE 1 TO SUBPART X OF PART 63—GENERAL PROVISIONS APPLICABILITY TO SUBPART X

Reference Applies to subpart X Comment

63.1 ...... Yes. 63.2 ...... Yes. 63.3 ...... Yes. 63.4 ...... Yes. 63.5 ...... Yes. 63.6(a), (b), (c) ...... Yes. 63.6(d) ...... No...... Section reserved. 63.6(e)(1)(i) ...... No...... See 63.543(k) for general duty requirement. 63.6(e)(1)(ii) ...... No. 63.6(e)(1)(iii) ...... Yes. 63.6(e)(2) ...... No...... Section reserved. 63.6(e)(3) ...... No. 63.6(f)(1) ...... No. 63.6(g) ...... Yes. 63.6(h) ...... No...... No opacity limits in rule. 63.6(i) ...... Yes. 63.6(j) ...... Yes. 63.7(a)–(d) ...... Yes. 63.7(e)(1) ...... No...... See 63.543(j). 63.7(e)(2)–(e)(4) ...... Yes. 63.7(f), (g), (h) ...... Yes. 63.8(a)–(b) ...... Yes. 63.8(c)(1)(i) ...... No...... See 63.543(k) for general duty requirement.

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TABLE 1 TO SUBPART X OF PART 63—GENERAL PROVISIONS APPLICABILITY TO SUBPART X—Continued

Reference Applies to subpart X Comment

63.8(c)(1)(ii) ...... Yes. 63.8(c)(1)(iii) ...... No...... 63.8(c)(2)–(d)(2) ...... Yes. 63.8(d)(3) ...... Yes, except for last sen- tence. 63.8(e)–(g) ...... Yes. 63.9(a), (b), (c), (e), (g), (h)(1)through (3), (h)(5) and (6), Yes. (i) and (j). 63.9(f) ...... No. 63.9(h)(4) ...... No...... Reserved. 63.10 (a) ...... Yes. 63.10 (b)(1) ...... Yes. 63.10(b)(2)(i) ...... No. 63.10(b)(2)(ii) ...... No...... See 63.550 for recordkeeping of occurrence and dura- tion of malfunctions and recordkeeping of actions taken during malfunction. 63.10(b)(2)(iii) ...... Yes. 63.10(b)(2)(iv)–(b)(2)(v) ...... No. 63.10(b)(2)(vi)–(b)(2)(xiv) ...... Yes. 63.(10)(b)(3) ...... Yes. 63.10(c)(1)–(9) ...... Yes. 63.10(c)(10)–(11) ...... No...... See 63.550 for recordkeeping of malfunctions. 63.10(c)(12)–(c)(14) ...... Yes. 63.10(c)(15) ...... No. 63.10(d)(1)–(4) ...... Yes. 63.10(d)(5) ...... No...... See 63.550(e)(11) for reporting of malfunctions. 63.10(e)–(f) ...... Yes. 63.11 ...... No...... Flares will not be used to comply with the emission lim- its. 63.12 to 63.15 ...... Yes.

TABLE 2 TO SUBPART X OF PART 63—EMISSIONS LIMITS FOR SECONDARY LEAD SMELTING FURNACES

You must meet the following emissions limits . . . a

For vents from these processes . . . Total hydrocarbon ppm by volume Dioxin and furan (dioxins and expressed as propane corrected to furans) nanograms/dscm 4 percent carbon dioxide expressed as TEQ corrected to 7 percent O2

Collocated blast and reverberatory furnaces (new and existing) ...... 20 ppmv ...... 0.50 ng/dscm. Collocated blast and reverberatory furnaces when the reverberatory 360 ppmv ...... 170 ng/dscm. furnace is not operating for units that comments construction or re- construction before June 9, 1994. Collocated blast and reverberatory furnaces when the reverberatory 70 ppmv ...... 170 ng/dscm. furnace is not operating for units that commence construction or re- construction after June 9, 1994. Blast furnaces that commence construction or reconstruction before 360 ppmv ...... 170 ng/dscm. June 9, 1994. Blast furnaces that commence construction or reconstruction after 70 ppmv ...... 170 ng/dscm. June 9, 1994. Blast furnaces that commence construction or reconstruction after May 70 ppmv ...... 10 ng/dscm. 19, 2011. Reverberatory and electric furnaces that commence construction or re- 12 ppmv ...... 0.20 ng/dscm. construction before May 19, 2011. Reverberatory and electric furnaces that commence construction or re- 12 ppmv ...... 0.10 ng/dscm. construction after May 19, 2011. a There are no standards for dioxins and furans during periods of startup and shutdown.

TABLE 3 TO SUBPART X OF PART 63—TOXIC EQUIVALENCY FACTORS

Toxic equiva- Dioxin/furan congener lency factor

2,3,7,8-tetrachlorinated dibenzo-p-dioxin ...... 1 1,2,3,7,8-pentachlorinated dibenzo-p-dioxin ...... 0.5 1,2,3,4,7,8-hexachlorinated dibenzo-p-dioxin ...... 0.1 1,2,3,7,8,9-hexachlorinated dibenzo-p-dioxin ...... 0.1 1,2,3,6,7,8-hexachlorinated dibenzo-p-dioxin ...... 0.1 1,2,3,4,6,7,8-heptachlorinated dibenzo-p-dioxin ...... 0.01 octachlorinated dibenzo-p-dioxin ...... 0.001

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TABLE 3 TO SUBPART X OF PART 63—TOXIC EQUIVALENCY FACTORS—Continued

Toxic equiva- Dioxin/furan congener lency factor

2,3,7,8-tetrachlorinated dibenzofuran ...... 0.1 2,3,4,7,8-pentachlorinated dibenzofuran ...... 0.05 1,2,3,7,8-pentachlorinated dibenzofuran ...... 0.5 1,2,3,4,7,8-hexachlorinated dibenzofuran ...... 0.1 1,2,3,6,7,8-hexachlorinated dibenzofuran ...... 0.1 1,2,3,7,8,9-hexachlorinated dibenzofuran ...... 0.1

[FR Doc. 2011–32933 Filed 1–4–12; 8:45 am] BILLING CODE 6560–50–P

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Part III

Federal Reserve System

12 CFR Part 252 Enhanced Prudential Standards and Early Remediation Requirements for Covered Companies; Proposed Rule

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FEDERAL RESERVE SYSTEM may also be viewed electronically or in Regulation; or April C. Snyder, Senior paper form in Room MP–500 of the Counsel, (202) 452–3099, or Benjamin 12 CFR Part 252 Board’s Martin Building (20th and C W. McDonough, Senior Counsel, (202) [Regulation YY; Docket No. 1438] Streets NW.) between 9 a.m. and 5 p.m. 452–2036, Legal Division. on weekdays. Early Remediation Framework: RIN 7100–AD–86 FOR FURTHER INFORMATION CONTACT: Barbara J. Bouchard, Senior Associate Director, (202) 452–3072, or Molly E. Enhanced Prudential Standards and Mark Van Der Weide, Senior Associate Director, (202) 452–2263, or Molly E. Mahar, Senior Supervisory Financial Early Remediation Requirements for Analyst, (202) 973–7360, Division of Covered Companies Mahar, Senior Supervisory Financial Analyst, (202) 973–7360, Division of Banking Supervision and Regulation; or AGENCY: Board of Governors of the Banking Supervision and Regulation; or Paul F. Hannah, Counsel, (202) 452– Federal Reserve System (Board). Laurie Schaffer, Associate General 2810, or Jay R. Schwarz, Counsel, (202) ACTION: Proposed rule; request for Counsel, (202) 452–2272, or Dominic A. 452–2970, Legal Division. public comment. Labitzky, Senior Attorney, (202) 452– SUPPLEMENTARY INFORMATION: 3428, Legal Division. Table of Contents SUMMARY: The Board is requesting Risk-Based Capital Requirements and comment on proposed rules that would Leverage Limits: Anna Lee Hewko, I. Introduction implement the enhanced Prudential Assistant Director, (202) 530–6260, or II. Overview of the Proposal A. Scope of Application standards required to be established Meg Donovan, Supervisory Financial under section 165 of the Dodd-Frank B. Risk-Based Capital Requirements and Analyst, (202) 872–7542, Division of Leverage Limits Wall Street Reform and Consumer Banking Supervision and Regulation; or C. Liquidity Requirements Protection Act (Dodd-Frank Act or Act) April C. Snyder, Senior Counsel, (202) D. Single-Counterparty Credit Limits and the early remediation requirements 452–3099, or Benjamin W. McDonough, E. Risk Management and Risk Committee established under section 166 of the Senior Counsel, (202) 452–2036, Legal Requirements Act. The enhanced standards include Division. F. Stress Testing Requirements risk-based capital and leverage Liquidity Requirements: Mary Aiken, G. Debt-to-Equity Limits for Certain requirements, liquidity standards, Manager, (202) 721–4534, or Chris Covered Companies H. Early Remediation Framework requirements for overall risk Powell, Financial Analyst, (202) 921– management (including establishing a I. Transition Arrangements and Ongoing 4353, Division of Banking Supervision Compliance risk committee), single-counterparty and Regulation; or April C. Snyder, J. Reservation of Authority credit limits, stress test requirements, Senior Counsel, (202) 452–3099, Legal K. Common Definitions and a debt-to-equity limit for companies Division. III. Risk-Based Capital Requirements and that the Financial Stability Oversight Single-Counterparty Credit Limits: Leverage Limits Council has determined pose a grave Mark Van Der Weide, Senior Associate A. Background threat to financial stability. Director, (202) 452–2263, or Molly E. B. Overview of the Proposed Rule DATES: Comments: Comments should be Mahar, Senior Supervisory Financial 1. Capital Planning and Minimum Capital Requirements received on or before March 31, 2012. Analyst, (202) 973–7360, Division of 2. Quantitative Risk-Based Capital ADDRESSES: You may submit comments, Banking Supervision and Regulation; or Surcharge identified by Docket No. 1438 and RIN Pamela G. Nardolilli, Senior Counsel, IV. Liquidity Requirements 7100–AD–86 by any of the following (202) 452–3289, Patricia P. Yeh, A. Background methods: Counsel, (202) 912–4304, or Anna M. B. Overview of the Proposed Rule • Agency Web Site: http:// Harrington, Attorney, (202) 452–6406, 1. Key Definitions www.federalreserve.gov. Follow the Legal Division. 2. Corporate Governance Provisions instructions for submitting comments at Risk Management and Risk 3. Liquidity Requirements Committee Requirements: Pamela A. V. Single Counterparty Exposure Limits http://www.federalreserve.gov/ A. Background generalinfo/foia/ProposedRegs.cfm. Martin, Senior Supervisory Financial • B. Overview of the Proposed Rule Federal eRulemaking Portal: http:// Analyst, (202) 452–3442, Division of VI. Risk Management and Risk Committee www.regulations.gov. Follow the Banking Supervision and Regulation; or Requirements instructions for submitting comments. Jonathan D. Stoloff, Senior Counsel, A. Background • Email: (202) 452–3269, or Jeremy C. Kress, B. Overview of the Proposed Rule [email protected]. Attorney, (202) 872–7589, Legal 1. Risk Committee Requirements Include docket and RIN numbers in the Division. 2. Additional Enhanced Risk Management subject line of the message. Stress Test Requirements: Tim Clark, Standards for Covered Companies • Fax: (202) 452–3819 or (202) 452– Senior Adviser, (202) 452–5264, Lisa VII. Stress Test Requirements A. Background 3102. Ryu, Assistant Director, (202) 263–4833, • B. Overview of the Proposed Rule Mail: Jennifer J. Johnson, Secretary, Constance Horsley, Manager, (202) 452– 1. Annual Supervisory Stress Tests Board of Governors of the Federal 5239 or David Palmer, Senior Conducted by the Board Reserve System, 20th Street and Supervisory Financial Analyst, (202) 2. Annual and Additional Stress Tests Constitution Avenue NW., Washington, 452–2904, Division of Banking Conducted by the Companies DC 20551. Supervision and Regulation; Dominic A. C. Request for Comments All public comments are available Labitzky, Senior Attorney, (202) 452– VIII. Debt-to-Equity Limit for Certain Covered from the Board’s Web site at http:// 3428, or Christine E. Graham, Senior Companies www.federalreserve.gov/generalinfo/ Attorney, (202) 452–3005, Legal A. Background B. Overview of the Proposed Rule foia/ProposedRegs.cfm as submitted, Division. IX. Early Remediation unless modified for technical reasons. Debt-to-Equity Limits for Certain A. Background Accordingly, your comments will not be Covered Companies: Robert Motyka, B. Overview of the Proposed Rule edited to remove any identifying or Senior Project Manager, (202) 452–5231, 1. Early Remediation Requirements contact information. Public comments Division of Banking Supervision and 2. Early Remediation Triggering Events

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X. Administrative Law Matters orderly liquidation authority for organizations. The definition of A. Solicitation of Comments and Use of financial companies (other than banks ‘‘covered company’’ for purposes of the Plain Language and insurance companies); the proposal would nonetheless include a B. Paperwork Reduction Act Analysis establishment of the Financial Stability foreign banking organization’s U.S.- C. Regulatory Flexibility Act Analysis Oversight Council (Council) empowered based bank holding company subsidiary I. Introduction with the authority to designate nonbank that on its own has total consolidated 6 The recent financial crisis showed financial companies for Board oversight; assets of $50 billion or more. This that some financial companies had stronger regulation of major bank proposal would not extend to the U.S. grown so large, leveraged, and holding companies and nonbank operations of a foreign banking financial companies designated for interconnected that their failure could organization that are conducted outside Board oversight; and enhanced of a U.S.-based bank holding company pose a threat to overall financial regulation of over-the-counter (OTC) subsidiary. stability. The sudden collapses or near- derivatives, other core financial The prudential standards for covered collapses of major financial companies markets, and financial market utilities. companies required under section 165 were among the most destabilizing of the Dodd-Frank Act must include events of the crisis. The crisis also Overview of Statutory Requirements enhanced risk-based capital and demonstrated weaknesses in the The focus of this proposal is stronger leverage requirements, enhanced existing framework for supervising, regulation of major bank holding liquidity requirements, enhanced risk regulating and otherwise constraining companies and nonbank financial management and risk committee the risks of major financial companies, companies designated by the Council requirements, a requirement to submit a as well as deficiencies in the for Board supervision. In particular, resolution plan, single-counterparty government’s toolkit for managing their sections 165 and 166 of the Dodd-Frank credit limits, stress tests, and a debt-to- failure. Act require the Board to impose a equity limit for covered companies that As a result of the imprudent risk package of enhanced prudential the Council has determined pose a grave taking of major financial companies and standards on bank holding companies threat to financial stability. In general, the severe consequences to the financial with total consolidated assets of $50 the Act directs the Board to implement system and the economy associated billion or more 2 and nonbank financial enhanced prudential standards that with the disorderly failure of these companies the Council has designated, strengthen existing micro-prudential interconnected companies, the U.S. pursuant to section 113 of the Dodd- supervision 7 and regulation of government (and many foreign Frank Act,3 for supervision by the Board individual companies and incorporate governments in their home countries) (together, covered companies and each macro-prudential considerations so as to intervened on an unprecedented scale to a covered company). By their terms, reduce threats posed by covered reduce the impact of, or prevent, the sections 165 and 166 of the Act apply companies to the stability of the failure of these companies and the to any foreign nonbank financial financial system as a whole. Section 166 attendant consequences for the broader company designated by the Council for of the Act requires the Board to financial system. Market participants supervision by the Board 4 and any establish a regulatory framework for the before the crisis had assumed some foreign banking organization with total early remediation of financial probability that major financial consolidated assets of $50 billion or weaknesses of covered companies in companies would receive government more that is or is treated as a bank order to minimize the probability that assistance if they became troubled. But holding company for purposes of the such companies will become insolvent the actions taken by the government in Bank Holding Company Act of 1956 and the potential harm of such response to the crisis, although pursuant to section 8(a) of the insolvencies to the financial stability of necessary, have solidified that market International Banking Act of 1978.5 the United States.8 view. However, as explained in greater detail In addition to the required standards, The market perception that some below, this proposal does not apply to the Act authorizes but does not require companies are ‘‘too big to fail’’ poses foreign banking organizations, and the the Board to establish additional threats to the financial system. First, it Board expects to issue a separate enhanced standards for covered reduces the incentives of shareholders, proposal shortly that would apply the companies relating to (i) contingent creditors and counterparties of these enhanced standards of sections 165 and capital; (ii) public disclosures; (iii) companies to discipline excessive risk- 166 of the Act to foreign banking short-term debt limits; and (iv) such taking. Second, it produces competitive other prudential standards as the Board distortions because companies 2 The Board, pursuant to a Council perceived as ‘‘too big to fail’’ can often recommendation, may raise the $50 billion asset 6 With the exception of the proposed liquidity fund themselves at a lower cost than threshold for bank holding companies with respect and enterprise-wide risk management requirements to the application of certain enhanced standards. and the debt-to-equity limit for covered companies other companies. This distortion is See 12 U.S.C. 5365(a)(2)(B). that the Council has determined pose a grave threat, unfair to smaller companies, damaging 3 See 12 U.S.C. 5323. The Council proposed rules the proposed rule would not apply to any bank to competition, and tends to artificially to implement its authority under section 113 in holding company subsidiary of a foreign banking encourage further consolidation and January 2011 and October 2011. See 76 FR 4555 organization that has relied on Supervision and (January 26, 2011) and 76 FR 64264 (October 18, Regulation Letter SR 01–01 issued by the Board of concentration in the financial system. 2011). Governors (as in effect on May 19, 2010) until July A major thrust of the Dodd-Frank 4 See 12 U.S.C. 5323(b). Section 102(c) limits the 21, 2015. This is consistent with the phase-in Wall Street Reform and Consumer application of section 165 to only the U.S. activities period for the imposition of minimum risk-based Protection Act of 2010 (Dodd-Frank Act and subsidiaries of a foreign nonbank financial and leverage capital requirements established in section 171 of the Dodd-Frank Act. 1 company. 12 U.S.C. 5311(c). or Act) is mitigating the threat to 5 See 12 U.S.C. 5311(a)(1) (defining the term 7 Micro-prudential supervision focuses on financial stability posed by systemically ‘‘bank holding company’’ for purposes of Title I of surveillance of the safety and soundness of important financial companies. The the Dodd-Frank Act). A foreign banking individual companies, whereas macro-prudential Dodd-Frank Act addresses this problem organization is treated as a bank holding company supervision focuses on the surveillance of systemic pursuant to section 8(a) of the International Banking risk posed by individual companies and systemic with a multi-pronged approach: a new Act if the foreign banking organization operates a risks posed by interconnectedness among branch, agency or commercial lending company in companies. 1 Public Law 111–203, 124 Stat. 1376 (2010). the United States. 8 See 12 U.S.C. 5366(b).

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determines appropriate.9 The Board is other risk-related factor the Board By setting forth comprehensive not proposing any of these deems appropriate. enhanced prudential standards and an supplemental standards at this time but early remediation framework for II. Overview of the Proposal continues to consider whether adopting covered companies, the proposal would any of these standards would be The Board is requesting comment on create an integrated set of requirements appropriate. proposed rules to implement certain that seeks to meaningfully reduce the The Act requires the enhanced requirements of sections 165 and 166 of probability of failure of systemically 15 standards established by the Board for the Dodd-Frank Act. The Board important companies and minimize covered companies under section 165 to consulted with the Council, including damage to the financial system and the be more stringent than those standards by providing periodic updates to broader economy in the event such a applicable to other bank holding members of the Council and their staff company fails. The proposed rules, companies and nonbank financial on the development of the proposed which increase in stringency with the companies that do not present similar enhanced standards. The proposal level of systemic risk posed by and the risks to U.S. financial stability.10 reflects comments provided to the Board risk characteristics of the covered Section 165 also requires that the as a part of this consultation process. company, would provide incentives for enhanced standards established The Board also intends, before imposing covered companies to reduce their pursuant to that section increase in prudential standards or any other systemic footprint and encourage stringency based on the systemic requirements pursuant to section 165 covered companies to consider the footprint and risk characteristics of that are likely to have a significant external costs that their failure or individual covered companies.11 impact on a functionally regulated distress would impose on the broader subsidiary or depository institution financial system, thus helping to offset In prescribing prudential standards subsidiary of a covered company, to any implicit subsidy they may have under section 165(b)(1) 12 to covered consult with each Council member that enjoyed as a result of market companies, the Board is required to take primarily supervises any such perceptions of implicit government into account differences among bank subsidiary.16 support. holding companies covered by the rule This proposal includes rules to This proposal provides a core set of and nonbank financial companies implement the requirements under concrete rules to complement the supervised by the Board, based on section 165 related to (i) risk-based 13 Federal Reserve’s existing efforts to certain considerations. The Board also capital and leverage; (ii) liquidity; (iii) enhance the supervisory framework for has authority under section 165 to tailor single-counterparty credit limits; (iv) covered companies. The Federal the application of the standards, overall risk management and risk Reserve, since before the passage of the including differentiating among covered committees; (v) stress tests; and (vi) a Dodd-Frank Act, has been taking steps companies on an individual basis or by debt-to-equity limit for covered 14 to strengthen its supervision of the category. When differentiating among companies that the Council has largest, most complex banking companies for purposes of applying the determined pose a grave threat to companies. For example, the Federal standards established under section 165, financial stability. The proposal also Reserve created a centralized the Board may consider the companies’ includes rules to implement the early multidisciplinary body called the Large size, capital structure, riskiness, remediation requirements in section 166 Institution Supervision Coordinating complexity, financial activities, and any of the Act related to establishing Committee (LISCC) to oversee the measures of financial condition and supervision of these companies. This 9 See 12 U.S.C. 5365(b)(1)(B). remediation requirements that increase committee uses horizontal, or cross- 10 See 12 U.S.C. 5365(a)(1)(A). in stringency as the financial condition company, evaluations to monitor 11 See 12 U.S.C. 5365(a)(1)(B). Under section 165(a)(1)(B), the enhanced standards must increase of a covered company declines. interconnectedness and common in stringency, based on the considerations listed in Section 165(d) of the Act also practices among companies that could section 165(b)(3). These considerations are establishes requirements that each lead to greater systemic risk. The summarized in note 13, infra. covered company submit periodically to committee also uses additional and 12 12 U.S.C. 5365(b)(1). The Board is separately the Board and Federal Deposit required to issue regulations to implement the risk improved quantitative methods for committee and stress test enhanced standards Insurance Corporation (FDIC) a plan for evaluating the financial condition of pursuant to sections 165(h) and 165(i), respectively. rapid and orderly resolution under the companies and the risks they might 13 See 12 U.S.C. 5365(b)(3). The factors the Board Bankruptcy Code in the event of its pose to each other and to the broader must consider include—(i) The factors described in material financial distress or failure, as financial system. sections 113(a) and (b) of the Dodd-Frank Act (12 well as a periodic report regarding U.S.C. 5313(a) and (b)); (ii) whether the company A. Scope of Application owns an insured depository institution; (iii) credit exposures between each covered nonfinancial activities and affiliations of the company and other significant financial The Dodd-Frank Act requires the company; and (iv) any other risk-related factors that companies. The Board and FDIC jointly Board to apply enhanced standards the Board determines appropriate. 12 U.S.C. established under section 165(b)(1) and 5365(b)(3)(A). The Board must, as appropriate, issued a final rule to implement the adapt the required standards in light of any resolution plan requirement that became early remediation requirements under predominant line business of a nonbank financial effective on November 30, 2011 and company for which particular standards may not be expect to implement periodic reporting that robust reporting of a covered company’s credit appropriate. 12 U.S.C. 5365(b)(3)(D). Section of credit exposures at a later date.17 exposures to other significant bank holding 165(b)(3) also requires the Board, to the extent companies and financial companies is critical to possible, to ensure that small changes in the factors ongoing risk management by covered companies, as listed in sections 113(a) and 113(b) of the Dodd- 15 12 U.S.C. 5365 and 5366. well as to the Board’s ongoing supervision of Frank Act would not result in sharp, discontinuous 16 See 12 U.S.C. 5365(b)(4). covered companies and financial stability changes in the prudential standards established by 17 See 76 FR 67323 (November 1, 2011). In responsibilities, and the FDIC’s responsibility to the Board under section 165(b)(1). 12 U.S.C. response to significant concerns expressed by resolve failed covered companies. However, the 5365(b)(3)(B). The statute also directs the Board to commenters about the clarity of key definitions and agencies also recognize that these reports would be take into account any recommendations made by the scope of the reporting requirement of the most useful and complete if developed in the Council pursuant to its authority under section proposed credit exposure reporting requirement, conjunction with the Dodd-Frank Act’s single 115 of the Dodd-Frank Act. 12 U.S.C. 5365(b)(3)(C). the Board and FDIC postponed finalizing the credit counterparty credit exposure limits. See 12 U.S.C. 14 See 12 U.S.C. 5365(a)(2)(A). exposure reporting requirement. The Board believes 5365(e).

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section 166 of the Dodd-Frank Act to calculation will be effective as of the profiles of companies that would be covered companies. As noted above, due date of the bank holding company’s subject to designation by the Council covered companies are described in the most recent FR Y–9C.22 Under the could vary significantly. Act as bank holding companies with proposal, a bank holding company that While this proposal was largely total consolidated assets of $50 billion becomes a covered company would developed with large, complex bank or more (which would include any remain a covered company until its total holding companies in mind, some of the foreign banking organization that has consolidated assets, as reported to the standards nonetheless provide sufficient banking operations in the United States Board on a quarterly basis on the FR Y– flexibility to be readily implemented by and that has global consolidated assets 9C, fall and remain below $50 billion for covered companies that are not bank of $50 billion or more) and nonbank four consecutive quarters. holding companies. In prescribing financial companies the Council has This proposal would apply the same prudential standards under section designated for supervision by the Board. set of enhanced prudential standards to 165(b)(1), the Board would to take into The proposal incorporates this covered companies that are bank account differences among bank holding definition but, for reasons described holding companies and covered companies and nonbank financial below, at this time only covers U.S. companies that are nonbank financial companies supervised by the Board.26 bank holding companies and nonbank companies. As noted above, however, in Following designation of a nonbank financial companies the Council has applying the enhanced prudential financial company by the Council, the designated. standards to covered companies, the Board would thoroughly assess the Under section 165(i)(2), the Board may determine, on its own or in business model, capital structure, and requirements to conduct annual stress response to a recommendation by the risk profile of the designated company tests apply to any financial company Council, to tailor the application of the to determine how the proposed with more than $10 billion in total enhanced standards to different enhanced prudential standards and consolidated assets and that is regulated companies on an individual basis or by early remediation requirements should by a primary federal financial regulatory category, taking into consideration their apply. The Board may, by order or agency.18 The Board, as the primary capital structure, riskiness, complexity, regulation, tailor the application of the Federal financial regulatory agency for financial activities, size, and any other enhanced standards to designated bank holding companies, savings and risk-related factors that the Board deems nonbank financial companies on an 23 loan holding companies, and state appropriate. individual basis or by category, as 27 member banks, proposes to apply the The Board notes that this authority appropriate. annual company-run stress test will be particularly important in The Board solicits comment on requirements to any bank holding applying the enhanced standards to alternative approaches for applying the company, savings and loan holding specific nonbank financial companies enhanced prudential standards and the designated by the Council that are early remediation requirements the company,19 and state member bank with organized and operated differently from Dodd-Frank Act requires to nonbank more than $10 billion in total banking organizations.24 Under the covered companies. consolidated assets. Moreover, the Act,25 the Council generally may Question 1: What additional requirement to establish a risk determine that a nonbank financial characteristics of a nonbank covered committee under section 165(h) of the company, i.e., a company company—in addition to its business Act applies to any publicly traded bank predominantly engaged in financial model, capital structure, and risk holding company with $10 billion or activities, should be subject to profile—should the Board consider more in total consolidated assets.20 supervision by the Board and the when determining how to apply the For purposes of the definition of a enhanced standards established enhanced standards and the early covered company, a bank holding pursuant to section 165 and the early remediation requirements to such a company is deemed to have met the $50 remediation requirements established company? billion asset criterion based on the pursuant to section 166, if material Question 2: What are the potential average of the company’s total financial distress at such company, or unintended consequences and burdens consolidated assets as reported on its the nature, scope, size, scale, associated with subjecting a nonbank four most recent quarterly reports to the concentration, interconnectedness, or covered company to the enhanced Board, i.e., the Consolidated Financial mix of the activities of the nonbank prudential standards and the early Statements for Bank Holding Companies financial company, could pose a threat remediation requirements? 21 (Federal Reserve Form FR Y–9C). This to the financial stability of the United The current proposal would apply States. As such, the types of business only to U.S.-based bank holding 18 12 U.S.C. 5365(i)(2). The Dodd-Frank Act companies that are covered companies defines primary financial regulatory agency in models, capital structures, and risk section 2 of the Act. See 12 U.S.C. 5301(12). The and to nonbank covered companies, and Board, Office of the Comptroller of the Currency, three quarters for purposes of calculating its average would not apply to foreign banking and Federal Deposit Insurance Corporation have total consolidated assets. consulted on rules implementing section 165(i)(2). 22 For purposes of subpart E of the proposed rule, 26 See 12 U.S.C. 5365(b)(3). The factors the Board 19 As discussed below, the Board proposes to the same calculation approach would be applied to must take into consideration in prescribing the delay the effective date of the portion of the any bank holding company in determining when it enhanced standards under section 165(b)(1) are proposal implementing section 165(i)(2) for savings becomes an over $10 billion bank holding company. described above. See supra note 13. Under section and loan holding companies until such time as the For purposes of subpart G of the proposed rule, the 171 of the Dodd-Frank Act, the Board is required Board has implemented consolidated capital rules same calculation approach would be applied to any to impose the same minimum risk-based and for savings and loan holding companies. bank holding company, savings and loan holding leverage capital requirements on bank holding 20 12 U.S.C. 5365(h). company, or state member bank in determining companies and nonbank covered company as it 21 With respect to a company that has been a bank when it becomes an over $10 billion company. imposes on insured depository institutions. 12 holding company for less than four quarters, the 23 12 U.S.C. 5365(a)(2). U.S.C. 5371. Board would refer to the company’s financial 24 To date, the Council has not designated any 27 Following designation of nonbank financial statements from quarters preceding the time that it nonbank financial company for supervision by the companies by the FSOC, the Board also would began reporting on the FR Y–9C. For example, if a Board. consider the appropriate risk-based capital bank holding company had been reporting on the 25 See 12 U.S.C. 5315. See also 76 FR 64264 (Oct. treatment of asset types with no explicit treatment FR Y–9C for only one quarter, the Board would 18, 2011) (proposing to implement the Council’s under the current risk-based capital rules. See refer to its GAAP financial statements for the prior authority under section 113 of the Dodd-Frank). generally 76 FR 37620 (June 28, 2011).

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organizations. As discussed above, agency and that has more than $10 requirements. Therefore, similar to the however, foreign banking organizations billion in total consolidated assets must approach with respect to applying the that have U.S. banking operations conduct an annual stress test.29 Thus, annual company-run stress test (whether a U.S. branch, a U.S. agency, the proposal would apply annual requirement to savings and loan holding or a U.S. subsidiary bank holding company-run stress test requirements to companies, the Board intends to impose company or bank) and have global total any savings and loan holding company enhanced prudential standards and consolidated assets 28 of $50 billion or with more than $10 billion in early remediation requirements on more are subject to sections 165 and 166 consolidated assets. However, because savings and loan holding companies of the Dodd-Frank Act. Section 165 the annual stress test requirement, as with substantial banking activities once instructs the Board, in applying the proposed, is predicated on a company the Board has established risk-based enhanced prudential standards of being subject to consolidated capital capital requirements for savings and section 165 to foreign financial requirements, this proposal would delay loan holding companies. companies, to give due regard to the the effective date of the company-run Question 3: The Board seeks comment principle of national treatment and stress test requirements for savings and on its proposed approach to the equality of competitive opportunity, and loan holding companies until the Board application of the company-run stress to take into account the extent to which has established risk-based capital test requirements, including the delayed the foreign company is subject, on a requirements for savings and loan effective date, to savings and loan consolidated basis, to home country holding companies. holding companies. Also, what standards that are comparable to those While the remaining parts of section additional or alternative criteria should applied to financial companies in the 165 and section 166 do not specifically the Board consider for determining United States. apply to savings and loan holding which savings and loan holding Determining how to apply the companies, the Board, as the primary companies initially would be subject to enhanced prudential standards and supervisor of savings and loan holding the enhanced prudential standards and early remediation framework companies, has the authority under the early remediation requirements? established by the Dodd-Frank Act to Home Owners’ Loan Act to apply the B. Risk-Based Capital Requirements and foreign banking organizations in a enhanced standards to savings and loan Leverage Limits manner consistent with the purposes of holding companies to ensure their safety The recent financial crisis exposed the statute and the Board’s existing and soundness.30 The Board intends to significant weaknesses in the regulatory framework of supervising foreign issue a separate proposal for notice and capital requirements for large banking banking organizations is difficult. The comment to initially apply the companies. The amount of capital held scope of enhanced prudential standards enhanced standards and early required under sections 165 and 166 by many large, complex banking remediation requirements to all savings companies proved to be inadequate to extends beyond the set of prudential and loan holding companies with standards that are part of existing cover the risks that had accumulated in substantial banking activities—i.e., any the companies. For certain exposure international agreements, and foreign savings and loan holding company that banking organizations are subject to types, such as trading positions, OTC (i) has total consolidated assets of $50 derivatives, and securitization and re- home country regulatory and billion or more; and (ii)(A) has savings supervisory regimes that employ a wide securitization exposures, it became association subsidiaries which comprise evident that capital requirements did variety of approaches to prudential 25 percent or more of such savings and regulation. Further, foreign banking not adequately cover the risk of loss loan holding company’s total organizations operate in the United from those activities. In addition, it consolidated assets, or (B) controls one States through diverse structures, became apparent that some of the or more savings associations with total complicating the consistent application instruments that qualified as tier 1 consolidated assets of $50 billion or of the enhanced standards to the U.S. capital for banking companies, the core more. The Board believes that applying operations of a foreign banking measure of capital adequacy, were not the enhanced prudential standards of organization. Finally, the risk posed to truly loss absorbing. this proposal to savings and loan U.S. financial stability by foreign Section 165(b)(1)(A)(i) of the Act holding companies that satisfy these banking organizations that are subject to directs the Board to establish enhanced criteria is an important aspect of sections 165 and 166 varies widely. The risk-based capital and leverage Board is actively developing a proposed ensuring their safety and soundness. standards for covered companies to framework for applying the Act’s The Board also may determine to apply address these weaknesses. The Board enhanced prudential standards and the enhanced standards to any savings plans to meet this statutory requirement early remediation requirement to foreign and loan holding company, if with a two-part effort. Under this banking organizations, and expects to appropriate to ensure the safety and proposal, the Board would subject all issue this framework for public soundness of such company, on a case- covered companies to the Board’s comment shortly. by-case basis. capital plan rule, which currently While sections 165 and 166 generally As is the case with stress testing, requires all bank holding companies do not apply to savings and loan many of the other enhanced standards with $50 billion or more in consolidated holding companies, section 165(i)(2) are predicated on a covered company assets to submit an annual capital plan requires the Board to issue regulations being subject to consolidated capital to the Board for review (capital plan pursuant to which any financial rule).31 Under the capital plan rule, company for which the Board is the 29 Among entities covered by this part of the covered companies would have to Dodd-Frank are state member banks, bank holding primary federal financial regulatory companies, and savings and loan holding demonstrate to the Board that they have companies with total consolidated assets of $10 robust, forward-looking capital planning 28 For a foreign banking organization subject to billion or more. processes that account for their unique section 165 of the Dodd-Frank Act, total 30 See 12 U.S.C. 1467a(g) (authorizing the Board risks and that permit continued consolidated assets would be based on the foreign to issue such regulations and orders as the Board banking organization’s Capital and Asset Reports deems necessary or appropriate to administer and operations during times of economic for Foreign Banking Organizations (Federal Reserve carry out the purposes of section 10 of the Home Form FR Y–7Q). Owners’ Loan Act). 31 12 CFR 225.8.

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and financial stress. The supervisory have worked together with other forthcoming proposal would and company-run stress tests that are members of the Basel Committee on contemplate adopting implementing part of this proposal and discussed in Banking Supervision (BCBS) to rules in 2014, and requiring G–SIBs to detail below are important aspects of strengthen the regulatory capital regime meet the capital surcharges on a phased- this forward-looking process.32 The for internationally active banks and in basis from 2016–2019. develop a framework for a risk-based Board expects that a covered company C. Liquidity Requirements will integrate into its capital plan, as capital surcharge for the world’s largest, one part of the underlying analysis, the most interconnected banking The financial crisis revealed results of the company-run stress tests companies. The new regime for significant weaknesses in liquidity conducted in accordance with section internationally active banks, known as buffers and liquidity risk management 165(i)(2) of the Dodd-Frank Act and the Basel III,34 materially improves the practices throughout the financial Board’s proposed implementing rules. quality of regulatory capital and system that directly contributed to the The results of those stress tests, as well introduces a new minimum common failure or near failure of many as the annual supervisory stress test equity requirement. Basel III also raises companies and exacerbated the crisis. conducted by the Board under section the numerical minimum capital Section 165(b)(1)(A)(ii) addresses 165(i)(1) of the Dodd-Frank, will be requirements and introduces capital inadequacies in the existing regulatory considered in the evaluation of a conservation and countercyclical buffers liquidity requirements by directing the covered company’s capital plan. to induce banking organizations to hold Board to establish liquidity standards Under the capital plan rule, covered capital in excess of regulatory for covered companies. Similar to companies would be required to minimums. In addition, Basel III enhanced risk-based capital and demonstrate to the Board their ability to establishes for the first time an leverage requirements, the Federal maintain capital above existing international leverage standard for Reserve intends to implement this minimum regulatory capital ratios and internationally active banks. The Board statutory requirement through a multi- above a tier 1 common ratio of 5 percent is working with the other U.S. banking stage approach. under both expected and stressed regulators to implement the Basel III This proposal would subject covered conditions over a minimum nine- capital reforms in the United States. companies to a set of enhanced liquidity quarter planning horizon.33 Covered Building on the Basel III reforms, the risk management standards, including 36 companies with unsatisfactory capital BCBS published a document in liquidity stress testing. The proposal plans would face limits on their ability November 2011 entitled Global builds on guidance previously adopted to make capital distributions. systemically important banks: by the Board and other U.S. federal The Board intends to supplement the Assessment methodology and the banking agencies and proposes higher enhanced risk-based capital and additional loss absorbency requirement liquidity risk management standards for 37 leverage requirements included in this (BCBS framework), which set forth an covered companies. proposal with a subsequent proposal to additional capital requirement for global The proposal would require covered systemically important banks (G– companies to conduct internal stress implement a quantitative risk-based 35 capital surcharge for covered companies SIBs). tests at least monthly to measure their The Basel III and BCBS frameworks, or a subset of covered companies. Over liquidity needs at 30-day, 90-day and once implemented in the United States, the past few years, the Federal Reserve one-year intervals during times of are expected to significantly enhance and other U.S. federal banking agencies instability in the financial markets and risk-based capital and constrain the to hold liquid assets that would be leverage of covered companies and will 32 In June 2011, the Board, along with the OCC sufficient to cover 30-day stressed net and FDIC, issued for comment proposed be a key part of the Board’s overall cash outflows under their internal stress supervisory guidance on stress testing for banking approach to enhancing the risk-based scenarios. Covered companies also organizations with more than $10 billion in total capital and leverage standards would be required to meet specified assets. 76 FR 35072 (June 15, 2011). That proposed applicable to these companies in guidance contains principles for an effective stress corporate governance requirements testing framework that would cover an accordance with section 165 of the around liquidity risk management, to organization’s various stress testing activities, Dodd-Frank Act. The Board intends to project cash flow needs over various including capital and liquidity stress testing. The propose a quantitative risk-based capital time horizons, to establish internal agencies issued the proposed guidance for comment surcharge in the United States based on separately from this proposal because the proposed limits on certain liquidity metrics, and guidance is intended to apply broadly to the BCBS approach consistent with the organizations’ use of stress testing in overall risk BCBS’s implementation timeframe. The 36 See supra note 32. management, not just to capital and liquidity stress 37 Supervision and Regulation Letter SR 10–6, testing, as is the case for the requirements of this 34 See Basel Committee on Banking Supervision, Interagency Policy Statement on Funding and proposed rule. The agencies are considering Basel III: A global regulatory framework for more Liquidity Risk Management (March 17, 2010), comments on the proposed guidance and expect to resilient banks and banking systems (revised June available at http://www.federalreserve.gov/ issue a final version shortly. The Board expects that 2011), available at http://www.bis.org/publ/ boarddocs/srletters/2010/sr1006.pdf; 75 FR 13656 companies would follow the principles set forth in bcbs189.htm (hereinafter Basel III framework). See (March 22, 2010). The Board, the Office of the the final stress testing guidance—as well as with also Basel Committee on Banking Supervision, Comptroller of the Currency (OCC), the FDIC, the other relevant supervisory guidance—when Basel III: International framework for liquidity risk Office of Thrift Supervision, the National Credit conducting capital and liquidity stress testing in measurement, standards and monitoring (December Union Administration, and the Conference of State accordance with requirements in this proposed 2010), available at www.bis.org/publ/bcbs188.htm Bank Supervisors jointly issued the Interagency rule. (hereinafter Basel III liquidity framework); Liquidity Risk Policy Statement. The Interagency 33 Under the capital plan rule, tier 1 common is Enhancements to the Basel II framework (July Liquidity Risk Policy Statement incorporates defined as tier 1 capital less non-common elements 2009), available at www.bis.org/publ/bcbs157.htm; principles of sound liquidity risk management that in tier 1 capital, including perpetual preferred stock and Revisions to the Basel II market risk framework the agencies have issued in the past, and and related surplus, minority interest in (July 2009), available at www.bis.org/publ/ supplements them with the principles of sound subsidiaries, trust preferred securities and bcbs158.htm. liquidity risk management established by the Basel mandatory convertible preferred securities. 35 See Basel Committee on Banking Supervision, Committee on Bank Supervision (Basel Committee) Specifically, non-common elements include the Global systemically important banks: Assessment in its document entitled ‘‘Principles for Sound following items captured in the FR Y–9C reporting methodology and the additional loss absorbency Liquidity Management and Supervision.’’ Principles form: Schedule HC, line item 23 net of Schedule requirement (November 2011), available at http:// for Sound Liquidity Risk Management and HC–R, line item 5; and Schedule HC–R, line items www.bis.org/publ/bcbs207.htm (hereinafter BCBS Supervision (September 2008), available at https:// 6a, 6b, and 6c. capital surcharge framework). ww.bis.org/publ/bcbs144.htm.

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to maintain a contingency funding plan adequately cover credit exposures company and a counterparty that each (CFP) that identifies potential sources of generated by derivatives and some either have more than $500 billion in liquidity strain and alternative sources securities financing transactions.38 total consolidated assets or are a of funding when usual sources of In an effort to address concentration nonbank covered company. In addition, liquidity are unavailable. risk among large financial institutions, the proposal provides rules for In addition to the enhanced liquidity section 165(e) of the Dodd-Frank Act measuring the amount of credit risk management standards included in directs the Board to establish single- exposure generated by the various types this proposal, the Federal Reserve and counterparty credit limits for covered of credit transactions. Notably, the other U.S. federal banking agencies have companies in order to limit the risks proposal would allow covered been working with the BCBS over the that the failure of any individual companies to reduce their credit past few years to develop quantitative company could pose to a covered exposure to a counterparty for purposes liquidity requirements to increase the company.39 This section directs the of the limit by obtaining credit risk capacity of internationally active Board to prescribe regulations that mitigants such as collateral, guarantees, banking firms to absorb shocks to prohibit covered companies from having and credit derivative hedges. The funding relative to the liquidity risks credit exposure to any unaffiliated proposal describes the types of they face. The BCBS approved two new company that exceeds 25 percent of the collateral, guarantees and derivative liquidity rules as part of the Basel III capital stock and surplus of the covered hedges that are eligible under the rule reforms in December 2010. The first rule company.40 This section also authorizes and provides valuation rules for is a Liquidity Coverage Ratio (LCR), the Board to lower the 25 percent reflecting such credit risk mitigants. which would require banks to hold an threshold if necessary to mitigate risks E. Risk Management and Risk amount of high-quality liquid assets to the financial stability of the United Committee Requirements sufficient to meet expected net cash States.41 outflows over a 30-day time horizon Credit exposure to a company is Sound, enterprise-wide risk under a supervisory stress scenario. The defined broadly in section 165(e) of the management by covered companies second rule is the Net Stable Funding Act to cover all extensions of credit to reduces the likelihood of their material Ratio (NSFR), which would require the company; all repurchase and reverse distress or failure and thus promotes banks to enhance their liquidity risk repurchase agreements, and securities financial stability. In addition to resiliency out to one year. Under the borrowing and lending transactions, adopting enhanced risk management terms of Basel III, global banks are with the company; all guarantees and standards for covered companies, the required to comply with the LCR by letters of credit issued on behalf of the Board is directed by section 165(h) to 2015 and with the NSFR by 2018. company; all investments in securities require publicly traded covered The Basel III liquidity rules are issued by the company; counterparty companies and publicly traded bank currently in an international observation credit exposure to the company in holding companies with $10 billion or period as the U.S. federal banking connection with derivative transactions; more in total consolidated assets to agencies and other BCBS members and any other similar transaction that establish a risk committee of the board assess the potential impact of the rules the Board determines to be a credit of directors that is responsible for on banks and various financial markets. exposure for purposes of section oversight of enterprise-wide risk The Board intends, in conjunction with 165(e).42 Section 165(e) also grants management, is comprised of an other federal banking agencies, to authority to the Board to exempt appropriate number of independent implement these standards in the transactions from the definition of the directors, and includes at least one risk United States through one or more management expert. separate rulemakings. Through term ‘‘credit exposure’’ if the Board implementation of these standards in finds that the exemption is in the public The proposal would require all interest and consistent with the covered companies to implement robust the United States, the Board anticipates 43 that the Basel III liquidity rules would purposes of the subsection. enterprise-wide risk management then become a central component of the The proposal implements these practices that are overseen by a risk enhanced liquidity requirements for statutory provisions by defining key committee of the board of directors and covered companies, or a subset of terms, such as covered company, chief risk officer with appropriate levels covered companies, under section 165 unaffiliated counterparty, and capital of independence, expertise and stature. of the Dodd-Frank Act. stock and surplus. The proposal also The proposal also would require any targets the mutual interconnectedness of publicly traded bank holding company D. Single-Counterparty Credit Limits the largest financial companies by with $10 billion or more in total As demonstrated in the crisis, setting a stricter 10 percent limit for consolidated assets and that is not a interconnectivity among major financial credit exposure between a covered covered company to establish a risk companies poses risks to financial committee. stability. The effects of one large 38 Section 610 of the Dodd-Frank Act amends the term ‘‘loans and extensions of credit’’ for purposes F. Stress Testing Requirements financial company’s failure or near of the lending limits applicable to national banks collapse may be transmitted and to include any credit exposure arising from a The crisis also revealed weaknesses in amplified by the bilateral credit derivative transaction, repurchase agreement, the stress testing practices of large exposures between large, systemically reverse repurchase agreement, securities lending banking organizations, as well as gaps in transaction, or securities borrowing transaction. See the regulatory community’s approach to important companies. The financial Dodd-Frank Act, Public Law 111–203, § 610, 124 crisis also revealed inadequacies in the Stat. 1376, 1611 (2010). As discussed in more detail assessing capital adequacy. During the structure of the U.S. regulatory below, these types of transactions are also all made height of the crisis, the Federal Reserve framework for single-counterparty credit subject to the single counterparty credit limits of began stress testing the capital adequacy section 165(e). 12 U.S.C. 5365(e)(3). of large, complex bank holding limits. Although banks were subject to 39 See 12 U.S.C. 5365(e)(1). companies as a forward-looking exercise single-borrower lending and investment 40 12 U.S.C. 5365(e)(2). limits, these limits did not apply to 41 See id. designed to estimate losses, revenues, bank holding companies on a 42 See 12 U.S.C. 5365(e)(3). regulatory capital ratios, and reserve consolidated basis and did not 43 See 12 U.S.C. 5365(e)(5)–(6). needs under various macroeconomic

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scenarios.44 By looking at the broad that (i) such company poses a grave includes triggers based on supervisory needs of the financial system and the threat to the financial stability of the stress test results, market indicators and specific needs of individual companies, United States and (ii) the imposition of weaknesses in enterprise-wide and these stress tests provided valuable such a requirement is necessary to liquidity risk management. The information to market participants and mitigate the risk that the company poses proposed rule also describes the had an overall stabilizing effect. to U.S. financial stability. The proposal regulatory restrictions that a covered Section 165(i)(1) directs the Board to establishes procedures to notify a company must comply with in each implement rules requiring the Federal covered company that the Council has remedial stage. Reserve, in coordination with the made a determination under section I. Transition Arrangements and Ongoing appropriate primary Federal regulatory 165(j) that the company must comply Compliance agencies and the Federal Insurance with the 15-to-1 debt-to-equity ratio Office, to conduct an annual evaluation requirement, defines ‘‘debt’’ and Another important aspect of the of whether each covered company has ‘‘equity’’ for purposes of calculating proposal is the timing of initial sufficient capital to absorb losses as a compliance with the ratio, and provides compliance and ongoing reporting to the result of adverse economic conditions an affected company with a transition Board in conjunction with the proposed (supervisory stress tests). The Board is period to come into compliance with enhanced standards. In order to reduce also required to publish a summary of the ratio. the burden on covered companies of coming into initial compliance with the the results of the supervisory stress H. Early Remediation Framework tests. In addition, section 165(i)(2) standards, the Board is proposing to directs the Board to implement rules The financial crisis revealed that the provide meaningful phase-in periods. In requiring each covered company to condition of large banking organizations general, a company that is a covered conduct its own semi-annual stress tests can deteriorate rapidly even during company on the effective date of the and any state member bank, bank periods when their reported regulatory final rule would be subject to the holding company or savings and loan capital ratios are well above minimum enhanced prudential standards holding company with more than $10 requirements. The crisis also revealed beginning on the first day of the fifth billion in total consolidated assets (that that financial companies that addressed quarter following the effective date of is not a covered company) to conduct its incipient financial problems swiftly and the final rule. A company that becomes own annual stress tests (company-run decisively performed much better than a covered company after the effective stress tests). Companies must also companies that delayed remediation date of the final rule generally would publish a summary of the results of the work. become subject to the enhanced Section 166 of the Dodd-Frank Act company-run stress tests. standards beginning on the first day of The proposal would implement these directs the Board to prescribe the fifth quarter following the date that statutory provisions by requiring the regulations to provide for the early it became a covered company. For a Federal Reserve to conduct annual remediation of financial distress at variety of reasons, the proposed rule supervisory stress tests of covered covered companies so as to minimize provides different transition companies under baseline, adverse, and the probability that the company will arrangements for enhanced risk-based severely adverse scenarios and by become insolvent and to reduce the capital and leverage requirements, potential harm of the insolvency of a requiring companies that are subject to single-counterparty credit limits and covered company to the financial company-run stress test requirements to stress testing requirements. Transition stability of the United States. The conduct their own capital adequacy arrangements for these standards are regulation must use measures of the stress tests on an annual or semi-annual discussed in the relevant sections of the financial condition of a covered basis, as applicable. Under the proposal, preamble below. company, including regulatory capital the Board would publicly disclose To reduce the burden of ongoing ratios, liquidity measures, and other information on the company-specific compliance with the enhanced forward-looking indicators as triggers results of the supervisory stress tests. standards, the Board is also proposing to for remediation actions. Remediation sequence the timing of required G. Debt-to-Equity Limits for Certain requirements must increase in submissions. For example, the Covered Companies stringency as the financial condition of requirement that covered companies Section 165(j) of the Dodd-Frank Act a covered company deteriorates. conduct stress tests is specifically timed provides that the Board must require a Remedies must include, in the initial to coordinate with the reporting covered company to maintain a debt-to- stages of financial decline of the covered requirements associated with the capital equity ratio of no more than 15-to-1, company, limits on capital plan, and the capital plan and stress test upon a determination by the Council distributions, acquisitions, and asset requirements are specifically timed to growth. Remedies in the later stages of minimize overlap with resolution plan 44 In early 2009, the Federal Reserve led the financial decline of the covered update requirements.45 Supervisory Capital Assessment Program (SCAP) as company must include a capital Question 4: Are there alternative a key element of the plan to stabilize the U.S. restoration plan and capital-raising approaches the Board should consider financial system. Building on SCAP and other requirements, limits on transactions supervisory work coming out of the crisis, the to phase in the proposed enhanced Federal Reserve initiated the Comprehensive with affiliates, management changes, prudential standards for either bank Capital Analysis and Review (CCAR) in late 2010 and asset sales. holding companies or nonbank financial to evaluate the internal capital planning processes The proposed rule implementing companies? of large, complex bank holding companies. The section 166 establishes a regime for the CCAR represented a substantial strengthening of J. Reservation of Authority previous approaches to ensuring that large firms early remediation of financial distress at have thorough and robust processes for managing covered companies that includes several To address situations where and allocating their capital resources. The CCAR forward-looking triggers designed to compliance with the requirements of the also focused on the risk measurement and identify emerging or potential issues proposed rule would not sufficiently management practices supporting firms’ capital adequacy assessments, including their ability to before they develop into larger mitigate the risks to U.S. financial deliver credible inputs to their loss estimation problems. In addition to regulatory techniques. capital triggers, the proposed rule 45 See 12 CFR 243.3.

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stability posed by the failure or material capital and leverage standards for believes that the safety and soundness financial distress of a covered company, covered companies that are more rationale that underlies the capital plan the proposed rule includes a reservation stringent than the risk-based capital and rule’s enhanced risk-based capital and of authority provision. This reservation leverage standards applicable to leverage standards for bank holding of authority would permit the Board to nonbank financial companies and bank companies is also applicable to nonbank implement additional or further holding companies that do not present covered companies, and that enhanced prudential standards for a similar risks to the financial stability of compliance with this rule by such covered company, including, but not the United States and increase in companies would help to promote their limited to, additional capital or liquidity stringency based on the systemic ongoing financial stability. By requiring requirements, corporate governance footprint of the company. covered companies to have robust standards, concentration limits, stress As discussed above, in addition to capital plans and to hold capital testing requirements, activity limits, or implementing the broader Basel III commensurate with the risks they other requirements or restrictions that capital reforms, the Board seeks to would face under stressful financial the Board may deem necessary to carry implement enhanced risk-based capital conditions, and by limiting capital out the purposes of the proposal or and leverage standards for covered distributions under certain section 165 of the Dodd-Frank Act.46 companies in a two-stage process: (i) In circumstances, the proposed rule would The proposed rule also specifies that the this proposal, the application of the reduce the probability of the failure of Board may determine that a bank Board’s capital plan rule to covered a covered company. holding company that is not a covered companies, including the requirement The current capital plan rule imposes company shall be subject to one or more for covered companies to maintain enhanced risk-based and leverage of the standards established under the capital above 5 percent tier 1 common requirements on large bank holding proposed rule if the Board determines risk-based capital ratio under both companies in several ways. The rule that doing so is necessary or appropriate expected and stressed conditions; and requires such companies to submit to protect the safety and soundness of (ii) in a separate future proposal, the board-approved annual capital plans to the company or to promote financial introduction of a quantitative risk-based the Federal Reserve in which they stability. capital surcharge for covered companies demonstrate their ability to maintain In addition, the proposed rule would or a subset of covered companies based capital above the Board’s minimum risk- specifically state that nothing in the rule on the BCBS capital surcharge based capital ratios (total capital ratio of would limit the authority of the Board framework for G–SIBs. 8 percent, tier 1 capital ratio of 4 under any other provision of law or B. Overview of the Proposed Rule percent) and tier 1 leverage ratio (4 regulation to take supervisory or percent) under both baseline and enforcement action, including action to 1. Capital Planning and Minimum stressed conditions over a minimum address unsafe and unsound practices Capital Requirements nine-quarter, forward-looking planning or conditions, deficient capital or Under the proposal, all covered horizon. Each such plan must include a liquidity levels, or violations of law. companies would be required to comply discussion of the bank holding K. Common Definitions with, and hold capital commensurate company’s sources and uses of capital with, the requirements of any reflecting the risk profile of the firm A number of terms are used regulations adopted by the Board over the planning horizon. In addition, throughout the proposed rule. Some of relating to capital plans and stress tests. these bank holding companies must these terms are generally given the same Thus, in addition to the stress testing demonstrate the ability to maintain a meaning as their definitions under other requirements that are part of this minimum tier 1 common risk-based regulations issued by the Board. For proposal, this subpart would require all capital ratio of 5 percent over the same example, under the proposal, the term covered companies to comply with the planning horizon (under both baseline ‘‘company’’ would be defined as a capital plan rule recently adopted by the and stressed conditions).50 The stressed corporation, partnership, limited Board.48 In addition, the Board is scenarios must include any scenarios liability company, depository proposing that nonbank covered provided by the Federal Reserve (such institution, business trust, special companies be subject to the same as those discussed in section VII of this purpose entity, association, or similar minimum risk-based and leverage preamble) as well as at least one organization. The term ‘‘bank holding capital requirements that apply to stressed scenario developed by the bank company’’ generally would have the covered companies that are bank holding company appropriate to its same meaning as in section 2 of the holding companies. business model. A capital plan must Bank Holding Company Act, as As discussed further below, the amended (12 U.S.C. 1841), and the capital plan rule would enhance 12 CFR part 225, appendix E (market risk rule), and Board’s Regulation Y (12 CFR part minimum capital standards for covered 12 CFR part 225, appendix G (advanced approaches 225).47 Additional common definitions companies in several dimensions, risk-based capital rule). A firm that met the applicability thresholds under the market risk rule are detailed in the proposed rule. including requiring firms to The Board solicits comment on these or the advanced approaches risk-based capital rule demonstrate capital adequacy over a would be required to use those rules to calculate its proposed definitions. minimum nine-quarter planning minimum risk-based capital requirements in III. Risk-Based Capital Requirements horizon under both expected and addition to the general risk-based capital 49 requirements and the leverage rule. and Leverage Limits stressed conditions. The Board 50 Under the capital plan rule, tier 1 common is defined as tier 1 capital less non-common elements A. Background 48 12 CFR 225.8. See 76 FR 74631 (December 1, in tier 1 capital, including perpetual preferred stock Section 165 of the Dodd-Frank Act 2011). The capital plan rule currently applies to all and related surplus, minority interest in directs the Board to establish risk-based U.S. bank holding companies with $50 billion or subsidiaries, trust preferred securities and more in total consolidated assets (large bank mandatory convertible preferred securities. holding companies). Specifically, non-common elements include the 46 12 U.S.C. 5365(b)(1)(B)(iv). 49 At present, the Board’s rules for calculating following items captured in the FR Y–9C reporting 47 Control would have a different meaning under minimum capital requirements are found at 12 CFR form: Schedule HC, line item 23 net of Schedule the proposed rules concerning single-counterparty part 225, appendix A (general risk-based capital HC–R, line item 5; and Schedule HC–R, line items credit limits. rule), 12 CFR part 225, appendix D (leverage rule), 6a, 6b, and 6c.

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also include a description of all planned In addition, 180 days following its Question 5: What factors should the capital actions over the planning designation by the Council, a nonbank Board consider in deciding whether to horizon. covered company would be subject to impose different capital planning or In its capital plan, a large bank minimum risk-based capital and stress testing requirements on nonbank holding company must provide a leverage requirements. A nonbank covered companies? detailed description of its process for covered company would be required to Question 6: What alternative assessing capital adequacy, including a calculate its minimum risk-based and enhanced capital requirements for description of how it will, under leverage capital requirements as if it nonbank covered companies should the stressful conditions, maintain capital were a bank holding company in Board consider? Should the Board commensurate with its risks and accordance with any minimum capital consider a longer or shorter phase-in continue its operations by maintaining requirements established by the Board period for capital requirements for ready access to funding, meeting its for bank holding companies.53 nonbank covered companies? obligations to creditors and other Accordingly, the nonbank covered Conforming Amendment to Section counterparties, and continuing to serve company would be required to hold 225.8 of Regulation Y as a credit intermediary. A large bank capital sufficient to meet (i) a tier 1 risk holding company that is unable to based capital ratio of 4 percent and a To make the applicability of the satisfy these requirements generally may total risk-based capital ratio of 8 Board’s capital plan rule consistent with not make any capital distributions until percent, as calculated according to the the applicability of the proposed it provides a satisfactory capital plan to Board’s risk-based capital rules,54 and enhanced capital standards under this the Federal Reserve.51 (ii) a tier 1 leverage ratio of 4 percent as proposed rule, the Board is considering In addition, a large bank holding calculated under the leverage rule.55 whether to amend the capital plan rule company must obtain prior approval Finally, each nonbank covered company to provide that a bank holding company from the Federal Reserve before making would be required to report to the Board subject to that rule would remain a capital distribution in certain on a quarterly basis its risk-based capital subject to that rule until its total circumstances where the Federal and leverage ratios. Upon ascertaining consolidated assets fall below $50 Reserve had provided a non-objection to that it had failed to meet any of its billion for four consecutive calendar the large bank holding company’s minimum risk-based or leverage quarters. capital plan. The bank holding company requirements, a nonbank covered 2. Quantitative Risk-Based Capital would be required to include certain company would be required to notify Surcharge information in the request, which may the Board immediately.56 In November 2011, the BCBS agreed include, among other things, an Under the proposed rules’ reservation to require G–SIBs to hold an additional assessment of the bank holding of authority, the Board may require any amount of common equity above the company’s capital adequacy under a covered company to hold additional regulatory minimums to enhance their revised stress scenario provided by the capital or be subject to other resiliency and ability to absorb losses Federal Reserve, a revised capital plan, requirements or restrictions if it under difficult economic conditions. and supporting data. determines that compliance with the The recently finalized BCBS framework As stated above, a nonbank covered requirements of the proposal does not establishes five capital surcharge company would be subject to the capital sufficiently mitigate risks to U.S. categories, ranging from 100 to 350 basis plan rule under this proposal. While a financial stability posted by the failure points,57 and allocates G–SIBs to a bank holding company that becomes a or material financial distress of the specific surcharge category based on a covered company over time is subject to covered company. twelve-factor formula. The formula the requirements of the capital plan rule The Board seeks comment on all includes measures of size, as provided for in that rule,52 a nonbank aspects of the proposed enhanced risk- interconnectedness, complexity, lack of covered company would become subject based capital and leverage requirements. substitutes and cross-border activity. to the requirements of the capital plan In particular, the Board seeks The capital surcharge must be met with rule in the calendar year that it was comment on the appropriateness of common equity only and would operate designated by the Council, if the requiring nonbank covered companies to expand the Basel III capital nonbank covered company was to have the same capital planning and conservation buffer. The BCBS designated by the Council more than stress testing, and regulatory capital framework would phase-in the G–SIB 180 days before September 30 of that requirements as bank holding surcharge requirement in equal calendar year. companies. increments from 2016 to 2019, in 51 See section VII supra on the enhanced 53 See supra note 49. parallel with the capital conservation prudential requirement that a covered company 54 12 CFR part 225, appendix A and G. buffer. conduct certain stress tests for explanation of the 55 12 CFR part 225, appendix D, section II. Approximately 30 global banks would relation between this enhanced prudential capital 56 Under section 171 of the Dodd-Frank Act, the be subject initially to the G–SIB requirement and the stress test requirement under Board is required to impose minimum risk-based surcharge under the BCBS framework. section 165. and leverage capital requirements on bank holding 52 See generally 12 CFR 225.8(b). The final capital companies and nonbank covered companies that The BCBS has noted that the number of plan rule provides that a bank holding company are not less than the generally applicable capital banks subject to the framework, and the that becomes subject to the final rule by operation requirements it imposes on insured depository surcharge category associated with of the asset threshold after the 5th of January of a institutions. 12 U.S.C. 5371. The Board recognizes different banks, would evolve over time calendar year will not be subject until January 1 of that some aspects of its capital requirements may the next calendar year to the final rule’s not take into account the characteristics of activities as the systemic risk profiles of different requirement to file a capital plan with the Federal and assets of nonbank covered companies that are Reserve, resubmit a capital plan under certain impermissible for banks and bank holding 57 Initially, G–SIBs would be placed in 1 of 4 circumstances, or to obtain prior approval of capital companies. When a nonbank covered company is categories, with surcharges ranging from 100 to 250 distributions in excess of those described in the designated by the Council, the Board may consider basis points and the fifth category, with an firm’s capital plan. A bank holding company would whether any adjustments to the minimum capital associated surcharge of 350 basis points, would be be subject to all other requirements under the requirements applicable to the nonbank covered left empty in order to leave room to apply higher capital plan rule immediately upon becoming company may be appropriate, within the limits of surcharges to G–SIBs that increase their systemic subject to that rule. section 171 of the Dodd-Frank Act. footprint further over time.

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banks change. The BCBS expects to financial stress because they did not requirements for funding liquidity that refine and update the framework in the manage their liquidity in a prudent are designed to promote the resilience of coming years as additional analysis is manner. In some cases, these companies a banking organization’s liquidity risk performed. had difficulty in meeting their profile.60 These minimum requirements The Board and other U.S. federal obligations as they became due because are imposed through two ratios: banking agencies worked closely with sources of funding became severely • A liquidity coverage ratio (LCR), other members of the BCBS to develop restricted. These events followed several which is designed to promote the short- the BCBS framework and the Board years of ample liquidity in the financial term resiliency of a banking believes that it is consistent with the system, during which liquidity risk organization’s liquidity risk profile by financial stability objectives of section management did not receive the same ensuring that it has sufficient high 165 of the Dodd-Frank Act, including level of priority and scrutiny as quality liquid resources to survive an minimizing the threat to U.S. financial management of other sources of risk. acute stress scenario lasting for one stability posed by systemically The rapid reversal in market conditions month; and • important financial companies. The and availability of liquidity during the A net stable funding ratio (NSFR), Board believes that a U.S. capital crisis illustrated how quickly liquidity which is designed to promote liquidity surcharge framework based on the BCBS can evaporate, and that illiquidity can risk resilience over a longer time period framework would meaningfully reduce last for an extended period, leading to and to create incentives for a banking the probability of failure of the largest, a company’s insolvency before its assets organization to fund its activities with most complex financial companies and experience significant deterioration in medium- and longer-term funding would minimize losses to the U.S. value. sources. The NSFR has a time horizon financial system and the economy if Many of the liquidity-related of one year, and is designed to provide such a company should fail. A capital difficulties experienced by financial a sustainable maturity structure of assets surcharge would help require that these companies were due to lapses in basic and liabilities. companies account for the costs they principles of liquidity risk management. Under the terms of Basel III, the LCR impose on the broader financial system This problem was evident from the and NSFR are to be implemented by and would reduce the implicit subsidy horizontal reviews of financial Basel Committee member countries by they enjoy due to market perceptions of companies conducted by the Senior 2015 and 2018, respectively. The Board intends to institute a their systemic importance. The Board Supervisors Group (‘‘SSG’’), which liquidity regime for covered companies intends to issue a concrete proposal for comprises senior financial supervisors 58 through a multi-stage process that implementation of a quantitative risk- from seven countries. The SSG found would include a regulatory framework based capital surcharge for covered that failure of liquidity risk management practices contributed significantly to the for strong liquidity risk management companies, or a subset thereof, based on and quantitative liquidity requirements the BCBS approach consistent with the financial crisis. In particular, the SSG noted that firms’ inappropriate reliance based on the Basel III liquidity ratios. In BCBS’s implementation timeframe. The the first stage, covered companies forthcoming proposal would on short-term sources of funding and in some cases, the repo market, as well as would be subject to enhanced liquidity contemplate adopting implementing risk management standards under this rules in 2014, and requiring G–SIBs to inaccurate measurements of funding needs and lack of effective contingency proposal. The proposal builds on the meet the capital surcharges on a phased- core provisions of the Board’s in basis from 2016–2019. funding were key factors in the liquidity 59 Supervision and Regulation (SR) letter Question 7: How should the Board crises many firms faced. Given the direct link between 10–6, Interagency Policy Statement on implement the BCBS framework liquidity risk management failures and Funding and Liquidity Risk discussed above, or are there the many strains on firms and the Management issued in March 2010 alternatives to the BCBS framework the financial system experienced during the (Interagency Liquidity Risk Policy Board should consider? recent crisis, the Board believes that Statement).61 As discussed in detail Question 8: What is the appropriate below, the proposed rules would require scope of application of a quantitative strong liquidity risk management is crucial to ensuring a company’s a covered company to take a number of capital surcharge in the United States in prudential steps to manage liquidity light of section 165 of the Dodd-Frank resiliency during periods of financial market stress and that covered risk. Significantly, the proposed rules Act? What adaptations to the BCBS introduce liquidity stress test framework, or alternative surcharge companies should be held to the highest liquidity standards, as well as capital requirements for covered companies assessment methodologies, would be and require them to maintain liquid appropriate for determining a standards. The Board also believes establishing assets sufficient to meet projected net quantitative capital surcharge for minimum quantitative liquidity cash flows under the stress tests. The covered companies that are not standards will improve the capacity of proposed rules would also require a identified as global systemically firms to remain viable during a liquidity covered company to generate important banks in the BCBS stress. The Basel III Liquidity comprehensive cash flow projections, to framework? Framework establishes minimum establish and monitor its liquidity risk Question 9: If the BCBS framework tolerance, and maintain contingency were to be applied to nonbank covered 58 See Senior Supervisors Group, Observations on plans for funding where normal sources companies, how should the framework Risk Management Practices During the Recent of funding may not be available. be modified to capture the systemic Market Turbulence (March 2008), available at The Board believes liquidity footprint of those companies? http://www.newyorkfed.org/newsevents/news/ banking/2008/SSG_Risk_Mgt_doc_final.pdf requirements are vitally important to the IV. Liquidity Requirements (hereinafter 2008 SSG Report). 59 See Senior Supervisors Group, Risk 60 Basel Committee on Bank Supervision, Basel A. Background Management Lessons from the Global Banking III: International Framework for Liquidity Risk Crisis of 2008 (October 2009), available at http:// Measurement, Standards, and Monitoring During the financial crisis that began www.newyorkfed.org/newsevents/news_archive/ (December 20, 2010), available at www.bis.org/ in 2007, many solvent financial banking/2009/SSG_report.pdf (hereinafter 2009 publ/bcbs188.htm. companies experienced significant SSG Report). 61 See supra note 37.

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overall goals of section 165 of the Dodd- companies from the possibility of failure a. Board of Directors and Risk Frank Act, to prevent or mitigate risks due to liquidity shortfalls. These metrics Committee Responsibilities (§ 252.52) to the financial stability of the United are currently undergoing observation by A covered company’s board of States that could arise from the material the BCBS and may be modified directors is ultimately responsible for financial distress or failure, or ongoing depending on the results of that the liquidity risk assumed by the activities, of large, interconnected observation. The Board and other covered company. Accordingly, the financial companies. The liquidity federal banking agencies have been proposed rule at § 252.52(a) would requirements in this proposal are also working with banking organizations and require that the board of directors (or more stringent than liquidity standards other members of the BCBS to gather the risk committee) 62 must oversee the applied to nonbank financial companies data and study the impact of the covered company’s liquidity risk and bank holding companies that do not proposed standards on the banking management processes, and must present similar risks to financial system. The Board is carefully review and approve the liquidity risk stability. Currently, the Board oversees considering what changes to the management strategies, policies, and liquidity risk management at bank standards it may recommend to the procedures established by senior holding companies primarily through BCBS based on the results of this management. supervisory guidance, and generally observation. The Board also is currently The proposed rule would impose does not impose specific regulatory considering, along with the Office of the several specific duties on the board of liquidity requirements on bank holding Comptroller of the Currency and the directors. First, the board of directors companies. The proposed rules would Federal Deposit Insurance Corporation, would be required to establish the require covered companies to one or more joint rulemakings that covered company’s liquidity risk implement liquidity risk management would implement the Basel Liquidity tolerance at least annually. The practices that are encouraged, but not Framework in the United States. proposed rule would define liquidity required, for non-covered companies. Question 10: Is the Board’s approach risk tolerance as the acceptable level of The requirements of the proposed rule to enhanced liquidity standards for liquidity risk the covered company may are also designed to increase in covered companies appropriate? Why or assume in connection with its operating stringency based on the systemic why not? strategies. In determining the liquidity footprint of a company. For example, a Question 11: Are there other risk tolerance, the board of directors covered company’s capital structure, approaches that would effectively would be required to consider the risk profile, complexity, activities, size, enhance liquidity standards for covered covered company’s capital structure, and other appropriate risk related companies? If so, provide detailed risk profile, complexity, activities, size, factors would be considered in: (i) examples and explanations. and other appropriate risk related Setting the liquidity risk tolerance of the Question 12: The Dodd-Frank Act factors. These considerations should covered company; (ii) determining the contemplates additional enhanced help to ensure that the established amount of detail provided in cash flow prudential standards, including a limit liquidity risk tolerance will be projections; (iii) tailoring liquidity stress on short-term debt. Should the Board appropriate for the business strategy of testing to the covered company; (iv) adopt a short-term debt limit in addition setting the size of the liquidity buffer; the covered company and its role in the to or in place of the LCR and NSFR? financial system, and will reflect the (v) formulating the contingency funding Discuss why or why not? plan; and (vi) setting the size of the covered company’s financial condition specific limits on potential sources of B. Overview of the Proposed Rule and funding capacity on an ongoing liquidity risk. In addition, the Board basis. 1. Key Definitions The liquidity risk tolerance should would reserve its authority to require a reflect the board of directors’ assessment covered company to be subject to Under the proposed rule, liquidity is of tradeoffs between the costs and additional or further enhanced defined as a covered company’s prudential standards if it determines capacity to efficiently meet its expected benefits of liquidity. That is, inadequate that compliance with the rule does not and unexpected cash flows and liquidity can expose the covered sufficiently mitigate the risks to U.S. collateral needs at a reasonable cost company to significant financial stress financial stability posed by the failure or without adversely affecting the daily and endanger its ability to meet material financial distress of the covered operations or the financial condition of contractual obligations. Conversely, too company. the covered company. Liquidity risk is much liquidity can entail substantial In addition to the enhanced liquidity defined as the risk that a covered opportunity costs and have a negative risk management requirements of this company’s financial condition or safety impact on the covered company’s proposal, the Board intends to and soundness will be adversely profitability. In establishing the covered implement the second stage of affected by its inability or perceived company’s liquidity risk tolerance, the establishing a regulatory liquidity inability to meet its cash and collateral Board would expect a covered framework for covered companies obligations. company’s board of directors to through one or more future proposals articulate the liquidity risk tolerance in 2. Corporate Governance Provisions that would require covered companies such a way that all levels of (or a subset of covered companies) to A critical element of sound liquidity management clearly would: (i) satisfy specific quantitative liquidity risk management is effective corporate Understand the board of director’s requirements that are derived from, or governance, consisting of oversight of policy for managing the trade-offs consistent with, the international the covered company’s liquidity risk between the risk of insufficient liquidity liquidity standards incorporated into management by its board of directors, as and generating profit; and (ii) properly Basel III. The Board believes that the well as senior management, and an apply this approach to all aspects of eventual introduction of the Basel III independent review function. The liquidity standards will be important to proposed rule includes provisions 62 The risk committee would be defined as the enterprise-wide committee established by a covered establish a rigorous liquidity framework addressing these aspects of a covered company’s board of directors under proposed and should further the important goal of company’s corporate governance with section 252.126 of the risk management rules buttressing systemically important respect liquidity risk management. subpart of this proposal.

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liquidity risk management throughout including the covered company’s stress procedures required under the proposed the organization.63 To ensure that a testing practices, methodologies, and rule. covered company is managed in assumptions. The risk committee or a Senior management would also be accordance with the liquidity risk designated subcommittee would also be required to report regularly to the risk tolerance, the proposed rule would required to conduct this review and committee or designated subcommittee require the board of directors to review approval whenever the covered thereof on the liquidity risk profile of information provided by senior company materially revises its liquidity the covered company, and to provide management at least semi-annually to stress testing; determine whether the covered (iii) A review of the liquidity stress other relevant and necessary company is managed in accordance testing results produced under section information to the board of directors (or with the established liquidity risk 252.56 of the proposed rule; risk committee) to facilitate its oversight tolerance. (iv) Approval of the size and of the liquidity risk management Second, the risk committee or a composition of the liquidity buffer process. As noted above, the proposed designated subcommittee of the risk established under section 252.57 of the rule would require the risk committee or committee would be required to review proposed rule; a designated subcommittee to establish and approve the liquidity costs, (v) A review and approval of the procedures governing the content of benefits, and risk of each significant specific limits on potential sources of management reports on the liquidity new business line and each significant liquidity risk established under section risk profile of the covered company and new product before the covered 252.59 of the proposed rule, and a other information regarding compliance company may implement the line or review of the covered company’s with the proposed rule. The Board offer the product. In connection with compliance with those limits; and expects that management would be this review, the risk committee or a (iv) A review of liquidity risk required under these procedures to designated subcommittee would be management information necessary to report as frequently as conditions required to consider whether the identify, measure, monitor, and control warrant, but no less frequently than liquidity risk of the new strategy or liquidity risk and to comply with the quarterly. product under current conditions and new liquidity rules. under a liquidity stress is within the In addition, the risk committee or a c. Independent Review (§ 252.54) established liquidity risk tolerance. At designated subcommittee would be Under the proposed rule, a covered least annually, the risk committee or a required to periodically review the company would be required to establish designated subcommittee would be independent validation of the stress required to review approved significant tests produced under section and maintain an independent review business lines and products to 252.56(c)(2)(ii) of the proposed rule. function to evaluate its liquidity risk determine whether each line or product The proposed rule establishes management. Under the proposal, this has created any unanticipated liquidity minimum requirements governing the review function must be independent of risk, and to determine whether the frequency of certain reviews and management functions that execute liquidity risk of each line or product approvals. It also would require the funding (the treasury function). The continues to be within the established board of directors (or the risk independent review function would be liquidity risk tolerance. committee) to conduct more frequent required to review and evaluate the Third, the proposed rule would reviews and approvals as market and adequacy and effectiveness of the require the board of directors to review idiosyncratic conditions warrant.64 The covered company’s liquidity risk and approve the covered company’s risk committee or a designated management processes regularly, but no CFP at least annually and whenever the subcommittee would also be required to less frequently than annually. It would covered company materially revises the establish procedures governing the also be required to assess whether the plan. As discussed below, the CFP is the content of senior management reports covered company’s liquidity risk covered company’s compilation of on the liquidity risk profile of the management complies with applicable policies, procedures, and action plans covered company and other information laws, regulations, supervisory guidance, for managing liquidity stress events. described in the senior management and sound business practices, and to Fourth, the risk committee or a responsibilities section below. report statutory and regulatory designated subcommittee would be noncompliance and other material required to conduct the following b. Senior Management Responsibilities reviews and approvals at least quarterly: (§ 252.53) liquidity risk management issues to the board of directors (or the risk (i) A review of cash flow projections Under the proposed rule, senior committee) in writing for corrective produced under section 252.55 of the management of a covered company proposed rule that use time periods in would be required to establish and action. excess of 30 days to ensure that the implement liquidity risk management An appropriate internal review covered company’s liquidity risk is strategies, policies and procedures. This conducted by the independent review within the covered company’s would include overseeing the function should address all relevant established liquidity risk tolerance; development and implementation of elements of a covered company’s risk (ii) A review and approval of the liquidity risk measurement and management process, including liquidity stress testing described in reporting systems, the cash flow adherence to its own policies and section 252.56 of the proposed rule, projections, the liquidity stress testing, procedures, and the adequacy of its risk the liquidity buffer, the CFP, the identification, measurement, and 63 Under the proposed rule, the established specific limits, and the monitoring liquidity risk tolerance would be considered in reporting processes. Personnel assessing new business strategies and products conducting these reviews should seek to (proposed § 252.52(b)(2)), in setting the size of the 64 As used in this preamble, idiosyncratic understand, test, document, and liquidity buffer (proposed § 252.57(b)), in conditions or events refer to conditions or events evaluate the risk management processes, developing the CFP (proposed § 252.58(a)), and in that are unique to the covered company. Market setting the specific limits on sources of liquidity conditions or events refer to conditions or events and recommend solutions to any (proposed § 252.59(b)). that are market-wide. identified weaknesses.

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3. Liquidity Requirements that use more time periods than the two stress scenarios and assessing the effects a. Cash Flow Projections (§ 252.55) minimum time periods that would be of these scenarios on the covered required under the rule. company’s cash flow and liquidity. By Comprehensive projections of a The proposed rule states that a considering how adverse events, covered company’s cash flows from the covered company must establish a conditions, and outcomes, including company’s various operations are a robust methodology for making its cash extremes, affect the covered company’s critical tool for managing liquidity risk. flow projections,66 and must use exposure to liquidity risk, a covered To ensure that a covered company has reasonable assumptions regarding the company can identify vulnerabilities, a sound process for identifying and future behavior of assets, liabilities, and quantify the depth, source, and degree measuring liquidity risk, the proposed off-balance sheet exposures in the of potential liquidity strain, and analyze rule would require a covered company projections. Given the critical the possible impacts. Under the to produce comprehensive projections importance that the methodology and proposed rule, the covered company that forecast cash flows arising from underlying assumptions play in would use the results of the stress assets, liabilities, and off-balance sheet liquidity risk measurement, the covered testing to determine the size of its exposures over appropriate time company would also be required to liquidity buffer, and would incorporate periods, and to identify and quantify adequately document the methodology information generated by stress testing discrete and cumulative cash flow and assumptions.67 In addition, the in the quantitative component of the mismatches over these time periods. Board expects senior management to CFP. The proposed rule would specifically periodically review and approve the The proposed rule would require that require the covered company to provide assumptions used in the cash flow liquidity stress testing comprehensively cash flow projections over the short- projections to make sure that they are address a covered company’s activities, term and long-term time horizons that reasonable and appropriate. exposures, and risks, including off- are appropriate to the covered balance sheet exposures. To satisfy this b. Liquidity Stress Testing (§ 252.56) company’s capital structure, risk profile, requirement, stress testing would have complexity, activities, size and other While financial companies typically to address the covered company’s full risk-related factors.65 manage their liquidity under normal set of activities, exposures and risks, To make sure that the cash flow circumstances with regular sources of both on- and off-balance sheet, and projections will analyze liquidity risk liquidity readily available, they should address non-contractual sources of risks, exposure to contingent events, the also be prepared to manage liquidity such as reputational risks. For example, proposed rule would require that under adverse conditions in which stress testing should address potential projections must include cash flows liquidity sources may be limited or liquidity issues arising from the covered arising from contractual maturities, as nonexistent. Insufficient consideration company’s use of sponsored vehicles well as cash flows from new business, of liquidity management under the that issue debt instruments periodically funding renewals, customer options, conditions that arose during the to the markets, such as asset-backed and other potential events that may financial crisis was a major contributor commercial paper and similar conduits. impact liquidity. Static projections to the severe liquidity problems many Under stress scenarios, the covered based on the contractual cash flows of financial companies faced at the time. company may be contractually required, assets, liabilities, and off-balance sheet Accordingly, rigorous and regular stress or compelled in the interest of items are helpful in identifying liquidity testing and scenario analysis, combined mitigating reputational risk, to provide gaps. However, such static projections with comprehensive information about liquidity support to such a vehicle. may inadequately quantify important an institution’s funding position, is an The proposed rule would require a aspects of potential liquidity risk important tool for effective liquidity risk covered company to conduct the because these projections ignore new management that should reduce the risk liquidity stress testing at least monthly. business, funding renewals, customer of a firm’s failure due to adverse In addition to monthly stress testing, a options, and other contingent events liquidity conditions. covered company should have the that have a significant impact on a To promote preparedness for adverse flexibility to conduct ‘‘ad hoc’’ stress covered company’s liquidity risk liquidity conditions, the proposed rule testing to address rapidly emerging risks profile. A dynamic analysis that would require the covered company to or consider the impact of sudden events. incorporates management’s reasoned regularly stress test its cash flow Accordingly, the proposed rule specifies assumptions regarding the future projections by identifying liquidity that the covered company must have the behavior of assets, liabilities, and off- ability to perform stress testing more balance sheet items in projected cash 66 In its most basic form, a cash-flow-projection frequently than monthly, and the ability flows is far more useful than a static may be a worksheet-table with columns denoting to vary underlying assumptions as projection in identifying potential the selected time periods or buckets for which cash flows are to be projected. The rows of this table may conditions change. To facilitate effective liquidity risk exposure. consist of various types of assets, liabilities, and off- supervision of the sufficiency of a Under the proposed rule, a covered balance sheet items, often grouped by their cash- covered company’s liquidity company would be required to develop flow characteristics. Different groupings may be management, under the proposed rule, a cash flow projections that provide used to achieve different objectives of the cash-flow covered company may be required by sufficient detail to reflect its capital projection. For each row, net cash flows arising from the particular asset, liability, or off-balance the Federal Reserve to perform structure, risk profile, complexity, sheet activity may be projected across the time additional stress testing as conditions activities, size, and other appropriate buckets. The detail and granularity of the rows, and relating to the institution or the markets risk related factors. Such detail may thus the projections, should depend on the generally may warrant, or to address include projections broken down by sophistication and complexity of the institution. Complex companies generally provide more detail, other supervisory concerns. The Federal business line, legal entity, or while less complex companies use higher levels of Reserve may, for example, require a jurisdiction, and cash flow projections aggregation. covered company to perform additional 67 See section 252.61 of the proposed rule, which stress testing where there has been a 65 A covered company would be required to states that a covered company must document all significant deterioration in the covered update short-term cash flow projections daily, and material aspects of its liquidity risk management update long-term cash flow projections at least process and its compliance with the requirements company’s earnings, asset quality, or monthly. in the rule. overall financial condition; are negative

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trends or heighten risk associated with make sure that a covered company’s highly liquid assets that are a particular product line; or are stress testing captures such events, unencumbered and other appropriate increased concerns over the covered condition, and outcomes, the proposed funding sources may be used.69 company’s funding of off-balance sheet rule would require that the covered A covered company’s liquidity stress exposures. company’s stress scenarios use a testing should account for deteriorations Effective stress testing should include minimum of four time horizons in asset valuations when there is market scenario analysis that uses historical including an overnight, a 30-day, a 90- stress. Accordingly, the proposed rule and hypothetical scenarios to assess the day, and a one-year time horizon. A would require the covered company to impact on liquidity of various events covered company may be required to impose a discount to the fair market and circumstances, including extremes. use more time horizons where necessary value of an asset that is used as a cash Effective liquidity stress testing should to reflect the covered company’s capital flow source to offset projected funding also employ a range of stress scenarios structure, risk profile, complexity, needs in order to reflect any credit risk involving macroeconomic, market-wide, activities, size, and other appropriate and market volatility of the asset. The and idiosyncratic events, and consider risk-related factors. proposed rule would also require that interactions and feedback effects. The proposed rule further provides sources of funding used to generate cash Accordingly, the proposed rule states that liquidity stress testing must be to offset projected funding needs be that a covered company’s stress testing tailored to, and provide sufficient detail sufficiently diversified throughout each must incorporate a range of stress to reflect a covered company’s capital stress test time horizon. Thus, if a scenarios that may significantly affect structure, risk profile, complexity, covered company holds high quality the covered company’s liquidity, taking activities, size, and other appropriate assets other than cash and securities into consideration its on- and off- risk-related factors. This requirement is issued by the U.S. government, a U.S. balance sheet exposures, business lines, intended to ensure that stress testing government agency,70 or a U.S. organizational structure, and other will be tied directly to the covered government-sponsored entity,71 the characteristics. At a minimum, the company’s business profile and the assets should be diversified by proposed rule would require a covered regulatory environment in which the collateral, counterparty, or borrowing company to incorporate stress scenarios covered company operates,68 and will capacity, and other liquidity risk to account for market stress, address relevant risk areas, provide for identifiers. idiosyncratic stress, and combined the appropriate level of aggregation, and The proposed rule would impose market and idiosyncratic stresses. capture all appropriate risk drivers, various process and system Additional scenarios should be used as internal and external influences, and requirements for stress testing. needed to ensure that all of the other key considerations that may affect Specifically, a covered company would significant aspects of liquidity risks to the covered company’s liquidity be required to establish and maintain the covered company have been position. This may require analyses by policies and procedures that outline its modeled. The proposed rule would also business line, legal entity, or liquidity stress testing practices, require that the stress scenarios address jurisdiction, or stress scenarios that use methodologies, and assumptions; detail the potential impact of market time horizons in addition to the the use of each stress test employed; and disruptions on the covered company, minimum number described above. provide for the enhancement of stress and the potential actions of market The proposed rule would require a testing as risks change and techniques participants experiencing liquidity covered company to incorporate certain evolve. The proposed rule also states stresses under the same market assumptions designed to ensure that that a covered company must have an disruption. stress testing will provide relevant effective system of control and oversight Under the proposed rule, a covered information to support the over the stress test function to ensure company’s liquidity stress scenarios establishment of the liquidity buffer (see that each stress test is designed in must be forward-looking and section 252.56(b)(4) of the proposed accordance with the rule, and the stress incorporate a range of potential changes rule). As discussed below, the liquidity process and assumptions are validated. to a covered company’s exposures, buffer is composed of highly liquid The validation function must be activities, and risks as well as changes assets that are unencumbered, and is independent of functions that develop to the broader economic and financial designed to meet projected net cash or design the liquidity stress testing, and environment. To meet this standard, the outflows and the projected loss or independent of management functions stress tests would need to be sufficiently impairment of existing funding sources that execute funding (e.g., the treasury dynamic to incorporate changes in the for 30 days during a range of liquidity function). covered company’s on- and off-balance stress scenarios. To reflect this design, In addition, the proposed rule would sheet activities, portfolio composition, the proposed rule would require that the require a covered company to rely on asset quality, operating environment, covered company must assume that, for reasonably high-quality data and business strategy, and other risks that the first 30 days of a liquidity stress information to produce creditable may arise over time from idiosyncratic scenario, only highly liquid assets that events, macroeconomic and financial are unencumbered may be used as cash 69 The liquidity buffer is discussed more fully market developments, or some flow sources to meet projected funding below, as are the definitions of ‘‘unencumbered’’ and ‘‘highly liquid asset.’’ combination of thereof. The stress tests needs. For time periods beyond the first 70 A U.S. government agency is defined in the should look beyond assumptions based 30 days of a liquidity stress scenario, proposed rule as an agency or instrumentality of the only on historical data, and incorporate U.S. government whose obligations are fully and new events and challenge conventional 68 For example, applicable statutory and explicitly guaranteed as to the timely payment of principal and interest by the full faith and credit of assumptions. regulatory restrictions on covered companies, including restrictions on the transferability of assets the U.S. government. Effective liquidity stress testing between legal entities, would need to be 71 A U.S. government-sponsored entity is defined should be conducted over a variety of incorporated. For bank holding companies these in the proposed rule as an entity originally different time horizons to adequately restrictions include sections 23A and 23B of the established or chartered by the U.S. government to capture rapidly developing events, and Federal Reserve Act (12 U.S.C. 371c and 371c–1) serve public purposes specified by the U.S. and Regulation W (12 CFR part 223), which govern Congress, but whose obligations are not explicitly other conditions and outcomes that may covered transactions between banks and their guaranteed by the full faith and credit of the U.S. materialize in the near or long term. To affiliates. government.

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outcomes. Specifically, the proposed company’s liquidity buffer, the of financial market distress during rule would require that the covered proposed rule would require that the which liquidity is impaired (flight to company must maintain management liquidity buffer would also be aligned to quality). For example, certain ‘‘plain information systems and data processes reflect the covered company’s capital vanilla’’ corporate bonds (that is, bonds sufficient to enable it to effectively and structure, risk profile, complexity, that are neither structured products nor reliably collect, sort, and aggregate data activities, size, and other appropriate subordinated debt) issued by a non- and other information related to risk related factors, as well as the financial company with a strong liquidity stress testing. covered company’s established liquidity financial profile have been reliable Question 13: What challenges will risk tolerance. These factors, however, sources of liquidity in the repurchase covered companies face in formulating could not justify reducing the buffer to and sale market during past stressed and implementing liquidity stress a point where it would be insufficient conditions. Assets with the above testing described in the proposed rule? to meet projected net cash outflows and characteristics could, as proposed, meet What changes, if any, should be made the projected impairment of existing the definition of a highly liquid asset. to the proposed liquidity stress testing funding sources for 30 days under the The highly liquid assets in the requirements (including the stress range of liquidity stress scenarios liquidity buffer should be readily scenario requirements and required incorporated into its stress testing. As available at all times to meet a covered assumptions) to ensure that analyses of explained above, under the proposal, company’s liquidity needs. Accordingly, the stress testing will provide useful the risk committee or a designated the assets must be unencumbered. information for the management of a subcommittee of the risk committee Under the proposed rule, covered company’s liquidity risk? What would be required to approve the size unencumbered would be defined to alternatives to the proposed liquidity and composition of the liquidity buffer mean, with respect to an asset, that: (i) stress testing requirements, including at least quarterly. The asset is not pledged, does not the stress scenario requirements and The proposed rule limits the type of secure, collateralize or provide credit required assumptions, should the Board assets that may be included in the buffer enhancement to any transaction, and is consider? What additional parameters to highly liquid assets that are not subject to any lien; (ii) the asset is for the liquidity stress tests should the unencumbered. The definition of highly not designated as a hedge on a trading Board consider defining? liquid assets would ensure that the position; 75 and (iii) there are no legal or assets in the liquidity buffer can easily contractual restrictions on the ability of c. Liquidity Buffer (§ 252.57) and immediately be converted to cash the covered company to promptly To withstand liquidity stress under with little or no loss of value. Thus, liquidate, sell, transfer, or assign the adverse conditions, a company cash or securities issued or guaranteed asset. generally needs a sufficient supply of by the U.S. government, a U.S. liquid assets that can be sold or pledged government agency, or a U.S. Generally, an asset would be to obtain funds. During the financial government-sponsored entity are designated as a hedge on a trading crisis, financial companies that included in the proposed definition of position if the asset is held by a covered experienced severe liquidity difficulties highly liquid assets. In addition, the company directly to offset the market often held insufficient liquid assets to proposed rule includes criteria that may risk of another trading asset or group of meet their liquidity needs as market be used to identify other assets that trading assets held by the covered sources of funding were severely could be included in the buffer as company. For example, if a covered curtailed. The BCBS’s LCR standard was highly liquid assets. Specifically, the company holds a position in a corporate developed to promote short-term proposed definition of highly liquid bond index in its trading account, resilience of a bank’s liquidity risk assets includes any other asset that a corporate bonds that hedge that index profile by ensuring that it has sufficient covered company demonstrates to the position may not be included in the high-quality liquid assets to survive an satisfaction of the Federal Reserve: liquidity buffer. adverse stress scenario lasting for one (i) Has low credit risk (low risk of To account for deteriorations in asset month, providing time for appropriate default) and low market risk (little or no valuations when there is market stress, corrective actions to be taken by price volatility); 73 the proposed rule also would require a management or supervisors, or to allow (ii) Is traded in an active secondary covered company to impose a discount 74 the institution to be resolved in an two-way market that has observable to the fair market value of an asset orderly way.72 market prices, committed market included in the liquidity buffer to reflect Consistent with the effort towards makers, a large number of market the credit risk and market volatility of developing a comprehensive liquidity participants, and a high trading volume; the asset. In addition, to ensure that the framework that would eventually and liquidity buffer is not concentrated in a incorporate the LCR standard, the (iii) Is a type of asset that investors particular type of highly liquid assets, proposed rule, in addition to requiring historically have purchased in periods the proposed rule requires that the pool stress tests as described above, would of assets included in the liquidity buffer 73 require a covered company to Generally, market risk is the risk of loss that must be sufficiently diversified, as could result from broad market movements, such as discussed above. Thus, these highly continuously maintain a liquidity buffer changes in the general level of interest rates, credit of unencumbered highly liquid assets spreads, equity prices, foreign exchange rates, or liquid assets should be diversified by sufficient to meet projected net cash commodity prices. instrument type, counterparties, outflows and the projected loss or 74 A two-way market would be defined as a geographic market, and other liquidity market with independent bona fide offers to buy risk identifiers. impairment of existing funding sources and sell so that a price reasonably related to the last for 30 days over a range of liquidity sales price or current bona fide competitive bid and stress scenarios. offer quotations can be determined within one day 75 A trading position would be defined as a In addition to using the results of the and settled at that price within a reasonable time position that is held by a covered company for the period conforming to trade custom. This definition purpose of short-term resale or with the intent of liquidity stress testing to size a covered is consistent with the definition of ‘‘two-way benefiting from actual or expected short-term price market’’ contained in the interagency proposed rule movements, or to lock-in arbitrage profits. This 72 See Basel III liquidity framework at paragraphs on Risk-Based Capital Guidelines; Market Risk, 76 definition is based on the definition of trading 4 and 15. FR 1890 (January 11, 2011) (Market Risk NPR). position in the Market Risk NPR.

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Question 14: The Board requests These components are discussed in covered company is expected to base its comment on all aspects of the proposed detail below. analysis on realistic assessments of the definitions of ‘‘highly liquid assets’’ and behavior of funds providers during the a. Quantitative Assessment ‘‘unencumbered.’’ What, if any, other event, and should incorporate assets should be specifically listed in The first component of the CFP is the alternative funding sources. The the definition of highly liquid assets? quantitative assessment of liquidity analysis should include all material on- Why should these other assets be needs and funding sources. A covered and off-balance sheet cash flows and included (that is, describe how the asset company would be required to their related effects. The result should is easily and immediately convertible incorporate information generated by be a realistic analysis of the covered into cash with little or no loss in value liquidity stress testing into this company’s cash inflows, outflows, and during liquidity stress events)? Are the component of the CFP. The proposed funds availability at different time criteria for identifying additional assets rule would provide that the stress tests intervals during the identified liquidity for inclusion in the definition of highly are used to: (i) Identify liquidity stress stress event, which should permit the liquid assets appropriate? If not, how events that have a significant impact on covered company to measure its ability and why should the Board revise the the covered company’s liquidity; (ii) to fund operations. criteria? assess the level and nature of impact on iv. Identifying alternative funding Question 15: What changes, if any, the covered company’s liquidity that sources. Liquidity pressures are likely to should the Board make to the proposed may occur during identified liquidity spread from one funding source to definition of unencumbered to make events; (iii) assess available funding another during significant liquidity sure that assets in the buffer will be sources and needs during the identified stress events. Accordingly, the proposed liquidity stress events; and (iv) identify readily available at all times to meet a rule would require a covered company alternative funding sources that may be covered company’s liquidity needs? The to identify alternative funding sources used during the liquidity stress events. that may be accessed during identified rule would require a covered company i. Identification of stress events. A to discount the fair market value of liquidity stress events. Since some of covered company would be required to these alternative funding sources will assets that are included in the liquidity identify stress events that have a buffer. Please describe the process that rarely be used in the normal course of significant impact on the covered business, a covered company should covered company will use to determine company’s liquidity. Possible stress the amount of the discount. conduct advance planning and periodic events may include deterioration in testing (see discussion below) to make d. Contingency Funding Plan (§ 252.58) asset quality, ratings downgrades, sure that the funding sources are widening of credit default swap spreads, available when needed. Administrative The proposed rule would require a operating losses, declining financial covered company to establish and procedures and agreements are expected institution equity prices, negative press to also be in place before the covered maintain a CFP. A CFP is a compilation coverage, or other events that call into company needs to access the alternative of policies, procedures, and action plans question the covered company’s ability funding sources. for managing liquidity stress events. The to meet its obligations. Discount window credit may be objectives of the CFP are to provide a ii. Assessing the level and nature of incorporated into CFPs as a potential plan for responding to a liquidity crisis, impact. Once the liquidity stress events source of funds in a manner consistent to identify alternate liquidity sources are identified, a covered company’s CFP with the terms provided by the Federal that a covered company can access would incorporate an assessment of the Reserve Banks. For example, primary during liquidity stress events, and to level and nature of impact on the credit is currently available on a describe steps that should be taken to covered company’s liquidity that may collateralized basis for financially sound ensure that the covered company’s occur during the identified liquidity depository institutions as a backup sources of liquidity are sufficient to stress event. The CFP would delineate source of funds for short-term funding fund its operating costs and meet its the various levels of stress severity that needs. CFPs that incorporate borrowing commitments while minimizing can occur during the stress event, and from the discount window should additional costs and disruption. identify the various stages for each type specify the actions that the covered The proposed rule states that a of event. The events, stages, and severity company will take to replace discount covered company must establish and levels should include temporary window borrowing with more maintain a CFP that sets out the covered disruptions, as well as those that might permanent funding, including the company’s strategies for addressing be intermediate or longer term. The proposed time frame for these actions. liquidity needs during liquidity stress covered company may use the different events. Under the proposed rule, the levels of severity to design early b. Event Management Process CFP would be required to be warning indicators, to assess potential Under the proposed rule, the CFP commensurate with the covered funding needs at various points in a must also include an event management company’s capital structure, risk profile, developing crisis, and to specify process that sets out its procedures for complexity, activities, size, and other comprehensive action plans. managing liquidity during identified appropriate risk related factors, and iii. Assessing available funding liquidity stress events. This process established liquidity risk tolerance. A sources and needs. To meet the must include an action plan that clearly covered company would be required to requirement of the proposal, the CFP describes the strategies the covered update the CFP at least annually or must assess available funding sources company would use to respond to whenever changes to market and and needs during identified liquidity liquidity shortfalls for identified idiosyncratic conditions warrant an stress events. This would require an liquidity stress events, including the update. analysis of the potential erosion of methods that the covered company Under the proposed rule, the CFP available funding at alternative stages or would use to access the alternative includes four components: a severity levels of each stress event, as funding sources identified in the quantitative assessment, an event well as the identification of potential quantitative assessment. management process, monitoring cash flow mismatches that may occur Under the proposed rule, the event requirements, and testing requirements. during the various stress levels. A management process must also identify

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a liquidity stress event management elements of a CFP that are associated liquidity risks across the enterprise, and team and specify the process, with lines of credit, the Federal Reserve intraday liquidity positions. In addition, responsibilities, and triggers for discount window, or other secured the covered company would be required invoking the CFP, escalating the borrowings, since efficient collateral to monitor compliance with the specific responses described in the action plan, processing during a liquidity stress limits established under § 252.59. decision-making during the identified event is especially important for such a. Collateral Positions liquidity stress events, and executing funding sources. contingency measures identified in the Question 16: Are the proposed CFP Under the proposed rule, a covered action plan. requirements appropriate for all covered company would be required to establish In addition, to promote the flow of companies? What alternative and maintain procedures for monitoring necessary information during a liquidity approaches to the CFP requirements assets it has pledged as collateral for an stress, the proposed rule would require outlined above should the Board obligation or position, and assets that the event management process to consider? If not, how should the Board are available to be pledged. The include a mechanism that ensures amend the requirements to make them procedures must address the covered effective reporting and communication appropriate for any covered company? company’s ability to: within the covered company and with Are there additional modifications the (i) Calculate all of the covered outside parties, including the Federal Board should make to the proposed rule company’s collateral positions in a Reserve and other relevant supervisors, to enhance the ability of a covered timely manner, including the value of counterparties, and other stakeholders. company to comply with the CFP and assets pledged relative to the amount of c. Monitoring establish a viable and effective plan for security required under the contract the management of liquidity stress governing the obligation for which the The proposal would also impose events? collateral was pledged, and the monitoring requirements on covered unencumbered assets available to be e. Specific Limits (§ 252.59) companies so that they are able to pledged; proactively position themselves into To enhance management of liquidity (ii) Monitor the levels of available progressive states of readiness as risk, the proposed rule would require a collateral by legal entity, jurisdiction, liquidity stress events evolve. covered company to establish and and currency exposure; Specifically, the proposed rule would maintain limits on potential sources of (iii) Monitor shifts between intraday, require the CFP to include procedures liquidity risk, including three specified overnight, and term pledging of for monitoring emerging liquidity stress sources of liquidity risk. The size of collateral; and events, and for identifying early each limit must reflect the covered (iv) Track operational and timing warning indicators of emerging liquidity company’s capital structure, risk profile, requirements associated with accessing stress events that are tailored to a complexity, activities, size, and other collateral at its physical location (for covered company’s capital structure, appropriate risk related factors, and example, the custodian or securities risk profile, complexity, activities, size, established liquidity risk tolerance. The settlement system that holds the and other appropriate risk-related covered company would be required to collateral). factors. Such early warning indicators establish limits on: may include, but are not limited to, (i) Concentrations of funding by b. Legal Entities, Currencies, and negative publicity concerning an asset instrument type, single counterparty, Business Lines class owned by covered company, counterparty type, secured and Regardless of its organizational potential deterioration in the covered unsecured funding, and other liquidity structure, it is critical that a covered company’s financial condition, risk identifiers. company actively monitor and control widening debt or credit default swap (ii) The amount of specified liabilities liquidity risks at the level of individual spreads, and increased concerns over that mature within various time legal entities and the group as a whole. the funding of off-balance-sheet items. horizons. This requires processes that aggregate (iii) Off-balance sheet exposures and d. Testing data across multiple systems to develop other exposures that could create an enterprise-wide view of liquidity risk The proposed rule would require a funding needs during liquidity stress exposure and identify constraints on the covered company to periodically test events. Such exposures may be transferability of liquidity within the the components of the CFP to assess its contractual or non-contractual organization. reliability during liquidity stress events. exposures, and include such liabilities To promote effective monitoring Such testing would include trial runs of as unfunded loan commitments, lines of across the enterprise, the proposed rule the operational elements of the CFP to credit supporting asset sales or would require a covered company to ensure that they work as intended securitizations, collateral requirements establish and maintain procedures for during a liquidity stress event. These for derivative transactions, and a letter monitoring and controlling liquidity tests would include operational of credit supporting a variable demand risk exposures and funding needs simulations to test communications, note. within and across significant legal coordination, and decision making Question 17: Should covered entities, currencies, and business lines. involving relevant managers, including companies be required to establish and In addition, the proposed rule would managers at relevant legal entities maintain limits on other potential require the covered company to within the corporate structure. sources of liquidity risk in addition to maintain sufficient liquidity with A covered company would also be the three specific sources listed in the respect to each significant legal entity in required to periodically test the proposed rule? If so, identify these light of legal and regulatory restrictions methods it will use to access alternate additional sources of liquidity risk. on the transfer of liquidity between legal funding to determine whether these entities.76 The covered company should sources of funding will be readily f. Monitoring (§ 252.60) The proposed rule would require a available when needed. For example, 76 For example, for bank holding companies such the Board expects that a covered covered company to monitor liquidity restrictions include sections 23A and 23B of the company would test the operational risk related to collateral positions, Continued

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ensure that legal distinctions and d. Specific Limits credit and served as over-the-counter possible obstacles to cash movements The proposed rule would require a derivative counterparties to each other. between specific legal entities or covered company to monitor Counterparties of a failing firm were between separately regulated entities are compliance with the specific limits on placed under severe strain when the recognized. The Board expects a potential sources of liquidity risk failing firm could not meet its financial covered company to maintain sufficient established under § 252.59. obligations resulting in the liquidity to ensure such compliance in Question 18: Should the Board counterparties’ inability to meet their normal times and during liquidity stress require a covered company to monitor own obligations. events. other areas of liquidity risk in addition The financial crisis also revealed inadequacies in the U.S. supervisory c. Intraday Liquidity Positions to collateral positions, risk across entities, currencies, and business lines, approach to single-counter party credit Intraday liquidity monitoring is an and intraday liquidity positions? If so, concentration limits, which failed to important component of the liquidity what areas should be added to the list limit the interconnectedness among and risk management process for a covered and why? concentration of similar risks within company engaged in significant large financial companies that payment, settlement, and clearing g. Documentation (§ 252.61) contributed to a rapid escalation of the activities. Given the interdependencies Comprehensive documentation is crisis. While banks were subject to that exist among payment systems, large necessary to achieve good liquidity risk single-borrower lending and investment complex organizations’ inabilities to management and to support the limits, these limits were applied at the meet critical payments have the supervisory process. The proposed rule bank level, rather than holding company potential to lead to systemic disruptions would require a covered company to level, and excluded credit exposures that can prevent the smooth functioning adequately document all material generated by derivatives and some of payments systems and money aspects of its liquidity risk management securities financing transactions.77 markets. processes and its compliance with the In an effort to address single- counterparty concentration risk among The proposed rule would require a requirements of the proposed rule, and large financial companies, section covered company to establish and submit such documentation to the risk 165(e) of the Dodd-Frank Act directs the maintain procedures for monitoring committee. Material aspects of its Board to establish single-counterparty their intraday liquidity risk exposure. liquidity risk management process credit concentration limits for covered These procedures would address how would include, but would not be companies in order to limit the risks the covered company will: limited to, the methodologies and material assumptions used in cash flow that the failure of any individual firm (i) Monitor and measure expected projections and the liquidity stress could pose to a covered company.78 daily gross liquidity inflows and testing, and all elements of the This section directs the Board to outflows; comprehensive CFP. The covered prescribe regulations that prohibit (ii) Manage and transfer collateral company must make this covered companies from having credit when necessary to obtain intraday documentation available to the Federal exposure to any unaffiliated company credit; Reserve upon request. that exceeds 25 percent of the capital (iii) Identify and prioritize time- Question 19: The Board requests stock and surplus of the covered specific obligations so that the covered comment on all aspects of the proposed company.79 This section also authorizes company can meet these obligations as rule. Specifically, what aspects of the the Board to lower the 25 percent expected; proposed rule present implementation threshold if necessary to mitigate the (iv) Settle less critical obligations as challenges and why? What alternative risks to the financial stability of the soon as possible; approaches to liquidity risk United States.80 Credit exposure to a company is (v) Control the issuance of credit to management should the Board consider? defined in section 165(e) of the Dodd- customers where necessary; and Are the liquidity management requirements of this proposal too Frank Act to mean all extensions of (vi) Consider the amounts of collateral specific or too narrowly defined? If, so credit to the company, including loans, and liquidity needed to meet payment explain how. Responses should be deposits, and lines of credit; all systems obligations when assessing its detailed as to the nature and impact of repurchase agreements, reverse overall liquidity needs. these challenges and should address repurchase agreements, securities The monitoring of intraday cash flows whether the Board should consider borrowing and lending transactions generally is an operational risk implementing transitional arrangements with the company (to the extent that management function. To ensure that in the rule to address these challenges. such transactions create credit exposure liquidity risk is also appropriately for the covered company); all monitored, the Board expects a covered V. Single-Counterparty Exposure Limits guarantees, acceptances, or letters of company to provide for integrated A. Background oversight of intraday exposures within 77 Section 610 of the Dodd-Frank Act amends the During the recent financial crisis, the operational risk and liquidity risk term ‘‘loans and extensions of credit’’ for purposes some of the largest financial firms in the functions. The Board also expects the of the lending limits applicable to national banks world collapsed or nearly did so, to include any credit exposure arising from a procedures for monitoring and demonstrating the risk that the failure of derivative transaction, repurchase agreement, managing intraday liquidity positions to reverse repurchase agreement, securities lending large financial companies poses to the reflect in stringency and complexity, transaction, or securities borrowing transaction. See financial stability of the United States and scope of operations of the covered Dodd-Frank Act, Public Law 111–203, § 610, 124 and the global financial system. The Stat. 1376, 1611 (2010). As discussed in more detail company. effect of one large financial institution’s below, these types of transactions are also all made failure or near collapse was amplified subject to the single counterparty credit limits of Federal Reserve Act (12 U.S.C. 371c and 371c–1) section 165(e). 12 U.S.C. 5365(e)(3). by the interconnectedness of large, 78 and Regulation W (12 CFR part 223), which govern See 12 U.S.C. 5365(e)(1). covered transactions between banks and their systemically important firms–the degree 79 12 U.S.C. 5365(e)(2). affiliates. to which they extended each other 80 See id.

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credit (including endorsement or limits that are applicable to it and its the proposed rule would establish a standby letters of credit) issued on subsidiaries. The Board believes that a more stringent net credit exposure limit behalf of the company; all purchases of covered company should be able to between a major covered company and or investments in securities issued by comply with section 165(e) and the any major counterparty, i.e., a major the company; counterparty credit proposed rule implementing it on a covered company’s aggregate net credit exposure to the company in connection consolidated basis, in addition to exposure to any major counterparty with a derivative transaction between complying, as appropriate, with the would be limited to 10 percent of the the covered company and the company; investment securities limits and lending capital stock and surplus of the major and any other similar transaction that limits applicable to a bank subsidiary. covered company.88 The proposal the Board, by regulation, determines to Question 20: How would the limits of would define a ‘‘major covered be a credit exposure for purposes of section 165(e) and the proposed rule company’’ as any nonbank covered section 165.81 interact with the other existing limits company or any bank holding company Section 165(e) also grants authority to such as the investment and lending with total consolidated assets of $500 the Board (i) to issue such regulations limits applicable to banks and what billion or more.89 A ‘‘major and orders, including definitions other conflicts might arise in complying counterparty’’ would be defined as any consistent with section 165(e), as may with these different regimes? major covered company, as well as any be necessary to administer and carry out The financial crisis also revealed foreign banking organization that is or is that section; and (ii) to exempt weaknesses in the large exposure limits treated as a bank holding company and transactions, in whole or in part, from in place in other major financial that has total consolidated assets of the definition of the term ‘‘credit markets. These limits also failed to $500 billion or more.90 exposure,’’ if the Board finds that the restrict interconnectedness among large The proposed definition of a exemption is in the public interest and global financial companies. In response, counterparty would include a natural consistent with the purposes of section the BCBS has established a working person (including the person’s 165(e).82 Section 165(e) states that its group to examine challenges posed by immediate family), a company provisions and any implementing weaknesses and inconsistencies in large (including its subsidiaries); the United regulations and orders of the Board will exposure limit regimes across States (including all of its agencies and not be effective until 3 years after the jurisdictions and to carefully evaluate instrumentalities, but not including any date of enactment of the Dodd-Frank the merits of reaching an international State or political subdivision of a State); Act, and the Board is authorized to agreement on large exposure limits. If an a State (including all of its agencies, extend the transition period for up to an international agreement on large instrumentalities, and political additional 2 years.83 exposure limits for banking firms is subdivisions); and a foreign sovereign The concept of single-counterparty reached, the Board may amend this entity (including its agencies, credit limits for covered companies is proposed rule, as necessary, to achieve instrumentalities, political similar to, but also broader than, consistency with the international subdivisions). Under the proposal, existing limits that operate at the approach. credit exposures to sovereign entities depository institution level of banking are made subject to the credit exposure organizations, including the investment B. Overview of the Proposed Rule limits (unless specifically exempted) in securities limits and the lending limits The Board’s proposal to implement the same manner as credit exposures to imposed on depository institutions.84 A section 165(e) introduces a two-tier companies. As explained further below, depository institution generally is single-counterparty credit limit, with a the Board proposes to include sovereign limited, subject to certain exceptions, in more stringent single-counterparty entities in the definition of counterparty the total amount of investment credit limit applied to the largest because the Board believes that credit securities of any one obligor that it may covered companies. The proposed rule exposures of a covered company to such purchase for its own account to no more includes limits on the exposures of the governmental entities create risks to the than 10 percent of its capital stock and covered company as well as its covered company similar to those surplus.85 In addition, a depository subsidiaries—i.e., any company the created by large exposures to other types institution’s total outstanding loans and parent company directly or indirectly of entities, e.g., privately owned extensions of credit to one borrower controls. ‘‘Control’’, for purposes of this companies. may not exceed 15 percent of the bank’s proposed rule, would exist when a Both the general and more stringent capital stock and surplus, plus an covered company directly or indirectly credit limits would be measured in additional 10 percent of the bank’s owns or controls 25 percent or more of terms of a covered company’s capital capital and surplus, if the amount that a class of a company’s voting securities stock and surplus. The proposed rule exceeds the bank’s 15 percent general or 25 percent or more of a company’s would define ‘‘capital stock and limit is fully secured by readily total equity, or consolidates the surplus’’ of a covered company as its marketable collateral.86 company for financial reporting total regulatory capital plus excess loan Section 165(e) is a separate and purposes. The proposal would establish loss reserves. Under the proposed rule, independent limit from the investment a general limit that prohibits a covered the single-counterparty credit limit securities limits and lending limits in company from having aggregate net the National Bank Act, and a covered credit exposure to any single statute by limiting the credit exposure of a covered company must comply with all of the company to an unaffiliated ‘‘counterparty’’ as unaffiliated counterparty in excess of 25 defined in the proposed rule and as discussed percent of the covered company’s further below. See proposed rule § 252.92(k) 81 See 12 U.S.C. 5365(e)(3). capital stock and surplus.87 In addition, (defining ‘‘counterparty’’). 82 See 12 U.S.C. 5365(e)(5)–(6). 88 See proposed rule § 252.93(b). Section 165(e)(2) 83 See 12 U.S.C. 5365(e)(7). 87 See proposed rule § 252.93(a). This general grants the Board authority to lower the limit on net 84 See, e.g., 12 U.S.C. 24(7); 12 U.S.C. 84; 12 CFR limit in the proposed rule follows the 25 percent credit exposure below 25 percent if necessary to parts 1 and 32; see also 12 U.S.C. 335 (applying the limit contained in section 165(e) of the Dodd-Frank mitigate risks to the financial stability of the United provisions of 12 U.S.C. 24(7) to state member Act. See 12 U.S.C. 5365(e)(2). Section 165(e) of the States. See 12 U.S.C. 5365(e)(2). banks). Dodd-Frank Act limits credit exposure of a covered 89 See proposed rule § 252.92(aa) (defining ‘‘major 85 See 12 U.S.C. 24(7); 12 CFR part 1. company to any unaffiliated company. 12 U.S.C. covered company’’). 86 See 12 U.S.C. 84(a); 12 CFR part 32. 5365(e)(2). The proposed rule implements the 90 See proposed rule § 252.92(z).

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would apply to a broad range of equity derivative hedge would only company for purposes of the proposed transactions with a counterparty, such include an equity-linked total return rule appropriate? 95 If not, explain why as extensions of credit (including loans, swap and would not include other, not. deposits, and lines of credit), securities more complex equity derivatives, e.g., Question 23: Should the Bank lending or securities borrowing purchased equity-linked options. Holding Company Act/Regulation Y transactions, as well as credit derivative definition of ‘‘control’’ be adopted for Section-by-Section Analysis or equity derivative transactions in purposes of the proposed rule? Are which the covered company has sold a. Section 252.91: Applicability there alternative approaches to defining protection to a third party referencing Section 252.91 states that, in general, when a company is a subsidiary of the counterparty. The proposed rule the proposed rule would apply to a another the Board should consider? also would allow the Board to company on the first day of the fifth Under the proposed rule, a fund or determine that any similar transaction quarter following the date on which it vehicle that is sponsored or advised by should be a ‘‘credit transaction’’. became a covered company. Initially, a covered company would not be The proposal also specifies how the the proposed rule would not apply to considered a subsidiary of the covered gross credit exposure on a credit any covered company until October 1, company unless it was ‘‘controlled’’ by transaction should be calculated for 2013.91 that covered company. A covered each type of credit transaction defined Question 21: Should the Board company would not control a fund or in the proposed rule. For example, the consider a longer phase-in for all or a vehicle that is sponsored or advised by proposed rule would require that the subset of covered companies? the covered company if (i) it did not gross credit exposure of a securities own or control more than 25 percent of borrowing transaction be valued at the b. Section 252.92: Definitions the voting securities or total equity of amount of cash collateral plus the Section 252.92 of the proposed rule the fund or vehicle; and (ii) the fund or market value of securities collateral defines the key terms used in the rule. vehicle would not be consolidated with transferred by the covered company to As discussed above, the limits of the the covered company for financial the counterparty. proposed rule apply to credit exposure reporting purposes.96 If a fund or The general limit (25 percent of of a covered company, including its vehicle is not controlled by a covered capital stock and surplus) and the more subsidiaries to any unaffiliated company, the exposures of such fund or stringent limit between major covered counterparty. A ‘‘subsidiary’’ of a vehicle to its counterparties would not companies and major counterparties (10 specified company means a company be aggregated with those of the covered percent of capital stock and surplus) that is directly or indirectly controlled company.97 Such arm’s length apply to the aggregate net credit by the specified company.92 A company treatment, however, may be at odds exposure between the covered company would control another company if it (i) with the support that some companies and the counterparty, or between major Owns or controls with the power to vote provided during the financial crisis to covered companies and major 25 percent or more of a class of voting the funds they advised and sponsored. counterparties. The rule would specify securities of the company; (ii) owns or For example, many money market how gross credit exposure amounts are controls 25 percent or more of the total mutual fund (MMMF) sponsors, converted to net credit exposure equity of the company; or (iii) including banking organizations, amounts by taking into account eligible consolidates the company for financial supported their MMMFs during the collateral, eligible guarantees, eligible reporting purposes.93 The proposed crisis in order to enable those funds to credit and equity derivative hedges, rule’s definition of control would differ meet investor redemption requests other eligible hedges (i.e., a short from that in the Bank Holding Company without having to sell assets into then- position in the counterparty’s debt or Act and the Board’s Regulation Y.94 The fragile and illiquid markets. equity security), and for securities Board proposes to vary from the Bank Question 24: Since a covered financing transaction, the effect of Holding Company Act/Regulation Y company may have strong incentives to bilateral netting agreements. Under the definition of control for purposes of this provide support in times of distress to proposed rule, ‘‘eligible collateral’’ is proposed regulation because a simpler, MMMFs and certain other funds or generally defined to include cash on more objective definition of control is vehicles that it sponsors or advises, the deposit with a covered company more consistent with the objectives of Board seeks comment on whether such (including cash held for the covered single-counterparty credit limits. funds or vehicles should be included as company by a third-party custodian or Question 22: Is the approach of part of the covered company for trustee); debt securities (other than including all subsidiaries of a covered purposes of this rule.98 Is the proposed mortgage- or asset-backed securities) company in the definition of covered that are bank-eligible investments; 95 As described below, the same approach to subsidiaries is used for counterparties that are equity securities that are publicly 91 See proposed rule § 252.91(a)(2); see also 12 companies. Such counterparties are defined to traded; or convertible bonds that are U.S.C. 5365(e)(7)(A) (stating that regulations and include a company and its subsidiaries, thus publicly traded. orders under section 165(e) shall not be effective requiring aggregation of the entire organization’s An ‘‘eligible guarantee’’ is a guarantee until 3 years after the date of enactment of the credit exposures to the covered company it faces. Dodd-Frank Act). that meets certain criteria described in 96 Financial Accounting Standards Board, ASC 92 See proposed rule § 252.92(jj). Section 810, Consolidation. Further, these the proposed rule, including being 93 See proposed rule § 252.92(i). This definition of requirements are currently under review. The Board written by an eligible protection control is similar to that in Appendix G of may review the effect any change made to these provider. Similarly, eligible credit or Regulation Y which states that a person or company consolidation requirements has on whether a equity derivative hedges would also be controls a company if it (i) owns, controls, or holds covered company is required to consolidate such with the power to vote 25 percent or more of a class fund or vehicle for financial reporting purposes and required to be written by an eligible of voting securities of the company; or (ii) amend this rule, as necessary. protection provider and meet certain consolidates the company for financial reporting 97 Instead, a non-controlled fund or vehicle would other criteria. For example, an eligible purposes. See 12 CFR 225, App. G. The only be treated as a counterparty of the covered company credit derivative hedge would have to difference between the definition from Appendix G and any exposure or transaction between those and the proposed rule’s definition of control is the entities would be subject to the limits of the be in simple form, including single- addition of the prong to capture total equity in the proposed rule. name or standard, non-tranched index proposed rule. 98 The same issued is raised with respect to the credit derivatives. Moreover, an eligible 94 See 12 U.S.C. 1841(a)(2); 12 CFR 225.2(e)(1). treatment of funds sponsored and advised by

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rule’s definition of ‘‘control’’ effective, believes that the authority in the Dodd- SPV to its sponsor or to the issuer of the and should the proposal’s definition of Frank Act and the Board’s general safety underlying assets may serve at times to ‘‘subsidiary’’ be expanded to include and soundness authority in associated improperly mask a covered company’s any investment fund or vehicle advised banking laws are sufficient to exposure to those parties. Accordingly, or sponsored by a covered company or encompass sovereign governments in under the proposed reservation of any other entity? the definition of counterparty in this authority, the Board may look through The proposed rule would establish manner.103 some SPVs either to the issuer of the limits on the credit exposure of a As discussed below, certain credit underlying assets in the vehicle or to the covered company to a single exposures of a covered company to the sponsor. In the alternative, the Board ‘‘counterparty’’.99 ‘‘Counterparty’’ U.S. government are exempt from the may require covered companies to look would be defined to mean (i) With credit exposure limits.104 There is no through to the underlying assets of an respect to a natural person, the person similar exemption, however, for SPV but only if the SPV failed certain and members of the person’s immediate exposures to U.S. state or local discrete concentration tests (such as family, collectively; 100 (ii) with respect governments or foreign sovereigns. having more than 20 underlying to a company, the company and all of Accordingly, credit exposures to U.S. exposures). its subsidiaries, collectively; (iii) with state and local governments and foreign Question 27: How should exposures respect to the United States, the United sovereigns would be subject to the to SPVs and their underlying assets and States and all of its agencies and proposed limits. sponsors be treated? What other instrumentalities (but not including any Question 25: Should the definition of alternatives should the Board consider? State or political subdivision of a State), ‘‘counterparty’’ differentiate between The credit exposure of a covered collectively; (iv) with respect to a State, types of exposures to a foreign sovereign company to an unaffiliated counterparty the State and all of its agencies, entity including exposures to local is limited to a percentage of the capital instrumentalities, and political governments? Should exposures to a stock and surplus of the covered 105 subdivisions (including municipalities), company controlled by a foreign company. Under the proposed rule, collectively; and (v) with respect to a sovereign entity be included in the ‘‘capital stock and surplus’’ of a bank foreign sovereign entity, the foreign exposure to that foreign sovereign holding company is the sum of the sovereign entity and all of its agencies, entity? company’s total regulatory capital as instrumentalities, and political Question 26: Should certain credit calculated under the risk-based capital subdivisions, collectively.101 exposures to foreign sovereign entities adequacy guidelines applicable to that Section 165(e) directs the Board to be exempted from the limitations of the bank holding company under limit credit exposure of a covered proposed rule—for example, exposures Regulation Y (12 CFR part 225) and the company to ‘‘any unaffiliated to foreign central banks necessary to balance of the allowance for loan and 102 lease losses of the bank holding company’’. The Board included facilitate the operation of a foreign company not included in tier 2 capital sovereign entities in the definition of banking business by a covered under the capital adequacy guidelines counterparty to limit the vulnerability of company? applicable to that bank holding a covered company to default by a The Board also notes that difficult company under Regulation Y (12 CFR single sovereign state, because the Board issues are raised in connection with the part 225).106 This definition of capital believes that credit exposures of a valuation of credit exposure arising stock and surplus is generally consistent covered company to such governmental from direct investments in or indirect with the definition of the same term in entities create risks to the covered exposures to a collateralized debt the Board’s Regulations O and W and company that are similar to those obligation (CDO) or other obligation created by large exposures to other types the OCC’s national bank lending limit issued by a special purpose vehicle regulation.107 For a nonbank covered of entities. The severe distress or failure (SPV). The failure to look through an of a sovereign entity could have effects company, ‘‘capital stock and surplus’’ includes the total regulatory capital of on a covered company that are 103 See 12 U.S.C. 5365(b)(1)(B)(iv) (allowing the comparable to those caused by the Board to establish additional prudential standards such company on a consolidated basis, failure of a financial firm or for covered companies as the Board, on its own or as determined under the risk-based pursuant to a recommendation made by the Council nonfinancial corporation to which the capital rules the company is subject to in accordance with section 115, determines are by rule or order of the Board.108 covered company has a large credit appropriate) and 5368 (providing the Board with An alternative measure of ‘‘capital exposure. For these reasons, credit general rulemaking authority); see also section 5(b) stock and surplus’’ might focus on exposures to sovereign governments are of the BHC Act of 1956, as amended (12 U.S.C. 1844(b)); and section 8(b) of FDI Act (12 U.S.C. common equity and, in that respect, be made subject to the credit exposure 1818(b)). Section 5(b) of the BHC Act provides the consistent with the post-crisis global limits in the same manner as credit Board with the authority to issue such regulations regulatory move toward tier 1 common exposures to companies. The Board and orders as may be necessary to enable it to administer and carry out the purposes of the BHC equity as the primary measure of loss Act. Section 8(b) of the FDI Act allows the Board absorbing capital for internationally counterparties. Such funds or vehicles similarly to issue to bank holding companies an order to active banking firms. For example, Basel would not be considered to be part of the cease and desist from unsafe and unsound counterparty under the proposed rule’s definition of practices. III introduces for the first time a specific control. 104 See generally proposed rule § 252.97 tier 1 common equity requirement and 99 See proposed rule § 252.93. (exempting direct claims on, and portions of claims uses tier 1 common equity measures in 100 ‘‘Immediate family’’ is defined in section that are directly and fully guaranteed as to principal its capital conservation buffer and 252.92(y) of the proposed rule. and interest by, the United States and its agencies 101 See proposed rule § 252.92(k); see also and direct claims on, and portions of claims that are 105 proposed rule § 252.92(hh) (defining ‘‘sovereign directly and fully guaranteed as to principal and See 12 U.S.C. 5365(e)(2); see also proposed entity’’). interest by, the Federal National Mortgage rule § 252.93. 102 12 U.S.C. 5365(e)(2)–(3). ‘‘Company’’ is Association and the Federal Home Loan Mortgage 106 See proposed rule § 252.92(g); see also defined for purposes of the proposed rule to mean Corporation, only while operating under the proposed rule § 252.92(kk) (defining ‘‘total a corporation, partnership, limited liability conservatorship or receivership of the Federal capital’’). company, depository institution, business trust, Housing Finance Agency, and any additional 107 See 12 CFR 12 CFR 215.3(i); 223.3(d); see also special purpose entity, association, or similar obligations by a U.S. government sponsored entity 12 CFR 32.2(b). organization. See proposed rule § 252.92(h). as determined by the Board.) 108 See proposed rule § 252.92(g).

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countercyclical buffer.109 In addition and surplus of the major covered rule to be a measure that recognizes the, the BCBS capital surcharge company.116 As discussed above, the certain credit risk mitigants, including framework for G–SIBs builds on the tier Dodd-Frank Act grants the Board netting agreements for certain types of 1 common equity requirement in Basel authority to impose stricter limits on transactions, most forms of collateral III.110 In addition, the Federal Reserve covered companies with a larger with a haircut, and guarantees and other focused on tier 1 common equity in the systemic footprint and indeed requires forms of credit protection.120 The Board SCAP conducted in early 2009 and the Board to impose stricter single- recognizes that while net credit again in the CCAR conducted in early counterparty credit limits on covered exposure limits reduce the risk that the 2011 to assess the capacity of bank companies with a larger systemic failure of a single counterparty could holding companies to absorb projected footprint. significantly undermine the financial losses.111 Question 29: What other limits or strength of a covered company, net Question 28: Are the measures of modifications to the proposed limits on limits also understate the level of ‘‘capital stock and surplus’’ in the aggregate net credit exposure should the interconnectedness among financial proposed rule effective in light of the Board consider? companies. While gross credit exposure intent and purpose of section 165(e) or In accord with the directive of section limits might more effectively capture would a measure of ‘‘capital stock and 165, the proposed rule imposes a more interconnectedness among financial surplus’’ that focuses on tier 1 common conservative limit on larger covered companies, the Board has not proposed equity be more effective? What other companies that have a larger systemic supplementary gross limits at this time alternatives to the proposed definition footprint.117 The Board recognizes, due to the tendency of gross limits to of ‘‘capital stock and surplus’’ should however, that size is only a rough proxy significantly overstate the credit risk the Board consider? for the systemic footprint of a company. inherent in any given transaction. Question 32: Should the Board c. Section 252.93: Credit Exposure Limit Additional factors specific to a firm, including the nature, scope, scale, supplement the net credit exposure Section 252.93 of the proposed rule concentration, interconnectedness, mix limit with limits on gross credit contains the key quantitative limitations of its activities, its leverage, and its off- exposure for all covered companies or a on credit exposure of a covered subset of covered company, i.e., major 112 balance-sheet exposures, among other company to a single counterparty. As factors, may be determinative of a covered companies? Explain why or noted above, the Board has determined company’s systemic footprint.118 The why not. to limit the ‘‘aggregate net credit BCBS proposal on capital surcharges for exposure’’ of a covered company to a d. Section 252.94: Gross Credit systemically important banking Exposure counterparty. ‘‘Aggregate net credit organizations, for example, uses a exposure’’ is defined to mean the sum twelve factor approach to determine the Section 252.94 of the proposed rule of all net credit exposures of a covered systemic importance of a global banking explains how a covered company would company to a single counterparty.113 As organization.119 Moreover, the Board be required calculate its ‘‘gross credit described in detail below, sections recognizes that drawing one line exposure’’ on a credit transaction with 252.94 and 252.95 of the proposed rule through the covered company a counterparty. ‘‘Gross credit exposure’’ explain how to calculate gross and net population and imposing stricter limits is defined to mean, with respect to any credit exposure in order to arrive at the on exposures between major covered credit transaction, the credit exposure of aggregate net credit exposure relevant to companies and major counterparties the covered company to the the single-counterparty credit limit in may not take into account nuances that counterparty before adjusting for the section 252.93.114 effect of qualifying master netting There are two separate limits might be captured by other approaches. Question 30: Should the Board adopt agreements, eligible collateral, eligible contained in section 252.93 of the guarantees, eligible credit derivatives proposed rule. The general limit a more nuanced approach, like the BCBS approach, in determining which and eligible equity derivatives, and provides that no covered company may other eligible hedges, i.e., a short have aggregate net credit exposure to covered companies should be treated as major covered companies or which position in the counterparty’s debt or any unaffiliated counterparty that 121 counterparties should be considered equity security. Consistent with the exceeds 25 percent of the capital stock statutory definition of credit exposure, and surplus of the covered company.115 major counterparties? Question 31: Should the Board the proposed rule defines ‘‘credit There is also a second, more stringent transaction’’ to mean, with respect to a limit for aggregate net credit exposure introduce more granular categories of covered companies to determine to counterparty, any (i) Extension of credit between major covered companies and to the counterparty, including loans, major counterparties. Specifically, no appropriate net credit exposure limit? If so, how could such granularity best be deposits, and lines of credit, but major covered company may have excluding advised or other aggregate net credit exposure to any accomplished? Section 165(e) provides the Board uncommitted lines of credit; (ii) unaffiliated major counterparty that repurchase or reverse repurchase exceeds 10 percent of the capital stock with discretion to determine how a covered company measures the amount agreement with the counterparty; (iii) securities lending or securities 109 of credit exposure in various transaction See Basel III framework, supra note 34. borrowing transaction with the 110 See BCBS capital surcharge framework, supra types. As noted above, the proposed note 35. rule limits aggregate net credit exposure counterparty; (iv) guarantee, acceptance, 111 See, e.g., The Supervisory Capital Assessment of a covered company to an unaffiliated or letter of credit (including any Program: Overview of Results (May 7, 2009), counterparty. ‘‘Aggregate net credit available at http://www.federalreserve.gov/ exposure’’ is defined in the proposed 120 See proposed rule § 252.92(c) (defining newsevents/press/bcreg/bcreg20090507a1.pdf ‘‘aggregate net credit exposure’’) and § 252.95 (hereinafter SCAP Overview of Results); and 76 FR (describing how to calculate aggregate net credit 74631, 74636 (December 1, 2011). 116 See proposed rule § 252.93(b). exposure taking into accounting netting, collateral, 112 See proposed rule § 252.93. 117 See 12 U.S.C. 5365(a). guarantees and other forms of credit protection). 113 See proposed rule § 252.92(c). 118 See, e.g., 12 U.S.C. 5323(a). 121 See proposed rule § 252.92(x). Section 252.95 114 See proposed rule §§ 252.94 & 252.95. 119 See BCBS capital surcharge framework, supra of the proposed rule explains how these 115 See proposed rule § 252.93(a). note 35. adjustments are made.

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confirmed letter of credit or standby plus (ii) an add-on equal to the market Question 36: What impediments to letter of credit) issued on behalf of the value of the securities transferred calculating gross credit exposure in the counterparty; (v) purchase of, or multiplied by the collateral haircut set manner described above would covered investment in, securities issued by the forth in section 252.95 (Table 2) that is companies face? counterparty; (vi) credit exposure to the applicable to the securities transferred. In the valuation rules described counterparty in connection with a (v) The value of reverse repurchase above, trading and available-for-sale derivative transaction between the agreements is equal to the amount of debt securities held by the covered covered company and the counterparty; cash transferred by the covered company are valued at the greater of (vii) credit exposure to the counterparty company to the counterparty. amortized purchase price or market in connection with a credit derivative or (vi) Securities borrowing transactions value in section 252.94(a)(2) of the equity derivative transaction between are valued at the amount of cash proposed rule. Similarly, equity the covered company and a third party, collateral plus the market value of securities held by the covered company the reference asset of which is an securities collateral transferred by the are valued at the greater of purchase obligation or equity security issued by covered company to the counterparty. price or market value in section the counterparty; 122 and (viii) any (vii) Securities lending transactions 252.94(a)(3) of the proposed rule. The transaction that is the functional are valued at (i) the market value of the valuation rule for these types of equivalent of the above, and any similar securities lent by the covered company securities requires a covered company transaction that the Board determines to to the counterparty plus (ii) an add-on to revalue upwards the amount of an be a credit transaction for purposes of equal to the market value of the investment in such securities when the this subpart.123 securities lent multiplied by the market value of the securities increases. Question 33: Are the definitions of collateral haircut set forth in section In these circumstances, the valuation ‘‘credit transaction’’ appropriate in light 252.95 (Table 2) that is applicable to the rule merely reflects the covered of the purpose and intent of the Dodd- securities lent. company’s greater financial exposure to (viii) Committed credit lines extended Frank Act? If not, explain why not? the counterparty and reduces the by a covered company to the Question 34: What transactions, if covered company’s ability to engage in counterparty are valued at the face any, should be exempt from the additional transactions with a definition of credit transaction? amount of the credit line. (ix) Guarantees and letters of credit counterparty as the covered company’s Section 252.94 describes how the exposure to the counterparty increases. gross credit exposure of a covered issued by a covered company on behalf of the counterparty are equal to the The valuation rules also provide that company to a counterparty on a credit the amount of the covered company’s transaction should be calculated for maximum potential loss to the covered company on the transaction. investment in these securities can be no each type of credit transaction described less than the purchase price paid by the 124 (x) Derivative transactions between above. In particular, section 252.94(a) covered company for the securities, of the proposed rule provides that, for the covered company and the counterparty not subject to a qualifying even if the market value of the securities purposes of calculating gross credit declines below the purchase price. exposure: master netting agreement, are valued in an amount equal to the sum of (i) the Using the purchase price of the (i) The value of loans by a covered securities as a floor for valuing them company to a counterparty (and leases current exposure of the derivatives contract equal to the greater of the mark- would appear to be appropriate for in which the covered company is the several reasons. First, it ensures that the lessor and the counterparty is the lessee) to-market value of the derivative contract or zero and (ii) the potential value of the securities never falls below is equal to the amount owed by the the amount of funds actually transferred counterparty to the covered company future exposure of the derivatives contract, calculated by multiplying the by the covered company to the under the transaction. counterparty in connection with the (ii) The value of debt securities held notional principal amount of the derivative contract by the appropriate investment. Second, the purchase price by the covered company that are issued floor would limit the ability of a covered by the counterparty is equal to the conversion factor, set forth in section 252.94 (Table 1). company to provide additional funding greater of (i) the amortized purchase to a counterparty as the counterparty price or market value for trading and (xi) Derivative transactions between the covered company and the approaches insolvency. If the proposed available for sale securities, or (ii) the rule were to value investments in amortized purchase price for securities counterparty subject to a qualifying master netting agreement, are valued in securities issued by a counterparty held to maturity. strictly at market value, the covered (iii) The value of equity securities an amount equal to the exposure at company could lend substantially more held by the covered company that are default amount calculated under 12 CFR funds to the counterparty as the issued by the counterparty is equal to part 225, appendix G, § 32(c)(6). counterparty’s financial condition the greater of the purchase price or (xii) Credit or equity derivative worsened. As the financial condition of market value. transactions between the covered the counterparty declines, the market (iv) The value of repurchase company and a third party where the value of the counterparty’s securities agreements is equal to (i) the market covered company is the protection held by the covered company would value of the securities transferred by the provider and the reference asset is an also likely decline, allowing the covered covered company to the counterparty obligation or equity security of the counterparty, are valued in an amount company to provide additional funding to the counterparty under the proposed 122 ‘‘Credit derivative’’ and ‘‘equity derivative’’ equal to the lesser of the face amount of are defined in sections 252.92(m) and (v) of the the transaction or the maximum rule. This type of increasing support for proposed rule, respectively. potential loss to the covered company a counterparty in distress could vitiate 123 See proposed rule § 252.92 (n). The definition on the transaction. the public policy goals of section 165(e) of ‘‘credit transaction’’ in the proposed rule is Question 35: What alternative or by permitting a covered company to similar to the definition of ‘‘credit exposure’’ in section 165(e) of the Dodd-Frank Act. See 12 U.S.C. additional valuation rules should the exceed the regulatory single- 5365(e)(3). Board consider for calculating gross counterparty limits through serial credit 124 See proposed rule § 252.94(a)(1)–(12). credit exposure? extensions to a collapsing counterparty.

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Question 37: Does the requirement to • Is the valuation approach for a must treat a transaction with any person use the greater of purchase price or derivative transaction between a as a credit exposure to a counterparty to market value introduce significant covered company and a counterparty— the extent the proceeds of the burden for covered companies? Would i.e., a combination of the current transaction are used for the benefit of, the use of the market value alone be exposure and a measure of potential or transferred to, that counterparty.128 consistent with the purposes of section future exposure of the contract— The Board notes that an overly broad 165(e)? appropriate? What alternative valuation interpretation of the attribution rule in The add-on included in the gross approaches for derivative transactions the context of section 165(e) would lead valuation rule for repurchase should the Board consider? to inappropriate results and would agreements and securities lending • Is the valuation approach for a create a daunting tracking exercise for transactions (set forth in sections derivative transaction between a covered companies. For example, if a 252.94(a)(4) and 252.94(a)(7)) of the covered company and a third party covered company makes a loan to a proposed rule is intended to capture the appropriate in the case of a derivative counterparty that in turn uses the loan market volatility (and associated transaction where the covered company to purchase goods from a third party, potential increase in counterparty is the protection provider and the the attribution rule could be read to exposure amount) of the securities reference asset is issued by the mean that the covered company would transferred or lent by the covered counterparty? have a credit exposure to that third company in these transactions. The proposed rule generally allows party, because the proceeds of the loan The final gross credit exposure covered companies to calculate gross with the counterparty are used for the calculation amounts noted in sections credit exposure to a counterparty for benefit of, or transferred to, the third 252.94(a)(10)–(12) of the proposed rule derivatives contracts with that party. The Board recognizes the address derivative transactions. The counterparty subject to a qualifying difficulty in monitoring such proposed rule addresses both credit master netting agreement by using the transactions and the limited value in exposure of a covered company to a Basel II-based exposure at default tracking such money flows for purposes derivative counterparty, which is valued calculation set forth in the Board’s of maintaining the integrity of the as the sum of the current exposure and advanced approaches capital rules (12 single-counterparty credit limit regime. the potential future exposure of the CFR part 225, appendix G, § 32(c)(6)).126 The Board thus proposes to minimize contract, and credit exposure of a With respect to cleared and uncleared the scope of application of this covered company to the issuer of the derivatives, the amount of initial margin attribution rule consistent with reference obligation of certain credit and and excess variation margin (i.e., preventing evasion of the single- equity derivatives when the covered variation margin in excess of that counterparty credit limit. company is the protection provider, needed to secure the mark-to-market Question 40: The Board requests which is valued on a notional basis.125 value of a derivative) posted to a comment on whether the proposed Question 38: The Board seeks counterparty should be treated as credit scope of the attribution rule is comment on all aspects of the proposed exposure to the counterparty unless the appropriate or whether additional approach to calculating gross credit margin is held in a segregated account regulatory clarity around the attribution exposures for securities financing and at a third party custodian. In the case of rule would be appropriate. What derivative transactions, including the cleared derivatives, a covered alternative approaches to applying the add-on in the proposed gross valuation company’s contributions to the guaranty attribution rule should the Board rule for repurchase agreements and fund of a central counterparty (CCP) consider? What is the potential cost or securities lending transactions. would be considered a credit exposure burden of applying the attribution rule • The Board recognizes that the credit to the CCP and valued at notional as described above? amount.127 risk targeted by the valuation rule for e. Section 252.95: Net Credit Exposure securities lending transactions and Question 39: Should margin posted repurchase agreements—i.e., that a and contributions to a CCP guaranty As discussed above, the proposed rule counterparty would fail at the same time fund be considered a credit exposure for imposes limits on a covered company’s that the underlying securities are rising purposes of the proposed rule? The net credit exposure to a counterparty. in value—may be smaller than the credit Board recognizes that there are ‘‘Net credit exposure’’ is defined to risk associated with reverse repurchase competing policy concerns in mean, with respect to any credit agreements or securities borrowing considering whether to limit a covered transaction, the gross credit exposure of transactions. Should the Board consider company’s exposure to central a covered company calculated under a lower add-on than the haircuts in counterparties. The Board seeks section 252.94, as adjusted in section 252.95 (Table 2) to reflect this comment on the benefits and drawbacks accordance with section 252.95.129 difference? If so, how should the Board of such limits. Section 252.95 of the proposed rule calibrate the add-on? Section 252.94(b) of the proposed rule explains how to convert gross credit • Will the proposed add-on approach includes the statutory attribution rule exposure amounts to net credit exposure to valuing credit exposure for securities that provides that a covered company amounts by taking into account eligible lending transactions and repurchase collateral, eligible guarantees, eligible agreements lead to significant changes 126 See proposed rule § 252.95(a). ‘‘Qualifying credit and equity derivatives, other master netting agreement’’ is defined in section eligible hedges (i.e., a short position in in current practices in those markets? 252.92(ee) of the proposed rule in a manner consistent with the Board’s advanced risk-based the counterparty’s debt or equity 125 See proposed rule § 252.94(a)(10)–(12). capital rules for bank holding companies. security), and for securities financing ‘‘Credit derivative’’ is defined in section 252.92(m) 127 The Board notes that it has the authority to transactions, the effect of bilateral of the proposed rule, and ‘‘equity derivative’’ is deem margin posted to be a credit exposure as such netting agreements.130 defined in section 252.92(v) of the proposed rule. exposure is part of counterparty credit exposure to ‘‘Derivative transaction’’ is defined in section the covered company arising in connection with a 252.92(p) of the proposed rule in the same manner derivative transaction. The Board also has broad 128 See proposed rule § 252.94(b); see also 12 as it is defined in section 610 of the Dodd-Frank authority in section 165(e) to determine that any U.S.C. 5365(e)(4). Act. See Dodd-Frank Act, Public Law 111–203, similar transaction is a credit exposure. 12 U.S.C. 129 See proposed rule § 252.92(bb). § 610, 124 Stat. 1376, 1611 (2010). 5365(e)(3)(E)–(F). 130 See proposed rule § 252.95.

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Collateral gross credit exposure to the issuer of the exposure of $700 to the issuer of the Section 252.95(b) of the proposed rule collateral. In effect, the covered collateral and $300 net credit exposure explains the impact of eligible collateral company would have shifted its credit to the original counterparty that posted when calculating net credit exposure. exposure from the original counterparty the collateral. ‘‘Eligible collateral’’ is defined to to the issuer of the eligible collateral. As noted above, the amount of credit include (i) Cash on deposit with a The amount of credit exposure to the exposure to the original counterparty covered company (including cash held original counterparty and the issuer of and the issuer of the eligible collateral for the covered company by a third- the eligible collateral will fluctuate over will fluctuate over time based on party custodian or trustee); (ii) debt time based on the adjusted market value movements in the adjusted market value securities (other than mortgage- or asset- of the eligible collateral. Collateral that of the eligible collateral. For example, if backed securities) that are bank-eligible previously met the definition of eligible the adjusted market value of the eligible investments; (iii) equity securities that collateral under the proposed rule but collateral decreases to $400 in the are publicly traded; or (iv) convertible over time ceases to do so would no previous example, the covered bonds that are publicly traded.131 For longer be eligible to reduce gross credit company’s net credit exposure to the any of these asset types to count as exposure. original counterparty would increase to eligible collateral for a credit A covered company would have the $600, and its gross credit exposure to transaction, the covered company option of whether or not to use eligible the collateral issuer would decrease to generally must have a perfected, first collateral as a credit risk mitigation tool $400. By contrast, in the event of an priority security interest in the collateral in recognition of the fact that tracking increase in the adjusted market value of (or, if outside of the United States, the the market movements of a diverse pool the eligible collateral to $800, the legal equivalent thereof). This list of of collateral can, in some circumstances, covered company’s gross credit be operationally burdensome. In this exposure to the issuer of the eligible eligible collateral is similar to the list of respect, a covered company may opt not collateral would increase to $800 and its eligible collateral in the Basel II to recognize eligible collateral and thus net credit exposure to the original standardized capital rules. Question 41: Should the list of eligible avoiding potentially burdensome counterparty would decline to $200. In collateral be broadened or narrowed? tracking of collateral. each case, the covered company’s credit In computing its net credit exposure Question 43: Is recognizing the exposure would be capped at the to a counterparty for a credit fluctuations in the value of eligible original amount of the exposure created transaction, a covered company may collateral the correct approach, and by the loan or $1,000—even if the reduce its gross credit exposure on a what would be the burden on covered adjusted market value of the eligible transaction by the adjusted market value companies in calculating such changes collateral exceeded $1,000. on a daily basis? Question 45: Is the approach to of any eligible collateral.132 ‘‘Adjusted Question 44: What is the burden on a eligible collateral that allows the market value’’ is defined in section covered company associated with the covered company to choose whether or 252.92(a) of the proposed rule to mean, proposed rule’s approach to changes in not to recognize eligible collateral and with respect to any eligible collateral, the eligibility of collateral? Should the shift credit exposure to the issuer of the fair market value of the eligible Board instead consider introducing eligible collateral appropriate? What collateral after application of the stricter collateral haircuts for collateral alternatives to this approach should the applicable haircut specified in section that ceases to be eligible collateral? Board consider? 252.95 (Table 2) for that type of eligible So as not to dis-incentivize Question 46: Alternatively, should collateral. The haircuts in Table 2 are overcollateralization, the credit eligible collateral be treated the same consistent with the standard exposure to the collateral issuer is way eligible guarantees and eligible supervisory market price volatility capped so that it will never exceed the credit and equity derivative hedges are haircuts in Appendix G to Regulation Y. credit exposure to the original treated (as described below), thus Question 42: Should a covered counterparty.134 A covered company requiring a mandatory look-through to company be able to use its own internal would, in every case, continue to have eligible collateral? estimates for collateral haircuts as credit exposure to the original permitted under Appendix G to counterparty to the extent that the Unused Credit Lines Regulation Y? adjusted market value of the eligible Section 252.95(c) of the proposed rule A covered company has the choice of collateral does not equal the full amount concerns the unused portion of certain whether to reduce its gross credit of the credit exposure to the original extensions of credit. In computing its exposure to a counterparty by the counterparty. net credit exposure to a counterparty for adjusted market value of any eligible 133 For example, under the proposed rule, a credit line or revolving credit facility, collateral. If a covered company the treatment of eligible collateral a covered company may reduce its gross chooses to reduce its gross credit would work as follows. Assume a credit exposure by the amount of the exposure by the adjusted market value covered company makes a $1,000 loan unused portion of the credit extension of eligible collateral, however, the to a counterparty, creating $1,000 of to the extent that the covered company covered company would be required to gross credit exposure to that does not have any legal obligation to include the adjusted market value of the counterparty, and the counterparty advance additional funds under the eligible collateral when calculating its provides eligible collateral issued by a facility until the counterparty provides third party that has $700 of adjusted qualifying collateral equal to or greater 131 See proposed rule § 252.92(q); see also proposed rule § 252.92(dd) (defining ‘‘publicly market value. The covered company than the entire used portion of the traded’’). may choose to reduce its credit facility.135 To qualify for this reduction, 132 See proposed rule § 252.95(b). exposure to the original counterparty by the credit contract must specify that any 133 The Board notes that it has the authority to the adjusted market value of the eligible used portion of the credit extension treat eligible collateral as a gross credit exposure to collateral. As a result, the covered must be fully secured at all times by the collateral issuer as a consequence of the broad grant of authority to the Board in section 165(e) to company would have gross credit collateral that is either (i) Cash; (ii) determine that any other similar transaction is a credit exposure. See 12 U.S.C. 5365(e)(3)(F). 134 See proposed rule § 252.95(b). 135 See proposed rule § 252.95(c).

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obligations of the United States or its would be required to reduce its gross entities and regulated financial agencies; or (iii) obligations directly and credit exposure to the counterparty by companies in order to limit the ability fully guaranteed as to principal and the amount of any eligible guarantee of covered companies to arbitrage the interest by, the Federal National from an eligible protection provider.140 rule by obtaining multiple small Mortgage Association or the Federal The covered company would then have guarantees (each beneath the covered Home Loan Mortgage Corporation, only to include the amount of the eligible company’s limit) from high-risk while operating under the guarantee when calculating its gross guarantors to offset a large exposure conservatorship or receivership of the credit exposure to the eligible protection (exceeding the covered company’s limit) Federal Housing Finance Agency, and provider.141 Also, as is the case with to a single counterparty. any additional obligations issued by a eligible collateral, in no event would a Question 50: Should covered U.S. government sponsored entity as covered company’s gross credit companies have the choice of whether determined by the Board.136 exposure to an eligible protection or not to fully shift exposures to eligible Question 47: What alternative provider with respect to an eligible protection providers in the case of approaches, if any, to the proposed guarantee be in excess of its gross credit eligible guarantees or to divide an treatment of the unused portion of exposure to the original counterparty on exposure between the original certain credit facilities should the Board the credit transaction prior to the counterparty and the eligible protection consider? recognition of the eligible guarantee.142 provider in some manner? Question 51: Would a more Eligible Guarantees The exposure to the eligible protection provider is effectively capped at the conservative approach to eligible Section 252.95(d) of the proposed rule amount of the credit exposure to the guarantees be more appropriate to describes how to reflect eligible original counterparty even if the amount penalize financial sector guarantees in calculations of net credit of the eligible guarantee is larger than interconnectedness–for example, one in exposure to a counterparty.137 Eligible the original exposure. A covered which the covered company would be guarantees are guarantees that meet company would continue to have credit required to recognize gross credit certain conditions, including having exposure to the original counterparty to exposure both to the original been written by an eligible protection the extent that the eligible guarantee counterparty and the eligible protection provider.138 An eligible protection does not equal the full amount of the provider in the full amount of the provider includes a sovereign entity, the credit exposure to the original original credit exposure? What other Bank for International Settlements, the counterparty. alternative approaches to the treatment International Monetary Fund, the For example, assume a covered of eligible guarantees should the Board European Central Bank, the European company makes a $1,000 loan to an consider? Commission, a multilateral unaffiliated counterparty and obtains a development bank, a Federal Home Eligible Credit and Equity Derivative $700 eligible guarantee on the loan from Hedges Loan Bank, the Federal Agricultural an eligible protection provider. The Mortgage Corporation, a depository covered company would have gross Section 252.95(e) describes the institution, a bank holding company, a credit exposure of $700 to the protection treatment of eligible credit and equity savings and loan holding company, a provider as a result of the eligible derivatives in the case where the securities broker or dealer registered guarantee and $300 net credit exposure covered company is the protection with the SEC, an insurance company to the original counterparty. As a second purchaser.143 In the case where a that is subject to supervision by a State example, assume a covered company covered company is a protection insurance regulator, a foreign banking makes a $1,000 loan to an unaffiliated purchaser, such derivatives can be used organization, a non-U.S.-based counterparty and obtains a $1,500 to mitigate gross credit exposure and are securities firm or non-U.S.-based eligible guarantee from an eligible treated in the same manner as an insurance company that is subject to protection provider. The covered eligible guarantee. A covered company consolidated supervision and regulation company would have $1,000 gross may only recognize eligible credit and comparable to that imposed on U.S. credit exposure to the protection equity derivative hedges for purposes of 144 depository institutions, securities provider (capped at the amount of the calculating net credit exposure. broker-dealers, or insurance companies original exposure), but the covered These derivatives must meet certain (as the case may be), and a qualifying company would have no net credit criteria, including having been written 145 central counterparty.139 exposure to the original counterparty as by an eligible protection provider. An Question 48: In what ways should the a result of the eligible guarantee. eligible credit derivative hedge must be definition of eligible protection provider The Board proposes to require a simple in form, including single-name be expanded or narrowed? covered company to reduce its gross or standard, non-tranched index credit Question 49: Are there any additional exposure to a counterparty by the derivatives. An eligible equity or alternative requirements the Board amount of an eligible guarantee in order derivative hedge may only include an should place on eligible protection to ensure that concentrations in providers to ensure their capacity to exposures to guarantors are captured by 143 See proposed rule § 252.95(e). 144 perform on their guarantee obligations? the regime. This requirement is meant to By contrast, in section 252.94(a)(12) of the In calculating its net credit exposure proposed rule, where the covered company is the limit the ability of a covered company to the counterparty, a covered company protection provider, any credit or equity derivative to extend loans or other forms of credit written by the covered company is included in the to a large number of high risk borrowers calculation of the covered company’s gross credit 136 Id. exposure to the reference obligor. 137 See proposed rule § 252.95(d). that are guaranteed by a single 145 See proposed rule § 252.92(r) and (s) defining 138 See proposed rule § 252.92(t) for the definition guarantor. The proposed rule also ‘‘eligible credit derivative’’ and ‘‘eligible equity of ‘‘eligible guarantee’’ and for a description of the would narrow the set of eligible derivative’’, respectively. ‘‘Eligible protection requirements of an eligible guarantee. protection providers to sovereign provider’’ is defined in § 252.92(u) of the proposed 139 See proposed rule § 252.29(u). Eligible credit rule. The same types of organizations that are and equity derivatives, as described below, also eligible protection providers for the purposes of 140 must be written by eligible protection providers. See proposed rule § 252.95(d). eligible guarantees are eligible protection providers ‘‘Qualifying central counterparty’’ is defined in 141 See proposed rule § 252.95(d)(1). for purposes of eligible credit and equity section 252.92(ee) of the proposed rule. 142 See proposed rule § 252.95(d)(2). derivatives.

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equity-linked total return swap and does eligible guarantees, and requires Netting of Securities Financing not include other more, complex forms covered companies generally to Transactions of equity derivatives, such as purchased consider themselves as having credit In calculating its credit exposure to a equity-linked options. exposure to the protection provider in counterparty, a covered company may Question 52: What types of an amount equal to the notional or face net the gross credit exposure amounts of derivatives should be eligible for value of the hedge instrument. In (i) its repurchase and reverse repurchase mitigating gross credit exposure and, in essence, the rule only recognizes simple transactions with a counterparty, and particular, are there are more complex derivative hedges on a transaction-to- (ii) its securities lending and borrowing forms of derivatives that should be transaction basis. The rule does not transactions with a counterparty, in eligible hedges? accommodate proxy hedging or each case, where the transactions are The treatment of eligible credit and portfolio hedging and uses a simple subject to a bilateral netting agreement equity derivative hedges in the substitution approach of guarantor for with that counterparty. proposed rule is much like that of obligor. guarantees. A covered company would Question 53: What alternative e. Section 252.96: Compliance be required to reduce its gross credit approaches, if any, should the Board Section 252.96(a) of the proposed rule exposure to a counterparty by the consider to capture the risk mitigation indicates that a covered company must notional amount of any eligible credit or benefits of proxy or portfolio hedges or comply with the requirements of the equity derivative hedge that references to permit covered companies to use proposed rule on a daily basis as of the the counterparty if the covered company internal models to measure potential end of each business day and must obtains the derivative from an eligible exposures to sellers of credit protection? submit a monthly compliance report.149 protection provider.146 In these Question 54: Should covered Section 252.96(b) addresses the circumstances, the covered company companies have the choice to recognize consequences if a covered company fails would be required to include the 150 and shift exposures to protection to comply with the proposed rule. notional amount of the eligible credit or providers in the case of eligible credit or This section states that if a covered equity derivative hedge in calculating equity derivative hedges or to apportion company is not in compliance with its gross credit exposure to the eligible the exposure between the original respect to a counterparty due to a protection provider.147 As is the case for counterparty and the eligible protection decrease in the covered company’s eligible collateral and eligible provider? capital, the merger of a covered guarantees, the gross exposure to the company with another covered eligible protection provider may in no Question 55: Would a more conservative approach to eligible credit company, or the merger of two event be greater than it was to the unaffiliated counterparties of the original counterparty prior to or equity derivative hedges be more appropriate, such as one in which the covered company, the covered company recognition of the eligible credit or will not be subject to enforcement equity derivative.148 covered company would be required to recognize gross notional credit exposure actions with respect to such For example, a covered company noncompliance for a period of 90 days holds $1,000 in bonds issued by both to the original counterparty and the eligible protection provider? (or such shorter or longer period Company A, and the covered company determined by the Board to be purchases an eligible credit derivative Other Eligible Hedges appropriate to preserve the safety and in a notional amount of $800 from In addition to eligible credit and soundness of the covered company or Protection Provider X, which is an financial stability) if the company uses eligible protection provider, to hedge its equity derivatives, a covered company may reduce exposure to a counterparty reasonable efforts to return to exposure to Company A. The covered compliance with the proposed rule company would now treat Protection by the face amount of a short sale of the counterparty’s debt or equity security. during this period. The covered Provider X as its counterparty, and has company may not engage in any Question 56: Rather than requiring an $800 credit exposure to it. The additional credit transactions with such firms to calculate gross trading covered company also continues to have a counterparty in contravention of this exposures and offset that exposure with credit exposure of $200 to Company A. rule during the compliance period, eligible credit and equity derivatives or Similarly, consider the case of an except in cases where the Board short positions, should the Board allow eligible equity derivative, where a determines that such additional credit covered companies to use internal covered company holds $1,000 in equity transactions are necessary or pricing models to calculate the net securities issued by Company B and appropriate to preserve the safety and mark-to-market loss impact of an issuer purchases an eligible equity-linked total soundness of the covered company or return swap in a notional amount of default, applying a zero percent financial stability. In granting approval $700 from Protection Provider Y, an recovery rate assumption, to all for any such special temporary eligible protection provider, to hedge its instruments and positions in the trading exceptions, the Board may impose exposure to Company B. The covered book? Under this approach, gains and supervisory oversight and reporting company would now treat Protection losses would be estimated using full measures that it determines are Provider Y as its counterparty, and has revaluation to the greatest extent appropriate to monitor compliance with a credit exposure to it of $700. The possible, and simply summed. For the foregoing standards. The Board covered company also has credit derivatives products, all pricing inputs notes that section 165(e) of the Dodd- exposure to Company B of $300. other than those directly related to the Frank Act contains a provision allowing The proposed rule generally treats default of the issuer would remain the Board to exempt transactions, in eligible credit and equity derivatives in constant. Similar to the proposed whole or part, from the definition of the the same manner as non-derivative approach, only single-name and index term ‘‘credit exposure’’ if the Board credit enhancement instruments such as credit default swaps, total return swaps, finds that the exemption is in the public or equity derivatives would be included 146 See proposed rule § 252.95(e). in this valuation. Would such a models- 149 See proposed rule § 252.96(a). Also, see supra 147 See proposed rule § 252.95(e)(1). based approach better reflect traded note 17. 148 See proposed rule § 252.95(e)(2). credit exposures? If so, why? 150 See proposed rule § 252.96(b).

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interest and is consistent with the receive an exemption from the limits of during the crisis had significant purposes of this subsection.151 the proposed rule? deficiencies in key areas of risk Question 57: Are there additional A second exemption from the management. Two recent reviews of risk non-compliance circumstances for proposed rule is for direct claims on, management practices of banking which some cure period should be and the portions of claims that are companies conducted by the Senior provided? directly and fully guaranteed as to Supervisors Group (SSG) illustrated Question 58: Is the 90-day cure period principal and interest by, the Federal these deficiencies.160 appropriate and is it appropriate to National Mortgage Association and the The SSG found that effective generally prohibit additional credit Federal Home Loan Mortgage oversight of an organization as a whole transactions with the affected Corporation, while these entities are is one of the most fundamental counterparty during the cure period? If operating under the conservatorship or requirements of prudent risk receivership of the Federal Housing not, why not? 156 management. For example, the SSG Finance Agency. This provision found that business line and senior risk Section 252.97: Exemptions reflects a policy decision that credit managers did not jointly act to address exposures to these government- Section 252.97 of the proposed rule a company’s risks on an enterprise-wide sponsored entities should not be subject sets forth certain exemptions.152 Section basis; business line managers made to a regulatory limit for so long as the 165(e)(6) of the Dodd-Frank Act states decisions in isolation and at times entities are in the conservatorship or that the Board may, by regulation or increased, rather than mitigated, risk; receivership of the U.S. government. As order, exempt transactions, in whole or and treasury functions were not closely determined by the Board, obligations in part, from the definition of the term aligned with risk management issued by another U.S. government- ‘‘credit exposure’’ for purposes of this processes, preventing market and sponsored entity would also be exempt. subsection, if the Board finds that the counterparty risk positions from being The Board requests comment on exemption is in the public interest and readily assessed on an enterprise-wide whether these exemptions are is consistent with the purposes of this basis.161 153 appropriate. subsection. The third exemption from the The SSG reviews also revealed that The first exemption is for direct proposed rule is for intraday credit solid senior management oversight and claims on, and the portions of claims exposure to a counterparty.157 As noted engagement was a key factor that that are directly and fully guaranteed as above, the proposed rule requires differentiated companies’ performance to principal and interest by the United compliance on a daily end-of-business during the crisis. Senior managers at 154 States and its agencies. The day basis.158 This exemption would successful companies were actively exemption in section 252.97 of the help minimize the impact of the rule on involved in risk management, which proposed rule clarifies that, despite the the payment and settlement of financial includes determining the company’s fact that the United States is defined as transactions. The Board requests overall risk preferences and creating the a counterparty, a covered company’s comment on whether the exemption for incentives and controls to induce credit exposures to the U.S. government intraday transactions is appropriate in employees to abide by those are exempt. Thus, exposures to the U.S. light of the intent and purpose of the preferences. Successful risk government will not be subject to the proposed rule. management also depends on senior limits of the proposed rule. This The fourth exemption implements managers having access to adaptive includes direct holdings of securities section 165(e)(6) of the Dodd-Frank Act management information systems to issued by the U.S. government and and provides a catchall category to identify and assess risks based on a indirect exposure such as the case exempt any transaction which the Board range of dynamic measures and where U.S. government securities are determines to be in the public interest assumptions. In addition, the SSG found pledged as collateral. Section 252.95(b) and consistent with the purposes of that active involvement of the board of of the proposed rule provides a covered section 165(e).159 directors in determining a company’s company with the option to shift credit Question 60: Should other credit risk tolerance was critical to effective exposure to the issuer of eligible exposures be exempted from the risk management and curbing of collateral.155 Where the eligible limitations of the proposed rule. If so, excessive risk taking. The SSG reported collateral pledged is U.S. government explain why? that ‘‘firms are more likely to maintain securities that are directly and fully Section 252.97(b) of the proposed rule a risk profile consistent with the board guaranteed as to principal and interest implements section 165(e)(6) of the and senior management’s tolerance for by the United States and its agencies, Dodd-Frank Act, which provides an risk if they establish risk management the credit exposure would be exempted. exemption for Federal Home Loan committees that discuss all significant Question 59: Is the scope of the Banks. risk exposures across the firm * * * [and] meet on a frequent basis exemption for direct claims on, and the VI. Risk Management portions of claims that are directly and * * *.’’ 162 fully guaranteed as to principal and A. Background Section 165(b)(1)(A) of the Dodd- interest by, the United States and it The recent financial crisis highlighted Frank Act requires the Board to agencies appropriate? If not, explain the the need for large, complex financial establish overall risk management reasons why in detail and indicate companies to have more robust, requirements as part of the prudential whether there are alternatives the Board enterprise-wide risk management. A standards to ensure that strong risk should consider. Are there other number of companies that experienced management standards are part of the governmental entities that should material financial distress or failed regulatory and supervisory framework

151 See 12 U.S.C. 5365(e)(6). 156 See proposed rule § 252.97(a)(2). 160 See 2008 SSG Report and 2009 SSG, supra 152 See proposed rule § 252.97. 157 See proposed rule § 252.97(a)(3). notes 58 and 59. 153 See 12 U.S.C. 5365(e)(6). 158 See proposed rule § 252.96(a). 161 See 2008 SSG Report, supra note 58, at 3–5. 154 See proposed rule § 252.97(a)(1). 159 See 12 U.S.C. 5365(e)(6); proposed rule 162 See 2008 SSG Report, supra note 58, at 8; see 155 See proposed rule § 252.95(b). § 252.97(a)(4). also 2009 SSG Report, supra note 59, at 2–5.

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for covered companies.163 More risk management practices and report to worldwide operations. Additional generally, section 165(h) of the Dodd- the covered company’s risk committee proposed requirements relating to the Frank Act directs the Board to issue and chief executive officer. structure and responsibilities of such regulations requiring publicly traded These standards should help address risk committees are described below. nonbank covered companies and the risk management failures observed a. Structure of Risk Committee publicly traded bank holding companies during the crisis and their potential with total consolidated assets of $10 contribution to the failure or instability Section 252.126(b) of the proposed billion or more to establish risk of financial companies by mandating an rule establishes requirements governing committees.164 Under the statute, a risk enterprise-wide structure for managing the membership and proceedings of a committee required by section 165(h) risk and identifying the responsible company’s risk committee. Consistent must be responsible for the oversight of parties that supervisors will look to with section 165(h)(3)(B) of the Act, the enterprise-wide risk management when evaluating a company’s risk Board proposes that a covered company practices of the company, include such management practices. This should and over $10 billion bank holding number of independent directors as the facilitate more effective identification company’s risk committee must be Board may determine appropriate, and and management of the company’s risk chaired by an independent director. The include at least one risk management as well as supervisors’ ability to monitor Board views the active involvement of expert having experience in identifying, the risk management of companies independent directors as vital to robust assessing, and managing risk exposures subject to the rule. oversight of risk management and of large, complex financial firms. In addition, the proposed standards encourages companies generally to The Board is proposing to address the seek to meet the requirements of the include additional independent risk management weaknesses observed Dodd-Frank Act by imposing regulatory directors as members of their risk during the recent crisis and implement standards for risk management on committees. the risk management requirements of covered companies and over $10 billion The concept of director independence the Dodd-Frank Act by establishing risk bank holding companies that are is a concept familiar in federal securities management standards for all covered publicly traded. The Board does not law. To promote consistency, the Board companies that would (i) Require currently impose regulatory risk proposes to refer to the definition of oversight of enterprise-wide risk management standards on bank holding ‘‘independent director’’ in the Securities management by a stand-alone risk companies generally; the Board and Exchange Commission’s (SEC) committee of the board of directors and traditionally has addressed risk Regulation S–K for companies that are chief risk officer (CRO); (ii) reinforce the management through supervisory publicly traded in the United States. independence of a firm’s risk guidance. The proposed standards Under this definition, the Board would management function; and (iii) ensure would be more stringent for risk not consider a director to be appropriate expertise and stature for the committees of covered companies than independent unless the company chief risk officer. The proposal would for risk committees of over $10 billion indicates in its securities filings, also require bank holding companies bank holding companies. The Board pursuant to the SEC’s Regulation S–K, with total consolidated assets of $10 expects the expertise of the risk that the director satisfies the applicable billion or more that are publicly traded committee membership to be independence requirements of the and are not covered companies (over commensurate with the complexity and securities exchange on which the $10 billion bank holding companies) to risk profile of the organizations. Thus, company’s securities are listed. These establish an enterprise-wide risk the requirements of the proposed rule independence requirements generally committee of the board of directors. would increase in stringency with the include limitations on compensation Over $10 billion bank holding systemic footprint of the company. paid to the director or director’s family companies that are not covered The Board emphasizes that the risk members by the company and companies and are not publicly traded committee and overall risk management prohibitions on material business would not be subject to the risk requirements contained in the proposed relationships between the director and management requirements in this rule supplement the Board’s existing the company. In all cases, and proposal. risk management guidance and consistent with the listing standards of The proposed rule seeks to address supervisory expectations.165 All banking many securities exchanges, the the risk management problems noted by organizations supervised by the Board proposed rule excludes from the the SSG and others by mandating the should continue to follow such definition of ‘‘independent director’’ a major responsible parties within a guidance to ensure appropriate director who is or recently was company for its enterprise-wide risk oversight of and limitations on risk. employed by the company or whose immediate family member is or recently management: the risk committee and the B. Overview of the Proposed Rule CRO. The proposal sets out certain was an executive officer of the responsibilities of a risk committee, 1. Risk Committee Requirements company. which include the oversight and The proposed rule would require that In the case of a director of a covered documentation of the enterprise-wide each covered company and each over company that is not publicly traded in risk management practices of the $10 billion bank holding company the United States, the proposed rule company. The proposal also would establish a risk committee of the board would provide that the director is establish various requirements for a risk of directors to document and oversee, independent only if the company committee, including membership with on an enterprise-wide basis, the risk demonstrates to the satisfaction of the appropriate risk management expertise management practices of the company’s Federal Reserve that such director and an independent chair. The would qualify as an independent proposed rule also requires a covered 165 See Supervision and Regulation Letter SR 08– director under the listing standards of a company to employ a CRO who will 8 (Oct. 16, 2008), available at http:// securities exchange, if the company implement appropriate enterprise-wide www.federalreserve.gov/boarddocs/srletters/2008/ were publicly traded on such an SR0808.htm, and Supervision and Regulation Letter exchange. The Board proposes to make SR 08–9 (Oct. 16, 2008), available at http:// 163 12 U.S.C. 5365(b)(1)(A). www.federalreserve.gov/boarddocs/srletters/2008/ these determinations on a case-by-case 164 12 U.S.C. 5365(h). SR0809.htm. basis, as appropriate. At a minimum, the

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proposed rule provides that the Board requirements will help ensure that a management responsibilities; and would not find a director to be company’s risk management has the integration of risk management and independent if the director or a member appropriate stature within the control objectives in management goals of the director’s immediate family company’s corporate governance and the company’s compensation member is or recently was an executive framework. structure. officer of the company. In making Question 61: Should the Board In general, the Board believes that independence determinations, the consider specifying by regulation larger and more complex companies Board expects to analyze other indicia additional qualifications for director should have more robust risk of independence, including independence? If so, what factors management practices and frameworks compensation limitations and business should the Board consider in than smaller, less complex companies. relationship prohibitions discussed establishing these qualifications? Accordingly, as a company grows or above. Question 62: Would it be appropriate increases in complexity, the company’s In addition to the independent for the Board to require the membership risk committee should ensure that its director requirements, the proposed rule of a risk committee to include more than risk management practices and would require at least one member of a one independent director under certain framework adapt to changes in the company’s risk committee to have risk circumstances? If so, what factors company’s operations and the inherent management expertise that is should the Board consider in level of risk posed by the company to commensurate with the company’s establishing these requirements? the U.S. financial system. capital structure, risk profile, Question 63: Should the Board Question 65: What is the appropriate complexity, activities, size, and other consider specifying by regulation the role of the members of the risk appropriate risk-related factors. minimum qualifications, including committee in overseeing enterprise- However, given the importance of risk educational attainment and professional wide risk management practices at the management oversight, the Board experience, for risk management company and is that role effectively expects that a risk committee’s members expertise on a risk committee? addressed by this proposal? generally will have an understanding of Question 64: What alternatives to the Question 66: Is the scope of review of risk management principles and requirements for the structure of the risk enterprise-wide risk management that practices relevant to the company. Risk committee and related requirements this proposal would require appropriate committee members should also have should the Board consider? for a committee of the board of experience developing and applying b. Responsibilities of Risk Committee directors? Why or why not? risk management practices and Question 67: How can the Board procedures, measuring and identifying Section 252.126(c) of the proposed ensure that risk committees at risks, and monitoring and testing risk rule sets out certain responsibilities of a companies have sufficient resources to controls with respect to banking risk committee. The proposed rule effectively carry out the oversight role organizations (or, if applicable, nonbank would generally require a company’s described in this proposal? financial companies). risk committee to document and oversee The Board believes that the requisite the enterprise-wide risk management 2. Additional Enhanced Risk level of risk management expertise for a policies and practices of the company. Management Standards for Covered company’s risk committee can vary Consistent with the enterprise-wide risk Companies depending on the risks posed by the management requirement in section Consistent with section company to the stability of the U.S. 165(h)(3)(A) of the Act, a company’s risk 165(b)(1)(A)(iii) of the Dodd-Frank Act, financial system. The Board expects that committee would be required to take the proposed rule establishes certain a company’s risk committee members into account both its U.S. and foreign overall risk management standards for should have risk management expertise operations as part of its risk covered companies. These enhanced commensurate with the company’s management oversight. standards are in addition to, and in capital structure, risk profile, The proposed rule would require a some cases expand upon, the risk complexity, activities, size and other risk committee to review and approve committee requirements discussed appropriate risk-related factors. Thus, an appropriate risk management above that apply to covered companies the Board expects that the risk framework that is commensurate with and over $10 billion bank holding committees of covered companies that the company’s capital structure, risk companies. pose greater risks to the U.S. financial profile, complexity, activities, size, and system would have members with other appropriate risk-related factors. a. Appointment of CRO commensurately greater risk The proposed rule specifies that a The Board believes that, in light of the management expertise than the risk company’s risk management framework complexity and size of a covered committees of other companies that must include: Risk limitations company’s operations, it is important pose less risk. appropriate to each business line of the for each covered company to have a The proposed rule also would company; appropriate policies and designated executive officer in charge of establish certain procedural procedures relating to risk management implementing and maintaining the risk requirements for risk committees. governance, risk management practices, management framework and practices Specifically, the proposed rule would and risk control infrastructure; approved by the risk committee. require a company’s risk committee to processes and systems for identifying Accordingly, section 252.126(d) of the have a formal, written charter that is and reporting risks, including emerging proposed rule directs each covered approved by the company’s board of risks; monitoring compliance with the company to appoint a CRO to directors. In addition, the proposed rule company’s risk limit structure and implement and maintain appropriate would require that a risk committee policies and procedures relating to risk enterprise-wide risk management meet regularly and as needed, and that management governance, practices, and practices for the company. the company fully document and risk controls; effective and timely The proposed rule provides that the maintain records of such proceedings, implementation of corrective actions; specific responsibilities of a covered including risk management decisions. specification of management’s authority company’s CRO must include direct The Board expects that these procedural and independence to carry out risk oversight for: allocating delegated risk

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limits and monitoring compliance with should meet certain additional approaches to assessing capital such limits; establishing appropriate requirements beyond those described adequacy and aiming to ensure that policies and procedures relating to risk above to ensure that covered companies’ large organizations have thorough and management governance, practices, and risk committees are appropriately robust processes for managing and risk controls; developing appropriate structured to oversee the risk of a allocating their capital resources. The processes and systems for identifying company with a significant role in the CCAR also focuses on the risk and reporting risks, including emerging U.S. financial system. Specifically, the measurement and management practices risks; managing risk exposures and risk Board believes that best practices for supporting organizations’ capital controls; monitoring and testing risk covered companies require a risk adequacy assessments, including their controls; reporting risk management committee that reports directly to the ability to deliver credible inputs to their issues and emerging risks; and ensuring Board and not as part of or combined loss estimation techniques. that risk management issues are with another committee. Thus, section Building on the SCAP and CCAR, the effectively resolved in a timely manner. 252.126(b)(5)(i) of the proposed rule Board proposes to implement section The proposed rule specifies that these would require that a covered company’s responsibilities are to be executed on an 165(i)(1) of the Dodd-Frank Act, which risk committee not be housed within requires the Board to conduct annual enterprise-wide basis. another committee or be part of a joint analyses of the financial condition of Under the proposed rule, a CRO committee. In addition, section covered companies to evaluate the would be required to have risk 252.126(b)(5)(ii) of the proposed rule potential effect of adverse economic and management expertise that is would require a covered company’s risk financial market conditions on the commensurate with the covered committee to report directly to the capital of these companies (supervisory company’s capital structure, risk profile, covered company’s board of directors. stress tests). The Board also proposes to complexity, activities, size, and other As mentioned above, the proposed implement section 165(i)(2) of the Act, appropriate risk related factors. For rule requires a covered company’s CRO example, the Board would expect that to report to the company’s risk which requires the Board to issue an executive whose qualifications and committee. To ensure that a covered regulations that (i) require financial experience are highly focused in a company’s risk committee appropriately companies with total consolidated specific area (e.g., an executive whose considers and evaluates the information assets of more than $10 billion and for primary skills relate to the risks taken it obtains from the CRO, the proposed which the Board is the primary federal by a firm engaged predominantly in rule would direct a covered company’s financial regulatory agency to conduct consumer or commercial lending) risk committee to receive and review stress tests on an annual basis, and (ii) would be unlikely to possess the regular reports from the covered require covered companies to conduct expertise necessary to effectively company’s CRO. semi-annual stress tests (together manage the risks taken by a firm company-run stress tests). Request for Comment engaged in more diverse activities (e.g., The supervisory stress tests involve a large, more complex universal banking The Board requests comment on all the Board’s analyses of the capital of organization). aspects of this proposal. each covered company, on a total In light of the CRO’s central role in VII. Stress Test Requirements consolidated basis, and an evaluation of ensuring the effective implementation of the ability of the covered company to a covered company’s risk management A. Background absorb losses as a result of adverse practices, the proposed rule would economic and financial conditions. The require a covered company’s CRO to As part of the effort during the recent crisis to stabilize the U.S. financial Act requires the Board to provide for at report directly to the risk committee and least three different possible sets of the chief executive officer. Further, the system, the Federal Reserve began stress testing large, complex bank holding conditions—baseline, adverse, and proposed rule would require that the severely adverse conditions—under compensation of a covered company’s companies as a forward-looking exercise designed to estimate losses, revenues, which the Board would conduct this CRO be appropriately structured to evaluation.166 The Act also requires the provide for an objective assessment of allowance for loan losses and capital needs under various economic and Board to publish a summary of the the risks taken by the covered company. supervisory stress test results.167 This requirement supplements existing financial market scenarios. In early Board guidance on incentive 2009, the Federal Reserve led the For the company-run stress tests, the compensation. Supervisory Capital Assessment Act requires that the Board issue Question 68: Should the Board Program (SCAP) as a key element of the regulations that: (i) Define the term consider specifying by regulation the plan to stabilize the U.S. financial ‘‘stress test’’ for purposes of the minimum qualifications, including system. By looking at the broad capital regulations; (ii) establish methodologies educational attainment and professional needs of the financial system and the for the conduct of the company-run experience, for a CRO? If so, what type specific needs of individual companies, stress tests that provide for at least three of additional experience or education is these stress tests provided valuable different sets of conditions, including generally expected in the industry for information to market participants and baseline, adverse, and severely adverse positions of this importance? had an overall stabilizing effect. conditions; (iii) establish the form and Question 69: What alternative Building on SCAP and other content of a required report on the approaches to implementing the risk supervisory work coming out of the company-run stress tests that companies committee requirements established crisis, the Federal Reserve initiated the subject to the regulation must submit to pursuant to the Dodd-Frank Act should annual Comprehensive Capital Analysis the Board; and (iv) require subject the Board consider? and Review (CCAR) in late 2010 to companies to publish a summary of the assess the capital adequacy and evaluate results of the required stress tests.168 b. Additional Risk Committee the internal capital planning processes Requirements for Covered Companies of large, complex bank holding 166 See 12 U.S.C. 5365(i)(1). The Board proposes that risk companies. The CCAR represents a 167 Id. committees of covered companies substantial strengthening of previous 168 See 12 U.S.C. 5365(i)(2).

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B. Overview of the Proposed Rule The stress testing requirements The supervisory stress tests would described below are designed to work in provide supervisors with forward- 1. Annual Supervisory Stress Tests tandem with the Board’s capital plan looking information to help them Conducted by the Board rule 171 to allow the Federal Reserve and identify downside risks and the a. Purpose covered companies to better understand potential impact of adverse outcomes on the full range of their risks and the capital adequacy at covered companies. The Board has long held the view that potential impact of stressful events and Supervisory stress tests would also bank holding companies generally circumstances on their overall capital provide a means to assess capital should operate with capital positions adequacy and financial condition. The adequacy across companies more fully well above the minimum regulatory Board and the other federal banking and support the Board’s financial capital ratios, with an amount of capital agencies previously have highlighted stability efforts. In addition, the that is commensurate with each bank the use of stress testing as a means to publication of summary results from holding company’s risk profile.169 Bank supervisory stress tests would enhance better understand the range of a banking holding companies should have internal public disclosure of information about processes for assessing their capital organization’s potential risk 172 covered companies’ financial condition adequacy that reflect a full exposures. The 2007–2009 financial and the ability of those companies to understanding of the risks associated crisis further underscored the need for absorb losses as a result of adverse with all aspects of their operations and banking organizations to incorporate economic and financial conditions. ensure that they hold capital stress testing into their risk Inputs from the supervisory stress tests, commensurate with those risks.170 management, as banking organizations along with the results of any company- Stress testing is one tool that helps both that are unprepared for stressful events run stress tests, would be used by the supervisors and supervised companies and circumstances are more vulnerable Federal Reserve in its supervisory ensure that there is adequate capital to acute threats to their financial evaluation of a covered company’s through periods of stress. condition and viability.173 capital plan.

TABLE 1—PROCESS OVERVIEW OF ANNUAL SUPERVISORY STRESS TEST AND CAPITAL PLAN CYCLE

Supervisory stress test steps Capital plan steps Proposed timeframe

Regulatory reports submitted (using data as of Sept. 30 ...... By Mid-November. and other required information)...... Capital plan submitted (including individual results of com- By January 5. pany-run stress tests). Board communicates results to each covered company ...... By early March...... Federal Reserve response to capital plan ...... By March 31. Board publishes summary results of the supervisory stress ...... By Mid-April. test.

The design of the supervisory stress company’s internal capital adequacy the parties primarily responsible for the tests focuses on determining post-stress processes and the results of its own financial condition of a covered capital positions at covered companies internal stress tests. In particular, a full company, its board of directors and to inform assessments of capital assessment of a company’s capital senior management bear the primary adequacy. Because the Board’s adequacy must take into account a range responsibility for developing, supervisory stress tests would be of factors, including idiosyncratic implementing, and monitoring a standardized across covered companies aspects of individual companies that a covered company’s capital planning and not adjusted for each company, they standardized supervisory stress test strategies and internal capital adequacy are not expected to fully capture all applicable across companies cannot be processes and are in the best position to potential risks that may affect a specific expected to cover as sufficiently as the oversee these processes. Thus, along company’s capital position. Supervisory companies’ internal stress testing with the results of a covered company’s stress tests are one of several practices. Idiosyncratic factors would capital plan, any company-run stress supervisory assessment tools, include evaluation of a company’s tests, and other supervisory information, accordingly, a full assessment of a internal stress testing results, its capital the Board would use the results of the company’s capital adequacy should be planning processes, the governance over supervisory stress tests as one factor in informed by a broad range of those processes, regulatory capital the overall supervisory assessment of a information including a covered measures, and market assessments. As covered company’s capital adequacy.174

169 See 12 CFR part 225, appendix A; see also available at http://www.federalreserve.gov/ Advanced Capital Framework, 73 FR 44620 (July Supervision and Regulation Letter SR 99–18 (July boarddocs/srletters/2010/sr1006.htm; Supervision 31, 2008); SCAP Overview of Results, supra note 1, 1999), available at http:// and Regulation Letter SR 10–1, Interagency 111; and Comprehensive Capital Analysis and www.federalreserve.gov/boarddocs/srletters/1999/ Advisory on Interest Rate Risk (January 11, 2010), Review: Objectives and Overview (March 18, 2011), SR9918.htm (hereinafter SR 99–18). available at http://www.federalreserve.gov/ available at http://www.federalreserve.gov/ 170 See Supervision and Regulation Letter SR 09– boarddocs/srletters/2010/sr1001.htm; SR 09–4, newsevents/press/bcreg/bcreg20110318a1.pdf. 4 (revised March 27, 2009), available at http:// supra note 170; Supervision and Regulation Letter 173 See Basel Committee on Banking Supervision, www.federalreserve.gov/boarddocs/srletters/2009/ SR 07–1, Interagency Guidance on Concentrations Principles for Sound Stress Testing Practices and SR0904.htm (hereinafter SR 09–4). in Commercial Real Estate (January 4, 2007), Supervision (May 2009), available at http:// 171 See 12 CFR 225.8. available at http://www.federalreserve.gov/ www.bis.org/publ/bcbs155.htm. 172 See, e.g., 76 FR 35072 (June 15, 2011); boarddocs/srletters/2007/SR0701.htm; SR 99–18, 174 The Board notes that the design of the Supervision and Regulation Letter SR 10–6, supra note 169; Supervisory Guidance: Supervisory supervisory stress tests focuses on capital adequacy Interagency Policy Statement on Funding and Review Process of Capital Adequacy (Pillar 2) and does not focus on all aspects of financial Liquidity Risk Management (March 17, 2010), Related to the Implementation of the Basel II condition.

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b. Applicability year, covered companies would be iii. Conducting Stress Tests required to submit to the Board data and Except as otherwise provided in the other information to support the The Board intends to conduct the proposed rule, a bank holding company conduct of that year’s tests. To the supervisory stress tests using data that becomes a covered company no less greatest extent possible, the data collected from covered companies as than 90 days before September 30 of a schedules, and any other data requests, well as supplemental information. In calendar year must comply with the would be designed to minimize burden the course of conducting the stress tests, requirements of the proposed rule on the covered company and to avoid the Board intends to consult with regarding stress tests, including the duplication, particularly in light of covered companies as necessary timing of required submissions to the other reporting requirements that may throughout the process, particularly if Board, from that September 30 forward. be imposed by the Board. The Board the company’s data submissions or With respect to initial applicability, a envisions collecting the requisite other information provided are unclear bank holding company that is a covered information from covered companies or the supervisory stress test raises company on the effective date of the primarily through the regulatory questions more generally. After proposed rule must comply with the reporting process, and these reports may conducting its analyses, the Board plans proposed requirements as of the change from time to time. The to communicate to each covered effective date of the rule, including the confidentiality of any information company the results within a reasonable timing of required submissions to the submitted to the Board for the period of time. Board. A company that the Council supervisory stress tests will be designates for supervision by the Board determined in accordance with the iv. Publishing Results on a date 180 days before September 30 Board’s rules regarding availability of Subsequent to communicating results of a calendar year must comply with the information.175 As discussed below in requirements of the proposed rule of the analyses to each covered section e.iv., the Board proposes to company, the Board would publish a regarding stress tests, including the publish a summary of the results the timing of required submissions to the summary of the supervisory stress test supervisory stress test, as required by results, as discussed further below. Board, from that September 30 forward. the Dodd-Frank Act.176 The Board may Question 70: Are the timing obtain supplemental information, as v. Proposed Steps for Annual and requirements of this proposal sufficient needed, through the supervisory Additional Stress Tests to allow a covered company or nonbank process. The Board plans to publish for covered company to prepare, collect, notice and comment any new or revised Table 2 describes proposed steps in and submit to the Board the information data requirements and related reporting the Board’s annual supervisory stress necessary to support the supervisory instructions in a separate information test cycle, including proposed general stress test? If not, what alternative collection proposal.177 timeframes for each step. The Board timing should the Board consider? Question 71: What is the potential devised this proposed process in burden on covered companies stemming conjunction with the proposed process c. Process Overview of Annual outlined below for the company-run Supervisory Stress Test Cycle from the requirements to submit internal data to support the supervisory stress tests, given the overlap in The Board expects to use the stress tests? applicability for certain companies. As following general process and noted above, the timeline is also timetables in connection with the ii. Publication of Scenarios and intended to facilitate the use of supervisory stress tests. Methodologies supervisory stress tests to inform the The Board plans to publish the Board’s analysis of companies’ capital i. Information Collection From Covered scenarios in advance of conducting the plan submissions under the annual Companies annual stress tests. The Board also plans CCAR process, where applicable. The For a supervisory stress test to publish an overview of its related proposed timeframes are illustrative and conducted within any given calendar stress testing methodologies. are subject to change.

TABLE 2—PROCESS OVERVIEW OF ANNUAL SUPERVISORY STRESS TESTING CYCLE [Using data collected as of September 30, except for trading and counterparty data, for a planning horizon of at least nine calendar quarters]

Step Proposed timeframe

1. Board publishes scenarios for upcoming annual cycle ...... No later than mid-November. 2. Covered companies submit regulatory reports and any other required information ...... By mid-November. 3. Board completes supervisory stress tests and compiles results ...... By mid-February.

175 See generally 12 CFR part 261; see also 5 U.S.C. 552(b). 176 12 U.S.C. 5365(i)(1)(B)(v). 177 To minimize burden on covered companies, the Board plans to leverage, to the extent possible, any pre-existing data collections that are relevant for the proposed rule’s stress testing purposes (for example, see the proposed agency information collection available at http:// www.federalreserve.gov/reportforms/formsreview/ FRY14Q_FRY14A_20110907_ifr.pdf).

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TABLE 2—PROCESS OVERVIEW OF ANNUAL SUPERVISORY STRESS TESTING CYCLE—Continued [Using data collected as of September 30, except for trading and counterparty data, for a planning horizon of at least nine calendar quarters]

Step Proposed timeframe

4. Board communicates individual company results to covered companies ...... By early March. 5. Board publishes a summary of the supervisory stress test results ...... By early April.

d. General Approach to Supervisory unemployment rate, equity and property markets in particular regions of the Stress Tests prices, and various other key financial United States. The Board anticipates that its variables. The Board recognizes that ii. Data and Information Requirements framework for conducting its annual certain trading positions and trading- of Covered Companies stress test of covered companies would related exposures are highly sensitive to assess the impact of different economic adverse market events, potentially The Board’s stress test framework and financial market scenarios on the leading to large short-term volatility in would rely on consolidated data and consolidated capital of each covered covered companies’ earnings. As a other information supplied by each company over a forward-looking result, to address these scenarios, the covered company. The proposed rule planning horizon, taking into account Board would supplement the scenarios would require each covered company to all relevant exposures and activities of in some cases with market price and provide data and information to the that company. The proposed rule rate ‘‘shocks’’ that are consistent with Board, generally no later than 40 days defines the planning horizon as the historical or other adverse market events after the end of each calendar quarter, period of time over which the specified by the Board. The scenarios, in although some items may need to be supervisory stress test projections some cases, may also include stress collected only on an annual basis and would extend, specifically at least nine factors that may not be directly others may need to be collected on a quarters. The key feature of this correlated to macroeconomic or monthly basis. For data related to framework would be an estimate of financial assumptions but nevertheless trading and counterparty exposures, the projected net income and other factors can materially affect covered Board expects to communicate the as-of affecting capital in each quarter of the companies’ risks, such as factors that date for those exposures during the fourth quarter of each year. Covered stress test planning horizon, leading to affect operational risks. an estimate of how each covered companies would need to provide such Each year, the scenarios specified by data and other information in the company’s capital resources would be the Board would reflect changes in the affected under the scenarios. The manner and form prescribed by the outlook for economic and financial primary outputs produced under the Board to enable the Board to estimate conditions. In general, the baseline framework would be pro forma net income, losses, and pro-forma scenario would consider the most projections of capital positions capital levels and ratios for those recently available views of the (including capital levels and regulatory companies over the planning horizon macroeconomic outlook expressed by and other capital ratios) for each under baseline, adverse, and severely government agencies, other public- quarter-end over the planning horizon. adverse scenarios (or other such sector organizations, and private-sector conditions as determined appropriate by i. Scenarios forecasters as of the beginning of the the Board). This data would include Under the proposed rule, prior to annual stress-test cycle. The adverse information: conducting the analyses of covered scenario could include economic and (i) Related to the covered company’s companies, the Board would publish a financial conditions consistent with a on- and off-balance sheet exposures, minimum of three different sets of recession of at least moderate intensity, including in some cases information on economic and financial conditions, including a shortfall of economic individual items (such as loans and including baseline, adverse, and activity and increase in unemployment securities) held by the company, and severely adverse conditions relative to the baseline scenario, including exposures in the covered (‘‘scenarios’’), under which the Board weakness in household incomes, company’s trading portfolio, other would conduct its annual analyses. As declines in asset prices (including trading-related exposures (such as discussed above, the Board would equities, corporate bonds, and property counterparty-credit risk exposures) or update, make additions to, or otherwise prices) and changes in short- and long- other items sensitive to changes in revise these scenarios as appropriate, term yields on government bonds. The market factors, including, as and would publish any such changes to severely adverse scenario would consist appropriate, information about the the scenarios in advance of conducting of economic and financial conditions sensitivity of positions in the trading each year’s analyses. The Board expects that are more unfavorable than those of portfolio—including counterparty credit that the stress test framework would the adverse scenario and that also exposures—to changes in market prices produce at least three sets of projections include, in some instances, salient and interest rates; using quarterly intervals over the factors that are likely to place notable (ii) To assist the Board in estimating planning horizon based upon the strains on at least some lines of the sensitivity of the covered company’s scenarios specified by the Board. The business. For example, such severely revenues and expenses to changes in Board envisions that the scenarios adverse conditions could include economic and financial conditions; and would consist of future paths of a series precipitous declines in property or other (iii) To assist the Board in estimating of economic and financial variables over asset prices; shifts in the shape of the the likely evolution of the covered the stress test planning horizon, yield curve; marked changes in the company’s balance sheet (such as the including projections for a range of propensity of households or firms to composition of its loan and securities macroeconomic and financial enter bankruptcy; or strains on portfolios) and allowance for loan indicators, such as real GDP, the households, businesses, or real property losses, in response to changes in

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economic and financial conditions in use a separate methodology or a loan losses, and the extent of their each of the scenarios provided. combination of methodologies— impact on the company’s capital levels As noted above, the Board plans to potentially including covered and ratios, including regulatory capital issue a separate information collection companies’ internal models, if ratios. proposal to support its annual appropriate—to estimate projected supervisory stress test analyses.178 The ii. Communication of Results to Covered losses related to covered companies’ Companies specific data requirements would be trading portfolio or counterparty credit- outlined in that proposal and the Board risk exposures in the event of an adverse The Board notes that, under the Dodd- would publish any updates to its market shock, taking into account the Frank Act, it is required to publish a information requirements in a manner complexity and idiosyncrasy of each summary of the results of its annual that provides covered companies with covered company’s positions. The analyses.181 Under the proposed rule, sufficient lead time to implement the framework may also incorporate an prior to publishing a summary of the changes. In addition, under the approach to estimate potential losses results of its annual analyses, the Board proposed rule, the Board may require a from stress factors specifically affecting would convey to each covered company covered company to submit any other the covered companies’ other risks. the results of the Board’s analyses of information the Board deems necessary Finally, the framework would include a that company and explain to the firms in order to: (i) Ensure that the Board has set of methodologies to assess the information that the Board expects to sufficient information to conduct its impact of losses, pre-provision net make public. analysis; and (ii) derive robust revenue, allowance for loan losses, and iii. Post-Assessment Actions by Covered projections of a company’s losses, pre- other factors on future pro forma capital Companies provision net revenues, allowance for levels and ratios. As a general matter, under the loan losses, and future pro forma capital Another element of the framework proposed rule, subsequent to receiving positions under the baseline, adverse, would be a set of models or rules to the results of the Board’s annual and severely adverse scenarios (or other describe how a covered company’s analyses, each covered company must such conditions as determined balance sheet would change over time, take the results of the analysis appropriate by the Board). The as well as a set of assumptions or conducted by the Board under the confidentiality of any information models for other actions or decisions by proposed rule into account in making submitted to the Board for the the covered company that affect capital, changes, as appropriate, to the supervisory stress tests will be such as its provisioning, dividend, and company’s capital structure (including determined in accordance with the share repurchase policy. Information the level and composition of capital); its Board’s rules regarding availability of about planned future acquisitions and exposures, concentrations, and risk information.179 As discussed below in divestitures by the companies would positions; any plans of the company for section e.iv., the Board proposes to also be incorporated. These projections recovery; and for improving overall risk publish a summary of the results of the would then be analyzed to assess their management. In addition, each covered supervisory stress test, as required by combined impact on the company’s company must make such updates to its the Dodd-Frank Act.180 capital positions, including projected resolution plan (required to be capital levels and capital ratios, at the iii. Methodology for Estimating Losses submitted annually to the Board end of each quarter in the planning and Revenues pursuant to the Board’s Regulation QQ horizon. The framework would thus (12 CFR part 243)) as the Board, based While the Board expects to publish an incorporate all minimum regulatory on the results of its analyses of the overview of its methodology for the capital requirements, including all company under this subpart, determines supervisory stress tests, the Board appropriate limits and deductions. appropriate within 90 days of the Board believes it is useful to provide, as part These projections used in the publishing the results of its analyses. of this proposal, a general overview of supervisory stress tests also would Additionally, each covered company the anticipated methodology in advance incorporate, as appropriate, any that is subject to the requirement to of that publication. The Board would significant changes in or the significant submit a capital plan to the Board under calculate each covered company’s effects of accounting requirements section 225.8 of the Board’s Regulation projected losses, revenues, and other during the planning period. Y (12 CFR 225.8) would be required to factors affecting capital using a series of Question 72: What alternative models consider the results of the analysis of models and estimation techniques that or methodologies for estimating a the company conducted by the Board relate the economic and financial covered company’s losses and revenues under the proposed rule when updating variables in the baseline, adverse, and should the Board consider? severely adverse scenarios to the its capital plan. Stress testing results company’s losses and revenues. The e. Results of Annual Analyses may also result in the application of Board would develop a series of models i. Description of Supervisory early remediation requirements as to estimate losses on various types of Assessment described further below. loans and securities held by the covered The Board, through its annual iv. Publication of Results by the Board company, using data submitted by that analyses, would evaluate each covered company. These models may be Under the proposed rule, within a company as to whether the covered adjusted over time. The Board would reasonable period of time after company has the capital, on a total completing the annual analyses of 178 To the greatest extent possible, the data consolidated basis, necessary to absorb covered companies (but no later than templates, and any other data requests, would be losses under economic and financial mid-April of a calendar year), the Board designed to minimize burden on the bank holding market conditions as contained in the would publish a summary of the results company and to avoid duplication, particularly in designated scenarios. This evaluation of such analyses. The Board emphasizes light of potential new reporting requirements arising from the Dodd-Frank Act. would include, but would not be that there are certain factors to bear in 179 See generally 12 CFR part 261; see also 5 limited to, a review of the covered mind when interpreting any published U.S.C. 552(b). company’s estimated losses, pre- 180 12 U.S.C. 5365(i)(1)(B)(v). provision net revenue, allowance for 181 12 U.S.C. 5365(i)(1)(B)(v).

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results from the Board’s annual analyses 2. Annual and Additional Stress Tests adequacy and do not focus on other under the proposed rule. For example, Conducted by the Companies aspects of financial condition. the outputs of the analyses might not a. Purpose b. Applicability align with those produced by other The Board views the company-run parties conducting similar exercises, i. General stress tests under the proposed rule as even if a similar set of assumptions were The proposed rule would apply to having a shared purpose with the covered companies and over $10 billion used. In addition, the outputs under the supervisory stress tests. The company- companies. Over $10 billion companies adverse and severely adverse scenarios run stress tests would provide forward- are defined as any bank holding should not be viewed as most likely looking information to supervisors to company (other than a bank holding forecasts or expected outcomes or as a assist in their overall assessments of a company that is a covered company), measure of any covered company’s company’s capital adequacy, help to any state member bank, or any savings solvency. Instead, those outputs are the better identify downside risks and the and loan holding company that (i) has resultant estimates from forward- potential impact of adverse outcomes on more than $10 billion in total looking exercises that consider possible the company’s capital adequacy, and consolidated assets, as determined outcomes based on a set of different assist in achieving the financial stability based on the average of the total hypothetical scenarios. goals of the Dodd-Frank Act. Further, consolidated assets as reported on the the company-run stress tests are The Board proposes to publish a high- bank holding company’s four most expected to improve companies’ stress level summary of supervisory stress test recent FR Y–9C reports, the state testing practices with respect to their results for each covered company, i.e., member bank’s four most recent own internal assessments of capital company-specific results. This will Consolidated Report of Condition and adequacy and overall capital planning. support one of the key objectives of the The proposed rule would apply to Income (Call Report), or the savings and supervisory stress tests, namely to two sets of companies: covered loan holding company’s four most enhance transparency of covered companies and over $10 billion recent relevant quarterly regulatory companies’ risks and financial companies, as defined below. Covered reports; and (ii) since becoming an over condition and its ability to absorb loss companies would be required to $10 billion company, has not had $10 as a result of adverse economic and conduct semi-annual company-run billion or less in total consolidated financial conditions. The annual set of stress tests and over $10 billion assets for four consecutive calendar published results for each company for companies would be required to quarters as reported on the bank holding company’s four most recent FR Y–9C each quarter-end over the specified conduct annual company-run stress reports, the state member bank’s four planning horizon is expected to include: tests. For purposes of the company-run most recent Call Reports, or the savings • Estimated losses, including overall stress tests, the proposed rule defines a and loan holding company’s four most losses on loans by subportfolio, stress test as a process to assess the recent relevant quarterly regulatory available-for-sale and held-to-maturity 182 potential impact on a covered company reports. This calculation will be securities, trading portfolios, and or an over $10 billion company of effective as of the due date of the counterparty exposures; economic and financial conditions company’s most recent regulatory • Estimated pre-provision net (scenarios) on the consolidated report. revenue; earnings, losses and capital of the c. Process Overview • Estimated allowance for loan losses; company over a set planning horizon, Except as otherwise provided in the • taking into account the current proposed rule, a bank holding company Estimated pro forma regulatory and condition of the company and the other capital ratios. that becomes a covered company or a company’s risks, exposures, business bank holding company, savings and The Board recognizes that there are strategies, and activities. loan holding company (subject to the important considerations related to The Board expects that the company- delayed effective date for savings and disclosure of such information that must run stress tests required under the loan holding companies) or state be taken into account with respect to proposed rule would be one component member bank that becomes an over $10 publishing company-specific results of the broader stress testing activities billion company no less than 90 days from supervisory stress tests, and has conducted by covered companies and before September 30 of a calendar year carefully analyzed the issues over $10 billion companies. The broader must comply with the requirements, surrounding public disclosure of such stress testing activities should address including the timing of required results in formulating this proposal. The the impact of a broad range of submissions to the Board, of the Board requests comment on its proposal potentially adverse outcomes across a proposed rule from September 30 to publish company-specific results. wide set of risk types beyond capital forward. In addition, except as adequacy, affecting other aspects of a Question 73: What are the benefits otherwise provided in the rule, a bank company’s financial condition (e.g., holding company that becomes a and drawbacks associated with liquidity risk). In addition, a full company-specific disclosures? What, if covered company no less than 90 days assessment of a company’s capital before March 31 of a calendar year must any, company-specific items relating to adequacy must take into account a range the supervisory stress tests would of factors, including evaluation of its 182 Under section 165(i)(2), the requirements to present challenges or raise issues if capital planning processes, the conduct annual stress tests apply to any financial disclosed, and what is the nature of governance over those processes, company with more than $10 billion in total those challenges or issues? What consolidated assets and that is regulated by a regulatory capital measures, results of primary federal financial regulatory agency. 12 specific concerns about the possible supervisory stress tests where U.S.C. 5365(i)(2). The Dodd-Frank Act defines release of a company’s proprietary applicable, and market assessments, primary financial regulatory agency in section 2 of information exist? What alternatives to among others. The Board notes that the the Act. See 12 U.S.C. 5301(12). The Board, Office of the Comptroller of the Currency, and Federal the company-specific disclosures being company-run stress tests described in Deposit Insurance Corporation have consulted on proposed should the Board consider? this proposed rule focus on capital rules implementing section 165(i)(2).

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comply with the requirements, subject to minimum risk-based capital including baseline, adverse, and including timing of required and leverage requirements. severely adverse, that each covered submissions to the Board, of the The Board expects to use the company and each over $10 billion proposed rule from March 31 forward. following general process and company must use to conduct its annual A company that the Council has timetables in connection with the stress test required under the proposed determined shall be supervised by the company-run stress tests. rule. The Board expects that these will Board on a date no less than 180 days i. Reporting by Companies be the same scenarios published for use before September 30 of a calendar year in supervisory stress tests also required must comply with the requirements of Under this proposal, the Board would by the Act. this subpart, including timing of collect the covered companies’ and over required submissions, from September $10 billion companies’ stress test results iii. Additional Company-Run Stress Test 30 of that calendar year and thereafter. and additional qualitative and Cycle for Covered Companies quantitative information about the tests Further, a company that the Council has Within a given year, covered on a confidential basis and may require determined shall be supervised by the companies (but not over $10 billion Board on a date no less than 180 days companies to provide other information companies) would be required to before March 31 of a calendar year must on a supplemental basis. The Board conduct one company-run stress test in comply with the requirements of this plans to publish for comment both addition to the annual stress test subpart, including timing of the specific requirements for the report to described above. For this additional required submissions from March 31 of be submitted to the Board, as described company-run test, each covered that calendar year and thereafter. below, and related instructions in a company would be required to develop With respect to initial applicability, a separate information collection proposal and employ scenarios reflecting a bank holding company that is a covered before requiring companies to perform minimum of three sets of economic and company or a bank holding company or the company-run stress tests that would financial conditions, including baseline, state member bank that is an over $10 be required under the proposed rule. billion company on the effective date of Following the stress test, each covered adverse, and severely adverse scenarios, the proposed rule would be subject to company and each over $10 billion and such additional conditions as the the proposed requirements as of the company would be required to publish Board determines appropriate. effective date, including timing of a summary of its results as described iv. Proposed Steps for Annual and required submissions to the Board. Also further below. Additional Company-Run Stress Tests with respect to initial applicability, a savings loan and holding company that ii. Annual Company-Run Stress Test Table 3 below describes proposed is an over $10 billion company on or Each year, in advance of the annual steps for the company-run stress test after the effective date of the rule would company-run stress test required of all cycle for covered companies and over not be subject to the proposed covered companies and over $10 billion $10 billion companies, including requirements, including timing of companies on a schedule to be proposed general timeframes for each required submissions to the Board, until established, the Board would provide to step. The proposed timeframes are savings and loan holding companies are such companies at least three scenarios, illustrative and are subject to change.

TABLE 3—PROCESS OVERVIEW OF ANNUAL AND ADDITIONAL COMPANY-RUN STRESS TEST CYCLES [With annual test using data as of September 30 and additional test using data as of March 31]

Step Proposed timeframe

Annual company-run stress test cycle for all covered companies and over $10 billion companies

1. Board provides covered companies and over $10 billion companies with scenarios for annual stress tests ...... No later than mid-November. 2. Covered companies and over $10 billion companies submit required regulatory report to the Board on their By January 5. stress tests. 3. Covered companies and over $10 billion companies make required public disclosures ...... By early April.

Additional company-run stress test cycle for covered companies

4. Covered companies submit required regulatory report to the Board on their additional stress tests ...... By July 5. 5. Covered companies make required public disclosures ...... By early October.

d. Overview of Stress Test Requirements company and certain related items over additional stress test using the i. General Requirements for Company- at least a nine-quarter forward-looking company’s financial data as of March 31 Run Stress Tests planning horizon taking into account all of that year. relevant exposures and activities.183 The The Board recognizes that certain Under the proposed rule, each Board would communicate the required parent company structures of covered covered company and each over $10 as of date for data related to trading and companies and over $10 billion billion company would be required to counterparty exposures of a company companies may include one or more conduct annual stress tests using the during the fourth quarter of each subsidiary banks, each with total company’s financial data as of calendar year. Each covered company consolidated assets greater than $10 September 30 of that year, with the would also be required to conduct an billion. The company-run stress test exception of trading and counterparty requirements of Section 165(i)(2) would exposures, to assess the potential impact 183 The Board expects to communicate the as-of apply to the parent company and to of different scenarios on the date for data on trading and counterparty exposures each subsidiary regulated by a primary consolidated earnings and capital of that sometime in the fourth quarter of each year. federal financial regulatory agency that

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has more than $10 billion in total over $10 billion company would also be losses, pre-provision net revenues, consolidated assets. To minimize any required to calculate, for each quarter- allowance for loan losses, changes in undue burden associated with multiple end within the planning horizon, the capital levels and ratios, and changes in entities within one parent structure potential impact of the specific the company’s balance sheet over the having to meet the proposed rule’s scenarios on its capital ratios, including planning horizon; requirements, the Board intends to regulatory and any other capital ratios • Assumptions about potential capital coordinate with the other federal specified by the Board. distributions over the planning horizon; financial regulatory agencies, as The proposed rule would require each • For covered companies subject to appropriate. For example, the Board covered company and over $10 billion additional stress tests, a description of would aim to coordinate with the other company to establish and maintain a scenarios developed by the company for federal financial regulatory agencies in system of controls, oversight, and its additional test, including key providing scenarios to be used by documentation, including policies and variables used; and multiple entities within a holding procedures, designed to ensure that the • Any other relevant qualitative company structure when meeting the stress testing processes used by the information to facilitate supervisory requirements of the annual stress tests company are effective in meeting the assessment of the tests, upon request by described in the proposed rule. requirements of the proposed rule. The the Board. company’s policies and procedures Quantitative information under each ii. Scenarios must, at a minimum, outline the scenario: The proposed rule would require each company’s stress testing practices and • Estimated pro forma capital levels covered company and each over $10 methodologies, validation, use of stress and capital ratios, including regulatory billion company to use a minimum of test results and processes for updating and any other capital ratios specified by three sets of economic and financial the company’s stress testing practices the Board; conditions (scenarios), including consistent with relevant supervisory • Estimated losses by exposure baseline, adverse, and severely adverse guidance. Each covered company would category; conditions, or such additional also need to include in its policies • Estimated pre-provision net conditions as the Board determines information describing its processes for revenue; appropriate. scenario development for the additional • Estimated allowance for loan losses; stress test required under the proposed • Estimated total assets and risk- (1) Annual Company-Run Stress Tests rule. The board of directors and senior weighted assets; In advance of the annual stress tests, management of each covered company • Estimated aggregate loan balances; the Board would provide at least three and each over $10 billion company • Potential capital distributions over scenarios (baseline, adverse, and must approve and annually review the the planning horizon; and severely adverse) that all covered controls, oversight, and documentation, • Any other relevant quantitative companies and over $10 billion including policies and procedures, of information to facilitate supervisory companies would be required to use to the company established pursuant to the understanding of the tests, upon request conduct the stress tests required under proposed rule. by the Board. the proposed rule. These scenarios A covered company subject to an iv. Stress Test Information and Results would be expected to be the same as the additional stress test would also be scenarios used by the Board in 1. Required Report to the Board of Stress required to report to the Board the conducting the supervisory stress tests. Test Results and Related Information results of its additional test on or before On or before January 5 each year, each July 5 each year, in a manner similar to (2) Additional Company-Run Stress its report required for its annual stress Tests for Covered Companies covered company and each over $10 billion company would be required to test. The Board may also request The Board would not provide report to the Board, in the manner and supplemental information as needed. scenarios to covered companies for the form prescribed in the proposed rule, Under the Dodd-Frank Act, companies additional company-run stress tests. the results of the stress tests conducted are required to publish a summary of Rather, for the additional stress test, a by the company. To the extent possible their stress test results (see discussion in covered company would be required to and where relevant, a covered company section 3. below).184 develop and employ its own scenarios would be able to refer to information 2. Supervisory Review of Companies’ reflecting a minimum of three sets of submitted in connection with capital Stress Test Processes and Results economic and financial conditions— plan rule requirements when submitting baseline, adverse, and severely adverse the report required under this rule. The Based on information submitted by a conditions—or such additional Board plans to publish for comment a covered company or an over $10 billion conditions as the Board determines description of items to be included in company in the required report to the appropriate. the required report to the Board. The Board described above as well as other relevant information, the Board would iii. Methodologies and Practices Board anticipates that the report would include (but not necessarily be limited conduct an analysis of the quality of the Under the proposed rule, each to) the following qualitative and company’s stress tests processes and covered company and each over $10 quantitative information. related results. The Board envisions that billion company would be required to Qualitative information: feedback about such analysis would be use the applicable scenarios discussed • A general description of the use of provided to a company through the above in conducting its stress tests to stress tests required by the proposed supervisory process. In addition, each calculate, for each quarter-end within rule in the company’s capital planning covered company and each over $10 the planning horizon, potential losses, and capital adequacy assessments; billion company would be required to pre-provision revenues, allowance for • A description of the types of risks take the results of the annual stress test loan losses, and future pro forma capital (e.g., credit, market, operational, etc.) (or additional stress tests in the case of positions over the planning horizon, being captured in the stress test; a covered company), in conjunction including the impact on capital levels • A general description of the and ratios. Each covered company and methodologies employed to estimate 184 12 U.S.C. 5365(i)(2)(C)(iv).

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with the Board’s analyses of those Question 74: What alternative to the businesses, and State and local results, into account in making changes, public disclosure requirements of the governments and as a source of liquidity as appropriate, to the company’s capital proposed rule should the Board for the U.S. financial system. The Board structure (including the level and consider? What are the potential is required to promulgate regulations to composition of capital); its exposures, consequences of the proposed public establish procedures and timelines for concentrations, and risk positions; any disclosures of the company-run stress compliance with section 165(j).186 plans of the company for recovery and test results? The Board seeks comment on this proposed rule that would establish resolution; and to improve the overall C. Request for Comments risk management of the company. procedures to notify a covered company Additionally, each covered company The Board requests comment on all that the Council has made a would be required to consider the aspects of the proposed rule for the determination under section 165(j) that results of its company-run stress tests in annual and additional company-run the company must comply with the 15- developing and updating its capital stress testing cycles. to-1 debt-to-equity ratio requirement plan. The Board may also require other Question 75: Is the proposed timing of (identified company), as well as actions consistent with safety and stress testing appropriate, and why? If procedures for terminating the soundness of the company. not, what alternatives would be more requirement. The proposed rule also appropriate? What, if any, specific defines the components of the debt-to- 3. Publication of Results by the challenges exist with respect to the equity requirement and establishes a Company proposed steps and timeframes? What time period of 180 days for an identified Consistent with the requirements of specific alternatives exist to address company to comply with the debt-to- the Act, the proposed rule would these challenges that still allow the equity ratio requirement, and provides require each covered company and each Board to meet its statutory that the time for compliance may be over $10 billion company to publish a requirements? Please comment on the extended if an extension would be in summary of the results of its annual use of the ‘‘as of’’ date of September 30 the public interest. company-run stress tests within 90 days (and March 31 for additional stress tests), the January 5 reporting date (and B. Overview of the Proposed Rule of submitting its required report to the July 5 for additional stress test) the The debt-to-equity limitation in Board. A covered company subject to publication date, and the sufficiency of section 165(j) applies to any covered the additional stress test would also be time for completion of the stress tests. company where the Council makes two required to publish a summary of the Question 76: Does the immediate findings: (i) That the covered company results of its additional test within 90 effectiveness of the proposed rule poses a grave threat to the financial days of submitting its required report to provide sufficient time for an institution stability of the United States; and (ii) the Board for that test. The summary that is covered at the effective date of that the imposition of the specified may be published on a covered the rule to conduct its first annual stress debt-to-equity requirement is necessary company’s or an over $10 billion test? Would over $10 billion companies, to mitigate that systemic risk. Under the company’s Web site or in any other in particular, have sufficient time to proposal, ‘‘debt’’ and ‘‘equity’’ would forum that is reasonably accessible to prepare for the first annual stress test, have the same meaning as ‘‘total the public; further, it is expected that an under either the proposed initial or liabilities’’ and ‘‘total equity capital’’ over $10 billion company that is a proposed ongoing applicability rules? respectively, as calculated in an subsidiary of another covered company identified company’s reports of VIII. Debt-to-Equity Limits for Certain or another over $10 billion company financial condition. The 15-to-1 debt-to- Covered Companies could publish its summary on the equity would be calculated as the ratio parent company’s Web site or in another A. Background of total liabilities to total equity capital form along with the parent company’s minus goodwill. summary. The required information Section 165(j) provides that the Board must require a covered company to Section 252.152(a) provides for notice publicly disclosed by each covered to the identified company and company and each over $10 billion maintain a debt-to-equity ratio of no more than 15-to-1, upon a determination establishes the maximum debt-to-equity company, as applicable, would, at a ratio requirement for an identified minimum, include: by the Council that such company poses a grave threat to the financial stability company. An identified company would (i) A description of the types of risks receive written notice from the Board being included in the stress test; of the United States and that the imposition of such requirement is that the Council has made a (ii) For each covered company, a high- determination under section 165(j) that level description of scenarios developed necessary to mitigate the risk that such company poses to the financial stability the company poses a grave threat to the by the company for its additional stress 185 financial stability of the United States test, including key variables used (such of the Unites States. The Act requires that, in making its determination, the and that the imposition of the statutory as GDP, unemployment rate, housing debt-to-equity ratio requirement is prices); Council must take into consideration the criteria in Dodd-Frank Act sections necessary. An identified company (iii) A general description of the 113(a) and (b). These criteria include, would be permitted 180 calendar days methodologies employed to estimate among other things, the extent of the from the date of receipt of the notice to losses, revenues, allowance for loan leverage of the company, the nature, comply with the 15-to-1 debt-to-equity losses, and changes in capital positions scope, size, scale, concentration, ratio requirement. The proposed rule over the planning horizon; interconnectedness, and mix of the does not establish a specific set of (iv) Aggregate losses, pre-provision activities of the company, and the actions to be taken by a company in net revenue, allowance for loan losses, importance of the company as a source order to comply with the debt-to-equity net income, and pro forma capital levels of credit for U. S. households, ratio requirement; however, the Board and capital ratios (including regulatory would expect a company to come into and any other capital ratios specified by 185 The statute expressly exempts any federal compliance with the ratio in a manner the Board) over the planning horizon home loan bank from the debt-to-equity ratio under each scenario; requirement. See 12 U.S.C. 5366(j)(1). 186 12 U.S.C. 5366(j)(3).

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that is consistent with the company’s organizations can deteriorate rapidly should be moved to the next level of safe and sound operation and even during periods when their reported remediation; (ii) initial remediation, in preservation of financial stability. For capital ratios are well above minimum which a covered company would be example, a company generally would be requirements. The crisis also revealed subject to restrictions on growth and expected to make a good faith effort to fundamental weaknesses in the U.S. capital distributions; (iii) recovery, in increase equity capital through limits on regulatory community’s tools to deal which a firm would be subject to a distributions, share offerings, or other promptly with emerging issues. As prohibition on growth and capital capital raising efforts prior to detailed in the Government distributions, limits on executive liquidating margined assets in order to Accountability Office’s (GAO) June 2011 compensation, and requirements to raise achieve the required ratio. study on the effectiveness of the prompt additional capital, and additional While it is important that a company corrective action (PCA) regime, the PCA requirements on a case-by-case basis; that presents a grave threat to U.S. regime’s triggers, based primarily on and (iv) recommended resolution, in financial stability take prompt action to regulatory capital ratios, limited its which the Board would consider reduce risks to financial stability, ability to promptly address problems at whether to recommend to the Treasury section 252.152(b) provides that an insured depository intuitions.187 The Department and the FDIC that the firm identified company may request an study also concluded that the PCA be resolved under the orderly extension of time to comply with the regime failed to prevent widespread liquidation authority provided for in debt-to-equity ratio requirement for up losses to the deposit insurance fund, Title II of the Dodd-Frank Act. to two additional periods of 90 days and that while supervisors had the While the proposed framework each. Requests for an extension of time discretion to act more quickly, they did 188 includes regulatory capital triggers, to comply must be received in writing not consistently do so. which the Board recognizes can be a by the Board not less than 30 days prior Section 166 of the Dodd-Frank Act to the expiration of the existing time was designed to address these problems lagging indicator, non-discretionary period for compliance, and must by directing the Board to promulgate restrictions on growth and capital provide information sufficient to regulations providing for the early distributions would occur once a demonstrate that the company has made remediation of financial weaknesses at covered company’s capital levels fall good faith efforts to comply with the covered companies. The Dodd-Frank below the ‘‘well capitalized’’ threshold. debt-to-equity ratio requirement and Act requires the Board to define In contrast, similar actions do not occur that each extension would be in the measures of a covered company’s under the PCA regime until a depository public interest. The proposed 180-day financial condition, including, but not institution falls below the ‘‘adequately 190 period is intended to provide sufficient limited to, regulatory capital, liquidity capitalized’’ level. time for an identified company to take measures and other forward-looking Further, in December 2010, the BCBS appropriate action to comply with the indicators that would trigger remedial adopted a series of reforms directed at debt-to-equity ratio requirement. In the action. The Act also mandates that improving the quantity and quality of event that an extension of time is remedial action requirements increase capital held by internationally active requested, the Board would review the in stringency as the financial condition banking organizations. Specifically, the request in light of the relevant facts and of a covered company deteriorates and Basel III reforms introduce a minimum circumstances, including the extent of include: (i) limits on capital tier 1 common risk-based capital ratio, the identified company’s efforts to distributions, acquisitions and asset heighten the qualification standards for growth in the early stages of financial comply with the ratio and whether the regulatory capital, introduce a capital decline; and (ii) capital restoration extension would be in the public conservation buffer on top of minimum plans, capital raising requirements, interest. regulatory capital ratios, and raise the limits on transactions with affiliates, Section 252.152(c) provides that an minimum tier 1 capital risk-based management changes and asset sales in identified company would no longer be requirement. In addition, under the the later stages of financial decline.189 subject to the debt-to-equity ratio Basel II-based advanced approaches requirement of this subpart as of the B. Overview of the Proposed Rule rule, companies are required to estimate date it receives notice of a The proposed rule establishes a expected credit losses and deduct from determination by the Council that the regime for the early remediation of capital the amount by which expected company no longer poses a grave threat financial distress at covered companies credit losses exceed eligible credit to the financial stability of the United that includes four levels of remediation reserves, as defined in the rule.191 The States and that the imposition of a debt- requirements and several forward- reforms are expected to result in to-equity requirement is no longer looking triggers designed to identify regulatory capital ratios that provide a necessary. emerging or potential issues before they more accurate reflection of a company’s The Board requests comment on all develop into larger problems. The four condition. As noted above, the Board aspects of the proposed rule, and levels of remediation are: (i) Heightened and the other federal banking agencies specifically on the definitions of debt supervisory review, in which the Board are in the process of developing a and equity and on whether the proposed would conduct a targeted review of the proposal to implement the Basel III 180-day time period for compliance is covered company to determine if it framework in the United States. The appropriate. Board expects to evaluate the Question 77: What alternatives to the 187 See Government Accountability Office, interaction between the early definitions and procedural aspects of Modified Prompt Corrective Action Framework remediation framework for covered Would Improve Effectiveness, GAO–11–612 (June this proposed rule should the Board companies and any revised capital consider? 23, 2011), available at http://www.gao.gov/ new.items/d11612.pdf (hereinafter GAO Study). standards as those standards are IX. Early Remediation PCA is required by section 38 of the Federal Deposit incorporated into U.S. regulation, and Insurance Act. 12 U.S.C. 1831(o). PCA applies only may propose conforming changes to the A. Background to insured depository institutions, rather than to consolidated banking organizations. The recent financial crisis revealed 188 See id. 190 See 12 CFR 208.45. that the condition of large banking 189 12 U.S.C. 5366. 191 See 12 CFR part 225, appendix G.

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early remediation framework at that The Board considered including an company enters into or changes time. explicit quantitative liquidity trigger in remediation levels. In addition to regulatory capital-based the proposal, but is concerned that such Question 78: The Board recognizes triggers, the proposed rule includes a trigger could exacerbate funding that liquidity ratios can provide an early forward-looking triggers based on (i) pressures at affected covered indication of difficulties at a covered supervisory stress tests, which provide companies, rather than provide for early company and seeks comment on the remediation of issues. The Board also costs and benefits of including a an assessment of the covered company’s considered including certain balance quantitative liquidity trigger in the early ability to withstand adverse economic sheet measures as triggers, including remediation regime. If the Board were to and financial market conditions; and (ii) nonperforming loans and loan include a quantitative liquidity trigger market indicators, which provide a concentrations, in the early remediation in the regime, what quantitative third-party assessment of the covered regime. In its recent study, the GAO liquidity trigger should be used and company’s financial position. The Board identified asset quality as an important how should it be calibrated? also has sought to harmonize the predictor of future bank failure.192 Question 79: The Board also seeks proposed rule with the risk management However, the Board is concerned that comment on the value of including and risk committee requirements as well such triggers would be inappropriate for balance sheet measures, such as as the liquidity risk management firms engaged predominantly in nonperforming loans and loan standards that would be applicable to activities other than commercial concentrations, in the early remediation covered companies under this proposed banking, and therefore would provide regime as triggers. What balance sheet rule. Identified weakness in any of the limited value in an early remediation measures, if any, should the Board enhanced risk management and regime applicable to all covered include, and how should they be liquidity risk management standards companies. calibrated? may also trigger supervisory actions, In implementing the proposed rule, Tables 4 and 5 below provide a including non-discretionary actions the Board expects to notify the primary summary of all triggers and associated specified in the early remediation regulators of a covered company’s remediation actions in this proposed regime. subsidiaries and the FDIC as the covered rule.

TABLE 4—EARLY REMEDIATION TRIGGERS

Enhanced risk man- Enhanced liquidity Risk-based capital/le- Stress tests agement and risk risk management Market indicators verage committee standards standards

Level 1 (Heightened Meets all risk-based Covered company’s Covered company Covered company The median value of Supervisory Review and leverage re- regulatory capital has manifested has manifested any of the covered (HSR)). quirements for a ratios exceed min- signs of weakness signs of weakness company’s market well capitalized imum requirements in meeting en- in meeting the en- indicators exceeds covered company: under the super- hanced risk man- hanced liquidity risk the trigger thresh- Tier 1 RBC ratio visory stress test agement or risk management old for the entire > 6.0%. severely adverse committee require- standards for cov- breach period. Total RBC ratio scenario but it is ments for covered ered companies. > 10.0%. otherwise in non- companies. Tier 1 Leverage compliance with the ratio > 5.0%. Board’s capital plan However, the or stress testing covered com- rules. pany has dem- onstrated cap- ital structure or capital plan- ning weak- nesses. Level 2 (Initial Reme- Fails to meet any one Under the supervisory Covered company Covered company n.a. diation). of the Level 1 cap- stress test severely has demonstrated has demonstrated ital levels and adverse scenario, multiple defi- multiple defi- maintains: the company’s Tier ciencies in meeting ciencies in meeting Tier 1 RBC ratio 1 common RBC the enhanced risk the enhanced li- > 4.0% ratio falls below 5% management and quidity risk man- Total RBC ratio during any quarter risk committee re- agement standards > 8.0% of the nine quarter quirements for cov- for covered compa- Tier 1 Leverage planning horizon. ered companies. nies. ratio > 4.0%

192 See GAO Study, supra note 187, at 2.

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TABLE 4—EARLY REMEDIATION TRIGGERS—Continued

Enhanced risk man- Enhanced liquidity Risk-based capital/le- Stress tests agement and risk risk management Market indicators verage committee standards standards

Level 3 (Recovery) ..... Fails to meet any one Under the severely Covered company is Covered company is n.a. of the Level 2 cap- adverse scenario, in substantial non- in substantial non- ital levels and the covered com- compliance with compliance with maintains: pany’s Tier 1 com- enhanced risk man- enhanced liquidity Tier 1 RBC ratio mon RBC ratio falls agement and risk risk management > 3.0% below 3% during committee require- standards for cov- Total RBC ratio any quarter of the ments for covered ered companies. > 6.0% nine quarter plan- companies. Tier 1 Leverage ning horizon. ratio > 3.0% Or institution’s risk-based cap- ital ratios re- main below 6.0% Tier 1 RBC, 10.0% Total RBC, or 5.0% Lever- age, for more than two com- plete consecu- tive calendar quarters. Level 4 (Rec- Covered company’s n.a ...... n.a ...... n.a ...... n.a. ommended resolu- regulatory capital tion). ratios are below any of the following thresholds: 3.0% Tier 1 RBC 6.0% Total RBC 3.0% Tier 1 Le- verage ratio

TABLE 5—REMEDIATION ACTIONS

Enhanced risk man- Risk-based capital/ agement and risk Enhanced liquidity leverage Stress tests committee require- risk management Market indicators ments standards

Level 1 (Heightened Heightened Super- HSR ...... HSR ...... HSR ...... HSR. Supervisory Review). visory Review (HSR): The Board will produce an in- ternal report on the elements evidencing de- terioration with- in 30 days of a Level 1 trigger breach and de- termine wheth- er the institu- tion should be elevated to a higher level of remediation.

Level 2 (Initial Reme- All capital distributions (e.g., dividends and buybacks) are restricted to no more than 50% of n.a. diation). the average of the covered company’s net income in the previous two quarters. Covered company faces restrictions on growth (no more than 5% growth in total assets or total RWA per quarter or per annum), and is generally prohibited from directly or indirectly acquiring controlling interest in any company. Covered company will be subject to a non-public MOU. Covered company may be subject to other limitations and conditions on its conduct or activities as the Board deems appropriate.

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TABLE 5—REMEDIATION ACTIONS—Continued

Enhanced risk man- Risk-based capital/ agement and risk Enhanced liquidity leverage Stress tests committee require- risk management Market indicators ments standards

Level 3 (Recovery) ..... Covered company is placed under a written agreement that prohibits all capital distributions, n.a. any quarterly growth of total assets or RWA, and material acquisitions. The written agreement will also include a requirement to raise additional capital to restore the covered company’s cap- ital level to or above regulatory minimums. If written agreement timeframes are not met, the covered company may be subject to divestiture requirements. Covered company will also be subject to a prohibition on discretionary bonus payments and re- strictions on pay increases. Supervisors may also remove culpable senior management and limit transactions between af- filiates. Covered company may be subject to other limitations and conditions on its conduct or activities as the Board deems appropriate.

Level 4 (Rec- The Board will con- n.a. n.a. ommended Resolu- sider whether to tion). recommend to the Treasury Depart- ment and the FDIC that the covered company be re- solved under the orderly liquidation authority provided for in Title II of the Dodd-Frank Act.

1. Early Remediation Requirements capital distributions, acquisitions and controlling acquisitions, such as the a. Level 1 Remediation (Heightened asset growth. The proposed rule acquisition of less than 5 percent of the Supervisory Review) provides that a covered company that voting shares of a company, generally triggers level 2 remediation (because it would not require prior approval. The The proposed rule provides that the does not meet certain risk-based capital, covered company would also be first level of remediation consists of leverage, or stress test thresholds, or has required to enter into a non-public heightened supervisory review. Level 1 ongoing weaknesses in multiple memorandum of understanding or remediation would be triggered when a requirements under the enhanced undergo another enforcement action covered company first shows signs of liquidity risk management standards acceptable to the Board. financial distress or material risk and enterprise-wide risk management As part of level 2 remediation, the management weaknesses such that requirements included in this proposal) Board would also be able to impose further decline of the company is would be prohibited from distributing limitations or conditions on the conduct probable. Level 1 remediation would in any calendar quarter more than 50 or activities of the covered company or require the Board to produce a report on percent of the average of its net income any of its affiliates as the Board deems the elements evidencing deterioration for the preceding two calendar quarters. appropriate and consistent with the within 30 days and determine whether The company would also be prohibited purposes of Title I of the Dodd-Frank the institution should be elevated to a from permitting (i) its daily average total Act, including limitations or conditions higher level of remediation. assets and daily average total risk- In determining whether to elevate the deemed necessary to improve the safety weighted assets in any calendar quarter covered company to a higher level of and soundness of the covered company, to exceed daily average total assets and remediation, the Board would consider promote financial stability, or limit the daily average total risk-weighted assets, the extent to which the factors giving external costs of the potential failure of rise to a triggering event were caused by respectively, during the preceding the covered company. financial weakness or material risk calendar quarter by more than 5 percent; The restriction on capital management weaknesses at the covered and (ii) its daily average total assets and distributions under level 2 remediation company, such that further decline of daily average total risk-weighted assets would apply to all capital distributions the company is probable. The Board in any calendar year to exceed daily (common stock dividends and share may also use other supervisory average total assets and daily average repurchases) and would help to ensure authority to cause the covered company total risk-weighted assets, respectively, that covered companies preserve capital to take appropriate actions to address during the preceding calendar year by through retained earnings during the the problems reviewed by the Board more than 5 percent. earliest periods of financial stress, under level 1 remediation. The covered company would also be thereby building a capital cushion to prohibited from directly or indirectly absorb losses that the covered company b. Level 2 Remediation (Initial acquiring a controlling interest in any may continue to accrue due to the Remediation) company without the prior approval of weaknesses that caused it to enter level The Dodd-Frank Act provides that the Board. This includes controlling 2 remediation. This cushion is remedial actions required of covered interests in any nonbank company and important to making the covered companies in the initial stages of the establishment or acquisition of any company’s failure less likely, and also to financial decline shall include limits on office or place of business. Non- minimize the external costs that the

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covered company’s distress or possible facilitate the establishment of a or risk management failures have failure could impose on markets and the reasonable action plan for the covered deteriorated to the point that it is economy generally. company to improve its condition. subject to this level of remediation. In developing this proposed rule, the These restrictions, while potentially c. Level 3 Remediation (Recovery) Board considered the impact of the disruptive to aspects of the company’s proposed restriction on capital The Act provides that remediation business, are consistent with the distributions under level 2 remediation. actions required of covered companies purpose of section 166 of the Dodd- According to data reviewed by the in advanced stages of financial stress Frank Act: to arrest a covered Board, prohibiting a weakened covered shall include a capital restoration plan company’s decline and help to mitigate company from distributing more than 50 and capital raising requirements, limits external costs associated with its percent of its recent earnings should on transactions with affiliates, potential failure. promote the important purpose of management changes and asset sales. Furthermore, to the extent that a building a capital cushion at the Accordingly, under the proposed rule, a covered company’s management is a covered company to absorb potential covered company that has entered level primary cause of its level 3 remediation additional losses while still allowing the 3 remediation (because the covered status, the proposal would allow the firm some room to pay dividends and company did not meet certain risk- Board to take appropriate action to repurchase shares. The Board notes that based capital, leverage or stress test ensure that such management could not the capital conservation buffer under thresholds, or is in substantial non- increase the risk profile of the company Basel III is similarly designed to impose compliance with the enhanced risk or make its failure more likely. Taken increasingly stringent restrictions on management or enhanced liquidity together, the mandatory and optional capital distributions and employee standards of this proposal) would be restrictions and actions of level 3 bonus payments by banking subject to a number of fixed limitations. remediation provide the Board with organizations as their capital ratios The covered company would be important tools to make a covered approach regulatory minima.193 prohibited from making any capital company’s failure less likely and if Furthermore, the level 2 remediation distributions and from increasing the failure were to occur, less costly to the restrictions on asset growth is intended compensation of, or paying any bonus financial system. to prevent covered companies that are to, its senior executive officers or encountering the initial stages of directors. Additionally, the covered d. Level 4 Remediation (Resolution financial difficulties from growing at a company could not permit its average Assessment) rate inconsistent with preserving capital total assets or average total risk- Under the proposed rule, if level 4 and focusing on resolving material weighted assets during any calendar remediation is triggered (because the financial or risk management quarter to exceed average total assets or covered company did not meet certain weaknesses. A 5 percent limit should average total risk-weighted assets during risk-based capital or leverage generally be consistent with reasonable the previous quarter. The covered requirements), the Board would growth in the normal course of a company would also be prohibited from consider whether to recommend to the covered company’s business. (i) directly or indirectly acquiring any Treasury Department and the FDIC that The level 2 remediation restriction on interest in any company; (ii) the firm be resolved under the orderly acquisitions of controlling interests in establishing or acquiring any office or liquidation authority provided for in other companies without prior Board other place of business; or (iii) engaging Title II of the Dodd-Frank Act, based on approval is also intended to prevent in any new line of business. whether the covered company is in covered companies that are Furthermore, the covered company default or in danger of default and poses experiencing initial stages of financial would be required to enter into a a risk to the stability of the U.S. difficulties from materially increasing written agreement or other form of financial system pursuant to section 203 their size or systemic formal enforcement action with the of the Dodd-Frank Act. interconnectedness. A company in early Board that would specify that it must Question 80: The Board seeks stages of financial stress needs to focus raise capital and take other actions to comment on the proposed mandatory its energies on improving its financial improve capital adequacy. If the covered actions that would occur at each level condition, not on seeking major company subsequently did not satisfy of remediation. What, if any, additional acquisition opportunities or integrating the requirements of the written or different restrictions should the major new acquisitions. Under this agreement, the Board could require the Board impose on distressed covered provision, the Board would evaluate the company to divest assets identified by companies? materiality of acquisitions on a case-by- the Board as contributing to the covered case basis to determine whether company’s financial decline or that pose 2. Early Remediation Triggering Events approval is warranted. Acquisition of substantial risk of contributing to the The proposed rule provides triggering non-controlling interests would company’s further financial decline. events based on the Board’s existing continue to be permitted to allow Under the proposal, the Board could definitions of minimum risk-based covered companies to proceed with also require a covered company under capital and leverage ratios, the results of ordinary business functions (such as level 3 remediation to conduct new the Board’s supervisory stress tests equity securities dealing) that may elections for its board of directors, under this proposed rule, weaknesses in involve acquisitions of shares in other dismiss directors or senior executive complying with enhanced risk companies that do not rise to the level officers that have been in office for more management and liquidity standards of control. than 180 days, hire senior executive under this proposed rule and market The proposed rule would also require officers approved by the Board, or limit indicators. covered companies that are subject to transactions with its affiliates. level 2 remediation to enter into a non- The Board believes that these a. Risk-Based Capital and Leverage public memorandum of understanding restrictions would appropriately limit a The Act specifies that capital and with the Federal Reserve in order to covered company’s ability to increase its leverage will be among the elements risk profile and ensure maximum used to evaluate the financial condition 193 See Basel III framework, supra note 34, at 60. capital conservation when its condition of a covered company under the early

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remediation framework. The risk-based detailed explanation of such alternative provides that, if the Board determines capital and leverage ratios for each triggering events with supporting data. that a covered company has failed to covered company would be measured comply with the enhanced risk b. Stress Tests using periodic statements, in connection management provisions of Subpart E of with inspections of a covered company, As discussed more fully in section VII this proposed rule, it would be subject or upon request of the Board. of this proposal, the supervisory stress to level 1, 2, or 3 remediation, Although there is no fixed capital- test gauges a covered company’s capital depending on the severity of the related threshold for level 1 adequacy under baseline, adverse and compliance failure. remediation, weaknesses in a covered severely adverse scenarios. The Thus, for example, level 1 company’s capital structure or capital proposed rule would use the results of remediation would be appropriate if a planning processes could lead to level 1 the stress test under the severely covered company has manifested signs remediation, even where the covered adverse scenario to trigger early of weakness in meeting the proposal’s company’s capital ratios exceed the remediation. A covered company whose enhanced risk management and risk minimum levels for level 2 remediation. tier 1 common risk-based capital ratio committee requirements. Similarly, Thus, if a covered company maintains a falls below certain minimum thresholds level 2 remediation would be total risk-based capital ratio of 10.0 under the severely adverse scenario appropriate if a covered company has percent or greater, a tier 1 risk-based during any quarter of the planning demonstrated multiple deficiencies in capital ratio of 6.0 percent or greater, horizon (which extends for at least nine meeting the enhanced risk management and a tier 1 leverage ratio of 5.0 percent quarters) would be subject to early or risk committee requirements, and or greater, but the Board determines that remediation. Under the rule as level 3 remediation would be its financial condition is not proposed, the lower the tier 1 common appropriate if the covered company is in commensurate with the risks posed by risk-based capital ratio under the stress substantial noncompliance with the its activities, then level 1 remediation test, the more stringent the required enhanced risk management and risk would apply. Level 2 remediation remedial actions would be. Specifically: committee requirements. (initial remediation) would apply if a (i) Level 1 remediation. A covered Question 83: The Board seeks covered company has a total risk-based company would be subject to level 1 comment on triggers tied to risk capital ratio of less than 10.0 percent remediation if it is not in compliance management weaknesses. Should the Board consider specific risk and greater than or equal to 8.0 percent, with any regulations adopted by the management triggers tied to particular a tier 1 risk-based capital ratio of less Board relating to capital plans and stress 194 events? If so, what might such triggers than 6.0 percent and greater than or tests. The Board believes that even if involve? How should failure to equal to 4.0 percent, or a tier 1 leverage a covered company meets the minimum promptly address material risk ratio of less than 5.0 percent and greater regulatory capital requirements under management weaknesses be addressed than or equal to 4.0 percent. the severely adverse stress scenario, noncompliance with the Board’s capital by the early remediation regime? Under A covered company would be subject such circumstances, should companies to level 3 remediation (recovery) if: plan or stress testing regulations is sufficient to warrant level 1 be moved to progressively more (i) For two complete consecutive stringent levels of remediation, or are quarters, the covered company has a remediation. (ii) Level 2 remediation. A covered other actions more appropriate? Provide total risk-based capital ratio of less than company would be subject to level 2 a detailed explanation. 10.0 percent, a tier 1 risk-based capital remediation if, under the results of the ratio of less than 6.0 percent, or a tier d. Liquidity severely adverse stress test in any 1 leverage ratio of less than 5.0 percent; quarter of the planning horizon, the The Dodd-Frank Act provides that the or covered company’s tier 1 common risk- measures of financial condition to be (ii) The covered company has a total based capital ratio fell below 5.0 percent included in the early remediation risk-based capital ratio of less than 8.0 and remained above 3.0 percent. framework shall include liquidity percent and greater than or equal to 6.0 (iii) Level 3 remediation. A covered measures. Under the proposal, a covered percent, a tier 1 risk-based capital ratio company would be subject to level 3 company would be subject to level 1, of less than 4.0 percent and greater than remediation if, under the results of the level 2, or level 3 remediation if the or equal to 3.0 percent or a tier 1 severely adverse stress test in any Board determines that the company’s leverage ratio of less than 4.0 percent quarter of the planning horizon, the measurement or management of its and greater than or equal to 3.0 percent. covered company’s tier 1 common risk- liquidity risks is not in compliance with Finally, a covered company would be based capital ratio fell below 3.0 the requirements of Subpart C of this subject to level 4 remediation percent. proposed rule. The level of remediation (resolution assessment) if it has a total Question 82: What additional factors to which a covered company would be risk-based capital ratio of less than 6.0 should the Board consider when subject shall vary, at the discretion of percent, a tier 1 risk-based capital ratio incorporating stress test results into the the Board, depending on the severity of of less than 3.0 percent or a tier 1 early remediation framework? Is the the compliance failure. leverage ratio of less than 3.0 percent. severely adverse scenario appropriately Thus, for example, level 1 The Board believes that the remediation incorporated as a triggering event? Why remediation would be appropriate if a requirements listed above are reasonable or why not? covered company has manifested signs restraints on covered companies that are of weakness in meeting the proposal’s unable to meet these regulatory capital c. Risk Management enhanced liquidity risk management thresholds. The Board believes that material standards. Similarly, level 2 Question 81: The Board seeks weaknesses and deficiencies in risk remediation would be appropriate if a comment on the proposed risk-based management could contribute covered company has demonstrated capital and leverage triggers. What significantly to a firm’s decline and multiple deficiencies in meeting the alternative or additional risk-based ultimate failure. The proposed rule enhanced liquidity risk management capital or leverage triggering events, if standards, and level 3 remediation any, should the Board adopt? Provide a 194 See 12 CFR 225.8. would be appropriate if the covered

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company is in substantial deteriorated (false negatives), depending following the methodology of Acharya, noncompliance with the enhanced on the sample, time period and Pederson, Phillipon, and Richardson liquidity risk management standards. thresholds chosen. Further, the Board (2010). MES data are available at http:// notes that if market indicators are used vlab.stern.nyu.edu/welcome/risk. e. Market Indicators to trigger corrective actions in a Market Equity Ratio. The market Section 166(c)(1) of the Dodd-Frank regulatory framework, market prices equity ratio is defined as the ratio of Act directs the Board, in defining may adjust to reflect this use and market value of equity to market value measures of a covered company’s potentially become less revealing over of equity plus book value of debt. condition, to utilize ‘‘other forward- time. Accordingly, the Board is not Option-implied volatility. The option- looking indicators’’. A review of market proposing to use market-based triggers implied volatility of a firm’s stock price indicators in the lead up to the recent to subject a covered company directly to is calculated from out-of-the-money financial crisis reveals that market- early remediation levels 2, 3, or 4 at this option prices using a standard option based data often provided an early time. The Board expects to review this pricing model, reported as an signal of deterioration in a company’s approach after gaining additional annualized standard deviation in financial condition. Moreover, experience with the use of market data percentage points by Bloomberg. numerous academic studies have in the supervisory process. concluded that market information is Given that the informational content 2. Debt-Based Indicators complementary to supervisory and availability of market data will Credit default swaps (CDS). The information in uncovering problems at change over time, the Board also Board uses CDS offering protection financial companies.195 Accordingly, proposes to publish for notice and against default on a 5-year maturity, the Board proposes to use a variety of comment the market-based triggers and senior unsecured bond by a financial market-based triggers designed to thresholds on an annual basis (or less institution. capture both emerging idiosyncratic and frequently depending on whether the Subordinated debt (bond) spreads. systemic risk across covered companies Board determines that changes to an The Board uses financial companies’ in the early remediation regime. The existing regime would be appropriate), subordinated bond spreads with a Board proposes to implement a system rather than specifying these triggers in remaining maturity of at least 5 years of market-based triggers that prompts a this rule. In order to ensure over the Treasury rate with the same heightened supervisory review (level 1 transparency, the Board’s disclosure of maturity or the LIBOR swap rate remediation) of a covered company’s market-based triggers would include published by Bloomberg. financial condition and risk sufficient detail to allow the process to The Board recognizes that all market management. The Board would produce be replicated in general form by market indicators for different covered a report on the elements evidencing participants. The Board seeks comment companies are not traded with the same deterioration within 30 days of a on the use of market indicators frequency and therefore may not contain covered company hitting a market described below. Before commencing the same level of informational content. indicator trigger and determine whether use of any particular market-based Question 84: The Board seeks the institution should be elevated to a indicator the Board intends to publish comment on the proposed approach to higher level of remediation. In such indicators for notice and comment. market-based triggers detailed below, determining whether to elevate the alternative specifications of market- covered company to a higher level of i. Proposed Market Indicators based indicators, and the potential remediation, the Board would consider In selecting market indicators to benefits and challenges of introducing the extent the factors giving rise to a incorporate into the early remediation additional market-based triggers for triggering event were caused by regime, the Board focused on indicators levels 2, 3, or 4 of the proposed early financial weakness or material risk that have significant information remediation regime. In addition, the management weaknesses at the covered content, i.e. for which prices quotes are Board seeks comment on the sufficiency company such that further decline of available, and provide a sufficiently of information content in market-based the company is probable. The Board early indication of emerging or potential indicators generally. issues. The Board proposes to use the may also use other supervisory ii. Proposed Trigger Design authority to cause the covered company following or similar market-based to take appropriate actions to address indicators in its early remediation The Board’s proposed market the problems reviewed by the Board framework: indicator-based regime would trigger heightened supervisory review when under level 1 remediation. 1. Equity-Based Indicators The Board recognizes that market- any of the covered company’s indicators based early remediation triggers—like Expected default frequency (EDF). cross a threshold based on different all early warning metrics—have the The EDF measures the expected percentiles of historical distributions. potential to trigger remediation for firms probability of default in the next 365 The Board seeks comment on the use of that have no material weaknesses (false days. The Board uses EDFs calculated both time-variant and time-invariant positives) and fail to trigger remediation using Moody’s KMV RISKCALC model. triggers, as follows: for firms whose financial condition has Marginal expected shortfall (MES). Time-variant triggers capture changes The MES of a financial institution is in the value of a company’s market- 195 See, e.g., Berger, Davies, and Flannery, defined as the expected loss on its based indicator relative to its own past Comparing Market and Supervisory Assessments of equity when the overall market declines performance and the past performance Bank Performance: Who Knows What When? by more than a certain amount. Each of its peers. Peer groups would be Journal of Money, Credit, and Banking, 32 (3), at determined on an annual basis. Current 641–667 (2000). Krainer and Lopez, How Might financial institution’s MES depends on Financial Market Information Be Used for the volatility of its stock price, the values of indicators, measured in levels Supervisory Purposes?, FRBSF Economic Review, at correlation between its stock price and and changes, would be evaluated 29–45 (2003). Furlong and Williams, Financial the market return, and the co-movement relative to a covered company’s own Market Signals and Banking Supervision: Are time series (using a rolling 5-year Current Practices Consistent with Research of the tails of the distributions for its Findings?, FRBSF Economics Review, at 17–29 stock price and for the market return. window) and relative to the median of (2006). The Board uses MES calculated a group of predetermined low-risk peers

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(using a rolling 5-year window), and above the threshold for any of the indicators? What are the comparative after controlling for market or market indicators used in the regime. advantages of using one or the other? systematic effects.196 The value In considering all thresholds for each Question 90: Is the proposed trigger represented by the percentiles for each time-invariant trigger, the Board time (when the median value over a signal varies over time as data is evaluated the tradeoff between early period of 22 consecutive business days updated for each indicator. signals and supervisory burden crosses the predetermined threshold) to For all time-variant triggers, associated with potentially false signals. trigger heightened supervisory review heightened supervisory review would Data limitations in the time-invariant appropriate? What periods should be be required when the median value of approach also require the construction considered and why? at least one market indicator over a of different thresholds for different Question 91: Should the Board use a period of 22 consecutive business days, market indicators. The Board proposes statistical threshold to trigger either measured as its level, its 1-month the following calibration: heightened supervisory review or some change, or its 3-month change, both CDS. The CDS price data used to other framework? absolute and relative to the median of a create the distribution consist of an Question 92: Should the Board group of predetermined low-risk peers, unbalanced panel of daily CDS price consider using market indicators to is above the 95th percentile of the firm’s observations for 25 financial companies move covered companies directly to or the median peer’s market indicator 5- over the 2001- 2006 period. Taking the level 2 (initial remediation)? If so, what year rolling window time series. The skewed distribution of CDS prices in the time thresholds should be considered Board proposes to use time-variant sample and persistent outliers into for such a trigger? What would be the triggers based on all six market account, the threshold was set at 44 drawbacks of such a second trigger? Question 93: To what extent do these indicators listed above. basis points, which corresponds to the 80th percentile of the distribution. indicators convey different information Time-invariant triggers capture about the short-term and long-term changes in the value of a company’s Subordinated debt (bond) spreads. The data covered an unbalanced panel performance of covered companies that market-based indicators relative to the should be taken into account for the historical distribution of market-based of daily subordinated debt spread observations for 30 financial companies. supervisory review? variables over a specific fixed period of Question 94: Should the Board use Taking the skewed distribution into time and across a predetermined peer peer comparisons to trigger heightened account, the threshold was set to 124 group. Time-invariant triggers are used supervisory review? If so, should the basis points, which corresponds to the to complement time-variant triggers Board consider only low-risk covered 90th percentile of the distribution. since time-variant triggers could lead to companies for the peer group or a MES. The data covered a balanced excessively low or high thresholds in broader range of financial companies? If panel of daily observations for 29 cases where the rolling window covers a broader a range is more appropriate, financial companies. The threshold was only an extremely benign period or a how should the peer group be defined? set to 4.7 percent, which corresponds to highly disruptive financial period. The Question 95: How should the Board the 95th percentile of the distribution. Board acknowledges that a time- account for overall market movements invariant threshold should be subject to Option-implied volatility. The data in order to isolate idiosyncratic risk of subsequent revisions when warranted covered a balanced panel of daily covered companies? by circumstances. option-implied volatility observations C. Notice and Remedies As currently contemplated, the Board for 29 financial companies. The would consider all pre-crisis panel data threshold was set to 45.6 percent, which The proposed rule provides that the for the peer group (January 2000– corresponds to the 90th percentile of the initiation of early remediation and the December 2006), which contain distribution. transfer of a covered company from one observations from the subprime crisis in EDF. The monthly EDF data cover a level of remediation to another would the late 1990s and early 2000s as well balanced panel of 27 financial occur upon notice from the Board. as the tranquil period of 2004–2006. For companies. The threshold was set to Similarly, a covered company shall each market indicator, percentiles of the 0.57 percent, which corresponds to the remain subject to the requirements historical distributions would be 90th percentile of the distribution. imposed by early remediation until the computed to calibrate time-invariant The Board invites comment on the Board notifies the covered company that thresholds. The Board would focus on use of market indicators to prompt early its financial condition no longer five indicators for time-invariant remediation actions. warrants application of the requirement. triggers, calibrated to balance between Question 85: Should the Board Covered companies have an affirmative their propensity to produce false include market indicators described duty to notify the Board of triggering positives and false negatives: CDS above in the early remediation regime? events and other changes in prices, subordinated debt spreads, If not, what other forward-looking circumstances that could result in option-implied volatility, EDF and MES. indicators should the Board include? changes to the early remediation The market equity ratio is not used in Question 86: Are the indicators provisions that apply to it. the time-invariant approach because the outlined above the correct set of indicators to consider? Should other D. Relationship to Other Laws and cross-sectional variation of this variable Requirements was not found to be informative of early market-based triggers be considered? issues across financial companies. Question 87: How should the Board The early remediation regime that Time-invariant thresholds would trigger consider the liquidity of an underlying would be established by the proposed heightened supervisory review if the security when it chooses indicators? rule would supplement rather than median value for a covered company Question 88: The Board proposes replace the Board’s other supervisory over 22 consecutive business days was using both absolute levels and changes processes with respect to covered in indicators. Over what period should companies. The proposed rule would changes be calculated? not limit the existing supervisory 196 Market or systemic effects are controlled by subtracting the median of corresponding changes Question 89: Should the Board use authority vested in the Board, including from the peer group. both time-variant and time-invariant the Federal Reserve’s authority to

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initiate supervisory actions to address information collection requirements implement enhanced prudential deficiencies, unsafe or unsound would implement section 165 and 166 standards and section 166 requires the conduct, practices, or conditions, or of the Dodd-Frank Act, as mentioned in Board to implement an early violations of law. For example, the the Abstract below. remediation framework. The enhanced Board may respond to signs of a covered The reporting requirements found in standards include risk-based capital and company’s financial stress by requiring section 252.136(b) have been addressed leverage requirements, liquidity corrective measures in addition to in the Resolution Plans Required standards, requirements for overall risk remedial actions required under the Regulation (Reg QQ).199 The reporting management (including establishing a proposed rule. The Board also may use requirements found in sections risk committee), single-counterparty other supervisory authority to cause a 252.13(a), 252.96(a), 252.134(a), credit limits, stress test requirements, covered company to take remedial 252.146(a), and 252.146(b) will be and debt-to-equity limits for companies actions enumerated in the early addressed in a separate Federal Register that the Council has determined pose a remediation regime on a basis other notice at a later date. grave threat to financial stability. than a triggering event. Comments are invited on: Section 252.61 would require a (a) Whether the proposed collections covered company to adequately X. Administrative Law Matters of information are necessary for the document all material aspects of its A. Solicitation of Comments on the Use proper performance of the Federal liquidity risk management processes of Plain Language Reserve’s functions, including whether and its compliance with the the information has practical utility; Section 722 of the Gramm-Leach- requirements of Subpart C and submit (b) The accuracy of the Federal all such documentation to the risk Bliley Act (Pub. L. 106–102, 113 Stat. Reserve’s estimate of the burden of the 1338, 1471, 12 U.S.C. 4809) requires the committee. proposed information collections, Section 252.145(b)(1) would require Federal banking agencies to use plain including the validity of the that each covered company or over $10 language in all proposed and final rules methodology and assumptions used; billion company must establish and published after January 1, 2000. The (c) Ways to enhance the quality, maintain a system of controls, oversight, Board has sought to present the utility, and clarity of the information to and documentation, including policies proposed rule in a simple and be collected; and procedures, designed to ensure that straightforward manner, and invites (d) Ways to minimize the burden of the stress testing processes used by the comment on the use of plain language. the information collections on covered company or over $10 billion B. Paperwork Reduction Act Analysis respondents, including through the use company are effective in meeting the of automated collection techniques or requirements in Subpart G. These Request for Comment on Proposed other forms of information technology; policies and procedures must, at a Information Collection and minimum, describe the covered In accordance with section 3512 of (e) Estimates of capital or start up company’s or over $10 billion the Paperwork Reduction Act of 1995 costs and costs of operation, company’s stress testing practices and (44 U.S.C. 3501–3521) (PRA), the Board maintenance, and purchase of services methodologies, validation and use of may not conduct or sponsor, and a to provide information. stress tests results, and processes for respondent is not required to respond All comments will become a matter of updating the company’s stress testing to, an information collection unless it public record. Comments on aspects of practices consistent with relevant displays a currently valid Office of this notice that may affect reporting, supervisory guidance. Policies of Management and Budget (OMB) control recordkeeping, or disclosure covered companies must describe number. The Board reviewed the requirements and burden estimates processes for scenario development for proposed rule under the authority should be sent to the addresses listed in the additional stress test required under delegated to the Board by OMB. the ADDRESSES section. A copy of the section 252.144. The proposed rule contains comments may also be submitted to the Section 252.148 would require public requirements subject to the PRA. The OMB desk officer for the Federal disclosure of results required for stress reporting requirements are found in banking agencies: By mail to U.S. Office tests of covered companies and over $10 section 252.164(b); the recordkeeping of Management and Budget, 725 17th billion companies. Within 90 days of requirements are found in sections Street, NW., #10235, Washington, DC submitting a report for its required 252.61 197 and 252.145(b)(1); 198 and the 20503 or by facsimile to (202) 395–5806, stress test under section 252.143 and disclosure requirements are found in Attention, Commission and Federal section 252.144, as applicable, a covered section 252.148. The recordkeeping Banking Agency Desk Officer. company and over $10 billion company burden for the following sections is Proposed Information Collection shall disclose publicly a summary of the accounted for in the section 252.61 results of the stress tests required under Title of Information Collection: burden: 252.52(b)(3), 252.56, 252.58, section 252.143 and section 252.144, as Reporting, Recordkeeping, and 252.60(a), and 252.60(c). These applicable. The information disclosed Disclosure Requirements Associated by each covered company and over $10 197 with Regulation YY. Most of the recordkeeping requirements for billion company, as applicable, shall, at Subpart C—Liquidity Requirements have been Frequency of Response: Annual, addressed in the Funding and Liquidity Risk semiannual, and on occasion. a minimum, include: (i) A description of Management Guidance (FR 4198; OMB No. 7100– Affected Public: Businesses or other the types of risks being included in the 0326). Only new recordkeeping requirements are for-profit. stress test; (ii) for each covered being addressed with this proposed rulemaking. company, a high-level description of 198 Respondents: U.S. bank holding Some of the recordkeeping requirements for scenarios developed by the company Subpart G—Company-Run Stress Test companies, savings and loan holding Requirements have been addressed in the proposed companies, nonbank financial under section 252.144(b), including key Recordkeeping and Disclosure Provisions companies, and state member banks. variables used (such as GDP, Associated with Stress Testing Guidance (FR 4202). Abstract: Section 165 of the Dodd- unemployment rate, housing prices); See the Federal Register notice published on June 15, 2011 (76 FR 35072). Only new recordkeeping Frank Act requires the Board to (iii) a general description of the requirements are being addressed with this methodologies employed to estimate proposed rulemaking. 199 See 76 FR 67323 (November 1, 2011). losses, revenues, allowance for loan

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losses, and changes in capital positions proposed rule will not have a significant exceed the $175 million asset threshold over the planning horizon; and (iv) economic impact on a substantial at which a banking entity is considered aggregate losses, pre-provision net number of small entities. Nevertheless, a ‘‘small entity’’ under SBA revenue, allowance for loan losses, net the Board is publishing an initial regulations.203 The proposed rule would income, and pro forma capital levels regulatory flexibility analysis. A final apply to a nonbank financial company and capital ratios (including regulatory regulatory flexibility analysis will be designated by the Council under section and any other capital ratios specified by conducted after comments received 113 of the Dodd-Frank Act regardless of the Board) over the planning horizon, during the public comment period have such a company’s asset size. Although under each scenario. been considered. the asset size of nonbank financial Section 252.164(b) would require that In accordance with sections 165 and companies may not be the determinative when a covered company becomes 166 of the Dodd-Frank Act, the Board is factor of whether such companies may aware of (i) one or more triggering proposing to adopt Regulation YY (12 pose systemic risks and would be events set forth in section 252.163; or CFR 252 et seq.) to establish enhanced designated by the Council for (ii) a change in condition that it believes prudential standards and early supervision by the Board, it is an should result in a change in the remediation requirements applicable for important consideration.204 It is remediation provisions to which it is covered companies.201 The enhanced therefore unlikely that a financial firm subject, such covered company must standards include risk-based capital and that is at or below the $175 million asset provide notice to the Board within 5 leverage requirements, liquidity threshold would be designated by the business days, identifying the nature of standards, requirements for overall risk Council under section 113 of the Dodd- the triggering event or change in management (including establishing a Frank Act because material financial circumstances. risk committee), single-counterparty distress at such firms, or the nature, credit limits, stress test requirements, Estimated Paperwork Burden scope, size, scale, concentration, and debt-to-equity limits for companies interconnectedness, or mix of it Estimated Burden per Response: that the Council has determined pose a activities, are not likely to pose a threat Section 252.61 recordkeeping—200 grave threat to financial stability. to the financial stability of the United hours (Initial setup 160 hours). Under regulations issued by the Small States. Section 252.145(b)(1) recordkeeping— Business Administration (SBA), a As noted above, because the proposed 40 hours (Initial setup 280 hours for ‘‘small entity’’ includes those firms rule is not likely to apply to any U.S. bank holding companies $50 within the ‘‘Finance and Insurance’’ company with assets of $175 million or billion and over in total consolidated sector with asset sizes that vary from $7 less, if adopted in final form, it is not assets; 240 hours for institutions over million or less in assets to $175 million expected to apply to any small entity for 202 $10 million in total consolidated assets). or less in assets. The Board believes purposes of the RFA. The Board does Section 252.148 disclosure—80 hour that the Finance and Insurance sector not believe that the proposed rule (Initial setup 200 hours). constitutes a reasonable universe of duplicates, overlaps, or conflicts with Section 252.164(b) reporting—2 firms for these purposes because such any other Federal rules. In light of the hours. firms generally engage in actives that are foregoing, the Board does not believe Number of respondents: 34 U.S. bank financial in nature. Consequently, bank that the proposed rule, if adopted in holding companies with total holding companies or nonbank financial final form, would have a significant consolidated assets of $50 billion or companies with assets sizes of $175 economic impact on a substantial more, 39 U.S. bank holding companies million or less are small entities for number of small entities supervised. with total consolidated assets over $10 purposes of the RFA. Nonetheless, the Board seeks comment billion and less than $50 billion, 21 As discussed in the SUPPLEMENTARY on whether the proposed rule would state member banks with total INFORMATION, the proposed rule impose undue burdens on, or have consolidated assets over $10 billion, 39 generally would apply to a covered unintended consequences for, small savings and loan holding companies company, which includes only bank organizations, and whether there are with total consolidated assets over $10 holding companies with $50 billion or ways such potential burdens or billion. more in total consolidated assets, and consequences could be minimized in a Total estimated annual burden: nonbank financial companies that the manner consistent with sections 165 97,736 hours (72,188 hours for initial Council has determined under section and 166 of the Dodd-Frank Act. setup and 25,548 hours for ongoing 113 of the Dodd-Frank Act must be compliance). supervised by the Board and for which List of Subjects in 12 CFR Part 252 and such determination is in effect. 12 CFR Chapter II C. Regulatory Flexibility Act Analysis However, the enterprise wide risk Administrative practice and In accordance with section 3(a) of the committee requirements required under procedure, Banks, Banking, Federal Regulatory Flexibility Act 200 (RFA), the section 165(h) of the Act would apply Reserve System, Holding companies, Board is publishing an initial regulatory to any publicly traded bank holding Reporting and recordkeeping flexibility analysis of the proposed rule. company with total assets of $10 billion requirements, Securities. The RFA requires an agency either to or more. The company-run stress test provide an initial regulatory flexibility requirements part of the proposal being Authority and Issuance analysis with a proposed rule for which established pursuant to section 165(i)(2) For the reasons stated in the a general notice of proposed rulemaking of the Act also would apply to any bank SUPPLEMENTARY INFORMATION, the Board is required or to certify that the holding company, savings and loan proposed rule will not have a significant holding company, and state member 203 The Dodd-Frank Act provides that the Board economic impact on a substantial bank with more than $10 billion in total may, on the recommendation of the Council, number of small entities. Based on its assets. Companies that are subject to the increase the $50 billion asset threshold for the analysis and for the reasons stated application of certain of the enhanced standards. proposed rule therefore substantially See 12 U.S.C. 5365(a)(2)(B). However, neither the below, the Board believes that this Board nor the Council has the authority to lower 201 See 12 U.S.C. 5365 and 5366. such threshold. 200 5 U.S.C. 601 et seq. 202 13 CFR 121.201. 204 See 76 FR 4555 (January 26, 2011).

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of Governors of the Federal Reserve Subpart G—Company-Run Stress Test organizations. Except with respect to System proposes to add the text of the Requirements the liquidity requirements in subpart C, rule as set forth at the end of the 252.141 Applicability. the risk management requirements of SUPPLEMENTARY INFORMATION as part 252 252.142 Definitions. subpart E, and the debt-to-equity limits to 12 CFR chapter II as follows: 252.143 Annual stress test. in subpart H, the requirements of this 252.144 Additional stress test for covered part will not apply to any bank holding PART 252—ENHANCED PRUDENTIAL companies. company subsidiary of a foreign banking STANDARDS (REGULATION YY) 252.145 Methodologies and practices. 252.146 Required report to the Board of organization that is currently relying on 1. The authority citation for part 252 stress test results and related Supervision and Regulation Letter SR shall read as follows: information. 01–01 issued by the Board (as in effect 252.147 Post-assessment actions by on May 19, 2010) until July 21, 2015. Authority: 12 U.S.C. 321–338a, 1467a(g), covered companies. (d) Reservation of authority. (1) In 1818, 1831p–1, 1844(b), 5365, 5366. 252.148 Publication of results by covered general. If the Board determines that 2. Part 252 is added to read as follows: companies and over $10 billion compliance with the requirements of companies. this part does not sufficiently mitigate PART 252—ENHANCED PRUDENTIAL Subpart H—Debt-to-Equity Limits for the risks to U.S. financial stability posed STANDARDS Certain Covered Companies by the failure or material financial Subpart A—General Provisions 252.151 Definitions. distress of a covered company, the 252.152 Debt-to-equity ratio limitation. Board may require the covered company Sec. 252.1 Authority, purpose, applicability, and Subpart I—Early Remediation Framework to be subject to additional or further reservation of authority. enhanced prudential standards, 252.161 Definitions. including, but not limited to, additional 252.2 through 252.9 [Reserved] 252.162 Remediation Actions. 252.163 Remediation triggering events. capital or liquidity requirements, limits Subpart B—Risk-Based Capital on exposures to single-counterparties, Requirements and Leverage Limits 252.164 Notice and remedies. risk management requirements, stress 252.11 Applicability. Subpart A—General Provisions tests, or other requirements or 252.12 Definitions. restrictions the Board deems necessary 252.13 Enhanced risk-based capital and § 252.1 Authority, purpose, applicability, to carry out the purposes of this subpart leverage requirements. and reservation of authority. or Title I of the Dodd-Frank Act. 252.14 Nonbank covered companies: (a) Authority. This part is issued by reporting and enforcement. (2) Other supervisory authority. the Board of Governors of the Federal Nothing in this part limits the authority Subpart C—Liquidity Requirements Reserve System (the Board) under of the Board under any other provision 252.51 Definitions. sections 165 and 166 of Title I of the of law or regulation to take supervisory 252.52 Board of directors and risk Dodd-Frank Wall Street Reform and or enforcement action, including action committee responsibilities. Consumer Protection Act of 2010 (the to address unsafe and unsound practices 252.53 Senior management responsibilities. Dodd-Frank Act) (Pub. L. 111–203, 124 or conditions, or violations of law or 252.54 Independent review. Stat. 1376, 1423–32, 12 U.S.C. 5365 and 252.55 Cash flow projections. regulation. 252.56 Liquidity stress testing. 5366); section 9 of the Federal Reserve (3) Application of enhanced 252.57 Liquidity buffer. Act (12 U.S.C. 321–338a); section 5(b) of prudential standards to bank holding 252.58 Contingency funding plan. the Bank Holding Company Act of 1956, companies in general. In order to 252.59 Specific limits. as amended (12 U.S.C. 1844(b)); section preserve the safety and soundness of a 252.60 Monitoring. 10(g) of the Home Owners’ Loan Act, as bank holding company and thereby 252.61 Documentation. amended (12 U.S.C. 1467a(g)); and mitigate risks to the stability of the U.S. Subpart D—Single-Counterparty Credit sections 8 and 39 of the Federal Deposit financial system, the Board may Limits Insurance Act (12 U.S.C. 1818(b) and determine that a bank holding company 252.91 Applicability. 1831p–1). that is not a covered company shall be 252.92 Definitions. (b) Purpose. This part implements subject to one or more of the standards 252.93 Credit exposure limit. certain provisions of sections 165 and established under this part based on the 252.94 Gross credit exposure. 166 of the Dodd-Frank Act (12 U.S.C. company’s capital structure, size, 252.95 Net Credit Exposure. 5365 and 5366), which requires the complexity, risk profile, scope of 252.96 Compliance. Board to establish enhanced prudential operations, or financial condition and 252.97 Exemptions. standards for covered companies, as any other risk related factors that the Subpart E—Risk Management defined herein. Board deems appropriate. (c) Applicability. (1) In general. 252.125 Definitions. Except as otherwise provided in this 252.126 Establishment of risk committee Subpart B—Risk-Based Capital and appointment of chief risk officer. part, a covered company is subject to Requirements and Leverage Limits the requirements of this part beginning Subpart F—Supervisory Stress Test on the first day of the fifth quarter § 252.11 Applicability. Requirements following the date on which it became (a) Applicability. A nonbank covered 252.131 Applicability. a covered company. company is subject to the requirements 252.132 Definitions. (2) Initial applicability. Except as of sections 252.13(b)(1) and (2) on the 252.133 Annual analysis conducted by the provided in this part, a company that is later of the effective date of this subpart Board. a covered company on the effective date or 180 days following the date on which 252.134 Data and information required to the Council determined that the be submitted in support of the Board’s of this subpart is subject to the analyses. requirements of this subpart beginning company shall be supervised by the 252.135 Review of the Board’s analysis; on the first day of the fifth quarter Board. A company the Council has publication of summary results. following the effective date. determined shall be supervised by the 252.136 Post-assessment actions by covered (3) U.S. bank holding company Board on a date no less than 180 days companies. subsidiaries of foreign banking before September 30 of a calendar year

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must comply with the requirements of reporting date on which it ceased to be the Board immediately upon sections 252.13(b)(3) from September 30 a covered company. ascertaining that it has failed to meet its of that calendar year and thereafter. (e) Foreign banking organization enhanced risk-based capital and means any foreign bank or company that leverage requirements under section § 252.12 Definitions. is a bank holding company or is treated 252.13(b). For purposes of this subpart: as a bank holding company under (a) Bank holding company is defined section 8(a) of the International Banking Subpart C—Liquidity Requirements as in section 2 of the Bank Holding Act of 1978 (12 U.S.C. 3106(a)). § 252.51 Definitions. Company Act, as amended (12 U.S.C. (f) Nonbank covered company means 1841), and the Board’s Regulation Y (12 any company organized under the laws For purposes of this subpart: CFR part 225). of the United States or any State that the (a) Bank holding company is defined (b) Company means a corporation, Council has determined under section as in section 2 of the Bank Holding partnership, limited liability company, 113 of the Dodd-Frank Act (12 U.S.C. Company Act, as amended (12 U.S.C. depository institution, business trust, 5323) shall be supervised by the Board 1841), and the Board’s Regulation Y (12 special purpose entity, association, or and for which such determination is CFR part 225). (b) Company means a corporation, similar organization. still in effect. partnership, limited liability company, (c) Council means the Financial depository institution, business trust, Stability Oversight Council established § 252.13 Enhanced risk-based capital and leverage requirements. special purpose entity, association, or by section 111 of the Dodd-Frank Act similar organization. (12 U.S.C. 5321). (a) Bank holding companies. A (c) Council means the Financial (d) Covered company means covered company that is a bank holding Stability Oversight Council established (1) Any company organized under the company must comply with, and hold capital commensurate with the by section 111 of the Dodd-Frank Act laws of the United States or any State (12 U.S.C. 5321). that the Council has determined under requirements of any regulations adopted by the Board relating to capital plans (d) Covered company means section 113 of the Dodd-Frank Act (12 (1) Any company organized under the U.S.C. 5323) shall be supervised by the and stress tests. (b) Nonbank covered companies. A laws of the United States or any State Board and for which such determination that the Council has determined under is still in effect (nonbank covered nonbank covered company must: (1) Calculate its minimum risk-based section 113 of the Dodd-Frank Act (12 company). U.S.C. 5323) shall be supervised by the (2) Any bank holding company (other and leverage capital requirements as if it were a bank holding company in Board and for which such determination than a foreign banking organization), is still in effect (nonbank covered that has $50 billion or more in total accordance with any minimum capital requirements established by the Board company). consolidated assets, as determined (2) Any bank holding company (other based on: for bank holding companies, including 12 CFR part 225, appendix A (general than a foreign banking organization), (i) The average of the bank holding risk-based capital rule), 12 CFR part that has $50 billion or more in total company’s total consolidated assets in 225, appendix D (leverage rule), 12 CFR consolidated assets, as determined the four most recent quarters as reported part 225, appendix E (market risk rule), based on: quarterly on the bank holding and 12 CFR part 225, appendix G (i) The average of the bank holding company’s Consolidated Financial (advanced approaches risk-based capital company’s total consolidated assets in Statements for Bank Holding Companies rule); the four most recent quarters as reported (the Federal Reserve’s FR Y–9C (FR Y– (2) Hold capital sufficient to meet (i) quarterly on the bank holding 9C)); or a tier 1 risk based capital ratio of 4 company’s Consolidated Financial (ii) The average of the bank holding percent and a total risk-based capital Statements for Bank Holding Companies company’s total consolidated assets in ratio of 8 percent, as calculated (the Federal Reserve’s FR Y–9C (FR Y– the most recent consecutive quarters as according to the general risk-based 9C)); or reported quarterly on the bank holding capital rules, and (ii) a tier 1 leverage (ii) The average of the bank holding company’s FR Y–9Cs, if the bank ratio of 4 percent as calculated under company’s total consolidated assets in holding company has not filed an FR Y– the leverage rule; 205 and the most recent consecutive quarters as 9C for each of the most recent four (3) Comply with, and hold capital reported quarterly on the bank holding quarters. commensurate with, the requirements of company’s FR Y–9Cs, if the bank (3) Once a covered company meets any regulations adopted by the Board holding company has not filed an FR Y– the requirements described in paragraph relating to capital plans and stress tests 9C for each of the most recent four (2), the company shall remain a covered as if the covered company were a bank quarters. company for purposes of this part holding company, including but not (3) Once a covered company meets unless and until the company has less limited to section 225.8 of the Board’s the requirements described in paragraph than $50 billion in total consolidated Regulation Y (12 CFR 225.8). (2), the company shall remain a covered assets as determined based on each of company for purposes of this subpart the bank holding company’s four most § 252.14 Nonbank covered companies: unless and until the company has less recent FR Y–9Cs. reporting and enforcement. than $50 billion in total consolidated (4) Nothing in paragraph (3) shall (a) Reporting. Each nonbank financial assets as determined based on each of preclude a company from becoming a company must report to the Board on a the bank holding company’s four most covered company pursuant to paragraph quarterly basis its risk-based capital and recent FR Y–9Cs. (2). leverage ratios as calculated under (4) Nothing in paragraph (3) shall (5) A bank holding that has ceased to section 252.13(b). preclude a company from becoming a be a covered company under paragraph (b) Notice of non-compliance. A covered company pursuant to paragraph (3) is not subject to the requirements of nonbank financial company must notify (2). this subpart beginning on the first day (5) A bank holding that has ceased to of the calendar quarter following the 205 12 CFR part 225, appendix D, section II. be a covered company under paragraph

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(3) is not subject to the requirements of determined promptly and a trade can be strategies. In determining the covered this subpart beginning on the first day settled at such a price within a company’s liquidity risk tolerance, the of the calendar quarter following the reasonable time period conforming with board of directors must consider the reporting date on which it ceased to be trade custom. covered company’s capital structure, a covered company. (k) Risk committee means the risk profile, complexity, activities, size, (e) Depository institution has the same enterprise-wide risk committee and other appropriate risk-related meaning as in section 3 of the Federal established by a covered company’s factors. Deposit Insurance Act, 12 U.S.C. board of directors under section 252.126 (ii) The board of directors must 1813(c). of subpart E of this part. review information provided by senior (f) Foreign banking organization (l) Trading position means a position management at least semi-annually to means any foreign bank or company that that is held by a covered company for determine whether the covered is a bank holding company or is treated the purpose of short-term resale or with company is managed in accordance as a bank holding company under the intent of benefitting from actual or with the established liquidity risk section 8(a) of the International Banking expected short-term price movements, tolerance. Act of 1978 (12 U.S.C. 3106(a)). or to lock-in arbitrage profits. (2) Business strategies and products. (g) Highly liquid assets means: (m) Two-way market means a market (i) The risk committee or a designated (1) Cash; with independent bona fide offers to subcommittee thereof must review and (2) Securities issued or guaranteed by buy and sell so that a price reasonably approve the liquidity costs, benefits, the U.S. government, a U.S. government related to the last sales price or current and risks of each significant new agency, or a U.S. government-sponsored bona fide competitive bid and offer business line and each significant new entity; and quotations can be determined within product before the covered company (3) Any other asset that the covered one day and settled at that price within implements the business line or offers company demonstrates to the a reasonable time period conforming the product. In connection with this satisfaction of the Federal Reserve: with trade custom. review, the risk committee or a (i) Has low credit risk and low market (n) Unencumbered means, with designated subcommittee thereof must risk; respect to an asset, that: consider whether the liquidity risk of (ii) Is traded in an active secondary (1) The asset is not pledged, does not the new business line or product under two-way market that has observable secure, collateralize, or provide credit current conditions and under liquidity market prices, committed market enhancement to any transaction, and is stress is within the covered company’s makers, a large number of market not subject to any lien; established liquidity risk tolerance. participants, and a high trading volume; (2) The asset is not designated as a (ii) At least annually, the risk and hedge on a trading position; and committee or designated subcommittee (iii) Is a type of asset that investors (3) There are no legal or contractual thereof must review approved historically have purchased in periods restrictions on the ability of the covered significant business lines and products of financial market distress during company to promptly liquidate, sell, to determine whether each line or which market liquidity is impaired. transfer, or assign the asset. product has created any unanticipated (h) Liquidity means, with respect to a (o) U.S. government agency means an liquidity risk, and to determine whether covered company, the covered agency or instrumentality of the U.S. the liquidity risk of each strategy or company’s capacity to efficiently meet government whose obligations are fully product continues to be within the its expected and unexpected cash flows and explicitly guaranteed as to the covered company’s established liquidity and collateral needs at a reasonable cost timely payment of principal and interest risk tolerance. without adversely affecting the daily by the full faith and credit of the U.S. (3) Contingency funding plan. The operations or the financial condition of government. board of directors must review and the covered company. (p) U.S. government-sponsored entity approve the contingency funding plan (i) Liquidity risk means the risk that means an entity originally established or described in section 252.58 at least a covered company’s financial condition chartered by the U.S. government to annually, and whenever the covered or safety and soundness will be serve public purposes specified by the company materially revises the plan. adversely affected by its inability or U.S. Congress, but whose obligations are (4) Other reviews. (i) At least perceived inability to meet its cash and not explicitly guaranteed by the full quarterly, the risk committee or collateral obligations. faith and credit of the U.S. government. designated subcommittee thereof must: (j) Publicly traded means traded on: (A) Review the cash flow projections (1) Any exchange registered with the § 252.52 Board of directors and risk produced under section 252.55 of this U.S. Securities and Exchange committee responsibilities. subpart that use time periods in excess Commission as a national securities (a) Oversight. The covered company’s of 30-days to ensure that the covered exchange under section 6 of the board of directors (or the risk company’s liquidity risk is within the Securities Exchange Act of 1934 (15 committee) must oversee the covered established liquidity risk tolerance; U.S.C. 78f); or company’s liquidity risk management (B) Review and approve liquidity (2) Any non-U.S.-based securities processes, and must review and approve stress testing described in section exchange that: the liquidity risk management strategies, 252.56 of this subpart, including stress (i) Is registered with, or approved by, policies, and procedures established by testing practices, methodologies, and a national securities regulatory senior management. assumptions. The risk committee or authority; and (b) Actions. designated subcommittee thereof must (ii) Provides a liquid, two-way market (1) Liquidity risk tolerance. (i) The also review and approve liquidity stress for the instrument in question, meaning board of directors must establish the testing whenever the covered company that there are enough independent bona covered company’s liquidity risk materially revises its liquidity stress fide offers to buy and sell so that a sales tolerance at least annually. The liquidity testing; price reasonably related to the last sales risk tolerance is the acceptable level of (C) Review liquidity stress testing price or current bona fide competitive liquidity risk the covered company may results produced under section 252.56 bid and offer quotations can be assume in connection with its operating of this subpart;

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(D) Approve the size and composition covered company’s liquidity risk scenarios on the covered company’s of the liquidity buffer established under management processes; cash flow and liquidity. The covered section 252.57 of this subpart; (2) Assess whether the covered company must use the results of stress (E) Review and approve the specific company’s liquidity risk management testing to determine the size of its limits established under section 252.59 complies with applicable laws, liquidity buffer under section 252.57 of of this subpart and review the covered regulations, supervisory guidance, and this subpart, and must incorporate the company’s compliance with those sound business practices; and information generated by stress testing limits; and (3) Report statutory and regulatory in the quantitative component of the (F) Review liquidity risk management noncompliance and other material contingency funding plan under section information necessary to identify, liquidity risk management issues to the 252.58(b) of this subpart. measure, monitor, and control liquidity board of directors or the risk committee (2) The covered company must risk and to comply with this subpart. in writing for corrective action. conduct stress testing in accordance (ii) The risk committee or designated with the requirements of this section at subcommittee thereof must periodically § 252.55 Cash flow projections. least monthly. The covered company review the independent validation of (a) Requirement. The covered must be able to perform stress testing the liquidity stress tests produced under company must produce comprehensive more frequently and to vary underlying section 252.56(c)(2)(ii) of this subpart. cash flow projections in accordance assumptions as conditions change or as (iii) The risk committee or designated with the requirements of this section. required by the Federal Reserve due to subcommittee thereof must establish The covered company must update deterioration in the company’s financial procedures governing the content of short-term cash flow projections daily condition, market conditions, or to senior management reports on the and must update long-term cash flow address other supervisory concerns. liquidity risk profile of the covered projections at least monthly. (b) Stress testing requirements. company and other information (b) Methodology. The covered (1) Stress scenarios. (i) Stress testing described at section 252.53(b) of this company must establish a robust must incorporate a range of stress subpart. methodology for making cash flow scenarios that may significantly impact (c) Frequency of reviews. Paragraph projections. The methodology must the covered company’s liquidity, taking (b) of this section establishes minimum include reasonable assumptions into consideration the covered requirements for the frequency of regarding the future behavior of assets, company’s balance sheet exposures, off- certain reviews and approvals. The liabilities, and off-balance sheet balance sheet exposures, business lines, board of directors (or the risk exposures. organizational structure, and other committee) must conduct more frequent (c) Cash flow projections. The covered characteristics. reviews and approvals as market and company must produce comprehensive (ii) At a minimum, stress testing must idiosyncratic conditions warrant. cash flow projections that: incorporate separate stress scenarios to (1) Project cash flows arising from account for market stress, idiosyncratic § 252.53 Senior management assets, liabilities, and off-balance sheet stress, and combined market and responsibilities. exposures over short-term and long-term idiosyncratic stresses. (a) Senior management of a covered periods that are appropriate to the (iii) The stress scenarios must address company must establish and implement covered company’s capital structure, the potential impact of market strategies, policies, and procedures for risk profile, complexity, activities, size, disruptions on the covered company managing liquidity risk. This includes and other risk related factors; and must address the potential actions overseeing the development and (2) Identify and quantify discrete and of other market participants implementation of liquidity risk cumulative cash flow mismatches over experiencing liquidity stresses under measurement and reporting systems, these time periods; the same market disruptions. cash flow projections, liquidity stress (3) Include cash flows arising from (iv) The stress scenarios must be testing, liquidity buffer, contingency contractual maturities, as well as cash forward-looking and must incorporate a funding plan, specific limits, and flows from new business, funding range of potential changes in a covered monitoring procedures required under renewals, customer options, and other company’s activities, exposures, and this subpart. potential events that may impact risks, as well as changes to the broader (b) Senior management must regularly liquidity; and economic and financial environment. report to the risk committee or (4) Provide sufficient detail to reflect (v) The stress scenarios must use a designated subcommittee thereof on the the covered company’s capital structure, variety of time horizons. At a minimum, liquidity risk profile of the covered risk profile, complexity, activities, size, these time horizons must include an company and must provide other and any other risk related factors that overnight time horizon, a 30-day time relevant and necessary information to are appropriate. Such detail may horizon, 90-day time horizon, and a the board of directors (or risk include cash flow projections broken one-year time horizon. committee) to facilitate its oversight of down by business line, legal entity, or (2) Stress testing must the liquidity risk management process. jurisdiction, and cash flow projections comprehensively address the covered that use more time periods than the company’s activities, exposures, and § 252.54 Independent review. minimum required under paragraph risks, including off-balance sheet (a) The covered company must (c)(1) of this section. exposures. establish and maintain a review (3) Stress testing must be tailored to, function, independent of management § 252.56 Liquidity stress testing. and provide sufficient detail to reflect, functions that execute funding, to (a) Requirement. (1) The covered the covered company’s capital structure, evaluate its liquidity risk management. company must regularly stress test its risk profile, complexity, activities, size, (b) The independent review function cash flow projections in accordance and any other risk related factors that must: with the requirements of this section. are appropriate. This may require (1) Regularly, but no less frequently Stress test analysis consists of analyses by business line, legal entity, than annually, review and evaluate the identifying liquidity stress scenarios or jurisdiction, and stress scenarios that adequacy and effectiveness of the and assessing the effects of these use more time horizons than the

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minimum required under paragraph liquidity stress testing under section company will use to respond to (b)(1)(v) of this section. 252.56 of this subpart, and must align liquidity shortfalls for identified (4) A covered company must the size of the buffer to the covered liquidity stress events, including the incorporate the following assumptions company’s capital structure, risk profile, methods that the covered company will in its stress testing: complexity, activities, size, and any use to access alternative funding (i) For the first 30 days of a liquidity other risk related factors that are sources; stress scenario, only highly liquid assets appropriate, and established liquidity (ii) Identify a liquidity stress event that are unencumbered may be used as risk tolerance. management team; cash flow sources to offset projected (c) In computing the amount of an (iii) Specify the process, funding needs. asset included in the liquidity buffer, responsibilities, and triggers for (ii) For time periods beyond the first the covered company must discount the invoking the contingency funding plan, 30 days of a liquidity stress scenario, fair market value of the asset to reflect escalating the responses described in highly liquid assets that are any credit risk and market volatility of the action plan, decision-making during unencumbered and other appropriate the asset. the identified liquidity stress events, funding sources may be used as cash (d) The pool of unencumbered highly and executing contingency measures flow sources to offset projected funding liquid assets included in the liquidity identified in the action plan; and needs. buffer must be sufficiently diversified. (iv) Provide a mechanism that ensures (iii) If an asset is used as a cash flow § 252.58 Contingency funding plan. effective reporting and communication source to offset projected funding needs, within the covered company and with (a) Contingency funding plan. The the fair market value of the asset must outside parties, including the Federal covered company must establish and be discounted to reflect any credit risk Reserve and other relevant supervisors, maintain a contingency funding plan and market volatility of the asset. counterparties, and other stakeholders. that sets out the covered company’s (iv) Throughout each stress test time (3) Monitoring. The contingency strategies for addressing liquidity needs horizon, assets used as sources of funding plan must include procedures during liquidity stress events. The funding must be sufficiently diversified. for monitoring emerging liquidity stress (c) Process and systems requirements. contingency funding plan must be events. The procedures must identify (1) The covered company must establish commensurate with the covered early warning indicators that are and maintain policies and procedures company’s capital structure, risk profile, tailored to the covered company’s that outline its liquidity stress testing complexity, activities, size, and any capital structure, risk profile, practices, methodologies and other risk related factors that are complexity, activities, size, and other assumptions, detail the use of each appropriate, and established liquidity appropriate risk related factors. stress test employed, and provide for the risk tolerance. The covered company (4) Testing. The covered company enhancement of stress testing practices must update the contingency funding must periodically test the components as risks change and as techniques plan at least annually, and must update of the contingency funding plan to evolve. the plan when changes to market and assess the plan’s reliability during (2) The covered company must have idiosyncratic conditions warrant an liquidity stress events. an effective system of control and update. oversight over the stress test function to (b) Components of the contingency (i) The covered company must test the ensure that: funding plan. The contingency funding operational elements of the contingency (i) Each stress test is designed in plan must include the following funding plan to ensure that the plan accordance with the requirements of components: functions as intended. These tests must this section; and (1) Quantitative Assessment. The include operational simulations to test (ii) The stress process and contingency funding plan must communications, coordination, and assumptions are validated. The incorporate information generated by decision-making involving relevant validation function must be liquidity stress testing described in managers, including managers at independent of functions that develop section 252.56. The stress tests are used relevant legal entities within the or design the liquidity stress testing, and to: corporate structure. independent of management functions (i) Identify liquidity stress events that (ii) The covered company must that execute funding. have a significant impact on the covered periodically test the methods it will use (3) The covered company must company’s liquidity; to access alternative funding sources to maintain management information (ii) Assess the level and nature of determine whether these funding systems and data processes sufficient to impact on the covered company’s sources will be readily available when enable it to effectively and reliably liquidity that may occur during needed. identified liquidity stress events; collect, sort, and aggregate data and § 252.59 Specific limits. other information related to liquidity (iii) Assess available funding sources stress testing. and needs during the identified (a) Required limits. The covered liquidity stress events; and company must establish and maintain § 252.57 Liquidity buffer. (iv) Identify alternative funding limits on potential sources of liquidity (a) A covered company must maintain sources that may be used during the risk including the following: a liquidity buffer of highly liquid assets liquidity stress events. (1) Concentrations of funding by that are unencumbered. The liquidity (2) Event management process. The instrument type, single counterparty, buffer must be sufficient to meet contingency funding plan must include counterparty type, secured and projected net cash outflows and the an event management process that sets unsecured funding, and other liquidity projected loss or impairment of existing out the covered company’s procedures risk identifiers; funding sources for 30 days over a range for managing liquidity during identified (2) The amount of specified liabilities of liquidity stress scenarios. liquidity stress events. This process that mature within various time (b) The covered company must must: horizons; and determine the size of its liquidity buffer (i) Include an action plan that clearly (3) Off-balance sheet exposures and requirement using the results of its describes the strategies the covered other exposures that could create

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funding needs during liquidity stress company can meet these obligations as standards (IFRS), or such other events. expected; accounting standards that a company (b) Size of limits. The size of each (4) Settle less critical obligations as uses in the ordinary course of its limit described in paragraph (a) of this soon as possible; business in preparing its consolidated section must reflect the covered (5) Control the issuance of credit to financial statements. company’s capital structure, risk profile, customers where necessary; and (e) Bank eligible investments means complexity, activities, size, other (6) Consider the amounts of collateral investment securities that a national appropriate risk related factors, and and liquidity needed to meet payment bank is permitted to purchase, sell, deal established liquidity risk tolerance. systems obligations when assessing the in, underwrite, and hold under 12 covered company’s overall liquidity U.S.C. 24 (Seventh) and 12 CFR part 1. § 252.60 Monitoring. needs. (f) Bank holding company is defined (a) Collateral monitoring (d) Monitoring of limits. The covered as in section 2 of the Bank Holding requirements. The covered company company must monitor its compliance Company Act, as amended (12 U.S.C. must establish and maintain procedures with all limits established and 1841), and the Board’s Regulation Y (12 for monitoring assets that it has pledged maintained under section 252.59 of this CFR part 225). as collateral for an obligation or subpart. (g) Capital stock and surplus means position, and assets that are available to with respect to a bank holding be pledged. These procedures must § 252.61 Documentation. company, the sum of the following address the covered company’s ability The covered company must amounts in each case as reported by the to: adequately document all material bank holding company on the most (1) Calculate all of the covered aspects of its liquidity risk management recent FR Y–9C report, or with respect company’s collateral positions in a processes and its compliance with the to a nonbank covered company, on the timely manner, including: (i) the value requirements of this subpart and submit most recent regulatory report required of assets pledged relative to the amount all such documentation to the risk by the Board: of security required under the contract committee. (1) The company’s total capital, as governing the obligation for which the calculated under the capital adequacy collateral was pledged; and (ii) Subpart D—Single-Counterparty Credit guidelines applicable to that bank unencumbered assets available to be Limits holding company under Regulation Y pledged; (12 CFR part 225) or nonbank covered § 252.91 Applicability. (2) Monitor the levels of available company under this subpart; and collateral by legal entity, jurisdiction, (a) Applicability. (1) In general. (2) The balance of the allowance for and currency exposure; Except as otherwise provided in this loan and lease losses of the bank (3) Monitor shifts between intraday, subpart, a covered company is subject to holding company or nonbank covered overnight, and term pledging of the requirements of this subpart company not included in tier 2 capital collateral; and beginning on the first day of the fifth under the capital adequacy guidelines (4) Track operational and timing quarter following the date on which it applicable to that bank holding requirements associated with accessing became a covered company. company under Regulation Y (12 CFR collateral at its physical location (for (2) Initial applicability. A company part 225) or that nonbank covered example, the custodian or securities that is a covered company on the company under this subpart. settlement system that holds the effective date of this subpart will be (h) Company means a corporation, collateral). subject to the requirements of this partnership, limited liability company, (b) Legal entities, currencies and subpart beginning on October 1, 2013. A depository institution, business trust, business lines. company that becomes a covered special purpose entity, association, or (1) The covered company must company after the effective date of this similar organization. establish and maintain procedures for part and before September 30, 2012 will (i) Control. A company controls monitoring and controlling liquidity be subject to the requirements of this another company if it (1) owns, controls, risk exposures and funding needs subpart beginning on October 1, 2013. or holds with power to vote 25 percent within and across significant legal or more of a class of voting securities of § 252.92 Definitions. entities, currencies, and business lines. the company; (2) owns or controls 25 (2) The covered company must For purposes of this subpart: percent or more of the total equity of the maintain sufficient liquidity with (a) Adjusted market value means, company; or (3) consolidates the respect to each significant legal entity in with respect to any eligible collateral, company for financial reporting light of legal and regulatory restrictions the fair market value of the eligible purposes. on the transfer of liquidity between legal collateral after application of the (j) Council means the Financial entities. applicable haircut specified in Table 2 Stability Oversight Council established (c) Intraday liquidity positions. The of this subpart for that type of eligible by section 111 of the Dodd-Frank Act covered company must establish and collateral. (12 U.S.C. 5321). maintain procedures for monitoring (b) Affiliate means, with respect to a (k) Counterparty means intraday liquidity risk exposure. These company, any company that controls, is (1) With respect to a natural person, procedures must address how the controlled by, or is under common the person, and members of the person’s covered company will: control with, the company. immediate family; (1) Monitor and measure expected (c) Aggregate net credit exposure (2) With respect to a company, the daily gross liquidity inflows and means the sum of all net credit company and all of its subsidiaries, outflows; exposures of a covered company to a collectively; (2) Manage and transfer collateral single counterparty. (3) With respect to the United States, when necessary to obtain intraday (d) Applicable accounting standards the United States and all of its agencies credit; means U.S. generally applicable and instrumentalities (but not including (3) Identify and prioritize time- accounting principles (GAAP), any State or political subdivision of a specific obligations so that the covered international financial reporting State) collectively;

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(4) With respect to a State, the State advised or other uncommitted lines of and has been confirmed by the and all of its agencies, instrumentalities, credit; protection purchaser and the protection and political subdivisions (including (2) Any repurchase or reverse provider; any municipalities) collectively; and repurchase agreement with the (2) Any assignment of the derivative (5) With respect to a foreign sovereign counterparty; contract has been confirmed by all entity, the foreign sovereign entity and (3) Any securities lending or relevant parties; all of its agencies, instrumentalities, and securities borrowing transaction with (3) If the credit derivative is a credit political subdivisions, collectively; the counterparty; default swap, the derivative contract (l) Covered company means: (4) Any guarantee, acceptance, or includes the following credit events: (1) Any company organized under the letter of credit (including any confirmed (i) Failure to pay any amount due laws of the United States or any State letter of credit or standby letter of under the terms of the reference that the Council has determined under credit) issued on behalf of the exposure, subject to any applicable section 113 of the Dodd-Frank Act (12 counterparty; minimal payment threshold that is U.S.C. 5323) shall be supervised by the (5) Any purchase of, or investment in, consistent with standard market Board and for which such determination securities issued by the counterparty; practice and with a grace period that is is still in effect (nonbank covered (6) Any credit exposure to the closely in line with the grace period of company); and counterparty in connection with a the reference exposure; and (2) Any bank holding company (other derivative transaction between the (ii) Bankruptcy, insolvency, or than a foreign banking organization), covered company and the counterparty; inability of the obligor on the reference that has $50 billion or more in total (7) Any credit exposure to the exposure to pay its debts, or its failure consolidated assets, as determined counterparty in connection with a credit or admission in writing of its inability based on: derivative or equity derivative generally to pay its debts as they (i) The average of the bank holding transaction between the covered become due and similar events; company’s total consolidated assets in company and a third party, the (4) The terms and conditions dictating the four most recent quarters as reported reference asset of which is an obligation the manner in which the derivative quarterly on the bank holding or equity security of the counterparty; contract is to be settled are incorporated company’s Consolidated Financial and into the contract; Statements for Bank Holding Companies (8) Any transaction that is the (5) If the derivative contract allows for (the Federal Reserve’s FR Y–9C (FR Y– functional equivalent of the above, and cash settlement, the contract 9C)); or any similar transaction that the Board incorporates a robust valuation process (ii) The average of the bank holding determines to be a credit transaction for to estimate loss with respect to the company’s total consolidated assets in purposes of this subpart. derivative reliably and specifies a (o) Depository institution has the same the most recent consecutive quarters as reasonable period for obtaining post- meaning as in section 3 of the Federal reported quarterly on the bank holding credit event valuations of the reference Deposit Insurance Act, 12 U.S.C. company’s FR Y–9Cs, if the bank exposure; 1813(c). (6) If the derivative contract requires holding company has not filed an FR Y– (p) Derivative transaction means any 9C for each of the most recent four transaction that is a contract, agreement, the protection purchaser to transfer an quarters. swap, warrant, note, or option that is exposure to the protection provider at (3) Once a covered company meets based, in whole or in part, on the value settlement, the terms of at least one of the requirements described in paragraph of, any interest in, or any quantitative the exposures that is permitted to be (2), the company shall remain a covered measure or the occurrence of any event transferred under the contract provides company for purposes of this subpart relating to, one or more commodities, that any required consent to transfer unless and until the company has less securities, currencies, interest or other may not be unreasonably withheld; and than $50 billion in total consolidated rates, indices, or other assets. (7) If the credit derivative is a credit assets as determined based on each of (q) Eligible collateral means collateral default swap, the derivative contract the bank holding company’s four most in which the covered company has a clearly identifies the parties responsible recent FR Y–9Cs. perfected, first priority security interest for determining whether a credit event (4) Nothing in paragraph (3) shall or, outside of the United States, the legal has occurred, specifies that this preclude a company from becoming a equivalent thereof (with the exception determination is not the sole covered company pursuant to paragraph of cash on deposit and notwithstanding responsibility of the protection (2). the prior security interest of any provider, and gives the protection (5) A bank holding that has ceased to custodial agent) and is in the form of: purchaser the right to notify the be a covered company under paragraph (1) Cash on deposit with the covered protection provider of the occurrence of (3) is not subject to the requirements of company (including cash held for the a credit event. this subpart beginning on the first day covered company by a third-party (s) Eligible equity derivative means an of the calendar quarter following the custodian or trustee); equity-linked total return swap, reporting date on which it ceased to be (2) Debt securities (other than provided that: a covered company. mortgage- or asset-backed securities) (1) The derivative contract has been (m) Credit derivative means a that are bank eligible investments; confirmed by the counterparties; financial contract that allows one party (3) Equity securities that are publicly (2) Any assignment of the derivative (the protection purchaser) to transfer the traded; or contract has been confirmed by all credit risk of one or more exposures (4) Convertible bonds that are relevant parties; and (reference exposure) to another party publicly traded. (3) The terms and conditions dictating (the protection provider). (r) Eligible credit derivative means a the manner in which the derivative (n) Credit transaction means, with single-name credit derivative or a contract is to be settled are incorporated respect to a counterparty: standard, non-tranched index credit into the contract. (1) Any extension of credit to the derivative provided that: (t) Eligible guarantee means a counterparty, including loans, deposits, (1) The derivative contract meets the guarantee from an eligible protection and lines of credit, but excluding requirements of an eligible guarantee provider that:

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(1) Is written and is either (w) Foreign banking organization (2) Any non-U.S.-based securities unconditional or the enforceability of means any foreign bank or company that exchange that: the guarantee is contingent only to the is a bank holding company or is treated (i) Is registered with, or approved by, extent it is dependent upon affirmative as a bank holding company under a national securities regulatory action on the part of the beneficiary of section 8(a) of the International Banking authority; and the guarantee or a third party (for Act of 1978 (12 U.S.C. 3106(a)). (ii) Provides a liquid, two-way market example, servicing requirements); (x) Gross credit exposure means, with for the instrument in question, meaning (2) Covers all or a pro rata portion of respect to any credit transaction, the that there are enough independent bona all contractual payments of the obligor credit exposure of the covered company fide offers to buy and sell so that a sales on the reference entity; before adjusting for the effect of price reasonably related to the last sales (3) Gives the beneficiary a direct qualifying master netting agreements, price or current bona fide competitive claim against the protection provider; eligible collateral, eligible guarantees, bid and offer quotations can be (4) Is not unilaterally cancelable by eligible credit derivatives and eligible determined promptly and a trade can be the guarantor for reasons other than the equity derivatives. settled at such a price within a breach of the contract by the (y) Immediate family means the reasonable time period conforming with beneficiary; spouse of an individual, the individual’s trade custom. (5) Is legally enforceable against the minor children, and any of the (ee) Qualifying central counterparty guarantor in a jurisdiction where the individual’s children (including adults) means an entity that guarantor has sufficient assets against residing in the individual’s home. (1) Facilitates trades between which a judgment may be attached and (z) Major counterparty is any counterparties in one or more financial enforced; (6) Requires the guarantor to make (1) Major covered company and all of markets by either guaranteeing trades or payment to the beneficiary on the its subsidiaries, collectively; and novating contracts; occurrence of a default (as defined in (2) Any foreign banking organization (2) Requires all participants in its the guarantee) of the obligor on the (and all of its subsidiaries, collectively) arrangements to be fully collateralized reference entity in a timely manner that has total consolidated assets equal on a daily basis; and without the beneficiary first having to to or greater than $500 billion (3) Is subject to effective oversight by take legal actions to pursue the obligor determined based on the foreign a national supervisory authority. for payment; and banking organization’s total (ff) Qualifying master netting (7) Does not increase the beneficiary’s consolidated assets in the most recent agreement means a legally enforceable cost of credit protection on the year, for annual filers, or the average of bilateral agreement such that: guarantee in response to deterioration in the four most recent quarters, for (1) The agreement creates a single the credit quality of the reference entity. quarterly filers, as reported on the legal obligation for all individual (u) Eligible protection provider means: foreign banking organization’s Capital transactions covered by the agreement (1) A sovereign entity; and Asset Reports for Foreign Banking upon an event of default, including (2) The Bank for International Organizations (Federal Reserve Form FR bankruptcy, insolvency, or similar Settlements, the International Monetary Y–7Q). proceeding of the counterparty; Fund, the European Central Bank, the (aa) Major covered company is any (2) The agreement provides the European Commission, or a multilateral (1) Covered company that is a bank covered company the right to accelerate, development bank; holding company and that has total terminate, and close-out on a net basis (3) A Federal Home Loan Bank; consolidated assets equal to or greater all transactions under the agreement (4) The Federal Agricultural Mortgage than $500 billion determined based on and to liquidate or set off collateral Corporation; the average of the bank holding promptly upon an event of default, (5) A depository institution; company’s total consolidated assets in including upon event of bankruptcy, (6) A bank holding company; the four most recent quarters as reported insolvency, or similar proceeding, of the (7) A savings and loan holding quarterly on the bank holding counterparty, provided that, in any such company (as defined in 12 U.S.C. company’s FR Y–9C; and case, any exercise of rights under the 1467a); (8) A securities broker or dealer (2) Nonbank covered company. agreement will not be stayed or avoided registered with the SEC under the (bb) Net credit exposure means, with under applicable law in the relevant Securities Exchange Act of 1934 (15 respect to any credit transaction, the jurisdiction; U.S.C. 78o et seq.); gross credit exposure of a covered (3) The covered company has (9) An insurance company that is company calculated under section conducted sufficient legal review to subject to the supervision by a State 252.94, as adjusted in accordance with conclude with a well-founded basis insurance regulator; section 252.95. (and has maintained sufficient written (10) A foreign banking organization; (cc) Nonbank covered company documentation of that legal review) that (11) A non-U.S.-based securities firm means any company organized under the agreement meeting the requirements or a non-U.S.-based insurance company the laws of the United States or any of paragraph (2) of this definition and that is subject to consolidated State that the Council has determined that in the event of a legal challenge supervision and regulation comparable under section 113 of the Dodd-Frank (including one resulting from default or to that imposed on U.S. depository Act (12 U.S.C. 5323) shall be supervised from bankruptcy, insolvency or similar institutions, securities broker-dealers, or by the Board and for which such proceeding) the relevant court and insurance companies; and determination is still in effect. administrative authorities would find (12) A qualifying central counterparty. (dd) Publicly traded means traded on: the agreement to be legal, valid, binding, (v) Equity derivative means an equity- (1) Any exchange registered with the and enforceable under the law of the linked swap, purchased equity-linked U.S. Securities and Exchange relevant jurisdiction; option, forward equity-linked contract, Commission as a national securities (4) The covered company establishes or any other instrument linked to exchange under section 6 of the and maintains procedures to monitor equities that gives rise to similar Securities Exchange Act of 1934 (15 possible changes in relevant law and to counterparty credit risks. U.S.C. 78f); or ensure that the agreement continues to

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satisfy the requirements of this the consolidated capital stock and (i) The market value of securities lent definition; and surplus of the major covered company. by the covered company to the (5) The agreement does not contain a counterparty; plus § 252.94 Gross credit exposure. walkaway clause (that is, a provision (ii) The amount in paragraph (7)(i) that permits a non-defaulting (a) Calculation of gross credit multiplied by the collateral haircut in counterparty to make lower payments exposure. Under this subpart, exposures Table 2 applicable to the securities lent than it would make otherwise under the of a covered company to a counterparty by the covered company to the agreement, or no payment at all, to a include the exposures of its subsidiaries counterparty. defaulter or the estate of a defaulter, to the counterparty. The amount of gross credit exposure of a covered company to (8) Committed credit lines extended even if the defaulter is a net creditor by a covered company to a counterparty, 206 a counterparty with respect to credit under the agreement). equal to the face amount of the credit (gg) Short sale means any sale of a transactions is, in the case of: (1) Loans by a covered company to the line. security which the seller does not own (9) Guarantees and letters of credit or any sale which is consummated by counterparty and leases in which the covered company is the lessor and the issued by a covered company on behalf the delivery of a security borrowed by, of a counterparty, equal to the lesser of or for the account of, the seller. counterparty is the lessee, equal to the amount owed by the counterparty to the the face amount or the maximum (hh) Sovereign entity means a central potential loss to the covered company government (including the U.S. covered company under the transaction. (2) Debt securities held by the covered on the transaction. government) or an agency, department, company that are issued by the (10) Derivative transactions between ministry, or central bank. counterparty, equal to: the covered company and the (ii) State means any State, territory or (i) The greater of the amortized counterparty not subject to a qualifying possession of the United States, and the purchase price or market value, for master netting agreement, in an amount District of Columbia. trading and available for sale securities, equal to the sum of (i) the current (jj) Subsidiary of a specified company and exposure of the derivatives contract means a company that is directly or (ii) The amortized purchase price, for equal to the greater of the mark-to- indirectly controlled by the specified securities held to maturity. market value of the derivative contract company. (3) Equity securities held by the or zero and (ii) the potential future (kk) Total capital means qualifying covered company that are issued by the exposure of the derivatives contract, total capital as defined in 12 CFR part counterparty, equal to the greater of the calculated by multiplying the notional 225, appendix A or total qualifying purchase price or market value. principal amount of the derivative capital as defined in 12 CFR part 225, (4) Repurchase agreements, equal to: contract by the appropriate conversion appendix G, as applicable, or any (i) The market value of securities factor, set forth in Table 1. successor regulation thereto. transferred by the covered company to the counterparty; plus (11) Derivative transactions between § 252.93 Credit exposure limit. (ii) The amount in paragraph (4)(i) the covered company and the (a) General limit on aggregate net multiplied by the collateral haircut in counterparty subject to a qualifying credit exposure. No covered company Table 2 applicable to the securities master netting agreement, in an amount shall, together with its subsidiaries, transferred by the covered company to equal to the exposure at default amount have an aggregate net credit exposure to the counterparty. calculated under 12 CFR part 225, any unaffiliated counterparty that (5) Reverse repurchase agreements, appendix G, § 32(c)(6). exceeds 25 percent of the consolidated equal to the amount of cash transferred (12) Credit or equity derivative capital stock and surplus of the covered by the covered company to the transactions between the covered company. counterparty. company and a third party where the (b) Major covered company limits on (6) Securities borrowing transactions, covered company is the protection aggregate net credit exposure. No major equal to the amount of cash collateral provider and the reference asset is an covered company shall, together with its plus the market value of securities obligation or equity security of the subsidiaries, have aggregate net credit collateral transferred by the covered counterparty, equal to the lesser of the exposure to any unaffiliated company to the counterparty. face amount of the transaction or the counterparty that is a major (7) Securities lending transactions, maximum potential loss to the covered counterparty that exceeds 10 percent of equal to: company on the transaction.

TABLE 1—CONVERSION FACTOR MATRIX FOR OTC DERIVATIVE CONTRACTS 1

Credit (bank- eligible Credit (non- Precious 2 Foreign bank-eligible Remaining maturity Interest rate exchange rate investment reference Equity metals (except Other reference obligor) gold) obligor) 3

One year or less ...... 0.00 0 .01 0.05 0.10 0.06 0.07 0.10 Greater than one year and less than or equal to five years ...... 0.005 0 .05 0.05 0.10 0.08 0.07 0.12

206 The Board considers the following the case of non-corporate entities, and if a branch covered by the agreement; and the jurisdiction that jurisdictions to be relevant for a qualifying master of a counterparty is involved, then also the governs the agreement. netting agreement: The jurisdiction in which the jurisdiction in which the branch is located; the counterparty is chartered or equivalent location in jurisdiction that governs the individual transactions

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TABLE 1—CONVERSION FACTOR MATRIX FOR OTC DERIVATIVE CONTRACTS 1—Continued

Credit (bank- Credit (non- Precious Foreign eligible bank-eligible 2 Equity metals (except Other Remaining maturity Interest rate exchange rate investment reference reference obligor) gold) obligor) 3

Greater than 5 years 0.015 0.075 0.05 0.10 0.10 0.08 0.15 1 For an OTC derivative contract with multiple exchanges of principal, the conversion factor is multiplied by the number of remaining payments in the derivative contract. 2 For an OTC derivative contract that is structured such that on specified dates any outstanding exposure is settled and the terms are reset so that the market value of the contract is zero, the remaining maturity equals the time until the next reset date. For an interest rate derivative con- tract with a remaining maturity of greater than one year that meets these criteria, the minimum conversion factor is 0.005. 3 A company must use the column labeled ‘‘Credit (bank-eligible investment reference obligor)’’ for a credit derivative whose reference obligor has an outstanding unsecured debt security that is a bank eligible investment. A company must use the column labeled ‘‘Credit (non-bank-eligi- ble investment reference obligor)’’ for all other credit derivatives.

(b) Attribution rule. A covered exposure to a counterparty cannot be protection provider that covers the company must treat any of its used to adjust the covered company’s transaction, provided that: transactions with any person as a credit gross credit exposure to any other (1) The covered company includes the exposure to a counterparty to the extent counterparty; and amount of the eligible guarantees when the proceeds of the transaction are used (3) In no event will the covered calculating its gross credit exposure to for the benefit of, or transferred to, that company’s gross credit exposure to the the eligible protection provider; and counterparty. issuer of collateral be in excess of its gross credit exposure to the (2) In no event will the covered § 252.95 Net credit exposure. counterparty on the credit transaction. company’s gross credit exposure to an (a) Calculation of initial net credit (c) Unused portion of certain eligible protection provider with respect exposure for securities financing extensions of credit. (1) In computing its to an eligible guarantee be in excess of transactions. net credit exposure to a counterparty for its gross credit exposure to the (1) Repurchase and reverse a credit line or revolving credit facility, counterparty on the credit transaction repurchase transactions. For repurchase a covered company may reduce its gross prior to recognition of the eligible and reverse repurchase transactions credit exposure by the amount of the guarantee. with a counterparty that are subject to unused portion of the credit extension (e) Eligible credit and equity a bilateral netting agreement with that to the extent that the covered company derivatives. In calculating net credit counterparty, a covered company may does not have any legal obligation to use the net credit exposure associated exposure to a counterparty for a credit advance additional funds under the with the netting agreement. transaction, a covered company must (2) Securities lending and borrowing extension of credit, until the reduce its gross credit exposure to the transactions. For a securities lending counterparty provides the amount of counterparty by the notional amount of and borrowing transactions with a adjusted market value of collateral any eligible credit or equity derivative counterparty that are subject to a required with respect to the entire used from an eligible protection provider that bilateral netting agreement with that portion of the extension of credit. references the counterparty, as counterparty, a covered company may (2) To qualify for this reduction, the applicable, provided that: use the net credit exposure associated credit contract must specify that any (1) The covered company includes the with the netting agreement. used portion of the credit extension face amount of the eligible credit and (b) Market value adjustments. In must be fully secured by collateral that equity derivative when calculating its computing its net credit exposure to a is (i) cash, (ii) obligations of the United gross credit exposure to the eligible counterparty for any credit transaction States or its agencies, or (iii) obligations protection provider; and (including securities financing directly and fully guaranteed as to (2) In no event will the covered transactions), a covered company may principal and interest by, the Federal company’s gross credit exposure to an reduce its gross credit exposure (or as National Mortgage Association and the eligible protection provider with respect applicable, net credit exposure for Federal Home Loan Mortgage to an eligible credit or equity derivative securities financing transactions Corporation, while operating under the be in excess of its gross credit exposure calculated under section 252.95(a)) on conservatorship or receivership of the to the counterparty on the credit the transaction by the adjusted market Federal Housing Finance Agency, and transaction prior to recognition of the value of any eligible collateral, provided any additional obligations issued by a eligible credit or equity derivative. that: U.S. government sponsored entity as (1) The covered company includes the determined by the Board. (f) Other eligible hedges. In adjusted market value of the eligible (d) Eligible guarantees. In calculating calculating net credit exposure to a collateral when calculating its gross net credit exposure to a counterparty for counterparty for a credit transaction, a credit exposure to the issuer of the a credit transaction, a covered company covered company may reduce its gross collateral; must reduce its gross credit exposure to credit exposure to the counterparty by (2) The collateral used to adjust the the counterparty by the amount of any the face amount of a short sale of the covered company’s gross credit eligible guarantees from an eligible counterparty’s debt or equity security.

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TABLE 2—COLLATERAL HAIRCUTS [Sovereign entities]

Residual maturity Haircut without cur- rency mismatch 207

OECD Country Risk Classification 208 0–1 ...... ≤ 1 year ...... 0 .005 >1 year, ≤ 5 years ...... 0 .02 > 5 years ...... 0.04 OECD Country Risk Classification 2–3 ...... ≤ 1 year ...... 0.01 >1 year, ≤ 5 years ...... 0 .03 > 5 years ...... 0.06

CORPORATE AND MUNICIPAL BONDS THAT ARE BANK-ELIGIBLE INVESTMENTS

Haircut without Residual maturity for debt securities currency mis- match

All ...... ≤ 1 year ...... 0.02 All ...... >1 year, ≤ 5 years ...... 0.06 All ...... > 5 years ...... 0.12

OTHER ELIGIBLE COLLATERAL

Main index 209 equities (including convertible bonds) ...... 0.15. Other publicly traded equities (including convertible bonds) ...... 0.25. Mutual funds ...... Highest haircut applicable to any security in which the fund can invest. Cash collateral held ...... 0.

§ 252.96 Compliance. appropriate to preserve the safety and (2) Direct claims on, and the portions (a) Scope of compliance. Acovered soundness of the covered company or of claims that are directly and fully company must comply with the U.S. financial stability. In granting guaranteed as to principal and interest requirements of this section on a daily approval for such a special temporary by, the Federal National Mortgage basis at the end of each business day credit exposure limit, the Board will Association and the Federal Home Loan and submit on a monthly basis a report consider the following: Mortgage Corporation, only while demonstrating its daily compliance. (1) A decrease in the covered operating under the conservatorship or (b) Noncompliance. Except as company’s capital stock and surplus. receivership of the Federal Housing (2) The merger of the covered otherwise provided in this section, if a Finance Agency, and any additional company with another covered covered company is not in compliance obligations issued by a U.S. government company. with this subpart with respect to a sponsored entity as determined by the (3) A merger of two unaffiliated counterparty solely due to the Board. counterparties. (3) Intraday credit exposure to a circumstances specified in this section (4) Any other circumstance the Board 252.96, the covered company will not be counterparty. determines is appropriate. (4) Any transaction that the Board subject to enforcement actions for a The Board may impose supervisory exempts if the Board finds that such period of 90 days (or such other period oversight and reporting measures that it exemption is in the public interest and determined by the Board to be determines are appropriate to monitor is consistent with the purpose of this appropriate to preserve the safety and compliance with the foregoing subsection. soundness of the covered company or standards as set forth in this paragraph. (b) Exemption for Federal Home Loan U.S. financial stability) if the company Banks. For purposes of this subpart, a uses reasonable efforts to return to § 252.97 Exemptions. covered company does not include any compliance with this subpart during (a) Exempted exposure categories. Federal Home Loan Bank. this period. The covered company may The following categories of credit not engage in any additional credit transactions are exempt from the limits Subpart E—Risk Management transactions with such a counterparty in on credit exposure under this subpart: contravention of this rule during the (1) Direct claims on, and the portions § 252.125 Definitions. compliance period, except in cases of claims that are directly and fully For purposes of this subpart: where the Board determines that such guaranteed as to principal and interest (a) Bank holding company is defined credit transactions are necessary or by, the United States and its agencies. as in section 2 of the Bank Holding

207 In cases where the currency denomination of of the OECD’s February 2011 Arrangement on Reserve that the equities represented in the index the collateral differs from the currency Officially Supported Export Credits Arrangement. have comparable liquidity, depth of market, and denomination of the credit transaction, an addition 209 Main index means the Standard & Poor’s 500 size of bid-ask spreads as equities in the Standard 8 percent haircut will apply. Index, the FTSE All-World Index, and any other & Poor’s 500 Index and FTSE All-World Index. 208 OECD Country Risk Classification means the index for which the covered company can country risk classification as defined in Article 25 demonstrate to the satisfaction of the Federal

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Company Act, as amended (12 U.S.C. Deposit Insurance Act, 12 U.S.C. (i) Is registered with, or approved by, 1841), and the Board’s Regulation Y 1813(c). a national securities regulatory (12 CFR part 225). (g) Enterprise-wide risk committee authority; and (b) Chief risk officer means a means a committee of a covered (ii) Provides a liquid, two-way market management official of a covered company’s or over $10 billion bank for the instrument in question, meaning company who fulfills the holding company’s board of directors that there are enough independent bona responsibilities described in section that oversees the risk management fide offers to buy and sell so that a sales 252.126(d) of this subpart. practices of such company’s worldwide price reasonably related to the last sales (c) Company means a corporation, operations. price or current bona fide competitive partnership, limited liability company, (h) Foreign banking organization bid and offer quotations can be depository institution, business trust, means any foreign bank or company that determined promptly and a trade can be special purpose entity, association, or is a bank holding company or is treated settled at such a price within a similar organization. as a bank holding company under reasonable time period conforming with (d) Council means the Financial section 8(a) of the International Banking trade custom. Stability Oversight Council established Act of 1978 (12 U.S.C. 3106(a)). (l) Risk management expertise means by section 111 of the Dodd-Frank Act (1) An understanding of risk (i) Independent director means (12 U.S.C. 5321). management principles and practices (e) Covered company means (1) In the case of a covered company with respect to banking holding (1) Any company organized under the or over $10 billion bank holding companies or depository institutions, or, laws of the United States or any State company that has a class of securities if applicable, nonbank financial that the Council has determined under outstanding that is traded on a national companies, and the ability to assess the section 113 of the Dodd-Frank Act (12 securities exchange, a member of the general application of such principles U.S.C. 5323) shall be supervised by the board such company who: and practices; and Board and for which such determination (i) Is not an officer or employee of the (2) Experience developing and is still in effect (nonbank covered company and has not been an officer or applying risk management practices and company). employee of the company during the procedures, measuring and identifying (2) Any bank holding company (other previous three years; and risks, and monitoring and testing risk than a foreign banking organization), (ii) Is not a member of the immediate controls with respect to banking that has $50 billion or more in total family, as defined in section organizations or, if applicable, nonbank consolidated assets, as determined 225.41(a)(3) of the Board’s Regulation Y financial companies. based on: (12 CFR 225.41(a)(3)), of a person who (m) Over $10 billion bank holding (i) The average of the bank holding is, or has been within the last three company means any bank holding company’s total consolidated assets in years, an executive officer of the company (other than a foreign banking the four most recent quarters as reported company, as defined in section organization) that is not a covered quarterly on the bank holding 215.2(e)(1) of the Board’s Regulation O company, and that: company’s Consolidated Financial (12 CFR 215.2(e)(1)); and (1) Has $10 billion or more in total Statements for Bank Holding Companies (iii) Is an independent director under consolidated assets, as determined (the Federal Reserve’s FR Y–9C (FR Y– Item 407 of the Securities and Exchange based on: 9C)); or Commission’s Regulation S–K, 17 CFR (i) The average of the bank holding (ii) The average of the bank holding 229.407(a). company’s total consolidated assets in company’s total consolidated assets in (2) In the case of a director of a the four most recent quarters as reported the most recent consecutive quarters as covered company or over $10 billion quarterly on the bank holding reported quarterly on the bank holding bank holding company that does not company’s Consolidated Financial company’s FR Y–9Cs, if the bank have a class of securities outstanding Statements for Bank Holding Companies holding company has not filed an FR Y– that is traded on a national securities (the Federal Reserve’s FR Y–9C (FR Y– 9C for each of the most recent four exchange, a member of the board of 9C)); or quarters. directors of such company who: (ii) The average of the bank holding (3) Once a covered company meets (i) Meets the requirements of company’s total consolidated assets in the requirements described in paragraph paragraphs (1)(i) and (ii) of this section; the most recent consecutive quarters as (2), the company shall remain a covered and reported quarterly on the bank holding company for purposes of this subpart company’s FR Y–9Cs, if the bank (ii) The company demonstrates to the unless and until the company has less holding company has not filed an FR Y– satisfaction of the Federal Reserve than $50 billion in total consolidated 9C for each of the most recent four would qualify as an independent assets as determined based on each of quarters. director under the listing standards of a the bank holding company’s four most (2) Once an over $10 billion bank national securities exchange if the recent FR Y–9Cs. holding company meets the (4) Nothing in paragraph (3) shall company were publicly traded on a requirements described in paragraph (1), preclude a company from becoming a national securities exchange. the company shall remain an over $10 covered company pursuant to paragraph (j) National securities exchange billion bank holding company for (2). means any exchange registered with the purposes of this part unless and until (5) A bank holding that has ceased to U.S. Securities and Exchange the company has less than $10 billion be a covered company under paragraph Commission as a national securities in total consolidated assets as (3) is not subject to the requirements of exchange under section 6 of the determined based on each of the bank this subpart beginning on the first day Securities Exchange Act of 1934 (15 holding company’s four most recent FR of the calendar quarter following the U.S.C. 78f). Y–9Cs. reporting date on which it ceased to be (k) Publicly traded means traded on: (3) Nothing in paragraph (2) shall a covered company. (1) A national securities exchange; or preclude a company from becoming an (f) Depository institution has the same (2) Any non-U.S.-based securities over $10 billion bank holding company meaning as in section 3 of the Federal exchange that: pursuant to paragraph (1).

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(4) A bank holding that has ceased to management deficiencies, including covered company no less than 90 days be an over $10 billion bank holding emerging risks, on an enterprise-wide before September 30 of a calendar year company under paragraph (2) is not basis; must comply with the requirements of subject to the requirements of this (4) Monitoring of compliance with the this subpart from September 30 of that subpart beginning on the first day of the company’s risk limit structure and calendar year and thereafter. A company calendar quarter following the reporting policies and procedures relating to risk the Council has determined shall be date on which it ceased to be an over management governance, practices, and supervised by the Board on a date no $10 billion bank holding company. risk controls across the enterprise; less than 180 days before September 30 (5) Effective and timely of a calendar year must comply with the § 252.126 Establishment of risk committee implementation of corrective actions to and appointment of chief risk officer. requirements of this subpart from address risk management deficiencies; September 30 of that calendar year and (a) Risk committee. Each covered (6) Specification of management and thereafter. company and each publicly-traded over employees’ authority and independence (2) Initial applicability. A bank $10 billion bank holding company, shall to carry out risk management holding company that is a covered maintain an enterprise-wide risk responsibilities; and company on the effective date of this committee consisting of members of its (7) Integration of risk management subpart must immediately comply with board of directors, and, for each covered and control objectives in management the requirements, including timing of company, that satisfies the requirements goals and the company’s compensation required submissions to the Board, of of section 252.126(d). structure. this subpart. (b) Structure of risk committee. An (d) Chief risk officer. A covered enterprise-wide risk committee shall: company shall employ a chief risk § 252.132 Definitions. (1) Have a formal, written charter, officer who: For purposes of this subpart: approved by the company’s board of (1) Has risk management expertise (a) Bank holding company is defined directors; that is commensurate with the as in section 2 of the Bank Holding (2) Have at least one member with risk company’s capital structure, risk profile, Company Act, as amended (12 U.S.C. management expertise that is complexity, activities, size, and other 1841), and the Board’s Regulation Y commensurate with the company’s risk-related factors that are appropriate; (12 CFR part 225). capital structure, risk profile, (2) Is appropriately compensated and (b) Company means a corporation, complexity, activities, size, and other incentivized to provide an objective partnership, limited liability company, appropriate risk related factors; assessment of the risks taken by the depository institution, business trust, (3) Be chaired by an independent company; special purpose entity, association, or director; (3) Reports directly to both the risk (4) Meet with an appropriate similar organization. committee and chief executive officer of (c) Council means the Financial frequency and as needed, and fully the company; and document and maintain records of its Stability Oversight Council established (4) Directly oversees the following by section 111 of the Dodd-Frank Act proceedings, including risk management responsibilities on an enterprise-wide decisions; (12 U.S.C. 5321). basis: (d) Covered company means (5) In addition, in the case of a (i) Allocating delegated risk limits and covered company: (1) Any company organized under the monitoring compliance with such laws of the United States or any State (i) Not be housed within another limits; committee or be part of a joint that the Council has determined under (ii) Implementation of and ongoing section 113 of the Dodd-Frank Act (12 committee; compliance with, appropriate policies (ii) Report directly to the covered U.S.C. 5323) shall be supervised by the and procedures relating to risk company’s board of directors; and Board and for which such determination (iii) Receive and review regular management governance, practices, and is still in effect (nonbank covered reports from the covered company’s risk controls and monitoring company). chief risk officer. compliance with such policies and (2) Any bank holding company (other (c) Responsibilities of risk committee. procedures; than a foreign banking organization), A risk committee shall document, (iii) Developing appropriate processes that has $50 billion or more in total review and approve the enterprise-wide and systems for identifying and consolidated assets, as determined risk management practices of the reporting risks and risk-management based on: company. Specifically, the risk deficiencies, including emerging risks, (i) The average of the bank holding committee shall oversee the operation on an enterprise-wide basis; company’s total consolidated assets in (iv) Managing risk exposures and risk of, on an enterprise wide-basis, an the four most recent quarters as reported controls within the parameters of the appropriate risk management framework quarterly on the bank holding company’s risk control framework; and company’s Consolidated Financial commensurate with the company’s (v) Monitoring and testing of the capital structure, risk profile, Statements for Bank Holding Companies company’s risk controls; (the Federal Reserve’s FR Y–9C (FR Y– complexity, activities, size, and other (vi) Reporting risk management 9C)); or appropriate risk-related factors. A deficiencies and emerging risks to the (ii) The average of the bank holding company’s risk management framework enterprise-wide risk committee; and company’s total consolidated assets in shall include: (vii) Ensuring that risk management the most recent consecutive quarters as (1) Risk limitations appropriate to deficiencies are effectively resolved in a reported quarterly on the bank holding each business line of the company; timely manner. (2) Appropriate policies and company’s FR Y–9Cs, if the bank procedures relating to risk management Subpart F—Supervisory Stress Test holding company has not filed an FR Y– governance, risk management practices, Requirements 9C for each of the most recent four and risk control infrastructure for the quarters. enterprise as a whole; § 252.131 Applicability. (3) Once a covered company meets (3) Processes and systems for (a) Applicability. (1) In general. A the requirements described in paragraph identifying and reporting risks and risk- bank holding company that becomes a (2), the company shall remain a covered

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company for purposes of this subpart annual basis, conduct an analysis of the (b) Additional submissions required unless and until the company has less capital, on a total consolidated basis and by the Board. The Board may require a than $50 billion in total consolidated taking into account all relevant covered company to submit any other assets as determined based on each of exposures and activities of each covered information on a consolidated basis the the bank holding company’s four most company to evaluate the ability of the Board deems necessary in order to: recent FR Y–9Cs. covered company to absorb losses in (1) Ensure that the Board has (4) Nothing in paragraph (3) shall adverse economic and financial sufficient information to conduct its preclude a company from becoming a conditions. The analysis will include analysis under this subpart; and covered company pursuant to paragraph the projected net income, losses, and (2) Derive robust projections of a (2). pro forma, post-stress capital levels and company’s losses, pre-provision net (5) A bank holding that has ceased to ratios for the covered company and use revenue, allowance for loan losses, and be a covered company under paragraph the analytical techniques that the Board future pro forma capital positions under (3) is not subject to the requirements of determines are appropriate to identify, the baseline, adverse, and severely this subpart beginning on the first day measure, and monitor risks of the adverse scenarios, or other such of the calendar quarter following the covered company and to the financial conditions as determined appropriate by reporting date on which it ceased to be stability of the United States. the Board. a covered company. (b) Economic and financial scenarios (c) Confidential treatment of (e) Depository institution has the same related to analyses. The Board will information submitted. The meaning as in section 3 of the Federal conduct its analysis under section confidentiality of information submitted Deposit Insurance Act, 12 U.S.C. 252.133(a) using a minimum of three to the Board under this subpart and 1813(c). different sets of economic and financial related materials shall be determined in (f) Foreign banking organization conditions (scenarios), including accordance with applicable exemptions means any foreign bank or company that baseline, adverse, and severely adverse under the Freedom of Information Act is a bank holding company or is treated conditions. The Board will notify (5 U.S.C. 552(b)) and the Board’s Rules as a bank holding company under covered companies of the conditions the Regarding Availability of Information section 8(a) of the International Banking Board will apply in advance of (12 CFR part 261). Act of 1978 (12 U.S.C. 3106(a)). conducting the analysis. (g) Planning horizon means the period § 252.135 Review of the Board’s analysis; of time over which stress test § 252.134 Data and information required to publication of summary results. projections must extend. The planning be submitted in support of the Board’s (a) Review of results. Based on the analyses. horizon cannot be less than nine results of the analysis conducted under quarters. (a) Regular submissions. The Board this subpart, the Board will evaluate (h) Publicly traded means traded on: will require each covered company to each covered company to determine (1) Any exchange registered with the submit the data, on a consolidated basis, whether the covered company has the U.S. Securities and Exchange that the Board determines is necessary capital, on a total consolidated basis, Commission as a national securities for it to estimate relevant pro forma necessary to absorb losses and continue exchange under section 6 of the estimates discussed in 252.133(a), of the to function as a credit intermediary as Securities Exchange Act of 1934 (15 covered company over a period of at a result of adverse and severely adverse U.S.C. 78f); or least 9 calendar quarters under baseline, economic and financial market (2) Any non-U.S.-based securities adverse, and severely adverse scenarios, conditions. exchange that: or other such conditions as determined (b) Communication of results to (i) Is registered with, or approved by, appropriate by the Board, including: covered companies. The Board will a national securities regulatory (1) Information related to the covered convey to each covered company the authority; and company’s on- and off-balance sheet results of the Board’s analyses of such (ii) Provides a liquid, two-way market exposures, including in some cases covered company within a reasonable for the instrument in question, meaning information on individual items (such period of time. that there are enough independent bona as loans and securities) held by the (c) Publication of results by the Board. fide offers to buy and sell so that a sales company, and including exposures in Within a reasonable period of time after price reasonably related to the last sales the covered company’s trading portfolio, completing the analyses of the covered price or current bona fide competitive other trading-related exposures (such as companies under this subpart, the Board bid and offer quotations can be counterparty-credit risk exposures) or will publish a summary of the results of determined promptly and a trade can be other items sensitive to changes in such analyses. settled at such a price within a market factors, including, as appropriate, information about the § 252.136 Post-assessment actions by reasonable time period conforming with covered companies. trade custom. sensitivity of positions in the trading (i) Scenarios are a set of economic and portfolio to changes in market prices (a) In general. Each covered company financial conditions that the Board and interest rates. shall take the results of the analysis publishes for the use in the supervisory (2) Information to assist the Board in conducted by the Board under this stress tests annually, including baseline, estimating the sensitivity of the covered subpart into account in making changes, adverse, and severely adverse. company’s revenues and expenses to as appropriate, to the covered changes in economic and financial company’s capital structure (including § 252.133 Annual analysis conducted by conditions. the level and composition of capital); its the Board. (3) Information to assist the Board in exposures, concentrations, and risk (a) In general. The Board, in estimating the likely evolution of the positions; any plans of the covered coordination with the appropriate covered company’s balance sheet (such company for recovery; and for primary financial regulatory agencies, as as the composition of its loan and improving overall risk management. defined in section 2(12) of Dodd-Frank securities portfolios) and allowance for (b) Resolution plan updates. Each Act (12 U.S.C. 5301(12)), and the loan losses, in response to changes in covered company shall make such Federal Insurance Office, will, on an economic and financial conditions. updates to its resolution plan as the

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Board determines appropriate, based on (b) Company means a corporation, (g) Planning horizon means the period the results of its analyses of the covered partnership, limited liability company, of time over which stress test company under this subpart, within 90 depository institution, business trust, projections must extend. The planning days of the Board publishing the special purpose entity, association, or horizon cannot be less than nine summary results of its analyses. similar organization. quarters. (c) Council means the Financial (h) Publicly traded means traded on: Subpart G—Company-Run Stress Test Stability Oversight Council established (1) Any exchange registered with the Requirements by section 111 of the Dodd-Frank Act U.S. Securities and Exchange (12 U.S.C. 5321). § 252.141 Applicability. Commission as a national securities (d) Covered company means exchange under section 6 of the (a) Applicability. (1) In general. (i) A (1) Any company organized under the Securities Exchange Act of 1934 (15 bank holding company that becomes a laws of the United States or any State U.S.C. 78f); or covered company, or a bank holding that the Council has determined under (2) Any non-U.S.-based securities company, a state member bank, or section 113 of the Dodd-Frank Act (12 exchange that: except as provided in paragraph (a)(2) of U.S.C. 5323) shall be supervised by the (i) Is registered with, or approved by, this section, a savings and loan holding Board and for which such determination a national securities regulatory company becomes an over $10 billion is still in effect (nonbank covered authority; and company no less than 90 days before company). (ii) Provides a liquid, two-way market September 30 of a calendar year must (2) Any bank holding company (other for the instrument in question, meaning comply with the requirements of this than a foreign banking organization), that there are enough independent bona subpart from September 30 of that that has $50 billion or more in total fide offers to buy and sell so that a sales calendar year and thereafter. A company consolidated assets, as determined price reasonably related to the last sales that the Council has determined shall be based on: price or current bona fide competitive supervised by the Board on a date no (i) The average of the bank holding bid and offer quotations can be less than 180 days before September 30 company’s total consolidated assets in determined promptly and a trade can be of a calendar year must comply with the the four most recent quarters as reported settled at such a price within a requirements of this subpart from quarterly on the bank holding reasonable time period conforming with September 30 of that calendar year and company’s Consolidated Financial trade custom. thereafter. Statements for Bank Holding Companies (i) Over $10 billion company means (ii) A bank holding company that (the Federal Reserve’s FR Y–9C (FR Y– any: becomes a covered company no less 9C)); or than 90 days before March 31 of a (ii) The average of the bank holding (1) Bank holding company (other than calendar year must comply with the company’s total consolidated assets in a foreign banking organization) that is requirements of this subpart from March the most recent consecutive quarters as not a covered company and that has 31 of that calendar year and thereafter. reported quarterly on the bank holding more than $10 billion in total A company that the Council has company’s FR Y–9Cs, if the bank consolidated assets, as determined determined shall be supervised by the holding company has not filed an FR Y– based on: Board on a date no less than 180 days 9C for each of the most recent four (i) The average of the bank holding before March 31 of a calendar year must quarters. company’s total consolidated assets in comply with the requirements of this (3) Once a covered company meets the four most recent quarters as reported subpart from March 31 of that calendar the requirements described in paragraph quarterly on the bank holding year and thereafter. (2), the company shall remain a covered company’s FR Y–9C; or (2) Initial applicability. (i) In general. company for purposes of this subpart (ii) The average of the bank holding A bank holding company that is a unless and until the company has less company’s total consolidated assets in covered company or an over $10 billion than $50 billion in total consolidated the most recent consecutive quarters as company on the effective date of this assets as determined based on each of reported quarterly on the bank holding subpart must immediately comply with the bank holding company’s four most company’s FR Y–9Cs, if the bank the requirements, including timing of recent FR Y–9Cs. holding company has not filed an FR Y– required submissions to the Board, of (4) Nothing in paragraph (3) shall 9C for each of the most recent four this subpart. preclude a company from becoming a quarters; (ii) Savings and loan holding covered company pursuant to paragraph (2) Savings and loan holding company companies. A savings and loan holding (2). that is not a covered company and that company that is an over $10 billion (5) A bank holding that has ceased to has more than $10 billion in total company, before or after the effective be a covered company under paragraph consolidated assets, as determined date of this subpart, would not be (3) is not subject to the requirements of based on: subject to the proposed requirements, this subpart beginning on the first day (i) The average of the savings and loan including timing of required of the calendar quarter following the holding company’s total consolidated submissions to the Board, until savings reporting date on which it ceased to be assets in the four most recent quarters and loan holding companies are subject a covered company. as reported quarterly on the savings and to minimum risk-based capital and (e) Depository institution has the same loan holding company’s relevant leverage requirements. meaning as in section 3 of the Federal regulatory report; or Deposit Insurance Act, 12 U.S.C. (ii) The average of the savings and § 252.142 Definitions. 1813(c). loan holding company’s total For purposes of this subpart: (f) Foreign banking organization consolidated assets in the most recent (a) Bank holding company is defined means any foreign bank or company that consecutive quarters as reported as in section 2 of the Bank Holding is a bank holding company or is treated quarterly on the savings and loan Company Act, as amended (12 U.S.C. as a bank holding company under holding company’s relevant regulatory 1841), and the Board’s Regulation Y (12 section 8(a) of the International Banking reports, if the savings and loan holding CFR part 225). Act of 1978 (12 U.S.C. 3106(a)). company has not filed such a report for

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each of the most recent four quarters; September 30 of that calendar year, future pro forma capital positions over and except for data related to the covered the planning horizon; and (3) State member bank that has more company’s trading and counterparty (ii) Capital levels and capital ratios, than $10 billion in total consolidated exposures for which the Board will including regulatory and any other assets, as determined based on: communicate the required as of date in capital ratios specified by the Board. (i) The average of the state member the fourth quarter of each year. (b) Controls and oversight of stress bank’s total consolidated assets in the (2) The stress test shall be conducted testing processes. four most recent quarters as reported in accordance with this section and the (1) Each covered company and each quarterly on the state member bank’s methodologies and practices described over $10 billion company must establish Consolidated Report of Condition and in section 252.145. and maintain a system of controls, Income (Call Report); or (b) Scenarios provided by the Board. oversight, and documentation, (ii) The average of the state member In conducting its annual stress tests including policies and procedures, bank’s total consolidated assets in the under this section, each covered designed to ensure that the stress testing most recent consecutive quarters as company and each over $10 billion processes used by the covered company reported quarterly on the state member company must use scenarios provided or over $10 billion company are bank’s Call Report, if the state member by the Board that reflect a minimum of effective in meeting the requirements in bank has not filed a Call Report for each three sets of economic and financial this subpart. These policies and of the most recent four quarters. conditions, including a baseline, procedures must, at a minimum, (4) Once a company or bank meets the adverse, and severely adverse scenario. describe the covered company’s or over requirements described in paragraphs In advance of these stress tests, the $10 billion company’s stress testing (1), (2), or (3), the company shall remain Board will provide to all covered practices and methodologies, validation an over $10 billion company for companies and over $10 billion and use of stress tests results, and purposes of this part unless and until companies a description of the baseline, processes for updating the company’s the company has $10 billion or less in adverse, and severely adverse scenarios stress testing practices consistent with total consolidated assets as determined that each covered company and each relevant supervisory guidance. Policies based on each of the bank holding over $10 billion company shall use to of covered companies must describe company’s four most recent FR Y–9Cs, conduct its annual stress tests under processes for scenario development for the savings and loan holding company’s this subpart. the additional stress test required under four most recent relevant regulatory § 252.144 Additional stress test for section 252.144. reports, or the bank’s four most recent covered companies. (2) The board of directors and senior management of each covered company Call Reports. (a) Additional stress test requirement. (5) Nothing in paragraph (2) shall (1) Each covered company must and each over $10 billion company shall preclude a company from becoming an complete an additional stress test each approve and annually review the over $10 billion company pursuant to year based on data of that company as controls, oversight, and documentation, paragraph (1). of March 31 of that calendar year except including policies and procedures, of (6) A company or bank that has for data related to the covered the covered company or the over $10 ceased to be an over $10 billion company’s trading and counterparty billion company established pursuant to company under paragraphs (1), (2), or exposures for which the Board will this subpart. (3) is not subject to the requirements of communicate the required as of date in this subpart beginning on the first day § 252.146 Required report to the Board of the fourth quarter of each year. stress test results and related information. of the calendar quarter following the (2) The stress test shall be conducted reporting date on which it ceased to be (a) Report required for stress tests. On in accordance with this section and the or before January 5 of each year, each an over $10 billion company. methodologies and practices described (j) Scenarios are sets of economic and covered company and each over $10 in section 252.145. billion company must report the results financial conditions used in the (b) Scenarios related to additional of the stress test required under section companies’ stress tests, including stress tests. baseline, adverse, and severely adverse. (1) In general. Each company subject 252.143 to the Board in accordance with (k) State member bank has the same to a stress test under this section section 252.146(b). On or before July 5 meaning as in section 208.2(g) of the 252.144 shall develop and employ of each year, each covered company Board’s Regulation H (12 CFR 208.2(g)). scenarios reflecting a minimum of three must report the results of the stress test (l) Stress test is a process to assess the sets of economic and financial required under section 252.144 to the potential impact on a covered company conditions, including a baseline, Board, in accordance with section or an over $10 billion company of adverse, and severely adverse scenario, 252.146(b). economic and financial conditions or such additional conditions as the (b) Content of report for both annual (scenarios) on the consolidated Board determines appropriate, in and additional stress tests. Each covered earnings, losses and capital of the conducting each stress test required company and each over $10 billion company over a set planning horizon, under this paragraph. company must file a report in the taking into account the current manner and form established by the condition of the company and the § 252.145 Methodologies and practices. Board. company’s risks, exposures, strategies, (a) Potential impact on capital. (c) Confidential treatment of and activities. (1) In conducting a stress test under information submitted. The section 252.143 and section 252.144, confidentiality of information submitted § 252.143 Annual stress test. each covered company and each over to the Board under this subpart and (a) In general. $10 billion company shall calculate how related materials shall be determined in (1) Each covered company and each each of the following are impacted accordance with applicable exemptions over $10 billion company shall during each quarter of the stress test under the Freedom of Information Act complete an annual stress test of itself planning horizon, for each scenario: (5 U.S.C. 552(b)) and the Board’s Rules based on data of the covered company (i) Potential losses, pre-provision net Regarding Availability of Information or the over $10 billion company as of revenues, allowance for loan losses, and (12 CFR part 261).

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§ 252.147 Post-assessment actions by depository institution, business trust, Frank Wall Street Reform and Consumer covered companies. special purpose entity, association, or Protection Act (12 U.S.C. 5361(a)), or (a) Each covered company and each similar organization. otherwise as required by the Board. over $10 billion company shall take the (c) Council means the Financial (2) In the case of a bank holding results of the stress tests conducted Stability Oversight Council established company (other than a foreign banking under section 252.143 and, if by section 111 of the Dodd-Frank Act organization), on the Federal Reserve’s applicable, section 252.144, into (12 U.S.C. 5321). Form FR Y–9C (Consolidated Financial account in making changes, as (d) Covered company means Statements for Bank Holding appropriate, to the covered company’s (1) Any company organized under the Companies) or any successor form. capital structure (including the level laws of the United States or any State (g) Depository institution has the same and composition of capital); its that the Council has determined under meaning as in section 3 of the Federal exposures, concentrations, and risk section 113 of the Dodd-Frank Act (12 Deposit Insurance Act, 12 U.S.C. positions; any plans for recovery and U.S.C. 5323) shall be supervised by the 1813(c). resolution; and to improve overall risk Board and for which such determination (h) Foreign banking organization management. is still in effect (nonbank covered means any foreign bank or company that company). is a bank holding company or is treated § 252.148 Publication of results by (2) Any bank holding company (other as a bank holding company under covered companies and over $10 billion than a foreign banking organization), section 8(a) of the International Banking companies. that has $50 billion or more in total Act of 1978 (12 U.S.C. 3106(a)). (a) Public disclosure of results consolidated assets, as determined (i) Publicly traded means traded on: required for stress tests of covered based on: (1) Any exchange registered with the companies and of over $10 billion (i) The average of the bank holding U.S. Securities and Exchange companies. Within 90 days of company’s total consolidated assets in Commission as a national securities submitting a report for its required the four most recent quarters as reported exchange under section 6 of the stress test under section 252.143 and quarterly on the bank holding Securities Exchange Act of 1934 (15 section 252.144, as applicable, a covered company’s Consolidated Financial U.S.C. 78f); or company and an over $10 billion Statements for Bank Holding Companies (2) Any non-U.S.-based securities company shall disclose publicly a (the Federal Reserve’s FR Y–9C (FR Y– exchange that: summary of the results of the stress tests 9C)); or (i) Is registered with, or approved by, required under section 252.143 and (ii) The average of the bank holding a national securities regulatory section 252.144, as applicable. company’s total consolidated assets in authority; and (b) Information to be disclosed in the the most recent consecutive quarters as (ii) Provides a liquid, two-way market summary. The information disclosed by reported quarterly on the bank holding for the instrument in question, meaning each covered company and each over company’s FR Y–9Cs, if the bank that there are enough independent bona $10 billion company, as applicable, holding company has not filed an FR Y– fide offers to buy and sell so that a sales shall, at a minimum, include— 9C for each of the most recent four price reasonably related to the last sales (1) A description of the types of risks quarters. price or current bona fide competitive being included in the stress test; (3) Once a covered company meets bid and offer quotations can be (2) For each covered company, a high- the requirements described in paragraph determined promptly and a trade can be level description of scenarios developed (2), the company shall remain a covered settled at such a price within a by the company under section company for purposes of this part reasonable time period conforming with 252.144(b), including key variables used unless and until the company has less trade custom. (such as GDP, unemployment rate, than $50 billion in total consolidated § 252.152 Debt-to-equity ratio limitation. housing prices); assets as determined based on each of (3) A general description of the the bank holding company’s four most (a) Notice and maximum debt-to- methodologies employed to estimate recent FR Y–9Cs. equity ratio requirement. Beginning no losses, pre-provision net revenue, (4) Nothing in paragraph (3) shall later than 180 days after receiving allowance for loan losses, and changes preclude a company from becoming a written notice from the Council that it in capital positions over the planning covered company pursuant to paragraph has made a determination, pursuant to horizon; and (2). section 165(j) of the Dodd-Frank Act (4) Aggregate losses, pre-provision net (5) A bank holding that has ceased to that a covered company poses a grave revenue, allowance for loan losses, net be a covered company under paragraph threat to the financial stability of the income, and pro forma capital levels (3) is not subject to the requirements of United States (identified company) and and capital ratios (including regulatory this subpart beginning on the first day that the imposition of a debt to equity and any other capital ratios specified by of the calendar quarter following the requirement is necessary to mitigate the Board) over the planning horizon, reporting date on which it ceased to be such risk, an identified company shall under each scenario. a covered company. achieve and maintain a debt to equity (e) Debt-to-equity ratio means the ratio of no more than 15-to-1. Subpart H—Debt-to-Equity Limits for ratio of a company’s total liabilities to (b) Extension. The Board may, upon Certain Covered Companies a company’s total equity capital less request by an identified company, goodwill. extend the time period for compliance § 252.151 Definitions. (f) Debt and equity have the same established under paragraph (a) for up (a) Bank holding company is defined meaning as ‘‘total liabilities’’ and ‘‘total to two additional periods of 90 days as in section 2 of the Bank Holding equity capital’’, respectively, as each, if the Board determines that the Company Act, as amended (12 U.S.C. reported: identified company has made good faith 1841), and the Board’s Regulation Y (12 (1) In the case of a nonbank financial efforts to comply with the debt to equity CFR part 225). company supervised by the Board, in a ratio requirement and that each (b) Company means a corporation, report of financial condition filed extension would be in the public partnership, limited liability company, pursuant to section 161(a) of the Dodd- interest.

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(c) Termination. The debt to equity the four most recent quarters as reported Securities Exchange Act of 1934 (15 ratio requirement in paragraph (a) shall quarterly on the bank holding U.S.C. 78f); or cease to apply to an identified company company’s Consolidated Financial (2) Any non-U.S.-based securities as of the date it receives notice from the Statements for Bank Holding Companies exchange that: Council of a determination, based on the (the Federal Reserve’s FR Y–9C (FR Y– (i) Is registered with, or approved by, factors described in subsections (a) and 9C)); or a national securities regulatory (b) of section 113 of the Dodd-Frank Act (ii) The average of the bank holding authority; and (12 U.S.C. 5323), that the company no company’s total consolidated assets in (ii) Provides a liquid, two-way market longer poses a grave threat to the the most recent consecutive quarters as for the instrument in question, meaning financial stability of the United States reported quarterly on the bank holding that there are enough independent bona and that the imposition of a debt to company’s FR Y–9Cs, if the bank fide offers to buy and sell so that a sales equity requirement is no longer holding company has not filed an FR Y– price reasonably related to the last sales necessary. 9C for each of the most recent four price or current bona fide competitive quarters. bid and offer quotations can be Subpart I—Early Remediation (3) Once a covered company meets determined promptly and a trade can be Framework the requirements described in paragraph settled at such a price within a reasonable time period conforming with § 252.161 Definitions. (2), the company shall remain a covered company for purposes of this part trade custom. For purposes of this subpart: unless and until the company has less (m) Risk-weighted assets means total (a) Affiliate means, with respect to a than $50 billion in total consolidated weighted risk assets, as calculated in company, any company that controls, is assets as determined based on each of accordance with 12 CFR part 225, controlled by, or is under common the bank holding company’s four most appendix A or 12 CFR part 225, control with, the company. recent FR Y–9Cs. appendix G, as applicable, or any (b) Bank holding company is defined successor regulation thereto. as in section 2 of the Bank Holding (4) Nothing in paragraph (3) shall preclude a company from becoming a (n) Senior executive officer of a Company Act, as amended (12 U.S.C. covered company means a person who 1841), and the Board’s Regulation Y (12 covered company pursuant to paragraph (2). holds the title or, without regard to title, CFR part 225). salary, or compensation, performs the (5) A bank holding that has ceased to (c) Capital distribution means a function of one or more of the following be a covered company under paragraph redemption or repurchase of any debt or positions: President, chief executive (3) is not subject to the requirements of equity capital instrument, a payment of officer, executive chairman, chief this subpart beginning on the first day common or preferred stock dividends, a operating officer, chief financial officer, of the calendar quarter following the payment that may be temporarily or chief investment officer, chief legal reporting date on which it ceased to be permanently suspended by the issuer on officer, chief lending officer, chief risk a covered company. any instrument that is eligible for officer, or head of a major business line. inclusion in the numerator of any (h) Depository institution has the (o) Severely adverse scenario has the minimum regulatory capital ratio, and same meaning as in section 3 of the same meaning as defined in the context any similar transaction that the Board Federal Deposit Insurance Act, 12 of Subpart F of this part. determines to be in substance a U.S.C. 1813(c). (p) Tier 1 capital means tier 1 capital distribution of capital. (i) Foreign banking organization as defined in 12 CFR part 225, appendix (d) Company means a corporation, means any foreign bank or company that A or 12 CFR part 225, appendix G, as partnership, limited liability company, is a bank holding company or is treated applicable, or any successor regulation depository institution, business trust, as a bank holding company under thereto. special purpose entity, association, or section 8(a) of the International Banking (q) Tier 1 common risk-based capital similar organization. Act of 1978 (12 U.S.C. 3106(a)). ratio means the ratio of tier 1 capital less (e) Control is defined as in section 2 (j) Net income means: the non-common elements of tier 1 of the Bank Holding Company Act, as (1) For a bank holding company (other capital, including perpetual preferred amended (12 U.S.C. 1841), and the than a foreign banking organization), the stock and related surplus, minority Board’s Regulation Y (12 CFR part 225). net income as reported on line 14 interest in subsidiaries, trust preferred (f) Council means the Financial schedule HI of the company’s FR Y–9C securities and mandatory convertible Stability Oversight Council established report. preferred securities, to risk-weighted by section 111 of the Dodd-Frank Act (2) For a nonbank covered company assets. (12 U.S.C. 5321). that is publicly traded, the net income (r) Tier 1 leverage ratio means the (g) Covered company means as reported on the company’s quarterly ratio of tier 1 capital to total assets as (1) Any company organized under the financial statements. defined in 12 CFR part 225 appendix D, laws of the United States or any State (3) For a nonbank covered company or any successor regulation thereto. that the Council has determined under that is not publicly traded, net income (s) Tier 1 risk-based capital ratio section 113 of the Dodd-Frank Act (12 as reported on the company’s most means the ratio of tier 1 capital to risk- U.S.C. 5323) shall be supervised by the recent audited financial statement. weighted assets, as calculated in Board and for which such determination (k) Planning horizon means the period accordance with 12 CFR part 225, is still in effect (nonbank covered of time over which stress test appendix A or 12 CFR part 225, company). projections must extend. The planning appendix G, as applicable, or any (2) Any bank holding company (other horizon cannot be less than nine successor regulation thereto. than a foreign banking organization), quarters. (t) Total capital means qualifying total that has $50 billion or more in total (l) Publicly traded means traded on: capital as defined in 12 CFR part 225, consolidated assets, as determined (1) Any exchange registered with the appendix A or total qualifying capital as based on: U.S. Securities and Exchange defined in 12 CFR part 225, appendix G, (i) The average of the bank holding Commission as a national securities as applicable, or any successor company’s total consolidated assets in exchange under section 6 of the regulation thereto.

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(u) Total assets means: preceding calendar year by more than 5 (4) Shall not increase the (1) For a bank holding company (other percent; or compensation of, or pay any bonus to, than a foreign banking organization), (iii) Permit its daily average risk- its senior executive officers or directors. total consolidated assets as reported weighted assets during any calendar (5) May also be required by the Board quarterly on the bank holding quarter to exceed its daily average risk- to: company’s FR Y–9C. weighted assets during the preceding (i) Conduct a new election for the (2) For a nonbank covered company calendar quarter by more than 5 percent; institution’s board of directors; that is publicly traded, total (iv) Permit its daily average risk- (ii) Dismiss from office any director or consolidated assets as reported nonbank weighted assets during any calendar senior executive officer of the covered covered company’s quarterly financial year to exceed its daily average risk- company who had held office for more statements. weighted assets during the preceding than 180 days immediately prior to (3) For a nonbank covered company calendar year by more than 5 percent; receipt of notice pursuant to section that is not publicly traded, total (v) Directly or indirectly acquire any 252.164 that the covered company is consolidated assets as determined based controlling interest in any company subject to level 3 remediation; or on the company’s audited financial (including an insured depository (iii) Employ qualified senior executive statements. institution, establish or acquire any officers approved by the Board. (6) The Board may place restrictions (v) Total risk-based capital ratio office or other place of business, or on a covered company engaging in means the ratio of total capital to risk- engage in any new line of business), transactions with its affiliates if it is weighted assets, as calculated in without the prior approval the Board. subject to level 3 remediation. accordance with 12 CFR part 225, (3) Shall be required to enter into a (d) Level 4 remediation (resolution appendix A or 12 CFR part 225, non-public memorandum of assessment). The Board shall consider appendix G, as applicable, or any understanding, or other enforcement whether the covered company poses a successor regulation thereto. action acceptable to the Board. (4) In addition, may be subject to the risk to the stability of the U.S. financial § 252.162 Remediation Actions. following additional limitations system. If the Board determines, based (a) Level 1 remediation (heightened imposed by the Board: on the covered company’s financial supervisory review). Under level 1 (i) Limitations or conditions on the decline and the risk posed to U.S. remediation, the Board shall conduct a conduct or activities of the company or financial stability by the failure of the targeted supervisory review of a covered any of its affiliates that the Board finds covered company or other relevant company to evaluate whether the to be appropriate and consistent with factors, that the covered company covered company is experiencing the purposes of Title I of the Dodd- should be placed into receivership financial distress or material risk Frank Act. under Title II of the Dodd-Frank Act, the management weaknesses such that (c) Level 3 remediation (recovery). A Board shall make a written further decline of the covered company covered company subject to level 3 recommendation that the covered is probable and that the covered remediation: company be placed in resolution under (1) May not make any capital company should be subject to initial Title II of the Dodd-Frank Act. distribution. remediation (level 2 remediation). (2) Shall not: § 252.163 Remediation triggering events. (1) The review required by this (i) Permit its average total assets (a) Capital and leverage. section 252.162(a) must be completed during any calendar quarter to exceed (1) Level 1 remediation triggering within 30 days of the company’s its average total assets during the events. A covered company that has a entrance into level one remediation. preceding calendar quarter; or total risk-based capital ratio of 10.0 (2) If, upon completion of the review, (ii) Permit its average total risk- percent or greater, a tier 1 risk-based the Board determines that the covered weighted assets during any calendar capital ratio of 6.0 percent or greater, company is experiencing financial quarter to exceed its average total risk- and a tier 1 leverage ratio of 5.0 percent distress or material risk management weighted assets during the preceding or greater, is subject to level 1 weaknesses such that further decline of calendar quarter; or remediation (heightened supervisory the covered company is probable, the (iii) Directly or indirectly acquire any review) if the Board determines that the covered company shall be subject to interest in any company (including any covered company’s capital structure, initial remediation (level 2 insured depository institution), capital planning processes, or the remediation). establish or acquire any office (or other amount of capital it holds is not (b) Level 2 remediation (initial place of business), or engage in any new commensurate with the level and nature remediation). A covered company line of business; of the risks to which it is exposed. subject to level 2 remediation: (3) Must enter into a written (2) Level 2 remediation triggering (1) Shall not make capital agreement or other form of enforcement events. A covered company is subject to distributions during any calendar action with the Board that specifies that level 2 remediation (initial remediation) quarter in an amount that exceeds 50 the covered company must raise if it has a total risk-based capital ratio percent of the average of the covered additional capital and take other of less than 10.0 percent and greater company’s net income in the preceding appropriate actions to improve its than or equal to 8.0 percent, a tier 1 risk- two calendar quarters. capital adequacy. based capital ratio of less than 6.0 (2) Shall not: (i) If a covered company fails to percent and greater than or equal to 4.0 (i) Permit its daily average total assets satisfy the requirements of such a percent or a tier 1 leverage ratio of less during any calendar quarter to exceed written agreement, the covered than 5.0 percent and greater than or its daily average total assets during the company may be required to divest equal to 4.0 percent. preceding calendar quarter by more than assets identified by the Board as (3) Level 3 remediation triggering 5 percent; or contributing to the covered company’s events. A covered company is subject to (ii) Permit its daily average total assets financial decline or posing substantial level 3 remediation (recovery) if: during any calendar year to exceed its risk of contributing to further financial (i) For two complete consecutive daily average total assets during the decline of the covered company. quarters, the covered company has a

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total risk-based capital ratio of less than level 3 remediation if it is in substantial (f) Measurement and timing of 10.0 percent, a tier 1 risk-based capital noncompliance with the enhanced risk remediation action events. ratio of less than 6.0 percent or a tier 1 management and risk committee (1) Capital. For the purposes of this leverage ratio of less than 5.0 percent; or requirements under Subpart E of this subpart, the capital of a covered (ii) The covered company has a total part. company is deemed to have been risk-based capital ratio of less than 8.0 (d) Liquidity. calculated as of the most recent of the percent and greater than or equal to 6.0 (1) Level 1 remedial triggering events. following: percent, a tier 1 risk-based capital ratio A covered company is subject to level of less than 4.0 percent and greater than 1 remediation if it has manifested signs (i) The FR Y–9C report; or equal to 3.0 percent or a tier 1 of weakness in meeting the enhanced (ii) Calculations of capital by the leverage ratio of less than 4.0 percent liquidity risk management requirements covered company submitted to the and greater than or equal to 3.0 percent. under Subpart C. Board, pursuant to a Board request to (iii) Level 4 remediation triggering (2) Level 2 remediation triggering the covered company to calculate its events. A covered company is subject to events. A covered company is subject to ratios; level 4 remediation (resolution level 2 remediation if it has (iii) A final inspection report is assessment) if it has a total risk-based demonstrated multiple deficiencies in delivered to the covered company that capital ratio of less than 6.0 percent, a meeting the enhanced liquidity risk includes capital ratios calculated more tier 1 risk-based capital ratio of less than management requirements under recently than the most recent FR Y–9C 3.0 percent or a tier 1 leverage ratio of Subpart C. report submitted by the covered less than 3.0 percent. (3) Level 3 remediation triggering company to the Board. (b) Stress Tests. events. A covered company is subject to (2) Stress tests. For purposes of this (1) Level 1 remedial triggering events. level 3 remediation if it is in substantial paragraph, the ratios calculated under A covered company is subject to level noncompliance with the enhanced the supervisory stress test apply as of 1 remediation if it is not in compliance liquidity risk management requirements the date the Board’s report of the test with any regulations adopted by the under Subpart C. results is transmitted to the covered Board relating to capital plans pursuant (e) Market indicators. company pursuant to section 252.135(b) to 12 CFR 225.8 and stress tests (1) Definitions. of Subpart F. pursuant to Subparts F and G of this (i) Market indicator means an part. indicator based on publicly available § 252.164 Notice and remedies. (2) Level 2 remediation triggering market data that is identified in the events. A covered company is subject to annual indicator list, as specified by the (a) Notice to covered company of level 2 remediation (initial remediation) Board. remediation action event. If the Board if its results under the severely adverse (ii) Indicator list means a list of the ascertains that a remediation triggering scenario in any quarter of the planning market indicators and market indicator event set forth in section 252.163 has horizon produced pursuant to a stress thresholds that will be used during a occurred with respect to a covered test executed pursuant to Subpart F of defined period, as specified by the company, the Board shall notify the this part reflect a tier 1 common risk- Board. covered company of the event and the based capital ratio of less than 5.0 (iii) Breach period means the number remediation action under section percent and greater than or equal to 3.0 of consecutive business days, as 252.162 applicable to the covered percent. specified by the Board, over which the company as a result of the event. (3) Level 3 remediation triggering median value of a market indicator must (b) Notification of Change in Status. If events. A covered company is subject to exceed the market indicator threshold to a covered company becomes aware of (i) level 3 remediation (recovery) if its trigger remediation. one or more triggering events set forth results under the severely adverse (iv) Market indicator threshold means, in section 252.163; or (ii) a change in scenario in any quarter of the planning with respect to each market indicator condition that it believes should result horizon produced pursuant to a stress described on the indicator list, the level, in a change in the remediation test executed pursuant to Subpart F of as specified by the Board, indicating provisions to which it is subject, such this part reflect a tier 1 common risk- that a covered company is experiencing covered company must provide notice based capital ratio of less than 3.0 financial distress or material risk to the Board within 5 business days, percent. management weaknesses such that identifying the nature of the triggering (c) Risk Management. further decline of the covered company event or change in circumstances. (1) Level 1 remedial triggering events. is probable based on historic measures (c) Termination of remediation action. A covered company is subject to level of data. A covered company subject to a 1 remediation if it has manifested signs (2) The Board shall publish for remediation action under this subpart of weakness in meeting the enhanced comment annually, or less frequently as shall remain subject to the remediation risk management and risk committee appropriate, the indicator list, market action until the Board provides written requirements under Subpart E of this indicator thresholds, and breach period notice to the covered company that its part. that will be used during a twelve-month financial condition or risk management (2) Level 2 remediation triggering period. no longer warrants application of the events. A covered company is subject to (3) A covered company shall be requirement. level 2 remediation if it has subject to level 1 remediation upon demonstrated multiple deficiencies in receipt of a notice indicating that the By order of the Board of Governors of the meeting the enhanced risk management Board has found that, with respect to Federal Reserve System, December 22, 2011. or risk committee requirements under the covered company, any single market Jennifer J. Johnson, Subpart E of this part. indicator has exceeded the market Secretary of the Board. (3) Level 3 remediation triggering indicator threshold for the breach [FR Doc. 2011–33364 Filed 1–4–12; 8:45 am] events. A covered company is subject to period. BILLING CODE 6210–01–P

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Part IV

Department of the Interior

Fish and Wildlife Service 50 CFR Part 17 Endangered and Threatened Wildlife and Plants; Listing Two Distinct Population Segments of Broad-Snouted Caiman as Endangered or Threatened and a Special Rule; Proposed Rule

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DEPARTMENT OF THE INTERIOR shown in FOR FURTHER INFORMATION regulations. Please make your comments CONTACT below by February 21, 2012. as specific as possible and explain the Fish and Wildlife Service ADDRESSES: You may submit comments basis for them. In addition, please by one of the following methods: include sufficient information with your 50 CFR Part 17 • Federal eRulemaking Portal: http:// comments to allow us to authenticate [Docket No. FWS–R9–ES–2010–0089; www.regulations.gov. Search for docket any scientific or commercial data you 4500030115; 1113F116] number FWS–R9–ES–2010–0089 and reference or provide. In particular, we then follow the instructions for seek comments concerning the RIN 1018–AT56 submitting comments. following: • (1) New biological, trade, or other Endangered and Threatened Wildlife U.S. mail or hand-delivery: Public Comments Processing, Attn: FWS–R9– relevant information and data and Plants; Listing Two Distinct concerning any threat (or lack thereof) Population Segments of Broad- ES–2010–0089; Division of Policy and Directives Management; U.S. Fish and to the broad-snouted caiman, Snouted Caiman as Endangered or particularly whether there is Threatened and a Special Rule Wildlife Service; 4401 N. Fairfax Drive, MS 2042–PDM; Arlington, VA 22203. information that indicates the species AGENCY: Fish and Wildlife Service, We will not accept comments by no longer meets the definition of Interior. email or fax. We will post all comments endangered in any part of its range. (2) New information and data on ACTION: Proposed rule. on http://www.regulations.gov. This generally means that we will post any whether or not climate change is a SUMMARY: We, the U.S. Fish and personal information you provide us threat to the broad-snouted caiman, Wildlife Service (Service), propose to (see the Public Comments section below what regional climate change models reclassify the broad-snouted caiman in for more information). are available, and whether they are reliable and credible to use as a step- Argentina from endangered to FOR FURTHER INFORMATION CONTACT: threatened in the List of Endangered Janine Van Norman, Chief; Branch of down model for assessing the effects of and Threatened Wildlife under the Foreign Species, Endangered Species climate change on the species and its Endangered Species Act of 1973, as Program; U.S. Fish and Wildlife Service; habitat. (3) The location of any additional amended (ESA or Act). As part of this 4401 North Fairfax Drive, Room 420; proposed rule, we would establish two populations of broad-snouted caiman. Arlington, VA 22203, U.S.A. Individuals (4) New information concerning the distinct population segments (DPSs) of who are hearing-impaired or speech- the broad-snouted caiman (Caiman range, distribution, and population size impaired may call the Federal and population trends of the broad- latirostris): a DPS in Argentina and a Information Relay Service at 800–877– DPS that would encompass Bolivia, snouted caiman in the wild. 8339 for TTY assistance 24 hours a day, (5) New information on the current or Brazil, Paraguay, and Uruguay. This 7 days a week. planned activities within the geographic second DPS would remain listed as SUPPLEMENTARY INFORMATION: range of the broad-snouted caiman that endangered under the Act. We are Public Comments may impact or benefit the species. proposing this action under the Act (6) New information concerning based on the best available data We received eight comments from the captive-breeding operations in indicating that the Argentine population public on the 90-day finding (73 FR Argentina, Bolivia, Brazil, Paraguay, and of the broad-snouted caiman no longer 33968, published on June 16, 2008). We Uruguay. meets the definition of endangered received comments from foreign (7) New information and data on the under the Act. Intense management of government agencies, the scientific broad-snouted caiman in Argentina, the species in Argentina has brought the community, and the reptile product Bolivia, Brazil, Paraguay, and Uruguay Argentine DPS to the point where a industry. We received scientific that would enhance our analysis of change in status is appropriate. This literature about this species from whether or not these two populations also serves as our 5-year review. members of the IUCN Crocodile qualify as a DPS under the Act (16 We also propose that the Argentine Specialist Group. This literature U.S.C. 1531 et seq.), and whether or not population of broad-snouted caiman be provided additional information about these populations warrant continued included in the special rule for trade in the distribution, abundance, and protection under the Act. caiman species. Inclusion in this special conservation status of the species. The (8) Information concerning the status rule would allow U.S. commerce in comments and information we received and results of monitoring actions for the skins, other parts, and products of this have been considered and incorporated broad-snouted caiman, including those species originating from Argentina, and into this proposed rule to reclassify the implemented under the Convention on reexport of such specimens originating broad-snouted caiman. International Trade in Endangered in Argentina, if certain conditions are We intend that any final action Species of Wild Fauna and Flora met prior to exportation to the United resulting from this proposed rule is (CITES). States. We are seeking information, data, based on the best scientific and The information available emphasizes and comments from the public on this commercial data available and be as field studies and species management in proposed rule. This proposed rule to accurate and effective as possible. Argentina, with little direct information reclassify the broad-snouted caiman in Therefore, we request comments and on the species in the other range Argentina to threatened under the Act information from government agencies, countries (Bolivia, Brazil, Paraguay, and also constitutes our warranted 12-month the scientific community, industry, and Uruguay). This species is primarily finding (status review) on a petition. other interested parties concerning this being monitored in Argentina, and we DATES: To ensure that we are able to proposed rule. The comments that will were unable to find additional consider your comments on this be most useful and likely to influence information or only able to locate a proposed rule, they must be received or our decisions are those supported by small amount of information regarding postmarked on or before March 5, 2012. scientific data or peer-reviewed studies the broad-snouted caiman in its other We must receive requests for public and those that include citations to, and range countries. We are seeking hearings, in writing, at the address analyses of, applicable laws and information and data on the status of the

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species throughout its range, Endangered Species Program located in Argentina cited reasons for the particularly in Bolivia, Brazil, Paraguay, our Headquarters office (see the FOR reclassification such as the broad- and Uruguay as part of this proposed FURTHER INFORMATION CONTACT section). snouted caiman populations in rule. Argentina are healthy, habitat remains Public Availability of Comments Please note that submissions merely plentiful, caiman ranching programs in stating support for or opposition to the Before including your address, phone Argentina have proven successful (wild action under consideration without number, email address, or other populations are increasing), and broad- providing supporting information, personal identifying information in your snouted caiman production and harvest although noted, will not be considered comment, you should be aware that is increasing in Argentina. in making a determination, as section your entire comment—including your The reclassification of the species 4(b)(1)(A) of the Act directs that a personal identifying information—may under the Act would allow for determination as to whether any species be made publicly available at any time. commercial U.S. imports of broad- is an endangered or threatened species While you can ask us in your comment snouted caiman originating from must be made ‘‘solely on the basis of the to withhold your personal identifying Argentina to occur. Because the petition best scientific and commercial data information from public review, we from the Government of Argentina was available.’’ cannot guarantee that we will be able to for reclassification of the Argentine Prior to issuing a final rule on this do so. population only, the Service must first proposed action, we will take into Public Hearing consider whether the population of consideration all comments and any Argentina qualifies as a distinct additional information we receive. Such Section 4(b)(5)(E) of the Act provides vertebrate population segment (DPS) information may lead to a final rule that for one or more public hearings on this under the Act. (See discussion in differs from this proposal. All comments proposed rule, if requested. The main Distinct Population Segment section.). and recommendations, including names purpose of most public hearings is to We then evaluate the entire species to and addresses of commenters, will obtain public testimony or comment. In determine if a change in status under become part of the administrative most cases, it is sufficient to submit the Act is warranted based on any new record. comments through the Federal information since the species was listed You may submit your comments and eRulemaking Portal, described above under the Act. The DPS policy requires materials concerning this proposed rule under ADDRESSES. We must receive FWS to determine whether or not a by one of the methods listed in requests for public hearings in writing at vertebrate population is discrete and ADDRESSES. If you submit a comment via the address shown in FOR FURTHER significant; and the population http://www.regulations.gov, your entire INFORMATION CONTACT by the date shown segment’s conservation status in relation comment—including any personal in DATES. We will schedule public to the Act’s standards for listing, identifying information—will be posted hearings on this proposal, if any are delisting, or reclassification (i.e., is the on the Web site. Please note that requested, and announce the dates, population segment endangered or comments posted to this Web site are times, and places of those hearings, as threatened). If it qualifies, the policy not immediately viewable. When you well as how to obtain reasonable requires a status determination to submit a comment, the system receives accommodations, in the Federal determine if the population is it immediately. However, the comment Register at least 15 days before the first endangered or threatened. will not be publicly viewable until we hearing. On June 16, 2008, the Service post it, which might not occur until Previous Federal Actions published in the Federal Register a 90- several days after submission. day finding (73 FR 33968) on the If you mail or hand-deliver a We listed this species as endangered petition, stating that the petition hardcopy comment that includes on June 14, 1976 (41 FR 24062), in provided substantial information to personal identifying information, you response to a petition we received in indicate that the requested action (to may request at the top of your document 1975 from the Fund for Animals, reclassify the Argentine population of that we withhold this information from requesting that the Service list all the broad-snouted caiman) may be public review. However, we cannot species that were included in Appendix warranted. In that finding, we guarantee that we will be able to do so. I of CITES (See additional discussion in announced that we were initiating a To ensure that the electronic docket for CITES section.) as endangered under the status review of the species as required this rulemaking is complete and all Act. In 2007, we received a petition under section 4(b)(3)(A) of the Act, and comments we receive are publicly from the Government of Argentina, that we were seeking comments on the available, we will post all hardcopy dated November 5, 2007, requesting that petitioned action, as well as information submissions on http:// we reclassify the broad-snouted caiman on the status of the species, particularly www.regulations.gov. in Argentina from endangered to in Argentina. The comment period In addition, comments and materials threatened. The Argentine population of closed on September 15, 2008. During we receive, as well as supporting broad-snouted caiman has been listed the comment period, we received documentation used in preparing this on Appendix II of CITES since 1997. scientific literature about this species proposed rule, will be available for The broad-snouted caiman is still listed from members of the International public inspection in two ways: in Appendix I of CITES in Bolivia, Union for Conservation of Nature (1) You can view them on http:// Brazil, Paraguay, and Uruguay. With (IUCN) Crocodile Specialist Group www.regulations.gov. In the Enter this petition, the Government of (CSG), and researchers in South Keyword or ID box, enter FWS–R9–ES– Argentina requested reclassification of America, particularly in Argentina. This 2010–0089, which is the docket number the species from endangered to literature provided additional for this rulemaking. Then click on the threatened in that country only. The information about the distribution, Search button. petition contained detailed information abundance, and conservation status of (2) You can make an appointment, about the natural history and biology of the species, particularly in Argentina. during normal business hours, to view the broad-snouted caiman including the The comments and new information the comments and materials in person at species’ current status and distribution have been considered and incorporated the U.S. Fish and Wildlife Service’s in Argentina. The Government of into this proposed rule to reclassify the

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Argentine population of the broad- column direct readers to 50 CFR distribution of the population occurs in snouted caiman. 17.42(g); however, the special rule for the Province of Santa Fe. Here, the all of these species is at 50 CFR 17.42(c). species is found primarily in the Background floodplain along the Parana´ River, the Five-Year Review The primary purpose of the Act is to Salado river watershed, and the prevent animal and plant species’ Section 4(c)(2)(A) of the Act requires Saladillos watershed (Larriera 1995, pp. endangerment and extinction. The Act that we conduct a review of listed 221–230). requires the Service to identify species species at least once every 5 years. A 5- This species is primarily found at that meet the Act’s definitions of year review is a periodic process altitudes up to 100 m (328 ft) above sea endangered and threatened species, to conducted to ensure that the level (Borteiro et al. 2006, p. 99). The add those species to the Federal Lists of classification of a listed species is broad-snouted caiman exhibits a high Endangered and Threatened Wildlife appropriate. Section 4(c)(2)(B) requires degree of flexibility in its habitat and Plants (50 CFR 17.11 and 17.12, that we determine: (1) Whether a preferences. It is an opportunistic feeder respectively), and to plan and species no longer meets the definition of and prefers shallow, vegetated water. It implement conservation measures to threatened or endangered and should be generally prefers shallow aquatic improve their status to the point at removed from the List (delisted); (2) environments with abundant vegetation. which they no longer need the whether a species more properly meets In some areas, the broad-snouted protections of the Act. When that the definition of threatened and should caiman is sympatric (occurs in protection is no longer needed, we take be reclassified from endangered to overlapping geographical areas) with the steps to remove (delist) the species from threatened; or (3) whether a species yacare caiman (Caiman yacare), but the the Act. If a species is listed as more properly meets the definition of broad-snouted caiman is usually found endangered, we may first reclassify it to endangered and should be reclassified in quieter, more heavily vegetated threatened status as an intermediate from threatened to endangered. It is waters (Medem 1983, Scott et al. 1990). step before its eventual removal from based on the best scientific and C. yacare prefers large rivers with the Federal Lists of Endangered and commercial data available at the time of adjacent marshes (Scott et al. 1990, pp. Threatened Wildlife and Plants; the review. Therefore, we are requesting 43–51). Like many crocodilians, the however, reclassification to threatened submission of any such information that broad-snouted caiman can be found in status is not required prior to removal. has become available since the original temporary bodies of water and Section 3 of the Act provides the listing of this species. This serves as our manmade habitats, such as isolated following definitions that are relevant to 5-year review of this species. cattle or agricultural stock ponds, this rule: Endangered species means any Species Description livestock watering holes, and drainage species which is in danger of extinction ditches or areas of runoff water. It can throughout all or a significant portion of The broad-snouted caiman is a be found in flooded forested areas in its range; Threatened species means any medium-sized crocodilian with a body years of intense rains usually within species which is likely to become an length usually no more than 2 meters 2,000 m (6,562 ft) from bodies of water endangered species within the (m) (6.6 feet (ft)), and has the (Larriera et al. 2008, p. 151). foreseeable future throughout all or a proportionally broadest snout of any The reproductive cycle of this species significant portion of its range. Species crocodile (Verdade et al. 2010, p. 18). It is seasonal. Mating occurs in the spring includes any subspecies of fish or is found generally in lagoons, rivers, (October through December), when wildlife or plants, and any DPS of any creeks, marshes, ponds, and mangroves polygynous males (males who breed species of vertebrate fish or wildlife in river systems of northeast Argentina, with more than one female) establish which interbreeds when mature. southeast Bolivia, Paraguay, and territories. When laying eggs, this When an endangered species (or DPS) northern Uruguay (Borteiro et al. 2006, species constructs a mound out of has recovered to the point where it is no p. 97; Verdade et al. 2010, p. 18). vegetation, and it deposits its eggs in the longer currently in danger of extinction According to Imhof (unpublished center of the mound. This process is throughout all or a significant portion of 2006), approximately 60 percent of the called ‘‘mound-nesting.’’ Another its range, but is likely to become so in species’ range is in Brazil, 30 percent is characteristic of this species is that it the foreseeable future, it is appropriate in Argentina, seven percent is in exhibits communal nesting (several to reclassify that species (or DPS) to Paraguay, and three percent is in females laying eggs in the same nest). threatened. The broad-snouted caiman Bolivia. The percentage of its range in Partially divided nest chambers, each was listed as endangered in 1976. Uruguay is unknown. Broad-snouted with normal clutch sizes, and nests with However, recent information indicates caiman populations are on the Atlantic unusually large clutches (129 eggs) have that the Argentine population has coast, connected through the Parana´ and been observed in this species which is increased since the time of the original Sa˜o Francisco River systems of indicative of communal nesting listing. northeast Argentina, southeast Bolivia, (Larriera 2002). Clutch sizes range Paraguay, and northeast Uruguay. The between 18 to 50 eggs, with females Technical Corrections Sa˜o Francisco River is 2,914 km (1,811 typically laying between 30 and 40 eggs This proposed rule would correct mi) in length. (Micucci and Waller 1995). Egg laying errors in 50 CFR 17.11 as follows: The The broad-snouted caiman exhibits occurs during the wet summer season, table at 50 CFR 17.11(h) does not greater climatic tolerance than other which occurs from December through currently list Bolivia in the historic caiman species (Verdade and Pin˜ a February (Verdade 1998, pp. 18–19). range of the broad-snouted caiman. This 2006). The southernmost limit of the Young hatch at the end of fall and early proposed rule corrects the ‘‘Historic distribution of the broad-snouted winter (February–April) (Micucci and Range’’ entry to include Bolivia. In caiman is northern Argentina (Jenkins et Waller 1995, p. 81). addition, we propose to correct errors in al. 2006), where it is found in the This species is an opportunistic the entries for three other caiman provinces of Chaco, Corrientes, Entre feeder. The young feed on insects and species: brown caiman, common Rı´os, Formosa, Jujuy, Misiones, Salta, small arthropods. As hatchlings grow, caiman, and yacare caiman. The entries Santa Fe, and Santiago del Estero. In their diet becomes primarily aquatic for these species in the ‘‘Special Rules’’ Argentina, 80 percent of the Argentine mollusks and crustaceans, and then

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adults primarily feed on fish (Micucci incentives for landowners and by between 250,000 and 500,000 and Waller 1995, pp. 81–112). increasing public awareness in the local individuals (http://www.flmnh.ufl.edu/ communities to encourage the increase cnhc/csp_clat.htm, accessed January 18, CITES of caiman populations. Another 2011). The broad-snouted caiman was listed objective was to conserve natural It is difficult to accurately obtain in Appendix I of CITES on July 1, 1975. wetlands on which caimans depend population numbers for crocodiles due CITES Appendix I includes species that (Larriera et al. 2008a, pp. 143–145). As to variables such as water temperature, are ‘‘threatened with extinction which of 2008, four ranching programs were the nature of their behavior of are or may be affected by trade.’’ Species operating in Argentina (Larriera et al. disappearing underwater in response to listed under Appendix I may not be 2008), producing a total of certain types of disturbance, their traded for primarily commercial approximately 12,000 skins per year respective visibility based on water purposes. These protections were put in (Verdade et al. 2010, p. 19). As of 2010, depths, and their ability to migrate place because the species had suffered there were seven ranching programs based on drought or flooding substantial population declines registered with the government of (Magnusson 1980, pp. 393–394; Bayliss throughout its range due to habitat Argentina. These programs also 1987, p. 158; Graham 1988, p. 74; destruction and overexploitation reintroduce captive-raised individuals Pacheco 1996, p. 44). An early journal through the commercial crocodilian to the wild. Three of the programs article described ‘‘night counts’’ as a skin trade. function on an educational basis, with mechanism for surveying American The Argentine population was no commercial production. These alligators, which live in habitat similar transferred to Appendix II (which educational ranching operations are in to that of broad-snouted caiman (Wood allows for commercial trade) in 1997. Entre Rı´os, Chaco, and Corrientes et al. 1986, p. 263) and exhibit similar CITES Appendix II includes species that Provinces. Two of the commercial characteristics. This paper indicated are less vulnerable to extinction and ranching programs are in Formosa; the that ‘‘the accuracy of night count that ‘‘although not necessarily now other two are in Corrientes and Santa Fe indices is only 20–25 percent of true threatened with extinction may become Provinces. In 2010, there were 7,768 population means’’ and referred to so unless trade in specimens of such hatchlings produced in Argentina previous research conducted by Taylor species is subject to strict regulation in (Larriera 2010b, p. 1). and Neal (1984, pp. 316–317). Night order to avoid utilization incompatible count surveys use spotlights to detect with their survival.’’ Management Conservation Status caiman eyes. Although night counts are activities in Argentina were reviewed by The broad-snouted caiman is not entirely precise, they are very often the CITES Parties prior to transferring currently listed as endangered used as a method of surveying crocodile this population from Appendix I to throughout its range under the ESA and species. Appendix II. The review included received protections under the ESA on As an example of the difficulty in assessments of population status, June 14, 1976 (41 FR 24062). With accurately obtaining population determination of sustainable harvest respect to CITES, this species was numbers for crocodiles, a review of quotas (and approval of ranching placed in Appendix I of CITES due to crocodile ranching programs conducted programs), and the control of the illegal severe exploitation for international for CITES by the IUCN Crocodile harvest. Management regulations trade and habitat destruction. Because Specialist Group (CSG) in 2004 found imposed after harvest included the the Argentine broad-snouted caiman that only three Parties (one of which tagging of skins and issuance of permits population was moved to Appendix II of was Argentina) to CITES attempted to to satisfy the requirements for CITES in 1997, commercial estimate what proportion of the total Appendix-II species. For a more in- international trade is allowed, subject to wild production was being harvested depth discussion on CITES, please see several restrictions, for specimens, under their ranching programs (Jenkins the International Trade and Regulation parts, and products originating in et al. 2006, p. 35). These estimates were under CITES section under Factor B. Argentina. The broad-snouted caiman is based on production estimates which Overutilization for Commercial, presently listed as endangered in its have wide variances and largely Recreational, Scientific, or Educational entirety under the Act (41 FR 24062; unknown accuracy. However, this Purposes. June 14, 1976), and importation into the report indicated that the easiest data to United States of endangered species is obtain and report to track population Trade prohibited under the Act with certain trends are those linked to the operation Beginning in the 1940s, the broad- exceptions. IUCN classifies this species of the ranching programs (the method snouted caiman was hunted as ‘‘least concern’’ (http:// used by Argentina), data such as commercially for its leather, which is www.iucnredlist.org, accessed numbers of eggs collected from the wild. considered to be higher quality than that November 8, 2010). However, IUCN The eggs in Argentina’s program are of other caiman species (Verdade et al. rankings do not confer any actual collected from known nest locations in 2010, p. 19). Prior to being protected by protection or management. the wild and are an indication of caiman CITES, thousands of broad-snouted density. This is why we use the caiman skins were exported from its Status in Range Countries and information reported from Argentina’s range countries, which led to the listing Population Estimates egg harvest as the best available of the species in Appendix I of CITES In part because broad-snouted caiman information of population trend. The in 1975 (Verdade 1998, pp. 18–19, habitat tends to be heavily vegetated IUCN–CSG report also indicated that Larriera 2003, unpaginated). In 1990, and is difficult to access for humans, results probably indicate deficiencies in ‘‘Projecto Yacare´’’ (‘‘Caiman Project’’) actual numbers of the species have been reporting rather than any declines of was implemented in Argentina based on difficult to document; some researchers conservation significance in wild a concept of conservation through believe that the size of the population populations. The CSG recommended sustainable use of broad-snouted has historically been underestimated field data to verify this assertion, some caiman. The objective of the program (Larriera and Imhof 2000, pp. 311–313). of which has been collected over the was to improve the status of the The imprecision is reflected in the past few years. However, recent surveys population in two ways: by creating global wild population estimate of (Siroski 2004, 2006; Micucci et al. 2007;

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Pin˜ a et al. 2008) have found broad- densities of broad-snouted caiman The map below illustrates the snouted caiman in sampled populations ranged between 5 and 238 caiman per distribution of the species. Below is the at densities comparable to the non- kilometer (km), and almost 70 sites were best available information regarding the threatened American alligator (Wood et surveyed. status of the species in each country. al. 1985, p. 271). In Argentina, recent

Argentina increased to between 20 and 120 caiman lagoons, still and slow-moving waters in per km in 2009; up from 2 to 8 caiman rivers and channels, artificial ponds, In Argentina, the broad-snouted and on small hills in wetlands (Larriera caiman is found in nine provinces per km in 1990 when Argentina’s 1995, pp. 221–230). Nests have also (Formosa, Santa Fe, Misiones, management program of broad-snouted been found in mature chaco forests of Corrientes, Entre Rios, Chaco, Santiago caiman first began (Siroski and Larriera open or closed canopy as far as 300– del Estero, Salta, and Jujuy). According 2010, pers. comm.). These densities are to Imhof (unpublished 2006), within the normal range for crocodile 2,000 m (984–6,562 ft) from water approximately 30 percent of the species’ species. In Argentina, this species has (Larriera 1995, pp. 221–230; Larriera et range is in Argentina. Argentina has been observed in a variety of habitats al. 2008, p. 151). large areas of intact, although altered and waterways, including rivers near Since management and monitoring of habitat with healthy populations waterfalls such as Iguazu´ , and the Argentine population began, (Verdade 1998, pp. 18–19; Pin˜ a et al. freshwater creeks with rocky bottoms population estimates for Argentina have 2009). For example, broad-snouted (Micucci and Waller 1995, pp. 81–110). indicated an upward trend. This has caiman is thought to inhabit 2,400 of In the Province of Santa Fe, the species been achieved through an organized 2,700 water bodies (Pin˜ a et al, 2008, p. is found primarily in the floodplain ranching program and reintroduction of 4) in the Salta Province in Argentina. along the Parana´ River, the Salado river hatchlings into the wild (See Factors B Surveys conducted in 2007 and 2008 watershed, and the Saladillos watershed and D discussion below). Through this indicated that broad-snouted caiman (Larriera 1995). Its nesting areas reflect program, a significant increase in egg habitat in Salta Province is about 3,650 the adaptability of this species to a collection and harvest has occurred in km2 (1,409 mi2). These surveys found variety of habitats. Nests have been the wild; over 30,000 hatchlings from broad-snouted caiman densities had found along dikes or levees, shallow eggs collected have been released into

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the wild since the program began. 2000, and over 4 caiman per kilometer conditions but readily respond to wetter Surveys conducted between 1991 and in 2006 and 2007 (Larriera 2008c, p. 2). conditions. Overall, egg harvest 1992 indicated an average density of This decrease in density during 2006– increased 750 percent between 1992 and 12.2 individuals per km. Later surveys 2007 was attributed to drought (Larriera 2007 (Larriera 2008c, p. 2). This conducted during the 1999–2000 season 2008c, p. 3); however, natural increase in egg production was indicated that in the Ibera´ Reserve, fluctuations such as this often occur in attributed in part to caiman being Corrientes Province, the density had wild populations (Woodward 2010, p. released through this program and increased to 32.4 individuals per km 2). Caiman populations, like most other reaching sexual maturity (Larriera (Waller 2003 in Pin˜ a et al. 2010, p. 4). crocodilian populations, can be 2008c, p. 3). Additional surveys Night counts found an increase of less adversely affected by droughts. Most revealed densities found within its than 1 caiman per km when the program crocodilians and prey species suffer range recorded in Table 1. began, to almost 10 caiman per km in short term declines during these

TABLE 1—DENSITIES OF BROAD-SNOUTED CAIMAN OBSERVED DURING POPULATION COUNTS

Number of Country/province Years localities Range of caiman densities Source

Argentina/Formosa ...... 2007–2008 11 22 to 238 per km ...... Pin˜a et al. (2008). Argentina/Corrientes ...... 2007–2008 10 5 to 125 per km ...... Pin˜a et al. (2008). Argentina/Salta ...... 2007–2008 39 3 to 5 caiman per lagoon ...... Pin˜a et al. (2008). Argentina/Sante Fe ...... 2007–2008 * * 4 per km * ...... Larriera et al. (2008). Argentina/Santa Fe ...... 2002 7 6 to 200 per km ...... Larriera and Imhoff (2004). Bolivia/Pilcomayo River Basin, Tarija .. 1998 6 3 to 58 per km ...... Llobet-Querejazu (1998). Bolivia/Tarija Department ...... 2004–2005 54 6.17 per km ...... Aparicio and Rios (2008). Uruguay ...... 2001–2004 36 3.5 per km ...... Borteiro et al. (2008). Brazil/Sa˜o Francisco River Basin ...... 2006–2007 64 Presence in 44 percent of areas sur- Filogonio et al. (2009). veyed. * Recent caiman counts suggest that populations declined somewhat during 2002–2003 and 2007–2008 (Micucci et al. 2007; Larriera et al. 2008). This has been attributed to cyclic drought conditions during the early 2000s (Micucci et al. 2007; Larriera et al. 2008). * * Not available.

Bolivia During a survey conducted in 2003 suggesting an increasing trend in the The population of broad-snouted and 2004, 6.2 individuals per km were Bolivian population, populations of caiman in Bolivia is at the far western observed (Aparicio and Rios 2008, p. broad-snouted caiman are still edge of the species’ range. According to 104). The survey was conducted in 54 considered to be severely depleted in Imhof (unpublished 2006), water bodies; 42 of which are part of the Bolivia (Aparicio and Rı´os 2008, p. 104; approximately three percent of the Pilcomayo River sub-basin, 12 water Verdade et al. 2010, p. 19). species’ range is in Bolivia. In 1983, bodies were in the sub-basin of the Brazil broad-snouted caiman was found in the Bermejo River (Aparicio and Rios 2008, Pando Department (departments in p. 110). The highest abundance values Brazil has the largest range for this South America are comparable to state were recorded in ‘‘atajados’’ (dikes) and species; approximately 60 percent of the jurisdictions in the United States) of artificial ponds. Broad-snouted caiman species’ range is in Brazil (Imhof Bolivia, which is at the northwestern tip here exhibit preferences for inhabiting unpublished 2006). In 2003, Brazil of Bolivia (Medem 1983). In 1989, shallow temporary water bodies that established a nationwide research and broad-snouted caiman was only found have abundant vegetation cover. The development program, called in the Pilcomayo River area, a tributary population of broad-snouted caiman for Programme for Biology, Conservation of the Paraguay River (King and Videz- this area was calculated on the basis of and Management of Brazilian Roca 1989). The Paraguay River, also 135 individuals. In 1998, an abundance Crocodilians (Coutinho and Luz 2008 in known as Rio Paraguay, is 2,621 km of 3.3 individuals per km was reported Velasco et al. 2008 p. 80). The broad- (1,629 miles (mi)) in length and runs (Pacheco and Llobet 1998). The 1998 snouted caiman was listed as an through Bolivia, Brazil, Paraguay, and data indicated that the population was endangered species in Brazil until 2003, Argentina, joining the broad-snouted dominated by young individuals at which time the species was caiman populations in these countries. (Aparicio and Rios 2008, p. 110). A high withdrawn from the Brazilian List of Surveys in the late 1990s considered the level of young may indicate that the Endangered Fauna (The Brazilian Bolivian population of this species to be population is growing. Although Institute of Environment and Renewable severely depleted (Verdade 1998, pp. different survey methods and timing Natural Resources [IBAMA] 2003). In 18–19). Anecdotal reports indicate that were employed in the 1998 and 2003– 2006, it was reported that in southeast the abundance of broad-snouted caiman 2004 surveys, the population estimates Brazil there were four farms involved in in the Pilcomayo River region may have suggest an increase in density of almost breeding this species. There were a total increased over the past 10 years, but in 3 individuals per km from 1998 to of 354 caiman in the farms, and in 2006, the Bermejo River region, populations 2003–2004. A further observation of the 719 hatchlings had been produced (CSG may have declined (Aparicio and Rı´os survey found that broad-snouted caiman Steering Committee Meeting 2006, p. 6). 2008, pp. 111, 122). It is unclear exist in areas previously unknown to be We have no other information about the whether the population change is public inhabited. It is found in the Gran Chaco, status of this program. perception or whether the perception Arce, and O’Connor Provinces (sub- Although there is still a lack of represents an actual change in broad- basins Pilcomayo and Bermejo) in the population data and monitoring, the snouted caiman population numbers Tarija Department, which is in the south surveys conducted indicate that broad- within Bolivia. of Bolivia. Despite information snouted caiman is present (confirmed in

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44 percent of 64 areas surveyed) management of Brazilian crocodilians, and Brazilian populations through the throughout the Sa˜o Francisco River data are lacking for this species. Uruguay River basin (Borteiro et al. basin, its primary habitat. A 2006–2007 2006, p. 103). Paraguay survey conducted in the Sa˜o Francisco Previous local reports about the River basin found the occurrence of No recent survey data are available for population status of broad-snouted crocodilians in 61 percent of 64 Paraguay, however, according to Imhof caiman in Uruguay published since the surveyed localities, in which the (unpublished 2006); approximately mid 1950s suggested that this species presence of broad-snouted caiman was seven percent of the species’ range is in was subject to extinction due to habitat confirmed in 44 percent of the surveyed Paraguay. The latest data available destruction and poaching (Vaz-Ferreira sites. This was a survey conducted indicate that the population of broad- 1956; Orejas-Miranda 1969; Talice 1971; primarily to detect presence and snouted caiman is naturally low and Vaz-Ferreira 1971; Achaval 1977); absence, rather than an estimate of the scattered throughout eastern Paraguay however, no discussion of survey data population (Filogonio et al. 2009, p. and the southern half of the Chaco and methods was made to support these 961). Caiman occurred in both lentic region, western Paraguay, possibly conclusions (Borteiro et al. 2008, p. (still water) and lotic (moving water) because other potential habitat in 247). During surveys conducted habitats, although caiman preferred western Paraguay is ephemeral between 1981 and 2003, the species was water bodies consisting of small dams, (seasonal, not permanent) (Scott et al. found in both the Cebollatı´ and Tacuarı´ 1990, pp. 43–49). The Paraguayan oxbow lakes, and wetlands. Despite the Rivers, as well as in the Pelotas, India population is found in seasonal marshes hunting pressure and human impact on Muerta, and San Miguel stream basins and livestock ponds, and has colonized natural habitats, results indicated that (Borteiro et al. 2006, p. 97). In the manmade water bodies (Scott et al. the populations of broad-snouted Department of Artigas (northern tip of 1990). There is no known conservation caiman in the Sa˜o Francisco basin are Uruguay), broad-snouted caiman was program for broad-snouted caiman in found to be present in 29 out of 36 broadly distributed and not fragmented Paraguay. (Filogonio et al. 2009, p. 961). surveyed areas (Borteiro et al. 2008, pp. Uruguay 246). The area studied consisted of No other recent survey data are approximately 400 km2 (154 mi2) of known in Brazil other than in the The broad-snouted caiman is the only fluvial plains in the Uruguay River northwest portion of Santa Catarina caiman species found in Uruguay basin, in Artigas Department, Island, in the Ratones River plain. In (Borteiro et al. 2006, p. 98); the northwestern Uruguay. The caiman this area surveyed, a density of 0.25 percentage of this species’ range in observed were predominantly sub- caiman per km was encountered (Fusco- Uruguay is unknown (Imhof adults. A total of 462 individuals were Costa et al. 2008, p. 185). Based on their unpublished 2006). There were little located during these surveys, and the size, these caiman were generally data available regarding this species’ density was determined to be 3.5 considered to be adults. The purpose of population numbers until recently. New individuals per km. study was to primarily confirm the information available to the Service presence of this species in this location. updates the density estimates of broad- Although comparisons with these snouted caiman in Uruguay. The previous surveys are difficult based on Preliminary data indicate that this population of broad-snouted caiman in unknown methodologies used in the species is more widespread and Uruguay is more widespread and past, the 2008 data, along with the prevalent in Brazil than previously appears larger than previously believed population age structure of caiman, believed. The main concern for this (Borteiro et al. 2006, pp. 97–108; suggests that the population may be species in Brazil appears to be dams that Borteiro et al. 2008, pp. 244–250), but it increasing (Borteiro et al. 2008, p. 248). have been constructed for hydroelectric is unclear whether population growth The researcher noted that the observed stations that block water flow to has occurred or whether earlier surveys caiman were predominantly subadults wetlands. Both drainage of land for were inaccurate. In the past, it was and, thus, had the potential to recruit agriculture and river pollution have also suggested that a decline in population into adult size classes (as opposed to reduced the availability of broad- had occurred in Uruguay, but no strong very young hatchlings which have a snouted caiman habitat in Brazil basis for this existed (Verdade 1998, p. significantly higher mortality rate). This (Verdade 1998, pp. 18–19). Hunting 20). Recent observations and field observation may be due to an increase pressure is another factor that affects surveys indicate that broad-snouted in agricultural and livestock activities broad-snouted caiman in Brazil. It is caiman is fairly common in northern that inadvertently had a positive effect hunted for several reasons: Because Uruguay, and is also widely distributed on broad-snouted caiman. These caiman feed on the fish attached to in central and western Uruguay previous reports about the population fishing nets; because caiman destroy (Borteiro et al. 2008, p. 248). This status of broad-snouted caiman in fishing nets; and because caiman are a species is adaptable to a wide range of Uruguay may have been due to source of food. Although Brazil has water sources and habitats (Borteiro et inadequate surveys or survey established a research and development al. 2006, p. 102, Borteiro et al. 2008, p. methodology, or the population may program for the conservation and 244) and is connected to the Argentina have grown.

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In 2008, the number of caiman located species into the wild. The goal of this other endangered or threatened species in each area surveyed ranged between Government-sanctioned farm was to or subspecies. The term ‘‘distinct one and 31. The average abundance was produce skins and meat commercially. population segment’’ is part of the between 1.3 and 3.4 per km (Borteiro et In 2008, there were 20 adult caiman in statutory definition of a ‘‘species’’ and is al. 2008, p. 246). Research conducted the farm, yet they had reintroduced 100 significant for listing, delisting, and recently regarding the population age caiman back into the wild (Velasco et al. reclassification purposes under section structure of caiman in Uruguay 2008, p. 82). The Service knows of no 4 of the Act. indicates that the population is additional information regarding this increasing (Borteiro et al. 2008, p. 248). private farm. To interpret and implement the DPS provisions of the ESA and This may be due to an increase in In summary, the population of broad- agricultural impoundments that have snouted caiman in Uruguay appears to Congressional guidance, the Service and been constructed in the past few be larger than previously believed, but the National Marine Fisheries Service decades which have unintentionally differences in survey methodologies jointly published the DPS Policy (see created suitable habitat for caiman. Each used make it difficult to assess the Policy regarding the recognition of department in which broad-snouted population trends. The percentage of the distinct vertebrate population segments caiman has recently been documented broad-snouted caiman population that under the Act (61 FR 4722; February 7, and the most recent date observed is exists in Uruguay has still not been 1996). Congress included the DPS below (Borteiro et al. 2008, pp. 244– estimated. concept in the ESA, recognizing that a 250). listing, reclassification, or delisting Distinct Population Segment Analysis Dept. of Artigas (Northern Uruguay; action may, in some circumstances, be caiman commonly found) As indicated previously in this more appropriately applied over • Yacuy stream (2002) document, the Government of Argentina something less than the entire area in • Mandiyu stream (2003) requested that we review the status of which a species or subspecies is found Dept. of Cerro Largo (eastern Uruguay) the species in Argentina in order to or was known to occur in order to • Fraile Muerto stream (2005) determine whether or not the species protect and recover organisms in a more Dept. of Lavelleja warrants reclassification to threatened timely and cost-effective manner. A DPS • Jose´ Pedro Varela (2003) status under the Act. Section 3(16) of is a listable entity that is usually Dept. of Paysandu´ (1997) the Act defines ‘‘species’’ to include described geographically rather than Dept. of Rocha ‘‘any species or subspecies of fish and • biologically. By using international San Luis (2001) wildlife or plants, and any distinct boundaries, we are able to clearly • San Miguel River stream (2003) population segment (DPS) of any identify the geographic extent of the Dept. of Rivera (1992) species of vertebrate fish or wildlife DPS listing and thereby facilitate law Dept. of Tacuarembo´ which interbreeds when mature’’ (16 enforcement and promote public • Paso Bonilla (2003) U.S.C. 1532(16)). In evaluating whether Dept. of Salto (Northwestern Uruguay, the action petitioned by Argentina is understanding of the listing. Under this no current reports; historical warranted, we first must analyze Policy, we evaluate a set of elements in accounts only, whether this population constitutes a a three–step process in order to make Borteiro et al. 2006, pp. 98–100) ‘‘species’’ as defined under the Act. our decision concerning the Dept. of Treinta y Tres Thus, we begin our analysis with a establishment and classification of a • Merin Lake; Tacuari River (2002) determination of whether the possible DPS. These elements are • Paso del Dragon (2002) population in Argentina represents a applied similarly for both additions to, • Kiosco Tacuari (2003) DPS. A DPS is a listable entity under the reclassifications under, and removals Additionally, in Uruguay, a private Act, and is treated the same as a listed from the Federal Lists of Endangered farm began in 2002 that involved species or subspecies. It is listed, and Threatened Wildlife and Plants. reproduction and reintroduction of this protected, and recovered just as any These elements include:

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(1) The discreteness of a population in A population segment needs to satisfy above under Distinct Population relation to the remainder of the taxon to only one of these conditions to be Segment Analysis. Recognition of which it belongs; considered significant. Evidence with international boundaries when they (2) The significance of the population respect to any one of these scenarios coincide with differences in the segment to the taxon to which it may allow the Service to conclude that management, status, or exploitation of belongs; and a population segment can be significant the species under the Act is consistent (3) The population segment’s to the taxon to which it belongs. with CITES, which recognizes conservation status in relation to the Furthermore, the Service may consider international boundaries for these same Act’s standards for listing (addition to other information relevant to the reasons. the list), delisting (removal from the question of significance, as appropriate. Lastly, if we determine that the Physical, Physiological, Ecological, or list), or reclassification (i.e., is the Behavioral Factors population segment endangered or population is both discrete and threatened). significant, then the DPS Policy requires There are no studies or information The Policy first requires the Service to an analysis of the population segment’s that indicate there are physical, determine that a vertebrate population conservation status in relation to the physiological, ecological, or behavioral is discrete in relation to the remainder Act’s standards for listing (addition to characteristics that would contribute to of the taxon to which it belongs. the list), delisting (removal from the separateness between the Argentine Discreteness refers to the ability to list), or reclassification (i.e., is the population and the population in delineate a population segment from population segment endangered or Bolivia, Brazil, Paraguay, and Uruguay. The Paraguay River joins the broad- other members of a taxon based on threatened). A detailed discussion is snouted caiman populations in either (1) Physical, physiological, then presented for the five listing factors Argentina, Bolivia, Brazil, and Paraguay. ecological, or behavioral factors for each DPS as required by the Act. We The Uruguay population of the broad- (quantitative measures of genetic or analyze these factors in response to the snouted caiman is connected to the morphological discontinuity may current status of the species, which Argentine and Brazilian populations provide evidence of this separation), or encompasses present and future threats through the Uruguay River basin (2) international governmental and conservation efforts. The broad-snouted caiman has a (Borteiro et al. 2006, p. 103). Broad- boundaries that result in significant continuous range from Argentina to snouted caiman populations are also differences in control of exploitation, Bolivia, Brazil, Paraguay, Uruguay (see connected through the Parana´ and Sa˜o management, or habitat conservation Figure 1). We evaluated the status of Francisco River systems of northeast status, or regulatory mechanisms that this species to determine if two distinct Argentina, southeast Bolivia, Paraguay, are significant in light of section population segments exist (one in and northeast Uruguay. This is a wide- 4(a)(1)(D) of the Act—the inadequacy of Argentina, and the other in Bolivia, ranging species that occurs primarily in existing regulatory mechanisms. Brazil, Paraguay, and Uruguay) under freshwater environments such as lakes, Second, if we determine that the this Policy because its range spans swamps, and slow-moving rivers. population is discrete under one or several countries and its conservation Because it is connected via the major more of the discreteness conditions, status varies by country. We evaluated river systems that flow through the then a determination is made as to the species in this manner specifically species’ range and we have found no whether the population is significant to for two reasons. First, the Government information indicating separateness the larger taxon to which it belongs in of Argentina petitioned us to reclassify between the Argentine population and light of Congressional guidance (see the species in Argentina to threatened, the population occurring in the Senate Report 151, 96th Congress, 1st and second, in Argentina, this species is remainder of the species’ range due to Session) that the authority to list DPS’s listed in Appendix II of CITES, and in physical, physiological, ecological, or be used ‘‘sparingly and only when the the rest of its range: Bolivia, Brazil, behavioral factors,, we did not find biological evidence indicates that such Paraguay, and Uruguay, it is listed in either population segment is discrete action is warranted.’’ In carrying out Appendix I of CITES. The significance based on this factor. this examination, we consider available of this distinction is that these two Moreover, we are not aware of any scientific evidence of the population’s populations may be subject to different quantitative data of genetic or importance to the taxon to which it management regimes and may have morphological discontinuity to indicate belongs. This consideration may different conservation statuses. Thus, separateness between the two include, but is not limited to the we considered whether these two populations. Because of their following: populations meet the discreteness and interactions through interconnected (1) The persistence of the population significance criteria under our DPS river systems and a current range that segment in an ecological setting that is policy, and then whether these two mirrors their historical range, we find unique or unusual for the taxon; potential DPSs of the broad-snouted that the two populations overlap, (2) Evidence that loss of the caiman still meet the definition of allowing for genetic intermixing. population segment would result in a endangered, should be reclassified to Therefore, these two population significant gap in the range of the taxon; threatened, or whether either segments cannot be delineated based on (3) Evidence that the population population segment has recovered and physical, physiological, ecological, or segment represents the only surviving is no longer either endangered or behavioral factors. natural occurrence of a taxon that may threatened. be more abundant elsewhere as an International Differences in Species’ introduced population outside of its Discreteness Conservation Status historic range; and In the first step in our DPS analysis, Under our DPS policy, consideration (4) Evidence that the discrete we determine whether there are any may be given to utilizing international population segment differs markedly populations that are discrete in relation boundaries in establishing discreteness from other populations of the species in to the remainder of the taxon to which when differences in management, its genetic characteristics from other it belongs. A DPS may be considered conservation status, or control of populations of the species. discrete if it meets the criteria described exploitation of the species exist between

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these population segments as a Argentina’s caiman egg harvesting status of this species under CITES to the consequence of national legislation. program began creating incentives for less restrictive Appendix II listing Thus, we analyze below whether any of locals to protect and conserve habitat for (www.cites.org, accessed July 7, 2011). these differences exist that are the broad-snouted caiman (see Factor Although this international trade significant in light of section 4(a)(1)(D) D). restriction is in place for range countries of the Act. This species is also protected through other than Argentina, we remain legislation (Law 22.421 and Decree 691/ concerned about habitat loss, the status Argentina 81), administered by the Direccio´n and management of wild populations in Two clear differences in the Nacional de Fauna y Flora Silvestres. those countries. exploitation, management, habitat The Government of Argentina is In the remainder of this species’ range conservation status, or regulatory adequately enforcing its legal (Bolivia, Brazil, Paraguay, and mechanisms of this species exist frameworks, both at the national and Uruguay), these governments either between Argentina and the remainder of international levels. The best available have not demonstrated an ability to its range. This species is intensely information strongly suggests that the adequately enforce their legal managed in Argentina, and due to its caiman population in Argentina is framework, or there is no population improved status in the wild, is listed in increasing, while the population trend trend or monitoring data about the Appendix II of CITES. In contrast, this in the other range countries is unclear species to indicate the status of the species is not intensively managed in (Verdade et al. 2010, pp. 18–19). The species in these countries is improving. the remainder of its range, and it species has significantly increased in We found little to no information about continues to be listed in Appendix I density since the caiman ranching the status of the species in these under CITES due to its unimproved program began in 1990, and its range countries. This was supported by the status in the range countries outside of has expanded into areas where it had most recent report on the status of the Argentina. The primary reason this not been seen prior to 1990. In the Santa species prepared by the IUCN’s species was protected by the ESA and Fe Province, for example, the number of Crocodile Specialist Group (Verdade et CITES was because of the decrease in nests identified increased from 14 in al. 2010, pp. 18–19). The best available population numbers due to 1990 to 304 nests in 2002 (Jenkins et al. information indicates that this species overutilization (see discussion under 2004, p. 27). The monitoring reports in these countries is still subject to Factor B in the Evaluation of Factors indicate that Argentina’s management of unmitigated pressures such as Affecting the Species section below). the species is resulting in an upward destruction of habitat due to human Argentina’s management regime has trend in this species’ population. encroachment, construction of dams, resulted in an increase in this species’ Argentina submits reports in accordance and conversion of habitat to agriculture, population such that harvest for with CITES and is an active participant and, in some cases, illegal hunting. international trade may be conducted in the IUCN’s Crocodile Specialist Conservation actions for this species sustainably under proper management. Group, particularly for this species. The may not be a priority in these other Although all of this species’ range management of this species has led to range countries, and these countries countries have national protected- significant improvement in the status of may be facing economic issues, high species and protected-areas legislation the species in Argentina, which has levels of poverty, hunting pressure, and under the jurisdiction of specific been demonstrated through monitoring conversion of caiman habitat to other ministries or departments that control and reporting (Jenkins et al. 2004, pp. uses. The lack of funding and personnel activities that impact the broad-snouted 25–28; Verdade et al. 2010, pp. 18–20). often makes enforcement of their legal caiman and its habitat, Argentina’s Due to Argentina’s management, the frameworks challenging. As a result of national legal framework is particularly population of broad-snouted caiman is differences in exploitation, robust (See Factor D). In 1990, now widespread and abundant management, habitat conservation Argentina began a joint government- throughout its range in Argentina. It is status, or regulatory mechanisms, the private initiative to recover this species relatively common in suitable habitat in broad-snouted caiman in Bolivia, Brazil, in the Santa Fe Province (Jenkins et al. the provinces of Formosa, Santa Fe, Paraguay, and Uruguay remains in 2004, pp. 25–28; Verdade 2010, pp. 18– Corrientes, and Salta. While some CITES Appendix I. Based on these 20). This program was ratified by habitat loss and degradation remain in differences in the control and Provincial Law 4830, Articles 22 and 37 Argentina, these threats have been management of habitat and exploitation (CITES CoP 10, Proposal 10.1) and reduced, as explained in our five-factor as delineated by international subsequently expanded in scope. Now analysis below. boundaries, we consider the population there are seven government-approved in Bolivia, Brazil, Paraguay, and Bolivia, Brazil, Paraguay, Uruguay broad-snouted ranching programs Uruguay to be a separate discrete within four provinces. This initiative Within each of these countries, not population. began in order to increase this species’ only is there a wide variability in the population size and to be able to sustain amount of information available about Conclusion on Discreteness commercial harvest. In the proposal to the species, but also about the level of We have determined, based on the transfer this species from CITES management and monitoring of the best available information, that the Appendix I to Appendix II, the proposal species (Borteiro et al. 2006; Larriera et population of broad-snouted caiman in noted that although the primary threat al. 2008, p. 152; Verdade et al. 2010, p. Argentina is discrete from the was initially overutilization, the more 20). This species is listed in Appendix population in Bolivia, Brazil, Paraguay, recent and significant threat was habitat I of CITES in these range countries, and Uruguay due to the significant loss (CITES Cop 10, Proposal 10.1). The which means that international trade difference in the control of exploitation, proposal indicated that a method to originating from these countries of management of habitat, conservation reduce the threat of habitat loss is to put broad-snouted caiman including its status, and regulatory mechanisms an economic value on the species’ parts and products, for primarily between international boundaries. We habitat, so that the local communities commercial purposes is prohibited. To conclude that these two populations (1) and farmers would not drain the land our knowledge, none of these countries the population in Argentina and (2), the (degrade the species’ habitat). Thus, have submitted proposals to change the population in Bolivia, Brazil, Paraguay,

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and Uruguay, of the broad-snouted population of the broad-snouted caiman represents a significant resource caiman meet the requirements of our occurs in habitat that includes unique warranting conservation under the Act DPS Policy for discreteness. features not used by the taxon elsewhere (61 FR 4724). The Ninth Circuit Court in its range. Therefore, we conclude that stated ‘‘[t]he plain language of the Significance neither the discrete population of broad- second significance factor does not limit If a distinct population segment is snouted caiman in Argentina nor the how a gap could be important,’’ considered discrete under one or more discrete population in Bolivia, Brazil, National Association of Home Builders of the conditions described in the DPS Paraguay, and Uruguay are ‘‘significant’’ v. Norton, 340 F.3d 835, 846 (9th Cir. policy, its biological and ecological as a result of persistence in a unique or 2003). Thus, we consider ways in which significance will be considered in light unusual ecological setting. the loss of each discrete population of of Congressional guidance (see Senate the broad-snouted caiman might result Differences in Genetic Characteristics Report 151, 96th Congress, 1st Session). in a significant gap in the range of In making this determination, we No data have been located that species. Its range is estimated as consider available scientific evidence of indicate that the Argentine population follows: 28 percent in Argentina, and 72 each discrete population segment’s and the population in the remaining percent in the remainder of its range: 4 importance to the taxon to which it range countries are each significant percent in Bolivia, 58 percent in Brazil, belongs. Since precise circumstances based on genetics (Villela et al. 2008, 8 percent in Paraguay, and 2 percent in vary considerably from case to case, the pp. 628–635). Our knowledge across the Uruguay (Larriera pers. comm. 2011). DPS policy does not describe all ways range countries is sparse with respect to that might be used in determining the genetic diversity and integrity on the Argentina biological and ecological importance of broad-snouted caiman. However, a 2008 We considered whether the Argentine a discrete population. However, the DPS study indicates that genetic flux (genetic DPS constitutes a significant gap in the policy describes four possible scenarios flow between members of a species) range of the species. In 2006, the that provide evidence of a population occurs; the species remains fairly population of broad-snouted caiman in segment’s biological and ecological connected through the major waterways Argentina was estimated to be 13 importance to the taxon to which it within its range. River channels are percent of the potential global belongs (see additional discussion above important routes to crocodilian population. The species is distributed in under Distinct Population Segment dispersal. The Paraguay River joins nine provinces in the northern part of Analysis). Brazil, Bolivia, Paraguay, and Argentina, Argentina. It is increasing within its A population segment needs to satisfy and the populations of this species are range within Argentina into habitat only one of these conditions to be connected in part through this river. where it had not been seen since the considered significant. Furthermore, The populations of this species are also caiman ranching program began. It has other information may be used as connected between Uruguay and been observed in a variety of habitats appropriate to provide evidence for Argentina via the Uruguay River, which and waterways including rivers near significance. Having determined that the is the border between these two waterfalls, freshwater creeks with rocky population of broad-snouted caiman in countries. bottoms, and in agriculture and cattle Argentina is discrete from the Additionally, a 2006–2007 survey in impoundments. population in Bolivia, Brazil, Paraguay, Brazil found that C. latirostris is widely In Argentina, human impact on the and Uruguay, we then determine the distributed throughout the Sa˜o species has been reduced since 1990 significance of these two discrete Francisco River basin, and its through educational programs and populations to the taxon. We evaluate distribution pattern indicates that the incentives which have served to the biological and ecological populations within the river basin are minimize habitat loss. The caiman significance based on the available not fragmented (Filogonio et al. 2010, p. ranching program (see discussion under scientific evidence of each population 964). The genetic variations of broad- Factor A below) has resulted in segment’s importance to the taxon to snouted caiman were found to be improvements in the quality of the which it belongs. A population’s closely related to patterns of these river species’ habitat (such as the decrease in biological significance is evaluated basins, and indicated that there was no draining of wetlands), thereby based on the principles of conservation significant correlation between genetic increasing the range and population size biology using the concepts of variation and genetic distance (Villela et of the species. Its rate of survival in redundancy, resiliency, and al. 2008, p. 6). This species is not only Argentina far surpasses the normal representation (see Redford et al. 2011 a mobile species but is also flexible in survival rate of this species in the for additional information on these its habitat preferences. The river basins remainder of its range due to the concepts). These concepts also can be within its range appear to be sufficiently ranching program (described below). expressed in terms of four viability connected, despite any habitat Reports indicate that the Argentine characteristics: Abundance, spatial modifications. There is no other population of this species is increasing. distribution, productivity, and diversity information available that indicates The captive-held stock reported in 2010 of the species. there are significant differences in the was 39,624 (Larriera et al. 2010, p. 1), populations. Based on the best available and the density of caiman surveyed in Persistence in a Unique Ecological information, we have determined that the wild has increased substantially Setting the Argentine population of the broad- (Pin˜ a et al. 2009, pp. 1–5) since The broad-snouted caiman is a wide- snouted caiman does not have any surveying began in 1990. ranging species that occurs primarily in genetic characteristics that are markedly Argentina is the only range country freshwater environments such as lakes, different from the population in Bolivia, that actively manages and conserves the swamps, and slow-moving rivers. Its Brazil, Paraguay, and Uruguay. broad-snouted caiman and its habitat by habitat in Argentina is typical of the harvesting eggs, hatching the young, species’ habitat throughout its range Gap in the Taxon’s Range raising them to an age where they are (including Bolivia, Brazil, Paraguay, and The loss of a DPS could result in a more able to escape predators and other Uruguay). We do not have any evidence significant gap in the range of a taxon, threats, and returning between five and to indicate that the Argentine indicating that a population segment ten percent of those hatchlings to the

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wild (Verdade et al. 2010, p. 20). Argentina’s active management efforts would create a significant gap in the Experts indicate that returning at least affect the quality of the species’ habitat current range of the species. Based on five percent of the hatchlings to the wild which subsequently contributes to the this evaluation of each population increases the species’ survivability, as it species’ resiliency. Based on the segment’s significance, we found that mitigates for the high incidence of increase in density as evidenced by the each is significant to the species as a mortality that occurs in the wild even population counts, the significant whole. increase of hatchlings reared in prior to hatching (Bolton 1989, Ch. 4, p. Conclusion of DPS Analysis 1). Most caiman mortalities occur either captivity and subsequently released, before hatching or during the first few and the expansion in range, we find that Under the DPS policy, once we have months after hatching due to factors the population of the broad-snouted found that a population segment is such as flooding or nest predation caiman in Argentina significantly discrete and significant, we then (Bolton 1989, Ch. 4, p. 1). The release contributes to the resiliency of the evaluate whether the potential DPS of these animals at a later age species. warrants endangered or threatened significantly increases their chances of We found that the success of the status under the Act, considering the survival, primarily due to the caiman ranching program has created a factors enumerated under section 4(a)(1) hatchlings’ increased ability to escape robust, healthy, sustainable, increasing and the statutory definitions for an predators and their ability to survive population in Argentina. This ‘‘endangered species’’ and ‘‘threatened other factors such as nest flooding, fire distinguishes the Argentine population species.’’ Based on our evaluation under ants, and exposure to pesticides. from rest of the species’ range where it the DPS Policy, we propose to establish Because Argentina releases hatchlings is not being intensely monitored and two distinct population segments of the into the wild after an age they are most managed to the point where it is self- broad-snouted caiman. The first is the susceptible to predators and flooding sustaining. The factors in Argentina population in Argentina, and the second events, the population has a greater including: The increase in density and is the population in the remainder of its chance of survival in the wild than population counts; large numbers of range: Bolivia, Brazil, Paraguay, and broad-snouted caiman hatchlings in the caiman collected from the wild, reared Uruguay. We will refer to this second other range countries. This increase in in captivity and subsequently released; population as the ‘‘Northern DPS.’’ On survivability further distinguishes the and expansion in range, all contribute to the basis of the best available Argentine population from rest of the the resiliency, representation, and information, we conclude that each of these two population segments meet the species’ range and greatly contributes to redundancy of the species and its requirements of our DPS Policy for the resiliency (abundance, spatial overall viability. discreteness and significance. These two distribution, and productivity) to the Thus, the loss of the Argentine DPSs are each discrete due to the species as a whole. population would create a significant gap in the current range of the species. significant differences in the Argentina’s wild caiman population is Based on this evaluation of this management of habitat, conservation also well distributed. The Argentine population’s biological significance, we status, exploitation, and regulatory population is considered healthy and found that the broad-snouted caiman in mechanisms between the international increasing as opposed to the Argentina is significant to the species as boundaries of Argentina and the species populations in Bolivia, Brazil, Paraguay, a whole. We, therefore, conclude that in the rest of its range: Bolivia, Brazil, and Uruguay. This species is moving the population of broad-snouted caiman Paraguay, and Uruguay. These two into habitat where it had not been seen in Argentina is significant under the discrete population segments are clearly in many years, which increases the DPS policy because it contributes to the defined by international governmental potential environmental variability redundancy, resilience, and boundaries and these other differences. within the range of the species. representation of the species such that The robustness of the population in Argentina’s broad-snouted caiman the loss of this DPS would result in a Argentina significantly contributes to population helps contribute to the significant gap in the range of this the biological and ecological health and viability of the species overall; and it is taxon. viability of the species as a whole. providing a margin of safety for the Argentina is the only country actively species to withstand catastrophic Bolivia, Brazil, Paraguay, and Uruguay managing the broad-snouted caiman. It events, strengthening the redundancy of Because the species is widely also is the only country actively the species. This expansion allows for distributed within these countries and working with local people to create adaptations in response to variations in constitutes 72 percent of its range, the financial incentives to protect caiman the environment. The abundance of this Bolivia, Brazil, Paraguay, and Uruguay and its habitat. Argentina’s species in Argentina contributes to the population is significant under the DPS implementation of its ranching program potential diversity of the species, policy because it also contributes to the increases the species’ survivability particularly since Argentina constitutes redundancy, resilience, and success, which further distinguishes the the southernmost part of its range. representation of the species such that Argentine population from the rest of Because it is at the edge of its range, this the loss of this population would result the species’ range. It was reclassified to population may add to its adaptive in a significant gap in the range of this Appendix II in Argentina, allowing for capabilities, particularly if there is a taxon. commercial trade in accordance with significant gradient in temperature the provisions of CITES. Due to within the range of the species. Because Conclusion on Significance Argentina’s intense management of this the Argentine population is more robust We have determined, based on the species, the survivability rate of the than the other range countries, the loss best available information, that the Argentine population is far higher than of the Argentine population would population of broad-snouted caiman in in the other countries within this result in a significant gap in the range Argentina is significant to the taxon and species’ range. This difference is further of the species, particularly because it is the population in Bolivia, Brazil, supported by the fact that broad-snouted believed to consist of over a quarter Paraguay, and Uruguay is also caiman in Bolivia, Brazil, Paraguay, and (approximately 28 percent) of the significant to the taxon because the loss Uruguay remains listed in Appendix I of species’ range. of each discrete population segment CITES as a species threatened with

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extinction which is or may be affected includes any subspecies or, for 10 years, Argentina has undergone by trade, while the population in vertebrates, distinct population significant changes in land use. Argentina no longer meets the criteria segments. The world market for soy is causing for an Appendix I listing. Following is a range wide threats the conversion of pastures to soy We find that these two population analysis in which we evaluate whether monocultures. Soy is now Argentina’s segments meet our DPS policy for the broad-snouted caiman is endangered main export crop, and Argentina is the significance because the loss of either or threatened in the Argentine DPS and world’s third largest producer of this population (28 percent of its range in the DPS which consists of Bolivia, commodity (USDA, Foreign Agricultural Argentina and 72 percent of its range in Brazil, Paraguay, Uruguay, which we Service (FAS) 2010a, p. 11). Argentina’s Bolivia, Brazil, Paraguay, and Uruguay) will refer to as the Northern DPS. shift toward soy has displaced would result in a significant gap in the cultivation of many grains and Factor A. The Present or Threatened range of the taxon. Based on our vegetables as well as beef production. Destruction, Modification, or analysis, we find that these two Many established cattle ranches are Curtailment of Its Habitat or Range populations meet the criteria for being sold to soy investors. For discreteness and significance under the Habitat destruction and modification example, in Salta Province, potential DPS Policy due to (a) differences in has increased throughout the species’ conversion to soy cropland in Northern management delineated by international range and is now likely the greatest Argentina could exceed over one boundaries, and (b) a loss of either threat to the survival of the broad- million hectares (USDA FAS 2010b, population segment (28 percent of its snouted caiman (Verdade et al. 2010, p. 1). Cattle feed mostly on established range in Argentina and 72 percent of its pp. 18–19). The overharvest for introduced grasses but native grasslands range in Bolivia, Brazil, Paraguay, and commercial purposes, rather than also persist in pastures, especially along Uruguay) would result in a significant habitat destruction or modification, was wetlands edges. Soy now covers gap in the range of the taxon. the primary reason for the broad- approximately 16.6 million hectares, snouted caiman’s inclusion in CITES more than half the country’s cultivated Evaluation of Factors Affecting the and subsequently being listed under the land (USDA FAS 2010b, p. 10). The Species Act. The analysis of the five factors large scale production of soy requires Section 4(b) of the Act and regulations under the Act requires an investigation the application of fertilizers and promulgated to implement the listing of both current and future potential pesticides. As a result of this change in provisions of the Act (50 CFR part 424) factors that may impact the species, habitat use from traditional cattle set forth the procedures for listing, including the present or threatened grazing to primarily soy production in reclassifying, or removing species from destruction, modification, or many areas, significant changes in the listed status. We may determine a curtailment of its habitat or range. We habitat and landscape occur which species to be an endangered or found that data on habitat destruction affect this species to the point that its threatened species because of one or were generally presented separately for former habitat is no longer suitable. more of the five factors described in each individual country. Therefore, the Adding to this problem of habitat section 4(a)(1) of the Act; we must following analysis of the potential conversion is that Argentina’s consider these same five factors in threats to the species from habitat management of its resources is delisting species. Revisions to the list destruction or modification generally decentralized. Provincial and municipal (adding, removing, or reclassifying a first presents the specific information governments have great autonomy, species) must reflect determinations available for broad-snouted caiman in property rights are respected, and made in accordance with these same each country, and then summarizes the federal authority is relatively limited. five factors and the Act’s definitions for information that was available for the This is particularly evident in control endangered and threatened species two DPSs. over property with respect to the Section 4(b) requires the determination conservation of natural resources, land Argentine DPS of whether a species is threatened or use, and protection of the environment. endangered to be based on the best In some areas in Argentina, habitat In this decentralized system, there is available science. We are to make this destruction has significantly increased very little comprehensive land use determination after conducting a review in recent years (Verdade et al. 2010, p. planning at all levels of government. of the status of the species and taking 19). Argentina has lost substantial Regulatory mechanisms that exist at the into account any efforts being made by forested areas, and conversion of caiman national and provincial levels are foreign governments to protect the habitat to other uses is likely to further seldom coordinated and are sometimes species. affect the broad-snouted caiman’s contradictory and inefficient. For species that are already listed as habitat in Argentina. In some cases, Although habitat conversion is threatened or endangered, this analysis habitat modification actually has currently impacting the species, suitable of threats is an evaluation of both the positive effects on the caiman (such as broad-snouted caiman appears to exist, threats currently facing the species and the creation of water impoundments, for and the species is expanding into new the threats that are reasonably likely to example), and in other cases the habitat sites, in part due to intense management affect the species in the foreseeable modifications may have a negative of this species through Argentina’s future following the delisting or effect. The practice of drying swamps caiman ranching programs. For downlisting and the removal or (potential caiman habitat) through example, as of 2004, surveys indicated reduction of the Act’s protections. channeling occurs in its habitat, that the broad-snouted caiman Under section 3 of the Act, a species is particularly for producing soybeans population in Santa Fe Province ‘‘endangered’’ if it is in danger of (Larriera et al. 2008, p. 152). increased 320 percent since the project extinction throughout all or a significant Landowners also commonly channelize began (Larriera and Imhof 2006). portion of its range and is ‘‘threatened’’ wetlands to increase grazing land for Observed wild population densities if it is likely to become an endangered cattle (which may have a positive increased from an average of between species within the foreseeable future effect). Since the early 1800s, 2 and 8 individuals per km in 1990, to throughout all or a significant portion of Argentina’s economy greatly depended between 20 and 120 individuals per km its range. The word ‘‘species’’ also on cattle grazing; however, over the past during the 2008–2009 survey period

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(Larriera and Siroski 2010, p. 2). The Province, Argentina, increased 320 plantations and soybean production distribution of the wild population has percent since the project began (Larriera (Aide and Grau 2004, p. 1915; Pacheco expanded into areas from which the and Imhof 2006). Observed wild 2004, pp. 205–225). The highest species had formerly disappeared population densities here increased abundance values of this species were (Larriera et al. 2005). from an average of 2 to 8 individuals per recorded in ‘‘atajados’’ (dikes) and With respect to habitat modification, km in 1990, to 20 to 120 individuals per artificial ponds. The tropical forests of some changes have positive effects and km in 2008–2009 (Larriera and Siroski Bolivia are found in the departments of some have negative effects. Although 2010; p. 2). The distribution of the wild Santa Cruz, Beni, and Pando, and this species has been shown to occupy population has also expanded into areas northern areas of La Paz and disturbed habitat, much of the species’ from which the species had formerly Cochabamba. The deforestation to the original range in Argentina has been disappeared (Larriera et al. 2005). north and east of Santa Cruz is primarily altered, and significant alteration is However, the degradation and due to large-scale agro-industry, expected to occur in the future due to destruction of this species’ habitat whereas the areas of deforestation the conversion of cattle pastures to continues to occur in Argentina. around Pando and Beni tend to be monocultures such as soy, which is not Therefore, based on the best available mainly a result of small-scale desirable habitat. Increases have been information, we find that the population colonization and clearing. Large-scale observed in the relative abundance of in Argentina continues to be threatened agriculture responds mainly to external the species in Argentina due in part to by the destruction, modification, or market demands (e.g., biofuels, active management programs (see Factor curtailment of its habitat now and in the sugarcane, soy; principally from the D). These caiman conservation and future. United States, Brazil, and Argentina), public awareness programs have while smaller farmers respond mainly to Bolivia, Brazil, Paraguay, Uruguay DPS resulted in less habitat alteration (e.g. the domestic market. burned grass) and less drained (Northern DPS) The government actively promotes the marshland for cattle production in the In Bolivia, the broad-snouted caiman development of infrastructure projects nesting areas (Larriera and Imhof 2006). is on the edge of its range. Broad- in the Bolivian lowlands, in particular While these programs are helping, snouted caiman has been found in the extensive road construction and increases in habitat conversion to Pando Department, the Pilcomayo River improvement (Byers et al. 2008 p. 22). agriculture, roads and transportation, area, a tributary of the Paraguay River, Road projects in northwest Bolivia are infrastructure to transport crops such as and in the Tarija department. Here, key being considered, including paving of soy continue (USDA FAS 2010b, p. 2). threats, particularly in broad-snouted the ‘‘Northern Corridor,’’ which is part Without additional incentives and caiman habitat, include loss, of the Peru-Brazil-Bolivia hub of the intervention, suitable habitat for this conversion, and degradation of forests Initiative for Integration of Regional species will decrease. Although it is and other natural habitats and pollution Infrastructure in South America (IIRSA, mitigated by provincial governments of aquatic ecosystems (Byers et al. 2006, http://www.iirsa.org). through the caiman ranching program, p. vi). Particular to this species, both Contamination of water bodies due to habitat destruction and modification in agriculture and pollution have been sugar mills, which empty their waste Argentina is likely to continue in the indicated to be significant threats. In into the Rio Grande (Aparicio and Rios foreseeable future. Despite the intense Bolivia, vast areas have been drained for 2008, p. 114), also occurs. Sugar mills management of this species in agricultural purposes (also see the are commonly known to produce high Argentina, we conclude that the present discussion under Factor E). levels of air and solid waste pollutants or threatened destruction, modification, Deforestation in lowland Bolivia as byproducts (U.S. Environmental or curtailment of its habitat or range exceeded 1,500 km2 (579 mi2) per year Protection Agency [EPA] 1997, 26 pp). continues to be a threat to the broad- during the 1980s and early 1990s Waste water from sugar mills can snouted caiman. (Steininger et al. 2001, pp. 856–866). rapidly deplete available oxygen in Currently, about 300,000 ha (741,316 ac) water creating an inhospitable Summary of Factor A for the Argentine of forest is lost each year for a variety environment for aquatic life and for DPS of reasons including expanding species that depend on aquatic In most of the range of this species, agriculture, due both to large-scale environments. In the Bermejo River sub- the habitat threats are very similar; industrial agriculture and to small-scale basin in Tarija, Bolivia, based on the however, a country’s management colonization and cultivation; large-scale absence of nests and the low number of actions (refer to factor D) affect the infrastructure projects (roads, dams, individuals recorded during nest status of the species. In Argentina, energy infrastructure); expanding coca counts, researchers believe that this habitat conversion to agriculture production; forest fires; illegal logging; population of broad-snouted caiman is continues to cause habitat degradation and climate change causing changes in probably not reproductively active due within the broad-snouted caiman range, geographical and altitudinal distribution to water pollution (Aparicio and Rios although this is being mitigated through of species and ecosystems (Byers et al. 2008, p. 115). This particular area the caiman ranching program. Habitat 2006, p. vi). borders wetlands and estuaries in conversion is expected to increase and Factors such as low land prices and Argentina, where higher quality suitable further degrade this species’ habitat. economic policies promoting an export habitat is available (OSDE 2005b, p. 2) The population numbers in the wild economy have led to a rapid increase in for the species and is likely less have significantly increased since this the growth of the private agricultural disturbed and polluted by humans. species was listed. Data collected on the sector (Pacheco 1998). Both large-scale Because the Bermejo River sub-basin in distribution and abundance of the and small-scale farmers contribute to Bolivia faces threats due to sugarcane species indicate that the species’ range the expansion of the agriculture and plantations and contamination from has expanded and overall population livestock frontier, and both thrive in the sugar mill activities, it is not likely to numbers appear to be increasing near absence of regulatory oversight and sustain a healthy population of broad- (Larriera and Imhof 2006). As of 2004, control (Byers et al. 2008, p. 22). In snouted caiman. surveys indicate that the broad-snouted Bolivia, large tracts of land have been Although natural resource managers caiman population in Santa Fe cleared particularly for sugarcane recognize the importance of wetlands

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(Byers et al. 2008, p. 14), economic March 2001. The purpose of the 1995 four issues to be addressed: (1) River considerations usually outweigh survey was to determine what species basin and coastal zone environmental concerns regarding habitat loss and would be affected by the construction. analysis; (2) public and stakeholder destruction in Bolivia. The activities The survey was done in the Parana´ participation; (3) organizational described under this factor, such as River basin between Sa˜o Paulo and structure development; and (4) agricultural production and expansion, Mato Grosso do Sul states. The number watershed management program sugar mill activities, roads, and other of caiman nests found during the survey formulation. As of 2005, the studies and infrastructure development, affect indicated that at least 630 reproductive projects had all been completed broad-snouted caiman habitat. Its females were present at that time. The (www.oas.org/osde, accessed March 9, habitat is primarily being affected due to presence of so many nests suggested a 2011). However, the implementation agriculture and pollution. Based on the large total population (Moura˜o and process is still underway above factors, we find that the present Campos 1995, pp. 27–29) in that area. (www.ana.gov.br/gefsf, accessed March or threatened destruction, modification, After the study was completed, a 9, 2011). or curtailment of its habitat or range recommendation was made to create a Caiman habitat is still severely continues to be a threat to this species reserve to protect habitat downstream of degraded in Brazil. Broad-snouted in Bolivia. the dam; however, it is unclear whether caiman in the Sa˜o Francisco River basin In Brazil, agriculture, pollution, and a reserve was established as a result of occurred not only in preserved habitats hydroelectric dams have been indicated the dam being constructed. but also in habitats affected strongly by to be significant threats to the species With the construction of Porto human occupation. This attests to the (Verdade et al. 2010, p. 1). In this Primavera Dam, the last floodplains of species’ highly flexible nature. country, vast areas have been drained the Parana´ River within the state of Sa˜o Researchers even found broad-snouted for agricultural purposes. The effects Paulo disappeared, and with them, caiman in sewage and urbanized areas, from agricultural activities on the those populations of wild animals showing that the species is fairly species can be either consumptive (for dependent on wetlands for survival also resistant to human impacts and that example, destruction of nests and eggs disappeared. Lakes, swamps, and habitat modification has varied effects by machinery) or nonconsumptive (for seasonally flooded areas contribute to on the species’ distribution. The data example, loss of access to traditional hydrological ecosystem processes by indicated that habitat modification may nesting or feeding sites), and these retaining water and mitigating flooding. be a variable in determining the small effects are generally attributed to habitat These wetlands and lakes are important size of these natural populations, rather loss or fragmentation. Pollution has ecosystem components and are than affecting the species’ distribution been a considerable problem in rivers particularly important to the broad- pattern, at least in Brazil (Filogonio et that flow through Brazil’s large cities. snouted caiman. When altered, they no al. 2010, p. 964). A 2006–2007 survey Sa˜o Paulo, Brazil’s largest city, is in the longer are capable of supporting their found that most of the surveyed sites center of the species’ range in Brazil. unique assemblages of species and presented some degree of human impact The species exists here in artificial maintaining important ecological (Filogonio et al. 2010, p. 962). Habitat reservoirs, ponds, marshes, and small processes and functions, upon which modification included: Conversion to wetlands. Construction of large the caiman relies. Caiman use the Sa˜o pasture in 46 surveyed localities (72 hydroelectric dams (Verdade et al. 2010, Francisco River main channel and its percent), roads (25 localities; 39 p. 19) to support Brazil’s human tributaries as dispersion routes; percent), urbanization (23 localities; 36 population has been indicated to be one however, populations of individuals of percent) and monocultures (Filogonio et of the primary threats here to broad- all age and sizes occur mainly in lentic al. 2010, p. 962). Of the areas surveyed, snouted caiman. Most of the natural (still water such as lakes, ponds, or broad-snouted caiman was present wetlands of the Parana´ and Sa˜o swamps) environments. Studies on the (positively identified as broad-snouted Francisco River systems in Brazil have impact of the construction of large caiman rather than a different caiman been dammed for these large hydroelectric stations and how they species or unknown caiman species), in hydroelectric stations. Construction of affect the density and reproduction of 39 localities surveyed (61 percent), and dams can have severe impacts on broad-snouted caiman populations were was widely distributed along the river ecosystems (McCartney et al. 2001, p. conducted using aerial surveys (Moura˜o basin. Its presence was detected in all v). For example, a dam blocks the flow and Campos 1995, pp. 27–29). The lentic water body types, in the three of sediment downstream. During surveys indicate major damage of the biomes: Cerrado, Caatinga, and Atlantic construction of dams, disturbance to habitat due to these dams. An unusual Forest (Filogonio et al. 2010, pp. 963– soils at the construction site is one of finding with respect to caiman was that 964). However, the researchers did not the largest concerns. This leads to researchers found that the destruction of attempt to estimate population size. downstream erosion and increased floating vegetation is particularly They observed a number of populations sediment buildup in a reservoir. destructive. This is likely because with low numbers of individuals, which Because the construction of the Jupifi floating vegetation is used by caiman for were scattered throughout the survey and Ilha Solteira Dams in the 1970s nest construction. sites. During 2006 and 2007 surveys, caused the loss of a significant amount In 2001, the government of Brazil researchers found the presence of of floodplains of the Parana´ River, a launched a plan for the Sa˜o Francisco caiman species in only 17 survey was conducted prior to River basin in order to minimize human municipalities in 64 locations along the construction of the Porto Primavera impacts and implement restoration Sa˜o Francisco River basin in Brazil. Dam (also known as the Engineer Se´rgio efforts (Andrade 2002 in Filogonio et al. The density data found in Brazil were Motta Dam). The Porto Primavera Dam 2010, p. 962). This was a huge similar to that found by Borteiro (2006, is 28 km (17 mi) upstream from the undertaking involving federal and local 2008), who also found broad-snouted confluence of the Paranapanema and governments, nongovernmental caiman widespread in Uruguay, Parana´ Rivers. This dam created the organizations (NGOs), universities, and occurring in 29 of the 36 localities Porto Primavera Reservoir and was the public. An initial report was issued surveyed (81 percent of the sampled filled in two stages: The first in in 2005 that indicated that progress had areas). Caiman in Brazil were observed December 1998 and the second in been made in terms of identifying these in lotic (actively moving water) habitats,

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and considering that river channels are Paraguay. Within Paraguay, the Atlantic that the present and threatened important routes to crocodilian Forest has been under increasing destruction, modification, or dispersal, it is logical to predict not only pressure from development. In curtailment of its habitat in Paraguay physical movement of C. latirostris Paraguay, the Atlantic Forest is reduced continues to be a threat to broad- throughout its range, but also genetic to one large tract, San Rafael, and snouted caiman. However, we will flux within the river basin. The increasingly numerous scattered and review the information we receive distribution pattern in Brazil indicates fragmented small patches. More than during the comment period on this that the populations within the river half of the original area of the Atlantic proposed rule. basin are not fragmented, but seem to rainforests had been degraded by the In Uruguay, very little information exist in low numbers. Despite this data, turn of the last century, and more has been collected about how habitat trend data are lacking regarding the recently only one percent was found to degradation affects the broad-snouted population in Brazil and the health of be still in its original state (Wilson 1988, caiman. Based on available information, the species overall. The construction of in Rivas et al. 1999, chapter 5). current threats to this species’ habitat in hydroelectric dams and associated Conservative estimates have placed the Uruguay are likely due to agriculture habitat degradation such as pollution remaining forest cover in Paraguay at and cattle ranching which occur within and environmental degradation is approximately 6 percent of the original this species’ range. Cattle and sheep currently affecting broad-snouted cover (IUCN 1988a). Threats to this farming in Uruguay occupy 60 percent caiman and its habitat. Pollution is a remaining forest cover include of its land (Food and Agriculture severe problem—caiman habitat fragmentation and acceleration of large- Organization of the United Nations overlaps Sa˜o Paulo, Brazil’s largest city, scale agriculture and ranching projects, [FAO], p. 4). Other agricultural activities and these polluted rivers that flow commercial logging, and the such as production for dairy, fodder for through Brazil’s large cities. construction of hydroelectric dams cattle, and crops such as rice consist of Although a plan was initiated in 2001 (Rivas et al. 1999, ch. 5) such as the approximately 20 percent. Secondary, to address issues associated with the Itaipu hydroelectric dam on the borders related effects related to agriculture are construction of the dam in central of Paraguay and Brazil. habitat degradation and pollution due to caiman habitat, 10 years later, there is pesticide use, erosion, and altered Habitat destruction has increased no evidence that caiman habitat has ecosystems. The surveys conducted in throughout the species’ range in improved in Brazil, nor does it appear the early 2000s indicate that caiman do Paraguay, and is believed to be one of that caiman are a main concern of the exist in manmade habitats in plan. The conservation of broad-snouted the greatest threats to its survival in northwestern Uruguay. However, the caiman in Brazil does not appear to be Paraguay (Verdade 1998, pp. 18–19). current amount of suitable habitat for a priority, and there is very little current Approximately 98 percent of Paraguay’s this species in Uruguay is unknown. information available regarding this population lives in Paraguay’s eastern Researchers suggest that the apparent region, with a population density of species in Brazil. Based on the best 2 increase in this species’ population may available scientific and commercial 18.6 per km , compared with 0.2 per be due to the construction of agriculture 2 information available, we find that the km in the western, or Chaco, region. A impoundments, which provide habitat present or threatened destruction, contributing factor is that in the eastern for broad-snouted caiman in recent modification, or curtailment of this region, the soil is more suitable for decades (Borteiro et al. 2008, p. 248). In species’ habitat is a threat to the species cultivating crops; therefore, cattle the area surveyed to determine caiman and is likely to continue in the future in production, forestry products, and presence and abundance, Brazil. agricultural crops are widespread in the impoundments were being used mainly In Paraguay, no recent data are range of this species in Paraguay. for irrigation of rice (69 percent) and available specifically for this species. Paraguay’s main agricultural exports are sugar cane crops (31 percent) in the However, we do know that over the past soybeans and cotton (Harcourt and N˜ aquin˜ a´ stream basin. In the Lenguazo 60 years, widespread and uncontrolled Sayer 1996; USDA FAS 2010, p. 2). stream basin, 80 percent was used for deforestation practices have continued Although the overharvest for irrigation of sugar cane and 20 percent throughout Paraguay, particularly in the commercial purposes, rather than was used for other food crops. eastern region (World Land Trust 2009, habitat destruction or modification, was Two other factors that likely affect p. 1). In 1945, 8.8 million ha (21,745,273 the primary reason for this species being caiman habitat here are drought and ac) of forest covered this region, but listed under the Act, threats have hydroelectric dams (United Nations currently it is estimated that less than changed. Now, the largest threat seems Environment Programme [UNEP] 2004, 1.6 million ha (3,953,686 ac) remain to be habitat destruction or modification pp. 78–85; Borteiro et al. 2008, p. 248; (Huerta 2011, p. 1). Most of Paraguay’s due to agriculture and development of Verdade et al. 2010, p. 20). Uruguay has tropical moist forests are in the eastern urban infrastructure, which still occur experienced severe drought in the past region of the country near the Parana´ to a large extent in Paraguay, few years (IPS NEWS 2011), which has River. This river is 4,880 km (3,032 mi) particularly within the range of broad- had a significant effect on agricultural in length and extends from the snouted caiman. Paraguay implemented and cattle production, and this very confluence of the Grande and Paranaı´ba a Zero Deforestation Law as of 2004; likely affects caiman habitat. The rivers in southern Brazil. It runs through however prior to that law, its rate of construction and existence of the Atlantic rainforest, also known as deforestation was the second highest in hydroelectric dams to generate Mata Atlaˆntica. The Atlantic Forest the world (WWF 2006, p. 1). Despite the electricity may be an additional threat to stretches from northeast Brazil along the enactment of this law, the best available the broad-snouted caiman (UNEP 2004, Brazilian Atlantic coastline into information indicates that this habitat pp. 78–85). Uruguay is highly Uruguay, inland into the northeast destruction and modification still dependent on hydroelectricity, and portion of Argentina and eastern significantly affect this species. We have these hydroelectric dams are within Paraguay; and partially overlaps the no indication that conditions have broad-snouted caiman habitat. Although range of the broad-snouted caiman. improved in Paraguay since this species we know these activities occur within Imhof (unpubl. 2006) estimated that 7 was listed under the Act; rather, habitat the range of the broad-snouted caiman percent of the species’ range is in loss has increased. Therefore, we find in Uruguay, there is very little

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information regarding the status of the Factor B. Overutilization for management of its population of the species in Uruguay. We have no Commercial, Recreational, Scientific, or broad-snouted caiman, particularly evidence that there has been any change Educational Purposes since 1990. Currently, there are seven to the status of the species in Uruguay. The overharvest for commercial ranching programs registered with the We do not know population trends in purposes was the primary reason for the Federal government in Argentina. Three Uruguay, and threats to the species’ broad-snouted caiman’s inclusion in of them function as educational habitat such as agricultural activities, Appendix I of CITES and subsequent programs, with no commercial drought, and hydroelectric dams exist. listing under the Act. The species exploitation. The non-commercial ´ There is no information to indicate that suffered due to effects of unregulated ranching operations are in Entre Rıos, Chaco, and Corrientes Provinces. There habitat modification or destruction has exploitation between 1930 and 1980. are four commercial ranching programs: decreased such that the population Protections were put in place because two in Formosa Province, one in trend is stable or increasing. Researchers the species had suffered substantial Corrientes Province, and one in Santa population declines throughout its here recommend more surveys of broad- Fe Province. The ranching programs in range due to overexploitation through snouted caiman at a larger scale in Formosa, Corrientes, and Chaco are for the commercial crocodilian skin trade. northern Uruguay to assess the usage of both the broad-snouted caiman and Under this factor, we examine how manmade habitats by caiman in order to yacare caiman. The programs in Entre overutilization within each country has apply this knowledge to caiman Rı´os and Santa Fe are for only broad- changed since the species was listed conservation and management snouted caiman. Each ranching program strategies. Given the lack of evidence under the Act, and then we discuss this showed an increase in the number of that indicates that Uruguay’s population factor with respect to international trade eggs collected since the program began. of broad-snouted caiman has either and its regulation through CITES. This indicates an upward trend in increased or has stabilized since its Argentine DPS population numbers. inclusion under the Act, we find that In Argentina, illegal hunting was Ranching Programs in Argentina the present or threatened destruction, widespread through the late 1980s, but On cattle ranches in Argentina, modification, or curtailment of its decreased in the early 1990s (Micucci habitat or range continues to be a threat landowners commonly channelize the and Waller 1995, pp. 81–108) due to the wetlands to increase grazing land for to the species in Uruguay. proliferation of caiman ranching cattle; this subsequently provides Summary of Factor A for Bolivia, Brazil, programs and the enforcement of suitable caiman habitat. Most habitat Paraguay and Uruguay (Northern) DPS national and provincial regulations (see preferred by the caiman (swamps with Factor D). Between the 1940s and early heavy vegetation) are considered In most of the range of this species, 1990s, reports indicate that more than unproductive agricultural land. In the the habitat threats are very similar; 700,000 caiman skins were produced past, the swampy areas have been however, a country’s management from Corrientes Province in Argentina drained for conversion to agricultural actions (refer to factor D) may affect the (estimated in Micucci and Waller (1995) lands. However, by placing an economic status of the species. In Bolivia, Brazil, in Pin˜ a et al. 2010, p. 4). Some of these value on preserving caiman habitat Paraguay, and Uruguay, although these skins were illegally obtained; however, through compensation from the countries are making progress with there has been no report of illegal ranching program, habitat destruction respect to habitat modification and hunting since 1998 (Larriera et al. 2008, can be reduced. Additionally, by p. 143). Since the species was listed destruction and some have adopted providing monetary compensation to both under CITES and the Act, a relevant conservation laws (see Factor ranch employees for each nest they significant change in public perception D), habitat loss continues to occur. locate, there is incentive for ranch and awareness regarding this species Increasing human populations, owners and employees to protect the has occurred. Now, the species is wetlands and caiman nesting areas. As development of hydroelectric projects, thought to be managed sustainably in of 2006, there had been a 30 percent and draining of wetlands also have Argentina (Jelden 2010, pers. comm.; increase in the caiman nesting areas on caused habitat degradation. Conversion Verdade et al. 2010, p. 19; Woodward cattle ranches where caiman egg harvest of broad-snouted caiman habitat to 2010, p. 3). Local people participate in occurs (Larriera et al. 2006). For agricultural plantations occurs caiman ranching programs in which example, the caiman nesting area of the commonly in these countries, and they locate nests and harvest eggs from Lucero Ranch (Estancia) in Santa Fe adequate management plans in these these nests (Larriera et al. 2008; Verdade Province was 830 ha (2,051 ac) in 1990, countries for this species are not in et al. 2010, p. 19) and take them to and increased to 1,060 ha (2,619 ac) in place. We seek information on the status captive-rearing facilities. These 2004. Larriera suggests that one reason of the species, particularly in Bolivia, individuals, primarily cattle-ranchers, for the increased population density Brazil, Paraguay, and Uruguay, as part are compensated for the eggs. The may be due to a decline in the practice of this proposed rule. Although the communities within the range of the of burning and drying wetlands for species is widespread, we have no broad-snouted caiman have an economic reasons, in addition to the information to indicate that the status of understanding of the caiman ranching dispersion of female broad-snouted the species has changed in these four program, and they no longer have a caiman into new habitat due to the countries, and there is little to no need or desire to illegally hunt these caiman ranching program. population trend information available animals because individuals earn an In the wild, as many as 60 to 70 in these countries. Based on a review of income from harvesting eggs. This is percent of the eggs do not hatch (Smith the best available information, we find due in part to a long-standing public and Webb 1985; Woodward et al. 1989, the destruction, modification, or awareness program and significant p. 124). Estimated survival of hatchlings in the wild has been as low as 10 to 20 curtailment of its habitat or range in community involvement in protecting this species (Larriera et al. 2008, p. 145). percent, depending on environmental these four countries is a continued The Government of Argentina has had conditions (e.g., frost and predation can threat to the species. a long history of research and active alter survival (Aparicio and Rios 2008,

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p. 109); see discussion under Factors C produced 100 percent females, while at Natural Resources, Corrientes Province). and D below). In Woodward, researchers 33 °C (91 °F) 100 percent males were The experimental program initially explained that in order to increase produced. Incubation at a higher conducted surveys and included a survival rate of American alligators, the temperature (34.5 °C; 94 °F) induced small-scale collection of eggs. practice of egg collection has been production of both sexes (Simoncini et Population surveys for yacare and implemented to preclude embryo al. 2008, p. 231). broad-snouted caiman in the province mortality due to factors such as Young are marked by removing were conducted to determine the depredation, flooding, and desiccation. selected caudal scutes corresponding to feasibility and biological sustainability In the Argentina ranching program, to hatch year and nest origin. Hatchlings of a commercial ranching program increase survivability, young caiman are are raised for nine months in concrete (Micucci and Waller 2005) and now this reintroduced to their former nesting site pools until November, when some are is a commercial operation. In after they have passed critical life stages removed for reintroduction to the preparation for the experimental in which they are more susceptible to original nest site. The decision on how ranching program in the Province of factors such as predation and nest many young will be retained in Corrientes, the numbers of broad- flooding (Larriera 2003). Removal and captivity for commercial production; as snouted caiman nests in three study incubation of eggs taken from the wild well as how many will be reintroduced areas were surveyed. In nesting seasons increases hatchling survivability to the wild depends on the status of the 2004–2005 and 2005–2006, one area because the larger the caiman is, the wild population in the area from which maintained its number of nests and the greater likelihood it has of long-term the eggs were harvested. Argentina other two areas showed increases survival in the wild (Woodward et al. provides reports to the CITES resulting in a total of 165 nests observed 1989, p. 124). Secretariat in accordance with CITES in the first season; and 265 nests High mortality can occur during the Resolution Conf. 11.16. If there is a high observed in the second season (Larriera first few weeks of incubation in the population density in the wild, more et al. 2008). The first egg collection was wild; one study found that highest young are retained and raised for conducted in 2005 (Jenkins et al. 2006, embryo mortality of alligator eggs commercial purposes. p. 27). In late 2010, 500 hatchlings were occurred between days 7 and 16 of Chaco Province released. As of 2010, there were 4,736 incubation (Joanen and McNease 1987 hatchlings and 12,793 individuals over in Woodward et al. 1989, p. 124). In the El Cachape´ Wildlife Refuge (Refugio one year in age in captivity (Larriera caiman ranching programs in Argentina, de Vida Silvestre El Cachape´) is a 2010, p. 1). the practice is to remove all eggs from conservation and sustainable-use project all the nests in collection areas that are developed through an agreement Formosa Province accessible and not flooded, burned, between a private landowner and The program in Formosa Province (in depredated, or necessary for survival Fundacio´n Vida Silvestre Argentina in the most northern part of the species studies (Larriera 1995). Between the Chaco Province. The project was range in Argentina) was established in months of December and January, eggs established in 1996 for the ranching of 2001, based on an agreement between a are collected soon after laying. Caiman both yacare and broad-snouted caiman company called Caimanes de Formosa ranch project managers pay cattle ranch (Cossu et al. 2007, p. 330), and it also S.R.L. and the Direccio´n de Fauna y employees for each located nest, and conducts ecotourism activities. El Parques de Formosa (Directorate of each nest is assigned a number. The Cachape´ is in the center of the harvest Wildlife and Parks of Formosa) under nests are marked so that young hatched area, and encompasses 1,760 hectares the Ministry of Production (Jenkins et and reared in captivity can be returned (ha) (4,349 acres (ac)). Between 1998 al. 2006). The first egg collection in to the same area. Each ranching program and 2004, the Chaco program collected Formosa Province was in 2002. The maintains records of how many are 4,867 eggs and released 1,236 yearlings Formosa program collected 13,050 eggs collected, how many are reared, and (Larriera and Imhof 2006) within the between 2002 and 2004, and released how many individuals are later released Chaco Province. A population survey 1,265 young (Larriera and Imhof 2006). back into the wild. conducted over 60,000 ha (148,263 ac) Surveys of the combined yacare caiman Artificial incubation has been of the harvest area in Chaco Province and broad-snouted caiman populations demonstrated to enhance hatch success indicates that there was an average in Formosa have indicated that the wild in addition to early development of density of 4.0 individuals of C. population densities have increased hatchlings (Ferguson 1985, Joanen and latirostris per km during the 1999–2000 from a range of 2.3 to 66 individuals per McNease 1987 in Woodward et al. 1989, study period (Prado 2005), but we are km in 2002 (Siroski 2003; Siroski and p. 124). Caiman ranching programs in unaware of any additional data Pin˜ a 2006), to 22 to 238 individuals per Argentina use various methods in collected since that time. This km in 2008 (Pin˜ a et al. 2008). artificial incubation to increase the conservation ranching program is Santa Fe Province success rate. For example, small working towards increasing population temperature variances can be used to numbers of this species in the Chaco The Santa Fe program (in the accelerate the growth of hatchlings. Province (Verdade 2010, pp. 18–22). We southernmost part of the species’ range Animals reared at a slightly higher are requesting additional information in Argentina) is the largest of the temperature (22.4 °C; 72.3 °F) grow pertaining to population data for all approved programs; this province has faster than those maintained at a lower provinces, including the Chaco the largest population of broad-snouted temperature (18.2 °C; 65 °F) (Pin˜ a and Province, as part of this proposed rule. caiman in the wild in Argentina. Larriera 2002, pp. 387–391). Hatching Proyecto Yacare´, in the province of success and survival are not negatively Corrientes Province Santa Fe, Argentina, was established in affected by artificial incubation An experimental program in 1990, with an agreement between the temperature, as long as it is within the Corrientes Province was established in Ministry of Agriculture of the Province appropriate temperature range for this 2004, based on an agreement between a of Santa Fe and a non-governmental species (Pin˜ a et al. 2003, pp. 199–201). company called Yacare´ Pora´ S.A. and organization called Mutual del Personal For broad-snouted caiman, eggs the Direccio´n Provincial de Recursos Civil de la Nacio´n (Benefit of Civil incubated at 29 or 31 °C (84–88 °F) Naturales (Provincial Directorate of Personnel of the Nation) to improve the

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conservation status of the broad-snouted certificates that are issued by the Argentina to the United States would be caiman and its wetland ecosystem designated CITES Management and allowed, provided that certain (Larriera and Imhof 2000). The northern Scientific Authorities of each CITES conditions are met. We do not believe part of the Province of Santa Fe contains Party (http://www.cites.org). In the this potential increase in international 80 percent of the wild broad-snouted United States, the Scientific and trade is likely to threaten or endanger caiman population in Argentina. Early Management Authorities reside in the wild broad-snouted caiman based on on, the Caiman Specialist Group (CSG) U.S. Fish and Wildlife Service. Argentina’s management and identified ranching programs in Under CITES, a species is listed in monitoring of the caiman ranching Argentina as a high priority for species one of three appendices; listing in each program. However, exports of broad- conservation (Verdade 1998, pp. 18–19). Appendix has a corresponding level of snouted caiman and its parts and It described the program in Santa Fe protection (i.e., regulation of products from the rest of the range Province as a model for other Argentine international trade), and different countries would still be regulated under provinces where habitat still remains permit requirements (CITES 2007). CITES Appendix I and as endangered and the wild population is large. In Appendix II allows for commercial trade under the Act. 1999, the management for sustainable and includes species requiring Summary of Factor B for Argentine DPS use of broad-snouted caiman reached a regulation of international trade in order commercial scale (Verdade 1998, pp. to ensure that trade of the species is In Argentina, the legal harvest does 18–19). compatible with the species’ survival. not appear to have negative impacts on Between 1990 and 2004, the Santa Fe At times a species may be listed as the species based on reported harvest, program harvested 1,410 of 1,945 endangered under the U.S. Endangered nest counts, and egg harvest trends identified nests and produced 35,197 Species Act, and concurrently listed (Larriera et al. 2010, pp. 1–2; Larriera hatchlings from 47,948 eggs (Larriera under Appendix II of CITES, rather than and Siroski 2010, pp. 1–5). We believe and Imhof 2006). Of the hatchlings that the more restrictive Appendix I, which that adequate protections are in place survived, 15,120 yearlings were does not allow commercial trade of wild under Federal and provincial law and returned to the wild and 14,046 were specimens, except under limited regulations in Argentina. Broad-snouted retained for commercial use (Larriera circumstances. Although CITES caiman that hatched in captivity and and Imhof 2006). The number of nests Appendix II allows for commercial were released near their former nesting found in the collection area increased trade, in order for specimens of this site have successfully matured and from 14 (1990–1991) to 439 (2003– species to be traded internationally, a reproduced in the wild (Larriera et al. 2004), resulting in an increase from 372 determination must be made that the 2006). For example, during the summers to 12,031 eggs collected per year during specimens were legally obtained; and of 2001 and 2002, seven females the same time period (Larriera and that the export will not be detrimental released as part of Proyecto Yacare´ were Imhof 2006). Mean clutch size in Santa to the survival of the species in the recaptured while attending their nests. Fe Province has been reported to be 35 wild. CITES Appendix I includes The females were between 9 and 10 eggs per nest, and the natural incubation species that are ‘‘threatened with years old at the time of capture. Their period is around 70 days (Larriera and extinction which are or may be affected clutch sizes and hatching success were Imhof 2000). by trade.’’ Appendix I has a further similar to those of wild females of As of 2004, monitoring the wild restriction that a CITES import permit unknown age also captured during the population in the collection areas must be issued by the importing country season. Mortality of eggs and hatchlings indicated that the broad-snouted caiman after finding that the specimen will not in the wild can exceed 95 percent population in Santa Fe increased 320 be used for primarily commercial (Hutton 1984 in Larriera et al. 2008, p. percent since the project began (Larriera purposes. 154). This indicates that released and Imhof 2006). Observed wild The World Conservation Monitoring ranched yearlings can survive and population densities increased from an Centre (WCMC) at UNEP manages a reproduce at least as successfully as average of 2 to 8 individuals per km in CITES Trade Database on behalf of the their wild counterparts, and may have a 1990, to 20 to 120 individuals per km CITES Secretariat. Each Party to CITES greater rate of survival. in 2008–2009 (Larriera and Siroski is responsible for compiling and Research also indicates that this 2010, p. 2). This program has resulted submitting annual reports to the CITES practice of releasing a percentage of in increased numbers of broad-snouted Secretariat regarding their country’s captive-hatched juveniles is a valuable caiman in the wild in areas surveyed international trade in species protected management tool for crocodilian and expansion of nesting areas (Larriera under CITES. The trade database species. This is because releasing them and Imhof 2000, 2006; Larriera et al. (www.unep-wcmc.org/citestrade) into the wild at an age of 8–10 months, 2006). The distribution of the wild indicates that between 2000 and 2009, rather than at hatching, has been shown population has expanded into areas 11,837 broad-snouted caiman parts and to enhance their chances of survival from which the species had formerly products (primarily leather and skins), (Elsey et al. 1992, p. 671). Survivorship disappeared (Larriera et al. 2005). plus an additional 1,210 kilograms in juvenile alligators has been shown to (2,662 pounds) of such parts and be a function of size, with survivorship International Trade and Regulation products were exported. The vast increasing as size increases (Woodward Under CITES majority of exports were from et al. 1989, p. 124). CITES provides varying degrees of Argentina, and the database did not Wild populations in the collection protection to more than 32,000 species indicate any trends in the trade data to areas are increasing based on egg of animals and plants that are traded as cause concern. There were very few collection and density surveys (Larriera whole specimens, parts, or products. exports from the other range countries et al. 2010). Despite the fact that all CITES regulates the import, export, and during the period reviewed. accessible nests are harvested in the reexport of specimens, parts, and If the proposed rule to reclassify the collection areas and the number of products of CITES-listed plant and Argentine population and yearlings returned to the wild is animal species (also see discussion accompanying Special Rule are variable, the Santa Fe program has under Factor D). Trade is managed finalized, then commercial exports of resulted in higher population densities. through a system of permits and broad-snouted caiman products from Increased reproduction in released

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animals, a greater number of nests monitoring. This may be indicative of a frequently. No other recent data are located and harvested, and the need for stronger involvement by the available in Bolivia for this species. observation of broad-snouted caiman in provincial and federal governments or In Brazil, small amounts of illegal areas where they had been extirpated the need for a stronger legal framework harvest are reported to still occur in (Larriera and Imhof 2006; Larriera et al. at the provincial level to regulate or some areas (Verdade et al. 2010, p. 19) 2008, pp. 143–172) have also been monitor these activities. However, and in Uruguay (Borteiro et al. 2006, p. observed. What may be most important despite these concerns, the reports on 102). In northeastern Brazil, illegal to the survival of the broad-snouted the broad-snouted caiman conservation hunting still supplies local markets for caiman, however, is that nesting areas program in Argentina do indicate that meat in small cities along the Sa˜o are now protected by local inhabitants the population is increasing, and the Francisco River basin. The meat is sold who have an economic interest in program is being actively monitored as salted carcasses like codfish, and is maintaining the wild populations. Due within the country. The government of actually called ‘‘Sa˜o Francisco codfish’’ to public awareness programs and Argentina oversees the ranching (Verdade 2001a). Hunting for meat also monetary incentives for locals who program in Santa Fe Province, and occurs in some parts of Uruguay collect eggs, there has been no report of Santa Fe contains the largest population (Borteiro et al. 2006, p. 104). However, illegal harvest since 1998. of broad-snouted caiman in the wild. species experts concluded that illegal The information reported on ranching The species is not overutilized in hunting is no longer a major threat to programs indicate increased population Argentina and overutilization is the species due to improved protection, numbers in Argentina of this species unlikely to be a threat to the population costs and consequences of illegal based on nest counts and egg harvest in the future. Annual reporting under hunting, and the availability of legal reports (Jenkins et al. 2006, pp. 26–27). CITES may alert us to any new threat of skins (Verdade 1998, pp. 18–19). People For example, in the 1991 season in overutilization in Argentina. We are in the past justified hunting caiman Santa Fe, 10 nests were harvested; 14 seeking information on the status of the primarily for food. Many fishermen also nests were located, and 237 hatchlings species in Argentina as part of this killed caiman because caiman feed on were produced. In 2003, 228 nests were proposed rule. However, based on a the fish in their fishing nets, and caiman located, 304 were identified, and 5,638 review of the best available information, also destroy their nets (Filogonio et al. hatchlings were produced (p. 27). The and in the absence of conflicting new 2010, p. 964). Thus, current levels of current population survey methods used information, we find no evidence that hunting pressure may have only in Argentina are not entirely reliable as overutilization for commercial, localized impacts. a tool for establishing direct recreational, scientific, or educational In Paraguay, in the past, the broad- relationships with populations in the purposes is a threat to the broad- snouted caiman may have been subject wild, but they provide a general idea of snouted caiman throughout its range. to greater hunting pressure than C. the increase in caiman numbers. Prior yacare because the quality of its skin is Bolivia, Brazil, Paraguay, and Uruguay determination of density or absolute considered finer (Scott et al. 1990, pp. (Northern) DPS abundance of nests prior to the removal 45–46). Hunting was almost of eggs is a more reliable way of One of the primary threats to the uncontrolled through 1990, and some determining the population numbers. species before it was listed in CITES caiman populations almost disappeared. Although there is not accurate Appendix I in 1975 was uncontrolled However, small residual populations population trend data for this species in international trade. In Bolivia, Brazil, were increasing in size when last the wild (Micucci 2010 pers. comm.), Paraguay, and Uruguay, this species is surveyed in places where they and their we consider the egg harvest data to be listed in Appendix I of CITES. habitat were protected (Scott et al. 1990, the best available information. Micucci International trade primarily for pp. 45–46). points out that the information provided commercial purposes is restricted from In Uruguay, broad-snouted caiman directly by nest counts and night Bolivia, Brazil, Paraguay, and Uruguay was never legally hunted for surveys is more reliable and direct than due to the species’ Appendix I status commercial purposes (Verdade 1998, egg harvest counts, at least in under CITES. The UNEP–WCMC trade pp. 18–19), although illegal hunting has environments with large fluctuations in database did not indicate any unusual been observed (Borteiro et al. 2006, p. water mass, which is the case of this trends in the species’ trade with respect 97). Uruguay’s standard of living, species, particularly in Argentina (2010 to these countries. literacy rate, and large urban middle pers. comm.). We acknowledge that the Beginning in the 1940s, the broad- class (http://www.state.gov, accessed current population survey methods used snouted caiman was hunted March 14, 2011) are reported to be quite in Argentina are not the most reliable commercially for international trade in high compared with other countries means of providing population its leather, which is commonly reported within this species’ range, which may estimates of this species in the wild; to be of higher quality than that of other account for the lack of commercial however, the data collected indicate an caiman species (Brazaitis 1987 in hunting in this country. There is no upward trend in population numbers for Verdade et al. 2010, pp. 1–2). However, indication that overutilization occurs in this species. since the time the species has been Uruguay. A secondary concern in the protected by CITES and the Act, this management of this species in Argentina factor is no longer a threat to the species Summary of Factor B for the Bolivia, is there may be inadequate oversight by in these countries. Brazil, Paraguay, and Uruguay provincial governments when extracting In Bolivia, caiman is used for its fat, (Northern) DPS eggs from nests, movement of eggs, and meat, and leather products (Aparicio We are seeking information on the tracking the origin of these eggs (this and Rios 2008, p. 112). It is also killed status of the species in Bolivia, Brazil, also applies to Factor D, the Inadequacy out of fear by humans. In the Chaco Paraguay, and Uruguay as part of this of Regulatory Mechanisms). province of Bolivia, there were reports proposed rule. Domestic use still occurs, Additionally, the level of independent of the species attacking and killing pigs but levels remain low. Any incidence of or outside evaluation of the ranching and other small cattle (Pacheco in hunting or harvest that may occur does programs in Argentina is unclear and Embert 2007, p. 55), but these not significantly affect the species. there may be a lack of transparency in incidences do not seem to occur Based on a review of the best available

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information, and in the absence of when nests are depredated, females can began the management and monitoring conflicting new information, we find rebuild these nests (Larriera and Pin˜ a of the Argentine population of broad- that overutilization for commercial, 2000). Clutch sizes can be as high as 129 snouted caiman, population estimates recreational, scientific, or educational eggs in a good year (Larriera 2002, p. for Argentina have indicated an upward purposes is no longer a threat to the 202). Based on surveys conducted and trend. Through this program, a broad-snouted caiman in Bolivia, Brazil, numbers of eggs collected, it appears significant increase in egg collection Paraguay, and Uruguay. that caiman populations are continuing and harvest has occurred in the wild; to increase in Argentina. Although over 30,000 hatchlings from eggs Factor C. Disease or Predation disease and predation are sources of collected have been released into the Argentina mortality, it is not a limiting factor for wild since the program began. On September 18, 1997, at the 10th There is little information on diseases population growth. meeting of the Conference of the Parties that affect wild broad-snouted caiman Summary of Factor C for the Argentine (‘‘CoP10’’), the Argentine population of (Huchzermeyer 2003; Jacobson 2007). In DPS broad-snouted caiman was transferred 1999, the Field Veterinary Program of Disease and predation normally occur to Appendix II based on a proposal from the Wildlife Conservation Society and Argentina. The proposal described the ´ in populations, and the best available Fundacion Vida Silvestre Argentina increased population status of the studied the health of caiman scientific and commercial information does not indicate that either of these species in Argentina, and a ranching populations in the wild and in captivity program that had contributed to its ´ factors negatively affect the broad- at the El Cachape ranching operation in increase (CoP10 Doc. 10.86, CoP10 Prop. Chaco Province, Argentina. There was a snouted caiman here such that they rise to the level of threats to the species. 10.1, Government of Argentina 1997). very low incidence of pathogens and no Appendix II allows for regulated evidence of infectious disease in either Neither disease nor predation are a significant factor affecting this species. commercial trade as long as the population. Health conditions of exporting country finds that the ranched and wild animals continue to Therefore, we do not find that disease nor predation threatens this distinct specimens were legally acquired and be monitored in Argentina (Uhart and that the activity is not detrimental to the Moreno 2000; Uhart et al. 2000). population segment of the broad- snouted caiman, now or in the future. survival of the species. Exported skins There is naturally a high level of must be tagged according to the CITES predation on eggs and hatchlings. In the Bolivia, Brazil, Paraguay, and Uruguay Resolution on a universal tagging wild, an average of 60 to 70 percent of (Northern) DPS system for the identification of crocodile the eggs do not hatch, usually due to In the range countries of Bolivia, skins (Resolution Conf. 11.12 (Rev. nest flooding or predation (Hutton 1984; Brazil, Paraguay, and Uruguay, there is CoP15)). Larriera 2003). One study found that the no indication that disease and predation A Resolution on a universal tagging rate of depredation in a low rainfall are affecting the broad-snouted caiman system for the identification of crocodile season was significantly higher than such that this factor threatens the skins was adopted by the Parties at normal seasons; resulting in over half of species. Therefore, we do not find that CoP9, held in 1994. At CoP10 (1997, the nests being depredated in some disease nor predation threatens this Harare, Zimbabwe), the CITES areas (Larriera and Pin˜ a 2000). During population segment of the broad- Secretariat reported that, to its particularly dry seasons, high predation snouted caiman. knowledge, all range countries were may occur due to easier access to nests, effectively implementing the Universal and the increased distance between the Factor D. The Inadequacy of Existing Tagging System Resolution. Caiman nest and the water. This may be in part Regulatory Mechanisms yacare skins and products originating in due to less maternal attention when the Argentine DPS Argentina have been imported into the mother is in the water. At such times, United States with the appropriate up to 50 percent of entire clutches in The broad-snouted caiman was listed CITES tags. This species was downlisted forest nests and 80 percent of clutches in Appendix I of CITES on July 1, 1975. under the Act in 2000 to threatened along levees and dykes can be This listing (also refer to the factor B status [65 FR 25867, May 4, 2000]. consumed by predators (Larriera and discussion) requires strict regulation of Adherence to the CITES tagging Imhof 2006). Predators of eggs and international movement of this species, requirements has reduced the potential hatchlings include herons (Ardea cocoi), which may only be authorized in for substitution of illegal skins, which storks (Ciconia ciconia), crested ‘‘exceptional circumstances,’’ and trade has reduced trade enforcement caracaras (Caracara plancus), iguanas for commercial purposes is generally problems involving the similarity of (Tupinambis merianae), and prohibited. In 1990, the ‘‘Projecto appearance of skins and products carnivorous mammals such as the South Yacare´’’ was implemented in Argentina among different species of crocodilians. American gray fox (Pseudalopex based on a concept of conservation According to CITES Resolution Conf. griseus) (Larriera and Imhof 2006). through sustainable use of broad- 11.16 (Rev. CoP15), for trade in ranched Other research found that no more than snouted caiman. The objective of the specimens of species transferred from 10 percent of the hatchlings typically program was to improve the status of Appendix I to Appendix II to occur, a survive to adulthood (Larriera and the population in two ways: by creating ranching program must: (1) Demonstrate Imhof 2006). This level of mortality incentives for landowners and by that the program is beneficial to the from predation is considered normal in increasing public awareness in the local conservation of the local population; (2) caiman populations. communities to encourage the increase identify and document all products to In Argentina, methods are taken to of caiman populations. Another ensure that they can be readily minimize the effects of predation. To objective was to conserve natural distinguished from products of decrease the death rate due to predation, wetlands on which caimans depend Appendix I populations; (3) maintain ranched young are returned to the wild (Larriera et al. 2008a, pp. 143–145). appropriate inventories and harvest- only after they are past the critical first These programs also reintroduce level controls and mechanisms in the year when the risk of predation is captive-raised individuals to the wild. program to monitor wild populations; greatest (Larriera and Imhof 2006). Even Since the government of Argentina and (4) establish sufficient safeguards in

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the program to ensure that adequate which means they meet all the economic development, especially in numbers of animals are returned to the requirements to implement CITES. With the forestry sector, where it provided wild if necessary and where respect to CITES, based on the trade clearly defined roles for institutional appropriate. data (see Factor B discussion) and other oversight and control. To its credit, At the national level, Argentine Law data and information available to the Bolivia has become the world leader in 22.421 prohibits all use of fauna that is Service, the Argentina appears to be the area of certified production forests not specifically authorized (Micucci and adequately enforcing international trade (Byers et al. 2008, p. 31). Because there Waller 1995). In 2000, when the through its legal framework. has been a growing concern regarding experimental operations began indigenous people’s rights, workers’ Summary of Factor D for Argentine DPS commercial production of broad- rights, and reductions in the snouted caiman, Resolution 283/00 was Monitoring indicates that environmental impact of logging, there enacted by the Government of Argentina management efforts within Argentina has been an increase in third-party under Law 22.421. This law approves are working. The population in certifiers such as the Forest Stewardship the inter-province transit and export of Argentina, based on reports provided to Council (FSC) in the global wood trade caiman products from ranching the Service and the CITES Secretariat, (www.fsc.org, accessed March 14, 2011). operations that comply with CITES appears to be increasing. All Parties that FSC certification ensures that wood is Resolution 11.16, but trade in conduct ranching operations approved responsibly harvested. In Bolivia, most specimens from any other sources (i.e., in accordance with Resolution Conf. of the FSC certified operations are large- not from registered ranching operations) 11.16 are obligated to report to the scale private enterprises that are able to is illegal. Resolution 283/00 also CITES Secretariat (Jenkins et al. 2006, pay for audits and maintain access to establishes minimum requirements for p. 3). While some habitat loss and international markets for certified ranching operations. One of the degradation remain in Argentina, these products. However, management issues requirements is that there must be a threats have been reduced based on in Bolivia still remain. The ratification baseline population study covering at intensive management efforts of this of autonomy statutes by the least 40 percent of the province in species. These reports suggest that the Departments of Santa Cruz, Pando, Beni, which the operation is located. The populations of this species are and Tarija, and their conflict with the study must be conducted for at least increasing in Argentina. While we do National government is currently one of 2 years (Larriera and Imhof 2006). The not have complete population survey the more contentious issues (Byers et al. study results must be approved by the information in Argentina, all indications p. 33). The most important implications province and then submitted to the suggest that the wild population is well of this movement toward enhanced national authorities (Direccio´n de Fauna managed and is increasing. Wildlife departmental authority and y Flora Silvestres [Directorate of Wild such as the caiman can be responsibility relate to land-use Fauna and Flora]) for final approval. advantageously used in commerce if planning and authority over land tenure The Registro Nacional de Criaderos management is sufficient to maintain matters. This issue is still in flux and (National Registry of Breeding Centers, suitable habitats, and if harvest is at a this transfer towards decentralized Resolution 26/92) lists registered level that allows maintenance of healthy governance could have negative ranching operations. In provinces with and sustainable populations. Broad- repercussions on the broad-snouted nationally approved ranching programs, snouted caiman, under such conditions, caiman. the provincial government must can provide revenue to pay for its own With respect to caiman management conduct an annual evaluation of the management and stimulate local in Bolivia, a management plan for population status of the species in their economies. Therefore, we find that Caiman latirostris population recovery province and submit it to the Direccio´n although the strong management of the and conservation in Tarija department de Fauna y Flora Silvestres. According species through local programs was proposed for 2006–2009. It is to Larriera (pers. comm. 2006), all the promoting egg harvest and hatchling unclear whether the plan was surveys are conducted under the release has reduced threats to this implemented, and no updated data have supervision of members of the CSG. species and its habitat, threats (see been provided with respect to the Ranching operations and harvests of factor A) do still exist. With respect to species’ status in Bolivia (Aparicio and wildlife that are not transported across international trade of broad-snouted Rı´os 2008). The best available provincial boundaries or exported are caiman parts and products, we find that information does not indicate that the controlled through regulation at the CITES is an adequate regulatory regulatory mechanisms in place are provincial level (Larriera and Imhof mechanism throughout its range. We adequate to sufficiently protect this 2006). will continue to monitor the status of species. Populations of broad-snouted the species in Argentina; however, caiman are still considered to be National Legislation To Implement based on the best available information, severely depleted in Bolivia (Aparicio CITES we find that this factor is not a threat and Rı´os 2008, p. 104; Verdade et al. Information available to the Service to the species in Argentina. 2010, p. 19). Habitat loss, destruction, indicates that Argentina has protected- and modification (refer to Factor A Bolivia, Brazil, Paraguay, and Uruguay species and protected-areas legislation discussion) are still occurring and are (Northern) DPS under the jurisdiction of specific not expected to decrease in the future ministries or departments that control Bolivia’s current environmental (Anderson and Gibson 2006, p. 99), thus activities that impact the broad-snouted legislative framework represents a suggesting that existing regulatory caiman and its habitat. The Federal legal significant improvement since the 1992 mechanisms are insufficient to framework within the Government of World Summit on Sustainable ameliorate or remove the threat from Argentina is particularly robust. The Development in Rio de Janeiro began a habitat destruction. CITES National Legislation Project foundation for the sustainable and Brazil is faced with competing (www.cites.org, SC59 Document 11, equitable use of the country’s priorities of encouraging development Annex p. 1) deemed that the environmental resources and to control for economic growth and resource Government of Argentina has national destructive practices. This framework protection. In the past, the Brazilian legislation that is considered Category 1, has had a positive effect on Bolivia’s government, through various

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regulations, policies, incentives, and reform objectives (USAID 2004, p. 4). government promoted a waterway in the subsidies, has actively encouraged However, there are still concerns; land Paraguay–Parana´ Basin known as the development of previously undeveloped is still being converted to soybean Hidrovı´a development project, the Alto lands in southeastern Brazil, which plantations, and land ownership is still Paraguay forest became an area of land helped facilitate the large-scale habitat a concern in Paraguay (USAID 2004, speculation. It is unclear what is conversions that have occurred pp. 3, 8). Paraguay’s objectives are to occurring in this area now and how this throughout the Atlantic Forest (Ratter et work towards more effective regulation activity may affect the broad-snouted al. 1997, pp. 227–228; Saatchi et al. and utilization practices. Environmental caiman. 2001, p. 874; Brannstrom 2000, p. 326; laws, such as the ‘‘Zero Deforestation There is no evidence that effective Butler 2007, p. 3; Conservation Law’’ and ‘‘Valuation and Retribution of protective measures have been International 2007c, p. 1; Pivello 2007, Environmental Services Law’’ have had undertaken to conserve the broad- p. 2). These development projects the most significant impact during the snouted caiman. The existing regulatory include logging, housing and tourism past five years. These measures have mechanisms currently in place for developments, and expansion of declared wild areas be protected from broad-snouted caiman in Paraguay do plantations (Collar et al. 1992, p. 776; the private sector. not adequately address the factors Ratter et al. 1997, pp. 227–228; Barnett While we acknowledge that Paraguay threatening the species. We are seeking et al. 2000, pp. 377–378; Saatchi et al. is making significant progress in the information and data on the status of the 2001, p. 874; Butler 2007, p. 3). These conservation of its resources, existing species in Paraguay as part of this projects impact potentially important regulatory mechanisms are still proposed rule; however, in the absence sites for this species and would affect inadequate. For example, Paraguay of new information, we find that habitat within and adjacent to provides a legal framework for the regulatory mechanisms in Paraguay are established protection areas in Brazil forestry sector under the Forest Law of inadequate to protect broad-snouted (Collar et al. 1992, p. 776; Barnett et al. 1973. Some of the aspects of Paraguay’s caiman. 2000, p. 377–378). The Brazilian forest law are that it establishes Uruguay’s richest biodiversity is government has encouraged incentives for reforestation and defines found in its wetlands and its growing development of dams for hydroelectric forest land in categories such as practice of rice production. Its economy power, irrigation and expansion of reserves, production forests, or semi- is highly dependent on exports, and the agricultural practices, primarily for protected forests; and sets up agricultural sector contributes 11 soybean production (Braz et al. 2003, regulations and fines to protect the percent of its total gross domestic p. 70; Hughes et al. 2006, pp. 51–56; forest resources. The export of logs was product (GDP). One of Uruguay’s Verdade et al. 2010, pp. 18–19). Brazil’s prohibited in 1972, but illegal export environmental problems is that rice competing priorities make it difficult to was still occurring in the 1980s, paddies are replacing marshlands, and it enforce regulations that protect broad- especially from the northeastern part of is causing degradation of these snouted caiman habitat. the country (IIED and USAID 1985, in ecosystems. While some species are In 2003, Brazil established a Harcourt and Sayer 1996). In part, this capable of adapting to these human- nationwide research and development has been due to insufficient financial made ecosystems, environmental program, called Programme for Biology, resources. The 1973 Forest law was degradation is associated with the Conservation and Management of problematic in the sense that not only conversion of natural habitat to rice Brazilian Crocodilians (Coutinho and does it allow people to colonize forest paddies. Luz 2008 in Velasco et al. 2008 p. 80). reserves, but it also considers forested The government has taken steps to The broad-snouted caiman was listed as lands unproductive, and therefore little address the issue of wetland protection an endangered species in Brazil until attempt is made to prevent and biodiversity. Uruguay has 2003, at which time the species was deforestation. Agricultural land has a developed methods aimed at improving withdrawn from the Brazilian List of much higher economic value than issues associated with rice production Endangered Fauna (The Brazilian forested land (in some regions it can be such as harmful residue generated Institute of Environment and Renewable as high as $1,000 U.S. dollar (USD) per during processing and is working at Natural Resources [IBAMA] 2003). ha, compared with $400 USD per ha for methods of reducing the impact caused Despite these initiatives, we have no forested land), which represents an by residue accumulation. In the past, information to indicate that regulatory obvious economic incentive for the rice hulls were burned which mechanisms exist to effectively limit or deforestation. In 1991, Paraguay’s emitted toxic chemicals into the restrict habitat destruction for this annual deforestation rate was estimated atmosphere and contributed to air species. We do not have information to be 4.7 percent (WWF 1991, cited in pollution. Now, Uruguay is working indicating that impacts to this species Brooks et al. 1992), which at the time towards composting the rice hulls, (e.g., development of dams for was higher than that of any other South which has minimal environmental hydroelectric power, and expansion of American country. impact. Additionally, Uruguay became a agricultural practices, primarily for More recently, Paraguay enacted a member of the Ramsar Convention in soybean production) have been or will Forest Conversion Moratorium (also 1984 and a member of the Convention be adequately addressed through known as the Zero Deforestation Law) in on Biological Diversity in 1992 in order existing regulatory mechanisms at the 2004 which is still in place. The law to increase wetlands protection. sites where this species is found or in prohibits the conversion of forested Uruguay enacted law number 16.170 its habitat. Based on data and areas in Paraguay’s eastern regions. which directly addresses the information available to the Service, we Restrictions are difficult to implement conservation of wetlands, and believe that the existing regulatory and enforce. For example, the area in specifically mandates that the areas mechanisms in Brazil are inadequate to the northernmost part of Paraguay assigned for wetlands conservation must ameliorate the current threats to this known as the Alto Paraguay was once a be respected by rice farmers. species in Brazil. refuge for wildlife such as the caiman. Although Uruguay has made progress In Paraguay, the environmental This was primarily due to its isolation in improving its environmental laws situation has improved; Paraguay has and difficulty in accessing the habitat. and recognizes the importance of completed many of its governmental However, when the Paraguayan protecting its biodiversity, enforcement

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of its laws regulating protection of this be threatened by the inadequacy of the agriculture, particularly on soy species may still be insufficient in some existing regulatory mechanisms in plantations. Not only did the study areas (Brazaitis et al. 1996). This has Bolivia, Brazil, Paraguay, and Uruguay result in deformities of exposed caiman, primarily been due to the limited to ameliorate the effects of habitat loss but it also resulted in mortalities resources available to local enforcement and degradation. Management efforts (Poletta et al. 2009, p. 98). One form of agencies, as well as the remoteness and vary within the range of broad-snouted glyphosate, Cycloposphamide, in inaccessibility of much of the caiman caiman. Each country has both unique particular, caused malformations in the habitat. We have no information to and overlapping factors that affect the exposed caiman, causing 90 percent indicate that the existing regulatory species. In some cases, there was an embryo mortality (Poletta et al. 2009, p. mechanisms effectively limit or restrict abundance of information available 97). Another study found that exposure habitat destruction for this species. regarding potential threats to the to pesticides increases the egg weight Although Uruguay is making progress in species, and in other cases, there was loss and decreases hatchlings weight of its protection of natural resources, it is little to no information available, Caiman latirostris (Beldomenico et al. unclear how this species is being particularly regarding the adequacy of 2007, p. 246), which negatively affects monitored and managed in Uruguay. We regulatory mechanisms with respect to species’ fitness. This study evaluated do not have sufficient evidence that this species. responses based on exposure to atrazine impacts to this species (e.g., conversion In Bolivia, Brazil, Paraguay, and and endosulfan, which are commonly of wetlands to rice paddies and Uruguay, the best available information used in agriculture. Egg weight loss was subsequent environmental degradation indicates that the primary threat to the significantly greater for those eggs that occurs) have been or will be species is habitat loss (Factor A). treated with an environmentally adequately addressed through existing Related to this factor is the inability of relevant dose of atrazine (0.2 parts per regulatory mechanisms at the sites the governments, at a national, million) (ppm) and relatively low doses where this species is found or in its provincial, or regional level, to of endosulfan (2 and 20 ppm) habitat. Based on the best available adequately enforce mechanisms to (Beldomenico et al. 2007, p. 249). The information, we find that the existing address threats. In these countries, there study was done on captive-held broad- regulatory mechanisms continue to be is little monitoring data on broad- snouted caiman; the impact of these inadequate to ameliorate the current snouted caiman. Based on a review of pesticides on natural caiman threats to this species in Uruguay. the information available, we were populations is unknown. However, unable to find that regulatory extrapolations can be made that exposed National Legislation To Implement mechanisms are adequate in Bolivia, smaller hatchlings would have less CITES in Bolivia, Brazil, Paraguay, and Brazil, Paraguay, and Uruguay to protect chance of survival during their first Uruguay broad-snouted caiman from threats year, thus affecting the population The CITES National Legislation including habitat loss. dynamics of the species. Impaired Project (www.cites.org, SC59 Document Factor E. Other Natural or Manmade embryonic growth may also be 11, Annex p. 1) deemed that the occurring when exposed to Governments of Brazil and Uruguay Factors Affecting Its Continued Existence contaminated water and food have national legislation that is (Beldomenico et al. 2007, p. 250). considered Category 1, which means Following is a rangewide threats Potential effects from contamination they meet all the requirements to analysis in which we evaluate whether by commonly used pesticides such as implement CITES. Bolivia was other natural or manmade factors affect aldrin, chlordane, endrin, lindane, described as being in Category 2, both the continued existence of the broad- methoxyclor, toxaphene, DDT, with a CITES legislation plan and draft snouted caiman throughout its range parathion, endosulfan, malathion, and legislation, but not enacted, and because the information available is not carbaryl, similar to that found in the Paraguay was described as Category 2 specific to each DPS. This evaluation is studies conducted on captive broad- with no plan and only draft legislation. not specific to each country unless snouted caiman, are likely to occur and Overutilization (unsustainable trade in specified as such. affect this species in the wild. Farmers skins, parts, and products) was the Pesticides and Endocrine Disruptors are not well trained in proper primary reason that this species was application methods, often over- listed in CITES Appendix I and also Approximately 10 to 15 percent of applying agrochemicals, applying them listed as endangered under the ESA. pesticides applied in agricultural under inappropriate physical or However, now, overutilization is no activities actually reach target environmental conditions, and not longer a concern for this species. With organisms, and the remainder is following appropriate handling, respect to CITES, based on the trade dispersed into the atmosphere, soil, and washing, and storage protocols (Byers et data (see Factor B discussion), we find water (Poletta et al. 2009, p. 96). In al. 2008, p. 26). Despite regulations that the governments of Bolivia, Brazil, Argentina, soy, which requires the governing the use of these and other Paraguay, and Uruguay are adequately application of pesticides, occupies 16 pesticides, more oversight and resources enforcing international trade through million hectares, and land dedicated to are needed to monitor their use and their respective legal frameworks. soy plantations continues to expand effects on this species. Such pesticide (Larriera et al. 2008, p. 165). A study use is likely to occur throughout the Summary of Factor D for Bolivia, Brazil, regarding the genotoxicity of the species’ range. Paraguay, and Uruguay (Northern) DPS herbicide formulation Roundup® In Bolivia, contamination of aquatic With respect to international trade of (glyphosate) was conducted in systems from agrochemicals occurs in broad-snouted caiman parts and Argentina on broad-snouted caiman. some areas, particularly in Santa Cruz products, we find that CITES is an Glyophosate is a broad-spectrum and Cochabamba (Byers et al. 2008, p. adequate regulatory mechanism in herbicide used widely in weed control. 26). In the lowlands of Santa Cruz Bolivia, Brazil, Paraguay, and Uruguay. In this study, specimens of broad- Department, for example, where broad- However, the best available scientific snouted caiman were exposed to various snouted caiman may exist, agro- and commercial information indicates concentrations and compounds of industrial development is leading to that broad-snouted caiman continues to glyphosate commonly used in increased use of agrochemicals. Soy,

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sunflower, cotton, and sugarcane are the benefit to remove them shortly after it rises to the level of a threat. main crops, and to a lesser extent coffee, females lay eggs to reduce or eliminate Throughout the rest of the species’ cacao, and rice are grown. Mechanized exposure to environmental contaminant. range, human conflict with broad- agriculture on large areas with poor soil Regardless of this aspect, based on the snouted caiman occurs sporadically and has led to the increased use of best available scientific and commercial may result in the death of some agrochemicals such as fertilizers and information available, we currently do individual caiman. However, the best pesticides that are often applied by not find that exposure to pesticides or available scientific and commercial aerial spraying. Despite increasing other environmental contaminants is a information does not indicate that oversight, 17 pesticides have been threat to the species. human conflict occurs to the extent that banned in Bolivia but are nevertheless it is a threat to the species. Therefore, Human Conflict freely sold in local markets and relative to the population size, human routinely used (Byers et al. 2008, p. 26). Although it is commonly known that conflict does not appear to be a threat Although we recognize that pesticides human conflict with caiman occurs, this to the species. will result in mortalities and decreased is not a significant factor affecting the The broad-snouted caiman, like other fitness in some individuals, the best species. The most recent status survey wildlife, is a victim of collisions with available information does not indicate of broad-snouted caiman by the motor vehicles while crossing roadways. that pesticides threaten this species. Crocodile Specialist Group indicates This results in the mortality of about Studies have been conducted in that the principal threats to this species 200 animals per year (Larriera, pers. Argentina, where similar pesticides are are habitat destruction, illegal hunting comm. 2006). Broad-snouted caiman used, and reproduction and survival in localized areas (in some states of often successfully cross roads in areas rates of broad-snouted caiman in Brazil, where caiman population is containing sparse human developments. Argentina appear to be currently robust. low), and construction of large Development of high volume Populations currently remain stable or hydroelectric dams (Verdade et al. 2010, transportation corridors in broad- are increasing in Argentina; and the p. 1). In Bolivia, a survey indicated that snouted caiman habitat may inhibit species has even expanded its range in 92 percent of individuals said that they their movements between habitat some areas (Borteiro et al. 2008, pp. hunted broad-snouted caiman to avoid patches, potentially reducing 244–249; Verdade et al. 2010, pp. 18– the danger of an attack. This was more connectivity among water bodies 22). This is an indication of the species’ common when caiman were found in generally inhabited by broad-snouted intrinsic resilience and adaptability. cattle watering areas such as ponds and caiman. However, these mortality events Although environmental contaminants agricultural impoundments near their do not occur to such an extent that they such as pesticides and herbicides likely homes. However, the actual impacts are are a significant factor affecting the affect individuals, there is no evidence unknown; the survey was anecdotal. species. that they currently pose a threat to the Most broad-snouted caiman populations Fire Ants species. in Argentina occur on privately owned Specifically, with respect to wetlands. In Chaco, Argentina, local The red fire ant, Solenopsis invicta, is endocrine disrupters, studies in other people have been known to kill caiman, an extremely aggressive species. It is crocodile species have been conducted not only for food, but out of fear that originally from central South America to examine their effects (Rainwater et al. these animals will attack them or their and is distributed throughout a large 2008, pp. 101–109). Vitellogenin livestock and poultry (Prado 2002, variety of habitats (Folgarait et al. 2005 induction is a useful biomarker to Aparicio and Rios 2008, p. 112). Based in Parachu´ -Marco´ et al. 2008, pp. 1–2). examine exposure and response to on interviews with ranchers, It completely occupies the area of endocrine disruptors, specifically landowners and police, it is estimated distribution of broad-snouted caiman. environmental estrogens. The that approximately 30 to 40 wild caiman This is an opportunistic, aggressive vitellogenin gene is a biomarker per year are killed for food, and about species and is able to reach high frequently used to detect estrogenic 50 per year are killed out of fear population densities. The fire ant effects in male fish. However, this study (Larriera 2006, pers. comm.). These prefers total or partial exposure to the concluded that endocrine disruptors do killings often occur during the dry sun, and apparently is attracted by not appear to have negative effects on season, when caiman move to ponds sources of protein, sugar, and lipids as crocodile species in the wild. To the that are closer to human-populated well as high levels of humidity. Because best of our knowledge, endocrine areas. To counter these fears, biologists broad-snouted caiman generally nest in disrupters are not a threat to broad- have been working with local fairly open habitats, and its nests are snouted caiman. communities through the caiman raised, they provide an ideal source of We recognize that environmental ranching project at the El Cachape´ protection for S. invicta colonies from contaminants may affect individuals, Wildlife Refuge in Argentina. One rains during the summer. Allen et al. especially given the potential for long- aspect of this program was that they (1997, pp. 318–320) showed that red fire term bioaccumulation of contaminants developed an educational campaign in ants affect the success of hatching, during the species’ life. However, we do local schools. The students also causing the death of unborn embryos in not have information or data on the participate in the ranching project on the nest, and possibly preventing the extent of the impact, if any, that the refuge. The project has produced female from opening the nest when her environmental contaminants currently two educational Web sites, hatchlings call. In Argentina, these ants have on the species. An inadvertent www.yacare.net and www.chicos.net, use broad-snouted caiman nests to set aspect of the research referenced above that describe the conservation and up their new colonies (Larriera 2006, indicated that the removal of eggs from ecology of caiman species in Argentina. personal communication), and have the wild and hatching in a captive In Argentina, because there is been documented to decrease hatching environment can actually have a incentive for local communities and success by 20 percent (Parachu´ -Marco´ et beneficial effect. If eggs are negatively villagers in the range of the species to al., 2005, pp. 1–2). The severity and affected by exposure to pesticides conserve broad-snouted caiman, conflict magnitude of long and short term effects through either a decrease in fitness or and killing of caiman for food, although of fire ants on broad-snouted caiman mortality in the wild, it would be of it occurs, do not occur to the extent that populations is currently unknown.

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Although fire ants have the potential of make projections of climate change reduced snowpacks, and increased fire being a localized threat, particularly in globally and for broad regions through frequency, or other changes occurring disturbed areas, the best available the 21st century (Meehl et al. 2007, p. individually or in combination, may information does not indicate that this 753; Randall et al. 2007, pp. 596–599). affect species and their habitats. The factor affects the species such that it is Highlights of these projections include: vulnerability of a species to climate a threat to the species throughout all or (1) It is virtually certain there will be change impacts is a function of the a significant part of its range. warmer and more frequent hot days and species’ sensitivity to those changes, its Drought and Flooding nights over most of the earth’s land exposure to those changes, and its areas; (2) it is very likely there will be adaptive capacity (IPCC 2007, p. 883). This species has survived large-scale increased frequency of warm spells and As described above, in evaluating the droughts and floods in the past (Larriera heat waves over most land areas, and status of a species the Service uses the 2003), but high rainfall can lead to the frequency of heavy precipitation best scientific and commercial data reduced hatching success from flooding events will increase over most areas; available, and this includes (Larriera and Pin˜ a 2000). Recent caiman and (3) it is likely that increases will consideration of direct and indirect counts suggest that populations occur in the incidence of extreme high effects of climate change. As is the case declined somewhat during 2002–2003 sea level (excludes tsunamis), intense with all other stressors we assess, if the and 2007–2008 (Micucci et al. 2007, tropical cyclone activity, and the area status of a species is expected to be Larriera et al. 2008). This was attributed affected by droughts in various regions affected that does not necessarily mean to cyclic drought conditions during the of the world (Solomon et al. 2007, p. 8). it is a threatened or endangered species early 2000s (Micucci et al. 2007, More recent analyses using a different as defined under the Act. Species that Larriera et al. 2008). The harvest of global model and comparing other are dependent on specialized habitat broad-snouted caiman eggs during the emissions scenarios resulted in similar types, limited in distribution, or 2009 season was drastically reduced in projections of global temperature change occurring already at the extreme Corrientes, Santa Fe, and Formosa (Prinn et al. 2011, pp. 527, 529). periphery of their range will be most Provinces also due to a severe drought. As is the case with all models, there susceptible to the impacts of climate However, in 2010, wetlands recovered is uncertainty associated with change; however, the broad-snouted due to heavy rains, and egg harvest in projections due to assumptions used, caiman has a wide distribution. 2010 was approximately 30 percent data available, and features of the The information currently available higher than the historical average models. Despite this, however, under all on the effects of climate change and the (Larriera and Siroski 2010, pp. 1–2). models and emissions scenarios the available climate change models do not However, drought and flooding does not overall surface air temperature trajectory make sufficiently accurate estimates of occur to such an extent that they are a is one of increased warming in location and magnitude of effects at a significant factor affecting the species. comparison to current conditions scale small enough to apply to the range Climate Change (Meehl et al. 2007, p. 762; Prinn et al. of the broad-snouted caiman. Below is The term ‘‘climate’’ refers to an area’s 2011, p. 527). Climate models and a discussion of data and research long-term average weather patterns, or associated assumptions, data, and available, with which we can make more specifically, the mean and analytical techniques continue to be inferences on the projected impacts to variation of surface variables such as refined, and thus projections are refined the broad-snouted caiman due to temperature, precipitation, and wind, as more information becomes available climate change, particularly the whereas ‘‘climate change’’ refers to any (e.g., Rahmstorf 2010 entire). For potential impacts of shifting global change in climate over time, whether instance, observed actual emissions of temperatures on sex ratios as well as the due to natural variability or human greenhouses gases, which are a key species’ distribution. activity (Intergovernmental Panel on influence on climate change, are A study conducted to determine Climate Change (IPCC) 2007, pp. 6, 871). tracking at the mid- to higher levels of climate change’s projected impacts to Although changes in climate occur the various scenarios used for making the American crocodile (Crocodylus continuously over geological time, projections, and some expected changes acutus) illustrates possible impacts to changes are now occurring at an in conditions (e.g. melting of Arctic sea the broad-snouted caiman (Escobedo- accelerated rate. For example, at ice) are occurring more rapidly than Galva´n 2006, p. 131). This is significant continental, regional and ocean basin initially projected (Raupach et al. 2007, because the sex of crocodiles is scales, recent observed changes in long- Figure 1, p. 10289; Comiso et al. 2008, determined during incubation and is term trends include: A substantial p. 1; Pielke et al. 2008, entire; LeQuere temperature-dependant. This study increase in precipitation in eastern parts et al. 2009, Figure 1a, p. 2; Manning et selected areas in Florida and western of North American and South America, al. 2010, Figure 1, p. 377; Polyak et al. Mexico that contain American northern Europe, and northern and 2010, p. 1,797). In short, the best crocodiles, and predicted how increased central Asia; declines in precipitation in scientific and commercial data available temperatures could affect the the Mediterranean, southern Africa, and indicates that increases in average geographical distribution and sex ratios parts of southern Asia; and an increase global surface air temperature and of the species in Florida, the Caribbean, in intense tropical cyclone activity in several other changes are occurring and and Central America. It focused on the the North Atlantic since about 1970 likely will continue for many decades geographic distribution and sex ratios of (IPCC 2007, p. 30). Examples of and in some cases for centuries (e.g. American crocodiles in the present observed changes in the physical Solomon et al. 2007, pp. 822–829; (2006), 2020, and 2050. It suggested that environment include an increase in Church 2010, p. 411). the geographic distribution and sex global average sea level and declines in Changes in climate can have a variety ratios of American crocodile mountain glaciers and average snow of direct and indirect impacts on populations in different parts of its cover in both the northern and southern species, and can exacerbate the effects range would change in response to hemispheres (IPCC 2007, p. 30). of other threats. For instance, climate- temperature and sea-level parameters. The IPCC used Atmosphere-Ocean associated environmental changes to the Optimal growth in crocodilians has General Circulation Models and various landscape, such as decreased stream been found to occur around 31 °C greenhouse gas emissions scenarios to flows, increased water temperatures,

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digestion diminishing below 29 °C while at 33 °C (91.4 °F) 100 percent developed for use at the local scale in (84 °F) (Coulson and Hernandez 1964, males were produced. Incubation at Argentina, Bolivia, Brazil, Paraguay, and pp. 2–33; Coulson and Coulson 1986, higher temperatures Uruguay, there is little certainty pp. 585–588), which correlates with (34.5 °C; 94.1 °F) induced production of regarding the timing, magnitude, and optimal temperatures for incubation. both sexes (Simoncini et al. 2008, p. net effect of climate change’s impacts. According to Escobedo-Galva´n et al. 231). Therefore, we find it is not possible at 2008, increased global temperatures and There is conflicting information on this time to make reliable predictions of sea level could in some ways benefit the how climate change could affect this climate change effects on the Argentine American crocodile by significantly species; it could benefit the species or population or the Bolivia, Brazil, increasing its potential habitat and have no significant impact. We are not Paraguay, Uruguay population due to distribution. Through this we could able to make inferences based on a the current limitations in available data infer that similar effects could occur in study on C. crocodilus in this case. and climate models. We found no the broad-snouted caiman species. The Based on the data available, we do not information that the other stressors study predicted that the distribution for currently have sufficient information to evaluated under this factor significantly the American crocodile would expand determine how changes in climate will affect the survival of the species. Based 69 percent in 2020 and 207 percent in affect this species at this time, on the best available information, we 2050. This is an 81 percent increase in particularly with respect to how it will find that there are no other natural or potential distribution from 2020 to 2050 affect the species’ sex determination and manmade factors are not threats to (Escobedo-Galva´n et al. 2008, pp. 9–10). distribution. either population segment. While the American crocodile is The broad-snouted caiman’s adapted to a narrow climate range geographic distribution is one of the Finding (Escobedo-Galva´n et al. 2008, p. 5), the largest latitudinal ranges among all We have carefully assessed the best broad-snouted caiman’s geographic crocodilians (Verdade and Pin˜ a 2006). available scientific and commercial distribution is one of the widest Due to its variability in use of habitat, information regarding the past, present, latitudinal ranges among all an expansion of the range of the broad- and future threats faced by the broad- crocodilians (Schmidt-Villela et al., snouted caiman may occur, as it is more snouted caiman throughout its range, 2008 p. 1). Broad-snouted caiman of a habitat generalist than other and we have separately evaluated the ° latitudinal range is between 5 S to crocodile species. population in Argentina (referred to as ° Based on scenarios that do not assume 32 S (Simoncini et al. 2009, p. 191). As a distinct population segment, or DPS) explicit climate policies to reduce global temperatures increase, areas that and the Northern DPS which consists of greenhouse gas emissions, global are currently too cool to support broad- Bolivia, Brazil, Paraguay, and Uruguay. snouted caiman may become warm average temperature is projected to rise enough to support them in the future. by 2–11.5 °F by the end of this century Argentine DPS (relative to the 1980–1999 time period) The study also predicted that In Argentina, our status review found (USGCRP 2011, p. 9). Optimal growth in increased global temperatures could that, although some localized impacts to crocodilians has been found to occur have a negative impact on the sex ratios broad-snouted caiman still occur in around 88 °F (31 °C), with appetites and of the American crocodile. Like other Argentina, such as habitat modification, effective digestion diminishing below crocodilian species, both the American particularly due to agricultural crocodile and the broad-snouted caiman 84 °F (29 °C). Although climate change development, the Government of exhibit temperature-dependent sex may cause changes in the broad-snouted Argentina has reduced threats determination. Temperature determines caiman distribution, especially given associated with habitat loss and the proportion of males to females the crocodilian requirement for overutilization through its ranching produced in nests (Escobedo-Galva´n et temperature dependent sex program such that the species is not al. 2008, p. 4). In C. crocodilus, determination, we do not have any data currently in danger of extinction. incubation temperatures greater than to indicate that effects on the species Through the five-factor analysis, we about 34 °C (93 °F) or less than 32 °C due to climate change would have a considered the progress made by (90 °F) were found to produce females detrimental effect, nor is climate change Argentina towards addressing previous while temperatures between 32 and 34 likely to become a threat in the threats to this species. We took into °C (90 and 93 °F) generally produced foreseeable future. However, we are consideration the conservation actions males (Escobedo-Galva´n 2006, p. 133; seeking information and data on the that have occurred, are ongoing, and are Escobedo-Galva´n et al. 2008, p. 2). effects of climate change on the broad- planned. Since listing under the ESA, Thus, the production of males is snouted caiman as part of this proposed the species’ status has improved in entirely dependent upon a sustained rule. Argentina based on the following: incubation temperature range of only • three degrees. In this study, incubation Summary of Factor E National and international laws and temperatures greater than 36 °C (97 °F) Few, if any, other natural or manmade treaties have minimized the impacts of were found to be at the upper end of the factors are anticipated to significantly trade. tolerance range for these eggs and affect the continued existence of the • Effective community-based resulted in both death of embryos and broad-snouted caiman in either DPS. We ranching programs have been stress to the surviving hatchlings reviewed factors such as fire ants, established. (Escobedo-Galva´n et al. 2008, p. 2). human conflict, pesticides and • Population numbers appear to be Although the study with respect to C. endocrine disruptors, droughts and increasing in Argentina based on nest crocodilus predicted that by 2020, the flooding, and climate change. With counts and egg harvest data. sex ratio is expected to shift in favor of respect to climate change, we lack The primary factor that led to the males, this did not appear to be the case adequate local or regional models on listing of this species under the Act was for broad-snouted caiman. For broad- how climate change would specifically overutilization. In Argentina, we find snouted caiman, one study indicated affect the habitat in the broad-snouted few threats to the species in the wild, that eggs incubated at 29 °C or 31 °C (84 caiman’s range. Given that reliable, though we find the DPS is still or 88 °F) produced 100 percent females, predictive models have not been threatened by the present or threatened

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destruction, modification, or females previously released by the species remains currently in danger of curtailment of its habitat or range program, the expansion of the nesting extinction. Therefore, because this (Factor A). However, information areas, the increase in the quantity of population segment satisfies the regarding the caiman ranching program harvested nests, and the observation of discreteness and significance criteria in Argentina indicates that the caiman caiman in places where they had under the DPS policy, we find that the is increasing in the wild in Argentina disappeared (Larriera et al. 2008, p. distinct population segment of the such that it is no longer in danger of 172). Age classes reflect healthy broad-snouted caiman in Bolivia, Brazil, extinction. The information indicates reproduction and recruitment into a Paraguay, and Uruguay should remain that the broad-snouted caiman wild breeding population. endangered under the Act. We will population is now widespread We find that the impacts previously continue to monitor the status of the throughout its historic range in identified in Argentina when the species throughout its entire range. Argentina, and it is found in comparable species was listed under the Act no Additionally, the broad-snouted caiman densities relative to other species of longer are of sufficient magnitude such in Bolivia, Brazil, Paraguay, and crocodilians. Recent surveys (Siroski that it is endangered. Because the Uruguay will remain listed in Appendix 2004, 2006; Micucci et al. 2007; Pin˜ a et Argentine population of broad-snouted I of CITES. al. 2008) have found broad-snouted caiman satisfies both the discreteness Special Rule caiman in sampled populations at and significance criteria as defined by densities similar to the American the DPS Policy, we propose to reclassify Section 4(d) of the Act states that the alligator (Wood et al. 1985; Woodward the distinct population segment of the Secretary of the Interior (Secretary) may, 2008, p. 1). This supports our finding broad-snouted caiman (C. latirostris) in by regulation, extend to threatened that the broad-snouted caiman Argentina from its present endangered species prohibitions provided for populations are increasing in the wild. status under the Act to threatened endangered species under section 9. Our In the region that has had the oldest status. As identified above, only one of implementing regulations for threatened caiman ranching program (Santa Fe the five listing factors currently poses a wildlife (50 CFR 17.31) incorporate the province); population trend information known threat to the broad-snouted section 9 prohibitions for endangered based on night counts during 1990–2002 caiman, namely, Factor A—the present wildlife, except when a special rule is indicates five of six populations or threatened destruction, modification, promulgated. For threatened species, increased during that period (Larriera or curtailment of its habitat or range. section 4(d) of the Act gives the and Imhof 2004). Recent data tracking of Although not currently in danger of Secretary discretion to specify the the success of hatching shows the extinction due to the destruction, prohibitions and any exceptions to percentage of hatchlings born from the modification, or curtailment of its those prohibitions that are appropriate harvested eggs has been above 70 habitat, we find that it is likely to for the species, provided that those percent in recent years, sometimes become so with the continued prohibitions and exceptions are exceeding 80 percent (Larriera et al. destruction of habitat in the foreseeable necessary and advisable to provide for 2008, p. 158). future. We have seen substantial the conservation of the species. A As discussed under Factor B, progress in Argentina with respect to special rule allows us to include removing eggs from the wild, rearing the addressing threats to this species. In provisions that are tailored to the young, and releasing them at an age developing this proposed rule, we specific conservation needs of the where they can defend themselves more carefully assessed the best scientific and threatened species and which may be readily can be advantageous, because commercial data available regarding the more or less restrictive than the general larger size in young crocodilians threats facing this species, as well as the provisions at 50 CFR 17.31. improves survivorship. Survivorship in ongoing conservation efforts by In some cases, caiman skins and other juvenile crocodilians has been shown to Argentina. Consequently, we have parts are exported to another country, be a function of size, with survivorship determined that the Argentine DPS of usually for tanning and manufacturing increasing as size increases (Elsey et al. the broad-snouted caiman should be purposes. The processed skins and 1992). For crocodilians, supplementing reclassified to threatened. finished products are exported to the wild populations with captive-reared United States. The rule prohibits Bolivia, Brazil, Paraguay, and Uruguay juveniles taken from eggs collected in importation or re-exportation of such (Northern) DPS the wild is a valuable tool for skins, parts, and products if we crocodilian management, because In contrast, there is a lack of determine that either the country of mortality of juveniles in the wild information about the broad-snouted origin or re-export is engaging in decreases with age and size. caiman in Bolivia, Brazil, Paraguay, and practices that are detrimental to the Enforcement of existing national and Uruguay (Aparicio and Rı´os 2008; conservation of caiman populations. international laws and treaties has Borteiro et al. 2008; Verdade et al. 2010, The purpose of this rule is threefold. minimized the potential impact of trade p. 20). In Bolivia, Brazil, Paraguay, and First, the rule accurately reflects the in Argentina, and available data strongly Uruguay, the best available information conservation status of the broad-snouted suggest that wild populations in indicates that threats remain such that caiman. Second, we wish to promote the Argentina are increasing (Pin˜ a et al. the species should retain its endangered conservation of the broad-snouted 2009). Exports from Argentina are status under the Act due to habitat caiman by ensuring proper management carefully managed and commercial degradation and the inadequacy of of commercially harvested caiman exports are limited to those caiman from regulatory mechanisms (Factors A and species in its range countries and, managed programs. All indications D, respectively). Although we have very through implementation of trade suggest that Argentina has been quite little data about the species in these controls (as described in the CITES successful in increasing its population countries and are unable to determine Universal Tagging System Resolution), of broad-snouted caiman through population numbers or trends, the best to reduce co-mingling of caiman intensive management efforts. The available information indicates that the specimens. Third, downlisting of the population has increased as evidenced species continues to face threats under broad-snouted caiman Argentine DPS to by an increase in population density, Factors A and D in Bolivia, Brazil, threatened reconciles listings of the the identification of reproductive Paraguay, and Uruguay such that the species in the Act and CITES.

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This special rule: (1) Recognizes the conservation regulatory requirements of snouted caiman in Argentina as positive recovery efforts and CITES as the appropriate regulatory threatened in the List of Endangered accomplishments of the government of provisions. It would also allow and Threatened Wildlife. This rule, if Argentina in recovering the broad- interstate or foreign commerce. The adopted, would also establish a special snouted caiman to the extent that the proposed special rule would, if adopted, rule for the broad-snouted caiman in species no longer meets the definition of allow import and export of broad- Argentina, which would allow the endangered; (2) Provides increased snouted caiman parts and products and importation into the United States of regulatory flexibility; and (3) Helps interstate or foreign commerce of this skins and other parts and products from streamline or eliminate review and species without a permit under the Act Argentina. This rule would also allow permitting requirements, thus providing as described at 50 CFR 17.42(c). the import of specimens originally from a net benefit to the broad-snouted Finally, this special rule does not Argentina reexported by other countries, caiman by providing incentives to cover the importation of viable caiman if certain conditions are met by those countries who are conducting eggs or live caimans into the United countries prior to exportation to the conservation efforts for the species. A States. Importation of these two types of United States. These conditions pertain special rule for this DPS allows U.S. specimens will require an Endangered to the implementation of a CITES commerce in their skins, other parts, Species Act import permit and the Resolution on a universal tagging and products from Argentina and appropriate CITES permit. This system for the identification of crocodile countries of re-export if certain requirement will allow scrutiny of skins as well as provisions intended to conditions are satisfied by those individual applications for importation support appropriate management for countries prior to exportation to the of live caimans or eggs so as to prevent sustainable use of wild populations of United States. Therefore, under section accidental introduction of these exotic C. latirostris. Thus, for specimens that 4(d) of the Act, we determine, through species into the United States, which do not qualify under the provisions of this special rule, that it is necessary and may have detrimental effects on U.S. the special rule, prohibited activities advisable to provide for the native wildlife or ecosystems. requiring a permit under 50 CFR 17.32 conservation of the broad-snouted Reexportation from the United States of would still include take; export or caiman in accordance with applicable caiman skins, other parts, and products reimport; delivery, receipt, carrying, laws. will continue to require CITES transport or shipment in interstate or Currently, the listing of the broad- documents. We find that it is not foreign commerce, in the course of a snouted caiman from Argentina in necessary or advisable for the commercial activity; or sale or offering Appendix II of CITES allows conservation of the broad-snouted for sale in interstate or foreign commercial trade under certain caiman to regulate interstate or foreign commerce live animals, eggs, or restrictions in the species, including commerce of this species. gametes. In addition, changing the parts and products. On May 4, 2000, the In addition, Argentina must continue species’ status under the Act will not Service reduced restrictions on a similar to effectively implement the CITES decrease the level of protection species, the yacare caiman (Caiman Resolution on a universal tagging provided by CITES. yacare), by reclassifying it from system for the identification of crocodile Consistent with the requirements of endangered to threatened under the Act skins and must have adequate national sections 3(3) and 4(d) of the Act, as (65 FR 25867). That final listing rule legislation for the implementation of described above, this proposed rule included a special rule that exempts the CITES. The special rule would also contains a special rule to amend 50 CFR commercial importation and re- allow trade in broad-snouted caiman part 17.42(c) to allow commercial exportation, under certain conditions, of parts and products through importation and reexportation, under yacare skins, parts, and products into intermediary countries only if the certain conditions, of whole and partial and out of the United States from the countries involved are effectively skins, other parts, and products from Act’s implementing regulatory implementing CITES. Both the country broad-snouted caiman from Argentina prohibitions for threatened species of origin and intermediary countries without a threatened species import under section 50 CFR 17.31. Our must be effectively implementing the permit otherwise required by 50 CFR regulations at 50 CFR 17.42(c) set forth CITES Universal Tagging System part 17, if all requirements of the special this special rule for threatened caiman, Resolution. The intent of this special rule and 50 CFR parts 13 (General including, among others, the yacare (C. rule is to enhance the conservation of Permit Procedures), 14 (Importation, yacare), common caiman (C. crocodilus the broad-snouted caiman in Argentina, Exportation, and Transportation of crocodilus), and brown caiman (C. which is properly managing its broad- Wildlife), and 23 (CITES) are met. crocodiles fuscus and C. crocodiles snouted caiman populations. By gaining The reclassification of the broad- chiapasius). Section 17.42(c) allows the access to commercial markets in the snouted caiman from Argentina to import, export, or re-export, or the United States for broad-snouted caiman threatened and the accompanying interstate or foreign commerce of products, Argentina will be encouraged special rule allowing commercial trade caiman skins, parts, and products to continue its sustainable-use into the United States without without a threatened species permit management programs. These programs threatened species import permits does otherwise required under 50 CFR 17.32, require annual surveys of wild not end protection for this species, provided the requirements of this populations to ensure biological which remains listed in Appendix II of Special Rule and parts 13, 14, and 23 of sustainability in participating provinces CITES. To the contrary, the special rule 50 CFR are met. and reintroduction of ranched offspring complements the CITES universal We propose to add the Argentine DPS to the wild. The programs also provide tagging resolution. A benefit of this of the broad-snouted caiman to the an economic incentive for local people special rule is that it would reconcile special rule at 50 CFR 17.42(c). This to protect and expand broad-snouted the Act’s requirements for the special rule allows import, re-export, caiman habitat. importation and exportation of and interstate commerce of specimens Argentine broad-snouted caiman parts and products originating only from Effects of This Rule and products shipments into and from Argentina. This proposed rule, in most This rule, if made final, would revise the United States with CITES instances, adopts the existing 50 CFR 17.11(h) to reclassify the broad- requirements.

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In summary, this special rule would from the United States of caiman skins, Section 8(a) of the Act authorizes the prohibit the importation, exportation, other parts, and products will continue provision of limited financial assistance and reexportation of specimens (skins, to require CITES documents. Interstate for the development and management of other parts, or products) of broad- commerce within the United States in programs that the Secretary of the snouted caiman originating from legally imported caiman skins, other Interior determines to be necessary or Argentina or imported from a country of parts, and products would not require useful for the conservation of manufacture or reexport unless the U.S. threatened species permits. endangered or threatened species in following conditions are met: This special rule would allow trade foreign countries. Sections 8(b) and 8(c) (1) Each Argentine broad-snouted through intermediary countries. of the Act authorize the Secretary to caiman skin or part imported, exported, Countries are not considered as encourage conservation programs for or reexported must be tagged or labeled intermediary countries or countries of foreign listed species, and to provide reexport if the specimens remain in in accordance with the CITES assistance for such programs, in the Resolution on a universal tagging Customs control while transiting or form of personnel and the training of system for the identification of crocodile being transshipped through the country, personnel. skins. This does not apply to meat, and provided those specimens have not skulls, scientific specimens, or entered into the commerce of that Section 9 of the Act and its products, or to the noncommercial country. However, the CITES Resolution implementing regulations at 50 CFR part import, export, or reexport of personal on a universal tagging system for the 17.31, set forth a series of general effects in accompanying baggage or identification of crocodile skins prohibitions and exceptions that apply household effects. presupposes that countries of reexport to all threatened wildlife. As such, these (2) Any countries reexporting have implemented a system for prohibitions are applicable to the broad- Argentine broad-snouted caiman skins monitoring skins. snouted caiman. These prohibitions, in or parts must have implemented an Available Conservation Measures part, make it illegal for any person administrative system for the effective subject to the jurisdiction of the United matching of imports and reexports. Conservation measures provided to States to ‘‘take’’ (includes harass, harm, (3) Argentina and any intermediary species listed as endangered or pursue, hunt, shoot, wound, kill, trap, country(s) must be effectively threatened under the Act include capture, or to attempt any of these) implementing CITES as described recognition of conservation status, within the United States or upon the above. If we receive persuasive requirements for Federal protection, and high seas; import or export; deliver, information from the CITES Secretariat prohibitions against certain practices. receive, carry, transport, or ship in Recognition through listing encourages or other reliable sources that a specific interstate commerce in the course of country is not effectively implementing and results in conservation actions by commercial activity; or sell or offer for CITES, we will prohibit or restrict Federal, State, and private agencies and sale in interstate or foreign commerce imports from such country(s) as groups, and individuals. The protection any threatened wildlife species. It also appropriate for the conservation of the required of Federal agencies and the species. prohibitions against take and harm are is illegal to possess, sell, deliver, carry, In a limited number of situations in discussed, in part, below. transport, or ship any such wildlife that which the original tags from the country Section 7(a) of the Act, as amended, has been taken in violation of the Act. of export have been lost in processing and as implemented by regulations at 50 Certain exceptions apply to agents of the the skins, we will allow whole skins, CFR part 402, requires Federal agencies Service and State conservation agencies. flanks, and chalecos into the United to evaluate their actions that are to be Permits may be issued to carry out States if CITES-approved reexport tags conducted within the United States or otherwise prohibited activities have been attached in the same manner upon the high seas, with respect to any involving threatened wildlife species as the original tags and proper reexport species that is proposed to be listed or under certain circumstances. certificates accompany the shipment. If is listed as endangered or threatened Regulations governing such permits are a shipment contains more than 25 and with respect to its proposed or codified at 50 CFR part 17.32. Import percent replacement tags, the U.S. designated critical habitat, if any is into, export from, or reexport from the Management Authority will consult being designated. Because the broad- United States, as well as other with the Management Authority of the snouted caiman’s range does not prohibitions, including movement in reexporting country before clearing the include the United States, no critical the course of a commercial activity and shipment. Such shipments may be habitat is being proposed for sale in interstate or foreign commerce, seized if we determine that the designation with this rule. Regulations of threatened species and their parts and requirements of the Convention have implementing the interagency products, are currently prohibited under cooperation provision of the Act are not been met. the Act unless otherwise authorized. Finally, this special rule would not codified at 50 CFR part 402. Section Authorizations for species listed as cover the importation of viable caiman 7(a)(2) of the Act requires Federal threatened under the Act may be made eggs, gametes, or live caimans into the agencies to ensure that activities they for scientific purposes, to enhance the United States. Importation of these authorize, fund, or carry out are not propagation or survival of the species, specimens would require a threatened likely to jeopardize the continued species import permit and the existence of a listed species or to for economic hardship, for zoological appropriate CITES permit or certificate. destroy or adversely modify its critical exhibition, for educational purposes, for This requirement would allow scrutiny habitat. If a proposed Federal action incidental taking, or for other special of individual applications for may affect a listed species, the purposes consistent with the purposes importation of live caimans, eggs, or responsible Federal agency must enter of the Act. gametes so as to prevent accidental into formal consultation with the Monitoring introduction of this exotic species into Service. Currently, with respect to the United States, which may have broad-snouted caiman, no Federal We will continue to monitor the detrimental effects on U.S. native activities are known that would require status of this species in cooperation wildlife or ecosystems. Reexportation consultation. with the range countries.

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Peer Review summarize the opinions of these recordkeeping requirements, In accordance with our joint peer reviewers in the final decision Transportation. document, and we will consider their review policy with the National Marine Proposed Regulation Promulgation Fisheries Service, ‘‘Notice of input and any additional information Interagency Cooperative Policy for Peer we received as part of our process of For the reasons described in the Review in Endangered Species Act making a final decision on this preamble, we propose to amend part 17, proposal. Such communication may Activities,’’ that published in the subchapter B of chapter I, title 50 of the lead to a final decision that differs from Federal Register on July 1, 1994 (59 FR Code of Federal Regulations, as follows: 34270), and the Office of Management this proposal. and Budget’s Final Information Quality References Cited Part 17—[AMENDED] Bulletin for Peer Review, dated December 16, 2004, we will seek the A complete list of the references used 1. The authority citation for part 17 expert opinions of at least three to develop this proposed rule is continues to read as follows: appropriate independent specialists available upon request from the regarding the science in this proposed Endangered Species Program in our Authority: 16 U.S.C. 1361–1407; 16 U.S.C. rule. The purpose of peer review is to Headquarters office (see FOR FURTHER 1531–1544; 16 U.S.C. 4201–4245; Pub. L. 99– ensure that listing, downlisting, and INFORMATION CONTACT). 625, 100 Stat. 3500; unless otherwise noted. delisting decisions are based on Author 2. In § 17.11(h), the List of scientifically sound data, assumptions, Endangered and Threatened Wildlife, The primary author of this rule is and analyses. We will send copies of revise the entries for ‘‘Caiman, broad- this proposed rule to the peer reviewers Amy Brisendine, Branch of Foreign snouted,’’ ‘‘Caiman, brown,’’ ‘‘Caiman, immediately following publication in Species, Endangered Species Program, common,’’ and ‘‘Caiman, yacare’’ under the Federal Register. We will invite U.S. Fish and Wildlife Service, 4401 these peer reviewers to comment during North Fairfax Drive, Suite 400, REPTILES to read as follows: the public comment period, on the Arlington, Virginia 22203. § 17.11 Endangered and threatened specific assumptions and conclusions in List of Subjects in 50 CFR Part 17 wildlife. this proposed downlisting of the * * * * * Argentine population (DPS) of the Endangered and threatened species, broad-snouted caiman. We will Exports, Imports, Reporting and (h) * * *

Species Vertebrate popu- Historic lation where endan- Status When Critical Special Common name Scientific name range gered or threatened listed habitat rules

******* REPTILES

******* Caiman, broad- Caiman latirostris ..... Argentina, Bolivia, Bolivia, Brazil, Para- E 15 NA NA snouted. Brazil, Paraguay, guay, Uruguay. Uruguay. Caiman, broad- Caiman latirostris ..... Argentina, Bolivia, Argentina ...... T 790 NA 17.42(c) snouted. Brazil, Paraguay, Uruguay. Caiman, brown ...... Caiman crocodilus Mexico, Central Entire ...... T(S/A) 695 NA 17.42(c) fuscus (includes America, Colom- Caiman crocodilus bia, Ecuador, Ven- chiapasius ). ezuela, Peru. Caiman, common .... Caiman crocodilus Bolivia, Brazil, Co- Entire ...... T(S/A) 695 NA 17.42(c) crocodilus. lombia, Ecuador, French Guiana, Guyana, Peru, Suriname, Ven- ezuela. Caiman, yacare ...... Caiman yacare ...... Argentina, Bolivia, Entire ...... T(S/A) 695 NA 17.42(c) Brazil, Paraguay.

*******

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3. Amend § 17.42 by revising (A) Broad-snouted caiman (Caiman (F) Saltwater crocodile (Crocodylus paragraph (c)(1)(i) to read as follows: latirostris) originating in Argentina; porosus) originating in Australia (also referred to as Australian saltwater § 17.42 Special rules—reptiles. (B) Brown caiman (Caiman crocodilus fuscus, including Caiman crocodilus crocodile). * * * * * chiapasius); * * * * * (c) * * * (C) Common caiman (Caiman Dated: December 16, 2011. (1) * * * crocodilus crocodilus); Gregory E. Siekaniec, (i) Threatened crocodilian means any (D) Yacare caiman (Caiman yacare); Acting Director, Fish and Wildlife Service. live or dead specimen of the following (E) Nile crocodile (Crocodylus [FR Doc. 2011–33602 Filed 1–4–12; 8:45 am] species: niloticus); and BILLING CODE 4310–55–P

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Part V

Environmental Protection Agency

40 CFR Part 80 Regulation of Fuels and Fuel Additives: Identification of Additional Qualifying Renewable Fuel Pathways Under the Renewable Fuel Standard Program; Direct Final Rule

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ENVIRONMENTAL PROTECTION ADDRESSES: Submit your comments, Docket: All documents in the docket AGENCY identified by Docket ID No. EPA–HQ– are listed in the www.regulations.gov OAR–2011–0542, by one of the index. Although listed in the index, 40 CFR Part 80 following methods: some information is not publicly • [EPA–HQ–OAR–2011–0542; FRL–9502–2] www.regulations.gov: Follow the available, e.g., CBI or other information on-line instructions for submitting whose disclosure is restricted by statute. RIN 2060–AR07 comments. Certain other material, such as • Email: [email protected], copyrighted material, will be publicly Regulation of Fuels and Fuel Attention Air and Radiation Docket ID available only in hard copy. Publicly Additives: Identification of Additional EPA–HQ–OAR–2011–0542 available docket materials are available Qualifying Renewable Fuel Pathways • Fax: [Insert fax number]. either electronically in Under the Renewable Fuel Standard • Mail: Air and Radiation Docket, www.regulations.gov or in hard copy at Program Docket No. EPA–HQ–OAR–2011–0542, the Air and Radiation Docket and Environmental Protection Agency, AGENCY: Environmental Protection Information Center, EPA/DC, EPA West, Mailcode: 6406J, 1200 Pennsylvania Agency (EPA). Room 3334, 1301 Constitution Ave. Ave. NW., Washington, DC 20460. NW., Washington, DC. The Public ACTION: Direct final rule. • Hand Delivery: EPA Docket Center, Reading Room is open from 8:30 a.m. to EPA/DC, EPA West, Room 3334, 1301 SUMMARY: EPA is issuing a direct final 4:30 p.m., Monday through Friday, Constitution Ave. NW., Washington, rule identifying additional fuel excluding legal holidays. The telephone DC, 20460, Attention Air and Radiation pathways that EPA has determined meet number for the Public Reading Room is Docket, ID No. EPA–HQ–OAR–2011– the biomass-based diesel, advanced 0542. Such deliveries are only accepted (202) 566–1744, and the telephone biofuel or cellulosic biofuel lifecycle during the Docket’s normal hours of number for the Air Docket is (202) 566– greenhouse gas (GHG) reduction operation, and special arrangements 1742). requirements specified in Clean Air Act should be made for deliveries of boxed FOR FURTHER INFORMATION CONTACT: section 211(o), the Renewable Fuel information. Vincent Camobreco, Office of Standard Program, as amended by the Instructions: Direct your comments to Transportation and Air Quality Energy Independence and Security Act Docket ID No. EPA–HQ–OAR–2011– (MC6401A), Environmental Protection of 2007 (EISA). This direct final rule 0542. EPA’s policy is that all comments Agency, 1200 Pennsylvania Ave. NW., describes EPA’s evaluation of biofuels received will be included in the public Washington, DC 20460; telephone produced from camelina oil, energy docket without change and may be number: (202) 564–9043; fax number: cane, giant reed, and napiergrass; it also made available online at (202) 564–1686; email address: includes an evaluation of renewable www.regulations.gov, including any [email protected]. gasoline and renewable gasoline personal information provided, unless SUPPLEMENTARY INFORMATION: blendstocks, as well as biodiesel from the comment includes information esterification, and clarifies our claimed to be Confidential Business I. Why is EPA using a direct final rule? definition of renewable diesel. We are Information (CBI) or other information EPA is publishing this rule without a also finalizing two changes to regulation whose disclosure is restricted by statute. prior proposed rule because we view that were proposed on July 1, 2011(76 Do not submit information that you this as a noncontroversial action. These FR 38844). The first change adds ID consider to be CBI or otherwise new pathway determinations did not letters to pathways to facilitate protected through www.regulations.gov require new agricultural sector references to specific pathways. The or email. The www.regulations.gov Web modeling and involved relatively second change adds ‘‘rapeseed’’ to the site is an ‘‘anonymous access’’ system, straightforward analyses that largely existing pathway for renewable fuel which means EPA will not know your relied upon work done for the RFS2 made from canola oil. identity or contact information unless final rule. If EPA receives relevant This direct final rule adds these you provide it in the body of your adverse comment or a hearing request pathways to Table in regulation as comment. If you send an email on a distinct provision of this pathways which have been determined comment directly to EPA without going rulemaking, we will publish a timely to meet one or more of the GHG through www.regulations.gov your email withdrawal in the Federal Register reduction thresholds specified in CAA address will be automatically captured indicating which portion of the rule is 211(o), and assigns each pathway a and included as part of the comment being withdrawn. Any distinct corresponding D-Code. It allows that is placed in the public docket and amendment, paragraph, or section of producers or importers of fuel produced made available on the Internet. If you today’s rule not withdrawn will become pursuant to these pathways to generate submit an electronic comment, EPA effective on the date set out above. Renewable Identification Numbers recommends that you include your In the ‘‘Proposed Rules’’ section of (RINs), providing that the fuel meets the name and other contact information in today’s Federal Register, we are other requirements specified in the RFS the body of your comment and with any publishing a separate document that regulations to qualify it as renewable disk or CD–ROM you submit. If EPA will serve as the proposed rule to fuel. cannot read your comment due to update Table 1 of § 80.1426 to add any DATES: This rule is effective on March 5, technical difficulties and cannot contact additional renewable fuel production 2012 without further notice, unless EPA you for clarification, EPA may not be pathways or regulatory provisions receives adverse comment or a hearing able to consider your comment. which may be withdrawn from the request by February 6, 2012. If EPA Electronic files should avoid the use of direct final rule. We will not institute a receives a timely adverse comment or a special characters, any form of second comment period on this action. hearing request, we will publish a encryption, and be free of any defects or Any parties interested in commenting withdrawal in the Federal Register viruses. For additional information must do so at this time. For further informing the public that the portions of about EPA’s public docket visit the EPA information about commenting on this the rule with adverse comment will not Docket Center homepage at http:// rule, see the ADDRESSES section of this take effect. www.epa.gov/epahome/dockets.htm. document. We will address all public

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comments in any subsequent final rule II. Does this action apply to me? transportation fuels, including gasoline based on the proposed rule. and diesel fuel or renewable fuels such Entities potentially affected by this as ethanol and biodiesel. Regulated action are those involved with the categories and entities affected by this production, distribution, and sale of action include:

NAICS 1 SIC 2 Category Codes Codes Examples of potentially regulated entities

Industry ...... 324110 2911 Petroleum Refineries. Industry ...... 325193 2869 Ethyl alcohol manufacturing. Industry ...... 325199 2869 Other basic organic chemical manufacturing. Industry ...... 424690 5169 Chemical and allied products merchant wholesalers. Industry ...... 424710 5171 Petroleum bulk stations and terminals. Industry ...... 424720 5172 Petroleum and petroleum products merchant wholesalers. Industry ...... 454319 5989 Other fuel dealers. 1 North American Industry Classification System (NAICS) 2 Standard Industrial Classification (SIC) system code.

This table is not intended to be • Follow directions—The agency may Energy Cane, Giant Reed, and exhaustive, but rather provides a guide ask you to respond to specific questions Napiergrass Cellulosic Biomass (New for readers regarding entities likely to be or organize comments by referencing a Feedstocks) regulated by this action. This table lists Code of Federal Regulations (CFR) part • Ethanol, renewable diesel the types of entities that EPA is now or section number. • (including renewable jet fuel and aware could be potentially regulated by Explain why you agree or disagree; heating oil), and naphtha — qualifying this action. Other types of entities not suggest alternatives and substitute as cellulosic biofuel listed in the table could also be language for your requested changes. regulated. To determine whether your • Describe any assumptions and Renewable Gasoline and Renewable entity is regulated by this action, you provide any technical information and/ Gasoline Blendstock (New Fuel Types) should carefully examine the or data that you used. • Produced from crop residue, slash, • applicability criteria of Part 80, subparts If you estimate potential costs or pre-commercial thinnings, tree residue, D, E and F of title 40 of the Code of burdens, explain how you arrived at annual cover crops, and cellulosic Federal Regulations. If you have any your estimate in sufficient detail to components of separated yard waste, question regarding applicability of this allow for it to be reproduced. • separated food waste, and separated action to a particular entity, consult the Provide specific examples to municipal solid waste (MSW) person in the preceding FOR FURTHER illustrate your concerns, and suggest • Using the following processes — all INFORMATION CONTACT section above. alternatives. utilizing natural gas, biogas, and/or • Explain your views as clearly as III. What should I consider as I prepare biomass as the only process energy possible, avoiding the use of profanity sources — qualifying as cellulosic my comments for EPA? or personal threats. • biofuel: A. Submitting information claimed as Make sure to submit your Æ Thermochemical pyrolysis CBI. Do not submit information you comments by the comment period Æ Thermochemical gasification deadline identified. Æ Biochemical direct fermentation claim as CBI to EPA through Æ www.regulations.gov or email. Clearly C. Docket Copying Costs. You may be Biochemical fermentation with charged a reasonable fee for catalytic upgrading mark the part or all of the information Æ that you claim to be CBI. For CBI photocopying docket materials, as Any other process that uses biogas information in a disk or CD ROM that provided in 40 CFR part 2. and/or biomass as the only process energy sources you mail to EPA, mark the outside of the IV. Identification of additional disk or CD ROM as CBI and then qualifying renewable fuel pathways Esterification (New Production Process) identify electronically within the disk or under the renewable fuel standard • Process used to produce biodiesel CD ROM the specific information that is (RFS) program from soy bean oil, oil from annual claimed as CBI). In addition to one EPA is issuing a direct final rule to covercrops, algal oil, biogenic waste complete version of the comment that identify in the RFS regulations oils/fats/greases, non-food grade corn includes information claimed as CBI, a additional renewable fuel production oil, Canola/rapeseed oil, and camelina copy of the comment that does not pathways that we have determined meet oil—qualifying as biomass-based diesel contain the information claimed as CBI the greenhouse gas (GHG) reduction and advanced biofuel must be submitted for inclusion in the requirements of the RFS program. This This direct final rule adds these public docket. Information so marked direct final rule describes EPA’s pathways to Table 1 to § 80.1426 and will not be disclosed except in evaluation of: assigns each pathway one or more D– accordance with procedures set forth in Codes. This final rule allows producers 40 CFR part 2. Camelina Oil (New Feedstock) or importers of fuel produced under B. Tips for Preparing Your Comments. • Biodiesel and renewable diesel these pathways to generate Renewable When submitting comments, remember (including jet fuel and heating oil) — Identification Numbers (RINs) in to: qualifying as biomass-based diesel and accordance with the RFS regulations, • Identify the rulemaking by docket advanced biofuel providing that the fuel meets other number and other identifying • Naphtha and liquefied petroleum definitional criteria for renewable fuel. information (subject heading, Federal gas (LPG) — qualifying as advanced Determining whether a fuel pathway Register date and page number). biofuel satisfies the CAA’s lifecycle GHG

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reduction thresholds for renewable fuels to many other oilseeds, camelina has a for biofuel production. Given the requires a comprehensive evaluation of relatively short growing season (less information currently available, the lifecycle GHG emissions of the than 100 days), and can be grown either camelina is expected to be primarily renewable fuel as compared to the as a spring annual or in the winter in planted in the U.S. as a rotation crop on lifecycle GHG emissions of the baseline milder climates. 23 Camelina can also be acres that would otherwise remain gasoline or diesel fuel that it replaces. used to break the continuous planting fallow during the camelina planting. As mandated by CAA section 211(o), the cycle of certain grains, effectively Since substituting fallow land with GHG emissions assessments must reducing the disease, insect, and weed camelina production would not evaluate the aggregate quantity of GHG pressure in fields planted with such typically displace another crop, EPA emissions (including direct emissions grains (like wheat) in the following does not believe new acres would need and significant indirect emissions such year.4 to be brought into agricultural use to as significant emissions from land use Although camelina has been increase camelina production. In changes) related to the full fuel cultivated in Europe in the past for use addition, camelina currently has only lifecycle, including all stages of fuel and as food, medicine, and as a source for limited high-value niche markets for feedstock production, distribution, and lamp oil, commercial production using uses other than renewable fuels. Unlike use by the ultimate consumer. modern agricultural techniques has commodity crops that are tracked by In examining the full lifecycle GHG been limited.5 In addition to being used USDA, camelina does not have a well- impacts of renewable fuels for the RFS as a renewable fuel feedstock, small established, internationally traded program, EPA considers the following: quantities of camelina (less than 5% of • market that would be significantly Feedstock production—based on total U.S. camelina production) are affected by an increase in the use of agricultural sector models that include currently used as a dietary supplement camelina to produce biofuels. For these direct and indirect impacts of feedstock and in the cosmetics industry. reasons, which are described in more production Approximately 95% of current US • detail below, EPA has determined that Fuel production—including process production of camelina has been used production of camelina-based biofuels is energy requirements, impacts of any raw for testing purposes to evaluate its use not expected to result in significant materials used in the process, and as a feedstock to produce primarily jet GHG emissions related to direct land benefits from co-products produced. 6 fuel. The FDA has not approved use change since it is grown on fallow • Fuel and feedstock distribution— camelina for food uses, although it has land. Furthermore, due to the limited including impacts of transporting approved the inclusion of certain feedstock from production to use, and non-biofuel uses for camelina, quantities of camelina meal in production of camelina-based biofuels is transport of the final fuel to the commercial feed.7 consumer. not expected to have a significant • Camelina is currently being grown on impact on other agricultural crop Use of the fuel—including approximately 50,000 acres of land in combustion emissions from use of the production or commodity markets the U.S., primarily in Montana, eastern (either camelina or other crop markets) fuel in a vehicle. Washington, and the Dakotas.8 USDA Many of the pathways evaluated in and consequently would not result in does not systematically collect camelina this rulemaking rely on a comparison to significant GHG emissions related to production information; therefore data the lifecycle GHG analysis work that indirect land use change. To the extent on historical acreage is limited. was done as part of the Renewable Fuel camelina-based biofuel production However, available information Standard Program (RFS2) Final Rule, decreases the demand for alternative indicates that camelina has been grown published March 26, 2010. The biofuels, some with higher GHG on trial plots in 12 U.S. states.9 evaluations here rely on comparisons to emissions, this biofuel could have some For the purposes of analyzing the beneficial GHG impact. However, it is the existing analysis. EPA plans to lifecycle GHG emissions of camelina, periodically review and revise the uncertain which mix of biofuel sources EPA has considered the likely the market will demand so this potential methodology and assumptions production pattern for camelina grown associated with calculating the GHG GHG impact cannot be quantified. emissions from all renewable fuel oilseed. p. 314–322. In: J. Janick and J.E. Simon a. Growing Practices pathways. (eds.), New crops. Wiley, New York. 2 Moser, B.R., Vaughn, S.F. 2010. Evaluation of Current market conditions indicate A. Analysis of Lifecycle Greenhouse Gas Alkyl Esters from Camelina Sativa Oil as Biodiesel that camelina will most likely be grown Emissions for Biodiesel, Renewable and as Blend Components in Ultra Low Sulfur in rotation with wheat on dryland wheat Diesel, Jet Fuel, Naphtha, and Liquefied Diesel Fuel. Bioresource Technology. 101:646–653. acres replacing a period that they would Petroleum Gas (LPG) Produced From 3 McVay, K.A., and P.F. Lamb. 2008. Camelina otherwise be left fallow.10 In areas with Camelina Oil production in Montana. MSU Ext. MT200701AG (revised). http://msuextension.org/publica™tions/ lower precipitation, dryland wheat 1. Feedstock Production AgandNaturalResources/MT200701AG.pdf. farmers currently leave acres fallow 4 Putnam et al., 1993. once every three to four years to allow Camelina sativa (camelina) is an 5 Lafferty, Ryan M., Charlie Rife and Gus Foster. additional moisture and nutrients to oilseed crop within the flowering plant 2009. Spring camelina production guide for the accumulate and to control pests. Current Central High Plains. Blue Sun Biodiesel special family Brassicaceae that is native to research indicates that camelina could Northern Europe and Central Asia. publication. Blue Sun Agriculture Research & Development, Golden, CO. http:// be introduced into this rotation in Camelina’s suitability to northern www.gobluesun.com/upload/Spring%20Cam- certain areas without adversely climates and low moisture requirements elina%20Production%20Guide%202009.pdf. impacting moisture or nutrient 6 allows it to be grown in areas that are Telephone conversation with Scott Johnson, accumulation (see Figure 1). Because unsuitable for other major oilseed crops Sustainable Oils, January 11, 2011. 7 camelina has shallow roots with such as soybeans, sunflower, and See http://agr.mt.gov/camelina/FDAletter11– 09.pdf. drought resistant characteristics, the canola/rapeseed. Camelina also requires 8 McCormick, Margaret. ‘‘Oral Comments of 1 the use of little to no tillage. Compared Targeted Growth, Incorporated’’ Submitted to the 10 See Shonnard, D. R., Williams, L., & Kalnes, T. EPA on June 9, 2009. N. 2010. Camelina-Derived Jet Fuel and Diesel: 1 Putnam, D.H., J.T. Budin, L.A. Field, and W.M. 9 See https://www.camelinacompany.com/ Sustainable Advanced Biodiesel. Environmental Breene. 1993. Camelina: A promising low-input Marketing/PressRelease.aspx?Id=25. Progress & Sustainable Energy, 382–392.

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land can be returned to wheat In addition, camelina uses the same equipment for harvesting as wheat; cultivation the following year with therefore, farmers would not need to moisture and soil nutrients intact 12 Wheeler, P and F. Guillen-Portal. 2007. invest in new equipment to add quantitatively similar to a fallow year.11 Camelina Production in Montana: A survey study camelina to the rotation with wheat.12 sponsored by Targeted Growth, Inc. and Barkley Ag. BILLING CODE 6560–50–P 11 See Shonnard et al., 2010; Lafferty et al., 2009. Enterprises, LLP (unpublished).

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BILLING CODE 6560–50–C

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b. Land Availability does not have other significant markets, d. Indirect Impacts USDA estimates that there are expanding production and use of Although wheat can in some cases be approximately 60 million acres of wheat camelina for biofuel purposes is not grown in rotation with other crops such in the U.S.13 USDA and wheat state likely to have other agricultural market as lentils, flax, peas, garbanzo, and cooperative extension reports through impacts and therefore, would not result millet, cost and benefit analysis indicate 2008 indicate that 83% of U.S. wheat in any significant indirect land use that camelina is most likely to be 15 production is under non-irrigated, impacts. This assessment is based on planted on soil with lower moisture and dryland conditions. Of the a three year rotation cycle in which only nutrients where other rotation crops are approximately 50 million non-irrigated one third of the 9 million available acres not viable.20 Because expected returns acres, at least 45% are estimated to would be fallow in any given year. on camelina are relatively uncertain, follow a wheat/fallow rotation. Thus, Yields of camelina are expected to farmers are not expected to grow approximately 22 million acres are approach the yields of similar oilseed camelina on land that would otherwise potentially suitable for camelina crops over the next few years, as be used to grow cash crops with well production. However, according to experience with growing camelina established prices and markets. Instead, industry projections, only about 9 improves cultivation practices and the farmers are most likely to grow camelina million of these wheat/fallow acres have application of existing technologies are on land that would otherwise be left the appropriate climate, soil profile, and more widely adopted.16 Yields of 1650 fallow for a season. The opportunity market access for camelina pounds per acre have been achieved on cost of growing camelina on this type of production.14 Therefore, our analysis test plots, and are in line with expected land is much lower. As previously uses the estimate that only 9 million yields of other oilseeds such as canola/ discussed, this type of land represents wheat/fallow acres are available for rapeseed. Assuming average US yields the 9 million acres currently being camelina production. of 1650 pounds per acre,17 targeted for camelina production. approximately 200 MG of camelina- Current returns on camelina are c. Projected Volumes based renewable fuels could be relatively low ($13.24 per acre), given Based on these projections of land produced on existing wheat/fallow average yields of approximately 800 availability, EPA estimates that at acres. Finally, if investment in new seed pounds per acre and the current current yields (approximately 800 technology allows yields to increase to contract price of $0.145 per pound.21 pounds per acre), approximately 100 levels assumed by Shonnard et al (3000 See Table 1. For comparison purposes, million gallons (MG) of camelina-based pounds per acre), approximately 400 the USDA projections for wheat returns renewable fuels could be produced with MG of camelina-based renewable fuels are between $88–$105 per acre between camelina grown in rotation with could be produced on existing acres.18 2010 and 2020. Over time, existing crop acres without having Depending on future crop yields, we advancements in seed technology, direct land use change impacts. Also, project that roughly 100 MG to 400 MG improvements in planting and since camelina will likely be grown on of camelina-based biofuels could be harvesting techniques, and higher input fallow land and thus not displace any produced on currently fallow land with usage could significantly increase future other crop and since camelina currently no impacts on land use.19 camelina yields and returns.

TABLE 1—CAMELINA COSTS AND RETURNS

Inputs Rates 2010 Camelina 22 2022 Camelina 23 2030 Camelina 24

Herbicides: Glysophate (Fall) ...... 16 oz. ( $0.39/oz) ...... $7.00 ...... $7.00 ...... $7.00. Glysophate (Spring) ...... 16 oz. ( $0.39/oz) ...... $7.00 ...... $7.00 ...... $7.00. Post ...... 12 oz ( $0.67/oz) ...... $8.00 ...... $8.00 ...... $8.00. Seed: Camelina seed ...... $1.44/lb ...... $5.76 ...... $7.20 ...... $7.20 (4 lbs/acre) ...... (5 lbs/acre) ...... (5 lbs/acre). Fertilizer: Nitrogen Fertilizer ...... $1/pd ...... $25.00 ...... $40.00 ...... $75 (25 lb/acre) ...... (40 lb/acre) ...... (75 lbs/acre). Phosphate Fertilizer ...... $1/pd ...... $15.00 ...... $15.00 ...... $15 (15 lb/acre) ...... (15 lb/acre) ...... (15 lb/acre).

Sub-Total ...... $67.76 ...... $84.20 ...... $119.20.

Logistics: Planting Trip ...... $10.00 ...... $10.00 ...... $10.00. Harvest & Hauling ...... $25.00 ...... $25.00 ...... $25.00.

13 2009 USDA Baseline. See http:// State University Agronomy Facts 72. See http:// 20 See Lafferty et al., 2009; Shonnard et al., 2010; www.ers.usda.gov/publications/oce091/. pubs.cas.psu.edu/freepubs/pdfs/uc212.pdf. Sustainable Oils Memo dated November 5, 2010, 14 Johnson, S. and McCormick, M., Camelina: an 17 Ehrensing, D.T. and S.O. Guy. 2008. Oilseed 21 Wheeler & Guillen-Portal, 2007. Annual Cover Crop Under 40 CFR Part 80 Subpart Crops—Camelina. Oregon State Univ. Ext. Serv. 22 See Sustainable Oils Memo dated November 5, M, Memorandum, dated November 5, 2010. EM8953–E. See http://extension.oregonstate.edu/ 2010, 15 Wheeler, P. and Guillen-Portal F. 2007. catalog/pdf/em/em8953-e.pdf; McVay & Lamb, Camelina Production in Montana: A survey study 2008. 23 Based on yields technically feasible. See sponsored by Targeted Growth, Inc. and Barkley Ag. 18 See Shonnard et al., 2010. McVey and Lamb, 2008; Ehrenson & Guy, 2008. Enterprises, LLP. 19 This assumes no significant adverse climate 24 Adapted from Shonnard et al, 2010. 16 See Hunter, J and G. Roth. 2010. Camelina impacts on world agricultural yields over the Production and Potential in Pennsylvania, Penn analytical timeframe.

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TABLE 1—CAMELINA COSTS AND RETURNS—Continued

Inputs Rates 2010 Camelina 22 2022 Camelina 23 2030 Camelina 24

Total Cost ...... $102.76 ...... $119.20 ...... $154.20.

Yields ...... lb/acre ...... 800 ...... 1650 ...... 3000. Price ...... $/lb ...... $0.145 ...... $0.120 ...... $0.090. Total Revenue at avg prod/pricing ...... $116.00 ...... $198 ...... $270. Returns ...... $13.24 ...... $78.80 ...... $115.80.

While replacing the fallow period in The determination in this final rule is would not be expected to have land use a wheat rotation is expected to be the based on our projection that camelina is impacts beyond what was considered primary means by which the majority of likely to be produced on what would for international soybean production all domestic camelina is commercially otherwise be fallow land. However, the (soybean oil is the expected major harvested in the short- to medium- term, rule applies to all camelina regardless of feedstock source for U.S. biodiesel fuel in the long term camelina may expand where it is grown. EPA does not expect production and thus the feedstock of to other regions and growing methods.25 that significant camelina would be reference for the camelina evaluation). For example, if camelina production grown on non-fallow land, and small Because of these factors along with the expanded beyond the 9 million acres quantities that may be grown elsewhere small amounts of fuel potentially assumed available from wheat fallow and used for biofuel production will not coming from other countries, we believe land, it could impact other crops. significantly impact our analysis. that incorporating fuels produced in However, as discussed above this is not Furthermore, although we expect other countries will not impact our likely to happen in the near term due to most camelina used as a feedstock for threshold analysis for camelina-based uncertainties in camelina financial renewable fuel production that would biofuels. returns. Camelina production could also qualify in the RFS program would be e. Crop Inputs occur in areas where wheat is not grown in the U.S., today’s rule would commonly grown. For example, testing apply to qualifying renewable fuel made For comparison purposes, Table 2 of camelina production has occurred in from camelina grown in any country. shows the inputs required for camelina Florida in rotation with kanaf, peanuts, For the same reasons that pertain to U.S. production compared to the FASOM cotton, and corn. However, only 200 production of camelina, we expect that agricultural input assumptions for acres of camelina were harvested in camelina grown in other countries soybeans. Since yields and input 2010 in Florida. While Florida acres of would also be produced on land that assumptions vary by region, a range of camelina are expected to be higher in would otherwise be fallow and would values for soybean production are 2011, very little research has been done therefore have no significant land use shown in Table 2. The camelina input on growing camelina in Florida. For change impacts. The renewable biomass values in Table 2 represent average example, little is known about potential provisions under the Energy values, camelina input values will also seedling disease in Florida or how Independence and Security Act would vary by region, however, less data is camelina may be affected differently prohibit direct land conversion into new available comparing actual practices by than in colder climates.26 Therefore, agricultural land for camelina region due to limited camelina camelina grown outside of a wheat production for biofuel internationally. production. More information on fallow situation was not considered as Additionally, any camelina production camelina inputs is available in materials part of this analysis. on existing cropland internationally provided in the docket.

Regarding crop inputs per acre, it higher percentage of oil per pound of approximately 18% oil, therefore should be noted that camelina has a seed than soybeans. Soybeans are crushing one pound of soybeans yields

25 See Sustainable Oils Memo dated November 5, camelina is likely to be grown in wheat fallow 26 Wright & Marois, 2011. 2010 for a map of the regions of the country where conditions.

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0.18 pounds of oil. In comparison, are similar to those for growing soy produce more oil per pound than camelina is approximately 36% oil, beans, direct land use impact is soybeans. As a result, the lifecycle GHG therefore crushing one pound of expected to be negligible due to planting emissions associated with crushing and camelina yields 0.36 pounds of oil. The on land that would be otherwise fallow, oil extraction are lower for camelina difference in oil yield is taken into and the limited production and use of than soybeans, per pound of vegetable account when calculating the emissions camelina indicates no expected impacts oil produced. Table 3 summarizes data per mmBTU included in Table 2. As on other crops and therefore no indirect on inputs, outputs and estimated shown in Table 2, GHG emissions from land use impacts. lifecycle GHG emissions from crushing feedstock production for camelina and and oil extraction. The data on soybean soybeans are relatively similar when f. Crushing and Oil Extraction crushing comes from the RFS2 final factoring in variations in oil yields per We also looked at the seed crushing and oil extraction process and compared rule, based on a process model acre and fertilizer, herbicide, pesticide, 27 and petroleum use. the lifecycle GHG emissions from this developed by USDA–ARS. The data In summary, EPA concludes that the stage for soybean oil and camelina oil. on camelina crushing is from Shonnard agricultural inputs for growing camelina As discussed above, camelina seeds et al. (2010).

TABLE 3—COMPARISON OF CAMELINA AND SOYBEAN CRUSHING AND OIL EXTRACTION

Item Soybeans Camelina Units

Material Inputs: Beans or Seeds ...... 5.38 2.90 Lbs. Energy Inputs: Electricity ...... 374 47 Btu. Natural Gas & Steam ...... 1,912 780 Btu. Outputs: Refined vegetable oil ...... 1.00 1 .00 Lbs. Meal ...... 4 .08 1.85 Lbs. GHG Emissions ...... 213 64 gCO2e/lb refined oil.

2. Feedstock Distribution, Fuel glycerin co-product. The hydrotreating biodiesel pathways (e.g., based on soy Distribution, and Fuel Use process can be configured to produce oil) that were analyzed as part of the For this analysis, EPA projects that renewable diesel either primarily as RFS2 final rule. Therefore the same co- the feedstock distribution emissions diesel fuel (including heating oil) or product credit would apply to glycerin will be the same for camelina and primarily as jet fuel. Possible additional from camelina biodiesel as glycerin soybean oil. To the extent that camelina products from hydrotreating include produced in the biodiesel pathways contains more oil per pound of seed, as naphtha, LPG, and propane. Both modeled for the RFS2 final rule. The discussed above, the energy needed to processes and the fuels produced are assumption is that the GHG reductions move the camelina would be lower than described in the following sections. associated with the replacement of soybeans per gallon of fuel produced. Both processes use camelina oil as a residual oil with glycerin on an energy To the extent that camelina is grown on feedstock and camelina crushing is also equivalent basis represents an more disperse fallow land than soybean included in the analysis. appropriate midrange co-product credit of biodiesel produced glycerin. and would need to be transported a. Biodiesel further, the energy needed to move the As part of our RFS2 proposal, we camelina could be higher than soybean. For this analysis, we assumed the assumed the glycerin would have no Based on this, we believe the same biodiesel production facility value and would effectively receive no assumption to use the same distribution designs and conversion efficiencies as co-product credits in the soy biodiesel impacts for camelina as soybean is a modeled for biodiesel produced from pathway. We received numerous reasonable estimate of the GHG soybean oil and canola/rapeseed oil. comments, however, stating that the emissions from camelina feedstock Camelina oil biodiesel is produced glycerin would have a beneficial use distribution. In addition, the final fuel using the same methods as soybean oil and should generate co-product produced from camelina is also biodiesel, therefore plant designs are benefits. Therefore, the biodiesel expected to be similar in composition to assumed to not significantly differ glycerin co-product determination made the comparable fuel produced from between fuels made from these as part of the RFS2 final rule took into soybeans, therefore we are assuming feedstocks. As was the case for soybean consideration the possible range of co- GHG emissions from the distribution oil biodiesel, we have not projected in product credit results. The actual co- and use of fuels made from camelina our assessment of camelina oil biodiesel product benefit will be based on what will be the same as emissions of fuel any significant improvements in plant products are replaced by the glycerin produced from soybeans. technology. Unanticipated energy and what new uses develop for the co- saving improvements would further product glycerin. The total amount of 3. Fuel Production improve GHG performance of the fuel glycerin produced from the biodiesel There are two main fuel production pathway. industry will actually be used across a processes used to convert camelina oil The glycerin produced from camelina number of different markets with into fuel. The trans-esterification biodiesel production is equivalent to the different GHG impacts. This could process produces biodiesel and a glycerin produced from the existing include for example, replacing

27 A. Pradhan, D.S. Shrestha, A. McAloon, W. Biodiesel’’, United States Department of Energy Policy and New Uses, Agricultural Yee, M. Haas, J.A. Duffield, H. Shapouri, September Agriculture, Office of the Chief Economist, Office of Economic Report Number 845. 2009, ‘‘Energy Life-Cycle Assessment of Soybean

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petroleum glycerin, replacing fuel diesel is defined to include the products configured to maximize diesel fuel products (residual oil, diesel fuel, diesel fuel, jet fuel and heating oil, the replacement production, all of the natural gas, etc.), or being used in new following discussion uses the term emissions from the process would be products that don’t have a direct renewable diesel to also include diesel attributed to diesel fuel, but we would replacement, but may nevertheless have fuel, jet fuel and heating oil. The yield then assume the other co-products were indirect effects on the extent to which of renewable diesel is relatively displacing alternative products, for existing competing products are used. insensitive to feedstock source.28 While example, naphtha would displace The more immediate GHG reduction any propane produced as part of the gasoline, LPG would displace natural credits from glycerin co-product use hydrotreating process will most likely gas, etc. This assumes the other will likely range from fairly high be combusted within the facility for alternative products are not produced or reduction credits when petroleum process energy, the other co-products used, so we would subtract the glycerin is replaced to lower reduction that can be produced (i.e., renewable emissions of gasoline production and credits if it is used in new markets that diesel, naphtha, LPG) are higher value use, natural gas production and use, etc. have no direct replacement product, and products that could be used as This would show up as a GHG emission therefore no replaced emissions. transportation fuels or, in the case of credit associated with the production of EPA does not have sufficient naphtha, a blendstock for production of diesel fuel replacement. information (and received no relevant transportation fuel. The hydrotreating comments as part of the RFS2 rule) on process maximized for producing a To account for the case where RINs which to allocate glycerin use across the diesel fuel replacement as the primary are generated for the jet fuel, naphtha range of likely uses. Therefore, EPA fuel product requires more overall and LPG in addition to the diesel believes that the approach used in RFS2 material and energy inputs than replacement fuel produced, we would of picking a surrogate use for modeling transesterification to produce biodiesel, not give the diesel replacement fuel a purposes in the mid-range of likely but it also results in a greater amount of displacement credit for these co- glycerin uses, and the GHG emissions other valuable co-products as listed products. Instead, the lifecycle GHG results tied to such use, is reasonable. above. The hydrotreating process can emissions from the fuel production The replacement of an energy also be maximized for jet fuel processes would be allocated to each of equivalent amount of residual oil is a production which requires even more the RIN-generating products on an simplifying assumption determined by process energy than the process energy content basis. This has the effect EPA to reflect the mid-range of possible optimized for producing a diesel fuel of tending to increase the fuel glycerin uses in terms of GHG credits. replacement, and produces a greater production lifecycle GHG emissions EPA believes that it is appropriately amount of co-products per barrel of associated with the diesel replacement representative of GHG reduction credit feedstock, especially naphtha. fuel because there are less co-product across the possible range without Producers of renewable diesel from displacement credits to assign than necessarily biasing the results toward camelina have expressed interest in would be the case if RINs were not high or low GHG impact. Given the generating RINs under the RFS2 generated for the co-products.29 On the fundamental difficulty of predicting program for the slate of products other hand, the upstream lifecycle GHG possible glycerin uses and impacts of resulting from the hydrotreating emissions associated with producing those uses many years into the future process. Our lifecycle analysis accounts and transporting the plant oil feedstocks under evolving market conditions, EPA for the various uses of the co-products. will be distributed over a larger group believes it is reasonable to use the more There are two main approaches to of RIN-generating products. Assuming simplified approach to calculating co- accounting for the co-products product GHG benefit associated with each product (except propane) produced produced, the allocation approach, and glycerin production. via the camelina oil hydrotreating Given the fact that GHG emissions the displacement approach. In the process will generate RINs results in from camelina-based biodiesel would be allocation approach all the emissions higher lifecycle GHG emissions for similar to the GHG emissions from from the hydrotreating process are diesel fuel replacement as compared to soybean- based biodiesel at all stages of allocated across all the different co- the case where the co-products are not the lifecycle but would not result in products. There are a number of ways to used to generate RINs. This general land use change as was the case for soy do this but since the main use of the co- principle is also true when the oil used as a feedstock, we believe products would be to generate RINs as hydrotreating process is maximized for biodiesel from camelina oil will also a fuel product we allocate based on the jet fuel production. As a result, the meet the 50% GHG emissions reduction energy content of the co-products worst GHG performance (i.e., greatest threshold to qualify as a biomass based produced. In this case, emissions from lifecycle GHG emissions) for diesel diesel and an advanced fuel. Therefore, the process would be allocated equally replacement fuel and jet fuel produced EPA is including biodiesel produced to all the Btus produced. Therefore, on from camelina oil via hydrotreating will from camelina oil under the same a per Btu basis all co-products would occur when all of the co-products are pathways for which biodiesel made have the same emissions. The RIN-generating (we assume propane will from soybean oil qualifies under the displacement approach would attribute be used for process energy). Thus, if RFS2 final rule. all of the emissions of the hydrotreating these fuels meet the 50% GHG process to one main product and then reduction threshold for biomass based b. Renewable Diesel (Including Jet Fuel account for the emission reductions diesel or advanced biofuel when co- and Heating Oil), Naphtha, and LPG from the other co-products displacing products are RIN-generating, they will The same feedstocks currently used alternative product production. For for biodiesel production can also be example, if the hydrotreating process is 29 For a similar discussion see page 46 of Stratton, used in a hydrotreating process to R.W., Wong, H.M., Hileman, J.I. 2010. Lifecycle produce a slate of products, including 28 Kalnes, T., N., McCall, M., M., Shonnard, D., Greenhouse Gas Emissions from Alternative Jet R., 2010. Renewable Diesel and Jet-Fuel Production Fuels. PARTNER Project 28 report. Version 1.1. diesel fuel, heating oil (defined as No. from Fats and Oils. Thermochemical Conversion of PARTNER–COE–2010–001. June 2010, http:// 1 or No. 2 diesel), jet fuel, naphtha, LPG, Biomass to Liquid Fuels and Chemicals, Chapter 18, web.mit.edu/aeroastro/partner/reports/proj28/ and propane. Since the term renewable p. 475. partner-proj28–2010–001.pdf.

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also do so in the case when RINs are not evaluation considers information on the mass and energy balance data in generated for co-products. published in peer-reviewed journal Pearlson (2011) which analyzes a We have evaluated information about articles and publicly available literature hydrotreating process maximized for the lifecycle GHG emissions associated (Kalnes et al, 2010, Pearlson, M., N., diesel replacement fuel production and with the hydrotreating process which 2011,30 Stratton et al., 2010, Huo et al., a hydrotreating process maximized for can be maximized for jet fuel or diesel 2008).31 Our analysis of GHG emissions jet fuel production.32 This data is replacement fuel production. Our from the hydrotreating process is based summarized in Table 4.

TABLE 4—HYDROTREATING PROCESSES TO CONVERT CAMELINA OIL INTO DIESEL REPLACEMENT FUEL AND JET FUEL33

Maximized for Units (per gallon diesel fuel Maximized for jet of fuel production fuel production produced)

Inputs: Refined camelina oil ...... 9.56 12 .84 Lbs. Hydrogen ...... 0.04 0.08 Lbs. Electricity ...... 652 865 Btu. Natural Gas ...... 23,247 38,519 Btu. Outputs: Diesel Fuel ...... 123,136 55,845 Btu. Jet fuel ...... 23,197 118,669 Btu. Naphtha ...... 3,306 17,042 Btu. LPG ...... 3,084 15,528 Btu. Propane ...... 7,454 9,881 Btu.

Table 5 compares lifecycle GHG We also assume that the naphtha is used generate RINs. This is because, as emissions from oil extraction and fuel as blendstock for production of discussed above, lifecycle GHG production for soybean oil biodiesel and transportation fuel to generate RINs. In emissions per Btu of diesel or jet fuel for camelina-based diesel and jet fuel. this case we assume that RINs are would be lower if the naphtha or LPG The lifecycle GHG estimates for generated for the use of LPG in a way is not used to generate RINs and is camelina oil diesel and jet fuel are based that meets the EISA definition of instead used for process energy on the input/output data summarized in transportation fuel, for example it could displacing fossil fuel such as natural Table 3 (for oil extraction) and Table 4 be used in a nonroad vehicle. The gas. Supporting information for the (for fuel production). We assume that lifecycle GHG results in Table 5 values in Table 5, including key the propane co-product does not represent the worst case scenario (i.e., assumptions and data, is provided generate RINs; instead, it is used for highest GHG emissions) because all of through the docket. process energy displacing natural gas. the eligible co-products are used to

TABLE 5—FUEL PRODUCTION LIFECYCLE GHG EMISSIONS (KGCO2e/MMBTU) 34

RIN–Generating Feedstock Production process products Other co-products Oil extraction Processing Total

Soybean Oil ...... Trans-Esterification Biodiesel ...... Glycerin ...... 14 (1) 13 Camelina Oil ...... Trans-Esterification Biodiesel ...... Glycerin ...... 4 (1) 3 Camelina Oil ...... Hydrotreating Maxi- Diesel ...... Propane ...... 4 8 12 mized for Diesel. Jet Fuel. Naphtha. LPG.

Camelina Oil ...... Hydrotreating Maxi- Jet Fuel ...... Propane ...... 4 11 14 mized for Jet Fuel. Diesel. Naphtha. LPG.

As discussed above, for a process that naphtha) we allocate lifecycle GHG each fuel product. Therefore, each RIN- produces more than one RIN-generating emissions to the RIN generating generating product from the same output (e.g., the hydrotreating process products on an energy equivalent basis. process will be assigned equal lifecycle summarized in Table 5 which produces We then normalize the allocated GHG emissions per mmBtu from fuel diesel replacement fuel, jet fuel, and lifecycle GHG emissions per mmBtu of processing. For example, based on the

30 Pearlson, M., N. 2011. A Techno-Economic and 32 We have also considered data submitted by 34 Lifecycle GHG emissions are normalized per Environmental Assessment of Hydroprocessed companies involved in the hydrotreating industry mmBtu of RIN-generating fuel produced. Totals Renewable Distillate Fuels. which is claimed as confidential business may not be the sum of the rows due to rounding 31 Huo, H., Wang., M., Bloyd, C., Putsche, V., information (CBI). The conclusions using the CBI error. Parentheses indicate negative numbers. 2008. Life-Cycle Assessment of Energy and data are consistent with the analysis presented here. Process emissions for biodiesel production are Greenhouse Gas Effects of Soybean-Derived 33 negative because they include the glycerin offset Biodiesel and Renewable Fuels. Argonne National Based on Pearlson (2011), Table 3.1 and Table Laboratory. Energy Systems Division. ANL/ESD/08– 3.2. credit. 2. March 12, 2008.

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lifecycle GHG estimates in Table 5 for increased production of camelina-based are assumed to be not significant for the the hydrotreating process maximized to renewable fuel is not expected to result camelina pathway considered. Thus, produce jet fuel, the jet fuel and the in significant land use change EPA is including camelina oil as a naphtha both have lifecycle GHG emissions. For the purposes of this potential feedstock under the same emissions of 14 kgCO2e/mmBtu. For the analysis, EPA is projecting there will be biodiesel and renewable diesel (which same reasons, the lifecycle GHG no land use emissions associated with includes diesel fuel, jet fuel, and heating emissions from the jet fuel and naphtha camelina production for use as a oil) pathways for which soybean oil will stay equivalent if we consider renewable fuel feedstock. currently qualifies. We are also upstream GHG emissions, such as However, while production of including a pathway for naphtha and emissions associated with camelina camelina on acres that would otherwise LPG produced from camelina oil cultivation and harvesting. Lifecycle remain fallow is expected to be the through hydrotreating. This is based on GHG emissions from fuel distribution primary means by which the majority of the fact that our analysis shows that and use could be somewhat different for all camelina is commercially harvested even when all of the co-products are the jet fuel and naphtha, but since these in the short- to medium- term, in the used to generate RINs the lifecycle GHG stages produce a relatively small share long term camelina may expand to other emissions for RIN-generating co- of the emissions related to the full fuel growing methods and lands if demand products including diesel replacement lifecycle, the overall difference will be increases substantially beyond what fuel, jet fuel, naphtha and LPG quite small. EPA is currently predicting. While the produced from camelina oil will all Given that GHG emissions from impacts are uncertain, there are some meet the 50% GHG emissions reduction camelina oil would be similar to the indications demand could increase threshold. GHG emissions from soybean oil at all significantly. For example, camelina is We are also clarifying that two stages of the lifecycle but would not included under USDA’s Biomass Crop existing pathways for RIN generation in result in land use change emissions (soy Assistance Program (BCAP) and there is the RFS regulations that list ‘‘renewable oil feedstock did have a significant land growing support for the use of camelina diesel’’ as a fuel product produced use change impact but still met a 50% oil in producing drop-in alternative through a hydrotreating process include GHG reduction threshold), and aviation fuels. EPA plans to monitor the jet fuel. This applies to two pathways in considering differences in process expansion of camelina production to Table 1 to § 80.1426 of the RFS emissions between soybean biodiesel verify whether camelina is primarily regulations which both list renewable and camelina-based renewable diesel, grown on existing acres once camelina diesel made from soy bean oil, oil from we conclude that renewable diesel from is produced at larger-scale volumes. annual covercrops, algal oil, biogenic camelina oil will also meet the 50% Similarly, we will consider market waste oils/fats/greases, or non-food GHG emissions reduction threshold to impacts if alternative uses for camelina grade corn oil using hydrotreating as a qualify as biomass based diesel and expand significantly beyond what was process. If parties produce jet fuel from advanced fuel. Although some of the described in the above analysis. Just as the hydrotreating process and co- potential configurations result in fuel EPA plans to periodically review and process renewable biomass and production GHG emissions that are revise the methodology and petroleum they can generate advanced higher than fuel production GHG assumptions associated with calculating biofuel RINs (D code 5) for the jet fuel emissions for soybean oil biodiesel, land the GHG emissions from all renewable produced. If they do not co-process use change emissions account for fuel feedstocks, EPA expects to review renewable biomass and petroleum they approximately 80% of the soybean oil to and revise as necessary the analysis of can generate biomass-based diesel RINs biodiesel lifecycle GHGs. Since camelina in the future. (D code 4) for the jet fuel produced. camelina is assumed not to have land Taking into account the assumption of § 80.1401 of the RFS regulations use change emissions, our analysis no land use change emissions when currently defines non-ester renewable shows that camelina renewable diesel camelina is used to produce renewable diesel as a fuel that is not a mono-alkyl will qualify for advanced renewable fuel fuel, and considering that other sources ester and which can be used in an and biomass-based diesel RINs even for of GHG emissions related to camelina engine designed to operate on the cases with the highest lifecycle biodiesel or renewable diesel conventional diesel fuel or be heating GHGs (e.g., when all of the co-products production have comparable GHG oil or jet fuel. The reference to jet fuel are used to generate RINs.) Because the emissions to biodiesel from soybean oil, in this definition was added by direct lifecycle GHG emissions for RIN- we have determined that camelina- final rule dated May 10, 2010. Table 1 generating co-products are very similar, based biodiesel and renewable diesel to § 80.1426 identifies approved fuel we can also conclude naphtha and LPG should be treated in the same manner as pathways by fuel type, feedstock source produced from camelina oil will also soy-based biodiesel and renewable and fuel production processes. The meet the 50% GHG emissions reduction diesel in qualifying as biomass-based table, which was largely adopted as part threshold. If the facility does not diesel and advanced biofuel for of the March 26, 2010 RFS2 final rule, actually generate RINs for one or more purposes of RIN generation, since the identifies jet fuel and renewable diesel of these co-products, we estimate that GHG emission performance of the as separate fuel types. Accordingly, in the lifecycle GHG emissions related to camelina-based fuels will be at least as light of the revised definition of the RIN-generating products would be good and in some respects better than renewable diesel enacted after the RFS2 lower, thus renewable diesel (which that modeled for fuels made from rule, there is ambiguity regarding the includes diesel fuel, jet fuel, and heating soybean oil. EPA found as part of the extent to which references in Table 1 to oil) from camelina would still meet the Renewable Fuel Standard final ‘‘renewable diesel’’ include jet fuel. 50% emission reduction threshold. rulemaking that soybean biodiesel The original lifecycle analysis for the resulted in a 57% reduction in GHG renewable diesel from hydrotreating 4. Summary emissions compared to the baseline pathways listed in Table 1 to § 80.1426 Current information suggests that petroleum diesel fuel. Furthermore, was not based on producing jet fuel but camelina has limited niche markets and approximately 80% of the lifecycle rather other transportation diesel fuel will be produced on land that would impacts from soybean biodiesel were products, namely a diesel fuel otherwise remain fallow. Therefore, from land use change emissions which replacement. As discussed above, the

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hydrotreating process can produce a (pennisetum purpureum), also known as and napiergrass. As with the mix of products including jet fuel, elephant grass. In the proposed and switchgrass analysis, we have attributed diesel, naphtha, LPG and propane. Also, final RFS2 rule, EPA analyzed the all land use impacts and resource inputs as discussed, there are differences in the lifecycle GHG impacts of producing and from use of these feedstocks to the process configured for maximum jet fuel using cellulosic ethanol and cellulosic portion of the fuel produced that is production vs. the process maximized Fischer-Tropsch diesel from derived from the cellulosic components for diesel fuel production and the switchgrass. The midpoint of the range of the feedstocks. Based on this analysis lifecycle results vary depending on what of switchgrass results showed a 110% and currently available information, we approach is used to consider co- GHG reduction (range of 102%–117%) conclude that biofuel (ethanol, products (i.e., the allocation or for cellulosic ethanol (biochemical cellulosic diesel, jet fuel, heating oil and displacement approach). process), a 72% (range of ¥64% to naptha) produced from the cellulosic In cases where there are no pathways ¥79%) reduction for cellulosic ethanol biomass of energy cane, giant reed, or for generating RINs for the co-products (thermochemical process), and a 71% napiergrass has similar lifecycle GHG from the hydrotreating process it would (range of ¥62% to ¥77%) reduction for impacts to switchgrass biofuel and be appropriate to use the displacement cellulosic diesel (F–T process) meets the 60% GHG reduction threshold method for capturing the credits of co- compared to the petroleum baseline. In required for cellulosic biofuel. products produced. This is the case for the RFS2 final rule, we indicated that 1. Feedstock Production and most of the original feedstocks included some feedstock sources can be Distribution in Table 1 to § 80.1426.35 As was determined to be similar enough to discussed previously, if the those modeled that the modeled results For the purposes of this rulemaking, displacement approach is used when jet could reasonably be extended to these energy cane refers to varieties of fuel is the primary product produced it similar feedstock types. For instance, perennial grasses in the Saccharum results in lower emissions then the information on miscanthus indicated genus which are intentionally bred for production maximized for diesel fuel that this perennial grass will yield more high cellulosic biomass productivity but production. Therefore, since the feedstock per acre than the modeled have characteristically low sugar hydrotreating process maximized for switchgrass feedstock without content making them unsuitable as a diesel fuel meets the 50% lifecycle GHG additional inputs with GHG primary source of sugar as compared to threshold for the feedstocks in question, implications (such as fertilizer). other varieties of grasses commonly the process maximized for jet fuel Therefore in the final rule EPA known as ‘‘sugarcane’’ in the would also qualify. concluded that since biofuel made from Saccharum genus. Energy cane varieties Thus, we are interpreting the the cellulosic biomass in switchgrass developed to date have low tolerance for references to ‘‘renewable diesel’’ in was found to satisfy the 60% GHG cold temperatures but grow well in Table 1 to include jet fuel, consistent reduction threshold for cellulosic warm, humid climates. Energy cane with our regulatory definition of ‘‘non- biofuel, biofuel produced form the originated from efforts to improve ester renewable diesel,’’ since doing so cellulosic biomass in miscanthus would disease resistance and hardiness of clarifies the existing regulations while also comply. In the final rule we commercial sugarcane by crossbreeding ensuring that Table 1 to § 80.1426 included cellulosic biomass from commercial and wild sugarcane strains. appropriately identifies fuel pathways switchgrass and miscanthus as eligible Certain higher fiber, lower sugar that meet the GHG reduction thresholds feedstocks for the cellulosic biofuel varieties that resulted were not suitable associated with each pathway. pathways included in Table 1 to for commercial sugar production, and We note that although the definition § 80.1426. are now being developed as a high- We did not include other perennial of renewable diesel includes jet fuel and biomass energy crop. There is currently grasses such as energy cane, giant reed, heating oil, we have also listed in Table no commercial production of energy or napiergrass as feedstocks for the 1 of section 80.1426 of the RFS2 cellulosic biofuel pathways in Table 1 at cane. Current plantings are mainly regulations jet fuel and heating oil as that time, since we did not have limited to research field trials and small specific co-products in addition to sufficient time to adequately consider demonstrations for bioenergy purposes. listing renewable diesel to assure them. Based in part on additional However, based in part on discussions clarity. This clarification also pertains to information received through the with industry, EPA anticipates all the feedstocks already included in petition process for EPA approval of continued development of energy cane Table 1 for renewable diesel. energy cane, giant reed, and napiergrass particularly in the south-central and southeastern United States due to its B. Lifecycle Greenhouse Gas Emissions pathways, EPA has evaluated these high yields in these regions. Analysis for Ethanol, Diesel, Jet Fuel, feedstocks and is now including the Heating Oil, and Naphtha Produced cellulose, hemicelluloses and lignin Giant reed refers to the perennial From Energy Cane, Giant Reed, and portions of renewable biomass from grass Arundo donax of the Gramineae Napiergrass energy cane, giant reed, and napiergrass family. Giant reed thrives in subtropical in Table 1 to § 80.1426 as approved and warm-temperate areas and is grown For this rulemaking, EPA considered feedstocks for cellulosic biofuel throughout Asia, southern Europe, the lifecycle GHG impacts of three new pathways. Africa, the Middle East, and warmer types of high-yielding perennial grasses As described in detail in the following U.S. states for multiple uses such as similar in cellulosic composition to sections of this preamble, because of the paper and pulp, musical instruments, switchgrass and comparable in status as similarity of these feedstocks to rayon, particle boards, erosion control, an emerging energy crop. Energy cane switchgrass and miscanthus, EPA and ornamental purposes.36 37 Based in (related to sugarcane), giant reed believes that new agricultural sector (Arundo donax), and napiergrass modeling is not needed to analyze them. 36 See http://www.fs.fed.us/database/feis/plants/ We have instead relied upon the graminoid/arudon/all.html. 35 The exception is naphtha produced from waste 37 See Lewandowski, I., Scurlock, J.M.O., categories, but these would pass the lifecycle switchgrass analysis to assess the Lindvall, E., Christou, M. (2003). The development thresholds regardless of the allocation approach relative GHG impacts of biofuel and current status of perennial rhizomatous grasses used given their low feedstock GHG impacts. produced from energy cane, giant reed, Continued

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part on discussions with industry, EPA Fertilized field trials have shown yields Based on these yield assumptions, in anticipates continued development of around 13 to 28 dry tons per acre in areas with suitable growing conditions, giant reed as an energy crop particularly Spain, and 12 dry tons per acre in Italy energy cane would require in the Mediterranean region and warmer (based on annual yields of 3, 14, 17, 16, approximately 26% to 47% of the land U.S. states. and 12).42 High yields have been area required by switchgrass to produce Napiergrass is a tall bunch-type grass demonstrated with unimproved giant the same amount of biomass, giant reed that has traditionally been grown as a reed populations, and therefore there is would require less than 40% of the land high-yielding forage crop across the wet potential for increased biomass area required by switchgrass to produce tropics. There is a considerable body of productivity through improved growing the same amount of biomass, and agronomic research on the production of methods and breeding efforts.43 napiergrass would require napiergrass as a forage crop. More Napiergrass field trials have produced approximately 33% of the land area recently, researchers have investigated dry biomass yields exceeding 20 tons required by switchgrass to produce the ways to maximize traits desirable in per acre per year in north-central same amount of biomass due to their bioenergy crops. Practices have been Florida. Using currently available higher yields. Even without yield developed by USDA and other technology, average yields for full- growth assumptions, their currently researchers to lower fertilization rates season napiergrass should range from 14 higher crop yield rates means the land and increase biomass production. Based to 18 tons per acre with future use required for these crops would be in part on discussions with industry, improvements expected. Yield depends lower than for switchgrass. Therefore EPA anticipates continued development greatly on the type of cultivar and the less crop area would be converted and of napiergrass as an energy crop amount and distribution of rainfall and displaced resulting in smaller land-use particularly in Gulf Coast Region of the fertilization rates. There is potential for change GHG impacts than that assumed United States (more specifically the increased biomass productivity through for switchgrass to produce the same growing region includes Florida and improved growing methods and amount of fuel. Furthermore, we believe southern portions of Texas, Louisiana, breeding efforts.44 In general, the yields energy cane and napiergrass will have a Georgia, Alabama and Mississippi).38 for all three of the energy grasses similar impact on international markets considered here will have higher yields as assumed for switchgrass. Like a. Crop Yields than switchgrass, so from a crop yield switchgrass, energy cane and perspective, the switchgrass analysis napiergrass are not expected to be For the purposes of analyzing the traded internationally and their impacts GHG emissions from energy cane, giant would be a conservative estimate when comparing against the energy cane, on other crops are expected to be reed, and napiergrass production, EPA limited. Increased giant reed demand in examined crop yields and production napier grass, and giant reed pathways. Furthermore, EPA’s analysis of the U.S. for biofuels is not expected to inputs in relation to switchgrass to impact existing markets for giant reed, assess the relative GHG impacts. Current switchgrass for the RFS2 rulemaking assumed a 2% annual increase in yield which are relatively small niche markets national yields for switchgrass are (e.g., musical instrument reeds). approximately 4.5 to 5 dry tons per acre. that would result in an average national Average energy cane yields exceed yield of 6.6 dry tons per acre in 2022. b. Land Use switchgrass yields in both unfertilized EPA anticipates a similar yield In EPA’s RFS2 analysis, switchgrass and fertilized trails conducted in the improvement for energy cane, giant plantings displaced primarily soybeans southern United States. Unfertilized reed, and napiergrass due to their and wheat, and to a lesser extent hay, yields are around 7.3 dry tons per acre similarity as perennial grasses and their rice, sorghum, and cotton. Energy cane while fertilized trials show energy cane comparable status as energy crops in and napiergrass, with production yields range from approximately 11 to their early stages of development. Given focused in the southern United States, 20 dry tons per acre.39 40 Until recently this, our analysis assumes an average are likely to be grown on land once used there have been few efforts to improve energy cane yield of 19 dry tons per acre for pasture, rice, commercial sod, cotton energy cane yields, but several energy in the southern United States by 2022; or alfalfa, which would likely have less cane development programs are now an average giant reed yield of of an international indirect impact than underway to further increase its biomass approximately 18 dry tons per acre by switchgrass because some of those productivity. Giant reed field trials 2022; and an average napiergrass yield commodities are not as widely traded as conducted in Alabama over a 9-year of approximately 20 dry tons per acre by soybeans or wheat. Given that energy period showed an average yield of 15 2022.45 The ethanol yield for all of the cane and napiergrass will likely dry tons per acre with no nitrogen grasses is approximately the same so the displace the least productive land first, fertilizer applied after the first year.41 higher crop yields for energy cane, EPA concludes that the land use GHG napiergrass, and giant reed result impact for energy cane and napiergrass as energy crops in the US and Europe. Biomass and directly in greater ethanol production per gallon should be no greater and Bioenergy 25, 335–361. compared to switchgrass per acre of likely less than estimated for 38 For a map depicting the northern limit for production. switchgrass. Given that giant reed is in sustained napiergrass production in the United States see Figure 1 in Woodard, K., R. and early stages of development as an energy Sollenberger, L, E. 2008. Production of Biofuel Revolution 2.0; 2010 Oct 31–Nov 4; Long Beach, crop, there is limited information on Crops in Florida: Elephantgrass. Institute of Food CA. where it will be grown and what crops 42 and Agricultural Sciences, University of Florida. SS Mantineo, M., D’Agnosta, G.M., Copani, V., it will displace. We expect giant reed AGR 297. Patane`, C., and Cosentino, S.L. (2009). Biomass 39 See Bischoff, K.P., Gravois, K.A., Reagan, T.E., yield and energy balance of three perennial crops will displace the least productive land Hoy, J.W., Kimbeng, C.A., LaBorde, C.M., Hawkins, for energy use in the semi-arid Mediterranean first and would likely have a similar or G.L. Plant Regis. 2008, 2, 211–217. environment. Field Crops Research 114, 204–213. smaller indirect impact associated with 40 See Hale, A.L. Sugar Bulletin, 2010, 88, 28–29. 43 Lewandowski et al. 2003. crop displacement than what we 44 41 Huang, P., Bransby, D., and Sladden, S. (2010). Based on discussions with industry and USDA assumed for switchgrass. Exceptionally high yields and soil carbon and Woodard and Sollenberger (2008). sequestration recorded for giant reed in Alabama. 45 These yields assume no significant adverse Considering the total land potentially Poster session presented at: ASA, CSSA, and SSSA climate impacts on world agricultural yields over impacted by all the new feedstocks 2010 International Annual Meetings, Green the analytical timeframe. included in this rulemaking would not

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impact these conclusions (including the and transporting energy cane, giant This assessment assumes production camelina discussed in the previous reed, and napiergrass feedstocks in of all three new feedstocks uses section and the three energy grasses comparison to switchgrass. Table 6 electricity for irrigation given that considered here). As discussed shows the assumed 2022 commercial- growers will likely irrigate when previously, the camelina is expected to scale production inputs for switchgrass possible to improve yields. Irrigation be grown on fallow land in the (used in the RFS2 rulemaking analysis), rates will vary depending on the timing Northwest, while energy grasses are average energy cane, giant reed, and and amount of rainfall, but for the expected to be grown mainly in the napiergrass production inputs (USDA purpose of estimating GHG impacts of south on existing cropland or projections and industry data) and the electricity use for irrigation, we pastureland. In the switchgrass ethanol associated GHG emissions. assumed a rate similar to what we scenario done for the Renewable Fuel Available data gathered by EPA assumed for other irrigated crops in the Standard final rulemaking, total suggest that energy cane requires on cropland acres increases by 4.2 million Southwest, South Central, and acres, including an increase of 12.5 average less nitrogen, phosphorous, Southeast as shown in Table 6. million acres of switchgrass, a decrease potassium, and pesticide than Applying the GHG emission factors of 4.3 million acres of soybeans, a 1.4 switchgrass per dry ton of biomass, but used in the RFS2 final rule, energy cane million acre decrease of wheat acres, a more herbicide, lime, diesel, and production results in slightly higher electricity per unit of biomass. Giant decrease of 1 million acres of hay, as GHG emissions relative to switchgrass reed may require on average less well as decreases in a variety of other production (an increase of nitrogen and insecticide than crops. Given the higher yields of the approximately 4 kg CO eq/mmbtu). switchgrass, but more phosphorous, 2 energy grasses considered here Giant reed production results in slightly compared to switchgrass, there would potassium, herbicide, diesel, and electricity per unit of biomass. lower GHG emissions relative to be ample land available for production switchgrass production (a decrease of without having any adverse impacts Napiergrass may require similar amounts of nitrogen fertilizer approximately 2 kg CO2eq/mmbtu). beyond what was considered for Napiergrass production results in switchgrass production. application as switchgrass, less phosphorous, potassium and insecticide slightly higher GHG emissions relative c. Crop Inputs and Feedstock Transport than switchgrass, but more herbicide, to switchgrass production (an increase EPA also assessed the GHG impacts lime, diesel, and electricity per unit of of approximately 6 kg CO2eq/mmbtu). associated with planting, harvesting, biomass. TABLE 6—PRODUCTION INPUTS AND GHG EMISSIONS FOR SWITCHGRASS, ENERGY CANE, GIANT REED, AND NAPIERGRASS (BIOCHEMICAL ETHANOL), 2022

Switchgrass Energy Cane Giant Reed Napiergrass Emission factors Inputs (per Inputs (per Inputs (per Inputs (per dry ton of Emissions (per dry ton of Emissions (per dry ton of Emissions (per dry ton of Emissions (per biomass) mmBtu fuel) biomass) mmBtu fuel) biomass) mmBtu fuel) biomass) mmBtu fuel)

Nitrogen Fertilizer 3,29 kgCO2e/ton 15.2 lbs .... 3.6 kgCO2e .... 8.4 lbs ...... 2 kgCO2e ...... 5 lbs ...... 1 kgCO2e ...... 10 lbs ...... 2.4 kgCO2e. of nitrogen. N2O ...... N/A ...... N/A ...... 7.6 kgCO2e .... N/A ...... 5.9 kgCO2e .... N/A ...... 4.8 kgCO2e .... N/A ...... 7.6 kgCO2e. Phosphorus Fer- 1,12 kgCO2e/ton 6.1 lbs ...... 0.5 kgCO2e .... 3.2 lbs ...... 0.3 kgCO2e .... 7.4 lbs ...... 0.6 kgCO2e .... 1.1 lbs ...... 0.1 kgCO2e. tilizer. of phosphate. Potassium Fer- 743 kgCO2e/ton 6.1 lbs ...... 0.3 kgCO2e .... 4.2 lbs ...... 0.2 kgCO2e .... 7.4 lbs ...... 0.4 kgCO2e .... 4.0 lbs ...... 0.2 kgCO2e. tilizer. of potassium. Herbicide ...... 23,45 kgCO2e/ 0.002 lbs .. 0.003 kgCO2e 1.0 lbs ...... 1.8 kgCO2e .... 0.02 lbs .... 0.03 kgCO2e .. 0.4 lbs ...... 0.6 kgCO2e. tons of herbi- cide. Insecticide (aver- 27,22 kgCO2e/ 0.025 lbs .. 0.04 kgCO2e .. 0 lbs ...... 0 kgCO2e ...... 0 lbs ...... 0 kgCO2e ...... 0 lbs ...... 0 kgCO2e. age across re- tons of pes- gions). ticide. Lime ...... 408 kgCO2e/ton 0 lbs ...... 0 kgCO2e ...... 104.7 lbs .. 3.1 kgCO2e .... 0 lbs ...... 0 kgCO2e ...... 100 lbs ..... 2.9 kgCO2e. of lime. Diesel ...... 97 kgCO2e/ 0.4 gal ...... 0.8 kgCO2e .... 1.3 gal ...... 2.4 kgCO2e .... 1.4 gal ...... 2.5 kgCO2e .... 1.3 gal ...... 2.2 kgCO2e. mmBtu diesel. Electricity (irriga- 220 kgCO2e/ 0 kWh ...... 0 kgCO2e ...... 14.7 kWh .. 1.6 kgCO2e .... 10 kWh ..... 1 kgCO2e ...... 25 kWh ..... 2.7 kgCO2e. tion). mmBtu.

Total Emis- ...... 13 kgCO2e/ ...... 17 kgCO2e/ ...... 11 kgCO2e/ ...... 19 kgCO2e/ sions. mmBtu. mmBtu. mmBtu. mmBtu. Assumes 2022 switchgrass yield of 6.59 dry tons/acre and 92.3 gal ethanol/dry ton, 2022 energy cane yield of 19.1 dry tons/acre and 92 gal ethanol/dry ton, 2022 giant reed yield of 18 dry tons/acre and 92.3 gal ethanol/dry ton, and 2022 napiergrass yield of 20 dry tons/acre and 92.3 gal ethanol/dry ton. More detail on calcula- tions and assumptions is included in materials to the docket.

GHG emissions associated with analysis therefore assumes the same production facilities per gallon or Btu of distributing energy cane, giant reed, and GHG impact for feedstock distribution final fuel produced. napiergrass feedstocks are expected to as we assumed for switchgrass, although 2. Fuel Production, Distribution, and be similar to EPA’s estimates for distributing energy cane, giant reed, and Use switchgrass feedstock because they are napiergrass feedstocks could be less all herbaceous agricultural crops GHG intensive because higher yields Energy cane, giant reed, and requiring similar transport, loading, could translate to shorter overall napiergrass are suitable for the same unloading, and storage regimes. Our hauling distances to storage or biofuel conversion processes as other cellulosic

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feedstocks, such as switchgrass and corn approximately 6 kg CO2eq/mmBtu renewable fuel production. stover. Currently available information higher than switchgrass. These are small Furthermore, any energy grass on energy cane, giant reed, and changes in the overall lifecycle, production on existing cropland napiergrass composition shows that representing at most a 6% change in the internationally would not be expected their hemicellulose, cellulose, and energy grass lifecycle impacts in to have land use impacts beyond what lignin content are comparable to other comparison to the petroleum fuel was considered for switchgrass crops that qualify under the RFS baseline. Furthermore, the three production. Even if there were regulations as feedstocks for the feedstocks considered are expected to unexpected larger differences, EPA production of cellulosic biofuels. Based have similar or lower GHG emissions believes the small amounts of feedstock on this similar composition as well as than switchgrass associated with other or fuel potentially coming from other conversion yield data provided by components of the biofuel lifecycle. countries will not impact our threshold industry, we applied the same Under a hypothetical worst case, if analysis. production processes that were modeled the calculated increases in growing and Based on our assessment of for switchgrass in the final RFS2 rule harvesting the new feedstocks are switchgrass in the RFS2 final rule and (biochemical ethanol, thermochemical incorporated into the lifecycle GHG this comparison of GHG emissions from ethanol, and Fischer-Tropsch (F–T) emissions calculated for switchgrass, switchgrass and energy cane, giant reed, 46 diesel ) to energy cane, giant reed, and and other lifecycle components are and napiergrass, we do not expect napiergrass. We assumed the GHG projected as having similar GHG variations to be large enough to bring emissions associated with producing impacts to switchgrass (including land the overall GHG impact of fuel made biofuels from energy cane, giant reed, use change associated with switchgrass from energy cane, giant reed or napier and napiergrass are similar to what we production), the overall lifecycle GHG grass to come close to the 60% estimated for switchgrass and other reductions for biofuel produced from threshold for cellulosic biofuel. cellulosic feedstocks. EPA also assumes energy cane, giant reed, and napiergrass Therefore, EPA is including cellulosic that the distribution and use of biofuel still meet the 60% reduction threshold biofuel produced from the cellulose, for cellulosic biofuel, the lowest being a made from energy cane, giant reed, and hemicelluloses and lignin portions of 64% reduction (for napiergrass F–T napiergrass will not differ significantly energy cane, giant reed, and napiergrass diesel) compared to the petroleum from similar biofuel produced from under the same pathways for which baseline. We believe these are other cellulosic sources. As was done cellulosic biomass from switchgrass conservative estimates, as use of energy for the switchgrass case, this analysis qualifies under the RFS2 final rule. assumes energy grasses grown in the cane, giant reed, or napiergrass as a United States for production purposes. feedstock is expected to have smaller C. Lifecycle Greenhouse Gas Emissions If crops were grown internationally, land-use GHG impacts than switchgrass, Analysis for Certain Renewable used for biofuel production, and the fuel due to their higher yields. The docket Gasoline and Renewable Gasoline was shipped to the U.S., shipping the for this rule provides additional detail Blendstocks Pathways finished fuel to the U.S. could increase on the analysis of energy cane, giant In this rule, EPA is also adding transport emissions. However, reed, and napiergrass as biofuel pathways to Table 1 to § 80.1426 for the considering the increased transport feedstocks. production of renewable gasoline and emissions associated with sugarcane Although this analysis assumes renewable gasoline blendstock using ethanol distribution to the U.S., this energy cane, giant reed, and napiergrass specified feedstocks, fuel production would at most add 1–2% to the overall biofuels produced for sale and use in processes, and process energy sources. lifecycle GHG impacts of the energy the United States will most likely come The feedstocks we considered are grasses. from domestically produced feedstock, we also intend for the approved generally considered waste feedstocks 3. Summary pathways to cover energy cane, giant such as crop residues or cellulosic Based on our comparison of reed, and napiergrass from other components of separated yard waste. switchgrass and the three feedstocks countries. We do not expect incidental These feedstocks have been identified considered here, EPA believes that amounts of biofuels from feedstocks by the industry as the most likely cellulosic biofuel produced from the produced in other nations to impact our feedstocks for use in making renewable cellulose, hemicellulose and lignin average GHG emissions. Moreover, gasoline or renewable gasoline portions of energy cane, giant reed, and those countries most likely to be blendstock in the near term due to their napiergrass has similar or better exporting energy cane, giant reed, or availability and low cost. Additionally, lifecycle GHG impacts than biofuel napiergrass or biofuels produced from these feedstocks have already been produced from the cellulosic biomass these feedstocks are likely to be major analyzed by EPA as part of the RFS2 from switchgrass. Our analysis suggests producers which typically use similar rulemaking for the production of other that the three feedstocks considered cultivars and farming techniques. fuel types. Consequently, no new have GHG impacts associated with Therefore, GHG emissions from modeling is required and we rely on growing and harvesting the feedstock producing biofuels with energy cane, earlier assessments of feedstock that are similar to switchgrass. giant reed, or napiergrass grown in other production and distribution for Emissions from growing and harvesting countries should be similar to the GHG assessing the likely lifecycle impact on energy cane are approximately 4 kg emissions we estimated for U.S. energy renewable gasoline and renewable CO2eq/mmBtu higher than switchgrass, cane, giant reed, or napiergrass, though gasoline blendstock. We have also relied emissions from growing and harvesting they could be slightly (and on the petroleum gasoline baseline giant reed are approximately 2 kg insignificantly) higher or lower. For assessment from the RFS2 rule for CO2eq/mmBtu lower than switchgrass, example, the renewable biomass estimating the fuel distribution and use and emissions from growing and provisions under the Energy GHG emissions impacts for renewable harvesting napiergrass are Independence and Security Act would gasoline and renewable gasoline prohibit direct conversion of previously blendstock. Consequently, the only new 46 The F–T diesel process modeled applies to unfarmed land in other countries into analysis required is of the technologies cellulosic diesel, jet fuel, heating oil, and naphtha. cropland for energy grass-based for turning the feedstock into renewable

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gasoline and renewable gasoline and F–T diesel pathways as part of the process to a biochemical renewable blendstock. RFS2 rulemaking. gasoline or renewable gasoline In this rulemaking we are analyzing blendstock fermentation process. In 1. Feedstock Production and renewable gasoline and renewable some cases, the available data sources Distribution gasoline blendstock produced from corn included process yields for renewable EPA has evaluated renewable gasoline stover (and, by extension, other waste gasoline or renewable gasoline and renewable gasoline blendstock feedstocks). The number of gallons of blendstock produced from wood chips pathways that utilize cellulosic fuel produced from a ton of corn stover rather than corn stover which was feedstocks currently included in Table 1 (modeled process yields) is specific to specifically modeled as a feedstock in to § 80.1426 of the regulations. The the process used to produce renewable the RFS2 final rule. We believe that the following feedstocks were evaluated: fuel. EPA has adjusted the results of the process yields are not significantly • Cellulosic biomass from crop earlier corn stover modeling to reflect impacted by the source of cellulosic residue, slash, pre-commercial the different process yields and heating material whether the cellulosic material thinnings and tree residue, annual cover value of renewable gasoline or comes from residue such as corn stover crops; or wood material such as from tree • renewable gasoline blendstock product. Cellulosic components of separated The results of this calculation are shown residues. We made the simplifying yard waste; • below in Table 7. assumption that one dry ton of wood Cellulosic components of separated We based our process yields and feedstock produces the same volume of food waste; and heating values for renewable gasoline renewable gasoline or renewable • Cellulosic components of separated and renewable gasoline blendstock on gasoline blendstock as one dry ton of MSW. corn stover. We believe this is The FASOM and FAPRI models were several process technologies reasonable considering that the RFS2 used to analyze the GHG impacts of the representative of technologies rulemaking analyses for biochemical feedstock production portion of a fuel’s anticipated to be used in producing ethanol and thermochemical F–T diesel lifecycle. In the RFS2 rulemaking, these fuels. As discussed later in this processes showed limited variation in FASOM and FAPRI modeling was section, there are four main types of fuel process yields between different performed to analyze the emissions production technologies available for feedstocks for a given process impact of using corn stover as a biofuel producing renewable gasoline. These four processes can be characterized as technology.48 In addition, since the feedstock and this modeling was renewable gasoline and renewable extended to some additional feedstock (1) thermochemical gasification, (2) catalytic pyrolysis and upgrading to gasoline blendstock pathways include sources considered similar to corn feedstocks that were already considered stover. This approach was used for crop renewable gasoline or renewable gaoline blendstock (‘‘catalytic pyrolysis’’), (3) as part of the RFS2 final rule, the residues, slash, pre-commercial existing feedstock lifecycle GHG thinnings, tree residue and cellulosic biochemical fermentation with upgrading to renewable gasoline or impacts for distribution of corn stover components of separated yard, food, and were also applied to this analysis.49 MSW. These feedstocks are all excess renewable gasoline blendstock via carboxylic acid (‘‘fermentation and Feedstock production emissions are materials and thus, like corn stover, shown in Table 7 below for corn stover. were determined to have little or no upgrading’’), and (4) direct biochemical fermentation to renewable gasoline and Corn stover feedstock production land use change GHG impacts. Their emissions are mainly a result of corn GHG emission impacts are mainly renewable gasoline blendstock (‘‘direct fermentation’’). The thermochemical stover removal increasing the associated with collection, transport, profitability of corn production and processing into biofuel. See the gasification process was modeled as part of the RFS2 final rule, included as (resulting in shifts in cropland and thus RFS2 rulemaking preamble for further slight emission impacts) and also the discussion. We used the results of the producing naptha via the F–T process. Our analysis of the catalytic pyrolysis need for additional fertilizer inputs to corn stover modeling in this analysis to replace the nutrients lost when corn estimate the upper bound of agricultural process was based on the modeling work completed by the National stover is removed. However, corn stover sector impacts from the production of removal also has an emissions benefit as the various cellulosic feedstocks noted Renewable Energy Laboratory (NREL) for this rule for a process to make it encourages the use of no-till farming above. 47 which results in the lowering of The agriculture sector modeling renewable gasoline blendstock. The fermentation and upgrading process was domestic land use change emissions. results for corn stover represent all of This change to no-till farming results in the direct and significant indirect modeled based on confidential business information (CBI) from industry for a a negative value for domestic land use emissions in the agriculture sector change emission impacts (see also Table (feedstock production emissions) for a unique process which uses biochemical conversion of cellulose to renewable 13 below). For other waste feedstocks certain quantity of corn stover (e.g., tree residues and cellulosic gasoline via a carboxylic acid route. In produced. For the RFS2 rulemaking, components of separate yard, food, and addition, we have qualitatively assessed this was roughly 62 million dry tons of MSW), the feedstock production the direct fermentation to renewable corn stover to produce 5.7 billion emissions are even lower than the gasoline process based on similarities to gallons of ethanol assuming biochemical values shown for corn stover since the the biochemical ethanol process already fermentation to ethanol processing. We use of such feedstocks does not require analyzed as part of the RFS2 have calculated GHG emissions from land use changes or additional rulemaking. The fuel production section feedstock production for that amount of agricultural inputs. Therefore, we below provides further discussion on corn stover. The GHG emissions were conclude that if the use of corn stover then divided by the total heating value extending the GHG emissions results of of the fuel to get feedstock production the biochemical ethanol fermentation 48 Aden, Andy. Feedstock Considerations and emissions per mmBtu of fuel. In Impacts on Biorefining. National Renewable Energy 47 addition to the biochemical ethanol Kinchin, Christopher. Catalytic Fast Pyrolysis Laboratory (NREL). December 2009. with Upgrading to Gasoline and Diesel Blendstocks. 49 Results for feedstock distribution are process, a similar analysis was National Renewable Energy Laboratory (NREL). aggregated along with fuel distribution and are completed for thermochemical ethanol 2011. reported in a later section, see conclusion section.

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as a feedstock in the production of (i.e., it has at least a 60% lifecycle GHG renewable gasoline or renewable renewable gasoline and renewable reduction as compared to conventional gasoline blendstock that qualifies as gasoline blendstock yields lifecycle fuel), then the use of other waste cellulosic biofuel. GHG emissions results for the resulting feedstocks with little or no land use fuel that qualify it as cellulosic biofuel change emissions will also result in

TABLE 7—FEEDSTOCK PRODUCTION EMISSIONS FOR RENEWABLE GASOLINE AND RENEWABLE GASOLINE BLENDSTOCK PATHWAYS USING CORN STOVER

Direct biochemical Catalytic pyrolysis Biochemical fer- fermentation proc- to renewable gas- mentation to re- ess to renewable newable gasoline gasoline and re- Feedstock production emission sources oline blendstock via carboxylic acid (g CO2-eq./ newable gasoline (g CO2-eq./ mmBtu) mmBtu) blendstock (g CO2-eq./mmBtu)

Domestic Livestock ...... 7,648 6,770 ∼ 9,086 Domestic Farm Inputs and Fertilizer N2O ...... 1,397 1,237 ∼ 1,660 Domestic Rice Methane ...... 366 324 ∼ 434 Domestic Land Use Change ...... ¥9,124 ¥8,076 ∼ ¥10,820 International Livestock ...... 0 0 0 International Farm Inputs and Fertilizer N2O ...... 0 0 0 International Rice Methane ...... 0 0 0 International Land Use Change ...... 0 0 0

Total Feedstock Production Emissions ...... 287 254 ∼ 361

The results in Table 7 differ for the 4. Fuel Production of 3.50 For the reasons described below, different pathways considered because we have decided to authorize the of the different amounts of corn stover In the RFS2 rulemaking, EPA generation of RINs with a D code of 3 used to produce the same amount of analyzed several of the main cellulosic for renewable gasoline and renewable fuel in each case. Table 7 only considers biofuel pathways: a biochemical gasoline blendstock produced using the feedstock production impacts fermentation process to ethanol and two specified cellulosic feedstocks for the associated with the renewable gasoline thermochemical gasification processes, processes considered here. pathways, other aspects of the lifecycle one producing mixed alcohols Several routes have been identified as are discussed in the following sections. (primarily ethanol) and the other one available for the production of renewable gasoline and renewable 2. Fuel Distribution producing mixed hydrocarbons (primarily diesel fuel). These pathways gasoline blendstock from renewable A petroleum gasoline baseline was all exceeded the 60% lifecycle GHG biomass. These include catalytic developed as part of the RFS2 final rule threshold requirements for cellulosic pyrolysis and upgrading to renewable which included estimates for fuel biofuel using the specified feedstocks. gasoline or renewable gasoline distribution emissions. Since renewable Refer to the preamble and regulatory blendstock (‘‘catalytic pyrolysis’’), gasoline and renewable gasoline biochemical fermentation with impact analysis (RIA) from the final blendstocks when blended into gasoline upgrading to renewable gasoline or RFS2 rule for more details. From these are similar to petroleum gasoline, it is renewable gasoline blendstock via reasonable to assume similar fuel analyses, it was determined that ethanol carboxylic acid (‘‘fermentation and distribution emissions. Therefore, the and diesel fuel produced from the upgrading’’), and direct biochemical existing fuel distribution lifecycle GHG specified cellulosic feedstocks and fermentation to renewable gasoline and impacts of the petroleum gasoline processes would be eligible for renewable gasoline blendstock (‘‘direct baseline from the RFS2 final rule were cellulosic and advanced biofuel RINs. fermentation’’).51 52 applied to this analysis. The thermochemical gasification Similar to how we analyzed several of the main routes for cellulosic ethanol 3. Use of the Fuel process to diesel fuel (via F–T synthesis) also produces a smaller portion of and cellulosic diesel for the final RFS2 A petroleum gasoline baseline was naphtha, a gasoline blendstock. In the rule, we have chosen to analyze the developed as part of the RFS2 final rule final RFS2 rule, naphtha produced with main renewable gasoline and renewable which estimated the tailpipe emissions specified cellulosic feedstocks by a F–T gasoline blendstock pathways in order from fuel combustion. Since renewable to estimate the potential GHG reduction process was included as exceeding the gasoline and renewable gasoline profile for renewable gasoline and 60% lifecycle GHG threshold, with an blendstock are similar to petroleum renewable gasoline blendstock across a applicable D–Code of 3, in Table 1 to gasoline, the non-CO2 combustion emissions calculated as part of the RFS2 § 80.1426. 50 See http://www.epa.gov/otaq/fuels/ final rule for petroleum gasoline were Since the final RFS2 rule was renewablefuels/compliancehelp/rfs2-lca- pathways.htm for list of petitions received by EPA. applied to our analysis of the renewable released, EPA has received several 51 Regalbuto, John. ‘‘An NSF perspective on next gasoline and renewable gasoline petitions and inquiries that suggest that generation hydrocarbon biorefineries,’’ Computers blendstock pathways. Only non-CO2 renewable gasoline or renewable and Chemical Engineering 34 (2010) 1393–1396. emissions were included since carbon February 2010. gasoline blendstock produced using 52 fluxes from land use change are Serrano-Ruiz, J., Dumesic, James. ‘‘Catalytic processes other than the F–T process routes for the conversion of biomass into liquid accounted for as part of the biomass could also qualify for a similar D–Code hydrocarbon transportation fuels,’’ Energy feedstock production. Environmental Science (2011) 4, 83–99.

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range of other production technologies further in a technical report available which any excess displaces U.S. average for which we are confident will have at through the docket.53 Catalytic pyrolysis grid electricity. Excess electricity is least as great of GHG emission involves the rapid heating of biomass to generated from the use of co-product reductions as those specifically about 500°C at slightly above coke/char and product gases and is analyzed. atmospheric pressure. The rapid heating available because internal electricity a. Catalytic Pyrolysis to Renewable thermally decomposes biomass, demands are fully met. The estimated Gasoline and Renewable Gasoline converting it into pyrolysis vapor, energy inputs and electricity credits Blendstock which is condensed into a liquid bio-oil. shown in Table 8, below, utilize the The liquid bio-oil can then be upgraded data provided by the NREL process The first production process we investigated for this rule is a catalytic using conventional hydroprocessing modeling. However, Industry sources fast pyrolysis route to bio-oils with technology and further separated into also identified potential areas for upgrading to a renewable gasoline or a gasoline and diesel blendstock streams improvements in energy use, such as the renewable gasoline blendstock. We (cellulosic diesel from catalytic use of biomass fired dryers instead of utilized process modeling results from pyrolysis is already included as an natural gas fired dryers for drying the National Renewable Energy acceptable pathway in the RFS2 incoming wet feedstocks and increased Laboratory (NREL). Information program). Some industry sources also turbine efficiencies for electricity provided by industry and claimed as expect to produce smaller fractions of production which may result in lower CBI are based on similar processing heating oil in addition to gasoline and energy consumption than estimated by methods and suggest similar results diesel blendstocks. Excess electricity NREL and thus improve GHG than those reported by NREL. Details on from the process is also accounted for in performance compared to our estimates the NREL modeling are described our modeling as a co-product credit in here.

TABLE 8—2022 ENERGY USE AT CELLULOSIC BIOFUEL FACILITIES [Btu/gal]

Purchased Technology Biomass use Natural gas use electricity Sold electricity

Catalytic Pyrolysis to Renewable Gasoline Blendstock ...... 136,000 51,000 0 ¥2,000

The emissions from energy inputs TABLE 9—FUEL PRODUCTION EMIS- renewable gasoline blendstock. This were calculated by multiplying the SIONS FOR CATALYTIC PYROLYSIS process involves the fermentation of amount of energy by emission factors for TO RENEWABLE GASOLINE biomass using a mixed-culture of fuel production and combustion, based BLENDSTOCK USING CORN STOVER microorganisms that produce a variety on the same method and factors used in of carboxylic acids. If the feedstock has the RFS2 final rulemaking. The Catalytic pyrol- high lignin content, then the biomass is emission factors for the different fuel ysis to renewable pretreated to enhance digestibility. The types are from GREET and were based Lifecycle stage gasoline acids are then neutralized to carboxylate blendstock (g salts and further converted to ketones on assumed carbon contents of the CO2-eq./mmBtu) different process fuels. The emissions and alcohols for refining into gasoline, from producing electricity in the U.S. On-Site & Upstream Emis- diesel, and jet fuel. were also taken from GREET and sions (Natural Gas & The process requires the use of Biomass*) ...... 31,000 natural gas and hydrogen inputs.55 No represent average U.S. grid electricity Electricity Co-Product purchased electricity is required as production emissions. Credit ...... ¥3,000 lignin is projected to be used to meet all The major factors influencing the Total Fuel Production facility demands as well as provide Emissions: ...... 28,000 emissions from the fuel production excess electricity to the grid. EPA used stage of the catalytic pyrolysis pathway Only non-CO2 combustion emissions from the estimated energy and material are the use of natural gas (mainly due biomass. inputs along with emission factors to to hydrogen production for b. Fermentation and Upgrading to estimate the GHG emissions from this hydroprocessing) and the co-products Renewable Gasoline and Renewable process. The energy inputs and available for additional heat and power Gasoline Blendstock electricity credits are shown in Table generation.54 See Table 9 for a summary The second production process we 10, below. These inputs are based on of emissions from fuel production. investigated is a biochemical Confidential Business Information (CBI), fermentation process to intermediate rounded to the nearest 1000 units, carboxylic acids with catalytic provided by industry as part of the upgrading to renewable gasoline or petition process for new fuel pathways.

53 Kinchin, Christopher. Catalytic Fast Pyrolysis is currently produced via steam reforming (DOE, not as efficient or cost effective as the use of fossil with Upgrading to Gasoline and Diesel Blendstocks. 2002 ‘‘A National Vision of America’s Transition to fuels and therefore we conservatively estimate National Renewable Energy Laboratory (NREL). a Hydrogen Economy to 2030 and Beyond’’). Other emissions from hydrogen production using the 2011. alternatives are available, such as renewable or more commonly used SMR technology. 54 A steam methane reformer (SMR) is used to nuclear resources used to extract hydrogen from 55 Hydrogen emissions are modeled as natural gas produce the hydrogen necessary for water or the use of biomass to produces hydrogen. hydroprocessing. In the U.S. over 95% of hydrogen These alternative methods, however, are currently and electricity demands.

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TABLE 10—2022 ENERGY USE AT CELLULOSIC FACILITY [Btu/gal]

Purchased Technology Biomass use Natural gas use electricity Sold electricity

Biochemical Fermentation to Renewable Gasoline or Renewable Gasoline Blendstock via Carboxylic Acid ...... 49,000 59,000 0 ¥2,000

The process also uses a small amount c. Direct Fermentation to Renewable poisoned when interacting with of buffer material as neutralizer which Gasoline and Renewable Gasoline accumulated products. We also expect was not included in the GHG lifecycle Blendstock that the lignin/byproduct portions of the results due to its likely negligible The third production process we biomass from the fermentation to emissions impact. The GHG emissions investigated involves the use of hydrocarbon process could be converted estimates from the fuel production stage microorganisms to ferment sugars into heat and electricity for internal are seen in Table 11. hydrolyzed from cellulose directly into demands or for export, similar to the hydrocarbons which could be either a biochemical fermentation to ethanol TABLE 11—FUEL PRODUCTION EMIS- complete fuel as renewable gasoline or pathway. SIONS FOR BIOCHEMICAL FERMENTA- a renewable gasoline blendstock. The Therefore, we can conservatively TION TO RENEWABLE GASOLINE OR process is similar to the biochemical extend our final RFS2 rule biochemical fermentation to ethanol process results RENEWABLE GASOLINE BLENDSTOCK fermentation to ethanol pathway modeled for the final RFS2 rule with the to a similar (but likely slightly VIA CARBOXYLIC ACID USING CORN major difference being the end fuel improved) process that instead produces STOVER product, hydrocarbons instead of hydrocarbons. Since the final RFS2 rule ethanol. Researchers believe that this cellulosic ethanol GHG results were GHG Emissions new technology could achieve well above the 60% GHG reduction Lifecycle stage (g CO2-eq./ mmBtu) improvements over classical threshold for cellulosic biofuels, if fermentation approaches because actual emissions from other necessary On-Site & Upstream Emis- hydrocarbons separate spontaneously changes to the direct biochemical sions (Natural Gas & from the aqueous phase, thereby fermentation to hydrocarbons process Biomass*) ...... 33,000 avoiding poisoning of microbes by the represent some small increment in GHG Electricity Co-Product accumulated products and facilitating emissions, the pathway would still Credit ...... ¥3,000 separation/collection of alkanes from likely meet the threshold. Table 12 is the reaction medium.56 In other words, our qualitative assessment of the Total Fuel Production some energy savings may result because potential emissions reductions from a Emissions: ...... 30,000 fewer separation unit operations could process using biochemical fermentation

*Only non-CO2 combustion emissions from be required for separating the final to cellulosic hydrocarbons assuming biomass product from other reactants and there similarities to the biochemical may be better conversion yields as the fermentation to cellulosic ethanol route fermentation microorganisms are not from the final RFS2 rule.

TABLE 12—FUEL PRODUCTION EMISSIONS FOR RFS2 CELLULOSIC BIOCHEMICAL ETHANOL COMPARED TO DIRECT BIOCHEMICAL FERMENTATION TO RENEWABLE GASOLINE OR RENEWABLE GASOLINE BLENDSTOCK USING CORN STOVER

Direct biochemical fermentation to re- RFS2 Cellulosic newable gasoline biochemical eth- and renewable Lifecycle stage anol emissions (g gasoline CO2-eq./mmBtu) blendstock emis- sions (g CO2-eq./ mmBtu)

On-Site Emissions & Upstream (biomass) ...... 3,000 < or = 3,000 Electricity Co-Product Credit ...... ¥35,000 = ¥35,000

Total Fuel Production Emissions 57 ...... ¥33,000 < or = ¥33,000

Table 13 below breaks down by stage contribution of each stage in the fuel assume natural gas as the process energy the lifecycle GHG emissions for the pathway and its relative significance in when needed; using biogas or biomass renewable gasoline and renewable terms of GHG emissions. These results as process energy would result in an gasoline blendstock pathways using are also presented in graphical form in even better lifecycle GHG impact. corn stover and the 2005 petroleum a supplemental memorandum to the baseline. The table demonstrates the docket.58 As noted above, these analyses

56 Serrano-Ruiz, J., Dumesic, James. ‘‘Catalytic 57 Numbers do not add up due to rounding. Information for Renewable Gasoline and Renewable routes for the conversion of biomass into liquid 58 Memorandum to the Air and Radiation Docket Gasoline Blendstock Pathways Under the hydrocarbon transportation fuels,’’ Energy EPA–HQ–OAR–2011–0542 ‘‘Supplemental Renewable Fuel Standard (RFS2) Program’’. Environmental Science (2011) 4, 83–99.

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TABLE 13—LIFECYCLE GHG EMISSIONS FOR RENEWABLE GASOLINE AND RENEWABLE GASOLINE BLENDSTOCK PATHWAYS USING CORN STOVER, 2022

[kg CO2-eq./mmBtu]

Direct biochemical Biochemical fer- fermentation to re- Catalytic pyrolysis mentation to re- newable gasoline 2005 gasoline Fuel type to renewable gas- newable gasoline and renewable baseline oline blendstock via carboxylic acid gasoline blendstock

Net Domestic Agriculture (w/o land use change) ...... 9 8 ∼ 11 ...... Net International Agriculture (w/o land use change): Domestic Land Use Change ...... ¥9 ¥8 ∼ ¥11 ...... International Land Use Change: Fuel Production ...... 28 30 < or = ¥33 19 Fuel and Feedstock Transport ...... 2 2 ∼ 2 * Tailpipe Emissions ...... 2 2 ∼ 1 79

Total Emissions ...... 32 34 < or = ¥29 98

% Change from Baseline ...... ¥67% ¥65% ¥129% ...... * Emissions included in fuel production stage.

d. Extension of Modeling Results to from cellulosic feedstock as shown in pyrolysis, direct fermentation, and Other Production Processes Producing literature. 59 60 The two primary routes fermentation with catalytic upgrading Renewable Gasoline or Renewable for renewable gasoline and renewable are considered in this rule and the Gasoline Blendstock gasoline blendstock production from gasification route was already included In the RFS2 rulemaking, we modeled cellulosic feedstock can be classified as in the RFS2 final rule. In all cases, the the GHG emissions results from the either thermochemical or biological. processes that we have considered meet biochemical fermentation process to Each of these two major categories has the 60% lifecycle GHG reduction ethanol, thermochemical gasification two subcategories. The processes under required for cellulosic biofuels. the thermochemical category include: Furthermore, we believe that the results processes to mixed alcohols (primarily • ethanol) and mixed hydrocarbons Pyrolysis—in which cellulosic from our modeling would cover all the (primarily diesel fuel). We extended biomass is decomposed with likely variations within these potential these modeled process results to apply temperature to bio-oils and requires routes for producing renewable gasoline when the biofuel was produced from further catalytic processing to produce a and renewable gasoline blendstock ‘‘any’’ process. We determined that finished fuel. which also use natural gas, biogas or • Gasification—in which cellulosic since we modeled multiple cellulosic biomass for process energy and that all biomass is decomposed to syngas with biofuel processes and all were shown to such production variations would also further catalytic processing of methanol exceed the 60% lifecycle GHG threshold meet the 60% lifecycle threshold. to gasoline or through Fischer-Tropsch requirements for cellulosic biofuel using The main reason for this is that we the specified feedstocks its was (F–T) synthesis to gasoline. believe that our energy input The processes under the biochemical reasonable to extend to other processes assumptions are reasonable at this time category include: but probably in some cases conservative that might develop as these would likely • Direct fermentation—requires the for commercial scale cellulosic represent improvements over existing release of sugars from biomass and the facilities. The cellulosic industry is in processes as the industry works to use of ‘‘synthetic biology’’ in which its early stages of development and improve the economics of cellulosic microorganisms are altered to ferment many of the estimates of process biofuel production by, for example, sugars straight into hydrocarbons technology GHG impacts is based on reducing energy consumption and instead of alcohols. pre-commercial scale assessments and improving process yields. Similarly, this • Fermentation w/catalytic demonstration programs. Commercial rule assesses multiple processes for the upgrading—requires the release of scale cellulosic facilities will continue production of renewable gasoline and sugars from biomass and aqueous- or to make efficiency improvements over renewable gasoline blendstocks and all liquid-phase processing of sugars or time to maximize their fuel products/co- were shown to exceed the 60% lifecycle intermediate fermentation products into products and minimize wastes. For GHG threshold requirements for hydrocarbons using solid catalysts, cellulosic biofuel using specified As part of the modeling effort here, as cellulosic facilities, such improvements feedstocks. well as for the RFS2 final rule, we have include increasing conversion yields As was the case in our earlier considered the lifecycle GHG impacts of and fully utilizing the biomass input for rulemaking, a couple reasons in the four possible production valuable products. particular support extending our technologies mentioned above. The An example of increasing the amount modeling results to other production of biomass utilized is the combustion of process producing renewable gasoline 59 Regalbuto, John. ‘‘An NSF perspective on next undigested or unconverted biomass for or renewable gasoline blendstock from generation hydrocarbon biorefineries,’’ Computers heat and power. The three routes that cellulosic feedstock. Under this rule we and Chemical Engineering 34 (2010) 1393–1396. we analyzed for the production of analyzed the core technologies most February 2010. renewable gasoline and renewable 60 Serrano-Ruiz, J., Dumesic, James. ‘‘Catalytic likely available through 2022 for routes for the conversion of biomass into liquid gasoline blendstock in today’s rule production of renewable gasoline and hydrocarbon transportation fuels,’’ Energy assume an electricity production credit renewable gasoline blendstock routes Environmental Science (2011) 4, 83–99. from the economically-driven use of

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lignin or waste byproducts; we also ran further minimized under certain allowing the pathway to meet the GHG a sensitivity case where no electricity scenarios. We believe that as performance threshold. credit was given. We found that all of commercial scale cellulosic facilities There is an even wider gap between the routes analyzed would still pass the develop, more of these improvements the results modeled for the direct GHG threshold without an electricity will be made to maximize the use of all fermentation route and the cellulosic credit, providing confidence that over the biomass and waste byproducts lifecycle GHG threshold. The variation the range of technology options, these available to bring the facility closer to we considered for the direct process technologies will surely allow energy self-sufficiency. These fermentation process resulted in an the cellulosic biofuel produced to improvements could help to increase approximately 129% reduction in exceed the threshold for cellulosic the economic profitability for cellulosic lifecycle GHG emissions compared to biouel GHG performance. Without facilities where fossil energy inputs the petroleum baseline. This process did excess electricity production the become costly to purchase. Therefore consider production of electricity as catalytic pyrolysis pathway results in a we can extend the modeling results for part of the process but as mentioned 65% lifecycle GHG reduction, the our pyrolysis route to all variations of even if this was not the case the biochemical fermentation via carboxylic this production technology which use pathway would still easily fall below acid pathway results in a 62% lifecycle natural gas, biogas or biomass for the 60% lifecycle threshold for GHG reduction, and the direct production energy for producing cellulosic biofuels. If actual emissions biochemical fermentation pathway renewable gasoline or renewable from other necessary changes to the results in a 93% reduction in lifecycle gasoline blendstock. direct biochemical fermentation to hydrocarbons process represent some GHG emissions compared to the The F–T gasification technology route small increment in GHG emissions, the petroleum fuel baseline. considered as part of the RFS2 final rule pathway would still likely meet the Additionally, while the final results resulted in an approximately 91% threshold. Therefore, we can extend the reported in this rule include an reduction in lifecycle GHG emissions results to all variations of the direct electricity credit, this electricity credit compared to the petroleum baseline. biochemical route for renewable is based on current technology for This could be considered a conservative gasoline or renewable gasoline generating electricity; it is possible that estimate as the process did not assume blendstock production which use over the next decade as cellulosic any excess electricity production, which natural gas, biogas or biomass for biofuel production matures, the as mentioned above could lead to efficiency with which electricity is production energy. additional GHG reductions. The F–T The biochemical with catalytic generated at these facilities will also process involves gasifying biomass into improve. Such efficiency improvements upgrading route that we evaluated syngas (mix of H2 and CO) and then resulted in a 65% reduction in GHG will tend to improve the GHG converting the syngas through a performance for cellulosic biofuel emissions compared to the petroleum catalytic process into a hydrocarbon mix baseline. However, this can be technologies in general including those that is further refined into finished used to produce renewable gasoline. considered a conservative estimate. For product. The F–T process considered instance, the biochemical fermentation Furthermore, industry has identified was based on producing both gasoline other areas for energy improvements to gasoline via carboxylic acid route and diesel fuel so that it was not considered did not include the potential which our current pathway analyses do optimized for renewable gasoline not include. Therefore, the results we for generating steam from the production. A process for producing combustion of undigested biomass and have come up with for the individual primarily renewable gasoline rather pathway types represent conservative then using this steam for process energy. than diesel from a gasification route If this had been included, natural gas estimates and any variations in the should not result in a significantly pathways considered are likely to result consumption could potentially be worse GHG impacts compared to the decreased which would lower the in greater GHG reductions that what is mixed fuel process analyzed. considered here. For example, the potential GHG emissions estimated from Furthermore, as the lifecycle GHG the process. Therefore, the scenario variation of the catalytic pyrolysis route reduction from the F–T process considered here resulted in a 67% analyzed could be considered considered was around 91%, there is conservative in estimating actual natural reduction in lifecycle GHG emissions considerable room for variations in this gas usage. As was the case with the compared to the petroleum baseline. route to still meet the 60% lifecycle pyrolysis route considered, we believe However, as was mentioned this was GHG reduction threshold for cellulosic that as commercial scale cellulosic based on data from our NREL modeling fuels. Therefore, in addition to the F–T facilities develop, improvements will be and industry CBI data indicated more process orginially analyzed for made to maximize the use of all the efficient energy performance which, if producing naphtha, we can extend the biomass and waste byproducts available realized, would improve GHG results based on the above analyses to to bring the facility closer to energy self- performance. Another area for include all variations of the gasification sufficiency. These improvements help improvement in this pathway could be route which use natural gas, biogas or to increase the economic profitability the use of anaerobic digestion to treat biomass for production energy for for cellulosic facilities where fossil organics in waste water. If the anaerobic producing renewable gasoline or energy inputs become costly to digestion is on-site, then enough biogas renewable gasoline blendstock. These purchase. The processes we analyzed could potentially be produced to replace variations include for example different for this rulemaking utilized a mix of all of the fossil natural gas used as fuel catalysts and different refining natural gas and biomass for process and about half the natural gas fed for processes to produce different mixes of energy, with biogas replacing natural 61 hydrogen production. Thus, fossil final fuel product. While the current gas providing improved GHG natural gas consumption could be Table 1 entry in the regulations does not performance. We have not analyzed specify process energy sources, we are other fuel types (e.g., coal) and are 61 Kinchin, Christopher. Catalytic Fast Pyrolysis with Upgrading to Gasoline and Diesel Blendstocks. adding these specific eligible energy therefore not approving processes that National Renewable Energy Laboratory (NREL). sources since we have not analyzed utilized other fuel sources at this point. 2011. other energy sources (e.g. coal) as also Therefore, we are extending our results

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to include all variations of the value for baseline gasoline as in the cellulosic biofuel RINs for renewable biochemical with catalytic upgrading RFS2 final rule analysis. The results of gasoline or renewable gasoline process utilizing natural gas, biogas or the analysis indicate that the renewable blendstock produced by catalytic biomass for process energy. gasoline and renewable gasoline pyrolysis and upgrading, gasification While actual cellulosic facilities may blendstock pathways result in a GHG and upgrading, direct fermentation, show some modifications to the process emissions reduction of 65–129% or fermentation and upgrading, all scenarios we have already analyzed, our better compared to the gasoline fuel it utilizing natural gas, biogas, and/or results give a good indication of the would replace using corn stover as a biomass as the only process energy range of emissions we could expect feedstock. Since the renewable gasoline sources or any process utilizing biogas from processes producing renewable and renewable gasoline blendstock and/or biomass as the only energy gasoline and renewable gasoline pathways which use corn stover as a sources, and using corn stover as a blendstock from cellulosic feedstock, all feedstock all exceed the 60% lifecycle feedstock or the feedstocks noted above. of which meet the 60% cellulosic GHG threshold requirements for In order to qualify for RIN generation, biofuel threshold (assuming they are cellulosic biofuel, and since these the fuel must meet the other definitional utilizing natural gas, biogas or biomass pathways capture the likely current criteria for renewable fuel (e.g., for process energy). Technology changes technologies and since future produced from renewable biomass, and in the future are likely to increase technology improvements are likely to used to reduce or replace petroleum- efficiency to maximize profits, while increase efficiency and lower GHG based transportation fuel, heating oil or also lowering lifecycle GHG emissions. emissions, we have determined that all jet fuel) specified in the Clean Air Act Therefore, we have concluded that since processes producing renewable gasoline and the RFS regulations. all of the renewable gasoline or or renewable gasoline blendstock from A manufacturer of a renewable motor renewable gasoline blendstock fuel corn stover can qualify if they fall in the vehicle gasoline (including parties using processing methods we have analyzed following process characterizations: a renewable blendstock obtained from exceed the 60% threshold using specific • Catalytic pyrolysis and upgrading another party), must satisfy EPA motor cellulosic feedstock types, we can utilizing natural gas, biogas, and/or vehicle registration requirements in 40 conclude that processes producing biomass as the only process energy CFR Part 79 for the fuel to be used as renewable gasoline or renewable sources. a transportation fuel. Per 40 CFR gasoline blendstock that fit within the • Gasification and upgrading utilizing 79.56(e)(3)(i), a renewable motor vehicle categories of process analyzed here and natural gas, biogas, and/or biomass as gasoline would be in the Non-Baseline are produced from the same feedstock the only process energy sources. Gasoline category or the Atypical types and using natural gas, biogas or • Direct fermentation utilizing natural Gasoline category (depending on its biomass for process energy use will also gas, biogas, and/or biomass as the only properties) since it is not derived only meet the 60% GHG reduction threshold. process energy sources. from conventional petroleum, heavy oil In addition, while other technologies • Fermentation and upgrading deposits, coal, tar sands and/or oil sands may develop, we expect that they will utilizing natural gas, biogas, and/or (40 CFR 79.56(e)(3)(i)(5)).In either case, only become commercially competitive biomass as the only process energy the Tier 1 requirements at 40 CFR 79.52 if they have better yield (more gallons sources. (emissions characterization) and the per ton of feedstock) or lower • Any process utilizing biogas and/or Tier 2 requirements at 40 CFR 79.53 production cost due to lower energy biomass as the only process energy (animal exposure) are conditions for consumption. Both of these factors sources. registration unless the manufacturer would suggest better GHG performance. As was the case for extending corn qualifies for a small business provision This would certainly be the case if such stover results to other feedstocks in the at 40 CFR 79.58(d). For a non-baseline processes also relied upon using biogas RFS2 final rule, these results are also gasoline, a manufacturer under $50 and/or biomass as the primary energy reasonably extended to feedstocks with million in annual revenue is exempt source. Therefore based on our review similar or lower GHG emissions from Tier 1 and Tier 2. For an atypical of the existing primary cellulosic biofuel profiles, including the following gasoline there is no exemption from Tier production processes, likely GHG feedstocks: 1, but a manufacturer under $10 million emission improvements for existing or • Cellulosic biomass from crop in annual revenue is exempt from Tier new technologies, and consideration of residue, slash, pre-commercial 2. the positive GHG emissions benefits thinnings and tree residue, annual cover Registration for a motor vehicle associated with using biogas and/or crops; gasoline at 40 CFR 79 is via EPA Form biomass for process energy, we are • Cellulosic components of separated 3520–12, Fuel Manufacturer approving for cellulosic RIN generation yard waste; Notification for Motor Vehicle Fuel, any process for renewable gasoline and • Cellulosic components of separated available at: http://www.epa.gov/otaq/ renewable gasoline blendstock food waste; and regs/fuels/ffarsfrms.htm. • Cellulosic components of separated production using specified cellulosic D. Esterification Production Process biomass feedstocks as long as the MSW. For more information on the Inclusion for Specified Feedstocks process utilizes biogas and/or biomass Producing Biodiesel for all process energy. reasoning for extension to these other feedstocks refer to the feedstock Table 14, shown below, includes 5. Summary production and distribution section or pathways for biodiesel using specified Three renewable gasoline and the RFS2 rulemaking (75 FR 14793– feedstocks and the production process renewable gasoline blendstock 14795). transesterification. Transesterification is pathways were compared to baseline Based on these results, today’s rule the most commonly used method to petroleum gasoline, using the same includes pathways for the generation of produce biodiesel (i.e., methyl esters) by

62 Commonly used base catalysts include sodium hydroxide (NaOH), potassium hydroxide (KOH) and sodium methoxide (NaOCH3).

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reacting triglycerides with methanol catalyst, see the simplified form in typically under the presence of a base Equation 1.62

TABLE 14—EXCERPTS OF EXISTING FUEL PATHWAYS FROM § 40 CFR 80.1426

Fuel type Feedstock Production process requirements D-Code

Biodiesel, and renewable diesel...... Soy bean oil; Oil from annual One of the following: Trans- 4 (Biomass-Based Diesel). covercrops; Algal oil; Biogenic Esterification Hydrotreating Ex- waste oils/fats/greases; Non-food cluding processes that co-process grade corn oil. renewable biomass and petro- leum. Biodiesel, and renewable diesel...... Soy bean oil; Oil from annual One of the following: Trans- 5 (Advanced Biofuel). covercrops; Algal oil; Biogenic Esterification Hydrotreating In- waste oils/fats/greases; Non-food cludes only processes that co- grade corn oil. process renewable biomass and petroleum.

While triglycerides are usually the TABLE 15—RANGES OF FFA IN esterification of the FFAs and the main component of oils, fats, and grease BIODIESEL FEEDSTOCKS 63 64 transesterification of the triglycerides. feedstocks, there are other components The simplified form of the esterification such as free fatty acids (FFAs) that are Biodiesel feedstock Percentage process is given below in Equation 2. typically removed prior to FFA Acid esterification can be applied to transesterification. Removal or Refined vegetable oils ...... <0.05 feedstocks with FFA contents above 5%. conversion of FFAs is important if the Crude vegetable oils ...... 0.3–0.7 Because the transesterification of traditional base-catalyzed Restaurant waste grease ...... 2–7 triglycerides is slow under acid transesterification production process is Yellow grease ...... <15 catalysis, a technique commonly used to used since FFAs will react with base Animal fat ...... 5–30 overcome the reaction rate issue is to catalysts to produce soaps that inhibit Brown grease ...... >15 first convert the FFAs through an acid Trap grease ...... 40–100 the transesterification reaction. Table 15 esterification (also known as an acid below gives the usual ranges for FFAs ‘‘pretreatment’’ step), and then follow- found in biodiesel feedstocks. One of the most widely used methods up with the traditional base-catalyzed for treating biodiesel feedstocks with transesterification of triglycerides. See higher FFA content is acid catalysis. Figure 2 for a general flow diagram of Acid catalysis typically uses a strong the acid esterification and subsequent acid such as sulfuric acid to catalyze the transesterification biodiesel process.

62 Commonly used base catalysts include sodium 63 Van Gerpen, J., Shanks, B., Pruszko, R., 64 Van Gerpen, J., ‘‘Used and Waste Oil and hydroxide (NaOH), potassium hydroxide (KOH) and Clements, D., Knothe, G., ‘‘Biodiesel Production Grease for Biodiesel,’’ NC State University A&T sodium methoxide (NaOCH3). Technology,’’ NREL/SR–510–36244, July 2004. State University Cooperative Extension, http:// www.extension.org/pages/Used_and_Waste_Oil_ and_Grease_for_Biodiesel.

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Under the RFS2 final rule, biodiesel higher levels of FFAs. As described these maximum observed inputs for from biogenic waste oils/fats/greases below, EPA has evaluated the use of energy used plus a high estimate for qualifies for D-Codes 4 and 5 using a these higher FFA feedstocks to make process materials used will estimate the ‘‘transesterification’’ process. This biodiesel and has determined that use of highest GHG emissions profile for conclusion was based on the analysis of such feedstocks also results in a biodiesel production GHG emissions. yellow grease as a feedstock in a process biodiesel with lifecycle GHG emissions When combined with the feedstock where there was an acid ‘‘pretreatment’’ at least 50% less than that of GHG emissions impact (see discussion or ‘‘esterification’’ process to treat the conventional fuel. below), the results still predict a GHG FFAs contained in the feedstock. In fact, The National Biodiesel Board (NBB) emissions reduction comfortably one of the material inputs assumed in has conducted a comprehensive survey exceeding 50% as compared to the the modeling for the final RFS2 rule of the actual energy used by commercial petroleum fuel it displaces. Therefore, yellow grease pathway is sulfuric acid, biodiesel production plants in the U.S.65 there is little risk in predicting that any which is the catalyst commonly used for The survey depicts the amount of facility that utilizes esterification and acid esterification. However, we had not energy and incidental process materials feedstock over the range of likely FFA stipulated ‘‘esterification’’ as a qualified such as acids used to produce a gallon content can meet the 50% biomass- production process in Table 1 to § 40 of biodiesel. The survey data returned based diesel and advanced biofuel CFR 80.1426. We believe this ambiguity represents 37% of the surveyed 230 threshold. could unnecessarily cause confusion as NBB biodiesel members in 2008 and According to the survey, the to whether esterification can also be includes producers using a variety of maximum electricity use for a producer used for the production of biodiesel virgin oils and recycled or reclaimed reached as high as 3,071 Btu per gallon under the currently approved pathways. fats and oils. While there is no specific biodiesel. This is about 5 times higher Since the biodiesel modeling data on the FFA content of the than the industry average. The completed for the final RFS2 rule feedstocks used, the feedstocks did maximum natural gas usage for a actually includes esterification include reclaimed greases which producer reached as high as 12,324 Btu upstream of the transesterification represent the feedstocks which typically per gallon biodiesel, which is about 3.5 process, we find it appropriate to clarify have the highest FFA content. As the times higher than the industry average. Table 1 to § 40 CFR 80.1426 to include data is partially aggregated, we used the For ‘‘materials used’’ only an industry ‘‘esterification’’ as a qualified process in maximum surveyed electricity and average for each material was provided which to produce biodiesel. As the natural gas used at the facilities and a in the survey. Therefore, as a modeling for yellow grease met an 86% high estimate of ‘‘materials used’’ based conservative estimate, we totaled all the GHG reduction emissions level, and on a sum of industry averages for all average material inputs to equal 0.51 kg/ yellow grease is typically <15% FFA process materials for calculating gal biodiesel.66 We believe that this is content, it is reasonable to conclude that potential GHG emissions. Even though conservative because not all facilities esterification and subsequent some of the facilities might be are likely to use each and every one of transesterification with a yellow grease processing feedstocks with relatively the process materials listed in the feedstock containing FFAs at the very low FFA content, we believe that using survey (e.g., we totaled all the acids least up to 15% can meet the GHG reduction threshold for biomass-based 65 National Biodiesel Board, Comprehensive 66 The material inputs include methanol, sodium diesel and advanced biofuel of 50%. Survey on Energy Use for Biodiesel Production methylate, sodium hydroxide, potassium (2008) http://www.biodiesel.org/news/RFS/ hydroxide, hydrochloric acid, sulfuric acid, As noted in Table 15, however, there rfs2docs/NBB%20Energy%20Use%20Survey%20 phosphoric acid, and citric acid. The majority of are feedstocks that may contain even FINAL.pdf. material input is from methanol.

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used even though a facility is not likely determination, we had not intended the VI. Statutory and Executive Order to use each different acid). Thus, our supplemental determination to cover Reviews estimate of materials used will estimate just those varieties or sources of A. Executive Order 12866: Regulatory a level of maximum usage of materials rapeseed that are identified as canola, Planning and Review at a given facility. In addition, we did but to all rapeseed. As described in the not include a glycerin co-product credit July 1, 2011 NPRM, we currently This action is not a ‘‘significant when calculating emissions since the interpret the reference to ‘‘canola’’ in regulatory action’’ under the terms of esterification reaction does not produce Table 1 to § 80.1426 to include any Executive Order 12866 (58 FR 51735, glycerin (see Equation 2). Using the rapeseed. To eliminate ambiguity October 4, 1993) and is therefore not same methodology as was used for the caused by the current language, subject to review under Executive yellow grease modeling under RFS2, but however, we proposed to replace the Orders 12866 and 13563 (76 FR 3821, using the high energy and materials use term ‘‘canola’’ in that table with the January 21, 2011). assumptions per the above discussion term ‘‘canola/rapeseed’’. Canola is a B. Paperwork Reduction Act and omitting the glycerin co-product type of rapeseed. While the term credit, we estimate the emissions from ‘‘canola’’ is often used in the American This action does not impose any new information collection burden. The biodiesel processing at 23,708 gCO2eq continent and in Australia, the term per mmBtu of biodiesel. The estimated ‘‘rapeseed’’ is often used in Europe and corrections, clarifications, and GHG emissions reduction for the entire other countries to describe the same modifications to the final RFS2 process is ¥71%. Since the GHG crop. We received no adverse comments regulations contained in this rule are threshold is at ¥50% for biomass-based on our proposal, and thus are finalizing within the scope of the information diesel and advanced biofuel, we believe it as proposed. This change will collection requirements submitted to the that there is a large enough margin in enhance the clarity of the regulations Office of Management and Budget the results to reasonably conclude that regarding the feedstocks that qualify (OMB) for the final RFS2 regulations. OMB has approved the information biodiesel using esterification of under the approved canola biodiesel collection requirements contained in the specified feedstocks with any level of pathway. existing regulations at 40 CFR part 80, FFA content meets the biomass-based Second, we wish to clarify that diesel and advanced biofuel 50% subpart M under the provisions of the although the GHG emissions of lifecycle GHG reduction threshold. Paperwork Reduction Act, 44 U.S.C. producing fuels from canola feedstock Therefore, we are including the process 3501 et seq. and has assigned OMB grown in the U.S. and Canada was ‘‘esterification’’ as an approved control numbers 2060– 0637 and 2060– specifically modeled as the most likely biodiesel production process in Table 1 0640. The OMB control numbers for source of canola (or rapeseed) oil used to § 40 CFR 80.1426. In addition, EPA’s regulations in 40 CFR are listed for biodiesel produced for sale and use consistent with the modeling conducted in 40 CFR part 9. in the U.S., we also intended that the for RFS2, we interpret the RFS approved pathway cover canola/ C. Regulatory Flexibility Act regulations as they existed prior to rapeseed oil from other countries, and today’s rule as including a direct The Regulatory Flexibility Act (RFA) esterification process as part of the we interpret our regulations in that generally requires an agency to prepare biodiesel pathways for which only manner. We expect the vast majority of a regulatory flexibility analysis of any ‘‘trans-esterification’’ was specifically biodiesel used in the U.S. and produced rule subject to notice and comment referenced in Table 1 to § 40 CFR from canola/rapeseed oil will come from rulemaking requirements under the 80.1426. U.S. and Canadian crops. Incidental Administrative Procedure Act or any amounts from crops produced in other other statute unless the agency certifies V. Additional Changes to Listing of nations will not impact our average that the rule will not have a significant Available Pathways in Table 1 of GHG emissions for two reasons. First, economic impact on a substantial 80.1426 our analyses considered world-wide number of small entities. Small entities We are also finalizing two changes to impacts and thus considered canola/ include small businesses, small Table 1 to 80.1426 that were proposed rapeseed crop production in other organizations, and small governmental on July 1, 2011 (76 FR 38844). The first countries. Second, other countries most jurisdictions. change adds ID letters to pathways to likely to be exporting canola/rapeseed For purposes of assessing the impacts facilitate references to specific or biodiesel product from canola/ of today’s rule on small entities, small pathways. The second change adds rapeseed are likely to be major entity is defined as: (1) A small business ‘‘rapeseed’’ to the existing pathway for producers which typically use similar as defined by the Small Business renewable fuel made from canola oil. cultivars and farming techniques. Administration’s (SBA) regulations at 13 On September 28, 2010, EPA Therefore, GHG emissions from CFR 121.201; (2) a small governmental published a ‘‘Supplemental producing biodiesel with canola/ jurisdiction that is a government of a Determination for Renewable Fuels rapeseed grown in other countries city, county, town, school district or Produced Under the Final RFS2 should be very similar to the GHG special district with a population of less Program from Canola Oil’’ (FR Vol. 75, emissions we modeled for Canadian and than 50,000; and (3) a small No. 187, pg 59622–59634). In the July 1, U.S. canola, though they could be organization that is any not-for-profit 2011 NPRM (76 FR 38844) we proposed slightly (and insignificantly) higher or enterprise which is independently to clarify two aspects of the lower. At any rate, even if there were owned and operated and is not supplemental determination. First we unexpected larger differences, EPA dominant in its field. proposed to amend the regulatory believes the small amounts of feedstock After considering the economic language in Table 1 to § 80.1426 to or fuel potentially coming from other impacts of this action on small entities, clarify that the currently-approved countries will not impact our threshold I certify that this rule will not have a pathway for canola also applies more analysis. Therefore, EPA interprets the significant economic impact on a generally to rapeseed. While ‘‘canola’’ approved canola pathway as covering substantial number of small entities. was specifically described as the canola/rapeseed regardless of country This rule will not impose any new feedstock evaluated in the supplemental origin. requirements on small entities. The

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relatively minor corrections and governments. Thus, Executive Order justice. Its main provision directs modifications this rule makes to the 13175 does not apply to this action. Federal agencies, to the greatest extent final RFS2 regulations do not impact practicable and permitted by law, to G. Executive Order 13045: Protection of small entities. make environmental justice part of their Children From Environmental Health mission by identifying and addressing, D. Unfunded Mandates Reform Act Risks and Safety Risks as appropriate, disproportionately high This rule does not contain a Federal EPA interprets EO 13045 (62 FR and adverse human health or mandate that may result in expenditures 19885, April 23, 1997) as applying only environmental effects of their programs, of $100 million or more for State, local, to those regulatory actions that concern policies, and activities on minority and tribal governments, in the aggregate, health or safety risks, such that the populations and low-income or the private sector in any one year. We analysis required under section 5–501 of populations in the United States. the EO has the potential to influence the have determined that this action will EPA has determined that this rule will not result in expenditures of $100 regulation. This action is not subject to EO 13045 because it does not establish not have disproportionately high and million or more for the above parties adverse human health or environmental and thus, this rule is not subject to the an environmental standard intended to mitigate health or safety risks. effects on minority or low-income requirements of sections 202 or 205 of populations because it does not affect UMRA. H. Executive Order 13211: Actions the level of protection provided to This rule is also not subject to the Concerning Regulations That human health or the environment. requirements of section 203 of UMRA Significantly Affect Energy Supply, These amendments would not relax the because it contains no regulatory Distribution, or Use control measures on sources regulated requirements that might significantly or This rule is not subject to Executive by the RFS regulations and therefore uniquely affect small governments. It Order 13211 (66 FR 18355 (May 22, would not cause emissions increases only applies to gasoline, diesel, and 2001)), because it is not a significant from these sources. renewable fuel producers, importers, regulatory action under Executive Order distributors and marketers and makes K. Congressional Review Act 12866. relatively minor corrections and modifications to the RFS2 regulations. I. National Technology Transfer and The Congressional Review Act, 5 Advancement Act U.S.C. 801 et seq., as added by the Small E. Executive Order 13132 (Federalism) Business Regulatory Enforcement Section 12(d) of the National This action does not have federalism Fairness Act of 1996, generally provides Technology Transfer and Advancement that before a rule may take effect, the implications. It will not have substantial Act of 1995 (‘‘NTTAA’’), Public Law direct effects on the States, on the agency promulgating the rule must 104–113, 12(d) (15 U.S.C. 272 note) submit a rule report, which includes a relationship between the national directs EPA to use voluntary consensus government and the States, or on the copy of the rule, to each House of the standards in its regulatory activities Congress and to the Comptroller General distribution of power and unless to do so would be inconsistent responsibilities among the various of the United States. A major rule with applicable law or otherwise cannot take effect until 60 days after it levels of government, as specified in impractical. Voluntary consensus Executive Order 13132. This action only is published in the Federal Register. standards are technical standards (e.g., EPA will submit a report containing this applies to gasoline, diesel, and materials specifications, test methods, renewable fuel producers, importers, rule and other required information to sampling procedures, and business the U.S. Senate, the U.S. House of distributors and marketers and makes practices) that are developed or adopted relatively minor corrections and Representatives, and the Comptroller by voluntary consensus standards General of the United States prior to modifications to the RFS2 regulations. bodies. NTTAA directs EPA to provide Thus, Executive Order 13132 does not publication of the rule in the Federal Congress, through OMB, explanations Register. This action is not a ‘‘major apply to this action. when the Agency decides not to use rule’’ as defined by 5 U.S.C. 804(2). F. Executive Order 13175 (Consultation available and applicable voluntary and Coordination With Indian Tribal consensus standards. VII. Statutory Provisions and Legal Governments) This action does not involve technical Authority standards. Therefore, EPA did not This rule does not have tribal consider the use of any voluntary Statutory authority for the rule implications, as specified in Executive consensus standards. finalized today can be found in section Order 13175 (65 FR 67249, November 9, 211 of the Clean Air Act, 42 U.S.C. 2000). It applies to gasoline, diesel, and J. Executive Order 12898: Federal 7545. Additional support for the renewable fuel producers, importers, Actions To Address Environmental procedural and compliance related distributors and marketers. This action Justice in Minority Populations and aspects of today’s rule, including the makes relatively minor corrections and Low-Income Populations recordkeeping requirements, come from modifications to the RFS regulations, Executive Order (EO) 12898 (59 FR Sections 114, 208, and 301(a) of the and does not impose any enforceable 7629 (Feb. 16, 1994)) establishes Federal Clean Air Act, 42 U.S.C. 7414, 7542, and duties on communities of Indian tribal executive policy on environmental 7601(a).

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List of Subjects in 40 CFR Part 80 PART 80—REGULATION OF FUELS which meets the definition of gasoline AND FUEL ADDITIVES in § 80.2(c). Environmental protection, Renewable gasoline blendstock means Administrative practice and procedure, ■ 1. The authority citation for part 80 a blendstock made from renewable Agriculture, Air pollution control, continues to read as follows: biomass that is composed of only Confidential business information, hydrocarbons and which meets the Diesel Fuel, Energy, Forest and forest Authority: 42 U.S.C. 7414, 7521(1), 7545 and 7601(a). definition of gasoline blendstock in products, Fuel additives, Gasoline, § 80.2(s). Imports, Labeling, Motor vehicle ■ 2. Section 80.1401 is amended by * * * * * pollution, Penalties, Petroleum, addition of the following definitions of ■ 3. Section 80.1426 is amended by Reporting and recordkeeping ‘‘Renewable Gasoline’’ and ‘‘Renewable requirements. revising Table 1 in paragraph (f)(1) to Gasoline Blendstock’’ in alphabetical read as follows: Dated: November 30, 2011. order to read as follows: § 80.1426 How are RINs generated and Lisa P. Jackson, § 80.1401 Definitions. assigned to batches of renewable fuel by Administrator. * * * * * renewable fuel producers or importers? For the reasons set forth in the Renewable gasoline means renewable * * * * * preamble, 40 CFR part 80 is amended as fuel made from renewable biomass that (f) * * * follows: is composed of only hydrocarbons and (1) * * *

TABLE 1 TO § 80.1426—APPLICABLE D CODES FOR EACH FUEL PATHWAY FOR USE IN GENERATING RINS

Fuel type Feedstock Production process requirements D-Code

A Ethanol ...... Corn starch ...... All of the following: Dry mill process, using natural 6 gas, biomass, or biogas for process energy and at least two advanced technologies from Table 2 to this section. B Ethanol ...... Corn starch ...... All of the following: Dry mill process, using natural 6 gas, biomass, or biogas for process energy and at least one of the advanced technologies from Table 2 to this section plus drying no more than 65% of the distillers grains with solubles it mar- kets annually. C Ethanol ...... Corn starch ...... All of the following: Dry mill process, using natural 6 gas, biomass, or biogas for process energy and drying no more than 50% of the distillers grains with solubles it markets annually. D Ethanol ...... Corn starch ...... Wet mill process using biomass or biogas for proc- 6 ess energy. E Ethanol ...... Starches from crop residue and annual covercrops Fermentation using natural gas, biomass, or biogas 6 for process energy. F Biodiesel, renewable Soy bean oil; Oil from annual covercrops; Algal oil; One of the following: Trans-Esterification, 4 diesel, jet fuel and heat- Biogenic waste oils/fats/greases; Non-food grade Esterification Hydrotreating Excluding processes ing oil. corn oil; Camelina oil. that co-process renewable biomass and petro- leum. G Biodiesel, heating oil .. Canola/Rapeseed oil ...... Trans-Esterification using natural gas or biomass 4 for process energy. H Biodiesel, renewable Soy bean oil; Oil from annual covercrops; Algal oil; One of the following: Trans-Esterification, 5 diesel, jet fuel and heat- Biogenic waste oils/fats/greases; Non-food grade Esterification Hydrotreating Includes only proc- ing oil. corn oil Camelina oil. esses that co-process renewable biomass and petroleum. I Naphtha, LPG ...... Camelina oil ...... Hydrotreating ...... 5 J Ethanol ...... Sugarcane ...... Fermentation ...... 5 K Ethanol ...... Cellulosic Biomass from crop residue, slash, pre- Any ...... 3 commercial thinnings and tree residue, annual covercrops, switchgrass, miscanthus, napiergrass, giant reed, and energy cane; cellu- losic components of separated yard waste; cellu- losic components of separated food waste; and cellulosic components of separated MSW. L Cellulosic Diesel, jet Cellulosic Biomass from crop residue, slash, pre- Any ...... 7 fuel and heating oil. commercial thinnings and tree residue, annual covercrops, switchgrass, miscanthus, napiergrass, giant reed and energy cane; cellu- losic components of separated yard waste; cellu- losic components of separated food waste; and cellulosic components of separated MSW.

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TABLE 1 TO § 80.1426—APPLICABLE D CODES FOR EACH FUEL PATHWAY FOR USE IN GENERATING RINS—Continued

Fuel type Feedstock Production process requirements D-Code

M Renewable Gasoline Cellulosic Biomass from crop residue, slash, pre- Catalytic Pyrolysis, Gasification and Upgrading, Di- 3 and Renewable Gaso- commercial thinnings, tree residue, annual cover rect Fermentation, Fermentation and Upgrading, line Blendstock. crops; cellulosic components of separated yard all utilizing natural gas, biogas, and/or biomass waste; cellulosic components of separated food as the only process energy sources. Any proc- waste; and cellulosic components of separated ess utilizing biogas and/or biomass as the only MSW. process energy sources. N Butanol ...... Corn starch ...... Fermentation; dry mill using natural gas, biomass, 6 or biogas for process energy. O Ethanol, renewable The non-cellulosic portions of separated food Any ...... 5 diesel, jet fuel, heating waste. oil, and naphtha. P Biogas ...... Landfills, sewage waste treatment plants, manure Any ...... 5 digesters.

* * * * * [FR Doc. 2011–31580 Filed 1–4–12; 8:45 am] BILLING CODE 6560–50–P

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CUSTOMER SERVICE AND INFORMATION CFR PARTS AFFECTED DURING JANUARY

Federal Register/Code of Federal Regulations At the end of each month the Office of the Federal Register General Information, indexes and other finding 202–741–6000 publishes separately a List of CFR Sections Affected (LSA), which aids lists parts and sections affected by documents published since Laws 741–6000 the revision date of each title. 40 CFR Presidential Documents 3 CFR 80...... 462 Executive orders and proclamations 741–6000 Proclamations: The United States Government Manual 741–6000 8768...... 209 Proposed Rules: 8769...... 211 80...... 700 Other Services 8770...... 407 42 CFR Electronic and on-line services (voice) 741–6020 8771...... 413 Privacy Act Compilation 741–6064 63...... 556 Public Laws Update Service (numbers, dates, etc.) 741–6043 10 CFR 410...... 217, 227 TTY for the deaf-and-hard-of-hearing 741–6086 Proposed Rules: 411...... 217 50...... 441 414...... 227 52...... 441 415...... 227 ELECTRONIC RESEARCH 100...... 441 416...... 217 World Wide Web 419...... 217 489...... 217 Full text of the daily Federal Register, CFR and other publications 12 CFR 495...... 217, 227 is located at: www.fdsys.gov. Proposed Rules: Federal Register information and research tools, including Public 44...... 23 44 CFR 248...... 23 Inspection List, indexes, and links to GPO Access are located at: 65...... 423, 425 www.ofr.gov. 252...... 594 351...... 23 E-mail 45 CFR FEDREGTOC-L (Federal Register Table of Contents LISTSERV) is 14 CFR Proposed Rules: an open e-mail service that provides subscribers with a digital 39...... 1, 3 1355...... 467 form of the Federal Register Table of Contents. The digital form 71...... 5, 6 46 CFR of the Federal Register Table of Contents includes HTML and 117...... 330 PDF links to the full text of each document. 119...... 330 1...... 232 121...... 330 10...... 232 To join or leave, go to http://listserv.access.gpo.gov and select 11...... 232 Online mailing list archives, FEDREGTOC-L, Join or leave the list 16 CFR 12...... 232 (or change settings); then follow the instructions. Proposed Rules: 13...... 232 PENS (Public Law Electronic Notification Service) is an e-mail 303...... 234 14...... 232 service that notifies subscribers of recently enacted laws. 305...... 234 15...... 232 To subscribe, go to http://listserv.gsa.gov/archives/publaws-l.html 47 CFR and select Join or leave the list (or change settings); then follow 17 CFR Proposed Rules: the instructions. Proposed Rules: 76...... 468 FEDREGTOC-L and PENS are mailing lists only. We cannot 230...... 24 respond to specific inquiries. 255...... 23 48 CFR Reference questions. Send questions and comments about the 21 CFR Ch. 1...... 182, 205 Federal Register system to: [email protected] 606...... 7 1...... 197 The Federal Register staff cannot interpret specific documents or 610...... 7 2...... 183, 187 regulations. 640...... 7 4 ...... 183, 187, 204 5...... 189 Reminders. Effective January 1, 2009, the Reminders, including Proposed Rules: 6...... 189 10...... 25 Rules Going Into Effect and Comments Due Next Week, no longer 7...... 183, 187 appear in the Reader Aids section of the Federal Register. This 29 CFR 8 ...... 183, 189, 194, 204 information can be found online at http://www.regulations.gov. 9 ...... 183, 187, 197 CFR Checklist. Effective January 1, 2009, the CFR Checklist no 1915...... 18 11...... 189 longer appears in the Federal Register. This information can be 31 CFR 12...... 194, 197 found online at http://bookstore.gpo.gov/. 13...... 187, 189 351...... 213 15...... 204 359...... 213 FEDERAL REGISTER PAGES AND DATE, JANUARY 16...... 189, 194 363...... 213 17...... 183 1–212...... 3 Proposed Rules: 18 ...... 183, 187, 189 150...... 35 213–418...... 4 19...... 204 419–728...... 5 22...... 204 33 CFR 23...... 204 117 ...... 419, 420, 421, 423 25...... 187 26...... 187 37 CFR 28...... 204 Proposed Rules: 31...... 202 1...... 442, 448 35...... 183 11...... 457 36...... 189

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41...... 183 49 CFR 239...... 154 Proposed Rules: 42...... 197, 204 17...... 45, 666 173...... 429 50 CFR 52 ...... 187, 197, 202, 204 648...... 52 Proposed Rules: 1552...... 427 17...... 431 665...... 66 238...... 154 679...... 438

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(phone, 202–512–1808). The H.R. 3672/P.L. 112–77 text will also be made Disaster Relief Appropriations LIST OF PUBLIC LAWS available on the Internet from Act, 2012 (Dec. 23, 2011; 125 Public Laws Electronic GPO’s Federal Digital System Stat. 1277) Notification Service This is a continuing list of (FDsys) at http://www.gpo.gov/ H.R. 3765/P.L. 112–78 public bills from the current fdsys. Some laws may not yet Temporary Payroll Tax Cut (PENS) session of Congress which be available. Continuation Act of 2011 have become Federal laws. It (Dec. 23, 2011; 125 Stat. H.R. 2055/P.L. 112–74 may be used in conjunction 1280) with ‘‘P L U S’’ (Public Laws Consolidated Appropriations S. 278/P.L. 112–79 PENS is a free electronic mail Update Service) on 202–741– Act, 2012 (Dec. 23, 2011; 125 Sugar Loaf Fire Protection notification service of newly 6043. This list is also Stat. 786) District Land Exchange Act of enacted public laws. To available online at http:// H.R. 2867/P.L. 112–75 2011 (Dec. 23, 2011; 125 subscribe, go to http:// www.archives.gov/federal- United States Commission on Stat. 1294) listserv.gsa.gov/archives/ register/laws. International Religious S. 384/P.L. 112–80 publaws-l.html The text of laws is not Freedom Reform and To amend title 39, United published in the Federal Reauthorization Act of 2011 States Code, to extend the Note: This service is strictly Register but may be ordered (Dec. 23, 2011; 125 Stat. authority of the United States for E-mail notification of new in ‘‘slip law’’ (individual 1272) Postal Service to issue a laws. The text of laws is not pamphlet) form from the H.R. 3421/P.L. 112–76 semipostal to raise funds for available through this service. Superintendent of Documents, Fallen Heroes of 9/11 Act breast cancer research. (Dec. PENS cannot respond to U.S. Government Printing (Dec. 23, 2011; 125 Stat. 23, 2011; 125 Stat. 1297) specific inquiries sent to this Office, Washington, DC 20402 1275) Last List December 22, 2011 address.

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